>> i'm joe weisenthal. >> u.s. stocks advancing with commodities as investors focus on corporate earnings and the start of the fed's first policy meeting of 2016. joe: the question is, "what'd you miss?" iphone sales finally nearing a peek? -- peak? we'll find out how strong global demand is. alix: the apple watch. later we look at the major market impact. scarlet: we begin with the u.s. market close, which shrugged off another rally in chinese equities. maybe we are seeing a decoupling between shanghai and the united states. yesterday's laggards turned into today's leaders. joe: the shanghai market got absolutely destroyed last night,

falling 6.3% with a big plunge late in the day. but it does seem like that first week of the year is china, chi na, china, and since then it does feel like a decoupling is happening, not that the u.s. markets are doing that great, but at least today -- alix: i'm raising the flag. we are looking at oversold bounce. some of the top performers on the s&p today are those energy names that got killed, like williams, the pipeline operator, and southwests, in particular as well as range resources, those two have serious short positions on the market. nothing fundamentally changed, williams cut their budgets. by the end of the day, shortcoming rally, i'm calling it. scarlet: theris a positive correlation with oil. you have been tracking oil prices every day this year. is it finally putting in a bottom? alix: i'm not big on that call. i'm not going to be on record

calling the bottom on oil prices. and thatup today to, is very interesting because when you have a rally in oil and a rally in stocks, treasury selling off, you do not expect to see gold up. that might be telling you something else heading into the second meeting. expect the fed is going to signal some sort of easier bias than what they previously signaled, that is the queue to buy everything by commodities, by gold, buy stocks. maybe that is what today's market signaled. alix: we went -- we want to take a look at the three most important things we saw in the markets today. scarlet: as u.s. stocks tried to recover from their plunge, a big question, how richly valued our their share prices? the pe ratio, the white line going back to the early 1990's, it has fallen to 15.6, below the 25 year average, the dotted blue line. that is around 15.7.

after the great recession, you see that the pe ratio of the s&p 500 mainly stayed below the average. much consistently been below that dotted blue line. it did break above that level in october and state higher until this month. we are within one standard deviation of the 25 year average. joe: great, so stocks are cheap again. scarlet: cheaper. alix: you mentioned the correlation between stocks and oil. come inside the bloomberg terminal here. i normalize global equities versus brent crude. this comes from mark chandler. are they really comparable, when you look at them? not really. the world index down over the last year by 11% or 12%. crude is off by almost 40%. i normalized basis li for like, crude getting hit much harder. you really cannot hit that correlation seriously. joe: it is easy to lose the

forest through the trees on a day-to-day basis. stocks seem like they're doing the same thing as oil. the magnitude is so different, so even yesterday's stocks fell. clobbered.t i want to dive into the terminal and talk about interesting economic data we got today. we got consumer confidence numbers, holding up really well despite all this market carnage, concerns about recession, the gold line here is at the highest level in over a three-month -- on the flipside, i want to do a comparison in the consumer confidence survey. they asked consumers, do you think stocks are going to go up? that has been tumbling. i circled two previous times in 2009. we saw them both plunge, but currently we're seeing a consumere where

confidence is holding up while expectations of the market is plunging. perhapseresting and suggests that consumers are not that sensitive to the stock market. so far it does not seem to have had -- >> maybe one of them will catch up with the other. joe: very possible. scarlet: see all these charts and more on twitter. us, thank you for joining us at this late hour. joe: in op-ed for "the new york times" it was written that the fed may have sound themselves -- found themselves in a tight spot. quote, they wanted to throw wall street and gop a bone and got into a loop of incestuous amplification. paul, should they have waited? did they convince themselves they had to raise rates in 2015 even with the data not really supporting it, and thus they went ahead in december and possibly made a mistake? employmentth is up,

is up, core inflation is up, headline inflation is up, wages, manufacturing production is up. does that sound like an economy which needs the rates? no. it is an economy which is probably 6 to 9 months beyond the rate cycle that should've started. the fed was late to the party and they should have raised rates. monetary policy operates on an economy with a 12 month to 18 month lag. what is going on in the markets is entirely because the markets want to have this happen. the real world continues to do just fine at the moment. is: on the other hand there the global slowdown, on inflation while you say it has been rising, core still is not that high. there's no particular indication that it's about to hit their target. why not have just waited? >> core inflation is 2.1%.

the fed is looking for an inflation rate of 2%. in an environment where you have volatile community -- commodity prices, the federal reserve is not in charge of opec, in this sort of situation you have to assume overtime headline inflation will revert to wear core inflation is. that's the general rule. the fed is acting appropriately. if we look outside the united states, inflation has been consistently surprising. it's not runaway inflation. we are coming back to a more normalized inflation environment, european core inflation is hovering over 4%. japan is a special case. not in most part, we are a deflation environment world. if you're not in deflation, you don't need zero rates.

i'm not saying you need 4%, 5% rates. alix: we showed a chart of brent oil prices. we do see some kind of gap in between them. brent heading lower. the surprise index is holding up. what do we think of inflation expectations? the lower oil prices stay here, does that wind up dragging down core at the end of the day? >> no. this is very important. there are three groups in an economy that fought off inflation. the first of these is consumers. consumers are absolutely useless at forecasting inflation. time,et it wrong all the because consumers don't think rationally like economists do. is the price, what of gasoline today, what is the price of food today? that's it. no housing, no education, no flatscreen tvs, no holidays included.

and that's what it's going to be forever. consumers are useless. to worry about consumer inflation expectations if you have a tight labor market and inflation expectations are going up because that will feed through two wages. forecasting,oup the second group is pretty useless at forecasting. all the time.ong the third group is the one group that can forecast inflation properly and get it right most of the time. that group is economists. their inflation expiration -- expectation is the only one that has a chance of predicting where things are going. if we look at the livingston survey from the fed, they are pretty stable. they have come down a small amount, the medium-term inflammation expectations are stable at the moment. scarlet: i want to go back to the idea -- you rightly pointed out there's a big gap between

where brent crude trades, and gasoline products we actually use, like auto fuel actually moves. there's a gap that indicates we are not getting as big a benefit from falling oil prices as we might think. exactly. this is a phenomenon that has really come through globally over the course of the last year. if we look at the u.s., you guys can't pour a barrel of crude oil into -- it won't work. gasoline is a lot more than crude oil. gasoline is roughly 50% crude oil, 35% labor costs in the and 15% ofribution, taxation. what we have been seeing is retail costs in terms of labor costs have been going up. the oil price has been coming down, and that's half the price of gasoline. 35% of the price of gasoline is

going up and the taxes have also gone up a little bit. take that altogether, and you end up with this gap widening out between the inflation rate for crude oil and the inflation rate in the real world, which is not doing that much overall. decisionave the fomc out tomorrow. what are you looking for in terms of any sort of acknowledgment about the market volatility and economic concerns that have dominated headlines to start the year? got to see we have is a delicate balancing act. the first point to make clear is the fed just about has the majority of economists on it. there are rather too many lawyers for my taste sitting on the fomc. economists live in the real world and they're more concerned with main street and wall street. they're looking at rising wages, looking at rising employment, and they're looking at a stronger housing market which has a positive wealth.

ist is really concentration going to be. at the same time, the fed does not want to chuck a barrel of crude oil on the raging inferno of financial markets. they are not going to say anything which will shock the markets too much. my guess is they will continue to point to the ongoing steady pace of economic recovery. that leaves the way open to raise rates in march, providing markets that are behaving themselves a bit more sensibly and a bit more rationally at that point, and it leaves some focusing very much on the real economic data. alix: over the last few weeks the real conversation has been, are we in a real 2008 scenario? what is your call? guest: no chance whatsoever. recessions are caused by credit bubbles or by inventory byrhangs or by policy error,

a central bank that is to bloomberg -- deliberately trying to slow growth down. we don't have a credit bubble in the united states. united states has just finished dealing with the aftermath of its credit bubble. we don't have massive inventory overhang. inventory is at a perfectly reasonable level in the united states. reserve is not making a mistake. real interest rates are shockingly low at the moment. the situation in the united states has got nothing which is signaling to me that a recession is in any way immanent. alix: strong words from paul donovan. thank you very much, ubs global economist. ourlet: coming up, we begin full count down. shares are under pressure as analysts reduced their estimates for iphone production ♪ here it ♪ -- production. ♪

mark: the united nations is monitoring the lead water crisis in flint, michigan. an official tells the associated press the u.n. is quote, following the developments in clinton looking at it from the human rights lens,". the u.n. sent two human rights officials to detroit in 2014, as that city was shutting off water service to residents who were behind on their bills. a new poll shows donald trump dominating the field of republican presidential candidates. in a new cnn/orc national poll, 41% of republicans surveyed backed trump. senator ted cruz is at 19%. the other candidates are all in

single digit straight san francisco's mayor is requesting a federal investigation into the police shooting of a young black man. mayor and lee made the request in a letter to attorney general loretta lynch. mario woods died on december 2. family disputes that account and has filed a lawsuit. died inter actor has new jersey. he was best known for playing over the hill detective phil fish in the 1970's cb series barney miller. fans of "the godfather" remember him. he was 94 years old. news 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus around the world. scarlet? scarlet: apple will report fiscal earnings in about 15 minutes. its stock has underperformed.

firms including ubs and morgan stanley cut their iphone sales estimates. what do the numbers say about apple? sales pose ae major risk for apple since the company relies on the device for 2/3 of its sales. since its introduction in 2007, smart phone sales have risen at an average annual rate of 56%. if you look at shipments of the iphone, they have actually plateaued, which translates into flat growth year over year. you will see how the blue line has peaked and come down and is projected to stay in a single digits over the next four years. stagnating sales of smartphones are making investors nervous. here is how growth in china has outpaced the rest of the world. isna peaked early and nearing such ration. unit growth rose just 1% last year.

you have a fixation on margins as a result. because china is apple's number two market, the fear is a slowdown in that country's economy could drive down apple's profitability. apple could also raise its prices to keep markets intact. there's a lot of hope pinned on other products, such as the apple watch. idc forecasts that apple shifted 14 million watches last year. for later on watch is 75 million estimated iphone unit sales last quarter. we will be keeping and i on that and the rest of its earnings when they come out in a few minutes. alix: joining us to discuss apple is the founder and ceo of a firm that follows technology. what you think this happened -- what do you think happened this quarter with the iphone? it worries people to see

this company that has been the most profitable company ever in world history having been dominated by one product face the risk that that product's growth is really slowing, and maybe it's going to be subject to gravity. disagree with the general consensus that we are headed towards slower growth if not a declining market right now. the market has not been excited about apple in a while. even from a consumer standpoint, what is there? i like that way of asking the question. i think there is plenty of reasons to be excited about them. in the rash of statistics being thrown around, they still only have 12% of smartphone markets. they have taken share steadily in pc's for a long time with a much higher price product.

the iphone is by far the best smartphone, unequivocally. i think you can see them grow even in a slowing market if they continue to come out with new products, iphone 7 later this year is expected to be excellent. they have one of the world's greatest brands, and that is one of the reasons why they are so profitable. scarlet: tim cook identified taking market share from google's operating system as a future sales growth driver. is there a clear-cut growth strategy, or is it more of the same? guest: yes, i think that is their big opportunity, to continue to grow their share of the overall smart phone market, even if it is not growing in the aggregate. when you have the best product and the best brand, there's always still huge opportunity. thinkt: what do you happens first, they get a blockbuster product that takes

off, or they become more of a services company, making more headways with subscription models? probably the latter. they need more to get into software and services. it is higher margin in the end, generally. the apple watch is a great product, you had some interesting numbers on there. it isn't enough to really move the needle in a big way by apple. the watch over time was it is iterated and approved, next version or two, will be a good size, healthy business. they need software businesses because that is where they can really be more properly compared to the googles and facebook's of the world, and have that kind of a business. alix: through earnings, we are seven minutes away. coming up, we will break down apple's earnings forecast. ♪

moments away from apples earnings, just how negative have analysts become in the last four weeks? very. scarlet: absolutely. function foreb apple. what were looking at is how much analysts have downgraded their expectation for the revenue apple will make in the fiscal first quarter. over the last four weeks, 16 analysts have cut their estimates by an average $595 million. some $6.5stimate is billion. if you were to look at the full number and see how that translates, that works out to with 27 analysts

cutting estimates for revenue for the full year. same story, for the first quarter you're looking at 13. analysts cutting it by about two cents. if you brought it out and look at what happened for the next year, $.24, 24 analysts have downgraded their estimates by $.24. this is immaterial. joe: we saw over the last several weeks the string of analysts come out. also, does the commentary, negative. morgan stanley cutting, estimating a drop of 6% for iphone unit sales for 2016, jpmorgan cutting its estimate of iphone sales for next year to a range of $75 million to $77 million, down from $80 million. in addition to just the wrong numbers, you have seen a huge

change in the tone. this is the company that analysts were afraid to say anything negative about because they would look silly. samsung the big competitor to apple when it comes to handsets. alix: everyone kind of knows iphone sales will be down. the question is how rapidly it will decline. gene munster came out with a call on friday, saying apple could see 50% appreciation until september because it mirrors the upgrade cycle we saw in 2013. he will upgrade your hardware and software, and that means evaluation winds up being improved, could mean a huge bump for the stocks. you do have those outliers. it is so undervalued right now. scarlet: next up, we will bring you those apple earnings. ahead of that, apple shares trading down 1.3%. we will be back with apple's fiscal first-quarter results. the only way to get better is to challenge yourself,

and that's what we're doing at xfinity. we are challenging ourselves to improve every aspect of your experience. and this includes our commitment to being on time. every time. that's why if we're ever late for an appointment, we'll credit your account $20. it's our promise to you. we're doing everything we can to give you the best experience possible. because we should fit into your life. not the other way around.

scarlet: breaking news -- apple earnings just crossing, $3.28 per share, higher than what analysts were anticipating. this is an increase from $3.06 they are before. in terms of the big number, apple sold 78 million iphones, less than what they were looking for. this is a miss when it comes to the number of iphones sold. in terms of second-quarter revenue, the outlook for this quarter, apple is looking for revenue of $53 billion. what's worth keeping in mind is that not only have analysts been

burning down estimates for this current quarter and last quarter, apple is notorious for lowballing estimates for both revenue and profit. apple has been very conservative in its guidance. in terms of growth margin for the first quarter, it was 40.1%, higher than what analysts were looking for. they had anticipated 39.9%, and apple was looking for anywhere between 39% to 40%, so at the high end of what it had anticipated. when we look at the outlook it anticipates, it is forecasting a first sales drop since 2003 on the iphone slowdown, evidence that the market for smartphones is becoming saturated, not just here in the u.s. but in china as well. joe: and yet the instant market reaction to these numbers, despite their seeming subdued, is up around 2.9%.

we will see how the market ultimately digest that. .50, when$690 an analysts were looking at six and $74. -- looking at $674. it looks like the average selling price is higher, so apple is not having to reduce its price as much to maintain the growth market share. alix: curative right down the numbers is cory johnson and david kirkpatrick. are seeing the stock reaction -- what is the number you think they are happy about? cory: a lot of numbers to be happy about. it's one of the biggest quarters ever. in growth, they are not happy about 1% iphone growth. that is coming off of 36% the previous quarter. a genetic slowdown, but it didn't go negative.

the number they have got to love is the average selling price. apple has never gotten an average selling price as high as $691 per phone, the highest that number has ever been. while everyone else has been fighting over market share, apple said we will go after profit. yes, we want some market share gains, and there is lots of room to grow, but they haven't dominated because they haven't tried. they haven't gone low market. they have gone for more expensive phones, and you can see the payoff here with $691 per iphone. and i should point out that china sales also came in at $18.4 billion, the estimate was $12.4 billion. david, is that apply china is still going strong even though we were very worried about demand? david: it sounds like it. i'm not the world's leading instant analyst, but i would say that if china is still relatively strong, considering the fears we have heard, that is

really good news. anything could happen next. the interesting thing about the high average selling price that corey was talking about is that it leaves so much room to gain market shares of rising later if they choose to. that is pretty exciting for them. i don't think they are out of any kind of woods. scarlet: another headline i caught is the average selling price of the iphone. the ipad was $400 when the -- it is curious, this is a quarter where they came out with the ipad pro, which appeals to the enterprising customers and should have a higher price tag. cory: that's right. -- that figures a last quarter when it wasn't the most expensive. %ust as interestingly, 25 decline in year-over-year growth. the ipad business is really slipping.

yes, it mirrors all the tablet business all across the industry. we see that great decline. we don't know of that is because macintoshes are so much tha inner, or the fact that the phones are bigger and provide a lot of the same functionality. it's interesting when we see that, and it is worth noting that the macintosh revenues were down 3% year-over-year. macintoshes and picking up where the ipad had been. we have seen a slowing growth of macintosh sales, and i think that is important thing to take note of. as david mentioned, they have gaining market share. macintosh's relative success

in that respect. david: one interesting thing to think about is everybody has been saying, this company really should be more than just a one product company. if anything, the results as we are seeing that now suggests that they are even more an iphone company and nothing else. i should point out that other product revenue did come in at $4.35 billion, meaning that they are making more money off other products. cory: another headline that i think puts this into big picture crossed the-- apple milestone of one million active devices. it puts in perspective have gigantic this company is. and the headline is forecasting the first year-over-year decline, so i think those are the two big picture ways to think about it. one billion devices is absolutely enormous, where for the first time they won't be able to sell as many next year. cory: and when i look at my model, one thing i keep track of

is the total cumulative iphones they have ever sold. they have sold 10 to me because i keep dropping them. 96 million iphones sold cumulatively through the end of december, and that shows you with a dominant product it is. and 68.1% of revenues were from the iphone alone. that is the second-biggest product they have ever had. 68% of revenues coming from that single product. it is so successful that even the success of the other categories can't come close to the success of the iphone. scarlet: we are getting some other headlines from apple. the company is seeing softness in china, especially in hong kong, according to the cfo in an interview. we will get the highlights from that interview at emily chang just a little bit later, but i

think it is interesting. just as there are flaws of the idea that you look to oil prices at an indicator for the strength of the global economy, it seems like people are watching t apple as a comment on china's economy and i don't think that's right. joe: that's absolutely right. it goes both ways. people want to look at china to see about apple, but everyone is so curious about china without apple that i think his comments of particular softness in hong kong, a consumer company that has done well, it doesn't add much confidence. the consumer is supposed to be the bright spot. scarlet: david, china represents 25% of their sales. would you suggest launches around the lunar new year as opposed to the u.s.? sense.it makes a lot of they brought out a gold iphone specifically because it appeals to the chinese consumer.

if you're getting 25% of your revenue from one country, you are going to accommodate that country. scarlet: i also want to take a look at an intraday chart. we saw a spike of 3% after numbers were announced, and we really pared those gains. they were relatively flat. this huge spike, and then they fell neutral. does that reaction make sense? cory: this has been so baked in -- it shows you how the analyst community, and who knows what the nods were. this shows how well into the market this was. yes,things slowing down; it is fundamentally a hardware company and there are things to be concerned with, but this is a

fantastically profitable company. they took down the share count -- and looking at the model -- 6.3 billion shares two years ago now down to 5.9 billion. they bought back a ton of shares, paid dividends. at the same time, they have gotten bigger and more profitable. so yes, their main engine of but what alowing, massive an awesome company this is to the whole. absolutely. we know apple raised prices internationally in response to the currency devaluation in china and the stronger dollar, well making its products more expensive in overseas markets. apple was able to push back on supply chain to absorb some of the dollar strength. is it still driving its suppliers a way that it was once able to, now that it is looking to take market share rather than get new market share? david: i agree with cory on

the extraordinary nature of this company, and one of their best capabilities as logistics. cook is probablye the world's leading expert in that and i think they have all sorts of tricks up their sleeves. joe: i just want to read one quote from cfo, "record sales and strong margins drove all-time records in spite of a difficult macroeconomic environment." it really six to how they are great gauge on the entire world. alix: thank you so much, everybody. cory johnson and david kirkpatrick. scarlet: coming up, we will hear more from the apple cfo on his quote, saying he sees softness in china. we will be back. ♪

scarlet: apple just coming out with its earnings, the company forecasting a filter climb for this quarter for the first time in more than a decade. last quarter, profit beat estimates while sales missed. you want to check in with emily chang, who spoke with the cfo about the results. she joins us now from san francisco to give us a synopsis of what he said. emily: just got off the phone overall,cfo, and record epf, record sales, record iphone sales, record watch sales. those are numbers that any company would love, but there are some comments about china that may cause a little bit of concern. i want to read what he said. he also said that sales of the iphone in mainland china are better than ever, up 18%. he said specifically they continue to see strong business

in china, very strong interest in our product, all-time records for iphones in the first weeks of january. however we are seeing some level of economic softness, not in mainland china and hong kong. hong kong, as we understand it, is a fairly large part of their business. softness,s one word, that everyone will hone in on. that said, record levels of the iphone, not just in china but in several different countries in europe. scarlet: did you get any color as to why it was dollar related, or is it a macro environment where they don't want to spend? emily: they definitely emphasized the foreign exchange rates. about howlked a bit several economies are going through a recession. he specifically mentioned canada, russia, brazil. he also said this is just in the first two weeks of january where

they are seeing this level of softness. one thing he did emphasize -- and we have been talking a lot about apple's reliance on the iphone -- corey mentioned earlier 1% sales growth -- he gave us a deep dive on the service as part of their business. he said in recent weeks we crossed a very important milestone. for the first time ever, our install rate is more than one billion. if you look at the size of this business and how much it is growing and compare it to other internet services companies, is a very big business and possibly not valued the way other services are. when you look at the amount of cash on our balance sheet, we end up concluding that our valuation is not correct, that the stock price doesn't perfect the true value of the company. he's saying, we are getting credit for this monster number. emily: -speaking -- iphones in then

first quarter with an average selling price of just under 691 numbers. joe: all these numbers are extraordinary. the number is net 1 billion. base saying that is a huge on which to draw regular revenue, and there had been a debate that they don't think they are getting credit for. emily: exactly. and he says it is growing 25% year-over-year. the strength of the services business is necessarily dependent on devices, because if i get a new iphone, i give my old iphone someone else and that is a device still being used. i asked about the rumors we have heard, that there have been iphone production cuts, and he said we don't comment on rumors but we havey chain, provided guidance for the second quarter, which points to a revenue decline. we have a very different macro environment from a year ago. there are a lot of countries out there in the recession. we have issues of foreign

exchange, currencies around the world are weaker against the u.s. dollar. i think we will hear them talk about this a lot. joe: i was just going to ask you about that. the difficult macro environment he alluded to is now just a china story -- is not just a china story. emily: we're talking canada, brazil, russia, countries around the world. he is saying it is a different world this year, and you will see that reflected in the numbers. alix: what about the tax investigation still ongoing? some of it might consider an overhang, although for apple, a it matters a little bit less. that? -- he on commented on that? nd this could, a potentially result in billions of dollars back taxes apple owes.

we asked if they could have a material impact on the business, and he said, pending with the outcome is, it could, if the decision is negative. we cannot estimate what the impact would be because we don't know what the theory of the case is. ireland has never provided us with any selective treatment, and we fully believe we paid all the taxes that we know. scarlet: good stuff. thank you for recapping your comments, your interview with the cfo of apple. you can catch her full coverage, plus the discussion of earnings, airing at 6:00 p.m. new york time. alix: coming up, apple's earnings in. has to watch her or helps the company? scarlet: and coming up on bloomberg television, rick perry joins "with all due respect" at 5:00 p.m. eastern time. ♪

scarlet: coming up on bloomberg television, an advisor at cooper will be joining us at 5:30 p.m.. alix: apple earnings reporting. the key metric with the iphone sales, and we want to focus on the apple watch and how it has helped the company and effective competition. nowr to helpins us us cringe the numbers. we did see other product revenue coming in at $4.3 billion. what is your guesstimate for how big the market is for apple? >> it is difficult to say. without a shadow of a doubt, the apple watches the dominant smart watch. i would even go for it to say

that it may be even the dominant watch of the moment, including traditional mechanical watches. joe: let's look big picture. we know swiss watch sale exports have been mediocre. apple came out saying that the hong kong sales have been week, attributed to the weakness of the luxury watch. how crucial is this rich asian buyer for the watch market overall, whether it is apple, rolex? >> highly. looking at the softening of completely is com true with the swiss. hong kong is down 25% through november of 2015. significant drops in purchasing. scarlet: when i lived in hong kong, every commercial was about a swiss watch as opposed to beer or any kind of tv. it was very focused on the watch. joe: is there any other market showing signs of growth, rising

demand? >> absolutely. the two strongest markets are europe, and the united states. lost,hing that asia europe is picking up. scarlet: is there one portion of the market that apple is eating away? >> it's $3000 and below, particularly watches that are functional. there is nothing luxury about them, they just tell the time. rolex and above, those are doing just fine. it is folks who are competing on price and function, and the apple watch has so much to offer. joe: how are the non-apple digital variable companies doing? are they getting crushed by the apple watch? >> well, this was contemporaries are. the fitbits are doing ok, but when you look at these guys that are trying to bring the silicon

valley technology to switzerland, it's now we would want to see. trying, but we haven't seen anything with that design sensibility or social capital. alix: we don't know the apple watch numbers, but how has this injury into the market changed the way traditional watchmakers strategize? >> last week, we were all in geneva for the big tradeshow for luxury watchmakers, and we see a total shift in the size and pricing of these average watches. whereas before they were the 45 millimeters and $10,000, they are 40 millimeters and $4000. much more conservative, geared toward european and american buyers. joe: what else did you see at the tradeshow, at the cutting edge of timepieces? >> a lot of really high-end things for sure, but really a target for people who know what they are buying. the aviation consumer is less

educated when it comes to watches, so we see things geared more toward the american client that really have an understanding of watchmaking. we also see a lot of people, these major luxury houses, trying to get into the digital. connected device. scarlet: good stuff, thank you. coming up, what you need to gear up for tomorrow's trading day. ♪

alix: don't miss this on thursday. we answer the question on every investor's list. is the u.s. economy recession bound? we will investigate in a special report, so tune in at 3:30 p.m. eastern. joe: a good economic debate

again, and i am glad we will have 90 minutes to dive into it. scarlet: my guess is that the fed will not mention anything near the "r" word. alix: that's it for us, thanks are watching. john: have a great evening. ♪ the only way to get better is to challenge yourself, and that's what we're doing at xfinity. we are challenging ourselves to improve every aspect of your experience. and this includes our commitment to being on time. every time. that's why if we're ever late for an appointment, we'll credit your account $20. it's our promise to you. we're doing everything we can to give you the best experience possible. because we should fit into your life. not the other way around.

john: i'm john heilemann. mark: and i'm mark halerin. and with all due respect to the current republican field, rick perry is back in iowa. >> it feels rate. it smells right. it is right. mark: hello from what we modestly call the center of the political universe for another week. we are here in iowa, at the des moines marriott. a week to go before the presidential caucuses. today, candidates of both parties crisscrossed the state,

and went