Quintanilla joined by sara eisen. Our top story today is going to be apple hitting the alltime highs. The company beat on the top of the bottom lines last night issuing stronger than expected guidance for the september quarter. Strong device shipments are building the best Revenue Growth in seven quarters, jon, with unit Revenue Growth in all categories and surprise ones ipad, i was looking for more than half the ipads life now, it has been in decline so this performance up year over year, at least sparked some hope that that might be shifting. But i want to see a couple more quarters before being confident of that. The two things that seem most significant to me off this call were the low inventory levels, the big sell through they had in this quarter, and the aggressive guide into the start of what we expect to be an iphone launch, given that so many people had expected the highest iphone to be delayed somewhat. What does this mean . Are we going to have more Iphone Models out than we have had in the past perhaps updated models why is tim cook so confident andy, all the buzz about it today and the optimism, i think youre probably going to keep some of that in check, am i right . Depends what you want to hear, i guess. I dont want to put a wet towel on people, but i would say, you know, there was good and bad the expectations were really, really low for the september quarter. And so that is some of what were seeing, just relief that, yes, they are going to ship new iphones. That there is going to be a cycle coming but i thought there was good and bad. You know, john mentioned the inventory reduction. The bad side of that is, you know, apple anticipated a pause in demand in front of the new phone. And it doesnt seem like were getting it, which says that, people still want to buy iphones which is great, but it also says they dont care enough about the new one to wait a few months yes, but explain this evaluation we talk about how ginormous it has gotten, its still trading 18 less than earnings its a big discount to the Overall Technology sector and the Consumer Staples sector. How is that justified given a quarter like this and the outlook apple just provided . Well, i think you have to take a step back and look at the multiyear outlook over the last couple of years we have grown profit not at all, zero, and if you look at, you know, iphones still generating over 65 of the gross profit, that is a as musaturated mark a end. If youre looking forward, i think it is really hard to get growth rates that are anything more than maybe midsingle digit. And so from that perspective when youre comping it to other Technology Companies, even big ones like google, facebook, the companies are growing extremely fast i think it is really hard to argue that apple should be worth anything close to them shawn, when you look at Apple Services business and the fact that i think it was tim cook who pointed out on the call, payments capability has recently accelerated in international markets. And that is a big part of what is drive gt it how important do you think that business is to investors, given i mean, the iphone is pretty much what seems to be driving this story yeah, the services, as you know, the hardware markets are tough. And theres always margins and inventory and a lot of things, but the things that people love about the Services Market is the margins. They are up to 185 million subscriptions, i believe, of people subscribing to apps and just collecting a toll they dont really have any cost to goods on that so i think its quite important. They never really figured out ads. And thats where you see a lot of the growth of acebook and google so i think its important, but there needs to be more obviously, were talking about phone cycles, but theres a longerterm story in augmented reality, which tim cook did address on the Earnings Call last night take a listen to this. We believe ar has broad mainstream capability across education, entertainment, interactive gaming, enterprise and categories we probably havent even thought of. With hundreds of millions of people actively using iphone and ipad today, ios will become the worlds biggest augmented reality platform as soon as ios 11 ships all right so categories we havent even thought of, he says, andy, does that get you above the 12month target of 150 . Well, yes, if i havent thought of it, its not something that is included in my numbers. It has to be something i havent thought of and something i want. Thats the trick with augmented reality. Theres a lot of things you can think of i havent seen any to make me buy a new phone yet. Im not as big into pokemon that a lot of people were and that was a massive thing that drove sales, app sales certainly, but there is something there i believe that there is some change in the Technology Platform that is going to come with this. It will be positive, i just dont know how to quantify it. Shawn, my take is people are perhaps putting too much into augmented reality, too much stock in that too soon could be big down the line, but you have to really develop a developer community. Its not going to be apple itself to turn this into a huge business, it will be thirdparty developers and it will take them time once they get the hardware, once people get the hardware in their hands to figure out how to build a business around it isnt this more than 12 months out, shawn actually, the if the developers and their buzz is any indicator, they are actually quite excited about ar i was a little bit skeptical on my last time on the show, but have checked in with a bunch of it and even the current devices, you think of the ipad, the iphone, they have a camera and they have a screen and the current ios 11 sdk lets you essentially move around it with pretty high degree of precision and see a virtual item sitting there. So the existing hardware is actually quite capable of it ive been looking at some of the leaf drawings to see what on that hardware might make it better but, you know, theres a current base the question, is what is the killer app will the pokemon go type of apps where people can use for education and other things, you know, broadbased use that is kind of a fad. Back to the financials for a moment, i wanted to bring up the cash war chest of 261. 5 billion. How should investors be thinking of that . I have heard everything from grand ambitions to buy tesla to a repatriotation act, what are you telling people you do need to have repatriotation because the vast majority of that is offshore if you want to use it for repurchases, onetime dividends, jacked up dividends on the ongoing basis, big purchases of other companies, it has to come back and they dont seem likely to bring it back unless they get the tax holiday. So if we get that, then maybe we can think about bigger m a i think about it just as a cushion for the valuation. Its always there, worse case scenario, you have to pay a little tax and that helps you out. Finally, andy, you have a sector weight on the stock some viewers ask is andy serious . Youve been i would say net skeptical for a while now, what are your favorites if not this one . Well, i try to be less serious than a lot of people in my position. But im deadly serious about the stocks, though our favorite names are still google and facebook. And it comes back a little bit to what we were talking about earlier. When you look across the landscape, you have to weigh growth versus the valuations were paying i look at apple and think its a multiyear gdp type of grower and the other companies are growing very, very much faster than that. And i think the price that you have to pay for them is much more attractive for the growth you get. Andy hargraves and shawn carol, thank you back to the markets, well get a rapid update on the Economic Growth from Steve Liesman back at headquarters john, good morning. We got the first piece of data for the Third Quarter so well tell you where we are tracking for the Third Quarter. That was the auto sales. Coming in around where economists expected. Its a good number running here at 2. 5 tracking for the Third Quarter. A good way to start the quarter with a range of 2. 7 to 2. 3 the 2. 4 was reported due to construction levels. Moodys analytics call late it for us and estimate it at 2. 7 Morgan Stanley at 2. 7 and bank of america at 2. 3 federal fundamentals including labor market and global growth, she thinks further rate hikes will be needed and supports a gradual path loretta says not to curtail it she does see weakness but thinks it reflects special factors like pharmaceutical prices and telecommunications prices. She says that inflation is not signaling a downward trend shes seeing inflation back to 2 over the next year or so. John williams will speak this afternoon. Back to you guys. At 3 30 thank you very much, Steve Liesman. When we come back, it took 107 trading days to get to down to 22,000 what will be the catalyst for that then amazon is hiring. The candidates are hiring up a live report is coming up and later more on the apples Third Quarter earnings, including tim cooks plan for the mother of all ai projects when squawk alley comes back you always pay your insurance on time. Tap one little bumper, and up go your rates. What good is having insurance if you get punished for using it . News flash nobodys perfect. For drivers with accident forgiveness, Liberty Mutual wont raise your rates due to your first accident. Switch and you could save 782 on home and auto insurance. Call for a free quote today. Liberty stands with you™ Liberty Mutual insurance. For years, centurylink has been promising fast internet to small businesses. But for many businesses, its out of reach. Why promise something you cant deliver . Comcast business is different. We deliver superfast internet with speeds of 250 megabits per second across our entire network, to more companies, in more locations, than centurylink. We do business where you do business. The dow hitting 22,000 for the first time after the record close of the year yesterday. Well bring in Brian Jacobsen as well as bmo Capital Markets chief investment strategist brian belski so brian belski, apple is the leader today without that, the dow joins the s p and nasdaq in negative territory, is apple feeling hopes that the tech rally can continue and is that going to be the leadership position of this market its been rotating all over the place. Thats a great question, sarah. I think that you in a prior segment were talking about how tech has compared to Consumer Staples. If you take a look at what is leading tech and what has been leading to answer your question, tech has been leading because most investors out there that we speak with believe that growth is scarce and Technology Companies are putting up the best growth. But within the tech sector overall, it has really been a consumer stapleish type tech. These types of companies, platforms, machines that deal, that you deal with on your every day life, almost every minute life, whether or not its the facebook machine, the google machine or the apple machine so these consumer stapleish type tech stocks will continue to leave, we believe, and it will be more based on cash you think about the cash that is involved with running the businesses, i have always learned through all my years in business and in wall street, you follow the cash. And even without the repatriotation, you have a stock among the strongest dividend growers in the u. S. And we would continue to own the stock just because of the strong dividend and cash flow that we think will be in place for the next several years. So follow the cash. Brian jacobson, what is your advice in this sort of tepid growing environment where earnings are doing a whole lot better and you are getting divergence between Industry Groups we have seen quite a bit of divergence year to date. And i expect to see that continue in this market. What im really looking forward to brian belskis point about the growth being scarce and perhaps the people are willing to pay for growth improvement stocks under the surface here, we did get the personal expenditure and expense numbers yesterday. And they were a little weak. Praches becau but if we do see the pick up in growth, growth will be a little less scarce. And maybe youll see a rotation or a pivot more towards the value side of the spectrum as far as what might be leading for the balance of the year. So yeah,right now it looks lik growth is scarce, but watch for that change. And when it happens, i think that could favor some more of your valuetype sectors as opposed to the growth sectors. Brian belski, we talk about tech a lot, but i cant help but notice over the past three months, mcdonalds pretty much number four on the list of dow stocks that has helped lead this rally. Walmart has done pretty well also are we going to need to see continued contribution from those types of stocks in order to maybe hit 23k yeah, great point, john but i think its more an issue with respect to mcdonalds constituency within the Consumer Discretionary space, which as you know has been a disaster with respect to the Amazon Effect and really issues from a secular and structural basis of inspector retail and quite frankly, a lot of the media companies, which have become the largest portion of the Consumer Discretionary sector from the market cap perspective have not done all that well this year. So investors are chasing the restaurants, the hotels before that, so mcdonalds clearly from a fundamental basis have done very strong changes. The walmart, costco and the Consumer Staples area havebeen where the Retail Investors have been starting to go again because, quite frankly, this is really about traditional retail being so weak, jon, and walmart and eventually we think costco will be taking a lot more of those investors on with respectto the whole value thing, remember, we have been long term value players early on, and i think the biggest part of the value part is this, when growth is scarce, growth outperforms. But the prior point was made, as more Companies Give you earnings growth, you want to become a Value Investor thats why we think financials, in particular, are going to be leading the market higher from here to answer your question to get us to 23,000 all right on that note, sort of Brian Jacobsen, do you see anything in the future to lend support to the dollar and do we necessarily want that . Yeah, the weaker dollar should be a benefit to u. S. Businesses that are exporting overseas so its for the large caps its interesting how the narrative has changed over the last couple of years, first worries about the strong dollar and worries about a weaker dollar but when you look at where the dollar is today, its a nonissue for a lot of businesses youre not really hearing them mention it too much in the Earnings Calls thats because they only blame it when its strong. They dont blame the weak dollar for helping. At the same time, the dollar was strong, you also had weaker earnings whether or not that was just sort of blaming the dollar or if it was the legitimate remains to be open for debate but i think the weaker dollar could actually, i think, its not a big issue now. I think that it could strengthen from here. A lot of people have already repriced fed expectations that the Inflation Numbers have been pretty weak. As a result, the fed is going to be on hold for a while if we start getting a little bit of a pickup in the inflation, that may change and youll get a repricing of the dollar so i would not be surprised for the balance of the year to see more Dollar Strength as opposed to dollar weakness. It is down, what, 9 or 10 for the year well leave it there Brian Jacobsen and brian belski, thanks very much and coming up, first it was prime day. But now amazon is kind of celebrating a jobs day looking to hire some 50,000 people across the country. 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Carson called Financial Health one of the three essential initiatives for our nations seniors. Call now to get your free information packet. A one reverse mortgage licensed specialist is standing by we have breaking news on qatar and American Airlines. Hey, phil. Qatar airways has decided to abandon the plan to buy up a 10 stake in American Airlines it was just five weeks ago at tend of june that the ceo told d doug parker, the ceo of American Airlines, he wanted to buy 10 of american. And immediately you heard from american and from doug parker who said, we dont like this idea, we dont like this plan. And initially they said that they