again. many out there including chairman of the house financial services committee in the past called it a subsidy. in 2016, 12 billion out of 102 billion interest fed earned was paid on interest on reserve to big banks. is that something to look at? is he ride it's a subsidy or not worth discussion at this point? >> he's both right and wrong. number one, it would be the most effective -- it would have the greatest impact if they could pay interest directly but optics are all wrong. essentially the way it would play out is they're paying the banks interest on those reserves so that then that will reduce incentives to lend money to corporations or individuals. so i think the optics of it make the most pragmatic option they have a dead issue. >> i got you. mark, always interesting to hear your opinions. thank you for being my guest today. and now it's time to shoot over to the "squawk alley" team. >> thank you very much, rick

santelli. just as a note to viewers, we are monitoring fbi director comey testifying in front of the senate judiciary committee. he's already made some emotional comments defending his decision to make public that investigation before the election last fall. any further comments into russia's role into the election, the trump campaign, the clinton campaign, we'll bring them to you. in the meantime, it's 8:00 a.m. at at apple headquarters and 11:00 a.m. on wall street. l "squawk alley" is live. ♪ good wednesday morning.

welcome to "squawk alley." post 9 this morning. jon is on assignment. jo guys, good morning to you both. watching tech stocks closely here today. worst day for the nasdaq in several weeks. shares of apple are slipping after reports after the close last night. continued weakness in china. our josh lipton is watching all of those details. good morning, josh. >> good morning, carl. iphone shipments might have disappointed wall street but apple ceo tim cook telling me in an interview that the franchise had in his words a great quarter. 7 plus growth is strong so why were shipments down 1% year over year? cook telling me he pins that on inventory drawdown and consumers are putting off upgrading phones because responding to reports about the new product arriving later this year. another hot topic, apple's

ongoing legal fight with qualcomm which has turned very ugly very quickly. cook addressed that on the call. >> you can't pay something when there's a dispute about the amount. you don't know how much to pay. and so, you know, they think we owe some amount. we think we owe a different amount. and there hasn't been a meeting of the minds there and so at this point, we need the courts to decide that unless we, you know, are able to over time settle between us on some amount. >> finally, i did ask cook why he recently secured those permits to test self-driving cars here in california. cook telling me we are investigating a ton in machine learning and autonomous systems. you can use autonomous systems for a variety of things. transportation is one of those.

there are others. you will hear at some later date what we're going to do with all of them. back to you. >> all right, josh. thank you very much for that. let's turn to eric and roger. sounds like you want to take this from a top down level. what are your thoughts? >> i just think that this earnings season really matters because the stock market has been on a huge roll. it's on a huge roll for good stock market reasons. it's expecting a big tax cut. we've got a market that likes what's going on. if you look at stock markets and this is true in tech, we've had a huge run. what used to be a value six months ago is not anymore. i think we're in that territory where everything is about market momentum. there's a lot of news coming up, not all of which is going to be good. i think the market is going to have to digest a lot of that news and like i said, i do expect a tax cut, you know.

it wouldn't shock me if the market continued up for a ways. i think we're coming into the territory here where the danger signals are everywhere. >> eric, your comments on what we heard of apple and maybe more importantly the stock is only off 1.5% after what roger characterized as a strong run-up. >> this reflects the strength and size of the base which is gigantic, because there's really no product innovation. we're kind of in between new products. the new phone -- the phone 7, which i have, is incrementally better. i just bought a new ipad. it's inkrecrementally better. the market is waiting for something new. the service revenues that come from it keep growing. that's what is being reflected in the marketplace. >> this team that there is this lull in innovation at apple, everyone seems to think there should be more money thrown at it or they have to somehow buy something and yet the stock is up 50% in six months and it's

almost $800 billion. does it all come down to -- it doesn't seem to me the stock is necessarily embedding tremendous hopes and dreams about further innovation. it is underpinned by the performance of iphone. >> i think you're exactly correct, carl. here's the thing. i think apple doesn't get enough credit. they did an operating system upgrade recently to 10.3, ios 10.3, which included a file system change. i cannot overstate that technical accomplishment. i mean, historically file systems have been the hardest thing for software companies to change. microsoft has run up on the rocks several times on this. i don't think apple's problem is lack of innovation. the problem is everyone is on their second or third smartphone and they just don't feel a sense of urgency to get great new technology because the phones do so much already. there's just not that much you can do to change the perception of what a phone can do. this next product, the iphone 8, its you can ssuccess is based ot

that there are a zillion iphone 5s and 6s being used about i people a -- by people and they are going to need to be replaced. apple should be a value stock. it's up 50% as you pointed out. it's not the same value it used to be. none of these things are. >> would you put it in the value stock category or not given -- i'm asking -- >> it's a value stock. it's just 50% higher. it's not as great a value as it was. >> obviously it's not behaving like a value stock. the investors think it's a growth stock. i think once you have this global install base and you don't really need to do -- for instance, i think they sold 3.5 watches during the first quarter. i have one. i always found it very useful.

and i think it's picking up in momentum. i think the next generation of these watches will be much more functional than they are today. >> all right. we have breaking news now. we want to get to leslie with some news out of puerto rico. leslie? >> that's right. puerto rico announcing an intent to trigger the largest debt restructuring in the municipal bond market history. the newly elected governor of puerto rico said that he requested the federally appointed fiscal oversight board to begin the process to restructure its debt. he triggered what's known as title 3, which is the proceeding similar to chapter 9 bankruptcy here stateside, and what's interesting is puerto rico and hoards of creditors which is who's who of mutual funds and hedge funds largely based here in new york, they were unable to come up with an agreement over the weekend on how to restructure that debt and so

then a stay on litigation expired at midnight last night and that encouraged at least five lawsuits to be filed in new york, d.c. and san juan. >> leslie, thank you very much. does this have an impact on the bond market? >> only locally with those puerto rico bonds. i think this is pretty much roughly expected next step in the process. >> a couple more tech names reporting after the close today. tesla and facebook. facebook announcing this morning it's hiring 3,000 people to monitor live videos and other content on the site. it's on top of the 4,500 already monitoring content. company ceo cheryl sandburg replying keeping people life is our top priority. we will not stop until we get it right. a lot of discussion about how difficult a job that would be. depressing. however you want to take it. to add 3,000 workers when your work base is 17,000 is not

insignificant. >> and i think it goes back to the key issue is facebook a tech company, a media company or tech enabled media company like most media companies are today? mark zuckerberg has gone to great lengths to say he's not a media company but 3,000 people that he's adding really are editors. they are people that are going to make editorial judgment as to whether certain content is worth putting on the platform or not so to me that's a media company. >> does that mean that they can't do the work of a human editor. machines can't tell the difference between fr one individu -- from one video to another. they can't get it off the platform by machines. >> we had the example of the famous vietnam war photo. human curation. at least one today, wouldn't you agree? >> i think it's a step in the right direction. let's face it, facebook's

issue -- i mean, this is not going to hurt the earnings much. the company is a monopolyist in three or different categories. it will grow dramatically its revenues in at least a couple of those businesses. the question i think they face fundamentally is that at their level of market share, they've become an issue for personal safety as well personal privacy. i would be really surprised if at some point the european regulators in particular didn't start to question, you know, the impact of internet monopolies on the rights of citizens. i think facebook and google have done the bare minimum to deal with this issue and i think there's a topic we should go into in greater depth in the future because over time it will become a bigger issue. not an issue for earnings in the near term. neither will 3,000 people be a problem. >> is it different than what google had to do with youtube

and have a quality control function that does prevent certain types of content. maybe a nuisance long-term for the business but does it change the overall outlook longer term? >> i think the volume is bigger than youtube. there's also more disperse because you have hundreds of millions of different feeds. youtube is more concentrated. it's more complicated. i think, you know, i agree that they're doing the bare minimum. i think again if they say to themselves we are -- we have media company responsibilities in terms of editing content, that will change the perception, change the internal view of how they have to deal with this problem. >> that's an important point. >> we're going to learn more tonight at least about the quarter. good to see you guys together. thanks for joining us today. when we return, general atlantic ceo bill ford on all his latest investments. tim cook says users are waiting

for the next iteration of the iphone before they buy. we'll hear what walt mossberg has to say on that. later on, blame uber. why one stock is sinking hard a day after earnings when "squawk alley" continues in a moment. ♪ predictable. the comfort in knowing where things are headed. because as we live longer... and markets continue to rise and fall... predictable is one thing you need in retirement to help protect what you've earned and ensure it lasts. introducing brighthouse financial. a new company established by metlife to specialize in annuities & life insurance. talk to your advisor about a brighter financial future.

investors are onguard for the fed to wrap up its two-day meeting today with a decision and statement due at 2:00 p.m. we got private payroll numbers out of adp this morning. 177,000 private sector jobs added in the month of april. a bit of a slowdown. joining us now to talk about it is peter and michael. good to see you both. >> good morning. >> thanks for having us. >> peter, does this raise the stakes for friday's job report? >> could you repeat that? >> did softer adp raise the strikes for frid strikes for friday's job report? >> adp data doesn't correlate well to what will happen with payrolls and payroll number to me is a very difficult number to predict. certainly to interpret.

i think the stakes were always high with payrolls and market cares a lot about payrolls. i tend to think that it's an overanalyzed number given the uncertainty in the variables that actually go into it. >> michael, do you agree? >> i do think it's going to be a highly watched number. we're coming into an fmoc meeting where a lot of data slowed and the fed is likely to characterize that slowdown as transitory and signal that we're going to continue on with normalization. friday is that first number that says is it really transitory or is it not? the fed's bar for what constitutes reasonable is probably 150,000 or greater. i would agree adp is not a strong signal and we're looking for something even a bit stronger. anything 150 or better if we get a solid bounceback and it's 200 or more, then i think it's much more clear sailing for the fed as it enters june. >> we'll see what happens this afternoon.

gentlemen, i hope you'll forgive us for a moment. let's go back to the senate judiciary committee meaning as comey is taking q & a. >> there have been recent concerns that organized criminals including russians are using luxury real estate market to launder money. the treasury department noted a significant rise in the use of shell companies in real estate transactions because foreign buyers use them as a way to hide their identity and find a safe haven for their money in the u.s. in fact, nearly half of all homes in the u.s. worth at least $5 million are purchased using shell companies. does the anonymity associated with the use of shell companies to buy real estate hurt the fbi's ability to trace the flow of illicit money and fight organized crime and do you support efforts by the treasury department to use its existing authority to require more transparency in these transactions? >> yes and yes. >> okay. very good. i think this is a huge problem. when you hear that over $5 million homes, half of them

purchased by shell companies, that is a major problem. in march, this subcommittee on crime and terrorism held its first hearing. i thank senator graham and senator whitehouse for that. ken agreed that this is a very important issue. as the ranking member of the rules committee, i'm particularly concerned about ensuring our elections are safe from foreign interference. i recently led a group of 26 senators in calling for a full account of the election assistance commission's efforts to address russian cybersecurity threats in the 2016 election. i'm also working on legislation in this area. can you discuss how the fbi has coordinated with the election assistance commission, department of homeland security, and state and local election officials to help protect the integrity of our election process? >> thank you, senator. in short what we've done with

dhs is share the tools, tactics and techniques we see hackers, especially from the 2016 election season and using to attack voter registration data bases and trying to engage in other hacks and we pushed that out to all of the states and election assistance commission so they can harden their networks. that's one of the most important things we can do is equip them with the information to make their system tigs tighter. >> we have different equipment all over this country. there's some advantage to that, i think. i think it's good when we have paper ballot backups of course. we have to be prepared for this. this certainly isn't about one political party or one candidate. last time you came before the committee in december 2015, just one week after the san bernardino attack, since then as was noted by the chair, we've seen other attacks in our country. we had a tragedy in a shopping

mall in st. cloud, minnesota, ten wounded at a shopping mall. thankfully brave off-duty cop was there and able to stop further damage from being done. i would also like to thank you and the fbi for your investigation having talked to the chief up there, senator franken and i were briefed by him as well as congressman emmer right after this attack. the local police department is a mid sized department, and they had to do a lot with working with the community. they have a significant somali community there that's a big part of their community that they're proud to have there. they were working with them. they're working with the community. they're helping. >> we're going to continue to monitor this for you. of course james comey, the director of the fbi, taking questions on the judiciary committee if he has anything else news worthy, we'll bring it to you. we've been having a conversation about the markets on this fed day with peter and michael.

guys, we were just talking about what to expect on jobs day. before that, we will get the fed statement this afternoon. micha michael, what will you be looking for? what kind of language in the statement as to further hints about monetary policy? >> i think this is a big meeting today. the reason why is we don't expect them to raise rates or say anything about the balance sheet. this is really all about whether this is a new fed or not. and by that i mean we've got some soft data and in the past soft data has derailed the fed almost instantly. so what we're expecting is balanced language. acknowledging the soft data but in some case dways dismissing i putting attention and focus back on labor markets and labor market conditions which will likely have positive comments for. so we think it will be, yes, we had some slowdown and some data. other data looks just fine. the message to markets will be we're going to continue on our path of normalization and we'll get to the balance sheet later this year. so for me that's a big deal.

it is a new fed in the sense that the fed is content to lead markets rather than to follow. >> peter, meanwhile, the markets both stock and bond markets, have kind of been at a standstill for the last week or so waiting for the fete gd gett into may. what's your sense of the field position when it comes to the stock market basically unable to take out the old highs and really taking a bit of a breather today? >> yeah, we're actually quite concerned about that. we put out a piece yesterday that discussed a little bit, you know, the sell in may go away cliche, if you will. we think there's actually a reason for it. since 2004, june returns have actually on average been negative by about a percent. we feel that momentum right now is diverging from price meaning we pushed into new highs but momentums have not confirmed that. given season aality and the fac that we've had very strong earnings but relative to easiest

comp since the first quarter of 2012, we think that tailwind is probably behind the markets and markets probably need to take a breather now going into the summer months, which would not be unusual given the seasonal effects that we've observed. >> we've been hearing that summer pause. heard it from jeffrey as well. thank you. we'll leave the conversation there. thank you for bearing with us throughout the comey testimony and breaking news. >> still to come, general atlantic ceo bill ford investing in uber, snap, air bnb will weigh in on tech euphoria and walt mossberg on upcoming iphone 8 and what users should expect ten years after the original iphone hit store shelves. "squawk alley" back after this. look at me...look at me... look at me... you used to be the "yes" guy. what happened to that guy? legacy technology can handcuff any company.

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and learn more about the kinds of plans that will be here for you now - and down the road. i have a lifetime of experience. so i know how important that is. getting movement as it regards to health care. let's get to eamon javers in washington for more on that. >> we just had two congressman here at the white house, upton

and long, who were nos on the health care bill until they came here and met with folks at the white house just now. they came out to address cameras. they said they are now yes. that brings no count to 19 up on capitol hill. they can afford to lose 22 and still pass it. coming down from 21 to 19 puts this white house in good position in the house of representatives. the reason why the members said they are switching their votes is because there's a new provision dealing with people with pre-existing conditions and feel that's enough to get their support. we'll see if that loses votes on the conservative side. this is progress on the health care vote in the house that this white house will be cheered by. the question is where that goes ultimately when they are scheduled to vote and what happens when it gets to the senate, carl. >> we'll watch that all week long. thank you very much, eamon javers in washington. david faber back at post 9 with a big interview. >> it's actually the first tv interview ever given by a

gentleman named bill ford. the ceo of general atlantic. we sat down at this year's mi milken conference. active investor providing capital to some of what are the best known unicorns including air bnb. >> air bnb is probably the most exceptional company in our portfolio. it's a company that continues to double in terms of both room nights and revenue. it's up to 3 million listings and it operates in over 180 countries around the world, which is pretty remarkable. it's really transforming and disrupting the whole hospitality space. this is what we expect great things from. it's on a path for multiple years of growth and value creation. >> it's always interesting when you look at management of some of these companies. brian comes up with the idea when he's not in his dorm but something along those lines and yet he seems to be a very

effective ceo. how do you determine when that's the case? >> i think brian is mature beyond his years. one thing that's quite remarkable about him is his willingness to higher exceptional talent around him. his cfo you have known for years. >> blackstone ceo. worked at cnbc many years ago. very qualified guy. >> terrific guy. he's done that again and again and again in all his key positions. it shows a level of maturity for a ceo that's differentiated. that's why brian has been so effective. it's allowed him to elevate and focus on product development and things that propel a company in the years ahead. we're big fans. >> speaking of maturity, criticism leveled at the man that runs uber lacking to a certain extent. is that a concern for you at all when you look at the management of uber? >> i step back first and look at what uber has accomplished. this company grew last year and it's in 580 cities.

tremendous growth. i think the truth is that being the relative of a hyper growth company is not easy. we've seen it over years and years. i think travis learned challenging lessons but he is learning. he's taking good counsel from his board and investors and has our confidence. we think he'll do great things. >> you think he'll work through those problems so to speak? >> i think he's taken what's happened the last few months to heart. he's getting good counsel. reaching out to the right people. i think he'll grow. i go back to the fact that the company is performing exceptionally well and it's hard to double year in and year out and come frver the kind of grou he's trying to cover. we're friends of travis' as well. >> these growth rates which you can participate in as a private investor but the public doesn't. it's interesting on these growth curves. do these companies come public almost too late in their growth

cycle? >> i actually think they do. what i would love to see is renaissance on the ipo market. i started this business in 1991 when companies at that 500 to 2 billion market cap could complete exciting ipos and offer the opportunity for the public to participate. i think one thing that's been lost to retail investors is the opportunity to participate in the most exciting companies that are household names. i'm hoping that secretary mnuchin and the s.e.c. will drive real change in some of the ipo roles to allow us to have a renaissance. >> isn't there more to it? they can raise capital so easy now. 20 years ago it wasn't so easy. >> what i noticed is a real shift in the psychology of ceos. so burdensome to be a public company that many say wait a minute. i can raise capital but do i want to subject myself to that now. if we reduce regulatory burden of being a public company, more

companies would be interested in going public. >> finally on snap which is a public company and facing pressures of the likes of an instagram for example, facebook product that you were an early investor in facebook as well, do you worry about the growth curve there to perhaps coming public too late? >> they're on a great track. 150 million daily active users. announce earnings last week. we'll see how the first quarter went. they are moving into the best part of modernization. one data point last week that's worth knowing about is wpp talking about more than doubling their ad commitment to snap this year from under 100 million to over 200 million. serious advertisers are recognizing snap as an ad platform and they want a third alternative. think you'll see that propel growth forward. i think we'll see user growth. >> you guys stay in there and don't monetize? >> we've only been in a little over a year. we're big believers in the

company. we'll be there for a while. >> very strong track record at general atlantic. interesting to hear them talk about names you guys on "squawk alley" talk about all the time whether it's airbnb or uber or recently public snap. >> we hear mixed reports about private funding of companies and valuations you get now. what was your overall sense? >> when you get to later rounds, particularly uber, he's very favorable on the prospects for the company. it is a question. where are we? 60, 70? i don't know when the last one was. these guys are not venture investors. facebook i think came in at a $50 billion valuation which proved to be a very good entry point over time. they are making later stage but significant capital contributions to many of these companies. >> fifth anniversary of facebook's ipo in a couple weeks. started tough. been okay since then. >> good times. thank you. david faber.

>> straight ahead, apple iphone sales disappoint. why the company says future product rumors could be to blame. do not miss this one. ceo tim cook will be on "mad money" tonight with jim cramer 6:00 p.m. eastern time only on cnbc. just like the marines did. the process through usaa is so effortless, that you feel like you're a part of the family. i love that i can pass the membership to my children. we're the williams family, and we're usaa members for life.

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good morning, everybody. i'm sue herrera. here is your cnbc news update at this hour. isis is claiming responsibility for a suicide bombing against a u.s. military convoy in kabul killing at least eight and injuring 28 more including three u.s. service members. the morning rush hour attack taking place near the u.s. embassy. australian prime minister says that he and president trump will engage as two seasoned businessmen turned politicians when they meet tomorrow focusing on north korea and economic issues. turnbull spoke before leaving for his meeting with president trump. >> a lot of things to discuss obviously in terms of the national security issues our reliance is fundamental. >> homemedics is recalling 400,000 handheld massagers because the cord can break near

the base exposing wires and causing electric shock and burn hazards. three models were sold from august of 2013 through february of this year. and that's the news update this hour. i'll send it back downtown to you, carl. >> all right. thank you very much. we are counting down to the close. have counted down to the close of the uk and across europe. seema is at hq. >> european stocks pulling back from that 20-month high they hit yesterday on a day in which data actually shows eurozone gdp growth of 0.5% in the first quarter in line with expectations. let's talk technology because apple's iphone sales missed having an impact on shares of the company's european suppliers. they include dialogue semiconductor imagination technologies and stmi mic microelectron.

hugo boss is a big mover. and then there's volkswagen falling disfight an espite an i first quarter profits. and with four days to go until the french presidential runoff, a televised debate in a couple of hours as macron leads in the polls. you can see the spread narrowing just a bit. back over to you. >> thank you very much, seema mody. apple as you know by now reporting that second quarter revenue beat and it fell short as iphone missed expectation. walt mossberg joins us this morning. nice to check in with you on a quarter as important as this one. i think you told us last week that samsung's quality problems had basically bought apple a year. here we are again talking about this sort of lull in innovation and waiting for the next big

thing and apparently now that's weighing on sales of the 7. >> you know, when i said it bought apple a year, what i meant was that apple made a controversial decision a year ago to take two years to do the next big, big rev of the iphone. they did bring out iphone 7. i think tim cook said on the call yesterday that the bigger version of the 7 was still selling well. you know, it looks a lot like its predecessor so the next big deal, big redesigned iphone was on a much longer cycle than usual. i think what you see in the sales thing wasn't that huge a miss. it's just people are -- why would you buy one now unless you had to when you could wait and see what they're going to have just in september and october.

it's already may. >> walt, i mean, trying to figure out outlook for apple really has come down to figuring out upgrade intentions. everyone knows this is tremendous installed base. hundreds of millions of phones that are two generations old. do you see anything in terms of a cooling of the enthusiasm in general across smartphone owners to kind of grab for that next new thing? are they just slave to their contract and things like that or will there be a burst of enthusiasm for the 8? >> i think there has been -- i mean, look, we're in the -- this will be the tenth year anniversary of the iphone. android was a year later. you know, everybody in the developed world that can afford it has a smartphone already, and so obviously it's not like it was in 2010 or 2011 or something like that. you can still imagine a company like apple or one of its

competitors doing something really spectacular that really rocks your world and makes you want to go out and buy it. and so the stakes are very high for the next iphone and beyond that, i think the bigger story is the stakes are very high for when will they do another great product category? >> we've been asking that for a long time. in the meantime, walt, i know you're a product guy. want to get your take on services, which is increasingly becoming important for wall street and we know that apple has been framing it this way. the bulls say double digit growth is a bigger part of the business. a really great opportunity. bears say there's so much competition in this space. amazon and netflix. what's your level of optimism around the services business for apple? >> well, first of all, i am a product guy. services to me are products. i follow them very closely. i think that once you have

bought in to the google ego system or the apple ego system or anybody else's that matters, then that's where these services come into play. if i have an iphone, i want to enable apple pay. i want to enable the photo streaming service. i want to enable apple music instead of spotify because of integrates with my iphones. i do -- i'm a little more -- i'm not giving investment advice but i'm more in line with the bulls. i think that will grow. my only hesitation is that apple has got to execute better on cloud based things. it's not that they're terrible, but they're not doing that as well as they do hardware. they should be evening that up. >> certainly not for lack of resources that's for sure given all of their cash and resources. we're going to see what the fall

out is as we watch the price action today. it's good to see you. walt mossberg. be sure to tune into "mad money" tonight. 6:00 p.m. eastern time. jim has an exclusive with apple's tim cook. as we go to break, we're watching shares of twilio sinking. uber accounts for about 12% of the business and is changing the way it does messaging and will move some of its driver/passenger communication away from the company. facebook is the other major client. stocks down by a fourth. rick santelli, what are you watching? >> you know, people in chicago like in this pit are or micritil of the cubs now that they won the world series last year. is the fed going to be critical of softer data because of the stock market's run since november? that's what we're going to talk about after the break.

coming up, are apple's earnings something to be worried about or a sign of things to come? we'll get the answer. plus, jim cramer weighs in just ahead of his interview with tim cook. plus, better late than never. the one stock goldman sachs just upgraded and the fed may be ready to steal the show. that's coming up. see you in ten minutes or so. >> let's get to cme group. rick santelli and santelli exchange. >> in the tease i just did for those who might not have caught

it, cubs won the world series. that means this year all of the fans are expecting a whole lot more. sometimes when you're successful whether in sports or whether it's in markets, that means the litmus test or the bar goes higher with respect to future expectations. we all know that the stock market had a good run upward after november. we can argue about what it's giving back you it's holding onto a boat load of gains. will the slowdown that we've had in data -- believe me, it has slowed down. slowing is a relative term. how will the fed deal with that? a couple of things i would like to throw out there. you know, the problem that the fed has and they've had really all along since 2011, '12 when the markets started and the economy started to do better is the fact that it's hard to calibrate. in other words, raising rates is always considered an event tightening whether it's balance sheet removing accommodation, always an event associated with an economy that is lifting more or has a skate philosophy.

but the calibration problem presents an issue. imagine if the speed limit for rates higher than they are is 35 miles an hour and we were going 50 miles an hour. the fact that we're going 45 now is slower in terms of the of th the better data, but still may be more than enough to still remove more acome days and that's the way in my opinion, the fed should approach the issues. the second thing is i've seen several people today describe current fiscal policy has muddled and that the fed needs to take that into consideration. here's my answer to that word, muddled. you can have muddled when you're trying to get the government to do more. we have muddled now where it seems as though the administration is doing things most economists would think are pushing a little government are, more private sector in. i'd rather have that than the previous muddled and it seems as

though investors agree with this. >> thanks very much. we're keeping our eye on the comey testimony. so far, the fbi director has said that the russian government is still involved in american politics. take a listen. >> does the investigation have access to president trump's tax return? >> i have to give you the same answer. i hope people don't overinterpret my answers, but i don't want to start talking about what we're looking at and how. >> we konlt to learn about ties between russia and former members of the president's campaign. and current senior members of his administration. jeff sessions, attorney general. and former eer campaign advise carter paige, paul manafort. former campaign manager. and a also he was chief strategist, rex tillerson. secretary of state. roger stone, political mentor and former campaign adviser.

michael flynn. former national security adviser. jared kushner, white house senior adviser. and son-in-law. now, we don't even if this last is exhaustive, but i don't think you might see where i'm going and these connections appear against the backdrop of proven russian interference in the election, interference that the intelligence community has concluded was designed to favor president trump. from i know i'm hitting my time, but let me ask one question. for -- [ inaudible ] thank you u, mr. chairman. from an investigative standpoint, is the sheer number of connections unusual or significant? what about each individual's proximity to the president? is it unusual for individuals in these important role to have so many unexpected and often undisclosed ties to a foreign power? >> i have to give you the same

answer. not something i can comment on. >> okay. thank you, mr. chairman. >> thank you, mr. chairman and director comey. with regard to 702 reauthorizati reauthorization, last, well, in 2014, the privacy and civil liberties oversight board recommended agencies develop mechanisms to limit the potential scope of incidental collection. >> we'll continue to monitor the testimony from james comey. not really giving any details there on some of the questions from senator franken on possible trump and his associate links to russia. we'll let you know if anything changes there. watch iing the dow. down 16 points. the s&p 500 off a quarter of a percentage point. and the nasdaq down a half a percent. taking a pause coming off that record high. we'll be right back.

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markets modestly lower. nasdaq continues to be the leerd. apple down slightly hurting pfotenhauer indexes. also take a look at disney. it is the worst performer in the dow. it's the biggest drag down close to 2%. not a lot of dramatic new, but a lot of swirling talk about the prospects for espn as the competitors start coming through into the market. about 112 down to $2.10.

one of the worst days for the nasdaq in about six weeks as we await facebook and tesla earnings.

decemb disney, the worst day for disney since june of last year. that's weighing on the dow. zwl. >> lot of these stocks has a vertical sprint and how hot was the nasdaq run ining has been a big question. facebook up ten bucks in two weeks, that's more than snap added to facebook. >> let's get to wapner and the half. welcome to the halftime report. i'm scott wapner. top trade this hour, the apple aftermath. why that stock falling today and whether it is a reality check for investors. with us for the hour, steve weiss, the brothers and rich, let's begin with apple. that stock is taking the biggest bite out of the dow today following its earnings report. iphone sales coming in light ethan expected and yet, i look at my list and almost everybody including you is thinking about buying more. wh