new companies. and keep an eye on it. >> thank you. >> thank you. >> okay, guys. a quick check on the markets before we go looking at the dow, by the way, up on the apple news in a big way. >> when did we split >> it's been gradually declining. >> who is in tomorrow? >> who is in tomorrow? good question. you are. make sure you join us tomorrow so you can see joseph kernis "squawk on the street" begins right now. ♪ welcome to "squawk on the street." i apple up 4%. it's fed day rate decision at 2:00 p.m. tesla earnings tonight europe is back to work pmi is down for a fourth straight month over there.

adp 204,000. forget the iphone doom and gloom. the company delivers strong services growth returning $100 billion to shareholders. >> snap chat tumbling and then the rate watch. futures point to a mixed open as investors await the fed policy announcement in the afternoon. apple iphone sales not coming in as weak as some feared the $100 billion buy back. the 16% dividend increase. tim cook told jim cramer and josh lipton, quote, "we have already surpassed a fortune 100 and what we said is versus where we were in '16 we'll double by 2020." services of 23, china up 21, and all the fun games about the

amount of money they bought back in the quarter exceeding the market cap of a couple hundred s&p companies >> i think it was minor compared to i think they didn't realize could happen, frankly, there would be a dramatic increase year over year that would take the service. you have 270 million people taking this. amazon prime is 100. hbo is 130 you can look at netflix. a little bit less than that. you only have visa international that is bigger in terms of the number of people and visa international is still up but there is no service that is anywhere near this of companies you have to pay a lot for. i think what you're going to do see is stream overtake in terms of the markets what will be the pipe that this is this is going to be the razr the company can no longer be covered by tony.

it has to be going to the people covering consumer. >> after so many years of calling it a phone company, it's now a subscription company. >> yeah. definitely i mean, honestly. >> we've sat and talked about this now for let's call it the last year and a half or so in terms of when they would reach that line. that dividing line and now you say they have. >> yeah. i talked with tim last week with josh it's clear this was a stream of revenue that is taking by surprise it's certainly taking the analysts by surprise the margins are incredible you're talking about a bunch of services you're talking about $40 billion. >> that is far behind spotify. >> you're not that far from spotify now. >> yeah. exactly. coca-co coca-cola and clorox up. i think you're taking look at the service and i know that tim cook personally is interested in

health care. i believe this will soon have all your health care information. how many times have you had to fill out multiple forms every single time. that will be gone. internationally they can charge $10 a month for that service and i think that will be ultimately what we be thinking of each quarter. a this is obviously a sign up that when you get india and china is much more powerful, i believe. i believe the 10 is more popular in china than here that was the only thing that the analysts missed. the analysts used a supply chain analysis that tim cook was completely befuddling to him they don't know where the analysts are getting the numbers. it's service, service, service that's all i want to talk about. he didn't mind that's all i want to talk about. >> they say you want to and the company would be call it on the run now. $40 billion revenue company. i would assume we would be focussed more on each of the

individual contributors to that service number what is the -- do we know what the larger contributor is from a revenue basis to the overall service number and/or what the best services are. which ones are growing >> it wasn't clear obviously news that was brought up. >> was icloud. >> apple pay mentioned briefly candidly i don't know that i know that the analysts played catch up today and started talking about service revenue. tim has been talking about service revenue for awhile i told him start breaking out the service revenue. it will be it. when we listen to warren buffett this weekend he'll talk about a company, you know, consumer satisfaction that can basically charge whatever it wants on a monthly basis that will have the different features that's what it matters the analysts are hung up whether it was 100 million units they need to be hung up on the sign ups were extraordinary. >> all the commentary, or most,

i should say, is about not super cycle but not a success cycle either no mira. uninspired investment at this point. >> you need to think bigger. you can't think big. these people are so inside the box. it's frightening they're literally looking at gillette and saying the razors are free and the blade, i mean, they have the wrong model. the razors are cheap and the blades are expensive here is one where because it is, yes, it is subsidized but the razor is expensive but this is something where you have 100 million people more than a year ago paying, i mean, look do you think that isn't better than netflix. you think it isn't better than visa let me ask you -- >> i understand. they made the point of breaking out the idea of adoption for apple pay and transit systems all over the world they want you to understand that whether it's beijing or shanghai or brazil or norway or poland.

>> i mean, tim cook said i'm not coming back yet. that's retail. we we took it because people want it. >> speaking of trade and china, you did talk to tim about that he said i'm pretty optimistic on china because i think china and the u.s. have an unavoidable mutually the u.s. can only win if china wins. the world can only win if both win. it's pretty much that simple you can almost hear tim saying those words to you. >> yeah. i love that. it was josh asking that. i know it was a little off point for the quarter, but it was kind of an -- i asked about american jobs and jobs in america are unbelievable i think everybody wants to accept apple that's what i felt i think she wants to accept apple because they hire so many people i think trump wants to accept apple because he said they hire so many people. >> they hire at lo of people in china, yeah. huge and they're also 13 billion. that number the revenue number from china is well above the

service revenue number, to put it in perspective. >> $13 billion. >> and they turned rather dramatically in china in terms the growth there again so the ten seems to be doing well there. >> the ten is an upside surprise i believe the ten was designed more for china than the united states i think another thing about the people who cover apple from the point of view of new york, i don't think they understand what people like about the iphone. >> you mean all the fancy malls and the high end retailers that play in china. it fits with that audience. >> yeah. the united states they're busy looking at taiwan and saying this is -- no one is buying this 99% brand loyalty? >> chinese have more price flexibility than we do in this country. they're willing to go higher. >> i feel that's the case as a status symbol. they're not allowed to own homes. how do you show you're rich? >> when i was in paris watching them line up at galleries at the

prada store, it went on forever. they like the high end stuff. >> i believe that what we're seeing is a general realization that united states is no longer the typical market and, you know, they're talking about if tim wants to talk about india. no one is talking about india yet. the analysts are hung up on components by the way, if you own micron. they did say this quarter is going to roll over when you speak with tim. tim wanted to talk about to the services and health care and don't forget, they can -- what a holy grail app, if it had your health care information dr. oz was speaking earlier. he showed me what the design is going to be. he's an eagles fan we spoked a the super bowl. >> it explains why apple is taking pains to say we're not selling you. we're selling a product. >> they do not sell you. facebook, i mean, look they are a company that sells a phone. they're not a company that sells

your name. by the way, facebook, according to axion finally hired outside counsel. >> is it paul weiser >> they don't listen about everything that bugs me i gave him a silver platter apologize, apologize, apologize. hire outside counsel to get verification they didn't go with me they went with ted wells that's a mistake. >> we'll get your take on yesterday in a little bit. snap oh, down on the premarket. dau revenue and guidance below consensus. amid mixed reaction with the redesign of the app. >> we build products we're not just thinking about what our community is going to like to use right away we're thinking about how our products we build will help us accomplish our mission we build things we believe that, you know, will help us empower people to express themselves,

live in the moment, learn about the world, and have fun together i think it's important to understand that people think about self-expression on snap chat in different ways some people would rather create content with a small audience of their friends. other people want to create content if they have a bigger audience because they want to reach more people. >> it goes from 9 to 13. they say that internet companies that reaccelerate don't meaningfully underperform. >> i thought it was a saturday night live parody of a conference call. my favorite line, by the way, we're having-- sorry [ laughter ] challenging conversations with advertisers. hey, guys! will you sign up with us no i mean, google they can't -- they're talking about just -- what example do they use beer ads. beer companies like them some people think that half the audience is not allowed to have beer because they're underage. you can lie about your age when

you sign up. beer ads beer ads beer ads the average person on this is 14 that's great have a beer corona on me for cid mayo. >> that's coming up. >> how about this, david these business people pay google like they have a $400 million a year deal for five years david, cash position, have you look at the expenses they're wracking up? did you see what their cash position could be? >> we took a nice stake in that company, right remember the economics of that company. >> yes they didn't talk to you before they did that, either. >> i'll tell you one thing that is interesting, ge had nothing to do with this. >> nothing. >> ge did not buy a stake. jeff did not take a stake.

he wanted nothing to do with this company that's a victory. >> they'll take it where they can get it there are a number of other large investors there early on it's going to be well below the average price. >> it wasn't good. how about the 143 million in stock-based compensation some people thinkit's 70% unde age. >> i can remember us sitting here talking similarly about twitter. >> yeah. >> and they managed to get it together to a certain extent not that they're going to dominate the world in any way. >> twit der a series of redesigns that brought people in these guys did a redesign that left people out. >> they don't play the network effect the way that other social media companies do. >> no. march was bad. at one point i said, well android. maybe the saving grace is people are buying apple phones. android they can't seem to make it work. i don't know

parody saturday night live parody of a conference call. weekend update. >> yeah. >> on a tuesday night. >> is it the current cast you're thinking of or going back to the '90s >> seth meyers you know, i'm thinking that literally this guy is bill murray andrew was on the call he's seth meyers i mean, this was like ba-dum-bum. >> beer ads. >> yeah. you know, i'm just, you know, whoa where is anthony when you need him? >> i know. we'll talk about more beer we'll keep an eye on apple a lot of other stocks to watch this morning plus, fed decision day rate decision coming at 2:00 p.m. eastern time. take another look at the premarket. more "squawk on the street" in a minute

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adp jobs number out this morning. up 204,000 in april. above expectations but down

slightly from the previous month. the fed will wrap up the two-day meeting today. the latest interest rate decision and policy statement out at 2:00 p.m. eastern time. no press conference. the central bank is not expected to raise rates this time around. as for adp, it's the lowest since november but it's the sixth month above 200 and that's the second longest streak in the series. >> yeah. look, there was a perception on wall street that expenses and salaries have gotten out of control. if you talk to people on main street, i call the largest regional banks in texas yesterday. they're talking about wages are going up, but not nearly as fast as profit. that's something we should be considering. even if we have great profit growth and wages go up it's positive. it's something that a lot of bankers are telling me is happening. and i think what people have to recognize is if the dollar stays strong, and we get a little freight relief, you'll be saying

commodity prices will be going the other way. a strong dollar will help commodity prices it's a question about fraigt and train bottle necks and a few more drivers if you listen to the cummins call you'll realize that trucking is peaking. i'm telling you that freight is peaking. >> freight costs. >> freight costs are peaking now. no one is speaking like that the companies are a bunch of stooges and say we're going to keep -- companies can adraft now the clorox they didn't adapt fast enough. i saw the organic growth go up some companies are able to overrun the freight. >> el they buy in some analyst universes. clorox downgrade this week. >> the organic growth attest th - estee lauder is exceptional. i'll have to speak for freda

because he doesn't come on-air, he's a consumer package goods guy of our time. >> china has been an important part of their growth for a long time it continues to be important. >> right the stock will go down because of the one particular line about how they have to do the internal review of claims that were made about the length of mascara. length of mascara. i don't know that much about it's an issue and cause the stock to go down and you buy it. >> we do have going into the decision ism here is the weakest in nearly a year but core pc or headline pc is the highest in a year. that's tough calculus. >> it is the rate -- the fed is in a difficult spot i point out if you listen to what amazon is doing with whole foods. prices are coming down for a key component. >> yep there's news on that today we'll get to that and cramer's mad dash we'll count down to the opening

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a little less than seven minutes to the opening bell. let's get to a "mad dash." >> yum was not able to separate. you couldn't tell how china was doing. they created two equities. well, listen, that is not

amazing. these may be the action in the stock. i disagree with this, by the way. >> okay. >> yum china has kfc up 5. pizza hut down 5 yum international pizza was plus two. kfc plus six this is a clinic it's a class like i used to teach at goldman sachs on friday night from 9:00 to 11:00 they call me the punisher. yum brands is cheaper than yum china and you get possible boycott! how great is that? i mean, if they find a mouse in the young china the brc can say that's it. >> the point here is buy yum and don't buy yum china? >> yum china is very clean the cleanest, by the way why do people go to yum china? why do people get married at kfc? the best part of the food chain in china

if the brc gets angry, david you never know. >> investors seem to understand that that's the stock performance that yum has been better than yum china. >> they sell at 26 times earnings one has government risk like you wouldn't believe. >> one has the higher growth rate, doesn't it >> no. it's about equal. >> really? >> yeah. yeah 26 times earnings, david. >> that's the high multiple. that's twice what apple's multiple is. >> get out of yum china or say, okay, wilbur ross, what do you think about the possibility of we go after steel. they go after chicken. or pizza chicken much bigger. just pointing it out they're saying they're going to after starbucks. i don't think they'll do these things. >> you don't think but there's the risk. >> yes. >> got it. we got an opening bell a few minutes away don't go anywhere.

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opening bell in 90 seconds a busy day between earnings. 51 s&p companies report today. a fed decision at 2:00 p.m adp came in strong and tonight khc, tesla, spotify, square, fitbit, and others. >> i think spotify will be the star of the night. i think tesla will tell a story so makes it so the people that like tesla will go out hard tomorrow and say buy it. because the conference calls are set to music, basically. it'll be good. but i just think the spotify is on the way this is the one that was the bargain, because the way the deal was done. and i think they'll blow away the numbers. >> the stock has done well it wasn't an ipo a listing here you have a lot of share holders, as a result. it settled up at 160 or so.

>> i wonder if they'll talk about bitcoin. but square made the point of saying they're the bitcoin the opening bell the s&p at the bottom of the screen the nasdaq it's a new beauty a beauty industry public indication we'll see to what degree apple can color overall sentiment. revenue between apple, google, facebook, and amazon up 28 for the quarter. s&p is negative for earnings season. >> look, the one you want to watch for is skyworks was upgraded today by a firm and they'll report tomorrow the most direct and secondarily, you can say sears. micron was negative.

western digital was a negative read through so i think that people have to recognize there's winners and losers therefore makes it harder to have a rosie glow over that. cvs, by the way, a stock up 3. now down a couple. we got to watch that very much and the deal world. >> yeah. we do. the decision by judge leon in the at&t time warner versus doj case will be on june 12th. that will have important implications for other mergers aetna among them so it's not just about, as we said many times, that one deal it's really important. the journal today writes an editorial. i don't know if you saw it just saying there's more or less the government didn't come close to proving its case. that is for the judge to decide. >> yeah. you guys, you got executives and you got government people flying over to china trying to make it

so there's some sort of policy that doesn't continue to kill the industrials. maybe they don't mind. you have the courts holding up a lot of deals we haven't spoken today, david, about the various percentage we're starting here. handicapping sprint and t-mobile. >> t-mobile reported numbers, as well we have those to deal with, jim. but and the stock is up this morning. remember in terms of the ratio that will help sprint. that's up, also. trading more or less in line in terms of the spread. i don't know, guys we'll see. you know, they're going to be spending a lot of time in washington trying to educate people whether they be members of congress, the white house, the fcc, the doj it's begin to be some time when we get some sense whether the arguments will be enough to combat the basic idea you go from four to three for the most important bill people pay every month. >> comcast added more people.

>> they did. >> why is it five to four? >> because, really >> no. just saying that john legre said it. >> yeah. >> a few hundred thousand? >> no. john legre said it. >> he said there's seven to eight competitors. i'm trying to figure it out. >> the magenta thing that will play against republicans in congress. they don't seem to be that same kind of guy. >> that won't be an issue? >> no. they're looking forward to seeing the magenta. >> really? >> yeah. >> interesting. >> bring it. john will have no problem with that on trade there's so many different headlines. you got lightheizer saying that nafta has been done in a couple of weeks or it's at risk in congress younger at the eu said we won't undernegotiability threat of tariffs. and navarro said tariff-exempted countries will face quotas you talked to wilbur ross.

>> yeah. they're going over there in addition to larry kudlow and the treasury secretary we talked to ross yesterday, the commerce secretary, asked him what his expectations are as he headed off to china later yesterday. and now, of course, is over there. take a listen. >> i wouldn't be going all the way over there if i didn't think there was some hope. >> that doesn't sound optimistic. >> i can't prejudge. these talks have been going on for a long time. the issues are very squarely in front of everyone. we have the spending and the 301 pending regarding intellectual property rights. >> remember, there's two separate tracks here they're connected, certainly you have the tariffs that's 232 refers to on fair trading practice and the ongoing stealing of intellectual property. that's being prosecuted under

301 of the u.s. trade by the u.s. trade rep how important is this, jim how are we going to figure out whether it's a victory or a loss or somewhere in between. will we know right away? >> i think the president would be reluctant to call anything not a victory. i think that's kind of in his lexicon. i think the next 5% of the stock market hangs on it i think the tariff in trade not the ten year not the raw costs. tariff and trade is pretty much everything a lot of companies i talk to can't make a forecast. but now if you want to be feel great about america, listen to the emmerson conference call david far a huge china business. so begrated wi -- integrated wi the insides of china even steve toosa there was a moment of laughter in the conference call they're not talking about worries about china. everyone else has their fingers

crossed. and that's not really what i'm looking at i don't want the fingers crossed. how do you answer it fingers crossed per share, david. >> kayla tweets that the delegation our delegation left for china last night no briefing from reporters meanwhile in china a half dozen senior chinese officials gave a three-day seminary on the chinese positions begin into the talks. so we don't necessarily know whether these seven officials agree with how it's going to be presented at the table how long it'll take to declare a victory, if there is one. >> you would like to think and i asked wilbur ross how much preparation goes into the meetings you go in with a framework of what you believe will be the end game i don't know the answer, carl. i'm not sure we all do do they allow bathroom breaks in the three-day system aeminar.

>> i was busy thinking about the talks. >> sorry. >> peter navarro is the most powerful >> you think his voice carries >> yeah. >> over larry? >> over the treasury secretary >> yeah. yeah yes. >> you're going to give us a reason why you think that? >> because i believe that when we saw the tariffs on steel, that was navarro and that was the most definitive tariff so far. do i think that peter that vav r -- navarro is worried about the u.s. economy. >> he's the most empowered by the president? >> yes i think he's the man who speaks for china. i don't think larry necessarily speaks for china i think that there's some hope of secretary ross is something that i think that navarro can live with. some hope. navarro is worried about intellectual property and worried about dumping. i think he's got the president's ear because he's got a simple

story. a simple story. >> and the white paper goes back to him and ross. that goes back a long way. >> yeah. that's the deal. don't forget the 20250 plan of world domination. >> i won't. >> okay. >> bathroom break 2025 there it is. substance versus form. i'm form new front week, as you probably know, in the media world. we're getting news out of hulu we'll go to julia. >> good morning, carl. hulu announcing new content deals and ad technology and the new front ad presentation happening this morning at madison square garden. the streaming platform announcing it has topped 20 million u.s. subscribers up from 17 million at the end of 2017 and up from 12 million in may 2016 showing accelerating growth the company says subscribers are spending 60 percent more time on the platform than a year ago, and nearly 80% of viewing takes place in the living room on connected tvs. that makes those ads more

valuable hulu which is partly owned by comcast signing more original content. renewing "the handmaid's tale. hulu isn't breaking out how many of the 20 million subscribers pay for the basic $8 ad-supported plan or the 40-live tv plan. the latter is relatively a likely smaller piece of the 20 million subscriber pie back over to you. >> thank you very much julia boarstein. >> it goes to the theme there's so much available now. there's not one college senior graduating starting a new residence who is going to take cable. not one. >> not one. >> not one. >> can i ask you where you got that information >> all the college seniors i've spoken to. >> okay. fine. >> it's definitive

i talked to all of them. the entire graduating class that is now about to graduate whatever it is, you know, the next few weeks or month. none of them will take cable. >> my favorite was when my daughter pulled the cable but i still pay for the cable. >> interesting. >> we're getting news out of reuters on ups that the company is in talks with warner enterprises on new in-home delivery service for bulk goods we'll see if we get more color on that. there's a ton of amazon headlines. the boston hub jobs we talked about yesterday. there's the new perks for prime members at whole foods >> i love that cnbc is reporting on a formal offer for 60% of flip cart. >> yeah. if they blow out the number of whole foods. go back to the original forecast that they used to have, when the previous guys were running it. they were talking about doing 1200 stores. amazon goes forward with the 1200 stores and goes with the

discount do you want to own kroger or super value? i say no. >> no on the ownership. >> got it. >> you don't because this is the whole foods plan was to have whole foods pretty much everywhere when that happens, look out! amazon stocks not up right now the president about to tweet >> no. apple is up 3% more or less coming in what it looked like in the early going. >> it's a giant company. i think amazon gets to a trillion ahead of apple. >> snap record low 1119 we'll get to bob this morning. hey, bob. >> good morning, carl. mixed open, frankly, about 50/50 advancing to declining stocks. apple up $5. a big help to the dow. faang is mixed a few things helping out technology today juniper had good numbers they're pushing the tech sector

up energy slightly positive had a rough day yesterday. industrials on the downside. consumer staples, every day they keep drifting lower. apple and the suppliers i mentioned a big help apple is up. they are all moving to the upside that's helping i think the important thing here is the bye back announcement from apple i do not follow buy backs. i follow share repurchases and that's what matters. a lot of company announced buy backs on the other end, of course, they have more options they don't reduce the shares outstanding. that's what you care about apple is not one of those companies. it's what i call a buy back monster. since 2013, and a lot of companies started getting aggressive on buy backs in 2013, and actually reduce share counts look what happened apple shares outstanding have been reduced by 21% since then that's huge. that means aull the things bein equal. the earnings are 20% higher than five years ago

all other things being equal they're not the only companies that are doing this. if you look in the last five years i've taken the same time period boeing has done the same thing put that back for a moment boeing reduced share counts by 23%. we've seen other companies that are out there, for example, ibm has reduced it significantly pfizer reduced it 20%. united technologies, exxon, caterpillar reduced theirs about 10%. these are significant declines elsewhere if you take a look what is going on, you can see we're talking about earnings one of the big things we've been talking about is higher costs. and today, again, we saw companies coming out with craft heinz talked specifically about higher dairy costs clorox was talking about higher resin higher plastics. energy and transportation costs. freighten fuel i'm saying the big transportation company specifically saying we have a driver shortage and tight capacity it means they're paying more for

drivers out there. so costs are definitely an issue. eyes up yet. we're not seeing massive impacts on margin. i anticipate it could be an issue, certainly, in the second quarter. so what we're facing right now for the markets is a trifecta of issues we talked about it yesterday higher earnings, whether or not they are priced in this is hotly debated. i don't think they are some people are pushing that how much is global growth slowing? i think it will pick up in the second quarter other people do not. and rates are notedly high you put these three issues together, this is a significant head wind for the stock market one of the reasons we're stuck in the 2600 to 2700 range for the s&p 500. can the bulls regain control of the narrative? because they're losing it a little bit three things the bulls are talking about yesterday was holding the 200-day moving average. that's what happened yesterday we bounced off it nicely fed will have to sound sufficiently dubbish they don't necessarily want clear indications of four rate hikes today. and, of course, a jobs report.

not too hot and not too cold a lot of people around me here want to know we have an ipo here today. right here rock royalty trust which didn't quite price the way people wanted $17. $20 was the talk right now, though, looking $16 to $17 right now we're down 14 points david, back to you. >> thank you, bob. i'll take it bob on the floor for us. and, you know, stock prices sort of secretary to what has been an incredible business story lately involving xerox and the significant shareholders we've been following it a bit here for you, of course. go back to friday. friday night judge in new york court to try to join that deal under which fuji was taking control of the deal which xerox owned 25%

paying $25 billion dividend and gaining 51.1% control of the company. the judge listened to the arguments and surprisingly said i agree. i'm enjoining the deal i won't allow fuji to do it. i'm going to say no. why? my words not his but i think fuji -- i think xerox's ceo was really trying to make sure to keep his job and didn't have the best interest of xerox shareholders at heart when he and the board decided to do the deal fast forward to last night and this morning, what do we get well, huge news again. jacobsen is out. six members of the board are out. deason and icahn take control. and fuji finds themselves in the cross hairs with a deal that is most likely dead

i'll get to that in a moment also, the judge in the ruling on friday raised the possibility that fuji could be liable for aiding and abetting a breach of fiduciary duty by the xerox board. and fuji is facing lawsuits to terminate the joint venture from the new board. so there's a lot going on here a lot to unpack. a huge victory for deason and icahn. here is fuji's statement they have serious concerns about the announced settlement they intend to file their objections with the court shortly. they're not going to the new board, from what i understand, is going to officially try to terminate the agreement with fuji and more importantly, perhaps, also, try to get out of a long joint venture 50 plus years they've had in asia. then move to put the company up

for sale with a complete and full process run to try to attract as many possible bidders as they can. will it succeed? we'll see. but this is quite a turn of events all of which began to try and part by the xerox board to keep icahn from getting three new members appointed to the board where does he find himself without a job, without a deal, and a board that is now controlled by icahn and not deason amazing story. >> wow i think you saw it coming. i've been following your report. that was a spectacular turn of events. >> it is. >> spectacular. >> yeah. it's been fascinating. there's more to come the stock it down this morning but that is the secondary part of what is really an incredible business story we'll head to the bond pits now and check in with rick santelli in chicago rick >> reporter: good morning. 24-hour a couple of things we can glean. first of all, we're hovering

above 295 a bit below 3% so we're going into these sec day of a two-day fed meeting pretty firm albeit not on the highs but we held at $2.95 which was the high in february that lasted until a week and a half ago. two-day chart you can see that even though we gave up what appeared to me to be a post adp hick up, we're still on the two-day chart looking pretty good we have the pay refunding announcement today and eased off on the t-bill which has been pedal to the metal we'll introduce a two-month t-bill at some point and the long data maturities were added, to some extent a little over 2% and even with the added issue use, you can see it seems it's a good investment. they talk two years. many are even talking t-bill something to pay attention to. 24-hour charter the dollar

index, you know, it's going sideways here. if you look at two-day chart and put it in perspective, it's generally holding up pretty well as a matter of fact, we're in the black for the years as we hoover around 92.5 above where we settled last year, as you see on the year to date chart back to you. happy fed day. >> thanks, rick. we'll see you in a bit take another look at apple this morning hanging on to premarket gains adding about 40 points to the dow. without it, the index would be relatively flat. dow down 43. back in a moment i am an independent financial advisor. for our firm, it's all about trust and transparency. trust that we do what's right for our clients, without the constraints imposed by the traditional brokerage houses. transparency in the way we're compensated. our philosophy is one of service, not sales...

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let's get to jim and stop trading. >> so much we didn't get used to we didn't get to cisco, buying terrific a.i. company run by yam chang and the most important thing, i didn't do -- congratulations. an amazing quarter for automatic data gilead, this is what happens when you have a disease that you

cure and you are in a price war, which is amazing this is hep-c. congratulations for what they did, gilead, which is solve and you're a disease this is what happens when it's not maintenance, which is what people really want >> you'll have some stuff to work with tonight. >> coop -- coupa and tom farrell. dominion is one of the finest utilities but cannot lift its head because it did a midstream deal wow, so much this is a really important day and apple, it's zero sum apple wins everybody else loses >> that is true. in many ways, jim. >> congratulations to tim cook who still gets much too much derision by people who want to stop covering -- >> "mad money" tonight at 6:00 apple hanging on to 4% gain. don't go away.

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dow but the index down 76 points now. close to some early session lows busy day between earnings. got a fed decision at 2:00 and the u.s. trade delegation heads to china our road map begins with apple in rallying moed the tech giant reports a beat and huge buyback what tim cook has to say about the quarter and the future of the company. decision day at the fed wrapping up its two-day meeting with a decision on the interest rate and clues to look for about future hikes plus missing two key targets. what the social media company is doing to combat a slowdown in user growth. apple shares shooting higher after the company tops expectations and announces this $100 billion buyback josh lipton joins us with more >> carl, investors have been pleasant plenty worried about iphone x. tim cook saying that the ten actually remains his best seller

telling me iphone x was the most popular phone each and every week of the quarter and that's on top of last quarter it was also the most popular iphone every week since its launch another positive surprise, revenue in greater china jumping 21%. strongest growth rate there in ten quarters now i did ask cook about trade tensions with china, too, with the ceo saying, i think china and the u.s. have this unavoidable mutuality where the u.s. can only win if china wins. china can only win if the u.s. wins and the world can only win if both win. it's pretty much that simple i then ask cook, does he feel in some way insulated from the trade fight because of the very investments he's made in china cook saying, never going to say we're insulated from anything but we do many things in china we have people there focused on everything from manufacturing to development and i think we have become a key part of the

community. finally as for as ongoing legal fight with qualcomm, cook saying we've never wanted to be in this lawsuit. we went into it reluctantly because we had no choice if they begin to admit the problems, then we would love to find another approach. also you mentioned that $100 billion buyback. no time table here on implementing that buyback but gene munster estimates about two years. carl, back to you. >> timeline on that was one thing we did not get last night, josh thank you for that for more on apple, let's bring in nomura instinet's i.t. manager. >> thanks for having us. >> are you in a mode now where you consider services over hardware in terms of how you evaluate the company >> we're getting there the services was only 10% or less of the company not that long ago with the growth in

services and then conversely the relative stability on the iphone sales. it's up to 15% we're starting to get to a threshold where you want to carve that out with individual valuation. >> and how does that change the valuation model? >> it would be helpful if apple gave us more with what to work on and there are a lot of things going on inside of that services business we do know the margin struct surbetter than the corporate average so more visibility into that and a greater mix of that should help the shares >> can we talk about how you and everybody else seemed to get it so wrong when it comes to demand for iphones? the channel checks, the supply chain. your note ahead of the quarter, you said checks continue to point to iphone x demand softness and in addition to incremental down tick in 8 plus procurement.

why does everyone have this so wrong? >> i'm not sure if we had it wrong if you look at the numbers. they came in line with where people were. and it came in below consensus asp coming in below consensus means iphone x was not as strong as people expected going into the quarter. it's essentially, yes, iphone x is doing better than many other lineups that they have and but at the end of the day when you look at the demand there at the beginning of january or in the december quarter, the demand has been weaker than that and that's showing up in the space that you can see >> were you surprised at the iphone numbers, jeff >> i just wanted to clear it up because there was a lot of talk looking at the japanese suppliers and taiwanese suppliers. everyone saying there's some softness it continues to grow and we continue to see ploblockbuster

demand for this phone. >> there's often a disconnect between what the component community is saying and what apple ends up reporting. there are a lot of steps between what one vendor might talk about in taiwan and what apple might end up shipping in inventory or internal share shifts or what have you as a general rule we tend not to overemphasize the data points that come out of the supply chain. they are a piece of the overall pie but not the overall story. >> jeff just raised this what kind of a multiple should we start thinking about for the services business given its recurring revenue in a way that we don't see or don't necessarily expect to see from the device business itself >> yeah, i think jeff brought up a good point that we don't have enough information to talk about the multiples yes. i'm not even sure if the business is big enough to move the needle for the company yet and maybe 15% to 20% of profits.

if we look at -- >> it's growing. it's grown 31% a year. we're already approaching a runway to almost $40 billion revenue. understand, it would be an enormous company if it were just its own public company you think they'll give us more information? you think we'll start to get more as it becomes a more important component? >> they could. i think apple has been very tight in terms of how much information they share but, yes, if it becomes more material and if it's something they want us to rally the company on, they would need to give us more information and 30% growth rate is one core. let's not extrapolate one quarter's growth rate to say it's going to keep growing at 30%. it can vary between anywhere from high teens to 30 plus >> the journal quotes this portfolio manager today saying that the days of huge iphone hardware unit sales growth are

dead and i wonder if you think that is too harsh is there any going back on that trend or not >> well, i don't really think so what we've seen with the iphone x, it's not in apple's control now whether they can bring out a new form factor and drive a tremendous amount of incremental demand the market has matured and it's settled and the way that consumers, we all purchase phones is different than it was a few years ago. you don't have hand-set subsidies in the same way. the manager is largely correct in that we should be thinking of a more sedate growth rates for units. a lot of apple's revenue growth in iphone has come from asp increases in the last few years. >> neither of you seem particularly excited the stock is up 4% you still think it remains an uninspired investment as you wrote in your last note? >> well, of course, i believe that i wrote it last night. >> not inspired by $100 billion

buyback, $61 billion in quarterly revenue? 30% growth in one of the businesses >> no. those were all things that were anticipated coming out of tax reform, right? so if -- or the buyback was so we knew about that, plus or minus. we know what their cash value has been and they've been including it as part of the valuation. i would add to what abe was saying a lot of pure hardware companies simply get 11, 12, 13 times p/es on their multiples apple is at 15, even though the cycle is not very strong one could make the case it's already getting embedded into shares >> fascinating transition that is taking a long time. >> they all do >> we'll see if we get there thank you, guys. take a look at shares of

snap down more than 20%. the snapchat parent posting an in-line loss for the latest quarter. however, revenue missed along with forward guidance and the all-important daily active users. this flollows the redesign of te new snapchat several posted against it. snap announced it's going to address the criticisms and redesign parts of the app. guys, they are redesigning the redesign never a good sign when kylie jenner says it's a sad look for snap this is their core audience. >> a good tell best day to have sold that stock was the ipo basically. this is a new low, i think >> it is at 10.96 it was a record low today. >> concerns about advertisers. they had -- they always pointed to the daily active user growth which they did continue to see but then warned -- but it was slower growth than the previous quarter and warned >> about a substantial decline >> a lot more on snap later in

the hour when we come back, it's d-day, decision day at the fed investors hitting pause as they await the fed decision and look for clues about future rate hikes. we'll talk about that, plus what under armour's ceo told us about the company's comeback plan. the stock is higher this morning substantially after a sell-off on enis.arng we'll discuss. "squawk on the street" will be right back oh, not so fast, carl. ♪ oh no. schwab, again? index investing for that low? that's three times less than fidelity... ...and four times less than vanguard. what's next, no minimums? ...no minimums. schwab has lowered the cost of investing again. introducing the lowest cost index funds in the industry with no minimums. i bet they're calling about the schwab news. schwab. a modern approach to wealth management.

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nasdaq higher. apple helping to fuel the gain the dow trying to avoid its fourth straight negative session as investors keep their eye on the federal reserve wrapping up a two-day meeting this afternoon. and the trump administration getting set for trade talks. when it comes to the fed, no change expected today. the big mystery is whether they will hint at faster rate hikes and up side to growth and inflation or the opposite. could go either way. >> yeah, i think you have to think about the fed in the context of where the u.s. economy is going the u.s. is in the vanguard of two of the key macro trends here the u.s. is accel raerating growthwise and also you're seeing firming inflation after long period where inflation was very disappointing. and so what that causes is a lot of confidence that the fed continues along a normalizing path here. i guess what i look out for in today's meeting is some evidence

there are dissenting views what we have not seen on the fomc broadly speaking is any desire to go fewer than three rate hikes or faster than four >> you're looking for hawks that are going to dissent today, vote for an increase and that will suggest -- >> these are people that want to go faster and maybe at off press conference meetings as well. >> tracy mcmilian is also joining us from wells fargo investment institute what are you telling your clients as it relates to the fed and risks of more aggressive hiking, what that could do to the markets? >> obviously, we don't think they'll make a move today but we are going to be watching for their tone change with regard to inflation and pricing pressures. we do not think that they are going to raise rates more than twice for the balance of the year so we do think they're going to continue at this slow gradual moderate pace. >> can the market digest that if that's what we get >> yeah, i think so.

you know, market is already having one of the great victories of central bank communication is the fed has convinced markets the balance sheet is firmly in the background here. revitalizing the fed funds rate and you have another one to two price hikes already priced in. what's the prize i'm wondering. >> any change in the trajectory of a balance sheet normalization or is that also -- >> no, they've set that on a glide path that they'll continue and that's kind of in the background so no worries from that right now. >> how should we away from the fed, how should we be thinking about china and trade and how close are you monitoring the developments of the delegation that's just arrived there? >> i think this is -- you can view it in a few ways. one, you can think about one of the seismic shocks in terms of trade policy and one of the key agenda items on this administration's trade policy

agenda so you've had steel. you've had china those are the big seismic shocks our base line expectation is from here on in, you're seeing reverberations of those shocks which you'd expect to be smaller magnitude as time goes on. i think you're seeing that and the other perspective is this is -- who is this trade policy aggressive toward is it against china? maybe. arguably it's towards u.s. companies doing business with china and so when you look at the recent round of earnings reports you've seen a lot of strength even in areas where there's a lot of business overseas and where you might expect some of that negative news to filter in. >> so should you be avoiding them on the risks of a trade war? >> i mean, it will make you think there will be a trade war. our view is there will not be. if those reverberations are small over time, i don't think it's a huge concern there. but the key point is this is not a big effect on the economy rit large. this is a distributional effect

among sectors. the main winners and losers. but if you think the shock itself is going to be small you're not that worried about that >> are you worried about the lack of how it impacts corporate managers' ability to plan? if this goes through the month of may and beyond, right how do these -- how do treasurers and logistics chiefs handle all this? >> i think in terms of supply chains, i think that's a very valid point. you've seen a lot of invest mmet continue to flow you've had a bit of uncertainty over trade what i'd say is that at the margin, that would affect managers' decision to go to china for investment versus the east asia manufacturing complex rit large. i don't think that's going to affect their decision whether to invest or not. >> is it them being too complacent about the prospect of a trade war? >> no, we don't think so

we don't think there's going to be a trade war typically if there's a trade war it's a very broad and very large tariff situation and that's not what we're seeing we think this is more of a trade skirmish than a trade war. >> well, it has been a skirmish already. we'll see what happens when administration official comes back from china. ben and tracy, thank you speaking of all of this, the members of the trump administration heading to china are on their way attempting to secure a deal to avert a trade war. kayla tausche has been all over this and joins us from washington >> seven high-ranking u.s. officials will be holding bilateral trade talks with china beginning this evening after departing last night in a pit stop in anchorage. the make-up of that delegation was changing but includes the secretaries of treasure and commerce, u.s. trade representative and economic advisers larry kudlow and peter navarro. the group has been coy about its

proposals, agenda and outcome although details for bilaterals are worked out weeks if not months in advance of such a trip speaking to a china business conference in washington yesterday, trade representative robert lighthizer couched his expectations >> i'm always hoping but not always hopeful so it's a big, big challenge, all right. there's a very different system over there, and it's a system that has, in all honesty, worked pretty well for the chinese and it has not worked well for us. >> "the new york times" reports officials held a three-day seminar with reporters to lay out their trade case in which top chinese officials said they have no intention of discussing the trade deficit or the made in china 2025 traindustrial prograa the heart of the administration's tariffs in an editorial in the state affiliated global times, "washington had better not expect that its trade war stick will force beijing to take whatever the u.s. delegation offers

the iminent dialogue must be held on an equal footing." china's commerce ministry officially is calling the talks an exchange of views with top economic adviser to president xi jinping representing china back to you. >> how serious the u.s. is about the threats that have been made, the $100 billion in tariffs. do you expect the administration to actually go through with it if they don't come back with whatever they want we don't have an exact sense of that >> not knowing what they want makes it easier for the administration and its delegation to come back and say they got whatever it is that they were seeking. but interestingly, robert lighthizer was asked that exact question yesterday about whether they'll in fact, put those tariffs in place and how long they'll give the chinese after the talks this week to make good on whatever they discuss or whatever they decide, if they do decide something he would only say that after may 22nd, that they are legally

allowed to put those tariffs in place and simply said we'll see what happens after that. >> it's going to be an interesting few weeks here, kayla tausche, in washington when we come back, snap hit some record lows today, although off of the lows of the early session warning investors of decel ratsi i decelerating add revenue dan rosensweig will join us to talk about that with the dow down 50. attention homeowners age sixty-two and older. one reverse mortgage has a great way for you to live a better retirement... it's called a reverse mortgage. call rfree information kityour with no obligation. it answers questions like... how a reverse mortgage works, how much you qualify for, the ways to receive your money and more.

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it is time for our etf spotlight where mike santoli is looking at corporate buybacks with apple announcing its buyback. this is where the tax reform savings are going. >> a lot of it, absolutely even before the $100 billion authorization from apple a new surge in buyback plans something like three quarter of a trillion dollars technology stocks have been some of the heaviest buyers of their shares if you look at etfs that track stocks doing heavy buybacks, it's not always been directly rewarded by the market here are three difference ways to cut the buyback approach.

the pkw is probably the biggest one. they have slightly underperformed all of them year to date. a few years ago, this was a pretty sure bet to outperform the market it's not been the case perhaps the reason is they own a lot of financials. overweighting in the financial sector just because they are all basically buying back a ton of stock. that's been a little liability interestingly, none of these three etfs, because of their construction, have apple as a very big holding maybe that's been hurting them the ttfs is interesting. they insist that the companies be actually net shrinking their share flow you have to be reducing your share count, not just buying stock to offset share compensation and things like that so it's not, i guess, sure if we're going to see this theme come back as a winner even though all this money is being thrown at the market could be a general support for the market when you buy back stock, it goes

into brokerage accounts. usually that gets recycled into the market but not into the same stocks >> i had no idea these strategies even exist. what i don't understand what the strategy is, mike? what are they actually doing >> all they do is look back at the companies that have bought back a lot of their stories. for the most part -- >> those are the companies that -- >> and the buyback achievers have many years of records of buying back. the s&p buyback index is the 100 stocks in the s&p 500 that have the highest buyback ratio. >> even though apple has been the largest single purchaser of its stock, the ratio is not as large? >> it's in there just not as high a holding as it would be in a regular s&p 500 fund >> sort of fits in with the overall market theme which is what's worked in the past few years of this bull market is becoming not as -- the market isn't that enthusiastic for this >> the financial engineering stuff has lost its touch a little bit and that's what buybacks are part of

and i think you are seeing some capital investment, alphabet not withstanding, getting rewarded in the market. >> and some pockets. very high concentrated pockets the creeping lbo of the stock market as we like to say >> slowly happening. >> apple is working against its own march to a trillion-dollar market cap when we come back -- tim cook taking a bit of a victory lap as it rockets on the strength of the ten. we'll talk about that with the ceo of chegg dan rosensweig.

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good morning i'm sue herera here's your cnbc news update iran reporting that 76 people were injured after an earthquake hit the country's southern region the magnitude 5.2 quake struck a remote mountainous area. disrupting power and communication lines. china's foreign minister arriving in pyongyang, the first visit by china's top diplomat to north korea in more than ten years. he was greeted by north korea's vice foreign minister and the chinese ambassador to north korea. here at home, with girls soon entering its ranks, the boy scouts of america announcing a new name for its boy scouts program. scouts bsa that change will take effect in february but the parent organization will remain boy scouts of america and the cub scouts will keep its name as well prince harry and meghan markle have chosen an open-topped ascot landow from the royal carriage collection to use in their wedding procession. their may 19th wedding, they'll

take the carriage pulled by four forces from windsor castle through the town center. can't wait that's the news update this hour i'll send it over to jackie deangelis for the eia inventory report >> good morning. the department of energy reporting a 6.2 million barrel build in crude oil inventories the build in gasoline as well up 1.2 million barrels. that number 6.2 million, was a little higher than traders were expecting. they are now trading lower overall, this is a bearish report you don't expect to see builds of this magnitude at this time as we're approaching memorial day. what's interesting, u.s. production, 10.619 million barrels, it is up again. the argument so far has been while the demand is there to meet rising u.s. production but keep an eye on that number because it continues to climb higher having said that, still reasons we're going to see support here and a reason that price didn't breach 67 this morning one of them is we're watching may 12 tot see what president trump does with the iran deal. does that oil stay on the market

or come off? if it comes off, these prices will probably go up, guys. >> that will be key. jackie, thank you. welcome back to "squawk on the street." i'm sara eisen live with carl quintanilla and david faber. the dow is down 69 points. tech and energy are fueling the gains. despite that build in inventories that jackie just reported groups like financials and health care are the biggest losers >> shares of snap taking a hit after disappointing earnings that were attributed to a costly and much criticized app redesign facebook announcing a series move to products including instagram video chat and that new dating platform. dan rosensweig joins us from one market this morning. good to see you. >> good morning, carl. and welcome back, sara >> thank you >> and david, too. >> i get nothing

>> well -- >> thanks. >> you know, david, i watched you at the milken conference and that you were brilliant. >> even better >> now we can move on. >> let's tackle snap first the revenue miss, the dau miss, the guide. this redesign. do you see a path to them working their way out of this? >> not any time soon to be honest, i was reflecting on sort of 2005 yahoo! days which is when the signs are your inventory is less and your price per head unit is less and your users are less that's not a recipe for success. so normally when a company knows its users as internet companies should, redesign should be something that increase usage, increase inventory, increase the contextual value of the inventory from advertising and everything went backwards, and i just think they'll be in the

penalty box for quite some time. >> dan, our viewers know you as the ceo of chegg in addition to so many other things sometimes gets lost you're a longtime board member of adobe, one of the most successful stories in technology over the last decade. you're on the board of snap now. what your trying to implore them to do in terms of changing the tra jectry >> what adobe did was understand its core business and recognize its business model was not working. and it was dealing with professionals who were getting fewer but it was recognizing more creators were being built because of the internet. and so the ceo brilliantly turned the company around, went to the cloud, changed its model. what snap has to do is ask itself, what is its core value proposition? i don't understand the concept of glasses or spectacles what does it do? it's a communications app. it's compete with other communications apps. facebook has three most powerful

communication apps and it's got to go directly at what facebook doesn't do well for its users. so there's a moment in time right now where facebook and its users are having a question about what does facebook do? the platforms aren't integrated yet, but they will be. they're bringing out features that snap started with onto all their stuff. snap needs to innovate their way out and just be better at execution, folk ous what their consumers want from them instead of giving them things they don't care about and then execute brilliantly on it and, frankly, the possibility is there it just feels like they don't know what their core business is right now. if it's advertising -- go ahead. >> i was going to say, on the conference call we got a snapshot of some things going right. there's a lot to hate about this but they said during the winter olympics, 81 million people watched the coverage on discover in different languages during march madness, the snaps were put on the stadium

jumbotrons in 67 different games. this feels like twitter. there's some relevance there >> exactly >> and they capture the moments well yet they can't figure out how to make money and keep the user growth and engagement going strong >> what twitter has done very well actually is stay in the fight. re -- see themselves for what they are they are a news and event situation. and they are monetizing around events and around news snap can do very well around events but how many events are there and how do you monetize around those events? that's a choppy business model so they can leverage that to build an ongoing business, but at the moment if all they can do is rise up during events they don't even control, it's very difficult to monetize those things it's taken twitter a number of years to get into back into a sustainable growth business. so i'm not saying snap can't do it i'm saying twitter really proved -- they went back and said what are we

we're not facebook what is snap it's right now instagram has outsnapped snap and so i think snap needs to focus on deciding what it is build that relationship with its consumers and its advertisers and then go execute on it. right now if you ask a kid, i don't think they can difrentiate between snap and instagram >> i want to ask about their corporate structure because since the ipo we've talked about how they zig when others zag camera not text. venice not the valley. piper has a note that looks at, they don't have a traditional hq a series of private homes that spiegel goes between addressed this in the s1 as a potential risk to morale piper says it's a poorly structured company demonstrating the clear pattern of mismanagement. how much can they buck traditional trends >> generally it's easier to buck it when you're doing well. google has bucked its but it's doing well apple has bucked it because it does well.

facebook, twhen doesn't do well, people question its structure. so the question is, is the structure the reason for the underperformance if it is, then the board and the ceo need to sit down and restructure around what a success formula looks like you don't always have to have a traditional structure to be successful but if your struct surpart of the reason you're not successful, then you van obligation to change it. i don't know the snap people very well, but since they've been a public company, they have -- i think they've only had one report where people have felt good about it >> dan, part of the problem here just stems from facebook's overall power, doesn't it, and its ability to take innovations that existed at snap and do them at instagram and perhaps do them better with more scale leads me to wonder again that question, is facebook simply too big and too powerful to compete with in some ways? >> well, i know you are from the breakup camp

but if you are snap, yes, you are looking down the barrel at three giant advertising environments and 100% of your business is based on advertising. and you are in like fifth place. that's hard to do because the advertising business, you want to be first buy, biggest buy facebook gets that google gets that now amazon is getting that around commerce which you saw in their last earnings call twitter probably comes next. and then after that, what is it? is it buzzfeed is it ad networks? is it retargeting networks and is it snap snap doesn't really have very much revenue compared to its market cap at this point so it's -- is facebook too difficult to compete with? it feels that way if you're snap >> and match and any of the dating companies. >> well, that's another question which is, i think match has taken more of a punishment than it deserves.

i feel like their investors have ghosted them for the moment. >> very good >> but -- >> well, i try i try to stay relevant the truth is what facebook has done is they have really good at their organic business which is building their social network. very good at buying companies like instagram and whatsapp. they haven't been as good as organically building something from scratch whereas match has been doing this 20 years there's a lot of nuances in connecting people and building two-sided marketplaces so i think snap is way overdone for the moment but it doesn't mean facebook can't be successful in it. i do like the way mark introduced it, which is it's not just for hook-ups, which is -- since my whole family is on it, i'm glad it's not just for hook-ups, but -- >> we loved match's response we're surprised at the timing given the amount of personal and

sensitive data that comes with the territory. that was - >> i thought joey's response was even better which is, you know, that you can -- the russians can help you decide who to vote or to date. >> joey the ceo, yes >> yeah if you didn't know it was coming, i think it's a clever response. match has weathered a lot of storms when i was at yahoo! we hadiya hoompt personals i don't think this is going to significantly impact match in the long term. doesn't mean facebook can't be successful in it but when you look at facebook's revenue of $40 billion and you look at the entire dating revenue market, it's not a significant business growth opportunity for facebook either but it makes perfect sense given they have all your dating status, all that information i think it's nice of mark to say they're not going to connect you to anybody that's currently in your network so that will be interesting to see who they connect you with.

>> dan, good stuff we'll see you soon dan rosensweig, president and ceo of chegg take a look at shares of mondelez the stock is down but the snackmaker did see revenue come in above forecast. it warned higher costs could be pressuring profit margins going forward. did see those power brands like oreo and cadbury in emerging markets strong let's send it to diana olick in los angeles >> we're going to bring you to an iconic west hollywood pen penthouse and show you absolutely nothing i'll explain why coming up next. can you afford it? is it the right time? yes. and you feel good about it. because you're doing this for him in return for everything he's always done for you. at pnc, we're here to help you take steps today

to make a plan to borrow and stick with it. bienvenido a casa, papá. pnc. make today the day.

apple surging after blowout earnings why isn't it giving the overall markets a boost? find out, tradingnation.cnbc.com more "squawk on the street" after this

shares of under armour up 4% lots of analyst action on this

name today barclays, web bush, all raising their price targets on the stock and what they see as progress in the company's turn around. that was despite what was originally a thumbs down from wall street on earnings yesterday and higher inventory levels and lower margins ceo kevin plank telling me this is a troansformation 2017 and 2018 were on a scale to grow early 2019 you will see our product pipeline led by running explode. he's focused on running, training and basketball. i had a chance to talk to his new number two patrick frisk we've been criticized for not being fashion forward. we're doubling down on performance. it's our long-term strength. that's what the consumer wants from this brand. i think you'll start to see guys under armour differentiate itself from nike and more adidas which is going with the fashion crowd into more just performance sports they point to hover, their new running shoe with built-in

technology as an example of that and they've got this new sleep wear line i was thinking of for you. it's very comfortable and something you don't see at like a nike or adidas they're pushing it as performance sleepwear. kevin brady uses it. >> i appreciate you thinking of me in my sleep >> i feel like you'd like a good pajama >> i could use something because my sleep has been a bit interrupted. bring it on. >> a long way to go. down 50% last year >> image of david in his pajamas. and now i cannot unsee >> can it have footsies? >> no. >> enjoyed those days. to the cme group in chicago and the santelli exchange. hey, rick. >> good morning, carl. like to welcome my second fed governor as we are now in the second day of the fed meeting. mark olson thank you for joining me this morning. >> thank you for having me, rick always a pleasure. >> all right let's start at the top

i guess what do you see in your crystal ball for today's meeting, no press conference and statement by the fed >> hoursere's what i see the general sense ought to be one of reassurance by the fomc members. they were anticipating a 1.9 core inflation and a 2% inflation. that wasn't the fear that was the expectation so my sense is the members will say we're exactly where we expected to be at this time. there's no reason to change the course there's a lag in the implementation of monetary policy but let's continue doing what we have said we'll do i may look -- i may anticipate they'll talk about the global economy because the movement of the dollar has suggested there's some changes in the global economy and that, of course, affects commodities which affects the underlying economy >> absolutely, mark. and commodities are having a resurgence, whether it's at

least thus far incorrectly envisioning how the trade and tariffs is going to play out many commodity prices have rebounded. all right. let's stick with that theme. if you believe a reassurance is near, i can understand that. our fed that our fed looks to be wanting to grab some life insurance so when the expansion ends they're not going to find themselves at zero or negative rates like europe and japan. so do you really think that jay powell is going to be able to slow down a bit, considering that 175 is better than a negative number and does afford some giveback should things reverse? >> well, remember, what they did when they hit zero they went out of the yield curve and so they attacked the yield curve pretty hard what they're doing is now adjusting back both with their balance sheet activities and with the prime rate or the interest rate that they're targeting. i think they're pulling back slowly and cautiously but

they're sending a signal as to what they're going to be doing it's not a surprise. i think what we're going to see now, the hope is that there will be the absence of surprises, unless there is some factors that come in that are unexpected >> all right now, give me a yes or no answer to this generically, mark, and then i will ask a follow-up. generically, are you pro the tax reform, the tax cuts that we had at the end of last year and how they're playing into the economy or pretty much a fan of that, yes or no? >> yes but i have to caveat it, but yes. yes. >> okay. we all have our caveats and i will get to that it seems to me that as much as i think that americans should have a more control over their revenue and the government's less efficient at deploying that capital, it certainly seems though this tax cut is being blamed for all that is debt and deficit when it's really just the final straw and low interest

rates by the fed amassed an ever growing debt problem speak to that in our last half a minute. >> i don't know how anybody could have plisds the fact that interest rates would come up again and, therefore, there would be duration risk i don't know how anybody who is a sophisticated investor or semi sophisticated could have missed that so that is the reality my caveat going back there, rick. >> real quickly, mark. >> lower taxes but don't balance the budget we're essentially setting ourselves up for that kind of an environment. >> exactly what a place to end. if you can't control spending even though revenues for the most part go up every year there's a problem. david faber, back to you >> mark olson, thank you. >> thank you, rick. >> time to send it over to jon fortt who has a look at -- well at microsoft headquarters in redmond, washington. >> that's right.

i'm here building 42 in the new azure cloud collaboration center anything that's going on with security incidents in the cloud with performance issues, it's going to show up here. i'm going to sit down in just a bit with microsoft's executive vice president over azure and cloud, jason xander. lots to talk about you saw apple services revenue was up 31% those services for apple and everybody else tsehe days running in the cloud and clouds like this one, that's coming up on "squawk alley."

at&t provides edge-to-edge intelligence, covering virtually every part of your retail business. so that if your customer needs shoes, & he's got wide feet. & with edge-to-edge intelligence you've got near real time inventory updates. & he'll find the same shoes in your store that he found online he'll be one happy, very forgetful wide footed customer. at&t provides edge to edge intelligence. it can do so much for your business, the list goes on and on. that's the power of &. & if your customer also forgets socks! & you could send him a coupon for that item.

apple earnings impact today, all eyes on the tech

turns out there's a new trend in real estate, the super rich are paying more for a lot less diana olick is in los angeles with that story. good morning, diana. >> good morning. this is a storied 7,000 square foot west hollywood penthouse overlooking pretty much every inch of l.a. to the ocean. 4,000 square feet of wrap-around terrace alone, $58 million the listing. no, it is not tricked out with the latest in luxury and apparently this bare space makes it more valuable >> a lot of times people will buy something totally done, beautiful, and they'll still rip everything out and start over. so this trend is more buy it, do

whatever you want to do, and you don't have to pay to rip out someone else's design. >> essentially it's more valuable like this >> this is much more valuable than buying something and having to rip everything out. >> it's called white boxing. it's very big in new york and l.a. the buyers love it, the sellers love it, and it's supposedly a little more environmental too. back to you guys >> all right diana, thank you very much diana olk.ic "squawk alley" is coming up next dow down 65.

good morning it is 8:00 a.m. at apple headquarters in cupertino, 11:00 a.m. on wall street and "squawk alley" is live ♪ ♪ ♪ >> good wednesday morning.