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tv   Closing Bell  CNBC  May 1, 2018 3:00pm-5:00pm EDT

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stock. >> look at the intraday charts, a bigger leg lower in the last few minutes. facebook went positive for a while, not as meaningful in revenue. >> ones to watch, afterpple hig as well. >> thank you for watching. >> closing bell starts right now. it's been a volatile day for stocks with one big exception, technology, which is on the rise >> i'm bob pisani on the floor of the new york stock exchange, what's to blame for the rally's pause? >> i'm steve leisman, something about stocks we have not seen in a long time. >> i'm josh lipton as apple is set to release its quarterly report, it's likely to move the stock. >> i'm kelly evans, those stories and big news on twitter and facebook and a full slate of earnings as the "closing bell" starts right now
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welcome to the "closing bell", everybody, we have a critical check on the markets in the final hour of trade, dow down 112 points here, but s&p a moment ago turned positive, slee slightly negative. the russell up a third percent today. we go to bob for more on what's driving the markets right now, bob? >> and, wilf, stocks are facing a trifecta of important issues coming to the floor today. number one, the argument we're essentially at peak earnings, a higher earnings are factored into the market. number two problem, slower global growth. this is hotly debated, but closer growth seems to be the montra right now, and, finally, rates higher put the three together, it's a potent stew for the markets to deal with. today's ism, the construction spending report, unfortunately, played into the hands of the bears on the slower growth, higher inflation argument. first, the ism itself below consensus, but strong. new orders lower, export owners
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lower, trade issues coming to the floor there, construction spending also lower. there's slow growth. slow growth, but slower, and inflation issue. ism prices paid seven year high. they see that, say, oh, our narrative is essentially correct. what can the bulls do to regain control? the bears are resting control of this narrative away from them. here's three suggestions number one, s&p has to hold at 200 moving day average, about 30 points below where it is right now. number two, the feds going to report tomorrow, they have to sound dovish so everybody says, okay, well, at least not four, maybe three or three and a half, and then jobs report on friday, we expect 195, it's got to be right there. right in the middle, go too strong, say, oh, see, the feds raises too weak, they say growth is slowing. it's a tough situation this s&p move in the last hour or so, a lot of people attributing to to the fed drift move up, tendency for the market to lift 24 ohours before the fed
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reports. >> thank you very much for that, bob. investors consider the factors behind the pullback, outlook on stocks might be taking a hit as well let's bring in our senior economics reporter steve leisman with more. >> the bearishness showing up in the cnbc fed's survey, this is the tale of the tape of prior surveys and outlook for stocks was up, up, up, up, up, about eight of the last surveys have been up, and look ag the last two since january, down and down we're still well below that 29.37, the peak, and still looking for gains from current levels, but it's from where they were, and part of the reason is the outlook for the fed and interest rates you can see here the ten year at 2.96, going up to 3.25 end of this year, and 3.5 in 2019 not a lot, but a change from
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where it was the fed funds rate has gone up this is the terminal rate, the place where the federal reserve is expected to stop at the end of the rate hike cycle it was low as 2.29 in august 16, and that's come up, 2.66, and now this is where we are the 37 responders to the cnbc fed survey see them stopping, and that's something else for the federal reserve to process >> wow they have plenty already, steve, stay with us let's bring in michael with us, just a way everyone's trying to tie it together. >> seems like the respondents to the survey are marking utlooks to market, right we've been stuck in the range, a low end of the range with the market for a while, and it seems as if whatever good we expect, whether it is a reacceleration of growth, there's the rate story pushing higher, and aggressive fed that's why we are here i don't know that that means it's indicative of how this year
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goes, and i keep talking about it in the survey underscores that i think that that enthusiasm has ebbed a little bit from excessive levels, a good thing if you look for ways the cycle can extend itself. >> steve, clearly, your survey shows people are less bullish on the s&p than they were, but we're at 2645 right now. still quite a lot of upside. overall net positive >> 2019 number at 7.5% always bearish on stocks, that was mike's kind way of saying they follow the market a little bit, but they are upbeat on growth, 2.8% this year, and 2.7% this year. also, their outlook, they believe that the tax cut benefits will outweigh the drag from higher rates on the economy. >> and, bob, as you mentioned, a little bit of fed drift going on here what does that mean this market thinks about what we might hear from them tomorrow >> the fed drift is -- the fed
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has observed seven or eight years ago the market tends to rise going into the 24-hour period prior to the federal reserve. this is a one-day event. i'm not putting too much on it what i think is a real problem now is that this is a very different market than it was in february there's a lot more at stake. we dropped in february, the initial concern was inflation, and that was why the market moved down initially in wage growth now, the argument then about we're making the peak earnings and slower growth, those arguments did not exist in february, so this is a much more potent argument than we saw a couple months ago, and that's why i think it's a little bit dangerous right now. i don't think the bulls are in control of the narrative, and i'm not sure how to do it, but i think the fed definitely plays a role in calming things down a bit. >> what about the president -- steve, another surprising finding about how people are viewing president trump. >> yeah. i have to set the table first with one start and then the surprising findsing. first thing is, this group, the
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37 economists, fund managers, strategists, 57% approve of the president's handling of the economy, and 16% disapprove. numbers are fairly constant. look at the view of trade policy, 58% are negative overall, the president's doing a fine job on the economy, but seriously dislike trade policies and worried as well about nafta, a large percentage, what is this here now, nearly 90%, exactly 90% negative on the possibility of leaving nafta with 49% strongly negative on that issue, and then when questiwe look at e chance of recession, look here, it's up just a little bit, 16.5%, below the average we've had around 20% here. look over my left shoulder here. what's the number one threat to the expansion? protectionist trade policies followed by rising interest rates and potential for fed policy and the president's trade policies at least with this group not doing well or the economy either
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>> steve, great stuff, thank you very much for that thanks to mike and bob see you both in the show ahead meantime, shares of tapestry dives today after company reported kate spade same store sales down 9% for the quarter. joining us now is our cnbc contributor from jay rogers, and very good to speak to you. what's your take on this i guess a bit of surprise after kate spade had been trying to pick things up again >> yeah. i expected kate to be a little bit better, coach was good, so i think kate gets better they were beaten up badly on something that was not that much of a miss or guidedown i think they will be better in the back half than what we saw so far, and they are basically fixed, so i'm positive on what coach can do here and positive on brands in general i like ralph i like michael kors now. i like tommy and calvin, and i like tapestry with coach, kate, and so i think they got beaten
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up, but i think you'll see this come back. this looks like a buying opportunity to me. >> speaking of the brands, how important is it for them to use or embrace amazon as a distribution channel chico is the latest now to do that, and in recognition of how many prime members they have and how well they are doing, is this the way the companies could find growth >> i think everybody is going to have to embrace some platform like that. some people go on walmart's platform, most on amazon's platform, as long as you get a website that looks good for you, they fix you up so you look like you on the website and not like something else, then you can get the kind of eyes on the target that you really need for the business i think all the brands are going to have to move to an amazon-type platform here. >> even super luxury >> well, super luxury eventually, yeah whether it's alibaba, amazon, walmart, or all three, you have to see even the high end luxury be online, and i think
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everybody's going to want to be on a platform, not their own website. i think we'll see that happen pretty much across the board >> what else do you think is key for kate spade to turn it around here >> well, i think with kate it's just getting the brand right again. you know,turmoil, and we have to get back to the place they want to be. customers like the kate name the kate brand has always been strong, stronger than the size of the business really is, and i think now it's just getting that in front of the consumer because brands are coming back, investment dressing is better, and athleisure is not as strong. logos are important. all of that works in kate spade's favor like it worked in coach's favor. i think they'll get there with it, but it's getting the customer back into the game now. >> okay, great stuff, thank you for joining us jan discussing some of the luxury brands. we got 50 minutes, just under, to go before the close, we recovered nicely, indeed, in the last hour or so, now essentially flat on the s&p.
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nasdaq up half a percent the dow down half a percent. largely waiting on apple earnings, aren't we? >> apple >> in 80 minutes time. we have a countdown clock shortly. we're just getting started straight ahead, the small cap connection they are underperforming the s&p, nasdaq, and dow, but are the little guys about to get big? plus, steve ballmer's big stock move >> sold right near the high. what he sold and wh th is the "closing bell" live from the new york stock exchange with kelly evans and wilfred frost. we're back in two minutes. mr. elliot, what's your wifi password?
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every device in the house. [ child offscreen ] hey! let's basement. and thanks to these xfi pods, the signal reaches down here, too. so sophie, i have an xfi password, and it's "daditude". simple. easy. awesome. xfinity. the future of awesome. welcome back to the "closing bell," i'm wilfred frost let's have a look at the laggards today pfizer down, merck down, and, of course, we've seen other drug stocks rise today on reports around certain cancer drugs. mcdonald's down 2.25% after a great day yesterday. >> overall temperature of the market, dow's down 138 points now, and russell hanging on to a gain of four and a half points
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small caps down 2% in three months so it's been a laggard. >> joining us to discuss more, michael belkin, michael, very good afternoon to you. >> thanks for having me. >> let's touch on the factors and attractions of small caps at the moment, one factor weighing on the market as of late is geopolitics. something when you invest in small caps that you can ignore >> you can never ignore the stuff. you never know what's going to happen, but i think what's been weighing on the market and small caps in general is people are getting concerned about interest rates up and inflation coming back history has shown a little bit of an increase in interest rates and inflation is good for the market and small cap >> and the dollar, especially. i mean, usually we see the pattern when the dollar's higher, people prefer small caps, correct? >> yes, that's correct >> what's happening now, the dollar strengthening again, is today emblematic of a better appetite for that market >> i wish i could predict that
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>> yeah. >> i really don't know, but all i can tell you is at the end of the day, what we try to do in small cap investing is looking at the long term earning growth of the companies >> better for big caps or how does it stack up for the russell relative to the s&p or the dow >> you know, we had a really good rally, and large caps over the last three, four years, small caps caught up a little bit here, and on historical basis, take out the money losing companies from the russell 2,000, we are slightly above normal on historical basis, but one thing i like about the small cap market is we got better earnings growth than large cap companies. you got tail winds from tax reform because they benefit the most from the tax cut changes, and the other thing, and this is key, is that big companies look for growth how? buying smaller companies >> interesting point i was going to bring that up with the headline-grabbing big cap merger announcement in recent days and weeks. are we already seaing pe iseein
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in takeovers >> i hear that all the time. we've seen an acceleration in small cap takeovers so as long as interest rates stay low, you'll see it is cheap to borrow money and make acquisitions. >> yeah. and, you know, i mean, feels like speculation, people playing around for that -- they might get picked up an o deal, but - >> well, we typically don't buy companies with the expectations they get acquired, but, again, if we have good earnings growth and good management teams and the whole bit, eventually someone else will find it. >> mike, you named one stock in particular, veronis. >> an interesting company in the cyber security software space. they have a product that allows organizations to see who is accessing their data, both externally and internally because, you know, corporations have all sorts of data everywhere now and don't know where it is all is varonis organizes it and allows
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them to see who accesses that that shouldn't be accessing the data, right? the other thing is over in europe, there's new regulations called gdpr, which is to protect consumers' data, so what happened with facebook, all of those things, they have regulation over that, and varonis varonhelps them addresse issue. >> up the last six months with room to go >> can be four times the size where it is today. >> wow >> great stuff, mike, thank you for joining us today we've got under 40 minutes before the close, rallying in the last hour k ta, taking us b flat on the s&p. the nasdaq, though, higher by half a percent moments away from one of the most important moments of earnings season, apple it gears up to report after the bell we are ready for the numbers
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>> mike is on the floor posting up today's big movers, mike? >> yeah, one of the biggest gainers today on the floor, kelly, big hospital operator moving on earnings and a few other factors that are helping the stock up 20% that's when we the closing bell comes back like their car or home computer, to help them do their work. but they might not know that those items may need special insurance to protect against costly damage, theft, or liability on the job. trusted choice independent insurance agents represent multiple insurance companies and customize coverage so business owners can focus on business. announcer: to find an agent, visit but we should be seeing ymore range of motion., i'm fine. okay, well let's see you get up from the couch. i'm sorry, what? grandpa come. at cognizant, we're uniting doctors, insurers and patients on a collaborative care platform, making it easier to do what's best for everyone's health, every step of the way. you may need more physical therapy. ugh... am i covered for that?
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breaking back on auto sales, and phil lebeau has details. >> the pace slightly better than expected, according to auto data, the sales rate for the
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month was 17.15 million vehicles to put that in perspective, most expected a sales rate of 16.8 to 17.1 million again, 17.15 million is the sales rate it is the 8th straight month we've seen a sales rate above 17 million. guys, back to you. >> pretty healthy. phil, thank you very much, phil lebe lebeau >> time for the quote of the day. it comes from former microsoft ceo steve ballmer who was on the halftime reporter earlier today asked about the stake in twitter. >> do you still hold on to every share that you own are you selling? >> actually, actually, i don't hold any of my shares anymore. >> you don't hold any, really? when did you sell? >> other than represented in index funds. i sold at a very good time, right near the high. i think twitter will succeed it will move forward, but i simplified my life and got out
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at a very nice price >> let's see the trade tapes he sold near the highs, steve ballmer did it this terms of shares of twitter, interesting he simplified life that's what people say when they quit using twitter, a reference to the engagement with it or sense of feeling cluttered on the investment front >> exactly i don't know if therefore he got lucky of getting the good price, but he looked happy about it listen, clearly, last year, as we know, had a great year in terms of share price, performance, partly off the bottom, but whether it's dealing with espn or other factors not quite as effective on the data side, it's relatively well-placed. >> amazing because there's not huge user growth, but shares of twitter up 72% over the past year back down to the floor where mike santoli is. >> see if anybody tells tenet at the high good results on earnings as well as the cash flow line, and even
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same store sales, yes, when it comes to hospitals and surgery centers, but other things are probably acting as an upside accelerating the move. it's been heavily shorted for a long time, 18% of the shares are short, covering there, and also a very leveraged company, a ton of debt on a small equity base, and that also probably makes for spring loaded upside there if you remember, there was a big focus stock during the whole debate about repealing obamacare. it's about doubled from the post-election lows after president trump was elected, guys >> wow, up another 18% today mike, thank you. see you shortly, mike santoli. 35 minutes to go, dow down 350 points earlier today, and now down 144, and s&p turned positive earlier, now down by three. nasdaq is positive, awaiting apple results. russell's up a couple, and apple is set to report earnings after the bell questions are swirling if the long term viability, especially in china, we'll break down results from the world's most valuable company as soon as they hit the tape julia is in san jose at
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facebook's annual developers conference julia? >> reporter: well, wilf, facebook's privacy fallout in fake news are front and center here, about 5,000 developers here, many of them angry about the changes that facebook has made and just yesterday, a topic that announced he's leaving the company. coming up next, sitting down with facebook messenger chief to learn how the data scandal impacted his business and what's next for the 1.3 billion user app. what do advisors look for in an etf? i tell clients, etfs can follow an index,
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hello, everyone, i'm sue herera with your news update at this time. secretary of state appearing at the state department for the first time since his confirmation he greeted employees before speaks to the diplomatic core. >> it's important that we listen and learn, and i know that i have an enormous amount to listen to you about and learn from you, and i talked about getting back our swagger, and i'll fill in what i mean by that, but it's important the united states diplomatic core needs to be in every corner, every stretch of the world, executing missions on behalf of this country california and 16 other states are suing the trump
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administration over its plans to scrap standards for how much greenhouse gases vehicles can em emit governor brown with the attorney general announced the lawsuit earlier today. president trump awarding the commander in chiefs trophy to the army football team, the first time in more than 20 years that west point has won the trophy for beating air force and navy in the same season. and the president saluted their fortitude. congratulations to them. you are up to date that's the nudes update this hour, back downtown to you >> all right, sue, thank you very much. sue herera a check on the qqqs of the nasdaq bertha has the index for us, two-thirds of 1% for the etf tracking today, and moves today and no apple yet >> interestingly, apple really weighed on the chip sector, people worried about the components in the iphone10 and what it means for apple's supply
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chain, but today we are watching chips rebound ahead of apple's interest in earnings rather after the bell, among the leaders, skyworks, one of the apple suppliers as well as, and for chips, it's a nice rebound, up 1% after the decline of 6% last month and being down two months in a row. among the other big tech gainers today, take two on an upgrade from web bush that upgraded that to an outperform with the price target of $126 a share along with check point and alphabet which is still in correction off well over 10% from its recent highs, but a couple of the big names that have been momentum movers are closer to regaining some of the losses that they have seen in the big selloffs as of late, and amazon today up just fractionally. microsoft as well, but both those stocks, which is been big momentum movers this year are
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less than 4% away from their all-time highs kelly? >> well, thank you very much for that, meantime, facebook holding its fa conference in california today. the company's ceo, mark zuckerberg taking to the stage to address the recent scandal. >> what i learned this year is we have to take a broader view of our responsibility. it's not enough to build powerful tools, but we have to be making sure they are used for good, and we will. >> for more on the conference, we could call it fate, but we bring in julia borsten who is there. fate, that's what people put on a license plate, but julia is there with david marcus now, facebook's head of messenger, a great guest, julia >> reporter: kelly, thank you so much, and, david, thank you so much for talking with us you just got off the stage where you announced a big redesign of messenger. what is this redesign going to do to your revenue you have augmented reality
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shopping are they features to generate revenue and profits for the platform >> yeah. you know, the goal was really to simplify the system and make sure that we could actually ensure that messaging was really at the center of everything that people wanted to do, so we simplified the inbox, simplified conversations, and we enabled now people to really, really find what they want much, much faster, and there are a bunch of new things also that we're introducing that the community asked for, simple things like a night mode for messenger >> does it mean more of a platform enabling advertising or transactions to happen on messenger? >> yes we already have advertising inside of messenger's inbox, and this has been rolling out doing quite well right now, and building more capabilities for the platform, like the ones announced on stage today, like augmented reality, enabling, for instance, nike, to build a great
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experience to introduce new shoes and sell it right then and there helps. >> consumers have been concerned about what all of your changes are going to mean for them and whether messenger's reading their messages to their friends. h have you seen a decline in user, engagement, time spent, amount of users you had in the last six weeks or so? >> we have not >> no impact of the scandal sm. >> no. >> what about the developers they are concerned you are pulling back the amount of data you give them, making it harder for them to run their apps what are you saying to them to reassure them or not reassure them >> well, no, actually, it's been going really, really well, and the developer community has been very understanding and sporti e supportive because they want this plat form to succeed over the long run if we succeed over the long run, they do as well. they are supportive and patient as we introduce new experiences
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in the last few weeks, now back open for business, and things are back to normal in terms of operations, but, you know, with more controls to ensure -- >> new experiences, but at the same time, you're not giving app developers as much data about us using facebook and messenger as you used to. >> that's right. >> is it harder to run the apps, even if you continue to approve them >> i don't think so. the goal here is to ensure people when they opt into something they have absolute clarity what they opt into and how they share data. if we do that well, developers do well, and people feel good about interacting with developers, and the ecosystem will thrive. >> do you see a time you give messenger developers more access than they have right now because you pulled back -- >> it's not a question of access or not access, but it's a question of truly making people aware of what data they share with whom and making sure they are always in control.
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>> what's app developer is leaving, another messaging platform what is this indicate to us about what comes next in terms of advertising or transactions or more revenue generated from what's app or indicate internal dissent how data is used >> definitely not. that was way overblown and not the case, and i can tell you firsthand that was not the case. you know, i think jan has been working on what's app for a long time, and he wanted to do something else right now, and as far as advertising is concerned, we're definitely getting what's app more open, and it was announced today, we are now going to have the ability to enable larger companies, not only small businesses, integrate new api to send and receive messages with people on the what's appellate form. >> do they report to you now >> no. >> okay. dave marcus, keep us posted, appreciate your time straight off the stage.
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back over to you >> thank you >> thank you very much, julia, sitting down with facebook's head of messaging. interesting couple comments there, else about jan koum on why he left or didn't leave. >> couple questions from julia, have you seen dissent in the use of the messaging apps in the last six weeks no clearly not feeding into the results, but maybe the next quarter based on those comments, but not affecting them >> another big headline, dating. shares of match group and iac, owning sites like tinder,, and okay cupid. they are slammed >> they are, indeed, getting slammed after zuckerberg said they are launching a dating feature he says is geared to build long term relationships, not just hookups the big question for me on this, why now? i mean, they could have gone into this space from day one >> i don't know. i see it more as a why not you have so many of the dating apps plug into facebook already
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to connect people, they figure, we can do this ourselves >> well, exactly i wonder whether one of the factors in deciding where now is the right time to do it is that perhaps before they thought, will users get concerned we are overreaching with data if we do this, and now -- >> they already know we overreach and they are still here >> not saying overreach, but now that people are aware of sort of what they can do with their data, they might as well do it >> are you going to give it a try? >> nope. on discussions with colleagues, i didn't know that exists. only for farmers i used to joke when i was on worldwide exchange, they should do one for 3:00 a.m. wakeups >> because you're the only person on there. >> try to find somebody else anyway, not an issue >> moving on 22 minutes to go before the bell here, dow is still down 150 points, well off the lows of the session, though, s&p trying to
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turn positive. what about the telecom company that dropped 30% on earnings today? we'll reveal which stock that is coming up. and speaking of earnings, we're less than an hour away from apple's results bringing you those numbers as soon as they cross stay with us here. back in a couple minutes
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welcome back to the "closing bell" trying to see if the dow turns positive, s&p did briefly, but both lower now the components of the dow 30, only five names in the green right now led by intel with a 3% gain, and apple up 2% inadvanc of earnings today. on the flip side, pfizer down 4% after results this morning, and mcdonald's giving back yesterday's gain, down more than 2% joining the closing bell exchain, michael zen, and rick in chicago, rick, starting with you. i guess today slightly
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disappointing pmi data from the u.s., but looking what the dollar's doing, we're thinking about worse data still elsewhere around the rest of the world >> absolutely. it's very difficult to try to handicap all the moving parts to the dollar, but that's one of them we have some charts ready, this is a really great day because this is the first time it looks to be a close in this camp since the 9th of january momentum for the dollar. watch after tomorrow's fed announcement and with two employment reports coming up, adp and friday, bureau of labor statistics another issue, wilf to watch, it's about the long end drifting up into fed meetings, but short end drifted aggressively this is the first time we settle above 2.5. we mentioned they traded above it going back, i believe, to august of 2008. hence, tens minus twos, back to flatting and now it's in 46
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today, which is only three points away from the flattest it's been, 43 a week and a half, two weeks ago, and that was the flattest since september of 2007, and, finally, 30s minus 5s, another version of the yield curve is the flattest trading 31, flattest it's been since july of 2008 the reason i bring that up is even though rates are rising, the short end is much more stubborn in that endeavor skewing the curve flat >> steve, are you watching that? i mean, why do you think we've bounced off the lows here today? >> i think today, you know, there's a lot of words floating on the street. there's fed drift ahead of the fed decision, no one expects them to raise rates at least this week, but it's more important, i think, to look at apple. apple was thrown out with all of tech, and apple probably started its issent earlier or in the middle lines of the tech debacle, but if you look at apple reacting well, people look towards that to lead the tech sector higher which normally apple is not the barometer
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>> we had apple drift, by the way, 5% in last couple days into the report >> right everyone threw out iphone sales weak, but people are focused in on maybe services, which is a big number in fact, it's a $30 billion number it's a huge number that we're looking at, and so if they can sort of make up some of the grounds on other things versus just the apple iphone sales, which we know is still a hardware company, i think that maybe people start to dip their toe back into tech again and those real high growth areas we've seen perform today, we had that selloff, did not check the 200 day again, bounced from there, let's see what the day holds >> mike, considering broader valuations, obviously, it's clear there's stock prices pulling back a bit, but given earnings grow as well, are the valuations at an attractive level again? >> well, i mean, you're in what i call a fed hike head wind so when you see a fed hike cycle, you see pes compress, so i don't think you are done with valuation trading at a lower
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premium, you know, so i think that typically when you see fed -- when you see rates begin to rise and a six month t-bill at 2%, that's stiff competition for stocks takes awhile to work through, and ultimately, persistence of strong earnings means stocks do better by year end, but look at 2004 similar setup, the year took a while for stocks to get going as it sort of sorted through the premiums >> talk about how you buy a little of match here -- i mean, it's a compelling move >> whatever you see a stock -- now, normally, i go with everyone when i'm on "fast money," it's a three-day rule, don't rush in when everyone's rushing out, but on this, when you see a stock -- when you see a stock that is down - >> and you know the underlying product so well. >> well, it's not under steve grasso, though so, i mean, if you look at this, is facebook -- it's ironic to me
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that you're looking at a data breach, and people are sharing even many data on facebook, and i think that match has done a great job from people i hear that have been on, and i've been married for a long time now, but it seems to me, like, i'm buying this on purely technical basis you buy an assassination like this in what's happened in the market >> like whole foods and amazon market, kroeger was hammered have a three-day rule not to be too hasty. >> you should, but this one, i couldn't help myself no one smacked my hand away from the buy button today >> on broad market themes, what's the sector pick for you at the moment? >> utilities we talked about it last time >> you don't hear that often >> you don't looking at pe kprepcompression, and established, midway through the hike cycle and exiting, they outperform, and they have
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outperformed, so that's what we like >> utilities, the dollar, and are the recommendations today from the closing bell exchange. michael, steve, rick, thank you, all, very much we have a news alert on united let's get phil lebeau in here, phil >> kelly, united airlines announcing its new policy when it comes to transporting pets in the cargo hold area of the flights. remember, they have been reviewing the policy since mid march with the horrific incident when a dog died when put in the overhead carry-on container. dogs and cats only will be allowed in the cargo hold area the exception being short or snub-nosed breeds like pugs, those trouble breathing in tight areas like that, and animal reservations for united airlines resume on june 18th. meanwhile, the airline is reviewing its in-cabin pet policy, developing the policy as well as executives from american humane as you look at shares of united since march 14th, that's when
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the last or when that incident happened with the dog put in the carry-on cabin, you looked at united having the worst death rate for carrying pets last year so they believe that these steps will ensure a much better outcome for the pets that they are transferring, again, dogs and cats only, and certain breeds will not be allowed guys, back to you. >> what were you thinking, wilfy? >> oh, i'm just thinking it's frankly amazing there are so many dogs aboard flights in america. >> oh, really, that's it uniquely u.s. thing? >> i don't know uniquely u.s., but i don't think i've seen it personally until i moved here. >> in the first class cabin, they don't have as many pets >> i wouldn't know >> phil, thank you >> by the way, i hope the changes work >> yes well, i personally like it when dogs are next to me on the plane. makes it for a more fun flight >> i don't mind it, just surprised. i don't know what the rules are
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in europe. maybe different rules? maybe phil can tell us next time i have not seen it as often before 12 minutes before the close. the dow at the moment is off 108 points, so we just slipped down a little bit again the s&p remains flat nasdaq up 0.7% >> a big day of earnings, up next, which stock typically moves 24% in recent history being a guide, on its rules, could be one of these. we're back afterhibrk. ts ea ♪ directv now gives you more for your thing. your letting go thing. your sorry not sorry thing. your out with the old in with the new, onto bigger and better thing. get the live tv you love. no bulky hardware. no satellite. no annual contract. try directv now for $10/mo for 3 months. more for your thing.
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morning, beat on earnings, miss on revenue that stock down 3.6% >> and coming up after the bell, we got major earnings headed our way, results from apple, snap, yum china, and more according to the data partners at kensho, there could be big swings. >> shares of apple moved an average of 4% by up or down or the past eight quarters when releasing earnings, and meantime, over five quarters, yum china moves 7% after earnings, and, finally, snap has moved, wait for it, kelly, 24% that is pretty extraordinary >> it is >> snap and netflix always have big moves, snap in particular. >> yes see if it holds up today, we bring you result and instant analysis as soon as numbers are released apple is supposed to be out at 4:30 p.m. eastern time we are counting down to the results. >> oh, look at this. >> on an iphone. >> i like that a lot i'm sad we have not used that already. >> that's something more
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bell," three minutes until the close. we start with the s&p intraday chart because it's been quite a volatile ride, even though the s&p is essentially ending the day flat, look at the chart, opening slightly lower we traded down for most of the day, hit a low around about 1:30, 2:00 p.m. and rallied since then into the close. the s&p now sightly higher for the day. look at all three indexes, you see the nasdaq leads the charge up, best part of a percent and dow is down just shy of half a percent. s&p somewhere in between let's have a look at apple, the key focus will be there as we get after the bell half an hour after the bell we'll see apple earnings there's the performance intraday, as you can see, a nice everyoneto imptous, and looking over two weeks, before today and yesterday, the prior two weeks, apple was down 7%. that's why yesterday and today we've been able to bounce a little bit, of course; all eyes
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on apple after the bell reporting on earnings. the u.s. dollar is being a little of a worry for investors. how much stronger will it get from here? it's touching a year to date high >> that is the fact the weakness we've seen recently. totally with you on that i've been asked about the rally in the middle of the day i'm suspicious of the rally. there's a tendency called fed drift to move up in 24 hours before the fed meeting, very well-documented, people who play this as a momentum play in the fed meetings that was a factor, number one, and number two, facebook started moving up about this time zuckerberg talked about the d e datidat dating service, that may have been a factor as well. the main issue still remains, the slower global growth story how much is it slowing i think it's not slowing that much, but the bulls are losing control of that narrative. the ism report today was a little bit below the expectations still strong >> particularly the pmis in the
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u.k. as well >> generally weaker. >> this is a big debate. it's hard to figure out whether there is the global growth is generally still strong, but when you have the bulls losing control of the narrative, they are losing control of the peak earnings narrative. earnings going up throughout the rest of the year, and bears say, oh, yeah, eventually it's slower, slower growth, higher inflation, and if that narrative is in, it's hard for stocks to advance, even with the good growth in general. >> we're going to pick up sector performances as well, and industrials towards the bottom of that, is that the pmis playing in it or individual stocks >> capital goods in general had a hard time today. energy and materials and industrials, there's the ism story, manufacturing story, and stronger dollar story as well, so, again, this stew is really the major issue, and what has to happen now, they have to turn the narrative around we're -- we had higher lows for the last several weeks now, and they got to change that around
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the market narratives have to get better >> approaching the close there, you saw the best performing sector, very much technology led higher by apple. they report in half an hour, but there goes the bell. ringing the bell here at the big board is -- and nasdaq, the empire resorts dow down 63 points kelly has the second hour. >> thank you, wilf, welcome to the "closing bell," everybody, i'm kelly evans, quite the comeback for the markets to kick off may. we're doing it with every major average possible the dow shed 68 points on the bell to close below 25,000 at 24095. again, down a quarter of a percent. s&p up a quarter percent, six and a half points on the bell, and look at the nasdaq, up nearly 1% today, to 7130 apple up another 2% ahead of
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earnings in 30 minutes time, and the russell 2,000 small caps, half a percent there's the apple chart for you, 2.3% gain. small caps also seeing a pretty nice session today with the dollar up becoming more and more of a focus more on that in a bit. it's going to be a busy hour for earnings we have apple crossing at half past, and we have deidre standing by for results for snap for us, and kate rogers has numbers from mondelez and yum china, and eric will bring us numbers from t-mobile as all of those earnings cross the wires thank you, guys, see you in a bit. joining me now, michael santoli and jim con from wealth enhancement group, and charlie here as well great to have you on board quickly in the markets today, topping the dow is intel, fiezer trailing after results this morning, and meanwhile in the s&p, ipg was the big leader, and tapestry the laggard, talking about that, and difficulty with
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the kate spade numbers in particular, so what do you think of the comeback and setup to start the month? >> even at the weakest levels of today, kelly, seemed like the market was not in any selling urgency, right it was very comfortable in the range. i feel like the market is okay here, and i think the longer you stay in trading range, the manufacture you explain why you are here, it makes sense, but when tech and banks rally as they did late today, the market, itself, is carried along, and i don't think it changes the story very much other than the market does not want to give way below recent lows. >> jim, we had the usual batch of data cake off the month, the manufacturing number this morning seemed okay. the auto sales numbers, again, pretty good, and anything for the market to hang its hat on there. >> back to the goldie locks economy. equity value rations are growing into the valuations, and it's been a great earnings season >> because they came down? >> a little bit, but the earnings seasons, earnings go up, stocks go down, earnings up. not as valuated as they were,
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even three months ago -- >> in january, it was pair bollic >> it was crazy. on the other side, there's inflationary bush that drives up interest rates, and the market's looking saying, well, stocks are not as expensive as they were, but we don't lie inflation, so interest rates go higher balance is what you expect in the late stage of the economic cycle. that's where we are right now. >> yeah. >> expect higher volatility and can expect a little bit of a, you know, bigger reactions than normal to news, but that said, that's where we are, just in a goldie locks spot. >> with the fed meeting coming up tomorrow, charlie, what's your personal view on whether we're talking about inflation here i mean, i know there's been a lot of kind of materials costs moving higher, of course, watching for any more news on the trade and tariff front to exacerbate that, and a great read in the journal today talking about communities handing people $5,000 incentives to move for housing or pay off student loans. feels like it's a bull market,
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charlie, but is it an inflationary one >> i think it is i know i've been repetitive on this, i apologize, but i think that just more inflation that people want toed ee eadmit beca there's been no inflation close to 30 years or declining for 30 years. it's hard to finally say we're going to have inflation, but i think not only is it in the data, but it's in the causes we got, as i said before, countries are competing to lower the value of their currencies, and that is what inflation is, making the pieces of paper with george washington's picture on it worth less, and then you got big deficits, big fiscal deficits, which are inflationary, and, frankly, when the interest rates go up, mortgages go up adding to inflation. >> we'll come back to this, but we want to hit earnings crossing the tape now it's moving already. >> kelly, a light quarter for
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gg gilead the estimate was 1.67, and revenue was light as well for the quarter. the estimate was 5.4 billion, and they did reiterate 2018 guidance, however, down 3.3% as we are going through the numbers, hepatitis c, overall, major drugs there coming in line at 1.05 billion dollars, in line with estimates just about. they just acquired kite, of course, acquiring that immunotherapy drug, and those sales did better than expected in the quarter, however, very, very small, still, just $40 million compared with estimates of 16.6 million, so a small beat there, but, clearly, not enough as they are down 2.4% on the miss for the quarter, kelly, back to you. >> although to your point, if they buy kite, and, yes, did 40 million rather than 16 million in sales, that's the whole idea that people go, woah, this new area of development is quite
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good >> perhaps, although, it's so small compared to the rest of the business, it's not going to move the needle. could be seen as happiness in the quarter, but definitely nothing compared with, you know, a big miss of $400 million on the whole top line >> yeah. take your point. $40 million a rounding error when revenues are $5.4 billion, and shares back down 5%. >> yeah, i mean, megacap biotech that the market values very cheaply, seems it is been a value trap for three years because the market doesn't know what to do with a biotech of this size where kind of the best days for the biggest drug, you can see, it passed over. >> the legty tech companies we talked about, trying to transition to the new business >> exactly >> the problem is here, what they are is distribution companies and they fill the pipeline with new drugs, and it's too small to make a dent in the overall, so it's a balloon with the air going out of it, and eventually it ends up being
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a lackluster stock >> credit for trying >> all right >> granted it comes down to the price they paid, charlie for names like kit and whether that grows enough to change the top line, but you are fan of anyone in biotech space right now >> we don't like to invest in things that are too hard to predict the future, and we think this continues to be an area where there's going to be a lot of regulatory pressure on pricing to the long term regulatory trends here negative where they are usually positive in most industries around the world. >> all right, gilead down 5% pressure on more deals then? >> already feeling that pressure obviously, the other story is unlocking the cash that companies like gilead have, and investors are probably going to want clarity on that and see if they turn it into growth >> speaking of which, when apple comes out at half past, you run up an interesting point whether investors are looking or markets look for the companies to move to a zero net cash balance is that the idea
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>> apple has said something to that effect, zero net cash basically, no more cash than you have debt. a lot of companies have said they are going to get rid of excess cash, conference calls and filings this quarter, that's what the tax reform bill and repatriation is doing. it's an interesting quarter with the wind fall, pressured politically to do hiring capx, share the money in dividends and buybacks, where does it go >> marco rubio dismissive of the own party's bill because it was used for buybacks. about the cash thing, is this another place where selling pressure on interest rates is on treasuries is coming from? companies hold the cash largely in the form of u.s. treasuries >> it's possible i think many people don't want to own u.s. treasuries because the prices are declining, right, and higher interest rates drives the broader macro, but this idea that repatriating cash or somehow the way you move cash in the system is going to create
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growth is a fallacy i want larry kudlow here to debate it >> i hope you are listening, larry, call in >> borrow the money, it's not stuck in ireland so this whole policy is a total fallacy, and we're not going to see it in the numbers. >> a difference is the companies had the ability to tell investors, oh, it's, you know, it's over there, you can't tell us we have to use it right now, and you lose that excuse at least. >> like being stuck in private equity funds >> see if there's more pressure put on them. t-mobile's numbers are out >> that's right. .78 earnings, beating .71 estimates. revenue a beat, 10.64 billion, and better than the 10.35 billion analysts expected, and net adds, 1.4 million net adds in the quarter, better than the 1.25 million they expected positive quarter, although, the story will be what happens with
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the merging going forward. back to you, kelly >> eric, thank you especially on the net ads piece of this, t-mobile had been so successful in stealing share from verizon and at&t, but it was slows down, and now they have a 1.4 million number beating the estimate >> interesting situation here because they are trying to get the merger approved with sprint, and they are in a similar place to at&t and time warner, they have to pretend they are vulnerable and less potent as maybe they pretended two weeks ago. >> surprised it's a beat >> well, you know, you want to get the customers and operate the business the right way while you can. >> charlie, how do you play the space in such flux >> yeah. frankly, we like the underlying fundamentals here. the devices continue to be more and more important that net users are going to grow around the world. there will be moves in terms of who gets the market share, but fundamentally, this is an interest in strong shape and maybe even an underappreciated
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shape. >> all right well, everyone stick around. charlie, jim, all right back after this to talk more about the dollar, about the cash positions. apple earns coming a lot more ahead on "closing bell." we are waiting on apple, when the news crosses, we are all over it. plus, we'll hit the suppliers, find out which moves when apple reports. we're live with facebook co-founder chris hughs, what he thinks about tim cook's criticism of facebook's boss, mark zuckerberg. we're back in two minutes.
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no. make that the password: "you_stillóhave_toóvisit_us." that's a good one. [ chuckles ] download the xfinity my account app and set a password you can easily remember. one more way comcast is working to fit into your life, not the other way around. welcome back, another set of earnings crossing from mondelez. kate >> a strong quarter for mondelez, beat across the board, eps adjusted from the 61 cents projected, and revenues at $6.77 billion, a beat, street expected 6 partnersh
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6.65 billion, and organic growth up 2.4% growth expecting 1.3%, and they noted 6.7% growth in emerging markets and noting progress in strength in europe and asia, the middle east and afri africa, and snacking strength in the areas, maintaining their fiscal year 2018 giensuidance. stock higher for the year, but has been down 9% >> i can speak to the snacking >> we all can. >> thank you very much, kate, mondelez up 2% let's go over to the mike. >> stocks, kelly, versus the dollar we talked about this comeback in the dollar we had in the last couple weeks this is since november 30th of last year, a lot of talk about how, of course, the s&p 500 is basically ha a huge run, and then come back to about the levels around thanksgiving this right here when we were in the mode of high growth, high liquidity, right dollar down, very loose money,
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rates still very low, and then things changed over here, obviously, you had the dollar make a little bit of a base and come back over here, and then this is when stocks started to struggle i'm not saying this is the only factor, but a rising dollar, at least lately, is one thing that's kept the stock market stalled a little because it sort of says to slightly tightening financial conditions and the fact the fed is more active than other central banks. something to watch as the market, stock market pulled even today, even with the dollar strong, but i think this is one of the dynamics in there that's sort of on a non-corporate basis driver here. >> i want a comment from jim and charlie. mike, jim, how much a head wind is it now that the dollar is restrength restrengthening? >> i don't think it's the dollar itself creating the head winds, but it's higher interest rates higher interest rates make dollar more attractive, but it's the higher interest rates that are basically making other investments more attractive, allocating away from equities into fixed income. >> charlie, your two cents
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>> mondelez beat earnings, another company beating earnings that's the lead that keeps being buried here. 91% earnings beats this year, and everybody says, oh, the tax benefits are already in the numbers. if that's so, how come the companies keep beating the estimates? so we got wonderfully strong earnings that are benefitting from lots of things, sales around the world are good, emerging markets very good, and that's going to be giving us fundamental strength in the market >> well, there's one who might spoil this for you a little bit, charlie. not saying snapchat is the market, but we have shares of that one moving lower after its earnings just crossed the wire in fact, we bring in deidre for more on that now >> kelly, indeed, a rough quarter for snap, quarter down 10%. the company meeting expectations on the bottom line, but short on revenue and warning on guidance. a loss of .17 per share. that was expected, but revenue,
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230.7 million, less than the 244.5 million that was expected. i want to also point out that average revenue per user down 21% while the costs of revenue per user up 1% quarter over quarter. not a great combo. all in all, the controversial redesign is tough for the company. daily active users ended at 191 million versus 194 million expected, operating expenses increasing quarter over quarter, and i want to point this out, 26 buried, some guidance from cfo, says they are planning for q2 growth rate to, quote, decelerate substantially from first quarter levels analysts who are expecting a small deceleration and company warns it could be substantial. they are now focused on optim e optimizing the redesign based on their ongoing experimentation, but looks like the redesign and seasonality hit earnings hard. stock down 13% now, kelly.
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>> thank you mike, this is a tough one for snapchat >> very tough. the company has not proven they have the ability to capture really much at all of the growth in the whole area. think about what facebook has done in the time snap has been public in terms of aggregate revenue added, snap is still struggling it shows you it's a little bit of an after thought for advertisers, and they have not figured out the product side >> and users dropped relative to what the market was expecting. watching snapchat. jim, charlie, thank you for joining us to talk markets today as well. coming up, you won't believe what iac says about facebook's plan to get into the dating space. that's next, and chris hughs on what to do to gape trust of investors and users. apple earnings in ten minutes, instandpoit reactions coming up. this is no ordinary coffee. it's single-origin kenyan coffee from the nyeri highlands,
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comes from this territory. match down 22%, iac down nearly 18%. >> match had a great run, giving back gains, but, still, i think it's interesting they are cavalier about this threat, and feeling like they are in a position of strength >> cavalier is the right word for it coming out with a statement joking about the russian - >> i'm not bringing up hbo calling netflix the albanian army, but -- >> meanwhile, next fltflix abouo eclipse disney's market cap. meanwhile, second day of the global conference underway in beverly hills where our brian sullivan is with chris hughs, co-founder of facebook, brian? >> reporter: kelly, thank you very much. yes, also coh-founder of the economics security project he's a big thinker thank you for joining us on cnbc >> thank you for having me >> before what you're doing in
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big picture ideas, i want to talk about facebook, mark zuckerberg spoke today, of course, do you think that facebook has done enough to protect our personal information? >> well, i don't think so. the question is what's happening next cambridge analytica story, everyone knows, 70 million people's data exposed. question now is, can we trust the companies to regulate themselves or government have a responsibility to do it? i'm in the camp we need both we need to keep up public pressure on facebook, google, all the companies to make sure the data that tens of millions of people are sharing are secure, and at the same time, create other data privacy, bill of rights, or a consumer data protection bureau that make sure that there is the rule of law when it comes to the questions because it's not just enough to trust the corporations i think there's a real role for policy >> you left facebook years ago, but dialled in and have friends in the valley, you're a younger guy, and what is the viewpoint of the tech executive, you know,
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the 28-year-old, 33-year-old in silicon valley, what is their view on d.c. are people sitting around, not just facebook, but google, oh, they think they regulate us, the old men in d.c., think don't know is there a respect for washington >> two things are happening. one is, there is a sense that all of these companies have gotten very big very fast. >> too big in. >> perhaps too big the concentration of power, 80% of the social traffic on the web goes through facebook's servers, it's instagram and what's app. google knows more about me between g-mail and google maps more than anyone in the world. there's an agreement that these companies have gotten very big very fast and there's a need for regulation, and mark, himself, weeks ago said that's needed now, at the same time, i think installing the questioning that happened that we as members of civil society need to work on educating elected leaders and people in those positions of power to understand better how these companies work
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>> was there a viewpoint of connect people and our friends, and then, oh, gosh, we make money from the information was it just an evolution of thinking >> i think -- well, speaking about facebook's case, there's always been a mission to connect the world. i think that there was a sense early on, particularly in the way that mark talked about it, that this could be a social utility, could be a kind of the pipes for social connection, and that there was a sense of connection in and of itself was good, and connection can be good in some cases, but if it's a terrorist network using it or a genocide brewing like in burma or elsewhere, it's very bad. what responsibility do we at facebook have and civil society have to ensure tools are used for good i don't think at the end of the day it should be up to the companies to decide what speech is permissible or not or to self-police when it comes to the data and security.
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that is in the role for government >> in your security project, a lot of people watching cnbc disagree with like the universal basic income the idea you pitched -- the idea that the data that they should pay a tax, facebook should pay a tax on this, basically on themselves because of the use of our data, put that into some kind of a bank, and then use that to fund a uvi how does that work >> here's the idea there's an immense amount of data americans create, not just on facebook or google, but with our phones and cars and even with our thermostats >> we are the product. >> we create immense amounts of data, and at the same time, a small p group of companies is creating historic levels of profits from it. the idea is to say, let's strike a bargain. yes, companies can and should innovate we want technology to move the world forward and ensure all the data people are creating is protected, number one, and, two, that people can share in the upside royalty, call it 5% on the
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revenues of companies that profit from consumer data goes into a sovereign well fund cutting out a dividend check there's a template how to do it. in alaska they do it >> taxing the tech companies that make money from the googles and facebooks and others, putting that in a bank like in alaska with oil and everybody gets a piece >> exactly >> you think that's going anywhere i mean, that's a very radical idea >> americans are wising up to the fact they create a lot of data that a few companies are profiting from it in a historic way and people say, wait a second, you have to protect my data, and what's more, this is making you all this money, the idea that you can't make it possible for me to get a couple hundred bucks a year to share in that upside, time to rebalance the shares >> should google be broken up? >> serious discussion about power and whole range of companies, small business starts at a historic low in the united states, and the concentration of power is one major cause of
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that it's got to be a much bigger conversation, but tech should be a part of it >> big ideas, people will not like them, others love them, chris, you're out there, talking about it, and we appreciate you coming on cnbc, co-founder of the economic security project and facebook as well chris, a pleasure to meet you. back to y'all. >> nice to see you >> how big's the market cap with the economic security -- kidding. brian thank you very much. our brine sullivan out at milken apple earnings any we finished l street up by 2% on anticipation dow down 64 points, others positive, s&p by six, and nasdaq by 64. the russell by eight joins us to discuss earnings, ed lee and james wong ed, what are you focused on >> expectations always high for apple. it's not been an easy game to play going forward you know, the 10 -- i have it, i
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love it, it's great, but - >> you're the only one >> i'm one of the few million who love it, but, no, i think we're looking at, what, capital returns, what that's going to look like, usually increase 10% a year going to get 12% a a little more begin the tax repatriation also, one of the more hidden line items is service business cvs is 13 million. >> here we go, josh. >> kelly, apple reporting eps of 2.73, versus expectations of 2.67 revenue, kelly, up 16% to 61.1 billion, versus expectations of 60.82 billion. gross margins of 38.3% iphone units up 3% to 52.2 million. street forecasted 52.5 million iphone revenue up 14%.
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iphone asp 728 dollars ipad shipments 9.1 million match shipments 4.1 million. services up 31% to 9.2 billion dollars. other products, of course, that includes the watch, up 38% to 3.95 billion q3 guide, apple guides between 51.5 and 53.5. they expected 51.6 billion and gross margins between 38 and 38.5%. street was at 38.5%. capital return update as well. the board approved a new 100 billion dollar share repurchase authorization in a 16% increase in our quarterly dividends, they say, on the call here, at one appointment, a couple points to make here quickly from a brief conversation i had with the apple ceo, tim cook, that asp number i mentioned that was lower than what the street looked for, cook saying on the
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call last quarter that cfo made a point to say that as we head into q2, we are lowering channel inventory on iphones and lowering by 1.8 million units. look to where we lowered it, it was disproportional on the line. there was a point of emphasizing this, the iphone10 remains thee best seller in the line. he said that was true in the march quarter as it was in the december quarter, and i asked how that, in fact, was shaping how he thinks about the high end opportunity versus more affordable models in the future. cook said with a market being so large for smart phones, essentially it's most people in the world, you need a variety of phones that meet the individual needs, and so we'll have, as we do today, a range of products from entry to sort of top of the line, and, finally, i asked about, of course, escalating trade tensions between the u.s. and china, his thoughts on that, tim cook saying, i'm pretty optimistic on china because i
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think that china and the u.s. are having this unavoidable mutuality where the u.s. can only win if china wins china only wins if the u.s. wins the world wins if they both win. that simple. kelly, back to you >> apple shares higher by 5% right now. ed lee and james wong with us to react to this. james, what sticks out to you? >> well, before this earnings, there was a ton of fear built into the stock, people are expecting a miss, and it looks like they did not beat on the top line strong, but the stock responded well after hours so i think -- >> the capital return? announced $100 billion share buyback, but rumors were for crazy figures. >> could be. as an invester, you know, if you focus on shipments this quarter or end of the year, apple is going to be a nauseating stock for you. it's always been the case for four, five years, and we're way off that train it's important to look at what the company as going to do going forward, and as ed mentioned, services, this is a segment that
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accelerated. >> a nice beat >> way beat, yeah. >> call it 4 billion, came in at 9.2 -- >> yeah, and the other thing, it's a more predictable source of revenue in that you rely on it quarter to quarter opposed to how shipments look quarter to quarter and year to year that's a harder thing to track this is easier to track. >> on the cell phone itself. selling price was below expectations, looking for a sign that the iphone10 was selling that well. >> yeah. i think offset by the fact that there was an upside surprise to most of the other lines. i mean, you know, gross margin okay guidance for the next quarter on the top line was better than forecasted, and so all together, i mean, look, the stock is not trading up to a new high it was a relief quarter right now. the buyback is not enormous in the scheme of apple. people thought they would do a big tend r or somethier or somee
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that or share authorization, and that's fine. >> why do you think that number is not bigger on the capital return >> i don't know. i guess they are going incrementally opposed to saying get all the cash out the door right now in a quick way >> gives them power for later to buy more >> opportunistic >> services number was a decent beat but so too the watch, james, that was to be 3.6, nearly 4 billion, is that big enough to move the needle for them >> it is i mean, that segment used to be nothing after the ipod died down, and now it's 6% of revenues, so i think going forward, the two important narratives before ar is subscriptions, like, acquired textter, netflix for magazines, two, three years, i see people subscribing to music, magazines, and to news and icloud >> explain that. when they announced that texter purchase, what makes that a good business for apple what are they really -- what are
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they getting in the long term? a 30% cut of every magazine subscription in the u.s. or something like that? >> it's a subscription business, right? so, you know, if you want to read right now, if you want to read a variety of magazines, you buy them ala cart, and if you can do it all at once, you get a value. so in a few years, if each person is paying $40 to apple a month, gosh, they became, like, a cable kind of business model they spot an opportunity in news as well. >> using the cable comparison in a flattering way >> the glory days. >> yeah, the glory days. then deal with the decline >> hang on i have to bring josh back in here looking at results. josh, what else do you have for us >> yeah, just a couple more comments and commentary to bring you guys from tim cook from the conversation i just had. you know, certainly, there was a lot of concern, you mentioned about the iphone10 heading into the record a lot of investors watched apple
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suppliers being nervous about the signals from them, but cook stressed to me the iphone has been a success, again, his top seller, saying the 10 has been a huge success, he said to me, it's the first time since we've split the lineup back at iphone 6 and 6 plus, that the top model has been the top seller model. that's unprecedented in that history. i also think just a step back, kelly, from the quarter to quarter here i asked aed p broader question t the cycle. in certain geographies, the cycle is lengthening interesting research from consumer intelligence research partners with a survey finding 60% of users own their phone two years or longer, up 50% from years ago. how does that impact business? the upgrade cycle is different in each country so most people in this country talk about upgrade cycles in this country think about the u.s. over time, the u.s. went from a traditional subsidy model where people were
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paying $199 rather than 599 or 699 for a phone to a net subsidy model, and then installment payments, so there's a lengthening of the replacement cycle in the u.s. in some countries that did not occur kelly, back to you >> josh, thank you this comes after results from connnet. he thought apple would discontinue iphone10 >> overblown >> shares up 4%. >> you have one of these little bit of fraeakouts every few months this time it took hole it's characterized as a relief quarter. nothing like the worse stories going around >> results provide evidence that the smart phone cycle turned south, and apples iphone is over does this quarter rebut that >> every call tim cook says, look, stop looking at singular data points in the channel and making assessments, and tim is
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speaking the truth there's no dooms scenario. apple is at such a scale now you basically even out demand over time i think it's not productive to look at data points. >> ed, is that true, talking about texter too, and this is predicated on people having a physical device, right >> people having the device, but it's, again, they are trying to get better margins, get a better boost on the ecosystem created whether it's texter, in that case, there's an opportunity in news everything happening with facebook and google, just fake news all around, they see, well, let's get this so we can get the real news. it's an opportunity for them again, in terms of services business, it's a way for them to have a more sort of regular predictable line of business, and focus less on the unite numbers and supply chain issues. >> last word, james. >> people did not appreciate apple is the largest subscription business with 240 million accounts paying them every month, and amazon at 100
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and spotify at 70 million. that's not talked about. it's interesting >> still less than 20% of revenue. it will grow into a critical mass where investors say, okay, that's the main story. >> right at least they are further along than gilead earlier this hour talking kite apple shares up 4.25%. ed, james, thank you guys. sticking with the name, though, from the chip makers to the app developers, tech suppliers relying on the growth has things to think about what do results mean for them? the fast money traders join us now. what -- karen, what do you think now? is it relief for the supply chain that had been under a lot of pressure? >> i hope so for them, i mean, it would be bad to suffer all the way on the downside, and then not have any of the upside if apple puts up a good quarter like they seem to have done. for me, i wouldn't want to play it that way. i'm not long apple i don't want to be in the suppliers on the hopes that apple does well. if i wanted to make that bet,
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i'd be p in apple for me, i'm in intel, the decreasing supplier in that we know it's likely that apple takes back the intel business for the mac. that could happen in two years, and intel looking at other things that's where i want to be in the space, not the intel-apple supply chain >> guy, what about you >> i agree with karen. go back to april, there was a piece that said intel's pain could be taiwan's semi's gain. intel's pain could be intel's gain, maybe not being with apple is the right move. you know, if you look at the supply chain, maybe it's not in the best interest necessarily to be squeezed by apple taiwan semias appointmented out minutes ago has not traded particularly well, and now we're in the wake of a terrific quarter by apple if you want to be in the space, more inclined to go to intel after the quarter they put up understanding the stock sold off after that >> right >> i think that's the best game
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in town. >> mike, what's interesting is the discussion we just had about apple's results and excitement around it was about the services business and subscription aspect of things. >> sure. >> if you're a supplier who is dependent on the hardware, that's not what we are talking about. >> that's right. i think the muscle memory for investors and traders is to look at that inflection point and what volumes are for the devices. i, you know, it's a harder game than i want to play. >> yeah. >> to get to the second derivative rate of change for the company that's two places removed from the customer. that's what you are talking about. >> sounds like high school calcu calcu calculous. >> the selloff, as we said, we talked about it, today's the first upday we've seen for the name in quite some time. looking for risk-reward, that could set up well, but you look at the quarter, intel put up -- look at the valuation, and it's
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a compelling story >> all right - go ahead >> you have a point about services, selling price is weak actually, i mean, maybe that drives the apple story >> interesting to see if, you know, how the suppliers trade, especially tomorrow after the call and everything. if they are consoled by this or not, so you're sticking to the data centers i see that, you know, makes sense. thank you, guys, more coming up at the top of the hour that's karen and guy, and all of the action on "fast money" at 5:00 with more on apple and snapchat, too, a big mover to the downside this hour apple rallies after the earnings though, two investors weigh in, one who says wait to buy, and the other who says do it now that's when the "closing bell" is back in two
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welcome back apple trading higher after earnings, but snap is going the other way. the shares are slam after hours after the earnings results deidre has more on the quarter >> kelly, we spoke exclusively to snap's chief operating officer who had more color on advertising in the quarter he addressed head winds from the redesign saying it disrupted user behavior and created apprehension among advertising partners, but he added, quote, we'll continue to make bold decisions to create an maintain a positive and healthy environment for our community. total advertising revenue for
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the quarter was $229 million, increase of 62% year over year, but users down, hitting the stock, down more than 16%. back to you. >> continues to sink thank you very much. apple is higher after reporting its better than expected results. for reaction there, we bring in web bush securities and ross gerber, so, ross, 4% gain after hours on top of, it's got to be a 4% 5% gain for apple what do you think? >> i think these are great numbers. i'm really impressed you know, they also prove again the analysts are just always wrong, and it's amazing that it got growth back in china, had enormous growth in services and other products over 30% in both sectors, and their average selling price is up, and their unit sales up on the iphone. we saw pretty much everything we wanted in the report, 16% revenue growth i mean, this company is amazing. they are buying back stock by
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the ton. shareholder friendly we love it >> even though, ross, on those points, it missed street expectations on a few of them like average selling price and capital return, numbers could have been larger relative to what people made of it was it up enough >> yeah. i mean, average selling price going up it is a very positive thing and only 3% growth of unit hand set, but 14% growth in average selling price. the iphone x strategy is working in bringing up the average selling price. what wall street guesses is a game, you know >> you'd buy now then, ross? >> we've been buyers of apple on any weakness for quite some time here and long on this this, one of the top positions >> ian, what about you >> i think you can wait at these levels i mean, i would classify it as a great quarter relative to expectations it did get beared in this front of the print i classify it as a good quarter overall. a lot of the questions that came in before the quarter still
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remain up clear that the iphone x is going to be a real product for them what's going on with china in terms of trade wars, and, also, what's going on with the u.s. consumer and how it's basically overstretched at this point. i don't think we got those answers. i think we got a good solid quarter. we got a cash return story i just don't see the rush to buy right now. i think i can get it cheaper >> yeah, ross, i mean, at this point, i think for those who say you need some kind of a catalyst to get a stock like this moving in the next six months, it's hard to see exactly what that is does the market settle into the idea it's a steady stage story, and it's a company with massive scale, and it looks like it's more predictable than it used to be in. >> well, services revenue is a wonderful thing, you know, because it is predictable, and in my mind, it should increase the multiple of the company because it's a much more consistent revenue stream, but, secondly, i think we're not counting in into the fact apple
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is working hard on video, and they are doing great stuff and working with great people in hollywood, and they are really intent on getting another revenue stream from itunes into the video side so, you know, i think it's very, very narrow mindedunderestimate apple's potential not only to acquire but innovate new products and other services. >> what do you think investors are looking? do they want apple to pursue those opportunities that ross is referring to in media and content? do they just want capital return or do they want it all >> well, i mean, i think first and foremost they'd like to see that the iphone and revenues and earnings that this is not going to be the peak quarter of growth year over year that's what it looks like it's going to be and then i think clearly the capital return story is what people like about the story. i mean, you get a great cash floe yield, you have a great dividend yield and they're buying back a ton of stock
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the only issue the that you won't get the same multiple on that kind of earnings growth as you would for the fundament aal reasons. >> what do you think about the supply chain which has been under pressure, people still trying to figure out what those iphone x production numbers will look like. what you with the supply chain for apple? >> i don't think i'd touch the supply chain for apple because as their margins continue to come under pressure they're going to squeeze suppliers so i don't think it's the best thing to be in their supply chain, especially these days when the competition is so fierce in the smartphone market. >> the old saying opportunity sell the pics and shovels for the gold rush but maybe not in this case. ross gerer, ian winer, thank you for joining us. >> thank you, kelly. >> thanks. >> that's what people said about buying cisco at $70 in 1999. >> did they? that's why make is here. remind us of the recent past.
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more after hour earnings results, then onup from, a top technician has a chart that could prove boyne is not a bubble got to see that coming up. whoever came up with the term "small business," never owned a business. there's nothing small about it. are your hours small? what about your reputation, is that small? when you own your own thing, it's huge. your partnerships, even bigger. with dell small business technology advisors you'll get the one-on-one partnership you need to grow your business. because the only one who decides how big your business can be, is you. the dell vostro 15 laptop, with
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we have another earnings alert here on yum china. kate rogers with those details. >> mixed quarter for yum china, eps coming in with a three cent beat here, 53 cents adjusted revenues $2.2 billion. that's not a comparable number for you unfortunately. comps a nice beat up 3%, kfc comps are really nice, 5u7%. the street had been look 23rgin
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3.6% for kfc pizza hut declined by 5% the street had been looking for .8% growth in that area so kfc very strong. pizza hut a big drop there they also open up 2503 restaurants. they say mobile sales accounted for 56% of company sales and queue on the stock is down because the pizza hut number was weak but for a year they're up 6% back up to you. >> that mobile payment number is impressive big names reporting earnings after hours, we'll recap the movers and headlines when we come right back. from some unexpected friends. these zebra and antelope. they're wearing iot sensors, connected to the ibm cloud. when poachers enter the area, the animals run for it. which alerts rangers, who can track their motions and help stop them before any harm is done.
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we have an earnings alert on shutter fly. eric >> shares of shutter fly jumping more than 8% it was up as much as 10% on the top and bottom line hitting an all time high the digital printing company reported a narrow-than-expected first quarter loss, shares of shutter fly up more than 8% after hours.
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>> what's with shutter fly. >> it's like an overlooked -- >> there's a basket of stocks of smaller internet >> it's like an overlooked -- >> there's a basket of stocks of smaller internet companies down big today. >> shopify down big today. let's get a look at other news after hours apple shares are rallying after the announcement of a fresh $100 billion share buyback. snap going the other way after wall street revenue expectation s. 15% snap right now gilead science is under pressure after missing earnings and revenue estimates after sales of its hiv drugs, gilead down more than 5%, the snap and apple calls start at five. >> apple, it's relief, i see a bid in the nasdaq 100 etf. it shows you it will get a head start for tomorrow but i don't think it will carry -- >> it had a head start today
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apple was up 2%. >> snap unfortunately i think has gotten itself into being an afterthought from an investors' point of view. >> that will be strategically difficult for them to sort out which kardashian tweeted about it she was right, right or jenner? i can't keep it straight i'm sure "fast money" will sort it it. that does it for "closing bell." "fast money" begins right now. "fast money" starts right now. live from the nasdaq market site overlooking new york city's times square, i'm melissa lee. tonight on "fast," it's a crypto crush as regulators take aim at ethereum but a top technician says the chart is flashing a buy sign he'll be here to break that down plus the dow down more than 300 points at the lows of the session, though stocks closed well off the lows but if today's action has you feeling nervous, don't be a top strategist says it's not the year to sell in may. he'll


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