Transcripts For CNBC Closing Bell 20170502

Health care in this country. Its a first on cnbc interview. Well talk about this ongoing battle on capitol hill, and how it could impact his business. Might see a vote this week. Always get a good read of whats going on in the industry when mark joins us. Looking forward to that very much. You saw muvaney giving a firey defense of the government funding deal reached in congress, and President Trumps tweet that the nation needs a good shutdown as he put it, we got the highlights on all of that coming out of washington. Coming up in a moment here. And microsoft taking aim at googles chromebook and dominance in the education market. Coming up, discussing whether mic microsoft can dethrone google. A guest thats a regular here on closing bell, and he happens to be the president of his local board of education, and he says they are very happy with the Google Chromebooks. Whats it take to get microsoft in the market . Thats coming up. Beginning, though, with apples earnings, due out after the bell, and josh lipton is at apple headquarters with numbers wall street is looking for, josh . Reporter bill, when apple reports today after the close, theres key numbers to focus on. One, of course, analysts do think apple, 52 million iphones in the Second Quarter implying growth of 2 year over year, and analysts say iphone fans could now be deferring upgrades because they are waiting for that new iphone to arrive in the fall. Of course, the key debate on the street is whether that new iphone is going to spark want big upgrade cycle that bulls are counting on. Also, this is typically the quarter when apple updates capital return program. Ubs thinks apple authorizes app additional 40 billion stock buyback and boost dividends by 10 to 62 cents. Beyond hardware, they Pay Attention to services, incoludig app store and apple music. In 2016, services representsed 12 of total revenue, surpassing the mac. They question whether services decouple from the iphone, meaning keep growing strongly as the iphone franchise matures. There are skeptics about whether that can happen. Find out what tim cook thinks about that dynamic on a Conference Call after the close. Guys, back to you. Josh, thank you very much. Well see you next hour. Joining our Closing Bell Exchange today, quincey crosby, keith bliss, and Rick Santelli from the cme in chicago. Keith bliss, this market just doesnt give up, does it here. It doesnt, but we see a divide occurring now, getting concerning for me. Bullish on the market the past few months. The large caps continue to rally, and the s p has 13 earnings growth, and thats good. Look at it, peel below the numbers, thats due to growth overseas and larger cap enjoys that. The thing thats troubling me about that, we had the canary in the coal mine here in the u. S. Is the small caps may be suffering a little bit. They are pulling back in a greater rush today, especially after the auto sales numbers. When we looking amount the data, scratching the head, why is the data weak over two weeks, but the large indexes rally. Now we know why. The area thats going to get hurt the most with the weaker data, gdp, auto sales, data, pricing data is the small caps, so, for me, the real key here for setting the trend and looking at the direction of the market is the rustle 2,000. A jobs report on friday, do you see the gap in the Economic Data and the earnings, which seem to be fuelling this market higher . Yeah, absolutely, but we always have to remember that the market is not necessarily the economy, and, i mean, they are divergences, but absolutely correct. The majority of the big push in earnings Revenue Growth is due to the weaker dollar coupled with demand finally coming from overseas, and the exporters have had a wonderful run at the expense of the domestic names. If we were in a state of unequivocally strong hard data, i imagine the dollar rise, and exporters weaken. Good for small and mid cap. Well, speaking of which, bringing in phil lebeau, you have the latest figures for the previous month, and expectations were not very high. Did they meet them . They did not meet them, bill, according to auto data, crunching numbers, the sales rate in april, 16. 88 million, a decline of 4. 7 compared to last year and march of this year, a decline in auto deliveries of more than 8 . Sales right. Guys k ba guys, back to you. No strong numbers there on autos. In fact, retail is suffering all along here. There is a premium on data right now. Were so used to the First Quarter being weak only to gain some momentum in the second and third quarters. If it does not happen this time, you say that the treasury market has been telling us this for some time. Today, as we speak, its not geopolitical risk pushing that yield down, but its worries over growth in the economy. Rick, with the tenyear yield sitting 229, stuck at below the 230 level, you play into that . Its playing in, of course, and the jobs report tomorrow and on friday, investors push back, but whats fascinating, and quincy is spot on, thats the big channel. Not horrible data, but misses. When it comes to cars as you heard phil. The year over year month over month numbers do not look good. More to the economy than autos, but as the canary in the coal mine, we are on the cusp of breaking below an established range. Now, argue weve closed as low as 216 over the last several weeks, but to have so little of a yield bounce from that level and have the dollar index here under 99, and i think both may go together, that were either at the bottom of a range or were going to breakthrough the downside, and its looking more like the latter, so i think the jobs numbers may give us that extra push. One thing i want to point out, of course, and that is the geopolitics that quincy mentioned, the markets are not interested in the second round of france. Now maybe thats a mute point to many, but the spreads, no matter how you handicap europe, negative rates, central banking aside, investors are pleased with the general outlook at this point. Well, that election is on sunday, and the central, market friendly candidate has more than 20 lead in the polls. So far. Technology is on fire here lately. Would you buy quickly, would you buy technology at the levels with amazon and alphabet and apple at alltime highs here, keith . You have to be selective like you always do looking at a sector. Im not necessarily sure i would be going out and buying the broad sector etf at this point in time. We actually have technology overbought, and i would expect a pullback on the run just had. Listen, look at the big names in their respective industries, theyll push forward not stopping any time soon. What do you think . The leadership now, though, are the ones coming up with the research and development and new products, looking ahead, and i think thats why people buy them specifically in order to be there for that next new push in development. All right. Well see what apple delivers today. Up 7 this year. Thank you for joining us today. Back to phil lebeau, oscar munoz testified about the passenger removal incident, reaccommodation was the word used at the time. Phil, you got to chat with him briefly. Briefly. He listened to members of congress for three hours with a straightforward message, clean up your act, or we will. We have a problem that as it the only people to fix it. That should be the take away from today is seize this opportunity because if you dont, were going to come, and youre not going to like it. Time and again, the airline executives, including oscar munoz, asked to defend overbooking flights. Southwest will stop overbooking flights next week. After the hearing, i put the question, are you worried about congress and washington fu airlines . The sense in the room was one of an admonition to get your collective stuff together, you, the industry, and you can avoid us, which i think is fair. If we dont do what we said, then we should be able to stand up to whatever they might offer for us. Thank you a, everybody. It will be interesting to see what happens. Remember, theres a Senate Hearing coming up on thursday. Similar questions, hear similar answers from the airline executives, but, guys, beyond that, lets see if this congress, which is, you know, its a republican controlled not ones to do a lot of regulation if they push to ban airlines from overbooking flights anymore. Yeah, i think thats a good point, and the stock market doesnt seem worried about it. Airlines, the best performing Industry Groups today, phil, but what do they do to impose . Specifics out there . I think the overbooking would not have a huge impact. Heres a concern i heard from a few people. What if congress says, you know what, youre making 2. 6 billion charging people to change their reservations. Thats egregious. Maybe you should not charge people to change reservation. That would impact the airline stocks. Or thank you very much, phil, doing double duty today. See you later. News alert on the phone call between President Trump and putin. Eamon, what did you learn about it . Reporter thats right, bill, we did not listen in the calls, but we have a readout afterwards from the staff, which is what we have here between the call of trump and pew tip at the white house earlier today. The readout says the two men talked about syria, saying President Trump and president putin agreed suffering in syria has gone on far too long and parties must do all they can to end e the violence. The white house says the conversation was a very good one, and it included discussion of safe or deescalation zones to achieve lasting peace for hum humanitarian and other reasons. A couple other topics discussed here, they said the United States will be sending representatives to cease fire talks in kazakhstan and discussed working together to e eradicate terrorism throughout the middle east, and the white house said they talked about how best to resolve the dangerous situation in north korea. Interestingly, the readout from the kremlin of the call, and in that readout, it said both men spoke about the idea of a face to face meeting between putin and trump at the g20 meeting in germany. This readout we get now from the white house is silent on that idea. They are not clear whether that was something they agreed to or not. Well press the white house for more on that, guys, back over to you. All right, thank you very much. See you later. Wouldnt you love to listen in on the phone calls . That one especially. They say to each other, i think we should coordinate more on north korea and on terrorism. I agree. Okay, thanks for calling. I think thats just the readout. I understand. We dont get the details. But i want to hear the other conversations going on there. Anyway, welcome to closing bell, 48 minutes left in the trading session today, dow up 18 points right now, and we are waiting for big numbers after the bell. Apple is the headliner. Fallout from a scrapped merger did not stop aetna today, and the ceo is with us first on cnbc next discussing the latest Earnings Report and how proposed Health Care Reforms could reflect future profits. Not just apple, but mondelez, etsy, a few big names reporting after the bell tonight. Well bring you the numbers and instant analyimaalysis as they e tape. Youre watching cnbc, first in business worldwide. The power of a low volatility investing approach. The power of smart beta. Power your clients portfolio with powershares. Before investing, consider the Funds Investment objectives, risks, charges and expenses. Call 8009830903 for the prospectus containing this information. Read it carefully. Distributed by invesco distributors inc. Containing this information. Read it carefully. At crowne plaza we know Business Travel isnt just business. Theres this. a bit of this. Why not . Your hotel should make it easy to do all the things you do. Which is what we do. Crowne plaza. Were all business, mostly. Molina healthcare up 15 . The medicaid provider announcing sudden departure of two top executives, sons of the founder, thats ceo mario molina and john molina, citing disappointing performance, chief accounting officer, joseph white, interim president and ceo now, and both brothers continue to serve on the companys board in the meantime. Apparently, the companys never been without molina family at the helm from the beginning. Could increase speculation of a sale. They could be the barrier. Something to talk about there. Aetna up 1 despite a First Quarter loss, which was expected, they beat expectations, and, in fact, upped gienup ed guidance for the rest of the year, loss attributable to the failure of the merger with humana after being rejected by the department of justice. We have the ceo of aetna, hi, nice to see you. The big hit, the failed merger mark, medicare a big growth driver for you right now . Well, its medicare and medicaid, but medicare is the Fastest Growing of the two. And what are you seeing in terms of the Obamacare Exchanges . I know youve been pairing back. You seem to indicate that more to come, what can you tell us . Are you going to be pulling out of more of those individual exchanges across the states . Yeah. We expect to lose around 200 million, 220 million this year on the exchanges with only a quarter of the shift we had last year, sub stannuates the view from a year ago withdrawing from a number of other exchanges, that we have the potential to lose 900 million, and were on that track, so were e evaluating the markets as we speak, and weve already withdrawn from iowa, but well be notifying other states here shortly, but we only have four states remaining. Our presence will be smaller than it is this year. However, as you well know, mark, theres talk about, again, reforming aca, and one of the amendments now in the current bill thats being talked about will allow insurers, like you guys, if youre in the exchanges, raise premiums on people with preexisting conditions, essentially, would that help . Would that be something to help you stay with the exchanges . I dont think its a matter of raising premiums on people with preexisting conditions. I think people with preexisting conditions, people under the age of 26, should all get insurance. Anyone who applies should get insurance. But the cost, right . Well, yeah. There is a cost associated with it, so i think the biggest problem with the aca is how it is funded. If it were funded appropriately, all the people get coverage. You were losing money on the high risk individuals including the people who we would call preexisting conditions, if you were able to raise premiums, does that change the equation for you . Again, defends how its funded, bill. If funded on the premium basis, no reinsurance, the cost sharing reductions do not show up after september, and none of it works. So there are a set of interconnected Financial Relationships to exist in order to support a market like this. So what are your overall expectations as to what the House Republicans are going to be able to pass if anything as soon as this week is the uncertainty hurting your business at all . No, its 2 of the revenue, sara, and its a negative number on earnings, but a small one, so, for us, its an important market from the standpoint of people who are insured and have adequate access to Preventative Care are better in the long run than people that show up in Emergency Rooms only when they have to. So finding a solution for this for all americans and funding it appropriately will get us where we need to be, but currently as structured, even with the continuing resolution of funding the Cost Sharing Reduction Program for the people currently in the program through september, is not enough to get people engaged in the exchanges again. As you know, were in the middle of legislative process, and being in the middle of the legislative process is so unpredictable, i imagine even las vegas would not take our time. Im curious, if you had been allowed to acquire humana, would you have stayed in more exchanges . I know you talked about, look, we have to pull out of more exchanges if youre not allowed to get in with this medicare provider. That would have given you scale in medicare where a lot of the money is these days. Would that offset losses incured by staying in the exchanges then . The losses associated with this program would have been more tolerable. I cant say wed stay in all the marks, but the capital base would have been more supportive of it, but thats bridge water under the bridge, and so were moving on. Yep. But we have new administration, one that is touting itself as more probusiness and friendly to regulation. After the blocked health care mergers, will the industry pass at it again in the Trump Administration in terms of m a . I think therell be review to vertical integration versus horizontal. Could be more deals done, but the court cases were clear that efficiencies are not something to be relied on or counted in any significant way, and thats a tough standard to set in precedent for any mermgmerger. Speaking of the new administration as we know, they are talking of lowering Corporate Taxes to as low as 15 , whats that mean to the bottom line, and, again, would it have an impact on how you view your participation in Health Coverage out there . Managed health care. Well, bill, our current tax rate is 42. 5 . 15 is a lot to offer in supporting programs. Do you think its likely . No. What are you betting on . 27 . Okay. Not much lower unless theres the border adjustment in some way, then maybe 20 . What would you plan to do with the savings . Well, we have minimum loss ratios and reinvest back in the business, meaning lower prices for customers or lower rises in prices for customers as we go for product. All earnings go back in the companys operations and to the degree were gated by minimum loss ratios to be returned to the customer in benefits or pricing. Meantime, your stock trades alltime highs right know, so, clearly, wall street likes what you are doing. Mark, good to see you, thank you for joining us. Thank you, sir, thank you, bill. You bet. Mark, the ceo of aetna. 45 minutes to go, a little over, before the closing bell. Dow positive, up 19, and nasdaq and s p negative territory, but barely. Watch the russell, its moving, larger or smaller, looking at that as a warning sign if it deteriorates from here with a broader market. By the way, how different the world now, 24 minutes into the show, not mentioning a fed meeting. We are not expecting a rate increase tomorrow, but at least thats on the minds of people on wall street as well. Apple earnings in the way. Yes, thats on everybodys minds. Full Team Coverage and analysis of the tech giants results the second they hit the street still to come here. Up next, why shares of handbag maker, coach, are on the up and up. Well be right back. Stay with me, mr. Parker. When a critical patient is far from the hospital, the hospital must come to the patient. Stay with me, mr. Parker. The at t network is helping First Responders connect with medical teams in near real time. Stay with me, mr. Parker. Saving time when it matters most. Stay with me, mrs. Parker. Thats the power of and. With e trades powerful trading tools, right at your fingertips, you have access to indepth analysis, level 2 data, and a team of experienced traders ready to help you if you need it. Its like having the power of a trading floor, wherever you are. Its your trade. E trade. Start trading today at etrade. Com up 64 on the news its being acquired by biac interactive. It values angies list at 8. 50 a share, above Closing Price yesterday, but the stock is up more than that. Look at the price of the inquirer. Going up too. They love the deal. Combined with the home adviser site, and theyll create a new publicly traded Company Called i dont know how they pronounce this. Its angi the ticker symbol, Home Services. Well ask the iac ceo next hour in the program. Do not miss that interview with joey levin. Big deal today. Another stock moving, coach surging after the handbag maker reported better than expected quarterly earnings. The companys been trying to boost status as a premium brand, keeping product promotions in check and pulling out 6 more than 250 department stores. Same store sales in north america rose for a forty quarter, up 3 , not bad, more than half the handbags sold at or above 400, up 40 from the same quarter last year. Sources say coach stalled, and a tieup makes sense, and the reporting kate is talking with private equity firms about a possible deal to take aways here. Coach will be an m a player to watch. Absolutely. They are coy. It is clear. They want to grow with acquisitions. They made some already. In the luxury space. Europe has lbmh, we do not. A lot of people look at that as a model, potentially, for coach. Another thing, coach is cool again. Did you yes. Did you see pictures from the met gala last night . Selena gomez in a coach ball gown. I watched it. You did . Diligently, as you can imagine. I doubt that. Okay. Youre lying. Anyway it was on social media, but shes working with a collaboration with coach, all new boutiques, really coming back. Can you imagine a portfolio of coach and kate spade and jimmy all under the same umbrella . Fun to talk to the ceos or raid the headquarters. Time for a news update. Hi, sue. Hi, sara, the shoes in the bag, they make the outfit. Heres the news update this hour, every. We start overseas. U. S. Troops were given a heros welcome by kurds in a syria town on the border with turkey. They were there to help protect kurdish fighters targeted by an air strike a week ago. They see the kurds as a terrorist group. A contentious u. S. Antimissile system in south korea is operating and can defend against north korean missiles. Images released by south korea shows the system set up at a converted golf course. Jimmy kimmel gave an emotional monologue last night, telling the story of molly giving birth to their son, billy, last week, and finding out doctors found a heart defect in the newborn that required open heart surgery. Monday morning, doctors opened his chest and fixed one of the two defects of his heart. They went in with a scalpel and did some magic that i couldnt begin to explain, opening the valve, and the operation was a success. It was the longest three hours of my life. And the little baby is doing just fine. Hell need two more surgeries at certain points in life, and we wish him the best. Thats the news update this hour. Me too. I love the name, too. Billy. Yes. Wouldnt you love it . Way to go, jimmy. Jimmy names the son billy. A manly name. Thank you, sue. Youre welcome, billy. Were on the floor, 29 minutes left in the trading session, you know what ill say, stevie that does not sound like a strong name. It works. William, steven is this a strong market . Its not giving up. Has not broke. Not giving anything back. Numbers like we had today of auto sales year over year, down 4 , sequentially, month over month down 8 . Its a problem. Weve been talking about peaks for a little now, and weve been talking about the problem with the consumer. What are they spending it on in not brick and mortar, and they are not spending money, period, and having said all that, the market will not give anything back, and i think its poised sitting waiting for some legislation to pass. That legislation passes, the market probably skyrockets from here. You think so . I do. If they get something the problem is, do we get that Corporate Tax rate . 15 is not going to happen. Mark said hell think its 27 . And if we get that, its going to be a tail wind, but its not going to be as much a tail wind as the 15 . 15s thrown out. 20 is probably out as well. If we get 25 or lower, i think thats the one that still rallies market forward. I think its the bigger macro piece. Can they get something through congress, some legislation to have some bite thats progrowth. All of this, 12 rally seen, 80 of it was for progrowth policy. Watch oil today. This is collapsed at the end. Sliding down, but that could be the canary in the coal mine. Okay. Thanks. Thats the third reference in 35 minutes to canaries in a coal mine. Tweet. Thanks. Bill, thank you. Little over half hour to go. Before the closing bell, show you where the major averages stack up. The s p is now going positive, holing recent gains as bell talked about. The nasdaqs negative, but barely, ands russell is beaten up the most, and up next, micr microsoft takes on google in the education market, but can it win the fight . Later, apple, mondelez, gilead with numbers after the close. Breaking down the numbers the second they hit the tape here on closing bell. Staff meeting. Noon . Eating. 3 45 . Uh, compliance training. 6 30 . Sams baseball practice. 8 30 . Tai chi. Yeah, so sounds relaxing. Alright, 9 53 . I usually make their lunches then, and i have a little vegan so wow, you are busy. Wouldnt it be great if you had investments that worked as hard as you do . Yeah. Introducing essential portfolios. The automated investing solution that lets you focus on your life. Hey. Pass please. Im here to fix the elevator. Nothings wrong with the elevator. Right. But you want to fix it. Right. So who sent you . New guy. What new guy . Watson. My analysis of sensor and Maintenance Data indicates elevator 3 will malfunction in 2 days. There you go. You still need a pass. Microsofts ceo emphasizing importance of technology in the classroom today up vailing a new streamlined version of windows 10 and a new surface laptop. Take a look. Technology should make teachers lives simpler and spark students creativity, not distract from it. This is a top priority that we are focused on at microsoft. To could this new software from microsoft propel the company above rival google and its popular chromebook in the education arena . Lets bring in jay, griffin securities, i think you say yes . Yes. And david from point view Wealth Management who says no. David, starting with you. We had you on before, obviously, talk about other companies, other sectors, but you are here today because you happen to be the president of your towns board of education, and your schools use the Google Chrome book, so but you dont think that microsoft could make any end roads with your school district, why . I really dont think remember, educators are conservative bunch. We dont want to gamble with our kids education, and here you have a company, microsoft, losing half the market share in this particular market for the last five years and google went up by a factor of 58 of all districts. School districts want to go with the winner. Second, of course, cost matters. Budgets are scrutinized. Thats just the start. If you want apps available, you pay more, and, finally, windows is not doing justice to the name. Its just a very narrow set of apps available. So, jay, whats the bull case . Well, i have to agree with the esteemed colleague microsoft share changed, but the point is shares are volatile, and my vo soft has shown over the last number of years a propensity for share gain in the overall tablet market. I think its important to include apple in the broader context here. Over the last few years, microsoft has clearly shown share gain with the surface products against apple in hardware. Then theres the software side, and i understand the importance of cost, of course, for educational systems, but what you have here is a total system that i think ought to be highly competitive. They are offering a slim down version of windows. They have other applications that i think add value to the total system here. As long as they meet price points and integrate software, they are to be competitive. Are you missing out on innovation at the just because of cost . I mean, are you cutting off a good product just because somebody does not want to be reflected i just dont see much there. The problem is, just cant be competitive. Weve spent thousands of dollars getting a onetoone rollout with the kids for chrome books. Better to overcome heavy transition costs. We dont see it. Maybe im missing the point. I love the todds take on cnbc. Com. They say this is a sneak attack against apples macbook. Technology in the clooassroom . Forget it. This is a super sleek competitor to apple. Maybe the education push is to get millennials at a certain age to grow up and get more comfortable with the microsoft brand. That is the broader point here. My view, microsoft covers necessary specks and price points, including the 200 version. They have a thousanddollar version, and committed to high quality products here. Its obvious. They gain share against apple. Its clear. There 2015, apples share gain in the broader category of tablets. All right. Got to go at this point, guys, very interesting. Thank you, both. Thank you. Shares at a record high, by the way. Yes, oh, by the way, along with the other technology on a cloud, not as much on hardware. There it is. Since the election. Microsoft up 15 . Dows up 15 points now though with 19 minutes left in the trading session. President trumps budget director declared victory on avoiding a Government Shutdown today for 2017, but now its on to 2018, and already the president is tweeting about a, quote, good shutdown if that even exists. Details next. White house budget director spoke in the past hour, and eamon is at the white house with the highlights. Todays press conference cameo. Reporter thats right. This is a white house bristling, very frustrated over the perception battle of who won the negotiations surrounding the deal to keep the government open and running for another couple months until september. This white house feels that democrats are taking too much of the credit. Take a look at the tweet from donald trump today. The president tweeted out, elect more republican senators in 2018 or change the rules now to 51 . That is the threshold to pass a bill rather than 60 votes. Our country needs a good shutdown in september to fix this mess. Muvaney, the budget direct, asked what a good shutdown means, and he said, really, a good shutdown would be a deal to fix the washington process. Shutdown fights happen again and again and again and expressed frustration about that, but also very frustrated about the idea that democrats, by claiming they had got a victory in the negotiation, were simply making the president look bad. Heres what he said. I think the president is frustrated with the fact that he negotiated in good faith with the democrats, and they tried to spike the football and make him look bad. I get the frustration. Its a terrible posture for thes to take. Reporter despite questions about who looks bad, who won, who lost, we do expect that vote on the spending bill to happen before the end of the week. We expect it to pass, although, the atmosphere in the air today made it feel like its more endowed than thought. We expect it to pass by thursday or friday of this week. All right. Oh, some things dont change in washington. Thats for sure. Someones got to get credit. Thanks, see you later. With less than 15 minutes here to go before the closing bell, its a mixed picture on stocks struggling to make real gains today. The dows up 16 points, nasdaq is flat to negative. If it manages to close higher, thats a a record. The strength is in industrials and health care, consumer staple, and energy bring up the rear in the s p. Minutes from the apples earnings, but what to expect with a good old fashion of bullbear debate. Yes, we have a bear on apple coming up. At fidelity, trades are now just 4. 95. We cut the price of trades to give investors even more value. And at 4. 95, you can trade with a clear advantage. Fidelity, where smarter investors will always be. Moments ago, art cashin looked stern there, didnt he . The market close orders show dow up 17 points now. Iphone maker, apple will report after the bell, and stock has seen a huge run so far this year, helping the techheavy nasdaq outperform major averages and propel above 6,000. Ahead of earnings, is there room for upside in the stock . Bringing in angelo, and ian. Angelo, youre a bull, 77 are bullish on the stock, but the average price tact is 153. They say buy, but a few bucks higher from here. Are you raising the target . Yeah. I mean, so apple reports after the close, of course, and theres really three things here, first is going to be the Services Business, of course, and tim cook in the last Earnings Call now expects the business to double here over four years, and were looking for growth of 18 year over year, and i think at the 20 range, thats good for the bulls. Second, of course, the margins, Gross Margins, you know, likely going to be hindered by the higher memory prices weve seen here recently, but that being said, we expect better selling prices, open, of course, a better mix from the Services Business, so, overall, we think the margins should do well, and, timely, Capital Allocations. Of course, apples cash balance, 245 billion. We expect hiking dividends by at least 10 , potentially more than that, and, you know, thatll, of course, be a positive in our view. Okay. Ian, theres a lot to respond to there. As we mentioned, i mean, it seems like apple got a second wind, the stock this year with the gains, and now at an alltime high. How uncomfortable are you . A sell rating on the company . No, no sell rating. We dont officially cover the stock. You are bearish on it, though. I am bearish on the stock, and people just need to consider these facts. One, samsung is back. S samsung was out nine months ago, but they are back, and thats a serious competitor to apple. The street is june versely bullish, 77 of analysts, but the buy side neither wants to own the stock or buy it in front of the iphone8. As far as margins are concerned, i say this, its a little interesting that all the sudden they are pressing suppliers like this imagination, et cetera, seeing margin pressure themselves. Is that what it tells you, angelo . Yeah, i mean, to an extent theres truth to that. I think ahead of the next launch poses a potential head wind for the company, that said, i do department the favorable mix to more than offset that. Why are the stocks going up, at an alltime high right now . Its going up because the market appments to allocate to equities, and people want to buy tech, and they feel with rates where they are, they want to own a stock like apple, makes all the sense in the world. 800 billion market cap better be a heck of a phone. Theres also, ian, what about the cash opportunity here . It could top 250 potentially coming fortunate first time, and this historically, as josh mentioned and angelo mentioned its the time to learn more about the Capital Allocation strategy, raise dividends or increase buybacks. Its great, but knew that hat 100 as well. At the end of the day, i dont buy stocks for buybacks and dividen dividends. When you made a bullish case, i heard hesitation in the voice as you itemized the issues that the Company Faces right now. What are you concerned about . If youre a longer term investor, its Capital Allocation strategy as well as the fact repatriation hinges here. We could see significant upside potential to the shares and buybacks here over the coming months, but i think its important to note this is a company that even with the appreciation its had, still trades on a multiple of less than 15 times and less than 12 times on a net cash basis based on this years estimates. All right. Thank you, both, for joining us today. Thank you. All right. Well come back with the closing countdown and the dow up 22 points. And after the bell, as we await Apple Earnings, not only complete analysis, but undercover look at what it is like working in an iphone factory in china. Reality of the jobs returning to the u. S. Well talk to someone that went to china and did it. Youre watching cnbc, first in business worldwide. Last year, he said he was going to dig a hole to china. At t is working with farmers to improve irrigation techniques. Remote moisture sensors use a Reliable Network to tell them when and where to water. So that farmers like ray can compete in big ways. China. Oh. He got there. Thats the power of and. We cut the price of trades to give investors even more value. And at 4. 95, you can trade with a clear advantage. Fidelity, where smarter investors will always be. And at 4. 95, you can trade with a clear advantage. You get to do the dishes. Ed. Bring em on. Dawn ultra has 3 times more greasecleaning power. A drop of dawn and grease is gone. Your insurance on time. Tap one little bumper, and up go your rates. What good is having insurance if you get punished for using it . News flash nobodys perfect. For drivers with accident forgiveness, Liberty Mutual wont raise your rates due to your first accident. Switch and you could save 509 on auto insurance. Call for a free quote today. Liberty stands with you™ Liberty Mutual insurance. With e trades powerful trading tools, right at your fingertips, you have access to indepth analysis, level 2 data, and a team of experienced traders ready to help you if you need it. Its like having the power of a trading floor, wherever you are. Its your trade. E trade. Start trading today at etrade. Com two and a half minutes left in the trading session today, nearly at this point, i show you the dow, but the nasdaq today is where the action has been lately, as we know, hitting an alltime high again yesterday, and are we going to be positive . If we are, its another new alltime high preparing for Apple Earnings here. Other markets that have been making big statements lately. Wti crude today collapsed on the close today, and it fell through another level down below 48 a barrel, and now its 47. 64, just as it closed going into the electronic session there. The dollar index, the dollar, itself, has been acting anemic lately, lackluster performance there, seeing the treasury markets, perhaps anticipating a slowdown in the economy. Auto sales disappointing. Gold bouncing a little bit from the recent lows that its been trading at, and not much of a bounce, though, up 2, now at 1257 and change, but the vix, after hitting a tenyear low yesterday came back a little bit today, up a third of a point, 3. 5 , but, still, at 10. 5, and now we have prepared for earnings and highlight is apple. Absolutely, whats remarkable, bill, about the market, despite escalation in geopolitics, military politics from north korea, the phone call with trump and pew tip, its still a positive story. This would be the highest proportion of top and bottom line ballets in 13 years. Wow. Apple, what it does with with cash, growth in china, decline in the market, will tim cook use the decline in china sales to talk about bullishness in india, the second biggest smart phone market. Watch for shares of apple, checking the global consumer. We have mondelez, american express, biotech player, gilead reporting after the bell. Big names there. Thank you. Good to see you. We go out with a gain of 30 points on the dpow, and ready fr huge earnings coming up hire from apple among others, so stay tuned for the second hour of the closing bell. Welcome to the closing bell, im sara eisen in for kelly evans. Bill rejoining us in a moment. Theres the bull. This is how we finished on wall street, another record close for the nasdaq. Anything positive would have done the trick, and we got it just in the final minute of trading here. The nasdaq composite closing below 6,100, a new record high. S p 500 managed to finish higher by more than a tenth of a percent, and the dow going out with a gain of 34 points. The russell 2,000 index flagging all day long, and closing well off the lows of the session, down a little more than half a percent. Its going to be a big hour for earnings. Get ready. Were going to get results from apple in just about a half hours time, and before that, meg has gileads results. Courtney reagan on etsy, susan lee on weight watchers, and i have earnings from mondelez in minutes. Joining the quad box there of earnings movers, and joining the market panel today, we have mike sa santoli, david cass, and cole smead. Mike, the resilience, the fact that even though stocks did not get going much of the day, they held their gains. Yeah. Driven by strong earnings. Remarkable. It is. Especially because were right up near those highs, so were idling in terms of the broad indexes, not running a the old march 1st highs, but not giving a lot of ground. Fraying on the edges, weak auto sales, energy, also a challenge, bank stocks weak, but upward drift in the other areas of the market. We are waiting for the jobs numbers, the fed, apple, all of that stuffer, i think, needs to be cleared out of the way so the market figures out if its a trading range or resting up for another push higher. David, we talk as if theres a disconnect when you talk about the decline in oil, the state of the auto sales, you know, the weak the lethargic Economic Data here lately, and yet certain sectors are just continuing to power higher, technology among them. Are we wrong to say thats a dichotomy of sorts, or Something Else going on here . The data points day by day basis, its impossible to figure out whats going on. Looking across all industries, about 76. 5 industries have beat expectations, outlooks are good, speaking to Industrial Companies today, and they are feeling good. Its an odd environment. We think the tie goes to a good economy. We wouldnt chase the winners. We looked for good businesses to beat, but whose stocks have not run up. All right. We have the first Earnings Report, mondelez reported. Sara . Looks like a minor beat on the top and bottom line, earnings per share, 53 cents, 50 cents, popped the stock, and revenue also coming in a little higher at 6. 4 billion versus the 6. 37 estimate. Mondelez is a global play, getting business abroad. We look regionally where the business was doing better. Europe, latin america, and all beating in terms of revenue versus expectation. Only soft spot in the quarter was actually north america where the revenue picture missed. We look at margins when it comes to mopd pleandelez, its squeez costs, whats attracted the activist investors to the stock, and it looks like the adjusted gross mar gyps were slightly below estimates, but overall margins ticked higher, and that is important for the company. I did have a chance to talk to irene about the results, the ceo of mondelez, and this is what she told me. She said, this was a messy quarter, thanks in part to easter. Something we heard from a number of consumer giants. She did say, importantly, they are seeing a turn around in russia, in germany, southeast asia, and mexico. All looking better this quarter. She also saw recovery faster than initially anticipated, weighing on results last quarter, a bright spot this quarter. As far as looking ahead, she did say that the pipeline for innovation looks strong, and she is expecting a better second half, a stronger back half of the year, and they said theyll capitalize, for instance, on kelloggs exit from one of the businesses where they compete. Europe is doing a lot better. Weak demand in the u. S. In q1, a theme from the Consumer Companies, waiting to see a rebound before blaming delayed tax refunds or anything like that. She said brexit and french elections are muting consumer confident. Her words. She said wants clarity and certainty on resolutions, she does expect a bounceback, though europe, overall, performed better. They have a lot of innovation when it comes to snacks, working on velveeta protein bar, a new snack brand of crackers launching, feeling good on the results on that. Thats the company we talked about last week, the coke and pepsi have to compete with, and theyve got a brand on healthier snacks that they are trying to compete with right now, right . And, by the way, that was amazing. That Earnings Report just came out a minute ago, and she had this complete report on mondelez. Thank you, bill, love you. I did homework. Ive been covering the company. They, too, are in a situation where they have to pay towards a healthier world. This is a company owning ritz crackers and oreo, traditional unhealthy snacks, but they are innovating, new a kind of ritz cracker thats lighter, less calories, going more towards protein. They got the oreo thins, originating from china, but big sellers here. Thats going to challenge to get to growth in the industry. Continuing to be a challenge, every in the whole food packaged food area waits for the newer, faster growing brand extensions to kind of overtake legacies. Its stable, and results are a matter of relief, down a buck in the last week or so. Another headline, member the story about succession in the wall street journal, saying reports of my death is greatly exaggerated. No news here. They are always pertinent on succession planning. We saw mondelez is up 1. 5 . Meg, how do numbers look . Miss in the First Quarter for the gilead on top and bottom lines, adjusted eps at 2. 23 compared with estimates of 2. 28. Revenue at 6. 51 billion, versus estimates of 6. 63 billion, but reiterated 2017 guidance, and on the hepatitis c sales number we look for, it came in at expectations, 2. 6 billion for all three hepatitis c drugs. They ended the quarter with 34 billion in cash. The question is, what are they going to do with it . Buy something in thats at 5 00. Back to you. Down 2. 9 right now. Thank you very much. Cole, welcome. What do you think of what you heard . I wouldnt Pay Attention to the Earnings Announcement or any statements around it. Watch what the insiders do because they sold tens of millions of dollars of stock in 1218 months. In comparison, we dont own gilead, but theres a total of four insider sales in the last year. Paultree in comparison followed insiders. They buy for many sell for many reasons, buy for one. Let me go back to mondelez. I would not want my businesss weak spots to be in the United States. That is going to be the best economic game in town for a myriad of reasons, but that could be the biggest frustration to stocks next two to three years that the economic story of the u. S. Doesnt excite higher multiples. All right. A temporary phenomena, which a lot of Consumer Companies saw. Yeah, for gilead, down again, oppressive down trend in the stock, biggest value trap in the market, down from 120 and change less than two years ago. Its cheap on the numbers, but nobody cares because theres no next act. Nothings changing there. Interesting how at some point you have to think that a lot of the bears, the Value Investors con pitch late in the name, but i guess not yet. Expectations not low enough. David, what kind of actionable ideas are you getting from the earnings . Well, one that was chatted about, gilead, the numbers are a touch light, outlook is fine, stock is absolutely thrown out. If you turn the volume down and look out six to 12 months, this has great product, sells eight and a half times earnings and pays 3. 3 dividend yield. Something better will happen with gilead whether its a smart acquisition, credit for the ongoing pipeline, for too cheap for too long, one of the biggest players in the industry says, ill buy for 12 times earnings. They are vulnerable if they stay at this level for any length of time. The mondelez was the best in the group. It was a company weve. Watching, hoping to get it cheaper. Based on todays print, thats not going to happen. This is probably one of the better positioned Consumer Product companies and theres panelists in place. Cole, before you go, three companies that you like right now, you like walgreens, lenar, and wells fargo. Why those three, necessarily . Well, yeah, wells, one of the more contentious names, tim sloan was in the open market this week. Like i said, in direct comparison against gilead. You have walgreens buy 160 Million Dollars worth in six months. Where are insiders going today versus where divesting at higher multiples. You could have bought gilead 12 time earnings a year ago. The insiders are not falling on purchases, but talking about valuations. Housing east going to crush it, lenar, the market only owns 43 basis points in housing. Thats a stock pickers dream right now so youre aware. All right. We are now. Good to see you. Thank you, cole, david, good to see you as well. Thank you. Thanks a lot. Thanks, guys. Minutes from apples earnings coming up. Find out how many iphones the company sold in the quarter and whether it makes sense to buy the stock at these record levels. But, first, iac ceo here exclusively to discuss the latest deal to buy angies list, a deal of the day. Youre watching cnbc, first in business worldwide. You always pay your insurance on time. Tap one little bumper, and up go your rates. What good is having insurance if you get punished for using it . News flash nobodys perfect. For drivers with accident forgiveness, Liberty Mutual wont raise your rates due to your first accident. Switch and you could save 509 on auto insurance. Call for a free quote today. Liberty stands with you™ Liberty Mutual insurance. A used car, truck, a used car, i am totally blind. And for years ive struggled with non24, a circadian rhythm disorder that can turn my sleep cycles upside down. It kept me from doing the things i truly love to do. Sometimes id show up early; sometimes i was too late. And sometimes, even though i was there. I didnt really feel. There. Talk to your doctor, and call 8442342424 to learn more. But weve got the get tdigital tools to help. Now with xfinitys my account, you can figure things out easily, so you wont even have to call us. Change your wifi password to something you can actually remember, instantly. Add that premium channel, and watch the show everyones talking about, tonight. And the bill you need to pay . Do it in seconds. Because we should fit into your life, not the other way around. Go to xfinity. Com myaccount earnings alert here. Hi, there, the stock is plunging at the moment, going down 24 at the moment, and the reason behind that could be the guidance. The company is reporting weak guidance for both q2 and full year, very weak guidance on both revenue and eps. Lets go back to the top line, the numbers are better, a beat on the top line as the Company Reported 87. 4 million compared to analysts expectations of. 83. 6. Eps, a loss of 4 cents versus a loss of 6 cents expected by annists, but, again, whats driving the stock right now is gie guidance for q2 and full year, are light. Looking for new customers. Some animal ealysts have worrie this company they might be too heavily reliant on bigger clients like facebook and uber. More color on guidance misses on the Conference Call. Back to you guys. Ouch. All right. Thank you. I was going to use that same technical term, ouch. Yes. Just shows exactly how reliant a stock like this is on fundamental momentum, new customers, new top line growth. The stocks down from 70, it was in the star class of 2016 ipos, down from 70 to 33, now down 25 on top of that just shows you, by the way, a 30 Short Interest so bears saw it coming. Oh, interesting. Iac announcing plans to buy ang angies lift, both stocks lifting on the news today. They are combining with angies list for a new publicly traded company to be called angi home sf services. Valued at more than 500 million. The stock is up 61 . Iac, itself, up 14 today. Joining us now, exclusively, iacs ceo joey levin. Welcome. Thank you. Up 60 , could you have got it cheaper . Heck of a premium. The stock reflects a few things. Theres the value of angies list and value of home adviser and value of the synergies. This would be the first public listing of home adviser, and home adviser is on an unbelievable run lately in terms of execution, growing revenue top line for seven, eight straight quarters over 35 , and its a business in a good place right now. Thats a piece of it too. People are excited. Angies list has not, but going in the other direction since you made that bid, what was it, a year, year and a half ago . Yes, a year and a half ago. Yeah. Is that what led it to work this time . No. I think that at that time it did not work out for a bunch of reasons, and we both went our separate ways, and six months ago, they were going to pursue strategic alternatives, calmed us in the process, and we dug in deeply, and digging in, we realized potential of our business with their business we thought was enormous. That results business, to be clear, the angies list shares trade at a value that reflects, i guess, optimism about the value of the resulting business. Its above the nominal level of the financial consideration that youre going to be getting. Yeah. The financial consideration, theres a cash option. Yeah. Its not a requirement, so people want liquidity, then, of course, people can get it. Otherwise, people will take the stock if they want the stock. And with that business from here out be a vehicle to roll up the industry more . Look, this is a strategy we pursued. Sure. Theres been enormous rollup in the travel category under expedia, look at match and theres enormous rollup in the dating category, and i want to see the same playbook work out here in home adviser. We are focused on one, a big one to digest, but that could be in the future, i hope. A similar question that making this a stand alone company, how does iac participate . Between 8790 shareholder of the entity, publicly traded, but owning a significant portion, and similar to how we have mass group under iac and own a significant portion of that. Your stock is a moon shot. Are you hungry for more . Trying to take up a quick breath this afternoon on this one. Well see about more. Always big on acquisitions, looking for new opportunities, and i think that what is left, interesting businesses besides match and Home Services is public is significant cash and look to deploy that aggressive aas we always do. Anything left . I noticed your chairman announce want said well keep doing this, right, separating companies, creating value that way. Anything left of skill in terms of operating businesses that are candidates to do Something Else like that . Yeah, i think that they are aways off from that, but, sure, recuring revenue businesses, consumer component, application business, a cash flow machine for a decade and a half, and publishing businesses, our great little businesses growing, and just rebranded dotcom today, one of the best now. Thank you. Up 101 in the 12 months. Behind iac were talking about. The ceo of the company. More earnings. Et sy is out. They have a new ceo and chairman effective tomorrow. They issued a letter saying they hoped to separate the positions, but chad dickerson is leaving as ceo and chairman effective tomorrow, and josh silverman, a board member on etsy takes over, holding positions at american express, skype, and shopping. Com. Fred wilson is chairman of the board. Look at the earnings, they report flat earnings, just a slight miss. The street hoped for a penny there, and revenues also light, but you can see the stock is down sharply, 14 on the news of the ceo departure. No gieuidance. Theyll let the new Management Team look at the company as a whole and then look at the guidance when they give us their earnings for the Second Quarter. Back to you. That is a welcome for the new ceo. Molina ceo leaves and the stock is up. Different responses there. Weight watchers earnings. Strong for weight watchers, stock up over 100 in six months, a Strong Quarter for the company. Going through the earnings eps. Coming in adjusted at a penny lost, better than expected. Revenues beat as well. Weight watchers is benefitting from a tax benefit, they say, in three months, subscriber growth up 16 . Thats better than they they ended 2016 and raised Earnings Guidance for this year, 1. 50, and oprah effect goes a long way. Back to you. And oprahs making 12 on the money right now. Good for her. Weve got to get to apple soon. Shares hitting a record high ahead of the latest Earnings Report. Instant analysis and reaction in the results the second they are released in minutes. Later, we love this story. Were going to hear from a student who worked in a chinesebased iphone factory just to find out why he thinks manufacturing jobs will not be coming back to the United States. Coming up. Predictable. The comfort in knowing where things are headed. Because as we live longer. And markets continue to rise and fall. Predictable is one thing you need in retirement to help protect what youve earned and ensure it lasts. Introducing brighthouse financial. A new company established by metlife to specialize in annuities life insurance. Talk to your advisor about a brighter financial future. Ltry align probiotic. N your digestive system . For a nonstop, sweet treat goodness, hold on to your tiara kind of day. Get 24 7 digestive support, with align. The 1 doctor recommended probiotic brand. Now in kids chewables. Time for a cnbc news update. Heres the news at this hour, everyone. The white house says President Trump and russian president putin held a good conversation about the ongoing crisis in syria. The two leaders discussed creation of safe zones in syria, and agreed the suffering there has gone on for too long. White house budget director accused the democrats of trying to make President Trump look bad by claiming victory in the budget negotiations adding that a Government Shutdown might be inevitable if they dont act a little better. They wanted a shutdown. We know that. They were desperate to make this administration look like we couldnt function, like we couldnt govern, and we know a large part of their base, especially their left wing base,mented a shutdown, and certainly didnt want them to cut a deal with us. The Boston Red Sox say they are sickened by how a group of fans treated Baltimore Orioles Center Fielder adam jones monday night. The fans yelled racial slurs at him and threw peanuts at him during the game. The red sox apologized, and the mayor of boston apologized to jones. That is the news update at this hour, back to you guys, bill . All right, sue, thank you very much. You feel that . Apples earnings due out any minute now. Well have full Team Coverage of the results when we come back. Moments from Apple Earnings, mike, what are you looking for other than the iphone number . Any guidance about the iphone8 timing. Is the street going to give them on pass and spin as positive simply because its about two quarters away . The other thing, though, its been a steep dissent the last six months, racing to a new high, up 40 in six months. Thats the question. The profit taking instinct versus stick around and see how bug iphone8 can be. Numbers right now. Josh, how does apple look . Bill, apple reporting eps of 2. 10 versus expectations of 2. 02. Revenue 52. 9 billion, street looked for 53. 02 billion, Gross Margins 3le 8. Th , the board of director authorized an increase of 50 billion to the Capital Returns Program as part of the update, the boards increasing its Share Repurchase authorization to 210 billion from 175 billion level announced a year ago. It does nkt a 10. 5 increase in the quarterly dividend. Iphones 50. 8 million in the quarter. Street was at 52. 3. Ipad 8 million, services up 18 to 7 billion. Other products, remember that includes the watch, revenue there, 2. 9 million. Turning ahead to q3 revenue guide, 43. 5 to 45. 5 billion. Projected 45. 6 billion, and q3 gross margin guide, 37. 5 to 38. 5 . Hi a chance to talk to the ceo, tim cook, about the quarter. About the iphone, cook telling me the iphone ruined every market other than china. The iphone looked good from japan to the u. S. To the emerging markets. You saw it slip 1 year over year. The street looked to climb about 2 in part, cook telling me, demand was stronger and the unites suggesting it takes down iphone inventory in the quarter 1. 2 Million Units and sold me that as he put it, because of rumors and reports about whats to come, he thinks theres some numbers iphone fans who are deferring upgrading right now. As for china, Greater China revenue down 14 , on china, cook saying, in china, we did similar to last quarter. We have now in the first half of this quarter had a dramatic turn versus the second half of last year. He told me that the iphone 7 remains the top smart phone in china, though, he did say previous generations are not doing as well as they did a year ago again. In china, he said, we are working on that, we have more work to do, and, finally, about that buybook, why the buyback now . He said, look at the product type line and what the province will be, and in other things we mite do, and based on that, it seems to us like we are undervalued, and that is why we are buying the stock here. Guys, back to you. All right. Josh, thank you very much. The stock is down 1. 33 now. This tells you how important this report is. We have not one, not two, but four people here to analyze earnings for us. Kevin, ross, and also joining us, jessica from the information, and Sean Harrison from long bow research. Mr. Wonderful, what did you hear . Missed on the iphone sales, shipments, is that a big deal for you . No, not at all. Hold the course, but they gave me everything i wanted. The buying back stock, they increased the dividend double digit. Thats music to my ears, as you know, but the number i watch every quarter is services, the highest margin Business Apple has, and they delivered, double digit growth on services, well north of 12 of revenue in servicesment we were betting up against 10 , wondering when the company would breakthrough. This is a classic move showing the Business Models getting interesting because the Actual Services business is keeping pace, and then some with iphone sales, so, in other words, people with phones are using more and more and more of the services. The music apps, the storage they sell, this 15 home run quarter. Its a perfect delivery for everybody that loves this stock. Im one of them. Not changing the position. Its a full waiting for me at 5 , and most important aspect . My number one pick in the cnbc stock pick challenge, which we just did last week, i got apple at number one and will bring me right to the top. You are down 1. 33 , but we digress. Oh watch what happens tomorrow. Ceo. You know, i love that exuberance but as a younger person thinking about the future, i think where does apple go from here . Its an iphone sales business, and their Services Business has risk to it from other competitors like netflix and spotir spotify and samsung and all the other players, all this cash, all they have the same playbook, buy back stock and pay dividends. Take back buybacks, apples numbers go down for a long time, and its time for tim cook to spend the money. Show me the money, tim buy something please go out, do something aggressive. Well, that might be a question on the call, especially on the call of repatriation. What about the return . Increasing quarterly dividends 10. 5 , pretty much expected. We tend to see that. Theres the cash pile, topping 250 billion. I think the Cash Return Program is what was anticipated. The focus is not the cash return. That hit numbers. More the giant focus is what is china doing in the summer time as well as just the incremental inventory reduction. That was not anticipated. Do they have to take down inventory . They did that last year and put pressure on the stock. Jessica, you know, there were hand ringing not long ago on apple we wondered about, where was the innovation . Evolution, not revolution, but now this year, the stock is taking off again. Alltime high territory. What do you think of whats going on there . The markets perception of the company . I think a lot of it is anticipating products to come not seen yet. I do not think this is a home run quarter. Missing on iphone is a big deal. That is a core product. Keep pace. Yes, investors are excited about the car. Investors are excited about the new model this fall. Theres not so much to be excited about in this report, and i will mention that Service Revenues are growing, but i agree, thats a competitive market, and they are still very, very small. We are a long way to see whether thats a revenue stream to propel the company. And, mike, on that point mentioned on china, Greater China revenue down 14 on the quarter. This was a big surprise. Conspicuous miss. Between that, the conservative or light guidance for the next quarter, whenever you interpret it as, and the fact they missed on iphones in this quarter, and you have such a modest pullback in the stock, it shows you, street says, okay, iphones not sold last quarter are upgrades down the road. Dont worry about china just yet. See if its a blip or bigger. Cook told our josh lipton they see pinned up demand. Thats why unit growth was soft. Waiting for the next big thing. You get a bigger buyback and dividend along the way. Jessica, no clues on the call about the iphone to come, do they . Never. They may give more commentary, you guys mentioned china. I mean, yeah, we looked to reverse that, right . Seen several quarters of declines in sales there, and a lot of folks i was talking to were hoping that the picture in china would be different now. Sounds like cook told josh that maybe something will change in the next quarter. We may get more commentary on the call about china. Kevin, before we go, and were going to bring you guys back to talk more about this, but what i hear you saying is i dont care about softness, the head winds that that the company may be facing, as long as i get my Dividend Payment and buy back my stock, im happy with this company, is that what youre saying . No. No. I think the buzz on the eight is huge. Stay close to the blogs, discussion about going on, production slow downs in the finger printing. This 8 phone has seamless glass to the edges. Exciting stuff. The margins will be obscene brings that thing out. Why are you so excited . I love the attributes. You get it all. You get a dividend, stock buybacksing exciting new product, and the Services Business up double digits, whats not to like . Apple 8 is not exciting. Ross give me a second, ross, i have to get a commercial break many. Sorry, sorry. No, thats all right. Thats a good question, i know. Well get into that. This is what its been following apple. You know, you either love it or youre so worried about it, and i think we got a good example of two of you right there. So well ask everybody to stick around here with apple trading down 1. 7 right now, right . Yep. A lot more analysis and find out whether to buy at the levels, dig into the numbers a little bit further, average selling prices higher, a lot more detail on that coming right up. Apple chshares a lower. Josh . Reporter color from the interview ceo tim cook, sara, asking about trumps call here for a onetime holiday on cash repatriation. Tim cook, like a lot of tech executives, supports thatted why. I asked cook what he thought the fair rate would be there. He said he, meaning trump, specified a 10 rate as a candidate. The last one that was done was at 6. 5 . Something in that range seems rational. Cook telling me. I also did ask about this fight with qualcom, a fight thats heated up quickly. Remember, apple is saying they are charging excessive royalties, charging on technology they have nothing to do with. They hit back saying apple built the iphone franchise on the back of the technology, and they are now trying to pay less. Tim cook, though, not backing down here, saying the issue is that you cant pay something for something when you dont know how much you should pay. We have one view, qualcomm with another trying to levy tax on the value of the entire phone. Now he says it is a debate, so expect at least that fight here to continue. Guys, back to you. All right. Josh, thank you very much. Still with us to talk about apple, kevin oleary, a shareholder, ross as well, and jessica from the information is with us, and so is Shawn Harrison from long bow research. When we left, ross, kevin talked about the buzz hes hearing, positive buzz about the iphone expect the to be out in the fall here, and you were about to say what . I was about to say, i dont know what buzz youre talking about. Its the samsung phone. Theres nothing apples innovated with that 12 billion in research and development in 12 months. No car, we know that. Everything they have done has not worked. Put the heat on tim cook. It should be illegal to have 250 billion in cash and not utilize it. That is what youre supposed to do as ceo. Im tired of it. I am. Kevin, you are too optimistic. Its a value stock, thats all it is. Kevin . Ross, dont be a sour pus. You missed out on 40 gains. Im in the stock. Im in the stock i own 11 Million Dollars. Hes an activist shareholder. Im not going to sit here and pretend they are innovating when they are not, kevin. Ross, im telling you this, this company is a masterful mix of science and art, fantastic marketsing and product with phenomenal margins. Its a brand story. Kevin, ive been in the stock since 83, i know the company as good as my kids. Theres nothing happening there. Theres nothing happening. Ask anybody working there. I know whats going on at apple, kevin, and its not that exciting. Hang on because theres other numbers that we have to get to that were learning about like the other products, which is interesting obviously small, its not going to move the whole company or the stock, but up 30 , so its the most likely the watch other things working, nothing is going to necessarily change the whole complex of the quarter, and the fact that the next quarter, the guidance is why it implies potential earnings miss, and, again, the question is, investors are tested just how much they are willing to wait it out for the next few months and see if the upgrade cycle it as strong as they hoped. Break the tie between kevin and ross on this for me. When you got a company thats got a market cap of over 770 billion dollars, is it tougher to innovate just because of the law of big numbers, or are we missing something here . I think both are correct in terms of, you know, they innovated historically, but innovation devices already out. They were not the first with the smart phone or mp3 player or tablet, but they do it better than everybody else. Theres rumors of a competitor for amazon echo. Theres innovation, they just wait to do it better than everybody else. At the same time, you want more capital put to use. Step up in the buyback today and dividend is a start to it, and, you know, theyve been explicit if they get access to the money and not pay a huge tariff, they bring the dollars back to the u. S. As quick as possible. Or maybe the innovation argument is not the right one to have, jessica, because as weve lem learned, if they bring in a new exciting 10th anniversary iphone to the market and big anticipation and double digit increases, new features like augmented reality, that gets growth going and the stock moving. Thats a dream. Could be. One thing jessica you mentioned augmented reality, a great point. What does that look like, yet, though . Were early in the life cycle of a. R. Being the killer product to get people, you know, buying lots of new phones. The experience just isnt there yet. I think theres still that question of cha is the next killer feature for the smart phone . Is there one . Is it going to speak to apples strength . A. R. , for example, is a combination of software and hardware. Apple has a good track record with that, and some areas like itunes, but bad track record in other areas like social, so im an a. R. Skeptic and skeptic its going to sort of drive a big wave of sales, at least in the short term. All right. Folks, thank you. That was fun as all. Kevin, ross, jessica, shawn, thank you for joining us today. By the way, i still dont get this slowdown in ipad sales. I you i know this sounds take the blackberry away, i cant live without the ipad. They have a lower price point, but not upgraded. Thats the thing. Thats the issue. Lasts longer. I dont get why if you have a big iphone and laptop, why do you need an ipad . We figured it out. I dont need the other ones here. Fire eye, susan lee, thats her nickname, isnt that interesting. Is it . Okay. Securities out for a company fireeye, spiking in afterhours, reseeming trade after being halted in the after hours, and earnings bateat, revenues toppe and this is the Third Straight consecutive quarter that fireeye beat and raised next quarter and full year guidance and have gone through restructuring and layouts in the past year, but fireeye up 12 in the after hours session. Back to you. Thank you, susan. As you know, apple has headquarters in california, but manufacturing is done in china, and while President Trump promises to bring jobs back to america, but likely not iphone. A student who worked in a chinese iphone factory last summer has his take on the story coming up. For more on apple, tech investor gene munster on fast money tonight at 5 00 p. M. As we await a Conference Call. Munster. I am totally blind. And i live with non24, a circadian rhythm disorder that can throw my days and nights out of sync, keeping me from the people, places, and things i love. The people i love have always been there for me. And now, im there for them, too. Talk to your doctor, and call 8442142424 to learn more. Apple trading down about one and twothirds of a percent after earnings before the all important conference calm. When we come back, a student who went under cover in an iphone factory in coin explains why he thinks iphone manufacturing isnt likely to come back here to the United States after this. Are the best here. Yeah, but his offensive win shares didnt even break 4. Come on, check out that stopandpop what do you think . My tradeoff analytics indicate no one creates more space on offense. This allows him to nail a jumper from a densely populated urban area. What youre trying to say is from way downtown . I am still learning. I can see that. Stay with me, mr. Parker. When a critical patient is far from the hospital, the hospital must come to the patient. Stay with me, mr. Parker. The at t network is helping First Responders connect with medical teams in near real time. Stay with me, mr. Parker. Saving time when it matters most. Stay with me, mrs. Parker. Thats the power of and. I cant wait for her to have that College Experience that i had. The classes, the friends, the independence. And since we planned for it, that student debt is the one experience, im glad shell miss when you have the right financial advisor, life can be brilliant. Ameriprise apple just announcing today that its shipped 58 million iphones in the Second Quarter. Our next guest actually spent last summer working under cover in a chinese factory to see how things operate out there. He is a student at nyu, he was featured recently in a piece where he said despite President Trumps calm for apple to manufacture here in the United States, ken doesnt think the company will be able to operate the kind of factories like in this country hike it does in china. He also spoke with a Business Insider about the factory conditions and in that beings insider story, apple said in a statement that it cuttinged 34 audits kfrg lcovering legatron factories. Apple found that 99 compliance with a 60hour workweek. Were intrigued about the possibility of can apple afford to bring jobs back to the United States and ken joins us now to give us more color on what you found during this under cover operation. Thanks for joining us today. Thank you for having me. They use some robots and they use some very menial work by humans who are just inserting batteries and things like that. Thats what you found out, right . Yeah, so my station is working to fasten oun one screw from the speak tore the housing, but there are stations done by the machines, for example, they have stations that put cameras on the back case of the iphone or stations that put battery on the back case of the iphone. Those stations are ordered by machines. So thats my point. I think in other words they can actually be done by machines because some are very simple. What was the experience like . I know well talk about this manufacturing in america in a moment. How did you get there and how easy was it to get in. So its very easy to get in. At the time they are mass expanding. They need toep people to show up at the factorys and wait in line. They ask for my i. D. Card and they ask me to show my hand and recite english alphabet. They need to use english letters on the 39. And your hand. And ensure my hands. Thats it. I get in. Suddenly you are an employee there. Exactly. You are inserting batteries and whatever. Getting in is very easy, i would say. So your conclusion, obviously, this is this style of manufacturing at that cost would not be something that could be transferred to this country. I can tell you how much i got paid monthly, its 3,100 yen which is about 450 mer month. We work 60 hours a day. Actually, were staying longer hours in the factory. Even at that, china is starting to price itself out of the market, too. Because they are raising wages there, you have other countries taking their market share away . Thats why we get into the factory specifically. Happening is high raised the minimum wages in 2016. But they cut the male stipend. Thats why they are getting less. Was the work you did something that needs to be done by a human or could they figure out a way to automate fit they have to move it to the u. S. . I think its easy to get done by machines. My fasten one screw. Its even easier than putting on camera in the case. Why they are doing in chosen is the waste t. Cost is too low. Even lower than machines. When, thank you. You can read the full story there on cnpc. Com. Portfolio shares plunging after full year guidance and thursday dont miss jim cramers exclusive interview with the ceo o twillio following that weeks guidance. The biggest take away for apple is that the unit froze . It is, i think the sober guidance for the next quarter and you know this is going to be the Conference Call is going to be a test of exactly you know if the street is okay with the stock at a hot t. Stock is no longer trading at the vast discount it was to comparable stocks or the market it was the last few years ago. I would point out since the iphone 5 was introduced in late 2012, stock has actually lacked the market a couple Percentage Points a year. They are playing catchup. Can you spin eight long way, either it has come a long way, or it has a while to go before it realizes that potential seed in 2012. 50 off the low . Off the recent low, yes, exactly. All right. So many people have advice on what to do with that 50 billion. He is doing okay. Thank you all for joining us. That young lady kelly whats her name, shell be back tomorrow. Back from her honeymoon. Its been fun. Its been a lot of fun. Thats it for us. Fast money begins right now. [ music playing ] fast money starts right now live from the nasdaq markets overlooking new york citys times skwooir square, a im mellissa lee, tonight on fast, auto shares are crashing it could mean trouble for the entire market. What have some warning aboutant auto apocalypse. Plus the united ceo in the hot seat testifying what went wrong when a presentation was forcibly taken out of airlines, what the repercussions could be . Later, twitter soaring after ll