On what were seeing on major heat waves. Well be exploring the markets all afternoon for the next two hours and beyond. Lets get more now on todays slide from bob pisani on the floor of the New York Stock Exchange. Bob . Hello, tyler, and what were seeing is a little bit of a reversal of some trading trends, specifically around the dollar and also to a trading around the dollar. Modest rally. Look at the dollar index moving down all throughout the quarter here. The lows recently. Thats reversed a little bit today and some people are debating. The dollar may have bottomed and that may have factored. Energy financial materials were weak today. You know what the market leaders are. Energy financials and materials this quarter and a very specific reap. Those are cyclical stocks. Very specific reasons why cyclicals have done well this quarter. Let me show you the q2 trade, the trade everybody is doing. You have the weaker dollar and combine it with a stable china and you combine that with oil bottom and you put up the next full screen and have an accommodative fed and what you got is buy cyclicals, energies and industrials and thats exactly what everybody has been doing. Today, things are just a little bit under strain with this whole thesis. First off, everybody has been buying the cyclicals like crazy so they are overbought. 21, 22 times forward. Thats a problem. Second problem, chinas data has been choppy. Overnight we saw the manufacturing data weak. Its been very hard to read and then you throw in the dollar reversings, and youve got a little reversal of trend. Heres the big question. Is this the start of Something Big . So far its not. Just remember, nokes, 2100, thats where we were at the end of april. Right now were only 40 points off of that or so, so were about 2 from where we were on the recent high. So farins just a garden variety move to the downside. Not very aggressive, but we want to keep a close eye on whether we get any breakouts to the downside on the cyclicals. Guys, back for you. Sure do. Thanks, bob. One stock that is holding up in todays slide, apple. The shares are higher following eight Straight Days of losses. You can see higher by 1. 5 . A lot of the concern over apple recently is squarely focused on china. You might israel of the week billionaire investor carl icahn made a bombshell announcement on apple right here on power lunch. I got out for the purposech because im worried about china and i have a huge profit. Being that said, i hope one day to get back into it. Last night apples ceo tim cook came out swinging defending apples sales in china and in an exclusive interview with jim cramer. Heres what i see in china, we see in china is the middle class there is booming, and so you look back just five years ago. There were about 50 Million People in the chinese middle class. Five years from now that number is going to be almost 500 million. I mean, this is an unprecedented growth of the middle class. But you left that out on the corner on the conference call. Parsed every word and you did not talk about middle class which made us thing there was something wrong. My error for not talking about it. I could not be more optimistic about china. Okay. I think the longterm thesis is intact. Theres never been anything like it in the history of the world, and im still as optimistic as ive ever been. Tim cook also telling cramer that he sees huge opportunities in india, and seema mody is here with more on that. Hey, seema . Reporter tyler, thats right. Apple and tim cook remain bullish on china, but there are signs that demand is slowing. Just take a look at this bar chart. Sales in the latest quarter in Greater China falling by 4. 3 billion. Thats in the Second Quarter and now apple is looking to india for growth. Currently the worlds Fastest GrowingSmartphone Market with an emerging middle class and compelling demographic trends. Youre talking about a young young audience as well. Tim cook, the ceo of apple mentioned that when he spoke to jim cramer. India today has about 50 of their population at 25 years of age or younger. Its a very young country. People really want smartphones there. Really want smartphones, and this year the first year lte begins to roll out. Huge market potential. Okay. But india has only roughly 2 of indias Smartphone Market, but a growing number of skeptics say india will be challenging to break into. First off its a crowded market, competition, samsung and micromax offering more cheaper and Cost Effective options. Some are sold under 200. Analysts say price point is such an important part of apples success. One strategy was to sell refurbished cheaper phones in india, but today the Indian Government rejected apples request to do so, so while india might have a young digital savvy audience, apples reach into the country will require time and perhaps a local partner that can guide the company through these hurdles. Guys . Seema, thank you very much. All right. Lets bring you back lets bring it back to the investor. What do you do with apple right now . Should you buy it . Lets bring in channing smith, an apple shareholder who says apple presents the perfect buying apple right now, an apple analyst at btig cut his price target to 115 which is higher than where it is right now. To that in a second, but walter, first, let me ask you, you have cut your estimates for how many phones you think apple is going to sell over the next couple of years . By pretty significant amount. Why is that . Is that due to china . Are you fearing loss of market share, why the lower expectations and their ability to sell phones . For those recisions for us it was about the upgrade cycle. Saw a dramatic change in the First Quarter. Little evidence of that in the december quarter but in the march quarter the upgrade rates for the developed markets, particularly in the u. S. Really came in, and people are just holding on to their phones longer. The reference to china and india, true huge opportunity, but we have seen lte in other emerging markets like brazil where lte pentation has gone from 13 to 26 . Not necessarily to the benefit of apple there because people are buying, as seema was saying, phones that are less than 200 of an asp and even with the se, still an expensive phone with that type of market. The newer, cheaper, smaller model. But you still have a price target of 115 which is higher than where it is now. Is that a buy . So the belief that you have to have, which we still do, is that they can return to growth in this december quarter. Theres concerns there that there is a structural change in the upgrade the upgrade rates of the developed markets, but we still believe that they can return to growth in this december quarter, so if you look at the valuation of the stock, the significant discount to the market multiple, if you believe that they can return a growth in the next fiscal year, then you should be owning the stock. The pressure then is, you know, what is it about this phone thats going to get people to buy more phones in this december quarter than what they did in the past december quarter, and by the way, you know, when tim cook said that he was going to grow phones in the december quarter, it was marginal, and that can be impacted by changes in your inventory, so this time around its going to have to be more than beating last years number by a couple hundred thousand units. I guess when youre talking about india, what will it take for apple to be successful in this market . Does it all come down to price point, because just from having conversations . Lets ask channing that question. Absolutely. What will it take for apple to be successful in india, just speaking to people on the ground and this morning, apple doesnt seem to have the same brand identity that samsung has and cheaper may not be enough to cut it. I think youre right and if you look at india and the price points, 4 5 of the phones are priced at under 100 so its a Challenging Market but like you said its only 2 . A bigger Addressable Market in the near term for india. It will be tough for them to have numbers that impress over the years and in the near term we think they can see growth out of india. 77 last quarter and fell to 56 . Well look at china and still think the markets are going to be attractive. We think the price point of the lower cost phone will come down so its really just getting market share, but the bigger point that we see is, yeah, it was a horrible quarter. Probably one of the worst quarters weve seen in a long time and were more optimistic on that september and october quarter. We think they return to sequential growth and the analysts are becoming way too bearish. A rough sledding for the next month or two but we think youll see a very impressive quarter in september and december. Channing, do you think then do you think that the refresh cycle is going to pick up then in contrast to what walter sees . You know, walter makes a good point. Were at the point in the Technology Cycle where you dont see a lot of innovation. Were two years removed from the big foreign factor and a number of users in the 5 and 5s so we think youll see a pretty good upgrade cycle starting in september. All right. Apple is not the same Growth Company that it was, but its still going to drive, you know, very good revenue and earnings growth. In a rut right here but we expect that investors will look forward to that starting this summer. Seema and thanks to all of you. Many apple suppliers are under pressure today as you see that list right there, all in the red. Already down more than 10 this year, many of them, so what could be next . Brian blair is grays peak capital head of research and follows the suppliers. We just looked at a list of four. There are probably many more. Right. All of them feeling some of the pullback. Have the stocks pulled back sufficiently that now or soon they might be on your buy list . I think they have pulled back enough. Theres really only one Major Company thats left to report that has, you know, significant exposure to apple and we hear from that this week and thats corvo and go back over the last few weeks of earnings and look at the results from synaptics and cirrus logic and a handful of others, weve already seen the impact of the supply chain from apples lower numbers. Many Companies Reported after apple did. Some like jable on the manufacturing side reported a bit earlier. We had a bit of an early look and then weve seen a lot of key supplier reports and i do think expectations have been appropriately lowered. Many of these Companies Reported dismal june guidance which really matched apple, you know, in many regards. The only ones that did better were the ones more diversified away from their exposure to apple with you a lot are being cautious about the comments in the back half of the year, and its because theres some uncertainty exactly about what the iphone 7 is going to look like and what demand will be like, so what were doing at grays peak is paying a lot of attention to the supply chain and were trying to Pay Attention to exactly whats happening there. Thats going to be the best indicator of whats going to occur. So, they have lowered the bar across the board. Are you more inclined to put money to work in one of the companies that you just described as more diversified and less strictly tied to apple, or are you more inclined to go with ones that are more dependant on business with apple . We like the ones more diversified, but what we pier focused on are the ones tied to the emerging technologies that were seeing. A lot of exciting things happening right now in voice and voice at an interface, so were looking at a lot of companies that are supplying key microphones and audio features we think will be an important part of the supply chain, not just for apple but also for samsung and were paying attention to those technologies. And more diversified would mean more names. Give me two of them. Samsung and the guys exposed to the high end of china are doing exceptionally well. The same guys who are hurting apple in china. They are seeing growth right now and seeing growth they are seeing declines in china. Not a zero sum game. Brian, thanks so much. Brian blair, thanks. April, another big month for auto sales. Phil lebeau live in chicago. Michelle, she is numbers will ease the concerns we saw coming after march numbers that were weaker than expected. Lets run down what were hearing from all of the automakers right now. Most of them were in line with expectations with the exception of Fiat Chrysler which beast estimates coming in at a 5. 6 gain. What drove sales, trucks and suvs small once again, pickup trucks, jeeps, sales up 17 last month. Talked about it for some time. Jeep has been on a roll. In terms of what the showrooms were offering and what people were paying month to month, incentives, now averaging 3,021 for the month from true car and thats an increase of 13 compared to april of last year. Take a look at shares of the major automakers. Remember, we get the final sales rate a little bit later on this afternoon. Most believe its going to come in at about 17. 3 or 17. 4 million. Guys, back to you. Got it, phil. Thanks. Ahead, a bold call from bill gates on your taxes. First though, Brian Sullivan is live in Beverly Hills with a huge lineup of power players. Hey, brian. Hey, michelle. Thanks very much. Were about to kick off two or just under two big hours hat the milken global conference in los angeles. Well talk about infrastructure spending. Is there a chance for a real spend and build. Well talk with one of the biggest engineering nirms in the world, eric cantor, former Prime Minister tony blair and will talk to us about everything about the u. S. Election and some of the problems in england right now and the chief economist for jeffreys, doesnt do a lot of tv. Has some really interesting ideas about what will happen to Central Banks all around the world. Infrastructure, as we kick off a big two hours at the milken global conference. Youre watching power lunch, and we ear back right after this. Welcome back to power lunch. Were live at the Milken Institute global conference here in Beverly Hills, can. You know when youre driving on a highway and whatever town youre living in and its filled with potholes and the bridges are old and thats old and kind of embarrassing for america, lets talk about a company thats trying to fix that. They are a huge infrastructure builder, engineering firm, design firm. You do it all, mike. You can tell i have no passion about this topic at all. Right. It is, infrastructure does represent a country. And you come to america and see the state of our airports and roads. Its kind of sad, at least to me. Do you believe that in the next year or so, new administration, that we will get a huge new infrastructure bill passed in this country. I do, brian. Seen the early indicators of it. Both parties of the president ial election are talking significantly about infrastructure. Weve seen momentum, the first bipartisan significant action in the fast act, the new transportation bill. We saw there year 300 billion dedicated to transportation infrastructure. Were seeing momentum. Seeing a vast, vast attention to the the problems that youre talking about. If words built things, wed have the greatest infrastructure in the world. Theres been a lot of talk and everyone seems to agree we need to do something. They all say it. Weve got a transportation bill in december done. Do you have real optimism though that these sides are going to come together and get something done, a couple hundred billion, 1 trillion, putting people to work building new things . For decades weve underinvested in infrastructure in the United States. And spend 2. 5 of our gdp on infrastructure. Europe is spending 5 , china 9 , so clearly were underinvested, but were seeing momentum and seeing the fast act that you mentioned. A lot of states are now putting in place specific tax measures addressed at transportation funding alone. Were seeing the private sector coming into the Public Sector through Public Private partnerships, so theres a lot of momentum, and im confident that that momentum will continue. You guys are not a household name, no offense, but everyone probably knows the stadiums that you guys build. Youre in the oil business, drilling rigs. Taking that down and building ports all around the world. You kind of do everything. Where is money being spent, either geographically or on certain projects . Right now the vertical construction, high Rise Construction is booming more than its ever been in the past 15 years. Seeing in the major metropolitan markets a significant amount of high Rise Construction. Although its certainly in the late innings of that cycle. Is it slowing, because a lot of people say were basically in a real estate bubble in new york hand san fran and others. Its starting to slow a bit and were starting one in vanderbilt, new york, the third tallest building in new york city after we built the world trade center, seeing activity there. It will slow down over time. Sports, as you mentioned sports, its a big market for us around the world. Yeah. Weve designed or built twothirds of all the Major League Sports arena or stadium here in the United States. You going to get the l. A. Stadium . Hoping, hoping. Bids are in . The bids are the in the process right now and were hopeful on that. Do a lot of stuff in the middle east. Just got back from qatar two weeks ago, building a port, some of the stadiums for the world cup. They are exposed to commodities. Any sign that the middle eastern customers are cutting back or slashing projects because of whats happened to oil. In the middle east, especially in the petrodollar fueled countries, a little bit of a pause but those countries have significant financial reserves and are investing in infrastructure for the long time. Recent