Transcripts For CNBC Squawk On The Street 20140910

Dollar goes to a tender offer. And ackman says, hey, wake up, allergen. He calls their actions embarrassing. And the first deal at microsoft reports theyre close to a 2 billion purchase. The target, the video game maker behind mind craft. First up, apple creating all that buzz by unveiling new iphone 6 models, which are larger than their predecessors as well as that apple watch and the mobile payment system. Stocks rose sharply, up more than 4 at one time, after apple pay was announced, but then lost its gains following the unveiling of the apple watch. It did finish the session lower in true apple fashion. A lot of analyst calls. A lot of media buzz today. The new york times, their headline is, quote, apple is back better than ever. Yeah, first of all, you are iron man. Last i looked, he was there. Maybe there are two carls. A lot of other media areas. When does the other carl come in . I think we ought to step back for a second. First of all, when the watch came out, the misfortunate came out at the exact same time as we heard the word considerable might be dropped from the fed statement. People are much more concerned as weve been doing a lot of work on cnbc. Com to see that the fed does the wrong thing. So it was just poorly timed, the watch presentation. But i think the presentation was good. A lot of us watched it, every minute. You know, carl, what would any other company in the world kill for to get when the front page of every business section . Isnt the real takeaway here that if youre an advertisement firm, i hate those guys. Now i have to go to my guys and say, ill get you a splash, but its going to cost you tens of millions of dollars. In the end, everyone in the country that i know is debating whether to buy a watch. Who the heck ever thought that would happen . You said on twitter youre going to get one. What does this do . All it does is scratch when i do the lightning round, so i take it off. And this isnt even sapphire. Ive had it. Its heavy because the one i bought at canal street was too light. People were fooled. Then they werent when they touched it. Its heavy. So what . If im going to get a heavy watch, why not make it a watch that does something other than tell time . Ill take this one. I want this to be swiped so i can find out look, one of the things we always look at is the snapshot. Will you give me my watch back . No, you can keep it. Im getting one in the spring. When you get the apps, im going to be able to get espn. Com and its going to do my fantasy. We have them on the show today. You have bowman . Bowmans back. I love bowman. Can i make a point here . Im a watch. All right, great. A new product getting kudos for it. What im hearing from investors is a lot more excitement about payments. Mobile pay. And creating an ecosystem that could lead to nearer term profitability, perhaps. And finally, transform what weve been talking about for many times and has been attempted by other companies not to success, but weve seen apple carve out New Territory where there were very small, minor paths made previously. Youre raising a great point. Do you remember in the isaacson book where jobs just went to the Record Companies and rolled them. Just rolled them. We know that they tried to roll the cable companies. We worked for comcast. They werent able. David, my question to you. Did they roll visa and mastercard . Did they roll them . Its win win, im sure theyre saying. Well, the Record Companies said win win too. They may have also. I think the proposition to them is we will reduce fraud. How much are you paying right now . Xpi reduces the fraud. Its a semiconductor. Well, no. Youre not even going to have a number anymore. Its just going to be in your phone. Its going to be protected. Apple may take on some of the fraud risk. Carl, you may have more details. The credit card is preloaded on your phone, absolutely. Look, maybe visa and mastercard had to do it in the same way that itunes made it. I think in the end apple has gotten in that business. Once youre in that business, a lot of people saying theyre not going to make enough money. People dont know anything. People dont know anything. I mean, visa and mastercard are profitable. You take a little of their cake, youre going to get a lot of money. Thats going to add up to a big number. A couple million cards in russia. If you really can transform this form of payment. And given every other day we hear about another breach, one would expect that will only add to the momentum behind something that is going to be more secure. Not completely secure, we know. Look what happened to the cloud. But more secure. You dont want to do you want to go back to a paper society. You dont want to use any online stuff. If someone offers me a secure anything, im thrilled. Meanwhile, all its really going to do is get you to buy new phones. Its the 6 and the 6 plus. By the way, for the watch, you still need the phone. So its an ecosystem. I buy in. You raise the ibm thing. I wish i had heard more about it. Did you hear anyone talk about the ibm . Not really. Josh lipton brought it up during the conversation. It was not a day for the ibm partners. Yes, but i keep thinking trojan horse. Once the ecosystem gets in, you buy the ecosystem. You do it because salesforce. Com is writing stuff right now for your watch. This is whats going to happen. Thats why the bowman interview what a great book. You made fun of pacific crest, which did downgrade as they threatened. Listen, let me give you a Little Research 101, having Read Research since 1979. Dont downgrade and raise your numbers for the reason you downgrade. We dont like the watch, but were downgrading it. However, were raising numbers because of the watch. You know, thats whats called wrong research. They can have an impact. But we know that one year from now, the average apple increase since phone is 38 . You downgrade and you cut numbers. You dont raise numbers. Etiquette. Its called research etiquette. Thats the way its done. Although, it is all about which way the stock price goes. He may be right for up to four hours. He may be right for 36 hours. Could be. Wow. Thats what this is in the end, its about any lessons you draw from that action yesterday . The stock up over 4 . Theyre talking payments. They get to the watch, then down on the day. The lesson is you ought to be in the brokerage business every time they launch a new phone. Were going to talk a lot more about the payment, the economics of payments today as it applies to apple. Thats going to be a good discussion. Meantime, microsoft making news today as well. Looking to boost its presence in the video game space. The Company Reportedly in talks to buy swedens mojang, the maker of the popular minecraft video game for more than 2 billion. The deal could be announced as soon as this week. This would be youre still playing with the watch. He likes the watch. Im sorry. I didnt mean to i just gave him the watch. I dont need the watch anymore. Ive got a watch. I can have two. Did you see colbert smash his watch last night on his desk . I only watch cnbc. Is that what he did . Well play the sound a little later on. I dont need this. Ill wait until march. I can do without a watch until the new watch comes. I have yours in case you want it back. I have a 10 canal one. Ill wear it next to you every day. It has two phones on it. Whatever. Anyway, first big deal. Is this the beginning of the spinoff of xbox that people have been talking about . Why not . You think so . I think xbox gets spun off. They both get up with the actual games and the console and then spin it. Yes. Really . Thats what i think is going to happen. Thats why this acquisition happened. Youve got the biggest Gaming Company in the world. We know from all these different acquisitions that gaming is done by hundreds of millions of people. This gives you i want a share of xbox. I do. I want a share of xbox. Dont forget when you do that and its interesting to consider it. You have your own currency if youre xbox, and therefore you can continue to acquire, not just for cash, but using your stock. In this case, always interesting to note, microsoft is using overseas cash. Were going to be talking later to Chuck Schumer about his latest bill on curbing inversions. Theyre using overseas cash, which they have a huge pile of. They did the skype deal the same way. 2 billion is nothing. They find that in the couch. But they find it in the couch overseas, as opposed to here. Absolutely. Thats whats going to happen. All guys you can ask. Can i have the iphone . The security, which tells me whats going on at my house. Im telling you, you got to think big, people. Bowman, ralph, these are the people. Davids got sprint. Yes, tomorrow. They do the best because of the new lte. They have more bandwidth. Not to mention, i would imagine with the new phones and sprint and tmo and what theyre trying to do, theyll just give them away. Who knows. Theyll pay you. Maybe theyll do an amazon deal. 99 cents. And you get prime, throw it in. And still nobody wants it. Think about the bookings. Youre talking about the bigtime winners off this. Its at t, right . It could be General Electric off of health care. It could be bowman. Time to get an mri. Thats what im going to get on my watch. You cant get jack with that 3,000 bright light. Its going in my pocket now. 365. Thats too much. Look at this thing. All it does it tell time and its fast. Its fast its not even like the naval observatory nice weight. David, no one knows how much it weighs unless theyre wearing it themselves. This is the kind of watch im going to keep. Jims guns i smash apples with my guns, but you dont see me on the today show. My mother was the same. When we come back, Dollar General going hostile. A wakeup call to allergen. Also, pennsylvaniaer in ra jumping on the apple pay bandwagon. Take another look at the premarket here. Some moderate strength. Nice turnaround in the middle of the session. We did start the morning weaker. A lot more in a minute. Im type e. My golden years will not just be gold plated. I had 3 different 401 k s. E trade offers rollover options and a Retirement Planning calculator. Now i know when im going to retire. Not if. This guy could take down your entire company. H . Stay with me. On thursday a hamster video goes online. On friday it goes viral a network choking phenomenon. Why do you care . Hes on the same cloud as your business. The more hits he gets, the slower your business may get. Do you want to share your cloud with a hamster . Today theres a new way to work. And its made with ibm. My golden years will not just be gold plated. I had 3 different 401 k s. E trade offers rollover options and a Retirement Planning calculator. Now i know when im going to retire. Not if. Dollar general has gone hostile in its bid to buy rival Family Dollar. Dg announcing this morning its taking its 80 a share offer directly to shareholders via a tender offer. That deal, which is 74. 50 a share, below the 80, but key has been antitrust. While this does take things to another level in a sense, it also is almost meaningless because while you can tender into their offer, which will expire on the 8th of october, they cannot close that tender offer, in other words buy the shares that have been tendered to them until they receive any trust approval, which is going to be far, far, far beyond october 8th. Hence, you will get a lot of shareholders tendering in. That will come before the shareholder vote on the dollar tree deal. And it will be at another time perhaps that Dollar General is able to use to make sure that deal does not go through. That being said, it will give Dollar General the opportunity to engage in conversations with the ftc to start to try to understand where they really would come down potentially in terms of forcing divestitures from a combination of Family Dollar and Dollar General. That in turn may allow Dollar General to figure out whether, in fact, it could go as weve been saying hell or high water. It could offer to Family Dollar what it wants, which is to say well take on all risk when we say were going to buy you, and thatll be it because theyll have a much better sense as to where the ftc is coming from. By the way, nothing would have stop them from filing hard and starting that process a couple weeks ago, even without a tender offer. But they have now done it at 80 a share. The dollar tree deal stands as it is right now. As we get closer to that vote and the end of this tender offer, well see where things stand. Youve got a board member you reference. Ed garden. Hes been quoted in the releases when they have said were not interested in your deal because were worried about antitrust. Youre him. You see this. Does it mean anything . No. Wow. In fact, it may still go to this. What i would argue is this background notion that these guys really are much more interested in trying to upset the deal with dollar tree rather than actually move ahead. But this gives them the opportunity to really explore in detail with the regulators what its going to take. They wont know for certain. Because its only a couple of months. Not even. Its a month. But they will at least get some sense as to a road map, perhaps. So they might be in a better position to know what risks theyre willing to take if they want to go down that road of more than 1500 stores. Remember, that was the last divestiture offer from Dollar General. No reason to buy, but a reason to stay focused. Yes. All right. Not the only fight thats going on either. Bill ackman sounding off and criticizing allergan. He writes, your actions have wasted corporate resources, delayed enormous potential Value Creation for shareholders, and are professionally and personally embarrassing for you. The smell of strong brew is in the air. Now is the time to wake up. One source said hes telegraphing his next position. Its going to be Green Mountain coffee. But no, we jest. He likes writing letters. Im not quite sure what the effect of this is. He does bring up points weve made in the past, which youve had an enormous turnover in the base of this company. If those shareholders who had been there really believed it had a great deal of upside from here, they would still be there. Thats a fair point. Weve pointed out they have over 33 of the shares in favor of consent calling for that special meeting that may take place in december. Perhaps a bit earlier than that. But yonbeyond that, im not qui sure what the point of this letter was. The key question from my perspective is, will allergan try to do some sort of acquisition that puts a stop to all this . That, i think, is ive reported, while nothing was imminent from what i was hearing, there certainly have been conversations that have taken place. Well see. Why is it always jazz pharmaceutical . Good company, but whenever i hear allergan might buy x, y, z. But if allergan were to do something, we dont know what it would be necessarily, but conceivably it would stop valiant in its tracks. What would the stock do . The reason why i like allergan on its own is they put out a 10 number. Suddenly you lose the 10 number but you end up losing the cash. What i see is that i hope they dont do that. If allergan is independent, you have 160, maybe 170 stock on its own. Typically 18 to 19. That means they have to continue to fight this fight over valuation and questioning valiants Business Model and growth. It simply comes down to, what will be that meeting . And allergan has to come through with these products people are saying are really big. They have a lot of work to do to stay independent. But david is still continuing to surprise people. You dont put a tough letter like that out unless you recognize he turned out to be more phorfo formidable than you thought. Ackman says its running the most unfriendly, hostile defense process in corporate america. I hope all the companies i recommend double. Awful to shareholders, but the stock doubled. But that doesnt matter. Kind companies. Tuna with good taste or tuna that tastes good . Well get cramers mad dash as we count down to the opening bell. Later, senator Chuck Schumer, whos pushing to make tax inversions a little less attractive to u. S. Companies. Premarket suggests a moderate bounce at the open. More squawk on the street in a minute. Theres a difference when you trade with fidelity. One you wont find anywhere else. Onesecond trade execution. Guaranteed. Did you see it . In one second, he made a trade, we looked for the best price, and the trade went through. Do the other guys guarantee that . Didnt think so. Open an account and find more of the expertise you need to be a better investor. An Unprecedented Program arting busithat partners businesses with universities across the state. For better access to talent, cutting edge research, and state of the art facilities. And you pay no taxes for ten years. From biotech in brooklyn, to next gen energy in binghamton, to manufacturing in buffalo. Startupny has new businesses popping up across the state. 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You and i have occasionally poked fun at research, at analysts. Lets stop right now. Russ at bank of america upgraded caterpillar downgrades it just now. You know what . Mining projects. They are in trouble. Mining projects can get canceled right in the middle of a mining project. And they are worried about mining, and they argue their energy and transportation, the Power Systems business, has peaked. They think the 2015 outlook, they cant make the numbers. This is whats driving the dow stock. I salute a guy who recommended it at 80 and takes it off here. They prefer joy global, which is a mining place. I dont prefer joy. Talk to me about mining then. Is mining slowing and or slowed . Do they stop all purchases . Watch the jjc. Seems to go down every day. Its not me, its copper. Goldman comes out with the iron ore, its peaked. Look at clf. Thats been a disaster. Sorry to the guys who just took it over. Well, they won the board. Sold to you. Here, have 17 board seats. But i think mining is in trouble. Caterpillar, this was an unbelievable call. No one liked cat. There are even people recommending shorting it. Now is the time to get out of caterpillar. What else we got . Okay. Lets go from hard goods to soft goods. A company that i have oh, palo alto networks. This reported an amazing quarter. I have them on tonight. They say theyve taken business from cisco. Theyve done unbelievable things taking retailers. Yet, they still only have about 600 million in revenues. Talk about how much money should be spent on Cyber Security. Youve been getting behind these guys in a big way. Every time we hear about a breach, why . Because these guys are the guys who stopped it before. They detect it immediately. These are the guys i have to tell you, i know people love fire and home depot brought in symantec. In the industry when i talk to people, i keep hearing pa low alto has the best detection software. Theyre spending but theyre still making money. This is the play. Ive been saying 100 per share since its been in the 60s. Were getting to my price target. You are. All right. Well, im interested to see where the ceo has to say tonight on mad money. We have the opening bell in four minutes. Stay withing us here on squawk on the street. A lot of other things to get to, including worries about a slow down in advertising. Ill have that story and more when we come back. So ally bank really has no hidden fees on savings accounts . Thats right. Its just that im worried about you know hidden things. Ok, whys that . No hidden fees, from the bank where no branches equals great rates. Its in this spirit that ingu u. S. Is becoming a new kind of company. One that helps you think differently about whats ahead, and whats possible when you get things organized. Ing u. S. Is now voya. Changing the way you think of retirement. [b ll rings] time and sales data. Splitsecond stats. Its so close to the options floor, youll bust your brainbox. All on thinkorswim, from td ameritrade. Youre watching cnbc squawk on the street live from the Financial Capital of the world. The opening bell in about a minute. A lot to watch today. People trying to absorb apples unveiling yesterday. The president , of course, addresses the nation tonight on isis, possible 2 billion deal out of microsoft, and a lot of analyst calls on big names. Upgrade for twitter and initiation to netflix. The twitter call, go read that. Thats basically saying, listen, this is the one thats going to monetize next. Thats been the theme. Thats a very good recommendation. Im totally on board with that. Ubs takes it to a buy. Price target, 65. Theyre upping their numbers for 15, 16, 17, 18. When i see these upgrades, im looking to see if the numbers are up. Thats significant, well above everybody. I like that. Theres the opening bell. The s p at the top of your screen. At the big board this morning, wbi celebrating the recent launch of ten Exchange Traded funds. Over at the nasdaq, aluminum, maker of life science tools, doing the honors. The netflix call we mentioned, by the way, initiating with a buy as well. Suntrust was neutral, basically saying we love it but the stock is too expensive. You rarely read that someone says, i dont like a stock because its too expensive. But we had a mobile downgrade. Deutsch bank saying its too expensive. Having upgraded it in late august, which got the whole rally under way. Were seeing Great Research today. Away from apple. Meaningful research. Speaking of which, im trying to think, there are some upgrades of apple, right . Some price target bumps, yeah. Look, i think that when you dont lose focus. I think that people are going to be isixing themselves. The reason why is mobile payments for the six and health and wellness. Theres a generational gap here. People who are 17 to 30, they want a tunup in their body. We look at maintenance required. We all have maintenance required, but were not paying attention to that. We Pay Attention to that little thing, hence why you need mobile life. That avoids collision. It does. Are they going to move into the body as well . Maybe a backup camera for your insides. Cardiac arrest baabout to occur. Find yourself a defibrillator. If you can use a watch and get it look, there is technology that makes wired into the health care system. Saw that just the other day. Theres a lot. I just think keep track. This is a health and wellness play. Thats what cook stressed. Everybody else well, you were there. You know. Everyone else is stressing bells and whistles. He said, go talk to kevin plank, who i think is the foremost representative of the younger people who know what they want on organic, natural, and wellness. He says its the only thing people really are most interested in, finding out their bodies. Chip kelly, one of the top nfl coaches. Everybody has to wear a little thing in practice. Whats going on . And its not the thing that ben richards had to wear, the running man. And theres the payments issue. Ebay is the biggest s p loser as piper cuts ebay to neutral, citing pressures from apple pay. And what itll mean for paypal. Look, there are a lot of options. We shouldnt just rule it out. We know theres room for everybody. But i do think that and we know because you can wand stuff now at the airport. Theres momentum here. This is itunes and all these Payment Companies are now, i dont know, atlantic records. A m. Right . I wanted to mention as i teased advertising, i was talking about Outdoor Advertising for the most part. Although, there may be concerns raised more broadly. Goldman sachs Media Telecom related conference is starting today. Well be covering it. Ill be doing some interviews from there, including the ceo of cbs. However, cbs outdoor making moves this morning in advance of the presentation they were going to make. The company said, National Advertising hasning has improve slightly, but the overall market is not as strong as expected. As a result, they update their view of Third Quarter revenueses. They now expect to be close to flat year over year, down from the low singledigit range of growth that they had provided on their august earnings call. This continues to include the comparison issue associated well leave it at that. So concern perhaps about a bit of softness. Certainly in Outdoor Advertising. I would assume thats bleeding over to lamar as well and some of the other plays in Outdoor Advertising. That coming out of the conference. We hear that twitter putting more money to twitter, putting more money to facebook. Its got to come from somewhere. P g. All the digital. Not that they necessarily do billboards. But thats been going on forever. Think about all the Restaurant Companies saying, listen, its better to be on facebook. Its our favorite way to invest. Then you see a lot of billboards for restaurants. The ads are not infinite by any means. Speaking of big advertisers, mcdonalds is down again. Its within 1 of an eight handle. Stern today, or yesterday, said we believe mcdonalds has lost credibility with the asia pack consumer. You saw those numbers yesterday. People are talking a generational short. I did that last night on mad money. I feel like this is about the food chain. Every time you look at a chipotle, numbers are bumped. When i look at all the videos that chipotle has done, theyre all about how corrupt the food chain is. If you look at the japan numbers with the problem really was, those are the china numbers, thats about people saying, listen, i cant buy this processed food anymore. I have to buy organic, fresh, natural. And thats just a secular trend. Theres nothing you can do about it. They cant mcdonalds overnight cannot start offering natural and organic. As annies told you, they had a 40 spike in organic wheat. General mills cannot bargain down organic wheat, but mcdonalds cannot go organic because those burgers would cost 8. And hard to do. Reports today about radio shack. No surprise. Analysts pointing out that the company is very close to bankruptcy. An analyst, by the way, who likes big, broad opinions. Yes, he does. And has been dead wrong on netflix for a very long time. I mentioned radio shack not because i have information to share with you about what may or may not be happening, but best buy is up about 1. 5 . The idea being, hey, theres a lot of radio shacks out there. If you were to reduce the store count, as they already have, perhaps best buy would be a beneficiary. Poorly run. A lot of different people have taken a shot at it and tried to turn around radio shack. Does feel very circuit city like. You mentioned sapphire glass. Down again today, almost 10 . Is there any way to understand whats happening in the supply chain . I dont know. Yesterday it was eye opening to see the ceo of corning on squawk just saying, hey, listen, the qualities of our glass are better than sapphire. Sapphire does not get the build into the phone. I think that took a lot of people by surprise. I think sapphire is amazing, but the qualities are obviously superior. No one ever talks about whats on the other side. Its aluminum. Aluminum is on other side. Do i hear Klaus Kleinfeld . Listen, that stock has been a big winner. David makes fun of me because when i think of kleinfelds, i think of the place you get the wedding outfits. What do i know about that . I dont know. I may. Finally, Philip Morris raising their dividend to 1 from 94 cents. I think the yield now on pm is is it almost 5 . I was shocked at that. European the europeans tax tobacco like its you know, lets stop sales. European sales rebounded. Of course, anyone who goes to europe knows when you go to a restaurant, your hair smells of cigarettes well, other peoples hair smells of cigarettes when you leave. Thats one of the advantages of my hair. Thats also one of the advantages of having a smoking ban as we have for quite some time in new york city and it began in many other cities. Europe, they keep raising and it doesnt matter. The numbers dont stop. Philip morris is an amazing company. China even more so. Thats out of control. I keep thinking if nixon were around, the speech tonight would be pretty amazing. He was good on Foreign Policy. Tough. Nixon, only he could go to china. He did a lot of things that before positive, dare i say. Started the epa. How could kissinger be that smart at that age . Dow is down about ten points. Lets get to bob, whos on the floor. Good morning. A fairly quiet open. A flat open. But bonds are moving. Were seeing yields moving to the upside. Steve liesmans article yesterday about concern that the fed may change the language, promising to keep rates low for an extended period. That initiated another big discussion. A lot of paranoia out there about fed tightening. The yield moving to the upside. We also see yields moving to the upside over in europe as well. Thats been going on for the last couple of days. Were still sort of flat in the markets, trying to get over 2,000 in the s p. My good friend at Raymond James had a good discussion this morning about how the market leadership is very iffy right now. Of 1,025 stocks in his universe, the average stock he follows is 23 off its 52week high. Even though were not far from new highs, theres a few big leadership stocks and a lot of other laggards out there. This is a sign that the advance is slowing a little bit. Thats one of the things that technicians watch pretty carefully. In terms of what stocks are moving, i agree with you, jim, on your comments on mining stocks. Australian mining stocks overnight in australia were notably weaker. A lot weaker than some of these over concerns of china continuing to slow. Theyve had a hard time recently. So keep an eye on that. Another group thats weak again here is Energy Stocks, particularly the small exploration and production stocks. A lot of the shale plays are weaker. Its very difficult to justify high valuations in some of these smaller names when you have weak demand and fairly high supply, which is exactly the situation weve been seeing. These Energy Stocks have been struggling for the last couple months. Radio shack, you guys mentioned it. Its a very good point to mention. The comment was bankruptcy was imminent. Heres the key line. Brick and mortar Electronics Retailers will see persistent structural decline as Internet Sales continue. Thats certainly true, but theyve been wrong on best buy. Theyve come off their lows, so take that with a grain of salt. Finally, on alibaba. After two days of a road show in new york, demand is strong. Reuters saying they essentially have it already allocated and theres many days to go. Take this with a little bit of a grain of salt. Remember, institutions routinely ask for a lot more than they receive. In this case, theres going to be a lot of demand. To hear the road show has already covered one time, it doesnt mean an awful lot. Youll hear this three, four, five, six, seven times oversubscribed. Thats fairly common for a high demand ipo. I think youre going to hear more about this. Of course, the question is whether or not theyre going to actually increase are the price or the size. The answer is maybe. Remember, there is a green shoe associated with this. Thats an additional 15 that could be allocated automatically by the people who are running the book there. If that happens, if we get that 15 instead of 21 billion for an ipo, now were talking about 24. 5 billion. If we get there, 24. 5 billion, even with that green shoe, now we are talking about the biggest ipo of all time. The old one, the Agricultural Bank of china back in 2010. That was about 22 billion. So my anticipation here, just based on what were already hearing, is theyll probably exercise that green shoe because this probably will be the biggest one of all time. As to whether theyll increase the price from 60 to 66, that remains to be seen. Guys, back to you. Thanks a lot, bob. When we return, apples new products make their way into pop culture from colbert to fallon, Justin Timberlake. Youll want to see what were talking about next. Also, instacart one of the companies agreed to use apple pay. Well talk with them a little bit earlier on squawk alley. Back in a minute. Kblap [ male announcer ] ours was the first modern airliner, revolutionary by every standard. And that became our passion. To always build something better, airplanes that fly cleaner and farther on less fuel. That redefine comfort and connect the world like never before. After all, you cant turn dreams into airplanes unless your passion for innovation is nonstop. My golden years will not just be gold plated. Unless your passion for innovation is nonstop. I had 3 different 401 k s. E trade offers rollover options and a Retirement Planning calculator. Now i know when im going to retire. Not if. Thats keeping you from the healthcare you deserve. At humana, we believe the gap will close when healthcare gets simpler. When frustration and paperwork decrease. When grandparents get to live at home instead of in a home. So lets do it. Lets simplify healthcare. Lets close the gap between people and care. Woo woo woo [ cheers and applause ] what . What . What does it do . I got to have the apple watch. That was Stephen Colbert last night obviously pumped up about the apple watch. Apples event definitely establishing itself in pop culture. The times today says if theres any question about whether tim cook is managing the reigns of the worlds most valuable question will likely be put to rest. Completely. People ought to look at numbers. The stock has done great under cook. Cooks done i said something yesterday, and i didnt mean any disrespect at all to the memory of steve jobs. But if you read the book, steve jobs had very traditional methods. I dont think thats necessarily the best, but each person to his own. Tim cook has the zeitgeist of health. Health and wellness, whether it be with chipotle, whether it be with under armour, now whether it be apple, it is the theme for the world, and hes captured it and jobs didnt. This is about health and wellness. Although, isaacson wrote jobs was frustrated by the Health Care Community in his final days, dealing with the antiquated instruments that measure how were living or dying. Well, we know that this is a personal thing of cook. I think its what look, i was trying for a while. I think that people have to recognize that knowing your body is a worldwide phenomenon. It has to do with the internet and the ability to be able to match your numbers at the end of the day. I have a standing desk at cnbc. Why . Because i know its better for you. Did you see the function of whether youve been standing for i mean, it was like, has he just read americas doctors minds . Cook is so far ahead on this. By the way, they are enlisting jimmy fallon, the host of the tonight show, Justin Timberlake for their new ads. Check out one of them. This is the iphone 6. And this is the iphone 6 plus. They come with a thing called health so they can help you track a lot of stuff. Like today i walked 3. 8 miles. Well, i ran 4. 2 miles. Well, i climbed 11 flights of stairs. Well, i drank a smoothy that had 362 calories. Well, i had a funnel cake that had 1230 calories in it. You know thats not good, right . It was good. It was delicious. Got some young voices. I love funnel cake too. I dont want to know any of that stuff. Not any of it. Im sorry. And i dont want anybody stealing that from wherever it is. I dont want my insurer knowing and asking me to get lower rates by putting one of these things on and denying me because i went to mcdonalds, even though i dont go there. When you see the price of insurance and how much its gone up, maybe you could get a better deal if you wore this watch. Young people get old too. They may not want it either forever. Im getting older too. Quick song, which one . Grumpy old men right here. If he understood what younger people understood, then hed be buying this watch. Youd be buying multiple watches as i will for my girls. Ill watch my kids and see if they buy the watch. They cant afford that. Then ill be able to monitor their every move, which theyll be really about. Ill know where they are, what they ate, who theyre with. And youll be using a phone to swipe things on your bill, as well as the chinese hackers. You better start watching your bill. Chinese hackers, they already got me. They got me, tossed me, and left me on the side of the curb. It was the russians that got me. This is like 1952. Like that documentary. Crazy. Every computer i touch. I like that documentary. You have bad luck with computers. Hes brought up that documentary so many times. Im wondering if you were unhappy with how many people watched it. Well, it was a year and a half ago. We were early. Very early. They were on it. People who downgraded apple were. Well get stock trading with jim after a short break. Dont go away. Take a closer look at your fidelity green line and youll see just how much it has to offer, especially if youre thinking of moving an old 401 k to a fidelity ira. It gives you a wide range of investment options. And the free help you need to make sure your investments fit your goals and what youre really investing for. Tap into the full power of your fidelity green line. Call today and well make it easy to move that old 401 k to a fidelity rollover ira. Time for kramer and stop trading. When lands end spun off from sears, even though they had to pay that dividend, lands end has a great business. The ceo is excellent. By the way, david darst, his daughter is the chairman. John mcclain, the former cfo. Brilliant man from jones apparel. Its incredible how well the companys doing. Tonight, the president s speech. You want to buy alieliant tech. Lockheed martin has a good dividend. Lockheed martin is always going to be in the mix. If you go to the website, they are the unmanned company to buy. This is going to be a lot of it is going to have to be unmanned. The president doesnt want put boots on the ground. Also, a terrific Cyber Security business. Mark mclaughlin on tonight because Cyber Security is everything. After that remarkable quarter. Enterprises around the world are recognizing that Cyber Security is a very lasting and important and probably permanent item. Its a ceo item now. No longer cto. Palo alto has the best protection. Did you expect a more forceful discussion of security a at apple . If theres a negative argument today, it tends to be that, right . I dont know. I felt if i went this way, it would be less likely id have to worry about hacking and my credit cards. Im very worried about my credit cards. I have someone who checks my balances every monday because im so afraid im missing something. Thats what every fbi guy tells you to do. The fbi guys, by the way, theyre not from ceos at companies. The fbi guys will go so far as to say dont even bank online. Thats not a practical matter for most people. But jack lew, the secretary, is very worried. When you watch mark mclaughlin, who i think is the foremost expert in Cyber Security, he has 598 million in revenues. His company is going to have 5. 9 billion in revenues. You have to. You need this company. You mentioned defense. Theres also, i think, a cleavage between the west coast, silicon valley, and their approach to cyber and what were seeing in the government. Its interesting as well. Theyre not all on the same page. And they should be. Not to mention from the defense perspective of the nation and what could be done by our adversaries. And then again, remember, theres always a big war on who to use. Palo alto talking about they want a major retailer and taking business away from cisco. I want to the hear from cisco on the other side. I think chambers is doing a good job. Cyber security is a niche business thats going to be a huge business. Palo alto, way too small a market cap given whats going on. Jim, well see you tonight. Wow. Welcome back, carl. I dont know how you do it. Youre fresher than you were before you left. Do you use muscle milk . Jim cramer, 6 00 p. M. On mad money. Could congress be about to stop the tax inversion . Chuck schumer will be lives with to tell us all about it. And well hear from companies partnering with apple pay. What it means for you, your wallet, and ultimately for apple shareholders. Hour two of squawk on the street. Looking good trying to keep up with you i told my producer karen that i take metamucil because it helps me feel fuller between meals. Its just one small change that can help lead to good things. Now shes breaking up with the vending machine. Nope. I call that the meta effect. [ female announcer ] 4in1 multihealth metamucil now clinically proven to help you feel less hungry between meals. And promotes heart health. Experience the meta effect with our new multihealth wellness line and see how one small change can lead to good things. With our new multihealth wellness line an Unprecedented Program arting busithat partners businesses with universities across the state. For better access to talent, cutting edge research, and state of the art facilities. And you pay no taxes for ten years. From biotech in brooklyn, to next gen energy in binghamton, to manufacturing in buffalo. Startupny has new businesses popping up across the state. See how startupny can help your business grow at startup. Ny. Gov big day . Ah, the usual. Moved some new cars. Hauled a bunch of steel. Kept the supermarket shelves stocked. Made sure everyone got their latest gadgets. Whats up for the next shift . Ah, nothing much. Just keeping the lights on. laugh nice. Doing the big things that move an economy. See you tomorrow, mac. See you tomorrow, sam. Just another day at norfolk southern. Welcome back to squawk on the street. We begin with breaking news on wholesale trade. Jim is at the cme. Hey, jim. Hey, carl. Two numbers coming out. Wholesale inventories and sales. Wholesale inventories came out at plus 0. 1 which is worse than expected. Wholesale Sales Numbers come out as plus 0. 7, which is better than expected. Last time was revised up to 0. 4 as well. The takeaway from this is the wholesale inventories number. Economists lean on that for gdp estimates. It was definitely worse than expected. The stock market came in heavy and basically stayed where it was, down six in the futures. And yields stayed the same, tenyear at about 2. 53. Back to you, sarah. Thanks very much for breaking that number. Shares of apple are higher this morning. Just one day after the big unveil. Will apples new products send the stock higher . More than just a quarter percent. Lets bring in ahmed from rbc capital. How do you take what we got, two new phones, apple pay, and the announcement of a watch, and then model it into what its going to mean for Revenue Growth in the next quarter, which is basically what you did in your note this morning . Yeah, no, its definitely not an easy task given the multiple new products they have out there. Ting from a revenue basis, though, the most relevant thing for them is going to be the iphone 6. Two things that stood out to us. One, i think esps will move much higher. Secondly, i think the content going up could also drive the market higher. We think when you look at revenues it and Gross Margins probably have a bit more upside bias for apple. Apple pay and the apple watch will probably be more immaterial to revenues. Should become a bigger story in 2015. You know, we have steve milon milonovic with ubs. Is it just going to be the iphone 6 and 6 plus in terms of the next boost with profit and revenue . I think so. I think expectations were high coming in. I think for the most part, they were met. The iphone 6 is the most financially important part, even though it was very much as expected. We think a large screen is going to be a big reason to upgrade your phone. From an innovation standpoint, the apple watch, obviously, was very important. Its only the first iteration, but i think its got a lot of apple magic in it. From an ecosystem standpoint, i think apple pay is the glue that puts it together. It seems like thats what investors were thinking as well. I was watching carl breaking all the news and headlines yesterday out of the event. The stock really popped up on announcement of apple pay. How do you factor that in, in terms of a growth driver . When does it start to really matter to the bottom line . Well, its certainly going to take time to replace the wallet, as tim cook indicated apple wants to do. Our view has been that the services at apple are mostly there to support the devices. There might be some disappointment that theyre not going to create a huge revenue stream from this. Its certainly not disruptive of the current payment structure sitting on top of visa, mastercard, and so farther. Nevertheless, youre going to have an iphone 6 to use it. Youre going to have to have an iphone 5 or 6 to use the apple watch. So its very much expanding the ecosystem, even though i dont think its a great revenue generator by itself. Well, to your point about what tim cook wants to do, lets listen to what he said during an interview on abc last night when he was asked whether it was going to disrupt the way we use credit cards and the way we pay for things. There were a lot of people who said, tim cook is going to walk on to that stage and kill the credit card. Did you . I think that we put a dagger in it. Ahmed, thats a bold statement. What does it mean in terms of numbers for apple . Again, something near term thats not going to get a lot of revenue. I think apple payment is going to be the Killer Software application that will drive people to buy the iphone 6 in general. I think its going to be more a driver that pulls in the hardware versus apple pay becoming the revenue in the near term. If you stretch this out, the beauty of apple pay, its a lot more secure. Its a lot more easy to use. And it takes a lot of the theft risk away from the process. I think down the road, as they really do take out the traditional wallet, youll see better revenues. Im a great apple fan, but apple is not the first group of people to come forward with this type of technology. And a lot of them have not yet got critical mass, putting that to one side. Lets talk about the stock, which has had this huge 30 run up in advance of yesterdays unveiling. What will it do from here, do you think . I mean, presumably the temptation would be to book profits after that substantial run. Absolutely. And i think theres plenty of historical precedents that apple underperforms after an iphone launch. It could be different this time. Step one, the weaker numbers you get in a couple weeks will be much bigger than what youve seen in the past. That will be an upside driver. When they do report numbers in october, we think they could surprise on not just the unit number but on the revenues and potentially eps as well. I think the next two catalysts will be favorable. We have to leave it there, guys. But thank you both for weighing in. Thank you. Switching gears to washington now. Tonight the president will deliver a primetime speech to outline his strategy to defeat the militant group isis. Obama telling congressional leaders at the white house yesterday he doesnt need their authorization to expand the military campaign into syria. Cnbc will have live coverage of the president s address to the nation tonight at 9 00 p. M. Eastern time. White house also upping the pressure on congress to close tax loopholes, which allow u. S. Companies to avoid u. S. Taxes by shifting their headquarters overseas. The administration saying that if congress doesnt act on socalled tax inversions, the president would take executive action soon. Joining us this morning first on cnbc is new York Democratic senator Chuck Schumer, sponsoring a new bill to restrict inversions. Senator, good morning to you. Good morning. The corporate inverters earnings stripping reform act of 2014. Walk us through what it does. Well, basically what it does is it no longer allows companies to borrow overseas and then use that deduction to avoid paying taxes on their profits here in this country. And thats only for companies that have done inversions. Its something that affects not Just Companies that have a lot of foreign competition, but what really jolted congress was when companies that were largely american, such as walgrens, decided they wanted to invert. They dont have much foreign competition. Almost all their revenues are u. S. Yet, if they inverted, they could use earnings and borrowing overseas to prevent them from paying taxes on their profits here. Right. Although, walgreens, to be fair, did not choose to invert and is buying alliance, which would increase their foreign profits a good deal. Yes, but they admitted it was only because of the pressure that many of us called them out against. They were intending to do it. Is that all this really is, pressure . For example, retroactivity is a part of this bill, back to 1994. I think its a deal breaker on the republican caucus. Are you willing to give that up . Is there any real chance of legislation . Yes, heres what im proposing to my republican colleagues. Its not in the bill that a whole group of democrats introduced, but we want to compromise and get this done. Its a very good political issue, but id rather get something done than have the political issue. We would propose to temporarily stop inversions until 2017. When, really, tax reform is the real answer here. I believe the corporate rate is too high at 35 . It should come down. But it should come down in an orderly way where you close loopholes and use that to reduce the rates. If this inversion proposal stopped inversions until 2017 and then expired, it would put huge pressure on the congress to do tax reform. And at the same time, prevent companies from inverting, which would reduce the pressure they would put on congress to do tax reform. So im proposing to my republican colleagues a real compromise, both of us, a good number of democrats and republicans who want to do corporate reform. And this would be a good path to do that. Its been reported that the head of cvs, the drugstore chain, was on our show the other day, met with you and said, senator, you have got to do something about this or there will be scores of others. I think you suggested there would be more in the month of august. How many do you think are in the wings . Well, there are a bunch in fact wi in the wings, but theyre looking at us. Were not going to get anything done in the next two weeks, but the kind of compromise i proposed has a good chance of happening in the lame duck session of november. There are republicans who are interested in it. The fact that the Administration May take certain actions that wouldnt be as comprehensive as legislation to put a crimp on inversions, i think it will slow down the rush to do these inversions. And lets face it, many of the Corporate Leaders dont want to do inversions. But their shareholders, particularly some of these hedge funds buy them and say you got to do this because it will temporarily increase your profits. Well, you know, thats how american capitalism works. But putting pressure the other way is a good thing. Senator, can i just change the subject to Foreign Affairs . Theres an article in this mornings journal which youve probably seen where they suggest that actually you could lose control of the senate as a result of the plunging popularity of president obama. Now at 40 below what george w. Bush or bill clinton was at their own midterm problems. As he addresses the nation tonight, and Foreign Policy is one of the major reasons why he seems to be losing popularity, as he addresses tonight the nation at 9 00, is that something he can correct, do you think . Id say two things in answer to your question. First, i think the president s going to be strong. I think thats what the American People want. Theres a fear of isis out in the land with some justification. While most intelligence reports say they cant hurt our homeland now, that if left alone they could, so i think americans have given the president a permission structure to be strong against isis. I think if he does speak strongly about doing things to stop isis, particularly from isis hurting our homeland, hell get broad support, democrat and republican in the congress. And i expect thats what he will do. On losing the senate, i know thats the prognosticators. If you look at it in a National Type way, do you like president obama, do you not . Particularly in these red states where we have a lot of incumbents, that hurts us. But when you compare the favorability of our candidates against the republican candidates, were doing well. Right now if you did a snapshot of all the polls, wed keep the senate. And i think things are going to move in our direction, not only because the president will show some real strength on Foreign Policy, but also as you get closer to the election, the focus more and more becomes on the two candidates and who they like better, who can represent arkansas better, who can represent alaska better. And we do better in those kinds of contests. I would predict were going to keep the senate. Senator, back to the issue of inversions and tax reform. I think those who are doing the inversions say, listen, were still going to be u. S. Taxpayers, albeit to your point they do take on debt and therefore are able to reduce their u. S. Earnings. We may be able to repatriate cash that otherwise would sit there, bring it back, and actually hire people for jobs. And finally, they would also say, you know what, the numbers dont add up to what the likes of other companies such as apple, which transfer their ipo overseas and generate a lot of royalties in Foreign Countries do. Youre not dealing with that. All of that argues not for a piecemeal approach but for a general Corporate Tax reform. Not to let each company find whatever loophole it has, overall reduced revenues and make the tax code more unfair and more like swiss cheese. This company has an advantage over this company because of a peculiarity. But rather, we should do Corporate Tax reform. And the way to do that is not allow individual loopholes to close but close those off and say now lets do tax reform. The fact that we would let our inversions bill if republicans would agree end the ban on inversions in 2017 would be a huge impetus for tax reform. If you ask Corporate Leaders, 95 of them would prefer broad tax reform than any particular loophole picking. One last thing, senator. S p ran some numbers. In the past 12 months, there have been 5513 billiondollar deals or more. The number that are inversions, seven. Does that feel like a lot to you . No, but i think it will get worse. Senator, thank you for your time. Of course, the president tonight on cnbc. Well carry that live at 9 00 p. M. Eastern time. Up next on the program, markets are taking a bit of a leg down this week. Its an interesting phenomenon as the dollar rises. Find out whats pushing stocks into the red and how you should play it through fall. And later, the mlb pairing with apple pay so fans can instantly buy tickets to games. Well talk to bob bowman, the ceo of mlb. Com next about the partnership. Squawk on street will be right back. When fixed income experts work with equity experts who work with regional experts who work with Portfolio Management experts thats when expertise happens. Mfs. Because there is no expertise without collaboration. Oh, he fakes a handoff quaand hes making a run. cause mattress discounters fall kickoff sale is ending soon hurry to save up to 300 on Sealy Posturepedic and serta mattress sets. Even get 24 months interestfree financing on every tempurpedic. Youre going to love their football fieldsize selection. This calls for a little touchdown dance. Mattress discounters fall kickoff sale is ending soon. Mattress discounters welcome back to squawk on the street. Were watching shares is of nps pharmaceutica pharmaceuticals. The stock is soaring after preliminary fda reviews said the companys hormone replacement therapy reduced the need for calcium and vitamin d supplements in clinical trials. It comes two days ahead of meetings on where the drug should be recommended for approval in heavy trade. You can see there this is treating symptoms of something that leads to deficiency of calcium in the bloodstream and causes cramping and muscle twitching. So something to watch for sure. Back over to you. Great development. All right, dom. Thank you very much. The front page of the Financial Times highlights how investors are chasing the dollar to new highs against a broadening range of currencies. In fact, the dollar index is now up a staggering 5 over the past two months with the move accelerating in recent sessions on growing talk that next week the fed will choose to spend a more hawkish signal on when it raises shortterm Interest Rates. Lets bring in the president and Portfolio Manager with permanent portfolio funds. Also joining us, Market Strategist with private cline group. Good morning to you both. Good morning. Good morning. Kevin, if the dollar has risen 5 over the last two months, presumably the value of the foreign earnings of these big blue chips quoted down here at the nyse has fallen by 5 over the last two months, is that why the market is stalling . It might be part of it. The real reason the dollar is moving higher is theres a concern the fed may begin to move Interest Rates higher. There was a paper out of the San Francisco fed a couple days ago what warned markets are not quite pricing in the potential for higher rates. If you look at the futures market, theres nothing on the horizon. We think Interest Rates start to move higher by the latter part of next year as the economy gets better. The dollar would strengthen. At the same time, the ecb is looking for ways to expand their policy of buying assets, which would weaken that currency. To us, its the improving dollar is really a function of a better economy. Thats ultimately better for corporate earnings. Would you say the same, michael . I would say broadly speaking, thats true. I think rates are going to gradually go up due to improving economic conditions, but there will be a ceiling to that. I think the economy is too anemic given the current structural impediments to cause a rise or allow for a rise much more than that. I do also think the divergence between what the fed is going to do at some point, the rise in u. S. Rates, and the quantitative easing and other measures in europe and japan are causing a differential there thats strengthen the dollar. In the longer term, you know, as long as the u. S. Is growing, thats great. Corporate profits grow, et cetera. But there will be sort of head winds, if you will, on the negative currency implications on u. S. Earnings as you mentioned, which could affect pes on a longer term basis if that trend continues. Whatever it is, the catalyst for perhaps knocking this rally off the recent high is whether its the dollar or not. Kevin, do you get concerned that bullishness seems to be rising and that every day we wake up with a new equity strategist raising their forecast for the s p . I think this morning it was piper jaffray. But this does appear to be more of a group think, that stocks continue to go higher, more so than what ive seen in the last year as this market has climbed. Yeah, theres clearly a lot of bullishness. In fact, i would reframe the market. Youre looking at a market that has been driven by momentum. It has been driven by a lot of bullish sentiment, really beginning before the start of the last round of quantitative easing. All of the riskiest sectors have really led higher here. This has been a beta on risk on market the last two, two and a half years now with very low negative Interest Rates for five years helping to support that. Ultimately, that cant go on forever. So we have been in a bull market. Were looking at the s p near 2,000. I dont think theres a lot of loss of enthusiasm for this market. A lot of money coming in and pushing this market higher. Okay, kevin. Forgive me for interrupting, but if next week the fed does just slightly technically change its language but it is signaling that were on the path to higher rates, do you think the market will shrug that off, or could that be a further pressure on a market that, as i point out again, has been unable to make headway over the last couple of weeks . A lot of the correlation between the stock market and whats been going on with monetary policy, theres a high correlation between what the fed has been doing and what the stock market has been doing. If the fed startins to indicate theyre tightening, see higher rates and turbulence in the market as a result of that. What does that mean . Is that a correction . Yeah, i think short term this is new information to the market because the futures market is not pricing in higher rates. If they start to price in higher rates, then it means that the market will need to express that somehow. And it probably means a break in the action. But its not the worst thing because the market just cant go on higher. A correction would be Something Like 10 . 10 would be sort of the number you would expect. Keep in mind, this market has had an enormous cap. Big move already. Thats the bigger point. Kevin, thank you for your time. Thank you both for your time. Thankthanks, simon. Up next, a home run for mlb. Com pairing with apples new apple pay system. How did it come together . Mlb. Com ceo bob bowman will be joining us live after the break. Its monday, a brand new start. With centurylink visionary cloud infrastructure, and Custom Communications solutions, your business is more reliable, secure, and agile. An Unprecedented Program arting busithat partners businesses with universities across the state. For better access to talent, cutting edge research, and state of the art facilities. And you pay no taxes for ten years. From biotech in brooklyn, to next gen energy in binghamton, to manufacturing in buffalo. Startupny has new businesses popping up across the state. See how startupny can help your business grow at startup. Ny. Gov whoyour boss . Rk for . Yourself . Your parents . Your family . At baird, what matters most to you. Matters most to us. As an Employee Owned firm, our Financial Advisors have the freedom and resources to realize a plan to fit your familys unique needs. Well listen. Well talk. Well plan. Baird. With centurylink visionary cloud a brinfrastructure, and Custom Communications solutions, your business is more reliable, secure, and agile. So it was a grand slam for apple yesterday as c. O. Tim cook unveiled not one, but two iphones, an apple watch, and of course apple pay, its new mobile payment system. Among the big names now queueing up to partner with the tech giants digital wallet is mlb, major league baseball. Fans will soon be able to use their iphone to instantly pay for tickets online using fingerprint touch i. D. On mlbs atbat app. In an exclusive interview now, bob bowman, the c. O. And president of mlb. Com, which is also importantly the owner of tickets. Com. Joins us live. Bob, welcome to the program. Good morning, simon. How are you today . Im good. I imagine as the highest grossing sports app in the app store for now the seventh year, it was inevitable that the pair of you would kind of beat a path to each others door to do a deal on this. Were blessed that apple thinks highly of our Development Team and that we have a good Development Team. Theyve been out there for a while for this conference as theyve done in the past with the ipad and with the iphone way back when. It was natural were there. Were delighted to be there. This is going to be much bigger than the analysts think its going to be. This is going to be very, very big. Okay. Lets be clear, though. The world is talking about the new antenna you touch close to a sensor on the iphone, and you transmit the payment in that manner. You presumably, as an online player, are talking about something different. This is about activating the Fingerprint Technology to activate a payment. Not necessarily the transmitter, correct . No, no. But look, were building an app that for all of our fans, 75 million fans that go into the turnstiles every year, theyre going to be able to use this phone. They wont need anything at a ballpark anymore. They can walk in with their phone as a ticket. They can pay for everything with their phone. Its going to make the experience at the ballpark phenomenal. Way back when, simon, it was talk and text. Then we went to content. Now the final frontier is commerce. This is great news for any retailer, and were a retailer too. Online, offline, its great news to be on the mobile phone. And its good news for samsung who had nfc as well. You say this is going to be big, bigger than the analysts say. What indication do you have that consumers are going to adopt this technology and abandon their cash and credit cards . I just think that it isnt just the technology. Its where it is. It cant just be technology. It cant just be content. When you combine the technology with a mobile phone, thats a juggernaut thats going to be hard to beat. Its going to be transgenerational. Younger kids who dont carry money are going to love this. People even as old as i am are going to love it because its easier to do things. I think the fact its on the phone is finally what will be the lance to the boil called a credit card. Its still a credit card, but now youre going to be able to do everything with your phone. I think the analysts are really underplaying this. Its not just apple. Its everyone who has nfc in their phones. People are wondering, if its such a big deal, what is it neck no logically that gives apple an edge . How long does that edge last once android players start thinking about their response . I think thats a fair question. Is that you, carl . Yeah. I think thats a fair question because samsung had nfc, you know, android in the galaxy 5. Didnt really work well. Apple will do a great job. I think samsung will be there as well. I think for all of us, android will have it, apple will have it. Its great news. As i say, transgenerational. These young kids are going to love this technology because they dont carry money and they dont carry credit cards. I think this is a home run for tim cook in every way. Were very were excite kpd about it, not just for online, which we do all the time, but because people use the phones throughout the ballpark. 75 Million People every year. This is very big news for our business. Were delighted to be partners with apple. Yeah, of course, as a new york mets fan, putting a Competitive Team on the field would be helpful too in the ballpark, bob. Just wait. Theres always next year. Thank you, bob, for that. A lot of good young pitchers. Yes, we do. By the way, our viewers may not understand. Youve been at this a long time. Youve been working back from, i dont know, 2000. I can remember meetings with you where you were unveiling technology. Im interested in your views. Give me a sense of how long this is going to play out over. It wouldnt seem to me this is going to be something that takes place next year. Youre talking about years long transition. I think for sure. But think about it. The itunes store is what now, ev seven years old . It does 10 billion, 15 billion a year. So itll take three to five years. Thats why they call you the brain. I think thats probably a fair estimate. Itll take three to five years. But its going to happen. You can never fight technology. It is the 800pound boulder rolling downhill. Embrace it, love it. I think kids are going to love this technology. I tip my hat to everybody. Before we go, you use the expression lancing the boil at the credit Card Companies. Credit Card Companies are particularly unpopular with merchants because of the huge slice they seem to still take. Why do you think that in this process tim cook has kept the credit Card Companies on his side, still within the apple complex, if you like . Is that so he can leverage something from them rather than cutting them out completely . In other words, say, look, you make great margins, stay in the game, and ill just take a slice of that rather than challenging your position. Im sorry if i said credit Card Companies. I meant credit cards. I apologize, simon. I meant the actual physical card. I think those are going to go by the way of the buggy whip. Credit Card Companies serve an invaluable role. Middlemen make money all the time. Credit Card Companies, mastercard, whos our partner, extremely valuable. Tim did it right. Enlarge the tent. Credit Card Companies are still going to be there. Its the credit card thats going to go byebye. Well clarified. Bob, thank you for your time. Bob bowman, mlb. Com ceo and president. Straight ahead, were going to talk to another Company Getting in on the apple pay action. Thats panera. Well find out what it means for the restaurant chain when were joined by one of its executives later on. Dow is down 13 points. While every business is unique, everyone is looking for ways to cut expenses. And thats where pg es Online Business Energy Checkup tool can really help. You can use it to track your Actual Energy use. Find rebates that make equipment upgrades more affordable. Even develop a Customized Energy plan for your company. Think of it as a way to take more control over your operating costs. And yet another Energy Saving opportunity from pg e. Find new ways to save energy and money with pg es Business Energy checkup. A little over an hour here into trading. Here is what is moving on the big board. S p losers were watching. Ebay, valero, tesoro, caterpillar. Some of the energy and resource names in there. Ebay downgraded and cited apple pay. A lot of folks watching this stock yesterday. It fell after apple announced the pay. Perhaps a threat to ebay. We know the love affair with apple. Holding on to that 110 target. Everyone else, steer clear. And the winners for today. Hartford financial, i. C. E. , amazon. Com. It was out yesterday that amazon prime is going to be the the video is going to be finally streamed on android. The other big news out of amazon this week is its phone is going down to 99 cents. Perhaps people are just that was monday, wasnt it . Preemptively. The stock was down yesterday. On that news. Thats kind of bombing. Heres a stock that is way down. Were keeping a close eye on it today. Radio shack falling again after an analyst lower t eered the pr target to zero, saying bankruptcy is likely. The company is reporting earnings tomorrow. This is not the first zero, right . Whats the future of this company, david . I think youre seeing it right there. Telegraph by the stock. Usually when you get to 79 cents, not saying too much. But the question, of course, is do they enter bankruptcy . Is it a reorganization . How many stores close . Best buy is potentially a beneficiary, why that stock is up. All right. Check out shares of twitter. Doing well. The company got an upgrade on improved digital advertising. Analysts are changing their tune about twitter here. These numbers, thats the street high. Youre talking 20 to 40 increases on estimates for 2015, 16, 17, 18. It is a bold call on twitter and a 65 target. All right. And a growing sign of panic in london perhaps over scotlands referendum on independence. David cameron today canceled his weekly appearance in parliament, traveling instead to eden borrow to beg scots not to rip britain apart. I would be heartbroken if this family of nations that weve put together and that weve done such Amazing Things together, if this family of nations was torn apart. Interestingly, cameron has so far stayed out of the campaign for fear his conservative partys longstanding unpopularity in scotland may inflame the situation. Of course, that maps out the difference between the system here, where the president will remain the president , and a party system in the u. K. Where if the ruling party, the Ruling Coalition decides to ax its leader, they can do that. Remember, thats how Margaret Thatcher fell and indeed tony blair. Good bit of history. Im just watching the british pound. Thats where they say this is all going to play out if theres any risk for that to happen. Increasingly strategists say if we get a yes vote, which is not wasnt the best Case Scenario before this weekend, the pound could go into the 150s, which would be significantly weaker from here against the dollar. Good for the scottish, though. Bad for us. Whiskey. When we come back, panera customers will soon be able to use apple pay at many of its restaurants. So how did the company decide to partner with apple, and what does it hope to gain . Well talk to paneras chief Technology Officer live when squawk on the street continues. Act i. Scene 3. Open port twentytwoohoneseven on the firewall for customer db access. Install version twopointthree of db connector and ensure verbose flag is set in case of problems. clapping sound isnt the cloud supposed to make business easier . Get the one that can connect to the systems that you already have. Today theres a new way to work. And its made with ibm. Opinions. Theres no shortage in this world. Who do you trust . Whose analysis is accurate . How do you make sense of it all . A simple, unbiased stock score consolidated from the opinions of independent analysts. Is that too much to ask . Nope. Equity summary score, powered by starmine, will help you execute your ideas with speed and conviction. And its only on fidelity. Com. Open an account and find more of the expertise you need to be a better investor. So what were looking for is a way to plus our Accounting Firms mobile plan. And minus our expenses. Perfect timing. Were offering our bestever pricing on mobile plans for business. Run the numbers on that. Well, unlimited talk and text, and ten gigs of data for the five of you would be. Oneseventyfive a month. Good calculating kyle. Good job kyle. You just made partner. Our bestever pricing on mobile share value plans for business. Now with a 100 bill credit for every business line you add. Crude oil is down more than a dollar. Take a look at energy today. One of the worst in the s p. Dominic chu is back with more. The worst by at least half a percent at the s p sectors oversove overall. You have refining names leading the way. And the big ones. Valero, also tesoro. Those are four of the worst performing stocks in the overall sector. This as Oil Prices Continue to fall here. Brent now still below the 100 per barrel level. Energy stocks overall have been on the steady down trend since the august of august, early september. That trend continues today. Back over to you. Thanks very much, dom. Apple unveiling its new mobile payment technology, apple pay, yesterday. Some bigname retailers already jumping at the chance to partner with the tech giants new digital wallet, including, as you can see, panera bread. Inning us now exclusively to explain how it will work in the stores and the safeguards in place to keep your Financial Information secure, the chief Technology Officer with panera. Good to see you. Good morning. How are you today . Well, you know, it strikes me im good that tim cook in an interview yesterday said itll put a dagger through the credit cards. Is this really from your Vantage Point the beginning of the end of plastic credit cards for transactions in places like panera . Obviously, you know, im not a future teller, but it clearly will play a significant role in the future. I have no doubt about that. And just between the convenience and the security thats offered through apple pay, i think there will be a material impact. Well see whether tim is actually right or not. But we obviously want to be on board with that trend. So how is it going to work . You go into panera bread, take out your cell phone and have something at the register that enables this to just scan the information on your credit card . Actually, its much more even secure than that. Remember, youve actually stored not stored your credit card, but youve associated your credit card to your phone. So literally, you walk into a panera, you place your order, and you hold your phone up to a device. You use your thumbprint to actually secure the transaction, and it charges then directly to your credit card. We dont see the transaction. Apple doesnt see it per se. We see it to make sure we can make it. But its extraordinarily secure. And then you can also use the same feature as part of our mobile application. So blaine, because apple has access to that chip, theyre able to execute directly with the banks. Is that right . That is absolutely correct. And is anybody else capable of that, or any other players be capable of that as well . You know, i think youd want to talk to them, truthfully. Im certainly not the one. Clearly, i think apple is setting the bar pretty high on this. And, you know, my hypothesis is that other people will come along. The capability that apple offers now with the integration of the banks, the issuing banks, the processors, and the merchants is unprecedented in this space. We see these hack attacks nearly every day, some big ones. And theyre in the Retail Consumer space. Youve seen it at target, home depot. How concerned are you about this . Are you confident that this is a safer meth than the traditional magnetic strip credit cards . Yes, i am actually quite confident that this is a solution. I think theres emerging other solutions as well, but i absolutely believe this is a solution. So for example, on everything you do in the future at panera, we will encrypt your card at the head. I will never actually see your credit card. Never, ever. So by doing that, we prevent this across the board. But clearly, this is probably the most secure because it requires your fingerprint. Lets game it out. 12 months, 24 months . What percentage of all transactions might happen under apple . Wow. I have no idea. We have no hypothesis, truthfully. You know, my expectation, it will build. Because it requires the new device, itll take a little while for it to get rolled out. But i do believe this will be the fastest uptake of mobile payment that weve ever seen. Certainly in the united states. In the payment chain, blaine, who is actually giving commission to apple . Presumably the Credit Card Company is at the end internally within their system. Are you also giving apple a take on the sale . At this point, you know, what apple does, i dont know. Certainly at this point we are not giving apple a take. I beg your pardon, i didnt hear that. You are or are not . We are not. Interesting. All right. Thanks very much for joining us. We will see. Blaine hearst, the ceo of panera bread. Thank you very having me. Still ahead, Apple Employee number 66. He says steve jobs himself was working on the apple watch back when he was with the company. Hell join squawk alley a little later on. And the newly minted c. O. Of sprint, marcelo claure, out with bold comments today on sprint pricing and his competitors. Basically, you can have an iphone for life for 70 a month. Theyll change it every two years. Tomorrow he sits down with david faber. Hi, are we still on for tomorrow . Tomorrow. Quick look at the weather. Nice day, beautiful tomorrow. Tomorrow is full of promise. We can come back tomorrrow. And we promise to keep it that way. Driven to preserve the environment, csx moves a ton of freight nearly 450 miles on one gallon of fuel. What a day. Cant wait til tomorrow. Everyone is looking for ways while to cut expenses. S unique, and thats where pg es Online Business Energy Checkup tool can really help. You can use it to track your Actual Energy use. Find rebates that make equipment upgrades more affordable. Even develop a Customized Energy plan for your company. Think of it as a way to take more control over your operating costs. And yet another Energy Saving opportunity from pg e. Find new ways to save energy and money with pg es Business Energy checkup. Welcome back to squawk on the street. Were watching shares on the automaker visteon. The board is splittinging its electronics and climate units apart. The stock is up near session highs by 4 on the day and, carl, does it make us feel old we still remember the days of visteon as part of ford motor . I dont think about it a lot, dom, but thanks for bringing it up. Meantime, General Electrics fast growing oil and gas Business Holding an investor meeting today. Mary thompson had the chance to sit down and talk with its ceo, one of the executives to be on the short list. Hey, mary. Reporter at 41 years old Lorenzo Simonelli ran the Transportation Business before taking over oil and gas. Now this business is a growth driver for ge. Revenue jumped 75 from 2009 to 2013 and it accounted for 43 of ges top line growth in the past five years. Simonelli said he was given two directives, keep the business growing and harness technologies to better serve oil and gas clients. He says these technologies from businesses as diverse and aviation and Health Care Help compete with longtime rivals. You look at the blades, the carbon fibers, were able to take that lightweight material knowledge, bring it into the aspect of oil and gas. You look at the power and water, the capabilities on the turbines, bringing that into oil and gas. You Mention Health care, the monitoring, the diagnostics. We have a big focus on making sure that we can reduce unplanned down time for our customers and that means going into also analytics. Reporter those analytics means software so they can improve those scheduling and production. Simonelli maintains it will grow at the 6 rate with demand for subsea drilling, measurement equipment, fueled not only by the shale boom here in the u. S. But the many new discoveries in developing regions around the world. Whats happened in north america, and as you said, its extremely exciting and were fortunate whats takinging place here and were active in north america. We also see a lot of opportunities taking place in africa, as you look at the number of discoveries that have taken place. But you look around the globe. Theres exploration thats ta taking place on an ongoing basis. But weigh focused in the key geographic areas, and weve placed capabilities in each of the regions and we have a regional model to really make sure that were close to each of the customers. Africa is a focus area as well as southeast asia. The units revenue of with about 17 billion accounted for over 11 of ges industrial revenue last year. Profits 13 of the industrial businesses total. Oil and gas is the business most levered to international growth. As 100 sites around the globe. Much of the business is done in countries where poll it particulars go handinhand with business. Oil and gas industry is always in places of political instability and risky areas. The first aspect is being close to our customers. We remain very close to our customers. We talk to them on a continuous basis. We work with them handinhand. We also obviously stay close from a political standpoint, understand the political situation. In russia were monitoring 0 the situation closely. Understanding what the impact is of the sanctions. Also abiding by the sanctions. And we do that on a global basis. Reporter now going into todays investor presentation, the key question he is how does simonelli plan to increase margins at 12. 8 lag those of rivals last year . He points out while margins improved this year boosting them is an ongoing effort. Were focused on bringing down our product costs not only for our customers but the returns of our shareholders. And thats really what were bringing from the rest of the portfolio of ge as well, personal execution, the simplification and adopting fast works. Fast works is an initiative that allows us to get things out there faster and lean er. Reporter it will be critical as Capital Expenditures are seen slowing in the coming years. Investors will be keeping a close eye on what he does. Hes often mentioned as a possible successor to jeff immel. Now over to Kayla Tausche with a look at whats up next on squawk alley. Good morning, sarah. The apple conversation continues. We have early Apple Employee Bruce Tognazzini who has had an inside look it at the process to build out apples wearables. He will join us to tell us all about that. Fin finally will mossberg writes this is a new direction but the question is about execution. Mossberg will join us as well to talk about that. Only one analyst so far that has put a price target and valuation on alibaba. Well have that analyst live to tell you how big that ipo could be when it goes public next week all up next. U. And cialis for daily use helps you be Ready Anytime the moment is right. Cialis is also the only daily ed tablet approved to treat symptoms of bph, like needing to go frequently. Tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex. Do not take cialis if you take nitrates for chest pain, as it may cause an unsafe drop in blood pressure. Do not drink alcohol in excess. 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Helping thousands of companies simplify how work gets done. Hows that for an encore . With xerox, youre ready for real business. Hows that for an encore . Whenwork with equity experts who work with regional experts who work with Portfolio Management experts thats when expertise happens. Mfs. Because there is no expertise without collaboration. I just want to check on markets as we round out the hour. Simon, we are seeing declines across the board, fractional in thames of percentages. The dow down 38 points. Did want to point this out as you can see the nasdaq in positive territory. Apple, 11 of the nasdaq. The dow if it does close lower would be the Third Session in a row. We actually havent seen a losing streak that long since july or august. Treasury yields are rising. The dollar continues to inch higher and the talk is that the fed is going to change its language on Interest Rates next week. That will will be exciting, a twoday fed meeting, janet yellen all coming up next week. Squawk alley and carl quintanilla, over to you. Over to dublin, ireland, u2 faithful wondering why they gave away their latest alabobum for free. That music you were listening to, the first ad for the iphone 6 starring jimmy fallon and Justin Timberlake. With us this morning Kayla Tausche with me. Jon for ittt is live having wor on the apple unveiling with us all yesterday. Apple shares back in the green today, up 77 cents after closing slightly lower yesterday following the big unveil. Joining us this morning the great tony sagonaki. Good to have you back, tony. Happy to be on, carl. You stayed very much if line with expectations, but some reason to at least start thinking about impact on Gross Margins. Explain. Yes, so i think the