Good tuesday morning. Welcome to squawk alley. Jon fortt, sara eisen and myself at post nine. Apples conference is usually focused on software but this year hardware is stealing the show. Josh lipton has that story from san francisco. Hey, josh. Reporter thats right. Apples ceo tim cook took the stage and unveiled home pod, a new smart speaker. We have such a great portable music experience but what about our homes . We think we can do a lot to make this experience much better. Just like we did with portable music, we want to reinvent home music. Reporter the smart speakers are integrated with siri, designed to work with apple music which we learned has 27 million paying subscribers and 349, home pod is pricier than rival devices from amazon and google. It ships in december. We also learned about new partnerships at last years code conference, remember, amazons jeff bezos said the two companies had not been able to negotiate acceptable terms but apple announcing that amazon, prime video is now coming to apple tv later this year. Good news for transparent and sneaky pete fans. This was a developer show so software did play a big role, including the unveiling of ios 11. Today we are going to take the worlds best and most advanced mobile operating system and turn it up to 11. Reporter highlights include a more intelligent siri, peertopeer payments within imessage and improved app store and maps. One last thing. Big tech from google to microsoft is investing in augmented reality. So is apple, which says that a. R. Is coming to ios devices with new tools for developers, apple is calling this the largest a. R. Platform in the world. Jon . Looks like it is. Thank you. Joining us now, early siri, uber and roku investor, Sean Caroline and with us at post nine, Foundation Capital general partner, steve asalo. Welcome to you both. Ios 11 has a number of tweaks in it, little bit of a change to the overall look of it. They are clearly trying to balance productivity especially on the ipad with simplicity. Think theyre getting it right . Its i think a classic apple announcement of a lot of things people have been expecting for some time. We celebrate drag and drop but thats a functionality we have been taking advantage of in our other interfaces for a long time. I appreciate they are bringing those features and functionality but i do think users are craving more, looking for more from apple, from these conferences, and specifically around productivity features, ways of interacting and communicating in more substantive ways. I was struck, for example, by some of the things they are doing around payments, the fact you are able to now not just connect with someone online and connect with them through Text Messages but also pay them on the fly. I think some of those things are chipping away but we are craving more. Well, between a. R. Kit, this augmented reality platform, apple announced, amazon video actually moving to apple finally and apples kind of peertopeer apple pay announcement, which did you think was the most significant . You know, i would actually say one of the ones you didnt mention. The Machine Learning library, i guess across the venture industry we are seeing stuff show up all over the place with basic a. I. Features and they are subtle. Its face recognition, image recognition, tagging, things like that but its making every experience a little bit better and they actually, im impressed with the amount of functionality they packed into that library. It runs on the phone so its very fast, responsive, doesnt still works when youre not online. I was impressed with that one. I think the a. R. Is a little bit novelty at this point. Until theres something thats in your glasses that you are wearing, holding up an ipad or a phone and looking at stuff, i never found to be too compelling of a use case aside from kind of a toy. Apple pay you didnt find that advancement in pokemon go to be amazing . I predicted that was a fad and i think it got a little bit bigger than i thought it would. But its still a game. Its not changing daily life which is the real advances. So when you look at core ml, what kinds of businesses, steve, do you think will be able to take the best advantage of that, as you look throughout your portfolio, the types of companies that are tapping into Machine Learning, does that excite you . So Machine Learning i think is absolutely a big piece of what apples investing in. They have some of the most talented hardware designers on the planet. Unlike maybe some of the companies they compete directly with, they build hardware which fundamentally, there are computing architectures that need to be built to support Machine Learning workloads. Im excited what they are doing there. To seans point from a minute ago, exposing those features and functionalities through apis will basically birth a whole bunch of interesting innovations. Like . There will be all sorts of applications related to sentiment analysis. How is it that people are feeling about the experiences they are having. Certainly recognition of whats in images. Today apple has a pretty lightweight way of telling whether you are in the photo or im in the photo and being able to sort of then find all the photos with you and me in it. The developers have been craving that functionality at the api level and apple is exposing that to them for the first time. I think we will see that really bear out. Also with respect to gaming, this is what struck me perhaps more under the covers, many folks were not noticing, in fact, a year ago no one was really talking about it. Metal 2 will be a disruptive thing, the partnerships they announced with epic and valve to expose High Performance functionality developers. Thats when really cool stuff happens at the app layer. Im excited about it. You pointed out people craving more than apples delivering. Cook made the point again yesterday that they are not interested in being early or being first. You think that will change over time . Well, they have always been the best follower. We always sort of give them credit for saying hey, they Just Announced something really new but then we look and say these intel processors were in ibm laptops a year ago. Then we celebrate drag and drop as i mentioned earlier. Apple has always been really good at this notion of following with a better product. They werent the first smart phone, they werent the first mp3 player but they clearly own those markets today. Whats interesting is whats going to happen with this battle for the home. Its clear that amazon wants it. They want to sort of own it through the lens of commerce. Google cares about it with respect to information. Apple i think really wants to own it with respect to entertainment and digital media. Thats why this device they launched yesterday could be very interesting. Its priced higher than any other device competitively but it also will deliver much more. I think thats where the apple strategy of delivering a better product later might actually bear out. Do you agree, sean . Where would you rank apple in the ai race that we have going on right now . Yeah. Im going to have to respectfully disagree with my good buddy in san francisco. I think at 349, its just priced out of the market. If you say okay, whats the most important experience to own in the home, i really believe its this Voice Assistant. Obviously we were the very First Investors in siri and the idea that over time, you are going to communicate with something thats going to give you answers back, theres a long road map to get to the point where it speaks to you like an expert, but at 349 thats not going to penetrate. I think its going after the sonos home speaker market. In the Voice Assistant battle which is a really fascinating one, that strategy is not positioning them well to win. I think the two leading horses in that race for the consumer angle at least is amazon with the echo, i think they will ship probably 20 million this year growing over like six million last year. Google home is not super pervasive product but if you think of who has the most voice queries right now, google, i think its 20 of google queries are coming in over voice. Google obviously is used for search on every phone so they are the ones to beat. Im surprised you would say its too expensive. This is a company thats selling 400 head phones, 700 phones. You dont think they can sell a 350 speaker. Interesting. Got to leave it there. Thanks so much. Steves new book is the way to design. We are following an incident that took place a short time ago at the Notre Dame Cathedral in paris. The Police Officer shot a man who tried to assault him with a hammer, injuring him. Some preliminary indications were that this was not terror related but nonetheless, french counterterrorism officials are investigating. Europe was already having a negative morning on their equity markets. The French Market is currently down three kwars of a percent. A lot more on apples latest device lineup and a closer look at the new home pod. The president fired up on twitter as meets with gop leadership. We will talk about that. And later, a new report says chicagos taxi business on the verge of collapse. Guess who its blaming for the downturn . Hey, the future, whats her problem . Apparently, i kept her up all night. She said the future freaks her out. How come no one likes me, jim . Intel does just think of everything intels doing right now with artificial intelligence. And pretty soon ai is going to help executives like her see trends to stay ahead of her competition. No more sleepless nights. Were going to be friends im sorry about this. Dont be embarrassed of me, jim. Im getting excited about this we know the future. Were going to be friends because were building it. [ eerie musthe mummy. T ] has returned. You wish to see. What i have seen . You will. When. I. Kill you. [ explosions ] [ intense music ] the mummy. Rated pg13. Taking a look at stocks at this hour, another session of minor declines on major averages. The nasdaq has been going back and forth around the unchanged line. The dow is down 26. S p down about two tenths of a percent. Do have positive bright spots, like technology, telecom, utilities and energy. Consumer discretionary, financials and health care bringing up the rear. This is the second day in a row we are seeing stocks pull back a bit from record highs. Well be right back. [vo] when it comes to investing, looking from a fresh perspective can make all the difference. It can provide what we call an unlock a realization that often reveals a better path forward. At wells fargo, its our expertise in finding this kind of insight that has lead us to become one of the largest investment and Wealth Management firms in the country. Discover how we can help find your unlock. We rbut we are not victims. Ack. We are survivors. We are survivors. We are survivors. And now we take brilinta. For people whove been hospitalized for a heart attack. We take brilinta with a baby aspirin. No more than one hundred milligrams. As it affects how well brilinta works. 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President trump going to capitol hill today to meet with gop law makers on mog hving his policy agenda forward. Joining us this morning to talk about the future of policy under this white house, walter isaacson, president and ceo of the aspen institute. Good to see you. Good morning. Good to be back with you. Hows everything . Happens on a day where we get survey results from the business roundtable. According to jamie dimon, the urgency of tax reform cannot be understated. How much how receptive is the hill to that . You know, it would seem you would want to focus an agenda on infrastructure and tax reform. At the moment they have gotten themselves very clogged up, when i say they, the white house, pushing Health Care Reform. I dont think the senate is going to be able to do Health Care Reform before the summer. That clogs everything up. You have two very important things that were key to the trump agenda really improving infrastructure which he sort of made a big deal of yesterday, but then didnt send anything up to the hill. Likewise, tax reform. He says his bill is doing fine but he actually hasnt written a bill or sent it up to the hill. We got a lot of cars kind of backing up on the freeway, feels like. You mentioned health care, infrastructure, tax reform. You think theres a method to this madness or is this a lack of discipline showing through . I think its a lack of discipline. I tried to figure out what is the method here of clogging things up, not sending up a tax reform bill. Not even deciding on some of the basics like a border adjustment tax and sort of allowing the dispute over border adjustment tax within your own administration to play out in public. Maybe you can figure out some method to that, but i dont see the method. We got a couple of ceos left to counsel, bob iger and elon musk. Today the journal oped page is rather critical of the president whand what they would argue are selfdefeating tweets. David axelrod will be a critic but today called him the incredible shrinking president. People should read that wall street journal editorial. We arent talking with the wall street journal editorial page of a place thats been thats some liberal establishment media and its such a sensible editorial. It basically says why do you keep shooting yourself in the foot when you should be keeping your eye on what at least to me, im not president , but would seem to be your two most important priorities which is figure out a tax reform bill and send it up to the hill and figure out infrastructure so you can get the economy growing at 4 , not 2 or 2. 5 . But walt, he Needs Congress to do that. By all indications, the Republican Party is backing it in matter when we are saying about the wall street Journal Editorial Board or what criticism hes getting. As long as Republican Leadership is on board, is it wrong for investors to still hold out hope for some of these legislative items . On board for what . I havent seen that Mitch Mcconnell has either scheduled the Health Care Reform and most republicans, not most but a lot of republican senators keep saying its not going to happen and its dead, including richard burr, very conservative, and likewise, i dont see a move to pass a tax reform bill yet. Maybe you are seeing something im not. But i think if you talk to Mitch Mcconnell and other leaders, especially in the senate, they seem to be scratching their heads and theyre not barreling ahead with Health Care Reform. I guess i just mean they are being awfully quiet when it comes to the scandal du jour. The journal going after some comments on the travel ban and paris climate accord. They havent broken with him on these controversial issues. If i were on the hill i would say why dont we take the focus off of tweeting about travel bans and frankly, take the focus off of the russia fbi comey investigation. I dont quite know why trump keeps tweeting about those things instead of going out and trying to sell either infrastructure, tax reform or affordable care, health care or you know, one of his big agenda items. Yeah, youre right. They have been quite silent about things like the russia investigation or the tweets about travel bans, but that doesnt mean they are moving forward with a tax reform bill, as far as i can tell. Obviously its going to be hard to ignore comey on thursday. We have some of the broadcast networks are going to break in live for coverage. People are making comparisons to the watergate hearings and all of that. What is the smartest path for the white house on thursday . Is it to have infrastructure speeches in the rust belt like they have planned . Yes. Thats exactly what i would be doing. I would be going to the rust belt, i would be talking about everything from the need for high speed rail, highways, air Traffic Control next generation, that sort of thing, because thats the type of thing that has always, if you talk about making america great, whether it was eisenhower in the 1950s with nasa and the interstate Highway Program and the Scientific Research that went into creating the microchip transistor. I would be trying to sell infrastructure. It would be a bad idea and you kind of see signs its starting to happen, for them to be tweeting and yelling and trying to say comey is not believable or something. Comey may not be somebody you think has all the wisdom he should have had in the past but hes always been honest. In fact, hes always been too honest which is whats gotten him in trouble. I think attacking comeys honesty is the worst idea. Sticking to the plan of going out and selling an infrastructure bill would be in my mind, the best plan. Got to come on soon and talk da vinci. You know, leonardo would have had this thing nailed by now. He was a sensible sort and also kind of playful. But he would have liked twitter. I know that. Yes. Available for preorder now on amazon. Im looking at it. Wow. Thank you, carl. Thank you very much, sir. See you soon. Walter isaacson. For the latest episode of binge we sat down with alan alda from m. A. S. H. And louis c. K. He has a new book about communication and we talked about his biggest hit and netwo