Europe is a big week personal income and spending is roughly in line. Our road map begins with apple, nearing an all time high, expanding ipad and air pod demand, Services Growth offsetting that demand social media twitter banning political ads, facebook defending its decision not to, saying, quote, its not all about money, facebook shares by the way rallying on those earnings head winds, markets are set for a mixed open, a report about chinas longterm doubts about a trade deal with this white house. Well begin with apple, though, higher than better expected revenue, despite iphone sales, results got a boost from stronger demand for ipads and air pods as well as growth in services they are issuing upbeat quarter guidance jim and josh lipton talked to tim cook about better sentiment in china as well. I was surprised with that, when talking with tim and with josh and on the street the whole tone of the discussion was that things are pretty much on track, more than we realize optimism by tim cook countered, of course, by blind stories involving chinese officials who we do not know, who are saying, listen, there is no real longterm plan that i totally discounted that what i care about is boots on the ground thats tim tim cook is selling a lot of phones everywhere. Now, its china is not as great as youd like, but does it really matter . This is not a phone story. When they decided that they were no longer going to release the granularity of the phones, most of the people i talked to said, ha ha, thats because phones are bad. What the reality was exactly what tim cook said, which is that phones are only a piece to the puzzle now i listen to service revenue. Its no longer just as big as a toaster kind of thing. Thats what they used to do, say its as big as a bread box no this is a company that has a multiple thats way too low given the fact that its consistent and that china does not seem to be the be all and end all of whats going to happen. The bears argue its exactly that the multiples had an incredible run just this quarter. So where should the multiple end up if were 20 now 21 geeze, i dont know, this is a weak quarter a transitioned quarter this is a quarter thats supposed to be bad weve got 5g ahead of us they had a camera three triple camera that people felt didnt really mean anything those of us who like to take pictures at night. Some can take pictures at night. Some said a battery light. Big deal it turns out, geeze, i cant run the battery down, what i said to tim was, hey, how about the air pod . Whats the deal with the buzz . Can we get them . The pods no, the answer is they will get very hard to get the Noise Cancellation one of the things he said to me was we are running foul out for watches, number out for watches . Watches are a big part of the business now so i say, if were just going to be bound by the four walls of the number of phones that are sold, were going to miss the fact that this thing might get a 22, 23 rollover. 22, 23. What about the fact that operating expenses growth are now exceeding sales growth look. I will keep hitting these things to you you will bat it away. I say own it, dont trade it. So far i have been right since i was 5, whenpy daughter told me she wanted a second ipod, one was pink she needed a blue one because they were jewelry. When you talk to tim cook, i say listen entertainment i dont know i mean dont have you as to buy the nfl or whatever i threw out stupid things because i like to hear myself talk he said, listen, were not going to buy a catalogue buy a content company. Were going to develop, like that unbelievable interview you had that fullday interview on hbo. Full day. Anyway, he said we wont buy a catalogue. We said how about the longterm value of a customer . Lucas said, jim, i like the longterm value. I used to ask the service question every single time now on long term but the credit card, i mean, i dont even have room to talk about the credit card. They have a credit card that people take in this is not the magnesium card this is being taken out of the pockets by millennials. Did you, david, did you pay your bill this month . My fico score went to 480. Who knows maybe we did who knows. I like to look every morning how how much i made. People say how did you get rich . Its because of look at my score every day. I am fought really rich. I think its morpt to recognize this is a quarter its important to recognize this is a quarter, he said hes coming down with a cold well, as far as targets go jpm goes to 280. Right webb bush and davidson 300. We have handles on targets now. That makes sense. How people are completely right. She is talking about the serviceing a seg racing. I remember the last quarter we started to hear about service deceleration every time you want to count this company out or say there is something wrong, look, we saw a bad review of a tv show. One tv show, apple plus, stock went down 5 on a bad review are you kidding me thats odd. This shouldnt have any impact whatsoever, you would think. None. In their efforts so far in streaming. We said, well see, you got to give it time like a lot of other things they have done and five years from now, we may be sitting here with a very different narrative about apple tv and its success in streaming. Right now, its not much of anything. This is a Delivery System its a fantastic Delivery System we used to talk about racer razor blade. Im tired of that we talk about Cell Phone Service david, i dont know whether you paid your bill yesterday for cotton, apple cares. It comes with its something that comes through, 299 here, 299 there its netflix. Then they do Something Else it was like 3 20 a. M. Benefit yack called me benniac called me the second time he likes the disney light sabres. Theyre very heavy. He does hows the book going for him . Do you turn the phone off at night . I keep the phone on, hey, man, how are you doing . 3 00 a. M the phone is in the different room its not in the bedroom. Thats a different strategy you get up to go to the bathroom in the middle of the night, you have it begging you to pick it up you do. You got to get the phone away from yourself. Why i need to be on every single second of my life. Thats whats really important work, david, is everything yeah. Of course it is, when you die will be happy you spent as much time you wont have any regrets. You worked too hard the only thing you will have is three hours of sleep you get every night. I cant get face id id to work you can help me get that tony saginagi who you leak, youve taken some shots. He is so nice he says q1 revenue guidance is somewhat reassuring, we think apple material 8 plus head winds for the phone. Meaning weakness and aphone weak ness remains a key wild card. He will face the research honestly, this was one of those stories that it, look, its clean across the board as katie said in my discussion with tim. You know you sit there you say, i have like 20 questions i want to add, josh asked 13 questions, 20s hard hitting questions i get down, hey, you know, you know, that was a credit card i mane, there is nothing like most of the time, you have a background call and there is like wow, one, two, boom, booming boom, no, whered you buy the stock . What price did you buy a lot of stock . This company is bulletproof. Now, i know as soon as you say that, thats the end, but people have been saying that. I mean there are still risks there are risks. There are always risks. Thermo nuclear war, always a factor you have a president that hasnt ruled it out right . Honestly, the number is in apac. The number, do you know that they had a billion dollar, billion dollar foreign currency issue . Billion dollars billion dollars but yeah, i know, but its a very large company. Im saying, the dollar got weak, what kind of number would they print anyway, i thought it was very special. I went to sleep with it last night. We are actually watching the dollar here, see if it breaks 97 we would have wide ranging implications well watch apple. Facebook is the other big story getting a lift social network betterthanexpected results on the top and bottom line, beating forecasts for average revenue per user the company says the facebook app had a particularly strong quarter. Mau is up 8 to 2. 45 billion. Jim. A lot of this over shadowed by twitters announcement minutes before the call they be ban political ads. Something they disagreed the day before 140 businesses in power. Mark zuckerberg starts with that i really like that heres a stock that if you gave it a 20 multiple, it would sell at 220 i mean, its trading under 20 times gap earnings, right . Its crazy, david done you think its crazy . Their guidance was higher than had been anticipated. Their op ex, a lot of investors were focused on operating guidance would be. They gooded top x growth of 32 to learn the . That 37 maybe you could hit better toplus or 45 growth thats not going to be their capex guidance lower than expectations yeah. Theyre for, everybodys cash flow numbers are moving up at some point the engagement metrix, there has been no slow down, no slow down in engagement whatever its on the old the facebook platform or instagram, of course, we talk so often about. So as you just indicated, saying stock trades below 20 games i tim 20 times gap. Gap earnings when youread through the beginning of this call, its really zuckerberg existential talking about the need for free speech i liked it i liked the empowerment theory i like the fact that you understand his view on political advertiseing yes, i do you do . Yes, i do yes, i do. He is talking on writing an editorial about it its the most powerful platform for distribution you could argue, period. Right right. Why shouldnt it be held to the same standards of all the other platforms are in terms of at least making sure the claims that are made in political advertising are not outright lies okay. Why . Why is that a free speech thing . Look, i know the most powerful platform there is for delivering information. Targeted information. Thank you to, okay, the world the electorate. Look, okay, let me give you an answer to thattheyre debating that right now. Thats why i like this call. Theyre debating this, no, they r. Theyre debating you think peter teel and Mark Andreson liberals on the board will change their mind for the values since the company was founded . They did take down 50ple hours. Free speech i get that but i dont understand where this argument goes you mean are they a Greyhound Bus . Should they be regulated why dont we just go to the Supreme Court . Eventually, thats where the multiple thats where its going its going to the Supreme Court. Eventually these things will be regulated how can you not regulate it . They devote a huge amount of time to why things are going to go bad because of regulation it was an incredible discussion. Incredible about all the things that can go wrong. Zuck basically says they are at the heart of it, at least the antitrust part. Instagram, hes focused more about all of the businesses built around instagram and a little mess about free speech. Free expression. Listen, i dont dismiss the difficulty of parsing sort of how you do both. But, well. Allowing outright lies on your platform to be propagated by all in all ways in terms of influencing, we know how influential this platform can be. Why dont we go to back to what Mark Elliot Zuckerberg says free speech you cant yell fire in a crowded theater . What are you Oliver Wendell holmes i will be if you like many zple how about putting the troop transport time tavenlts right now content is about political ads him should we block them with political ads google and platforms run the same ad. Most Cable Networks run the same ads, thats required by law to run the same ad. Is that not relevant is that not relevant thats exhibit a yeah, thats exhibit a. But we dont run ads that say, you know david, thats it what are you like foment dont foment he crushes it. This is why people are asking why twitters move forces zuckerbergs hand. They cant get metrics out of twitter. It was an ad that literally had lie after lie after lie complete total to be brickss nobody said you cant post it or write it for free you just cant pay to have it targeted to the people you think will believe it. Hire another 50,000 people which, theyll do it i mean, look, im not debating that theyre not debating. They are trying to wrestle with it his free speech position in georgetown it was as good as the Marshall Plan announced in the commencement speech. I kind of disagree with you. Its overstating the situation. But it was a good speech he is talking about free speech in their role. Hes debating it now, if mark benioff were here said instead of calling me at 3 00 am allege, theyd say there is no truth. I am saying this is a different facebook they are debating these issues why doesnt nobody believe me . If you say, believe me, if you say theyre thinking about this i trust you i do theyre thinking about i. Theyre not the evil empire. Theyre not the evil empire. Its not the soviet union. When we come back, well get cramers mad dash, count down to the opening bell so much to get to on this thursday morning take a look at futures here. Awonhetrts ckba after a break. Ah come on lets hide in the attic. No. In the basement. Why cant we just get in the running car . Are you crazy . Lets hide behind the chainsaws. Smart. Yeah. Ok. If youre in a horror movie, you make poor decisions. Its what you do. This was a good idea. Shhhh. Im being quiet. Youre breathing on me if you want to save fifteen percent or more on car insurance, you switch to geico. Its what you do. Lets go to the cemetery by the way, shes the it wasnext mozart. G day. As usual we were behind schedule. But sophies enthusiasm cannot be dampened. Not even by a runaway donut. We powered through it in our toyota prius. Because a stars got to shine, no matter what. Its unbelievable what you can do in the prius. Toyota lets go places. Annoepidemic fueled by juul use with their kidfriendly flavors. San francisco voters stopped the sale of flavored ecigarettes. But then juul, backed by big tobacco, wrote prop c to weaken ecigarette protections. The San Francisco chronicle reports prop c is an audacious overreach, threatening to overturn the ban on flavored products approved by voters. Prop c means more kids vaping. Thats a dangerous idea. Vote no on juul. No on big tobacco. No on prop c. [ music playing welcome back to squawk in the street. Time for a mad dash. We get you ready for the opening bell about 11 minutes from now so many different earnings on apple and facebook lets get to dupont. I think there the another worldly moment going on, almost everyone i heard who chattered after the fed said, well why does he really have to cut why dont you look at a company like dew pont . Almost every line except for the lines that are not cyclical are troubled its certainly not dew ponts fauld, transportation is not that good. Have you construction not that good what is good nutrition, you know the line i really like . What . I like the skrcellulose line why because when you eat a beyond meat burger, that taste is cellular, emuscle fire, dupont emulsifyer, dupont. That is a secular story, cow versus wood product. I like wood product with ketchup. No lets be honestly, organic sales minus 2 offsetting macro price. The fed has to cut because Industrial America is not doing well yes, its true walmart is doing well look at this, this is why a Federal Reserve cuts, david, look at that, look at that line i am drawing, how fabulous and powerful, clear that one. I dont nderstand they are doing a great job. What has to happen they have to split up the nutrition split, we have been talking for years the value resulted as a split of dupont. That has happened, they got together, split up so far dow created a lot of value you want to point that out, you got me on that one. How much time did we spend on that the banks, lawyers, everybody was advised on this thing, activists, all of them you are negative, man, i was just talking about the fun the right to fed cut, a negative, man. All right a a downer beyond meat, david. Cellulose. Thats why it has that great taste. You learn something new here every day, you got to admit that, right, folks we have opening bell next. Heading into retirement you want to follow your passions rather than worry about how to pay for longterm care. Brighthouse smartcare℠ is a hybrid Life Insurance and longterm care product. It protects your family while providing longterm care coverage, should you need it. So you can explore all the Amazing Things ahead. Talk to your advisor about brighthouse smartcare. Brighthouse financial. Build for whats ahead℠ brighthouse financial. 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