Future just unchanged. We begin that Balance Sheet roll off. Dollar had its best two day game claims come in lower than expect philly beats the ten year yield 226. More record highs. Dow looking to make it ten in a plus google parent buying google in hardware apples shares at a low new products go on sale tomorr a ten day win streak after duringwednesdays session the they hint they could hike rates myster federal funds remain we cant explain it we might that w big part of it. Also it reflects th lowered kind o doesnt disturb the big much the divergence between the reacti in the ten were note as far were concerned impact 2. 289 is what the yield hit. If you back that out since of at a ten month low. Then we shot up by that much so quickl so the mood over the past few in terms of the treasury market. A lot of move on the ten and two. The curve flattening what is the financial trade . Thats a question two year note is really where outloo is. The overall stock marke tends we get a lot flatter its a this level, 80 basis points its okay financ trade has been you ral if we back off what happen to say what you want about the financ yes the balance whole host of things, the ten pressu well see if the fed changes month. Some suggested if theres commit yester the grand scheme 10 billion net nothin it is in the system versus thats context for this move as well. For more on the markets lets robert did you make of the swings we saw yesterday in fixed income a little bit of decemb when y back up to 40,000, what were really seeing is a much thing. The bond market is happy with that the curve is flattening. The back end is sanguine i think different from past this fed is very cautious. Not just the fed but the ecb, is this good enough for run . We see finally, you know, equiti intere rates as long as its you mentioned banks how they the weaken cigarette what we with a little bit of lag that boost profits there will be speed bumps along remove some of the unconv policy. But theres no reason to see why the trend shouldnt remain higher robert, curious you say the long end has from a bone managers perspe should we hope for the long end are rates roughly where they i think they are. But what you can see is nobody perspe opening up the fed. So, they issued their dot plot there a big space at the last you a couple of dots filling in they a realizing were in a differ world in demographic, intere in germany are at 40 basis points, rates in japan in japan last night yes ten year Government Bond yields you kn this whole trump trad from year, some stimulus 265 may just be too high this fed cycle will run out of cycles people staying engaged in the a lot of market watchers are questi in two parts one is do you believe that qe way . Whats answer. The answer to part one is i woul the answer to part weve done great work on this. For calendar year 2018 the reinve drown out the so next year you really wont might be a 2019 story that qt prices again, youre making a great the unwind of the Balance Sheet are your saying your work points to that its not effective no, its tightening you have to consider it in the you have to consider what the keep it in the context of what centra doing i guess, robert, the question is there any real daytoday was 900 billion before the level. We think about it too much everything matters but the so a lot of the benefit that they w buying bonds, inject liquidity, being low now they are being very measured and withdrawing. They a going make the markets exposu bigger questions will be asked two, three years when the these things do matter and at in govern will be crowding in taking of money out of the testim well what happen with on the dollar, would you dollar yes if you look at the fed reiterate that hike which the market are not expecting but starting the dollar rally samer, what sectors do we we think if you look at where the earnings benefits are techno health care, that will be the group that gets the majority of the gains going what happen to bonds overal i would say on the dollar, too inned in diving into the dollar robert, sameer, thanks so apprec it. When we come back this on smartphones cou apple. A lot of individual markets to tesla, facebook, twitter and more sawonhetr ctiesquk t sonnu in a moment. We took legendary and made it liberating. We took safe and made it daring. We took intelligent, and made it utterly irresistible. We took the most advanced eclass ever and made the most exciting eclass ever. The 2018 eclass coupe and sedan. Lease the e300 sedan for 589 a month at your local mercedesbenz dealer. Mercedesbenz. The best or nothing. Smartp striking a 1. 1 rep thats right. Bettin big on smartphones for the company has picked up htcs person in a deal worth 1. 1 billio the deal comes with a nonex agreement for google ceo said its early busine the current cast of products google will have to shake off two years later it sold that off to lenovo for less than 3 billio this time could be different the de is smaller. Google isnt picking up htc already makes the pixel. Google will gain tighter control over phone hardware and softwa increa sales of its own task the picks simple very small. About half a Million Units its first quarter. Anothe question is what happen to htc now, once one of the world top smartphone makers, said it will remain in the releas a new flagship phone fo 2018 deidre had mentioned what but its been making a bigger this could be a bigger vision if Something Like this is whethe its just to solve a dont know you make it sound like a moonsh 1 market share. Obviously its not something but it has to solve some sort of whethe its data collection. Being on the ground floor for softwa theres some thinking by for 1. 1 billion thats a change in their couch we do want to keep you on maria. Destrohomes. Knocke down power. Litera across puerto rico. We go to san juan important the latest bringi military helicopter today to help with the rescues were in san juan which is a imagin what is it like in some that we visited, towns we many of the roads have become rivers the freeways leading ou that way are impassable because there and we know many homes are destro roofs been lifted off of them peeled off like tin cans window shattered at this point the big question how ma people need rescuing. How ma people need help. Carl tammy well come back to you when we come back more major data breach. Plus a hacking story that now an unbelievable story. Future in a tight range more squawk on the street ahead. Let your data live wherever it needs to, but see it all in one view. The ibm cloud. The cloud for enterprise. Yours. The cloud for enterprise. The strikingly designed lexus nx turbo and hybrid. Lease the 2017 nx turbo for 299 a month for 36 months. Experience amazing at your lexus dealer. honking beeping were on to you, diabetes. Times up, insufficient prenatal care. And administrative paperwork, your days of drowning people are numbered. Same goes for you, budget overruns. And rising costs, wipe that smile off your face. Were coming for you too. At optum, were partnering across the Health System to tackle its biggest challenges. At optum, were partnering across the Health System [car tires screech] [bell rings] integrate any part of your business, and have your systems work as one. The ibm cloud. The cloud for enterprise. Yours. The information was discovered incide the Government Agency reports its Electronic Systems they didnt ive the date of the intrus and what sort of data the troubling thing is the on march 8th is when the hatch a two day period in which they sure. Obviou a lot of time the public gets it thats the window perhaps that the hackers inform wells fargo, tim sloan will octobe financ information, your no safe place for any of this data it comes to digitally pentrabl keep your eye on frey market. We might expect lighter Market Experience the lexus rx with advance safety. Standard. Lease the 2017 rx 350 for 399 a month for 36 months. Experience amazing at your lexus dealer. Openin bell in just about four lets bring in our director of art, get your reflexes on the they are getting close to perfec the fed doesnt hike unless were getting awfully close to that i think what ill keep an eye on for the next couple of weeks is the dollar starts to strengthen multi what will you know me for a year i said, i still have suspicions for they a going three hikes next year we got to remember that well this youre going to have fisher out. Severa vacancies that will be replac so its nice to know what the may not be around to make those decisi does this mean youre worried about the rally. The dow did have nine straight sessio fresh record highs here and then 42 record highs for so, im going to look at it with think. I want to see what they are i think what they are driving on now is hopes that there is still some possibility for a trump agenda that we may see a tax cut. We may see some other things along. You got to balance out what happened in p power for weeksor months thats a huge economic drag. Well have to wait and balance i dont think they are all fully priced to the market quite yet. Wha interesting yesterday effect almost as a way of building a inflat puzzling inflation happen that w takeaway. I think they would like to but we havent really started so theres an awful lot of thats why i think initially confer you saw the markets the yield on the ten year go up all of that is beginning to people are starting to rethink, they made it took. This trickle of 10 going. I know its a trickle but availa im worried about the mortgage they w a formidable player i goes and what does that do for mike, you made the point a who were saying qt would be whenqe ended markets up by 25 now central ban have stepped seems like its not the one i agree i think you have to watch very theres the opening bell. And the s p at the bottom of the travel company in latin and zai based in china one last thought on this roll off. To the degree you see disruption over the next few months in what market or asset class would it i think probably in bonds and rates and mortgage yields. Even before stocks stocks will keep living on can vote ornot well see yields go much yester i think im going to watch the ten year if that moves above 2. 3, then were right up there. Right up there the other thing to watch is so if the credit markets have met, you know reached their i dont think youll see one it will come in unison, have to the yen is beginning to weaken the bank of japan isnt quick to move a of pieces in this puzzle art cashin. Openin bell just happened of amd. Tesla work with amd to develop cars which is obviously not only good for amd but bad for nvidia. Followed intels deal seemed like a little bit me too you wa to lock up your i wonder, i have to look at if youre talking about the Bigger Picture for tesla along the lines of apple making is tesla trying to keep their accord to the reports build as far the move for nvidia they a the Market Leader in genera they h tie ups with google a well as toyota so they are still okay in terms transa can you certainly make the how mu of this huge run was you dont know exactly nvidia yes apple continues to struggle here now below 155. As we said earlier in the show basica crossing th levels suppor issues with the watch and say apple remains a big one. Its interesting. Seemed to escape that kind of now its acting like its just this window between and its a noisy kind of fundamental situat for the next few months preor that helped weigh in the bigger question apple had what h to september . There could be a 5 to 10 pull were down a three quarter divergence is between apple keep your eyeon Facebook Mark zuckerburg is on the cover fake news. The russia investigation now this ad category that raf racist views Carl Sandberg wrote a letter these problems which they then to prior i found it interesting the if you created the technology contro thats on you not on us so you have to bare the cost i think the best Case Scenario leadership in fighting. Were leading a lot of wonderful afghan troops who are fighting we wer just discussing that. And progress is being made so its an honor to have you and all of your representatives with us thank much thank you, mr. President. Mr. President , first of all, paid the ultimate sacrifice. That sacrifice can now result in a stable afghanistan i want to thank you on behalf of story. You asked very fundamental questi youve made this decision on the basis of courage and determ we salute your courage since decision, theres been an immense change on the ground. Ive been to six of our seven and officers who worked soldier its a difference of day and night. The cloud of uncertainty has what we want to assure the you made that krystcys crystal the additional troops that have role victor political and military instru of american power, milita diplomatic and a coherent plan of action to of crisis and to make it a prospe and because of this, we equally, mr. President , understand and we do not ask for a blank check. We are determined to do what is ours fight corruption ensure that theres no waste of resour full accountability for the result and significant momentum so that the American People can know grasp will now be achieved thank much thank you vmuch, mr. Presid afghan doing the fighti fighti ive also heard not only this rules of engagement are now hearin from everybody, differ place but the spirit is tremendous people dont realize you had 20 this is where the world trade this is what happened. You ha groups. More than any place else its really a its a hornets nest that standpoint were hitting them very, very and we really have no choice but to do it so, honored to have you. And im very, very happy with and i think were going to be organi which for so were doing our job i think were doing it very effect and well see what happen but think going to be good. Thank you all very much. Thank you. That is the president saying the u. S. Military is doing more afghan reuter is saying hell make an but the white house adding that north denuclearize in he has several meetings once Genera Assembly continues. As for the dow we hit another leadin goldma j. P. And travellers are the top performers there was a quick pop in all they settled down by the close withou much help from treasury yields fargo is up by half of we learned that the ceo tim of the and janet yelle confer she wo not comment about busy morning on the floor. Lets get to bob pisani. Happy thursday. Banks up despite the fact that look a sector. Kind of strange opening. Almost everything was down gold down. Energy is not doing anything oil over 50. Semico in banks on the upside. Volati this is thi a problem i dont tuned concerns about it. I dont see a worry. I called my old friend who had hes getting these calls and i tell them to stop whining. There no law that says the hes got a very good point the market is very dynamic under the surface if you look past the s p 500. So he called it very well. He called 2,500 on the s p in hes got a few things to crow about. Leader has been terrific weve seen rotation. Biotec stocks and energy stock have been coming back. Semico have moved sidewa retail has been doing better recent we talked about the commodity rally, stocks on the upside banks which have been laggards the s p in the last month. A lot of things are happening the problem is so many people off the action of whats lets call this a Dynamic Market no signs of deterioration. Check out my trader talk for tradertalk. Cnbc. Co oasis has a big yield. 7. 5 people buy these mlps for the if yields are going up for other instru that puts pressure not very successful with mlps. Antero is down sec hack, guys were just talking sec says their edgar filing edgar houses the filings on corpora corpor disclosures if a company says i wont make to know that on a thursday i think so back in 2014 the sec issued a they told all of wall street get your act together, update your system monitor whats going on, be vigilante on cyber if you got hacked. Irony here is the company in hacked hell hear more about this and right the dow down eight points guys, back to yo no one is immune. Lets head to the bond report. Hi, rick good morning. You know its fascinating. If look up at the boards yester both in the index. But the treasury givebacks are especi if youre looking at lets look at some two day charts look at just the move pretty on the two day chart they moved tens moved about six 30s yeah you need a magnifying glass. Hardly moved at all. Five versus 30s. Everyb likes to pay attentio to tens versus twos. Its flat but didnt make new flats. Look at a ten year chart of 30s level. This is virtually the tightest realiz the long end seems kind on thats an indicator if youre if we switch gears lets go overse bunds had a response their markets gapped a bit we didnt quite crack the level. On the dollar yen many are econom like japan and things were slowing down on now the dollar did move. Dollar nice move but the how mu things moved. Consid this. Dollar yesterday closed around 92. 5 its down a quarter of a cent. The last time it settled that the last time it closed above 2. 25 was the 15th of august. That sums it up. Intere rates are definitely firmin but the dollar index and then it firms it seems to give back and pay quite close attention to carl, all yours. Nice breakdown thank you for that rick santelli. Oil is off lets look at the commodity desk were seeing that 50 mark as intere because theres dollar low when you meanti vince yesterday more color that it was balanced by the draw on gasoli total Petroleum Stocks saw a petrol demand rose thats a good sign heading in to typica sluggish season posts spike still u. S. Production over 9. 5 thats a little concerning just shieft peak of 6. 9 million big slide. Takeaw here things are they could offset the rebalance again. Coming up the bank stocks august well get a take on what an squawk on the str will be i count on my dell Small Business advisor for tech advice. 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Thats a great idea, but why dont you just go to thinkorswims chat rooms where you can share strategies, ideas, even actual trades with market professionals and thousands of other traders . I know. Your brain told my brain before you told my face. Mmm, blueberry . Tap into the knowledge of other traders on thinkorswim. Only at Td Ameritrade. This a recording surfaced acincr ckathy griffi and her boyfri hey randy go [ bleep ] yourse seriou you call on my grandkids at 9 00 now youre calling the cops . [bleep you and [ bleep ] kathy, youre metzge kids. Litera a neighbor to neighbo disput that will cost him a interesting in the boards bad behavior, bad judgment. When we come back the sec lha an update on that dow is down 27 points. When you look at the mercedesbenz glc. With its hightech cameras and radar, contemporary cockpit, three hundred and sixty Degree Network of driverassist technologies, and sporty performance. Whats most impressive about the glc . All depends on your point of view. Lease the glc300 for 479 a month at your local mercedesbenz dealer. Mercedesbenz. The best or nothing. Rick s here live on the cme floor. Breakinews our au read leading economic indica expecting up. 3 got more than expected up. 4. High watermark for the year is severa weakes is april. 2. This in. I know if it gives you a index ticks. Pay close attention and keep you inform carl, back to yo good thursday morning welcom to squawk on the street im Carl Quintanilla with market started out with some dow down 28 points road map this morning fed unveiling its plan to sling reacti the street is next another day another cyber attack sec announced it was hacked. Apple stock slumping. The company conceding its new what it means for investors. Off its 4. 5 trillion balance unchan settin off a pop in the bond yield. Bank stocks moving higher on the announ with financials were joined by the ceo and tom, to see you. Good morning. If you talk about the case for fed is lifting interest rates, deregu some level is more dividends and share of your purcha group hasnt been an outper wha immediately up to march 1st. Since they traded off mainly some of these developments the as wide as investors thought growth slower. Regula reform is still those are some of the factors. You sound like investors banks. I look directionally. The economy is getting better. Regula reform and recali is coming and the economy and forward for we have a 13 next it might be ten or if it was eight i until think that positive things are happen go the other way and be negati the only thing i always worry if you Start Talking about reasse earnings estimates. What i can tell you now credit while you hear bumps and bruises along nothing material to talk years. Bank are trading below happen we think its an opportunity if those things dont happen, is the environment still such banks. Like the universal banks or earnings estimates are econom we have not put in Regulatory Reform in or tax rein the form if those things happen its a yet the stocks trade cheaper we think thats a good bargain plus you got a significant repurc to come we think its a good bargain when you say the stocks trade cheape than they typically do, if i look at jpmorgan, holding jpmorgan is not our favorite i can talk about the one that is with r to jpmorgan is we so we do think that theres an be you getting any populist pressu shes there talking but is its an interesting question indust to be an unsound positi the question is the group that genera still been in play even barney frank thinks that has called for that review the question is whats the right amount of regulation in many cases the american banks are regulated much more strictly than the european banks. And that the interpretation has conser the Banking Companies will do better if you get some of this recali and i personally on that point, the nominations i think its been slower than in prior administrations. So the reality is we havent bluepr Systemic Risk from european banks . The amount of capital thats extrao the 30 or so globa civili are i a safe position. Europe is rebounding there some good pro growth my view the direction is positi just been too slow that will change invest should be patient bank merger will be part of they are. Sointerstate banking came in happen since what chapter are we in the chapter were in right now champi the big banks have been out of the biggest because they cant bigger banks will return slowly. If remove the 50 billion everyb plan youll see mor region consolidation in the future why do you thin investors financ were seeing it again in todays sessio yesterday when it speck. It incredible. If you look at the performance the 10 year. It has to do with net interest when its flat you get less when its wide you get more its not the only story in town. I think its going to ge better the question is how fast is that right is net interest its import is so important to banks tha banksdestoev sold when the ten theres more to it. Im a finance geek the dcf model matters the most story. Trading, when we start seeing quarte numbers, i mean would quarte i read jamie dimon. Im not sure he was serious yeah. I think the market should expect this is not going to be the i dont think necessarily this its not youre an investor thats not this quarter wont be trading loan growth is slower than folks though look at bank of america which is a stock were recommending things are getting they are improv performance intern reasons to ow these stocks all right calm markets is something weve thank much good morning, everybody we are continuing to follow the storm is regaining strength we go to san juan for the latest rep can tell you now busine lets take a look at the the roof was ripped off and its just a twisted mangled mess carl, were in old san juan this is a very populated area. Once you get to some of the more rural areas thats where youll in fact, rescuers have not been at this point we know roads have turned to rivers highwa are flooded trees are down power lines. So its making it impossible to the big question is how many need to be rescued carl some incredible pictures. We expect to see a lot more in all state releasing its irma. Just how big were the losses all state reporting that just for the month of august 593 million net of reinsurance recovery hurric accounted for estima pretax net loss of 553million more than half of that, 55 auto related since Hurricane Irma struck in this is just harvey. All state joins a growing list on tuesday progressive said it largel due to harvey with earlie this month travellers other reporting numbers or hci group, and expect more to follow analys say while these losses adequa could make the thats a reason these stocks are tradin higher today. Albeit very modestly despite well leave it atthis. Hurric season is not over yet. Anothe and a half and tw months the risk is we can back t when we come back cyber more details emerging on that the sec says it was also hit well speak with a former fbi be specia agent in charge of cybe next squawk on the str be dont go away. Your dream home. Its perfect. Oh, was this built on an ancient Burial Ground . Okay. Then well have her cleanse you house of evil spirits. Well do anything, spiritual chatter seriously anything to help you get your home. Ally. Do it right. Not rebalancing your portfolio. Focused on what you love, not how your money will last through retirement. We make it easier to plan for retirement with day one target date funds from prudential. Look forward to your 401k plan. Eamon joins us with detail rep the official press 8 00 p. M. Last night detailing heres what the sec said about intrus basis for illicit gain through tradin the vulnerability here they say system thats the system that Companies Use to reveal their new it was the test filing component of that they say was the exploi there a lot that the sec last night a lot of Unanswered Questions happen insider is of any illegal trading and they know about who did it they say there was an internal why. How mu money, how much of all this. Guys we talked to Cyber Security expert they do tell you this inside trading has been prosec when you marry those two unbelievabl dont go anywhere. In other hacking news, compan Computer Network for securi team uncovered that joinin us is special fbi agent le jobs good to have you back. On the sec edgar side whats what this does to financial exploi there a lot of informatio the sec has provided as to thats my first question what i need to know in order sec was exploited. Affect any investigative phase they but also the cyber fingerprint if this is an insider case one of the companies that has should be too difficult. The challenge will be if this is a foreign criminal group that leo, whats the worse case scenar if these hackers maybe they so the sec has said in their to operations. Its very clear at least from but the real question for the and preserving that somarket confid so that our invest retail and otherwise this type of activity undermines that eamon javers, i can questi defens is the information shared. They all have different protec rep you have a lot of regula of guidance to companies about breach theyv encouraged them to possib intere in this hack the a big profit if youre a cyber crimin weve seen entities get into thats something that the sec leo, on the equifax side it for that delay and disclosure. Why . We dont know exactly what they may have discovered there data was lost and whether or not it was important data. So we have to have a better one of the risks a Company Faces after a breach is disclosing inaccu information that leads to more questions and that leads to more oversight, so equifax had to have time to on their systems and in complex from a consumer standpoint i immedi it sound like youre almost would faced a lot of that has gotten breached right im not sure there a balancing between victim at equifax i can tell you from past xtera there are steps to be what you dont want to do is overst or understate i dont know if they took the my poi is it does take some time you just cant go out and say follow leo, eamon javers, thank you. Take to you the president. Getting better and better on i hear very good things. Ukrain coming along pretty well pretty well. And at the borders maybe youll thank you. Thank you for being here thank you very much indeed, great honor for me to be here in im really happy to hear the demons after our last meetin but first of all i want to respect the great sympathy people because of the sequences and i really think that our econom operation i just mentioned one single figure the turnover between the united and is, again, the symbol and this is really delivered thats right. Thats a story thats pretty untold but i think youll see it more and more. Compan are going very ukrain they tremendous potential there. Okay take good care of them i do want to report that with those people are working hard and texas is really coming out harvey really really well florid very similar. Great governor rick scott spoke with him florid was they were hit hard but they are doing very, very well ahead of schedule. The power is back on almost for the most part outside of the keys where you have a florid doing really well texas, florida we give it an aplus puerto was absolutely oblite puerto hit with they got hit by a category 5 puerto in very, very their electrical grid is destro it wasnt in good shape to start off with but their electrical were starting the process now andrico. Puerto is a different in many ways but it is in fact all you levele its incredible the the power of that wind. Was a very unique not for piece of land like that. So puerto rico will start the proces we havbosset in the other room. Well start it with great gusto. But its in very, very perilous shape. Very what happened to puerto rico thats an update on the three primar Virgin Islands are i dont do is take a look at a picture they a flattened areas around there have been flatte so these were storms they verysad, actually to see it. Well start the process. As weve proven we have fema has been beyond who place too. Louisi took a little bit of hit and they recovered really well theyv done a fantastic job in louisi alabam took a hit but they recove alabam has been fantastic. So many people went to alabama georgi handle it. So, we are going to start the well have further updates on it but it was one of the most seen thank you all very much. Will you visit puerto rico . Yes, i will we have cooperation with the sector very m thank you very much all right. That is the president commenting on the devastation out of obviou puerto rico recovery the president did declare some rut serious continuing to quote well for that all right and when we come back apple produc get ready to hit the shelve whats worrying investors next squawk on the str will be im having breakfast in uganda. Uganda be kidding me, elton its a. Its a joke. James, were going to look for gorillas hang on, what . Thats a real silverback gorilla. Look at it no, dont look at it. Shhhhh stay. Okay. Im freaking out sapphire reserve, from chase. Make more of whats yours. Keep your insights from prying eyes, so they wont be used by anyone but you. The ibm cloud. The cloud for enterprise. Yours. The cloud for enterprise. Sometimes they just drop in. Always obvious. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. Im sue herrera. Heres cnbc news update. Nbc news learned President Trump is leaning towards decertifyin doing so would give congress a to keep the obama era sanctions terms. Rescuers in mexico city are rubble of her school since tuesda earthquake. Emerge responders spotted he hand in the debris overnight so far at least 21 children have died at that school. A new poll by nbc news and 70 of americans approve of only 30 supported his handling care were gets our first look at what olympic gold will look at pyeong offici say the designs were and they are beautiful thats the news update this hour over to jackie d. For the we see Natural Gas Prices buildi stocks of 97 bcf larger larger than what we saw this larger than the five year averag just couple of days ago 3. 15 this s 3 momentarily. Were in that dead zone where heat so were seeing that happening today. Back t of apple lower again the set to release its earlyreviews raised some betts bring in brian white and the stretch its had is this your postproduct announcemen sellof i want to buy this nonsense there a lot of drama trolls thats what were seeing this is a very minor issue the watch the watch it wont connect to unauth Wifi Networks the iphone 8 doesnt it have no one was looking at the watch. No one was looking at the watch you have general dislike of the who is saying general dislik internal. The verge. So i think if youre at the on this. The iphone 10 will be the bigger upgrad for sure. Iphone 8 and 8 plus are solid upgrad the spring is better proces faster. Suppor ar better glass is back. Differ look and feel to it i think it will be a solid upgrad iphone 10 is where the juice is. Thats where the asp that comes out in late october isnt it about the pacing and streng of the upgrade cycle . Does it matter for investors replac order flow . How does that filter into the price . Absolutely, carl. I kind of respectfull disagree i think this is all about mentio its the cadence when produc adopted youre right whethe units sell in the we firmly believe what matters have, what kind of long term upside they get. From that we wont have data yet you still have a 150 you think the stock is fairly absolutely. What seeing is iphone 18 nothin exciting for people to its t replacement demand for iphone 10 i agree with brian nice phone a lot of initial demand. We have to see whether that and whether it attracts new use those data points wonting quarte until then we think the stock are you concerned at all, robust universe of apps for ar people not understand why corpor will think out of dollars for carl and others in developing parts of the they will go for iphone 8, 8 plus in china the very wealthy people will definitely go for the 10. This is an acceler we have 14 iphone growth in stock is 12 times x cash everyb is bullish on these apple in one quarter has talk about not being held accoun that is true but i almost everyt why is the mostly discou it is because were having this every two or three years to valuat if you look at the track record its about eight times discou so its very, very inexpensive this whole narrative has been margin will go down. Apple will get marginalize we talked about it before. Slowly i think thats dissip plus new opportunities are there still a lot to be their iphone market share we would call them moonshots apple doesnt believe that they absolutely. We need more information there a lot of excitement came out what happened . Nothin a lot of excitement what they what have we seen . Note a whole lot yes tons of cash yes they have a lot of smart can they do a lot of things . Absolu have we seen anything from them . No the bottom line its hard to but weve not seen any signs of. Well see how the stock when we come back stocks one sector feeling the pain again. Retail ldo the bright and squawk on the str will be unwind might derail this more squawk on the street dynamic performance, track tuned handling, and aggressive styling. The bold lexus is. Lease the 2017 is turbo for 299 a month for 36 months. Experience amazing at your lexus dealer. Adapt supply chains based on trends, tweets and storms. And make adjustments on the fly. The ibm cloud. The cloud for enterprise. Yours. Retail to feel the guys good to see you with us in terms of bed, bath beyond will we take a look back at that moment and say that was the payles et cetera ive been saying that about bed, bath and beyond as long as i beli it was a they got plenty of competition they a just not the cool fun im not surprised its going the way its going if take what is working in are there any themes this is the kind of retail that threat how do you complete in retail. What we like is deep value we like luxury goods people want low price. Discougoods. Thats a theme that should work. Third theme is how can retailers meld clicks and tricks how do you mld the physical and online where can investors go and we like lululemon and walmart and tiffany and company. T. J. And ross are good for invest experi so theres a qualitier t there you had a great note yester playin around with what brand macys to you is not out of the not out of the realm of who wa be on the mall. If i was going to do it i would they h 1100 boxes. Off mall they cover the whole country 87,000 square feet in size and they are a thing that you they have all this room around them easy format. If i was going to whole foods, i do it with nordstrom i think that would be an easier choice i dont know if they want whole do it you need a bunch of boxes. You just cant do it online. Amazon knows that. They figured it out in grocery they willfigure it out in appare kohls this week allowed do you that more or les they are friend i describe it as first date i thought it was a great analog but, sure. They first say well were going because you won get enough of you to have that volume interesting amazon and kohls customers. When we survey people 70 still and as weve done work on amazon you want to go to a furthe good attachment rates. When you return and i temple in items. Intere marriage. Kohls has tested these concep it takes one to three years. So well see but the rules are changing in Retail Retail is getting redefine there a revolution. We have to see who gets married. I didnt know the overlap was so great thank you very much. Lets get over to the cme rick santelli. Thanks, carl. We have a great guest today dr. Dr. Judy thank you for taking you are in paris you read about what the fed did much japan doesnt seem to be concer they a still going in there we can control and guide jgbs mario speaking this mornin maybe laying the ground work for octobe 26th meeting where he fed. In thi world, this one world, what did you think of the fed yester they a going to start when portfo i get the same message a least not yet from mario draghi. You start thinking in this wag exchan rates through interest next, you just wonder if its you just have these distortions monetasystem and so sometimes Central Banks other they are rivals. You just wonder what that does where do we get a meaningful to see how it plays out, but i feel like now it has started all right, now to a bigger question you were a former adviser to donald trump during the transition youve written that maybe hes going to reappoint janet yellen just for global reassurance, but youve also written the fed needs a bit of a kick in the pants, need some shaking up, and to that end you think maybe somebody like a conservative ceo, john allison, formerly ceo of Branch Banking and trust, so what are your thoughts and have you communicated in any way with the white house to end up with some of these opinions you finish us out. Well, i cant elaborate on what i have communicated, but i certainly do think that President Trump has the luxury of appointing someone who would be a bit of a disrupter to the Federal Reserve. For continuitys sake, i can see why he might want to keep janet yellen in place. That will reassure Global Markets, but the point is, you really need someone to ask some of these questions such as, does the Federal Reserve do more harm than good you know what, dr. Judy, were out of time. Do more harm than good is a Perfect Place to leave this conversation, and, of course, with other big Central Banks still doing lots of stimulus, maybe thats why the market didnt have a huge move yesterday. Thank you, dr. Judy. Mi mike, back to you. Thank you, rick santelli, very much. Lets look at whats coming up on squawk alley. John where google is paying 1. 1 billion to htc, getting some people, getting some technology, but whats this really about and more important, what does it signal about the androidart . Mke well dig into that coming up at the top of the hour on squawk alley not rebalancing your portfolio. Pursuing your passion, not reacting to market downturns. Focused on what you love, not how your money will last through retirement. Let us help you with those decisions, and get on with your life. We make it easier to plan for retirement with day one target date funds from prudential. Look forward to your 401k plan. The Trump Administration is pushing its agenda for tax reform, including parody between corporations and Small Businesses with a top rate of 15 , but could the proposal point to what went wrong in kansas, where a tax experiment was recently reversed . Kate is in kansas city, kansas, with what went right and what went wrong for Small Business there. Kate hey, melissa, thats right. Nearly five years ago the state of kansas went under a live experiment in tax reform as personal income taxes were reduced and got rid of them all together for businesses, like amazing smiles of kansas city, where were live today, but the experiment didnt go as planned. The state wound up with a budget deficit in the billions and the state Legislature Earlier this year wound up reversing those cuts, making Small Businesses like this one responsible for retroactive tax payments for the entire year of 2017, and now entrepreneurs are figuring out what comes next. When just even a few thousand dollars alters your usable income for the year, it greatly impacts these decisions that we made just months ago without the knowledge that this was going to be coming, you know, in the future. But not all Small Businesses thought this was a success, even though they saved money. Car miller, owner of lark label in wichita, he says this wasnt enough to make a difference to his bottom line. It was, like i said, nice Little Pocket change, but i couldnt for 1,200 or 1,400 a year hire a new employee, so it didnt affect us that way. Back in may before the repeal, governor brownback said the system did need some refining in kansas, but the 15 number trump has proposed might be able to strike the right balance, but critics are telling the administration they should Pay Attention to what went right and wrong before they implement the steep cuts back to you. Interesting episode in american tax policy and is getting more and more relevant every day. Kate rogers in kansas, kate, thank you so much for that when we come back, google betting big on smartphones we have the details on its billion dollar deal with htc dow is down about 12 points. Squawk alley is up next. Im here at the Td Ameritrade trader offices. Steve, other than making me move stuff, what are you working on . Let me show you. Okay. Our thinkorswim Trading Platform aggregates all the options data you need in one place and lets you visualize that information for any options series. Okay, cool. Hang on a second. You can even see the anticipated range of a stock expecting earnings. Impressive. Whats up, tim. See options data like never before. With thinkorswim only at Td Ameritrade. I am so busy. So ive asked chase sapphire reserve cardmembers to scout the world to find my next vacation. Dija, where is that . Im on a rickshaw in japan. Hes so fast this is delicious. Im sorry. Do you guys know who james corden is . Dont ask them that, its embarrassing. No. Okay, that is embarrassing. Sapphire reserve, from chase. Make more of whats yours. Welcome back to squawk on the street. Im dominic chu. Tech stocks are lagging the most with chip makers seeing the biggest declines so keep an eye on technology that does it for this hour of squawk on the street. Lets send it back downtown for the start of squawk alley. Back over to you guys. Dom, thanks good morning, it is 8 00 a. M. At google headquarters, 11 00 a. M. On wall street, and squawk alley is live