mean, mandy, that everything is fine in em world. >> it do you see not mean everything is fine but, of course, we'll continue to watch this story. in the meantime, thank you very much for watching "street signs." "the closing bell" is coming up next. scott wapner is out there, too. stay tuned to cnbc. and welcome to "the closing bell" at this hour. i'm kelly evans at the new york stock exchange with scott wapner. >> i'm in for bill griffeth today. this is not the snapback rebound investors were looking for after a very ugly finish to last week. feels like things have stabilized a little bit more but the buyers are not coming out en masse yet even though the dow from being down 80 or 90 points is positive by 50. >> the action midday did not look so good. now the s&p 500 has turned slightly positive, so it isn't just caterpillar which is pushing the dow up 50 points at the moment although that's certainly the lion's share of it. so coming up we'll get some perspective from legendary

investor john calamos here with his take on what investors should be doing right now. >> could apple help pull this market out of the funk. apple due out with earnings at 4:30. we'll have the crucial numbers the moment they cross with the analysis they need. apple's results will be watched closer than ever. >> regardless, it will have a huge impact whatever apple does because of the size of that company. it will have a big impact on markets tomorrow. let's look again at this hour of where we stand. the ten-year u.s. treasury yield is pretty flat. as a result earnings moving the indexes to some extend. we have caterpillar contributing in the range of 40 points to the dow which is up 47 at this hour. take a look at the nasdaq. this the underperformer today and it's the social media names which we have to watch. it's off about 0.4% or 16 points. and the s&p 500, as mentioned, is fighting to return to positive territory. you can look there at the chart

and see this turnaround we've had since midday. >> let's talk about the markets in our "the closing bell" exchange. joining us now is rebecca paterson david kudlow anthony chan from chase, and kenny from o'neill securities. our own rick santelli is along as well. kenny, to you first. how does it feel down here after the carnage late friday afternoon? >> you know the carnage, let's not overdo it it wasn't carnage in the sense it was a bloodbath. there was a reassessment. today we've had this 20-point swing in the s&p. now we're rallying back. 1788 yshish is a level where it wants to find support. you can feel them wanting to push it back there and try to close it at that level today. but by no means do i think this correction is over at all. i think there's more to come. i think no matter what apple does tonight apple is just one company. i think there's bigger issues that the market has to deal with. >> and we want to hold this thought for one second. do you have any or news on the

herbalife story you mentioned moments ago? that stock, of course moving higher by 69%. >> there was some news i delivered that tim ramey the analyst who was wall street's biggest bull on herbalife was leaving it. it looks like he's going to join bill steer ritz. he's one of the guys on the other side of ackman. >> this is a guy who is long on herbalife. >> long herbalife. george soros' firm at a time. that's an interesting development most significantly because of what it could mean that happens next. i read you a letter ramey sent out saying he was going to do some strategic m&a type stuff. the word on the street is eventually steerich will do an lbo or a giant buyback. the fact ramey is going to work

with him makes this story more juicy than it has been. >> does it demonstrate the conviction both of these parties have in the herbalife story? >> i think there's no doubt about that. i think one of the reasons why the stock had moved up the way it had was in anticipation of what all of this could mean. you have the biggest bull on the street and you've got one of the biggest bulls with deep pockets behind herbalife. who knows what happens now. >> shares are up 8% at this hour. as we get more news obviously we'll talk to scott wapner about it. want to get back to the markets more broadly here which are cast being a little bit for direction. anthony, what is the next move do you think? >> i think the markets have to stabilize here. the big concern is emerging markets. we heard some encouraging news from china. we heard some encouraging news from caterpillar. so as we continue to receive more stabilizing news i think things could stabilize, but we're not there yet. >> we're not there yet. david, we've seen declines of about 3% to 4% almost 5% across the major indexes in just the past several trading sessions.

it seems like a 4% correction is all this market has been giving us since 2011. do you think we'll continue that today? >> i think that we'll see this go a little further. we haven't had more than a 4% or 5% pullback along the way at least over the past year or two, and i think we have further to go this week because of the fed meeting, because of gdp coming out, and these continued problems in emerging markets in their currencies. we're seeing the impact of quantitative easing coming back out of the system and what that means to emerging markets, the currencies, and it's not enough to cause a market top in the u.s. we think it's enough to cause a correction more severe than we've had already. we look for more volatility this week. >> rebecca, is there a difference between a healthy sell-off and an unhealthy one? >> absolutely. you know as was just said we've had corrections of anywhere between 2% 5% 6% that will last a few days, a few weeks over the last year and a

half. every time that dip was bought and the market has gone higher. i think consolidation within broader trends whether that trends up or down is part of the process. i think you always ask yourself is this just a consolidation or is something fundamentally changing? and in the case today at least so far, i don't see anything changing. data out of europe continues to be very strong. data out of the u.s. mixed, but i think generally improving. >> rick santelli we're about to embark on a two-day fed meeting. do you think there's any possibility that as they have watched what's taken place in the emerging markets, that they're going to be spooked enough that they're not going to continue at least in this go-around taper? >> i personally don't think so and i personally don't think it would be a good idea to back away even if it gets to be bigger tectonic shifts in the emerging markets in china. of course, they can do anything they wish. the issue continues to be that, you know, when do you move from emergency-type programs to some normalization and the longer you

postpone it what ammunition does that give you should there be a fresh deterioration? you know the more i talk to various traders about what happened towards the end of last week and we continue to see stock and treasury rates correlate very highly and it makes sense because stocks are the messenger of that bad news consider this. let's say the chinese economy is anywhere from 8.25% to $8.35 trillion. many believe their shadow banking system represents 33% of their economy. i think that's more than enough to make traders and investors a little nervous when they see like the pmis and some of the peripheral issues in chibna. >> let's talk to the trader sitting right next to us. are we not giving what's happening in china either from an economic standpoint or a possible credit standpoint enough play? >> i think it needs to get more play until it really plays out, right? here is what i think.

i think the fed is going to hold the line at a $10 billion withdrawal. i don't think they'll increase it, but they're not going to decrease it. i think in my opinion based on what we have seen the last couple days the meltdown in the emerging markets, what's happened to the currency kind of the sense that you're getting here in this country, it's last thing they want to do is see the market fall out of bed. a test at 1765 is not out of the question. >> anthony, do you think this will be yellin's first big test? granted, she won't be leading the fed until the march meeting. >> i think what the fed actually can do is continue on the $10 billion tapering but they can actually say if this gets out of hand, it's a variable they will be watching closely. that in itself will calm the markets because it really says they're not tone deaf. as for china, let's not lose sight of the fact that they don't want another lehman moment. every time the short-term rates go up, what does the chinese central bank do? they go in and inject liquidity. i have no doubt that they're watching everything carefully. nobody wants another lehman

moment, including china. >> well moral hazard becomes a question for another day then. thank you so much and rebecca, really appreciate it in this busy hour. have a good one. investors are getting some whiplash again from this market. sheila, what is driving things today? >> you got to talk about earnings so let's kick it off with caterpillar which is moving higher on stronger than expected fourth quarter earnings. the company also announcing a $10 billion stock buyback. fellow dow component merck hitting an all-time high as morgan stanley upgraded the stock saying the company's prospects for a new cancer drug have improved. on the flip side we have to talk about tata motors. that stock is down after top executive who headed its indian operations died suddenly over the weekend. police say it could have been a suicide. xerox was downgrade edd citing valuation. finally, let's talk about sony falling after moody's cut the

debt rating to junk status. scott? >> sheila thanks so much. take a look at what we have left. about 50 minutes on this monday before the closing bell rings. the dow jones, a nice snack back at least from certainly earlier on in the session. we're up 50 points. the s&p 500 as i see it is up by just a couple. >> even the nasdaq is only off 15. we'll see -- >> nasdaq was off by more than 50. >> exactly exactly. keep a close eye on that one. emerging market weakness continuing to weigh on stocks. we'll tell you exactly what's been going on overseas. plus we'll look at the exchange traded funds for the markets have that taken a beating and wonder if now is the time for bargains bargains. we want to know what you think the fed should do this week amid this global market turmoil. should they keep tapering? we'll reveal your best tweets coming up. >> @cnbcclosingbell is how to reach us. plus we'll hear from john

calamos. he will join us later exclusive exclusively on "the closing bell." jur watching cnbc, first in business worldwide.

opportunities aren't always obvious. sometimes they just drop in. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group: how the world advances. welcome back. emerging markets are a major culprit for all this angst.

>> michelle caruso-cabrera joins us to break down what's going on, michelle and why your investments wound up in the crosshairs. >> the emerging markets slightly calmer today though it took an early morning announcement of an emergency meeting by the turkish central bank to calm things down. it's expected that the tishgishurkish central bank will announce a hike in interest rates. we could do country to country with loss specifically issues. what is true in general about all of them is the following. they lived as if commodity prices would rise forever and that interest rates would stay low forever. now with the fears of a china slowdown you were talking about it last block, commodity prices won't necessarily stay high. with the u.s. economy improving, the fed tapering interest rates may not stay low. another key thing to watch, china, its banking system you were also talking about that. there's a fear that a big financial product is likely to

go bust late they are week when it matured on friday and could that have a wider ripple effect and lead to some kind of banking crisis in the country. those familiar with the chinese economy say those fears are overblown, but this market is very nervous about what any kind of unknown financial links may exist. >> they always seem to be revealed in the crisis. >> exactly. >> thank you, michelle. many investors have exposure to emerging markets via exchange traded funds or etfs. >> bob pisani is down in florida with the inside etf conference looking at how the emerging market etfs are faring and which may be the babes being thrown out with the bath water making them possible opportunities for investors. >> hey scott. big etiongest etf conference in the world. let's talk to the guy in charge matt hogan is the man who puts this together. he's the president of etf analytics at etf.com.

the whole session in the afternoon is on emerging markets. tell us what the buzz is what are people say being what to do with emerging market etfs right now? >> emerging markets are a disaster. we've been running this conference for seven years and if you bought eem, the broad-based etf, held it for seven years, your total return is actually exactly zero to this point. people were talking about can they call the bottom in this emerging market correction? from what we see the baby is being thrown out with the bath water. the good countries and bad countries are going down together and until you start to see some differentiation there, you don't have a turn. >> eem is the main etf that's out there. kelly and scott, get in on this. >> bob, thanks so much. look, i'm fascinated by this point that the eem in particular has been such a disaster. i just wonder, you know, is it fair to at least try and look at that as one way to play emerging market value if it gets beaten down enough or alternatively,

are there other etf options you think are a better bet and why? >> i think it's time to be specific in emerging market etfs. the big emerging market boom we saw in the last deck wade was driven by natural resources. if you were exporting emerging market, you did great, but that game is over. that was driven by china's big growth boom. that story has played out. the story now is the emerging market consumer. rather than taking a big bet on eem, you want to narrow your focus. you want to look at a country like mexico eww, which is a great consumer-driven story. or poland or maybe even into china where the consumer stocks have been doing extraordinarily well. there's an etf, chiq that gives you exposure to chinese consumer stocks. those have been doing well as chinese financials and industrials and energy stocks have suffered. you can be more specific in your target. >> your point is get away from the focus on commodities and focus on consumers and the internal growth of consumers so

you're talking now mexico you're talking poland for example. this is not the old brics paradigm. >> brics story is over. emerging markets are being broken up into natural resource driven economies like brazil which are suffering from inflation and these new consumer-driven economy that is have take. the next leg up in growth. you can play it in mexico in china, you can play it in poland as you suggested. one thing we talked about earlier, bob my favorite emerging market play in the whole space right now is actually not emerging market at all. it's spain. >> spain? you think spain is an emerging market? >> it's the best maeshlemerging market for investors. >> why is it an emerging market? >> if you think of where it was three, four years ago, 25% unemployment, high deficits old labor laws. they have been forced to get rid of those. their industrial economy is turning around. >> spain as an emerging market. kelly, get back in. >> currencies are such an important part of the story anytime people invest outside the u.s. in fact they can be entirely

responsible for the gain or loss, forget what the fundamentals for the stock market in that country. do you recommend people choose a hedged product or not? >> that's a great suggestion. we love hedged products generally in developed market there's a great hedged etf, dbem that gives that you exposure without giving you the exposure to the emerging market currencies. we do like it. there are some costs involved but we like hedged exposure. >> last question quick answer. is china hopeless? is there nothing you would say any etf to invest in china? >> i think there is hope this china i just think it's in the consumer sector and not the industrials. >> >> and you like chiq a basket of chinese consumer stocks. >> that's exactly right. if you look, it's not far off its highs. those stocks have been screaming recently. they're making money. there is an emerging class in china. it's just all the banks and the resources that are dragging it down. so get rid of those, narrow your

foous, and hit that chinese consumer. >> our fifth year the conference keeps growing. congratulations on the success. guys back to you. >> bob and matt thank you both. you can be sure to catch much more of bob and coverage at the inside etf conference on our website at cnbc.com. >> 40 minutes to go before we close it up on this monday. a bit of a snapback today and we're holding onto the gains which is interesting as we enter the final stretch. the dow is still up more than 50 points after that steep sell-off and has not had five straight down days in a while. we were looking at that today so hopefully we'll break that streak. >> thank you caterpillar. some troubling trends are emerging this earnings season. we'll take a look at what they are and whether they could accelerate this market sell-off what could turn things around at this point. we'll talk about it. apple could be the catalyst. apple earnings are due out after the bell. the results could move the market. you nou they're going to move the stock. apple is making a bet on some expensive new glass. what's it using it for?

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period, at least the nasdaq down about 2%. josh lipton joins us now with a preview of apple's big earnings report. josh, it's due out in an hour. we want a sense of that and are we going to hear anything about bigger iphones and about this new glass that's potentially involved? >> yeah. the new glass is interesting there, kelly. forget diamonds and emeralds. apple things the gem to own is sapphire. apple investing a lot of time and money in the gemstone. the company signed a big deal with gt advanced technologies to become its producer of sapphire glass and it filed a patent detailing ways in which sapphire glass can be secured to various devices. sapphire is durable, it's scratch resistant, but here is the big drawback. it's also expensive. a layer of sapphire glass for a smartphone costs about 17 bucks. glass that is simply chemically strengthened, that costs about $4. sapphire glass at its current price point probably too expensive to use for larger

screens like ifdipads. for iphones it doesn't appear they have enough sapphire glass to cover that many displays. apple could keep using sapphire to cover smaller areas of its devices which it does right now. such as the camera lens on the iphone 5 and maybe in the much walked about i-watch, but it could simply make apple's products that distinctive from its rivals. the street remembering looking for $1,409 on revenue of $57.5 billion. >> josh, thanks so much. let's bring in a pair of analysts for their insights and if the market is being set up for disappoint with some report apple could have its best quarter after. alex and nahal both join us now. i think what's most striking from your notes is that neither one of you are raging apple bulls. nahal, why not?

>> the primary reason why we're not raging bull on apple is that a, they're exposure to emerging market is saturated, and they're maturity. they have a high retention rate but we question whether or not that retention rate will stay as high as it is one to two years down the road as users become more and more familiar with the android operating system. >> all right. alex, what about you? let's talk about the quarter in particular. we mentioned they could be turning in some of their best numbers ever. is this as good as it gets? >> i think people are expecting a good quarter from apple, and i think a lot of it is coming from the beginning of iphone sales on the china mobile network which is obviously a massive opportunity for them. but with that baked in i think

the real problem for apple right now is that there hasn't been enough innovation not enough change to the story other than the incremental addition of china mobile to really get you excited structurally for the name. you mentioned the sapphire glass. that's not really going to be a part of today's earnings call. that's something down the road. we need to see a lot more innovation on a lot more fronts to get excited about apple structurally. >> nahal, carl icahn may not get his way. he may not get the $50 billion buyback, but at this point do you think that apple needs to address that issue more specifically? not necessarily mr. icahn himself, but the issue itself for this stock to take another leg higher or at least get jump started once again? >> i think that the management definitely should address why they feel like they need to hold onto the 100-plus billion dollars of net cash they have

and why they're only committing to return the cash flow that they are going to be generating but that they want to hold onto that. certainly if they do make a comment that they see an opportunity to return that that would jump start the stock but i wouldn't expect them to do so given the conservative attitude that management and the board has taken with their cash hoard. >> alex at some point tim cook has tried to take the high road really as it pertains to the buy back. they say they'll look at it in the beginning part of the year maisch march. at this point do you want him to come out and say, look, we heard carl. we may not agree with the level to which he wants us to buy back our stock at this particular point, but we are going to do "x,"",,"",," "y," and "d"? >> personally i'd say to see that happen. i think tim cook had it right when he said this is a side show distraction. that's what it is.

the problem is there hasn't been enough innovation or other things to inspire confidence in the name and hence it finds itself i guess activist investors grasping at straws to try to create catalysts out of nothing -- >> wait a minute alex. apple is involved in like $100 billion capital return program between buybacks and the dividends. so they're hardly turning a blind eye to carl icahn's argument. if it makes sense for a smaller piece of what he wants, why wouldn't it make sense on a larger scale? >> those things were already in place. i agree with you, they already are returning cash to shareholders. what's more important is that they show more innovation to revolutionize ip tv like netflix is doing. to maybe get into gaming. a company like microsoft is now the number one leader in gaming con soles and that's hardly an innovation leader. to be a leader in things like wearables. so i think that they are already turning a nice amount of capital to shareholders. what they need to show is they can get back to sustainable

earnings growth. >> that is absolutely what we'll be watching in just about an hour's time when that company reports earnings. thank you both. >> thank you. the dow has given up some gains. the index only up 19. down from a high of 55 points. if it weren't for caterpillar with strong earnings this morning and a $10 billion buyback we'd probably be negative for the index because we are negative once again on the s&p. >> ge was helping things along for a time there. 20% of the companies in the s&p 500 have reported earnings so far and some very important trends are emerging that could determine whether this recent sell-off will continue. seema mody will break those down next. and to taper or not to taper. what do you think the fed should do? and can you put it in shakespearean prose? tweet us. we'll reveal your best responses later. it's @cnbcclosingbell. we'll be right back.

it's @cnbcclosingbell.

welcome back. want to send is straight over to sheila with a quick market flash for us. >> shares of american eagle are

spiking after the chairman bought 500,000 shares on january 24th. stock currently trading above 3%. scott? >> sheila thanks so much. with more than 25% of companies on the s&p 500 having reported earnings so far, our seema mody has been tracking the trends that are starting to emerge. one being the impact of the stronger dollar on companies that operate globally right, seema? >> that's right. this easternrnings season several companies have mentioned the fluctuation in currencies as a headwind. nike said weaker international currencies reduced gross margins and eroded the u.s. dollar values. ibm got specific saying it had been significantly impacted by the depreciation on the yen. manage ammament said because our business in japan is dominated by local business the impact

falls largely to the bottom line. other companies have had mentioned foreign exchange headwinds including red hat, oracle, and general mills. with over 120 companies reporting earnings this week many of which include mile multinationals analysts say expect it to be a hot topic. if the dollar strengthens, that could make services and products sold by multinationals less competitive overseas. kelly and scott? >> an important point, sheila -- seemy seema. >> no worries. >> some are blaming poorer fourth quarter earnings but how concerned should investors be about earnings quality. >> join us is chris whalen from carrington investment and tobias to you first. the main reason the market has had trouble certainly as of late emerging markets, not

really earnings per se driving us lower. >> look at this way, we had an extraordinary poor numbers going into the earnings season. we had 9 to 1 negative to positive earnings reannouncements. i don't think investors were expecting blowout earnings. currency has been an issue but not the primary driver. em has been the concern, that some of the growth vehicles a osenieks -- that have been relied on are going away. >> chris, i don't understand. i don't understand if it's emerging markets and something that happened in one of them or china that maybe was the catalyst or if they're suffering from a different story which is one of sort of global central bank tightening and we should blame the bank of england or something. >> i think it's three issues. one is the fed is changing policy after a long period of extraordinary ease. the fact we've only got 2% 3% growth with 0% interest rates

should concern everybody. and then secondly i follow financials and housing. house something pretty much done in terms of the recovery and remember most of that recovery -- >> why is that true? in terms of the stocks or -- >> i mean in terms of home prices. about half the gain was due to either foreclosures and real estate being sold by banks or cash buyers. 60% of the purchases -- >> but isn't that priming the punch for a more lasting housing cycle? >> i think if you took out the cash buyers and look at the small base of first-time homeowners, other purchasers of homes, you would find the market was only up half as much as the case-shiller would suggest. and then of course the other thing is that there's very little credit demand. banks are terribly underutilized right now. during the boom it was typical for a bank to have 110% 120% lobes to deposits. today it's 60% because they're not selling loans and, frankly, consumers either can't qualify for a mortgage or a consumer loan with the regulations we have in place or they just don't want to. they want to delever.

>> you want to address the situation in housing and what it means to the markets? >> i think i will take two pieces separately. the housing market our analysts are seeing better traffic broadly speaking around the country. but i think on the credit side and banks, lending, there's usually an 18-month lag between changes in credit standards and actual pick up in lending activity. to expect it to happen right now is premature relative to anything we've seen in the last 30, 40 years. so i differ there. >> i think we're more like the 1930s because we've put so many obstacles in the way of lenders extending credit that it's very hard. look most banks won't go below a 740 fico before. >> you're shaking your head. >> i'm looking at commercial/industrial activity, not the housing side which has that traditional 18-month lag. we're looking at hiring intention survey the nfib data or manpower survey they're all showing continued improvement in

houseing -- hiring intentions -- >> what about the economy more broadly. do you think we're going to look back on this as a period like the '30s or -- >> i don't think we're in the '30s at all. we don't have the same kind of situation. the central banks have been more plint this time and they were tighter in the '30s. >> the key thing that was the same is off balance sheet finance is now off the table. that's what drove the roaring '20s. that's what drove the housing boom from 2001 through 2008. it's now off the table. >> let me ask you a question in your wheelhouse being the financials which we were somewhat discussing on the periphery here. if we're trying to decide what to buy when this buying opportunity does emerge whether it's tomorrow or next week make the case for the financials here. which haven't exactly come out of the gate gangbusters. >> i'm biased. i work for a nonbank. that's where the growth is. they have more flexibility to do business. the regulators are beating the

large banks about the head and shoulders. they're extremely involved. they want them to avoid ric. they want them to avoid anything that will impair reputation. it's very hard for them to do business. >> the violin is playing here. there's still ways to make money if you're a major financial -- >> if you're looking -- >> look at some of the results that came out and some were far better than others. >> you know the way i am, you work with u.s. banks and work your way down. i don't think the mega banks create value. >> tobias, you work for a bank. >> i'm not going to comment on that. look, i think the reality is the market -- capital market sense of the banks or institutions will do well in an environment where markets are going up. so if it's asset managers if it's investment banks, things like that they would typically do better in a rising market environment. in the reit space there's an interesting thing which is part of the financials as well in that the real story there is the spread between dividend yields

on reits and ten-year yields not just the direction of yields which is what most people perceive. if you look at the way stocks trade, not the way you want them to trade, but the way they actually trade, watch that spread. there's clearly dislocation right now. >> there's an interesting point. thanks so much. we covered a lot of ground. >> you have to defend your turf. i hear you. i get snoopy up here. i'll charlie brown you. i have to pull the football out of the way. >> lucy is not there. don't worry. we have 20 minutes to go before we close it up here. the dow is hanging onto a 25 point gain. the s&p was barely positive. >> big concern is what is happening in china. the question is is that country about to experience a credit crisis of its own. eunice yoon will join us next. >> the stock is taking it on the chin but why? after the bell was it an

ipad christmas? we'll find out in about 45 minutes when apple's earnings are due out and we'll get you full-blown industry coverage with analysts and apple shareholders. >> there you go. there you go. the super bowl is at metlife stadium and the biggest stars are already in the house. we're back after this.

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welcome back. we need more than 140 characters to tell you what's wrong with twitter's stock today. >> yeah. julia boorstin joins us with a look at why this stock, julia is down something like 5%. >> well kelly w growing concerns about twitter's valuation, shares were down more than 9% though they have rebounded a bit. investors are profit taking ahead of the company's first earnings report. also in the mix, a couple analyst reports tells the advisory evaluating whether twitter's rise is part of an internet bubble and csla questions their ad measurement and distribution ability. shares are still up well over 200% from twitter's $26 ipo price. scott and kelly? >> all right.

julia, thanks so much. china's so-called shadow banking system has long been a worry for advanced economies dependent on china's continued growth. >> some of the turmoil lately is because of reports china's investors could be facing a potential default. >> china has averted a potential crisis. fears have been rising we could have a major default in the shadow banking industry which could have had ripple effects around the world, and this is what happened. give you a little background. there was a special investment instrument worth about $500 million that was coming due at the end of the week. the company that owed the money which is a coal mining business was having trouble and it couldn't pay back its 700 investors. but the shadow lenders, china credit trust worked out a deal. in a notice the lender said that an outside investor would put money into the coal mining company that borrowed the money

and we are hearing now that investors will get at least their principle back though maybe not all the interest. the fear is if these type of products went bad, people could lose faith in them generally and that could have major repercussions in china's financial sector. a lot of people here think that because shadow banking industry is so bag and unregulated, this case is just the tip of the iceberg. china may have dodged a bullet this time but many analysts are worried that it could be just a matter of time before we could be faced with another default. kelly, scott back to you. >> okay. eunice yoon thank you for that. we have about ten minutes to go before the closing bell is going to ring. we're barely holding onto positive territory. the dow is up 11 points trying to avoid its fifth straight losing day. >> you can see the effort in this market. it's been such a choppy day as we have gone from being up 50 to down 50 to effectively flat here. >> to injureyour point, you can almost

feel the effort of the bears, the sellers more so than those trying to keep the market positive. it's been a sell first market this year. almost from the beginning of the year. it's such a different tone since the way we ended it last year. >> and the s&p is down three points at this hour. the nasdaq has given up 29. former ub s chair robert wolff knows how washington and wall street works. robert wolf will join us after the closing bell. keep it right here. mine was earned in korea in 1953. afghanistan, in 2009. orbiting the moon in 1971. [ male announcer ] once it's earned, usaa auto insurance is often handed down from generation to generation.

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welcome back to the floor of the stock exchange. dow is hanging onto a gain of just about 11 points. mary thompson is with us and joe quinlan from u.s. trust. mary, what is the mood down here feel like following what happened late last week? >> i think what people are seeing is there's some relief the markets are a little bit steady. we saw the s&p see some support right around 1775 or so seemed to come up off of that. also what you're also continuing to see is you're selling what you can sell. some of the big-name tech stocks, more liquid stocks. >> social media. twitter is getting bludgeoned

today. >> they're selling what they can sell, but other than that i think there is some relief. >> are we still vulnerable though, joe, to a bigger pullback? >> perhaps, scott, but i think the emerging markets are settling down. the big issue is china. eu is growing and we're growing. as long as that story stays intact, i can think we can avoid things that are sloppier. >> are you telling folks to buy the dip here? >> we're looking to buy the dip selectively. whether it's energy, information technology. >> you're going cyclicals. you must believe in that story. >> europe is growing. numbers are expanding. it offsets at the problems out of argentina and venezuela. >> what do you think people expect the fed to do as it relates to the markets and the

pull back we saw from the traders you're talking to? >> a lot of people are talking about that. they're not expecting the fed to change the course that's been indicated so far. the taper will continue. additional taper is expected as well. what they're talking about now is what's going to be in the statement, what is the guidance going to be? will they change any guidance because they put that mark of 6.5% out there on the unemployment level as kind of a guide post. will they change that now? >> the issue of volatility, we were down 80 or 90 points earlier on the dow. went up positive by about 55 or so. we've gone negative again. are we to expect much more volatility going forward? >> get used to volatility. last year in december every day was a new high. but volatility because we're transitioning. >> we almost forgot that word last year. >> now you're transitioning with the fed, europe is transitioning to more growth china is still a question mark about where et

cetera secular bottom is. it makes for more of a difficult market. >> will the market have a problem if the fed comes out and says we're going to continue tapering as scheduled? >> i hope no. >> what if the emerging markets have a big problem? >> some of the emerging markets, big deficit countries, they've had time to prepare. i don't think that upsets the apple cart whether it's turkey argentina. at home i think we're ready for tapering. >> it's so interesting. we ended last year and even throughout much of the year, really for at least the last 12 months it was a let's buy the dip at any chance and now it's let's sell into anything. now it's sell it because i think most people down here don't believe the correction has run its course. >> not at all. i think also what you see is the markets trying to adjust itself to what is the start of the fed's taper. i think the markets want to see how the rest of the world reacts to this and they will adjust after that. we saw this kind of parabolic

rise in the markets at the end of the year. you kind of wonder at this point was it justified and are people just reassessing that right now given that we don't anticipate fantastic growth here in the u.s. modest growth at best. when you have modest growth with a fed that's tapering is it really reason to continue to buy in the aggressive manner we saw at the end of the 2013? >> mary thanks so much. joe, thanks so you as well. we're back right after this with the closing countdown.

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welcome back to the florida. right now the dow is down 14 points. getting set to post its first five-day losing streak in some time. you know one of the problems for the market may be lately this stock right here. it's going to report earns after the bell. it's apple. you see year-to-date it's down 2%. has not been able to carry that second half of 2013 momentum into this year. do the earnings pick up apple stock in the stock? the guys will break to down when the numbers cross. twitter got banged up. sellers on almost a great handful of the social media names, twitter among them down more than 6%. ben willis is with us. the feel something different today than it was on friday obviously. but what's up with the market? why not big snapback? >> it's a great example of money sitting on the sidelines ready to buy the dip.

we came in 300 down. we broke down for about a 5% correction at 1775 on the s&p and saw a movement up again yet we started to fail. i don't think the correction is over. but that's a very good indication of how much money is ready to buy a dip. they don't want to miss anything. volume is much better than it has been and that will pick up on the close. >> based on your experience, how bad does the correction go? >> i can only hope for 10% but i've been looking for that for the last six months. so you may not want to listen to me but i think that's very much built in. you see some of the big put spread went on the xlf etf. that's probably where some of the pressure will be on the crest side but a great trade happened in the vix today. there's a lot of volatility great for traders but we can only hope for another 5% to the downside. >> can apple save the day? >> today it didn't obviously. can it save the day? yes. i don't think with the momentum we have that one stock will do

that. >> what role is the fed doing to play in the taper? >> central banks are what this whole market is about, without a doubt. >> thanks so much. that does it for us. the dow is going to post a five-day losing streak. kelly evans picks it up on the other side. thank you, scott, and welcome to "the closing bell." i'm kelly evans on this monday after a brutal week on wall street it looks like another tough start. the dow jones industrial average helped by caterpillar trying to stay positive at least out of the major indexes all day, looks like that didn't happen. we've had quite a bit of sell pressure into the close as art cashin was just describing. you see the dow looks like it will finish down 40 points. we have a five-day losing streak. 15 15, 838 is roughly the closing level. the nasdaq off 1% as it was the clear underperformer today. and let's get straight to it

with today's "closing bell" panel. dan greenhouse sara eisen and dan fort and danny hughes and "fast money" contributor guy adami. we also have apple reporting earnings in about half an hour. so a lot going on. a lot to make heads and tails of. but i want to start right here dan greenhouse is this the beginning, middle or end of the correction? >> i have no idea. what i do know is that in the last two years, years that people generally have thought to be sanguine and from the bottom left to the top right chart speaking, the last two years has seen two declines more rapid than what we've seen at the end of last week. you had the decline around the election and the decline around the first -- >> is this serious? >> i'm not saying it's serious or not. i'm saying people are hyperventilating as if we haven't seen anything like this. i'm saying this is a par for the course decline. you saw some stability in stock prices today.

>> danny, i don't see anyone possibly other than us from time to time hyperventilating about what's going on in the market. in fact i just heard one of our friends, ben willis on the floor saying to scott that he would like a 10% correction. it seems like he's not the only one. >> we've been waiting for a long time for this kelly. i think once we see it investors start to get nervous. you have regard high margin debt right now, and that took a big bite out of people over the last week. so people start to get nervous about what's happening in other parts of the country. but we have been waiting for this and i think it's a good time to start getting your shopping list ready. may not be ready yet. we're probably going to have to play defense for a little while, but sure enough in the next week or two i think it might be time to start putting in some -- look at caterpillar. everyone was thinking the worst was yet to come but they surprised to the upside. >> guy, what is on your shopping list.

>> hi, kel. caterpillar should have reannounced. that's how good that quarter was. for whatever reason they don't want to get through 92 on the upside. what's on my shopping list? you know what's interesting to me? there's a word out there we use all the time opportunity, but the word that people put before it is always buying opportunity. has anybody ever uttered the phrase selling opportunity? and i'm not saying now is the time to do it but what i will say is a close below 1765 this week, and i have come on here a few times with you and said we're going to test those levels, i believe if we close below there this week technically we might be in for some dicey price action. >> sara it's interesting, crisis and opportunity, those are the who words people are debateing when it comes to emerging markets. how much is that the tale and how much is that -- who is wagging who here? >> it does seem to be that emerging markets and specifically emerging markets currencies are the leaders right now. it was another messy, ugly session overnight where we saw record lows on the turkish lira

before recovering. you saw multiyear lows for currencies like the south african rand. emerging markets are not what they used to be. they're 40% of global growth in total. back in the '90s -- >> they've emerged. >> and they're important and not just important to world growth but important to american multinationals. american stocks perhaps are ultra sensitive to what's going on there and the question is when do they get a respite? when do they become a buying opportunity? and it's hard to find a research note out there that says you should jump in there. >> jon fortt? >> i'll tell you, i think it comes down to people would like a correction but they want one for no reason. they don't want the world to be falling apart causing that because then you don't know -- >> i like that they want the correction, they just don't want the reasons for it. >> exactly. it's important to watch apple's earnings tonight but probably more important than the earnings report is the guidance. we're looking for, of course we've got chinese new year coming up which is big for them. also they tend to get a decent

amount of revenue from aipac in this coming quarter. so how do they guide based on that? also we saw a lot of social media names punished this morning. coming back a little in the afternoon. faish's facebook's earnings tomorrow will put a lot of numbers out there for people to see how much these types of companies have legs, are they making money? >> we talk a lot about apple because of the size of the company and just to be clear, cnbc's numbers put the estimate at about $14.07 a share for the earnings, $57.5 billion on revenue. the whisper, the street number whatever you want to call it, is a little higher than that. we'll see what they report but in terms of facebook you bring up an interesting point. that's one of the most heavily traded names in this market. if you always look at the most ak tifs you have bank of america and often facebook right up there. >> the numbers we saw out of adobe an lat icalytics this morning point to a strong quarter for facebook in terms of the amount of traffic, the ads they served

the stable prices of the ads. they point to some potential speed bumps ahead as other competitors try to steal that traffic. we know faish hascebook has the video ad spigot they can turn on. >> i want to ask a couple of you, dani what's the most important thing to watch tomorrow? >> you want to see how apple reports and where it's going to trade in the after market today. i think the follow through tomorrow is going to be key for tech. >> dan, what about you? what gauge tells you whether this is something benign or more malicious? >> i don't know the answer to that question. i know what the turkish central bank does is really important right now. >> it is important. >> but what about what the our fed does? most economists do expect the fed to proceed with another $10 billion taper. the question is how will emerging markets react? they've already shown to be very vulnerable and very volatile right now. >> guy, last word to you? >> i think the most important thing is how the s&p technically trades and chinese pmi at the

end of the week. everything else is a lot of noise. >> great to see you, sir. we'll catch more of guy coming up on "fast money" at 5:00 p.m. i was going to make a lumberjack joke. should investors be using this right now, speaking of which, as a buying opportunity? joining me now to help answer how you should be navigating these events is legendary investor john calamos, the ceo of calamos investments. john, it's great to see you, and offer our viewers here a sense of what is the story? what are you making of these markets? >> well, kelly, it's great to be with you as well. i think we're in for some volatility in here. we've been looking at this market as being cautiously optimistic. we're still there. i think we have more reason to be -- the volatility in here is really where the cautious part comes in. >> so you're going to be watching volatility for example. are you as dani just suggested, do you have a shopping list?

are you looking to pick up names individually on the cheap or are you more concerned about following the sell-off and gauging whether this is the start of something deeper? >> well i think the volatility in here, whether it's a 5% correction or a 10% correction is really day-to-day. it's going to be hard to judge. but we do see a shift here in the market. as we look at this market there's really more of a shift towards growth types of opportunities in this market. that shift has been going on for the last six, seven, eight months. we think that will continue. we'll be looking for opportunities in that particular area. >> do you want to give a couple examples? >> well you know the growth equities, what we had maybe a year ago or so is more of a income regime and the market shifted with the tapering towards more of a growth market environment, and when growth really starts to do well you

might even get some, you know expansion of the multiples, the pes in here but obviously as you have been pointing out, the near-term earnings everybody is going to be watching every day and trying to figure out what's happening day to day. >> you know you have such a fascinating viewpoint on global markets right now because you have been in this for decades. you have seen a number of crises play out. when you hear people that liken the action we've seen over the last couple sessions in emerging markets to emerging market crises of the past what do you think? and how do you sense what's really going on here compared with prior experiences? >> well i think the fear out there in emerging markets is more of is this a new systemic risk we need to be concerned about? so we're watching that very very carefully. but we do feel that the growth of the middle class and consumers and within an emerging

market is really a very serious theme that's going forward, and it's going from a commodity play to more of a consumer play and we want to take advantage of that. so it's not whether you should be in the emerging markets or out of the emerging markets. it's going to be much more actively managed, what countries, what companies rather than just be there or not be there. >> that goes back to the chiq that etf we were hearing about last hour. appreciate your perspective. we hope you will come back soon. >> okay kelly. nice to be with you. >> john calamos of calamos investments. the red arrows keep flying on wall street. up next some survival tips from robert wolf the former head of ubs america and one of president obama's chief wall street backers. plus it's make or break time for apple. the tech giant out with results in just moments. we want to know whether apple's results could snap the market out of this funk or keep it

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welcome back. now that we've tallied up the numbers, the dow failing to rebound much on the heels of friday's 300 point tumble. sheila is running through today's biggest movers. >> apple is the only tech earnings up today. look at seagate technologies moving lower after the company reported weaker than expected second quarter earnings. vodafone falling on the fact that at&t ruled out --

cisco systems losing ground after jpmorgan downgraded the stock from overweight to underweight while lowering its price target all thanks to that weakness in emerging markets. finally, let's talk about rayomer surging after saying it's splitting itself into two. kelly kelly? >> big moves there. my next guest is a white house insider and a wall street insider, too. please welcome robert wolf founder and ceo of 32 advisers former ceo of ubs america and an adviser to the obama administration. it's great to see you again. >> thank you kelly. >> this is an important week for the president. >> it is. >> state of the union address tomorrow night. it sounds like he's going to make income inequality a focus. i can't tell you how many guys on wall street have been saying this is one of their areas of concern as well. the question is what should be done about it? >> you know what i think? it will be one of many things he discusses. he started talking a few weeks

ago about the discovery zones where you can go into areas and with his ability to just write on a pen and piece of paper the ability to have companies come together with education to grow jobs. listen, at the end of the day it's about jobs and i think some of the things he's going to discuss is obviously infrastructure, which is about the most bipartisan topic you can have. >> and also a complete nonstarter. everyone loves infrastructure and nobody wants to do it. >> when we get rated with a grade of "d"-plus, it tells you we're failing. in this country we need not just roads and bridges bu fiberoptics, we need next generationg -- >> what if we tax financial services and use the revenue -- >> i wouldn't tax financial services. i think at the end of the day we should pass an infrastructure bill. infrastructure is public/private partnerships.

it's the fastest multiplyier of gdp growth and everyone realizes we need it. >> speaking of these markets you're mostly advising clients about corporate strategy but you can't ignore when we have a move like 300 points down on the dow on friday. what is your read on conditions in the u.s. and abroad right now? >> thank you. we help clients come into the u.s. and we have clients help them buy exports so goods and services from the u.s. i don't think anyone is that surprised with the slight collection. we were up north of 25% in the markets last year. i mean there's bulls, there's bears, there's pigs and then you know what. so i think, listen the fed's tapering, it started, it's going to continue. we have a lot of noise right now in china. we have a noise in the emerging markets. there's this shadowness being talked about contagion. we don't think it will impact the u.s. but obviously with tapering coming and possible slowing down in the developing

nations, that's a concern. so i don't think people are that surprised that we have 3% to 5% pullback in january. i really don't. i don't think anyone thought we're going to have a 25% return for 2014 after we had it in 2013. most people are thinking 10% less plus. so we have a little pullback. it may be a buying opportunity. i'm not as peppy about the stock market as others even though there's cash in the sideline. i think we'll be in an environment where it's going to be nervous earnings and there's probably going to be a little slowdown in housing. we've come a long way. so i'm a little nervous about the markets. >> how does that reflect in for example, your own investments? do you just keep a lot of cash sitting around to be defense siive or are there structures you're interested in? >> i've never been a real stock market player because i've been restricted for 30 years being a wall street guy and understanding i was always over the chinese wall. i'm very conservative.

i'm in municipals. in new york's mainly. i have a ladder going. >> you're not worried about puerto rico? >> i'm worried about puerto rico but i'm not in puerto rico. i'm really in new york triple tax exempt. yes, i would be worried about puerto rico if i was here. they obviously have $7 billion of debt outstanding and there's nervousness and gdp is slowing and unemployment is high. i would be nervous. >> and i want to bring this back as well to the president's address tomorrow night. you had said years ago that wouldn't it be nice if the state of the union was a venue where both sides were applauding more often? infrastructure aside s there anything he could say tomorrow night that both parties would rally around? >> i have to believe we're at a point where immigration reform is about the most bipartisan wee seen in years. you started seeing the house talking about it. it's not going to be the grand plan where he gets everything he wants. nor is it going to be a small plan where it's just the house,

but i think we can develop into something that both sides feel that there was a bit of a give and so immigration to me would be one. i think infrastructure two. it's clear to me free trade is something that's very important to the president and the economy. so the transatlantic agreement, the transpacific agreement. those are things that i think are bipartisan in nature and things we can do. >> all right. we'll have to see tomorrow evening. >> we will. >> thank you so much for joining us. >> thank you for having me on. >> robert wolf. our website is burning up because of the volatile markets. we'll tell you what's clicking to the top of "the hot list" next. plus the tech giant apple is expected to potion earn ed toed to post earnings. we'll break down the numbers. the stock was up a little bit today. we'll be right back.

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to generation. because it offers a superior level of protection. and because usaa's commitment to serve current and former military members and their families is without equal. begin your legacy. get an auto insurance quote. usaa. we know what it means to serve. welcome back. no surprise amid all the volatility we're seeing a lot of people heading to the website to make heads or tails on it. >> i have an outrage one burning up. the one percent starting to overreact. this is -- you might have heard tom perkins, the jen tourventure capital list wrote a letter to "the wall street journal" making an analysis to crystal knock and the 1%. we did a wrap-up analysis. talked about overreaching on

analogies. people are diving into the story. the fun part of it is the comments. over 500 comments already and just piling up. if you want to see a lot of teeth gnashing and high horse riding, check out the comments. >> this debate has been going on since the moment that letter went live in the journal. >> it's been rolling up. now, i got another one, super bowl is coming up. ticket prices are going down though and our little wrap-up of the interview we had earlier on the network with the ceo -- >> i think it was "squawk on the street." i think i remember that one. >> yeah. you know that one. did you that one, right? >> yeah. >> we wrote it up and people are just loving it. i have a feeling a lot of people might be playing that super bowl game. it was a combination of weather and distance driving the prices down. people are interested in that one. finally, diana olick did another wonderful analysis this time on new home sales and what's going on. she has a big following on the website and they're all going right into her story. plus carrying a few others. it's a big clicker today. >> the new home sales report was

not an impressive one and we haven't even spent enough time talking about it. so it's an important issue. i encourage people to go check it out. diana does great stuff. thank you, sir. i'm sure apple will be driving traffic as soon as it hits about 4:30. >> we're waiting. >> you're ready to bounce. >> you bet. >> the clock is ticking on apple's earnings. the tech behemoth's results when they hit we will have instant analysis from our panel of pros. we'll take a short break. "the closing bell" is back after this.

welcome back. apple earnings are due out at any moment. joining our panel is josh lipton. look at this. max wolf is joining us. patrick kaser, tim lesskow, and jon fortt here around set with us. jon, want to kick it off with you. the first thing you will be looking for is dot, dot, dot. >> iphone number because tim cook last quarter said they were below their target level of four to six weeks inventory. that's important because they're expanding distribution in japan and china. street is expecting around 58 million units consensus. if they're not counting on inventory fill we could get

closer to 60. that would also provide some upside. >> okay. want to talk -- max, you guys don't own apple, right? what are you going to be looking for? iphone approximates. >> we'll be looking for iphones and margin if it's above 36.5 and also looking very closely at the forward guidance. >> forward guidance. i would hope it's above 36.5 because as i understand it tim, this is a company that guided 36 to 37.5. >> right. and i think the street has slowly been cranking up their expectation on gross margin. apple continues to talk down gross margin which really they have been doing for three years. so i think the street has itself a bit caught up in wanting apple to sell lower price phones yet not wanting to see a degradation of margins. >> patrick, i know him and he's an awesome guy, so i'm biased. what specifically about guidance

are you looking for? >> one thing we know about apple management is they're generally pretty conservative. if it comes in below consensus i'm not terribly concerned in that regard. we're really interested in looking for a commentary about the mix of devices. are they selling more higher priced devices, lower priced devices. also how sales are going with china mobile. >> max does the iphone 5c matter? >> i mean obviously not all that much. that's both good news and bad news. i think we'll see a great iphone quarter with average sell price per unit but the iphone 5c was just sort of got out there is they could discount. the denominator is shrinking because they have less than 900 million outstanding shares now and that number is falling with the buyback. >> just want to point out here when it comes to apple beat great expectations. some analysts have caught on to this. collin gilles actually said it's

priced in the stock. shares have run up 37% since april when he put a buy on apple. he just downgraded the stock. he said you have to have pretty good news to keep the momentum going. you wonder how much is already baked in. >> tim, what do you think about that? >> well i think call it 12.5 times earnings i have a hard time thinking too much is baked into the price. certainly expectations are all over the place, but, sure give me 12.5 times a company that has revenue growth and such a strong product lineup. i have a hard time taking that as priced for perfection. >> but tim, looking forward, how many sales do you have in your model or how many do you estimate relating to the china mobile? >> you know we haven't put in the march model yet. we don't publish earnings estimates. we're investment managers so we're holders of the stock. i think that's one of the most important things we look at

going ford is how much of this might be in this quarter and how much are expected in the quarter. >> apple shares are moving lower at this hour. the earnings numbers hitting the tape. jon fortt do you want to give us a quick look -- let's go to josh lipton. we'll go back to -- okay. josh, go ahead, please with the numbers. >> yeah. kelly, so remember the street was looking for 1409 on $57.5 billion. apple turns in $14.50 on $57.6 billion. looking through the numbers, it looks like iphone shipments, the street was expecting 54.6 million. apple turns in 47.8 million. so i'm going to keep looking through the release and get back to you with any more numbers we can get here. >> kelly, a couple things i'd point out. the number of iphone shipped is 51 million. the street was looking for something close to 58 -- >> 51 million, wow.

that's well shy of expectations. >> 51 million. 26 million ipads which is just about in line. 4.8 million macs which is also just about in line and the guidance here is interesting. 42 to $44 billion for the march quarter. the street was really looking for $46 billion. gross margin guide is 37 to 38%, which is maybe a little higher than the street was expecting. operating expenses between $4.3 billion and $4.4 billion. that's a little higher than you might expect given the level of revenue that they're projecting. if you compare it back to a year ago, the year ago revenue level is similar but the op ex level is quite a bit higher. i think some people will be listening on the call to find out why that is. is this a new product ramp and what was it about the iphone in particular was it supply constraints or what that caused that number to be lower. >> you see this in the reaction of the stock. with the way that apple has

changed how they give revenue guidance, with the street at $46 billion, it's not impossible or i think the street in full disclosure btig my firm has a buy on it would have been 45 to $47 billion. their revenue guidance is a tremendous miss. i want to throw this quickly back to patrick. do you have any thoughts on the reaction to the stock or the report? >> no. until we hear the commentary obviously the quarter just pended looks all right from things from an ipad/mac standpoint. not so great from an iphone standpoint. we at brandywine are focused on value. if i have a stock at 12.5 earnings, i am willing to accept more conservative guidance perhaps guide sense a little disappointing to others. at this point because the next quarter's guidance does look weak, obviously the reasons behind that that they get into on the call are going to be very important. >> max, to go back to the point of apple always being

conservative on its guidance do you think that gives them at all a free pass? obviously the shares are moving lower but i'm wondering if it is in relation to that figure as opposed to something else in the quarter? >> i think i give them a pass on the whisper numbers but that's a soft revenue number. a very soft iphone number. that's 60-plus percent of revenue. that's no mineor matter. >> want to do a quick recap as apple shares down 5% after the company has just reported earnings. this is the world's biggest tech company. it's going to have a huge impact especially on the nasdaq which is already coming off a pretty weak couple of days. the buy side estimate if you want to cite gene munster was looking for 56 million to 57 million iphones. they came in with 51. on the mac side 5.6, they came in at 4.8. except for perhaps the i-pood

it's a disappointment. the question as you rightly pointed out is whether this is a supply story which is a much more positive theme for apple if they couldn't get enough product out there as opposed to one of demand. >> i think that mac estimate was a little aggressive. i think the major thing to look at here is the iphone shortfall based on people's expectations. how much of that was because of emerging markets? when you look at it a year ago they did 47.8 million iphones. they didn't have two models out there and they didn't launch china on day one the way they did this time. so given all of that oomph, why was this a little different than some people expected? granted, gross margins look good eps looks good, but we're going to need more information about where apple sees itself going. >> dani? >> you know big picture, again, if you pull back and look at where the stock was last summer we're 150 points now 125 points away from that low water mark.

this is a healthy pullback in most cases. we're going to have to see what the company says on the call. i think that's extremely important obviously, but, you know, the stock is pulling back and that's not a bad thing. >> this is apparently the biggest beat since the first quarter of 2012 on the eps side. it's interesting that that headline, unfortunately, now that the stock is down 6% that's probably not going to be the main takeaway from this. and jon, the focus will now turn to the call to the commentary and what can be an active art, not science. >> yes, it often is. a couple positives here though to note. greater china revenue came in 29% higher year-over-year. that's a rebound from the results that we had seen lately and itunes software and services revenue continues to notch higher as people get more ios devices. they're buying more apps and things like that on them. there are some positives here but the iphone -- >> i'm also curious to hear what

they have to say about the cash situation with carl icahn piling on the pressure. clearly they have been returning cash to shareholders. they're commending anting an additional $7.7 billion but i wonder if they will allude to that fact. >> max wolf do you see this as an opportunity? they're off 5.5.%. they have come up quite a bit since the summer. second question though do you want to see them pursue something more aggressive even than what they're doing in terms of returning capital? >> on the first one they tend to get beat up for a few days. it will depend a little bit on the conference call. often it's sma rt to wait a day or two, figure out and make your move. this was cheap going in. it's cheaper now. nornd on the other hand, they have get everyone focused on the new full-size phone and the mobile payments. and they have to show that they can at least copy the best of breed phones and do something innovative really soon to push

back on i-cahn and also just push back on the naysayers. they never used to have to deal with them who are emboldened when they do anything that's less than perfect. >> hasn't the stock been cheap when it was going down and going up and if so since i'm right, since i said it, is the stock any more attractive today because it's cheaper than it was 20 minutes ago? isn't this just a nonsense argument at this point for aple? >> i feel a little like your side dish since you asked and answered your own question. >> you're always handicapping the future and this has been a company that's been a little bit too confident in its future even though it does incredibly well and you're absolutely right, it's very cheap on the multiples basis. because it was cheap when we started talking and they have all that cash on book i don't think icahn changes much and they're cheaper now, it would be impossible for me to say if something was cheap and it went on sale it's now expensive. >> everyone stay there. we're going to take a quick break. >> are we saying valuation doesn't matter?

>> we're going to use that as our teaser. stick around. we're going to take a quick break. everyone is going to stay in place. we're going to talk about the valuation story with apple. such an important one, and what happens with this name will have a big impact on marketings tomorrow. down 5.5% after returning earnings. full team coverage continues. don't go anywhere. [ male announcer ] here's a question for you: is your tv powered by coal? natural gas? nuclear? or renewables like solar... and wind? let's find out. this is

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or if you have any allergic reactions such as rash, hives, swelling of the lips tongue or throat or difficulty breathing or swallowing, stop taking cialis and get medical help right away. ask your doctor about cialis for daily use and a 30-tablet free trial. with some big market news hitting in just the last couple minutes. look at apple shares they're under pressure.

they're down 5.6%. we want to get more reaction from our panel and from our own josh lipton who has been digging through the report. and, josh what can you tell us? >> well, i think right now you look at these numbers, it was a beat on the bottom as well as a beat on the top. that q2 revenue forecast is obviously disappointing. apple guiding $42 billion to $44 billion. the street wanted to see more like $46 billion. also iphone and ipad shipments as you were talking about all missing what analysts were expecting to see. >> let's try to pose the question that everyone is going to be asking. why is apple tanking? i think tim you were about to say something before we went to break talking about the reaction to the earnings report. what is your impression here? why such a poor performance and what are you going to do in reaction to it? >> oh i think first you have to say it's a poor performance of the stock, not the company. the company continues to deliver as promised. i do take exception to other commentators when they say the

valuation doesn't matter. the stock is cheap. they are currently at the cutting edge of technology whether it be in mobility integration with social media, distribution of advertising over mobile. so the whole idea somehow that this should trade at a -- call it an old tech or blue multiple i don't really understand. so, you know, i think apple continues to deliver to its customers what they want. >> tim, it's dan. my point about valuation not mattering is not that valuation doesn't matter. valuation always matters. my point is and again new segment so full disclosure my company has a buy, when apple rose to $700 a share, everybody came out and said the stock is cheap compared to the market it's a buy. when it fell down to $500 and change everybody say it's cheap to the market. it can't be cheap at $700 it can't be cheap at $500. either that argument no longer holds water or -- >> it's not a share that trades on valuation. >> i have to add to that point. the stock price is supposed to be -- >> in the long run everything

trades on valuation. >> -- based on future earnings and all of apple's businesses except for the ipad which was up 14% appear to be basically flattening out growthwise. i think that's the key thing here. retail outperformed nearly $7 billion in revenue from retail but that's just the aggregate of selling their stuff which they do very well. i think people who are looking for apple to do something new to spark real growth beyond the ipad are asking right now where that's going to come from. >> i think -- does anyone disagree that this basically -- it's true, you look across the major segments, is this not telling us that apple's growth in its key devices are flat lining. >> it has been for a year. >> sorry, go ahead. >> we know it's an ios 6 story and future growth has to come from more affordable larger screen devices in the emerging market and really importantly using some of the cash probably for strategic acquisitions and

moving in directions of things like mobile payments. they can do it. they haven't done it yet. that's why we're down below where we are. that's why it's cheap on a fundamental valuation basis. >> you have to also think about look at the macro picture the last couple days. everything is a little bit shaky. so, of course we're going to have a much bigger checkpoint with apple -- >> but what about caterpillar? if we're worried about -- >> we had a big -- >> -- foreign markets, then a company like that that clearly outperformed -- >> if apple gives guidance of $50 billion of revenue, the stock is not down 5%. >> because that would have been down enough. is this all about guidance? >> to get back to the earlier point when apple was $700 a share, people had $80 a share in earnings. perhaps we were a victim of our own, you know, over -- maybe overstepping estimates, but if you really look at the current business and the current growth

of that business i think apple is still cheap. >> talk about growth just a note here. apple's cash hoard jumped 8%. it was relatively flat in the last few quarters. it is building that cash pile -- >> $159 billion. that is a huge number. >> and they still have 30 or so billion left under the first repurchase program. >> that's going to show up in the next few weeks? >> you got to say this is a very well managed company but you also know it's a company that doesn't tend to cut for earnings sake. so that's why growth is important here. that's why the things you said, we all know they need a larger screen phone, payments et cetera, et cetera. you have to have a low level of confidence that you know what tim cook is going to do. when everybody says they better do this he might just say nah. >> i can't wait for that call. thank you for your thoughts. we'll let all of you go and we want to get straight out to washington now. we've got some breaking news. hampton pearson, what's going on? >> we've got a joint statement

from the attorney general and the director of intelligence essentially on new ways for reporting methods of national security orders. basically a joint statement issued by those two saying that the number of customer accounts targeted under those orders and requests in the underlying legal obligations, these new reporting methods communicating providers will be permitted to disclose more information than ever before to their customers. this was at the request of the likes of facebook google linkedin, microsoft, and the general counsel for yahoo!, now the justice department meeting them perhaps halfway on new disclosures. the letter from the justice department saying additional ways now that the government will allow those companies to report data concerns requests for customer information. this is a follow-up to the president's speech last week. we're notw getting more changes along the way in this patrolwhole controversy around what happens to data collected by these companies.

>> state of the union address tomorrow night, do you expect him to elaborate on any of this? >> well i'm sure it will come up as part of the overall -- that's the nature of the state of the union address, but this is very specific to a set of requests that major companies were asking for. more guidance. now the justice department is in essence loosening up more public disclosure, but again renewing all these guidelines and it's an ongoing process. >> all right. hampton pearson from washington with some important developments. what do shareholders speak of apple results? a couple heavy hitters will weigh in as we continue to watch the shares move around down almost 6% after hours. we'll be right back.

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welcome back. we want to get more on apple's earnings with larry haggerty. and they are both apple shareholders. it's great to have you with us. i really want to know to both of you who hold the shares here what you make of the quarter, first of all? and the stock's reaction, second of all. larry, first to you. >> hi kelly. i think the quarter reaction is fairly typical. for the stock to work apple has to move to a better neighborhood. it can't be looked at it as a

pure tech company because it doesn't have the thing that tech investors want which is rapid growth and margin expansion. it's like a consumer company. like a general mills. it has slow revenue growth. very stable operating margins. and it's returning about a third of its cash flow to shareholder shareholders. coke and general mills at 11 and our star beam that went out at 2046 times. this is a very cheap stock if it moves to a consumer product neighborhood. and you have a call option on the stock. if you look at a couple years, depreciation has tripled. i look at it as a cheap consumer product company and a call option. i'm a buyer of the stock. >> amish, how do you look at it? >> larry brought up a lot of good points.

mentioned general mills and some of the others. i'm very bullish on it. i think it's undervalued, as larry is saying. the way i look at it is you can get in right now with the p.e. ratio a little under 13. amazon is over 1,000-plus. google is like 30-plus. i like it compared to the p.e. ratio. i think it's $140 billion in cash. >> $160 billion, now. >> even better. don't be surprised. the iwatch when they talk about new products i think that's going to be huge. they're talking about a television, which again, is going to be huge. and the other part that i really love is the mobile payment services, that you've been talking about a little bit. they have 600 million credit cards. paypal has 150 million. if you look at that and they can monetize that. they could buy paypal or ebay. >> it's never been more important for apple to innovate. are they going to contract top flight engineers if they're general mills?

>> apple at its core is not general mills. i eat the same serial i did ten years ago. i can't use the same phone i did ten years ago. that's not what makes the engineers tick. they're not going to be satisfied with this trajectory. even if some investors are for the long-term. they want to come out with a hit. >> is this a kick in the pants? >> the run of the mill employees, they're watching the stock price in a way. that's what they're buying their houses in silicon valley on. but what's driving them is to create the next great thing that everybody's going to use. they're a growth company at their core. >> well let me -- >> go ahead. >> let me jump in there, being a tech investor dealing with a lot of start-ups. they've had ten acquisitions in the last year. apple is buying smaller companies that nobody's heard of taking their technology and spinning it out. just like you saw google buy an artificial intelligence company for $3 billion.

and apple will innovate. it is hot to work there. i would not be surprised if this stock hits $1,000 in the next few years. >> we will. >> my biggest question for the bulls is the china question. apple gets more than 60% of its business internationally. china was a huge bet. 700 million with the china mobile customers to that. yet, it's expensive and they're not willing to budge on the price of that phones. is that going to go down in china? >> another important question. >> there's a lot of people in china. i'm very happy as an investor in the mccal hotels. i have little doubt there's enough people there that can use the product. and this product, the company, apple, is much like jon describes. but the product that apple has it obsoletes periodically. every three or four years, you have to get a new one. an enormous stability of the

product. >> i wish we could continue it for ten minutes. we're out of time guys. thank you for joining us on the shareholders' perspective. make it happen with fidelity active trader pro. it's one more innovative reason serious investors are choosing fidelity. call or click to open your fidelity account today.

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our panel. dani do you change anything tomorrow because of apple's report tonight? >> absolutely not. volatility is my friend. and i embrace it. >> dan, are you embracing it? >> yeah. i'm going to wait to hear what our telecom analyst has to say about apple tomorrow. i don't think the larger story is different. and volatility is better than lack of volatility. anybody on the sell side will tell you that. >> it's going to be about china. whether it's caterpillar, or apple. >> u.p.s. boeing. we get a few betllwethers out later. what will be interesting is the u.s. and european stocks in favor of european, stocks, bonds. if we start to see that discrepancy. >> this will make it a tough slog for the nasdaq tomorrow. we're looking at the q's off half a percent. >> they're going to have to react to the apple results. at the same time we got face

book at the opposite end. >> wish we could keep you around all week. thank you for joining me this afternoon. let's hand it over to "fast money," coming up in a few seconds. melissa lee, more apple? >> we have colin gillis in the house. he downgraded apple. made a great call. he'll be following the earnings conference call for us. >> not going to miss it. over to you guys. >> "fast money" starts right now. live from the nasdaq market site in new york city's times square. your traders are tim seymour, josh brown, karen finerman and guy adami. we want to get to our top story tonight. that's the world's biggest tech company, falling in the after-hour sessions. beating the top and the bottom lines. but apple said it sold just 51 million iphones in the quarter. that was below