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good wednesday morning welcome to "squawk alley." i'm carl quintanilla the dow is up 61 we're going to start with apple again today after that big pivot to services kicking off yesterday's event at apple the arcade, of course, the streaming service, apple tv plus being priced at $4.99 a month. julia boorstin joins us with what this means for the likes of netflix, of hulu. >> the big question is whether apple tv plus costing $5 a month for nine shows at launch will get consumers to drop rival services or having a lower price point consumers will feel not they don't have to choice and will tack on another service the company believes most of its customers will see apple tv plus as incremental rather than a substitute for netflix, both in

terms of pricing and the smaller amount of content that apple tv plus is offering but news of apple tv plus's lower than expected price hitting rival streamers. while apple shares have gained 3% the past two days, roku is down 8%, disney down 2%, netflix down 1%. apple's pricing is lower than all of the streaming giants and that offer of dramatically -- and those rivals do offer dramatically more content and deep libraries, including disney plus it's launching at $7 a month in november netflix, its most popular offering comes in at $12.99 a month. credit suisse writing that the very attractive pricing for tv plus is a move that suggests apple may be more focused on seeding the subscriber base for the long term rather than maximizing near-term profitability on the offering, particularly when factoring in the free year for device purchasers now, another question to watch

for apple is how much it will ramp up its content and potentially raise its pricing over time. that could, of course, impact how it shakes up the rest of the market jon. >> all right, julia, thank you also plenty of hardware also announced at yesterday's event new phones, new apple watch, new ipad josh lipton has more on all of that from san francisco. josh >> so, jon, let's start with those new iphones. apple introducing three new models, all boasting a faster processor, longer lasting battery and better camera. one interesting theme, price apple cut the price of the new iphone 11, the successor to the xr by $50 to $699. how will that affect unit growth in the quarters ahead? there's also the new iphone 11 pro and iphone 11 pro max starting at $999 and $1,099 respectively p bottom line the question is this, do you think apple did enough here to keep the iphone

franchise stable, meaning flalt to slightly up, as we wait for the expected 5g iphone in 2020 i checked in with gene munster and he bets it will. apple also unveiling a new watch starting at $399 featuring a new always-on display and also lowered the price of the watch series 3 to $199 our own tech reviewer, todd hazelton, calling that a steal finally apple introducing a new ipad starting at $329 with a 10.2 inch display that takes advantage of multi tasking features and the ipad's new operating system investors don't focus as much on the ipad but when apple last reported results, ipad revenue did grow 8% thanks to the ipad pro. guys, back to you. >> josh, good setup. thanks for that. josh lipton after a busy 24 hours. thanks for breaking that down for us let's bring in rod hall to talk more about what he saw yesterday, what he sees in the months ahead rod, good to see you again.

>> yeah, good morning. good to see you. >> you've been skeptical for a while now. you've been on our program warning about a potential slowdown in services did anything change your mind yesterday? >> not really. the only thing i'll say is apple arcade is really interesting that if it takes off, and we'll see whether subscribers really sign up for it but if it does take off, that could drive a little bit of earnings we're calculating as much as 1% to the earnings line tv plus, we thought that the one-year free subscription, the free trial actually depletes the earnings contribution to that and we expected that to be pretty low at below a half a percent of earnings. so from a services point of view, nothing is changing too much we'll wait and see how arcade does. >> for a long time the bulls argued that you want to see higher asps. you want to see higher prices for everything now the bulls are starting to say actually this aggressive pricing on the downside is also good

which is it? >> yeah, that bull case just keeps rotating around, doesn't it but the pricing on the iphone, the base iphone is attractive. i think the fact that they have added that dual camera really makes that device the focal point for consumers looking for work so that's an sinteresting device i would expect unit share to shift over to that aggressively. that's going to drag asps down and that isn't particularly good for the revenue line. >> if you like profits and you like volumes of options, this was an interesting presentation. as we've talked about, when it comes to services, they did price things at $4.99. apple tv plus will have nine shows at launch. arcade will have 100 games, but games that people haven't played before because they're exclusive to arcade. so if you're looking at that and looking at tariff questions

about what happens over the next three, four quarters, how cautious do you have to be on apple's margins? >> how cautious on the margins i think that you need to be -- if anything, you've got tariffs weighing on the margins a little bit, but they'll probably pass that through in price to the extent that they need to remember, those tariffs are very complex so there's a lot apple can do to mitigate the impact of those tariffs. nan prices are coming down so that's a tailwind to margins i don't think you have to be worried about the margins here, it's much more what happens with the services revenue line and the phone asps as that attractive iphone mixes in. >> do you think they'll raise prices mid-cycle >> oh, no, i definitely don't think there's a lot of room to raise prices on the iphone i think we've all seen that price point is maximized and what you're seeing with the iphone 11 is that the price is actually coming down, for the

primary unit, while that unit gets more attractive. >> rod, in terms of the iphone lineup that was unveiled yesterday and those price points, is this enough to just stabilize sales here, especially as everybody waits and looks to 2020 and possible 5g >> yeah, i think a couple things i'll say about that. as you look at that price point, you know, stabilized sales, you've got to ask yourself how elastic is the iphone in terms of demand. i think price elasticity here we've shown with the high prices is not particularly high so you're probably not going to get a lot more unit demand coming through as a result of that lower price in addition, what we've seen through the summer is huawei taking quite a bit of share in china, particularly in july. so what apple is doing is fighting to maintain share, not necessarily take share in a market that's stagnated and fully penetrated as we look out into next year, what's interesting and not talked about enough is the fact that that naming convention

change, that gives apple the ability to differentiate between the pro and the iphone lineup. the iphone being the main device that consumers will purchase and then the pro being the really high-end unit. as you roll the 5g and that adds even more cost to the phone, you have the ability to give 5g to the pro units but maybe not the iphone unit and i think that's probably what we're setting up for next year. >> rod, we can nitpick at what we heard yesterday but the stock has doubled this year. do you feel like it's gotten away from you and are you nervous about what you i guess could call a cautious stance >> not really. we've seen apple trade between zero discount to the s&p 500 pe and a 20% discounting and it's trading close to parity, just a little over after its big event of the year. so it's at the top of the range right now. i'm not particularly concerned about having a cautious stance on it at this price point. of course at some price apple

gets attractive again. it's a very stable franchise and a very high-quality business it's all about the price you pay for things what kinds of dividend yield and cash yield you're getting. right now at this price apple isn't all that attractive in my opinion. >> that's what i'm wondering, rod, how low do you think it goes before people start anticipating 5g coming next year and then the stock is trading not on what they have actually got now or coming out in the fall, they just announced it, but what they're going to do in 2020 is it right after the holiday season when >> well, actually that story has already started on wall street that's been going since summer, if not spring of this year so that 5g story -- you know, the bull story on apple has been, hey, you can look through this cycle, it's not a particularly exciting cycle, and you can bet on or hope for 5g at the ending of 2020

so that's already out there and priced into the stock in my opinion. now the question will be how difficult a decision is 5g for apple. how many units to they actually sell with 5g on them don't forget there are other features they'll roll out. 5g is not the only story there are things like 3-d scanning on the front of the phone and form factor changes that also get consumers interested so it will probably be a reasonable cycle next year, it's just a question of how manyof those features make their way to that mainstream iphone unit and then how does that unit mix look next year at the end of the year it's not a very simple equation, but wall street already discounting that 5g cycle. >> all right, rod. it helps to get your take as well as we sort of process all the information that we got on tuesday. see you soon rod hall, goldman. >> yeah, thank you when we return, a big week for ipos continues with p ochlps

today. later, california passing a landmark bill set to shake up the gig economy. how that impacts both lyft and uber next. "squk awalley" is back after a quick break. dow is up 63 xt mozar as usual we were behind schedule. but sophie's enthusiasm cannot be dampened. not even by a run-away donut. we powered through it in our toyota prius. because a star's got to shine, no matter what. it's unbelievable what you can do in the prius. toyota let's go places.

peloton set to kick off its road show this morning leslie picker has more

>> hey, jon, we're here at goldman sachs, the lead underwriter for peloton's ipo. executives just wrapped up a meeting talking about how their plan to pitch the ipo to investors. they're heading uptown now to j.p. morgan, another lead underwriter, to do the same kind of thing there this effectively kicks off their road show, which is expected to span about two weeks before they debut. they set terms last night to raise about a billion dollars at an $8 billion valuation. guys, that represents about nine times their 2019 sales their fiscal year goes through june 30th. so multiples somewhere between a hardware and a software. that kind of makes sense because peloton is it it all, they make the bikes and the treadmills they sell as well as the tablets and soft mayware in the machines they also create the content that can be streamed or

downloaded so people can take those at-home fitness classes and they have two different revenue models as well they have one where people purchase the hardware between $2,000 and $4,000 depending on the product as well as that subscription service like we tend to see more with software companies where people pay a monthly fee to use that content. now, this vertical integration, though, does not come cheap. the company said that they lost about $200 million in 2019 it's a similar story for smile direct club with this whole idea of vertical integration to control that end-to-end user experience but of course oftentimes leads to losses as a result as you mentioned, smile direct club are concluding their road show today, set to price their ipo after the close of the market today with trading to begin tomorrow, guys. >> leslie, thank you meantime, california senate passing a landmark bill to remake the gig economy

shares of uber and lyft are trading higher on the news that california governor gavin newsom may carve out some exemptions. deirdre bosa has the latest on this developing story. >> morgan, that jump that you're seeing in ride-sharing stocks underlines that this is far from a done deal. uber and lyft have been lobbying hard against this bill and governor newsom could minimize the impact on their businesses jeffreys says fear not ab-5 and what changes answering everything but nothing. so this is complicated the bill does not go into effect until january 1st. that leaves time for uber and lyft to make a deal with newsom. if they cannot, the interpretation of the law and its effects on these companies is still uncertain beyond that, both companies have put aside $60 million for a ballot measure that would let californians vote against their inclusion in this bill guys, there is also a very good reason that uber and lyft are

fighting this so aggressively, almost like their future depended on it, because it does. industry officials have estimated classifying drivers as employees could raise their costs by 20% to 30%, putting off that path to profitability morgan stanley estimates it could hit uber's future contribution profit up to $465 million. that's a 6% to 16% impact. higher driver costs are likely to be passed along to consumers, the riders the bigger concern is what happens next morgan stanley asks could california be the beginning and will similar legislation be proposed or debated nationally throughout the 2020 election cycle? this morning both companies expressing disappointment in a statement, uber says california is missing a real opportunity to lead the nation. lyft says we are fully prepared to take the issue to the voters of california. guys, back over to you

>> i realize this is a fluid situation and there's still a lot we don't know here but are the carve-outs specifically -- would they be if we see them materialize, are they specifically for uber and lyft there are a number of companies, including other delivery companies, that would be affected by this legislation, right? >> right so uber and lyft are looking to carve out specifically ride-sharing drivers other gig economy companies are working on their own carve-outs. uber and lyft, it gets a little tricky because they're now working with door dash on that ballot measure so the point that you take away from this is that the gig economy companies, tech companies are having a harder time carving out these exemptions than some other industries like construction and journalism and i think that shows you the effect that lawmakers -- the way that lawmakers are thinking of tech and granting some of those exemptions. >> thank you. let's bring in mira joshi, now a visiting scholar at nyu's

ruden center for transportation policy thanks for joining us today. i want to get your thoughts. i realize we're getting reports of these discussions of potential carve-outs now, but the legislation in california as it currently stands and as it's moving through the legislature there, what does it actually do for the reclassification of drivers in that state and what does it actually mean for these different gig economy companies? >> i think a few people have mentioned, it doesn't necessarily change the state of affairs. it does have specific carve-outs for specific professions, but what's notable is it hasn't included the drivers so the assumption is that it will encompass the drivers there is a lot still to be determined going forward in terms of collective bargaining,

whether -- labor's role in it. so what it does primarily is it makes it clear that there will be many more protections for drivers going forward in one shape, form or another and that will cost the companies. >> meera, you can look across different industries really over decades and california is such a big market that when you tend to see some sort of regulation or law go into being that affects an industry in california, it does tend to carry over into other states eventually as well. is your expectation that this is what's going to happen here too? >> absolutely. i think governor cuomo in new york state has already signalled that he has an interest in making sure there isn't widespread worker misclassification ongoing in new york state and there's several states and cities that are looking at driver pay issues. new york city itself set a driver pay floor, and that tells you a little bit about how much

it costs to pay people minimum wage that's adding $750 a month into every driver's pocket. and so that is just one aspect of employee classification on top of the other expenses. >> meera, you mentioned the dynamex decision and the test to determine whether someone is an employee or should be classified as an employee, called the abc test a, free from company control, is that person free from company control. do they perform work not central to the company's business, and do they have an independent business in their industry is your sense that every uber or lyft or door dash driver would call as an employee under this abc test or just the ones who work the most? >> it's an interesting question, and i think often people forget, like regular taxi drivers are also independent contractors, so it's not just the gig economy, it's the larger industry as

well but what is characteristic is the level to which the algorithms direct the drivers about where they need to be, when they need to be and how their pay is pegged to that. i think courts will look at the very practical reality of inflexibility in a driver's ability to earn and an ability to earn enough and that will weigh in favor of classifying them as employees. >> meera, quickly, i'm glad you brought up courts here, because we have seen over the years, we have seen these challenges around independent contractors and that status. fedex comes to mind, i know there are some other companies over the years too do you expect to see court challenges, and does the precedent make this argument harder >> i would assume there will be court challenges because historically these have been very fact-intense inquiries and so the judges need to look at the particular circumstances so each segment of this industry is going to want to distinguish

itself from the abc test so i certainly would expect that there will be court challenges >> meera, thank you for joining us today on this shares. >> thank you. >> shares of uber and lyft are trading higher. still to come, a send-off n other. how jack ma spent his last day at alibaba and how josh grobin factored in. gonyer wreacin bk three. at fidelity, we believe your money

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european markets are set to close in just a couple minutes seema mody has the breakdown of today's action overseas. >> if you look across europe, the uk is the outperformer today in large part due to the london stock exchange shares are surging more than 6% after hong kong's exchange made a $36 billion bid to acquire its london-based rival this comes just weeks after the

loc agreed to snap up refinit viv in a $27 bill. tomorrow mario draghi expected to unveil broad monetary policy packages before he hands over the reins to christine lagarde. recent commentary from traditional hawks suggest draghi is running into significant resistance and that's why the size and content of the package is still in doubt. jpmorgan forecasting rates to be cut by 10 basis points and quantitative easing package to include 30 billion euros of bond purchases a month which will likely result in the european banks stepping up their complaints about negative interest rates on deposits since the last acb meeting in july, european banks are down about 3% and the broader european stock market is down half a percent the euro has been on the decline by over 1% if draghi's announcement is able to push the euro down even more, analysts say that would be good news for the multi nationals

like nestle and unilever. >> that's a big day tomorrow, seema, thank you very much. let's get to sue herera and get a news update. good morning, sue. >> good morning, carl. good morning, everyone here's what's happening at this hour today marks the 18th anniversary of the september 11th attacks. the president and first lady honoring the victims at the pentagon's remembrance ceremony. >> we offer you all that we have, our unwavering loyalty, our undying devotion, and our eternal pledge that your loved ones will never, ever be forgotten. >> hong kong's chief executive told investors at a belt and road forum that the territory can rebound from the months of demonstrations, despite no sign of those protests cooling. last week's promise to ax the controversial extradition bill that sparked the rallies failed to bring any relief. and the number of uninsured

americans rose last year for the first time in a decade that's according to new federal data that number now stands at 27.5 million, up nearly 2 million people from 2017 the report says the drop in coverage appears to be driven by a decline in coverage under public health programs, such as medicaid you are up to date that's the news update this hour i'll send it back downtown to you, carl. >> all right, sue, thank you very much. when we come back, more impressive from apple yesterday, the hardware announcements or the services we'll talk to b of a's rahmzi about that 'rba ia nute woman: my reputation was trashed online. i felt completely helpless. my entire career and business were in jeopardy.

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turning back to apple, our next guest sees apple's tv plus offering as a positive analyst for the stock, taking his price target up from $240 to $250 and reiter 8ing his buy rating joining us is wamsi mohan. wamsi, good morning. >> good morning. thanks for having me. >> so from a stock perspective, what did you like about yesterday? because i saw humility from apple. pricing at $4.99 for tv plus, i thought it would be a terrible deal if it was $9.99, but $4.99, okay and the pricing on the iphone, that was lower than a lot of people expected. why, though, does that cause you

to take your price target higher you think volumes will be better >> yeah, no, jon i think the most important thing, takeaway from yesterday's event that i attended in cas shown an ability to be tactical and understand the market dymithe fact that they priced the iphone too high and really got like these pro models a a broader segmentation of the product portfolio. this year they have shown they can be tactical. for instance, on the iphone on the very low end you've got the iphone 8 being offered at $449 that is a price band where apple only has like some 30% market share compared to an overall market share at the high end, which is close to 80%. so they're seeing opportunities, let's say, huawei is facing some challenges out in europe, this can be a tactical move to address some of those gaps

it knows that the product portfolio is price sensitive so i think pricing and a willingness to move pricing in a way that it can be tactical and take market share but at the same time keeping the price umbrella still very, very rock solid. the high-end models are very much at the price points they were last year as well so pricing on the product side is one of the bigger takeaways the second is on the services side this is a long game. this is going take time for them to build they know they're starting off with a small portfolio of very good programs, but over time they can really build this out the content spend that they have and the ability to spend supersedes pretty much every other company out there. so the ability to spend and take that initial teaser pricing out to something different over time is i think their long-term strategy which i think will be successful for them. that's what gives us confidence in moving that price there. >> how do you model the profitability or lack thereof in

the foreseeable future of the services business, taking both tv plus and arcade then? tv plus, they're only launching with nine shows. i imagine it takes you a long time at $5 a month for a family plan to reach anything near profitability or are you factoring in higher retention, which is already high in apple's base, off of people who are going to be watching and playing this content >> so i think the most important thing here is that over the next year, if you buy an apple device, more or less most of their portfolio, you are able to get the tv plus for free so effectively what they are doing is just exposing an install base of purchasers, 200 million devices easily sold over the next year in aggregate so we're talking about that many people getting apple tv plus for free for a year. so, yes, there is not a huge revenue contribution in the short term

but at the same time where have we seen any other streaming service get access to 200 million starting from the get-go i mean netflix is 160 million or so and when you think about the amount of subs that they can convert or period of time that can be very high when you look at apple music, people were skeptical about their ability to drive and sustain these subs, but right now you've got close to 60 million paying subs in just five years. they're launching with nine shows, but netflix launched original content five years ago with only 13 shows apple spent 60 million in buybacks which they can convert toward this. >> 13 original shows back in 2013 for netflix but hundreds and hundreds of shows since then. >> yes. >> is that what you expect apple to do as well? >> i think it's going to be interesting to see they have a balance sheet that can support massive amounts of investment

60 billion that they do buybacks of one year is actually more than the cumulative spend on original content that netflix has done since 2013. so they have the firepower and they also know what people are watching not necessarily in the same way that netflix has built out over the last five years, but they do have a huge movie catalog that they can monetize and understand viewing dynamics from there as well so what you have is they're going to mine that intelligence, make invests at a measured pace, but i do think that this is the long game. they have plenty of time to figure out what the strategy is because offering at this promotional pricing is just a teaser over time as they build more content, they get to monetize this >> wamsi, between the hardware and the services, you mentioned market share before. is your belief that this is going to actually bring on new users? >> yeah, absolutely. i think there is a big market share gap for apple when you

look at sort of the midrange of the smartphone portfolio, which is high-end for most of the smartphone makers. but when i talk about the $300 to $600 price point range, you have not seen apple go aggressively after that share. historically they have had very high share north of $600 and now north of $1,000 but you have not seen them capitalize on this $400 to $600 range with $449 for the iphone 8, i think that's very compelling so they're going to build out their install base, which is ultimately the reason why they're doing this as you convert more and more android users coming into the apple ecosystem, you have a larger install base to monetize your global services footprint so this is just sort of another step to solidify that install base and ensure that that continues to grow, which is the biggest risk in my mind for apple is really if that install base starts to turn the other way but there's absolutely no indication and is solidifying

that even more with all the new services. >> we'll see if they can keep them in the tent, wamsi, thank you. >> thank you. still ahead, even more on apple, including a deeper dive into its tv plus offering. the dow is up 72 we'll get to rick santelli in a moment what are you watching, rick? >> i'm watching long-end yields. i think there's a lot of clues as to the next move. so tune in after the break and i'll take our viewers on a chart trek after the break

good morning, i'm brian

sullivan here's what's coming up on "the halftime report. the rapid rotation in stocks, plus president trump's push for zero rates what all that means for your investments, your money, and more importantly, what to do about it and the day after apple's big event, our experts take it on and the other stocks to watch around that apple halo and do not miss john and pete najarian's latest trades and unusual activity the big moves in the options markets that you should be paying attention to. hard to believe, but coming up on "the halftime report," morgan. >> looking forward to it, brian. thank you. let's get other to the cme and rick santelli with the santelli exchange. >> good morning, thank you, morgan you know, it's been a wild four or five weeks, especially if you're paying very close attention to the fixed income market and more if you're paying close attention to the sovereign debt market. i'm talking about global whether it's minus 73 to minus 75 basis points on a 10-year, that has now been shaved into the minus mid-50s, or it's our

long ending. you realize at the beginning of august right at the end, 31st, 31st of july was a key time of course that was the fed meeting but it was also when president trump announced tariffs. all that happened at the same time and it unleashed so much activity in the markets. on one hand, our central bank looking to play the game of easing, potentially to try to affect foreign exchange values, kind of the race to the bottom but central banks have to do what they think is best, but ultimately what i'm interested in was the fallout in the marketplace. to go from a 2.60 yield down to a 1.95 in 30-year bonds in a matter of weeks is unbelievable with regard to history, especially if you look at it from a percentage basis, which i rarely do but in this case may be appropriate but how do we know after a big drop like that in august whether the bounce that we're experiencing now is the beginning of something that establishes a bottom or just a

retracement of the big drop and eventually rates will go down again? so let's go to the board here's july 1st. so i gave us a little bit of room before we got towards the end of the month but you can see how we clearly fell off right on the 31st we were at 2.61, eventually down to 1.97 and that isn't actually the low. the low was at 1.95. sometimes technical work is more art than science i like to take the biggest breadth of a move like that and encapsulate it in the smallest time period. i really think that did it so we have 1.97-2.61 and the difference is 64 basis points. 64 basis points times your 0.38% comes up with 24 basis points. that really is a super magic number because yesterday we settled at 2.22. where's 24 basis points added on to 1.97? you know, it's 2.21.

so basically yesterday's close and the run-up we've experienced basically takes you right to an area that is kind of the cloudy zone between the end of something or the beginning of something. so how do you pursue that as a trader well, it's actually pretty easy. 2.09 was the long dated closing yield historics of the 30-year bond in july of 2016 this is always your support on yields should there be rallies that push yields down, this needs to hold if this is the beginning of a big move higher. how do we know if it goes the other way? first daily, that's your first priority this is your second priority if we get two priorities above on a closing basis above 2.21 before any violation of 2.09, i would suggest we're probably looking in the 2.60s to get back where we started on 30-year bonds.

jon fortt, back to you. apple undercutting everybody with a $4.99 offering for apple tv plus. the head of content at netflix will join us on how and whether that impacts other streamers. take a look at gamestop getting crushed, down 12.5% after sadi pointing earnings we're back after a quick break t. help people find their way. fastsigns designed new directional signage. ...and got them back on track. get started at fastsigns.com. it's an honor to tell you that [ applause ] thank you. liberty mutual customizes your car insurance so you only pay for what you need. i love you! only pay for what you need. ♪ liberty. liberty. liberty. liberty. ♪ but we're also a company that controls hiv,

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we're excited to tell you that the first shows will be available on november 1st, and we'll be -- thank you. and we'll be adding more apple originals every month. apple tv plus will be available in over 100 countries at launchh and it is 4.99 per month for your whole family. >> apple upping the ante pricing below two of the big competitors, netflix and disney. but sit enough to shake up the streaming landscape? joining us is a former netflix and hulu executive sim simon, thanks for your time today. >> thank you for having me on. >> big substitution abodiscussie and whether they have to do buck shot strategy on netflix or be more precise in their

programming vat ji you seem to think between the stores and online, whatever they do is going to get a lot of support. >> absolutely. 1.4 million active apple devices around the world when you compare that with the 350 million active amazon consumers, apple have an immediate opportunity and advantage. just in the able ility to speak their existing customer base >> simon, there's a lot being made about how much content is going to be available at launch. and certainly, that around the price point, but there's also this idea that you're going to continue to see more content come out over time longer term, what do you think apple stream service looks like and how robust do i think it is in terms of offerings? >> it's fine there's a lot of discussion about the amount of shows they have at launch what i think apple is being very clever about is making themselves the hub for search and discovery.

if you have an online video service, it's all b about helping people find and consume great content. if they're consuming great content, they won't turn out of the service and churn with a key metric for these services. apple is through their existing platform, they are become iing home that you'd go to. reed hastings was famous for saying we want to win that moment of truth when people sit down the couch at 8:00 p.m instead of people deciding to watch pay tv, watch netflix use their play station, now they're going to their apple device saying how am i going to search through these services and they've made them the de facto home for that. l. >> sometimen, what are the chances apple can get people to pay that 4.99 for orders of magnitude, less content than the competitors out there are pay ing?

i get it you only need to hook each subscriber on three or four shows to make it worth it, but when you have so few shows, can they cure rate well enough to do it >> look i think they've been deliberate in the generas they've gone after their popular generas with best of breed talentalent you've seen with showtime and hbo, it's only taken a couple of shows each season to really encourage people to maintain their hbo or showtime subscription and i think apple will be ibl to do that with the current lineup they have in place. >> simon, what do you think it does to the landscape for content? i mean it's crowded, right you're a content creator there's a lot of demand for your product. how do you think this continues to push those prices for content? >> sure. look, it will continue to push the prices, but what it also does is give content creators this wonderful opportunity to go around and present their show concepts, their film ideas to a

variety of different buyers and there's different ways that content will be managed. each service has different positives and negatives. for why you might want content to appear on that service. certainly, with apple, there's incredible marketing support that they can put behind the show but there's considerations for others as well you may look at netflix and say they give me freedom perhaps to go make the show that i want to make you might look at others and say well, i still want to see my show appear on prime time sunday night hbo. that might be a driver for you or it might be more important that the show is released globally so lots of different motivations. and each producer has different motivations for why they would want to go with one service other another with all things being equal. >> i was going to ask you if i'm a show runner and pitching to various services and i think all

right, creator freedom at netflix. prestige at hbo. what's going to be the tag line for pitching to apple? >> look, i think apple are absolutely going to lean forward in terms of and i think we have already seen in this terms of their commitment to best of breed content creators and wlingness to lean forward on content budgets and most likely great freedom. we don't know having done a film lease yet, but i suspect there will be an opportunity if you take your film to apple, they'll have an opportunity to do a theatrical release run where as that might be restricted on other services so i think flexibility, great budgets. and incredible support and also they have the retail outlets. globally which i think can be hugely important. the foot traffic that they get through the stores, if you think about your ability to promote a new film or tv show through that type of venue, that i think is

pretty impressive. >> yeah. you can't walk into an apple store now and not see taylor swift's face so i think everybody knows exactly what yu you mean >> thank you >> i enjoyed being on. thank you. >> as we head to break, take a look at crude oil prices wti is down 2% right now on reports that president trump discussed easing sanctions on iran in a bid to help secure a meeting with iran's president later this month and after the break, jack ma celebrating his last day in style. certainly with aot l of flame boyenance we're going to bring you that next - stand up if you are first generation college student. stand up if you're a mother. if you are actively deployed, a veteran, or you're in a military family, please stand.

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♪ when i'm done and out my worr when travels come and my heart ♪ >> oh yeah, that is former alibaba chairman, one of the founders, celebrating his last day at the company and hbirthday, his own renditio of you raise me up and the stadium packed with 60,000

alibaba employees. >> need a jacket like that >> yeah, i see some '80s in there. i see, i see so much carl your review. makes you wonder if he wanted to ever be a business person in the first place. just wants to rock that does it for us. let's get to sully and the half. >> carl, morgan and jon, nothing i can do to follow up on that. i got nothing for you. welcome to the halftime report i'm brian in for scott today the market is flat, but that's not the story. we are see ago huge rotation inside the market. you've got a new call for zero rates and a game plan for you and your money it's going to be a busy hour it is 12:00 noon and this is the halftime report. >> a major shift in the stock market making the bulls nervous. what it means for your money and the stocks you should be looking at now president trump firing off on tee fed again calling for zero