indicator. >> yeah. >> and i'll save donut fries for another time >> quite a tease >> mcdonalds is down so do nut fries are your defense in this market >> thanks for watching power lunch. closing bell starts right now. welcome to the closing bell. i'm sarah. >> and i'm scott walker. >> the dow developing on alp sales warnings it plunged 677 points at the low of the session we are moving south again here down more than 600 points with an hour to go. >> not a great set up really the market was down 677 at the low. the dow was. if you had any bit of optimism you would have hoped that the market would be rallying off the lows and that apple too would be

pulling off of its own lows. it only suggests the market was really taken aback by what it got last night from apple. >> we were trying to figure out if there was a new mentality by the dip instead of fade the rally. so far it doesn't look like that the news has been coming in fast and furiously this afternoon besides the manufacturing we also got the warning on chinese travel lots of concerns coming up we'll dive deeper into the apple trade and discuss what is to blame stocks rocked by manufacturing data, what the numbers say about the state of the economy, if the investors should be concerned about a recession. let's get to our top story mike is watching the fallout in the broader tech sector. over to you with the interview and the stock move of the day. >> sarah, apple is down 10% right now.

that is after lowering revenue by $7 billion at the midpoint. that revenue miss was all iphone tim cook telling me that it was primarily related to china >> 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. what i believe to be the case is the trade tensions between the united states and china put additional pressure on their economy. >> it wasn't all china though. developed markets disappointed too. cook said he leveraged a pull to pu spur iphone upgrades they are not waiting around to see if that works. the average price target is 212. today is 173 they are looking for silver linings in that report like the strong gains we saw in services and wearables but it's those that are in charge today, scott.

>> thank you very much apple's warnings sending shock waves across the market hitting tech stocks as well. mike has a look at the fallout >> yeah. we are getting a look at the impact in three different orbits around apple the first one is applesupplier those are all down more than 40%. this is doin 27% a lot of the bad news or a good portion was priced in beforehand still, you're getting this kind of hit today on the actual guide down from apple. next chart will show other nontech stocks with china exposure a lot of the usual suspects.

so basically large capital goods that you export hit harder boeing and caterpillar nike and it is already down by almost half. not getting hit as hard. it seems to be more of an echo trade. finally one of the big holders of apple, owner of some 240 million shares fascinating, down 5% you'll remember he has been a really good outper pormer. it is taking them apple all at once so it's kind of funny the market decided to meet out the pain >> the buffet benefit with the dow.

some of the other financial stocks they are in big the stock slide didn't represent the stocks by any means. >> all right we'll see you in just a bit. joining us now and the impact on the market we have chris here, an analyst from raymond james. we have executive vice president and founder and chairman and portfolio manager. so chris, you have been cautious on apple >> yes >> what do you do now that some of the fears have been realized? are you more cautious? >> we are still not buying on it we are concerned about a couple of shoes to develop still. you worry about inventory that needs to get played out. we don't know if extent of that. we are concerned about deceleration because some part

is still tied to unit sales. that will have an impact our biggest concern is actually going into, you know, the iphone sie cycle later in 2019. we are not picking up any significant upgrades in next year's phone if it isn't selling particularly well we have to count on a down year next year once all of those things are settled. >> you guys have a good read into the individual investor, mom and pop, what are they doing with apple >> well, first of all thank you for having me. it really started last night as soon as the stock was halted we saw a big spike in the amount of trading that was going on we provide trading around the clock. we saw 67% increase overnight in that trade finally this morning by 10:30 we

had done as many trades in apple as we would normally do in the entire day >> wow >> what are they doing with it they are doing a lot of back and forth. it is pretty evenly distributed. >> what are you doing? >> it is a tough one it was selling at $233 it is now down to 140 dlarsz so it seems like it would be a bargain. in normal circumstances 140 would be a bargain however you don't know what's going to happen with the trade war between trump and china. if the trade war continues you'll have problems because there will be huge tariffs on apple sit a very difficult decision my opinion is that it's a bargain here at $140 it is a buy, but there's a lot

of uncertainty going on. it could go down much lower if the trade war materializes as we may expect it to be. if it is settling though $140 is an absolute bargain. >> one of the x factors is what does apple do if anything about the price of iphone. >> right the problem is they haven't had a lot of flexibility to do that. one is component prices have been rising. one of the benefits they have had -- and this is part of the global slowdown is memory prices are coming down. it may give them some room to -- wiggle room as you go intonext year as you go into 2020 we are expecting a 5g iphone. the problem is is component prices will go up again.

it is a bit of a difficult situation in terms of pricing. >> do you think that this feeds into some of the more barrish narratives at apple being dead, the worst day is behind it and iphone growth and, you know, the ability to pass on the high prices or is it strictly an economic worry about china >> it is partly ability that but the phone appeared to not be selling well, you know rg right out of the gate. i think it's probably a bit more than macro it is not necessarily apple's inability but that innovation costs money. that's tradeoff

question for you, apple itself is down close to 10% it cannot be good if it closes near the low of the day can it >> definitely not. you'll take a few more trading days because usually today, the day the news comes out a lot of these decisions will be emotional. it is terrible i have to get rid of apple others will say use of bargain down here. it is for people think through the issues i would say it is a critical element. it will be a few days i think. you're right from an emotional standpoint, if the stock, you know, stays down here today right around 140 it's not good >> yeah. it's given up 2 bucks since noon >> taking about 101 points off the dow. all of technology within s&p, that sector is lower

i think there are two names up right now. it is sharply lower. it is down almost 5% what sort of trading angst are you seeing related to apple whether it is semi conductors that apply to apple products or others that do a lot of business in china >> i think as mike pointed out earlier a lot of those have been hit already. some are down 40%. so, you know, retail clients we have tend to nibble when they see things get down at prices they find attractive as you guys nknow, apple is one of the most widely held stocks you know, for a lot of our clients they have held it for quite a while. >> yeah. what is attractive enough? what is a good price for this stock? what do you think fair value is now? >> the problem that i have and

usually methodology is you don't flow where they will fall out. i would like to see get some bad news and watch the stock fail to react to it. >> what is your rating >> market perform >> that comes out in fall. >> wow >> far while >> that's the issue. >> thank you good having you on today >> just ahead on the closing bell we'll have much more and

break down the stocks and sectors leading to declines in this critical final hour >> is apple's pain simply an apple issue or just the tip of the iceberg in it could see the biggest hit from the trade war with china straight ahead. with all that usaa offers why go with anybody else? we know their rates are good, we know that they're always going to take care of us. it was an instant savings and i should have changed a long time ago. we're the tenney's and we're usaa members for life. call usaa to start saving on insurance today.

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we are back on the closing bell we have about 45 minutes left of trade. the dow is down 633 points the low was 677. it seems we are moving back in that direction let's dive into what's driving this selloff right now seema we begin with you. >> we are losing steam as we approach the close a number of factors is a combination of apple sales outlook. a surprising move by the state department warning americans of travel to china. how does it conferencely call it the broader u.s. china trade discussions? they have been aggressively extending. those moving to the downside it is all about tech it is the worst performing sector and suppliers materials and industrials moving to the downside. more defensive sectors are

moving higher. take a look at our china trade index. it is underperforming the s & p 500. it is worth noting it extending beyond stock immerging market is down about 1 to 2%. safe haven buying continues to be a big theme gold is at a six month high. the japanese yen continues the yen gained 7% in the past five trading sessions. >> that's not a good sign. the australian dollar is at a ten year low >> absolutely. >> thank you let's send it uptown at the nasdaq for what's moving there >> after five days of gains apple's declines hitting the nasdaq hard. it is really if drag today getting hit hard by that

warning. apple getting a 17 month low giving back all of the gains since the lead up to the first $1,000 iphone back in 2017 its market cap below $700 billion below 690 billion to be specific they will continue to see slow up tick in demand. today's other big news being required by $75 billion. bio tech firms shares surging and hopes for more mergers we are going to see a lot of talk about bio tech next week as jp morgan health care conference gets underway. one last, netflix doesn't have any china exposure it is reclassifying how it

reports sfreemi reports streaming expenses it is ability that dvd segment >> yeah. always thank you. big miss for the index also contributing, the index which is a key read on manufacturing hitting the low level in more than two years joining our closing bell today chief global market strategist is the managing partner. we have rick at the cme group. christina, you pick your poison today. weak economic data worries about trade and then of course apple >> and it's a con fluns of events what i worry most about is apple. this is a canary in a coal mine. we are likely to tell us they are impacting their businesses now, the u.s. is saying this is great. it is a sign that the u.s. is winning trade wars these are u.s. companies that

are feeling this pain. >> yeah. it's a good point. i feel like you have two problems now you have the fed that the market seems to not trust and really the point, i think the administration may have miscalculated what this trade war would do to u.s. companies kevin was out saying it is not going to be just apple you'll hear from a whole host of companies and as larry always says, corporate profits, stocks are likely to go lower >> well, i don't know. a thousand dollars phone, china, the iphone is a fairly saturated market there's a lot of competitors i do think that the micro issues of apple figure in a majority of the occurrences that are going on it's impossible to handicap the politics and on the politics it's messy it certainly doesn't mean that the short-term pain, if the deal

is right isn't worth a long-term gain with regard to chinese companies. i don't see this through a political lens i see it tlhrough a slowing len. i would think the answer would be yes with regard to how all of it fits together, the interest rate complex in the last four weeks is so totally tuned in and paying attention to what's going on and like the split decision on why apple is moving. i think that partially it is slowing. partially it is issues of positions coming of ofcoming off another issue is when things get

crazy good collateral is hard to find treasuries are not only good collateral their haircuts are smaller i think it accounts for some in the long end as well do keep in mind that we have mostly parallel shifts on the yield curve. with regard to the fed, you know, that's everybody's antagonist they are not my antagonist i think somebody has to have the nerve to try to normalize. i think j. powell will notice all of the feed back we are getting. >> negative interest rates

forever. to think that we are surprised by apple acting this way after we have had a whip saw market really since october doesn't shock me at all. i wouldn't have been shocked to see it down another additional 5% >> i think when you look at that move overnight it speaks to the idea that it isn't about apple it is about people getting it wrong. it is about people being flat footed at the end of the year. maybe they were flat footed. maybe washington got it wrong. the market is speaking to us today. what it's telling us is china matters a lot more than the fed does right now china matters to apple and, look, there's a lot of soul searching going on people will say what happened to apple right now? do we own apple? i got news for you you own it all right if you own the s&p you gone the apple. you own the dow. >> good point. >> we are swimming in apple.

that's the opportunity it is also the problem it is because of how heavily reliant we are apple is the tip of the iceberg. if we resolve the china trade issue then maybe we get some of this cloud lifted and we can focus on the real economy. the feds will be our friend shortly. it will be a tail wind to this market i think people might feel a little more optimistic knowing that the bond bubble never really happened. people shouldn't have sold that the first half of the year they could have kept them. that's what made me nervous is them dumping into these names. if they stayed the course the pain might not have been so bad. that's why the world was flat footed >> it is what i have said today. apple is the tip of the iceberg. you'll have a ton of companies that have large exposures and they will be cutting their

numbers. >> absolutely. this is a modern day war of the roses. the real war of the roses both male lines of both houses were wiped out. so this idea that a trade war is easy to win is just a fallacy. we are living through the pain and it can get a lot worse from here >> by the way, the auto analyst was on here and he said going into auto show it tells you it will be an all you can eat of profit downgrades from some of the auto makers. one of the groups that is so closely tied to this market. you a company like nike which says it's not seeing an impact it's not so clear cut. zbli don't find downgrades are very helpful the day after they drochlt i find it's more help tfl day before the stock drops that's not what we are seeing today. >> thank you we have under 40 minutes to go here before the closing bell.

dow is still down 625 points right now. apple is a good chunk of that. but we are seeing broad based weakens across the board most groups are lower. technology industrials and materials along with china and global growth concerns the trade war havinga big impact on sales. we'll look at which other companies could get hit the hardest. details on the block buster big pharma deal. we are back right after this break.

>> apple almost down 10 pocket ver vieson is also down. some of the other defense ifr plays like walmart and coca-cola are also fairing a little bit better than the others a massive deal in the pharma space sending in completely opposite directions today. we are back with details on this mega deals >> a block buster pharmaceutical they are merging as they are the price tag $74 billion.

bristol-myers is -- it would be the biggest health care deal of all time shareholders will receive stock in cash giving them a premium on wednesday closing price. they say the deal eases concerns for those of both companies. they suffered a series of set backs. they will lose protection for the best selling drug by 2022. they called the deal expensive but logical. the companies say the deal will $2.5 billion worth of savorinins shareholders from both companies and regulators still have to give final approval of the deal. if it happens the acquisition is expected to be completed by the third quarter of 2019. right now the best day since d

1998 back to you guys >> any other day this would be the biggest story of the day >> yeah. a huge pharma deal the ones largest and also comes ahead of j.p. more morgan health care company >> you can see such a major deal we talked to some this morning saying you kick off 2019 with a bang like this the other players will feel they have to have scale to match this especially if we start to see good indications with these two coming together. it could be an area for activity >> prices have come down enough. it is time for cnbc news update with sue herrera celebrating her 30th anniversary sorry we missed the party. >> i'll save you some cake because it's delicious

thank you, guys. >> here is what's happening at this hour. stop playing the victim. those are the words of pope francis in a letter to u.s. bishops as they begin a week long retreat addressing the church's ongoing sexual abuse crisis it is to restore faith in the church the state department is updating travel warning urging americans headed to that country to use increased caution officials are concerned china may use the exit bans to keep u.s. citizens from leaving that country. a federal judge has blocked a new york city law requires air bnb. it is supposed to help find listings but the apartment listing web site argues it's illegal surveillance a new year's resolution for you. mediterranean diet topped u.s.

news rankings for 2018 it includes foods high in omega 3s and high in fats like fish, nuts and fruit i'll send it back to you >> is that the keto? >> that's not. >> mediterranean >> no. it includes more nuts and things like that. that's what they say >> thanks. >> and no cake whatsoever. >> darn it >> darn it >> bye >> all right the shutdown entering the 13th day democrats retake control of the house today. we'll have that coming up. and after the break apple may be just the tip of the iceberg when it comes to klichi trade fallout. stay with us when the oscling bell returns dow is down 557. read earnings r,

looked at chart patterns. i've even built my own historic trading model. and you're still not sure if you want to make the trade? exactly. sounds like a case of analysis paralysis. is there a cure? td ameritrade's trade desk. they can help gut check your strategies and answer all your toughest questions. sounds perfect. see, your stress level was here and i got you down to here, i've done my job. call for a strategy gut check with td ameritrade. ♪

it is clear that the economy began to slow in chien dpla for the second half. i believe that the trade tensions put additional pressure on the 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 smart phone industry contracting particularly bad in november >> 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 about somebody talking about not buying products because we are american do i think anybody elected not to buy because of that i'm sure some people did my sense is that much larger issue is the slowing of the economy and then this trade

tension that's further pressured it >> well, earlier at the white house council of economic advisers discussed the impact of china's on u.s. companies more broadly. >> this is something people have been seeing coming for a good long while yes. the chinese economy is slowing one of the reasons markets are responding the way they are is people are downgrading the earnings forecast for folks that have a lot of business in china. >> here to discuss the potential fallout beyond apple let's bring in cnbc contributor that focuses on the region. tell us a little bit about your business, what you do. i think you supply and how much business you do in china >> so, yeah, it is one of the largest suppliers. i'm very proud we supply those

companies. about 40 million people every day use our products about 20% of my business is local sales in china and 80% is u.s. >> what's happened to that china business >> so i started in 2007. we grew every year through 2017. so ten years of growth and in 2018 we were down 30%. it was unbelievable. it was like a cliff. when i heard that news about apple i really wasn't surprised. i'm talking about something as narrow as nonstick coatings for small appliances if you extrapolate my experience over this 15 trillion economy you can imagine wlhat kind of dark clouds we might have on the horizon. >> it's a really good read into what's happening on the ground and apple and we played the sound from kevin at the white house who by the way went onto say it's not just apple you then expect any big company that has

a sizable chunk of business in china that their profits will be cut as well. >> i'm much more interested in what they have to say than what an economist has to say. i think he is exactly right. i'm on seven of them one of them is a manufacturing company not too far away from the industry and we have seen the same thing happen there. i'm also on the board of a data services company where we are seeing the same thing happen on the tech side too. it is a huge story it is not just an apple story. it's not just a china slow down story. it's what happens when two governments and societies get in each other's face and start messing with each other. a few weeks ago i said the damage to the u.s. won't be done with exports and tariffs it will be done by the chinese messing with companies it's happening

>> do you feel some of that lost business was just a weakened consumer in china? did you feel any pressure? give us a little more color and flavor on why you think they dropped 30%. >> i wish i could report there was a villain that was screwing it up but that has not been the case i think it's absolutely the fact that the chinese consumer is and my product happens to be more expensive than local options i think the consumers are happy to switch to a cheaper product i'll mention something that maybe people don't know. i might have about four companies in the western world that compete with me that are major players. i probably have 80 that are direct competitors people don't realize this. so when you talk about, you know, switching costs a lot of chinese consumers, there's over a billion people there it's really hard when the president throws this

fragmentation grenade and hurts that as well as the tariff grenade on the u.s. side i think that it's really really hard >> how far from the end game are we would you guess >> i don't see an end game, scott. you know, what we have got here is not just a slowdown in china which is happening it is a rich guy slowdown. to a first approximation anyone that could afford an iphone owns stock. it is a rich guy billionaire bust it will ripple across all of the luxury goods and all of the tech companies. that's aside from the long term game going on. that's battle over who will build the new telecom network in the world. china is winning that war spending money in the imamericaning market i think we'll talk about this for a long long time

>> thank you >> yeah. last excellent >> yeah. i just want to make the comment that we are used to getting about six month visibility from our large american clients some of our big clients are saying they down 30 to 60 day visibility if you think about trying to manage a company when it is so volatile it is really really hard i have been talking about the tariffs far long time since the president was elected. i think what we haare seeing now are unintended consequences. i think it comes down to four words, trade wars are dumb it is a dumb thing to do i think hopefully the president stops making this relative argument saying that hey, look, the u.s. is down but it's down less than china so we are winning. i think the u.s. is down and it is an unforced error i don't think he likes to do that so i would recommend make that deal with president z and

get all of us u.s. companies back on track. right now they are hurting us for no good reason >> we'll make that the last word >> thanks. the government shutdown now on the 13th day. is there an end inig sht we have the latest when the closing bell returns alerts -- wouldn't you like one from the market when it might be time to buy or sell? with fidelity's real-time analytics, you'll get clear, actionable alerts about potential investment opportunities in real time.

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we have the latest from washington new congress any hope of a deal >> not so far democrats are officially in control of the white house. nancy pelosi holds the gavel we are in the era of divided government shortly after she was voted speaker she said even though they don't stand any house of getting passed the house plan to move forward with their vote to reopen the government as the mood shifts from celebrating to legislating. >> by have no illusions but we pledge when we disagree we respect each other and we

respect the truth. >> he told reporters that the white house plans to meet with congressional leadership from both parties the last time there was no meeting time or place set yet. >> he said if they want to have the meeting we'll have it. what you're hearing here on capitol hill is the reality setting in that the shutdown will be measured in weeks, not in days back to you guys >> thank you for the update. >> we have about 12 minutes to go before the closing bell check out the major averages it is down 600 points again. these are steep losses we are seeing apple down russell 2000 holds up a little

bit better than the rest basically anything tied to china is down. industrials, materials, some of those commodities and it's spreading broader than that. >> a weak finish to 1820 we'll dive in and do it next ton closing bell move to the enterprise-grade cloud that's built to handle all your apps. ♪ ♪ the ibm cloud. the cloud for smarter business. that's where i feel normal. having an annuity tells me my retirement is protected. learn more at retire your risk dot org.

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a weak finish to 2018. >> it may have been weak relative to december of 2017 the pace of sales last month generally pretty strong. when we were on the sales conference calls today with a nu number of auto makers the u.s. consumer remains strong. it will be about 17.4 million vehicles any other time people would say that's a great sales pace. take a look at general motors. when you look at what they have done over the last three months, remember, they report sales on a quarterly basis they were down 2.7% 2018 was the first time since 2014 that gm failed to sell at least 3 million vehicles in the united states and yet the stock under pressure why because of concerns that china

may be slowing down. in fact that's the main focus for a number of investors right now. how much will china weigh on the industry overall look at the supplier stocks, terrible right now look at gm it's under pressure finally take a look at the pace of sales for the united states for the year we are expected any minute now to give the official number. it is likely to come in at about 17.2 million it is the fourth straight year or last year was the fourth straight year with sales topping 17 million vehicles. best four-year stretch ever. when you look at that today everybody is saying we don't like what we see in the future back to you. >> yeah. and you mentioned that china is a big part of that >> sure. >> where are the warnings like we got from apple from some of the big auto makers? have we already seen that or are they coming? >> we haven't seen warnings about china.

we know third quarter sales were under pressure the expectation is the fourth quarter saying it is likely sales were down 3 to 4%. it is the first time you'll see lower annual sales in china. we haven't seen the warnings yet because of china if that happens don't be surprised if we start to see that either here in the first quarter or going into the second and third quarter. >> we did get the announcement from general motors on the plant closings and significant number of playoffs. >> right and that's due to capacity here in the united states >> sure. >> overall there are way too many around the world building far too many vehicles. one interesting thing, you heard this earlier today, this could be the first time in nine years global auto production drops it does not go up but drops. it is saying something about the state of the auto business worldwide. >> and demand too. >> yeah. >> very interesting.

>> we are back with the closing count downright after this >> and after the bell main street, what one investor says he is not spooked by the warning. the closing bell will be right back the dow is down 630 points hey... saved you a seat.

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it's getting ugly as we go towards the end. >> yes i don't think we'll see much of a liquidity event here on the bell i think they will soak it up that we have seen throughout the day here it hasn't been a pretty session overalthough >> biggest that the market will continue to face >> it is just growth you know, the evaluations, are they going to start, you know, reign in the multiples a little bit and start to calibrate some of the evaluations i think there's reasons to be skeptical they could get out of the way in the near term >> do you get any relief tomorrow >> yeah. i think the way is day is strading right now they seem to have stabilized them here. they haven't turned them over. i think we'll get a little bit of support tomorrow. >> you get we the jobs report as well it will be a big day

>> a lot of information. it has been quiet so far because of the hol day we are looking at what comes out tomorrow as an indicator of things to come >> thank you you know, one of the catalysts was today? that was apple all of that taking place after the bell last night when am cut the rev flew guidance dramatically than people had expected it was a stunner you knew today would be difficult. it has been throughout the day the dow was down 677 apple accounting for about 100 points of that market tried to fight its way back it looks like we'll go out close to the lows of the session but nonetheless that was the biggest story of the day yields falling again and dramatically so as we continue to watch those here. as we said, all of these things going on at once >> it is a reminder of the reach apple has. asia closed down technology was the worst

performing sector there. >> thank you second hour of the closing bell begins now. >> another ugly close here at the new york stock exchange. welcome to the closing bell. scott is joining me along with mike santoli let's take a look at how we finished up the day on wall street new lows just as the close there. the dow closing lower by about 660. it is still brutal 2.8% apple a big chunk of that closed lower, 9.96% worst day in years

a big drive on s&p down 2.5%. nasdaq is finishing lower by 3%. the russell 2000 down 1.85%. worst day for stocks since christmas eve. it was the worst ever towards the stock market apple the story of the day was a catalyst for the selloffs. we'll discuss whether apple needs to cut iphone prices in order to combat the sales concerns in china and beyond seema is here. let's start with you >> another rough session on wall street we started the session on the apple story. the data weighed on industrials and materials. rate sensitive sectors actually

posted gains for today shares of apple with today's losses down about 40% from the october high as you were discussing a number of them moving to the downside ranging there. that china effect being felt across sectors and you look at some of the industrial names leading the declines on the dow as did apple with today's losses we are looking at boeing not only for 2018 but starting the year down about 5% lastly travel stocks a number of those names have been aggressively expanding to china moving to the downside by 5% >> apple is the only low what a low it is retracing the

gains since october highs. it isreally casting a shadow across ship names. a lot of these names have already kind of foretold this shortfall because of apple it has them getting hit yet again today. we also saw some of the chinese tech name s hit as well. china put on new online games. it hit stocks like last fall they are just opening things back up here into the new year finally we did have a few stocks bucking the trend. getting acquired for $74 billion. it is igniting a number of names but also a couple of other names in retail including o'reilly

doing pretty well. if they are not buying new cars will be repairing them back to you. >> thank you joining us is stephanie. ally is here from ubs ishere i think the stock market made to separate the vulnerable. in fact 1,200 stocks were up today. but the market didn't allow for it treasury yields got so compressed your pricing at a global stall of some type it wasn't real lay washout but

it was this relentless repricing for perhaps a china recession of some sort and a macro stall and trying to force the feds hands here one final point, if this is all the market made you a little bit of an issue. you a 4% buffer in there you should have gotten a little more out of it you have to see the market respond a little better. zb who would have thought you would get this kind from apple you had been hoping far better earnings picture i'm wonder if you are rethinking it now >> for the past year we have been worried about tariffs and the economic growth as well as to earnings growth in the last 24 hours we are starting to see it play out in ways that are a little surprising apple's announcement, there's a lot going on with it cle

clearly they did see it having some sort of an issue for them if you dig deep into the number one-half of those people that were interviewed in the survey said it was tariff related in terms of the slowdown. it's starting to bubble up we'll have to see over the next couple of weeks what happens in terms of that. i'm sure there will be more maybe not to the extent of apple but i'm sure there will be more. >> how does it reshape your expectation for 2019 growth and earnings >> it has not been a happy new year so far. we are really at the point where if something happens any where it matters everywhere. i think stephanie's point is a good one we are sort of at hold until we start to see what comes out of 2018 third quarter announcements but even more what companies are thinking about 2019 and moving forward especially banks this was the beginning of that cycle. i think there are three things

out there. the apple announcement today feeds into all of them three things have existed since february that took us into october, november and december which are really out there it is a very unorthodox administration that last year policy helped immensely in the tax repatriation and this year we are starting to see the really negative implications priced in on the company side. that's one the second is people want to see and maybe we'll get more tomorrow that sensitivity that they are going to make decisions based on that. it seems we do think that if the market is pricing in zero rate hikes. ubs is still at 2. let's see what the next couple ofl weeks bring. the third thing is global growth it feeds hugely into the china story. so we still don't have any on those three thing. they have been waeighing on

markets. >> earlier today council of kpl economic advisers an how it impacts the markets. one of the reasons is people are downgrading earnings forecast for folks that have a lot of business in china. >> we know that weaker earnings were priced into some extent to stocks i don't think the market was pricing in really ugly earnings. apple upsets the whole picture on where you were thinking the numbers were going to be >> but they have specific issues, right? >> part of what he went onto say, any big company with exposure into china will be taking their profit numbers down >> it shouldn't be that

surprising though. we have already heard from tiffany. we have already heard from starbucks. all of them have said the same thing in terms of the economic slowdown not to mention tariffs but their economy has been slowing since the beginning of last year. >> so down 4% each today >> that is a complete china play if you want to do that they are kind of the companies that you would own. i just think actually they have held up fairly well in light of what's going on. they down substantially from last year. they could have collapsed today. what i thought was also interesting today, energy and financials, relative outperformers. that's in the last couple of weeks it's been what we have been seeing. >> the fear is that the flood gates open now though. for every apple there will be

five large companies that are coming out >> yes i think people are thinking about it it has been a negative sentiment and negative momentum for months now. it is based on sort of prognostications we have more than a prognostication. we have evidence that some of these fears are warranted. again, as she said, it is not news that china is slowing down. we have seen every fed in the past adapt to these conditions in theeconomy. it was down and less good and based on a solid >> i feel like we are dancing

around the issue >> the market is pricing in a higher probability of recession for sure it's a lot closer. >> the bond market >> it is a lot closer than basically people were positioned for and assets were pricedfor. >> it could be a premature panic. that's what the bond market was. it is a little bit of a buying panic there. i do think that the sentiment towards china is much more pronounced in a negative way than it is the company by company what's the impact, right? it's about the president kind of tweeting in a celebratory way that the tariffs are bringing in billions of dollars right now.

so the idea that aggression on china towards trade is some how part of the plan and the pain is part of the plan it doesn't sit well to a vulnerable market even though i don't think it telling you how it is going to >> how much does the market have to go down before the president changes his tune maybe he will stick to his guns. it has been his core issue from day one, something that he has talked about trying to change. it's hard to know. >> no. he has chosen his base in the shutdown if the market continues to slide, you're right. what is the impact going to be is the market's decline going to force the president's hand i'm not so sure. >> it was a lot more >> a campaign pledge

sit the whole way. china, china, china, china >> 3% and he got it last year. we will have our best gdp in about ten years for 2018 now the bond market is pricing in a recession >> the bond market is something like a recession i would say this time last year expectations went through the roof we were expecting huge things from companies evaluations were a bit extended. by the way, the first quarter of last year was quite disappointing. i didn't lead up to the hype lead by the banks. the markets are down substantially. a lot of companies are doing good things. so let's see what earnings bring. let's not make a huge deal of apple as it is going to be like the entire earnings season i'm not saying it is a one off but might not be as bad. >> the correction happened

because the bond market was telling us it would overheat and inflation was going to take off. you can't kind of confer any of that in any moment in time >> worried about 3%. now we are worried about 2.5%. >> yes airline stocks took a dive today after slightly lowered revenue outlook. reading into this one as well. >> yeah. >> and this is just kind of pressing an already weak trend in that direction. you know, it's been one of those situations where the stocks have looked really cheap far while now. on one hand you say they always look cheap when the cycle is rolling over on the other hands -- >> but this company had an analyst day. >> yes >> to come out and all of a sudden lower guidance that's a credibility issue.

>> these are all been for the whole year except for united >> you're right. in fact there was supposedly a seasonal trade in the fourth quarter that was supposed to happen because oil corrected so much they didn't get the pricing power they thought they were going to get it also compounded the reason why they preannounced. >> would you own airlines right now? >> no. at this point again i would like to see what happens with company announcements, specifically what the fed and financial companies are seeing and planning for. the other thing is i think to a certain extent both of the announcements we have had in the last 24 hours have been very company specific it has happened at a point of turmoil in the market that is exacerbated those conditions just like we saw in december so it is -- so it's hard to be excited about anything right now. it's hard to imagine that the negativity that is priced into the market right now is actually

going to baear out. we have an administration feeling like they are doing wonderful poz 2i6 things for the economy and wants to be known by that we have a fed that seems to be speaking more and more sensitive and accommodating to that. you know, i just don't see all of this negativity i don't see a 15% decrease in earnings we could be wrong. when you look at some of these characteristics if you have a day like this why are financials up, this sort of feels a little broken to me >> you guys seem in sync >> it is interesting to see the sector leaderships and back to your point about is the market expecting a recession or not, guess what it has been utilities and very defensive sectors. all of a sudden you switch to the new calendar year and you

have energies and financials outperforming. it's something worth noting. i'm bang pg on it that it does it has gotten so extreme let's see -- >> for now it could be you buy it in the first days of the year >> yeah. >> outperformed by a lot today so if it extends from there you take it but right now, you know, it's a noisy market. >> yeah. >> thank you >> thank you >> see you at noon >> thank you we have a news alert right now. we are on the phone with the details. what do you have >> hey just announced a few weeks after she left this role and she begins as she comes and she was cfo of blizzard entertainment. i did speak moments ago exclusively with jack dorsey

he also credited helping with the search that consisted of wall street names like former goldman sachs. i asked him if the he would play the same large role that she previously did she became the face of the company so much so that shares have fallen steeply. he said he wanted to show more of the executives perhaps learning from what it did to investor confidence. he noted that they so close. as for the outlook i asked for about continuing to run for companies. he said he is confident in both and has no hesitation regarding rising interest rates. he said he doesn't think any one person understands what's going on and that they are focusing on what they can control. he says they are prepared. back over to you

>> big week for blizzard alumni. thank you for the news still to come, apple blaming china for slowing iphone sales could the problem be that consumers are unwilling to spend a thousand dollars for the newest phone we'll tackle that question next. falling to the lowest level in two years we'll discuss whether investors should be worried about the economy ahead of tomorrow's jobs report ♪ [ dog snoring ]

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we spoke to tim cook he joins us with the latest on the fallout. what a fallout it has been since that interview >> yes apple clearly stunned investors with this move cutting revenue guidance the problem is iphone sales not as strong as expected. tim cook did pin the problem primarily on china he said in trade tensions adding

to the pressure kept arguing he leveraged to boost iphone upgrades like the trade-in program. >> to a consumer the trade-in looks like a subsidy it lowers the price of the phone that you want. there is a substantial benefit economic and environmental we are also working on placing ability to do monthly charges in so it begins to look like more of the traditional way of paying for it through the carrier by, you know, taking the rates out for 24 months or so. so you wind up getting an incredibly new phone that's so much better than what you have had for 20 to $30 a month or so. >> investors here if you're skeptical as clear positives in the kwarquarter like services a wearables.

>> all right thank you. many analysts have attributed to softening sales to the rising price of apple products. many are skyrocketing faster than the price of inflation. can it be attributed to the prices in joining us is jeffrey at the washington post who recently wrote about apple's pricing issues also founder and president of jewel financial. tell us what you have found about what you found in terms of apples price increase and how it may end up hurting consumers and how far it has gone. >> being loyal to apple is starting to cost you more and more money this average american spent $634 at the end of this year they

spent 898 numbers. it is a huge jump in samsung only went up 150 other phones down slightly the price of being loyal to to apple but across the line of products is rising fast. it is faster than inflation and faster than almost everything else we measure in the economy >> but maybe you're comparing apple to oranges, pardon the pun. so bmw, gucci, they don't cut their price. they are a premium brand apple is a premium brand >> yes but do you need a new iphone froebl not do you even want a new iphone? the latest ones haven't been that great the products haven't been keeping up with these premium prices >> i don't know.

my husband wakes up at 3:00 in the morning when the apple products go on sale. is it a problem or positive that prices are up? >> it was a problem and now it's a positive let me give you that specifically we came on this very show prior to earnings and exactly what the other was speaking about the our concern, the price of those phones we thought it would slow down. we had no interest in buying a stock with that high of evaluation with slowing revenue and slowing earnings because of those numbers. now you a stock that's down 40%. this is the time where it is attractive investors are the market are always going to shoot to the opposite extremes on the upside and downside we feel it's happening right now and the investors are going view it as a positive if they are

willing to step in and buy one of buffets favorite names here, 40 below where they could have a few months before. >> what do you have to assume if you're a buyer of apple at today's pricing in terms of resiliency of the cash flow which is incredibly strong do you to make any leaps that this is not a core business in steep decline? >> i don't think you do. i think it's again, it comes back to evaluation everybody was talking about the forward multiple of 12 my concern was what if the e went down? now that evaluation is much higher now you have an e that is going to go down let's say it goes from 1460 it comes down to 12 the stock is approximately $144 a share. >> we have to take you to the

briefing room at the white house. president trump has just joined the news conference with reporters. let's take a look. >> happy new year to everybody thank you very much. i appreciate that. thank you. i want to start off by congratulating nancy pelosi being elected as speaker of the house. it is a very great achievement hopefully we'll work together and get lots of things done like infrastructure and so much more. they want to do that very badly. so do i. hopefully we'll have a lotov of things we can get done together. oi just wanted to explain the folks that i'm with, people i have known over the last two years, people that have been extremely supportive of what we are doing on the border, they are tough, they are smart, they think. they love our country.

they have every quality and i'll tell you what, i really know them well. they have the kind of qualities that we need >> it's ice and it's border patrol and a man who has really become a friend, brandon i will say this. brandon judd has been a in terms of justice for people, in terms of fairness and in terms of the toughness you need you pretty toughsituations >> you never had so much support as i have had in the last week

over my stance for border security, for border control and for frankly the wall or the barrier. i have never had anything like it in terms of calls coming in, in terms of people writing in and tweeting and doing whatever they have to do i have never had this much support. so i'm going to ask brandon to step forward and say a few words. this group app repend herehendee 17,000 criminals trying to get across the border. that's 17,000. that's one category and there are 34re7bty of others the other thing that's been so incredible is in terms of drugs and stopping drugs with that and everything else plenty unfortunately come through our southern border. i will ask brandon to come up and say a few words and maybe introduce our friends and very brave people

brandon, please, thank you >> thank you president we really appreciate all of the support you have given the border patrol. my name is brandon i'm president of national border patrol council i can personally tell you from the work i have done on the southwest border that walls actually work. you hear a lot of talk from the expert that -- you hear lot of talk that say that walls don't work i promise you if you interview border patrol agents they will tell you that walls work i worked in arizona for ten years. we didn't have physical barriers there. illegal immigration and drug smuggling was absolutely out of control. we built the walls and illegal immigration dropped expo then shlly. any where that you look where we have built walls, they have

worked we appreciate president trump and all of his efrtds in getting us those physical barriers there is also a lot of talk on the shutdown that federal employees do not agree with the shutdown i will tell you that's not true. with that i would like to introduce art. he is the vice president he is also a long-time border patrol agent he would like to say a few words about the shutdown >> thank you >> we'll continue to monitor that the president making an appearance in the briefing room. >> yeah. the first one. he said congratulating nancy pelosi on house of representatives. they said hopefully we'll work together and mention infrastructure among other things the president could work on he also excellents from members of ice and border patrol who are

commenting about the border patrol the president holding strong there continuing to advocate his position for the border wall saying he has tremendous support for it it is pretty clear by bringing these folks up the president is trying to humanize this issue, if you will, from people who are down on the border trying to protect it >> he is trying to do that unfortunately the president has not gotten significant public support far wall majorities have consistently said they oppose building a wall the republican controlled congress did not pass money for a border wall. the president did pro totypes chlts it is even less likely that that happens under a house of representatives controlled by nancy pelosi the president has got hips into this shutdown.

it is not clear how he will get out. he is trying to move the needle on public opinion. he has an uphill fight ahead of him. >> it was so interesting one of the first things the president mentioned is we will do infrastructure spending. let's go back to the president he is speaking again >> we were working on different plans an different ways of stopping the problems that we have in our country. other countries have other problems with nobody like ours the economy is bringing people in we are doing so well with the economy. unemployment is 3.7% it is among lowest tonight i appreciate them. they basically said -- and i think i can take the word

basically out without a wall you can have border security >> i won't work. you can see what's been put out on social media where thousands of people are rushing the border nobody knows much more than i do having drones and other forms, they are all fine. they are not going to stop the problems that this country has we have never had more wanting to come and that has to do with a lot of other things. we are doing great as a country. the better we do the more people want to come in. it is an honor to be with you.

thank you all very much. appreciate it. >> he made that first appearance to talk about the wall that he continues to push for. we were speaking with you earlier not only about the issue of the wall but the president commenting on the economy. the economy is doing well. >> it's doing well but as you guys have been covering all day long we have some darkening clouds over the economy. market is declining and taking note of diminished prospects either in 2019 or 2020 and so what the president is feeling pressure to do is to maintain the support of its political base he also has robert mueller

coming at him. he was asking about the possibility of infrastructure in in theory it is something they can work together with this president on, however, we now have deficits back to a trillion dollars level. it will be very difficult to get agreement between the president, the democratic house and the republican controlled senate on spending a lot of money on infrastructure i would not expect him to go along with that. you know, i think the prospects generally speaking for legislative accomplishment among this divided washington are pretty bleak >> all right thank you.

how would wall street take it? i remember there was a lot of optimism, corporate tax cuts and recipe for groelt. recipe for a rally got the tax cuts and deregulation got the trade war, how would wall street react? >> i think it's one of those things that's sort of a modest positive right now i don't think the market is eager for pure deficit finance but sure, if you can get something down it would be fun >> i'm not sure how much they would be willing to stomach. >> politically it gets tougher to write the big check >> first they have to open 13 days >> we will look at how apple's

selloff is impacting wall street and main street, whether retailers are buying the stock on this decline. we'll discuss whether december jobs report will calm some of the concerns about the economy. for your heart... your joints... or your digestion... so why wouldn't you take something for the most important part of you... your brain. with an ingredient originally discovered in jellyfish, prevagen has been shown in clinical trials to improve short-term memory. prevagen. healthier brain. better life.

apple shares plunging today after cutting the rev flenue guidance leslie, what did you find? >> apple is a critical stop. if you recall months ago worth $1 trillion. the largest in multiple indexes. a huge contribute to today of course the story is different with declines. vanguard was the largest shareholder in black rock and state street also among the top holders they held shares largely through the passive products

it may have lost upwards of $10 billion combined today it is a second largest shareholder. it stands to lose almost 4 billion dlarollars if the holdis are the same according to facts that apple has held it is 915 wealth management. it is 200 hedge funds. it is important to know those d disclosures. so we'll have a sense of how much when the next 13 are due. guys >> thank you >> let's bring in tom fort he is the analyst who is on apple at a $260 price target a retail investor shared his portfolio and says he still owns shares of apple. are you waivering as we have

this conversation today? >> no. i was fordotunate enough at the midpoint of last year. so because my portfolio is about 85% cash i really don't have as much stock in apple as i could have had which is something i am quite thankful for right now >> i'm sure you are. i'm surprised you don't have a bigger smile on your face today. >> tom, 260, is this still right? >> the answer is yes so if you look at apple shares following today's pull back they trading at a 10% cash flow yield. it is tremendous value working in favor for the stock is that the company ended the december quarter with about 130 billion in car they have $100 billion repurchase program in place which we should get an update in april or may this year

today we definitely a dark day i still see value in the shares of apple >> were you blind sided by the announcement that we got >> the notion that there was weakness in iphones was not a surprise so we had lowered our sales forecast to the bottom of guidance the fact that they reported that the sales are going to be 5.5% weaker, that was a surprise. it is highly unusual and surprising to see weaker than expected results >> has any of this caused you to i guess sort of reassess sort of the reasons you own apple or things that you would like apple to do from here strategically? i don't know if it would mean making some sort of an ek by sa - acquisition. >> you realize that the market has gift wrapped itself from buyers that sat on the side line for years.

you the major indexes. you have apple in the red. it's a perfect environment to start buying in way more than you could have i brighter days are ahead. >> the fact that the iphone was softer, it's not a surprise. i agree with you on that the magnitude by which it fell off a cliff in rev flenue from china has shocked even the folks who have done the most work on this thing it seems like you're being dismissive of the dramatic decline. i don't know how you could have a price target this thing is going to nearly double in 12 months, really? >> if you look at the cash flow that apple generates while understanding that the results are disappointing it still generates very significant cash

flow if you look at where we go from here i am of the belief that the company can make adjustments on the strategy to try to stimulate it and you could see -- >> what does that mean are you talking about cutting prices on the iphone is that what you're talking about? >> sure. you're talking about extending financing toconsumers. >> it is the ability to extract the highest margin out of the most expensive opportunity >> we'll be back with you 12 months from now. >> looking forward to it

>> thank you so much >> thank you warning signs for the economy on the heels of weak manufacturing. friday brings the first jobs report of this new year. fed chair jay powell makes the first public remarks of the new year we'll put them all into context next coming up on fast money one says it's about to be an ugly earnings season. we'll explain what has him so worried. that's all at the top of the hour on fast money

we've got a news alert on don lobe's third point leslie picker has the details. >> person with knowledge of the matter telling me the hedge fund posted the year down in 2018

down 11% for the year. the bulk of the losses coming from their december returns. some of the biggest positions include holdings in industrials like utx and dow dupont. i know you covered this closely. they ran a campaign at campbells and have been a shareholder in that stock down about 16% through the month of december. now it's important to note that the returns in 2017 amounted to about 18%. so this is more a revision to the mean for them. back to you. >> another underperforming hedge fund, last year. >> but one of the better performers over certainly in recent years and over a longer period of time has dan lobe's third point. certainly relative to some of the other names we talked about. >> for sure a lot of hedge fund managers say we have a global portfolio so don't compare to the s&p. seen 11% is underperforming.

>> the ism manufacturing index showed slower than expected growth hitting the lowest level since november of 2016. >> jobless claims for the last week of december exceeded expectations increasing by 10,000 to 231,000 claims a little higher than estimates here to discuss the state of the u.s. economy ahead of the all important jobs number. michelle mier. scott wren, senior global equity strategist at wells fargo global investment institute michelle what do you expect for the jobs number and the wage number >> yeah, i think it's actually going to be a pretty good jobs report looking for 215,000 for non-farm payrolls that consistent with the adp survey this morning which was rebust and even the ism it was a react headline a lot of the components were weak but the important measure within the ism held up well i think the jobs report just fine on the headline and in terms of wages, the year

over year rate is likely to slip a bit lower to 2.9% because of difficult base effects from this time last year but nonetheless, in general, pointing to an environment with the labor market is tight and wage inflation heading higher, i think the question will be how much investors care. will they see the jobs numbers as more of a lagging indicator and focusing more on some of the early indicators that could tell us about what's to come going forward? >> all right that's a good question for you scott wren. what's more important jobs report or the ism today which was des appointing >> for us really michelle mentioned the initial jobless claim number sara did as well. you look at that number anything below 280 is a darn good number. now granted we've been at multi, multidecade lows until recently. and a little bit of pop up in that number. we don't think it's that big of a deal and then tomorrow certainly we're going to see a decent

headline number for non-farm payrolls and what we've been watching really is that wage number, that average hourly wage number appear if if does back of a of 3.1. the market would like that because one thing we haven't had at this point which you typically would this late in a cycle is really a margin squeeze. i mean operating margins in year, next year, they shall be good we haven't seen that big surge in wages so for us that ism number, 54 and change that's a good number. now below expect aches sns certainly it was but still that's nsbik active of of an nightmare economic scenario around the corner. >> michelle, even know though the numbers hold up okay domestically, can we ig near the implied message of the bond market i mean what is the bond market fixate the on in the way of growth expectations that's not in the data? >> i don't think we could ignore

it markets have information and we're supposed to take a signal from it and clearly the moves of the market have been dramatic. and the way i think about the linkage is market moves are the first step the next step would be the survey data or the soft economic data showing weakness. then in turn it ends up showing in the hard economic data. and the more -- the longer we have the market strain the more likely is the negative feedback loop kicks in. we're in early stages of that, first seeing the evidence of weakness in the survey data. not seeing the weakness in the hard economic data so i think we have to be kwafl in terms of reading too much into what markets say. we know they can flip around very quickly if some of the risk factors die down but at this point we're supposed to remain cautious and take all information, whether coming from markets, surveys or from the actual economic data into consideration. >> very, very quickly, michelle, if we were to see a turn or slowdown in the u.s. economy how

long would it take for jobs to catch up because jobs are late rb o, right. >> they are they they do tend to be late. it would be several months before you see anything significant in terms of weakening in the labor market. the first thing to look, for would be sloweding hiring. going from 2000 pace to 150 or below. but the real challenge will come if firing jobs up up jobless claims ticking up. keep a close eye on those measures. >> that's which scott mentioned. >> thank you representative. michelle, scott. >> thanks, guys. apple stock plunging today and itbrs and reputation may be taking a hit as well we'll discuss that next. i know there is a guarantee. it's for my family, its for my self, its for my future. annuities can provide protected income for life. learn more at retire your risk dot org.

another brutal day for wall street bulls the dow closing lower by more than 600 points. s&p also got slammed the nasdaq had a 3% down day, mike and tomorrow into jobs report and a powell -- >> yes. >> not a speech on a panel with bernanke and yellen. >> it's a rich conversation probably but not clear if it's a well-defined message or if it's going to be to have more improvesed i think the market was stepping back from risk not knowing what to expect from the jobs number but the bond market wants to

price in economic weakness. >> see if apple gets a bounce tomorrow telling on how people view that. >> you have a full day flush from extradepressed levels stuck in the 140s. >> "fast money" begins now "fast money" starts right now. live from the nasdaq market site over looking times square. i'm melissa lee traders are dan nathan guy adami. >> another wild day for the market the sea of red one analyst says there is an easy way to profit this year he will be here to tell us what it is. plus $74 billion that's mouch bristle myers is paying to buy cell gene. is there another big deal coming but first we start off with the markets selloff. the bear roars again it was the warning that shocked wall street.