After three days of losses, a strong day for stocks after fresh data this morning. Well find out where we go from here. Apple suddenly vulnerable. Bending iphones, Software Update gone awry. Will the stock continue its slide . Another day, another ipo, another one with blackstone. Well have the first trade for travelport after the company priced at the high end of expected range last night. As we bid adieu too jeter, we say hello to Steve Ballmer on microsofts new ceo and clippers. Durable goods fell last month, biggest drop on record and reversing an aircraftdriven surge in july. Strip out transportation, august orders rose 0. 7. Jobless claims rose less than expected last week. Data coming one day after the stock rally that ended three days of losses. We are getting a little chop as cramer might say in what is historically not a great week for the markets. When you think about some of the leading indicators, russell 2000, high yield etfs, all those are seeing outflows. Those have been broader trend setters for the overall market. When you think about taking money out of some of those indexes, thats about taking risk off the table. Whether you believe the fed is going to become more dovish because of a stronger dollar as Charles Evans said yesterday. Thats to be determined. When people look at those two indexes, ill be interested in art cashins take on what he thinks is behind this. Its all about the fed. If you look at the strong gains last week, its about the fed being more dovish. 1. 7 gain in the dow. Yesterday you have evens saying theyll be exceptionally patient on hiking rates. Very interesting for joe lavorgna at deutsche bank. It will be a less dovish fed when you come to the close calls when you are going to raise rates. He is suggesting this may be why treasuries are well bid. People understand that the rate rises from the fed are potentially getting pushed further away. Less hawkish. That move on the dollar is getting very important. Can you afford to be hawkish when the ecb is going the other way . We are on the verge of breaking out on the dollar index from a nineyear trading range. You can easily get 4 upside here. If you are a central banker, that is obviously a concern. When you think about the euro falling to a near twoyear low, we got manufacturing data out this morning. Simon, you know this better than anyone. Was weaker than expected. Of course, you are getting some comments from mario draghi that he does retain a whole host of options when it comes to monetary policy. Striking a dovish tone about what he plans to do with the euro. He is twice this week hinted at sovereign qe. They may not do it and it may not come, but its moving the euro. Ethan harris is cohead of Global Economics research. Thank you. Ethan, let me kick off with you. What do you think of the markets at the moment . Where do you think we are going . I think we are in a good spot here. The feds in no hurry to hike Interest Rates. The data looked quite good. Todays numbers, extracting from the crazy swings in aircraft orders looked nice and solid. This is a good macroback drop for the stock market. Kevin, what is your view . What do you think of this dollar . If the dollar continues to rise, surely at some point that has to impact this economy or impact the earnings of those multinational, those real Big Companies down here. Exactly. I think thats exactly right. I do think that the market is going to move higher from here eventually. We have come off a long way the last three years or so since ge began. The markets grown as better than 20 on an annualized basis. This cant go on forever. Even though the economy is doing well and earnings are flush and theres not a lot of places to go with cash, valuations do matter. I think we are at a point where maybe we have to consolidate for a while, but ultimately, i am happy to see data getting better. That means higher stock prices down the road. Do you believe there are so many Silver Linings in some of this data . Durable goods order helped by a strong transport order in july. Thats going to take a breather. Even some this morning say plans for new business spending look set to continue rising. Then there is negative housing data, too. What do you make of all this data and the fact the headline number does look bad, but underneath, there seems to be something that people are saying, look, im still bullish about this . As far as todays numbers concerned, the 18 number, throw it out. Its all distorted. Look at the broadest set of data possible. We see mostly the data is moving in a direction that signals growth. Thats an unqualified positive for the u. S. Economy. We are growing. Thats nice to see. We contracted in the first quarter. Its been a big turnaround. There is nothing but positive stuff there. All im saying is when you look at the value of the equity market at 23 trillion or 24 trillion on a 17 trillion economy, begin low Interest Rates and given very high profit margins, its still rich. I think the market may have to tread water for a while. Ethan, youre the economist here. Sorry to bring you back to this dollar story, but everybody else around the world is talking about it because its so important to them. If the dollar is rising this economy may be a victim of its own relative success. Can we just stick with that as the story or does it impact this market . The dollar has moved a bit by historic standards. This is not a big move. It feels big if you are in the Foreign Exchange market and trading on a daytoday basis. For the macroeconomy, it may slice 1 10 off growth going forward. Its not that big a deal. Again, we shouldnt be surprised there are some numbers that dont look as good as others. We are not talking about a ripping economy. We are moving from 2 growth to 3 growth. Not all the data is going to look better. The gdp statistics, which sum the whole thing up, Third Quarter growth is now looking line 3. 6 . We are in a pretty good spot. From an institutional standpoint for those big investors, what this dollar does mean, the fact its rising, is that treasuries are a good bet. U. S. Assets in general are a good bet if youre coming from anywhere else around the world. Does that explain to you why treasury yields remain so low . Will it keep treasury yields low . I mean, you have to credit Global Factors for low treasury yields. We have had a lot of negative news in europe. We had negative news in japan and china, brazil. Theres a lot of soft stuff out there globally. Bond yields in germany at 1 . Japan at 0. 5 . The u. S. Bond yields look pretty good by comparison. I do think those Global Factors act as a limit on how fast the bond market can sell off in the u. S. Before we let you go, what part of the market should people be in now . Health care did really well yesterday at 1. 6 . Consumer staples up 1. 2 . Relatively broad based. What do you like at the moment as a strategist . We like cash flush companies. We like cash flush sectors, not a lot of leverage. Tech and health care and Consumer Staples make sense to that. I would just go back to your dollar point. Youve got to understand whats happening in terms of the dollar, youve got falling Inflation Expectations which the fed is watching carefully. To the extent Inflation Expectations are falling, the real purchasing power of the dollar is swelling, for lack of a better word. That is what the fed is going to be keying in on. The fed will have to address this in the not too distant future, i think. Good to see you guys. Thanks for the analysis. Kevin caron and ethan harris. Judge. Apple confronting fallout with the new ios 8 operating system. Pulling update after users complained they had calls blocked and couldnt unlock their phones with their fingerprint using that touch i. D. Technology. Apple released a workaround to fix the problems. The company says, we apologize for the great inconvenience experienced by users, and are working around the clock to prepare ios. 8. 0. 2 with a fix for the issue and will release it as soon as it is ready in the next few days. Quite a turn of events after the hype over that launch. People are making the comparison already to apple maps and the debacle when they replaced google maps as the default. I dont know how serious yet this is. May depend how quickly they can release the update. They did get figures how many people downloaded it. You would think early days, only the absolute obsessed would have downloaded it by now. That didnt stop it from being on nightly news last night and on the front of usa today today. My favorite tweet, somewhere scott forestall is having a good laugh, the engineer who was ousted. I like the way they linked it back to tim cook when he said it was the greatest launch. I think a lot of peoples sympathy would be on the side the fact product cycles are short. There is huge pressure to bring all of this to market. Remember when jobs was in charge . Its not unusual for things to go wrong. If you are going to set expectations that high and have youtube play at your launch, you are going to be subject to the smallest amount of criticism. The fact in this glitch touch i. D. Stopped working, that is the technology that is supposed to be enabling apple pay. If you do have technology that is so integral to a brandnew platform like apple pay that does have a glitch, that is going to get a lot of haters talking about, well, is apple pay going to be changing this business or are there going to be huge risks out there . Haters dont buy the products. The people on twitter are not necessarily the bulk of people who buy the products. No. The other interesting story is all the reviews of the blackberry passport out today. Doesnt get nearly the attention. There are interesting descriptions in the papers today. Steve ballmer has gone from running microsoft to becoming its largest individual shareholder. What does he think about the job cella is doing . How do you beat the number one seed . You just have to win 70 of your points at net. And keep unforced errors under 10 . On the ibm cloud, the us open analyzes 41 million data points from 8 years of competition to uncover key insights. Data can help show you how to win, no matter what business youre in. Today theres a new way to work. And its made with ibm. Today could be the day. The day we give you hope. Relief. A cure. Today, we believe every life deserves worldclass care. As one of the top four hospitals in the nation, over 100,000 people from around the world come to Cleveland Clinic for care each year. And were ready for you with a Second Opinion or a sameday appointment today today today and everyday. Call today, for an appointment today. It has been seven months since Steve Ballmer stepped down as microsofts ceo, but he is the biggest individual shareholder. What does he think about the job his successor has done so far . Josh lipton sat down with ballmer and joins with us more. Since taking the reins from ballmer in february, he outlined a clear game plan for microsoft focusing on mobile technology and cloud services. I asked ballmer if he agreed with that strategy. Im excised and enthused about his job. Hes made a couple of Big Decisions which i think are important. There is work we had to do to rationalize the nokia being a sis. He took steps. He has come out strong in terms of the cloud and mobile, which i think is fantastic. I know hes built an incredible followership in the leadership team. He is off to a fantastic start. Truth is, you cant tell how anybody is doing in the tech business for at least five, ten years. The key decisions getting made, you wont see those in product two years, three years. The jury, as it is on me, you take any one period of time, i probably looked better or worse than any other one period of time. Its always about the body of work. Ballmer served 13 years as microsofts ceo. Later, youll hear him grade his own performance in that role. Back to you guys. Fascinating, i mean, every word he says is new insight. We havent heard much since the purchase of the clippers. I assume while get to that late they are morning . Absolutely. A lot of talk. It was wideranging discussion. We talked nba, clippers and the future of microsoft. All of that coming up later. To double back on what he is saying, you dont know how a tech ceo is doing for five or ten years. Does that mean the next five to ten years of microsoft will all be about his tenure . I guess his point when i was talking was that he agreed with nadellas strategy, but they cant be certain if that is the right one because it will take a while for these new strategies, products and services to get in the pipeline. It will take time before you know whether you are on the right course. In terms of ballmers legacy, he says its really about the body of work. You could pick and choose any single period of time under his tenure and make a different decision about how he actually did, but what do you think the body of work does say about him . This stock is down 22 under that time. You know, i think that if you talk to analysts who cover this company arc lot will say its a mixed legacy. You look at roecevenue. The top line did jump to 82 billion. Critics will say he missed big trek sends, social, mobile cloud. I asked him that. I think he gave an honest response. He said in 20 20 hindsight, he would have done things differently, particularly with mobile. The jury seems to be mixed. Growth on the topline. There are shareholders who were disappointed. We are looking forward to more of that interview later today. Josh, thanks for bringing that to us. When we come back, whats first and foremost on art cashins radar today. Wall street veterans will tell us as we count down to the opening bell. The child prodigy who said no to apple. Stick around to see what we are talking about. Futures just about ten minutes before the open indicating red across the major averages. More squawk on the street straight ahead. Guys youre not gonna believe this watch this. Sam always gives you the good news in person, bad news in email. Good news fedex has flat rate shipping. Its called fedex one rate. And its affordable. Sounds great. [ cell phone typing ] [ typing continues ] [ whoosh ] [ cell phones buzz, chirp ] and we have to work the weekend. Great. More good news its friday woo [ male announcer ] ship a pak via Fedex Express saver® for as low as 7. 50. [ male announcer ] ship a pak via Fedex Express saver® in a we believe outshining the competition tomorrow quires challenging your Business Inside and out today. At cognizant, we help forwardlooking Companies Run better and run different to give your customers every reason to keep looking for you. So if youre ready to see opportunities and see them through, we say lets get to work. Because the future belongs to those who challenge the present. Few minutes before the bell. Lets bring in art cashin, director of floor operations with ubs. Good morning. Happy to be here. You used the word impressive to describe the bulls rally into the close last night what do they have to do to make their point today . They really should try to make it two days in a row. Yesterday started out pretty much as an oversold reflex rally. It rolled over. They managed to hold the s p right around the 50day moving average. Then followed what looked to be a large dollop of Short Covering. You get a vertical rally that is a sign there is Short Covering involved. When they held at the 50day moving average, the dippers and short covers came back in. If they roll over here again, that is going to raise questions about the september october syndrome. Do you think that 50day is solid footing . Its important. The next test, if there is another test, will be critical. I think the first test will be somewhere around the 1987, 1989 area if they go through that, it will lock like yesterday may have been a reflex bounce. Traders are watching Technical Levels in the hyg nearing the august 1st intraday and closing lows. Its been pretty spectacular, the demise of that etf as theres been so much less faith that the junk bond rally will continue. Do you think we should take any sort of sign of a trend from that . Thats led the market in a lot of ways. I think do you want to watch that. It gives you some idea of how nervous people can be. I would watch that in parallel with the russell 2000. If those two continue to retreat or weaken, then we probably have more work to do on the down side. Yesterday was obviously a good retracement. I think its half the losses from the previous two days. The volume of negative sentiment on those two days moving down the ratio of decliners to gainers was far outpaced what we had yesterday. I didnt explain that very well. The breadth of the market was a concern monday, tuesday. We didnt reverse that sentiment yesterday, some would argue. No. Thats why i say probably was a large dollop of Short Covering so the money was narrowed down rather than spread out through the market to the small handful of stocks favorites among the shorts. We knew alibaba was coming in the diary. People said it would be a big test for momentum of the market overall do. You think the jury is still out whether that was a major turning point . I guess from what you are saying, it is. I think so, yes. We want to see how we finish this week. As carl noted earlier, the week after the expiration in september has a historically negative bias to it if we roll over the stock moving down again, that will raise questions whether we are having a fully corrective move that may go into the month of october. Traders will carefully watch what this week looks like at the end. How is it possible the markets are still not digesting in i news on the geopolitical front . We got the most serious news this week we have yet, and still it doesnt seem to be sinking in. No. I think they dont see it as an immediate threat. Im a little concerned with the isis move on the kurdish village right near the border. If they take that over, despite the air strikes or whatever, i think the geopolitical risk profile will go up substantially. Art, thanks a lot. See you soon. Art cashin, ubs. Opening bell a few minutes away. Dont go away. Know that chasing performance can mean lower returns and fewer choices in retirement. Know that proper allocation could help increase returns so you can enjoy t