Im jon fortt along with david faber here at post nine. Carl quintanilla is cold out in minneapolis ahead of sundays super bowl let us send it out there now to carl who has more on some big guests coming up this hour carl yeah, jon minus seven this morning that will wake up. But were in a nice enclosed set here not too far from u. S. Bank stadium where the big game is coming up on sunday. Big hour obviously, well watch the markets closely. Well check in with j. J. Watt, Houston Texans linebacker about his being a finalist for the nfls man of the year. Also, about his guesses for the game and popularity of the nfl speaking of that, well check in with the chief marketing officers of pepsico north america bench and fritolay north america about the big purchases theyve made not only on halftime but the ad campaigns. The popularity of the league and how they translate that to consumers through the marketing dollars. A big show coming up all right carl, thank you. Lets get started talking about the markets now. Of course, on this jobs friday as well, we were down or are down more than 250 points. The s p 500 off the lows, down about. 8 . Ubs director of floor operations art cashen joins us. Any key take aways as it relates to the broader markets whether they be fixed income or equities it looked a little better than it was. Perhaps some of it has to do with weather related people reported being unable to get to work and et cetera, et cetera so overall, not a bad report at all. Not very helpful to the market the markets got its mindset on a few other things mostly rates apple and alphabet and thats of concern. And politics there is a great deal and concern the republican memo is released will it have greater consequences there were rumors late yesterday that helped the market weaken. That it might cause the head of the fbi to resign. It might cause the assistant attorney general to resign and while they would be voluntary, that nevertheless reminded some of us oldtimers of the nixon saturday night massacre and that had implications and consequences that went on for quite a long time yeah. Back to the jobs number this morning, art, its that 2. 9 increase year over year in wage thats seems to be a focus of those participants in the bond market starting to talk about a 3 yield on the ten year not too far from that. Do you buy into that well, i i noticed it it certainly is of some importance. It certainly did spook the bond guys and lift the yield on the 30 years and ten years art, as long as weve been walti wa waiting for wage growth, how likely is the market to digest that over time it should be more money in peoples pockets to spend which is a good thing along with some of the bonuses that we saw come down after tax reform. Yeah. No i think it as a generally positive backdrop and certainly im sure the president is happy to hear it, many of the votes he got were from people who said i havent seen any wage growth nothings coming in. And im sure he will take credit for seeing some of that popup weve seen people dorm anlt for dormant for a couple years now. Lets go backward a little bit when the fed started pouring money in, people were talking about run away inflation, comparing it to the wymar republic the fed flew over the house and dropped 1 million on thelawn, think put it in the garage we had no envelovelocity of turr in our money supply for five years. If the inflation begins to pick up slightly and the velocity starts to pick up, then that might prompt the fed to overreact. And that is what markets are concerned about. Treasuries themselves, i mean, this year were going to be funding a very large deficit. Treasury is going to be very busy selling bonds and notes and the fed is not going to be among those buying that was a point i was going to chime in with up until now, the fed has unintentionally pretty much funded any deficit that came down the pike. And now they claim theyre going to cut back on that. So youre going to see more bonds with fewer official buyers and that can present a bit of a problem. And thats why equity holders have got to keep an eye on yields its going to be an important bat this will year i wonder what your big picture take on apple is there was a lot to do over the 1,000 phone were people going to buy one given what the economy is doing. On the one hand, the iphone unit sales were bate short of what some were hoping but the iphone x did just fine most popular model average selling price is high. What does that signal if anything about the help nl of t health of the consumer i think it shows the loyalty of the people to the apple name. The x is not a super phone it has ater irvi terrific camerd things of that type. I think people are willing to own the name and show they paid into it. Apple is enormously successful but in a perverse way it is one failed product away from failure. So if they come in and have a failed product, things will reverse for them but so far, theyre coining money. Thats the key to a Consumer Products company and why so many people are focused on the Services Revenue which occurs more often art, thank you speaking of apple, of course, that Services Revenue did increase a good amount last year lets get a lot more on this from josh lipton david, heading into this Apple Earnings report, there were a the love stories about demand trends for that new iphone x you were just talking about there. Apples ceo tim cook making it clear that he is very pleased with how that flag ship hand set is performing saying since we launched it in early november, for every week thereafter including the weeks in january, it was the top selling iphone which is pretty fem knoll pheno you think about it tlachlt is going incredibly well. Given it was the top selling smart phone in the world, its pretty good. I also asked cook about whether he really thinks of the x as a mainstream product or is this really more of a niche device . He said its not for everyone. Everyone cant spend 1,000. I dont have my head stuck in the sanld on thad on that. Some people love the fact that face id is even more secure than touch id some people love the cameras some people are swayed on the edge to edge super retina screen you dont sell the numbers were sealing that is only for a few people as for the march revenue guidance, our guidance for the quarter is 60 to 62 billion which represents growth of 13 to 17 which again is another acceleration it would be the sixth quarter of acceleration and were really, really pleased with. That guidance did undershoot expectations the street was looking for 65 billion. Gene munster of luke ventures tells me if the company hits the high end of guidance here and maintains a sps at 750, that translate, he says, to 5 iphone unit growth in the period. Guys, back to you. All right thank you, josh. Now for more lets bring in jim suva, apple analyst and managing director at citigroup jim, good morning. So there are a few moving pieces in this quarter for apple and on the one hand, it was the 13week quarter being compared to a 14week quarter a year ago so, you know, unitwise and revenue wise, maybe they were doing a little better week to week than expected but then on the other hand, the guide, not that strong so overall, is this a healthy cycle for apple . Do you take more joy from the asps or you are more worried about the units . We absolutely do think it is a healthy cycle for the stock and as well as their products also as earlier mentioned, the iphone 10 asps were very strong that shows the iphone x is selling well the units, were seeing growth in the developing and emerging markets. These are new users coming to the Apple Ecosystem. Who will then later down the road spend money on apps and purchasing through Apple Software which will bring more revenues to their services as well as potentially purchase the apple care systems and future higher products. So we think its a very healthy setup for apple and the most critical thing is our new users being added to the Apple Ecosystem and the answer to that is clearly yes jim, you use the word setup there. That for me is interesting has the story gone from super cycle for the iphone to setup to potentially, okay, maybe the next cycle you have not only the x but a x plus and that becomes the super cycle. You phrase it correctly the setup in the word of super cycle i think is now going to be something that we set aside and say thats no longer the case for this the smart phone industry overall is maturing. Most people in developed countries do have smart phones and so we think that days of double digit growth for the industry are far behind us and the setup is really more about growing users and net ads. And apple is still doing that the setup we think and the title of super cycles are forever gone and thats why we look at things what we call as apple wood or their push into india as well as services for many years ahead as long as those subscribers and users keep being added to the ecosystem. Zblr were used to apple being talked about as a home run hitter in terms of the iphones and the number of just years of profit and Revenue Growth that those trend up but are we maybe going into a cycle of singles and doubles you look at the ipad it also doesnt do an increase in units but didnt increase in revenue on the ipad pro. The mac was actually down quarter over quarter and i believe year over year as well thats a very correct observation. I dont think that grand slam and home runs as previously drove the stock higher is going to continue. Its going to be more of a value and cash deployment. And what i mean fwha is we believe apple is going to announce a massive stock buyback when it reports earnings in april. And with that, the company could buy back up to 10 of its stock. And we view that as a big positive but youre correct, its gone from a hitting home runs of products of wow we got to have this to, hey, these are very good products. Lets keep owning them and upgrading them but the replacement cycle is slowing and the home run products we think are a thing of the past well, specific to Capital Allocation and return of capitol to shareholders, let me get more information from you they have 163 billion net cash position they said on the call they expect to target net cash neutral over time. What do you look for in april given they already are returning 100 of Free Cash Flow now to share holderings yeah. Well its a great problem to have of too much cash. And the numbers you laid out are absolutely correct and whether we look at that, we expect the board of directors to sustain additional stock buybacks now the best use of apples cash is for organic and internal innovation but they have way more than enough to do that. In fact, theyre generating, we estimate, about 70 billion per year of cash flow generation after those innovations. So we think that a stock buyback to the tune of probably about 300 billion is what theyre going to announce in the april time period when they announce earnings, 300 billion 300 billion, thats a hard number to wrap your head around. Yeah. Its like 191 million a day perhaps. I dont know i couldnt even do the math. Im sorry actually, i meant 300 million is the buyback, 300 million right no way i am talking about the cash generation number that you threw out there. That too. No youre talking 300 billion you said 300 billion, yeah, not million. Yeah. The billion for the dollar amount right and it equates to really 10 of apple stock that is going to be repurchased. And thats a lot so when you look at the stock trading off here today, you know, they do have some more stock buyback they can do until march. But after that, you know, buying back 10 more of stock and still the problems going to continue of too much cash flow generation, setting it up for value holders to own right yeah a lot of money jim suva at citigroup, thank you for joining us have a great weekend now lets send it back out to carl at the super bowl site. Carl all right jon, thank you very much nfl set to announce this years Walter Peyton nfl man of the year aword tomorrow recognizing a players Outstanding CommunityService Activities off the field as well as excellence on it. Joining us to talk about that is one of the finalists of the year, j. J. Watt, defensive end with the Houston Texans. J. J. , thank you so much for the time today congratulations on being a finalist thank you i appreciate it very much. Glad to be here. Zblfr we were talking earlier about the amount of money that you helped raise for houston in the wake of that hurricane did you ever think you would be able to raise that much . No. I mean, i dont think anybody could have expected what happened to happen i mean, it speaks to the power of social media in todays world and the power of the good in people and people wanting to hop onboard of a cause that helps other people out i think that, you know, there is so much negativity in todays world and negative news, it whats so nice to have some stories about some positivity and really highlight the good in people its important to remember, especially whether the media tends to cover a disaster and then leave and not cover the recovery so much i mean let me quickly ask you, how is houston doing in your view all these months later . You know, its doing well its still a really long road ahead. Its not a six month or a one year program its a multiple year program ahead. I was just down in port arthur a week ago visiting them and the day after i was down there they actually got hit by more storms and got flooded again. So i mean its one of the things where its always an on going process. There is so much adversity its easy to forget once the tv cameras and headlines are gone there are so many people still going through so much today. Yep we hope the people Pay Attention to that and continue to. As for the game, j. J. , i mean youre here in town. Its been talked about so much the lopsided experience of being in this game between these two teams. How much does that matter . Who you are favoring sunday . I mean when one team has won five of them and tom has been in eight of the last 16, mine you have to obviously give an edge there. But never underestimate the power of an underdog story and a team that believers in themselves and the us against the world mentality. I have a lot of personal teammates from college on the eagles i know that theres a lot of that belief within them. So never underestimate that. But its always hard to bet against the greatest of all time yeah. Who is tougher to get, to brady or foles brady gets the ball out so quick. He is so tough to get. To he has a great offensive line and he knows where hes going to be and they know where hes going to be. Hes very difficult to get to. Yeah. Its been a busy week in terms of the media rights for the nfl. Thursday night, of course, now going to fox weve been talking about on our program for a while about whether or not the league was spreading out their content too thin both for the consumer but also for the player. Im wondering if you ever dread thursday night games sometimes we call it tired night football i mean they are very difficult. I dont think anybody can deny that obviously me bring in a lot of revenue and things like that they are very difficult, especially whether you have to go on the road on a short week like that. It puts a lot of stress on the players and difficult. So, yeah, theyre definitely bringing the challenges with them finally, the kmigtscommissior made it clear theyre going to continue to talk about the catch rule theyre going to continue to talk about safety. Did youer that week brett favre was asked how do you make football safer and his answer essentially was not to play. Whats going to be the easy answer to that over time i mean there is no easy answer its a violent game. Thats what its been the whole time i think theres definitely steps can you take to make it safer and we do everything to make the game as safe as possible at the end of the day, football is a violent game. You have that understand going into it. You have to really understand the risk reward factors and understand everything that comes along with it. If youre not willing to take them, you have to understand that but as long as they continue to do everything they can to make the game safer, you just have to understand what youre getting into j. J. , well be watching for you this weekend congratulations again. Thanks for the time. Appreciate it very much. Thank you very much have a great day. J. J. Watt joining us here in minneapolis. You, too more squawk alley continues after this amazon shares are surging up 6 you can see that this morning after posting the largest profit ever as they continue to reshape the retail landscape joining us now, bill simon from kkr. Hes a former walmart u. S. President and ceo. Bill, nice to have you one of the key components to the earnings for first time was whole foods. You have a good view on that business did you learn anything from the quarter and what they told us about whole foods and how its going under amazons management . Yeah, not too much. They were a little bit cryptic in their report and in the Earnings Call as well. They said it was going pretty well and they were happy with it but if you dig a little bit deeper, its it mate be more difficult than theyre letting on last year this quarter whole foods reported about 4. 9 billion top line. Amazon saying 4. 5 billion from their Retail Stores and its unclear exactly what that is but its largely whole foods so it looks like theres a decline there. But its not the same reporting period exactly whole foods made about 179 billion last year. Amazon saying the whole foods retail segment was a little bit off because of a change in maturization so it is hard to tell. It doesnt look like its doing too well then you listen to the anecdotal data there, out of stocks, difficulty in ships receipts, customers unhappy. And then some underpinnings of employees issues its a challenge. Now fresh food is really difficult and whole foods was not hitting on all cylinders at the sales. Amazons got their hands full. Yeah, how important is it as an investor, one looks at that company and says whole foods is a very small part of the pie. Is it still important, do you think, for the future strategy well, i think it is you know, to a certain extent in that, you know, its part of the tie in to the physical retail and particularly the largest segment in physical retail which is grocery now that doesnt mean it has to work the way that whole foods worked or a traditional brickandmortar retailer works. There is no telling what mr. Bezos has in mind with whole foods. They didnt report any samestore sales comparisons or any unit growth, typical things you would see in a retail report so that would lead me to believe thats not how theyre t