tv Closing Bell CNBC July 30, 2019 3:00pm-5:00pm EDT
>> financially independent person. >> that's right. exactly. they may change that. >> fascinating story, the lengths parent wills go to that's crazy. >> for their kids. >> thanks robert, and thank you for watching "power lunch." >> and "closing bell" starts right now. good afternoon, welcome to the "closing bell. the under armour today, that stock getting slammed down 12% more about that move coming up we've got everything you need to know about the broader markets which are at session highs as we enter this, the final hour of trade. >> welcome, everyone i am sara eisen. let's look what's driving the action slightly lower, the market trading ahead of tomorrow's key interest rate decision from the federal reserve. >> procter & gamble leaves the dow after strong earnings, and coming up in just a few minutes, a big exclusive interview for
you, procter & gamble ceo david taylor will be here to weigh in on what was the best quarterly organic revenue growth in years. joining us now for the hour, though, charlie baa brinskoy from aerial investments. industrials are an interesting standout today given lowered expectations for u.s./china trade hopes. what is that about >> low expectations. we had some people report and they were better than people's fears. we had big companies, the big maker of drilling rigs people were worried about that, they beat, and the stock was up almost 15% zebra technologies makes scanners, and that business was better than expected, the stock up 15%. >> low expectations, you think, which are easy to beat on earnings, but not on the fed you think maybe only able to cut in the short-term? >> yeah, that is the consensus prediction i happen to agree with it, which is one cut, 25 basis points. i don't think they'll pull a bait-and-switch. i think they would not want to mislead the market i think that will happen, but it
is fully baked in. >> charlie's with us for the full hour. lots to discuss with him let's drill in on the big stories we're watching josh lipton has a preview of apple's earnings sarah has more on under armour's big plunge josh, let's start with you >> so the question here is can apple sustain the momentum the stock is up more than 30% this year. it's up more than 40% since low and early january. after the bell we're looking for eps of $2.10 on revenue. that's basically flat on the top line investors are going to make a beeline for this company september guidance remember, apple typically does ship new iphones in late september. of course the expectations for that new iphone are kind of muted certainly when it comes to units and sales. many already looking ahead to that 2020 lineup and whether we see 5g enabled iphones at that point. guys, back to you. >> josh, thank you we look forward to those
numbers. it will be the big thing in the second hour of the show. under armour plunging to the head of the back of earnings, sara, what are the key take aways? >> a rough day for under armour. a turn around is taking longer than wall street hoped for its main market north america showed sales down 3% under armour lowered its outlook from around flat to a slight decline. despite the fact it did report overall improvement in costs, margin, inventories and international growth so what's going on here in north america? market share story for under armour, the apparel, which is its biggest business in the u.s. shrank from 6.4% to 5.6% through june of this year. that's according to mpd. nike and aididas are just grabbing share a company executive told me today they're relying less on sales and promotions, and so it takes a while to train the consumer to pay full price, especially seeing that in their
direct to consumer business. i did ask executives when that will turn. they say they're looking for better numbers starting in q4. comps get easier then, and they are seeing with better shelf space and better relationships with wholesale partners. but wall street is losing parin patience the stock had a nice run of more than 50% into earnings, so taking some of that off the table. most of the analysts that like this stock and like the improvement say it's still on track. just going to take a little longer to see the top-line growth would you buy on this dip? >> no, this is a name that's traditionally had a pe of over 30 i think it was very close to 30 going into this report, so slightly down is bad for a pe of 30 >> do you get concerned when you see the disappointment in north american sales about the u.s. consumer >> particularly when consumer confidence is so strong, and the u.s. consumer is so strong, and the buyers of these products, which tend to be younger people, frankly, good employment situation, earnings are up, this should be a time when their buyer does well, and it's a
little discouraging. >> i would say it doesn't really reflect anything about the consumer athleisure as a category has been super strong, if you look at earnings from nike. if you look at the lululemon numbers that have been put out there. vans, very, very strong. under armour is going through a little maturity stage. it is in the middle of the five-year transformation clearly it's got a lot of work to do. >> over the prior 18 months was up 52%, so today's pullback in that context let's send it over to mike santoli for today's market dashboard. >> real quick go through what we're going to look at, up from the depths this is kind of a maybe imminent turn around story, and then the tide is high that is one very big, very successful stock we're going to look at. back and fill, this is another big stock in the news that's bp tryi been trying to make do without too much wind and full sail, that is about the consumer, which is feeling pretty good up from the depths a lot of ways to slice how this market is behaving in terms of style right
now. this chart is from goldman sachs and it shows the relative performance of stocks with strong balance sheets and weak balance sheets so when weak balance sheet stocks are outperforming, this line is heading up coming off that low in late 2015 when high yield and risky stocks got really pounded it's really been all about strong balance sheet stocks and then you see this little bit of a comeback right here the question is with the fed cutting rates maybe giving some confidence that the expansion is going to continue. the credit markets remain okay, will this continue it's similar to the growth versus value story this is one of those dynamics you want to watch. you've had a one way for a while and then maybe a tentative balance, you could look at the banks too relative performance, and the question is is it going to continue in that direction, guys. >> just a small tick back up, mike interesting given some of the other discussions of quality versus momentum. mike santoli, we look forward to the next installment coming up. president trump taking aim at the fed again as it kicks off
its two-day policy meeting the fed is expected to cut rates for the first time since 2008. here's what president trump said when our eamon javers asked whether a court appointed basis cut by the fed is enough. >> and also higher interest rates simultaneously, i think was a big mistake. i also think that had they not done it, as good as we've done, we've set a record as you will tell -- as you will say in the stock market, we have the all time high of the history of the stock market i think i would have been 10,000 points higher, and i think we would have been in the fours with gdp. >> for more let's bring in chief u.s. economist at jpmorgan mike, what's your take for tomorrow, 25 basis point cut >> yeah, i think 25 basis points has been pretty well signaled by the fed. what's more interesting is what powell says in the press conference afterwards and whether, you know, he confirms the market's expectations that there's a lot more to come or
whether he kind of says they're going to be a little more data dependent. our expectation is that powell signals that from here on out. they're going to be watching the data prac data perhaps a little more than they did in june and july when they were pretty much on autopilot in terms of their rhetoric and in terms of how they were signaling for tomorrow that's our baseline expectation. as i said, the more interesting development i believe will probably be the press conference >> so are you saying that the market may be set up for a disappointment here expecting more rate cuts throughout the year >> yeah, so we're looking for another cut in september, though i must say the data over the past few weeks does, you know, dial down the odds perhaps a little bit that we get -- or maybe i should say ups the odds a little bit that it could be one and done we're sticking with another cut for september, and that would be it if that's the case, i think the market would be a little bit disappointed, not perhaps hugely disappointed you know, the market has already taken back expectations over the past few weeks of strongly expecting 50 basis points tomorrow to now being content
with around 25 basis points, and that happened without too much, you know, disruption in terms of risky assets selling off or anything like that i think you could have a further readjustment here of market expectations, provided that happens in the backdrop of data. it looks like it did over the past month, which has, you know, generally been pretty encouraging data in terms of the momentum of the u.s. economy here. >> is inflation going to stay low in the u.s. and allow further cuts >> i am glad you asked that. you asked me what's the risk that the market is not properly thinking about longer term it is inflation. if you look out three years from now and you then try to look back and you say we had trillion dollars deficits we had record low unemployment, we had countries around the world competing with each other to cut their value of their own currency, i think we've got a lot of things pushing inflation higher. >> people have been saying that for years. >> i know they have, but we haven't had all those factors the way we have right now. you're right, it has been a
prediction people have said for a while, but we've got it all lined up right now. >> i guess you could say a strong currency offsets some of that pressure to inflation look at a snapshot, even if we get a rate cut tomorrow, german inflation was disappointing versus strong consumer confidence, strong housing data. you're not going to get a very weak currency off the back of this. >> i'm glad you said that, the definition of inflation is a weak currency. it means the value of your currency is going down absolutely the reason we've had no inflation is because the dollar has been so strong. the market has shrugged off $22 trillion of national debt, but we are adding debt at a rate of over a trillion dollars a year that has not worked well historically >> who isn't though? >> sorry >> who isn't though? >> and there's no inflation. >> well, we are at a trillion dollars a year, we are bigger than anybody else. there is actually no other country in the world that is adding the kind of debt that we are. there is no point in history that we've added debt at this rate compared to our gdp these are all records uncharted territory. if you go to france and england
back in the 18th century, a lot of the problems they suffered was from excess debt that they couldn't fund. >> so michael ferrell lee, maybe you can weave in your inflation forecast into a bigger question i have about what the economy is actually doing i think the reason this cut is so controversial is there's a lot of disagreement on the street about how much weakening we're actually seeing as a result of slowing global growth and lower inflation and lower capex and that sort of thing so what's actually happening with the outlook >> well, i think the economy is doing better than expected, at least as of a month or two ago when the trade tensions really started to increase. i think a lot of us expected that that would show up in the data, and you know, we have had continued weakness in manufacturing. the global side of the story still looks, you know, plodding along, but all in all, we're not seeing things slow in an abrupt manner, so we do feel like second half, you know, growth will be okay maybe we have it just a little bit shy of 2%, but you know, i would emphasize that the number we saw in terms of the gdp
report last friday was pretty healthy in terms of underlying domestic demand. and i would say on the inflation side of thing, you know, in two weeks we're going to have an upper revision of labor costs. i wouldn't look for an inflation problem in the next few months, maybe not even quarters. if you look out a few years and we continue on this path where we globally continue to run very growth friendly policies, that should put upward pressure on inflation, but i wouldn't look for that right around the corner. >> mike, just quickly on this point about international versus u.s. growth that of course janet yellen commented on over the weekend, where do you stand on that if we do see, say, a full session in the euro zone, would the u.s. potentially be able to shrug that off >> not easily. generally u.s. -- it's pretty rare that u.s. recessions are caused by foreign growth however, i do think that would affected the path of interest rates, and the fed would have to be quite a bit more
accommodative than it would otherwise. and i think the very low, you know, normal skbrinterest rates we're seeing in the u.s., i think a lot of that has to do with the fact that global growth looks to be a lot slower than u.s. growth, and so i would expect that the u.s. economy would continue to grow with a european recession, but we'd probably do that with a much more accommodative monetary and perhaps fiscal stance. >> okay. mike, thanks so much for joining us mike feroli from jpmorgan. still ahead, one of the biggest moments from earnings season as apple gives up their results. we'll bring you all the headlines as soon as they hit. after the break, we'll speak exclusively with david taylor on the back of his company's earnings beat. as we head to break, here's a quick check on our data tracker. personal income, consumer spending and poor pce coming in as expected with small gains in june also consumer confidence in july topping expectations by nearly 12 points. do7.
w's down 22 points "closing bell" will be right back (soft music) - when i see obstacles, i create opportunities. - when i see adversity, i find a way. - when i hear never, i say now. - [announcer] southern new hampshire university is education made to fit your goals with over 200 degree programs, flexible class schedules, and some of the lowest online tuition rates in the nation. (cheering) - so when i face barriers, i can break through. - [announcer] breakthrough at snhu.edu.
high, and joining us now by phone in a cnbc exclusive is chairman and ceo david taylor. good day for cincinnati, thanks for phoning in. >> happy to be here. so this was a huge top line beat it was broad in category it was broad in geography. what's driving the resurgence here in growth at p and g? >> to me the headline is the strategies are beginning to deliver sustainable balance, growth and value creation. while we still have work to do, i'm very excited to see the strategy of superiority across product, package, go to market capability, communication, and value, both customer and consumer really working funded by productivity and brought to life by 90-plus thousand engaged, agile and accountable people that's what's driving it >> is it a statement about the state of the global consumer, david, or is this p & g specific >> i think there's certainly
strength in the global consumer, and that's important and good because it means the categories are constructive and the ability to create value for many stakeholders is there. i think we are leading in innovation in many of our categories, and that's consistent with our strategy, but we want to find ways to grow the category that's good for retailers, certainly good for us, and it improves the value creation opportunities and the categories in which we compete >> so the guidance everyone was looking for, fiscal year 2020, 3 to 4% organic revenue growth was certainly cheered by wall street it was better than expected, but it is a bit slower than the kind of numbers you reported today. so just talk us through what goes into your outlook there >> certainly, the guidance reflects the fact that we will be anniversary four quarters that are 4%, 4%, 5%, and 7%, so the two-year growth is very strong it also recognizes there's still
a lot of uncertainty we expect and frankly respect our competitors and expect them to come back in ways that we're going to have to respond to, and we're dealing with a micro environment that is still somewhat volatile. what we wanted to do is be prudent about the guidance but very committed to accelerate growth everywhere we see an opportunity to do it in a value creating way >> have you talked to investors and analysts right now, david, i mean, the exciting story is the innovation that's happening in p & g right now. can you give us some examples of what's working beauty was such a strong growth area, baby had some nice improvement. what's driving those kind of gains in market share and in volume gains >> well, it's driven by the strategy, but i'll give you one we haven't talked. we've taunlked beauty in the pa, fabric care many times, i can go to almost ten categories and give you examples. our global home care business, that's including our hard surface cleaners, swiffer,
swiffer,febreeze, each one of those, if we take hard surface cleaners, innovation called clean freak is growing magic eraser you've probably heard of grew 25%. swiffer we launched heavy duty which better serves consumers that have more challenging jobs in cracks and crevices in their floor, febreeze, fabric refresh r was up 5%. dish, both auto and hand dish are growing behind the premium platinum launch. all of those illustrate that when p & g innovates and delights the consumer we can accelerate market share. home care grew share across the area and has hit a record share driven by the innovation, and funded by outstanding work on productivity >> china looks like another double-digit quarter are you seeing any evidence there of an economic slowdown, and are you feeling any of the pressure from the trade tensions
twe between the u.s. and china >> i'd say if you look at just the consumer data, china's still very strong. there's a modest slowdown in category growth rates, but it's from very healthy levels so from maybe high single-digits to left high single-digits in most of our categories, and that may be nine to eight to seven and some categories may be a little softer, but still what i consider robust growth the chinese consumer is especially interested in premium products that provide superior benefits we've seen continued premiumization in china, and as we've accelerated our innovation, it has helped drive a lot of the growth that you've seen throughout the year and certainly very strong in the fourth quarter >> what about tariffs and maybe if you could throw that in with commodities and foreign exchange and all those things that are out of your control and just how you would describe the environment for those types of issues right now i would assume you feel all of them to some extent. >> no, you're absolutely right,
sara, this last year that ended june 30th, we've characterized it almost as a tsunami of collection of macro events that caused about $1.3 billion of hurt about 900 million of that was foreign exchange, but also significant commodity impacts, transportation and warehouse, warehouse costs that went up, and we've seen an impact on tariffs. what's helped us still deliver the plus 7% was the productivity program was very strong, and that allowed us to maintain investment in our product and packaged superiority as well as all elements of superiority and offset it. but yes, the macro environment is challenging, and i can't predict and won't try to predict what foreign exchange will be going forward, but what i can work on in our team of 90,000-plus people are working on is generating productivity on every cost bucket, cost pool to make sure that we've got the
contingency plans to continue to support the business. >> and really quickly, and we're under 24 hours away from what looks to be a federal reserve rate cut, the first in ten years. how would you describe the u.s. consumer, the u.s. economy, and whether we need that >> the u.s. consumer in our ten categories remains pretty strong the growth rate in the u.s. of the categories has been 3% and in some cases, some categories, 3.5 to 4%. so very robust, and we're doing everything we can with the innovation that we bring to continue to accelerate growth in the categories we expect maybe we've seen a modest decline in some categories, but overall the u.s. is healthy, and the consumer is respondent to innovation that delights him or her. >> david taylor, thanks again for making the time. >> thank you >> ceo and chairman of procter & gamble guys, the stock up 50% over the
last 12 months, so this kind of improvement in sales has been building and building and building, but 7% organic growth. that's like the old days of procter & gamble >> the question i was going to ask, sara, who do we give credit to, taylor or pelz. >> it's a combination. they've worked really well together i think the company would say to the employees, but clearly the plan to eliminate that matrix organization and get much more accountability and responsibility and innovation on the ground, just cutting out the layers and layers of corporate management was something that nelson pelz campaigned for to join the board that process sped up i was in cincinnati a few months ago when they announced it, and growth has really sped up since then the seeds were in place for this kind of transformation going into this fight. taylor deserves credit as well, and the stock has just really worked now i wonder how much room there is to go. >> yeah, i'd give the company and management credit for the
sales. i give pelz the credit for the -- he did get them to focus on inefficiencies. this sales story is really impressive. >> p & g up 4% still to come, wall street analysts are weighing in on pfizer's big deal with mylan we'll get the word on the street that's coming up next. every day, visionaries are creating the future.
. welcome back, let's get a quick check on the british pound sliding yet again against the dollar amid concerns of a no deal brexit. it's now down about 2.5% against the dollar since boris johnson took over as prime minister. it's down 4.2% in the month of july, which of course for a currency is a huge move. we've blown past quite a few support levels in that slide over the last month including today, 121, 6 was the short-term level. speaking to traders today, 119.88 is the next key level they're looking at that's essentially the effective low of 2017 if you put aside a
very brief flash crash and below that there really isn't much support going low. that's the kind of short-term level to watch as for how much of a no-deal we're pricing in, a lot of traders tend to use the range 140 if all of this went away, 110 if we did actually get a no deal, so we're sort of 66% of the way to pricing that in at the moment but 4% slide in the course of just a month. >> because boris johnson is so much tougher on the talk of no deal. >> so much tougher with his rhetoric, and it's hard to see in the month of august how that gets better because parliament's in recess, so there's no check on his rhetoric at the moment, and that's what's really affected markets over the last few weeks. >> maybe this is his whole negotiating ploy just to be tough with the e.u. >> could be and august of course not a great month to see volatility fall, and then in september you get the prospect of seeing -- >> did they get lower prices yet at liberty london? >> i doubt they've lowered prices but for you in dollars you're looking good either way
>> i guess raised to offset the pound is what i mean. >> i think -- >> i think i'd do well. >> i probably would either way time to get word on the street, oppenheimer initiating 10 cent music. the firm citing monetization potential and enhanced content as well saying it's a better music play than spotify. >> morgan stanley and bank of america downgrading pfizer to neutral, after pfizer's planned deal to merge its off patent drug business with mylan both of them cutting their price target from sort of the high 40s to the low 40s, similar sort of price cuts for both, and that's kind of why we're trading at the moment what's your take on this one >> this is another one very sensitive to regulation. there aren't a whole lot of things that democrats and republicans agree on, but drug prices they do and i think this a second trump administration or a warren administration or a sanders' administration there would be real pressure on drug prices i think the long-term outlook
for these stocks is going to be interesting. >> so are you out of them? >> we do not own any i own j & j, which is well distributed in the med tech, but the core bio tech and pharma companies i think there's long-term risk. >> that's how you feel about social media stocks, stay away, too much regulation. >> technology, the two industries i think they could come at hard are social media and drug companies. time to get a cnbc news update with sue herrera. hi sue. >> hello everyone. on capitol hill the acting commissioner of u.s. customs and border protection mark morgan defending his agency's treatment of migrants on the southern border. >> the men and women of the cbp are not running concentration camps making those in our custody drink from toilets nor denying them access to toothbrushes that is simply not true. this is the kind of irresponsible rhetoric that they have to endure from both the media and even some of our own
congressional leaders. >> protesters clashed with police again in hong kong after reports that some of -- would be charged with rioting 44 people were arrested on those charges stemming from a sunday night demonstration. in india, lawmakers approved a bill to end the muslim practice of instant divorce. two years after the supreme court ruled that it violated the constitutional rights of muslim women. muslim men could divorce their wives by saying the arabic word for divorce three times at any time you are up to date that is the news update this hour guys, i will send it back downtown to you. >> don't want to get that word wrong with -- repeating it. >> no, you don't that's why i stumbled it >> get it wrong. >> sue, thank you. >> you got it. we have got just under 30 minutes left of trade. we are about 52 points or so on the dow. the three things driving the
action, the market treading water ahead of tomorrow's key interest rate decision on the fed. on the data front, strong u.s. consumer confidence and housing numbers and p & g is leading the dow after strong earnings as we discussed earlier. 28 minutes to go in the session. let's send it back to mike santoli. >> the tide is high, david taylor went through all the reasons the company is really clicking right now what this chart shows is that wall street really appreciates this story this is the forward price to earnings multiple on procter & gamble going all the way back to the end of 1995. what you see of course here it has just gone vertical it's well up near 25 times next 12 months expected earnings. it also happened in a similar way i would say around 1996 into '97, and this period had some resemblance to our period right now, which is the market all it really loved was big tech stocks and huge multinational blue chips. they both got pretty over valued you see where it went there.
i do think you have to keep in mind it's building a pretty big premium to the overall market. here is p and g's evaluation against the s&p 500. you can see it's broken higher out of a range it's been in for a long time, all of which is to say things going well at procter & gamble, but no longer a secret to investors the question is will they continue to build in a premium. >> thank you very much after the break, we will speak with the ceo of horizon bancorp. >> plus, charlie doubling down on a previous media pick for today's last chance trade. we're going to reveal the call stay with us, "closing bell" will be right back, under 30 minutes to go, dow down 50 minutes to go, dow down 50 points abouten. and put back together. this is also hal's heart.
causing uncontrollable tremors. now, abbott technology can target those exact neurons. restoring control and harmony, once thought to belost forever. the most personal technology is technology with the power to change your life. welcome back capital one's plunging after announcing a security breach affecting more than 100 million customers. gained access to customer data including social security numbers and account numbers. this breach comes despite financial institutions investing billions of dollars into cyber
security each year joining us now, craig white ceo of horizon bancorp. craig, thanks very much for joining us. we're going to get on to your earnings, which were very strong in just a moment, but we could start if you don't mind with that capital one hack. what's your take on it, and how confident can any bank be that they are safe from these sorts of threats >> well, something we all are -- stay up late at night worrying about is cyber breaches et cetera. last night i signed up for the equifax data security and their breach that happened a couple of years ago. and unfortunately another one occurred today we do need, i think, government support to help defend against these actions going throughout the world, and it's unfortunate to hear about capital one's breach today >> how confident are you that you are protected as we sit here right now? >> as confident as probably capital one was. i think we all think we're doing
the best job we can. i'm a small bank, 5 billion of total assets headquartered in indiana, michigan, we had a great technology team. we have all kiepds of cyber walls and cyber security, but does anyone know how well they're protected when you have state sponsored cyber attacks taking place, even though this happened internally within the united states, there's a lot of attacks taking place every single day >> craig, let's move on and talk about your earnings, strong loan growth, strong deposit growth year-over-year, it doesn't paint the picture of a u.s. economy that requires a rate cut tomorrow, does it? >> no, it does not a lot of the community banks we're following also reported strong earnings for the second quarter. we reported record earnings for the second quarter what was supporting our earnings growth was the consumer side of the balance sheet and consumer loans. commercial loans actually fell down during the second quarter, but consumer and mortgages have had a strong rebound, primarily the lower interest rates as well
as the low unemployment rates for the consumer they're still spending their money. >> i was just going to ask about your outlook for m&a i mean, it always feels like a ripe place for deal making, the regional banking space is that something that you expect that you're going to be active in? >> yes, consolidation's going to continue to take place in the banking industry, about 5% of the banks are sold every single year, and for indiana, michigan, and ohio banks we expect about 22 looks every single year we've completed 14 acquisitions over the last 17 years and seven over the last four years we are very active in the mergers and acquisition game that would be an important part of our growth going forward. we like to see it about 50% mergers and acquisitions, and 50% of our growth organically. >> craig, you've got quite a high exposure to agriculture, given where you're based do you feel like farmers are feeling the pressure of the trade war? >> actually, we don't have a high exposure to ag.
we're about $100 million out of our $5 billion in total assets are in ag. we have an outstanding ag group. the farmers had a decent year last year in indiana and michigan what's hurting this year was the wet crops and the rainfall from the spring sometitime delayed tr ability to plant if they have crop insurance farmers are going to do quite well and report a profit because they didn't have the input cost due to the wet season. we actually think the ag industry in the midwest is not that bad the production will be down, though, so next year prices should go up >> do you see any areas of caution coming down the pike in terms of the economy, consumer, business, appetite for spending and taking out loans anything to be concerned about this year, the end of this year? >> consumer lending is really quite strong both in automotive, home equity, and home repair the challenge i think right now is we're seeing some softness in the c & i industry there has been some announced
layoffs in the eastern part of michigan and the automotive industry, and consumers, as long as they're continue working will continue to spend. with the low interest rates we should see a bigger uptick in mortgage volume this year. >> craig dwight, thanks for joining us >> thanks for having me on your show >> ceo of horizon bank after the bell we'll get earnings from apple, amgen, we'll get reaction from mad money's jim cramer who's got a special show from outside the stock exchange. >> he must be melting. >> it's really hot out there and i think raindrops started falling as well. that's all coming up on "closing bell," gearing up for a big afternoon enis thheofarngwi t dow down 53 points, under 20 dow down 53 points, under 20 minutes until the close.they'll. voya. helping you to and through retirement.
>> i'm going to guess that you are not touching this with a ten-foot pole. >> very good guess. >> i covered avm as an investment banker and they always talked about the meatless hamburger they were going to have nobody's ever got this test right, but the latest products seem to be getting closer and closer. >> i know you're not touching it but relative to 800% off three months after an ipo you could be much more spooked than that. >> especially because of the secondary offering there is going to be a lot of stock for sale i guarantee the people who invested in this as venture capitalists are looking to get out of this. >> what's your problem, valuation sm. >> no earnings i've seen a lot of other companies talk about their meatless hamburgers. >> you said that especially because of the offering, i'd say only because of the offering. >> exactly >> eps is a miss, it doesn't matter at this point the revenue is better than expected. >> down a percent off earnings and then it spilled another 10 plus. >> there's going to be a lot
more stock for sale. >> beyond meat down 12% today. we have got just 13 minutes left of trade, we are lower by only by about 47 points on the dow. you can frame this as outperformance relative to a 2% decline in europe. >> small caps up a nice 1% up next, your last chance trade. "closing bell" will be right "closing bell" will be right back don't get mad. get e*trade, dawg.
here, hello! starts with -hi!mple... how can i help? a data plan for everyone. everyone? everyone. let's send to everyone! [ camera clicking ] wifi up there? -ahhh. sure, why not? how'd he get out?! a camera might figure it out. that was easy! glad i could help. at xfinity, we're here to make life simple. easy. awesome. so come ask, shop, discover at your xfinity store today.
ten minutes until the close, charlie your last chance trade >> this is a very con trarn idea everybody hates cbs and viacom together we think they're going to merge we think there's $750 million of synergies. these companies are already trading cheap, but eight times earnings combined, they're going to be extremely cheap and earnings are going to grow because next year is a political year. >> they're going to merge by next wednesday >> we think they could merge they were planning to announce earnings we think they're going to be having merger talks this week. >> you say august 7th. we both know exactly that day, it's our birthday. >> twins.
>> this is actually a little freaky august 7th is my birthday. >> this is a little freaky >> seriously >> august 7th. >> that is crazy also the great bill griffeth's birthday as well. >> mine's a little before yours. >> that's so funny. >> is it cheap relative to a comcast or relative to a netflix? >> it's relative -- cheap to a comcast, to both people, again, think that cbs is losing negotiating power because of cord cutting, and that is absolutely true but on a combined basis they're going to have more negotiating power. >> there we go last chance trade, i can't believe all of our birthdays. >> this is a whole new bonding experience. >> 365 to the third power. >> a big hour of earnings, let's get a preview of electronic arts with julia boorstin. >> well, wolf with electronic arts facing a stiff competition from its games for fortnite the big question is whether the multidigital player game can deliver upside
its first season launched in february and its second season earlier this month in the first fiscal quarter revenue is expected to decline 4% to $719 million while earnings per share are projected to decline nearly 95% to just $0.01 per share. it is apex that's considered a wild card for just how well this company can perform. sara, back over to you. >> all right, thank you. we've got eight minutes left of trade, up next, we're covering all the angles of the market in our closing countdown. dow down 34 points stay with us ♪
you should be mad they gave this guy a promotion. you should be mad at forced camaraderie. and you should be mad at tech that makes things worse. but you're not mad, because you have e*trade, who's tech makes life easier by automatically adding technical patterns on charts and helping you understand what they mean. don't get mad. get e*trade's simplified technical analysis.
just about five minutes left to go, time for the closing countdown. let's trade the close, kevin hanks joins us kevin, in the next, i don't know, 24 hours we'll get the apple earnings, amd earnings, clear bellwether for the semis and of course the fed decision talk about the market positioning ahead of all of these key event risks and what you expect. >> i've got some interesting tidb tidbits for you guys, first and foremost out of 21 earnings reports, right, we've got the average expected move for apple and amd. first apple, about 4.7%, and that's exactly where it said at midday today, but this late in the day rally and apple has taken that expected move down from $9.50 down to $8.50, so the expected move based on implied
volatility has dropped a full dollar from midday today until the end of the close so that's pretty significant the other name, amd, 21 earnings reports, average move about 12.2%. this move that we're expecting today only about 8.4 so both apple and amd a little lower expected move than average going into this earnings report. >> kevin, what do you think the market's looking for tomorrow from the fed >> i think this market is setting itself up to be disappointed some of the people want to have basis point rate cut i don't think they're going to get it i think the wagy jerome powell states his mandate going forward, i think he's going to cut a quarter point. his wording, that press conference at 2:30 eastern time is going to be vital to how this market consumes and digests what the fed does tomorrow.
>> kevin hincks thanks so much for joining us hey, mike. >> back and fill, that's what a boat does when it doesn't have the wind in its favor, it has to ride the tide. that's what apple has been doing. we talked about that expected move after the close on earnings look at the setup in that stock going back two years here. what's significant is where it stopped this latest rally, right below the may highs. obviously a 4% move to the upside would actually take it above that, and of course you have this bigger high from late last year up about 232 so it seems as if there's still a struggle to figure out if apple's really resuming an up trend. look at it on a one-year basis, some other sectors of tech it has been underperforming a lot of these different areas it's been underperforming the overall tech sector, the software sector, that is semiconductors you see the white there, apple has struggled to keep up look at this same relationship over ten years, and you see that apple has basically built up a tremendous lead. it's only backed off a little bit, and look at these sections
here when it flattened out for long periods of time, but then eventually went higher that's the setup, guys 22 hours until the fed decision. let's get out to rick santelli. >> thanks, mike, you know, if you look at a micro view of ten-year notes over a three-day chart, you can see how compressed these ranges are getting. this is going to be the tenth day we've closed between 202 and 208. if you take a big view, if we drop ten basis points, that would take us back to november of 2016, so keep that in mind when you look at the next macro chart. this is a may $2,017 index hovering right there, right ready to pop out with history. rates low, and that's really going to be a bothersome effect to the fed now bertha, we couldn't stay in positive territory in the nasdaq. >> depends on what you're looking at there, rick we've got bio tech positive that led by earnings gainers, and small caps like mesa labs.
that is helping to boost the small caps overall chips are mixed. that's what's keeping tech pretty much tamped down. we did get good numbers out of nxpi although the guidance was a little bit less than some folks had liked. we will be watching for amd earnings after the bell. amd expected to post earnings of $0.08 a share on revenues of about $1.52 billion. over to the nyc right now. >> thank you, bertha we did get some help from proct procter & gamble, great numbers, historic high there. pfizer down another 6% today after being weak yesterday a caterpillar, some of the industrials still slightly trending downward here, even visa, new highs recently didn't have a lot of help today we had some weakness in some of the retailers, some of the car people, carmax, group one, automotive were on the weak side and away saw weakness in some of the hospitals, hco holdings had disappointing earnings down 9% capital one weighing on the financials with that data
breach, ryder had a warning there. there's the dow jones industrial average closing down 27 points on the day the s&p 500 couldn't make it into positive territory either the fed tomorrow welcome to the "closing bell" everyone. >> let's take a look at how we finished up the day on wall street lower across the board except for the russell 2000 index of small caps jumping 1% today. the dow kind of flattish closing down 22 points you had very strong numbers from p & g offsetting weakness from pfizer, intel, and verizon within the dow you want to see in a lower market if not for groups like energy, oil had a 2% hop today, those stocks did well, real
estate, materials, industrial, and consumer staples all closing higher consumer discretionary and utilities the worst performers. >> well off the lows, which came at the open, which is no surprise given that europe was still open we got a big snapshot whetheri was market moves, macro data or company earnings, the difference in sentiment around the rest of the world and the u.s. the u.s. definitely the outperformer in that sense, europe was down 2%, the dow only down 1% stands out >> talk about the u.s. versus the world, that consumer confidence soaring today, even pending home sales looking pretty decent. >> and apple, by the way, intraday all over the place, as low as 207, as high as 210, closing around 208, and we are counting down to apple results they're due out later this hour. first, we'll have results from a slew of other companies. our team of reporters are standing by. we'll bring you all of the numbers as soon as we get them. >> joining us to talk about the market today, liz young director of market strategy at bny melon investment management, and
charlie bobrinskoy still here, head of aerial investments mike, what are the chances of that >> well, charlie told you it's 365 cubed. and my birthday is not august 7th and i'm not sure about liz. >> july 3rd. >> all right, not too far. >> happy birthday. >> so what stood out it feels like we're in this waiting game. >> the market likes to pull itself into a neutral position ahead of a big thing like the fed meeting. you saw laggards get picked up you mentioned energy, small caps up 1%. some of the hot stuff cooled off like software and mobile payments i think it's really getting itself in that position, consolidating around the recent highs just to wait for confirmation of what i think is universally expected. >> is it going to be hard for the market to outperform following the fed meeting tomorrow >> i don't think it's going to be hard. as mike points out, we're expecting a cut. the market is fully expecting a cut. it's really a matter of whether it's going to be 25 or 50 basis points i would expect it to be closer to 25 basis points
i think if they did 50, it would just be an indication of how active the fed would be in this. the chance of there not being a cut at this point obviously pretty low, and i think really what the fed would watch is that if they didn't cut, it would tighten financial conditions probably further than really is warranted, even with some of this good economic data. >> let's just game this out. while it's not the most likely scenario, if they do surprise with a 50 basis point cut, charlie, does the market celebrate that >> i think it's a mixed signal i think it would mean that they're seeing more softness than the rest of us are seeing, and so i think the better scenario is 25 basis points tomorrow with an indication of another 25 down the road that would probably be okay. 50 basis points tomorrow would make me nervous about the state of the economy >> but would it make you buy u.s. equities in the short-term? >> i'm seeing a lot of strength in the economy and i keep having this fight with the fed and with a lot of other people about whether there's a recession coming the bond markets was saying there's one coming i don't see it i see good results so far.
until i see something different i'm going to stick with a strong economy. >> i think today that op-ed from bill dudly former new york fed president saying 25 basis points and then done or at least a message that says we're on hold, i think that kind of moves the expectations a little bit. i don't think that's what we're going to get the fact that that's one of the voices out there lessens the 50 basis point camp. >> the problem with that approach as i see it for powell would be it risks a big market selloff and tighter financial conditions which is what the fed is trying to get against. >> it also does not necessarily get the yield curve in the shape you want it in just 25 basis points and not cutting anymore at the short end, you're still probably very flat yield curve to me that's been the beacon for why the fed's moving now anyway. >> does the yield curve matter or does it purely link to what it means for market sentiment and therefore financial conditions >> i think the yield curve is still manipulated at this point, and i don't think that we're going to get an inversion at the twos, tens which is what you
really want to watch what we're going to see tomorrow, the difference between 25 and 50 basis points is a matter of 25 being kind of that insurance cut like we've been talking about. 50 might even be more of an indication that we're starting a rate cutting cycle so if the fed sees things that everybody else isn't seeing or if there's more weakness than we believe, they might be indicating that they're starting a rate cutting cycle, which i think is risky because woe don't have that many tools we can only cut so many times before we get to zero. if we're not not in a recession situation, i don't want them to use up all their tools. >> we've got our first earnings alert, it's gilead and amgen >> let's start with gilead it's a beat in the second quarter for the company. earnings per share coming in on an adjusted basis of $1.82 topping by $0.10 revenue 5.69 billion versus estimates of 5.53 billion on average. it's all about their hepatitis c drug and hiv drug franchise. hiv drugs came in at $4 billion,
just shy of the 4.07 billion that the street may have been looking for. vcv looks like a beat, versus $737 million for gilead. let's switch over to amgen, another beat eps for amgen 397 versus analyst estimates of $3.59 revenue $5.871 billion versus expectations of 5.677 billion, company also raising the lower end of its revenue and earnings guidance for the year. most of that beat guys driven by its big drug enbrel. back to you. >> meg, thank you. i can hit the mondelez numbers which are just crossing the tape right now. the snack maker with a beat and a raise here let's go through the headlines earnings per share $0.57, that was a match on 57 expected revenues coming in higher, 6.06 billion versus 6.03 estimated. it's organic revenues that matter most and that was the
strong beat here, up 4.6%. the street was looking for 2.8%. and some nice guidance increases here for mondelez. they raised their organic net revenue growth guidance to over 3% before that, for the year they were at 2 to 3% that's on the high end they also raised their adjusted earnings per share guidance to about 5% from 3 to 5% and raised their dividend 10%, 0.285 per share, guys. crackers and cookies are working right now, and also i would say so is the global economy this is a company that owns oreos and ritz and all these power brands, which is where you want to be in the food space right now. you don't want to be in canned soup you don't want to be in boxed mac and cheese you want to be in cookies and crackers they're the most internationally ebs posed. they've only got about 20% revenue in the u.s we're all worried about a global slowdown and yes they're kind of defensive and you always have to buy food, but stronger growth in
these countries shows that it's not all bad, especially in the emerging markets >> people have been worried about the -- you're right they have good products people have been worried about branding consumer products this is a nice number showing the strength of the american consumer and the global consumer, and they have the oreo which is the greatest product ever invented. >> really that does help drive results. they've also got this new ceo, he's put in place a very localized strategy in other words if you're going to be in russia, make cookies that russians like if you're going to be in the u.s., that's continued to be a strong revenue driver, really good chocolate chip cookies. >> and it seems like pricing across the board, if you look at these companies reporting, it's being tolerated. consumer is willing to go for it. >> and mondelez having a nice mix of higher prices, which you've seen but also some volume growth there as well >> mike, what about the valuations for this sort of company? in the environment we've had they've run up well, but mondelez, it's not a stretch as some of these -- >> no, i think that's just where they trade
the bigger, more stable quality companies that have these predictable earning streams with a little bit of a growth extra and a decent yield, they're getting priced against the corporate bond market. that's why you have a full valuation. it would be odd if they weren't priced as expensively. obviously a rotation away from safe into cyclical is not going to help them that's kind of where it makes sense. >> where are you in this space sm. >> we like smucker's, which is the one name in this space which isn't trading at 20 times earnings, it's more like 14. people don't like the coffee business and we think that's exaggerated. you're right, the safety trade, people looking to be defensive has helped these stocks. >> it's foldgers, pet food, quite a mix. >> if we were to get a 50 cut. >> you want to be cyclically bullish. financials look nice, they're going to have to take part on some of that you want to bet on the consumer,
i.t., consumer discretionary. >> thank you for joining us. happy birthday in advance. >> thank you for having me >> great to have you both with us up next, find out how a fed rate cut could impact the financial sector when we speak to the ceo of kbw: we're minutes away from apple earnings we'll have analysts and shareholder reactions as soon as that is out. plus, you'll also hear from "mad money's" jim cramer "mad because when it'ser decision time... you need decision tech. only from fidelity. you need decision tech. - stand up if you are first stand up if you're a mother. if you are actively deployed, a veteran, or you're in a military family, please stand. i will tell you this, southern new hampshire university can change the whole trajectory of your life.
how can i help? a data plan for everyone. everyone? everyone. let's send to everyone! [ camera clicking ] wifi up there? -ahhh. sure, why not? how'd he get out?! a camera might figure it out. that was easy! glad i could help. at xfinity, we're here to make life simple. easy. awesome. so come ask, shop, discover at your xfinity store today.
the federal reserve is expected to cut interest rates tomorrow for the first time since the financial crisis lower interest rates could pose another headwind for regional bank stocks which have already been underperforming the broader market this year joining us to discuss from the 20th annual kbw investor conference is thomas michaud, thanks so much for joining us, tom. >> good afternoon. >> firstly, i just wanted to ask about the interest rate environment. if we do see a rate cut tomorrow, how quickly do you think we'll see deposit rates react across the regional banking space? >> i do think that banks are going to try to be as quick as
they can in terms of reflecting any changes in market rates. i don't think it will be 100% because there still was a little bit of an adjustment going from some of the prior rate increases because this is a slow-moving item in terms of how quickly a bank's balance sheet readjusts but at this conference right here, we've been hearing from bank management teams that they will be reactive to what market rates are and what government policy is. if there's a rate cut, they will look to make adjustments as much as they can as well. >> thomas, the regional banks have significantly underperformed the nation's biggest banks of late. is that something that makes sense to you, or are they due a catch up >> i'll tell you what's really been remarkable is by how much all banks have underperformed since the first half of last year, and i was listening to much of the conversation that you are having earlier, which is that we think that the forecast that's in bank stocks right now
really adopts the more bearish view, and to the extent that the more bearish economic outlook doesn't play out, you could really see a better bid for all bank stocks that look like they're about 20% undervalued relative to the market with regards to your question, on friday we upgraded the nation's biggest banks to outperform our preference is more for the biggest banks because they rely a little bit less on the yield curve for earnings growth and revenue growth, so while we think that all banks are undervalued, if you had to pick one spot, we would actually right now focus object biggest banks in the nation. >> tom, what are you hearing in terms of pockets of loan growth, where has been the strongest for consumers and for businesses, and what parts are the weakest >> it's been really interesting. i wouldsay, sara, there have been two areas that have been the biggest areas for questions. investors keep asking management teams about how they're dealing with what's been a slowdown in
the economy and with a flatter and lower yield curve, and they're talking about loan growth in all the different categories i think, like in many cases, the consumer has been in a little bit better shape than commercial customers, and then what's also been interesting is that management teams have been asking investors why do they think that their stocks created such a significant discount to historical levels. those have been the two areas, one is your loan growth question and the second is why are these stocks so cheap right now i think has been a big talk of this conference. >> thomas michaud, thanks for joining us. >> thank you. >> kbw. we've got an earnings alert on electronic arts, julia boar stin. >> revenues beat estimates net bookings, that's the revenue number we watch coming in at 743 million. that's better than the 719 estimated. the company reporting earnings
of $4.57 per share, that's not exactly comparable with estimates because of an income tax benefit calculated into those earnings the company's saying we delivered operating results significantly above our expectations, driven by the broad strength across our core franchises, and they mentioned apex legends, which is a new game that's competitive with fortnite as one of those farkts driving success. guidance coming in line with expectations, you see shares trading 3% higher in the after hours. guys, back to you. >> julia, thank you very much. mike, this clearly in a very hot space but hasn't really taken part in the last 12 months or so. >> the stock itself has been kind of in the penalty box because of the fortnite thing, the releases weren't that great. stock was back here three weeks ago at 92. so it's obviously just picking up from relatively low levels. >> up 4% >> coming up, apple earnings just minutes away. we will get the apple earnings trade from "mad oney's" jim
apple earnings are just moments away, but we've already gotten results from mondelez which beat revenue estimates gilead beating on the top and bottom lines and electronic arts reporting stronger than expected three winners after hours as you can see led by ea. time to get a cnbc update with sue herera. >> hello, sara, hello everyone here's what's happening at this hour, california's governor
gavin newsome signing legislation requiring candidates for president to disclose their income tax returns in order to appear on that state's primary ballot the bill aimed primarily at president trump is likely to face legal challenges. air force general john hyte president trump's nominee to become the voice chairman denying sexual assault allegations against him. his accuser responded afterwards. >> i would also like to know as a victim, i felt like i got sandbagged in there. you want to know how an investigation was done, it blamed the victim. it did not investigate the subject thoroughly. british prime minister boris johnson visiting a chicken farm in wales, part of his national tour to reassure voters that his push for brexit won't hurt the economy and rip apart the u.k. the farm owner said the prospect of a no-deal brexit was a massive concern for his
industry you are up to date, that's the news update this hour. guys, i will send it back down to you. >> that concern weighing into the pound today and over the last couple of weeks as we discussed earlier. sue, thank you apple earnings, of course, on deck. less than ten minutes away up next, mad money's jim cramer will react to the numbers with us, plus we've got an analyst and a shareholder to react also seven and a half minutes or so until apple we're back in a couple minutes let's do it. [ sniffing ] also seven and a half minutes or so until apple we're back in a couple minutes summer event today sz for exceptional offers. lease the glc 300 suv for just $419 a month at the mercedes-benz summer event. going on now.
apple earnings just minutes away we've got an alert now on fire eye, ra held solomon with the details. >> plummeting in after hours, more than 14% after a surprise quarterly lost of $0.01 in the second quarter analysts had expected a $0.01 beat with revenue they did come in above estimates but sales in the key product category missed projections. reduced outlook in the second half of 2019 citing greater than expected increase in expenses residented to cloud and commissions on new businesses saying that negative live impacted their growth and
operating margins, plummeting more than 15%, almost 16%. send it now to mike santoli for the final dashboard of the day. mike. >> the consumer is really riding this economy pretty much with a lot of confidence. let's look at the consumer confidence indicator over a very long-term period of time big bounce today as you guys mentioned earlier, back towards the cycle highs, and actually, not very far off the all-time highs right there from the year 2,000. a lot of folks said how can the fed be cutting rates with consumer confidence in this level. i'll point back as we keep pointing back to the mid-90s right here, this little congestion there, that was right before the fed cut rates in mid-1995 it was a near miss on a recession, a global slowdown, and then things picked up from there. it's not unprecedented i would also point to 1998 was another time when we had a little bit of a switch back in confidence and the fed was
cutting rates. where consumer confidence is not inconsistent with thefed easin at least slightly and at least for a short period of time. >> the bears would say hey, consumers lagging indicator of the economy. >> all the more reason to cut then. >> mike, thank you very much for that we've got another earnings report out, and it's a and d which is sliding after hours. >> it is sliding the current quarter, second quarter results were more or less in line $0.08 on the bottom line in terms of earnings per share. on the top line it was a little better than expected, at $1.53 billion. among the areas that were strong, it was their enterprise segme segment, revenue there 590 million. the street had been looking for about 570 million. little bit soft when it came to their computing and graphics segment, that revenue 940 million. the street had been looking more for 960 million. their gross margins were right in line at about 41% the problem here is on the outlook for revenues for the third quarter. the company is now projecting
1.8 billion in revenues, plus or minus 50 million the street had been looking for closer to about 1.95 billion in revenue, don't really have a number on the bottom line, but they do actually anticipate better margins for the third quarter than the estimate of about 43%. for full-year they are maintaining their outlook. they are launching a new chip on august 7th, your mutual birthdays. they do expect that to drive results in the third quarter we'll come back to you if we see any more the conference will be taking place this afternoon. >> such a good day. >> bonus points. >> maybe we'll be given a new chip for our birthdays. >> that's going to be a crazy show >> mike, a and d, i should point out it did slide down 7 or 8% in the immediate reaction it's down 2 or so percent at the moment and it's sharply higher.
>> year-to-date more than 80%. best technology performer. >> i think it's just moderating little bit of the excess confidence or optimism semiconductors in general had this huge run. it may be time to just pause a bit. apple of course the big focus. it's due out any moment now. let's bring in ed snider, analyst, nancy tangler from tangler wealth management, and ed lee, cnbc contributor from the "new york times" who are here to react to the numbers due any moment ed snider, what's the key thing you're looking for >> we're primarily looking for revenue for iphones. since last year when things faded they stopped you want to see what they're making off the iphone this year and try to extrapolate how the -- progress is going that's where apple turns on all future earnings is to make sure their iphone business remains strong. >> what's the key item you're looking at ed? the same thing we want to get a better sense of -- we'll have to back out uni sales, that's the thing going
forward for us specifically in the china region, i want to get a sense of that we know they didn't get the tariff thing they were asking for from trump, and you know, the quarter's not necessarily going to reflect that. we want to get a better sense of the challenges they face in that region that's a huge part of what we want to be thinking about. >> the shares today were a little bit all over the place within the session, 207 to 210 the range. we are expecting the numbers any moment it's up 2% the immediate reaction, josh lipton's got the numbers josh >> apple reporting earnings per share here of $2.18 versus expectations of $2.10. revenue 53.8 billion the street was at 53.4 billion gross margins coming in at 37.6%. turning to the guidance, q4 guidance, apple is giving guidance of 61 to 64 billion analysts had modeled 61 billion and for margins of 37.5 to 38.5%. turning to the segments, iphone
revenue 26 billion it's basically in line with expectations that's down about 12%. remember in q2 revenue was down about 17%. ipad revenue 5 billion, services revenue, 11.5 billion. that's up 13%, though apple will emphasize that a year ago they did have that one-time litigation settlement. if you normalize for that, it's up 15% from the comparable figure a year ago. services margins this quarter, 64.1%. wearables, home and accessories 5 b 5.5 billion. mac revenue 5.82 billion and finally turning to china, greater china revenue 9 ppt.2 billion in the quarter that's down about 4% year-over-year in q2 greater china revenue was down quarter-over-quarter. >> josh, thank you let's get back to our panel of experts for some immediate reaction mike santoli let's go straight to you nice pop after hours, looks like all the below the revenue items
were pretty much in line. >> pretty much in line i think the guidance is a little bit better than the forecast for top line, so that's probably where you're getting that margin about performance for the stock right in the after hours i do think, i think you can back away and say this is now half an iphone company, half of revenues, slightly less than that were iphone i think that's the kind of mix that you want to look at going ahead. >> guidance clearly the standout as you say, mike, if you are looking for -- to pick holes in this, the beat for this quarter was slightly on the max, slightly on the wearables, the wearables in particular a strong year-over-year growth rate of 50%. >> long-term, services is the narrative they want us to go with i think the china business was interesting. they moderated from the previous quarter, where it's down 4% versus much bigger last quarter. that gives us a sign of, you know, that the challenges they've been facing in china, they've been able to handle it they've been able to deal with it i'm with mike here, half an
iphone company we need to look at these other businesses again, services i'd like to know more, get more color on what exactly makes up the components of services. we know it's advertising and some media stuff and some one-off sales. >> and some other really fat profit margin, 64.1% on margins for services up 13%. ed snyder, your reaction >> i agree it's slightly better than expected but with the services is a higher mix and the gross margin continue to decline kind of suggest what's going on with iphone is fading bit. there is speculation they're going to enter more of a mid tier market the beginning of next year. ultimately they've got to expand their reach of iphone beyond the high end and try to move into the mid tier to sustain the consumer base for the services businesses if they're able to do that, things will work out if they're not, things will start to ebb we'll see how the fall launch goes, which is a lot of eyes towards how successful the new phones are. >> apple shares up more than 3% after hours.
let's go back to josh lipton for more josh. >> i did have a chance to check in with apple's ceo tim cook about a few issues i want to bring you his comments one, iphone revenue of 26 billion down 12% that is a sequential improvement, and cook has talked about how he has these levers to pull when it comes to the iphone for example, we know one issue with the iphone franchise is that replacement cycle is getting longer people are holding onto their phones for longer, so trade-in programs he's mentioned as a lever. i asked him whether trade-in programs did have an impact. cook telling me it was a key part of the improvement sequentially also the trade-in and financing program were key to our results in china it was an important part of what we did, in addition to what i mentioned last call, that we were going to ignore the fx changes and essentially lower the price. and so that combined with the trade-ins and the financing programs, as long as the government -- which included a vat reduction, all of these things mixed together explain the negative 20 going to
negative 4 in china. he's talking about the difference in greater china revenue. i did also ask him about these potential tariff threats and whether he has made any changes to his supply chain in response to those potential tariffs coming cook telling me we've made no significant changes. keep in mind for us, our products are made everywhere you look underneath the hood you've got a significant amount of the cig csill come coming frh u.s. the aggregate looks very different when you portion it out by country back to you. >> thanks very much for that, josh the stock is up 3.3% let's get to nancy tangler for her reaction you're a shareholder what's your take on the numbers? >> listen, i think it was a great quarter in this regard i think mike's point is the right one. very quickly the company has grown their way away from the iphone being super dominant in terms of total revenues. i thought the services numbers were just a tad weak china was very encouraging in
terms of aslowdown in the sequential decline, and i think wearables is a bright spot for the ecosystem, so in general, i think the little bits of bad news were offset by some powerful news in other segments, and then you can't argue with the margins. it's impressive. >> so just in terms of what tim cook told josh lipton and what drove the improvement, even though iphone revenue down -- down 12%, the trade-in programs, trade-in and financing in china, what's the significance of that? >> clearly they're speaking to the chinese consumer they're also looking for value that's going to be a huge part of it. it's a program they've been implementing here in the u.s. as well it also tells you the competition, that's a huge thing for them to deal with. there's huawei out there, a bunch of other competitors that are gaining steam, and also these phones that might be cheaper are just as good in their eyes in terms of the functionality. chinese phones also on the
mobile system. we chat is the man operating system for how these things work consumers just want to know what they're paying >> is the key thing for the iphone in terms of revenue and including pricing going to be when 5g becomes a reality? >> no, no, i don't think 5g is going to help any phone company much at all. it's a separate topic, but if you get into the details on that, it's going to be a little bit of a disappointment. the journal had a great video on this a week or so ago by a young lady who tested it, and her findings mirrored exactly what we were. i think apple's being smart here they've enjoyed a phenomenal run in hand sets with greatmargins but they've captured about all the value there is to be captured on the high end, and they're going to have to move to the mid tier that's going to impact margins they're doing a trade-in program, offering better value you're necessarily going to see it hit their margin profile, but as long as uni continue to remain strong and they can eke
out gains in that area, their services business will thrive. if it doesn't, you've got the opposite problem like so many companies that went before them. >> for now investors are embracing this thank you all. up next, much more on apple's results, shares trading higher, reacting to better revenue guidance and better results. just moments ago we'll get jim cramer's first take on the numbers when we come right back defy the laws of human nature,at the summer of audi sales event. get exceptional offers now.
welcome back, it's an bn another wild after hours earnings session apple leading the way with an earnings beat, up 3% mondelez also beat, electronic arts gilead reporting better than expected profit and revenue, if we can look at the shares, apple the key mover, mike, ahead of tomorrow, of course it's going to have a big impact on various indices. can it have a read across further stocks as well, individual stocks? >> it could. i think apple kind of goes its own way based on its own dynamics even though it's a modest move to the upside, it's above where it topped in may, so 214 or so, under 212 in may, it's going to give some people reassurance that it didn't run into a wall at that level as it tries to kind of get back to last year's. >> it was coming into the report with a 33% gain for the year. >> yes, but remember it was july 3rd that the stock just took a huge dive after the overall market bottomed, so i think the year-to-date numbers are deceptive because you had such a
tumble into very close to your end. >> indeed as we said, extraordinary run-up coming into this, just coming off the ball a bit. >> it looks like a little bit of either cautious or down scale guidance is probably going to weigh on that slightly, but you know, i think it's kind of been an outperformer within semis which has been an outperformer i think it probably earns the benefit of the doubt. >> it really feels like with both names guidance is the key here with that, let's talk apple. we've got a very special guest to help break down the report, tell you what to do. jim cramer joining us from outside the new york stock exchange where he's getting ready for tonight's special edition of "mad money. he's got quite a setup out there. jim, thanks for joining us looks like wall street is embracing the numbers, especially guidance. >> i think these people down here are chanting apple, apple, apple, and i think what people like frankly is that you have to back out, back out that, but really you get down to is that
you would argue on a constant currency basis it's even higher than the range katie huberty was, the top person. you're talking about wearables and services amounting to being a fortune 50 company, the smallest company in fortune 50 is a $62 billion company still not enough to please those who say it's only a cell phone company, but i think a lot to think about going down the pike, particularly with the credit card right on the horizon. >> yeah, jim, it's going to be really interesting to listen to hear what they've got to say about credit card on the earnings call. to your point on the wearables, still small but growing at 50%, services perhaps fractionally disappointing compared to guidance, compared to expectations >> well, you did have a one-time gain last year that you're lapping, and you also did have a big currency, let's say a big currency swing i mean, i could understand if you just used currency you could probably get about 15% increase, but i'm using -- i say you could -- it's a little fungible, i know, but the idea that it was going to be at 12 where tony --
kind of the most tepid bull in history thought it might be, that didn't happen so i think the analysts are going to back out and do some of the calculations that i mentioned and try to hit -- be able to guide 16 to 18, which, again, is very good considering the size of it you're right about wearables it's all low base, but everything that starts is an awful low base when it begins, and that's how i view this quarter. >> jim, i want to ask about the show coming up you're outside, of course, for it, partly because you're grilling some burgers. what time exactly is that? because i might try and swing by when you're cooking up some burgers. >> well, i tell you, let's see, i'm not just doing burgers i might be doing the beyond meat lasagna. i had some beyond meat short rib tacos the other day. there's a lot to explore here, will of. we're going to take up the con te text of a stock that was supposed it crater david taylor, what a fabulous interviews thank you so much for getting
him. that was the kind of fired up story people should be in that these people behind me are caring about beyond meat should have been down much more if it was a phony. it's not, maybe 6:15 if you want to stick around. i don't have my usual g and t for you. >> i might be able to find one kicking around we'll see. >> he needs a good meatless meat, he hasn't really embraced the concept. jim, p and g, thanks for mentioning it. i think what that shows you, there's still a lot of growth despite the tough macro environment. look at apple, look at pand g, it's like tariffs and commodities and currencies, everything is being thrown at these companies and yet we're continuing to see growth mondelez just put up 4% organic revenue growth. >> you were the one who first turned me on to mondelez you were the one who explained to me that it could be in growth mode these are stealth growth stocks, i mean, not supposed to be happening. i mean mondelez grows like a drug company i mean, it really is incredible
how they've stepped up, up the proctor lines, really reminiscent of a junior growth company, starbucks, so there is a lot of growth. it's just -- it's kind of obscured by commons engine and obscured by autos and there's always something -- dow chemical i can come up with a million things that are not working, and then a couple million that are, but let's not forget that if we have another 300 tariffs on 320 billion a lot of what you and i like is going to go away >> yeah. >> jim, i just want to come back to apple, would that guidance beat 61 to 64 billion, analysts were expecting 61 billion, what do you now need to hear object earnings call to start liking this stock again what else do you need from the earnings call to start liking it again? >> i would like to know more about when 5g is so people don't feel like they can hop off and get back on. josh lipton asked some great
questions to tim about china, mainland china surprisingly mainland china was very good. again, here we are the president's poking fun at president xi that's not the way to do business if you're trying to get something done, but i think more questions about how mainland china is doing well, certainly more questions about when services inflect to the point where we're thinking about the lifetime value of a customer i know they're not doing that yet, and i certainly want to hear more about the credit card because a credit card is a fabulous, fabulous, fabulous business, and i know that cramericans behind me want to hear about that 2020, 2021 goodness that is going to drive apple higher. >> that's a good crowd of cramerica, jim final question, does apple have anything to worry about on the antitrust front? it gets lumped in there with big tech investigations. >> i'm glad you asked that, boy,
josh has somereally some pointed questions to management about that i know that tim cook feels passionately that there's competition on every single vertical i believe that's true. i do also believe that big is now bad. i don't know when it flipped like that. we used to have cheers for capitalism and success, but when you're big now, there are people who are taking shots at you, even if what you're doing is making great things. i mean, look, what would you do -- what would you do without the app store? i mean how many apps do you guys -- i have like 100 apps, and every day i find a new app i'm working on an app myself i think it's a fantastic marketplace. somehow people are thinking it's a restraint of trade somehow i mean, guys, give me a break. if you really want to pick on somebody, why don't you pick on like the big polluting companies, somebody doing something wrong for heavens sake. >> i like that tease there, "mad money" app to come, maybe we should launch a closing app.
>> jim cramer, thank you very much. >> love your show. >> have fun. >> love your show. >> get some bedazzled jeans. i see you got chip berg on >> he's the best 18 bucks it's a good price >> jim's handling that heat well he's got a huge show coming up, including chip as we just said and that awesome group of fans live to react throughout the show with jim. "mad money," 6:00 p.m. eastern time. up next, the earnings roll on qualcomm set to report its results tomorrow we'll bring you all the key things to watch. speaking of earningsge, ne munster will break down apple munster will break down apple results next on "mad money." ...while helping plan, invest and protect for the future. so they'll be okay... without me? um... and when we knock out this wall imagine the closet space? yes! oh hey, son.
china. rahel solomon with the results. >> reporter: hi, sara. after hours after a mixed quarters, starting with revenue, coming in at 2.1, versus the estimate the treat was expecting of 2.16 billion. eps was at a 46 per share versus the estimate of 39 per share 4%, which was roughly in line of expectations of 4.1% kfc slightly above estimates of same-store sales pizza hut roughly in line, 1%. again, the stock is slightly higher in off hours after a mixed quarter forum china, the largest fast food operator in china. wofrl, back to you. >> thank you very much up next on "closing bell", your wall street look ahead the key things every investor needs to know when we returnial. can we build ai without bias? how do we bake security into everything we do?
we need tech that helps people understand each other. that understands my business. we've got some work to do. and we need your help. we need your support. let's expect more from technology. let's put smart to work. ♪ ♪ so, every day, we put our latest technology and unrivaled network to work. the united states postal service makes more e-commerce deliveries to homes than anyone else in the country. ♪ as your life grows, so do your needs. ♪ and with bank of america and merrill, the benefits you get can grow, too. as a preferred rewards member, you can enjoy priority service and exclusive discounts... so your growing life can be more rewarding, too. ♪ what would you like the power to do? ♪
you mighyour joints...nge for your heart...? or your digestion... so why wouldn't you take something for the most important part of you... your brain. with an ingredient originally discovered in jellyfish, prevagen has been shown in clinical trials to improve short-term memory. prevagen. healthier brain. better life.
apple shares continue to climb after reporting earnings just a little over 25 minutes ago here, up 4.1% now. after apple returned to revenue growth, up 1% from a year ago quarter. first time we have seen it in a few quarters, beat on the bottom line and surprised wall street with the upside of its guidance in terms of the revenue forecast there's a quote here, guys, on the sandy feed.com story saying,
great services quarter unbelievable wearables quarter significant progress on iphone and off-the-charts significant progress on china compared to the previous quarter looks like wall street is on board with that. >> wall street is happy to say at this point, navigating the transition pretty well i mean there's been a real flattening of net earnings and revenues for years now, and the stock has done well. they're buying back a ton of stock. they have 200 billion in cash. that part of the story remains intact as they manage the lull in iphones. >> the eps coming in strong because of the buy backs for the wall street look ahead for tomorrow democratic debate tonight, and qualcomm going up tomorrow let's start with what to watch in tonight's debate. kayla has it for us. >> reporter: hey, the debate starts in about three hours. the ten candidates on stage have been touring the podium. audience members are lined up around the block and you see supporters filling in with posters behind me. here is what is going down
tonight or what we are expecting. watch for progressive allies elizabeth warren and bernie sanders to not only share the spotlight but share some flack as the rest of the field takes aim at what they see as far left policies that are socialist by comparison to what the rest of the field sees as a more capitalistic and centrist approach they will try to focus on performance over policy, despite the fact that many of these candidates have put out policy proposals on everything from housing to trade to health care in recent days but there's one reason why they're focused on performance, and that is because so many of the candidates need breakout moments in order to command the dollars and the pull to qualify for the next debate in september. about half of the candidates that will be on stage here in detroit tonight and tomorrow will not be on stage again wil and sara. >> i hope they get off about trade. i mean it is in detroit, which is obviously an important environment for that i just wonder how much distance
there's going to be between the democratic postures on trade elizabeth warren coming out with her plan this week, pretty restrictive in terms of the terms she wants to set to doing trade deals with the u.s >> reporter: and clearly it is something that senator warren wants to talk about or else she wouldn't have timed the proposal release the way she did ahead of this debate. one thing that we've seen unifying this democratic field as wide as it is is trade, and there seems to be categorical agreement that the way that donald trump is going about it is wrong but we haven't really heard much details behind exactly what is wrong about it or how these candidates would do it differently. we know senator warren wants to negotiate these trade deals differently, but we don't know exactly what her desired outcome would be we know that voters here in michigan feel that the tariffs at least are not working >> kayla, thank you. meantime, qualcomm set to report results tomorrow. we have a preview. >> qualcomm is expected to
report fiscal q3 revenues just over 5 billion, $0.75 eps. more than the numbers, this stock is still swung around buy out side pressure. they lost the latest round of ftc antitrust case the question is whether they will be able to delay penalties while they seek to appeal. there's apple last week announcing its intent to buy intel smartphone modem business and take that business of theirs from qualcomm. i will have qualcomm ceo as usual on the phone but before the numbers come out to see how he plans to unit couldcounter t >> apple ahead tomorrow, 4%, it will have a helpful impact on the future. >> we have this little thing called the fed meeting. >> that's right. >> so world class companies that are executing pretty well, i think was the after-hours message today but the market has figured out they've done okay with the flat earnings stretch we've been in for the overall market and now, yes, the fed. >> i think the key question is
what he says in the news conference, right? >> it is. >> the rate indicate is built in. >> how much they want to say, look, this is it, we're going on hold for a while i think the consensus is coalescing around the idea there will be -- >> and of course that news conference will start on "power lunch" and finish here on "closing bell" tomorrow. we don't want to miss that we're out of time. thanks for watching. >> "fast money" begins right now. ♪ live from the nasdaq market site overlooking new york city's times square, this is "fast money" i'm melissa lee. traders on the desk are tim seymour, chris verrone, and guy adami. we kick things off with an earnings alert on apple. moving in a big wear after hours, the company's conference call is getting under way. full-team coverage, "fast money" friend gene munster is manning the call and josh lipton has the takeaway from the big quarter. >> a few things we want to get into as th