Angen soaring and comments on its version of an obesity drug, and apple hires and focuses on that record buyback. Is the Company Using 110 billion to wallpaper over some weakness or were the results not as bad as feared . Steve covac covering apple for us from sfans. Hey, steve. So look. Last quarter revenue was down 4 , iphone sales down 10 , but no one really seems to care because apple gave its shareholders the biggest stock buyback in corporate history. Thats 110 billion, increased the dividend, 4 to 0. 25 and went towards modest growth which was expected as some have been trimming their estimates. China sales were down 12 , and in an interview yesterday, i was told iphone sales in Mainland China grew. Thats countering the narrative we have been hearing over the last few months. I also asked cook about his recent visit to china just a few weeks ago. He told me, quote, i feel great that in an extraordinary, competitive environment, that we grew iphone sales in Mainland China last quarter. That may come as a surprise to c some people, and i feel good about china more than i do the longterm or next week. The Services Business seems to be over its postpandemic slump beating expectations and posts an alltime record of 23. 9 billion in sales. Thats up about 14 from the year ago quarter. We heard on the Earnings Call last night to expect similar growth in services for the june quarter. As for Artificial Intelligence, big lingering question. Not much material to share there. I tried to squeeze fresh details out of cook, but he wouldnt budge, only teasing theres going to be an announcement on generative a. I. Soon which were of course, expecting at wwdc on june 10th, guys. Steve, thank you. Thats a great breakdown. Its been a busy days for you. If you doent mind hanging aroud right there, lets get to the Senior Analyst at bernstein. He upgraded apple to market perform. He has 195 price target. Maybe still a little bit of upside from these levels, but theyve certainly made you look quite prush i cant. What gave you the idea to give you that stock at that point in time . Theres still significant room to run from here. Good afternoon, leslie, and thanks for having me on. I think, you know, our sense was that expectations were quite low going into the quarter. Investors were fearful about china being weak, and that even if apple did, you know, guide below expectations, that is widely anticipated, and once this guidance was passed, investors would feel comfortable with new offerings. New ipads are being announced next week, new iphones in september which we think will have a. I. Capabilities, and then likely new macs and air pods as well in the second half of the year. So our contention really was that expectations were low, and once we got past this quarter, almost good or bad, the stock could be poised to run up given that it underperformed by 20 year to date and was trading at, you know, below its recent average multiple levels. And steve, i wanted to ask you about china in particular, and if you could help us kind of make the distinction between Mainland China and the Greater China because mainland i thought the whole narrative surrounding the slowdown there was this idea that the chinese economy was slowing down and therefore, you know, some iphone sale s were declining and also t was favor relative of the home to hometown brands in that area, but if tim cook is saying that mainland is growing, where are they seeing the pocket of weakness that bring down kind of the Greater China sales as a whole . Yeah. They didnt really talk too much ar about that yesterday, but there are things beyond just the iphone. First of all, services were up. That kind of helped things too, but also keep in mind its bsine the fall of 2022 that apple last released an ipad. That could have been some of the weakness we saw in china last quarter, so take that into account. They also said expect doubledigit growth return to the ipad because as toni just mentioned, well get those new mo models next week, so that should give them reason to buy an ipad. Mainland china is countering that narrative. We had reports of idc that sent the stock down on these fears that, you know, counterpoint saying iphone sales were down 19 . Well, apple thats not what they were necessarily showing yesterday, and of course, like i said, tim cook told me iphone is showing momentum and growth out there. So, you know, im looking a little bit more skeptical of these reports we have been hearing out of china. Not sure where theyre exactly getting the data, and its clear that theres a huge disconnect between what the third parties are saying and then what apple actually reports out there in china and leslie. Toni, its dom. 110 billion buyback is nothing to, you know, sneeze at right here. Its a lot of money. I know that apple generates a ton of cash, and that the buyback stories are a big part of the investment thesis for apple, but what happens if they take that money or even a fraction of it and plow it into things like Artificial Intelligence hypothetically . Wouldnt it move the needle . Good afternoon, dom. So the buyback is a very large number, 110 billion. They have been upping their buyback last year, it was 90 billion. This quarter they bought back, you know, i think 25 billion worth of shares. So theyre on pace to buy back about 100 billion worth of shares per year. That helps the growth by about 3 or 4 per year. So that is an important part of apples model. I think in terms of a. I. Investments, you know, Many Companies are raising their cap. A lot of it is for compute for a. I. Apple has a kind of a hypermodel where it uses some of its own compute, but increasingly its increasing the data centers for other places like microsoft, and its paying for that. Its not a capital expenditure, and so as a result, apples Capital Expenditures are relatively low. Theyre only about 10 billion a year. Youre hearing about some of the other magnificent seven, you know, spending 40 billion, 50 billion, 60 billion a year on that, in part for a. I. Apple is saying, you know, we dont need to lay out that cash in terms of the capital expense. What well do is just pay for ongoing use of third Party Compute services for us to do our work on a. I. Steve, in terms of this buyback that were talking about, is the sense from wall street that it is kind of the main driver of todays stock move or do you think that the results on a fundamental basis were Strong Enough to contribute to the gains that were seeing today . Probably the main driver, yes. The buyback. That was the Immediate Reaction as soon as we got those numbers at 4 30 yesterday afternoon. That seems to be whats driving, you know, the revenue came in a little bit on the top and bottom lines, but yeah. That seems to be the bulk of it. Plus the guidance. You know, tim cook told me before the call even started, he gave me a little guidance and said, low singledigit growth for the june quarter, and that seemed to be enough to drive it a little bit higher. Its up 7 now. Thats about what it was after hours as well. I also want to add onto something that toni was just talking about. Theres also spending in what theyre doing on Artificial Intelligence on device. I talked to cook about this too in our interview and talking about whats call these neuroprocessing units. Youll hear about this a lot as microsoft talks about a. I. Devices in the coming weeks as well. Those are the kind of chips that apple has been chipping since 2020, and that allows for more a. I. Activity to happen on device. Now of course, apple devices dont necessarily run generative a. I. Things right now, but it helps with Image Processing and other stuff kind of under the hood. They have a lot of experience on the hardware side and have been making investments in those kind of technologies to enable a. I. And again, were waiting for that big announcement next month to see exactly how they unleash that in a on the software level. Wwdc. Its going to be all about that. Toni and steve, thank you very much for the apple conversation. Have a nice weekend, guys. Thanks. Even forbefore this announcement, apple was the leader on the street in repurchasing its own stock. Were joined now with eyepopping numbers and ive seen hints of them about just how much apple will have bought become in its own stock in terms of market value over the course of its campaign and its staggering, bob. And its been doing this for a long time, dom. So apples 110 billion stock buyback announcement is very large, but apple is already the largest buyback company in the s p 500 in dollar terms and by a large amount. In the last 12 months, apples bought back 84 billion in stock. That is far above anybody else in the s p 500. So to give you an idea, alphabet is a distant second. They only bought back 62 billion, and meta, microsoft, exxonmobil, theyre in the top five but theyre way down there compared to apple. Apples been doing this for a really long time and consistently. They have been aggressively buying back its stock and reducing the share count too since 2013, 11 years now. The share count has gone from 26 billion shares in 2023 to 15. 3 billion today. Thats quite remarkable. Apple not only dominates buybacks, but it dominates the largest quarterly buybacks ever done. The 12 largest quarterly buybacks ever done in all history, all in the 20 billion range were all done by apple. Everybody else is way down the list. So in recent years, the buybacks in general have become the preferred method returning cash to shareholders, even over dividends because its harder to take back dividends. Whos next . Not surprisingly, companies with very large cash flow in the tech space. Theyve tended to be the companies that are buying back the most stock and reducing their share count. That includes, for example, meta, microsoft, texas instruments, and alphabet. Theyre the other ones besides apple, but there are a few surprises outside of tech. Ill give you an example. Home depot, and the homebuilder polte have been reducing their share count in the last few years as well. Ill give you an idea of apples priorities. They bought back 14 billion in dividends, and 18 billion in buybacks. Think about that. Thats a priority for them. Bob, im just curious, kind of given what weve seen apple has, you know, not necessarily seen some of the gains as the other companies that youve mentioned as being big share count reducers, but how does kind of performance play into this calculus as well as the tech environment as it pertains to antitrust in that maybe the capital theyre using their buybacks cant be used for things like acquisitions because they have regulators on the case about potential or at least alleged antimonopolistic behavior . Yeah. I think recently, that has become a real issue, particularly over in europe. I dont think it was in the past though. I think apple is speaking volumes that they dont the fact that they put so much money into buybacks and a little bit into dividends indicates to me that returning money to shareholders is a bigger priority even than over investing in and like looking at cars for example, which they decided to get out of. The important thing here, leslie, is not just buying back the stock, but at the same time, reducing the share count. There are companies that buy back stock, but add options and they dont reduce the share count. Apple does. In 2013, they have 40 less shares outstanding than they did in 2013. What that means is Everything Else on the income statement is the same. Everything else is the same. The earnings are 40 higher than they would have been without that because the share counts been reduced by 40 . So thats materially very, very significant. A good part of apples gains clearly are due to that share count reduction. Eyepopping numbers. Bob, thank you very much. Well see you later on. Coming up on the show, beyond apple, well break down the other big moves in the dow. Amgen playing an even bigger role in the dow, along with the jobs report. Thats all coming up next. To start a business, you need an idea. Its a pillow with a speaker in it thats right craig. A team thats highly competent. Im just here for the internets. At t its superfast. Reliable. You locked us out . arrggghh ahhhh solutionoriented. [jenna screams] and most importantly. Is the internet out . Dont worry, we have at t internet backup. The next level network. I sold a pillow norman, bad news. I never graduated from med school. What . But the good news is. Xfinity mobile just got even better now, you can automatically connect to wifi speeds up to a gig on the go. Plus, buy one unlimited line and get one free for a year. I gotta get this deal. Thats like 20 a month per unlimited line. I dont want to miss that. Thats amazing doc. Mobile savings are calling. Visit xfinitymobile. Com to learn more. Doc . Welcome back to power lunch. Apple is not the only stock contributing to todays stock market gains. In fact, amgen is responsible for probably at this point, more than half of this. Angelica peoples is here on why this is surging and let me take a stab. It has something to do with obesity. Youre exactly right, dom. Amgen is soaring after the company says it will experiment with its obesity drug in clinical trials. The look at the phase two data was encouraging and theyll move forward with this drug. We wont have the full results from those that phase two trial until the end of this year, but executives say theyre not seeing many people dropping out of the study, and the side effects have been a problem across the board, so amgen is trying to ensure investors this is not an issue here. Theyre investing in manufacturing so it can ramp up manufacturing when the time comes. This would compete with what goe sorry and zepbound. Amgen is also saying it will scrap an experimental pill. Its going all in on this drug and earlier drugs in the pipeline. Ill pick it up from here. Thank you very much for breaking it down for us. Appreciate it. Lets turn to the bond market now when yields took a sharp dip lower on the jobs data. Lets get to Rick Santelli with that data. Rick . Yes. Not only do i have a special gu guest, but todays jobs number was less than expected. The Interest Rates along the curve went lower, but they have since borm bottomed and the reason they bottomed is my guest. Jim bianco. We havent had a live interview with over four years. Welcome back. What are your thoughts about the jobs market . Good to be back. The jobs market were good for the market. It showed that, you know, the restraint that everybody thought backed off weve got jobs, but not too many jobs. Probably the best part of the report was labor costs fell twotenths up and on a year over year basis, theyre down 4 . The market got what it wanted. It got growth and backing off with inflation, and thats why you saw a rally. Thats the first time we are under 4 since midjune of 2021 on the year over year average hourly earnings, and Something Else happened at 10 00 eastern, right . Thats right. We got the ism Services Prices paid. Thats their measure at 59. This follows the 69 we got at manufacturing this week. This is more highfrequency, inflation is saying that purchasing managers are still paying up to get stuff, and that puts the bottom in yields today because this is what were worried about. Were worried about inflation and weve got another number that i wouldnt go problematic, but its not going in the right direction. Right. So jobs put it lower. We traded under 4 1 2, and under 480, and were now both hovering. That number did put a bottom in on rates. All right. Now let me ask you a question, okay . Where do you think we are on the inflation front, and did you see some of the q a with the chairman of the fed . What were your thoughts on anything that you found interesting . On the inflation front, two things can be true at once. We had a transitory element coming out of covid. We went to 9 , back to 3 , but when that transitory element dissipated, were now finding that sub2 inflation world we were in, is more like 3 , 3. 5 . We have higher inflation, and thats why Interest Rates are still 4. 5 , and nowhere where they were. Thats what he said about politics . The fed said theyre not political, and then the way he answered the question was, he said im not partisan. Okay. Thats a different question. Youre not partisan. You dont sit around the table deciding which candidate you want, but theres a meeting on july 31st between the republican and democrat convention. Are you going to move it, that meeting . Theres a meet september 18th. Are you going to move at that meeting . If you move, you become the part of the election. Will you wait until tend of the year . He didnt answer that question. Thats like saying im not a cub fan. That doesnt mean im not a baseball fan. We only have a half a minute left. My final question is, do you think that stagflation is a statistical probability albeit small . Yeah. I mean, to some extent were in a higher inflation world, and were not seeing weaker growth. Right there, that is some version of stagflation. The problem is the word is its a loaded term. Everybody remembers the late 70s. Thats a virulant form of it. It could be the homecoming of stagflation. Its great to see you in person, buddy. Dom, back to. You rick, jim, thank you very much, guys. Stocks are higher as the jobs report raises expectations for a federate cut possibly despite mixed messages on policy. Our next guest says earns are providing a constructive backdrop. Lets bring in the chief Investment Officer with rockland trust. The conversation frames pretty much everything these days. They do kind of help with the earnings story. Is the earnings story enough to drive the markets higher . I think it is, dom. At the end of the day, ultimately investors are looking at cash flow generated by companies and companies generate cash flows through earnings, and the expect tations are looking out, and we started the thirdquarter earning period. Were looking at the doubledigit Earnings Growth for 2024 and 2025. Thats a great backdrop for stocks for sure despite all the mixed messages were getting out of the fed and in the data again. Another data point where again, the labor force increased the the price increase in wages is very compelling, very surprised which is good news. Does that mean that you are