Transcripts For CNBC Squawk Alley 20160526

And this thursday morning, it is kayla tausche, and jon fortt, and joining us is hep ri blodget. Tech is up 0. 75, and the nasdaq is still down 2 , and not that far off, henry, from nasdaq 5,000. Is this what is going on with the buy in may and go away. Well, we who own the indexes are happy about this. And looking at apple, we went through the period of where all of the bad news was priced in and now looking forward to the iphone launch in september, and lot of excitement about that, and probably not revolutionary or anything, but in the buildup of that, people are excited, and so i am not surprised to see the stock move. But it is about enterprise, and the ipos working and the consumer hanging in there, jon . Well, it is about the winners pulling away. I think that there is a lot of fear in february that the whole story about cloud, and the whole story about everything, and even smartphone, it was falling apart, but adobe touched the alltime highs today, and that is for me in tech is a poster child for the transition from Package Software to software as a service. They have todone that absolutel very well. And blazed a trail for the service, and pure play, and that stock is doing well, and you can see a number of names like that, and rebounds in other names that have not been doing as well, and hp, inc. Is up 5, 6 this morning and that is in a different category. And the other thing going on is the valuations were fine and got to reasonable. Apple 11 times earnings and you can defend that as the upside to that if you have a good longterm outlook, and that is part of it, and the bubble talk was in the private market where companies were getting the massive private valuation, and the Public Market valuations are more reasonable. But what is taking a bite out of the stocks is earnings, and what killed the story around cloud and enterprise earlier in the year is earnings, and getting the Fourth Quarter earnings for the company, and we have two more quarters to report. Nobody is declaring victory on the year yet. And the gdp trackers it is going to be looking better than q1 . Yes, we hope so for the sake of the e kconomy if not for the market. And it is guidance that hit the markets and not the earnings themselves, and maybe some sandbagging, and over reaction on the part of the investors and if you are saying that the next quarter is not going to be great, but it is terribleer and maybe in fact, it is not terrible. And interesting in the period of memorial day to labor day, the s p has alternated gains for the last ten years, and positive negative positive, and since the crisis we dont know what the summer brings certainly within the election year, it is will be crazy as goldman has suggested. Apple shares are rebounding. Down the i da, but finishing higher for the last four sessions with the stock up close to 6 in may, but down 5 so far for the year, and then the repo report saying that eddie q. Of apple raised the idea of buying time warner, and apple did not enter serious negotiations, but the Company Still wants to spend several million a year on the original content. Netflix and time warner are rising on that report, and how seriously do we take the pieces, henry . Well, apple is trying the figure tout content business and they want to offer an al te alternative to television. Lots of companies are trying to figure it out, and verizon is going in the same direction and everybody is wanting to figure tot new cable model on all screens, and does time warner make sense for them . I would say absolutely not, in part, because if you are going to be buying time warner not just the content library, but they monetized themselves in the old world by selling to cable and movie, and you have to keep doing that, and you can get a easier deal, and much smarter to fund their own content or by netflix which is much more generous. And it is a 16 billion company, and they want to spend several million on original content, and there is a lot of room between a few hundred million and a 60 billion company . Yes, there is. And we could start a people of fun things that eddie q has thought of buying. When you that much money, and in negotiations with anybody, you could say, or we could buy you, ha, ha, ha, and sip of wine. That is not necessarily meaning that they could do it, and apple in the past has looked at not want ing ing to be bogged dhoun the relationships that it cant control. Whether those are regulatory or why they havent gone into the medical devices, and limited what the apple watch can do and they dont want to jump through the regulatory hurdles to bring something to the consumers, and that is involved in media, too, and they have a great relationship with disney and good for them, but if they buy time warner, bob iger has to get off of the board and that is going to go south, and might remove some of the string pulling. And we talked about the string pulling yesterday, and you said it is a big ball of string at apple headquarters, and do you find that the timing of cooks comment in india or wherever that comment was made and this report, do you think it is coincidence . I dont think it is a coincidence and i think that apple has gotten themselves into a corner here, and they have goep as far as they can with the current strategy. They have to buy Something Big in the arena and bust it up as they have traditionally or do a leap and do over the top cable evenb though they would have to do it at a higher price than they want to do, because the people who own the content are not going to give it for cheap the way they did with music. And people tend to overcomplicate the apple story, and dive into the stories, but the story is that it is the most profitable product in the history of the world. When they e introduced it the market did not exist, and now, five to seven years later, the market is mature and it is going to go through the same hardware pricing model that all hardware goes through and relentless pressure over prices over time, and you say, yeah, but apple has the ecosystem, and it is good and true, but if they want lever the ecosystem they need the prices to come down and drive the volume, but the idea that one gadget maker is going to be selling 700 and everybody else at 100 forever, not going to happen. There is a question of whether the next leg of apple strategy including m a in a big way. And cook said on the Conference Call they will be looking at bigger acquisitions and the they have in the past and i have spoken to a major investment ba banker who said look for the m a to rev up. It could be transformative and to jons point, we could buy you, you 60 billion company, and that is a tenth of the market cap, and they have a boatload of cap, and they could swallow time warner easily if they wanted to make a huge bet like that, but it would not be a smart bet. So they will do a transformative acquisition like that, it should be something else. Gives us something to talk about. Along with the snapchat valuation that we started to talk about earlier in the week, kayla. Yes, there was a tech crunch of the additional round of fundraising that snapchat did, but we got a filing about the series fround so there is no additional fundraising, but it is going around since last year, and in total 1. 8 billion in pure stock that the company has been raising from investors, and some them existing in investors and the valuation on the round is 18 billion. So it is a slight increase from the last round which is 16 billion. As far as the series f goes, they raised 650 million last year, and the rest of it 1. 15 came in this year, and the interesting part of this round is no protection for the investors, and all of it came around from the existing inv investors, and henry, we have been talking about the down rounds, and the companies marking the valuations down, and what does it say for snapchat, and no ipo ratchet at all in this. And very important if there is no downside protection, and if this is not preferred stock, that is something that is fundamentally different. It is not. Than most of the valuations, where they are not as risky as they seem, because you have downside protection, so snapchat has the opportunity to build yet another facebook effectively. This is a company that is building a network and took hold with the young teenagers, and they have a new model to build the platform that people are addicted to, and they are jumping into the video and the different forms. You mean by that 1. 4 billion users . Maybe not in terms of the size, but everybody is looking at twitter could be the next facebook, but twitter seemed like a niche market, and snapchat is a segment of the population loves and uses and loves remarkably, and they are aggressive on the development, and it is a media property, and aggres ive with the publishers and talking to them and cutting nice deals with them, and so this is a company that has the potential to be large. Here is what is not clear to me about snapchat and i have a horrible track record with them, and so when i say it is not clear to me, it does not mean it is not clear to somebody else, but the big value of facebook is the social graph, and knowing the relationships of people, and mobile era of foeing where you are not only physically in the real world, but where you are going online and able to triangulate all of it, and deliver an advertising experience that is thus more targeted in the era that is more important. I am not clear on what snapchat has that is going if be raising it to the level of value besides a large audience. It knows where you are. And it does take into account. Well, it could if you want to. And it is starting to move towards a feed basically, and it is visual. One of the problems with twitter is that it is words. This is visual, and it is video, and the addictive quality of it to the people who use it is not to be believed. And to the early years of facebook, and remember around the ipo and people thought it was dead, they have the ads on the side, and my goodness, the most hyper ever. And snapchat is just starting on that revenue model. And there is some question if facebook would see the 18 billion model, and want to make another run at them. Well, like mark zuckerberg, seeingle is not tempted by the wealth. He was offered amazing wealth, and he said, no, goodbye. Sometimes it is hard to persuade those guys to sell. Henry has a good laugh. Meanwhile, we will see you in the mixed action here in the market now, and the dow is lower and the s p is lower and the dow which had been in positive territory earlier is below, and oil did break 50 a barrel for the First Time Since october, and energy earlier on in the day was leading the utilities and the telecoms have taken the reins. We have six ipos in the market, and so it is a busy one for the equities and we are slightly into the negative territory in this hour. And hp, inc. Is giving weaker than expected guidance for the Current Quarter and cut the high end of the full year stock, but still up 5 . And costco is in the green sh, the profit is beating the expectation, and the same store sales were flat for the first time in six years, and that stock sup 5 and change as well. And when we come back, fitbit is under fire for lawsuits and studying saying it is not as accurate as claimed. We will will check out the wearables. And we will look at the ceo of pure storage joining us live with the dow down 35, and near the session lows. We will be back in a moment. And now much of that same advanced technology is found in the new audi a4. With one notable difference. The allnew audi a4, with available traffic jam assist. Off of the highs for the year as the music streaming market is brutal and almost exactly two months ago pandora decided to bring back the cofounder to lead the company into battle and sending the shares higher since the then, and how does pandora plan to beat back apple, spotify, google, amazon and, and, and. And here to join us is the companys cofounder and ceo tim we westerman, and tim, thanks for being here. And great to have you. So recent financial findings are suggesting that spotifys costs to get the music are rising faster than revenues are rising. So what is the business here in the streaming game at this point . Is it notal issing the music, itself . Is it selling advertising or the o onestop shop for music lovers and merchandising, concerts, et cetera . Well, there is a saying inside of pandora that you have not built a great product until you build a great business. A and so in the arena, we are a unicorn in that we have a business that is profitable. We made an agreement to go more expansive, and if we had not made the move, it would have generated 60 million or so in profit, and so it is going to set us up in the industry to be more healthful, and so we have been doing it for ten years. And is there going to be one app to rule them all . We have had others on before you bought them, and in the download arena versus the radio arena that you have been in, and are we getting the whole experience to where you can hear something on pan dor rashgs and tag it, download it, and save ut for later or maybe even own it, and all of it together in one experience, and is that where it should go . Yes, you are laying out the product road map there, and that is the ambition. We are starting with the foundation of 100 million listeners every month on pandora and the ep gaugement is growing more and more and we know a ton about them, and making money on the business, and we say, okay, lets expand, and hence the expansion of reo, and the ticket fly, and so start to flow the ticket discovery and purchase some of the platform, and the idea is that if you want to do music, you can do it all on pandora, whatever it is. That is one side of the marketplace, and the other side is the artists. So we are working on the tools and the relationships frankly so it is kind of the crm platform for artists, too, and you wake up in the morning if you are a musician on pandora and the person says, what can i do on pandora today . That is what we are looking to build. How can you change the perception of the consumer for a long time thought that pandora is a radio and the music genome product and produce something that i have not heard of before . Well, that is the challenge of the Product Design which we are good at. What you will see with the product is not a me, too, subscription service, but it is based on what we foe about you and which we know a lot about you, and we can bring you into the interactive space in a low effort way, and it is going to be differentiated. Is marrying the two worlds mostly an engineering challenge, marketing challenge, is it a royalty challenge a what are the economics behind it . Bundled into one, and starts with the music experience, and part of what has made man dor ra so successful is that it is drop dead easy to do. And we can nail the easy experience for you. And we will broaden the product, and we are well down the path, and it is promising a, and the business has to come along, and set up the deals to make sense, and we are in a position to do that to strike deals that are good for us and the industry. But music is like the lost industry, and like the milk at the convenient store, and how much do you to change the culture around recorded music to be successful . The fact that you are profitable in the core business is a good thing, but of course sh, the investors they want more and big growth and huge opportunity over time. That is the great promise of p pandora, and so i am a musician where i spent my youth playing in the bands and part of the world and i understand the industry and been there, and we bring the sensibility to the business and the products, and so we are in a business to align with the Music Industry to solve their problems ark and we have a gigantic user base, and 10 of all radio listen ing ing in the, and huge service, and still growing, and this is an audience to market to and educate about the products and the Interactive Services in a way that i dont believe anybody else can. How long do you give yourselves to deliver on the road map, because you have an activist in the stock who wants you the sell yourselves . Well, i started eight weeks ago. Welcome. It is good to be back in the seat, and im very excited, and look, we have laid out and you founded the company, so is you are not an outsider. No, i know the business like the back of my hand, and not just our business, but the world we live in like the back of my hand, and part of what i am excited about is that we have identified a cogent strategy for the coming years, and building what is like a generational marketplace for music, and with have great team, and fantastic team who knows what they are doing, and so my job is to tell people about it. I am going to be externally engaged with the ceo with the music, and wall street and advertising industry, and so you are going to be well represented and narrow the narrative gap here. And isnt it hard to go to the musicians and the songwriters and say, i get it, and i understand why you are complaining of the new paradigm, and hit the operating targets that you have given the street . Well, we can do both. That is the magic of pandora, we can build a business that is succe successful and driving the value for the musician, and we have tried it already, and so there are a host of products that thousands of musicians are availing themselves of, and to be able to log in and communicate with the fans, and drive real value, and sell tickets and fans, and drive fan engagement, and the results from that are quite extraordinary actu actually. And tim westerman, i and i love the underdog. You guys, i cant wait to see what you come up, and i am a user of pandora as we talked about. Thumbs up. Up next, putting the fitness tracker s trackers to the test. Are the devices really providing accurate results, and we will find out in a moment. So when i found out medicare doesnt pay all my medical expenses, i looked at my options. Then i got a Medicare Supplement insurance plan. [ male announcer ] if youre eligible for medicare, you may know it only covers about 80 of your part b medical expenses. The rest is up to you. Call now and find out about an aarp Medicare Supplement insurance plan, insured by unitedhealthcare insurance company. Like all standardized Medicare Supplement insurance plans, it helps pick up some of what medicare doesnt pay. And could save you in outofpocket medical costs. To me, relationships matter. Ive been with my doctor for 12 years. Now i know ill be able to stick with him. [ male announcer ] with these types of plans, youll be able to visit any doctor or hospital that accepts medicare patients. Plus, there are no networks, and virtually no referrals needed. So dont wait. Call now and request this free decision guide to help you better understand medicare. And which aarp Medicare Supplement plan might be best for you. Theres a wide range to choose from. We love to travel and theres so much more to see. So we found a plan that can travel with us. Anywhere in the country. [ male announcer ] join the millions of people who have already enrolled in the only Medicare Supplement insurance plans endorsed by aarp, an Organization Serving the needs of people 50 and over for generations. Remember, all Medicare Supplement insurance plans help cover what medicare doesnt pay. And could save you in outofpocket medical costs. Call now to request your free decision guide. And learn more about the kinds of plans that will be here for you now and down the road. I have a lifetime of experience. So i know how important that is. Fitbit is facing a lawsuit over the accuracy of the heart rate readings, and it is not the only fitness tracking company with questionable results. Our eric chimmy explains. Fitness trackers and everyone is wearing them, well, almost everyone. But how reliable are the stats . We gathered eight devices, and put them to the very unscientific test. Start with the most basic. Number of steps. I got huge variation in the number, and in just a small time frame i saw the ranges of 1,500 and 2,000 steps. That is a big deal if the goal is to get 10,000 steps a day, and while one app may say that you got 10,000, another may say that you are stuck at 8,000. And when i counted 500 steps myself. One of my two fitbits was the most accurate coming in just above 500. When it came to the heart rate, i counted my pulse at 140, but all of the devices had me less than that, and come on, give me some credit. All right. Getting the burn going. It is the apple watch that didclosest, and the distance walked, some apps thought i walked over a mile, but some were lowballing me over 20 . And it is the tracker that gave me the most accurate results from wibings. And kayla, with the technology companies, i talked to them and they said that the algorithms and the techs and the senators and they use Something Different so if i put the hands around, some may give me step credit and others dont and this is with the changes. And so the point is to buy one device, and try to do better tomorrow than you did today. And is you dont have one to recommend after wearing a couple of handfulfes . Well, it is depending on the body. If your stride length is different, some versions are going to be different, and if you are taller and shorter, and you have to find the one where you like the numbers better, and it is a personal decision, and it all comes down to the algorithm. And way to crush it on the elliptical. You were crushing it. Oh, yes. And simon, what about europe . H. Well, it is slightly down, because brent has dipped below 50 and that is taking the steam out. The peripheral banks in europe are front and scenter. Remember the context, the strong rally over the last week is on the stocks banks index up 7 partly because the ecb said they had a way to deal with the nonperforming loans, but today, poplar over in spain came through with a rights issue that has surprised a lot of people and almost 3 billion and taken their stock down but others wit. In the meantime, a couple of stock companies, the daily mail of the uk is warning of a accelerating decline in the print advertising, and that stock is extended the fall through the session. And on the upside, you will see the Steel Companies doing well, and this is the rbc highlights in steel briefing that suggests that the European Union is going to extend the investigation of antidumping beyond the chinese and the exist iing products to other countries like turkey and russia and brazil. Meantime, as we aide to the uks vote on exit iing the European Union on june 23rd, the german finance minister has been talking to the journalists suggesting that the world wont end if the british vote to leave, but he repeatedly said that in is in and out is out, and in other words, the referendum is going to render the matter settled as far as the rest of europe is concerned a it is separately reported by reuters and the daily express in the uk that the senior diplomats within the European Commission led by france and germany have started discussions of how the deal with the potential of the outvote, and notably for the european summit which is delayed until june 28th, june 29, and what do you say on behalf of the other 27 countries in te event that they vote to the leave . Back to you. Simon hobbs with that update, thank you. And up next, shares of pure storage is on track of the worst day since going public in october, down 18 , and at least seven brokerages are cutting the prices on the stock, but the ceo of pure storage is going to join with us his take in a moment. Im Courtney Reagan and this is the cnbc update. It is official that donald trump has reached the number of delegates needed to reach the nomination for president. By nbc newss count he has crossed the 1,237 threshold and with 330 delegates left at stake, he will easily pad the total. And now, french Union Activists are protesting at one of the Nuclear Power plants because of displeasure of the labor reform bill that extends the work week, and makes layoffs easier. And researchers are saying that there are things that women of high risk of breast kacancer can do to risk getting the disease, and among them, avoiding hormone replacement therapy, and stop drinking alcohol. And in california, the 8,200 fo fourstory brick home has 9 bedrooms and 8 1 2 baths, and it will be for sale. The storage tech company is under pressure today, and down more than 18 , and despite the reporting of the earnings beat growth of revenue close to 90 last year, and scott deet zis ir and ceo of pure storage, and most investors would like a 90 raise in revenues, but why the downlo downlook . Well, in pure, the business is more so, and in hindsight, we should have done a better job to reflect it in the guidance, but off of the 600 run rate, and the 90 year over year growth, and the 20 points of the operating improvement on the march to make cash flow positive next year, the conclusion is that the strong business bush the guidance could have been better. And the company has given annual guidance, and how much more information are you willing to give the street after seeing the reaction this quarter . Well, we obviously updated the guidance for the next quarter, including a modest raise of 103 to 157 million, but the intent is to deliver annual guidance once at the start of the fiscal year, and move to cadence of updating the quarterly gquarter quarterly guidance giving the scale and momentum of the business. Can you dig into the clouds impact of the business and on the call you said it is a catalyst for you sh, but at the a imtime, we have seen the mega scale cloud providers being cautious about how much money they spend with others outside of the ecosystem. How do you hedge against the possibility that could actually turn bad for you in coming quarters as the pricing pressures and the demands from the mega scale cloud providers come to bear . So, cloud is indeed a catalyst, because it is reflective of the next gen data s center that companies are moving to. 25 of the business is from cloud customers today, and we count in that Group Software as a Service Providers like intuit and work day, and other cloud providers like linkedin and shutter fly, and the infrastructure service, but we dont sell to the public hard core doityourselfers in amazon and google, because majority of the Service Provides and the consumer clouds are building their own cloud s fs for the performance critical processing, and the things that they are hanging the hat on and the reputation with their customers and building their own clouds a rather than using a public cloud. Scott, appreciate your joining us, but we have to leave it there because we are et getting breaking news with House Speaker paul ryan at the public briefing. We are passing through more and more through the lane, and we are putting in a bill ahead of the summer busy travel. Okay. I want to talk about the vote that we just had on the energy and the water appropriations bill. When i became speaker, one of the commitments i made to the members and to the American People was to open up this process. That means having more members contribute. It means more andmes both sides means fewer predetermined outcomes, and yes, more unpredictability. Early on i stood up here, and you remember this, and it is one of the first press conferences saying that some bills might fail, because we wont tightly control the process and tightly control outcome around here, and that is what happened here today. It is unfortunate, because this is a very good bill. It improves our energy infrastructure, and it enhances the National Security and it uses the power of the purse to stop harmful regulations. But what we learned today is that the democrats were not looking to advance an issue, but to sabotage the appropriations process, the mere fact that they passed the amendments then voted against the bill containing their amendments proves this point. That said, we remain dedicated to working on this bill and on all of the appropriations bill. In fact, we moved to go to conference for military construction and veteran funding as well as fighting the zika outbra outbreak. We are not e slowing down here, and we will talk to the members of how best to move forward to maintain a workable appropriations process, and we will continue with that appropriations process, and we will use the power of the purse to protect the taxpayer dollars, and we will use the power of the purse to hold this administration accountable, and this work is the far too important for these dill tear i ri tack dill terry tactics. I am curious, is this really about the constitution or the abortion funding . The constitution. Speaker ryan, i want to know how the phone call went with mr. Trump last night and we heard good from the team, and anything more . It is productive phone call, and we have had the k conversation, and the staffs have been meeting and we had a very good and productive phone call. And are you closer to yes . We had a productive phone call, and leave it at that. Juan . How will you look at the future appropriations bills, and will you try to look to push the amendment process, and is that the right approach at this point . Well, what we learned today is that the democrats are not looking to advance the issue, but to sabotage the process, the fact that the author of the amendment prevailed turned around to vote against the bill that contains the amendment tells us that they are trying to stop the appropriations process in the tracks so what we have to do when we return is to get the with the members to figure out how best to move forward to have a full functioning appropriations process. This is the Second Time Around the block with this issue, and yesterday when you met with some of us, you said that the first time it happened, it is because of the confusion, and the two minute vote, and chaos, and people thought it was a bathroom issue, and the evidence suggests that is not true and no, at the time in mil conn it was true, but now that the second time it came up, we let the place work its will, and let Congress Work the will, and then the people who brought this amendment forward voted against the bill containing the amendment which tells us that this is about sab only thing the appropriations. Now that the republicans know, and will they be more motivated and people didnt know what was happening and they have a clearer understanding now. Remember, that the authors of the bill voted against the bill that contained their amendment that had prevailed. This is about sabotaging the appropriations. Now that donald trump has clinch ed the delegates, are yo concerned how it looks for the speak over the house not being behind the nominee. I am more interested in real party unity and not pretend, because we need to win the nomination in the fall, and the point is we need real party unity and that is what i am concerned about. Is it fair to blame the democrats when you have the democrats saying that there were riders there trying to kill the Iranian Nuclear deal, and then saying well, a couple of them, and why did they pass by voice vote, and some of these things that you mentioned passed by voice vote with no one objecting to them. Mr. Speaker no, you raised it. Go ahead, ladies first. And what is your own view on the amendment . I voted for it to end up a decade ago, and so my position has not changed. We have had this long on the books in wisconsin since 1982, and put on a republican governor, and so my view has not changed on this. Jonathan. In terms of the future on the appropriation, are you still intending to rerun this bill or move other bills, and what happen s wi happens with the idea of the cr . Well, we want to pass the individual bills, and that is the best interest of the institution of congress of exercising the power of the purse. When we come back, we will get down, and we will sit down with the members and have a family discussion of how best to proceed so that the appropriations process cannot be sabotaged and derailed. Last question. Is this an issue that needs to go beyond the legislative process, and as of now, it is going to go through july . Well, that is not the case, and the rate it is going, that time line is not the case, and number one, we voted to go to conference on it, and not only had the appropriators been talking preconference, but now into official conference to work on this, and money in the pipeline going out the door right now, and this is another point that needs to be a point made clear. Thanks. That is speaker ryant the Weekly News Conference saying that he and donald trump in his terms a good and productive phone call, but he said that he would leave it at that, and this is on the day where the a. P. Says that trump has now secured enough delegates to clinch the nomination, and eamon javers is in washington watching all of this. Hishgs carl. Hi, carl, you can tell that the questions surrounded donald trump, and also this controversy that just erupted on the house floor about a lesbian, and gay and bisexual and trance gendered rights amendment added to the appropriations bill which then failed, and speaker ryan dealing with the controversy over that in the press conference, but donald trump giving no details about what the two men talked about last night, and then not endorsing trump as many had thought would be coming to ddayr later in the week. And paul ryans team clearly wants to focus on the policy here sh here, and just before the press conference a half hour, and then trolled the press by putting out a press release which said that a major announcement as the subject line, and then focusing in on the antipoverty policy agenda knowing that the repo reporters there are waiting for the press releases to wait for the endorsement for donald trump, but it is not coming today according to speaker of the house. Well, everybody is entitled to have a little fun. Thank you, eamon javers, an important issue that we are tracking. And now over to Rick Santelli with the santelli exchange. Good morning, jon, and i want to welcome in peter, and welcome in. Thank you, rick. On the fly, and everything has been changing. You had a chance to look at the d durable goods order this morning, and definitely popped up and in atlanta gdp now close to 3 , and now that on the web popped up, and landed gdp now close to 3 , and now what they said is that there is significant adjustments going back, and benpch marc edchmark , and i dont want to get into the weeds, but looking at the month, it made the rise look dramatically more, and that is the input that is going into the strength of the atlantas gdp forecast, and numerology aside, because it does not change anything, what is your read on the proxy of Business Investment, and how sluggish it has been. Well, that is one of the things that we have had the idea that the low energy would have a drag on the economy more than we saw, and this is the first sign that the data was mischaracterized and not done accurately and we had far less Business Investment which is leaving us focused on the jobs number, and the biggest outlier which are not connecting with anything else. You will see the p my weak, and bits and pieces are weaker except that the jobs are coming in consistently good, and we saw the first cracks last month, and we may see the bigger cracks sh showing up, and this is maybe the catch up of the data and all of the adjustments getting done, and the trued up, and the series of weak numbers particularly in the jobs. And many say historically the markets dont really respond that aggressively for fed tightening cycles, and this time is different, and listen, peter, if in your family, you had a lot of debt on the credit cards, and you want to end up living life and consuming, and the rate and the vix that you moved on the credit card moved, that would affect your behavior, would it not . And not only individual behavior, but the behavior at the csuite level, because the fed has spent two years having us so focused on the, you know, the Interest Rate moves and made such a big deal of the 25 bip, and if you hike, and you are the ceo of a company and you look and say, hey, hold off on the projects and see what happens with the fed and the investors the same thing, and the own purchasi purchasing, maybe they will hike more, and maybe i have to be careful and hold back some money, and they have been horrible in terms of the tying everyone to the small tiny number, and particularly the entire market so that thousands and thousands of investors and real money in stake decided that june was not on the table, and they went on the way to put june on the table, and that is leaving us scratching our heads, what are we missing . What is so weird about the messaging, and what are they seeing . They have caused the uncertainty, and made a mountain out of the molehill and it is much worse than they have gotten it done with a year or more ago. Peter, thank you for the thoughts, and complicated topic, and when we find out firsthand at some point. Thank you again. Thank you very much. And now we go back the squawk alley. Thank you, rick san ttelli. And madmen may have ended last may, but now the fans can buy a e piece of the show, thanks to the auk shup. Our Julia Boorstin is there at the auction for what is up for grab grabs . Do you want the buy peggys typewriter or the sunglasses or the lighter . My favorite, Pete Campbells bar in the shape of a globe. 1,500 props here on madmen sold on behalf of lieyolyonsgate. And screen bid which is an auction house which specializes with the items from the tv shows will start the auction next wednesday for many of the items at less than 100, and the fans can bid online for the item, and fans will receive a screen shot of where the product was within the show. And they will have a cut delivering the rest to lyonsgate which benefits from the incremental revenue, but drums up attention for the show a year after it is ended and drive people to buy episodes on amazon or itunes or to stream it on netfl netflix. And fans can binge on the show long after they have left the air makes his business more pop you lar. The availability of the streaming services for people to access the show whenever they want and to revisit the characters and the revisit the storylines is going to make the demand high. Now, there is no word on how much this auction is expected the bring in, but the context of the breaking bad merchandise, there was a copy of walter whites leaves of grass, and that book alone sold for more than 65,000. Kayla. Wow, that is incredible. I am sure that there are a lot of fans taking a look at their monies burning a hole in their pocket. Maybe eddie q, and maybe he is going to be buying that, too. He has the war chest. Julia, thank you. Speaking of apple, shares are on the comeback trail, and today, they went into the negative territory, and down half a percent, and now, a look at where they may be headed. announcer need to hire fast . Go to ziprecruiter. Com and post your job to over 100 of the webs leading job boards with a single click, then simply select the best candidates from one easytoreview list. And now you can use ziprecruiter for free. Go to ziprecruiter. Com offer2 shares of apple are sliding slightly lower after turning in the fourth consecutive daily gain, and the first time in more than a month, and down 5 on the year, and joining us is usb apple analyst, and steve, always good to take your temperature. When we came out of print, everybody looked at the sell side and said own the skepticism, and downgrade the stock. Are we seeing why they were hesitant to do so . Well, people got too negative and the stock was oversold, and some potentially positive news, and the reports that the iphone 7 production may be 76 million unit, and on one hand it is good, but it is still doub year over year, and we took down the iphone numbers for fiscal 17, and people were too negative. The sentiment will be more positive here, and we have the worldwide developer conference coming up in a few weeks, but aut the same time it is premature for the stock the breakout. The target is 115 on the 12month . Yes, that is correct. I would be surprised if we get to 115 in the near term. We have to get out closer to the 7 cycle, and get a sense of what that is going to be, and what apple is doing with the new product, and Virtual Reality and car, and little early for the excitement on those products. And steve, this is a number for the iphone, and not an syear, and we tend to look at those being important, but given all of the emphasis that apple has put on the services, all of the things swirling around software, and internet of thing, and technology in the home, and is wwdc relatively more important this year or is the iphone 7 launch more relatively important . The iphone 7 launch is more important, and apple is still primarily a hardware company, and we went through the facebook and developer conferences, and interest, but not particularly moving. There is a perception that apple is behind and facebook and google is doing the chat bots which could reduce apples differentiation, and so there is some question what they might release around the artificial intelligence, and maybe an amazon echotype product, but the iphone 7 is going to be moving the numbers and the stock. And steve, investors would have done well to buy the leadup to the 6s and sell after the fact, but how long of a tailwind does the 7 have . Can it come close to the gains that the stock showed after the 6 . Well, based on the features that we will see, it is not going to be a gigantic upgrade, and the thinking on the street is the 8 in next years is going to be bigger, and talking about being all glass, and having olxed screens, and so this is maybe a more tempered number, and consequently, stock may not run up as much into that as we are accustomed to, and on the other hand, people may have the stock run up with people anticipating the next cycle. And what do guy likes you say when you open up the ft, and looking at the conversations of eddie and the bankers . Well, apple is talking to a lot of people about a lot of things. This came out a number of months ago, and it is clear that apple tv is not making progress, and the company has not been able to sign content deals, and one approach is to acquire the content, and i would be surprised to the that because there a lot of talk about the service services, but at the end of the day, we view apple as platform company, and the services are importa important, but they tend to subsidize it and make money on the hardware. I would not go too far to emphasizing the services side. I would be surprised if they did a big content deal. Steve, good to see you, and good long weekend for you, steve over at usb. Coming up, peter thiel and his fight over what he said about gawker. They are exploring potential options as the legal fees mount. And peter theil did say that he had helped hulk hogan defend himself against the times. He says it is less about revenge and more about specific deterrence. I saw gawker pioneer a unique and incredibly damaging way. And this brings up the importance of these ceos dealing with technology and media. In media, he is able to say in the specific case, i will take them out. Interesting. And strategic alternative skills like an act of desperation of facing up to someone with a net wealth of 2. 7 billion. Good luck with that. And that is it for us, and up next is wapner and the half. All right. Guys, thank you, and welcome to the Halftime Report im scott wapner, and getting ahead of the fed. What janet yellin is likely to say on friday and how to profit from it. With us is joe terranova, and josh brown, and jon and pete najarian, and lets go to the countdown of janet yellin speaking tomorrow. We have new data showing that the e kconomy is not as weak as feared, and so it is some indication of where investors should be if the fed does raise