♪ 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 tension is lower, and i think there is

some level of that in the numbers. it's hard to say how much when the countries are meeting and talking, it is better than not cook telling me he sees no evidence that his products are being boycotted in china and that he has made no significant changes to his supply chain in response to potential new tariffs. we also talked about services up 18% when adjusted for currency in a one-time gain last year i asked cook about his new video streaming service that's on the way and how he will judge its success by what metrics, cook saying the most important thing is one, the product, and two the number of subscribers and whether we are going to announce that or not, i don't know. we don't aspire to have the biggest audience working in cook's favor for these new services leveraging that massive install base or the number of active guys devices in people's hands he says the active install base of iphones reached a new high. i asked cook about new regulatory scrutiny here in the u.s. he says he does not have

monopolistic share and that there is plenty of competition on his app store including from rivals like spotify. i think at the end of the day facts rule the day, plaarticulal when you are dealing with the law cook says. josh, back to you. >> good stuff. three straight quarters of declining iphone sales not slowing the stock down there morning. shares still rising on revenue growth and other categories notably wearable and services. tim cook saying the apple credit card will launch in august quote, apple is not the iphone company anymore. let's bridge in two apple analysts, krish s a,ankar of co. i'll start with you. sales of iphone comprising less than 50% of overall revenues good thing or bad? >> you know, today where the stock is i would say, you know, it's not a bad thing a year ago it would have been a terrible thing obviously having better iphone

sales is always good but the longer term you look at it, this is a company that's going through a transition iphone was the story for the last ten years i think the next ten years is going to be about services, so -- but those transitions do take time. it's not going to happen overnight. i think they're slowly progressing to that where you're exiting a mature hardware market to a more growth-focused high multiple services unit business. >> so amit, is that headline right to say that apple is not an iphone company anymore? >> i mean, it's 52% right, correct? at this point at least iphone units at the end of the day is what's going to drive the story, right if the install base starting declining, iphones unit ss is a leading indicator. i do think it's notable despite 12% revenue in iphones, the story is shifting from monetization of the ios base versus just the iphone units

where it's always been. >> we were just talking about this last hour it is still the iphone company because as you were saying, iphone drives services more than anything else. to me the bright light in this quarter was the realization that this other stuff, the margins on it and the growth in that if apple's able to get people to take on multiple services and multiple wearables, that could make up for the drop in iphone, and i wonder if you think we have enough data to really gauge how that's going over the next four quarters. >> that's a great point, and i do think there's two parts, right? on the services side, compares actually get really easy for apple for the next four quarters, if you think about all the china bans over there last year that along with the new product stuff josh was talking about should help drive acceleration there, and then on the other side you have wearables right, apple watches are doing fairly well i do think it's more about

wearables and services getting an easy compare as you go forward. >> krish, what does apple needs to do with this next iphone lineup what this quarter's earnings showed me is that price sensitivity really was an issue particularly in china. we saw the vat reduction having an impact reduction there, plus financing, plus trade-ins. where does apple need to price this next lineup in order to keep that goodness going >> it's a great question the one thing i would say is that that has been the biggest challenge last year where it is very obvious that once they crossed the $1,000 price point, the consumers are very sensitive to it. the other thing is the expectation is for a 5g iphone coming out later next year, therefore what you might see is the iphone cycle this year is a little bit artificially depressed with consumers holding out for the next iphone. i think one other thing worth

noting even though overall over the last several quarters, apple's iphone share in china has been coming down, i think they're trying to increase it in india and also having local manufacturing there with foxconn having a plant in india. one of the upsides to that is you don't have to pay some of the duties that you have to pay if you're importing it from outside india which actually helps or i should say adds to the pricing of the iphone. i think what you're going to see is a transition of overall over the next four quarters, more india, less china, but the big runup is going to be later next year when the 5g phone comes out. >> to that point, amit the stock historically starts to price in the new phone about nine months ahead of the launch. is there any reason to think this cycle might be different either because of 5g, because of global trade, anything like that >> you know, i would tell you, i think the 5g narrative is going to be powerful, and my gut is, you know, people are going to

start debating the duration if you're negative is about two quarters, but if you're bullish you probably need to start being engaged with the 5g cycle in early 2020 i do think that's going to be the overriding factor. china to your point, could have ramifications on apple it's a bit less of an aissue these days. >> i want to dig into services a bit more i realize apple's going to be launching new platforms this fall, but how much of that services growth hinges on the app store? and i ask that because you have that lawsuit that's moving forward. you also have this antitrust scrutiny more broadly here in the u.s. and europe where the app store is concerned >> absolutely. i think the td plus and the arcade launching is going to be closely watched for two reasons. number one is that the pricing is going to determine the consumer interest. you already have the plus at 699 a month, which has kind of set the bar. realistically going to see how

apple can price this the second one is that one thing to look into like longer term is once apple starts creating original content, which they need to do in order to acquire more consumers or customers, that's going to start throwing through the cogs line of the m and l. what you're goi -- p&l the gross profit dollars might increase as the revenue for services increases i think those are two things to keep in mind i think the pricing is going to be very critical that will actually determine if you're going to be still tethered to your hardware installed base or you're going to start getting more new consumers or customers that are not currently like apple users. >> all right, i'll just note that you both have outperformed ratings on the stock thanks for joining us today, krish and amit. >> thanks for having us. >> our next guest says a war of

words over interest rates has amassed bigger issues between amassed bigger issues between the white house and fed. can you do more with less? can you raise the bar while reducing your footprint? for our 100 years we've been answering the questions of today to meet the energy needs of tomorrow. southern company

. frankly if we ever 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 we would have done even better had we had a federal reserve that didn't raise interest rates so quickly the fed acted too soon i turned out to be right they acted too soon and too

violently. we've had nine increases, i believe, you'll check that, but i believe it's nine increases. a couple under her and a lot under powell i'm not a fan. >> the fed move in my opinion far too early and far too severely it puts me at a -- somewhat of a disadvantage fortunately i've made the economy so strong that nothing's going to stop us >> it's a montage of the president's recent criticism of the fed ahead of that important rate decision this afternoon our next guest writes a war of words over interest rates are only masking larger issues between the white house and the fed. former council of economic advisers chairman, glen hubbard joins us this morning to talk about his piece. good to see you again. >> like wise. >> you say that december was mistake and that a cut today would be a welcome precaution,

but more importantly you say th white house and the fed need to arrive at a thoughtful truce what would that look like? >> i think from the fed's perspective being clearer about what it takes to hit its inflation objective and clearer in communication the fed chair has talked a lot about well, maybe there's u.s. weakness, but we're not really seeing u.s. weakness the problems are from the global economy and with the failure to hit the inflation target on the white house's side it needs to understand that a slightly lower federal funds rate isn't really going to change the equation very much. the big issue on business people's minds is policy uncertainty in tariffs both sides need to calm down a bit. >> well, navarro who told cnn if we pass usmca and the fed cuts 100 basis points, he can guarantee dow 30 k it's pretty clear what their objectives are, isn't it >> well, i would question that that piece of math, but it is certainly true that if you weigh the balance of risks probably the last fed rate hike was too much so taking it back would be a

good idea. having said that, i hardly see getting to 30,000 on the dow for something like that. we could, though, if we got better trade policy and less policy uncertainty have a firming economy. that's what the white house should be focused on >> so glen, is president trump right to come out and argue that the fed has moved too soon and too fast with this tightening cycle that we've seen? >> well, i think the fed has made some mistakes both in substance and in communication, and sometimes white houses point those out. i think the president would be better served, perhaps, by focusing on government policy, trade, things -- fiscal policy that are more under the white house's control, but i think his criticisms of the fed are not off point. by the same token, i think the fed could learn more by engaging with more divergent views from the business community, from economists, and diversifying its

own group think. i think there's some light there as well as heat. >> so glen, is the fed's independence at risk based on how the president has been addressing his concerns with fed action and is this sort of listening and engagement you're talking about, if so a way to deal with that >> well, to answer the last part first, i think yes, if the fed were more engaged in that way i would only help itself, and i think chair powell is well-liked on both sides of the aisle and by the business community and could well lead that effort. there is always a worry about central bank independence being compromised, and it would be a huge economic problem if that happened having said that, i think where we are now is they can do well and the communication under their control, this should be fine >> how should the fed be assessing inflation? >> well, given that the fed hasn't hit its 2% inflation

target, certainly one reason to have a more accommodative policy is on average defined over some period the fed has hit that target that would be a clear signal to the public the fed however has talked in more evolving measures of data dependence, which are a little bit confusing. i think going back to the first principles would help it >> so it seems like a foregone conclusion that the fed is going to cut rates today, but how do you think this plays out as the year progresses? i mean there's also a lot of chatter on wall street, for example, about the balance sheet reduction program and what happens to that. >> well, i think we'it will be to chair powell and colleagues to really communicate how they're thinking about that. so, for example, are they focused on economic conditions in the u.s.? are they focused on interest rate trends and conditions abroad you know, tell people where to look how should people think about the inflation target and the lack of success in hitting it? those are the kind of communications the fed can do. at the same time, the president

and the white house can really focus on getting policy more clear in the minds of business leaders and less uncertain >> finally, glen, you know, since the blackout window began, this conference board number was pretty incredible, adp solid today, core pce. i just wonder when peopleargue that they've locked themselves into this cut and that they need to ask themselves how that happened, what do you say? >> well, i think if the fed were to make an argument for a cut, it would be less about current u.s. economic conditions for the reasons you just said, but more in terms of global weakness in terms of central bank trends outside the united states and their effect on the dollar, foreign exchange value of the dollar, and on the fed's lack of hitting its inflation target i think that's a better argument than evolving data dependence on the u.s. economy >> lastly, glen, and i ask this because of your position within the financial sector as well and some of the positions you have held there, the fact that we

have seen this prolonged period of low interest rates, you do have the fed now poised to follow suit with other central banks around the world in easing again, what do you expect that effect to be on the sector, and not only banks but also insurers >> well, i think, you know, low interest rates and low interest rate spreads obviously compress margins in the financial services sector, but they also lead firms to innovate i think the bigger question going forward is whether fiscal policy is positioned to step in and help central banks in the future so that not all the pressure is on central banks. >> glenn, good piece, and we're going to know a lot more in just a few hours. appreciate the time as aulsz. >> thanks my pleasure. and we are getting a news alert out of los angeles julia boorstin has that. >> jon, that's right, the four major broadcast networks have sued to set down low cast, a

nonprofit streaming video app that offers free tv feeds of the four main broadcast networks cbs, abc, nbc universal and fox say that low cast transmits their signal without their permission, therefore in violation of copyright law saying the app is not truly a nonprofit because it's backed by a half million dollars investment from at&t and also partly funded by a dish network lobbyist it's worth noting that both at&t and dish have recommended low cast to their subscribers when certain channels are blacked out during contract renegotiations now, this legal battle at its heart really seems to come down to the billions of dollars in retransmission fees that the media companies bring in from the tv distributors for their channels now, the media giants have been earning more for their channels from these retransmission fees which is helping compensate for the declining revenue for advertising that's tied to ratings. the perfect example of this

conflict right now cbs channels are blacked out for at&t's major markets and at&t is directing frustrated customers to download the locast app, which is considered a free and easier alternative to the trouble of going out and buying an antenna. as we see all those four media stocks are down right now. morgan. >> julia, thank you. >> it's aerial all over again, remember that? >> exactly. >> the little antenna. >> jon's, it's worth noting that ario tried to do something similar to this, a different technology on the back end, but it was shut down in a legal battle that was ario, but did not succe succeed. the question is if locast can get it right now several years later. >> we will be following it, julia boorstin, thank you. after the break, ak a my shares surges. ceo tom leighton joins us right here here stay with us

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we've got an earnings boost, led by higher revenue growth in its securities solutions business joining us at post nine and another first on cnbc is akamai ceo tom leighton. >> so $205 million, up 34% in constant currency for your security portfolio, you're arguing that it's potentially the biggest cloud security business out there how should we be defining cloud security for investors, especially in the wake of this capital one thing, right which is very difficult for people to parse, it's kind of a firewall configuration issue, but it's in the cloud. is that something you can fix or is that a whole different wing of cloud security? >> that's an area where we can really help, and i think it, you know, speaks about the need for zero trust, architectures for enterprise security. you know, the traditional model

for enterprises was to have the firewall, the perimeter, you know, around the castle, and once you're inside it's okay, and there's a couple of challenges with that first, today it's easy to get malware on employee devices. they bring them inside, you know, inside the perimeter, and then you've got a big problem. and the other challenge is that enterprises are moving more and more of their sensitive data into the cloud, and it's easy to move it to the cloud, but it gets a lot more complicated to secure it. and you know, we see an unfortunate number of big data breaches happening as a result of making that move. >> yeah. >> and those are things that we can help with with our zero trust architecture and our enterprise security professionals that help banks and other large companies move into the cloud safely. >> also want to talk about ott it was a driver for your overall business and you expect it to be in 2020 as well with the election cycle, with the

olympics what are the particular, i guess, deers in the machine that make these big events bigger for you? is it phone upgrades perhaps that are a leading indicator, people have bigger streams and therefore are going to stream higher quality video >> yeah, it's across the board more and more people are getting connected. more and more content is moving online it's moving online in higher quality levels, and to your point people are watching on bigger screens you need better quality. that means more traffic. so we're seeing a very large increase in video traffic on our platform and, you know, it could be that it increases even more next year as you get more ott services coming online you know, just a few weeks ago, we carried a cricket match in india that had 25 million concurrent viewers which, you know, that's a record for the internet that was just in india alone >> i want to go back to cloud security for a minute because for the past quarter, strong growth in that division again up

32% year on year clearly there's demand out there for the services and the security solutions that you're providing, and yet, we continue more broadly to see companies face these massive data breaches and these hacks. are companies doing enough, or is it that the hacking techniques have become so sophisticated? >> well, you know, there's big entities out there trying to cause harm you've got nation states you've got organized crime operating on a massive scale it is hard today for an enterprise to keep up with that, but, you know, that's where akamai can really help we basically stopped service attacks. we stopped, you know, the attacks that deface a website that take over, you know, bank accounts, and the next frontier is stopping these data breaches, and i think with our new enterprise security products we can take a big dent out of that, and a lot of the attacks we've seen we can prevent, you know, today. >> the speed of the 5g rollout in the u.s., how much of an influence is that going to have

over overall ott traffic for you? >> i think 5g is really exciting in general but also for akamai i think you might even compare it to the revolution that took place online when we had broadband roll out, for those who can think that far back. you're going to bring a lot more people online. we have a lot more bandwidth and throughput at the last mile and a lot lower latency. that means a lot more traffic, which is of course good for akamai, but also it means there's going to be a lot more iot applications talking to our customers, they're all now developing real projects, you know, sensors ain sneakers and clothing. sensors on merchandise for automated checkout and tracking. the airlines when you come into the airport, you are automatically updated about all the particulars on your flight, gaming companies, automobiles all working on iot that's going to be enabled by

5g that's exciting. >> looking forward to seeing it when it comes. great to have you. >> akamai now up 7%. we are set to close in just a moment seema mody has the breakdown of today's action overseas. >> just looking at the map, we have france and italy higher, but the u.k. stock market as you can see here with our chart is lower. a strong picture, though, for european banks credit suisse jumping after reporting a 45% surge in profits last quarter, and there's b and p pro he baa beating estimates as it recovers in fixed income vvb 8 in spain, that's the lone laggard. two other earnings stories,s a ta aston martin, demand jumped worldwide due to strength in asia stock down 12% l'oreal underperformance in north america but impressive growth in china, malaysia,

india, and sheet nvietnam. the fed expected to cut rates despite encouraging recent data. it's a different story in europe where there are still a lot of worrying signs about the health of that economy. take a look at the data we have received throughout this week. growth in france slowing unexpectedly last quarter. italy's gdp coming in flat at 0% italy entered a technical recession late last year, and then there's consumer confidence in germany dropping for a third month in a row just broadening it out to the wider euro zone, good to know that euro zone gdp is at 0.2% last quarter that's half the rate we saw back in the first quarter really supporting the case for the ecb to ease in september, but for now our eyes are on the fed. carl, back to you. >> you got that right, seema let's get a news update with sue herera over at hq. >> good morning again, carl, good morning everyone. here's what's happening at this hour house speaker nancy pelosi addressing ghana's parliament to acknowledge the 400th anniversary of the slave trade

from africa to the new world she told lawmakers she and her delegation were humbled by their visit to the gateway from which enslaved africans were slipped across the sea. >> are a sober testament to humanity's capacity for great evil and also a helpful reminder of the capacity for great resilience, renewal and strength of a people. america is firmly committed to economic progress in ghana >> charges were read against 23 hong kong protesters who have been accused of rioting. supporters rallied outside the court protesting china's influence in the city, all of those charged have since been released on bail and one of two soldiers killed in afghanistan on monday arrived at dover air force base this morning army specialist michael isaiah nance receiving a dignified transfer it was his first deployment to the region you are up to date that's the news update for this

hour back downtown to "squawk alley." carl, back to you. still to come, what elon musk's latest tweet on tesla production numbers mean for his deal on the s.e.c. we're going to talk about that in a moment. it is the last trading day of the month, major averages happening on e out a 2.5 for the s&p, 22 for thdow, better than flthree for the nasdaq we're back in a moment

shares of apple definitely a

bright spot today despite the supply chain concerns over tariffs. tim cook talked to cnbc last night. he said we've made no significant changes and reiterated how many countries apple products are actually manufactured in outside of china from japan and korea to the u.s. with us today to discuss that and a whole lot more, former yahoo chief operator, welcome, good to see you. >> thank you >> so the supply chain worries on apple, where do you think they want to make stuff and where will they? >> i think where they want to make it is cheapest and where they can make the best quality they're playing the game now of sort of wak mow where you got to watch the tariffs. if you think about the long-term value of apple and where they're going. they were a phone company and now an e-commerce company and now they're trying to be a subscription company the supply chain things are things to talk about over the quarter but the long-term that's all going to be resolved, and

they'll be wherever they need to be >> there was a day when there might be speculation about apple buying chag because they were so heavy in education now they're getting into services, which is what you do, what's your thought about their smartest path to navigate and getting deeper in services making money off their ecosystem which a lot of other companies like yours have been trying to do for a long time >> yeah, i think it's a great question they have the largest distribution channel on the planet probably other than google they've been selling through the itunes store, the app store. they bought companies to be able to sell news and other things, and they sell their icloud they really have not gotten into content that they own in any significant way, and unless they commit to it, they're not going to be successful but if they commit to it, there's no reason they can't be successful. >> what do you mean by commit? because they say a lot of stuff. >> that's true and lots of people do and lots of people tweet a lot of stuff, but what i mean but it is if you ask what is it that apple owns

proprietary and offers to their consumer in terms of content other than the icloud itself you really can't come up with anything so whereas adobe has all these software and services and microsoft has these things, they're sort of in the content area they're in the music subscription area. even in the music subscription area, they don't own the content, and so it's hard to make those things as profitable. you can sign up a lot of people. i think i would estimate the most of their profits are coming from just the icloud which is selling storage, which everybody needs because your phone is your home base. >> with iphone sales falling to less than half of overall revenue in this quarter, there does seem to be some chatter out there that this narrative that we've been talking about and we've been hearing about from the country, the shift beyond the iphone, two things like services, wearables, you know, this next act for apple so to speak is that we can finally say it's here. do you think that's too early? >> i think it's cyclical, right? which is i think there hasn't

been a big breakthrough. everything has gotten a little smaller a little better, a little cleaner, a little faster, a little more secure i don't know what the next break is or i'd be the guy running apple. what i do know is the need for mobility is endless. the kinds of things that are going to attach to our bodies seems to be endless, and so i think they're well-positioned to be that player because i think just in default mode if you're a user of apple products you prefer to use apple products because it's just easier the payments there, the click's there, the operating system's there. it's just too familiar for you but they chose the highest price model, and so the highest price model is generally the smallest group and it ends quicker. the question is can they come up with lower price models and make a lot of their money on subscription services as you pointed out. >> we're going to watch that transition tesla the other big story, elon musk back on twitter again. >> why is that a big story >> tweeting about production forecasts this time on solar

roofs. it's important because potentially a question of his tenure at the company, isn't it? >> i suppose it could be these things, you know, they flare-up because they're fun to talk about i have no idea why any ceo would want to do that. i would even less understanding of why somebody who's being told they shouldn't do it and can't do it would want to do it. there's not much to say other than he just shouldn't do it i don't know what his goal is with it, and you know, his tenure at the company i think is going to be determined by his shareholders rather than the government, which is if they continue to support him they'll fight for him. look, he is a genius i met him back in the late '90s. he is all the things that you think on the spectrum in terms of brilliant and complicated but at the end of the day if you think about the things he's invented and the industries he's really put us in, he's really an amazing guy. i just think he should get off twitter. >> you're on boards, some important boards, if you were on

this board you say you'd give him a long leash. >> no, i'm saying i wouldn't come on the air and tell him i gave him a short leash but i don't know that you can control people who are in control of -- feel they're in control of their own destiny i mean, you get the pros and the cons with people like this i mean, these things don't get invented unless you have people like this, but they do get themselves in trouble from time to time. >> i think that's sort of why this continues to, you know, be a story, right you have a man who has essentially taught himself rocket science just to put that in perspective, right? and yet he's taking to twitter and it's raising questions about whether it's violating his agreement with the s.e.c there's only three scenarios that play out, either the agreement with the s.e.c. continues to be ambiguous, he doesn't care, or maybe he's stretched too thin, which has been another question that's been raised as well. >> or it's possible that it's all three, you know, and it's also possible that his constituency in his mind are his investors, and his customers and this is how he likes to communicate with them. you know, i think we've all been talking a lesson about the

ability to communicate over twitter. he may just look at it differently and say this is the single best way for me to get out my story to the people i actually want to get it to again, it's not something that i would do and i don't recommend it to others but not everybody is elon musk. it's nice to end on this story, chegg surging double-digits up about 60% sips the start of the year. i always joke that viewers say why didn't you talk about chegg earlier, and we did. you came on when things were much different what's happening now >> well, i think this is one of those industries where the more you get into it the bigger it becomes. if you think about the enormity of education, not just in the u.s. but globally, if you think about the trends, just the obvious trends and jon talks about these kinds of things all the tile is it going more online? yes, are more people going to learn more things? yes. are more people going to need support because they don't have support in their homes or the governments or in the schools, yes. so the only company that is direct to student that literally

focuses on the student needs exclusively is chegg, and as a result of that we put them first. they have put us first so you see continued growth you see high margins and high profits because technology really does allow you to be on demand, accessible, affordable, releva relevant, and in their home on any device that they want to be whenever it's convenient for them that's why you're seeing extraordinary growth and really high margins and cash flow. >> what's the next leg of the vision you started off with textbooks you've gotten a lot bigger than that with advice and test prep. >> homework help. >> you go even deeper into that? do you do the sort of kaplan thing or physical locations? you've seen it at adobe them going from little artist software to huge cloud and marketing and experienced juggerna juggernaut, what's the next leg for chegg? >> i think if you had to choose the two of going into a declining retail or a juggernaut

business you'd choose the juggernaut, it really does open up your eyes in terms of what it means to be able to create overwhelming value for your consumer so the beautiful thing about our business model is we own the customer we own the channel of distribution we own the data. we own proprietary content we control our own destiny very few companies do that, and so for us the number of things that we can support them in or help them in, we talked about opening up a new leg in supporting them in job skills, preskilling, up skilling, reskilling all these are things people are forced to do on their own. who's helping them it's going to be chegg, that may be a market that's bigger than the market we're in. rescaling and upscaling in the corporate market is $53 billion a year we want to go direct and students have been asking us to we see lots of future growth engines for chegg. >> i just think about manufacturing, there's a lot of

opportunity for that in terms of automation skills and things along those lines. finally, maybe this is a big question, but we're having this debate in my house over the weekend, for example when you look at where the u.s. stands in global rankings for education, when you look at that wall street journal report that was circulated earlier this week about wealthy parents find loopholes for financial aid. it seems like the u.s. system for education more broadly is broken how do you fix it? >> well, we think we have a plan, actually, which is every one of the institutions similar to government or movie theaters or other things, they were set up at a time where a much smaller group of people went there were a hoe knowledge nous group of people, and there was somebody's interpretation of what it is you need to learn our economy has flipped and we're moving to a learn to earn economy. why do we have time-based education versus competency-based education, and so if you think about it, that

really bodes well for online, for older people i mean, the average college student is 25 years old and 25% of them have a kid we think it's not lifelong learning and gee, i want to learn cooking and knitting which is also great. it's hey, i've got to evolve myself i've got to learn skills to get a job, to stay in my job i've got to learn skills to change my job. for us the way you fix it is you focus on the needs of the student, not the needs of the institution. not the needs of a system that was set up a long time ago to be researched or to create tenure i'm not arguing that those were bad things i'm saying in today's market when 50% of high school kids don't even go on and 43% of the kids who go on don't even graduate and they're taking out debt, it's insane. so we built something that helps them learn in any modality, right? it could be live tutoring. we do hundreds of thousands of live tutoring at $0.50 a minute. it's possible to do and make money. our chegg services, 14.95 a

month. it can be affordable and relevant we think you've got to go more online, more relevant, more affordable more languages more ways to learn anybody with more than one kid knows that, and so it is possible to fix it i think technology is going to be the engine and i think technology is going to help drive it. >> affording education is going to be a huge story over the next year maybe we talk more about that next time. >> we're going to talk a lot about it we have a proposal about student debt and student loans that we want to bring here when we're ready. >> dan, thanks you cover the world. >> thanks. >> as we head to break, take a look at shares of spotify. those are down this morning after posting a wider than expected loss and seeing some subscriber metrics fall below the street's estimates shares are currently trading lower by 2%. lower by 2%. we're back in a moment is what teamwork is all about. you can't do everything yourself. you need someone to guide you and help you make those tough decisions,

that's morgan stanley. they're indu, but the most important thing is they want to do it the right way. i'm really excited to be part of the morgan stanley team. i'm justin rose. we are morgan stanley.

. scott walker here's what's coming up at the top of the hour, the fed in focus, a rate cut expected even as some say it's not needed. one of those voices, billionaire investor lee couperman will join us live. tony saccanagi with us as well as that stock surges after earnings, and investment committee debating ge and amd as those stocks make a move today i'll see you at noon at the half morgan we're about ten minutes away. looking forward to a big hour, scott. let's get over to rick santelli for the santelli exchange. >> good morning, and thank you you know, on fed day, of course, everybody's talking about the

fed, what they may do, but maybe even more importantly what they may say about what they will do or what they're considering doing. we've talked about it a lot. today i want to talk about one of the markets that's going to be active, of course, when the statement and the quarter point most likely arrives in the the e 10-year note yields. i call this average trading and 10-year yields i'm not talking about average as in c as a grade but the averaging process. technical anal sirks like everything in the marketplace, has gone high tech whether you talk about statistical probabilities of certain patterns like kensho or just traditional technical analysis, whether it's gan nrks elliott, wave, moving averages, it's gone deep into the computer and algorithms and it's a process that's almost automated. when things get automated they change a bit very important levels known by the computers. many systems end up at similar points of support and resistance it affects the efficacy of that

level, the hold. if everybody has something and they all use the same number, usually there's a violation and trying to handicap what that is is what this is all about. this isn't a chart of ten-year note yields going back to 2016 it's what i call a structure chart. so we had a double bottom in 2012 and 2016 in july at 135 this is that bottom. and this is just outlining the big moves. what i really want to show you is this. from 135 to the double top at 324 and that double top occurred in october and november of 2018, that separation is 189 basis points we've done this before 62% retracements the aggressive one. if you multiply that out it's 117. if you subtrabt 117 from 324 you get 207. the current low close for this sector move is 195 in early july here's where it gets fun, folks. here's that bottom in early july at 195 if you take all the closes from

that point to today and you average them out, they come out to 0.2, 2.062. now if you look at that, cognizant of the fact that retracement i just told you, the biggie is 207, the process of averaging gets you almost exactly to the point that's most important. even though it happened, of course, after we violated it down to 195. the point is, we are still holding. if that averaging process starts to go much lower, there's another big move we could actually test that low in july of 16 at 135 jon fortt, back to you >> rick santelli, thank you. up next, shares of amd losing july's gains, falling 8% in today's trade after cutting revenue guidance for the third quarter. what the ceo lisa sue told us early in the quarter -- earlier t quarter that's next. stay with us

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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's caused a little bit of a pause in demand but if you look at overall, i think we feel really, really good about the markets and particularly about our new products >> that's amd ceo lisa su.

she was on earlier on "squawk on the street" talking about the company's gaming consoles. shares currently down more than 8% in context, that's july's gains. it was trading at around this level, 31 bucks, at the end of june overall, intel, good quarter better than expected but the bar was low. amd, rough quarter because of a segment that's not exactly core to their business. and the expectations are rather high because they're the challenger coming back >> and the stock is up, 68% just since the start of the year. it's a big day for earnings. continuing after the bell. and speaking to semiconductors another name, qualcomm, set to report you'll be following those results as well. >> i expect to be talking to the ceo after the release comes out, but before the call. as usual a lot of the questions not going to have to do with the numbers themselves specifically. it's legal issues and, of course, apple stepping into the

game buying intel's smartphone modeum business for a billion dollars. that will be a big story tonight coming off the apple quarter and, of course, buckle up for the fed decision in just two hours. let's goat tet to the judge ande half." >> two big stories the first interest rate cut in more than a decade expected in just a couple of hours and apple surging after its earnings report. >> the countdown is on investors bracing for the first rate cut since the financial crisis more than a decade ago. is the fed making the right call and will it fuel this record-breaking rally? apple soaring. strong growth in services and wearables. but big questions about iphone sales. the number one apple analyst on the street tells us where the stock goes from here