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tv   Closing Bell  CNBC  January 26, 2016 3:00pm-5:01pm EST

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>> praying for snow as well. scott, thanks, appreciate it. >> folks, thank you for watching. >> i'll see you on "fast money." closing bell starts right now. >> hi, everybody, welcome to the closing bell. i'm kelly evans. >> stocking staging a major comeback after the late day sell-off yesterday. i heard that was quite a deal. >> glad to have you back. >> investors brushing off china's big decline overnight, focusing on promising earnings numbers and of course the big surge in oil again. there are reports that opec and nonopec members could be open to a coordinated production cut as unlikely as that would seem. >> i'm not sure. opec, this smells like a lot about the fed but we'll see. >> yes, we will. we'll following this action into the close today. we'll see which way we tip today. >> stocks are not participating
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in today's big rally. ta they were last year's market leaders and now we have somebody who has a new and somewhat interesting ak nim. he'll tell you what that is. >> could be worse but -- >> could be worse, it's somewhat pc. take a look at shares of coach. remember them? it's in there somewhere. one of the best performing stocks in the s&p 500 today after strong earnings this morning. >> top performer, up more than 10%. >> wow, luis, the ceo will join us to tell us where he's seeing strength and whether the china slowdown fears are overdone. that turned out to be a big market in the fourth quarter. >> that's a big worry spot for everybody in the market these days. let's begin with the big earnings report. it's apple, ort, josh lipton joins us from headquarters in couper teen no with more on what
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to watch for. josh? >> reporter: kelly, there are three key metrics investors will focus on besides the top and bottom line results. in q1, apple shipped about 75 million iphones but all attention and focus is on q2, the second quarter, march quarter, where apple does face tough comps and that's part of the reason he tells me in q2 apple will ship 55 million i phones, a drop of 10%. secondly, momentum in china, remember on the last earnings call, ceo tim cook sounded very confident about china and very bullish. mainland china does now represent about 30% of this company's revenues and last quarter greater china as a region revenue jumped nearly 100%. does cook sound just as confident this time?
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investors will listen very carefully to the language he uses. the street expects to see the same this time. you look at apple stock, it has been under real pressure and down about 20% over the last six months. so any bad news already priced in? we'll going to soon find out. >> josh, we will see you in about an hour with those numbers. joining us now is paul hickky who is out today with a new survey of chinese consumers in china, talking about apple as a matter of fact. good to see you, thanks for joining us today. >> good to see you, bill. >> i'm mindful, over the weekend, anybody who didn't live in the area where there was the big snow, the blizzard, we would hear from people outside the area who would say, are you okay? they assume all of us are suffering so much with the huge decline in the chinese stock market this year, we assume everybody is suffering but you didn't find that to be the case, did you? >> no, i think you have a good
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analogy there. as josh was just saying, the key for apple's earnings report will be china numbers and last quarter tim cook was optimistic about things and based on our survey, we're seeing from a bigger level picture, the consumer confidence and personal income, those consumers are saying their personal finances are either better or much better, over 60% versus the year ago where incomes are saying 59% are saying incomes are higher or much higher relative to a year ago versus less than 15% saying lower or much lower. so we're six months into this crash in the shanghai composite and slowing the chinese economy has been going on for quarters. but consumers are still confident. >> paul, the iphone over there is really expensive and somebody -- maybe in the journal today pointed out it was the eye
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equivalent for three or four months' pay. where does that leave people in terms of sentiment? their income might be moving higher but it is enough to buy the iphone and sentiment there as well? >> you have to differentiate between the urban areas in china and the more outskirts and the more rural areas. in the urban areas where incomes are higher, share of the iphone is continues to take share from an droid. in our surveys which we'll been running for several quarters, percentage of people who plan to buy an iphone, is over 60% for first time we've run the survey. consumers are still have positive on the iphone. where the iphone lacks is in affordability but quality and status symbol, far and away the leader, where it ranks fourth in terms of affordability. it's more expensive. but we see the higher level numbers on confidence coming down, that's when you would be more worried about the demand. but to your point, the key in
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china longer term, several quarters out is growing the pie, the middle class pie and making incomes higher so more people can afford it. >> people are holding their breath waiting for this apple report to come out an hour from now. it could have a big impact on the the market given apple's influence. based on what you're finding on the ground in china, do you think things are tough for apple or not? >> overall in china, the numbers -- it doesn't show significant slowing in momentum towards customer sentiment towards apple and apple products. based on our survey results we don't see any reason for tim cook to be less optimistic now than last quarter. >> thank you for now. >> more insight on the chinese consumer, coming up we'll have instant analysis and reaction to earnings when we speak about dan niles, shorting the stock for the last few months. >> he's an analyst and trader and he's good at both. let's get to our closing bell
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for tuesday. she made her way through the 3 feet of snow there in d.c. and with sun america funds and keith bliss and rick santoli joining us from chicago. volatility continues and you still have to look to oil to be mindful of where the market is going to be? >> i would lo say it wasn't the idea but all you have to do lay charts over oil and see moving in lock step. i wish it was more complex than that and it should be. most human based traders and machines are keying off of that price of oil. the question that i think everybody needs to ask themselves and try to answer, if there is a deal struck between opec and nonopec and they control the supply side of that dynamic, does that make all of the world's economic problems go away? the answer is clearly it doesn't. there are more fund. . al problems that need to be tackled regardless of what
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happens to the price of oil. short term we are set up where we could rally into the fmoc announcement. we have to stay above 1905, 1910 on the close. if we are able to do that and sustain that, we could get back to 1980 and 1990 and work the oversold readings. a lot of work has to be done, risks are still around. transports, small caps are lagging and we need the financials moving a little bit to say that with great certainty. >> heather, are you guys sifting around amid the wreckage here? >> i still think other than snow shovels, i put my money to work in snow shovels in d.c. over the past few days. i would say that the american -- retailer, retail investors, why does oil really matter at the end of the day? keith named it, saying he wish he could say markets are not correlated and that there's a lot more to it than the price of oil. if you overlay those charts, you'll see that oil is key right
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now but to the average american out there they see lower oil, lower prices at the pump and say it's great. it's kind of a misnomer that oil prices lead to billions of dollars immediately of stimulus. we're seeing consumer confidence up, spending up a little bit but at the end of the day, lower oil has been hurting us because plants and property and equipment close. it's a spillover into our industries, offices close down. new machinery to dig those holes in the ground. the rigs closed down. most of the jobs created over the past two years were in part due from the energy sector, came from oil. so that's why it's translating into a negative for investors into this market. for the consumer, it still real estate main s -- remains a positive. >> we used to key in so much on the 10-year yield compared to
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the stock market and use it as something as a leading indicator and now we're only watching oil. is the 10-year or anything along the yield telling you anything especially when you consider that the fed began meeting today? >> well, on oil, all i would say if an average vehicle can fill up for $35 instead of 50, we're better off saving $25. if you're invested in stocks and save $25, maybe it's a wash. but it is a good thing. on the business side of energy, it's going to work itself out just like the business side of the investment that occurred when we had the tech wreck. these things have a way of compensating and market will take care of it. with regard to the 10-year, the big compensation on the trading floor is how rates have gone down from 2.27 to 2%, very similar to the first month in 2015, very similar to the first month in 2014. a lot of people talking if you take 10-year minus 2-year
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yieldses, a familiar trade, trading in a difference of 115 basis points, the nar rowist and flattest since about new year's eve 2007. but, to those i would say put an asterisk there. the fed has a coral and it's filled with long term treasuries. where would 10-year notes be and the metric to gauge global economy be if they unleashed those treasury horses back into the wild. >> so it gets very difficult that many of the signals are toughing to interpret. >> release the hounds. >> what's surprising on december 16 blgts when we first raced rates, the 10-year at e was at 2.3 and now sitting at 2 percent, done nothing but go lower. is that a reflection of the economy or because globally invefrts are flocking to the u.s. as a safe haven? >> or are they two sides of the same coin? it's interesting as well some of the market moves we can show you
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as well illustrate really interesting shifts. remember when we used to talk about go back three years, all about apple and how big its market cap was. now look at the ways market caps are shifted, starbucks, $87 billion, goldman, $67 million. we mention this as well, deutsche bank, smaller yesterday to tesla, they are currently right about neck in neck. the entire value of the banking index we've been following is pretty much on par. you can see the banking index, $908 million in market cap, that's less than an apple and alphabet. >> keith list, does that present an opportunity or what do you make of that? >> it does on some of the names when you look at a company like caterpillar. it is doing everything it can to defend its dividend and not going anywhere. it's still relatively good company and still market cap between 45 and $55 billion and
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dividend yield above 5%. i think there are some opportunities when you see things start to sneak out at you. but the valuations kelly is talking about, more of a dynamic in the change of mindset and behavior of what we've experienced over the past ten years when you think people are chasing value, you have a lot of intri catcies changing the market cap of these companies and you're going to continue to see that. people will try to find out those pockets of value and typically it's going to be in new stage, new technology, new economy types of econocompanies >> biotech talking about how it's on the hunt for deals. >> yeah, for sure. you can redefine value when you look at the oil companies and higher quality operators will gobble up the lower quality producers that still have high quality assets on their books. you'll continue to see that con solid dags. >> i would remine you in 1999 when aol bought time warner in a
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strange bedfellows kinds of story because of market capitalizations and valuations at that time. thanks, folks, appreciate your thoughts today. >> 45 minutes to go here. we're following interesting things, the metals rallying and industrials do better. you had earnings this morning that sort of relieved people. we have more of that coming and we're off the highs of 236 points. >> there's much to come and apple is not the only earnings report we're waiting for. you have at&t, capital one, u.s. steel on the docket as well coming up. we'll bring you those numbers the second they are released and have analysis as well. >> with u.s. steel up more than 12% on the session today and as a warning sign as fed policy makers kick off the two-day meeting on interest rates, the latest survey shows economists and money managers still worried about a possible recession. details watch. you're watching cnbc, first in business worldwide.
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market holding on to gains today unlike yesterday around this time. the industrial average up 250 points.
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and that's best performer today. look at that. there was one stock -- what was the stock -- >> 3m. >> yes, accounting for 40 of those points today. >> when is the last time we said that? the industrials themselves have been lagging. it's so interesting to watch them come back with a vengeance today. >> nasdaq up 42 points. big deal in the regional banking industry, huntington bank shares acquiring rival first merit for 3.48. that would be a premium over the closing price on first merit up 13% and hunting ton bank shares down 8% after the announce many came out. >> meanwhile the latest survey shows economists and money managers concerned about a possible recession in the u.s. steve? >> kelly, i want you to watch carefully here when i show you this next chart. we'll get to the recession warnings in just a second. this next chart really
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encapsulates the sense of diminished expectations on wall street in a way we've never been able to do before. this is where we started off back in january of 2015, the expectation for growth this year in 2016. i want you to walk with me down the wall here of diminished expectations. we're starting 2016, if you can just zoom in on that number, the expectation for this year is just 2.17%. expectation for next year is just 2.3%. if you just go wide again, i want to show you here, we had been 3%, 2013 we thought we could do 13% we don't think that anymore. what we think we can do at best is 2, 2.5% growth. and the cpi forecast is also come down four tenths of a point to 1.5%. one of the things that's changed and changed dramatically the view of our respondents on the effect of oil.
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31% say lower oil prices will raise gdp but 23% think they'll lower it and they actually think it's going to lower it by more. the average of the two is actually negative. every other time we asked this in the past going back to march and january before that, it's been positive. so the view of the street on the effect of low oil prices at least in our survey has changed here. it's a net negative now. that is a very big change. now to the promised recess probabilities here, they've gone up quite a bit. we had been 36% back in september of 2011. we come back here and hit a new record, third highest one we had before, 28.8. then it came down in the last couple of weeks just a little bit. but it still remains elevated kelly and bill from what it was before we've been down to the 13s and 14s there now that probability is 24%. >> we had a guest through here not too long ago who showed us a
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chart that illustrated that the last few recessions, the u.s. economy was in occurred when oil prices peaked, not when they were lower. so what has changed in the economy to cause this phenomenon? >> i think there's been an underestimation of two things, first is just how much growth the oil sector gave us, that a lot of the growth must have been on top of what was happening in the economy had to have come from the shale business. and it was over -- underestimated how much that was the second thing that's been underestimated is the sensitivity -- overestimated, the sensitivity of consumers to lower gas prices, we simply have not seen the spending that was expected from these lower gas prices, they may yet come but more and more economists are thinking, it's like waiting for -- it's not happening. >> i loved this but reading a note from a uk analyst over the weekend who was talking, steve, about how apparently british
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consumers have been putting -- have been spending a lot more of their discretionary income than americans and he was just making the point that they weren't being as prudent as their american consumers when it comes to saving gasoline dividends if you will. i was shocked. that's such a different picture of the american consumer than we might have read five tore ten years ago. >> part of my estimation that the consumers would spend this money, they always spent it. you put an extra dollar in the pocket they spent 1.10 or some number. this is not something that's been modeled in and you see it in the personal savings rate. long term this is good for the economy. it keeps interest rates low longer term it creates a bigger fund for savings but for the short term and for growth this year, it's not really going to be -- we have the negative of lower oil prices in the oil patch but not a whole lot of the patch of lower oil prices in the retail patch. >> steve, thank you. >> we'll have more on retail that might be benefitting in
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just a moment. >> yes, indeed. we're up 236 points, we're about 38 minutes left in the trading session. holding on to these gains. haven't -- we've heard there's talk maybe bias is towards the buy side but haven't heard numbers or magnitude of that coming up but we'll try to get you those numbers as we head towards the close. >> up next, we've got a trader with a new acronym, for stocks that are giving a much better read on the state of the market. >> yes, he does. >> also ahead, coach, one of the best feperformers today, better than expected earnings and ce omt of the luxury handbag maker will be here with his take on the consumer and you'll be interested to hear where the strength came from in the last quarter. anything worth pursuing requires knowledge,
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mercedes-benz dealer. welcome back. it's been such a difficult month and we've seen early sessions ee vap wait but oil did settle an hour ago and hanging in there with gains and that is helping the broader market. so too were strong earnings this morning. he egs specially 3m a big
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contributor, up more than the s&p, up 1% and nasdaq less than that. one of the other big winners today, weight watchers oprah winfrey's big loss is the company's big gain, up 19%. the stock popping after she tweeted this commercial. >> that's the genius of this program. i lost 26 pounds and i have eaten bread every single day. >> oprah has been on the weight watchers program since october. remember, that's when she took a stake in the company and joined its board. >> has she ever lost any money on anything? >> has she ever lost weight before? >> no that has fluctuated like the stock market. >> her gains seem pretty consistent, her financial gains. >> eric points out factoring in the number of shares that oprah owns of weight watchers if she lost 26 pounds, she gained about $2.4 million for every pound lost.
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that is astounding. >> that's a motivator for you. i love that we're now talking about people who are tweeting commercials. >> low barrier to getting commercials out there. by the way, the fang stocks, facebook, amazon, netflix and google, they are kind of sitting out today's rally, pretty much this year's rally but our next guest says fang, that was so 2015, it's time to highlight a new set of stocks. that would be deutsche bank, union pacific, nabors and general motors, you do the math and figure out what that works out to. >> let's bring in brian kelly for more background to explain the ak nim. >> did you have dung on your mind first then backed fill in. >> i had a lot of time on my
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hands with the snow. >> i'm grateful you didn't come up with sears and halliburton and ibm and target. go ahead with what you've got there. the fang stocks carried the market last year and they are big technology stocks. what do these guys have in common? >> they are all economically sensitive stocks, so the banking, transportation in oil and auto, they are economically sensitive and bellweathers in the industry and they've really traded terribly, kind of like well, you can figure it out what they traded like but they haven't traded well. my point in this when you compare them to fang stocks, one of these group of stocks is correct. the world is either rosy and cheery like the fang stocks think they are or not so cheery like the dung stocks do. between those two, they are telling two completely stories in the market. >> there is a scenario in which
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they can both do well, where the fed comes out and says, don't worry, we're going to support this market and these global conditions and puts the bid so to speak back in there for everybody, right? >> i suppose so, although, i would argue that more qe at this point would probably be a negative thing but we'll see what happens when they do that. i do think over the next six months to a year the fed will start to try to backtrack on their raising rates. now they are going to try to backtrack but the process between here and there say long process. >> i'm surprised you didn't pick an oil stock in some ways. that has been representative of this volatility in the market right now, hasn't it? >> i picked nabors. >> that's right. >> i was trying to come up with an akron nim, exxon didn't fit. >> in a word, is it a demand play or something more to that?
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>> if you listen to what mike jackson said, auto sales are flat, repositioning for the next six months to be troublesome. i'm quite concerned about the auto sector. >> we just heard too there might be some january weather that's going to affect sales. thank you very much. >> my pleasure. >> bk with -- morgan? >> chris christie announcing a bailout plan for troubled atlantic city. this is new legislation that's going to be introduced to bail out the city with the city's finances with a payment in lieu of taxes, pilot plan for the casino industry in exchange new jersey will take on a larger role in atlantic city's finances and the compromise has been reached with city officials include gs ac mayor guardian. and it's happening ahead of an event scheduled by city officials in atlantic city for later today. they were planning to discussion the possibility of chapter 9 bankruptcy for the troubled
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seaside resort. again, getting news that governor chris christie has announced a bailout plan for atlantic city in return for more control, the state having more control over the city's finances, back over to you. >> what exactly are they bailing out? >> that's exactly -- >> the problem is there's so much competition for the gaming industry, that people don't go to atlantic city anymore, and you've got the casinos themselves that are declaring bankruptcy or leaving town or whatever. so what are you going to do to shore things up in that city if gaming just doesn't come back? i don't understand what the -- what they are trying to do here. >> i think that's been the biggest question, when you look at atlantic city, so much of its revenue comes from the gaming industry. we've seen that hemorrhage lose more than 50% over the last handful of years. the city certainly has been trying to turn around and move more into the style of las vegas, becoming more of a conference town and trying to strike out into other industries but one of the biggest things is
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that you've seen the casinos really fight back with the city in terms of property taxes and their assessments there as values have come down. you've also got the unions there. there's a lot of expenses that the city has seen and given the fact that they are on track to actually be physically insolve vent in april. it is really notable. >> chris christie had previously vetoed this now he will support it. you know, their revenue from the casinos dropped in half from 2006. tens and millions of dollars to keep them going. thank you, morgan. >> time for a cnbc news update with sue her rerer ra. >> a report issued saying there are not enough qualified air traffic controllers at the busiest airports including atlanta, chicago, new york, denver, dallas and houston. it takes about three to five years for a trainee to become fully qualified. presidential candidates and
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their backers have spents more than $70 million on ads in iowa. the biggest spender, jeb bush's super pac at $15 million and donald trump spent 3.3 million and hillary clinton spent 9 million followed by bernie sanders at 7.4 million. los angeles clippers basketball star blake griffin has broken his hand after punching a team equipment staffer. the hand injury is expected to keep griffin out for several weeks. character actor abe vigoda has died. he played phil fish in the 1970s tv series barn kney miller. he was 94 years old. >> kelly and bill back to you. >> and the grarveg reflecting the great line he had in the movie the god father, tell mike it was only business.
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thank you very much. abe vigoda. >> nice rally across the board, especially for the industrials frmg the dow up 241 points. >> a leading trader will tell us what he's watching into the close next. >> plus coach shares are soaring on earnings today and the ceo is giving us his reading on the global consumer and where they are tightening wallets. stay tuned.
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less than half an hour to go. on that note mark newton joins me with things to watch. >> we're definitely starting to see encouraging signs of stabilization that makes me think this move up today likely can continue through the fed and probably higher. >> really? the whole decline is likely finished in the near term. you start to see not only do we see the 100 point move off last wednesday to friday. here's a four-hour bar chart since last november. you see this break of this initial down trend, we attempted to pull back a little bit and now starting to move up. what's interesting about this, if we get over 1908 this opens things up to a test of 1990. >> only ten points higher than
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right now. >> not too far at all. 5-1 advance decliners and russell is also outperforming. the relative street index moved to the highest level on a four-hour chart based on recent improvement. >> highest levels of last 52 weeks? >> since this year thus far. there's enough there that we likely can continue on and push up above 1908 and give conviction to the near term we can move higher. >> thank you so much. pleasure. >> mark newton. bill? >> coach making a comeback today and late lixt the stock is up more than 9%. after the handbag maker topped earnings estimates and reported its first quarterly sales rise in ten quarters, joining us now in an exclusive interview is ceo victor luis. as i said earlier, welcome back. this is your first time with us but we used to have your
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predecessor on before and you've gone through a very tough time the last two years. now you're starting a comeback. >> we've been on a journey to transform the brand and we're very pleased with the results we've been showing since that transformation began about two years ago. we've seen our comps here in north america improve by about 20 points. in the last quarter, most significant combined with continued growth in europe, double digit growth in mainland china business and as well very good growth with the most recent acquisition that we've made. >> which we'll talk about. but that growth in china, that caught our attention. counter intuitive to what we've been hearing and seeing about the chinese market and slowdown in the economy over there. >> we're really pleased with what we're seeing with the chinese consumer globally, not just am mainland but more locally. a lot of kpet tofrs have called the fact that growth with chinese consumer has been
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slowing down, we've seen it pick up in europe and as well as japan. that has more than made up for the decrease in tourist flows we were experiencing in hong kong and macao while driving double digit growth in mainland china and it has a lot to do with our unique value proposition, looking for quality at great value and coach is uniquely suited to fitd that need. >> do you have evidence you're taking market share in china? the key differentiator, this is a coach story of success there or a story maybe the macro conditions in china aren't as abad as we figured? >> it has a lot to do as well with some of the anti-gifting policies that the government put into place in general, we see ourselves taking share from the traditional european luxury player and that has a lot to do with our value proposition and we're not as prone to play in the gifting space. >> the stewart whitesman
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acquisition, is that going to be the mo going forward, making other acquisitions in other categories to exploit those areas rather than trying to do it yourself. >> first and foremost, our number one priority is the coach brand and that is the number one area we've been investing, not only towards driving new product but remodeling our store fleet. by the end of this last quarter removedle approximately 250 locations, by the end of june, we will be at 40% of our fleet remodeled in the new concept. so a tremendous amount of our capital is going towards what we believe the number one priority is, which is the coach brand. it was a unique time for us to play in the footwear space where we also see tremendous growth, $27 billion global opportunity. and we could not be happier with the success that we have seen in their business in what was in essence, warm holiday period, they were outperforming in the boot sector. >> and the goal is to get
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positive sales growth by the end of this year. i wonder for success longer term, is it enough to reinvest in the store and stream line them down and add brands like that or are you going to have to do something larger and more innovative? whether it's something that reflects at thleisure category or more technology? is it we have to stick to improving the core business and play to our strengths and that's how we improve? >> we have tremendous confidence in the handbag and accessory space, it's a $41 billion global opportunity. we have a tiny share of it. we still believe there's a shift happening from apparel into handbags and accessories and still the number one investment that women especially and increasingly men make in their wardrobe. so we're very focused on capturing that with the coach brand and help the whitesman brand play in addition toward brands help us in the footwear space. in terms of consumer and innovation in general, we
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believe the other opportunity for us is what we can do with driving the brand through marketing, which we're very focused on. >> victor luis, ceo of coach on a pretty good day for the stock. thanks for joining us. >> pleasure to be with you. >> we've got about 17 minutes left in the trading session here and the industrial average up 279 points. we're holding all those gains. it is the best performer today and i don't know, i guess it's not ironic but it is interesting it's an industrial stock leading the way today. >> and the nasdaq is only up 1% and despite today's uptick in oil, companies in the sector are still feeling the pain. we'll have more on who that is next. >> tech moguls ee lon musk and jefs besos on the front lines for space travel and nas is a is returning with a familiar need to take missions to deep space as well. e*trade is all about seizing opportunity. so i'm going to take this opportunity to go off script. so if i wanna go to jersey
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pairing payroll or conserving dividends, that's the challenge with companies across the oil patch. morgan? >> energy prices may have crashed but many companies are paying the same dividends at
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$100 a barrel. even if they have to slash jobs to do. royal dutch shell would layoff workers as it merges with bg group and maintain its payout this year. bp and exxon-mobil and chevron have taken similar steps and analysts expect that to continue at least for now. halliburton laying oftens and thousands more workers and logging charges to do so as they brace for another challenging year but payouts are intact and announcing a $10 million stock buyback program. hess cutting 40% this year but no change in dividend payouts is expected. some companies have been hit especially hard and have been forced to reduce or suspend payouts and those includes kinder morgan, marathon oil and actually free port which laid out further plans to reduce debt by 5 to $10 billion by selling
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assets. back over to you. >> enough for a rally today. >> art cashin just stopped by. why is he still wearing his hat? >> it is chilly but he's tougher than i am. >> 600 million to buy going into the close. so there was a bias to the buy said. we heard about and that's the number that they are looking at. we'll see if it has any impact. >> now the dow is up 270. s&p is up 25 and nasdaq up 45 and the latest in the wireless wars is up next. it's not just apple. at&t is out with earnings after the bell. we'll tell you what to watch for next. rrow starts today. all across the state the economy is growing, with creative new business incentives, the lowest taxes in decades, and university partnerships, attracting the talent and companies of tomorrow. like in utica, where a new kind of workforce is being trained. and in albany, the nanotechnology capital of the world.
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a lot of news for mobile carriers right now. sprint reporting enkz this morning and at&t ast close tonight. >> let's get to julia with a preview on what to look for. >> today it's all about the number of new mobile subscribers that these companies have, sprint shares skyrocketing about 20% today on a narrower than expected loss for fiscal third quarter and addition of 366,000 phone subscribers and improvement on the result sprint announced in september. bolstered by a promotion for
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customers switching from other carriers reported smaller than expected loss of 21 cents per share and didn't miss on revenue estimates. sprint ceo will be on squawk alley tomorrow in an exclusive interview. at&t, shares are trading higher today even though analysts raised concerns about a drop in its subscriber numbers in thele company makes its prices more competitive. at&t earnings per share projected to grow 15% to 63 cents while revenues projected to grow 24% to $42.7 billion. this is first earnings report in which at&t will include directv's entire quarter. at&t's biggest rival, verizon is trading higher today, it is up 8% since it reported better than expected earnings results on thursday. i'll be back to break down at&t numbers after the bell. back over to you. >> we look forward to that. >> virtue financial, nice rally
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today. >> it certainly is. we've got the perfect storm this morning. we had -- it looked l eed ugly what was going on with china but lock step with oil, good news about a possible production cut and get a 5% more, that is just retracement of the 5% loss yesterday. it's basically a wash. >> who are you and what have you done with matt? are you buying this rally? >> not a buyer yet. i still need some more upside. we've only retraced 1.5 percentage points, only down 7 percentage points for a month. we have too much news out tomorrow. the fed will give us the road map what we're going to need to see tomorrow. why would you invest in something like that today. >> apple earnings out today and stock is flat. i think that's the way the market will react. >> what do you think we're setting up for expectationwise for the fed tomorrow? >> they are in a dicey spot. but i don't think if they are
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data dependent as they said they are, they are going to have to take a hard look what's going on around the world. >> markets are probably backing off. >> we're looking at not going to see the immediate rate hike we thought of or maybe hoped for in december because the economy was doing so well. maybe we're backing off and seeing that rally today. >> see you later, thanks. we'll come back with closing countdown in just a moment. >> then more earnings right after the bell. stay with us.
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coming up, courtney joins me for the close. the correlation you're seeing, a lot of different markets here. i want to show this two-day chart of the dow, yesterday and today. keep an eye on this trading pattern that late sell-off yesterday and then we off to the races today and held on to those gains. let's show you wti crude oil the last two days and watch the trading pattern on that one. a sell-off earlier then the takeoff and it took the stocks with it today a gain of 3% right now. finally the 10-year yield that was the forgotten indicator these days. there's the 10-year with the sell-off and then the comeback today. the other thing we're not really talk a whole lot about but will
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tomorrow, the federal reserve. >> federal reserve, exactly. this morning when we woke up we saw what happened overseas in china, another big sell-off but the markets shrugged it off. how were we able to shrug off those numbers and what we saw overseas? it's a phenomenon that the day before you have this fmoc meeting, equities tend to move higher almost every single time. that's very interesting and interesting way to play the day before. like you said we're totally coupled with oil prices. >> what they say tomorrow and we see the step move and then figure out whether this is good or bad after that. that's the big question. apple's report tonight is going to be a big indicator as well. >> we have 23 s&p companies reporting today. >> thanks, courtney, i love feeling tall, see you later. we're going out with a gain just off the highs of session, up 282
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points on the industrial average. stay tuned. here they come, apple, at&t and u.s. steel among the companies reporting earnings coming up on the second hour of "closing bell" see you tomorrow. [ bell ringing ] [ applause ] welcome to "closing bell", i'm kelly evans and we have a rally day on wall street. the dow jones industrial average going out with a gain of 283 points after being up 300 at one point today. the s&p 500 adding closing up 1.4% and nasdaq off 49 points for and technology broadly was and really the industrials doing strongly there. the metals, oil names all of those rallying today. and it's going to be a pretty busy hours for earnings, apple,
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at&t and u.s. steel and we'll bring you all of the numbers as soon as they are out and dan niles will join us to give us his take on apple's results. he was shorting the name over the last couple of months. >> we have mike santoli and for more on fast money trader guy adomest adommy. there was an x theme, maybe we'll call it the x men, fsc and free port comes out, a call analysts say good luck but shares up 7% and u.s. steel we mentioned up 33%. >> beaten down, old economy names that people had basically said look the global growth story is not cooperating, heavily shorted. then when you had oil trading firm, the rest of the market gets a lift and people look for turnabout situations where you had stuff maybe had priced in a
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lot of bad news, 3m earnings were well received, other names said maybe things are not falling off a cliff and that bring the lift into the market. held most of the gains positive for sure although a lot of story lines have been one day affairs this year. we're still kind of knocking around just above the lows. >> by the way, we have at&t earnings, it looks like they are the first out of the gate after hours. the bottom line number coming through at 63 cents which looks like it's matching consensus. revenues, this according to the company now, 4 2.1 billion, up 22% year on year. we'll get a little more detail on this for you in just a moment. john, the names, sprint included, why was it so significant today? >> the news wasn't as bad as people expected at sprint. overall that doesn't change their overall position in the market, they still don't have a
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network the strength of at&t or verizon. they are still making these cuts trying to get that business turned around but it's not as bad as people had thought. that was a theme throughout tech today. >> at&t, 218 billion. >> sprint doesn't have the capital strublgt tour perhaps to compete long term. a lot of debt, the debt does not trade anywhere near par value. obviously another heavily shorted name that got a reprieve today. >> that's a fair point. at&t earnings, first quarter with the directv acquisition, let's get more from julia. >> that's right, at&t earnings right in line with expectations, 63 cents per share, this exactly what wall street analysts had been expecting, revenue on other hand came in lighter than expected and the company reporting $42.1 billion in revenue, expectations had been for $42.75 billion. there you see the stock unchanged right now. looking at a couple of other key metrics here, the company saying
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it had 2.8 million total wireless net adds and wall street looking for addition of 2.3 million. it is better than expected. also saying its post paid turn rate is 1.18%. that's pretty much right in line with expectation. now in terms of guidance, 2016 guidance, the company expects double digit consolidated revenue growth and mid single digit range or better. we're going to continue to dig through this report and get back to you with more details. >> thank you. those shares do look like they dip lower on the revenue at first. what's your take? >> the revenue misses it gets disappointing but it's been what they've been saying last few quarters, you look at at&t, here's a stock been in this 33 to $38 range for the last two and a half to three years. now we find ourselves smack in the middle. i don't think you're going to
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get rich buying here for a trade. i don't think you're going to get wiped out either. to me it's sort of a nonstarter at 35 bucks. you sell it at $38. >> 214 u.s. directsv adds, pushing this as a channel to get back involved with at&t, unlimited data if you sign up for that as well. >> we'll see if they stick to unlimited data, a lot dip their toe back in and have to back out, people thought unlimited meant unlimited. but what they are trying broadly to do, get that spend per ugser higher, if you're willing to kick in the extra 50 bucks for directv, not as worried about you taking advantage, i think a couple of numbers interesting here, the mobility net adds number, i want to make sure it's apples to apples as far as expectations. the u.s. number seems to line up with the number that the street was looking for. it is just about where people were looking for it to be, it's
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1.18. people wanted 1.17. it was 1.16 last quarter. that shows a relatively healthy environment for them especially since they are trying to keep the more profitable customer and be careful to maybe let the less profitable go. >> and those share, guy rating down about half a percent. >> not too much of a surprise. these companies are handing back small portions of their customer base back and forth and it looks like at&t managed to retain most of what it needed to. >> guy, we look back on the market today as we wait for the rest of the earnings to come in. u.s. steel was a really interesting mover. what do you make of the metals showing some strength and that big move ahead of its results and the industrials today as well? >> i think mike spoke to it earlier. these are heavily shorted names and people are trying to take profits or get out while the getting is good. in other words, listen, we've had a tremendous run on the downside, let's not be pigs and take a shot.
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i think free port yes, it rallied but the debt didn't necessarily say that it should be rallying. i think you need with companies like that, you need to look at the debt. interesting day today. you know what, yesterday i talked about erngsz and revenue growth. you got at triple m. that was a tremendous quarter and that set us on our way. you had oil higher, gold higher, bond market was higher for a while, effectively unchanged and should be lower and wasn't and stock market higher. all sort of trading as if somebody knows something about what the fed is going to say tomorrow. which makes no sense to me, that's -- i don't think they'll say a damned thing frankly. >> it's almost going to be a shock test people can read into it, some sort of statement even if it flexes at financial dollar, this is it, this means that the easing -- they are tilting back towards easing. >> maybe you might be spot on
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with that. that is to me today's action clearly spoke to exactly what you were just saying today, just now, because if you look over, you talked about it earlier, look overnight in the asian markets and they were disastrous. the other thing interesting as well, a nice day in crude oil, up 3.5. but the volatility index was up on day. still north of 60, which is historically very elevated levels. again, a lot of weird things going on. i'm not suggesting i know what's happening. but you look at the things in ago agree gat and start to scratch your head. >> or understand this is a market which is bidding up expectations maybe for a fed to deliver which we don't know if it will. before we read too much to what happened today, there's that to take into account and i heard people say if the fed changes back towards easing, they expect a 50% pop. that's why -- >> any of these stocks that seem to be priced for me restrictive
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liquidity conditions and those are at the whip end of it, you would see that kind of move. keep in mind, 8% down year to date. the year is only three and a half weeks old. >> people are return turn the b already. >> do we make anything more broadly, about the weakness in technology and other parts of the market? >> there are certain technology that were stronger, sea gate was up 5%. western digital was higher, network appliance was higher. it wasn't technology overall that was just down. also the recent ipo names that have been suffering like etsy and grub hub were sharply higher today. but names like apple, not so much. up maybe a half percent. twitter unloved. that was down. it was all over the board and it's your bigger dow component names that didn't do as well. >> on that point let's get more
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from at&t earnings release. >> i want to pull out two things that were in the release here. ceo randall steven son pointing to mexico as a key area of growth saying they are seeing terrific results from the expansion to the mext can mobile market and in terms of the forecast to next quarter, they expect stable consolidated margins with a ramp in mexico investment. i also want to point out what's going on with the video market here, there's so much attention to the potential breaking down of the tv bundle. the company saying that throughout the year they plan to launch a variety of new video entertainment packages that give customers even more choices and that implies more potentially skinny bundles. and in the company's investor briefing, which is what we'll hear more about on pt earnings call starting in about 20 minutes, they reveal that total video subscribeds down slightly, 214 u.s. satellite subscriberers and u-verse declined 240,000.
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this is as the company focuses on profitability and increasingly emphasize satellite sales they ended with 25.4 million subscribeds, i'm sure we'll hear more about that on the earnings call. back over to you. >> before we let you go, is this area one place where people can hide amitd the market volt tilt. can you look at these names and say, cash flow, dividend yield, you know and hopefully to outright recession? >> it's interesting you use that terminology. i respect can people hide. this is not an environment people should be hiding. it's one where they should be looking at things and trying to figure out where the opportunity is. yes, you can buy at&t at 35.25 and you won't get blown out of the water but it won't give you 25% over the next three months original in my opinion. you look at names like boeing, for example, after that news release, i think a week or so ago, scott wapener was on the
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desk when they talked about their shipping planes and rach et back deliveries on the planes and stock held a level we last saw a couple of years ago and bounced. what's my point? there are tremendous opportunities here. yes, to answer your question, you can hide in at&t but life ain't about hiding, you know what i'm saying? >> i do. don't go anywhere, don't hide. we want your thoughts, ibm and the details. >> mark beelz has been name to ibm's board. the ibm chairman in the press release said they are polileasee will join the board of directors. in an industry where technology has driven innovation. ibm shares seem to be unchanged after hours for now. >> guy, what do you make of this one? >> i don't make a lot. maybe it's a first step in the right direction. i'll say this, i'm come on with
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you for a long time and tried to explain how ibm has become a simple math problem. what's the right multiple for a company with decelerating growth, 8.5 and 9.5. you talk about 14.5, earnings and get the stock price we subsequently traded down to. i think they need to do something, and need to do something bold. think about ibm and mike can speak to this. this if they didn't spend the money buying back stock and put it towards something like a sales force.com for example, think about the return they would be getting there. ibm old technology, is it a level that's interesting now? maybe, but until they prove themselves the next quarter, which is a couple of months from now, it's still a no touch. >> i don't know, are we going to hear ibm is going to make a car along with apple? >> i can't get over -- how times change. added the ceo of ford to the board. that's exciting, kreds it to the
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auto industry for the turn around but the fact that ibm bringing in an auto ceo to the board and citing turnaround, my, my, interesting. >> thanks you, guys. guy adami thank you as always. next hour they will have the latest from apple's earnings call and reaction from colingillis as well. >> first hillary clinton took aim at drug companies and now donald trump says medicare should be able to negotiate drug prices, are drug stocks in trouble no nater who wins the white house? and apple is expected to report the slowest iphone sales growth ever. we'll have instant anl list coming up and hear from dan miles, shorting apple shares up until yesterday. you're watching cnbc, first in business worldwide.
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♪ ♪ it was always just a hobby. something you did for fun. until the day it became something much more. and that is why you invest. the best returns aren't just measured in dollars. ♪
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the leading candidates in the presidential race seem to be attacking drug companies as much as they are attacking one another. meg has lts latest. >> it's mostly been democrats attacking drug prices and now we might be hearing it from the leading republican front-runner.
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take a listen to the comments donald trump made last night. >> they say 300 billion could be saved if we bid them out. we don't do it. why? because they are the drug companies, folks. you take a look at the drug companies, take a look at johnson & johnson and take a look at pfizer, leaving us and we're not doing anything. by the way, don't dare negotiate drugs. excuse me? >> so what trump seems to be talking about there is the ability for medicare to negotiate on drug prices. this is something that hillary clinton has proposed and something bernie sanders proposed but republican candidates have been really against this calling it price controls and there's a question here of is trump a dopting this generally seem to be democratic principle here. and this is something that the drug industry is afraid of. hillary clinton tweeting out in september her price gouging tweet that sent the knanasdaq d 5% in one morning.
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trump was also talking about tax inversions and mentioned johnson & johnson. they haven't done a tax aversion and pfizer is trying to do one right now. $300 billion in savings, it's not clear where that number comes froo either and bernie sanders put out number of 200 billion to 500 billion in a decade if medicare can negotiate prices. >> one thing you can give trump credit for, having some kind of sense of what people are outraged about, whether democrat or republican. it seems like maybe this issue in general plays and a lot of people have said it makes sense on paper for medicare to have a larger roll. right now it's the insurers themselves who will negotiate one by one with the drug companies. >> exactly. it's done in a private system. the drug industry argues that by allowing medicare to negotiate that will squash innovation. >> wouldn't you think bioteches would react much more to trump saying this than hillary clinton? you kind of expect it out of a democrat but out of the republican front-runner at this stage, you might have thought they would freak out. >> you would think so. i've been contacting about this
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to gauge whether they are worried about it. i saw the headline and thought that's big. and nobody really believes that trump is going to do this if he gets elected or is going to get elected. another one said this is scary because if the republicans fall in line behind him on this, that could spell more trouble. >> now we have to overlay the biotech index with donald trul p's likelied in of gaining the nomination. thank you very much for now. >> musk and besos, nasa hiring a major rocket company. and will apple beat estimates despite very low iphone sales expectations. those results are just minutes away.
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we begin here with around earnings alert. shows of vm wear after the software company reported better than expected earnings, 1.26 adjusted versus 1.25 and revenue coming higher than analyst estimate and shares did move lower on reports that the company was cutting staff but the stock is higher after hours. take a look at the one year chart and the stock is down 37% and stock has been moving lower since dell announced its plans to buy emc. >> john, quick response? >> the cfo is leaving and the reason why that hasn't hit the stock after hours as it normally
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would, they've appointed zain roe as the new cfo and executive vrpt, you recognize his name from apple and united and continental airlines. this along with the fact that license revenue came in at 825 million when it was expected to be at 817. that shows strength and yes, it's down quite a bit since the dell announcement. >> those shares up more than 4%. nasa has big plans to go to mars and going to get there with the most power flg rocket ever and help from a company a leader in the skies. jane wells has more. >> boeing announces earnings tomorrow but today we're looking at the biggest job at least in terms of physical size. thsz animation of the new rocket that boeing is helping to build for nasa, the space launch system sls, most powerful rocket ever which is going to cost billions of dollars but if all goes according to plan it will eventually take humans to mars. >> so 8.5 million pounds of
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thrust. that's 31 747s at full power. >> what you're looking at is the largest welding system in the world. >> to build the rocket, boeing is using new welding technology to make it lighter. it's welding the first 200 tall core vertically instead of horizontally and the core will not be painted to save on weight. first test flight slated for 2018. maned flight may be 2021 and possibly a trip to mars meaning some fifth grader could be the first american on the red planet and very popular on cnbc.com. why nasa has gone this traditional route with boeing instead of spacex, again on cnbc.com. >> that's exactly what i was going to ask. i shall go and find. thank you so much. jane wells. apple earnings just moments away. we're going to have complete coverage of the potentially market moving results in just a
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moment. and dan niles, shorting apple shares up until yesterday will join us, does he think the stock is starting to look attractive? we'll ask him coming up on "the closing bell." it's hard to find time to keep up on my shows.
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in case you missed it, it was a big rally day, dow up 280 points and nasdaq was the lag ard at 49 points, we're waiting on apple's results due out any moment now. anything here concernwise about apple, how to do with tech lagging today? >> i would say not really. i think it was about laggards leading today and the big growth stock in the nasdaq did not participate. apple has been sticking around the $100 mark for a while. >> you were saying since 2012. >> that's where it traded in late 2012 and had the ends of its huge run. >> it went down -- >> up 40% and now it's back here. i guess the question is, where does it go from here? one particular data point to watch is going to be inventory levels. last year in the march quarter, they built ip ven tri by 1 million iphone units so the
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question here, the guidance is going to reflect wherever they are in inventory. if they ended the holiday quarter within their target inventory range, they've got a 1 million unit iphone head wind. you need to factor that in. >> and sounds like much of the world is concerned about what's happening in growth in china and we'll watch for commentary along with tim cook to see if there's any change in rhetoric about the iphone sales that are so important. apple shares falling after hours. josh? >> let's get you those numbers, apple reporting 328 on 75.9 billion. the street was looking for 323 on 76.5 billion. apple pointing out the real currency challenges saying currency had a $5 billion impact on the top line. gross margin clocking in at 40.1%. turning to products here, iphone
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shipments, 74.8 million, analysts had modeled more like 75.5 million. ipads 16.1 million versus an expectation of 17.9. other products revenue, now includes the watch, $4.4 billion and finally the mac at 5.3 million units. apple also breaking out services here, music and pay services $31 billion business now and growing 24% in q1. apple also mentions who's using those services and apple releases new data there, more than 1 billion active apple devices now. turning to guidance, q2 revenue guide of 50 to 53 billion and street was looking for 55.6 billion. let me quickly tell you about the conversation i just had with tim cook who walked me through this quarter. on iphone, telling me the march quarter q2 will be the toughest
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compare we have all year. but he made the point that in his opinion his iphone franchise is still a healthy franchise and solid franchise, the rate of anroid switchers was the highest they've ever seen. 16% of the install base on older models, so 4s and 5s. that implies a lot of potential upgrade head room and greater china revenue up 14% year over year but 15% sequentially, telling me there is softness in the short term, acknowledged some volatility but remain confident there in china and investing accordingly. overall, kelly, tim cook summarizing the quarter this way, a lot of great things happening in a turbulent environment. back to you. >> josh, thank you very much. josh, could you repeat what he said about china's revenue numbers year on year, up 50% sequentially, how much up on the year? >> yes, a greater china revenue,
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this is a big point for cook, very confident, bullish about china, greater china revenue up 14% year over year about 50% sequentially. short term softness but apple continues to invest there accordingly. >> you said 5-0 or 1-5% sequentially? >> 50%, nearly 50%. >> thank you very much. josh. our josh lop lip ton as we look at shares, they are still a little under pressure. joining us christine short and joining us from recode. glad to have everybody on board. lance, we'll begin with you, some immediate reaction? >> better on the phones that i even expected, iphone 6s and plus were big hit coming out of the holiday season. it's the same number we had a year ago with the last round of the big iphone 6 and 6 plus
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updates. i'm also really pleased to see we finally understand a little bit more how apple music is doing as a business and subscription business. you wants to know it's doing well because it's going to be annuities and keep continuing. i thought that was impressive and i believe he said apple watch, i thought he said that's a 4 -- last time i heard about numbers it was a $1 billion business now it's a $4.4 billion business. >> that's the category that includes apple watch. >> i don't know that because they didn't get the number -- >> i'm looking at it. >> so we still don't know the number of watches sold. also by the way, the ipad numbers i need to dig into more, we have 16.1 million units but we want to know how the ipad pro impacted the overall picture for that and how businesses responded to that and the smart keyboard and pencil. >> big picture, christine, how do the results look? >> i think they are better than we were expecting. you have mixed results, we have
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a slice miss on revenues but i would agree with advance, the iphone number came in with tim cook said little higher. remember this is the first quarter that's fully involving the the 6s and 6 s plus. what i thought was interesting about the estimates, the disburgs, more than we've seen, crowding around the upside and downside. they are bullish on it however with all the of the warnings we got from the suppliers, it spooked a lot of people. estimates dropped. >> and as we watch apple shares a little bit higher now, christine brings up a good point. a lot of suppliers seem to indicate there were more pressures in terms of how well the iphone was actually selling. what do you think about the numbers? >> i think the apple stock price had been baked in with these expectation. it's still a miss in my opinion. if the iphone shipments didn't quite hit the estimate -- not bad, it's not that far off and
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as others pointed out it was a mixed bag in terms of missing on sales and i thought what was interesting they are talking a bit more about some of theer media sales with the apple music stuff. i think what that signals to me, guess what, guys, iphone sales might be slowing down or growth might be slowing down, we need to pump more revenue out of each iphone user so that's going to come through music services or other media services, that's a signal we should see more of that or ask for more of that going forward. >> john, mike? >> the iphone number is exactly what you would expect when tim cook promised that it wouldn't be down year over year. my question is, what did they have to do with inventory if anything to get there? did they have to really build channel inventory to the top of their target range? the ipad number is pretty terrible. unit wise it's down 25% year over year. revenue wise down 21%. the ipad pro had no discernible impact and that's what i
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expected. the thing was priced like a high end laptop. this isn't any kind of bargain. and you could argue that anyway -- functionalitiwise it didn't factor in. average selling price of iphone, 690 bucks, that's a bright spot. they are hit by currency but able to sell more expensive phones in this environment when other smartphone makers are actually in the tank. this is good. >> here's take from one analyst who follows the stock, overall in line but good enough but china growth poor and guess timt equals rubbish watch sales. >> everybody is kind of suggesting it's a slice miss on the formal estimates but market was geared up for more downside. a lot can happen over the course of the call and everything else but the reflex moves seems to be a little relief bounce, that tells you that people were looking for even worse. >> fair enough. >> on the ipad pro, i think the expectations have to be recalibrated based on what you
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said that this is not the ipad for the masses. this is very specifically after the business market and they tend to move super slow on integrating this kind of technology with the businesses and i know this is really all apple wants. if tim cook did not mention it, it's not mentioned in any way here, then it's probably not freely at all where they want it to be. it's a big question for them for the rest of the year, how they get people excited, businesses in particular about this gigantic ipad and the products that go with it because it's a big part of their strategy for expanding u.s. business. >> speaking of strategy, a cash hoard of $216 billion, ed lee, what are they going to do with that money? >> they can't repatriate a lot of that. there's a big tax bill coming. they are going to sit on it and maybe do more dividends, share buybacks and things that wall street likes. i'm still waiting for the next big product. we're talking about the ipad pro, wasn't so gray in terms of
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what they delivered. what's the next big product? we haven't seen that and want to know more about it. it can't continue to just be an iphone company going forward. >> we were debating the significance of the move that the car guy, ibm putting mark fields on the board. is that a big deal? we tend to dismiss it but we are looking for the next killinger category. >> apple had iphone guys leave in the past. now a google and continue to make money off the iphone. that's a product they are actually shipping. this car thing, i'm not yet convinced they are actually sure they are going to put a car on the road. they could be sure that the car is an area they want to play and got these billions of dollars in the bank and can afford to biltd a car and be ready to sell it and decide not to do it but have the knowledge what it takes. on the march quarter, it sounds from what josh lip ton was saying that tim cook is all about saying in the guidance he gave, the iphone number is going
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to be lower march year over year. >> i would pay attention to that. >> shrinking iphone sales but average revenue per iphone is higher and they are emphasizing services. >> and maybe making it more affordable, how significant is this march discussion? >> i would take the q2 guidance seriously. usually they give spot on guidance early in the products cycle they tend to sand bag a bit. it was lower than what analysts were expecting. if you look what the best tech analysts were saying about supplier warnings, it's not going to impact q1, that will be dragged into q2 even the june quarter until we hear about the new product. bif the june quarter maybe we'll hear about the iphone 7, something for people to get excited about. we've seen q2 estimates fall faster than the q1, over the last three months, both top and bottom line have dropped by 10%. >> if i think if you want to understand what apple is going to do with apple car, look at apple tv.
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the tv that never arrived. they really decided to put all of their eggs inside a device, which i believe is wrapped into probably the ipad shipment number because the apple watch shipment numbers. >> what's also interesting what we have to watch for the language they use in this call because last year at this time they were talking about 2015 as being a really big year for products. are they going to say something like that or are they basically be this is a tick tok year and we're going to focus on the products we have out there and make them better and maybe introduce an iphone 5 se but nothing that blows the doors off? >> we'll have more on apple coming up but christine short, ed lee, lance, really appreciate the context from everybody. apple shares hugging $100 mark, slightly in the green now. we'll have more with dan niles joining us next with his take. remember he closed that apple
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apple just out with its earnings, shares slightly higher, back in september dan niles outlined his key concerns about the company in our article on cnbc.com. since then the stock is down 8% and dan joins us on the phone. can we begin with your thoughts on the quarter? >> sure, i mean the quarter is about as bad as i figured it
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would be in terms of guidance, obviously the quarter itself isn't the problem. they missed the revenues which everybody was expecting. the real issue is when you look at the forward guidance, guiding revenues to 51.5 billion at the midpoint and right now people are at 55.5 billion. this would be a guide of down 11% year over year. and people are looking for about 4. it just speaks to the fact that business continues to decelerate for the company and i don't think that's something that's going to change any time soon. >> it also -- if they had hit the midpoint that would be first quarterly drop i think since 2003, for the company. so what we're talking about here is actually a huge sea change from the apple we've known to the company it is today. a victim of its own success. what would it take for you to buy shares here? >> quite honestly it would be challenging to get me to buy the shares the biggest thing they
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could do, figure out how to monday ties the 800 million credit cards on file for itunes, the big one we've been waiting for, for them to launch a tv service. the problem with that as things are developing, that in the past apple has been able to drive device sales so whether it's the ipod or iphone, to go along with services that they provided like itunes. going forward, you know, the question will be can they actually drive device sales what they service because now a lot of services are apps. if you think of netflix, for example, that app is sitting on my sony playstation 3 or amazon app is on that. will apple be able to drive device sales which by the way that's a big question because they are having trouble as we know negotiating to get the big networks to go on to a skinny bundle for them. we still have issues even if they get that up to some degree. >> i'm no valuation expert, obviously you are, doesn't look to me apple is priced right now
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like a strong growth stock anyway. my question is, let's suppose that the iphone is largely mature, we see single digit growth for a while from here. but the average selling prices are trending higher and do have these multibillion dollar ancillary revenues in services attached to the iphone that seem to be growing at the healthy clip. at what point pricewise are you interested, 80 bucks? >> here's the thing, i'll take issue with what you said first, it's a value stock. that's supposes you know what earnings are supposed to be. i remember having this argument on not with you but i remember back on this discussion i don't know, a couple of years ago where it's like the stock looks cheap. yeah but the earnings are probably worse than you think. with apple, the only thing you know for sure, they missed the april quarter for their iphone.
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they came in light on this quarter -- sorry missed june. and so they missed the june quarter iphone expectations, excuse me. and they came in light on september by a little bit and they are a little bit light for the current quarter and forward numbers are too high because they just guided them down. so that's the first thing, is that estimates for iphone sales have been coming down consistently and by the way, it's not just for them but for the smartphone market. to assume it is a value stock, you to have some confidence in the forward numbers and things are decelerating pretty quickly and argument i disagree as well, asps had been going up year over year on the iphone, 18% or so in june, 11%, if i've done this math quickly right in september and actually if i see this properly, roughly flat year over year. >> the sixth single has been good to them in average selling
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prices but i'm saying the popular wisdom, with samsung and big phones, apple will sacrifice pricing and margin or look how they are cheaply selling phones and in trouble now. you make the blackberry comparison, but the corps thesis has been sustained. assuming that continues because that seems the safer assumption since the goliaths supposed to slay them up to this point haven't. if they do continue to grow slowly and add this service and software and accessories revenue, then what's the value of that company? >> but this is what i'm telling you, i agree with that assumption because you can't have unit growth and these asps because the market is slowing down. you can say this is great because they kept the asps up but the unit growth is coming in
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low. you have to pick. the other thing which you're for getting on margins, right now component prices for dram, disk drive, chips, you name it, have been absolutely plummeting. they've been continue to keep t margins high as the components underneath it have been dropping rapidly. that's probably running out of a lot of room coming up in the next quarter or so, so at that point when you don't have that big offset of component price drops, then i think you're more likely to see margin pressure. >> okay. >> because you're not seeing the high-end phone selling. so that's helped to your point which is completely true. they have been able to hold margins until now, but you have to remember because all the other component prices have been dropping very rapidly. >> dan, we have to go. so just to close the thought, you were short the company for a couple of months until yesterday, correct? >> no, we've been short it since the april quarter when they they reported when the stock was at 130, trading around that, but in general we've had a negative position on it.
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we obviously wrote about it in september. the only reason i covered this short is you would have had to have been living under a rock not to know that the quarter wasn't going to be bad. >> right. >> so our view was, you know, we have made a lot of money. no need to push it right here. we've got other things, you know, we dislike even more at these levels. >> feel free to name names. >> no. >> okay. >> we'll do that on another interview. >> sounds good. thanks for joining us. >> all right. take care. >> dan niles from apple one capital partners. an earnings alert on u.s. steel, another one we're waiting for. morgan brennan has the numbers. morgan. >> reporter: u.s. steel beating estimates though keep in mind these are still rough numbers reporting an adjusted loss of 23 cents per share. that's excluding a are $600 million tax provice, revenue of $2.5 billion, better than estimates of 2.5 billion.
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the company also saying that are -- also say that for 2016 adjusted ebitda should come in about flat. we're taking a look at shares of u.s. steel. down 8%, almost 9% in after hours, but also on a total -- on an unrelated note, take a look at api crude oil inventories. those are just out. api reporting a weekly build of 11.4 million barrels. that's much larger than the 1.63 million that had been expected. take a look at wti. that is turning lower on the heels of that api report in after hours. back over to you. >> morgue answer, thank you. you know, again, this is actually the mirror image of the trading activity that we saw today. u.s. steel now down giving up much of its gain and wti crude now also giving up much of its gains and more earnings coverage coming up, plus news on a big bank buyback. stay with us. f a control... enthusiast.
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welcome back. we have a news alert on wells fargo. seema mody, what's happening? >> wells fargo announcing an increase to its stock buyback plan by an additional 350 million shares which at today's closing price comes out to approximately $17 billion.
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kelly. >> $17 billion. interesting the shares aren't moving more on that. >> obviously it's an incremental positive. wells fargo is not one of the banks trading below book value so a buyback is right automatically to the bottom line. it's good news that they are allowed to do it, right in the big banks have to ask permission to return capital so it's an incremental positive but that's already been the great outperformer of the large banks already. >> fair enough. turn back to apple. reporting earnings a while ago. shares fluctuating in negative territory by a quarter percent. earnings and conference calls start in just a couple of minutes. what to listen for next. pitch you investment opportunities. i've got a fantastic deal for you- gold! with the right pool of investors, there's a lot of money to be made. but first, investors must ask the right questions and use the smartcheck challenge to make the right decisions. you're not even registered; i'm done with you! i can...i can... savvy investors check their financial pro's background by visiting smartcheck.gov
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tomorrow, big numbers for sprint. so why is the telecom titan making big cuts in the next big move for ceo and for investors "quack alley" at 11:00 eastern cnbc. welcome back. momentarily apple's conference call will begin, shares down by a third of a percent. what do you guys think will be the immediate focus for some of the investors' immediate attention? >> well, obviously whatever color they can give on china and obviously the outlook for china. obviously what we want to hear, and then we already got the guidance on what they expect out of the coming quarter in terms of units. you know, i think people have to kind of assimilate to what apple is right now, and i think honestly the market got here first and that's why the stock is not really getting hit on what i think is a net miss. >> right? >> jon? >> i thought the numbers were not as bad as dan niles thinks
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they are. >> he said it is a like r.i.m. or blackberry. >> nobody has beaten apple. apple might be the victim of some headwinds just in general, currency being one of them. i expect to hear them talk a lot on that call. >> that does it for us on "closing bell." "fast money" next. "fast money" begins now, back live from the nasdaq market site overlooking "new york times" times square. tonight on "fast" there is one stock that's under five bucks that could be signaling the all clear in the economy. we'll tell you what that is, plus what its performance could mean for the markets? plus, check out shares of netflix falling despite today's huge real. could there be something fundamentally wrong with america's favorite media stock? we'll explain. starting with the biggest story happening right now in corporate america and that, of course, would be apple. earnings beating expectations an revenue iphone sales disappointing. the conference call just about to get under way and the stock

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