markets. dow looks like it would open up 64 points. nasdaq looking to open about 29, 30 points higher s&p 500 about 4 points higher. of course we'll be waiting to hear from the fed later today. steve liesman is in washington and make sure that you join us tomorrow where we'll do the postmortem squawk on the street begins right now. good wednesday morning welcome to "squawk on the street." stocks are looking for a bounce on final day of july in addition to the decision, we got u.s./china trade talks wrap upping up, pmi improved a bit, earnings movers. adp in line 156,000, employment cost up year on year iphone sales sag, but wearables

continue to drive growth stocks are poised to rally ahead of what could be the fed's first rate cut since the crisis. and gaming headwinds, amd delivering a revenue warning first up, apple rising on the better than expected results iphone down from a year ago and now represent less than half of quarterly revenue for the first time in about seven years. >> yeah, headlines today in the papers are staggering. "new york times," apple reports declining profits and stagnant growth again "wall street journal" quotes richard cramer, no relation. were these people on the same call maybe they were on the rotten apple call, i was on the straight apple call. i heard a situation where you are going to -- if you actually think out in the out years, it is a service company with the

best customer satisfaction there is and when you get an appliance of which there are about 1.5 billion, you are beginning to take either apple cloud or the app store, the ads, i think that you will be looking at the credit card starting tomorrow and then health care when i talked to tim cook, i was saying why not slap a $10 charge on all these things so i wrapped it all up by saying that the apple that we see now is the first quarter of many where we're going to figure out what that revenue stream is really valued at and then we'll put not a proctor and gamble multiple on it, which is the 24, let's give it a discounts. let's say 20%. wearable growing at 50 service revenue at 18. how can i not give it a higher multiple, but i won't because stupidly this company continues to be followed by people who want to be service now, sales

force, workday winblad was talking about companies selling at a gazillion times earnings that is a bad compare. >> how can you rely on services growth when services are tied to the unit base. and if that is slowing, how did we get the acceleration. >> so there are 4 million subscriptions. they don't tell us how many people are subs like we want from cable we get what the sub growth is, the actual sub growth, number of people we multiply -- come up with the long term value of those people. and that is how we do it we say just like a credit card person from capital one -- well, maybe not capital one. jpmorgan credit card person, you look at how many people keep it and what they are worth and say the lifetime value of that citi holder is x.

and that is how we view apple. lifetime value of a subscriber and then once we do that, we'll have it. when i played that out to tim co cook, at josh knows, crickets. they are not there yet but i will get them there. i will get them there. and what i need is just one analyst who covers clorox a 2% grower to cover apple and we'll get a 260 price tag. >> you've been trying to get apple in a different basket for a while. you believe that this is a transitionary quarter from iphone to ecosystem. >> without a doubt that is how i get at 260 that is a 20 multiple on next year's numbers still a discount to every package good company but if you tip to where revenue a recurring stream, you cannot keep that multiple down. you cannot continue to give it a

16, 17 multiple. >> katy huberty did complain one of the letdowns was app store growth did not translate into total services acceleration. >> i think she was using 16% growth if you include the 300 basis points president trump please notice stronger dollar, 300 basis points you do get to 18. was there is a certain stream that may not be that good? i'll tell you i get that apple credit card august 1 and there is a revenue stream of which all the real costs are born by goldman. >> who has the leverage here >> assures me not to worry are you going to -- that hacker from capital one, that was like an amy winehouse story >> the moore we learn, the more troubling it is. >> she had issues. >> yeah, troubled and bragging about it reportedly, about some

of her activities. >> and thlowers the value of th credit card. but put it all together and you need to find a person in the proctor world who emphasizes technology and if jamie or any of the first name guys, get david it dto do will -- jamgs shoues should mak that katy covers it with-let's switch firms you get the point. someone has to do joint coverage >> it is a part of your thesis that it is a consumer products company. >> and when i bounced it on tim, they are not there yet they -- i'm closer and closer. >> and then there is of course the iphone guidance and guidance about china. tim cooked about it last night take a listen. >> we saw significant

improvement compared to the first half of fiscal 2019 and return to growth in constant currency we experienced noticeably better year over year comparisons for our iphone business there than we saw in the last two quarters. and we had sequential improvement in the performance of every category. the combined effects of government stimulus, consumer response to trade in programs, financing offers and other sales in addition titiativ additioitie effect >> so the take today is that kind of commentary is good enough to tied you over until we get a 5g phone >> of which he will not really talk about 5g. he dodged that so how does richard cramer, the distinguished richard skryam crh

i never heard of until today but probably the only cramer that matters, but it is just a matter of when apple gets hit in china. so i'm going with cook, not cramer i'm putting my money on cook by the way all the key wearables, pods and everything, that was all invented after steve jobs but it is important to note that tim cook has never come up with anything >> yeah, you're right. one of the calls is that wearables, home and accessories are bigger than ipad citi makes the point that people are not appreciating the diversity. >> who did come up with those? under jobs or cook when is cook going to get the benefit 69 doubt i'm giving him the big time benefit of the doubt i think he will charge for health care. he always talks about how this saves lives. he will charge for the credit card i go the biggest issue is t

that -- i said listen, are you ready for the deluge of people who want that card he tells me that it is just a regular statement. but he's telling me that they are ready. i don't think anyone is ready for what will happen with this credit card. i think that it will be amazing. >> we'll find out a lot more in the coming days. >> goldman apple card? you have the best -- well of course i worked there.best brokerage with no card right now but they are up to speed and best consumer product tech company together offering a credit card? what is in your wallet what did you think was in your wallet let's bring back those vikings >> that was a good campaign. >> we didn't do the grub hub i want none. >> deep sub referencing, jim when we come back, shares of amd

have soared almost 900% since lisa su was named ceo. we'll talk to her about the earnings, game plan for growth, gaming take another look here at futures as we wait for the fed at 2:00 this afternoon

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trading down despite ongoing traf he tariff headwinds i don't know why it is surprised them joining us now is ceo dr. lisa su a lot of people saying there is a demand issue i look at what you have been telling us ever since the stock was at 18 at the beginning of the year, now 32, that there was going to be a gap quarter so to speak between consoles and this is what happens when you get a gap quarter. >> good morning, jim great to be with you this morning. we're very pleased with our second quarter results we grew revenue 20% sequentially and we've launched a slew of new products across pcs, data snta e and graphics yes, we did revise guidance a little downward due to game consoles and if you think about it, game

consoles are great overall market, however microsoft and sony just announced their new consoles just here a couple months ago and that caused a bit of pause in demand. but if you look being at overall i think that we feel really good about the markets and particularly about our new products >> so let's go over some of the demand issues so to speak. pcs. i saw good demand and i believe i saw big share take from a company that was always the dominator intel. did i read it right? >> so on the pc standpoint, overall pc market is good as you say. and then for us, we did very, very well in the quarter we saw notebooks grow substantially. double digits sequentially we saw a number of new platforms come into play we also launched new set of products our third generation desktop products which got great

reviews. so i'm pleaed with where the pc market is going. and i expect in the second half of the year we'll continue to gain share and grow revenue in that market. >> i look being at what can happen in the fourth quarter, a lot of people worry about execution risks. only thing that i'm worried given the fact that you have out executed everybody is perhaps china. where are you on the risk china for your fourth quarter? >> best way to look at our business is we're all about our new products and if you look just in the last 60 days, we started ramping three new product families so new desktop processors, new graphics processors. and we're just about to introduce new data center processors yes, we are forecasting significant growth in the second half of the year and that is on the back of the new products as it relates to china, it is a very fluid situation in china. i think all of us in the semiconductor industry are

watching it closely. we have stopped shipping some product s to a couple of our customers on the u.s. entity list but we have great products that are back stopping some of that and so we feel good about the growth prospects >> and you got to feel for investors in the space because every day they are given what seems to be conflicting information, where is the bottom, stockpiling, pricing how simple can you put it in terms of where we are in the cycle from your perspective? >> so when we think about semiconductors, you should think about it as a secular growth market it is a good market. there are pockets of inventory whether you are talking about some of the data center issues in the first half of the year or some of the volatility around china, but for us, there is new demand people want to build new data centers, ensure that they get better capex efficiency.

people want new gaming products. and so as a result, i believe if you have a strong product portfolio, you will see growth even though there is a lot of volatility in the market >> lisa, i want people at home to understand what you are trying to pull off here. you have three new products including rome when it comes to you wasn't built in a day but maybe a quarter. these are remarkable achievements for an amd that used to be cash strapped, used to have too much debt. look, anyone who takes the stock from 18 to 32, i'll give them a victory lap. tell people what it takes to have three brand new products coming out all at once >> this is all about execution it takes many, many years to get these products ready, really three or four years. when we think about it, we knew 2019 was going to be a special moment we knew that it would be an

inflection point for our product portfolio. we were aggressive on technology, first to market in these high performance markets the team is extremely excited and executing well i think rome is a very exciting product. next week we'll launch it in san francisco. you will see a number of customers, number of new plas forms. and the key is it is all about execution. when we promise product, we need to execute on that time line so we're all about meeting our commitments. >> analysts are really focused on the next quarter. the other day someone won $3 million playing a game amd specializes in this. do you see a world where we have a much larger group of gamers including people who may want to go at-to-college at $100,000 a year and the way they get this is an ncaa scholarship for gaming is it growing double digits so we should be thinking about 2020 if i can go out that far i know the analysts can't.

>> well, i think that you are right, gaming is a very exciting market and if you think about it, you have gaming now on every platform you have gaming on pcs, consoles, gaming in the cloud. and even on mobile so our world is how do we get the best user experience there i do think gaming is a growth -- secular growth market over the next couple years. i do think our technology is well suited. if you look across all of those markets, at the end of the day being partnered with the biggest gaming companies like microsoft, like season any ioig, google, i gives us a good place to be. >> do you follow the president on twitter because you mentioned list of companies that are you not supposed to sell to. how do you be a ceo and you can sell but maybe tomorrow not sell, or you can sell.

have you ever thought this would happen to the ceo of amd >> well, looking i think that we are very cognizant of the fact that it is a complex world out there. clearly there are a number of issues with china as it relates to trade and national security concerns we fully understand that and our goal is to have a diversified business, one that can turn on a dime sometimes we are turning on a dime, but i'd say overall when you look at the growth that we're seeing and the new products that we're putting out there, i think we feel really good about where things are and we'll continue to follow very closely the macro situations >> i hope you don't mind me asking, what is a good example of you turning on a dime >> look, when we talk about how we position our products, take a look at our portfolio today from a pc standpoint, i mean we are offering leadership performance at every price point you look at some of the new

graphics products, when customers call and customers say hey, we'd like your help to get our data center up and running, we're there in 24 hours because that is the way this business operate right now. >> so last question. when you took over, what was your share pc versus intel and what would you estimate it now >> we've made good progress in share gains. if you talk about where we were, we were probably high single digit pc market share a few years ago. market share has not turned overnight, but we've gained five or six points over the last five or six quarters. and i'm even more excited about what we see second half of 2019 and 2020 so from the standpoint of market share, i think that we're still underrepresented in the market i think people are still getting to know amd and what we can offer to the market. but i feel really good about where we're positioned and this is a journey

as you said, rome wasn't built overnight action but we', but w making progress. >> congratulations lisa su, thank you so much >> thank you when we come back, we'll get kra cramer's mad dash. and still have to get to ge and ea, talk some china as well and ea, talk some china as well and the fed on this big fed day. what about him? let's do it. come on.ing ] this summer, add a new member to the family. hurry into the mercedes-benz summer event today for exceptional offers. lease the glc 300 suv for just $419 a month at the mercedes-benz summer event. going on now.

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2 1/2 minutes to the bell. let's get a cramer's mad dash. >> ge reports a number where there is a guide up.

trying to get power under control. certainly industrial billion dollar cash flow better. here is the problem. it is not changing the person's mind that matters which is steve tussa and the people who like it continue to like it. steve says combined power were worse. health care material okay, but aviation big miss. aviation is max. they are hurt by the max >> as is u.s. gdp for that matter >> yeah. but larry is a good ceo. he included that even with his raise. here is the way i look at it we are four quarters from ge being a boring company that we don't really want to focus on. but not yet. and i know that larry is -- new cfo coming larry is bringing in his people. i don't think that he is trying to get the band back together so

to speak but there is going to be reliability to the numbers and that is the reason why the stock could go up. it does feel a little like 3 m in that 3 m opened up big and then the tusas of the world took over the story line and people regretted that they paid up. so there is no rush to buying ge off this quarter it is a 2020 story once again the reset meaning we don't really have thinking right now. larry is not a name caller, but he was dealt a real bad hand and what he has now, playing poker, he has a pair got a pair you never know it is a pair of jacks. one eyed jacks >> all right so no urgency on ge. >> no. and might pull a third jack, but hard do. >> we'll keep a watch on that. let's get the opening bell

it is an international drilling contractor celebrating their ipo. prep for prep, a nonprofit >> i think that when you see a stock up like that on a day when there is a lot that is red and you have a fed statement and someone will dislike it, you can wait on apple. you don't have to pay up -- rest of tech is coming down just to circle back to ge for a second, when you hear a drilling company ring a bell, you should be thinking that it will be off loaded in pieces that will be larry's next move might be a buyer of one part there are different parts. there are signs of turning in drilling

signs of turning so i think that they will be able to sell the ge company and that is where they will get the next -- >> all right that is the firewood >> good one. >> so is there urgency on apple? >> not yet >> is there urgency on any name right now? >> well, i don't pay up nine i don't think that makes sense just to go back to some of the things that lisa su said, it is a little a contrary to say that there is a problem with gaming after listening to the electronic arts call i mean which was an extraordinary -- >> s&p gainer right now. >> so you have to look through the whole amd. i understand that you have to do that there again sorry to say it, no urgency. yeah, this next quarter will just be okay, she said that. ge next quarter just going to be okay apple will be good, but the commentary doesn't embrace it.

urgency? how about we wait until after the fed speaks and then maybe we find someone that is let down. >> interesting cross current between the fed decision and china and these talks which ended some say abruptly, some say on schedule. they will meet again in september back home here in the u.s. but the journal officially on the record now saying that the chinese are in fact running out the clock. >> they are foolish because the leading democrat, elizabeth warren, if you add up all the things that she has against china, it is the quich lent of much more than a tariff. it is a shutdown it is going back to before ping-po ping-pong diplomacy. they have to recognize that

warren thinks that china is a terrible enemy of the worker and she represents the worker. similar to the afl-cio positions under president kennedy. you have to go back that far >> but you also have to believe that she's going to win the white house. there is a long way to go. >> i'm just saying that the chinese are waiting out the clock. when i listen to the democratic candidates all pro worker, i don't know if they are going to wait out the clock, i think the president has got a two touchdown lead and there is the two-minute warning. i think that they would be foolle lish to wait ultimate fol foolle lish to wait out the clock. peter navarro is a saint compared to these democrats. an interesting thing except for joe biden who expanded a lot much trade under obama >> china was up across the

board. demand, production, prices, employment ahead of whatever additional stimulus. >> and if you are the president, i think that you might say let's ratchet it up, you're doing too well remember, he is always talking about the dow versus -- he has his nielsen ratings and right now the nielsen ratings, if you can crack the chinese stock market, i mean honestly i think he looks at it a as a giant stratego game. and he is not happy when china has good numbers he is many when they have bad pmi. >> yes and we would not be happy with these numbers and i assume they aren't either. >> i just think that you have to be very careful because when you are on the apple call last night, think about what lisa su said a big company presumably huawei is on some list that you can or

can't do business. so hard thing to do. i come back and i say, i don't know, the president is in control right here and if he says that he felt the talks were bad and if he doesn't see a buy of agricultural soon, then it will be tariffs, you have a chance to booif all you wan spotify done almost 5% premium subs up 30 but still wasn't enough. >> and when you listen to tim cook, you know, he is coming after spotify. i think that you have to -- because i kind of liked the numbers. i like the podcast but i really believe when you listen to apple, apple will just big foot them. i can't disagree with that it is important for apple to have the service revenue stream. most of the conversation wasn't about the revenue stream

and you have to think music and game set match they want everything they want podcasts, music. it wouldn't surprise me if -- they can't eviscerate spotify. but they are blunare blunts blut and what about coors >> turning out they are the big share loser. kind of amazing. bud had a good quarter where they are constrained, they can't produce. what an amazing thing. they cannot meet the demand. what an incredible thing i don't think that coors has a problem meeting demand at all >> yeah. >> we haven't talked about mondelez >> yeah. >> an exciting quarter and they where doing it -- they got vegan

hallelujah by the way impossible burger, fda says it is not poisonous mondelez looks like constraints. looks like they are doing the right thing. that was the star of last night other than apple and maybe ea. i'm not going to include garmin. humana, i don't like that health care business at all martin marietta had good numbers two days ago but if you look at what is going on, i think you say that mondelez is a very exciting story again. millennial millennials like to eat seven times a day, but they like to eat snacks he is uniquely every single day all seven, he has what you want. by the way, kevin johnson veiled reference to millennials talking about the afternoon day part

they like nitra. i've seen it >> you've got tokeep pace with how the habits are changing. by the way you mentioned impossible burger. you did some grilling last night. which i think we have tape of. want to look at it here you are this is actually street cart >> yeah, i had to show him how to flip. he had never flipped the -- i think it was beyond his skill set. >> what was the verdict? >> i liked it. again, i like the condiments, with mustard and ketchup more than just plain. but i'm a huge believer in ethan brown. and goldman has that big piece of business. they will price that stock i believe so many of the short serls wa sellers want to be on that piece. it should go down, doesn't

belong at 12 billion, but think elon musk of -- i don't want to say faux beef. but of burgers burgers that skip the cow. -- remember the corn, soy, peas, and instead of running it through the cow's stomach, just get it another way >> if you are saying this will not go down on the secondary, i mean assumes a pretty firm floor on this price. >> i think so. you have to have a better burger than the one that i tasted which my wife threw out. we weren't even going to compost the darn thing might ruin the com post. can you imagine that in the easily done other than by nuclear waste and the nestle bugger but they are fixing that the impossible burger, gmos,

people say they feed the world but not millennials. gmo to them is put ketchup on it, mustard, and the roundup you have the roundup where is the roundup millennials say pass the roundup. i happen to think impossible burger tastes great. i had one at giant stadium oracle stadium, i don't like or are a cal, but i thought gmo and i should have spit it out, but i loved it i didn't taste the roundup at all. >> a will the of tlot of the ch amd down 8% now. along with other names some consumer names too here underarrest mower is do underarrest mowarrest mower is n 2% and you see the protests in hong

kong, but i think that the shorts should be worried about the most creative ceo out there leaving. sure be my guest hasn't been a great thing to sell stock up 43% for the year. >> and for the month, best dow names are proctble proctor, ibm. >> and western digital, we were supposed to worry about the balance sheet. report should not should be great. brian goldman came on "mad money" and said micron is the most hated stock and it is back being number one this is a very telling list the s&p. goldman turns out to be -- the seat car allows them to buy as much stock as they want and they have the credit card we got to hear more about the credit card. and ibm i think that it is just a recovery i talk to jim whitehurst quite a

bit and he's having a ball up there at ibm he is a miracle worker and he will work miracles with jenny. jenny and jim together, 170. >> 170 interesting. >> remember the days when warren bluff at the ti buffett wasted the stock at 170? i think it has a chance to see that level again >> 221 now actually meets a lot of new targets. >> and things that you need to say. best days are behind it. tim cook, no steve jobs. the mac. the wearables, nobody cares. every one of those statements is false. >> a lot of apple clichés. >> and a lot of apple haters who are -- they have got the airpods

on -- i'm being told to move on, i will not they are using every revenue stream they are backing up the cloud, baings e in buying the apple care, the credit card and they hate apple. they hate apple. >> that is true. they normally say buy what you know, but apple up 6% is a big story. let's get to bob pisani. >> happy wednesday mixed open as we await the federal reserve decision.s movid semiconductors down and tech sector is up, that doesn't happen very often. of course apple is pushing the tech sector up 6% overall and of course disappointments with amd down 6%. this is a fairly rare development. consumer staples is a bit on the weak side. energy flat, this has not been a

great month for the energy sector overall 60% through the s&p 500, about 300 stocks reporting, 300 companies reporting overall. guidance is helping again. you saw about garmin, humana strengthened its medicare advantage health care business general electric raising guidance best level for ge since about february not a lot of move there. and of course monday todhond ho. you look at 65% of the s&p is up not a bad month overall. the apple buybacks, they are in the news a lot a lot of people talking about it key thing about apple, thel buy

back about 60 bmd. they bought back $72 billion last year. key thing, it is close it 5% of the shares outstanding every year for years now in fact since 2013 so let me show you the chart here apple probably had 6.5 billion shares or so this is 2015, '16, '17, '18. but going back all the way done here, since 2013, apple has reduced its share count by about 30%. what that means is that all other things being equal, apple's earnings are 30% better than they would have been without the buybacks so keep that in mind big business for a lot of these companies. back to you. >> thank you very much, bob. chicago pmi coming out right now. let's get to rick santelli at the bond pits. >> our july read on chicago pmi certainly nothing to be proud of 44.4 4s are wild but the number far

from wild. contraction mode for the second month in a row last month 49.7 remains unrevised. this is now the lowest level since december of 2015 which was the same comp as our last month's look so it really is something to pay attention to we've seen some of the regional manufacturing numbers diverging as of late some showing strength, some not. this is definitely in the not column we all know today of course is the second day of the fed's two day meeting. we certainly do expect that we will see a quarter point decrease, first since 2008 and of course everybody will be listening to q&a with the chairman to see if this is the beginning of an easing cycle all they maybe he doesn't have enough information to go through in particular, but definitely to see if it is more of a one and done hawkish type statement and press conference or not. and in lieu of that, it is

interesting, look at the two day earnings settle, second day is lower. we're down about three basis points in twos but 10 year and 30 year, one basis point in 10 year note yields so this is a good thing and it makes sense-ing what the fed is doing. big question will be if there is any sustainability to that notion because whether it is the dollar or trying to make the curve less inverted or noninverted, it certainly seems though data isn't figuring as prominently in some of the recent fed speaks and ultimate decision if we look at fed fund futures themselves, and i'll go to december which includes the logjam of all the previous meetings, don't pay attention so much to percentages. what i want to draw your attention to since the last fed meeting in july, those prices somewhere gone down. done of course means less chance of cumulative eases. so that 50 was priced out.

we'll have to monitor some of the back months. and finally dollar index giving back a little today. couldn't quite take out the april 29 highs back to you. elon musk's twitter feedback in the spotlight under his settlement with the s.e.c., musk must get pre-approval from a securities lawyer before posting production figures that haven't been disseminated yet monday night the ceo of tesla responded to a twitter user about solar roofs, spooling up production line rap pidl lly hon to manufacture about 1,000 a week we'll see if the s.e.c. considers this a violation of their agreement. what do you think? >> why doesn't he shut up? honestly why does he create trouble is it really that hard to stay away from this i mean you got two guys who are addicted to it if i were -- kind of like as an intervention if i were jack

dorsey, just as an interception. >> f >> to his own good >> yeah. why be self-destructive. the article showed a man so self destructive. and i met him. is he a sweet guy? even is a fool you suffer fools i look at him and i think tweet to yourself. he should put that govern on his phone. >> i'm not sure it violates the terms of service >> i don't want him to get in trouble again. he is a visionary. knock it off >> when we come back, former white house economic adviser glenn hubbard says the war of words over interest rates has masked bigger issues he'll explain. and dow up almost 70 points. greatness of an suv?

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let's get to jim and stop trading. >> i have a puzzle it's called to you i am familiar with them. it's only education services it had been doing well i see it's down $20. that would be nothing on a $200 stock, right but how about if it was a $35 stock? i mean, this is just -- and i think that the piece sums it up. model uncertainty makes twou shares uninvestable, and it is, i mean, it was a consistent company for graduate work degrees, for colleges. a great way for colleges to make additional money i would say that i'm going to put it in the suboptimal category. >> i would say so. you don't get that uninvestable -- >> i am shocked. it was a very interesting

company that every college should want to affiliate with. i don't think they will after today. >> tonight qualcomm and zynga to play with. >> and lam research, remember that's the analogue to micron. micron up the most kla a top five lam is a big supplier to micron. i have to believe that archer, who is just such a good ceo, tells a good story, obviously people will say it's borrowed because it's a 210, up 54% tim archer is a great one. if it goes down, i sense urgency. >> i love the urgency rap. remember, rome wasn't built in a day. i need a queens guy to come back could we get a queens guy to come back? >> tomorrow david should be back see you tonight. >> thank you, carl. >> more reaction to apple's rally here nine-month high, up 57% from january. back in a minute

♪ good wednesday morning welcome back to "squawk on the street."

i'm carl quintanilla with sara eisen at post 9 of the new york stock exchange david faber is off markets having a pretty good morning as we watch the fed. last day of july u.s./china trade talks. >> the roadmap starts with apple soaring. growth at the company as iphone sales slow we'll break down the results and what they mean for apple next. >> it could be the first rate cut since the crisis looking ahead head to the fed's big decision and what it will mean for the market. >> and rallying on this last trading day of the month the best and worst of july and looking ahead to august. breaking news out of the white house. let's get to d.c >> good morning. we have got a statement now from white house press secretary stephanie grisham on the trade talks in shanghai. the u.s. delegation on the way home they are confirming that there will be another round of talks here in washington, d.c. in early september. they say they call this round of talks that happened in shanghai over the past couple of days

constructive they say the two sides discussed a number of issues, including forced technology transfer, intellectual property rights, non-tariff barriers and agriculture. the chinese side confirmed their commitment to increased purchases of united states agricultural exports so we'll see where we go from there. we expect to see the president on camera later this afternoon, perhaps giving us his take on what happened here you know that the president has been suggesting that he thinks that the chinese want to stall until after the election, possibly to deal with a democratic who might win in 2020 the president doesn't think that will happen, but he thinks the chinese may be trying to stretch the negotiations out we know the next round officially will be in d.c. in early september. so ultimately this amounts to sort of a kicking the can down the road the statement here using the word constructive to describe this round of talks. often there is a lot of debate about where they call it

constructive, productive, what the exact language is. that's where they landed on this one. >> anything but buenos aries thank you. apple is a clear leader this morning. the stock is up 5%, near 220 iphone sales down 12, but focus turning to other segments. tim cook says wearables and services combined are a fortune 50 business. wearables now bigger than the ipad, almost as large as the mac. joining us to discuss. good to see you. >> good morning. >> laura, you say "a" plus ecosystem execution. is that going to be enough to get us -- when we get a new phone? >> yes, i respectfully disagree with jim cramer. i would chase apple here we think the value of apple is unique users and installed base plus the lifetime value per user they hit all-time record highs for every product and they have

4 420 million subscriptions, implying they have a bigger install base than ever and they each person owns 1.6 products up from 1.5 a year ago. i would chase apple. it's up, as you said, 57% year to date. >> laura, does it mean they can grow lifetime value per user without necessarily growing units? do people need the new phone to take advantage of the new services >> so one of the things you see them doing is they are doing trade-in phones. they are bringing people into the ecosystem of apple at lower price points because they are selling them used phones or lower price point phones we like the product expansion because it increases on-ramps into the apple ecosystem we don't care if you start with a watch or a mac or the ipad pro, all of those are on-ramp to the ecosystem and now on average

950 million unique users own 1.6 products each. >> is your headline as bullish as laura's >> absolutely. the take away incrementally from the call were that we start to see china get a lot better, which was the largest area of concern for people secondarily, the gross margin guidance is absolutely stunning. you have never seen apple in recent years guide from june to september quarter anything but a flat range 37 to 38, move to 37.5 to 38.5 that shows you this tremendous leverage in the model. i think we are going to head into a period where we will see sustained gross profit dollar growth which is highly correlated to the stock and is very bullish heading into what our indicator predicted as better september revenues last week, and looking going into december with easy comps and a services tailwind with significantly large number of new products that are going to

hit the services line very soon. >> yeah, i mean, john, i think carl asked the key question, which is the services and wearables growth that drove the quarter. is that doable with slowing iphone chips >> i think it is if you can sell more services and more wearables to people than they have bought in the past. i think that's where your apple arcade, apple tv plus, your apple card come in if you look at what they are designed to do, they are designed goat people to pay a subscription fee to be in the ecosystem, consume content in t plus and arcade, and then the card, part of what it does is drive people to spend more inside the apple ecosystem because they get value there i think what was special about this quarter from a financial perspective is it just took square on the things that people were most concerned about with apple. china specifically i think when i -- i was convinced that pricing was an issue for apple in the cycle even more than people thought.

when they were able to, in china, get the vat taken down, apple didn't do that also, the trade-in program going. also the financing they were doing. essentially, all of those things lowering the price of the iphone they saw it go from down 22% to down four. it was technically positive in mainland china, what tim cook said that is a huge shift quarter to quarter. >> lawyer, a how do you think about the chinese market for apple? the competition, the pricing, and whether the improvement can continue in these numbers. >> i thought the important point was they said the chinese consumer isn't negatively reacting to u.s. products. that was positive. they said that the chinese government was doing a lot of stimulation of consumers and so i think they have sort of fixed china near term and it sounds like trade talks were constructive, as you just reported i think china is a positive. the one insight that i would add is the downside protection you

get from apple they did $40 billion of free cash flow. they have $100 billion of net cash which they want to get to zero by buying shares in the open market, which represents downside protection. and they traded a peg ratio less than one so i think this is a great sotok here. >> we will hear more about the credit card beginning tomorrow is it going to be another one of these situations, new category, new service, but not enough to move the needle? >> i think the credit card is important in that it strewnens the ecosystem. what apple is doing is making life easy for consumers whether it be for apple pay, whether it be for transit that they are incorporating. tim said that is very important. there is more and more reasons to stay within the apple e ecosystem. i think that drives incremental trade-ins from the install base and also drives incremental switchers coming not ecosystem it's all about strengthening the

ecosystem. the financial impact of that in this september quarter is not going to be very material. but as you look into 2020 you will have a lot more services and the contribution from all of those is going to be sustained reacceleration and services which we think is important for the story. >> there is a danger, guys i feel like everybody is so bullish. i think it's the margins going forward. what apple is doing with financing, with trade-in could potentially put down margins a bit. i think we have shown there is a ceiling how much people are willing to pay certainly overseas for iphones what apple is managing to do perhaps is treat the iphone ecosystem as part of the iphone. so services. we talk about services being separate from the iphone they are not really. they are mostly driven by the iphone the margins on those are pretty nice also the margins on wearables pretty nice. so if they can manage to drive t all those things together, even if the iphone isn't growing that

much and they can push this trade-in program which on its own might be a pressure to margins, then the margin stays as projected. >> we'll watch it. virtually all of the dow's gain right now is apple appreciate it. by the way, guys, the trillion dollars market cap is usually 217. we are waiting for the fresh share count. we think given the buy-back in the quarter it's around 221, 222. >> we are almost there. some other earnings movers to talk about this morning shares of ge off the initial highs, reporting an improved cash flow forecast they aflounced the cfo will be stepping down once a replacement is found spotify posting wider-than-expected loss for the latest latest quarter stock is down almost 5%. and mondelez, the snack giant, raising their yearly forecast, getting a boost from strong organic sales. the theme for a lot of these consumer names that i cover and mondelez is included, it's

internationally focused, the u.s. consumer and chinese consumer are doing just fine china grew double digits strong results in biscuits, oreos doing really well there. in the u.s and this just a narrative that the brands of our parents are dying, old-school brands guess kwla nutter butter turned 50 years old this year. double-digit growth. so pushing against some of those weaker narratives going into the not so boring consumer staples we have seen growth between mondelez, pepsi. >> right what they have done with oreos, cheerios, right? i mean the way you can package coke into various forms. >> they are figuring out the investment behind these brands and what it takes to market to younger people also how to innovate off of them oreo comes out with a new flavor every single week and it creates a lot of excitement. >> are you surprised under armour is down again

>> it was a disappointing forecast wall street had high expectations that the turnaround was taking shape this was a setback with the northern american revenues coming in slightly lower the analysts are sticking with it because they saw it in costs, they saw it in margins, they saw it in inventories. top-line growth will be a khashoggi challenge and they have to figure out how to train consumers to get that performance gear as must-have in a very competitive environment with lulu and nike, everyone else. >> down 3% we are just a few hours away, online, from the potential first rate cut in over a decade. we are going to hear from the fdic chair ahead ofthat big decision dow up 48. thank you, apple quk t see is back in a moment.

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sure, why not? how'd he get out?! a camera might figure it out. that was easy! glad i could help. at xfinity, we're here to make life simple. easy. awesome. so come ask, shop, discover at your xfinity store today. the federal reserve expected to make its first rate cut today since 2008 steve liesman has been monitoring the fed ahead of the big decision steve, what do we know >> history expected this afternoon with the first rate cut by the fed in 11 years, but also a dramatic turnabout in policy by the central bank not much change in the economic outlook. we looked at what was the fed thinking about 2019 in december versus what it's thinking in june 0.2 lower on growth. 0.1 higher on unemployment very low rate still. 0.1 lower encore inflation but a big change in the

economic -- sorry, the policy outlook. there were 15 fed officials who thought the fed would hike in 2019 that fell five, and now think there will be a rate cut this year there may be more after today's meeting. fed officials have described it as shoring up the economy and addressing inflation running consistently below the fed's 2% target news this morning. manufacturing indices turned down the u.s. consumer and job markets remain strong. the policy strange also comes as, you know, amid unprecedented pressure from the president for rate cuts. >> frankly, if we got interest rates down where they should be, and if they weren't raised so fast, you would see another probably 10,000 points on the dow. the fed acted too soon i turned out to be right they acted too soon and too violently. the economy is so strong that nothing is going to stop us, but

the fed could have made it a lot easier. >> so those are three public statements add to that since the fed met in june the president has written ten tweets critical of the federal reserve, the most before any meeting during his presidency the fed could also end balance sheet reduction two months earlier than planned and that's another point, sara, as you know. the president has publicly campaigned for that. >> i guess the drama, steve, is what the timing and scope of the next move will be. what's the latest thinking >> if i could back off a little bit and set a drama before the drama. the drama to me is how the chairman explains this how does he go about sort of telling us, telling the markets here's why we did this here is what we need to either cut again or not cut again so i'd say the first drama is in the explanation, and then comes

the kra drama you are talking about. how much further do they go? it's going to have to be some kind of systematic idea of how the fed is now thinking about this rate cut and that will then enable us to think about how it's thinking about future rate cuts. >> also could be drama in how many dissents there are. >> i think we counted, including eric rosen greg, who you interviewed, think five people, five fed officials, and i think two or three are voters. i can't remember but he'll have the whole board of governors with him on this. he has enough votes for the rate cut. the question, as you say, is how many dissents, and also this idea that market, as you know, is pricing in two more rate cuts after today. and the question is, does the chairman lean against that or does he go neutral or really promote the ideas. >> very exciting stuff. >> lots of drama. >> see you later

steve liesman. as the fed readies to cut rates for the first time in a decade let's talk about the impact on banks and the economy. now fbi chairwoman jelena williams joining us from the community bank investors conference in new york city. welcome back, jelena nice to see you. how do you think about the impact to the banks of a rate cut? >> thanks for having me, sara. at this point in time i know better as a former fed staffer to speculate whether or not the feder fed will cut rates if there is, we will make sure the banks are adjusting accordingly. we don't have any worries about financial stability and where the banks are standing they are having high capital levels and doing well. >> are we going to see instantaneous cuts from banks to deposit rates for borrowers? is that how that works >> i would imagine if there is a rate cut, there will be some delay.

the question is how quickly do the markets adjust and how quickly will that tricker down to the borrowers. >> there is a question about whether it hurts, obviously, banks, you know, with the yield curve. does it hurt regional banks more than the bigger wall street firms? where do you stand on that >> well, it depends on the portfolio of the bank and how they manage their risk again it would be based on a bank-to-bank basis and what types of products they have to their consumers. so it would be more idiosyncratic to say that a whole section of the banking industry is going to be going this way or that way. >> when people are looking for reasons to cut or not cut, they look at spreads pretty tight new issues are getting done pretty easily. the forward-looking data looks great. confidence backward-looking data looks great. jobs if you had to build a case for a cut from a bank standpoint, what would it look like >> i tell people all the time this is the best of times. the economy is doing well.

banks are doing well capital levels are at record high levels. at this point in time we are feeling good about where the economy is and where our banks stand. >> senator elizabeth warren brought up banks last night in the democratic debate, as she usually does here's what she said listen >> i know how to fight and i know how to win. i took on giant banks and i beat them i took on wall street and ceos and their lobbyists and their lawyers and i beat them. our biggest problem in washington is corruption it is giant corporations that have taken our government and that are holding it by the throat and we need to have the courage to fight back against that >> she is obviously made fighting wall street, cracking down on wall street central to her political career

i mean, do the banks that you talk to have an expectation that if elected she will double down? >> it's speculative at this point in time. i know that banks have to plan long term for the business cycle and elections play some role in that business cycle. i suspect that most of the banks so long as they have prudent risk management and they manage their balance sheets and portfolios well are going to be able to withstand different political churns. >> let's talk about your office. president trump campaigned on loosening regulations for big business and for banks how is that going? have you made progress at the fdic >> well, as i mentioned before when we spoke, i don't look at it as bank deregulation and loosening regulations. what we're trying to do is after ten years of post-crisis rules, we are trying to look at what's working and not working. where do we have holes in our understanding of how systemic risk being handed and adjust the rulemaking accordingly we have done a number of things

at the fdic, looking at broker deposits, understanding how banks are handling -- especially crucial for community banks in rural areas and in agricultural areas. it's something that we are focused on very heavily, understanding where can we do more to right size our regulatory approach to community banks in particular, but the banking system overall as well. >> ft has a piece out this morning that ubs is planning a negative interest rate for client deposits over a certain level. can you imagine a day where that's common plaguce in our financial institutions >> at this point knowing that some banks are offering over 2% for cds and even savings accounts rates, it's a little bit difficult to imagine a negative interest rate environment for the pdeposit accounts and savings accounts. but anything is possible if that happens, we will look and understand the impact on the

consumers, deposit insurance fund, and also protection of the systemic risk and financial stability concerns as well. >> finally, big banks like capital one this week proved vulnerable to a hack attack. 100 million people's information exposed. how vulnerable is our banking system >> at this point in time i can't comment about capital one in particular or any other banks. i can tell you we are taking a look at cybersecurity at our banks very carefully we are taking a look at how they protect personally identifiable information. we have exams where we focus on those issues and topics to understand the framework and understand kwloo they are taking appropriate measures to safeguard consumer information the breach that happened happened and it's something that unfortunately more and more corporations, including financial institutions, are exposed to as you know, some government agencies have breaches as well, and generally there is an emphasis in this era on protectk

consumers and protecting cyber information as much as we can for both government agencies, for financial institutions, and corporations in general. >> i'm wondering, to jamie dimon's point in his april shareholder letter, he said that cybersecurity may be the biggest threat to the u.s. financial system are banks more vulnerable to the rest of the economy right now to cyber hacks? >> it is a tremendous risk to our financial institutions and our financial institutions are aware of that risk they are investing billions of dollars in cybersecurity and i.t. systems in fact, some of the banks are investing so much money in their i.t. networks that their budget is higher than that of the operating budget of the fdic having said that, we are asking our institutions to, requiring them in fact, to safeguard customer information, to safeguard their systems. there are billions of transactions every day,

financial transactions in the united states, and any one of those transactions can expose a company to hackers and vulnerability in their i.t. framework. it's something we take seriously. i know banks take it seriously we will it certainly continue to focus on examining the banks to make sure that consumers are protected. >> chairman mcwilliams, thank you so much for joining us today. >> thank you. when we come back we will take closer look at ge, down 3.5% after today's pete. get some comments from ceo jamie paurer after announcing her derte.s&p back to the flat line. the dow is off the highs the dow is off the highs back in a moment and we'll make your first month's payment. experience amazing.

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breakthrough at snhu.edu. good morning everyone. i'm sue herera here is your cnbc news update at this hour. the trump administration says it will set up a system to allow americans to legally import lower cost prescription drugs from canada. it weakens a long standing ban that is a top priority for the politically powerful drug industry it is now unclear how soon consumers will see those

results. iranian foreign minister muhammad zarif described an offer for mike pompeo to travel to iran. he said pompeo has turned down dozens of interview requests by iranian news organizations. >> hypocritical, just shared by secretary pompeo when i go to the united states i do not go to visit the u.s i go to attend the united nations. now they have restricted us. >> police say threats against rapper cardi b forced her to cancel a concert last night. it was supposed to start at 7:00 p.m. in indianapolis. it was postponed after 6:30 p.m. eastern. a makeup concert planned for september 11th. that is the news update this hour back downtown to you guys. >> sue, thanks. time now for our etf spotlight. taking a look at the semiconductor etf today. ticker smh still up over 8% for the month of july. key components weighing heavy on

the sector today, micron, invidia, applied materials, among other names, amd under pressure with the chipmaker reporting lower than expected forecast you heard from the ceo last hour despite this morning's pullback, this is a sector that is on pace for the best yearly performance in about a decade. outperforming the broader s&p 500 in 2019. 66% of the s&p is positive for the year, and micron and twitter are the leaders both up 20% so far this month. >> then ge, lower after their earnings beat with the company announcing the departure of cfo jamie miller. >> in regards to the departure of jamie miller, they said on a the call this is the right time for change he made a number of hires since he has become the ceo of ge in october of 2018. there is a new digital ceo, a new cfo at the power portfolio he pointed the current cfo of health care to lead ge's

operational is changing leaders create a shift in culture. i just got off a call with ceo larry culp i asked about ge's long troubled power structure which faces competition from siemens and mitsubishi they said orders are up. that bodes well for the future we are trying to be smart about the orders be pursue and looking at good margins and cash profile. on the topic of china, culp just got back from a trip to china and he said that when you are on the ground he really got the sense that trade tensions are real so that will continue to be something that investors look for in terms of ge's performance on the ground in china tariff-related costs, by the way, is something ge is struggling with. 90 million net impact in the second quarter the company estimates that tariff-related costs for the year to about around 300 to

$400 million look at shares of ge they were higher by around 2% in pre-market trade now lower by 3.6%. i think it really has to do with the struggles that it's seeing in the power sector, which again is not only dealing with rising competition, but a lower pricing environment as well. guys, back to you. >> it's been a drag for a while. thanks. when we come back we will bring you some of the highlights from last night's debate with elizabeth warren and bernie sanders speaking out as we head to break look at the best s&p performers of july. we mentioned micron and twitter led the way. u.p.s. had a very strong month actually, the best mthon since 2009 more "squawk on the street" when we come right back

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night one of the second round of democratic debates

happening last night in detroit. kayla has some of the highlights. >> good morning. the democratic divide was on display last night between those politicians advocating for sweeping structural changes to the political system and those who were advocating for a more pragmatic incremental approach to existing policy the moderates pushing for that latter approach were decrying the wish list in fairy tale economics of the policies pushed by elizabeth warren and breaking news, the allied progressives who occupied much of the conversation last night. when they defended their positions they said their rivals just lacked vision >> i don't understand why anybody goes to the trouble of running for the president of the united states to talk about what we really can't do and shouldn't fight for. >> i get a little bit tired of democrats afraid of big ideas. republicans are not afraid of big ideas. they could give a trillion

dollars in tax breaks to billionaires and profitable corporations they could bail out the crooks on wall street. >> reporter: corporations were targeted by the candidates on stage 22 times last night. the ultra rich were targeted six times. mostly by sanders and warren, who commanded the most air time of any of the candidates coming in third was south bend mayor pete buttigieg, who said that he wasn't as concerned about triangulating different political parties and public interests to try to get policy done he just wanted to find something that worked. >> if we embrace a far left agenda, they are going to say we are a bunch of crazy socialists. if we embrace a conservative agenda they are going to say we are a bunch of crazy socialists. let's stand up for the right policy, go out there and defend it. >> reporter: who is they of course, the republican party. president trump himself was name-checked 34 times. someone not mentioned at all in last night's debate was frontrunner joe biden.

the former vice president who has a lead over elizabeth warren of as high as 19 points earlier this week. he takes the stage tonight with senators kamala harris and cory booker as well as seven other candidates guys. >> kayla, thank you. looking ahead to the fed this afternoon, a potentially historic decision in less than four hours do we need a cut i act procter & gamble's ceo how the u.s. economy is doing from his vantage point. >> the u.s. consumer in our ten categories remains pretty strong the growth rate in the u.s. of the categories has been 3% and in some cases categories 3.5% to 4% so very robust and we're doing everything we can with the innovation that we% bring to continue to accelerate growth in the categories. >> pretty strong read there. joining us is bmo capital markets chief investment strategist brian bellski and

commentator mike santoli so, brian, about whethwhether wr not, do we need it today for this economy >> no, we don't think so from an investment strategy standpoint, our economics team continues to believe we will see at least two cuts before the end of the year. i think what's going to end up happening, and we've said this a few times, is that we really believe that 2019 is this generation's 1995. i don't believe that we are going to see three rate cuts like we saw in 1995, sara, but i do believe the fed misstepped in december when global growth was slowing and they raised interest rates. they came out in january and basically did a pivot just like they did in early 1995 when greenspan admitted that they cranked up interest rates too much in 1994 i believe this is year one of two to three of goldilocks thi i think investors have to wrong. as i travel around the world, especially the last four to six weeks, those investors with less

than ten years experience really believe that we are going to see 50 basis points. clearly, the fed funds futures is telling you we will see 75 basis points still but i just don't think that's going to end up happening. i think the fed will cut by 25 the market will probablem bounca little bit in the long run, the next couple of days, as momentum unwinds, i think there is a good chance the market sells off >> well, that's interesting from you, brian, because every time you are on you always say buy, buy, buy so are you talking about just a near-term kind of disappointment are you changing your outlook here >> new york no, not changing we believe that u.s. stocks are in a 20 to 25 year bull market the momentum trade has been all over the place, especially the last couple of weeks investors, we think, have it wrong in terms of wanting more from the fed on a short-term basis there is a likelihood they will be disappointed we get a pull back and pause this market needs to pull back

and slow down a little bit near-term we remain excessively bullish on u.s. stocks. >> okay. just checking. >> interesting from a stock owner's perspective, you better hope it's 25. a year after a 50 cut is usually not good. >> that's right. and that's the thing you basically have four precedents right here you are working off of the last four ones, you never got just one cut when you started with 50, of course from much higher rates, it was basically a recession was entrained. obviously, that's what you hope for. i think they can properly characterize this as an insurance cut. there is a concept called overinsurance. you could be overinsured what's the cost of taking out this insurance is it really excessive probably not 25 basis points. i don't oppose the idea that the markets is roughly priced the scenario in. >> the market wants more and it's going to fein for more and the financial --

>> more after the 25 possibly and then you could ease from tighter conditions you know, you are on that treadmill again possibly 2% fed funds rate is not crazy given where the rest of the world is 2%, even 1.75% is not crazy. that's changed since december. nothing changed in u.s. policy except words. >> brian, core pce, three-month annualized it's running 2.5 a seven-year high. we got employment costs up 2.7 how likely is it that in six months a cut looks silly we get a true rebound in at least employment inflation >> that's a great point, carl. we remain excessively strong in terms of what's happened in employment we are very, very lean and mean across all sectors of the market in six months we could have a situation where the china issue has passed where we start to see the semblance of capex coming

into 2020. i think 2020 is going to be more of a volatile year, especially considering the election and all the noise and rhetoric surrounding that you are right. in six months from now we could say we didn't need that 25 basis point cut. at the end of the day this is all about earnings forecasts still are looking for a rebound in an earnings, especially in the fourth quarter. going back to what mr. santelli said, look at interest rate scenarios not heading into recession like 1987, 1995, and 1998 the periods of the fed cutting interest rates were very short and the stock market was very strong especially coming out of the rebound in'87 and then again i 1995 so that would be kind of the scenario that we would be looking for. >> yeah, '95, '98, three cuts over a few months. that actually did help the economy manage to avoid a downturn. >> it did. '98, financial continues globally had tightened

the stock market had a quick 20% drop similar to last quarter '95 is the dream scenario that everybody wants to point to because stocks were at a high at the time of the cut. the cut really did seem well timed. it was a fine-tuning of economic growth because you had a real domestic slowdown that averted a recession. of course, i mean, the pushback on that is arguably you add an earlier part of that economic cycle and there was a lot more behind it. >> brian, your favorite sectors with your excessively bullish call on long-term u.s. stocks? >> i would say financials remain an area that we believe investors are massively underexposed we still love technology we still love communication services i think health care from a valuation and earnings basis in terms of growth at a reasonable price is the sector for the next six months. >> brian bellski, mike santelli, thank you both. let's get a check of some of today's earnings a ton of them today. apple leading the charge

spotify and amd obviously not injoying the results of their dow has gone negative after an 85-point game at the open. back in a moment

a fed rate cut is in the cards wednesday. how should you play the next ndve fi out on tradingnation.cnbc.com more "squawk on the street" is coming up.

let's get to the cme group in chicago and get the santelli exchange rick. >> good morning. thank you, carl. like to welcome my guest professor ken rogof. let's get into it. you know, i have heard many reasons why the fed is going to do its first since 2008. the thing that jumps out is this covert beggar thy neighbor negotiation. central banks don't want to let other central banks create policies that let them get an edge central banks seem to be semi coordinated. do you agree with that do you think it's right for the u.s. fed to join that coalition

of easers? >> i think it is right to adjust the interest rate a bit down now because there is no inflation. i mean, it's not coming in at the level we'd expect with the economy going this hot, with the trade war going on, and the fed's groping around but this isn't a cycle this is an adjust the where they are easing down. i wouldn't look for, you know, several more cuts necessarily after this. >> i understand. so you believe that 25 may be a cumulative 50, something 75 is going to make a difference in the complexion of the yield curve for pricing versus the consumer of effects coming from other policies and prices that brings others down even canada's twos to ten is now inverted. >> you are absolutely right. we live in an environment where the world is determining the interest rates that we have, and that's why all of the other rates are really low or higher

we are not seeing any inflation. there is no question about that. on the other hand, you mentioned the dollar i don't think the fed is necessarily panicked about the dollar because everything is priced in dollars. all our imports, exports we don't feel it like other countries do. >> i do. >> i understand. another topic that you have much notoriety on and that of course is debt and how it affects growth two issues there, one the feedback loop of the markets penalizing governments for over issuing debt seems to be broken with things like quantitative easing that's one issue the other is just whether you get a feedback loop or not, the more debt you have the harder it is to have sustainable organic growth weigh in on growth and debt. >> well, certainly during this era where interest rates are trending down, if you believe that it's sustained, it makes sense to have more debt, especially if you invest in infrastructure, you invest in education, other things that help our economy grow. and also, if you borrow

relatively long-term, which we're not, so that if interest rates start trending in the other direction you're kind of insured against it the thing to be careful about is when you're borrowing very short-term you're funding lots of things because you want to avoid raising taxes, for example that's a risky proposition, u the united states, we are the winners in the global economy right now. we are less vulnerable than everybody else, but at the same time if interest rates start rising, it's going to hit us too. >> you know what they say, you have to earn your stripes every day. the past doesn't necessarily give you a pass into the future. >> absolutely. >> i guess my final question would be that servicing the debt and the fact that we've really ramped up short-term t bill issuance for 2019, your final thought on those two observations >> that's exactly right. we're borrowing very short-term. the u.s. debt if you combine the fed in there, has the shortest

duration since the high inflation of the '70s. if you think interest rates are going to keep going down, that's smar smart but i think at some point that's a risky strategy. we should be borrowing more long-term. those rates are pretty low, too, and then if you get it wrong it's not so catastrophic >> professor, thank you for your thoughts today, sara, back to you. >> thank you let's send it over to jon fortt with a look at what's coming up on "squawk alley." >> take a look, up better than 6% on really strong results. we have got the ceo tom layton coming up to explain that and where the next run of growth is going to come from on "squawk going to come from on "squawk alley. dutch) it's happening..! just ok is not ok. especially when it comes to your network.

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obviously a lot of news between now and the closing bell what's coming up this afternoon? >> we've got jay powell, his news conference usually goes into the 3:00 p.m. hour. it is the moment of truth, and we have an all star panel ready to react as soon as powell finishes speaking from his news conference former fed governor sarah bloom ras kin, jim grant, steve moore, jeremy seeing el, a lot diverse

opinions if the fed does cut rates as widely expected, david zervos has promised to get his haircut live on "closing bell. it will happen here at the new york stock exchange. he's also raised a lot of money. we just showed the website give david a buzz or something they've raised more than $200,000 for charity as a result of this whole campaign it started when he was coming on air with very long hair and i was just making fun of him he said i'll cut when the fed cuts >> here we go, moment of truth for mr. zervos as well. >> good for him, and we'll see you this afternoon on the "closing bell. when we come back, a lot mo oapple's strong quarter, stock up 4.5%. "squawk alley" starts in a moment

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

♪ good wednesday morning, welcome to "squawk alley." i'm carl quintanilla, morgan brennan, jon fortt, a busy day with the fed, but of course apple is the story of the morning at least shares are up after posting strong revenue growth again seeing another quarter of weak iphone sales apple's ceo spoke with our own josh lipton on the quarter, and josh joins us this morning from san francisco to talk about that conversation hey, josh. >> reporter: so carl, apple beat expectations and projected revenue for the current quarter that also bested forecasts iphone revenue did drop 12% to 26 billion still, that was an improvement from the march quarter which cook attributed to new trade-in and financing programs and recovery in china. on the subject of trade tensions with china, cook saying i think it always helps when the