Hour plus wework woes the shareholder wants to shelf the ipo well have those details and discuss them later its the momentum crush. Investors are fleeing the stocks with the biggest gains and could be a warning sign for the Broader Market so Pay Attention power lunch starts right now welcome to power lunch. Stocks are under a bit of pressure take a look at the nasdaq. Thats getting hit the hardest as the momentum gains are selling off. On the flip side, we have small caps continuing their outperformance from yesterday. Up by 1 two headlines affecting your money. Stocks did jump higher on a glimmer of hope in trade talks but then they turned right back lower when President Trump said that he has fired the National Security adviser john bolton over policy differences. That news also sending oil sharply lower. We are live to wrap up what has been yet another very tumultuous day. Thats right. Another dramatic departure from the Trump Administration we got a little more context here we heard from the secretary of state and the secretary treasurer about bolton resigning from the white house the president surprising the world and much of the white house staff when announcing that by tweet earlier today it was very sudden the way the rest of us found out about it. The secretary of state was asked if he was blind sided by this news heres how he responded to it. Im never surprised and i dont mean that on just this issue and i think you would say the same thing we work closely with the president of the United States we have a pretty good understanding. So our mission is not to talk about these workings. So saying there with a smile im never surprised. That smile might be an indication offed fact that pompeo and bolton were reported to be at odds for months bolton now out the question is is how is that going to shift this Administration Foreign policy. I have been asking whether or not that decision to invite the taliban leadership to camp sadai ahead of the anniversary tomorrow was one of the factors for this. The White House Press secretary told me no theres been many factors. Another official here texting me saying this was death by a thousand cuts. The white house explaining this by say iing the president and h National Security adviser disagree d on a number of thing. But they wont say specifically what they were or why it came to ahead today. Thank you very much now the apple product event is underway out in cooper tino lets see what we have heard so far. Thats right. They are right now talking about the iphone 11. Its going to be much faster with better battery life an hour more they have a great dual camera thats going to have a much wider field of view. But they still havent announced the price tag for the next generation iphone. Were waiting for that but we did get a price tag r for apple tv plus. We have been waiting for that since march. Now we have a launch date as well take a listen to tim cook. Were excited to tell you that the first shows will be available on november 1st and will be adding more apple originals every month and apple tv plus will be available in over 100 countries it is just 4. 99 per month for the whole family that 4. 99 is there was some speculation it could . 99 a month. We should note netflix and disney all moving on this news hitting new session lows we see disney down 2. 5 . Netflix down 3. 25 and roku down 9 we also got a price tag for apple arcade announcing that will cost 4. 99 a month for that unlimited Video Game Service with 100 games thats launching on september 19th in 150 countries. We also heard of a next generation ipad as well as new apple watches with more capabilities and a big focus on health well be continuing to listen and listen especially for the price tag for those new iphones. Lets get to our panel to breakdown what we heard. The managing editor of mobile nations and joining us for the first time after announcing the new firm gentlemen, welcome to you both walter, lets start with you in terms of what apple has announced. We spent a lot of time on the watch. We dont know the price on the phone. What do you make of it so far . Its a typical apple announcement theres a run up in the stock and sell off the day of the announcement because there hasnt been a tremendous amount of new unno vags the company sold 230 million phones with the the iphone 6 that was five years ago. Its a new camera. That helps them mitigate the unit decline that exists out there. But again, this is just more of the typical apple launch except for the new services they are talking about thats 5 a month. This is the new era where they are trying to move out from being an Equipment Company to recurring revenue business so thats the new thing for today. The iphone stuff is is kind of status quo what am i getting for 5 a month . Our partner, we have been debating this for months with investors trying to explain this is a really big deal this is not a joke apple is not doing this lightly. They are really serious. Were in this transformal period for tv moving to internet tv apple, this isnt like game over its not like netflix. Its going to be a lot of winners in this space. And for 5 a month, lets before we get to that if you buy an apple device and calculates theres 250 million apple devices sold each year 250 Million People will have a year subscription for the Service Without paying what am i looking for you have a billion devices. They will be able to turn this on a massive global installation. Youre going to be able to turn it on and watch it whether a samsung tv or television, youll be able to watch this product have they announced any of them the morning show is up. You have annual investment youre paying nothing for most people but still, eventually, the decision will have to be made whether you pay whatever it is at that point. For what for originals . How many shows do you watch in a year . So they need to have three shows that you like over the course of not the fist year but the second year. The second year they need three shows that each of you are going to watch this is going to upside surprise in terms of how big a deal this is the price of the iphone 11 is starting at 699 so going lower. They haved on price for years. Now the replacement cycle has extended as long as its been. You have upgraded rates and operators across the world now maybe they are saying we cut some prices after the last phone didnt sell well that seems to help us in the more recent quarter to mitigate the declans. They had to do this to co. Pete with huawei and the lower pri priced markets people talked about them cutting price in the past. Theres been plenty of successful years they havent done that and to grow the revenue or mitigate the declines but clearly this was an aissue after last year. They saw success with price declines in the international markets. They are going the opposite way right now to try its the lower version. It was lower. Then they had the 10s and max to try to expand you on a higher price increase revenue still ended up declining. They dont disclose units anymore. What we saw the revenue decline in iphone. I want to bring you in. Youre the gadget guy. I think theres some confusion going on with some of the stuff said the iphone 11 is a replacement for the 10r. Its kind of being rebrand ed into the standard brand of the iphone which is is a cool way of doing this, which is the iphone 11 pro instead of what we saw before with the max version so theres some shuffling with the the rebranding the iphone 10r was 749. So only a 50 in price apple shifted back in price. The biggest thing is to offer the camera and offer the initial service ises that come with a standard iphone at this price point and battery even greater offered last year. The biggest reason is these c cameras are designed to kind of meet the current pace were seeing from the pixel line not really exceed them which was going to be a challenge for apple in the later year, but the video capables are going to help set it apart especially to the front facing camera this is all around a good thing. The price difference isnt as significant as you think more people part apple tv trials because if you have more devices out there at a lowerer price, more people are going to get a oneyear subscription. You get the tv service. We dont have all the details. Apple is focusing on subscriptions. I think apple really wants to build a robust subscription business music isnt beating spotify, but its number two. I dont think they give enough credit for how well they are doing. Lets bring julia back in they are calling it the pro the iphone 11 pro. This one has three cameras and its the most advanced and detailed iphone yet. This is made out of surgical grade stainless steel and introducing a number of new finishes this will come in the 5. 8inch version and then also a 6 6. 5inch version they are talking about the capabilities now but spatial audio, and what they are calling a super retina display. So basically applying the mac book pro to a new iphone we know its starting at 699. Thank you this is similar to the format that was brought up last year. Were kind of getting rid of the xr design and replacing it with the pro model. It falls in line with some of the naming schemes a third camera that does even more having the display up front with the visual experience and ramp them up, this is the same kind of experiences we have gotten from previous generations gin just increase that one level higher you have lost me. But i have a lot of model names and prices the phone can do an appendectomy its going to be great should i buy the stock or not . The stock is at a premium to the s p. Its been outperforming market and they are returning to growth they are doing a lot of Earnings Growth through Share Repurchase. Since tim cook has take b over, thats seven times higher than what they used to spend. And hes the products that we have today they are still off their high the stocks also close to a trillion dollar market cap once again. While they are spend iing about that much every quarter on Share Repurchase if youre into Share Repurchase still as a way to drive evaluation, thats your stock. That was more meaningful when the stock was at 25 discount to the market just not as compelling as they get into the Television Production business, they are going to find a new way to spend money Steven Spielberg doesnt work cheap. 2 billion is as much as disney is spending in year one this could easily be netflix is spending 15 billion theres a a lot of head room to go that f they see the benefit to device purchases and other parts of the franchise and watch timing, everyone is is try ing to keep you in their ecosystem for longer amounts of time if people love the morning show, if if they love this content, why wouldnt you spend more . Tim cook was at a differenkimpbp can the years ago. He was asked could you be outspent as netflix. He said, look, this is day one for us well see. But in four or five years, well see whats possible. Apple has the Balance Sheet to really be a major player in this space. Buying the content brings legacy problems in terms of distribution windows and entanglements. If you look at what netflix and amazon are doing, its easier to just start fresh versus buy a Media Company and try to figure out a solution so i would be surprised if they did that i wouldnt be surprise d if we look up in a few years and they are spending 8 billion a year especially if its drives device purchases and new sub skringscrs stick around. Ahead on power lunch. We have a problem. Despite concerns, the companys road show could begin as soon as monday details, next. Plus the great rotation. Could it be a warning sign for the Broader Market as we continue to monitor apples product event, well bring you updates as they happen were back planning to go full speed ahead even against the wishes of the largest shareholder. Saga is the right word for it soft bank urging the Parent Company to abandon the deal altogether according to people with knowledge of the discussions, soft bank is concerned about the valuation that we were could get in the Public Markets. They are trouble having investor demand and onethird of the 47 billion price tag that soft bank signed in the latest funding round. That big markdown could spell a trouble for the attempt at raising another 100 billion vision fund. But wework does not appear to be giving up easily two separate sources said its still all systems go wework is still moving forward with the deal. There was a big meeting to discuss plans last night im told an official launch date has not yet been set im also hearing discussions about governance changes its unclear whether they will come to pass if this deal does move forward either way, wework needs the cash ipo could bring billions more dollars to the table plus they submit a credit. Talk more about this. We want to bring in a reporter with the wall street journal. Elliot, they are looking at this bond offering now. They have a lot of debt to raise on the ipo how much do they need the money . Weworks Business Model depends on it. Thats been the story with them from the start every year they keep doubling their evaluation and doubling the amount they raise. If they are going to keep growing,uate they need to keep raising money. The evaluation issues as they prepare to go public are going to be a big problem for them they are saying its a 14 billion evaluation the ranges was supposed to be in the 20s and maybe could still get there. What do you think they need to strive for many billions like you said, its the weird puzzle where you need to raise 3 billion to get 6 billion in debt then you have to pay it back so if the evaluation is lower, they have a lot more debt compared to the size of the company. The short answer is as long as they want to keep growing, which is the pitch they have made, they need to really sort of double their spending every year thats been the pattern for the last history so handicap the risks for me. If they shelf the listing and lose access to a loan, if they reduce the listing, that puts soft bank reduced the size of the ipo and the evaluation that hurts soft bank and its ability, who is one of the biggest backers. And its ability to raise a funding round. On the other hand, if they go with an ipo and it flops, theres a big risk there so handicap the risks for me its a really bad look if they were to have a big markdown because they are trying to raise a ton of money on the pieces they are a really good tech investor it have the hot Office Company of 99 and 200 they pulled in 99 after similar arguments were being made. To elliots point about the impact on soft bank, it seems like the impact would be almost greater than it would be for wework it would raise less money, but its writing down the evaluation of their stakes on their books so the impact wont be felt there. But for soft bank, this follows uber and slap. They are certainly a pattern here although its important to note for wework in comparison with uber and slack, those are trading in the Public Markets maybe lower than where they intended to initially. But they are still doing their thing. With regard to wework, there was a note today that said if they dont have about 7. 2 billion worth of capital to fund their Free Cash Flow losses over the next few years, over the next four years, they are basically out of business. They need this capital to stay alive. So its a matter of this is a company that risks going down to zero if they dont have the capital to fund their operations especially given the various plans we have set forth. The stressed for a recession in 2020 and in that is scenario for 9 billion in capital to fund their operations so this cash isnt really like a nice to have its a need to have for this company. I thought your comparison from the late 90s was entertaining we had sam on earlier this week saying nobody has made the Business Model work. But is it actually the case that theres a precedent for this business it just doesnt come with the multiple that wework would like. I actually think it you look at it today after a hiccup with bankruptcy, they are a decent business so you can make money by Leasing Office space and subleasing it for more money thats a sound Business Model. What is the multiple investors are willing to pay for that. Wework has been high on that well see thank you both appreciate it very much. Now lets go to mike for trading nation golds rally has been put on ice in september the metal falling below 1500 an ounce. Analyst ls target iing a record high of 2,000 an ounce in the next year or two pretty sharp pull back. What do you see as a gut check for the rally . First, its important to distinguish that gold was really trading lock step with bond prices as rates were collapsing, good got a bid to move higher. The safety trade is coming off this extended condition. And i think could continue to unwind, which i think, in our views, this should be bullish for risk instead so i think theres more downside here support starts at 139 followed by 136. 50. Theres some gaps in the chart there. A little over 141 right now as suggested, the macroconditions when they are right can work very well what do you think its place is is in a longterm portfolio . We talked about this about a month ago. I said, look, im not interested at these levels. And im still not interested because i think there are places you can invest and from these levels make more money. The thing that worries me about the gld is is its not backed dollar for dollar with gold. So its meant to trade in sentiment. That makes me nervous. And im more interested in companies that make money and i can can measure. The market has been giving conflicting messages its the two best performing industries through the end of august so i think you sit this one out for awhile if you do want to own it, you own the actual metal at less than a 5 of your total portfolio. Well see how this general unwind of august hottest trades goes that includes g