i'm willem marx. >> i'm julianna tatelbaum, these are your headlines. apple rocks global markets by slashing its quarterly sales forecast dragging european stocks lower tim cook tells cnbc in an exclusive interview that a slowdown in china and weaker handset sales are to blame >> our short fall is over 100% from iphone, it's primarily in greater china. shares in european chipmakers sink as the tech wreck bites, while apple's

german listing adds to after-hours declines. u.s. futures point lower with the dow and nasdaq set for triple digit losses after major markets stage a comeback in the first trading session of 2019. christmas cheer for next as the retailer posts a surprise rise in sales during the festive period sending shares higher alongside its rivals welcome, everybody apple has cut its sales forecast for the first quarter and blamed weaker iphone demand and in particular a slowdown in china tim cook used a shareholder letter to announce the company lowered its revenue guidance from a floor of $89 billion to a floor of $84 billion. he forecast grossmargins would come in at bottom end of a range, at approximately 38%.

we look at what happened to the share prices, extraordinary for apple. if we look at european apple suppliers, really significant changes there as well. >> absolutely. the european apple suppliers have been hit this morning, so that apple warning is weighing on shares. the biggest losses being seen in ams, that stock does tend to be volatile no surprise we're seeing a 20% drop in ams. tim cook told cnbc in an exclusive interview that the dispute between washington and beijing had sparked a stutter in the chinese economy. >> 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. and what i believe to be the case is the trade tensions between the united states and china put additional pressure on their economy. 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 bad in november i have not seen the december number yet i would guess that would not be good either. so that's what we've seen. >> mr. cook rejected suggestions that chinese consumers boycotted apple products as a result of that trade conflict. >> apple has not been targeted by the government. let me take any doubt about that away at the top. there are reports, 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 is not monolithic, just like america is

not monolithic you have people with different views, different ideas do i think anybody elected not to buy because of that, i'm sure some people did, but my sense is that the much larger issue is the slowing of the economy and then the trade tension that's further pressured it >> we're joined by richard windsor from radio free mobile he joins us on the phone we heard from tim cook, he thinks people not likely to be boycotting apple products, but is this a question of the price being too high for some of these products >> i think there's a big element to that. i think what you've seen, don't get me wrong, it's a big miss, it's about $7 billion, 9 millio iphones that he has not sold, y the chinese economy slowed down, but he knew that already when he gave his forecast in early november so i suspect really what's

happened is that there are two things at play in a mature market and a price sensitive market like china, maybe $1500 is too much to pay for a smartphone >> in the run up to last night's profit warning, we had a lot of signals from not only apple but suppliers around weakening demand for iphones what is so surprising about last night's profit warning that sent shares sharply lower today? >> given the scale of the warning, given that it's apple's first warning for probably over 15 years, given the fact that the valuation expanded nicely over the last couple of years, i suspect if this had been much more of a surprise than it was, you would have seen a more negative reaction on apple's share price. it's been declining steadily since the rumors about q4 have

come out i think an element of this is priced in perhaps the people looking at it didn't quite estimate how much apple would miss it is a pretty big miss. 9 million devices not sold is a big miss >> if we look at the analyst community, they are still overall quite bullish on apple is that a function of this push to become more of a services business is that realistic? is their services business capable of overtaking or compensate iing for the pullbaci their hardware business? >> as we always know, the consensus recommendation is always at its best when things are at their worst i think, you know what we are really looking at is that apple is really just adjusting to a normal market environment. if you cast your mind back to 2003 and 2006, you will basically see nokia went through the same thing with the phone market they dominated the market.

the most important thing is there's nothing out there that is really going to challenge apple's dominance at the high end. i think it will continue to hold on to share and continue to hold on to the margin, it's just going to sell less phones in a mature and less predictable market >> will it predict that it will sell less phones isn't that the question in terms of what they made about their predictions and coming in below those predictions? is there not an inst.ticentive y maybe we'll lowball expectations >> they could possibly nokia withdraw various elements of its guidance, not because it did not want to hide bad news but because it didn't know what would happen in a highly volatile market. i think we're seeing a repeat of that i would not be surprised to see apple completely withdraw the guidance that it has, or go back to lowballing it massively as it did in earlier years >> blatim cook blamed the slowdn

in china has that slowdown in china had a similar effect on other relatively high-end manufacturers? >> great question. there's certainly a softness in the market i think you'll see relatively the other manufacturers have done relatively better than apple. why? their devices are much cheaper the second thing also to bear in mind, you know, that comment about the chinese economy is up for question when you look at alibaba's single day performance in november, the same quarter that apple had a problem with. where total turnover on its consumer website was up 23% year over year. whether or not the chinese economy has really impacted apple or whether apple has misjudged how much people will pay for an iphone is open for debate >> i want to pick up on that

point and come back to your mention of nokia, when they were in a similar position we saw them cut prices and take out technology from their phones ap sol far hple so far has done opposite, but they offered reimbursement when you return an older iphone will this make them rethink that strategy about continuing to raise prices will they have to do more than simply offer a rebate when you turn in an older iphone? >> i don't think so. when you look at where nokia was then and apple today, nokia had massive market share a large part of its profitability was based on volume apple does not have that because it's the premium device manager and its profitability is based on its able to premium price products if you went out and cut products, you would see margins fall hard. i don't think that's where apple would go, but i would be

extremely surprised come september this year if we don't see some moderation on the price in terms of the next generation of products. apple will specify those devices accordingly. if you look for the last five years, every iphone has a 70% gross margin i think you'll see them continue to match that when they release the next iphone. >> richard, thank you very much for joining us double line capital ceo jeffrey gundlach also weighed in he said this is the kind of stuff that happens in a bear market in mid-december he correctly predicted u.s. equities would hit new lows and days later they did. for more on how apple's share price drop will hurt investors like warren buffett, head to cnbc.com let's check in on how european markets are trading they've been open for over an hour as you can see we are seeing a pullback the stoxx 600 is down 60 basis

points this follows a volatile day yesterday where we saw steep losses we saw that reverse course in the afternoon with a rally that left several regions slightly higher on the day. we're seeing those increases pull back this morning of course the narrative is being dominated in large part by the apple story, it's filtering through to the european apple suppliers. at the bottom of the pile, ams down about 20% we'll have a look into the sectors momentarily. the picture in europe today is one of caution certainly compared to where we left off yesterday. let's get into theeuropean markets and see how the regions are faring red across the board the worst performer of the day is the dax, down 0.85% no region is escaping the losses this morning ftse 100 down about 30 basis points the most resilient performer of them all italy in focus yesterday the banking sector in particular after news that the ecb had to step in, intervene with banca

carige, so negative news there yesterday. today we're seeing a downturn in italy as well. let's move to sectors. as mentioned, technology is the key laggard. the sector is down 2.75% the real drag there being ams, one of those key chipmakers that supplies into apple products at the top we have banks seeing a bit of a bounce. yesterday banks in focus, in particular in italy. food and beverage also performing well, 0.1%. retail has just dipped int negative territory, down 0.26% we did see that sect ner positipo secto in positive territory after a relief bounce. to pick up on this topic, we are joined by roger jones from

london & capital we saw those numbers for the european technology sector similar picture in the u.s is that sector significantly overvalued is there further for it to fall? >> i think it's a sector that clearly dominated the last few years. it's been the sector that rallied up a long way and gravity kicks in at some point i think maybe it's more with apple, it's the expectations that are probably too stretched. we're still working through that process of expectations starting to normalize and become more realistic for stocks the valuation itself, apple doesn't trade in a big premium the problem with that is the earnings expectations. >> when you look at the u.s. equity market as a whole, do you think that as a market looks overvalued >> i think it does certainly on a global context compared to other global indices and markets.

there's a lot of similarity around 2000, what we have seen there. the u.s. a leader in that. the risk is the earnings expectations but you have much cheaper markets or markets trading at cheaper valuations around the world. some of those clearly have more risk >> when you look at specific bits of economic data from markets in the u.s., like china, you look ahead for this year, what gives you pause for thought? >> that's the more risk element comes in china looks cheap. trading at low multiples we have already seen quite a big correction come through. we have seen earnings expectations starting to wind down

will we get stability in china, will the stimulus plan come in, will we move forward from that >> when i think about the impact of the china market on european and u.s. companies, how do you think about chinese demand in 2019 are you tempted to buy into those china exposed sectors in europe and the u.s. luxury autos and other parts of retail? >> i think china is crucial. this is the first time it will be so crucial. ultimately what you've had previously is a much smaller part of the global economy now the second biggest economy in the world the biggest contributor to global growth. it is vital that china doesn't continue -- or continues to grow and we see a good stabilization and move forward from there. at the moment the big overhang is the amount of debt and the quantity quanti quantity of debt >> you're concerned more about the debt than the consumers themselves this apple data point is one of

several around the retail sector that points to weakness, retail sales growth slowing, manufacturing pmis yesterday were weak. you're most concerned about debt levels in china? >> i think that's the next aspect of it and if you have stretched debt levels, there's more of a nervousness in terms of consumption. debt in the down side can aggravate the situation considerably so i think it's very much more the chinese consumer, we got to see continued resilience, a reacceleration, a lot of measures put in place at the beginning of last year in an attempt to champen the chinese economy, now we have to see if the opposite kicks through and we get a bit of a recovery coming through in china. >> excellent stay with us roger jones head of equities & london capital. china has become the first state to successfully land a spacecraft on the far side of

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welcome back china's central bank eased reserve requirements for small businesses in a bid to support its slowing economy. the new policy measure will take effect this year and will fulfill a previous problem to help small firms. and the yen spiked in trade against the dollar as investors sought safe havens there is some confusion over what caused the stock loss measure, but some blame apple's guidance cut others said low liquidity may

having e aggravated the move. president trump brushed aside krns aboconcerns after a selloff. he said he expects markets to move higher again. we're the talk in the world. we had a glitch in the stock market last month, it's still up 30% from the time i got elected. it's going to go up, once we settle trade issues, once a couple other things happen, it will happen. it has a long way to go. trade deals we're making are fantastic for our country >>trump also said market recovery would need a little help from the fed. steve liesman takes us through the u.s. growth forecast for 2019 >> let's look at two scenarios for 2019 the optimistic one and one not so quite optimistic. i'm focusing on two forecasters out there. morgan stanley and action economics. here's where we think we'll end 2018, 3.2% big slowdown here forecast by

morgan stanley down to 1.7 the big differences are what happens to the consumer and what happens business spending. look at the consumer, a much bigger slowdown for the consumer they don't see a lot of extra help to the economy coming from either the tax cuts or from the better jobs and wages we've had. they have the consumer going down to 2% action economics at 2.6. look at this big difference, in the outlook for business investment, which again linked very closely to the tax cuts we think we'll do 7 this year, 1.8, all the way down for morgan stanley, action sees more tax cuts or the tax cuts continuing to give off. here's a quote from morgan stanley, though a growth correction does not mean recession for the economy, financial markets march to a different drummer and may respond like they are in

recession. another difference, morgan looking for a much bigger dropoff in government spending than action. action thinks the market has this wrong, that government spending will help continue growth into 2019. the trade war, the government shutdown all can affect gdp. we started one place, we'll see what the ending is for the year. roger jones is still with us here in our london studio. roger what is your view on the u.s. economy for this year and the impact it will have on the stock market >> i think it's crucial from those numbers that we saw in terms of looking at the importance of the consumer you realize quickly that business investment, government spending, they don't make a huge difference it is what the consumer does this will be the key aspect. i think that at this point in time it's a wait and see the crucial element is how the

labor markets hold up. if the labor markets don't hold up, we'll get into troubled times. there will be a recession potentially. there will be a slowdown that by the nature and timing of it is more likely to be the beginning of next year as long as the labor markets remain firm, then the markets can actually stabilize >> so investors should be watching more closely than any other factor, non-farm payroll numbers in the u.s.? >> yes seeing how employment works out in the u.s. and how that moves forward. >> to what extent is there a risk that this growth scare, as you say, the data doesn't really support the moves we've seen in the market, to what extent is there that this gross scare turns into a growth slowdown >> absolutely. this is the classic down cycle risk that we get situation when corporates come under pressure what do corporates do? they cut costs, labor and we get

into that scenario where labor cuts costs, jobs are lost, consumption is lower and it goes back around again in this cycle, which is only broken by intervention from monetary or fiscal means >> looking to 2019, where would you prefer to be, europe or th u.s. when it comes to equities >> i think you get paid to take the risk in europe more than the u.s. if everything goes smoothly for equities, we navigate these challenges out there, you have a much better upside potential for europe than the u.s. >> where in europe would you look for value which sectors provide opportunity do you think >> so, again, this comes down to asset to risk and risk budgeting. if you want to take equity risk at the moment, go to a lot of the sectors, we're starting to see an element of recession getting priced into share prices fundamentally, maybe not in terms of sentiment from it, like we see today when apple has a

warning, ultimately the stock moves lower, we're getting more in the price we're seeing that in areas in europe, like european industrials that got hit hard. european banks, for political reasons they got hit hard. these areas could recover quite quickly if we have a more modest outlook in terms of the economic outcome. >> so sector-wise, industrials are offering good risk/reward in europe i think about the different regions, yesterday italy came back into focus, a couple of days after we saw budget resolutions. so clearly not the end of the road forever italy do you think italy's risk/reward is attractive here >> i never like an investor taking political risk in terms of political decisions a lot hinges on that the same with the uk and brexit. anybody that feels that they have a handle of how that will pan out is a little bit diluted.

in terms of those political risk areas we would probably look to avoid those. that's why industrials are probably more interesting from that point of view you don't have to take the political risk >> roger, we'll leave it there thank you very much. that was roger jones coming up next, tesla shares drive lower as the electric carmaker slashes prices on all its vehicles find out why after this break. c

first trading session of 2019. christmas cheer for next as the retailer posts a surprise rise in sales during the festive period sending shares higher alongside its rivals just briefly to bring you uk construction pmi data, the construction numbers have come in at 52.8, that's against 53.4. that's a three-month low coming in at 52.8, against 53.4 and very slightly lower than the reuters poll of 52.9 let's look at forex markets. sterling slightly weaker versus the dollar, down about 25 basis

points below that 1.26 level. the euro strengthening a bit versus the dollar, up about 30 basis points the real story in fx markets is the yen. you are seeing that strengthening there. the dollar is about 1% weaker versus the yen, some safe haven flows into that currency overnight. let's look at european markets and see how the regions are faring in early trade. early on we had seen a bit of a dip across europe. that is -- that dip is remaining in place the worst performer of the bunch, the german index, the dax down 64, 63 basis points france just behind them. a marginally weaker start to 2019 >> shares in next are trading at the top of the stoxx 600 after the retailer posted a surprise rise in christmas sales. however the company cut its

full-year improvement outlook and blamed lower margins as well as higher operational costs. next says full price sales grew in line with expectations thanks to strong online demand. if we look at some other major retailers, both here in the uk and across the continent, you can see marks & spencer trading higher next there up 5% this morning. ab foods up 1.78%, and h & m trading more than a percent higher we're joined by david beetle from moody's investment service. this is another example of firms grappling with this transition from bricks and mort tore ar toe and next seemingly doing okay. >> that's true next was at the forefront of that shift many years ago. now online is a big portion of its overall revenues, indeed a growing proportion of its profitability. so it's results today, kind of

in line with hour expectations nothing new in terms of major surprises there. you know, digging a bit deeper you see that bricks and mortar revenue was lower than expectations, their online revenues were a beth hiit highe. those come with higher costs in terms of fulfillment they trimmed their profit forecast ever so slightly. it's not a big move, it's broadly in line with expectations for what we see as a solidly positioned bellwether retailer >> would you say the bounce we're seeing today across the retail space is more of a relief rally because we saw mixed signals, we saw the asos profit warning in december, a few weaker data points out of the uk is this a case of analyst expectations and investor expectations too severe? or is this a case of the

retailer sector in better shape than the market was fearing? >> it's difficult for me to say in many and as a credit analyst i'm focused on the long-term trends. day-to-day volatility happens. people are looking for trends in a limited number of data points. we published a report a couple days ago, trying to predict what might happen around the christmas results season again, still pretty early to say. but those longer term trends were about the declining footfall, the uncertainty that consumers have around brexit, so consumer confidence is at a low. i don't think the uk high street is out of the woods. companies have got to continue to adapt their strategies for the differences in the way people shop these days to a few years ago, and that trend for more shopping online will

continue in the years to come. >> when you bear in mind that trend, those changes we've seen over the last few years, which of these major firms, from what you've seen is successfully handling that necessary transition >> it's a fair question. certainly next are doing well in that respect with the growth in online revenues offsetting the decline in the bricks and mortar estate. marks & spencer is going through a major transformation and that multi-year strategy they have to try and reengage with their core customers and improve on their clothing and home sales certainly it is a factor it's not easy for any of those guys people want value and convenience. when i think about it in those terms, someone like primark is doing a job on the value side of

things then you have the online specialists that have had strong growth from a low base >> in your outlook, you just mentioned it, the brexit uncertainty is certainly weighing on businesses short term how should we think about the impact of this uncertainty as a phenomenon is it something from which uk retailers can quickly recover once brexit is resolved? is it something that changes the longer-term trajectory of these businesses >> i don't think it's about brexit per se being a major influence on the longer term business prospects for retailers. they have to adapt to the way we shop in terms of fashion for food, it is less of an issue in terms of that shift in the way people shop. the amount of food bought online

is 4%, 5%, 6%. you compare that to fashion, it's up there in the 20% and 30% range. that will continue we'll see a change in the way people shop. people are -- retailers are already reacting to that with store closures that trend will need to continue >> julianna talked about the decision to vote to leave the european union, and one consequence is the collapse in the pound strength what does that mean for british retailers? does that somehow turn itself around if the pound recovers once -- if we make the assumption that brexit is resolved, if the situation does resolve itself >> the underlying issue is high levels of competition. that coupled with the sterling weakness has meant that

discounting has been prevalent to an extent we have not seen for many, many years factored in that weaker consumer confidence and such. that's a big factor in the discounting side of things the competition, that big challenge with online players, that will not disappear overnight if you have a bounce back in sterling it does mean there's a poszibility for retailers to try and keep some of those cost savings for themselves to improve their profitability. >> thank you very much for coming in appreciate your time that was david beetle from moody's investment services. let's look at u.s. futures we are still a few hours away from the u.s. open yesterday's session quite volatile with u.s. stocks suffering steep losses early on, then reversing course to change little closed. the big news came after hours from apple with their q1 profit

warning. that is filtering through to weakness in u.s. futures the dow looking to open 300 points lower the nasdaq to open about 168 points lower the s&p to open about 36 points lower. more than 250 prescription drug prices in the u.s. rose at the start of 2019 according to data from rx savings solutions the world's best selling medicine, humera was among the most expensive drugs as manufacturers raised prices on products as the trump administration continues to publicly pressure the industry on cost levels there were fewer drug price increases than there had been a year ago make sure you tune in to cnbc's coverage next week from the jpmorgan healthcare summit. tesla shares closed sharply lower after quarterly delivers of its mass market model 3

missed expectations. the carmaker also announced a $2,000 cut on all of its models. this is designed to offset the loss of green tax credits for drivers who buy electric vehicles phil lebeau has the latest on this announcement. walk into a tesla showroom and you'll immediately see prices have been cut down $2,000. the automaker is trying to entice potential customers to still buy a tesla despite the federal ev tax credit being cut in half to $3,750. >> this is really coming at an inopportune time for tesla this puts them at a competitive disadvantage and they can expect a loss of tesla sales have grown, they have sold more than 200,000 vehicles, the place at where carmakers lose the ev tax

credit that helped sales of electric models like the leaf and the bolt but gm recently sold its 200,000th electric car, so its customers will soon see what te tesla buyers are experiencing, a substantially lower tax credit, which begs the question, will the phase out of those incentives hurt these models >> carmakers can expect a loss in sales tesla may be more insulated, but still they can count on a significant drop in sales because of this. >> the federal tax credit of $7,500 is not going away any time soon for other automakers who sold relatively few electric vehicles, but don't look for this credit to be extended

further. the trump administration has given no indication that it wants to give americans further motivation to plug in their cars phil lebeau, cnbc business news, chicago. coming up on the show, apple sends shockwaves through the markets as it lowers guidance for the first quarter.

welcome back to street "streestreet signs. looking at how apple traded after this news, in after hours the stock dropped about 7.5% there were a number of red flags in the lead up to this, but clearly the market was taken by surprise to some degree. let's look at european apple

suppliers. ams suffering the biggest blow, down nearly 18%. it was down steeper, more than 20% early on this stock tends to be highly volatile, reacts strongly to news around apple. no major surprise that we're seeing a negative reaction elizabeth shultze joins us what did tim cook say then >> tim cook blaming a couple of factors, particularly weakness out of china he's saying the outlook there is lower than expected. this is a combination of macro factors and demand for the iphone he singled out a few other things he talked about the strong dollar affecting sales he talked about weakness in emerging markets and general supply chain issues affecting how sales will go in this quarter compared to prior quarters overall seems to be hesitant on the outlook for iphones, we've seen that several suppliers cut their outlooks

he was optimistic on the possibility that the broader macro picture could resolve specifically as it relates to the u.s. and china i wanted to play you what he told josh lipton on that >> i had many discussions over the course of many months to be constructive, and to give my perspective on trade and the importance of it to the american economy as well. and i feel like i'm being listened to in that respect. so i am actually encouraged by what i've heard most recently coming from the u.s. and from china. hopefully we'll see some changes. >> elizabeth, we've seen a sharp reaction across the apple supply chain here in europe talk us through what is really driving those shares down across the supply chain >> we saw weakness in asia for a lot of suppliers based in china and taiwan all were lower in europe we've seen losses

across the board what this is saying is that apple suppliers are worried they'll not be able to sell the products there have been warnings in recent months about this this is not the first we're hearing. several apple suppliers have cut their expectations suppliers knew there may be concern that apple is not able to sell as many iphones as they had in the past. >> thank you very much, elizabeth. the story not going away soon. shifting focus to another story in focus today, the u.s. government shutdown. this partial u.s. government shutdown moves into day 12 after a white house briefing for republicans and democrats yielded no break through hallie jackson has more. >> a situation room briefing

that went nowhere with neither side budging the president reiterating he wants more than $5 billion for a wall >> 5.6 billion is a small number it's one month in afghanistan. we're talking about national security this is not just a border. this is national security. >> reporter: democrats don't want to give a penny nancy pelosi with savannah guthrie. >> if you and the democrats can't meet half way, if you don't compromise, then why isn't the shutdown partially your responsibility, as well? >> it has nothing to do with us. it has the president saying i will hold six agencies of government hostage to my campaign promise that i was going to build a wall, and that mexico was going to pay for it that is so ridiculous, a mexico is not paying for it, a and b, we have better use of funds to protect our border. >> reporter: if this stand-off keeps going, so will the partial

shutdown. >> as long as it takes i mean, look, i'm prepared i think the people of the country think i'm right. >> reporter: hundreds of thousands of federal workers won't see a paycheck until the government reopens. like air traffic matt sibiato in north carolina he has a savings account but -- >> it's almost depleted. that was my rainy day fund and it rained. >> reporter: the president is focussed on the border where this week u.s. officials tear gassed a group of migrants agents aimed at people throwing rocks at them, not at migrants trying to cross into the u.s i'm pleased to bring in thomas gift joining us from washington, d.c. thank you for being with us. who has the upper hand in these negotiations >> well, i think the problem is that both sides think they have the upper hand, which is problematic and one of the reasons why we've seen such a

protracted government shutdown from the democratic side, they're thinking trump said he would own this shutdown. from mr. trump's side, he thinks that he's playing to what his own base wants >> and in terms of the economic impact of this shutdown, the consensus view seems to be the direct economic impact is pretty minimal. if we think about lingering effects of this shutdown, what can we expect? >> well, i think the problem with this shutdown is that it reflects the degree of dysfunction that exists in washington currently any time there's a sense that democrats and republicans are not working together to get basic tasks done in government, that's going to hurt the investment climate it's going to hurt businesses, it's going to make the overall economy more likely to stagnate

program that drug prices, there's been fewer increases this year than a year ago. that's partly down to administration pressure. is that an area you think where both parties in the united states could work together >> i think that may actually be one of the few areas where we could potentially see compromise democrats have been talking about this issue for a long time, as part of a more comprehensive approach towards improving access and affordability for healthcare donald trump also campaigned on this as well, though he has kind of ebbed and flowed. it's not always clear where he falls on this particular issue so this is one area that democrats and republicans could conceivably come together on going forward. >> democratic political leaders in the house and senate pointed out frequently over the last year or so that the trump administration has the benefit

or has had the benefit of a republican house, republican senate, and has yet failed to pass a huge amount of legislation. do you see there's going to be less opportunity for fresh legislation given that democrats have taken control of the house? >> absolutely. i think what we can expect here more than anything is political gridlock that's typically the default position when you have divided government anything that the house is going to want to pass, the senate is more than likely not going to want to. so it's very difficult to see the two sides coming together to achieve something legislatively over the next two years. >> is there a chance that president trump actually welcomes the fact that congress is focusing on this as opposed to focusing on something that could be more detrimental to his presidency, like launching an investigation inside the administration >> i actually think that's a big

part of this mr. trump views this as a deflection and a useful deflection at that he had a very bad end of the year in 2018, he is facing enormous pressure coming into this new legislative session with house democrats expected to launch a series of investigative probes into all sorts of corruption and abuse and these sorts of things. so anything that mr. trump can do to turn the focus off from that negative news story to something else, i think that's a net positive for him >> very quick question for you, obviously there's going to be pressure from house democrats what about pressure from his own party? we heard from mitt romney in this "washington post" op-ed elizabeth warren announcing an exploratory campaign is he going to face a primary challenger do you think?

>> i think it's less likely than likely that he will face a presidential challenger from the republican side. there's so much inertia towards mr. trump going into 2020 unchallenged but certainly mr. romney's scathing op-ed in the "washington post" didn't help. if anything, he was signaling to other republicans that you don't have to follow trump if you don't want to i'm there for you. so to that extent it may have effects of at least making some people think that he can be challenged going into 2020 >> we'll leave it there. thomas gift, thanks so much for joining us that's it for today's show i'm willem marx. >> i'm julianna tatelbaum. "worldwide exchange" is up next.

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apple rocks the market after slashing guidance on big concerns out of china. tim cook sitting down with cnbc as apple's stock plunges we'll bring you his comments straight ahead. futures right now tumbling on the back of that big apple news. >> right now the dow is pointing to a more than 300-point drop at the open and currencies crushed apple's rare warning sparking a mini flash crash in the currency markets. we're digging into that big move in the yen it's thursday, january 3, 2019, "worldwide exchange" begin