stephanie: welcome to the most important hour of the session. i am out steel and this is street smart. after coming under pressure from the clients in biotechnology companies are investors focus on earnings season. we are in our inch -- and change away from apple. we will hear from the blackberry ceo and ahead of the nfl draft, i will be joined by a former new york giants. "street smart" starts now. ♪ stephanie: here are the top stories we are watching ahead of

the opening bell. after three months of talks creditors failed to unlock eight. counterparts and thing in name-calling. greece said laws will be presented on wednesday. facebook interesting video calling in its messenger app. it has more than 600 million monthly users. the features are available on apple's's ios and and -- and google's's android. multiyear contracts with stocks. it will put its logo on stocks. mba says the league has generated triple digit growth in the stock category over the last few years. less than an hour to go to the close of trading area we want to get to our breaking news desk where scarlet fu was looking at action. lower here. >> there really were a lot. reports that china is

considering buying local government -- greece reshuffling its bailout negotiating team. things started turning south. falling within the biotech and nasdaq fared only three members hired 30 gives you some sense and that is helped pull all of the major averages. snapping a five-day rally. the nasdaq retreating from record highs. if you look across the other asset classes, speculation the fed will not move soon on interest rates. they begin a two-day meeting tomorrow, which ends with an announced wednesday afternoon. there will not be a news conference with fed chair janet yellen this time. apple reports after the close at 4:30 p.m. shares are up ahead of that 1%.

it has fallen in the trend of overall markets as we head into the close. according to bloomberg data, i was just checking in apple shares have gained the day after the earnings report for the past four earnings reports. perhaps that tells us some kind of anticipation before this earnings report. stephanie: a busy afternoon for us and i will check back with you later in the show. the latest board rejecting $40 billion bid saying the takeover grossly undervalues the company and a problematic culture. also saying it is committed even after the company rejected its sweet and offer on friday fared what is going on and what is next? joining me to discuss at hammond with all the details, why should

we be caring about these companies fighting with each other? classes based to what is going on at the moment, so much competition so much cop -- consolidation and pressure on these companies to do deals. probably because things are getting better -- bigger, so relatively getting smaller. people are rushing and people are under a lot of pressure to take out competitors. >> it seems like they did not get interested -- is it hard to get or is it a fundamental reason to want to buy? >> right. obviously, they kind of put themselves into place. and try to do a deal, they showed they were seeing the logic in becoming a bigger company. obviously, the point is they were only trying to get involved

now because it is too big to swallow. we have seen a rejection of -- a rejection today. it just blew everything apart. none of us have seen a rejection quite in these terms. stephanie: it is usual to have the company's image tool or -- doing hostile takeover. >> an eight page way of saying no. they say they have really bad corporate governance, they accused of being racist. a savage takedown of the company. stephanie: what are the options? >> i think the next move initially is to do nothing and wait to see what happens.

they will have to decide if they will continue to try to chip away. it is not quite the same. to actually -- they would know what their options are. i think they receive this and reiterated the interest in doing something. this makes it tough. stephanie: and at what price? $80 per share, but 82 is nowhere near enough. it is like 100. classes over 100 per the numbers

, we have done smart analysis and they said look, they could go up to own hundred and probably way above 100. but the point is, why should we pay that? they have given themselves some room to maneuver. i think over 100. ben mind, that is only one of the criteria. strategic risk massive antitrust risk. the obvious target for them, it is to be talked about as being good partners for a long time. there is not an obvious alternative. i think they will push hard to get the deal done, but there are ways to say no. stephanie: thanks so much. we appreciate you following that for us. coming up, you'll hear from the chairman and ceo live from the

conference. plus, later in the hour, the blackberry ceo on the company's's turnaround. back in two. ♪

alix stephanie: america alive today working very hard. on that chairman and ceo joins them now. take it away. .: thank you. and thank you for spending some time with us. there is a tendency of people to confuse what you do with what other companies in the alternative lending space are up to like lending club. what are you, exactly? do you consider yourself a shadow bank?

>> not at all. the distinction between on deck and some of the other companies you mentioned is our exclusive focus on small -- erik: prism or you could build a business on small business, but there are a lot of other lending opportunities out there here you have an algorithm. where would you take your computers next? >> 28 million small businesses in america are and we only have two of those products on our shelves. we are bullish on the long-term opportunity today. stephanie: you mentioned in out the rhythm. how exactly does it work? >> we collect about 2000 data points and use it to make a decision in minutes.

bank take 4-6 weeks, and it works. .: i want to know how you of had to tweak the out court -- the algorithm over time. where has it failed and you had to make corrections as a result? >> in august of 2007, we had to survive the credit crisis. we learned what was good for a model and we focused on businesses that had a large number of small transactions. think about the auto body shop or a restaurant, that is a great fit for us. general contractors, not so much. stephanie: there is more interest willing to lend their walk that influence the markets going to shrink? i sent you one can lend $1 million office and she here that is where the technology comes in.

>> wouldn't you want to lend money in a smart way rather than a fast way? >> we do it with much faster automation fair you should not have to compromise between speed and quality. we tried to engineer that. .: what is it investors do not seem enthusiastic about? you had a healthy ipo but your stock has been stuck. the enthusiasm you have for the business does not appear to be for the market shares. >> always can do is drive the business forward. put people like is a small business sector -- we're focused on a market that has not traditionally as other sectors.

serious moats around it for competitors that make it harder for competitors to come in. we rarely meet with them in person. we talked with small business owners every day. we think it is the right approach. stephanie: is it that the loans are too small? they are unbelievable growth stories. if i were an entrepreneur, i would absolutely want to meet with my lender and tell me the story and start this journey together rather than, here is my number and here is my staff. am i worth it? >> you have got automation that does the heavy lifting. when i visit our test mers, who worked with us for several years, they know the on deck representative by name aaron we're trying to build that relationship but we have to do

it in a scalable way. thank ranches are out there. it is a very expensive foot went to maintain. we think the future of lending is digital and needs to be delivered online. over the last couple of years, it peaked in 2011 and they have been declining at an impressive rate. erik: you are not in the shadow banking business. you get your wholesale credit line with banks. stephanie: hindsight is 2020. class can be good allocators of capital but for this segment, the sizes too small. on the $353,000, we are serving

a segment not served well and they see that opportunity, more efficient to use than the one we have. stephanie: the quality of borrowers, increasing, decreasing, stabilizing? >> what we see they're using it more offensively and that is a good thing for the company. stephanie: thank you for joining us. erik: the ceo of on deck capital here in beverly hills. alix: thank you so much. much more coming up next, even the white house definitely what we do not know is coming up next. ♪

alix: welcome back. it is just crazy to hold bonds of negative yields. he joins investors in warning of over evaluation of european sovereign debt. howard's also says the markets are inherently unstable in large part because of bank regulations. time warner cable has reached out to cox communications in recent days to discuss a possible merger according to down jones. elon musk is the latest victim

of cyber crime. tesla's twitter and media relations e-mail account was hacked on saturday. followed by more than 500 sisi 4000 followers. fraudulent posts within the hour. the white house attack last year was a lot worse than we thought. they are times report said the hack of president obama's classified e-mails -- just how bad is it? david joins us now from washington to discuss. in this report from the new york times, it seems like hackers gained access to e-mail are the people who corresponded with president obama p or put that into perspective for us? >> that is right. it is a technique called island hopping. if you think about it, the hub is the target. if it has security or is a more

elusive target, then you want to go after the spokes. they may have less security and it is easier to get into. getting into the and to tease, the white house communicated with and taking advantage of the weaker security to get to the hub. alix: why don't we know more? the white house is one of the first to say this responsible for the sony hack. what is going on? >> it is hard to say right now whether it is something that is machine driven or a group of sympathizers reacting to the sanctions levied upon them or international pressures. alix: that means to me the sanction german situation, iran, russia. classes is very open and not clear exactly where it is coming from.

alix: how does it even work and is it an actual deterrent? >> it is hard at the moment because internationally, the rules do not apply terms of a tax and a responsibility. we cannot just say what applies here applies everywhere else. there is so much in these coordinated attacks to pinpoint where they're coming from and who the threat actors are, now that we have them, what is possible legally and so forth. >> in your estimation, would that be a significant deterrent? would it have to attack financials to make a difference? >> as you go after the financial backing and make it more difficult for them, it will be an effective deterrent. alix: the white house was not the first government organization to be half as well.

thursday, we weren't for the first time russian hackers had actually attacked the pentagon's is unclassified system january 2015. state farm and back in november. the you think someone is responsible for all of this or is this multiple groups? >> this is something deemed operation on storm. we have observed activity around this particular attack especially since september. there are a couple of things at play here. number one is a tremendous amount of reconnaissance that goes into these attacks. especially purposefully build to bypass technologies. they are also doing it or amount of targeting so that who they get to they want to make sure you are you and once they make sure you are you, they can do things like, we have seen recently in february and ios espionage attack where you are now talking about turning on the microphone and recording or pegging down where the target is. alix: is the u.s. doing the same

thing? we were talking about iran and possibly russia. are we doing the same thing elsewhere? in terms of hacking? i mean, are we trying to infiltrate other governments as much as we are being infiltrated? >> i cannot say that much now, but what we're seeing is this the take other attack is not limited to just the white house 30 eight is being seen now in the financial sector. we are seeing it in other industries as well. when you think about that type of attack, you go after who entities communicate with nec it more widespread as we go. alix: thank you so much for joining us with trend mark arrow. -- trend micro. coming up next, we will hear from the ceo live from the conference. you do not want to miss it.

we will be right back. ♪ . .

alix: welcome back to "street smart." here are the top stories we're watching ahead of the closing bell. hopes of finding survivors in the deadly nepal earthquake are fading even as helicopters rescued 180 climbers on mount everest. at least 380 people were killed and thousands injured in the earthquake. relief agencies are warning of this rat of waterborne diseases as millions of people camp outdoors. applied materials is scrapping its $9 billion it for tokyo electron. antitrust concerns becoming the second deal to fall apart in less than a week after opposition from the justice department stop the two

companies separately announced plans to buy back stocks. amazon is said to be planning prime for business according to tech crunch. amazon says they are folding amazon supply into a new business to business strategy. we have 30 minutes to go until the close of trade. everybody waiting for numbers from apple. will they return more capital to shareholders? what about china? scarlet fu joins us from the breaking news desk with a preview. scarlet: i will try to answer those questions -- will apple shipped a record number of iphones? no. the last three months of beer is typically the strongest seasonally. the consensus is for the january to march quarter to have shipped 58 million phones, which is down from their 74.5 million record. the biggest concern is for ipad. they will post a fifth straight quarter of year on your declines.

the iphone 6 and six plus have cannibalized some ipad mini sales. apple does have a history of announcing capital return plans -- we're talking share buybacks plus dividends. they just began doing this three years ago. in 2012, apple announced a stock buyback program. last april, $30 billion worth. right now, the total capital return program stands at $130 billion. analysts are looking at it increased to $140 billion, i have also seen $155 billion. apple has a lot of cash and short-term investments. overall the headline numbers you want to pay attention to our earnings-per-share, likely to increase to two dollars and $.16 and revenue to increase 23%. alix: it is going to be a fun hour. we want to get back over to the

milken conference where erik schatzker is standing by with blackberry ceo john chen. erik: thank you very much. great to see you here at the milken conference. the question we always have to ask you because you are doing a lot of work at a black berry is where do things stand with your turnaround? john: we are starting phase two. phase one is about generating cash and making ourselves profitable. phase two is making ourselves profitable and sustain that and stabilize revenue. erik: you have $3 billion in the bank in a rolling out new product. you are even making acquisitions . i don't think anybody would have protected that a year ago. what is next? john: i'm building a very robust software business based on security and privacy. we are investing heavily into that and we will generate cash and make ourselves profitable

and keep our revenue at least stabilized because it has been dropping for the last couple of years. erik: how long is it going to take for revenue to stabilize? john: the next three or four quarters, we will happen. >> -- erik: so a year from now we should see revenue increase? john: picking up. liftoff is a dramatic word. erik: why is it taking so long for this software revenue to accelerate in a meaningful way? you have tried to incentivize people by giving out your software for free. people want to know why does it take that long? john: there are a number of reasons. obviously the market needs to heavily invest especially on security and privacy stuff so our server business days to have

the mindset that i need to get ahead of a cyber attack. erik: companies are not investing enough in mobile security? john: they are investing in a fix it type approach. they are patching things that happen to them. what they need to do is get ahead of it meaning you have to install all the stuff, not just like when people change your lock -- when people pick your lock in you change your lock. a mindset has to change in our company. we need to make sure we have a big software business and that's not an easy thing to do. we have been selling hardware through the carriers and now we need to sell software and other distributors. they are on the enterprise side. it takes time. erik: you have been giving away blackberry server enterprise 12 for free. what kind of conversion rate do you have? the enterprise customers who tried out, what's the percentage

that are actually starting to pay for it? john: we are in different stages. we have been looking at pretty good conversion in just the last quarter. i never really given the numbers out -- erik: which is why i am pressing you for it. john: last quarter airsoft revenue grew 22%. -- our software revenue grew 22%. a lot of the carriers and distributors are just starting. they have not fully kicked in yet. i think the receptivity is quite good. our product tested up very well. i am hopeful. erik: software is the future of this company, you still make

handsets, you are planning to bring out for this year. -- ring out four this year. this one is somewhat reminiscent of the blackberry torch. when is that coming out? john: by the end of the year. erik: the other two models? john: we are still working on that. it could be at the same time or slightly after. erik: what is the hold up? john: this is a very tedious and complicated process. not only on the technology side and the software side but the market receptivity and positioning of it. sometimes when you rush one thing out it might not be as great as it could be. that's the hold up. erik: what are the margins in a handset business? john: our gross margins are positive, but we are still losing money. erik: why stay in the business? john: i think i can make money.

erik: blackberry has roughly 1% of the global market in handsets right now. john: once i predict that, it's all over the news. erik: you think you can grow turkish air? using blackberry can be a more meaningful participant that it is today? erik: -- john: better than today. erik: what need are you trying to serve? john: president obama, for example. the keyboard brings a lot of people a lot of our loyal customers stay with the keyboard and they love the keyboard, the battery, the keyboard, the ability to get e-mail almost anywhere, that is an important element. productivity is important and the security. we are still very entrenched in all the major governments around the world. law enforcement, medical world

lawyers, -- erik: john chen, the ceo of blackberry. john knows this, but i have to share a secret with you, i also am a blackberry user. alix: not just because you are canadian. erik: not just because i'm canadian. i like the product. alix: coming up next, landry's ceo tillman for to the joins us from the milken conference. will get his take on gambling in america. ♪

alix: the milken global conference continues in everly hills. stephanie ruhle and erik schatzker are standing by with tilman fertitta chairman and ceo of landry's. take it away. stephanie: here we are at the

milken conference. you are a man and 70 businesses across the country. from your vantage point, what does the economy really look like? tilman it is amazing. january, april and march have been amazing. -- january, february and march have been amazing. april has been a little slow. we have had some bad weather, all over the country. or maybe gasoline is starting to go up a little bit, it's not where it was a few months ago. so it's only four weeks you had an early easter compared to last year and that has an effect spring break and easter vacation. as we go into make, we will get a good feel. stephanie: given oil prices, are your business is in texas does fortunately worse than across the country? tilman: not yet.

they are laying people off in houston every day now. you have had thousands upon thousands of layoffs, but you have so made people moving in. it is going to be interesting. there is always a lag, so let's see what the lag brings us the next few months. erik: you have a brand-new 10 acre develop and and houston. why now? tilman: i'm a houstonian and him bullish on the city long term. when you build these projects it takes to it half years to build them. if you surrounded wait for times to only be good, it's going to go bad on you. when things are good, you forget they're going to be bad. i think it's going to be a short cycle. rates seem to stay low, as long as oil doesn't go into the horrible 30's, you will have some layoffs but people will still do business. i think we're going to be all right.

we have crazy multiples and all of our businesses. stephanie: let's talk unions. we talked about atlantic city and you've got the golden nugget . the issue for you has been having to deal with union contracts. where do you stand now? tilman: we all have to get into a room and work things out. union leaders have their jobs and it's just the way -- none of us like it, none of -- i don't think the country needs unions today. people are paid good wages and have health care. there's a group of people who think unions have to exist. stephanie: they are not breaking any time soon. we're not going to see unions go away whether we like it or not. you are a guy in the casino business. tilman: we are to keep negotiating hard with the union. the minimum wage keeps going up, why do you need the union to negotiate that? why are you paying xml of your

hourly wages to the union when you could be taking that money? now you have health care. erik: a few people have thrown their hat into the ring for the republican nomination for 2016. who do you want to see in there? tilman: it is crazy right now. of course, hillary is going to get the democratic nomination and i still think you could have somebody you have no idea who it's going to be on the republican side. stephanie: who is getting your support? is it going to be jeb bush? tilman: i like jeb bush a lot and i'm so close to the family but i think it's going to be interesting to see how this thing plays out if they have 21 debates had beat on each other's heads week after week. i would not be surprised if jeb got it, but i would not be surprised if somebody we don't even think is in the game yet. erik: speaking of unions, could

you get behind scott walker? tilman: scott walker was in town and wanted to meet with me but i was out of town. he's a great guy, but can he raise the money out of wisconsin? when the drums start eating in favor of you, they start eating, so it will be easy to see. stephanie: i'm sure scott is going to track you down. tilman fertitta is the ceo of landry's. erik: coming up, investors are not buying deutsche bank's strategic overhaul. we're going to break down why, coming up next. ♪

alix: we do have some breaking developments in baltimore. scarlet, what are we looking at? scarlet: some very to medic year of protesters in baltimore. this is in downtown baltimore, not far from where mourners bid

farewell to freddy gray the 29-year-old who died from a spinal cord injury -- injury while he was in police custody and lead to all kinds of anger over racial relations in the city. you can see the police -- there are rocks and bottles being thrown between the two parties and we saw earlier that one policeman was taken away. you can see protesters running from the site. they have been scuffling and taunting police for about 10 minutes to an hour now. -- 90 minutes excuse me. we just tuned in as the protests turned a little violent, but this has been going on all day because of the funeral taking place and the debate it is generating. you can see police being confronted by protesters -- the protesters have been throwing models and rocks. at least one officer is hurt according to reports from cnn.

so we are the violence flareup and we know over the weekend money of people were arrested because of the violence taking place here. my producer is saying the baltimore police have tweeted one police officer has been injured in this latest round of violence between protesters and the police. alix: i should point out that freddy gray process -- freddy gray's sister came out condemning the kind of violence we have seen in baltimore. scarlet: 35 people on sunday were arrested. six officers had sustained minor injuries saturday night. alix: thank you for these very dramatic and staggering pictures. we will continue to update you on this story. the close is coming up next as we count down to apple earnings.

♪

alix: welcome to our viewers around the globe, you are watching bloomberg television. i'm alix steel and this is "street smart." we are just moments away from the closing bell and investors are counting down to earnings from apple. we want to get right to scarlet fu at the breaking news desk for a look ahead. scarlet: the s&p and 500 -- the s&p 500 and nasdaq both retreating from the record highs a closed at friday. drifting lower into the close with kleins of .7% for the nasdaq and the dow holding up the best almost two stocks are

lower for everyone up on the new york stock exchange. of the economic data we did get today, they all surprised to the downside. economic surprises were down and that doesn't help either. the positive catalyst from overseas, china considering quantitative easing and greece reshuffling its bailout team. biotech names -- those are big momentum stocks. we have seen them move the market in one direction or another. the nasdaq biotech index seeing 100 46 of its members down. only one is higher and one is unchanged. almost every single one of these numbers is lower and you are seeing that pressure on the overall market. alix: joining me for the close is david balin and our bloomberg

bond report, lisa abramowicz and economist -- and economist. we are coming down a little bit but there is more room -- is there more room to run or have we come too far, too fast? erik: i'd -- guest: people are certainly looking at what the employment is going to be, so i think there is room to run, but people are getting more cautious. we were talking just before we got on the year that investors have done two things i find surprising. they have been buying many more bonds than i expected especially in the u.s. expecting rates to stay low. they have also been buying more equity. i think people are confident but waiting to see how the data comes out. alix: is there a rotation of money in the bond market? lisa: there has been rotation into safer government that because it has done so well and is in a duration rotation,

that's what it's called would people going to longer dated bonds. they are stepping back from that a little bit under going into riskier corporate debt. but it is selective -- it is not a free-for-all. it at the beginning of 2013. alix: that's different from the economic data we have seen. guest: i think a big driver of that was the oil story. when oil was trying to find new lows, the expectation was inflation would be very modest. we are seeing a little stabilization on that front. i don't think we will see a significant pickup on inflation because it's a lagging economic indicator and with the country plodding along a trend growth it's not going to create an upward inflation by. -- inflation buy. alix: could there be that much

more pay back down the road? guest: optimism prevails for q2 and they have cut their forecast to almost one third of what they were looking for at the beginning of the quarter but they have not had the recognition yet. given the recognition we have seen, the lack of durable goods numbers suggests a q2 will be a soft start. alix: we just heard the closing bell. the dow was up as much as 95 points but fishing in the red by about 40 points. we had the winning streak for stocks that lasted about three days. now stocks are pulling back from that level -- about seven of the 10 sectors did close lower. we are 30 minutes from apple's earnings. we will ring those to you as soon as they cross. let's get to scarlet fu at the breaking news desk. scarlet: apple shares cap the

industrials hauling further. apple is a constituent of the dow average, the fifth biggest measure on that price weighted index. when you talk about earnings the trend had been for analysts to reduce estimates in the lead up to results, lowering the bar and companies receiving this reduced outlook. apple is notorious for giving out lowball forecast. apple likes to set the bar really really low and underpromise. analysts use that as their base case. the red line is analyst estimates for the second quarter. you can see here the lowest estimate that came in and it has been steadily increasing over time as apple share prices have been rising. today, apple shares gained as much as 2.2 percent, reaching a high of $133 and $.13 --

$133.13. but it could not hold on to that level. alix: i'm here with the crew. i want to start with greece because just a few hours ago greek ale out negotiators met in athens after the group was reshuffled. is there any hope a new team can push through these reforms? they are in essence sideline here. what did you think? guest: the shakeup indicates they have no material progress. that's a parent from everything, -- that is apparent from everything we have seen including the tweets. i think this reshuffling could mean there are different terms and a different way to look at it.

the expectation is they expect there to be a workout. about 30% or 40% of people are saying they're not sure and are speculating whether greece could stay in the euro. it is a major change of team but not necessarily a change of environment. alix: is it fun to think of this again? lisa: this is a fun greek job -- greek drama. people are viewing the potential for default as being lower after the shakeup, but let's be clear the yields are 22%. people are pricing in a hefty chance of there being a default. one other major game changer here is the general population of greece changing their tune a little bit. they are backing away from this militant anti-austerity take, so there's a little support around this resolution. alix: is it that or is it people

tired of the negative yield bonds? guest: i think there are a lot of risk alternatives to greece. i think we saw a microbe link maybe and the road to where we need to be to resolve the situation will involve a number of links from both sides. potentially even a different government. alix: the blinking will come when we look at the currency markets. deutsche bank saying at least 4 trillion euros will leave europe in the next few years. $.85 by 2017.

guest: that is consistent. if you look at the history of the euro, the lowest point ever was sometime around 1987 or 1988. by 2017. guest: that is consistent. if you look at the history of the euro, the lowest point ever was sometime around 1987 or 1988. not only because of that, but because of economic factors. we think they can do better than people expect and might have greater growth. alix: greater growth, you have to put quotes around that. guest: it could be 1.5% or two point -- or 2%. alix: a lot of people believe what you are saying, moving into european equities is one of the reasons the euro has gained value in the past couple of days rather than continuing on his deteriorating trend versus the dollar. they do see more than a may have priced in earlier. guest: mario draghi is very intent on maintaining cutie to its completion. it's going to depend on the fervor of the recovery and you

have to have this soft economic growth in the u.s. and the path to parity is going to be a lot longer if we have much firmer growth. alix: in terms of what we've seen with the u.s. economy in the stock market -- on to bring this up -- today's u.s. market is sustained by one key ingredient. the buyback him is a warning sign. when companies put their chips on financial engineering, they are betting against the future. talking about not seeing that kind of investment you need to drive growth, but in essence putting into boosting your on stock price. guest: not sure we buy that. is the level of buyback activity unusual? not really. if you look at the opportunity for them to buy back stock and what it does for remaining shareholders is pretty positive. alix: it hasn't eaten away into?

guest: we think they have sufficient capital, so we think they are doing both. alix: doesn't mean they haven't found anything else to put their money into? guest: yes, but they should retain the money on their balance sheet or should they give it to their shareholders or can they buy back her stock quest -- buy back their stock? if you are a stockholder and the company buys back their shares come there giving you fewer shares and doing well for you as a holder of that stock. i think there are counter arguments to the idea that this is somehow a warning sign for the guest: -- a warning sign. guest: the economy is growing at a slow pace and the capacity utilization rate has been declining over the last couple of months. until we search of go closer to 80% capacity utilization, there is not the need for the private sector investments. alix: and you know who is

watching? the fed. this is as you wrote today, the last safe meeting from the fed. guest: it is the last officially safe meeting but if we continue to see sluggish economic activity, the june meeting could become a safe meeting. they are not going to officially rule it out at the guidance will not just in that direction. alix: who is right, the market or the fed? we have a chart that talked about the difference between where the fed sees a rate hike going. which one winds up playing catch-up? guest: the fed is beating an optimistic drum here, but there will be a day of reckoning in the future. guest: we are expecting the fed will act, but not until the end of the year and maybe not that aggressively. the interesting thing will be this summer. we will see if the economy comes

back strongly. we have at a weird weather pattern and gas prices are off their lows. it could be that people believe oil prices are going to stay low for a while. once that is in place, they may take the savings they get from energy, so i'm not sure this is indicative of what will happen for the rest of the year. alix: thank you for coming in. coming up next, how much did the apple watch boost sales? we will look ahead to the company's earnings. plus violence or update between police and protesters in baltimore. we have live images of the scene and will continue to follow this incredible developing story.

alix: here are the top stories we are watching after the close. jpmorgan trace -- j.p. morgan chase is losing a manager -- he

was a credit trader at hedge fund citadel. they are trying to popularize on trading over computers. espn is suing verizon in new york. verizon fires's custom tv excludes espn which is typically part of the service. it has triggered a dispute between verizon and sports providers over how much they have to repackage pay-tv networks. the company did not say how much they invested. focusing back on the markets, apple is expected to report earnings momentarily. shares up 20% year to date. joining me is the ceo and founder of estimate -- estimize.

guest: the delta here which is comprised of hedge fund analyst and independent analysts and regular investors is much higher than the wall street consensus. the expectations here have been going up a lot throughout the quarter. alix: also joining us is someone who covers apple. beneath the numbers, what is the meet you want to get at from apple today? guest: the three things people will focus on -- the iphone numbers will be the biggest starting point for everyone. a second would be gross margins and how those are tracking and third would be this is the time to update us on the allocation programs. those are probably the biggest focus for investors today. alix: what about china?

there were estimates that they would have sold more than they would have in the u.s. what are you watching? guest: they do give you the aggregate revenue numbers out of china. i believe 70% year-over-year last quarter. what they don't give you are the actual details of what happened there. tim cook has talked about how he expects china to become a bigger market for iphones over time. alix: they have over $170 billion in cash. do you think we will hear anything about what they're going to do with that mark -- what they're going to do it that? guest: there really is no place for them to invest that much capital. with interest rates so low, it's

better they give that capital back to investors. that should get the stock price moving as well. alix: what about the watch sales? it went on sale last friday in the numbers won't he in the last quarter. what are your estimates for the third quarter? guest: our expectations are they should sell around 4 million units for the june quarter and about eckstein million units over the next four quarters. minimal expectations, i would say. they are not going to give you any clarity on this. it will be classified in the other category, so i would be surprised if you get any good information on the apple watch. alix: it sounds like everyone is expecting a positive quarter from apple. they get more than half the revenues overseas and they've seen the dollar have a huge run-up over the last quarter. guest: the risk could be to fall. you're getting into the quieter

part of the year. how investors react to that would be one. they sell these are excellent host of currencies but they procure in what tend to be u.s. dollars, so it could have an impact on gross margins. those are two risks you have going forward. guest: the risk that we see is the changeover from android two iphone doesn't happen as much as people expect. there's been a huge shift taking place to iphone 6. there were multiple years before the iphone 6 were people overseas were buying android phones that were much bigger. last quarter, we saw a monster shift. we should see another big one this quarter. if that doesn't take place applesauce growth rate will be much slower. it's not like previous replacement cycles. previous replacement cycles took two quarters. it is a replacement cycle from

android two apple. you will see a lot of residual effect. it should last a couple of more quarters. if it doesn't, apple will be in trouble. alix: going back to the massive amount of money apple has, what do you want to see them do with it besides a buyback merck -- besides a buyback? guest: a buyback is a great start. it also generates a fair amount of cash. the line would be returning the cash back to shareholders and using what they have to do strategic investments to increase the halo effect as you go forward. alix: what about competitors? at one point, it was samsung. at what point do you have to spend to compete?

guest: apple has shown a tendency to move up our get then try to compete in a game of posterity. you always want to try to play on the high-end of the market and extend the ecosystem. alix: looks like the only weak spot we are looking for is a dollar impact. thank you for joining us. just ahead, tiki barber will join me to discuss the upcoming nfl draft. violence are opting between police and protesters in baltimore. we have live images of the scene and we will continue to follow this developing story. we're looking at live pictures right now. ♪

alix: we have breaking news as hundreds of youth outside a mall in baltimore clashing violently with police in riot gear, throwing rocks, brakes and bottles at police officers. on the phone with me right now is a former corrections officer in u.s. army veteran who is currently an instructor at the fbi national academy. he is still with riots in his career. when it comes to addressing these turbulent crowds, what's the first thing that needs to be done? guest: the first thing you want to do is protect the innocent. you want to protect people and you want to protect property. that would involve controlling and containing the crowd. you have to make the decision

whether you want to control and contain or overwhelm the rioters with force. that's a decision usually made by the local commanders on the scene. alix: what is that breaking point? guest: when in fact you realize you are techniques or tactics in a particular case are not working as they relate to controlling and containing you may have to decide to bring in reinforcements and overwhelm the rioters with physical force and ring the riot to an end. rather than just allow an outlet for people to escape and run away, you might want to surround them, contain them and overwhelm them. it might be at that point right now. we have reports on -- alix: we have reports on twitter right now that an officer has an injured. at what point do you call the national guard? guest: when you bring in the

military, that is usually the last resort. that means law enforcement cannot control the situation. a are elected to do that. they are very well in whipped, as opposed to the 1960's when there was a reliance on the military far more than there is now. these local police departments are well-equipped and have officers trained in riot control techniques. the problem is they may not have enough of them. when they feel the situation is out of control and can no longer contain these rioters or stop the rioting, then as a last resort, they will call the military. alix: when you are a police officer looking at a right like this, how can you tell those who are a danger in those who are innocent? guest: that his observations at the scene. there's all kinds of surveillance going on right now. in the middle of a riot, there

are a lot of lot -- there are a lot of eyes on what is happening. sometimes it's difficult to tell who is along for a peaceful protest and who is an agitator and someone egging people on to cause more damage. usually, they are fairly obvious in the crowd. it would not take long for law enforcement to people out. the problem is when you have more peaceful -- you have more agitators and useful demonstrators. alix: what does tomorrow look like? guest: i know local law enforcement and city government are reaching out through the use of social media and public announcements trying to assuage the fears of the public. they are trying to reach out to people who may have influence over people who are out on the street, trying to identify who the agitators are an outside activists who may be coming in to create a worse situation. tomorrow, depending on a lot of

factors, there is no absolute here. alix: we are looking at amazing photographs year of people stomping on a police car. much more to come. thank you for joining us. "street smart" will be back in just a few minutes. ♪

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scarlet: we have $58 billion in revenue for the second quarter topping analyst estimates certainly higher than the same time one year ago. earnings-per-share analysts were looking for $2.16 and as we know apple tends to lowball is forecast. they have been steadily moving higher in the lead up to this earnings report. higher than what analysts had been looking for. they were looking for below 30% at 39 point 5%. in terms of the third-quarter

outlook, the gross margin will be anywhere between 30 percent to 39%, encompassing the estimate of analysts that we surveyed, 39%. third-quarter revenue will be $46 billion when the consensus here was for $46.93 billion. we should also mention that apple is expanding its capital return program to $200 billion, buying back shares and, the increasing dividend. i'm looking to see if we have the details on that. all that i can say is that they will extend their capital returns program. >> i should point out that the buyback plan looks to be good to $140 billion. a lot to go through right now. for now i want to bring in the ceo of [indiscernible] and cory johnson joining us from san francisco, with michael holland.

joining us over the phone from new haven, connecticut -- lee did you hear what you want to do so far? lee coleman they beat the numbers. not as much as last quarter, but they got a better idea of just how good these numbers were going to be. the stock is up everybody is pretty happy. good numbers. erik: good numbers, apple made a lot of money. corey -- cory johnson: compare that to the 44 million average that they rounded up when they sold it when you're ago. a tremendous year-over-year sales gain. units up 138% year over year. it was not that bad of a number one you're ago. forget what the analysts expected let's just look at this is a business, a rapidly growing business with their most profitable products growing the fastest.

this looks like a strong quarter moving up to another one. erik: -- alix: china sales, that is something we want to look at coming in at 15.8 2 billion. you own the stock, michael, what do you think? michael: the other beat that i am so happy that cory: is on with us, the last time they reported they had a massive increase in their buyback and dividend picture and this time around 200 million, which he talked about, is eye-opening, do you not think that? cory: it is. it shows what a cash machine is businesses. take a look at what they are doing at the same time. a huge capital spending program with suppliers essentially paying for the capital equipment

that they will need to make the the building this outrageous headquarters in silicon valley the likes of which the world has probably never seen before, this giant doughnut in cupertino with customized underground parking, this amazing thing. in the midst of this they are generating boatloads of cash and throwing back the shareholders with price increases. >> 39% gross margins, of course. cory: sick margins. alix: tell us about the capital return to shareholders. scarlet: it will be increasing overall, with apple boosting its dividend by 11% to $.52 per share from $.47. analysts were looking for an increase probably just a $.60 increasing expectations, they will continue to access domestic markets because a lot of the cash that they do have on hand part of than $180 billion they are holding in cash and short-term investments is being

held overseas and the use would be taxed. taking advantage of the high credit rating to borrow some money and redistribute that to shareholders. i should mention the four x impact, we mentioned how much apple relied on china for sales. $50.2 billion, the headwind from the strong dollar will be a strong factor this quarter quantified at 800 basis points, that will be the impact of the strong dollar on the apple bottom line in the fiscal third quarter. alix: michael when you talk about their capital allocation program, is that what you want to see? michael: i think that they are doing a spectacular job . i think of the 11% dividend increase that they are using their, the expectation that they would do what they did was a surprise last quarter, so to go to an 11% increase is brilliant and i think that what they are

doing in terms of managing offshore versus onshore is brilliant, i think they will be breaking out of washington sometime in the next couple of years with respect to a tax for some of that cash to come back in. at this point i have nothing to complain about whatsoever. cory: fair point. talking about china, we reported sales coming in at 6.8 2 billion , helped by the chinese new year, iphone sales outselling the u.s., that would be the first time this has ever happened. sustainable? >> those numbers are up year-over-year, and the important thing about that is that over the last two quarters you have not only seen this replacement cycle, but more importantly this is the first time that apple has had a large screen product for those people in china to go by. does not just going to be this quarter and last quarter, it is going to last for a couple of quarters.

we are seeing the estimates were revenue going much higher over a couple of quarters because of this kind of cycle and i think that this continues. cory: alix: -- alix: michael before we go, one thing was the epic impact coming in lighter than estimated at 30 percent what is your biggest concern for apple? michael: that they lose their touch. all of the things that cory talked about they have got the touch. the foreign exchange thing, 8% impact on microsoft this is not a surprise. i'm afraid that now there is not a whole lot to quibble about. alix: michael, thank you so much, we really appreciate your joining us. lee and corey we have much more on apple earnings, to read -- recap quickly revenue coming in at $58 billion iphone sales in

greater china outselling that in the u.s.. much more coming up on that. as we had to break we want to revisit the developing situation in baltimore, hundreds have taken to the street, fighting police and destroying vehicles. it is quite disturbing, the baltimore police reported that seven police officers have now been seriously injured. we will be right back. ♪

alix: breaking, hundreds of protesters in northwest baltimore continuing to clash violently with police. the baltimore police department reporting that seven police officers have now been seriously injured. "the new york post" reporting that the situation is so bad that rival gang members are calling a cease-fire in order to form an alliance against baltimore cops according to "the new york post."

three gangs have reportedly entered into a partnership to take out law enforcement officers. we will continue to follow these very disturbing elements out of baltimore. for a recap on the apple earnings, we want to get into the numbers. we have the ceo of [indiscernible] along with cory johnson from san francisco. and we also have a very special guest from affirmed networks. thank you for joining us. >> my pleasure, thank you. alix: i should point out what your company does. it helps wireless carriers get more room to make the iphone run better. what did you make of the news? >> apple made a lot of money and did a great job. what is really exciting is how smart phones became part of everyone's lives. we are seeing that around the world and they are transforming

their networks, which is great. alix: china sales coming out at 16.8 2 billion. >> more than domestic iphone sales, which is incredible. alix: is that what you are noticing throughout your business as well, growth related? >> we have growth in all the markets we are involved in. we definitely see the growth around the world. alix: cory:, was her anything bad that you found? what is the worry? cory: you want bad? i've got bad. talk about the ipad. what happened to the ipad? it was the fastest technological adoption in the history of technology, probably faster than fire. but if you look at what's happened to it, pardon the side of my face right here, but i'm

going to give you year-over-year decline not only have they declined in seven of the last eight quarters, but they are down eight, down 14%, down 22% down 29% year-over-year. now they are down 29% year-over-year in terms of revenue. what that says to me is that this big giant iphone my iphone six, that this thing is killing the ipad. this grew at 57% and then at 55% it was supported year-over-year but ipad sales are rapidly declining. what we know from outside is that cheaper android tablets are selling in emerging markets and that is taking away from the appleshare. why is the iphone working in the ipad isn't? there is certainly some cachet. the ipad remains cool. the macintosh is emerging as super cool. the ipad is not holding on to

that. does that meld with what you have seen in your world in terms of what products so where? >> the iphone, particularly the iphone six, is a great product. i suppose we the perspective of apple is great that their own product is displacing the ipad but the ipad has had a pretty good life in terms of replacing computing. the used to be on big workstations. it's not going away anytime soon. >> i don't think so. does it matter that ipad sales are declining? their average selling price is still $418. >> the ipad was a content production device and not so much of content consumption device. once consumers got that bigger iphone, it was good enough and they did not need something so big to consume.

yes, on the enterprise side you need that kind of tablet that is a little bit larger. but that really is the use case. taking a look out here in the third quarter, apple revenue what might that tell us about the apple watch? it's hard to say. more important is the guidance. the business might be big enough that even in its first year it might move overall margins up. we will see when we see those numbers. it's hard to figure it out because there is such a long history of guiding down and this game that they play -- i wonder if they missed a quarter just to get the analysts to stop being so crazy about boosting above the guidance. but it such a game with wall street i think it of skiers really going on with the company . facebook puts up a fantastic quarter, but it was all about playing the analyst game such

that they overestimated what would happen. really quick, the new macbook which is fantastic by all accounts -- one of them showed up at my house today and i paid good money for it -- 36% year-over-year revenue increase on the macintosh in the quarter just reported. that is before this new product hits the market before today. that's a really positive sign for these guys. think about the context for their competitors. dell, hewlett-packard, and so on . that's a very strong sign for this company. gentlemen, thank you so much. we really appreciate all of your insight into the industry. as we head to the break we want to revisit the developing situation in baltimore. hundreds of youths taking to the streets to fight police officers, destroying vehicles. baltimore police reporting that seven police officers haven't recently injured.

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alix: breaking news, hundreds of protesters in northwest baltimore continue to clash with elise. take a listen. >> a group of outrageous criminals attacked our officers. right now we have seven officers with serious injuries including broken bones, and one officer who is unconscious. we will do whatever is appropriate to set the safety of our police officers and ensure the safety of the people that live and work in the area. alix: we want to bring jean west

in on the phone. you just are the police captain talk about doing whatever is appropriate. what is appropriate in this circumstance? jean: whatever is necessary to restore order. at this point the police realize now that overwhelming force is probably what they are going to need and their tactics will change accordingly. this is no longer just control and contain. what we are looking at now is the application of force to stop what's happening immediately. when law enforcement officers start to go down, every citizen is at risk and they realize that. alix: what is overwhelming force in this situation? >> specialized units trained in riot control techniques separate and apart from your average police officer. they may bring in outside forces with heavy equipment, riot control vehicles and specialized equipment. they have a lot of forces to

bear. alix: we've got to go, will be right back. ♪

alix: an unbelievable development taking place in baltimore right now as you see youth in conflict against police officers. we have reports that there are seven police officers seriously injured as hundreds of youth protest in the area. julie hyman jointly now with more. this event really am folded fairly quickly over the last few hours. what can you tell us? julie: we have had seven reports of police officers hurt. we have been watching the dramatic video of what appeared to be mostly young people, reportedly, some of them students from the area possibly

throwing bricks and other projectiles at the police. the police up until now do not appear to be responding in terms of firing tear gas or other types of deterrence into the crowd but that may be changing as we do here the chief of baltimore police talking about maybe taking more measures although he calls them appropriate measures in order to respond to all of this. i should mention that this is occurring in the area of one dollar and mall -- occurring in the area near the funeral freddie gray. we should remind everyone, that is what set all of this off, the death of this man about one week ago who while in police custody was injured that -- and those injuries led to his death, there are still a lot of questions about what led to those injuries. the protest mostly coming in the wake of that. it's unclear how directly tied these protests are to those events.

alix: jean west is joining us on the phone. we have one officer unresponsive so far there were reports of seven being injured. you talked earlier about what overwhelming force would look like in this situation. describe it to us. jean: they would bring in the train specialized units for riot control technique using the specialized equipment. they may bring in outside resources if they feel that the police department is not able to contain the rioting. it may actually resort to using the military or requesting the military to come in. they may even go to the state and ask for state police resources to respond to baltimore. alix: what is the risk of escalation? there are reports saying that gang members are uniting against the police force. what is the risk of escalation?

jean: anytime you have a riot situation you have people looking to exploit that situation. the riots give cover to other crimes. time to settle scores, commit burglaries, do other types of crimes that they can do under the cover of the riots. you have a lot of people for their own interest, not necessarily people that are sympathizing with any one cause or another that may just want to exploit the situation. we have to be aware of that. alix: how long consulting like this go on for? jean: that's dictated by the amount of unrest and by the response. police departments in the united states are now well equipped to handle these situations. they could also bring in those other resources that we discussed, but this could go on because there is an underlying layer of discontent that does not go away simply from rioting in the street.

that's always going to be there. alix: everybody, thank you so much for that. jean west, we thank you so much for coming in. that is it for "street smart." tomorrow nouriel roubini will be on the program. you don't want to miss dr. doom's outlook. ♪

mark: i'm mark melbourne. john: i'm john hellmann. "with all due respect" to enron, we don't need any juice to enhance our performance around here. straight in my thigh. speaking of home runs, happy national babe ruth day. the weekend campaign. the clintons feel their pain. jeb bush makes it rain. the republicans get right change. ted cruz talks at an event in an apartment posted