New york stock exchange. The u. S. china trade war taking a bite out of apple, now on pace for the worst day in over a week as the white houses 15 tariff on a new batch of goods goes into effect over the weekend obviously, a big story for the markets. Apple products expected to be hit this time around include the apple watch, air pods, the home pod, imax, and some beat headphones for more on where the stock may go from here, were joined by an apple bear, Pierre Ferragu has a sell on the stock, a 170 target. Also with us, apple bull, daniel flax, whose target is, daniel . Carl, i cant give you a specific target, but what i can say is that while the nearterm environment certainly remains sluggish with iphone and clearly theres a risk in terms of higher prices from tariffs impacting demand, we see a lot that we like over the medium term and i say that because the iphone install base is continuing to grow the company has opportunities to show additional growth with Newer Services like tv and gaming when we look at the wearables market, the apple watch, even with the tariffs, we think theres a lot of innovation. And so if we pull it all together, the ecosystem remains healthy, we think apple is delivering innovation and its customers, its partners, the App Developers are benefiting from being part of this, which ultimately we think will create shareholder value over the next two to three years is your call a tariffrelated call not really. My call is simply that apples main issue, and i agree with dan, its a nearterm issue the next couple of years, is that the average iphone user actually loves her phone so much that she doesnt want to change it for a more expensive and not much better phone so apple has to go through this very difficult time where its user base is growing, its true, but theyre replacing their phone less and less often. So the way apple has been managing that very well has been by being very aggressive on promotions, on pricing to encourage people to renew their phones earlier than later. You can do that if your cost base is coming down. So price have been coming down in the last six months it has helped apple taking prices down much faster than usual. 7 to 8 faster than usual in the last six months. If prices kick in, prices are going up and there will be a squeeze. Apple cannot take prices down anymore, or apple will have to suffer a lot pierre, i love the courage of the sell call. Just like last time, when you had the sell call, the stock dipped down, but then it popped right back up. So i wonder, first of all, how much of this is a longer term issue with apple stock how much of it is, you think, this is just a little rough patch that apple is going through . And then, youve got the 5g cycle thats coming next year. Eventually, people are going to start Pay Attention to that. Maybe the Services Businesses do business than some people expect isnt there the risk that apple starts trading on that stuff instead of the iphone . Yeah, so, i think, youre framing it right five years, as dan says, the ecosystem is in place, people maybe love their phone less than they used to in the past, and the ecosystem ties are very strong so i think the business is, it isnt like a fundamental issue the real question is how is apples right to make money evolving if you cant make as much money on your phones in the past if you have to change the way you make money, selling more watches and more services, that creates a transition and what i have visibility on today is that transition and that transition, is extremely painful for the very reasons you mentioned. We are heading we are today at a very low level of demand. Very difficult to challenge that we are heading into a very weak cycle. Because who is going to buy like a 1,200 iphone that is not 5g knowing that the next one is going to be 5g that transition is going to be painful. When we have the low of the transition, and remember what i did in february of last year, then there is the possibility to look further away and see what kind of upside we can see in the stock. Yeah, dan, to that point, the fact that 5g is a 2020 story for apple, and the fact that you are so bullish on the company, expectations seem to be pretty low for this next iphone iteration which we are expecting to happen next week. What are you thinking about it expectations are low, morgan. I think people are expecting theres likely to be an additional camera and a faster processor. But we think, though, that the bigger story is around the integration of the hardware, the software, and the services that ultimately is what helps to differentiate the User Experience and helps the iphone stand out from the other products so, whether its a 5g variant late next year perhaps or whatever might come down the road, ultimately that innovation is whats critical and if we look at the history of the company, we, all of us, i think, here, remember the ipod, right . And so apple has reinvented itself so it is not a story without risks, but where we look for innovation, were finding it areas, for example, with the watch can enable them to move into areas like health care, with the ecg, the electrocardiogram app. So if the devices and the services are adding utility to their users lives, certainly there are more Payment Options that can make it affordable. We think thats important, over the medium term. So i know we dont have any tariffs on iphones, at least not until december, based on whats planned right now. But where you do look at where the growth is coming from in addition to services, it is watches and wearables like air pods, those are getting tri tine as of this past weekend, how do you factor that in it will be a hit to earnings. I think the market will look past it if it is clear that there is innovation in the new watches that come out, be it Additional Health care or maybe sleep functions that add utility to users lives. Theres little doubt that it will raise cost, it will impact demand but i think for those who want to look further out, as we are doing, we see opportunity here if there is liability, regarding tariffs, pierre, is the Balance Sheet, is the put thats implied by their pace of buybacks in recent years, is that still in tact because a lots been made of the slower pace of buybacks, some among all s pers year on year . Thats a good question. I think the change in behavior around the Balance Sheet and like the Financial Stability of the business relates more to whats behind the tariff situation. Because the tariff situation, at the end of the day, its going to make potentially look terrible, a very difficult time in terms of product cycle, china, thats my call. But in the long run, its no big deal its like, 10, 15 higher costs from china its a new opportunity to look at arbitration costs from other countries, rethinking your global footprint in terms of manufacturing. This is the ability to work through and for a company like apple, it doesnt present a lot of money the real issue around these tariffs is actually the impact on the macro and i think if you see apple being more careful today, thats probably because the macro is concerning them. The risk that there is a tariff war gets us into a recession is really what probably worries the management today well be looking for commentary from the company on that front next print. Thanks, guys, good debate. Well see where it goes from here, dan and pierre well, Hurricane Dorian beginning to move up the southeast coast today, following its severe destruction of the bahamas over the weekend Contessa Brewer has the latest from hq. Contessa hi, there, morgan Hurricane Dorian was just downgraded to a category 2 storm, but it is so slow moving. And its a powerful storm, even so moving at a mile per hour. People in the bahamas have really been enduring this for more than 24 hours with unprecedented wind, storm surge, punishing rain Public Officials have asked those who need rescued to text their location through whatsapp, which is now owned by facebook they are reportedly receiving more than 2,000 rescue requests. Flooding remains a challenge, roads washed out, communication, power, water lines destroyed the deepest Container Terminal in the region is on hardhit grand bahama island. Its a major container hub for the eastern seaboard and sea ports are closed here in the United States, too despite the forecast shift that keeps the storm just off the coast, it has a big impact on cruise ships that are normally docking in ft. Lauderdale and canaveral, jacksonville. Impacted a 5 cents impact on cruise stocks. The port of charleston will close tomorrow now, remember, we saw this last year during florence and closing down the port is a daunting operation thats the file video that youre seeing there, when we were on site last year a major rail line in Central Florida servicing sun rail, amtrak, csx is shut down csx headquarters are in jacksonville its under mandatory evacuation orders the Company Tells me it has set up alternative work sites and its keeping close track of this storm when it comes to real lines in georgia and the carolinas. All right. Lets talk insurance the reinsurers began feeling pressured last week. Renaissance and everest could have notable exposure, but with the change in forecast, those stocks have rebounded today. Renaissance is up more than 4 , everest up 3. 5 . Well keep our eye on those. Carl very comprehensive. Thanks, contessa our Contessa Brewer. After the break, rbc takes its target on amazon up to 2600 following a deep dive into the companys oneday shipping initiative mark mahaney will be on next to talk about that. Major averages, not too far from session lows everybody really watching the tenyear at 1445 were back in a nn mu i dont know whats going on. Ive done all sorts of research, read earnings reports, looked at chart patterns. Ive even built my own historic trading model. And youre still not sure if you want to make the trade . Exactly. Sounds like a case of analysis paralysis. Is there a cure . Td ameritrades trade desk. They can help gut check your strategies and answer all your toughest questions. Sounds perfect. See, your stress level was here and i got you down to here, ive done my job. Call for a strategy gut check with td ameritrade. Amazon to 2,600. That is the latest call out of rbc, reiterating its outperform rating, out with a new note this morning on the companys oneday shipping plans the analyst behind that call, rbcs mark mahaney, joins me now. Mark, good morning good morning, jon so if im reading this correctly, you expect oneday shipping to have a big impact, 100 to 200 worth of spend for the average prime household. Also, prime additions. A, whats the magic of one day that you think will push people in that direction . And b, who does that come from does that come from the drugstore that people are now running to because they need something within 36 hours . Okay. So, yeah, look, lets step back on prime they launched this first in 2004 this is the Biggest Initiative since then, not in terms of price, but in terms of speed of delivery and what weve noticed in seven years of survey work of u. S. Online shoppers is that an increasing percentage of people want their products next day or same day so amazon is starting to give it to them. They announced this earlier this year in april. They said it would lead to accelerating Revenue Growth in the june quarter it did we think it actually will continue to lead to acceleration of Revenue Growth, especially as its rolled out globally over the next year or two its that big of a catalyst, or what we call a gci growth Curve Initiative and it will do it in two ways. It will boost the appeal of prime. Youll get your packages next day, not two days, three days. So we think prime adoption will increase more like 60 in the u. S. , but we think prime adoption will rise and we think well see greater spend per prime household. People buying more frequently and probably getting more into some of those household products, consumer packaged goods products and some loose grocery products we think thats the win for amazon fundamentally and for the stock. So, then, where do you expect to see the bigger impact when you talk about household goods, nthat sounds to me like daytoday needs, versus key buying periods like holiday, like now prime day, back to school which is one day going to have the bigger impact on jon, probably the first one, which is that the products that you and i think about buying for households that we need, you know, pretty quickly, we dont want to just get it in the mail a few days from now, a parcel a few days from now, those products, those Consumer Household goods, those will be increasingly part of the amazon basket but theres also a play here, when we come into the Fourth Quarter this year, were all procrastinators. The closer that we can purchase things to the actual winter holidays, you know, christmas, et cetera, the more the appeal of amazon. And it creates this bigger and bigger gap between the capabilities of amazon with its hundreds of Distribution Centers and the capabilities of other retailers. Even those that have been selling online for a few years nobody can match the delivery capabilities of amazon i want widens the mote around the company. Yeah, to that point, mark, just to dig into it a little bit more for years now, weve been hearing about whether amazon is going to become a fierce competitor to fedex and u. P. S. And the other Delivery Companies out there. And certainly, even now, you could compare amazons footprint with those companies and its still just a fraction of the Global Infrastructure thats in place. That being said, the amount of money amazon has been spending the wall street journal put this together really well in a report last week, that shipping and fulfillment spend last year was nearly 62 billion versus 5. 5 billion in 2010 the question for you, as amazon spends all of this money on delivery capabilities, is it an amazon for amazon story, or do you think it would apply that aws model longer term . I think thats the right setup i saw that journal article and i thought it was spoton amazon is clearly building out the capability and has been doing this for a while and will continue to do it, because this is a multiyear investment bet, to take on directly the likes of fedex and u. P. S. The difference with amazon, however, is that theres another bigger win here. What theyre trying to do is incentivize retailers, vendors, manufacturers to sell on the amazon platform. They refer to this as the fly wheel impact so prime becomes more attractive, because the delivery is faster, more consumers will sign up. Because more consumers are signed up, more vendors, manufacturers, retailers will want to be on amazon, because thats where the customers are you will therefore incentivize retailers to sign up for whats called fulfillment by amazon, where you just send your inventory to amazon and theyll pick, pack, and ship it for you. So theres this fly wheel thats picking up will they take on shipping with amazon, the likes of u. P. S. And fedex. I think thats inevitable. It will happen over time but i think the bigger win is building out amazon marketplace. So mark, what do you do with shopify then shopify is now bigger by market cap than ebay. Its argument is, hey, amazon is not going to rule the entire world. Give small and medium businesses especially an option lots of different ways to reach the customer that stock has been on a tear. Are you bullish on that . Is it either or here well, im going to punt on shopify. I dont directly cover it, and i think what theyve been able to do is really impressive and exceptional. But the pitch that retailers are not going to be willing to sell on amazon, look, i think retailers want to get in front of consumers wheres the largest marketplace of consumers its increasingly and obviously at amazon. And especially as you make the amazon prime offering, both the consumers and retailers, more and more compelling. So thats really the win here for amazon and for amazon shareholders. We said this was a win for fba, for swa, shipping with amazon, fulfillment by amazon, and for amazon shares. Thats why we raised the price target to 2,600, using the same forward Free Cash Flow multiple or the ebitda multiple that the company has traded at over the last several years even though its been an outperformer this year, i think there are a few things that are underappreciated this is one. Big call with that big investment on oneday shipping markmahaney, thank you thank you, jon. The first trading day of the month starting in the red with the dow down triple digits currently down about 387 points right now. Here are the names dragging down the index the most in todays session. Boeing, goldma ao n,ls caterpillar. Were back after a quick break ur workflows in the cloud. This changes everything. Youre right sir. Everything. No not everything, i mean youre still blatantly sucking up to me gary. Brilliantly observed, sir. Always three steps ahead. Six steps ahead. Sixteen. So many steps. You done . A million steps ahead. Servicenow. Works for you. I felt completely helpless. Trashed online. My entire career and business were in jeopardy. I called reputation defender. They were able to restore my good name. If you are under attack, i recommend calling reputation defender. Vo theres more negativity online than ever. 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