different geography. i just don't think that's clear. >> john, thank you for being here i think that's a big question for investors. how much is a macro economic problem around the trade war, china slowing, lack of visibility and how much reflects questions about innovation and the fact that the iphone was a -- >> maturing product and macro and no visibility. that's the combination >> that does it for the closing bell. >> a lot to talk about. "fast money" picks up our coverage on this apple news right now. >> guys, thanks so much. "fast money" does start right now. live from the nasdaq market site overlooking new york's times square i'm scott wapner in for melissa lee. tim seymour, gia dam my. moments ago apple warning on the first quarter results. the stock is falling sharply after hours. our josh lipton is at apple headquarters where he just sat

down with tim cook stunning news to say the least, josh >> reporter: yeah, listen, stock. the q1, as you noted, the stock dropping hard. now calling for revenue of 84 billion. they had guided for 89 to 93 billion. i had the chance to speak exclusively to tim cook about the guard ter, the guidance. >> thank you so much for taking the time to chat i want to dig right into the results, tim iphone revenue specifically. as you mentioned, that was lower than expected and that accounted for the revenue shortfall here i want to dig in specifically to the trend you're seeing in china. because you say something interesting, which it isn't just the economy there, it's also the rising trade tensions. what did you mean by that? >> if you look at our results, our shortfall is over 100% from iphone and it's primarily in greater china. so as we look at what's going on in china, the -- it's clear that

the economy begins to slow there for the second half and what i believe to be the case is the trade tensions between the united states and china put additional pressure on their economy. and so we saw as the quarter went on things like traffic in our retail stores, traffic in our channel partner stores the reports of the smartphone industry contracting, particularly in november i haven't seen the december number yet, but i would guess that and so that's what we're seeing and now there are a lot of things we can do to turn our -- to sort of turn our business around in terms of the -- both in china and more generally across we're focusing on -- if you look at iphone more at a macro level,

the story on iphone is in addition to the emerging market weakness, which is primarily in china, it's there's not as many subsidies as there used to be from a carrier point of view and where that didn't all happen yesterday, if you've been out of the market for two or three years and you come back, it looks like that to you fx was a big challenge in the quarter. as interest rate hikes have started in the united states, there's more foreign capital coming in, that makes the dollar much stronger and the translation, we knew that was going to be a factor it affected us by about 200 basis points and then sort of in addition to those two things we've started a program worldwide where we dramatically lowered the battery replacement price. and so we have sort of a collection of items going on, some that are macro economic and

some that are apple specific and we're not going to sit around waiting for the macro to change i hope that it does, and i'm actually optimistic, but we're going to focus really deeply on the things we can control. >> let me -- in terms of things perhaps that are a little bit out of your control, tim >> yeah. >> i want to touch on china specifically, go back to that because the trade tensions are having an effect on the economy. do you see evidence that apple is getting caught in the cross fire in terms of is there evidence that chinese consumers say there's a dispute, there's tension and they're taking it out on apple in some way as well >> well, certainly apple has not been targeted by the government so let me take away any kind of doubt of that right up top there are reports sort of sporadic reports about somebody talking about not buying our products because we're american, maybe a little bit on social media, maybe a guy standing in front of a store or something.

my personal sense is that this is small keep in mind that china's not monolithic just like america's not monolithic you have people with different views and different ideas and so do i think anybody elected not to buy because of that i'm sure some people did, but my sense is the much larger issue is the slowing of the economy and then this -- the trade tension that's further pressured. >> and you talk -- given that this was a headwind and more than you expected, have you talked, i'm interested, to president trump or members of the administration this is a big, important american economy listen, this trade dispute is really impacting our business? have you recently talked to the members of the administration and conveyed that? >> i'm telling our investors first about what we saw last quarter, and that is the way it should be. but i've had obviously many, many discussions over the course of many months to be constructed and to give sort of my

perspective on trade and the importance of it to the american economy as well. and i feel like i'm -- that i'm being listened to in that respect and so i'm actually encouraged by what i've heard most recently coming from the u.s. and from china and hopefully we'll see some changes. >> but given that those trade tensions, tim, they do remain heated, given the pressure you're seeing, you're speaking to traders, investors, business people now, in the quarters ahead, how do you then navigate this >> well, you focus on what you can control. and so when i look at this i say, you know, there's some weakness outside of china as well i would have liked to have done better in some of our developed markets and so how can we do that well, the subsidies are fewer these days, that's true, but we can start or we have started a trade-in program we started it primarily because

it's great for the environment it keeps a unit with someone that wants it and the person who wants a new one gets one as well, and it's great for developers and so forth as well. but we haven't really marketed it very much and the truth is to a consumer the trade-in looks like a subsidy because it lowers the price of the phone that you want and so just let me give you an example of that. and so the retail price of the iphone 10r in the united states is $749. but if you happened to trade in a 7 plus which many people are in order to get that, the price goes all the way down to $449 or less and so there's a substantial benefit, economic and environmental from trade-in. we're also working on placing ability to do monthly charges in and so it begins to look like more the traditional way of paying for it through the

carrier by, you know, taking the rates out for 24 months or so and so you wind up getting an incredibly new phone that's so much better than what you've had for 20, $30 a month or so. and so we're doing that. we're also putting a lot of focus on the service side. our stores are unbelievable at service, and the ability -- people are very worried about transferring their at that they're very worried that the new phone, there will be something that they lost in the process, and so we're putting a lot of emphasis on doing that and doingthat well so those are just some things. the other things, which are not different than we thought but did affect our revenue in the quarter, are things like we had some supply constraints. we had an unprecedented number of new products during the quarter. we had new watches we had new ipad pros both of these were constrained for all or most of the quarter

>> did you think -- i mean, looking back did you think -- do you think you tried to introduce too much new too fast? >> no. i think you -- you know, our style, josh, is we release things when they're ready. and i think that's the way it should be. if you ever start worrying about cannibalizing yourself, you can talk yourself into not doing both things. our products were ready over that period. now would i have liked some of them to be ready a few months earlier? of course. i would always like that, but generally we're still going to march down the road of shipping things when they're ready. >> let me ask you, tim, with this release, investors get a lot of information and metrics. >> yes. >> as you spelled out, there will be changes in disclosures you're not going to get the number of iphones shipped. you don't see that as a relevant metric if that's not the data points investors should be focused on, what are the data points

>> that's a good question. what we did years ago, actually with apple watch we've never disclosed units sold why? it's not that we were secretive people it's that we looked at this is the watches were wide range in terms of pricing we knew that eventually we would have a cellular watch, a stainless steel versus aluminum, there's even an addition so you begin to say, what value is there in adding these things up i've made the comparison it's sort of like you and i going to the grocery store and putting things in our cart and coming up to the register and the person saying, how many you got it doesn't add together anymore because the price ranges are so wide so we didn't do it on watch from the beginning. we've never done it on ipod. as we now step back from the phone, we have phones being sold in the emerging markets, like an iphone 6s for around $300 so you've got a range from 300 to

1,000 or in some cases over 1,000 depending upon your selection of flash and so forth. and so this thing has lost its meaning. and so we felt that at the end of the day we were giving investors and sort of pointing them to something as if it had this incredible importance to it well beyond what it does that doesn't mean we're never going to comment on the units again. if we think that we can better explain results with talking about units, i'd be glad to say something about it, but generally to have it on a, you know, every 90 day clock of releasing this, i think it does the investor a disservice frankly. but now we are making additional disclosures. like, for example, we're going to give the gross margin or services business. we've never done that before services has grown, you know,

incredible amount. we're over -- we're going to have a report over 10.8 billion and when we report later this month for last quarter, that's a new record. >> and what drove that was it the app store was it music >> this is incredibly exciting for us because so many things hit records. the app store did. apple music hit a new record apple pay hit a new record our search ad product from the app store hit a new record icloud hit a new record. and so, you know, it's very wide and each of the geography -- geographies hit a quarterly record so even in china the app store hit a quarterly record why is that? it's because it's driven by the installed base and our installed base grew, you know, nicely year over year in china as well and as i say in the letter,

we've picked up 100 more million active devices over the last 12 months alone so this is an incredible number. and we'll have -- we've got some interesting things in the pipeline on services that, of course, we do on products as well and so that's sort of another way to grow the company. >> final question here, tim. >> yeah. >> you say you're going to end the quarter 130 billion in net cash >> that's right. >> apple has a history, you do a lot of acquisitions. they tend to be though smaller biggest was 3 billion for beats. do you think maybe given that cash position would apple be open to maybe shifting how it thinks about acquisitions and doing acquisitions that maybe investors would think are bigger, more meaningful? >> you know, for us, we've never changed our view on acquisitions we've never said thou shall not

buy a big company or medium company or in this country or that country we've asked from a strategic point of view. what does it do for the customer, what does it do for the user a vast majority has been technology and people that we think would bring a better user experience, that there's a feature or something that we could do in the future and that they could help on doing that, but that doesn't -- i've always been very clear. we look at many, many companies including very large companies we've elected so far not to do those. we haven't found one that we said, wow, that's a nice intersection of apple. but i'd never rule it out. we do have a lot of net cash, and i believe the company's stock is an incredible value and so you can bet that we're going to be buying some stock under

the flan we had out there for quite some time. >> thank you for your time you were generous. >> thank you pleasure to talk to you. >> reporter: scott, hearing some of the bottom line here for tim cook, listen, there were some big themes that they just didn't see coming they miscalculated you heard it there talking about china, the economyslowing in china more than they thought the rising trade tensions. cook saying they're feeling the pressure from that too not just china he also talked, you heard there, about those developed markets. iphone upgrades developed markets not as strong as they thought. a few reasons they rattled off fewer subsidies, u.s. dollar strain they did also, and you heard cook mention it, services. they called it apositive resul in the quarter, their words, that services is an all-time record revenue, $10.8 billion. one thing to think about is the relationship between iphone and services there's plenty of analysts who argue that the iphone franchise

at least has to stay stable and by stable i mean flat, just slightly up. if you're going to see that continued momentum so that relationship a question investors have to have. >> josh, thank you great interview with tim cook. let's open it up to the floor and talk about this, dan let's talk about the stock as well as it continues to move after hours. apple cutting its guidance and it's a huge cut. what do you make of it >> absolutely shocked that 60 minutes after they gave that guidance, it's the largest regions that has the best growth year over year in china it was up 60% the visibility is real interesting. it was 18% to me, you couple that with the fact that they change the way they give guidance it's likely to see its way through for a few more

>> it's so important in the markets now. by the way, we're seeing how disproportionately it's going in the market it's a disservice on iphones how can we say that two months, as dan's pointing out, after the moment where that was -- it's never been more important. he said this was 100% iphone and basically china, don't we need to know shipments? that's disappointing >> that's the problem, right you could have said and i have said it that apple botched that announcement with not having the units out there anymore. you might have passed it off and said, okay, they made a mistake and let's give them a pass on that, but now you have to question what's going on behind the scenes is there something else there? i think investors are going to take a bit where they're going to trust the company again and that's going to weigh on the stock. >> so, guy, tim cook, it's a value right here they mentioned buying back shares they've already been a huge buyer of their stock

>> the valuation has been a reason forever we're making the valuation argument the guys bring up a good point is it a credibility situation? i can only speak for myself. micron, a month or so ago. when they said smart phones were slowing down now you wonder if micron has to reguide to tim's point the trickle down -- >> i can't believe i'm going to ask this question, but has apple gone from a stockthat was pulling back apple of all the stock people are going to be afraid to touch it here? >> there are a couple of

consensus where this stock has had declines where we're almost getting there, 230 or something like that. it hasn't been abnormal. the difference is it's leading the market this time it was actually able to kind of have those corrections as the cycles changed think back to 2012, think back to 2015, '16 this has happened before. >> during those times you could argue that those were apple specific everything tim cook mentioned is everything the market has been worried about. trade, rates, dollar all of those things are macro economic issues that they have no control over. that could broaden out to the rest. >> it doesn't sound like an overnight issue. >> not -- >> we've been talking about this for a long time. >> you're getting to the point that it's macro, yeah, it's micro. they've talked about battery costs and different parts of the upgrade. it's a micro issue when you talk about the issue doesn't allow for the subsidization.

it's hardware. i don't think this is the falling knife moment, scott. i do like the services. >> hold on 60% of the sales are hardware. it's always been the iphone company. they're talking about a 38% gross margin they own all of the profitability in the entire smartphone market, okay? here's the thing, in china they are number three in market share behind samsung, wawa and then it's xio mi. and then they have one other thing, this is really important, we chat. when you think about the asp, average selling point of iphone was 793 bucks, they're making these bigger phones. that is a massive percentage of the per capita phones. the android based phones are 1/3 of the costs you look at services like we chat, 10 cent music, that's what chinese consumers are going for now. they're not as concerned about

upgrading. that's been going on for two years. >> i think we just have said that how about they are going to have record services profit they are actually in some of these smaller businesses whether it's apple pay, whether it's apple music. not reasons to go out and buy the stock. the bottom line is record profits in a services company that at least they believe that's where they should be. they still have $130 billion carbon market cap -- >> but you have to ask yourself -- >> do you have a reason for me to buy the stock tonight with this pull back of 11 bucks >> no. >> that's the problem is this peek profits because the entire thesis of this is that, yeah, they're going to grow iphone sales and their install base is going to grow they're going to extract revenue. then you have to re-evaluate what the thesis for the company is i think that's going to take a couple quarters for investors to digest that. >> if cook is worried about the impact in china of this trade fight, then you have our trade

rep lightheizir to strike a deal that the administration really wants. what is that going to mean for all of these companies that are being negatively impacted by china's slowdown >> i can play the other side of that i can give you reasons to buy it does this force the hand now of president trump and president xi, a company of this magnitude making comments like this? maybe there is some deal that's going to be made that would be market positive. and the two biggest buyers of apple have been apple and what does mr. buffet say about apple tomorrow i've got to believe somebody's on the phone asking him his opinion right now. so there are some -- there are potentially some catalysts to the up side. >> should we be surprised by this though? >> i hear you almost being somewhat affronted by this news today. we were told two months ago that emerging markets, china and fx were bad news for the company. >> the announcement itself, maybe not. the scale and size -- >> that's the scale. >> that's the stunning part.

>> i don't think anyone -- >> your point, guy, is a big deal i kind of got the sense that going into the most important season this is what they were telling us, they had some insight into that. let's be clear this is a $230 stock it's corrected down to the mid 140s and i think you had a market that's priced in a lot of pain. >> i think when you think about this company that is selling a premium product primarily focused in china, this is what they're talking about. there are other macro implications they're seeing this now. i think the surprise here isn't that they missed the surprise is the magnitude of it this is going to take a while to work itself through here i do not think that you have to go buy this stock at 140 bucks there are better opportunities in the market where there will be more opportunities. >> for more on this, let's bring in gene muenster dan ives called this a dark day

for apple. is that how you see it >> yeah, it's a dark day for gene muenster, too it's one of my predictors for best faang in 2019 i still stand behind that in part because i feel an element of deja vu as i listen to the conversation in 2008, 2009 when some of the economic markets impacted apple it had an impact in different geographies. i want to give a nod to tony osaganaki. largely there is the shift that dan was talking about in china about we chat and some of the cheaper competitors, but on the whole apple's brand continues to be strong. on the whole we continue to need tech so i agree that this is going to take some time for investors, probably a quarter or two for investors to kind of regain some element of

confidence that may take a full year. i am confident this is not the beginning of the end of apple. i think they still have some huge opportunities ahead, in particular what's going to happen with 5g that's going to be a major hardware upgrade i think the conversations on the next few months will be a thing of the past. >> 5g, their competitors will have it ready in the fall. apple is going to miss this cycle, gene. isn't this an issue here >> they can miss it by several months i don't think they can miss it by a year. we're going to wait and see. having 5g phones, they need to give a little bit of clarity 5g doesn't have a ton of coverage in the u.s. i think that broadly we're thinking 2020, 2021 is when it ramps up it's not necessarily a competitive headwind this is a major upgrade. i'm not trying to look at the

silver lining but what i'm trying to do is give it some perspective. china was bad. the upgrade extended -- or lack of subsidies that tim cook is talking about, that's nothing new. i was disappointed to hear tim talk about that because that's been going on for two years. i think the china thing is real. when he's talking about what's going on on social media, we chat related to huawei, that had a fractional impact on what's going on here -- >> to be clear, i'm sorry, gene, if you were still a sell side analyst and you were giving research out on this, you would have a strong buy on apple tonight on this pull back? >> i would, and the reason is this, is that i think right now we've priced in the bad news i think the bad news is in here. i don't think that there is anything structurally wrong with apple -- i can disagree with some of the people on set there, but i don't think there is anything structurally wrong with apple and what's going to happen with their market share. the fact that they gained 100

million users over the last year i think is evidence that this services theme will be intact. josh, incredible interview that josh had there one thing that i picked up that tim said is they're exploring ways for people to buy on a monthly basis. they're adding their own subscription that may be apple iphone or other products scott, i am still a big believer in this. i think apple can earn a consumer staples type of multiple i still believe this can be a much bigger stock, potentially $350 as crazy as that sounds on a day like today, i think all the news doesn't rock my confidence in this longer term theory. it will take time but it doesn't change longer term. >> gene, it's tim. how about your concern about the supply chain what do you do as an analyst in this space as an analyst >> supply chain is really tough because you're seeing what happens with global trade and loosening economies, but also

you have the issue of who apple wants to do business with. tim, i'm going to stay outside of that and not make any recommendations on where to go with that, but i do feel that directionally what they're trying to build, on more of a services hardware business that operates like services is still intact >> gene, do you think there's somewhat of a floor in the stock simply put in by the fact that you know, he eluded to it, tim cook did, they're going to be big buyers of their own stock. >> yeah, i want to be careful on the floor idea i think dan said it earlier. felt like it would have been in higher, i agree with that. you know, so -- but i can say that apple still even with these depressed numbers, that 84 billion in revenue, 8% off from what they're expecting, they're still going to be able to buy back close to $20 billion. let me leave you with one other quick thought. >> please. >> i'm thinking through this and doing this real time -- >> yes. >> -- i think there's this piece about this price increase that

happened in september. it was 23% was the average price increase i think the consumers, at least in china, aren't taking that price increase so i do think we're going to enter a phase where we don't see those big jumps in pricing i would see if apple is more aggressive actually at discounting to use this as an opportunity to gain market share, i would actually view that as favorable. >> gene, not easy to do this on the fly as you said, but we greatly appreciate you doing that for us tonight. we'll talk to you soon. >> thank you. >> gene muenster do you agree strong buy tonight >> no, i don't agree with strong buy. if anything, what guy hit on, how much is priced in? you have to evaluate there's a certain amount that's priced in, a certain amount of the economic weaknesses that's priced in. you can make the argument that all of these negative things are going to turn around and this pushes people into a situation or countries into a situation where they have to make a deal if that is the case and if you believe that and the market picks up on that theme then

maybe, yeah, you can nibble at apple. i think there's better places to be than apple. i think it's a no touch until it works through the problem. >> let me show you an e-mail i got. this is what happens in a bear market this is what tomorrow and other days are going to be delivering the bomb it just dropped. >> this is going to sound disingenuous it's not intended to be. if we started a normal show, what i was going to say the s&p traded back to the 25-30 level seemingly failed i thought we would make another retest down to the 2300 level or so now it sounds like i'm monday morning quarterback but i think it sets up exactly that way. how do you believe in sort of earnings for the broader market when you're hearing commentary not only from apple today, but from your tweet on december 18th, ppg, fedex, micron, a laundry list of companies. >> remember from a market perspective we were saying thank goodness apple is holding in

here now apple may be the poster child of everything. if you asked me who liked apple at these levels, what changed today? so clearly demand is weaker than forecast the services business is going as fast as i could want it to go and is the market in a place where i want to own it to me, no, the market is not in a place where i want it. >> gene said something that's important. the chinese carriers do not offer subsidies the way that u.s. carriers do the fact that tim cook mentioned the subsidy situation isn't helping us out it seems like they're throwing a lot of stuff up against the wall that it seems a bit disingenuous this may turn out to be one of the biggest unforced errors ever what did gene also say that they've raised prices on their phones, 23% year over year into what could be one of the most sharp declines in economic -- >> which the asp was mitigating. >> if you're just joining us home from work, 5:30 on the east coast. the bombshell tonight from apple, that company warning on the q1 revenue guidance taking

it down to $84 billion that from $91.5 billion. it is a stunning move from one of the biggest stocks, once the biggest stock on earth now, what, maybe in second place behind microsoft the stock has been down 30% or so in the last three months and only adding to those declines tonight. the man who watches the charts closer than anybody as you know is carter wurth is standing by plasma carter >> well, i suppose any way the imagination will allow let's talk about reference points when you plunge, you can see the plunge, there's nothing to interpret. news hits, straight down but there is something, you can see that here. i'll zoom it in. you can see how we've stopped trading. after the initial drop we've basically frozen there is a reference point the lows on christmas eve for the market and for apple, in this case 146.59 here it is at 146.55 meaning it has found the prior

lows and now there are people stepping in, other people are continuing to sell we've reached a reference point. longer term that's the bigger story. let's see if we can pull back and see some insight into a longer chart apple doesn't have support until you get back to the highs of 2013 so from my point of view what we would all say is there has to be this, a break in trend now if i clear that and then try to put this line on the top, that might give us some reference point as to how much more this could drop and basically those highs come into play around 135, which would be maybe 7 to 8% lower from where it is now that's a perfectly reasonable price objective. i'm going to do the qs, i'm going to quit. keep this in mind. burn this in your retina remember the tops. this is a bigger issue for the market look how far the qs are from their highs. meaning, if i did this same exercise and drew this line, this is nowhere near, and that's

the risk meaning the spillover effect apple has had more of a draw down, down 40% now where we know that's not the case for the general tech market. presumptively this could get worse in line with apple. >> carter, thank you the qs tomorrow, watch out >> the qs as carter pointed out on a relative basis have some room to go we started this day talking about china. this day was all about china macro overnight that got their pmi the lowest in 17 months, four major markets in asia in contraction territory. 263 on the ten year? we're trading as if this market is slowing down fast and, remember, this was guidance on q1, their fiscal fourth quarter -- their fiscal g1, the fourth quarter that's not a good start. this is the most important company. >> is it fair to say, guys, when you think about this cut, we're

going to have numbers cuts across the board this is a company that's supposed to have $61 billion in net income in fiscal 2019. when you're thinking about s&p earnings for 2019 and what that growth is going to be, this is a massive hit. we've already seen facebook take a huge chop to their 2019 estimates. you really have to extrapolate this i want to make one point i know some of you talked about maybe this has pushed xi and trump closer together. global markets don't turn on a dime they can have an announcement and these economies are not going to start reasserting themselves that quickly. this is the first half 2019. >> which of the suppliers -- i don't think we've -- >> sky work. >> orvo. >> texan. >> semi? >> that's a slow story in itself you'll have to follow tomorrow look at these. >> i think that's a great question a lot of these companies have already guided lower the question is, on which i don't know the answer to, will they have to guide lower again on valuations some of these

stocks are still expensive we actually had a conversation the other day talking about how micron is lower expensive now with lower prices than it was $10 or so ago. somewhat counter intuitive you might have to see a reguide lower from the skyworks, bro broadcomes. >> if this is a multi-quarter economic slowing, who has china as their largest customer? europe they already have a slowing economy there. so you could see other companies, you could see industrials fall on this you could see asia pacific and europe fall on this news if the market extrapolates that the china slowing is going to last for a long time. >> throw up gluu mobile, supplier of apps, games, things like that, jabl, all of these names are going to be front and center tomorrow as you start to dissect exactly how this is all going to play out in the months ahead if apple is in the penalty

box for an awfully long time. >> yeah. again, it goes back to how much has this been priced in. it appears by action this afternoon or this evening that we still have a little bit more to go on this. so maybe apple hits 136, then you start looking at their average. >> here's the good news if you get some of the big ones out of the way and the markets take i in stride, then you're set up obviously pretty decently to rally out of it. the worse we get early in january as a continuation of volatility in december, then all the news in january is basically priced in because i doubt that you' you're going to see too many 7 billion companies with -- >> i would say 150 on s&p earnings which is the consensus is in trouble. 7% earnings growth on s&p in a static environment is where we were on that call four months ago, five months ago even with some pullbacks that to me is the whole point. markets are cheap but they can get cheaper and on a trailing

basis, every strategist out there is telling you how cheap we are this is exactly where you went going into big pull back. >> i remember that day, you made a great point, guy, about the two biggest buyers being buffet and the company themselves i remember when becky was last interviewing buffet the day he was going to host the lunch for the person who had won the lunch with him i think she asked him about apple and he said, well, i'd love to buy it cheaper you do have to wonder at what point does the buffet organism itself, that whole big berkshire hathaway step in, take a look at what the shares are doing tonight down more than 7% and say that, you know, we already have the truck full but maybe we can't pass this up and then the cook backstop as well of buying back more stock. i think they buy back more than anybody. >> charlie munger wanted to buy more he was upset that warren buffet hadn't bought more maybe carter's 137 level, that's where you start to see these

people nibble. >> coming up, we'll have full coverage of apple throughout the hour the company warning on first quarter results. we just heard exclusively from tim cook moments ago plus we'll tell you the other names the warning is taking down after hours. started sharing some of those. we're live from the sdnaaq market site in times square. much more "fast money" is coming up is number one in the nation? sure, they probably know what they're talking about. or the one that j.d. power says is highest in network quality by people who use it every day? this is a tough one. well, not really, because verizon won both. so you don't even have to choose. why didn't you just lead with that? it's like a fun thing. (vo) chosen by experts. chosen by you. get six months apple music on us. it's the unlimited plan you need on the network you deserve. now buy the latest galaxy phones, get galaxy s9 free.

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simple. easy. awesome. click or visit a retail store today. as we look at what's going on in china, the -- it's clear that the economy began to slow there for the second half. i believe to be the case the trade tension and china put additional pressure on it. we just saw as the quarter went on we saw traffic in our retail store, traffic in our channel partner stores it's an industry contracting particularly that. i would guess that that would not be good either so that's what we've seen. >> that, of course, apple ceo tim cook sitting down with

cnbc's josh lip ton for an exclusive interview. mr. cook citing weakness in china in particular as you heard there for the slowdown shares are down more than 7% in the after hours session taking the nasdaq and other stocks down along with it. take a look at some of the industrial names very key in the u.s./china trade talk story, caterpillar, boeing among the industrial stocks. so sensitive to any development coming out of china and these are the stocks also that we need to keep an eye on. this is a bigger deal than just apple. >> yeah. this is the case that it broadens out you look at 3m as well, they get a lot of revenue not only from asia pacific but then europe. the multi-nationals. if i had to look at a silver lining for the industrials, if we get a weaker dollar against some things, which is the yen right now, that might help these guys out in general, you're talking about

economic slowdown in china that's going to hurt boeing, caterpillar, 3m. you name it, pick it sorry, tim >> the administration, i'm reminded of the interview that larry kudlow did on the halftime report where he said there was no end in sight on october 12th. talking about the economic boom. did they not expect, think that their trade war with china was going to have this sort of impact on the global economy and some of these companies like apple this quickly >> i'll tell you what, it's clear there was a sense that either it wasn't going to have that impact, scott, or it was something that was going to be very transient. >> or that china was going to capitulate >> i think we've heard a lot of analysis in terms of who sized up who better, trump versus xi if you listen to caterpillar management and recently management was out there with guidance, they believe their end

markets are in early or mid cycle outside of turkey or argentina. you saw pmis china, 49.7 contracting for the first time in 17 months. europe was in line but it was at 51.5 on pmis the bottom line is as asset prices fall and as ceos cut back on spending and cap ex, it's somewhat circular in the other way and that's what we're seeing. >> don't you think it's interesting with caterpillar, consensus is for 10% dps growth, 7% stock trade it's at the lowest eps in seven or eight years it's telling you investors don't believe the guidance it goes back to your question, scott, about apple was anyone surprised by the miss no one was surprised by the miss they were surprised by the magnitude of the miss and the timing of the miss and lack of visibility when you think of a caterpillar, it's hard to think with, what, 2/3 of their sales outside

of the u.s. how they are not going to have a guide down and this stock is not going to be trading at single point pes. >> if you were trying to convince yourself that we were in the midst of a correction that we haven't felt in a long time, trying to make the case that this wasn't a full-fledged and longer lasting bear market, that case harder to make tonight? >> it's significantly harder my case has been this i think the last seven or eight years the flood of money from central banks has absolutely accounted for more than half the rise in the stock market when global central banks are now taking money away, they're reducing their balance sheets almost across the board, there are ramifications for that by the way, i happen to think they're doing the right thing. i think this is the first time that it's doing what we should be doing, a much different conversation to guy's point, there is a chance now given this news you're going to have to see companies like caterpillar guide down at 9.5 forward pe it's telling

you that they're going to have to guide down. >> the question is, are we talking tonight -- i realize apple is the catalyst for this conversation we're having this existential conversation are we talking about sharply slower growth or are we talking about recessionary signals and that is -- >> the jury is out maybe the jury is going to come back quicker than we thought with the answer, with a verdict. >> that's the key here we all thought we know there's going to be some weakness from a trade war but we thought, hey, if we can get through it and it's better on the other side, let's put up a little bit of that economic weakness this happened a lot faster than i think the market expected. that's the difference here. >> i think jeffrey dunlap's questions are important here cisco had a broad warning in november of 2007 pre-dated all of this stuff that we are starting to see if you go back and look at that. go back and look at summer of

2000 there was a big pre-announcement when you think about this, think about the supply chains and their kind of exposure to this global tech, this is kind of right in those when you hear dunlap talk about that. >> we talked about it the day j&j came out leadership in the market and seemingly not technology, not cross hair trade war companies has been the disappointing part about the last call it two months it's not just fedex and certainly not the semis which we lost in july j&j, the headline was asbestos in tall cocum powder eps is probably as bullet proof as any sector out there in this environment yet unh has gone from 285 down to 235 and rallied a bit. >> we're 48 minutes into the

show now and we haven't talked about bond yields and yield curves that are -- >> ten year is at 264. >> at an alarming rate >> guy >> well, i mean, the point is -- >> i didn't make my point emphatically enough. >> i don't know -- >> the point is, that's been trying to tell a story for quite a time. >> does this put a nail in the tech trade >> how do you make a positive case for tech when you're getting such a larger percentage -- >> the positive case -- >> -- revenues overseas. >> the positive case is everything they talked about, the dollar is going to get weaker the fed is unlikely to raise rates. potentially, potentially hit your tariffs it's a weak case i see you shaking your head. i'm not saying it's a strong case it's weaker than yesterday if i had made this argument before apple earnings, i would have been more bullish than today. the question is is it too late now? >> you're going to hear people say, oh, whale about these companies that don't -- google are not in china, amazon is not in china. >> all the small cap stocks which have been in their own

bear market. >> the biggest glitch of anything. >> the qqq, nasdaq 100 you were just talking about it is so much closer to the highs than some of the components if you lose amazon, google, you already lost facebook. i think it's important to remember that advertising is one of the most cyclical things you can have we have not seen a year over year drop. you may see it in facebook if you see it in google, that's what's the next leg in the nasdaq 100. >> key level watching amazon i've seen notes in the last couple of days saying anything around $1500 a share for amazon is a gift. i wonder if you have to start to rethink these for big technology stocks like the faangs which are all going to get brought down even further to earth by this apple announcement >> if you're looking within faang as you point out, apple and netflix are pretty glaring in how high they went up but how they are holing on to more gains because they had more of them. you can make an argument that

those two components of faang still have a lot of room -- >> it really is about maga it's microsoft, amazon, google, apple. they all have issues ironically apple was the single largest ben fieficiary of that x cut. look where we are. when you book end year over year where apple is right now, wouldn't you have thought that this was going to be an aimazing thing? >> why is that >> the amnesty and the caps overseas their corporate tax rate going down you don't think they were the single largest $230 billion in sales? >> i don't think apple was an out sized winner and that was the reason for the pulling forward. >> how could you not, tim? over the last five years they bought 300 or $200 billion worth of stock back. hold on. they've been borrowing at zero they raised $140 billion in

stock. they retired $240 billion of shares and then they get this gift of a 21% tax rate and repatriation rate of 10% they were the single largest beneficiary of the tax cut. >> well before we got the tax cuts they're raising money and bringing effectively money here back to investors. my simple point is i wanted to make sure you weren't saying based upon how much they gained in the outside -- >> no, but apple is closer to the end of this selloff than any of the others. microsoft hasn't had a hit they're right in the middle. they had the most exposure when you think about i.p. theft and that sort of thing f. this gets pushed out -- >> let me step away for a quick break. we're going to give you more of our exclusive interview with apple ceo tim cook we're going to have special coverage into the 6:00 p.m. hour critical because you'll get your first look at futures.

you'll see how the over all market is taking this stunning announcement this guide down from apple we are back right after this >> as interest rate hikes have started in the united states, there's more foreign capital coming in. that makes the dollar much stronger and the translation we knew that was going to be a factor it affected us by about 200 basis points and then sort of in addition to those two things, we've started a program worldwide where we dramatically lowered the battery replacement price and so we had a reflection of items going on some that are macro economic and some that are apple specific and we're not going to sit around waiting for the macro to change. i hope that it does and i'm actually optimistic, but we're going to focus really deeply on the things we can control.

welcome. we are back. we are approaching just minutes away from the futures opening. you're going to get a real first look at how the markets may open in the morning that have stunning announcement from apple. the other thing to consider clearly as we lead up to the

futures, the s&p, what, 40% of their profits come from over seas >> yeah. >> getting a real eye opener from a company like apple. >> for sure. now i will point out on the other side of this, they're talking so much about the fx headwinds. it means growth differentials are contracting. brian has talked about this. the dollar is not going to be their enemy in the next couple of quarters if we continue to get this global backdrop in terms of where the s&p makes their hay when the sun is shining. we've talked about this. i don't think you're getting to 117.50 any time soon the street hasn't downgraded every strategist tries to click by what he claims is, the proverbial he or she is someone who says i've lowered my targets because the market is lower. everything else stays the same i have to structurally come down nobody is cutting s&p earnings. >> every single s&p target from a major strategist on wall street ending the year looking

ahead to '19 was higher than the market was at that particular time every single strategist. >> right. >> was still positive. >> they're not saying cut because it's gotten worse. they're saying we cut because the s&p is 400 points lower. it's probable to get to 3100, not because the environment has changed, because we're more concerned about earnings ceos have said we're cutting back on spending and the global growth has changed. >> we've asked the question so many times we have it at noon and you have here and everywhere else how important apple is to the overall market how much apple's performance matters to the market. you're going to find out in less than two minutes, guy. >> not just in terms of the math but the psychology. >> i'm talking everything. >> mostly the sentiment in psychology you've talked about a recession. i asked this question. i don't think i know the answer. i have my views. does a recession cause a stock market selloff or does a stock market selloff cause a recession. when 73% of this economy is

driven by the consumer and the consumer starts to feel a little skiddish. >> it's the wealth effect, right? basically 5% of the wealth effect is consumer spending or consumers spend 5% of the wealth as the stock market comes down, that's 5% off of consumer spending you keep going down, the stock market can cause a recession. >> tim and i double boxed this a month ago. we saw it in housing, we saw it in autos and now we're seeing it in $1,000 iphones. >> semis >> it makes a lot of sense theres a segue in this sort of thing. we peeked at iphone units. they're going down for three years straight that's what they're telling us with this guide. >> it's a shame we can't get to a double box i think there's enough emotion nkts the good news is because we are going for another hour we have plenty of time to work in the double box, if not the octobox depending how many guests that are booked. >> can only hope.

>> have 20 seconds until we get -- >> financial assets couldn't be higher than they are right now i am concerned about that as well >> yeah. again, i think it comes back to apple -- it's not just apple sentiment wise they said the slowing so it's not an apple issue. that's why this is going to filter and that's why this is more important than just apple. >> you don't -- you know, sometimes you don't get a huge move in the futures. obviously thinly traded and could be fairly volatile but can we see that again? put that back up there you will get at least an indication of where the sentiment is right now by virtue of where apple is. that stock's own decline and the fact it is drawing tech down across the board nasdaq would have a decline of about 2% dow about 1% i'm being told, s&p 500 about 1% as well so that's the instant reaction as we've underscored for all of you so many