my brother, stay warm. >> everybody out there >> it's fargo. >> be careful of frostbite. >> they're used to it. >> i guess. >> of course watching apple. the first time company management able to discuss the pre-announcement and the severity of the slow down in china. >> and nightly business report, too. >> thank you for watching "power." ♪ good afternoon very warm welcome to the "closing bell. i'm wilfred frost. >> i'm morgan brennan in for sara eisen apple earnings on deck set to release at 4:30 p.m. eastern sharp. >> i'm excited few more exciting earnings releases huge implications for other stocks and of course - >> new metrics. plus, some investors blaming the market's volatility on the

fed shrinking the portfolio. we'll discuss with don kohn. 59 mupinutes left of trade today communication services and technology that lead the declines in terms of sectors in the s&p. consumer discretionary and industrials the only outperformer. >> dechfense contractoring lift apple is lower ahead of the results. now to the reporters on earnings dom and josh dom, let's start with you. >> morgan, wilfred, a lot of numbers. we are at the quarter-mile mark. 27% of companies within the s&p 500 reported their numbers and of those 27% of the companies 74% of companies have beaten analysts' estimates and 24%

missed estimates and a positive start to the earnings season with regard to growth, it is still a positive story there, as well with the companies that reported and if all other companies in the s&p report as expected, we will see a gain in earnings per share by about 14.2% meanwhile, we'll see a gain in overall revenue 5.6% generally positive theme check out what's happening with industrials and energy because earnings per share could be up by about 60% for energy. easy comparisons there industrials up by about 26%. consumer staples one of the big laggards up 3% in terms of enings growth and the big laggard utilities down by 11% and keeping an eye and ear out with regard to china, a global slowdown and themes to watch as the earnings parade rolls on back over to you. >> thank you very much

after the close, we'll get earnings results from apple, disclosing metrics for the first time josh lipton with a preview hey, josh. >> wilf, here's what the threat expects when apple reports after the close. earnings per share of $4.17. and that's on revenue of $84 billion. that suggests a jump of 7% on the bottom two other big metrics to watch out for, one q2 revenue guidance the street expects $59 billion there and apple's going to start breaking out a new metric, too for the first time we get services margin. ubs saying that could be in th low 60% range and higher than the overall company. on the conference call you expect to hear questions of china and what is apple's real outlook for iphone demand in the country? tim cook talked about what he was seeing in china a weakening

economy saying xser baited by the trade conflict guys >> josh, looking forward to it thank you. joining our "closing bell" exchange now to talk about the market moves, carrie firestone and rick santelli at the cme in chicago. carrie, i'll start with you. in terms of the earnings so far, a lot of focus on the 2019 guidance and not necessarily been that good we have seen even just today revisions lower, by 3m and harley-davidson and pfizer what is your takeaway thus far for companies and for what it means for the broader equity market >> i think what we had been seeing is a real fear that earnings were going to be weaker than expected and that guidance would be particularly weak so, by the time we got to december 24th and the market was down about 20%, it seemed clear

that a lot of invest ors to entr a recession or maybe in a recession and hearing that earnings up 14%, 15%, they haven't been bad they maybe perhaps not stellar but not bad and some growth for the coming year is a relief. the reason you see a number of industrials and the financials and energy stocks up so far is because what we have heard from financials and industrials has been relatively good it really took the laggards from last year and they've been up 8% to 9% as sectors so far this year and that i think is the little surprising to many investors. >> carrie, we have seen a lot of differentiation this earnings season some stocks jumping some crashing after they have reported numbers what about coming to apple is that going to be a stock specific move tonight or because it's so big can it affect the whole market as it did in january when it pre-warned on

what to expect earlier in january >> that's a very good question and the market, of course, looking to apple but as we know apple is up 1% since the day that they gave those, you know, very weak guidance news and we have heard from starbucks, for example, and we have heard from a couple of other companies in china that gave reasonably good numbers about the chinese consumer so while the chip companies have been weak, there's a suggestion that the government stimulus has been doing a job at improving the sort of sentiment and the spendingpatterns of the chinese, you know, population. and i think we'll hear more about that, of course. it's a big player. it is an enormous market cap and if it has a bad outlook worse than expected and of course, they have given us a sense of how bad it would be but if it's worse than that i would think that the market will be down tomorrow but, you know, hopefully they

covered that in the last call a few weeks ago. >> and of course, rick, we have no dirth of market moving news today. we have a press conference and decision tomorrow. right now ahead of that, treasury yields largely lower. when's the bond market signaling as far as expectations from the fed chair tomorrow >> i think by the fact that it is hunkering down, real compression within the amount of basis points of closing ranges over the last 14, 15 sessions. and i think that speaks quite directly to the idea that the fed most likely is on pause. we can debate if the rate at which we pause is the neutral rate or is close to the neutral weight and i do think that tomorrow although no surprises, i like many look forward to anymore detail to the balance sheet and like to draw a line to the dollar index and the foreign exchange relationships if indeed that form of

tightening, quantitative tightening, balance sheet drain, if that slows or if there is a notion that we can see the light at the end of the tunnel of it leveling off and that is quantified directly through either statements or press conference, most likely the dollar will continue to drift. think about it this way. loosening up the grip on capital a bit should alleviate some of the pressures around the globe and dollars more scarce and i think by watching the dollar index especially in the afternoon during fed watch time and the press conference we should be able to see that dynamic in place. >> rick, if you had one question to the fed chair, what would you pose to him? >> what type of policy could any one given country use to repel policies in other large economies that just don't seem to be calibrated quite right >> interesting well, maybe steve will borrow

that tomorrow. i have a feeling he might focus on the balance sheet, first of all. carrie, back to equity markets, where are you positioning for the moment you said that earnings has been good enough given the current valuations which sectors in particular are you deploying cash >> well, the places that we have been buying have either been companies that really are u.s. sen tri cent ri centric. first republic, the banking sector as i mentioned very weak last year. total underperformer you can buy it for the same price of two years ago and they have made a lot of progress. they have a high touch network they serve high net worth individuals and spent money and margins are starting to improve. we like that story other names i like, constellation brands buying the stock, down 35% because they had weakness in beer transportation costs and glass shortages and we think they'll

solve the transportation and glass problems and own 40% of canopy which is the marijuana company and if you strip out the canopy it's selling for a major discount to other consumer sector stocks and then boston scientific which just resolved its patent dispute with edwards life sciences on a valve that's a real key for their growth and they had an extremely good quarter they preannounced. we think that's a possible takeover and without that they have organic growth of 7% plus globally earnings growth 14% and we like that name. we are finding companys that have either come down a lot or are cheap or u.s. focused or we really like the organic growth story. >> carrie, thank you for joining us rick santelli, as well >> thank you. now, we have a news alert on brexit in the last five to ten minutes or so, lots of voting taking place today, of course, on the amendments of the brexit bil

and one tabled failed to pass. morgan, the point behind the particular amendment if by february 26th, a month before the current exit day, no deal agreed the government to extend article 50 to the end of the year and the amendment was aimed at trying to take no deal as an option off the table but that amendment actually failed to pass and seeing with this amendment in particular and two or three others is the majority in parliament for overturning the result or avoiding no deal hasn't stepped up to the plate today and that's why you are seeing the pound drop 0.6% following the failure of that cooper amendment that said, up over the last week or so. last week the pound up 2.5% and giving up 0.6% from that. >> does it do anything to sort of change the two extremes either a hard brexit or another referendum to get rid of brexit altogether

>> in terms of a hard brexit, the likelihood of that fallen significantly as we know in the last six months. head of research of jpmorgan saying a 5% to 10% chance. that's still very low. indications from today's votes including the cooper amendment an the grieve amendment and the corbin amendment and all three of which failed slightly suggest that the second referendum is still pretty far off and distant so that's why you see the pound fall and not falling as much as as it gained because no deal is still unlikely a lot of possibilities still at play one other big amendment to watch, the brady amendment, watch out for the result of that when it comes up. still to come here on "closing bell," the senate and house with separate hearings on the high price of prescription drugs. but the ceo of mt. sinai health systems said he had a five-point plan to cut costs. federal the reserve is meeting this week. we'll find out what to expect

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welcome back to the "closing bell." the dow is higher. the nasdaq, tech underperforming today. down 0.28% both the house and senate are holding hearings on drug prices on capitol hill today. leaders of both the republican and democratic parties expressing a desire to implement regulations for drug companies >> when it comes to drug prices, you should not need a phd in economics to understand how much your prescription costs. i believe it starts with putting the list price of a drug on television ads as one example. >> 14 drug companies each made more than $1 billion in profits just in the third quarter of 2018 and they have the best lobbyists money can buy.

let me be clear. there are powerful interests here that do not want us to interfere with those massive profits. but there's a strong bipartisan consensus that we must do something. >> joining us now, dr. kenneth davis, ceo of mt. sinai that published the ideas for tackling the costs. thank you for joining us. >> good to be here. >> a bigger picture question are you optimistic something can be achieved because although there's polarization in politics this seems to be an issue that there is common ground on. >> i think there is common ground but i hope that the subtleties are appreciated and we do the right thing so that we can truly lower drug prices without affecting innovation and development of important future compounds. >> how do you do that? >> well, you have to realize that what goes on in europe where the europeans are simply

negotiating as the sole buyer of drugs and have prices that are a quarter to a third as low of the u.s., that doesn't give drug companies a margin for research and development. and what we might be asking ourselves is, in trade negotiations, why don't we sit down and say, you know what? american taxpayers shouldn't be the people who are paying for all of r&d, research and development, in the drug industry you have to raise the prices so it's at least fair for the americans and then we have to say to the drug companies you guys can't pocket that money. >> but are you suggesting that zero innovations from the likes of - >> no. yes and no i know today that drug discovery is largely a function of academic medicine and the nih generating the kind of grants and intellectual property that companies then will pick up. either by buying a small start-up bio tech or directly buying a license from an

academic medical center. big pharma is a drug development house. which is very expensive. >> the list price of a drug being displayed on a tv ad which was just proposed or just discussed in that montage we played is that a good idea the price that consumers and health care companies pay are totally different and no transparency around it so how do you get at that and unless you -- i mean, do you have to target the pbms? does the supply chain need to be taken a look at? >> it is utterly naive if we publish in ads or on tv what the list price of those drugs are that has any relationship at all to what people pay depending on their co-pays, deductibles, the insurance company that they're associated with it's all completely different.

and what it demonstrates to me is that we're not nuanced enough in looking at the subtletys that are associated with drug pricing and what we can do to address it. >> if in a mt. sinai hospital you provide a patient with a relatively mainstream drug whilst they're there, do you make a margin on that? >> do we make a margin on that that's a very complicated question we have to have a margin for our -- through our commercial insurers because every medicare and medicaid patient we lose a lot of money 35 cents on the dollar of medicaid our bills in the commercial payments kind of a bundle will include some price that is include the cost of drugs. >> so is there -- i guess the question is a bigger picture question then. 18% of gdp is spent on health care in the u.s. >> right. >> other developed nations

single digit percentages the likes of japan and uk, 10%, 11%, 12% what explains for the big gap? we are discussing today drug pricing with you but is there something that everyone can do or something - >> fee for service medicine is most expensive way to do things in health care it encourages doctors and hospitals to do more we're moving away from that to what we call value or population management where we get paid a fixed amount to take care of a population and then the incentives to keep people well and not doing things. >> so, when you have a number of potential presidential hopefuls looking to 2020 come out and say medicare for all, do you think that's a good idea >> that's naive, too how many people are truly uninsured? about 5% how can we get them insured? a lot of the system is working

pretty well. >> thank you very much for joining us. >> thank you. >> covering a broad topic in five or six minutes. dr. kenneth davis of mt. sinai. we have got just under 40 minutes left of trade. 38 to be precise the dow still holding on to slight gains s&p lower and as is the nasdaq leads us down lower. tech is suffering today. coming up, former fed vice chairman don kohn tells us whether he thinks the central bank could surprise wall street when its meeting concludes tomorrow. and quarterly results of apple, amgen, ebay and amd we'll break the numbers down later. (indistinguishable muttering) that was awful. why are you so good at this?

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with 35 minutes to go until the close, it is a mixed picture for stocks right now with the dow up slightly about 56 points. s&p fractionally lower down by three points nasdaq the big laggard down on tech stocks and the russell holding steady wilf up next, the fed meeting with former fed vice chair kohn joining us here and plus for the third straight quarter chinese investors sold more u.s. property than they purchased

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welcome back to the "closing bell." industrials top the list, materials doing well, also, but

technology is lagging. communications services, technology itself, the be the tom. consumer discretionary suffering. s&p's down 0.2%. >> yeah. sector to continue to watch with the apple earnings after the bell but meantime, we have a news update with sue herera sue? >> hello, everyone here's when's happening at this hour huawei executive juwanzhou at a canadian court and fallout continues between china, canada and the u.s., canadian prime minister trudeau said he'll hold firm on the rule of law. >> we are focused on fulfilling our international obligations, treaty obligations, making sure that the rule of law is consistently and sbintegral applied and the law is respected. new charges for the man

accused of killing 11 people at pittsburgh synagogue bowers facing 19 additional federal hate crime and firearms charges for that october shooting a federal grand jury returning a superceding indictment today. you may be genetically programmed to be a night owl or early risers researchers finding a genes to shift natural waking time by up to 25 minutes. little kids do that, as well they shift your waking time as morgan well knows. >> ha ha i do and as you do, too. >> you got it. >> all right well, thank you for that, sue. >> see you soon. "wall street journal" reporting some investors blame the market volatility on the fed's shrinking portfolio. joining us now donald kohn at the brookings institution. thank you for joining us today. >> good to be here, morgan.

>> in terms of this fed meeting and your expectations out of tomorrow, what do you think the biggest thing investors, economists really the world should be watching for >> well, i think we are looking at a couple things here. one is how does the fed seeing the economy, what are they seeing the risks to the economy and then how do they express that in their language so i expect that they're continuing to see the economy as strong the most recent data we have, the hard data we have, on employment, on industrial production towards the end of the year was quite solid quite good but there's also a number of downside risks out there that the markets are focused on there's the global economy appears to be slowing. and slowing somewhat unexpectedly and somewhat stronger china and europe are good examples of that markets have tightened some since the fall

although the stock market's come back and below where it was and spreads are higher there's data uncertainty associated with the shutdown of the economy -- of the government some of the surveys of business and consumer sentiment have fallen off as we saw today so there seems -- although things look good in the real data coming in there's downside risks. inflation is controlled. the fed will be patient. >> let's talk about what this means for policy moving forward. if we talk about rates first, we can talk about the balance sheet afterwards, you are going to be focused on the language which last time around said, quote, some foururther gradual increass do you think they'll change that language >> yes, i do, wilfred. that was a signal that's consistent with the dot plot which showed several more increases. i think what we have seen since

then is an attempt to back off and to down play strong forward guidance so i think while they'll try to draw back on the forward guidance, this is a consistent theme that the powell fed has done and they have done it as the interest rates have gotten higher, closer to neutral, the economy's been fine and feel like they don't need that forward guidance and i think this is another opportunity to dial that back and i expect them to do that they could dial it all the way back they could just say future interest rate changes will depend on our assessment of how the economy's doing relative to our dual mandate i kind of don't expect that. i think what we saw in the dot plot and in their language is there's a better chance that the next change in rates will be higher rather than lower so i think they could revert to some of that language they have

had that we have had earlier about the extent and timing of any increase in rates will depend on the data coming in >> don, i'm glad you brought up the dual mandate and the price stability part of that inflation, there are a lot of fears last year that inflation would flair up we haven't seen it how's that going to i guess color and affect the policy this year, especially given the fact that we have low unemployment? >> so i think it does color and affect it. so that's a great point, morgan. i think one of the things that allows them, the major thing that allows them to be patient and to see the -- assess the data that comes in is the fact that one half of the dual mandate, one piece, that inflation seems to be quite contained and in fact it was surprisingly low for a while in the third, early fourth quarter. most recent data back stronger and still well within the range of where they want it so as long

as that continues, they can be patient about deciding when and if they need to raise rates further. that is a key point. >> what about the balance sheet here do you expect the fed chair to stick to the script? i feel like if we're really focusing on the nuances here when he had script in front of him he said what the market wants to hear and other times maybe his true feeling is that it should still be semi on autopilot. >> i think he'll stick to the script that he comes out of the fmoc with. he's representing the committee. and i'm sure his verbiage, the language will reflect that i think it's probably on semi-autopilot at this point you have got $1.6 trillion of reserves in the system that's more than they need to run policy even with an abundant reserve operating scheme and a

floor system they don't need all that but they're surprised and other observers are surprised that the demand for reserves is as strong as it's been, putting a bit of upward pressure on the funds rate relative to the interest rates on reserves and i think they don't know how much further it needs to go so i think he'll -- i would expect him to say we're going to continue to let that balance sheet run off and we'll kind of -- we're feeling our way and learning while we -- while it goes on. no one's ever done this before we're breaking new ground and learning but for now, the balance sheet will continue to run off >> don, is the data from international economies and the rhetoric from their respective central banks another reason for the fed to hold back a little bit? >> i think the global situation is definitely another reason and that's reflected in the other central banks. i think in many places, we have

already mentioned china and the euro area, they're seeing weaker data than they expected. the central banks are being flexible and are poised to take steps if necessary to keep their economies going. so the central bank of china has cut reserve requirements the ecb said it would consider further actions if things weakened further so i think everywhere in the world we're seeing a bit slower economy than people expected. no real flair-up of inflation and that keeps the central banks very much in the mode of data dependence as the fed has said and trying to see where this is going to go, where the slowdown is going to go the other central banks, china and the ecb, are actually seeing more slowdowns, real slowdowns in their incoming economic data

than the u.s. is the u.s. has -- we have this peculiar situation of the incoming data with a few exceptions, housing, still look pretty strong. the markets are signaling concern. worried about feedbacks from overseas so the other central banks really wrestling with perhaps even more difficult problems than the fed is right now. >> don, thank you very much for joining us great to talk as always. >> all right great. thanks for having me on. >> don kohn there. now when we come back, we'll look at the winners and losers of the china/u.s. trade truce. >> we'll break down numbers of apple and instant analysis coming up.

welcome back to the "closing bell." china's cooling economy is having an impact on commercial real estate market as well as the equity markets diana olick with a look at why chinese investors are exiting real estate and seema mody with a look at how stocks fared since the trade truce. diana? >> the chinese are buying but they're now selling more

bringing the net investment to the lowest level in six years. investors from china sold close to $4 billion worth of u.s. commercial real estate last year they sold more than they bought for three quarters but ended up as net buyers only because of a big deal in q1 $11.6 billion deal of global logistics properties after big trophy properties like waldorf astorias they face restrictions on the cash the current trade war is making the u.s. less appetizing for investors. while they're buying less commercial real estate they're still the biggest foreign buyers of u.s. single family homes. $30 billion worth last year. that's down 4% from 2017 but they are now expanding from california into markets in texas, georgia and the carolinas. back to you guys. >> diana, quickly, the chinese

notoriously bought trophy properties what will this do to real estate values >> i think there are a lot of investors now in commercial real estate because there's so much cash on the sidelines so i don't think it hurts the value of commercial real estate in the u.s. broadly because there's still so much interest and pulling money out and it skouf an impact longer term. >> diana, thank you. >> switching focus to brexit, another significant vote on an amendment this one the so-called brady amendment that suggests that there is a majority in parliament for theresa may's brexit deal if she can renegotiate and gives may a mandate to go back to brussels to try to renegotiate. of course, thg something they say they won't do and seeing the pound down 0.7%.

let's bring in willa marks following the developments the most significant being the defeat of the attempted cooper amendment. all in all, do you think fractionally lowers the chance of brexit being overturned >> what it certainly does, wilf, based on the previous amendment that we did see pass the idea that no deal is now something that a majority of parliament doesn't want to see that in theory does imply that the government will have to try to find some way around that. and not legally binding or nor in fact the brady amendment has gone through this very senior conservative back bench mp proposed is alternative arrangements in place of the irish backstop and the insurance policy, part of the agreement that may's government spent 18 months negotiating with europeans to mean if the uk and the eu cannot

agree on a free trade arrangement by the end of the 2020 then there would be this backstop kicking in that would keep the uk as a whole in the european customs union unless and until that's the key language some kind of other arrangement can be found to the satisfaction of both party that is will mean there's no hard border on the island of ireland. brady and a lot of hard line pro-brexit members of the conservative party not happy with that backstop for at least two months and finally unified around this proposal the realistic question now for may is can she get any kind of change from the europe an side and not something they'd been prepared to do for several weeks. >> when we had the original vote on her deal a couple of weeks ago she faced a massive defeat that involved a very clear split within her own party what precisely these individual amendments mean aside tonight,

she has won a couple of votes and she seems to have unity amongst her party for at least the short term which i guess gives her more authority and increases the chances that some form of variation of her brexit deal could pass. >> yeah. she is essentially made a concession or a promise depending on the perspective to the hard line members of her own party to keep them happy she's essentially given her word to do the best to go back to europe and try to reopen the text of this 585-page withdrawal agreement with the europeans even though this afternoon president macron said that's not a possibility. even though the president of the european commission said that's not possible what we have heard over the last 24 hours again and again from conservative mps is unless that happens they will not back a deal and that means we get closer and closer to the deadline if there's no deal the european

commission has exceeded over the last week or so that would still mean a hard border on the island of ireland unless they take measures to avoid it >> willem, thanks very much, outside the houses of parliament let's switch to cass back to china where we are and to seema at hq for a look at winners and losers of the trade truce with china. >> hey, wilfred. optimism around a trade deal quickly traded after president trump and president xi struck a deal in argentina as a string of disappointing data from china weighed on chinese related stocks as an earnings of major multi-nationals reiterating fears of a slowloan. the china trade index down about 6 o 6% and the s&p off 4% in the

same period and emerging markets are higher by nearly 2%. investor attention now turns to tomorrow's trade meeting between chinese vice premier he and ambassador lighthizer where the chinese are expected to offer more ways to reduce the imbalance with agriculture goods purchased from the u.s. and other i.t. issues that they're said to be sharply divided on as the deadline approaches. morgan >> seema, thank you. well, with 12 minutes to go before the bell, the dow is up 39 points right now. the s&p is down slightly, .2%. the nasdaq is big underperformer lack heed martin, l3 communications and harris corp. all higher after reporting earnings earlier today that's powering the industrial sector how they have performed since trump was elected.

tomorrow on "closing bell," an exclusive interview with gary cohn on the trade, the market and maybe more like goldman sachs. we'll be back in a few minutes here ooo. ♪ ♪ wake up early, ♪ slap on some cologne ♪ i'm 85 and i wanna go home ♪ ♪ just got a job ♪ as a lifeguard in savannah ♪ ♪ i'm 85 and i wanna go home ♪ ♪ dropping sick beats, they call me dj nana ♪ ♪ 85 and i wanna go don't get mad. get e*trade, kiddo.

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welcome back lockheed martin, l3 technologies and harris corp. on the move after earnings this morning. morgan has more with the telestrator debut. >> it is my telestrator debut! this is super exciting and, mike, you have been put on warning here with my skills you know, wilfred, we talk a lot about financials, a favorite topic of yours, oil, tech stocks and what that means for the broader markets an one other area to talk about is aerospace and defense. what do i mean by that take a look at this chart. this is the comparison of s&p 500 versus ita etf this is since president trump was elected in late 2016 courtesy of miller tabak and lock at the strong correlation of this chart right now. if you extend it back over the past decade you see a correlation and not as tight as

what we have seen here in the past two years why are we seeing this one key reason that they point out, the economy does well and seen it since world war ii, when defense spending increases in a meaningful way not to say the economy isn't strong for other reasons but it is a key part of that we have seen it play out in the data just in the past year or so durable goods orders, for example. even quarterly gdp numbers military spending is a notable tail wind there. so you can take a look at this you see -- okay. >> wow. >> i'm doing it. you can see -- you can see the decline in the s&p and the decline in aerospace and defense stocks one of the things that actually happened in this same time period as the market turned lower was the fact that president trump said he was considering cutting defense spending that's what sent defense stocks lower so it's interesting, the timing of this one of the things to keep a focus on, we heard from lockheed

martin, 3 and harris technologies today is the expectation to see a defense budget for fiscal 2020 expected that's going to be at or higher than the levels we currently have so you could potentially see more military spending, what does that mean more stimulus. potentially another bigger tailwind for u.s. economic growth this is especially notable, wilf, because the u.s. is shifting its national defense strategy away from anti-terrorism to one that's focused on superpowers lik china, like russia so, it's something to keep an eye on another data point for you. >> definitely. the correlation as you showed since the election was -- i feel like my banks led the way. the correlation for the first year of his presidency and now you take over and you win. nice one, morgan thank you very much. right. up next, we'll be back with the closing countdown. we have got just five minutes left to trade and after the bell

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just over two minutes left of trade we have got the dow jones up very slightly. s&p down very slightly the nasdaq the significant laggard of the day tech stocks certainly trading lower. let's have a look at the sectors which bears it out for you you have the tech and the communications services at the bottom consumer discretionary down there. quite diverse performance. industrials doing well as morgan was just talking about materials higher just going to quickly show you sterling which, of course, took a leg lower in the votes in the last hour. the cooper amendment failed so the house of commons didn't say it was willing to delay brexit legally just yet the pound down 0.6% having risen in the last week have a look at i bring in bob pisani at the four big names reporting. focus on apple trading down over a percent ahead of this. don't forget it guided lower

pulled back a lot and back to roughly where it was. >> will we hear anything new from them we haven't factored in i would point out tomorrow we get alibaba and i want to hear what china has to say because apple's been talking a lot love to hear from alibaba. more industrial names and speaking of industrials we really dodged a bullet today i said at the open the earnings guidance crummy today. 3m, lockheed martin, whirlpool and then caterpillar yesterday the guidance generally lower overall. and i think the market's held up well there's a tendency to drift up on the day before the fed meeting. market's pricing in happy talk right now. who knows what's going to happen >> we did a nice little bit of oil price performance today which helped correlation in general. as we talk about apple, what happens to apple tonight, moving the market tomorrow morning or stock specific >> i think apple is always a

bellwether and so much negative news priced in that i think the potential is on the upside and not the downside. >> thank you very much there's the bell dws ringing at the big board and built by girls ringing at the nasdaq and the close, off 50 points on the dow. s&p down morgan, back to you. ♪ welcome to the "closing bell." i'm morgan brennan wi fred frost will rejoin me at post nine in a moment along with mike santoli well, here's a look at how we finish the day on wall street as stocks settle. the dow up 52 points about .2%. the s&p 500 finishing down fractionally 2640 the nasdaq, the big laggard today, finishing down .8%.

7028 to the upside, it's industrials, materials, energy and to the downside it was communications and tech stocks that dragged the nasdaq lower the russell 2000 also finishing the day slightly lower investors are now awaiting several big earnings we have seema mody watching amd, and of course less than half hour away from apple's earnings, as well. we'll have instant analysis on the numbers as soon as they are released >> ilike what we have done wit the double iphone there. >> very clever graphic right there. joining us to talk about the market day is michael block, managing director and market strategist at third seven advisers, as well. mike, we had middling in terms of trading activity with stocks. a lot of question marks, especially ahead of earnings

still. >> more stocks up than down. we have had the pattern again where the market doesn't want to come in that deep. during the trading session itself overnight weakness i don't want to extrap late too much it seems like we're churning sideways for six or seven days right now. maybe it is just because we're waiting for the fed. we are waiting really for the big growth names to report earnings in the next coming days. >> michael, overall do you feel like we're holding up well or too soft ahead of what is no significant big macro negative news >> things could have been a lot worse today but there's winners and losers and nasdaq is a big thumb to me. what's going on here i think there's nervousness ahead of apple and amd and the question is was that enough to guide down

i spent the day contemplating caterpillar earnings enough warning the market said no yesterday and we'll agree to disagree on that. apple, are things worse? amd, people are worried of intel. i'll point out microsoft invidia, china and they also talked about weakness in the cloud based business are people extrapolating that to apple? industrials, materials and energy is this a china trade anticipation i argue it's more about reinflation, it's happening slowly and i think in a month everybody will say reinflation we are seeing. >> one other aspect of tech, of course, more global so if you're seeing weaker results from non u.s. businesses than others it seems to line up with tech plus most of the big tech stocks are earlier in the kind of pullback process than, you know, the average industrial stock or semis.

>> let's move on and talk about some of the earnings that we saw out earlier today. of course, 3m, verizon and pfizer reported. 3m and pfizer finished higher after reporting a beat eps pfizer's 2019 earnings outlook disappointed showing little to no revenue growth for the year verizon missed on the fourth quarter. that was down 3% i mean, mike, the key thing i guess is that earnings matters and you see individual stock performances changing direction, some sectors come together but we're not seeing universal moves for the whole market. >> correlations broken down a bit. you have more give and take. if you had all three of those big earnings reports 12 hours in advance i'm not sure you would have traded the stocks right you don't know what's baked into

the market until you get did outlook and the reaction to the outtook because 3m could have been easily taken the other way but a stock under pressure for a year right now. >> i'm glad you brought that up. michael, i was surprised to see 3m ending the day up 2% and a company that lowered the guidance for 2019 or came in softer than expected and they did talk about macro risks on the earnings call. >> that's on the heels of caterpillar beaten up for walking about weakness in china and weakness in the finance business, especially latin america. that's a trouble spot. >> higher today, too, by the way. >> bounced back today. pretty beaten up yesterday 3m, guiding lower on china i'll say that's not surprising and may have been pleasant surprise is talking about relative strength in the health care related businesses. look at pfizer like mike said, flip a coin. how's that going to go

pfizer had great results from the emergent drug businesses, innovative drug business, excuse me that looks good. it was the other part, the more boring part of the business that d disappointing. you can find pockets of growth and maybe investors want to try to own here intermediate to long term 3m and pfizer at least for now with the argument they have. it's there >> sticking with the drugs business, we have an earnings alert on amgen frank holland has the details. >> shares falling very sharply down about 3% after the bell after the company reported strong beats on the top and the bottom line and very weak guidance for 2019. revenue was nearly $400 million over estimates eps more than 15 cents above what the street expected and in 2019 the company is expecting to post revenue in the range of 21.8 billion to $22.9 billion. that's xaektd below the 2018 revenues of 23.75 billion. the eps guidance coming in 60

cents below forecast on the top end. now, it's best selling drug enbrill with a decline in sales and best estimates and the conference call scheduled for an hour we're expecting to get insight in the numbers and bring them. amgen shares down about 2.5% right now. back over to you. >> frank, thank you. mike, your reaction here >> here's one where, you know, a lot of the health care stock that is did get a bid in the latter part of last year obviously was because of a perceived safety so i'm not going to take too well to a guidance cut and doesn't seem too severe a reaction just yet. >> let's move on and talk about the shutdown. the partial government shutdown. which hit u.s. consumer confidence with the index falling in january to 120.2 compared to estimates of 124 it is the third straight month of decline for the index

t michael, you are having a look at this. is this a sign of worst things to come? still an elevated level ultimately over any kind of historical perspective. >> i look that the number and look at the december stock selloff, us coming out of the holidays i look at the government shutdown and a lack of a trade deal with china and i say, yeah, this makes sense. lowest consumer confidence in a year and a half. question now is, government gets going. china trade deal, get some news. the harder data is better. if it does, will it drive this a little better? key thing. the market drive it is data. if the january rally is sustainable, that will affect consumer confidence. they feed each other and what i'm watching for this. >> yeah. it's a first sentry in the list of economic data points where we're going to test whether people write it off because of the shutdown this is not a number that's particularly predicted in a very fine fashion, right? it's a survey so aside from the

correlation with the stock market it is difficult to figure out what it's going to be and why the market didn't really take it too hard when we saw the downside disappointment. >> to what extent, mike, though when we see it in a consumer confidence number that it starts to feed on itself, that confidence goes and it falls away, the stock market's fallen, as well? >> there's the risk of that but it seems as if right now because the news flow is so overwhelming in the negative i think what you want to see is wait four weeks, until next month's number and there's a decent chance it looks like a blip. no if not, it is something that will fall away as the overall economy is weakening. >> the surveys are thursday chicago pmi and friday the ism manufacturing. looking for a 54 handle on the ism and that's another one with managers feeling better about the economy, at least better than they did in december or

perhaps november, if you have them more confident on trade deal, we could see an up sy surprise in the number and watching it for the quarter. are we seeing reinflation? the business confidence come back to me that's more of an indicator than this number. >> what does it mean for the fed? mike, meeting kicks off. no one's expecting anything tightening or loosening at the moment but focus really on qula the rhetoric around the balance sheet in particular? >> most likely, yeah i don't think it's going to be very easy for jay powell to be incremental dovish relative to where the market already wants the fed to be because i think that the market is trying to price the fed out for most of the year just about i don't think that's where he goes but yeah we have notes that the fed settling on a number for the final balance sheet size they didn't indicate anything

precise before and difficult to know i think that's about the only thing to expect. >> china trade talks, the other thing that's happening. >> oh yeah how about that >> expectations? >> expectations. i think the thing that needs to happen here is china has to blink on whole concept of intellectual property protection they haven't done that yet and we see what the united states is doing. we have today overnight the confirmation of huawei's cfo is -- there's an extradition request made and noise of criminal charges against huawei and not going away isn't that nice, china to import more energy products and soybeans another to say, okay, we'll stop stealing your software and everything else, god only knows what else. that's the big part of this. the question is, is china going to blink when is that going to happen in the next two days with liu he here i doubt it as soon as we start hearing the

whispers and chatter of that, that's when the tide turned and i think we will. >> michael, quickly, your view on apple ahead of numbers. >> i feel like again to look for a market leader and see where growth is, people seem to be overlooking where they are in services you're overlooking where they're going to be in terms of innovation i think a lot got priced into this let's see what happens, you know i thought that about caterpillar and saw what happened yesterday and today. three-day rule let's let the dust settle. i don't think we get a lot new here. >> okay. thank you for joining us michael block. up next, breaking down amd's earnings and we're counting down to apple's earnings this report with a new metric not released in previous quarters and we have those detailcongp.s mi u wouldn't it be great to have epix?

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exactly what the server number ends up being. we have to see the gaming side we expect a severe miss. we talked about this i think about three or four weeks ago so we expect that number to miss and then back into exactly how much money was made of cryptocurrencies and then the server share number for amd specifically. >> mitch, i realize we are still early in the season but the results from intel that warning yesterday from invidia, when's the read through here, not only to amd but to chips more broadly? >> i think it's essentially seeing a kind of a bottoming out. i think we have another two quarters i think coming down through june quarter and the reason for that is an overspending environment in the year and then secondly on top of that having some supply issues intel's been pretty forthcoming

in terms of what their cpu constraints have been. so you combine it and probably have a more severe correction for two quarters but in the back half probably see numbers start to improve year over year. >> in terms of the read across for likes of apple what extent is that priced in relating to demand in china? >> yeah. i think the demand in china's a little bit of a double-edged sword. i think that, for example, the invidia comments they made, i don't think that's entirely china demand and cryptocurrencies because essentially these miners don't need the product they just launched because essentially no games for it and then smartphone side i think it's probably overdone on the memory side of the equation because what happens is backing into the unit number, probably larger than memory side and probably overdone but i think the unit numbers and expectations are priced in. >> mitch, stay with us

we have an earnings alert on amd. seema? >> shares of amd up about 2% in extended trade earnings came in line with estimates at 8 cents adjusted. revenue a miss at $1.42 billion. the estimate was 1.44 billion. with regards to fourth quarter 2018 revenue of 1.42 billion up 6% year over year driven by the computing and graphics segment and revenue down 14% compared to the prior quarter. we're looking at shares now up about 6% after hours we should put the move in perspective and lost around 4% in today's session and another 8% yesterday on the back of that warning from invidia back to you. >> for sure. seema, thank you catch cnbc's exclusive interview with lisa su tomorrow on "squawk on the street.

meantime, mitch, i realize we have you sitting here in front of the camera and not pouring through the numbers but your immediate reaction to these results? >> i think there is very good. one thing to say now is invidia's by far the market leader in cryptocurrency we can say that the china demand issue's probably overdone and it tells you that essentially that was really cryptocurrency inventory sold on the secondary market i don't want to jump up and down on yet is server number. we have to figure out what the share gain number was f. that's positive, the stock continues to work here. >> what is your take on these? pretty positive and down beforehand >> exactly i think the fact that it did come after we had all of the very choppy and mostly negative reports of the other chipmakers, people maybe got the footing with what to expect here i haven't really plowed through the 2019 guidance but i think we need to check a little closer to see what that is.

>> mitch, just finally, when's the top pick in the sector of your coverage? >> top pick for us is actually synopsis i think that's a misunderstood company. essentially what they do is they create the software design for chips and want exposure to ai, chip that's created in china or the u.s. or anywhere, this's the name to own. i think that with that stock you get three-year revenue visibility and not worry about the cycles and undervalued that the time. >> okay. great stuff. thank you for joining us we appreciate it mitch steves from rbc. still ahead, just minutes away from apple's earnings we have an all-star team ready to break down the results. but first, embattled utility pg&e filing for bankruptcy protection as it faces billions in potential liabilities we have the details when "closing bell" returns we know their rates are good, we know that they're always going to take care of us.

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welcome back ebay just releasing the numbers. hey, d >> hey, wilf it is a beat on the top and bottom lines reporting for fourth quarter earnings per share up 71 krentds versus 68 cents. also revenue coming in higher than expected at $2.88 billion versus $2.86 billion a little light in the fourth quarter, 24.6 billion.

25.4 billion expected. they will return billions to shareholders over 2 years and it is initiating a dividend of 14 krentds. on the call we're listening out for what management says in any commentary regarding the activist campaigns remember that elliott management sent a letter in recent weeks saying that they should spin off stubhub and classifieds business and implement a dividend yield and we'll see if this $7 billion returned to shareholders is in response to that letter. back over to you. >> okay, d thank you for that mike, clearly elliott management having a little bit of an impact right away and not precisely what they called for. >> management wants to end a message to do shareholder friendly things and probably certainly have the financial wherewithal to have capital returned and probably is not

going to in itself satisfy the activists. >> gross merchandise volume coming in lighter than expected and probably more focus for the activist investors. >> no doubt about it keep in mind with ebay lots of europe exposure in the marketplace business and i don't know if that's a reason for the shortfall. >> okay. up next, apple earnings right after this break when they hit. less than five minutes your employees must love you. [ chuckles ] thank you. you could say that. i love you. servicenow works for you. with a $500,000 life insurance policy. how much do you think it cost him? $100 a month? $75? $50? actually, duncan got his $500,000 for under $28 a month. less than a dollar a day.

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welcome back to the "closing bell." pg&e faces potential billions in liabilities and filing for bankruptcy 11 protection aditi? >> reporter: pg&e filing follows a last-ditch effort reportedly to save them from bankruptcy through a $4 billion plan. so why did pg&e not take them up on it? for one analysts say pg&e could have gotten more favorable terms from their own banks but the biggest challenge is the uncertainty around wildfire liabilities and future risk and not access to capital risk also shares of pg&e are way up ending the regular session up

16.5%. why is that? analysts say it's a couple of reasons. one is that because the utility was required to give 15 days advance notice to investors about the bankruptcy filing it was already baked into the price. other reason could be that back in 2001 when the utility filed for bankruptcy investors and shareholders were largely made whole and the stock price rose 145% it's unclear though, guys, whether that will happen this time back to you. >> okay. thank you very much for that interesting to see it higher despite all of that news we are, of course, awaiting apple numbers due in the next minute or so we got a great panel to react whether that happens mike, in terms of the key things we're watching, they have changed the way they reported. talk us through that. >> i think guidance for the current quarter might be the thing people are looking for the most in terms of revenue

guidance overall to see if that really has changed relative to expectations and then the margin on the services business, they're going to give that: hopefully there's historical context for a sense of how profitable this side of things is. >> we'll get a revenue guidance for the quarter that we are currently -- >> ends in march. >> but not the iphone sales numbers but that's the main thing -- >> not unit sales numbers for iphone >> we have got the numbers josh lipton has them for us. hey, josh. >> apple reporting $4.18 versus expectations of $4.17. revenue $84.3 billion. the street at 84 billion as that's what apple preannounced this month gross margin 38% iphone revenue 52 billion. ipad revenue 6.2 billion mac 7.4 billion. wearables, home and accessories,

7.31 billion, a record services revenue, 10.9 billion, up 19% services gross margins, so that is new metric from apple, 62.8%. turning to guidance, apple's guiding q2 revenue between 55 and 59 billion and they say they're looking for gross margins in the quarter of 37 and 38% guys, back to you. >> josh, thank you very much for that initial jump in the share price, mike, that guidance for the quarter ahead, 52 billion to 55 billion and i think consensus looking for closer to 60. >> yes 59 i thought was kind of a number 58, 59 i guess this is a measure of the fact that people leaning negative even relative to the published sentiments >> and of course, lots more to come on the earnings call ahead. josh, you've already had a

chance to speak with tim cook and got color of what he might be saying later. >> yeah. i had a chance to sit down with tim cook and talked about trends and themes i wanted his sense on china, as you recall when they announced what cook highlighted is weakness in china, weakness in the economy. getting into january things have improved from where they ended in december and that gives us optimism you don't know what will continue and point out that seems to map to trade tensions, as well, that there is a bit more optimism in the air in january where certainly i feel that anyways i'm encouraged by the comments coming out of both countries i also did ask him, guys, about services can services continue to grow even as iphone units decline cook telling me services are largely connected to the active installed base and talking about the total active devices in people's hands and connected to the 1 hadn't 4 billion and very,

very little of services revenue connected to current quarter sales and people out there subscribing to apple music, i cloud. they're holders of the 1.4 billion devices and the conference call at 5:00 p.m. eastern and we'll be on it >> josh lipton, thank you for bringing those headlines and those numbers. let's bring in the panel for a reaction jon, ed, ross and dan morgan and ashley carmen. jon, i'll start with you i know you have been watching the numbers closely. that services margin, 62.8%, your thoughts? >> i don't know what to think of that because i don't know how they calculate it sounds like it's pretty good anything in the 60s sounds pretty good and we need to understand better how apple calculates that. i think the numbers that are overall important, the overall services revenue number looks

good, up 19% that's positive. i think that guide overall is positive even though it's really the street was looking for $58.8 billion and the top end of the guide is 59. you have to imagine apple is being somewhat conservative here at least so i mean, it doesn't sound like a huge amount of iphone inventory probably floating around out there of course, we have to wait to hear commentary on the call exactly why they're guiding and where they are and how optimistic they are. overall, pretty decently positive. >> dan, clearly guided down at the start of the month and the guidance for the current quarter was a little bit soft relative to expectations. given that are you surprised to see the shares jump after hours or do you think expectations were just so low coming into this >> i think overall initially

from the numbers that we have based on as you said the lower guidance that was given it looks like a pretty good number. as jon was saying earlier, that services number looks really good we need more color on that but 55 to 65 billion the range and came in at 59 in the second quarter so just based on this initial information after the numbers were lowered down a couple weeks ago it looks like a pretty good number again, we want do get more color in terms of average selling prices and everything going on but looks like a good number initially. >> ed lee, looking at the notes from you before we got the numbers today. services, services, services looking at these results right now, looking at this release of a new metric, is apple beginning to succeed in changing the narrative? >> yeah. i mean, i think so i think taking a closer look at how this business is faring, it

is the biggest services quarter ever so they have been on track for turning it into a massive, massive, you know, $40 billion plus business going forward. i'd like to get a better breakdown as to what that compromises. how much from i cloud and the advertising business that flows through and then the 30% tax charging all the app developers have their stuff in there? so that will give us a better idea of where their growth will come from. they're spending a lot of money on original television production when will that roll out? you want us to look there? give us more information >> ashley, there's always a lot of talk about whether they should be making an acquisition of not do you think that's realistic, a sizable one at least >> i mean, it's totally possible i don't think that's where they're going like ed mentioned. services is the discussion right now and it's all signs are

pointing to a potential content service on tv. they have air play to tv makers that are not apple brands. so, seeing how they do their own services i think is much more indicative of maybe where the company goes in the future. >> ross, a same question to you. we had dan ives on earlier suggesting maybe apple make a purchase around a streaming service. i know you have made some suggestions of your own in terms of acquisitions. what do you think right now? >> absolutely right. they haven't really made a real commitment to grow services beyond what they have done in video. it is a pretty weak effort in music. you know i really think that the best thing apple could do, bob iger's on the board of apple and great to buy 20% of disney, rights to all the disney apps for free if you buy an iphone for three months they need to jump start services

more have more of an exclusivity to the services they provide. we are seeing issues like we chat in china. your can't provide services if you're not controlling even your own operating system so apple needs to own this content somewhere and they need to make some moves if it is gaming, buy activision. if it's streaming, get involved with disney. you have tesla but all of these companies would be wonderful to add to the apple ecosystem even as strategic partners an time to reach out to, you know, double down on the services business. >> ross, based on the report, you're a shareholder in apple. would you be a buyer >> i would apple did something very good this quarter, lowered the expectations they were very straightforward at the beginning of the year and we took our lumps but they delivered what they said with the quarter and happy about that not sitting here hearing an even

worse quarter and i think a lot of investors are and looking at apple's valuation it's just cheap. dirt cheap for such a great brand and company. i was in the apple store yesterday. they still have the best products by such a large margin and god forbid they made the store sell some services it might be helpful, too. but we think apple has a great future over the long term. >> mike, is that the main reason why it's trading up right now? the valuation? >> obviously all optimism wrung out of the stock and interesting where it's traded up to is 157.90 something where it was before the warning right? before that january 3rd warning trading down to 142 so now we have gotten back above where it was when they warned overall market is up huge since then apple is underperformed the bounce in the overall market and playing a little bit of catch up because it could have been worse is the conclusion. we can talk about the strategy,

capital acquisition, content, right now wall street wants to see things are not falling apart more than they expected. >> we're going to be back with so much more reaction to those apple numbers but in the meantime ed lee who is up on the platform here at the new york stock exchange come on down here to the floor we want to talk to you. >> a grown-ups table finally awesome. >> finally the upgrade >> all right well, we'll take a look at apple shares right now those are up about 3% right now after hours on the heels of the results. we'll return next with more insight and analysis on those numbers. also, consumer confidence number that hit today, mike will alisn ats the data with hi anys oth to have a hundred percent renewable energy goal. if we don't make this move we're going to have changes in our environment, and have a negative impact to hawaii's economy. ♪

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welcome back apple out with numbers our panel back again with us to discuss. jon fortt, ed lee. >> i made it to the desk. >> ross, dan morgan, ashley carman mike santoli, as well. ross, i want to pick up with you. you are a positive long-term shareholder of the stock and you think tim cook should be out is that right? >> yeah. you know, i think if you're going to be a services company you need a services ceo. you have got a product ceo i was very disappointed at the

store yesterday. it's beautiful and products. you can't break down iphone sales and the things and say you're a services company and walk in the store and can't find a services to buy anywhere or anything to learn about services and you go into the amazon store and filled with amazon services and ito. the issue i have with tim is i think he's done a wonderful job in the tenure keeping apple where it needs to be within this range. but as far as doing anything that's going to propel apple over the next decade he has done this and not willing to make the difficult decisions to take risk and i've heard things like he's making content decisions like with television and it's similar to me like, you know, going into a farm and trying to pick the right crops. it is like he has no background in the businesses that he wants to be in and he really needs either to step aside or find a more help or change management but i think it's time for a change. >> he's done a hell of a lot

more than keep it within a range, ross, you have to say ed, your response to that? >> i'm with ross on -- look. services is going to be the growth story for apple going forward, at least that's what they're telling us and in that way apple looks like a hybrid company. 13% of the overall is business is services. in all fairness, yes, maybe apple didn't express the more cogent media experience and whether that's a sort of a ding against tim cook himself, i think it's too early to say. there's growth there we like to know more i don't know if it's because tim is in charge or not in charge. you brought up earlier of bob on the board. think i they're frenemies now. they have a streaming service and at&t time warner with one, as well. there's a whole lot of is this getting more crowded and apple taking a wait and see approach

they could go out and buy a bunch of studios and to fill those coffers but, you know, i don't think it's as simple - >> i know what's going on with apple in hollywood and it's a mess they're not coming out with a streaming service and disaster and probably going to give it all way away. they need help >> all the company that is make cars and tv shows valued less than apple apple's not a services company anymore than disney is a princess dress company i don't know if you want somebody who's good at services and just that necessarily running apple just because that's a growth area that they see. but i do think it is important for investors to figure out how much do you believe in apple's not only ability to pull off services but commitment to it? the first big example of apple succeeding in the area was itunes and coming out with itunes there was no ipod yet and

invest in a service essentially bigger than the hardware of before they gave apple the credit cards and logging in to buy from the store. are they going to do that with this services strategy getting android users, other people to sign up to see something to experience something the services that they have now are not that >> yeah. key point, jon i would note i have princess dresses at my house and might push back on that a little bit back to the point, ashley, you look at revenue of iphone declined 15% from the prior year and not breaking out the unit numbers for us anymore but to have a services business you need to be having people using these phones, right? so, what can we glean in terms of the few details, fewer details we do get here in terms of how the iphone is playing out in the global marketplace? >> yeah. what's interesting is saying ap sl more of a hardware company is true and the reason people don't

upgrade is because the phones are well made. i have a 6s and not upgraded because it run it is same ios as someone with an iphone 10r i can have the same phone as them but that said maybe with services they should try to come up with a feature that would make me want to upgrade. right now i'm not seeing this. >> or how about -- >> hold on dan, where are you terms of valuation and sort of share price expectations from here >> well, in terms of mentioning before, i mean, the stock trades about 11, 12 times earnings, a great valuation of being extremely low. they have a tremendous amount of cash on the balance sheet. $240 billion that they can spread out either with share repurchases or also in terms of dividends. i think -- i know we are talking about the service side and everything i still think apple is a product oriented company i think they're in a lull right now kind of like what we might

have seen, you know, ten or 15 years ago and it is a question of time before they come out with something that they can build upon this lost, you know, growth that's occurred in terms of iphone unit volume so i think we are in a transition period and i think apple has plenty of cash and trades at low valuation and makes the risk low so i think we are going through this kind of migration into something else we haven't got to yet. >> quickly, jon, we have got this conference call starting in about ten minutes or so. what are you looking fur fror f that call? >> exactly what they're seeing in services, how they calculate that gross margin, what they expect it to fluctuate based on. also more color on geographies and to the extent to talk about inventory, that's important, too. they don't seem to have a big inventory problem and to what extent is tim cook really more confident about china and see the slowdown that china we s

precipitated in emerging markets and see that continuing or not. >> all right we'll leave it there thank you all for joining us in this all-star panel. jon, ed, ross, dan and ashley. p 3.5% in the after hours trade. the federal government may have reopened, but backlash already being seen in today's kensumer confidence numbers. mi santoli breaks it down at the telestrator next

welcome back consumer confidence falling for a third straight month, but this is -- is this temporary trend or a red flag for the market? that is the key question mike santoli joins us from the telestrator with more. mike, you have a high bar to

hurdle, i'm just saying. >> i know it i appreciate you warming this up for me i'll see if you turn it against me it is an important question as to whether this downturn in consumer confidence is a blip. taking a look a little below the surface. this blue line is the overall consumer confidence index. that's the decline we discussed at the top of the hour, down to the 120 level, below expectations when they do the survey of consumers, people are asked about the current conditions they see, present conditions or expectations so what we see here is the present conditions in this orange line, it's basically hovered at a very high level on the flat line. that shows you unemployment is low, the things investors and consumers can see around them look just fine in terms of availability of jobs and consumer spending. but this expectations number right here, a little more emotional, a little more outlook, psychological aspect of it, that was the really sharpdown turn this is why it's significant for the cycle. we have another downturn that charts the spread between

current conditions and expectations before you come into a recession or any kind of an economic slowdown, a lot of times it's expectations that lead the market lower if we have that other chart of this spread, essentially -- jeff gunlock, the fund manager was talking about this before. it's a little bit of a danger sign when you have a peak in present conditions relative to expectations so this right here, that's circled. that was before a previous recession in 2000. this year was before the 2008 recession. obviously we haven't seen a sustained downturn in this number the absolute level is still very high so it's not necessarily an alarm but you have to keep an eye on this. that's why next month matters. if you don't see it bounce back in expectations, it probably means it wasn't just the government shutdown. >> the other thing to take away from the first chart is just how good consumer confidence has been for a while, which is hard to think is going to be sustainable. >> that's right. >> when you've already pulled most of the levers.

>> from a very long-term perspective, very high levels of consumer confidence, like very low levels of unemployment, is a top toppy indicator for the cycle. the question is how long can we sustain strength around those current levels. >> and we might get another shutdown in a couple of weeks and you'll of tax refunds playing a role as well. >> news flow matters a lot for that expectations matter that's why i think next month it will get a lot of attention. >> mike santoli, thank you mike did his as usual very polished job but he didn't have the same first-time zest as yours, morgan. >> he didn't curtsy. >> up next, the names to watch on the earnings calendar minimums and fees.

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♪ ♪ move to the enterprise-grade cloud that's built to handle all your apps. ♪ ♪ the ibm cloud. the cloud for smarter business. welcome back facebook reports tomorrow afternoon. what should we expect? julia boorstin has a preview for us hey, julia. >> well, when facebook reports earnings, we'll see whether advertisers and consumers continue to shrugoff negative headlines about the company. revenue growth is projected to slow to 26% to $16.4 billion, but analysts expect the company to grow its earnings by 52% to $2.19 per share.

investors will be looking for guidance on expenses in light of growing investment in safety and security as well as details on the profitability of ads in its newer stories feed and also thoughts on regulation guys, back over to you >> julia boorstin, thank you stock finishing down today 2%. it looks so warm there as we await snow here and all this talk about polar vortex. it's not the only earnings tomorrow we've got microsoft, tesla, fed decision what are you watching? >> we're transitioning into the growth in tech stock phase of earnings i'm not sure if apple will have a lot of coat tails. we'll see if this goes up. in terms of the fed, obviously we'll scrutinize everything, but i think that the market and the fed are more on the same page than they have een. >> your point earlier was that there was a risk of the market being underwhelmed by lack of bullishness. >> i don't see powell becoming overly dovish.

>> and of course we are getting news conferences after each of these meetings now. >> yes. >> so there is more room for misspeaking or misinterpretation. >> there is. perhaps over time it reduces the significance of each one and maybe we can take some of these off, but i doubt it. >> we'll leave it there. thank you very much. thanks for watching. that does it for "closing bell." "fast money" starts now. "fast money" starts right now with an earnings bonanza apple is higher beating earnings weeks after warning wall street. we're also watching advanced microdevices, amgen and ebay and we've got full team coverage josh lipton is in cupertino, frank holland is monitoring amgen. seema mody is going to join a call we're manning the red-eye phone and chris is standing by