we're in the negative for the month. we're still in the positive for the month but not by a whole lot. >> october 11th, as a matter of fact. >> october.

>> so we're going to look at both sides whether this slum is related to uncertainty about mr. trump's policies or weak earnings that came out this morning. after the bell, here comes a big one. dow component apple will be reporting. we will be all over that number and before that we'll talk about what to expect as well. president trump has been busy again today meeting with pharmaceutical ceos this morning. he's about to sign another executive order. this one on cyber security and we'll bring it to you live as soon as it happens. >> they're meeting on that right now, as a matter of fact, at the white house. plus the ceo of coach will join us exclusively to talk about the luxury retailer market and how the new administration could affect his business. this should be very interesting. i'm very interested to hear what victor luis has to say. 40% of their profits come from overseas. >> and a lot of what they source comes from overseas with those handbags not made in the u.s. under armour shares story of the day plunging. levels that this stock hasn't seen in more than three years.

it's losing 1/4 of its value. pretty much been there all day. the analysts who predicted a weak earnings report tells us whether this drop is now a buying opportunity. >> all that to come. >> to come. let's start with president trump's executive orders and his meeting with pharmaceutical executives earlier today at the white house. eamon javers is there at the white house. meg terrell is at cnbc global headquarters and we have michael ye. team coverage. eamon, you start us off. >> reporter: bill, we just saw this play out from the white house. president trump convening his panel of experts on cyber security to talk about this executive order that we believe he is likely to sign later this afternoon. president trump saying ultimately that a lot of this is going to be based on interaction with the private sector in terms of hospitals, power plants, the electrical grid, all of the above. here's what the president had to say a few moments ago at the white house. >> i will hold my cabinet secretaries and agency heads

accountable, totally accountable for the cyber security of their organization of which we probably don't have as much, certainly not as much as we should have. we must defend and protect federal networks and data. >> now the president and his team here at the white house making the point that this is different than what's been done in the past. they are raising the level of cyber security up to the agency head level. let me walk you through a couple of bullet points about what they say they are doing at the white house. they say agency heads will be responsible, as you just heard, for making their agency's cyber security. the omb director will assess cyber security risk across the entire executive branch. that's something new as well. agencies will be required to modernize their i.t. homeland security department will engage on critical infrastructure. that's the private sector piece. that's the big corporate piece we've been talking about. cabinet members must also make recommendations on keeping the internet open and protected. they also say their plan is

based in large part oftn obama recommendations. they're talking about continuity between obama and trump administration. >> eamon, thank you. president trump meeting earlier today with top executives of pharmaceutical companies. meg terrell has been following that story all day for us. meg? >> that's right, sarah. there was a lot of nervousness about how this meeting with donald trump would go because he has said, quote, the industry is getting away wa murder in terms of pricing. ceos of six companies meeting with him today. president placing a photo on facebook with companies like j&j, lily, novaras and a.m. gwen. number one was pricing. listen to this. >> you folks have done a terrific job over the years, but we have to get prices down for a

lot of reasons. we have no choice. >> you are seeing stocks of a lot of these companies up. they're talking about improving the tax environment for these companies. also in response they were making pledges to invest in the united states. take a listen to the ceos of amgen and merck. >> we're confident with the outlook and innovation of this country. proud to say we'll be adding 1600 jobs at amgen and bringing operation back for our cancer drug. you may have heard we have a drug that kills different cancers. >> so the debate all day has been trying to parse what donald trump meant when he talked about medicare and whether he's actually going to push for it to be able to negotiate on drug prices. >> meg, stay there. let's have you join the

conversation here. >> also joining us today with some thoughts on today's meeting is michael ye, biotech analyst. as an investor, michael, you might hear that president trump wants lower drug prices and more manufacturing in the u.s. and think lower profits. that would hurt the industry. stocks are up today so how do you interpret it? >> yeah, i think that on one side trump has been talking about and we've been hearing about these things for over a year. price, lower price, lower price. so that's been engrained and i think that's been somewhat expected. on the positive, which is why i think stocks have been moving up today, because it wasn't all so bad. we talked about innovation and we talked about speeding drugs to market and lowering regulatory requirements and buyer rog kra sis. so i think those things are positive. people are absorbing that it's not all bad news out there. >> meg, are they going to be able to do that? you did hear about those two ceos talking about creating new jobs. maybe 1600, a couple hundred here and there.

are they able to do that and still keep their profitability where it is? do you think? >> it's a good question. we reached out to amgen and merck. it's unclear whether they were new commitments or something they were doing. in terms of manufacturing a lot of folks it takes a lot of time to ramp up manufacturing in a new place. you have to go through a lot of regulations in order to get the plants online. donald trump is talking about reducing some of those regulations. i think there are some questions over what those reductions and regulations actually mean in terms of safety of products. people talking about streamlining and really accelerating drugs through the fda. there is some concern i'm hearing that we could tip the balance too far. the fda has been pretty good at speeding things through the fda while maintaining focus on safety and efficacy. >> maybe, michael, it's just this idea of a photo op, the idea of having the ceos there at the meeting is bullish in itself. last time we were talking about pharma companies he was talking about having the government do

the bidding like we see in other countries. didn't hear a lot about that. do you think this idea of the engagement, wall street seems to love meetings. it happened during the euro crisis. it's happening now with ceos and trump helps the group rebound. >> i think again on one side you have the most fear about what could happen, the most uncertainty. stocks priced that in very quick. i think we've come to believe that in the biotech industry trump wants to talk about it. he wants to look good. he wants to bring new jobs over and the fact that the ceos are getting together, that's a first step towards compromise and people feeling better about more togetherness rather than just be hostile. so i think that's why stocks are rallying, because people feel better that it's not all so bad. >> what's the bigger component in the price increases on the drugs that we're all complaining about? is it the regulations and the taxes that they have to pay or is it the r&d? that's what we keep hearing from the companies, it's the cost of getting these drugs to market,

the r&d and manufacturing and marketing. will lowering regulations and taxes really help them in that regard? >> well, i think lowering taxes and lowering the regulations is going to speed innovation and improve profitability on one side of the equation. on the other side i think that trump and the administration, including paul ryan and tom price, have talked about a system that generally works whereby the prices are value based prices. you want to differentiate between the 50 and 100% price increases versus price increases at about 5 to 9%. i think that there are situations where the innovative companies, pro innovation companies are responsible and that these prices do represent value and that's the key that celgene and amgen are trying to push. >> meg, final word? >> one of the words we heard over and over again is competition. this idea that pfizer on the call re-emphasizing that competition will bring prices down but repeatedly we haven't

seen that. people bringing pharmacy benefits managers into the equation. will they benefit and then you have prices go up. will competition actually bring prices down here? >> i think that competition does put pressure on prices. you're seeing on multiple sclerosis and you're seeing that in the cancer space. so it allows people not just to raise prices continuously, it does create managed pressure. it does work. that's what people are trying to get comfortable with. >> i know we're ending but list prices are going way up in multiple sclerosis. maybe the net prices are going down but list prices are still going way up there. >> that is the key, meg. you know that. thank you. >> very good. michael yee, meg, always good to see you. thank you very much. with the nasdaq biotech index up 2%. >> look at you. by the way -- >> correction? >> the worst two-day selloff since september.

you were right. >> since october. >> yes. >> if we do worse than we did yesterday. >> thank you very much. let's get to our "closing bell" exchange for the last day of the month. doug gordon from russell investments is with us. cnbc market analyst steve grasso is at post nine. there's rick santelli. steve, what a month we've had. flat for the first couple of weeks, then last week the rallies when president trump started the executive order flurry and this week down. we're essentially flat for the month as far as the dow is concerned. what do you make of what's going on in the markets right now? >> i mean, you had a rally coming off of the election. it was a shock that president trump was elected so the market had to recalibrate, readjust, had to sell bonds, had to buy more equities. it was for me -- you had to switch out of your game plan for the last eight years and switch to this administration. so when you look at it that way, bill, 50% of the country voted for him, 50 voted against him. you could argue over the

millions here and there. he lost the popular vote. you're going to have a lot of his initiatives be confronted with protesters. i think what's shocking the market, if he wants to do five things at once. he doesn't want to do one thing, he wants to do five things. that's what a businessman does. maybe running the country is a little bit different or a lot different than running a business, but i would prefer to have somebody who has a lofty goal list versus dragging their feet. the market as a whole i think will settle itself and will ultimately be a buying opportunity on all of these dips. >> as the market investor try to make sense of the trump policies and the agenda, are we getting any clarity on the economy, the outlook and policy expectation from earnings? >> yeah, i think you're asking the right questions here. do you restructure the way you invest as a result of the volatility or uncertainty seems to be the word of the day with respect to the trump policies? i think it kind of validates that multi-asset approach, diversifying, and given the

volatility that we're seeing it puts an emphasis on active management as well as being able to be nimble and take advantage of taxable opportunities, currencies across your portfolio. >> rick, i'm surprised that sarah's not asking this question. there was that charge from the trump administration this morning that germany, for one, was taking advantage of what they called a vastly undervalued euro currency. >> deutsch mark. >> as a deutsch mark and the dollar has moved lower today. i mean, it's been setting some benchmarks against other currencies as well. it comes down to currencies, doesn't it? i mean, that's -- when it comes to trade, they're going to focus on those currency levels, aren't they? >> absolutely, and i'll tell you, peter fl navarro is spot o. that's been a common refrain. germany's economy is a sprinter. many of the other economies in europe, you know, maybe outside of france when they're having a good year, u.k., they have to

move off to the side, they're much slower speeds. they're not sprinting. they're fast walking and to try to get those dual speed economies from south to germany all calibrated one currency, what ultimately happens is germany does reap the rewards. i remember in -- >> yes, rick, they also have to pay a bigger share of the greek bailout. they also had to -- they have a large responsibility in the european central bank. >> that isn't going to change how the economies are going. yeah, i get all of that, but that still doesn't change the actual dynamics that if you really wanted to calibrate europe right you have germany on the d mark, you have the rest of the europe on the euro. they could fine tune it to match the stodginess that's in the economies in southern europe. whether germany bails out greece or not doesn't change the physics of the relationship between a really strong country and all the weaker countries sharing the same dynamics as the central banks. in terms of uncertainty, i've had enough of the uncertainty

talk. we have a businessman who's a republican. he has two houses. they have a republican. that's more uncertain than the last administration? when most of the benefits to financial assets is what they were thinking every six weeks. that's uncertainty. >> all right. boy, a lot of topics we could have pursued further but there's never enough time. >> i tried to get his face the color of my dress. >> you did that well. thank you, guys. appreciate it very much. speaking of which, i did not wear a pink tie today because i would look like a tomato. >> i rhyme with your outfit. >> let's go to morgan brennan. she has a quick market flash for us. >> conocophillips shares are hitting a session high. the company announcing it's raising its quarterly dividends 26.5%. that is an increase of 6%. this is the first increase in that payout since the oil company slashed its quarterly dividends by 2/3. it stunned investors at the

time. the stock is up 24% over the past 12 months since crude prices have recovered. the company will report earnings thursday morning but, again, conocophillips increasing its dividend. the shares are trading up 2%, guys. >> thank you, morgan. we will see you later, no doubt. we've got 45 minutes left in the trading session. here's the final trading day of january. by the way, happy 99th birthday to my mother. 99 years old today. >> happy birthday. >> 99 years young. down 123 points on the dow as we head towards the close. president trump expected to sign an executive order this hour on cyber security. we'll bring it to you as soon as it happens. >> the earnings parade picks up and how after the close. apple, that will be front and center. we'll tell you what to expect from that report. that's coming up. you're watching cnbc first in business worldwide.

, stista.

welcome back. looking at cyber security stocks because that's a topic of conversation at the white house right now. we're just getting word from the

white house that the executive order related to cyber security is not expected to be signed this afternoon after all. that was the guidance early on, but there is a meeting of experts underway, as you saw, a little while ago and eamon javers will have more on that coming up and what they were talking about. in the meantime, under armour plunging today after the athletic wear retailer reported a big earnings miss and announced its cfo was leaving after only one year on the job. >> margins missed, sales missed and the guidance. joining us is analyst at instaynet. you warned this was going to be a tough quarter. were you surprised at the magnitude of the misses? >> the latter. this is a handful of departures since october. definitely. i think the magnitude and timing are a question. i think the reality to give under armour all the credit it's due, kevin plank has created

something that's phenomenal. the growth and looking at the sales trajectory of what's been happening seem to help and seeing the margins behind that have led to some concerns. and i think looking at where we r right now today obviously retail in general is very competitive and watching that sales miss but at the same time the profitability miss has been a theme we've been looking at. >> what are they doing, because of the competition they're playing the margin game? they're going after market share at the expense of profitability, is that the idea? >> one thing we think is really interesting is athletics specifically is all about market share. it's all about the size of your market and there's a very low focus on profitability. nike, for all of its scale, for all of its size has only leveraged expenses four times in the past 20 years. so you're talking about a business that's eight times the volume and yet they spend the same percent on sales in volume. whether it's the endorsers, r&d, this is a variable expense business. you don't get much scale and profitability as you go through.

>> thought the tone of the call was interesting. kevin plank with opening remarks mentioned the word humble twice and he mentioned it. we got a little over our cs. we're growing fast. learning from our mistakes. we're still on track to be a $10 billion brand. are you a buyer of the stock now that it's getting chipped by a quarter of its value and almost half since last year and with that kind of a remark from a ceo? >> i think a ceo has to have that kind of remark, especially a founder ceo. anyone who wants to be optimistic wants to know they're aware of the problems, aware of the environment and ready to take that forward. i think an interesting number, to over simplify the math here, the ebit, operating income was guided down 37, 38%. stock is down i'm going to say only 25% in that context. what that implies, very over simplifying, what that implies is that the multiplier is higher. they're giving under armour more

credit today. >> still a retailer that's going to grow revenues 10 to 11%. where do you find that in retail? >> exactly. sales growth is still leading industry growth. what's the cost of those sales? >> the end of the day operating can decline. >> clearly they were hurt when sports authority went under. what else is hurting them? are these outlets the problem? >> it's funny. i think everyone talks about how nike's losing share, nike's losing share. the reality is this is very interesting and important in the context of thinking through where the big global players play. under armour is one of those big global players. you're watching nike weather and flat out last some of the competition from the up starts. it makes sense. sales should decelerate. they are still growing. it's important to think about where the profits come. when you think about what a $10 billion company looks like, that's on sales. >> are you buying? >> it's hard to argue today why the multiple looks better than it did yesterday. >> thank you. at leisure is no longer

immune to the discounting and the promotions. >> that's for sure. >> still growing. >> still growing. >> less than 40 minutes to go before the closing bell. under armour by the way is the worst performer on the s&p 500. in terms of the dow, it's actually goldman sachs taking the most points off of the dow right now. still declining. 122. coming up, fresh from his company's earnings beat the ceo of coach will speak to us exclusively about the republican controversial proposal to tax imports. by the way, that stock is up 4% today on an otherwise down day. >> retail winner for a change. ups falling on the heels of an earnings miss. details on big brown's results coming next on "closing bell." er our etirgtireti e

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another selloff day on wall street. the dow's down about 125 points. stocks are selling higher for the month of january. >> slightly, at least on the dow. we have a number. 19,762. as long as we stay above that number, the dow would be positive for the month. >> firmly higher for the nasdaq which really outperformed this month and for the s&p as well. it's only down less than 1/4 of 1%. the russell 2000 is actually positive. that index of small caps. as far as groups that are moving a lot, industrials and financials are the winners. utilities and health care outperformed. >> and it's still all about earnings and we've got ups shares trading lower after the

package delivery giants results missed on both the top and bottom line for the fourth quarter. the company's chief financial officer blamed a shift in the product mix and continued softness in industrial production. international and domestic package volume increased while average revenue per piece declined. that's very important, i think. ups also issued light guidance for this year. the company expects earnings to come in between $5.80 and $6.10 a share. analysts expecting $6.17 a share. talk about going from market share at the expense of profitability. you think about the price pressures on the deliverers like fedex and ups during the holiday shopping season when amazon demands a lower price or any of the other retailers now, that i think is a huge pressure for those companies. >> also managing huge volumes which can always be costly. what i thought which is interesting. we talked about the cfo of this

company, the trade. try to find a company like ups or fedex that is more involved and could be more hit by more protectionist policies. >> right. right. >> from the administration. he maintains he's optimistic and he's all for fairer trade and that he's not worried about some of the trade policies. i pushed him. i said, what about the 20% import idea on mexico? wouldn't go there. still maintaining optimism. this is one group that you're certainly going to watch as we continue to see the trade policies unfold of president trump. and debate whether this can be a pro business president when you have protectionists policies. you have two agendas and they're sort of -- >> at odds. >> you watch some of these companies that get caught in the cross hairs. >> you would think so. time for a cnbc news update with that guy, tyler mathisen. >> here's what's happening now. the senate has confirmed elaine chao. she's married to mitch

mcconnell. she was the labor secretary under president george w. bush. and fighting in ukraine between government troops and russia backed separatist rebels has escalated killing at least eight, injuring dozens and briefly trapping more than 200 coal miners underground. electricity substation was damaged in the shelling. that cut off a mine. ladbrooks say they want to lay bets on him not lasting a year or forced to resign sometime in his first term but the big one is -- >> it will be incredibly unusual that he won president. the circumstances of nixon. so, yes, amazing how little faith people have in him. >> the fastest changing odds though surround folks whether mr. trump will go to the u.k. on a state visit sometime this year and see the queen.

that is the cnbc news update at this hour. back to you both. >> all right. >> tyler, thank you very much. less than half an hour to go in trading session. joining us to discuss this market, mark newton from newton advisers. we're going to talk technicals and focus on biotech, the movers of the day, mark. what do you see? >> increasing signs of health. we've seen good moves in biotech, pharma and also medical devices. biotech is much stronger than really a lot of other parts of health care. if you take a look in the last couple of weeks, you see the pattern that formed in general with biotech. this is the xpi. s&p spider biotech etf increasing signs of consolidating in this triangle. very good move today to multi-day highs. my thinking is the sector in general has been one of the better performing sectors of the week and also an outperformer of the year. the worst performing sector last year starting to gradually bottom out. biotech should outperform hitting above this level near

6595 sends biotechs up to the minimum. a lot of people kwleg trump will be negative in health care. reining in costs. there are signs that health care in general should continue to outperform. none of that news has been a damper to the sector thus far. so with regards to -- >> as you mentioned, have to play some catch up to last year. >> agreed. the worst performing sector. now we're talking about less regulation, reining in fda. in general it should be good for the sector and good for biotech. >> as we head into the close, another down day. triple digit news for the dow. doesn't mean as much as it used to. it is the worst back-to-back day since back in september. how much damage are we doing? >> only three straight days of selling. can't put too much really into the sentiment. the sentiment is extraordinarily negative with regards to, you know, anger with regards to potential policy implementation, this and that. it's tough to see bear markets start with a lot of anger and frustration of the highs. if anything, you want to see signs of exuberance.

the volume much more flat. it's not extremely tilted towards the down side. we're well off the lows that we saw earlier. so structure very much intact. if anything, the sentiment is still somewhat subdued. it bodes well with the advancers at all-time highs. it's a short-term pull back. >> thank you, mark. always good to check in with you. mark newton. bill, back to you. >> yes, sara, we are off the lows. it was the worst day for the dow since october 11th. right now though we are down 120 points. ceo of luxury hand bag maker coach will be weighing in. talk earnings. they're a positive stock. there, victor, i gave away my second question. we'll be back in just a minute. y

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adjustment tax. >> so much to talk about right now in our cnn exclusive with coach ceo victor luis. you had a good quarter in the stock market. what happened? >> we had a great quarter. we had a terrific performance by our team and we drove performance across all of our sectors, positive comp growth here in north america, international sales continue to grow nicely, especially strong in europe and in china. and stewart wiseman, which is a brand we acquired growing 26%. that with an expanding margin driving double digit net income. very pleased and proud. >> you also seem to be weaning your customers off of deep discounts. >> that is right. >> performance comes in spite of the very intentional pull back that we have had in the department store channel where there is increasing competition and increasingly promotional.

we've partnered with our department store partners. by approximately 40%. so really pleased with the performance. >> so the stewart wiseman acquisition worked out. that's contributing. >> it has. >> last time you were here we talked about the possibility of a case spade acquisition. that has not gone away. that was a topic of conversation on your conference call with analysts. what are you saying about that right now? >> not very much. obviously we won't comment on any speculation or rumor on any specific player. what i would add, bill, is we've been very consistent in terms of our capital allocation. we're very focused on our organic business, investing in coach. brand transformation is picking up and investing in stewart wiseman has tremendous opportunity for growth, not only here in the u.s. but internationally and growth outside of the footwear category as we look to give that a hand. >> you're not averse to acquisitions down the road. >> we're not averse. we are looking to be

opportunistic where we believe we can drive value and certainly we continue to be on the lookout. >> maybe i'll ask it in this way. do you aspire to be like the european brand, lbmh, big congress glom mer rants where they add in number of portfolio strong brands and that's worked? we don't have something like that here. >> i don't know if we're looking at any specific model. those are all great examples that you've given and i respect them all. certainly when we look at coach i think the key is exactly as you've described, looking for strong brands where we can drive growth globally as well as here in the u.s. >> the border tax or just trade in general with all the talk coming out of washington right now, what do you make of that? what would that do to your business? how much of what you produce is outside the u.s. and that you return here to the u.s.? >> we're an incredibly global business. >> right. 40% of your profits are outside of the country. >> nearly slightly 40% of our revenues are across all of the businesses. we employ 15,000 people across

the world, 8,000 in the u.s., 7 thousand internationally. >> so if your tax base goes down here in the united states, as has been discussed, but a border tax is imposed to encourage you to produce more here in the united states, would you be more inclined to do something like that? >> obviously, look. it all depends what the taxes are and whether the cost of goods includes the raw materials or not as an example. we're very dependent on leather and approximately 50% or over 50% of our hides come from the u.s. is that considered in any border tax? there's a lot of variants. >> where are your hand bags made? >> in 18 countries across the world with a concentration in asia. >> will they get more expensive if we see this border adjustment tax? >> in an economy where 70% of gdp is driven by consumption that is driven on imports, any border tax will lead to higher prices for the consumer. that's just a reality that we'll have to face if it comes to

that. >> you're waiting to see what the document looks like if they finally sign it? >> we're also in a very unique position, i think, bill, sara. we're in a very emotional category. we have a very high gross margin. we're not in a category that is perhaps a bit more restrained in passing on prices to consumers. >> are handbags there? >> your margin's a little bigger than under armour. victor, always good to see you. >> thank you. >> the ceo of coach joining us at post nine. heading to the close, 20 minutes in the trading session with the dow down 111 points. up next cnbc's exclusive fed survey with relationships on the trump market rally. find out revelations -- excuse me. find out what investors are saying about whether this rally can continue. lla brkd

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revenue and earnings growth this year. common refrain. >> very much heard that a lot. by the way, we are in the midst of a two-day meeting of the federal reserve. they met today, they're going to meet tomorrow. we have our latest cnbc exclusive fed survey. steve liesman has some intriguing results. >> revelations, i think. >> yes, he does. >> the cnbc fed survey for january. we're going to take a look at the outlook. it's maybe muted, 2280, that was the close yesterday. looking for just 3% returns according to our 41 respondents. they include economists, fund managers and strategists. 7% or 2453 for the end of 2018. maybe one reason is revealed in the next slide. that's because they see long-term yields going up by about 50 basis points. that was the close yesterday, looking for another 50 and another say call it 45, 50 for

2018. another reason why they're a little more muted is this group thinks the market's a little bit ahead of itself. 56% say they are too optimistic about the outlook for trump policies. 39% say they are realistic. and i want to show you one thing that trumps them all, i don't mean that with a pun, i guess i could mean it with a pun. take a look at the next slide. they really like the individual tax cuts coming from the administration. they really like business tax cuts. if it were possible, they like deregulation even more. what they really, really hate are the trade policies. 51%, sara, saying that protectionism is the number one threat facing the u.s. economy right now. i've been doing the survey for a long time there. 's never been a single factor that has gained the majority of those respondents for the biggest threat to the economy, not even when the global economy was melting down this time last year. >> very interesting. great stuff. >> that's what we hear from ceos, from investors. >> thanks, steve. nobody does powerpoint like

steve liesman. >> yes. >> and fed surveys. we've come back a little bit on the market, especially the s&p heading towards the flat line. >> nasdaq. >> going positive. >> the dow is down half a percent on 107. >> consumer staples turning green and telecom. >> we're half an hour away from apples earnings. some analysts expecting the best financial results ever from that company. we have a preview coming up next. makeug med- halol ac4/7. mei i makeug

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moments ago art cashin told us the markets show an end balance to the 500 to the buy side. we've seen the market come back. in fact, the nasdaq's turned positive and the s&p is coming off it as well. >> the dow is still down 116 heading into the close. >> so it could be -- it's possible it's a record quarter for apple. we'll know in a little while here. josh lip ton has a preview coming up. >> when apple reports results today after the close, the attention, of course, will be on its flagship product. now the street thinks apple shipped some 77 million iphones in the quarter. that would be a jump of just

some 3% year over year. there are challenges for apple. a maturing smartphone market, competition in china and fans holding off on buying new phones because they're waiting for the tenth anniversary edition in the fall. investors seem optimistic. the stock up more than 15% in the past six months. in addition to the iphone investors will have questions about the services business. china and how the tech giant is now navigating this new era of tru trumponomics. >> josh will be checking back with us. ten minutes left in the trading session. let's look at the top stories moving markets this tuesday. all of the major averages do continue their slide except the nasdaq's turned positive. the transports have been leading to the down side by a percent and a half. pharma stocks higher. this after president trump met ceos from various drug maker companies at the white house today. utilities are the leading sector

today up over 1% interestingly enough going into the last day of trade. >> nasdaq outperforming right now and for the month at large on this final day of january. joining us to talk about what's next, isabel matteos and jonathan frost. thomas, you've been looking a lot at the trump trade. has the optimism been dented or is this just some profit taking? >> no, i don't think the optimism has been dented at all. i think that trump is doing exactly what he said he was going to do, which meant he was going to deregulate, he was going to lower taxes. he's doing exactly what he said. if you look at where the market is today, we're trading at 1908. the night of the election we were trading at 1707. so we're still at 2,000 points from when he was elected so i think we're just experiencing a little bit of a breather and let's get some more details to see how trump is going to do what he's promising to do. >> you're the multi-asset strategist at black rock. let me ask you a few different

either/ors. stocks over bonds? >> definitely. >> do you like gold? everybody's expecting inflation at some point. >> yeah. when we get into hyper inflation but we're far from that. >> you're not laying the groundwork for that? >> no. >> where in stocks? what do you like here? >> well, actually, we prefer global equities rather than u.s. valuations in the u.s. are somewhat rich already and as you've said, the market is expecting more news. a bit of a wait and see mode. we're seeing very strong reflation in europe and japan, emerging markets even though perhaps there's more risks there. generally cyclicals as well as everything that can be put in the value bucket. that's what we expect to overperform in this environment. >> isabel mentioned high valuations in u.s. stocks. does that give you pause at all within any sectors? >> no, i think we're fairly valued. if you look at where interest rates are going when you would lay an interest rate model, we

think stocks are not overpriced. when you think about the market, bull markets do not die of sickness -- i should say of old age. bull markets die of sickness. right now when you look at the key areas of the economy, we continue to tell our clients things are still improving, right? the economy is improving. stock prices are not too expensive. manufacturing is doing good. housing is coming back. we happen to like u.s. equities over international especially if trump's policies on protectionism come true like he's pushing. >> right. >> no. we do not think the stock market is overpriced. >> global stocks if there is a protectionist movement that continues in the u.s., what does that do to your ability to invest overseas? >> if there's protectionism in the u.s. we're going to see it all over the globe and that's going to hurt everybody. that's not a scenario -- >> all things will be equal? >> no, they won't be equal. we still think everything else equal there is global reflation

going on with a domestic momentum in europe, japan, emerging markets. of course, if the u.s. is pulling back, that will hurt. there is momentum not purely u.s. driven unlike was the case. >> inflation numbers today. >> gdp numbers. eurozone faster than the u.s. in 2016. >> thanks. >> thomas. >> we will take a quick break here and come back with a closing countdown in a moment, right? >> closing countdown and the final tally of january. after the bell, president trump meeting with drug makers telling them he wants their medications made in the u.s. coming up, we'll talk to a pharma ceo about whether that will drive up costs. you're watching cnbc first in business worldwide.

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i usus.moevics in bi two minute mark as we head towards the close wrapping up the month of january. start of the month flat after that big rally late in the year after the election. the rally took off the second leg last week with a lot of the executive orders coming out on the economy and then this week we are seeing some selloff. but overall net net for the month we're looking at turns in the dow, the s&p and the nasdaq. we are finishing slightly positive. the dollar has been calling the shots for a lot of these when you start talking about trade

and protectionism and border taxes. the dollar and all the currencies mean something and that's a one-month chart of the dollar index and it is lower for the month. wti crude, this give and take between opec and u.s. producers, opec's cutting production, u.s. producers are pushing production higher because of higher prices and look at the volatility in oil for the month of january and overall net net we've seen finishing at $52.83. ten-year yield, don't forget the fed is meeting. we'll hear from them tomorrow. bob pasani not expecting any movement on interest rates on this meeting. >> no, but did you see what happened today? the s&p 500, put up the s&p, we moved ten points in the last couple hours in the s&p 500. look at that rally. there's a very well known phenomenon called the fmoc drift with the tendency of the market to drift higher in the day before the fed meeting. this is a very well-studied phenomenon. the fed itself has made note of it. you saw evidence of that today.

certainly there was no other macro event that occurred that drove the market up. >> this will be on the mid term, kids. the fmoc drift is what we just experienced. get ready for the big earnings reports, especially from apple as we close the books on the month of january with the dow down 108 points. stay tuned now for the second hour of the "closing bell." and welcome to the "closing bell." i'm sara eisen in again for kelly evans today. here's how we're finishing up the down day on wall street. down but certainly off the lows. stocks struggling again with the dow closing lower by half a percentage point. that's about 106 points lower. s&p coming up near the flat line in the final half hour or so of trade. real come back from an earlier slide of about half a percent. look at the nasdaq managed to close in positive territory. just barely. it's actually the best performer of all three of the major

averages for the month of january and it does look like we are going to get gains for stocks broadly on the month. third month in a row that stocks are higher. >> that was that -- that was that fmoc drift that bob was just talking about. we experienced in the last few minutes. >> apple set to report earnings in just a few moments. we'll bring you those numbers as soon as they're out. we'll talk about what to watch in just a moment here as well and a few other big names reporting results including electronic arts and arconic. it will post its first earnings as a public company. we'll have those results for you as soon as they hit the tape. let's talk about this market move. joining us today is john najarian and michael yoshikami from destination wealth management. good to see you. michael, we managed to talk about the gain for stocks in the month of january, but it's been a weak couple of sessions. how are you reading into that action as it relates to the broader trump trade and powerful

rally post election? >> well, i think the key is really, sara, rotation, right? the stocks that did particularly well in october/november are actually the stocks that are lagging behind. as you mentioned in your lead-in, you have utilities up, you have pharmaceuticals up so i think you're starting to see perhaps an understanding that any stimulus program that's going to be put in place is going to take time just like the reagan tax cuts, just like the bush tax cuts. it's likely going to take time to be put in place. larry kudlow was on earlier, as you know, and had talked about how critical he thought in order for the economy to move forward that the business tax cuts are implemented sooner rather than later. the market is beginning to declare that there's some concern that those tax cuts are going to come quite as fast as perhaps people thought in november/december. >> dr. j., we'll talk specific earnings in a few minutes. just overall how do you see the season playing out?

what opportunities have they presented to you guys who have been trading this volatility here? >> well, volatility's something, bill, of course that measures the calls and puts, in other words, the premium levels of the s&p 500 and it's been pretty low. the reason for it is we're not seeing a lot of movement. i mean, even to sara's point, if we finish .4 lower on any given day that, believe it or not, would be a vix of under 8, more like a 7 vix and we're up here trading in the 12 handle mainly because we've got the fmoc tomorrow, bill. we knew about that. they won't have a press conference at this one but they will on the march 15th meeting. and of course we'll focus in on what the minutes are from this meeting in the next few weeks. but overall i'm not surprised that we've done what we've done given the protests we saw at the airports, given that we've got fmoc uncertainty even with the

drift that bob pa san be asani . there's still concern with the volatility metrics as low as they have been in years. >> michael, we also saw the dollar fall during the month of january, about 2%. and it's near a two-month low. that was a big reversal from what we saw after the election. so we're trying to figure out broadly whether the trump rally is fading and what either takes it to the next level or turns it around. >> well, again, as i mentioned earlier, i think the trump rally is starting to fade just a little bit. i think you're, again, starting to see rotation back to many of these names that were so out of favor in the fourth quarter of last year. it's been -- it's a bit of a surprise given what's happened with interest rates the dollar has been as weak as it has but then again if you look at the ten year treasury it was at 2.6%. i think the latest click today was 2.45, somewhere in that general neighborhood. just the overall expectation for

economic growth is coming back just a little bit. i still, however, feel that the markets are still poised for positive action. i still think the environment is still good for equities. you have low interest rates even if they go up a little bit, you certainly do have what appears to be a very pro business perspective from the new administration. tax rates are likely to go down in our view, not only individual but also corporate tax rates. so i wouldn't get so caught up in is the trump rally fading. i think more so i would say are the conditions in place for equity markets to continue to at least have some reasonable strength? i think the answer given current conditions is yes. >> yeah. it's -- it's amazing that we talk about it the way we do. you're still very, very early days of the new administration. they don't even have a full cabinet yet. so much has happened in the meantime. >> exactly. >> let's move on here. speaking of which, the president

did hold a cyber security meeting at the white house. eamon javers is there with somebody who was inside the meeting. eamon? >> reporter: yeah, that's right. i'm here with general keith alexand alexander. thank you for joining us on cnbc. give us a sense of what the president said in the off camera piece of the meeting that we in the meeting couldn't see. >> eamon, first it's an honor and privilege to be here and it was an honor to be in the meeting with the president and a number of other people. what impressed me most which is how serious president trump took cyber security for our country, for our nation. what we need to do in the government, he walked through that with a number of experts there in the room. what we need to do for our nation and how they could collaborate. and all the aspects of it. he went around, talked to every one of the folks in the room, asked them questions and listened. i was really impressed with the way he did that and the way he was really concerned about the state of the information -- infrastructure for our government and what we're going

to do to fix that and what we do for the nation. >> he talked a little bit about the private sector, hospital and some of these other things. if you're running a company what's going to happen? are we going to expect new regulations? are we going to expect new assistance from the white house and the executive branch? >> well, i think one of the things, i can't get out in front in terms of the executive order, but one of the things that impressed me was the willingness to collaborate between government and industry with intelligence and pushing that out. so you had several folks from the intel community there talking about how we could share. i think those kinds of things are absolutely important and things that i hear when i talk to industry help us understand the threats. that's what they want to see. that's what they want to hear. that's what our government can do. >> you ran the nsa. you know that the intelligence community's first response, gutt instinct is to keep the secrets secret. do you feel that the

intelligence community needs to be sharing more and pushing more information out to american ceos and the business community? >> actually, we would share probably 90 plus% of vulnerabilities that we saw. so what's not seen by the american people is how that's done. now having said that, what we really need to share and i think what you're driving at is that's threat intelligence. what we need is actionable information that can be used to defend a network. i think the discussion that i witnessed there and the way they're looking at it is how do we defend this nation in cyber. >> let me ask you one last question because we saw that the white house has now postponed the executive order signing. the president was going to sign an executive order on cyber security today. now we hear he's not necessarily going to sign it. what's going on behind the scenes? why is that postponement going to happen? >> i think he was thoughtful. he wanted to get from the experts in the room any other issues that they might have. i thought that was very

positive. you know, i've never met the president before, but what he did do was he asked questions, listened, and thought, okay, do i have this exactly right before i sign it? so i think that's a good step forward. i think that's great for our country. >> general alexander, thank you. >> eamon, nice meeting you. >> reporter: thank you very much. i'll toss it back to you guys over in new jersey. >> eamon, good stuff. thank you very much. here come the earnings. first up, arconic just out. morgan brennan, how do they look? >> we have the results from arconic. 12 cents per share excluding special items. that is a 1 cent miss on the bottom line. analysts were looking for 13 cents per share adjusted but revenue, 2.97 billion. that's nearly in line with the $3 billion that the street was looking for. margin expansion in all of the segments of arconic. full year 2017 guidance was reaffirmed. revenue guidance was reaffirmed. first quarter guidance, revenue guidance of 2.8 to $3 billion, a

little light versus what analysts were looking for. in the remarks here we've got commentary from klaus klein felled saying in 2017 we are squarely focused on operational improvements, margin expansion and capital efficiency to drive shareholder's returns. we will continue to cut costs through corporate overhead reduction. keep in mind this is arconic's first earnings since it's spun out into what is now called alcoa. one cent miss on the bottom line. top line pretty much in line. taking a look at shares of ar c -- arconic down 1%. >> that stock down. by the way, arconic ceokla arconic ceoklaus kleinfeld will be on "mad money" tonight. you don't want to miss that.

since alcoa spun off arconic. it has alcoa. how do you view the two names? what do you think of the results? >> well, obviously it's a very small miss. i had no dog in the hunt though, sara. there was not a big tell as i like to say as far as bets being placed on the bullish or bearish side of the ledger. there wasn't that in this name. got a little bit in electronic arts and in apple but this name just didn't see a lot of play so despite the move that it's made since the election, we were not participants in this one. >> michael, i mean, this is a category that -- aluminum one side, you have the finished products on the other side. is that an area that you like right now? >> well, not at these prices, and i think the miss is not a huge miss. i mean, it's obviously not what was expected but i don't think it's a huge miss. i think the bigger concern here,

bill, is are we really at the last phase of the last big infrastructure push in terms of building. and so until we see more what's going to happen with the economy, it's not an area that we're really that thrilled with. we think that, frankly, it's part of that quarter end trade last year that we think is really going to tail off and we're already starting to see that now. >> all right. and that stock has been moving lower. it was down almost 4% a moment ago. it's come back a little bit. we're down 2.5% now. dr. j., good to see you. michael yoshikami, thank you for joining us. >> thank you, bill. thank you, sara. >> thank you. yesterday it was small business owners. today president trump met with the ceos of some of the nation's largest pharmaceutical makers. up next a pharma ceo will tell us whether mr. trump's promise to bring down drug prices and unleash innovation will help or hurt that industry. and we are just minutes away from apple's latest earnings. this is a headliner. coming up, find out whether the

iphone 7 is helping turn around revenue growth for the tech giant. will we see that this quarter? stay tuned. you're watching "closing bell" on cnbc, first in business worldwide. bo thof

more earnings, this time electronic arts out. julia boorstin, how do they look? >> e.a. shares trading down half a percent. e.a. reporting revenues thabeet estimates by a hair, $2.07 billion versus estimates of $2.05 billion. the company's fiscal year revenue guidance is in line. eps, earnings per share that the company is reporting, they're saying they're break even this year and it's not comparable to a year ago quarter. now the shares are positive in after hours trading but this is one of these companies where they've changed their financial accounting so it's hard to do an apples to apples comparison between this quarter and a year ago quarter. the company highlighting this quarter that they have new titles coming up and this is the first time they've generated over 1 billion in cash flow. big growth in digital sales. that's where everything is shifting away from stores

online. guys, back over to you. >> thank you. don't you hate that when there are so many special situations that you can't compare apples to apples. it's break even but you can't compare it to last year when they did $2.30. >> that 18% on digital sales, 60% he total net sales to julia's point. >> and the confusion you can see in the market, it was down, now it's up. >> let's talk drug stocks. president donald trump meeting with ceos of pharmaceutical companies at the white house. he vowed to get drug prices lower for consumers and also spoke to them about his goals for getting the products made in the united states. >> you have to get your companies back here. we have to make products back. we're going to get rid of a tremendous number of regulations. i know you have some problems where you cannot even think about opening up new plants. you can't get approval for the plant and then you can't get approval to make the drug. other than that you're doing fantastic. so we're going to get that taken care of.

>> let's bring in tony coles, ceo now of umanity therapeutics. he's joining us along with our own meg tirrell. tony, it sounds so simple. i'll lower your taxes, i'll lower regulations, you bring your construction -- i don't want to say construction, but you bring your factories back to the united states, lower your prices at the same time and keep profitability and innovation high. is that -- is it that easy? >> this is a complicated business. finding new cures and innovating for diseases we've not been able to treat is hard business. some of us have committed our lives to this matter. i've got a real interest. because it's complicated it's going to take it to a number of things, where we find the best scientists, how we can actually operate within the united states in a favorable and competitive

environment so there are a number of things that could be true and we have to see the details, of course, that could make it easier for pharmaceutical companies to compete effectively in the united states. >> you know, meg, the negotiations back and forth here are fascinating. on one hand you have president trump promising all these things and the drug companies saying they're creating jobs in america. on the other, they have said before if we go to a model like europe where the government can regulate pricing and do the bidding, that will -- then we'll just slash our r&d costs and we won't be the center of business anymore. who has the leverage? >> that's a great question. a lot of people are reacting favorably that trump did say here we are in the united states, we pay more for our drugs, we're getting taken advantage of by the rest of the world. he sort of seemed to imply that that needs to change. how he's able to actually do that i think a lot of people are going to be looking at. i'd be curious, tony, as to your thoughts. does the u.s. have a real advantage here? if we try to stop paying so much

for drugs, does that actually affect your ability to invest in research and development? >> well, one of the things we need, meg, and it's good to be with you this afternoon, one of the things we need is regulatory reform. and a real focus on the corporate tax rate and the ability to repatriate dollars. i think a figure most people are quoting is it takes 15 years to develop a new drug and get it to patients at a cost of more than $2 billion. so we need every advantage we can muster to treat diseases like alzheimer's and parkinson's and lou gehrig's. i do think the u.s. pays a price for the leadership that we have here and as long as we continue to innovate and provide jobs and economic growth, it seems to be a fair tradeoff. >> i'd be curious to know how you think the industry is thinking about pricing.

what we heard from the biggest companies, they say the same old things. competition is going to work to bring prices down. we don't necessarily need to change things. among the smaller companies, sort of younger companies like yourself i do hear a different message. also from generon's ceo. he doesn't think the industry has been putting patients first with the pricing. do you think the industry will change itself because of all of this pressure? >> i do think the conversation we're engaged in right now, which is a balance between finding new cures for difficult to treat diseases and how we do it responsibly as a community of stakeholders and this is not just the pharmaceutical industry, it's obviously the government, it's all of the players involved in distributing drugs, it's the entire ecosystem. we've got a joint responsibility. you know, there have been people in our industry who have led the way importantly in terms of disciplining the industry from a price increase point of view. i think my colleague got it

right when he said we have to pay attention to where we set the price originally and then really be very thoughtful about the inflation of prices over time. we've got a commitment and responsibility to find these cures but they don't come cheap and the research certainly doesn't come cheap. >> tony, we've been talking a lot about this border adjustment tax issue. as a nation we import a lot of pharmaceuticals. isn't this an issue that would affect the health care industry as well? i wonder how this plays into this whole idea of manufacturing at home. >> well, it certainly could, and i think we'd have to look at issues such as what the tariffs and the regulations are, the various import taxes on those things. one of the things our industry has been concerned with is the safety of these products that are manufactured outside of the control of the food & drug administration. so wherever we go in terms of how drugs get distributed and where they originate, we really can't leave that particular point behind because the food &

drug administration has a primary job to protect the public and really does need to have good handle on the source of these products. >> yeah. >> so we'll have to be thoughtful and not make too many big moves in that area. >> can't wait to see how this is all going to play out. dr. coles, good to see you. thank you for joining us. >> thank you. >> meg, as always, thank you very much. see you later. it's almost time. apple's been on a role since the election. stock up 9% since then outperforming the dow. the tech giant's earnings are out in just a few minutes. we'll have instant analysis for you of the results as soon as they hit the wires in just a moment. lmwi owooabyc? om

this after democratic senators gave lengthy speeches opposing sessions. >> this morning the judiciary committee, members of the democratic side spoke 45 minutes or so each, up to that long, were unable to conclude jeff sessions' confirmation vote in the committee today, but we will vote him out of the committee tomorrow. >> san francisco suing president trump claiming an executive order over an immigrant protecting sanctuary cities is unlawful. brazilian businessman eike batista facing corruption

charges. they said he would not negotiate a plea bargain at this time. that's the news update. i'll send it back downtown to you guys. >> sue, thank you very much. it's time for the main event. apple set to release its earnings right after this break. we have full team coverage of the tech giants' results when we come back. do not go anywhere.

welcome back. apple earnings in moments. jon fortt is here. what to watch, jon? >> yes, it is all about that iphone number last year in q1, fiscal q1 we saw 74.8 million units. tim cook has promised growth so -- and you should expect it given samsung's troubles. >> wait no more. here they are. josh lip ton, how do they look? >> bill, apple reporting eps here of 3.36. that's verse 3.21. revenue, 78.4 billion versus expectations of 77.3 billion. iphone units, 78.3 million. the street was at 77.4 million. ipad, 13.1 million. mac, 5.4 million. services revenue up 18% to a

better than expected 7.2 billion. other products revenue, remember that includes the watch that is down 8% to 4 billion. gross margins clocking in here at 38.5%. spinning ahead to q2 guide apple is guiding for revenue there 51.5 to 53.5 billion. the street was at 53.8 billion and the gross margin guide 38 to 39%. the street was at 38. 7%. i did just have the opportunity to speak briefly with ceo tim cook. he said it was a dynamite quarter in his opinion for the iphone. he called that particularly in the u.s., japan and western europe. also he said emerging markets like turkey, brazil and russia, they found the iphone 7 plus supply and equilibrium making enough to satisfy the demand but not too much forex ses excess inventory.

in terms of the drivers of the iphone franchise now looking ahead, he said they were confident about their current product lineup. he called out other countries, india most notably. apple does have a relatively low penetration there, but he said apple did hit an all time record of total revenue in india. about the pipeline finally, he said we are very excited about our pipeline. i asked him, you know, there are some skeptics out there who say that whatever changes are coming in the fall have to be necessarily evolutionary he said. well, they don't work here. guys, back to you. >> we've got a lot to unpack there, josh. thank you so much for the numbers. for more reaction let's bring in ross gerber, kevin landis, tim lesco and lou basinise. our own jon fortt is here with us. >> a cast of thousands. >> we've got a lot of numbers to talk about. jon, what seems to me to be the headline on this report is that apple imagined to end its quarterly streak of declining revenue growth.

>> yeah. not just revenue growth but also unit growth on the iphone. that number is a convincing beat. to me just beating by, you know, a million or so units wouldn't have been so impressive because we know that their top competitor, samsung, had major problems with the galaxy note 7. this is a pretty convincing beat. also gross margins look pretty good. on the guide maybe actually revenue wise it's not particularly strong given what the street is looking for, but guiding to a gross margin between 38 and 39% suggests pretty healthy profitability. so when the cash cow is working, when developed markets are working for them, when tim cook is speaking positively about a market like india, which is sort of pegged for growth and we expect to see lte expansion, for the bulls there's enough reason i think to get excited here given that even if this guide is spot on, if there they're not sandbagging, it's still pretty positive.

>> lou bazinise, what did you hear? you're among those that say it's all about the iphone. did you hear enough of that? >> i think there are a lot of narratives competing for supremacy. services will jump to the top of the headline. really, those all play second fiddle to the iphone. we still have greater than 60% of apple's total sales coming from the iphone. that's the main driver of the business and nothing else is going to be able to take over, jump in that driver's seat soon enough before we race into the end of the year here with the launch of what we're calling the iphone 8. so, yeah, i still think it's absolutely all about the iphone. >> it is, and it's about higher priced iphones, ross. it looks like the average selling price, that asp number, 69 $695. that's a record high and be a jump from last year. they're selling iphone 7 pluses which are more expensive. >> right. they're selling the 7 plus.

the camera -- the best camera i've ever used on a phone. the best phone in the world. that being said, the fact that all they have is the iphone is a big risk for them. because we all have iphones and almost everybody who has money has an iphone and they've got to look to grow their business. so i'm really happy with the numbers today. they've stopped the decline in earnings which is really important to stabilize the stock price. but we're still talking less than 15 multiple for the stock. there's room to grow. it's multiple but they have to innovate and they need to a care and they've done neither. >> you've never used the camera on the blackberry clearly. kevin landis, what did you hear? >> not recently. >> you're the only one who says that. >> kevin landis. >> by the way, that is interesting. somewhere along the line i think apple became the world's biggest camera company and we didn't bother to notice it along the way. >> phenomenal camera. >> yeah, absolutely. you know what i think is interesting to follow, everybody's right when they say it's all about the iphone.

that's what moves the numbers quarter to quarter. the interesting thing to follow is the services revenue because somewhere in there are the indicia of what people are going to be using this for next year and the year after and the year after. changes to service revenue kind of tell you how good a job they're doing of getting this thing really kind of into your life. and the other -- the other really cool number to follow is services revenue versus facebook's total revenue. they're neck in neck. you realize that, right? if you just took apple's service revenue, that's another facebook. that's pretty remarkable and it's going to be remarkable to see how those two numbers evolve because those are two companies that are kind of on top of the world right now and doing really, really well. >> so is that the future? do you think that quiets people who say they're too dependent on the iphone. it's a maturing market. they don't have a place to grow. do you think that's where the services, the key is there? >> well, it's vitally important to apple that you and i want to keep having an iphone and that five years from now we'll still

want to have an iphone, but they need to make more money off of it than just us buying a new phone every couple of years because they can't keep selling us the same -- new versions of the same product over and over again. so service is the whole key there. are you using apple pay a lot? >> i would caution investors against equating apple services revenue with facebook's revenue. partly because apple services revenue isn't really services revenue. a bunch of it is retail revenue. >> that's right. >> it's digital retail. it's not like they have a whole product line and business separate from the iphone. >> absolutely. >> don't think you're getting facebook for the price of apple. >> part of the ecosystem. >> i don't think it's a fair comparison. >> you have to peel it back. >> tim lesco, you were expecting messy news as you said. you were concerned about the impact of the qualcomm litigation on their margins. what did you hear here? are you pleased? >> definitely pleased. i think jon hit it right, it's

the margins. keeping the margins 38, 39 is really strong. i was worried about the european tax situation they've got it going on. everybody expected this to be somewhat of a messy quarter in a lot of areas. all the news looks pretty good from this angle. >> so, jon, i want to pick a few weak spots out of this report. china still continues to see sales falling 12% in the quarter. >> right. >> also it looks like -- i'm trying to find the mac numbers. they did introduce that new mac. there's only 1% growth there. >> i'm seeing 7% year-over-year growth in the mac which is good. greater china down 12% but that's better than down 20%. the comps have been tough there. not a surprise to see greater china weaker when we had qualcomm's earnings and they said the china market was going through a weak patch. it didn't look to be a one or two quarter thing, they projected out through 2017 that they expected china to be wee r

weaker in the lower end phone. to see that apple is not suffering worse, that it's actually moderating more suggests that they've got perhaps strength in china versus some of the lower end players. also, again, when you look at that margin number in the face of that, that's kind of encouraging. no, it's not great. also that other products revenue isn't great if you're looking for the apple watch to accelerate, you'd expect to see it in a holiday quarter. it's not doing it enough yet to show up in these numbers. maybe wait till next year. >> kevin landis, we're going to talk more next segment. we have another segment with you guys. i want to talk about what's going on in washington with protectionism, trade wars, border taxes and everything. tim cook is so high on india. he wants to put more manufacturing and sales over there. we already know what they do in asia. how is this going to impact this company if the president really starts to clamp down on bringing manufacturing back to this

country for example? >> i haven't thought about that. you framed that a great way. china and india were both the two biggest countries, both the same size and both poised to be tremendous growth stories. the difference is one embraced free markets and the other couldn't let go of its bureaucracy and all of its regulations and guess which one did better? poor tim cook, he's wrestling with the -- you know, the indian love of red tape and bureaucracy and meanwhile he turns back and looks at the u.s. and sees maybe it's going to get more complex there. that's a cautionary tale. >> yeah, it is. we'll talk more about it as well. let's get a break out of the way. we'll come back with this panel and talk more about these earnings from apple, which seems to please the market. the stock is up about 2, 3% in the after hours on that. and we'll talk about what to expect on the conference call as well. we've also got another silicon valley heavy hitter reporting earnings tomorrow. what to focus on in facebook's

quarterly results coming up. you're watching cnbc, first in business worldwide.

apple just out with earnings moments ago. the stock is up about 2.6% in the after hours. the headline here, strong iphone 7 demand helped put an end to that streak of quarterly revenue declines. apple saw three in a row. quarterly revenue is now growing. in fact, bill, it's seeing record revenue growth, higher

sales of the iphone 7s which shows that iphone 7 pluses were very popular. >> we're back now with a cast of thousands again. i'll reintroduce them, jon fort, kevin landis, tim lesko and lou basenese from disruptive tech research. tim lesko, how much did samsung's problems with that galaxy note phone, how much do you think that helped apple in this quarter? >> i think it had to help somewhat. you heard tim cook had mentioned that there were a lot of android switchers. you suspect that since all the samsung phones are android, that that's a fair, you know, part of that number. i also think you've seen this migration from the smaller size phone to the larger size phone really mean a lot for apple's margins really over the past -- since the 6s plus was introduced. the larger format and adding the

better camera to the larger format drove that demand. >> everybody is talking, jon, about the iphone 8 that will come out later this year in september. it's the tenth anniversary. there's a lot of excitement for it. does the thought that the average price went up to $695 show that consumers are willing to pay up for the enhanced features? >> the pressure is always on, but in some ways it's on a bit less because people are willing to pay more for iphones in an environment where around the world we're seeing pressure on phone prices. also, people apparently willing to pay more for macs. we were just talking about the mac growth. units are up 1% but revenue is up 7%. that's also a very nice high margin product for apple, the fact that they got through that "consumer reports" mess that they had with the software problem. that didn't get solved until after the holiday season. they still managed to charge a

lot for macs and sell a lot of macs. on the samsung question, tim cook saying they only got into supply/demand balance in january. even if it did help them, they have been saying that they were going to sell as many iphones as they could make. fortunately for them, they made several million more than they did last year and did well with that. now we'll see if they continue into the next quarter without that sort of imbalance issue at their backs. >> ross gerber, you're a long-time bull on apple. you've been trimming some of your positions on this though. does this get you to rethink that strategy, this report? >> well, no. we had a ton of apple and we trimmed back a little bit to a more reasonable level because of the fact that we don't see a lot of growth there. you know, not to break up this love fest. i am long apple and i like the company, but we're not addressing two major failures, which is the watch and the new headphones are not selling at all. they have no new products. and we can just sit here and love the iphone all day long, but at what point are we going to say, hey, you know, they actually have to do something

else and they have to be successful at it. and the next biggest thing is the autonomous electric car with tesla. they've totally missed on netflix and so, you know -- or vr. so where do they grow from here? so we know they've got to get back to market multiple but, you know, after that where's the future for apple? >> you stole my other question there, ross. you know, i was going to ask about the apple watch which we didn't expect them to break out those numbers. >> they won't. >> jon, this is something tim cook promised would be a hit, a huge hit in the holiday shopping season last year. >> it does say that they hit records in the title of the earnings report. apple watch set all time records. >> they sold more than they did -- >> yeah. small base. >> they sold more than they did before. it hasn't been a breakout yet, in both the literal and figurative sense. they're not breaking out the number of apple watches. it's not enough to be material given apple's overall size. >> isn't this problematic to you, jon? >> investors have to be careful

about sifting out actual products from hype. nobody's making money in vr. nobody's making real money in artificial intelligence. >> facebook is making money. >> driverless cars. no, not real money. that's not what they're making their money on. yes, they can put out press releases and we can just kind of talk about how much we love our echos and alexas, but those aren't money making products at this point. as a matter of fact, amazon is not breaking out its sales on profits. before you say apple is behind, recognize nobody is ahead. >> that's not true, jon. facebook is so ahead. >> absolutely true, ross. >> it is true. >> you are all talking. >> come on, let's be real. >> go ahead, lou. >> i agree with jon 100%. everyone wants them to break out into the other products. the fact of the matter is apple just put up the largest revenue number in history on one single product so i don't want to mischaracterize this as an

iphone or bust. from an invest standpoint it's iphone or boring. if they can't come up with another iphone, you know, product, another great release, this -- this year then we're going to be talking about apple not as a growth story but as a great capital allocator at the valuation it's at it's still an attractive investment. for apple to unlock the super cycle that so many analysts are talking about, it has to be driven by a product feature. they need something revolutionary. >> what can they do with a phone? we've done the analysis. there's not much else. >> the clues are there. the clues are there. in september they get rid of the lightning, the head phone jack. they talk about a wireless future. >> is this that exciting? is that exciting? >> no, but what is exciting -- >> no, it's not. not exciting at all. when i get -- >> this company is -- >> it's going to be amazing. >> making money. >> can i bring up the next point? >> boring value stock. >> it's a boring value stock.

>> i agree. >> the cash pile which we have failed to mention so far. but growing ever larger here, $246 billion is how much apple is holding in cash. of billion is how much apple is holding and most of is it being held overseas. last year that would have been a nonstarter. with the trump administration and a republican congress, there is increasing talk for a tax repatriation, lower rate, perhaps 10%. lower than the corporate tax rate, and that could be the key here as to what apple does next. >> it could. though i don't know that they're particularly hurting for cash. they seem to have enough for some of the debt they've taken on to do what they want to do. not to pivot away from that. i think they've gone from a ridiculous amount of cash. it shows the overall power. what we're talking about in apple excitement is saying, marvel, they keep coming out with the super hero movies. can't they come out with a

decent rom con? >> so they bought star wars. >> yes. disney does lots of things. you can't criticize marvel for not having a rom con. are they working on cars? yes. have they yielded profits yet? no, they haven't. but they haven't for anybody. >> a shareholder's last word on what you want to see happen with that cash. it has been a moot point until now. and their cash hoard is 26% of the cash held by all s&p 500 technology companies overseas. >> kevin? >> sure. as a shareholder, you're always happy to get a dividend and repurchases. really more than anything, what you want to see is something that basically supports both sides of that wonderful argument we just had. new products and the iphone. you want to see some great new

thing that siri does for with you the iphone so it makes it even more important to you. a new product that comes to you through your iphone. that's what i want to see. >> it comes through iphone. >> they're legalizing marijuana here so we can dream. >> thank you. >> see you guys later. that was fun. as we knew it would be. donald trump is set to announce his nominee for the supreme court in about three hours. we'll take look at who could be fig that vacant seat and the impact on business when we come back. >> and coming up on "fast money," in depth coverage. the skormer ceo john skulley will give us his take. sit iing.

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liberty stands with you™. liberty mutual insurance. we're a little more than three hours away from donald trump's announcement of his pick to fill open seat on the supreme court. now a look at the potential nominees. >> two candidates seem to be on president donald trump's short tlois fill the vacancy. both neil gorsuch and thomas hardiman are described in the tradition of the late antonin scalia. judge gorsuch serves in denver. he has written pen that's courts give too much power to bureaucrats. he also cited with groups that raise religious objects to obama providers. judge hardiman is 51 years old,

serves on the third court of appeals in philadelphia. last year he affirmed that $1 billion settlement of the nfl concussion claims. hardiman is viewed as a strong supporter of gun rights, he would perhaps relax restrictions on donations. the most optimistic timetable would see the new justice confirmed by the senate and on the high court in april in time for the last round of kiss this year's calendar. but the likelihood of a democrat senate filibuster would bring timetable into question. >> yes, it would. thank you very much. they have both justices coming to washington for the announcement. like the heisman trophy or something. facebook earnings on deck tomorrow. we have a preview after the break. tiugwi,thinvegi lg ieecth r

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as we await that conference apple call, facebook, what's the key here? >> i think it is top line first of all. we expect to blow out from facebook now. it is the usual growth and then cap backs. they've tenned to be conservative. then times they don't spend m h

much. >> can they beat apple services number? that will be a big one. >> apple services growing 18%. cash hoard growth, that $695 is the average selling price. >> i hope you're able to join us. thank you all. that's it for "closing bell." "fast money" begins now. "fast money" begins right now. overlooking new york city's times square. tonight on fast, one of the most influential voices on wall street says to guy trump slump. the global ceo who oversees more than $2 trillion is here to explain what has him so bullish. plus, trump meeting with a number of drug ceos say senting biostocks surging. first we start off with the biggest story in the afterhours session, that is apple. the earnings in the last