Transcripts For CNBC Squawk On The Street 20140922

Alibaba shareholders likely view jack ma as one of their heroes following fridays successful wall street debut and record breaking ipo. Good morning welcome to squawk on the street. Im david faber with jim cramer. Live from the New York Stock Exchange. Carl quintanilla has the day off. Futures this morning because we are looking down. Perhaps china. Im guessing, jim. Its all china. Its some statements out of china saying, listen, we dont need to stimulate as much. Were willing to accept decline in the growth. Growth. 7 now, some saying in gdp. Keeps coming down. All right. Our road map this morning and it starts not with china but right back here in the u. S. With the iphone. The official initial Sales Numbers just out. Guess what . New record, tim cook says they could have done better. Alibaba setting records. Biggest ipo in the world not just u. S. , we knew that would happen friday. What did push it over the line. It wouldnt be monday without a couple of deals. Weve got two comes from overseas. Well break them down for you. And a lot of talk, as well, speaking of m a about hewlettpackard and emc. And eve dell. A lot more on hewlettpackard emc, what emc is thinking about right now. Very good. Its so opaque. Looks like its keeps being floated and nothing happens. But i have learned from you that, when its being floated, eventually somebody wraps it. Interesting parts of the discussions with h. P. , which h. P. Shareholders should listen up for. Apple, its a new milestone for that company, alounnouncing first weekend sales, topped 10 million mark. That is a new record in apples release announcing the sale. Tim cook said results exceeded expectations, adding, quote, we could have sold many more with greater supply and were work hard to fill orders as quickly as possible. We call that a highclass problem. Right. I think when we listen to this, do we really fret that china is not buying yet . That because it wouldnt matter. There arent any phones. This is now makes it so i feel better about q4. I feel better about q1. The way apple has to get to 120, 130. What you need is a sustained Worldwide Growth in earnings. And i think that you get that from this, which is going to have very big margins. One where we havent heard from carriers yet. Can you imagine . We havent heard from what sprints going to do. Nice that we played the ma interview. I think the soft Bank Interview had a lot to do with apple. Tell me why, though. Talking, of course, about our conversation with mas son, soft bank. Alibaba, that was big for him. What do you mean . I look at sprint and i think that what people dont recognize, sprint is inferior network. Where did i get it from, dan hessy, former ceo. What does sprint have to do to get customers . They have to become the low cost provider of those to you. But i look at tmobile and i think, what is john leisure going to do . Hes said hes going to throw sprint under the bus. Y now two companies literal will give you more apples than you thought. This is how you get multiquarter rollout. Those who trade apple, sell it on friday, come in, have to pay up monday, thats not working for people. The and reason its not working for people, some company has a better product, we can listen to blackberry on friday about their new product and say samsungs got something going on. But the fact is this is taken the world by storm and its just, i think, people kind of yawn ahead of it. Oh, another one. I mean, what does it matter . Turned out to mat air lot because features are great. No ones talking watch. How about q3 for watch . This, from what we thought the watch wasnt available for the holiday season, oh, no, a staged rollout of apple products. Really good. 10 million, and as you say china not a part of it but we dont know how many phones people have been waiting in line for here. People wait in line to sell on the black market in china. Youre kidding. Im not kidding. What is that . New way to make a living . Well, a lot the economys not that great for a lot of people still. Shouldnt you be buying cigarettes and selling them . Im sure thats going on. Jon fortt sitting next to me, later on friday after you left, and he had both the plus and the 6, he took a picture of the huge crowd here behind us for the alibaba ipo. I took a picture with my iphone, difference in quality stunning. Difference between hd and regular where you look at regular and you cant believe its blurry . Yeah. His picture so much nicer than mine. A major, major innovation. What we discover every day, there is one of the things that apple does very right they do the presentation. Its only after you start fooling around with it that you realize its much more powerful. And by the way, the pc does not get more powerful. No. No. The pc just becomes more antiquated. Big iron, e mechltmc or hand. The gulf in the middle without 3d printing, without something thats got pizazz, you end up being stuck. Look at oracles numbers. Their core business, its not oracle one of the companies, at least emc talking to. Is that true . Yeah. Some of that that is big. The journal, and today i can confirm that. It doesnt mean anythings going to happen. Back to h. P. On printers and pcs. But first, lets talk alibaba. Because it does now rank officially as worlds biggest ipo ever, surpassing 25 billion after the underwriters exercised option to purchase additional 48 million shares from alibaba. Its the green chute. Certain sellings shareholders as well. Chinese ecommerce giant surges in its debut friday. Shares up 38 above where the stock was prices at 68. It was stunning. It was yes. We we hype, no doubt, but that thing was actually worth the hype in a lot of ways. I mean, its as big as walmart. At the end when i left the set at noon and looked, it was around 240 billion market value. You think, its 5 billion from walmart. A tremendous number of articles, again this weekend, as on the same day, unsustainable, unsustainable, unsustainable. I listen to jack ma, yes, the rununsustainable, its about to have a leg up. The big mutual funds took it. One of the things people dont understand behind the scenes, david, is that you can to some degree control price. Try to keep Retail Investors out. Keep hedge funds out. You end up just mutual funds that get half or a third of the allocation and then have to come in and buy in the aftermarket at 100, they were released. Anybody who bought tonight the deal was able to sell it, and theres no there was no punishment. I spoke to a few hedge funds who worked extraordinarily hard to get whatever allocation they could and, as you say, underwriters will slap you back if you think about entering the market quickly. But they did. They did. Mid 90s, they were done. Right. They were largely out of their entire position, i wont say obviously who, and i asked, why would you do that . They call it risk mitigation. At the same time, understand that nobody, everybodys attuned to the idea that there is an absurd place for this thing to go. Earnings basis, all that did at 100, get it to where you say its comparable to facebook. Some say ones retail model, ones a proprietary. What about the discount, chinese company, not a great deal of transparency and risks we dont fully understand. Remember when we asked jack, jack, mr. Ma, about china slowing. Remember, this is half of the people half of the countrys on the internet and of that half, only half are customers. And it seems to me we always seem to forget that they just arent stored over there. Remember, when you go down, youll see in our cities and then in our suburbs store after store that dont exist. If china. I think the stock can come down. I believe, david, every time the stock goes into the 0s, buyers will come back, they get the average after 68. This thing, they did not bump and they did not expand. True. That was disciplined. Im sure that was jack ma saying, huhuh, i know that im customer oriented but dont screw it up. Joe sigh went through every allocation. 1700 different accounts, checking each of them. Dont you think of the American Companies that come public, most are not nearly as sophisticated about the way our system works as they were . I doon think they are as attentive to something along those lines and making sure its who with us previously. I will say this, it becomes a way to play macro china, right . I totally agree. Wait 7 gdp, no stimulus, maybe ill short alibaba. Right. Or go the other way. Stimulus, buy alibaba. Youll see the most deep value stocks in the market, the companies that sell into china. They just it just seems like boats arent going in anymore now that the freight, i monitor that, thats been stable for a while at a low level. The day rates, by the way, for oil tankers, have you looked at those . Through the floor, china. China has basically gone offline for imports but not the Consumer Market where its extraordinarily strong. Where they continue to try to stimulate. By the way, the larger story for the market this morning. We forget if you go back to 2008, when the market peaked that was china peaking, too. Caterpillar, by the way, we had a great interview two years ago, it now seems to be coming true. Yeah. Caterpillar, i know you say the market went up big, it didnt go up any more in the market but that group of stocks did well. Those stocks are really under a lot of pressure. All right. Well talk more m a after we take a break here. Emc, of course, in the m about a spotlight, with hewlettpackard, talks between the two, i can give you insight as well. Also big deals from germany. German Companies Buying our Companies Left and right, the trw deal last week, two deals today. And not to mention, also going to speak with david wei, his take on the wall street debut and its future. Another look at futures this morning as we digest, you know, i guess, largely china. More squasquawk on the street after this. You know. Theres a more enjoyable way to get your fiber. Try phillips fiber good gummies. Theyre delicious and an excellent source of fiber to help support regularity. Mmmm. These are good the tasty side of fiber. From phillips i have a cold. I took nyquil but im still stuffed up. Nyquil cold and flu liquid gels dont unstuff your nose. Really . Alkaseltzer plus night rushes relief to eight symptoms of a full blown cold including your stuffy nose. breath of relief oh, what a relief it is. Thanks. Anytime. Big shot, tell you what tell you what welcome back. Reports this morning in both the wall street journal and New York Times, which i can confirm, detailing emc and hewlettpackards efforts at getting together in a what would have been blockbuster deal. Allstock transaction. They were speaking for months. They are no longer talking, jim. Of course, a lot of this comes in light of, as we know, activist investor in shares of emc, arguing that its 80 stake in vmware under valued and a ceo leave in february. Joe tuchy. These predated ownership of elliott, that is, emc and hewlettpackard. And they were advancing, in fact, people familiar with the situation tell me, you know august it did appear they were getting close to a potential deal between hewlettpackard and emc. But they never were able to fully mount issues having to do with price. Sources tell me, emc wanted a big premium, it would have been allstock transaction, whereas h. P. Wanted to do an atmarket deal. It gets back to combined ownership of respecter Shareholder Base of the combined company. And so it did not happen. Meg whitman would have been ceo of the combination, again, as we mentioned, tuchy stepping down, might have been chairman for some time. Right. When they previously, ralph witworth, not executive chairman, shes chairman and ceo, meg is. Didnt happen. But whats also interesting here, i dont want to make too much of it but they were considering as various plans came through and they continued to discuss spinning off psg, personal system groups, spinning off printing as well. So thats core. Right. Well. It is considered one h. P. Still, but it does show you theres a willingness at h. P. Clearly to consider a lot of Different Things now, including something weve talked about many times and the last regime, considered doing or was moving to do, which is spinning off pc. Hewlettpackard is dramatically undervalued, if thats the case. Willing to take forceful actions. I know theyve got 3d issues in the pipe now. I talk about 3d, its for the retail investor. Hewlettpackard has a lot of value. The fact theyre willing to entertain, whether emc, getting ow of printing, out of divisions that lagged, one time we talked about ibm and emc but ibm doesnt want to be in hardware. Storage and cloud make a lot of sense, ups their cloud offering a lot the hewlettpackard. Again, it doesnt appear things are revived at all. Why do you say that . Im watching emc stock. Is that for people saying, listen, if theyre for sale, someone will come in, dell chatter, someone what surprising . I think, a, theyre under pressure from activists at elliott, and, b, they do seem to be from what my reporting leads to exploring a lot of different options. And so i think theres an exp t expectation they may reach either some sort of other sale and or split and or sale of division. Unclear how many theyre looking at a lot of Different Things or perhaps nothing. But theres a lot going on at emc right now. Vmware the driver. Its funny, we see two downgrades of yahoo today. Yes. Bank of america, merrill, serious downgrade. Reads badly. Talking about Marissa Mayer not knowing what to do with capital. People are disrespecting her at a level which is extraordinary. Theyre saying whatever she does its going to be wrong. Remind me of vmware, if you bring out vmware without having a lot of tax, emc is undervalued but no ones able to unlock that. Great comparison you draw of course the remaining alibaba stake at yahoo and something ive talked about here endlessly, how do you tax efficiency sell that at some point. You cant. Well, not necessarily. Ken goldman, their cfo, trying to figure out ways you can. Talking yahoo by the way, if youre following us. Understand if you do the looksee at yahoo you say, wow, look at valuation of all of the different assets. Clearly the companys valued minus two. Look at vmware, back that out, say emc is just it seems like youre getting it for nothing but youre not because theres a giant began tick tax bill no matter what. Well get back to yahoo take a look at stock when it opens trading as well. Weve got more, of course. Hewletts big news. Big they would be willing to willing to consider many Different Things, hewlettpackard. Of course, does it reflect negatively on the view of the business . No, i dont think so. I think they see theyre not doing well, theyre willing to go with it. Thats a meg whitman style, i like that. A lot of deals to talk about. So much more to talk about. The mad dash coming up from the man to my right, to your left. Opening bell next. Later, sarah talks with Jose Manuel Barroso about the challenges facing europe and the economy. One look at futures. Back with mad dash after this. S philosophy is, reynolds . No. Not exactly. To attain success, one must project success. Thats why we use fedex one rate. 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So you can invest in the life that you want today. Tap into the full power of your fidelity greenline. Call or come in today for a free oneonone review. Strike it up this band is going to play my tune strike it up all right. Its a monday. Weve got a mad dash. Opening bell seven minutes away. Start off with a look, rumors on clorox and fact. Like the idea you called it rumor. This is a story in the New York Post this weekend saying its for sale. Donald retired earlier than i thought. New ceo. The companys growth challenge but did fight back a very important incursion buy, karg icon, getting the stock higher. Great dividend play, too. One reason it could be going up, more than the idea there dowel be a takeover. The number suitors, be careful about proctor, the government disallowed that combination 50 years ago. Theyre getting out of venezuela. Anybody who suffered through a clorox Conference Call in the last three years heard them say, charge, charge, charge venezuela, venezuela wont let them play prices. Getting out of venezuela is the bullet that must be bit bin a lot of companies. If proctor would do it, proctor would go to 90. Keep in touch with the idea, getting getting out of the venezuela. People dont understand, this is big market that everybody felt if we hang out after chavez he will become part of the western hemisphere. Again, they havent. You dont want nobody venezuela. Moving on. Now, one of the thingses that been continually misunderstood the decision by cocacola to buy a big stake in monster. Monster uses the cocacola distribution, i think monsters not unlike what happened with Green Mountain coffee where cocacola keeps coming back and back and back. Monster should be dramatically higher if able to plow the distribution network. This is red bull. Wheres monster mostly sold . At Convenience Stores. What happens at Convenience Stores when gasoline goes down, sales spike. What do they buy . They buy tobacco, they buy chocolate, and they buy energy drinks. Monster goes much higher. Much higher from here. Much higher. You believe that to be the case. I do. That was quite a move up, that the market gave credit for when they announced the deal. Its significant, they have nobody else is able to take over monster, it f. They choose down the road. Cocacolas gotten aggressive how to diversify. Companies, Big Companies keep buying. Why . They need growth. Monster has tremendous growth. This stocks a great place to be, even up here. I typically do not recommend stocks up here at these levels. Opening bell a few minutes away. Alibaba, day two of trading. Talk about yahoo as well, which was down insurancely. And mr. Barroso after this. [ male announcer ] automotive innovation starts. Right here. 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Jim, you know, lets get back to that broader market. Friday, everything was looking good. Yeah. Looking good and feeling good. Sentiment does seem to have swung a bit. Right. Month any flow back from the alibaba deal and go right back into the social media news. Funny to see why they spiked. People say, why did they spike . They spiked because you were allowed to return your money and go back to the same segments that you sold in order to raise money for alibaba. Now, i would tell people, look, alibaba, last dollar and a half was no buy, at the end of the day, a bit of a one of these, they gave you the average price. I believe that below 90, buyers come right back in. Monitoring this venezuela clorox. And colgate were to step out, colgate has been hurt. So youre seeing mergers in food and beverage. Youre seeing these hardware decisions that hewlettpackard news that you broke just now, youre seeing a lot of activity in m a, a lot of earnings coming in two weeks. Youve got to get your deal done between now and two weeks because earnings play not be so hot. Thats what you think. Worried about watch oil. Because theres a lot of people making a stand on the oil stocks however, david. Continental resources disappointing last week. [ bell ringing ] we have it, beginning of trading for this week. Here at the big board, European Commission president Jose Manuel Barroso, talking to him a little past the hour. At the nasdaq, nasdaq Communication Technology company, ericsson doing the honors. Realtime exchange, back at hq, composing itself, so to speak. More red on the board. And you know, its not clear how much of it is china slowing. Those worries cited by a number of Market Participants as one of the reasons were down. China september flash, pmi tomorrow morning. Right. Lower fit, 2015 gdp goal, idea there will not be additional stimulus efforts made by china in terms of perhaps on that front. All of it kind of cited as negative. One of the things, our proxy for china, by the way, the casino stocks. A very big downgrade today. A guy threw in the towel with casino stocks. Why does it matter . Wells. Wells very good firm. Las vegas, sands and wynn are directly plays. The slowdown in china, its funny, a lot of people feel what happens happened the end of showy spending. But when youre buying things on the internet in alibaba, no one sees. Chinas very important here in terms of being able to drive world growth. They take themselves dont forget, europe is just a giant began tick market for chinese exports and europe. A lot of people a bunch of discussions last week with people about u. S. Interest rates and how the fed has to do this and that. No one talks about the fact that the rest of the world is so slow, it doesnt matter what the fed does. Maybe the fed could issue a lot of bonds, you know, play off their tremendous portfolio. But she ruled that out last week. Janet yellen ruled it out. Jack lew ruled out systematically doing a big bond offering. The supply diminished. Despite encouragement to do that through the years i like jack lew. Youve been trying to get those guys do a longterm bond issue. Im with you, lock it in, man. How many people dont want 50year bond. How many corporate treasurers and cfos said i can get 30year money like this after tax . Its like equity. A negative article about buybacks i read and i have to tell you, its very difficult to not justify buying back if the governments give you free money. I like the Drug Companies here. The Drug Companies are taking action to be able to buy small biotechs or buy back stock. Notice, abbott upgraded this is stealth upgrade today. Why . Abbott is a company thats quietly going higher. I like the stock very much. Goldman goes neutral to buy, glaxo, another stock thats quietly going up. Glaxo is good today. People should get in on glaxo, its got a very good yield. Hmos, a lot of big downgrades there. Just to show how interesting its become, activists downgrade the act, avis downgraded by barclays. Jpmorgan says go to 300. The tugofwar, how much of the economy is slowing and how big you should be in drugs. How big you should be. Seems count intuitive, coming out of the gray recession. But theres every time we come out of the Great Recession people pull us back in. It does feel that way. Talk yahoo and potentially soft bank. Huge beneficiaries of that incredible move up in alibaba shares of 38, roughly percent above the 68 that yahoo did sell some of its stake in but remember, it has 401 million shares, lets call it 400 million, bernstein saying 394 million. Im working off the prospectus numbers. The point is its worth 36 billion the stake. None theless, bernstein chooses to downgrade the stock. B of a merrill chooses to downgrade the stock. How they can tax efficiently dispose if they choose to of more of that alibaba stake in the future after obviously what would be paying taxes on what theyve soeltd tld the other da the ipo. Bernstein would say, buying it at 40 a share, management will transfer to shareholders the tax efficiently or the yahoo will be acquisition target. Dont think its necessarily possible so they undergrade the stock. I believe, look, someones going to get the job done. I have more faith in Marissa Mayer. The buyback has been heres an interesting fact. Theyve bought back a huge amount of stock and its brilliant. Why is she not getting credit even for the buyback . The whied that ty eiey idea tha worthnology is fool hearty. A looked at the deal that s. A. P. Did this week. This concur technologies deal. Who says that yahoo cant do something very smart with its money . I tire of the negativity yahoo . Ive been right about this, ive been saying buy for a long, long time, and im not backing away one bit. But i have more faith in what the company may do with its capital than other people think. Well, time, we will see what decisions she chooses to make. We cant get the soft bank story out. Thats not going to happen. Its not going to happen. Soft bank not buying yahoo . Thank you. Soft bank down, actually, though because mr. Massa, who we had on the set, unexpectedly friday, 72 billion what the stake is worth. Almost 800 million shares of alibaba. Geez. Theyre a creative company. You think theyll stake other paid 28 million. Numbers are daunting people dont realize these companies will fund the next level of invention. Right. But i mean look, soft bank moves up shortly, yahoo moved up sharply. Both are selling off. Right. Whats funny, people have been saying, wait a second, if this if yahoo supposed to be at 46 and alibaba at 80, how can it it be at ho with alibaba at 90 . The answer is that always a lot of people who come up with takeover scenarios. It was the takeovers in the last four, five points. The idea, its absurd yahoo could have so much money and someone doesnt take a run at it, anybody i keep saying buybacks have worked. Im using a buck ten for earnings per share, got to be a multiple, give it a ten multiple. Add ten to what they are doing, 35, 36, you get 46 stock, its going back. Did want to come back to emc and hewlettpackard. Shares of h. P. Up, emc up, less than 1 . Wall street journal reporting New York Times also, talks between the two, i confirmed that as well. And they were serious talks. They were quite serious. They had gone on for many months. Broke down eventually over valuation. Right. H. P. Wanting atmarket deal, emc wanting a premium. Not far apart in size, 60 billion to 68 billion for hewlettpackard. Thats another part. Trying to negotiate, meanwhile stocks moving and its difficult to do that. And then h. P. , again, considering, it doesnt mean they would have done this, but certainly part of the conversation the idea that do we at some point spin printing and personal asystems the interview with meg whitman, it turns the stock around. The morning after they reported quarterly results. What i fine amazing, explain, why does she feel she has to do something . Shes taking a losing hand and made it into a winning hand. She seems to want to get this stock back to its glory. And even sacrificing divisions that ive long regarded as being great cash cow. Printing. I mean, selling those cartridges is gillette. Its high margin businesses pcs. Margins, lucky if 300 basis points. They have to go into some other business that has big margins . Swap out you want to be where growth is, too, dont you . Yes. Storage cloud, vmware. I continue to be impressed. She has been consistently underrated and then as you dig into the numbers, you see that one by one, theyre tackling the toughest and now if they cant tacking it, they get rid of. Thats a new hewlettpackard why i get, i reiterate its worth more than three. Bob pisani. Let him out of the post. In the post for a long time. Bob, great job friday. Thank you. Very cozy with mr. Ma and other alibaba executives. Great time. Important thing about today is were not getting any real energy. Not enough follow through to frip thats because of the concerns about china weakness. You mentioned that. Chinese minister of finance spoke at the g20 meet over the one. He complained about problems related to constant stimulus measure, particularly high Government Debt levels and the takeaway, dont expect us to do a big Stimulus Program anytime soon. China 1. 7 . You see that . Shanghai there. Also manufacturing numbers, the flash manufacturing numbers tonight. A lot of people think they will be notably on the weak side. Predictively when you get issues with china, emerging market stocks weak overnight. Look at eem, main emerging market, etf, thats weak. Were at now better than sixweek low on the eem. That could be on the volatile side. You see its down essentially the entire month. Predictably on china, slowdown concerns. You get material names weak, particularly steel stocks, iron ore stocks, rio, all of these names, predictable decline in the iron ore, steel stocks on the weak side. Japan is week. Going with another phase of the consumption tax, raising consumption tax. Thats a major issue there though its slowing the economy. They said theyre going to go ahead and deal with that. Japan down. 7 . Europes weak. Mr. Draghi, head of the ec. About, just out saying recovery losing momentum. Trying to brow beat ecb and europe into doing structural reforms. Theyre not doing it, theyre not paying attention to him and hes warning about that. Alibaba out of the way, this is the big week for ipos. The big one, believe it or not, second biggest ipo of the year is this week, its citizens financial. You know thats an rbs spinoff, thats a Rhode Islandbased bank, 3. 3 billion. The biggest bank in colombia, going big. Vantage, travelport, thats an Online Travel site. Smart and final stores, kind of hip store thats out there that may go public. Thats also slated for later in the week. Add it all up, 7. 5 billion in ipos. Huge week for ipos. Alibaba 25. But you throw another 7. 5 billion on it, and now youve got a real test for the overall market. See how some big names price, particularly citizens. Theres another Small Company that a lot of people are watching and thats cyberart. Cyberart is israeli cybersecurity company. A small deal, 5. 4 million shares, thats 70 million. But first its cybersecurity and, two, its tech. We havent seen a tech name if a long, long time april lot of people are wondering how the tech markets going to hold up. Last one, it was mobilei, they do all of the Collision Avoidance devices out there. Collision avoidance chips, really than was a huge success. That was 25 at the end of july. Up better than 90 . Thats the first one weve seen in a while. Finally, china stocks, alibaba opened around i cant see it, but opened around 91. There it is, 91. Jd. Com, dangdang. Bob pisani. Mentions mobile i. I like that stock. Yes, i do. Deals. Germany, whats go on over there . Feel aggressive, at least in m a. Boy, you qualified that. Thankfully. Trw, last week, this morning merck buying sigmaaldrich. And youve got dresserrand. Wow, these are three of the largest deals ever done by german companies, 3 of the 4 largest german acquisitions have occurred this year. German acquisitions in the u. S. , topped 61 billion this year, thats 5 of u. S. M a deal value. Of course, as we know, foreign buyers make up a good deal of the larger deals that have taken place cross border with us and with us to stay. We are at a total yeartodate value so far of 1. 25 trillion, surpassed last years deal volume already. 1. 25 trillion before we get to october is extraordinary. It is extraordinary. What do we got this morning . I mentions, trw last week. Weve got dresserrand, mr. Cramer knows a great deal about, and also merck. Not our merck, merck ag, germans merck. Buying sigmaaldrich. Remember, sigmaaldrich one point tried to put something together for life technology. Right. But whats interesting to me here is the premiums and the multiples. Premiums, both in these cash deals, all cash both of them. Same premium, 37 . I think maybe a trend. When i first started back in the news division, institutional investor, three was a trend. One more. Three. Then write a trend story. 37 . What i found amazing, sigmaaldrich used to be a stock i recommended the Goldman Sachs in the 80s. Why . Had one of the highest growth rates. And people said, be very careful. It had a very high price multiple. Great mosaimosaic, chemicals. Like growing up and your mom and dad gave you a chemical set. Now, david, this stock was selling in mid20s and prices 30 multiple coming in. Everybody told me it can never be taken over, its too rich. Trw had been rich because of the move tremendous amount. Paid enormous multiples. Multiples on sigmaaldrich, 18. 7 times 20125 earnings before interest tax the news a big number. By the way, on dresser, 17. 6 times or call it almost 18 times, last 12 months. Trailing ebitda. When it became public, it was a dog new york one would touch. Huge multiples pay by german acquirers. What unites theyll, unsolicited approaches you couldnt say no to. They say well pay you awe huge premium, multiple. You have to say, okay, sold to you. I felt the g. E. Would be a natural to be able to buy dresserrand, turns out of course g. E. Went for alsome, people want to confuse the, ones infrastructure, ones a direct play or shale drilling. If you say what else looks like that . A reason spinoff everybody now ink, symbol dnow. I had basic on last week, bas, its not a takeover name, basic energy, but they are in the similar thing. These stocks, last week, Continental Resources talked about having to spend more to drill. Continental resources i think unfairly slammed as opposed to corporal ceramics, thats expensive ceramics versus where sand can be. All part of the equation how to get il out and ship and the need to use trains. Using trains you cant sight pipe lines i was going to the eagles game and there were ban fracking signs. You cant frac in jersey. I mean, there are places where youre not allowed to frac. Texas that fracking underneath schools and graveyards. They havent moved bodies, moved graveyards. Kidding thats a reference to poltergeist. They are drilling under schools in ft. Worth. From fracking to santelli. Rick in chicago. Good morning. Good morning. So, technology to me, i like that. If we look at a twoday chart of 5s you, can see what was ever going on last week or with the fed meeting on Interest Rates, its subsided. Open the chart up to september on the 5s. More eyeballs on the five and the different spreads on the yield curve that include fives like the fob, 5s over bonds. Intraday traded higher, 185, september 1st settlement. We havent settled above it. So if you open the chart and go back to spring of 2011, you can so what we toy with in terms of the Interest Rates at least on a closing level for 5s. Switch gears to a longer maturity, look at 10s, twoday looks similar. Now, theres no secret that technically, somethings happened in the last couple of weeks, augers for potentially higher rate but its the path. Weve extended, 20basis point higher range, trading in 30s and 40s. In the 50s and 60s. It doesnt look like a time line thats on fire to get back up to 3 . Open the chart up to june, a lot of wood around 263 to 265. That will be key for this week. Foreign exchange, yeah, we used to talk about the euro. But thats so last spring. This time were going to have to look at dollar yen, hovering at best level since may 2008. David back to you. Thank you, Rick Santelli. Jack ma had millions of reasons to smile when alibaba made its big wall street debut. Hear what he told us about satisfying alibaba shareholders over the long term. Well be right back. Theres a gap out there. 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. Shares of alibaba are down, over 2 this morning. The second day of trading for that stock. Executive chairman jack ma, joined us on friday ahead of the companys first trade. He already had his eyes set on expansion. What will make shareholders happy over the long term . Take a listen. I think there are so many things you have to do with our ecosystem. Not only helping Small Business in china, i think Small Business in africa, in southeastern asia in europe, in the states, farmers need help. The money would be spent there technology, if we want to apply, apply, buy these companies can help the ecosystem, that can help the Small Business. Can you walk us through where your head is on the pricing . Is this where you wanted it . Why didnt you go higher . A lot of people said its worth more and will be worth more today. I i think thats the banks position, my team position. And to me i just give them i dont want i dont want, you know, disappoint shareholders. I want to make sure theyre making money. And im sure, and i really want to tell the team that shareholder number three, thats not a name, discrimination. But the thing we do better when you really care about it, the customers, you really make those innovative young people successful, the shareholders will be happy. So to me, the price up and down and all, thats the my people worry about. I worry whether customer happy. Customer first, employees second, shareholders third. But, jim, real quickly, transparency continues to be at least a question mark here. He says got to trust me. True. My cousin runs manager of doctors without borders. I hear he wants to go, chinese, a popular country overseas. They are regarded as being world humanitarian rightly or wrongly. But dont spend much money at all on that. Stop trading with jim, when we come back. While every business is unique, everyone is looking for ways to cut expenses. 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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. Im diana olick. Breaking news from the realtors. August existing home sales down 1. 8 to annual rate of 5. 05 Million Units and thats from a downwardly revises july figure. After four straight months of gains in sales we see the tides turned down. Street pecking 1 gain, this is disappoint. Existing home sales down 5. 3 yearoveryear. Regionally, sales up in the northeast and midwest, sales down in the south and west. But notably down in the west, 5. 1 monthtomonth, and down 10 from a year ago. Median existing home price came in 219,800 in august, gain of 4. 8 yearoveryear. But again, gains are shrinking. Inventory, the story here. Up 4. 5 , to 2. 31 Million Units, represents 5. 5 month supply. Realtors warning that inventory will start to drop how to that were in the fall. Expect 20 reduction through january. Now, one big story here is that the investors are moving out of the market. That, they say, accounting for the drop in sales. Investors dropped to 12 of all august home sales. Usually up around 20. All cash, a third down to 23 . But the first time buyers, no, not picking up the slack. Still only at 29 of august buyers. Back to you. Taking edge off of the home builders, thank you. News on activision blizzard. Julia boorstin. Activision hiring Rudy Giuliani to take on manuel noriega. Suing for using his likeness. He says hes entitled to share of the profits and news is that july annie is representing the activision blizzard. Former mayor giuliani will serve as cocounsel. He says im not interested in giving handouts to convicted murder and drug smuggler demanding money in activision for exericising it right to fre speech. Having giuliani argue the case would reassure investors about the lawsuit. In a twist, giulianis 1989 bid for mayor his thenfirm represented noriega which was used against him in campaign ads. Over to you. That is an interesting development. Thanks very much. Apple announcing record breaking first weekend sales for the iphone 6. Joshly. Ton joins us Silicon Valley with the Staggering Number and what it means. Josh . Reporter apple says it sold 10 million of its new iphone 6 and 6 plus phones. Put that in context, that is a new record and 1 million more than the company sold last year when the 5s and 5c launched. Tim cook saying sales for 6 and 6 plus exceeded expectations for the launch weekend. We couldnt be happier. Adding, we could have sold many more iphones with greater supply and working hard to fill orders as quickly as possible. Now we knew demand was strong for iphones. The company said preorders topped 4 million in the first 24 hours. Which was a record. And about twice the initial 5 sales. Lines at apple stores bigger than ever. Gene munster counted the lines says lines in new york city and the midwest were at least a third longer than last year. Ebb expectations are high for the new phones. Cook says, this is the biggest advancement in the history of iphone. The 6 and 6 plus are bigger and faster, with improved cameras and longer battery life. Remember, china was not included in this launch. Analysts think the iphone 6 plus, in particular, could receive a very warm welcome there. Simon, back to you. Seem to be a lot of chinese queueing up near my papal store. Thank you. For more on apple Sales Numbers and talk about the markets and alibaba, lets bring in david katz, with matrix asset. David seeburg with us, head of sales trading. Welcome. Nice to be here. David cath, i guess, the figures from apple are all of the more remarkable when you look at what obviously, as tim cook infers, problems with the supply. Im looking at cantor fitzgerald, suggesting their survey of 90 Stores Across the country indicated that the iphone 6 plus completely sold out by saturday afternoon, sunday morning, david . You have a few things going on. You have the product and then you have the stock on a longerterm basis. We think the products going to be a hit, not because of innovation but because people want a larger screen and wanted apple. That marries it with the iphone 6 and the 6 plus. We think sales will be very good. Near term the stock will trend higher on better than expected sales. Whats going to drive apples next generation and its 16 times earnings, we have question. Wed stay with the stock on a shorterterm basis but not putting new money in here. Interesting. The stocks up, what, 35 over the last 5 months . David seeburg, where are you on this . The other piece of commentary were getting, of course, not only are people going disproportionately for the higher margin, 6 plus, but also more likely, it is said within that, to upgrade their capacity. Which is a real high margin phenomenon, as we know well for apple, david. Yeah, absolutely. I mean, look, my position on it is, its incredible to see the demand. Its not about just the size of the screenen its not just about that. Its about the fact that, i said this, i think on the show may have been this show or on talking numbers, that i really predict, this is going to change the landscape from mobile payments perspective. With it nfc and people have confidence behind the apple product and the security aspect of itunes, giving credit card to itunes and the lock, this could change a landscape from mobile payment standpoint. Its not about them collecting on that. Its more about actual hardware sales and i think thats going to drive it Going Forward. David, while we have you, a big story moving markets, on a broader level is china. Its interesting that there was voracious demand for the alibaba im ipo on the play of the chinese economy and consumer but shanghai overnight fell 2 , concern not doing stimulus after commentser from g20 to rafr up economy. Is that a concern . Shortterm alibaba, in i universe of itself. We think the chinese economys okay. U. S. Industrials and Energy Stocks beat be down hard because of concern of chinese economy. We would be using this pullback in industrials to buy positions in the companies because we think the global economys intab intabct and we think the best wy to play that is through large u. S. Industrials that have exposure there. David, specifically on alibaba weve had the big bounce. We can see that. A fen no nphenomenal day in man respects on friday. Now 98. 78, what happens to the stock in is it a normal play on earnings and margins and mobile and the discussion or are there still extraordinary moves to come, do you think, because of just the sheer capacity of what were going through . Youve achieved the extraordinary returns on the ipo and then the first trade price. This point its 240 billion market cap company. Its richly priced. Its about 35 or 40 times earning. We think if it does well, its on continues china growth. There are articles in barrons about yahoo being a better way to play. Look at valuation, we think that probably makes sense though a few analysts did downgrade yahoo today. Sure. David seaburg, as head of sales and trading, let me ask you about the dissatisfaction that there is in the market, the dissatisfaction from those people that didnt get an allocation from any of the houses that only got a small fraction of what they wanted and perhaps, david, dissatisfaction amongst the bankers they have to share the spoils of what was a huge ipo. Right. Yeah, no, i understand, as far as dissatisfaction really, i mean, if youre a guy that wanted to build a bigs position in the stock and get a smaller allocation, if you look at way it traded friday, really sold their positions. It was too dpift to ifficult to at 98 when you didnt get enough at 687 those that own this long term, decent allocations at 68 they can buy at 93 and the sweet pot of 80, 85, where the average will be, people, institutions are comfortable with that. So when i look at it and say theres a period right now of digestion with alibaba, that die gergs is t digestion is the next several days where it falls. Significant demand for the 80, 85 level from institutions. Longer term, the question on pricing how you value the company . If you value on fundamentals alone, or is it the only pure play on really the china consumer . I think that this could ledge ga legitimately trade like a tesla or a stock with a crazy valuation on that assumption alone. Fascinating. Well leave it there. Have a great week. Up next exclusive interview with the president of the European Commission, what do economic worries across the pond mean for the u. S. . And u. S. Investors . More on that when squawk on the street returns. 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. A. Welcome back to squawk on the street. Charles plosser set to retire 2015. Known as maybe one of the leaders of the hawkish wing of the federal reserve. He has been one of the principal opponents of some of the policy. More of the forward reaching part, not the immediate stuff during the crisis. And charles ploser, frequent guest on cnbc and very i would say wellspoken individual when it comes to his side of the story. Theyre going to begin an immediate search for a replacement. This is not mandatory retirement, but im told its a personal reason that hes going to be retiring. So, back to you guys, charles ploser, president of the philly fed, retiring. Hes a big newsmaker and could shift the Power Dynamics inside the fed. Sigh of relief across europe last week as scotland did vote to remain part of the United Kingdom but future votes on cat loan na, ukraines status and the recovery continue to hang over investors around the world. Welcome Jose Manuel Barroso, stepping down at end of october after ten years and Prime Minister of portugal. Thank you, a pleasure. Start with the economy. Thats worrying us again in europe. Draghi speak this morning, saying risks remain to the downside. Is europe heading back into a recession . No. We are going to avoid the recession. Its true, the growth in real economys going slower than expects. Dont forget where we come from. We avoided the lets say financial instability, we avoid the sovereigning debt crisis. The crisis regarding euro is over. We went through it, yes. So this is over. Now, in terms of but the data looks poor. We are using all of the instruments. They are going to the lowering of the Interest Rates and they have announced theyre going to use if necessary, in conventional measures, by the way theyve announced also purchase of assetbacked securities. The commission very much support the decisions that ecb has taken. What about fullblown qe in europe . Would you support that. Its full independent institution. We think the ecb should use all instruments available to counter the risk of deflation. Thats worrying development recently. We are well under the target for inflation, thats been establishes at upn level. Jack lew was speaking specifically about the risks in the world when it comes to europe, when it comes to japan. He was talking of need to do more shortterm stimulus and said there was a philosophical difference between the United States and europe about this. Dont forget quwe are gettin out of the crisis, its very important. What the European Union has been doing and ive been asking for is that we cannot ask all of the countries to have a stimulus, it would be a mistake. There are different situations among our countries. We are asking the countries with fiscal space, for instance, germany, to do more in terms of investment, infrastructure, investment in education, for instance. Is it recommendations that we have already prepared last year for germany. Nothings new now about what we can when we speak about support of the demand. But i believe it will be a police take to put at risk sole is results we have achieved in terms of fiscal conservation. What we are asking for is gross friendly fiscal conservation, looking at situation of each country and also strict reforms. This is most important point now. States should keep momentum on reforms best way to foster growth and also investment, namely with budget, thats 1 trillion euros for the next seven years. I wanted to ask you about scotland. You applauded the decision. Are you convinces you have confidence the uk will stay in the upu. Im confident uk will stay. The arguments uk government used for scotland to remained in United Kingdom can be used for uk to stay in upnu. What about cat ta loana, sus special, populism is growing in europe . Look, theres a democrat debate going on in several parts of europe. I personally believe that europe is stronger by adding, not subtracting. I personally believe thats the best way to go in future. But of course, thats a decision for countries to make about their arrangements, constitutional arrangements but thats a debate thats going on. I believe, nevertheless, theres a strong support for the European Union to continue and even to reinforce integration process. Your personal legacy, 11th president of the commission, two terms coming to end, youve seen the crisis, now dealing with the ukrainian crisis. How much progress have you made in integration of europe. Great progs progress. People underestimate the efforts. In 2004, the year i became president of the commission, we were 15 countries. Now we are 28. So we have almost doubled. How many in ten years . I dont know. Many. But we are keeping our doors open many countries, in fact, want to come closer to us, like, for instance, ukraine, part of the crisis. I think the big motive of the positions of russia against ukraine was ukraine wants to come closer to us, what we have shown during ten years is the extraordinary resilience of the European Union. We have been able to enlarge in the sovereign debt crisis. Remember when many predicting greece exiting the euro, the implosion of the euro, and we have done the opposite. We have made our banking union, we have shown resilience. You didnt get euro bonds. I know you wanted that. No. Because European Union, be honest, 28 countries, we cannot have all of the time everybody agreeing. Its true that not all of the proposals for further integration were accepted but if you look today and lets say five years before, we are more integrated, we have more common issues of governance now than we had before. Yes. Youre proud of than thank you for joining us here on the New York Stock Exchange and ringing the opening bell. Outgoing president of the European Commission, simon, Jose Manuel Barroso. What does main street think about big business on wall street . Cnbcs corporate perception indicator reveals an astounding answer. Plus, alibaba trading lower on its second day of trading here at New York Stock Exchange. Well talk to one of alibabas underwriters after this break. 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. shouting location. Heres the location that matters the most. Here. Or here. Or here. Its wherever this is. To get customers to come here and stay here, youre going to need an app that connects to all your systems. 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It is we were surprised by results ourselves. We asked 25,000 people in 20 markets around the world, whats the first thing that comes to mind when you hear the World Corporation . In the United States, greed, big business, money. But on the other side of the world, there is a very different take. The most popular word among those polled in china, profits. Also strong showing for other less negative words, things like stateowned enterprises. We asked, whats the first thing that comes to pin s ts t mine w government . In the United States, corruption. But in china, an interesting mix, corruption does come out on top but we saw strong showings from serving people and public employees. Simon, whats telling about this, how theres a big difference between how people view corporations or favorable they can view corporations here in the United States and developing nations versus emerging nations. In developing nations, its barely 50 who think they have favorable views when it comes to corporations. If you look around the globe, its more in the developing nations, its 72 . Yeah. Some people pointed out and say, this is points to breakdown of trust in the elite in the developing nations because of the crisis. The fact theyre still doing ekay, ceos are doing okay, but average Living Standards are falling. Thats a major dynamic, becky, that people keep talking about. It is. We spoke to susan lee from cnbc asia, in asia they were insulated in some parts from the 2008 financial crisis because china spent so much money trying to make sure it was keeping its economy afloat. Youve got a busy day tomorrow as well. Becky will be live from the Clinton Global Initiative tomorrow on squawk box. A lot of what weve been discussing and feeding through to that as well. Get up early, 6 00, squawk box, tomorrow morning. Back to alibaba. Underwriters among the major winners of the companys massive ipo on friday. Kayla tausche with us on set with one of them. Thank you. Joins by the global head of Equity Capital markets at deutsche bank. Thanks for joining us. Short walk from your office. What does one do at the office on the day after the biggest ipo ever . Start off with being greatful. Its it was a tremendous, tremendous coming together of both bankers, issuer and inve invest investors. What a gray date it was. Fantastic. Youve been an underwriter of the top five biggest global ipos, many from china. But alibaba now is the biggest. What was different about this deal from the others . I think every situation has its circumstances that create challenges and opportunity. In the top five around the globe, this was different. The way that the approach, it was dissimilar to how youve talked about the culture of alibaba which is that a partnership. Whoa chose five banks, six book runners and, worked as a team first time ive seen a group Work Together for ultimately a successful offering. Those of white house cover banks n banks know how rare it is jim stewart talked about alibaba having an excitement premium, saying there was so much hype around this company and it being 15 years old, it had been expected to go public for so long, that that was already baked into the stuff. But weve also talked about the perceived discount of it being chinese company. How did the valuation shake out . Do you think theres an excitement premium on this stock . Great question. A couple of things. Firstly, level of preparation, the company hook on avoiding hype and being fundamentally based and sell what they have today. Obviously, if you had jack on here talking about tomorrow and the cross border opportunities, but really center around the consumer and the small person within china and the opportunities. So i think what they tried to do is talk more about what theyre doing as opposed to what they will be doing, per se, and downplaying the hype. I think that that really has come through in the way the stock has performed. One further thing on the valuation, this company was a u. S. Company, would this Company Market share and this Market Opportunity it would trade at a higher valuation. But in the context, clearly, a great, great home run. Do you expect other Companies Going public would have a similar overhang from the regulatory and government standpoint . Two things on that point. Firstly, the standard is actually lifted. I think alibaba will send a signal to other chinese corporations looking to International Market as a way in which why it was 0 successful, why we had more difficulty nay market thats opened and closed more often. I think that part of it is going to be Success Story that will percolate into other issuers. But also, i think in the Going Forward scenario, theres a vast amount of capital that needs to be raised in china that will look at u. S. Market as being an important place. Mark, im curious, yesterday friday, when jack ma was sitting there we talked to him about transparency or lack thereof, a concern raised by a number of investors who met with him he said, trust me. That is enough . I think actually, again, the way ive been working with this account for some time, and the way in they treat their own employees, the way they work with us as professionals, is a very transparent manner. And i do think the First Quarter will be important with respect to the consistency of being able to deliver details around the quarter. But from my perspective, my experience, that trust is well put. Weve spent the last several months introducing alibaba to our audience, even though its been around for 15 years. A lot of people didnt know that much about it. Im wondering, youve worked in honk kong, the u. S. , what companies should be on the radar that investor should be doing more research on . It doesnt have a herd mentality, it has a very broad set of different views at the same time. So the ability to Access Capital in this market is the best in the world. And i think that this is another example of that. Qu youll see more issuance from europe, both in technology and financial services, perhaps other sectors within china that will be coming here. I think were going to find a lift in activity in this market. Do you think part of that is also, though, because of the uncertainty about the economies in europe and in china . I think were a beneficiary of the u. S. Dollar, i think the economy and the solid nature of the background but i think the pipeline of issuance, that im aware of which may not be the public domain, seeing this as a stable platform to raise capital. An important day as we continue to talk about alibaba. We appreciate your perspective. Thank you for bringing up that aint interview. Apple, topping 10 million. What should you be doing with the stock today. Plus, more importantly, could the new iphones mean the death of skinny jeans . Well tackle that after a quick break. When change is in the air you see things in a whole new way. Its in this spirit that ing 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. Iphone 6 numbers are in. Apple announcing first weekend saler not two new iphones of over 10 million. A new record. What do the numbers mean for investors after the stock has run up so strongly in anticipation . Joining us, rob serra, a tech hardware analyst. Welcome. Thanks for having me. What do you think of the figures . High end of what were looking for, so pretty positive. A tough comp versus last year but they beat it. And the number now, double what they did two years ago with the iphone 5. So, phenomenal. Yeah. In an varmts where it would appear, if you look some of the surveys whether shortages were or what tim cook said overnight, that they have problems with supply, particularly the iphone 6l, larger model. Yeah, the 6 plus absolutely is constrained. But you know, if you look at it demand running ahead of supply, often the case when they launch something, but its impressive able to ramp 10 Million Units from a standing start. The larger screen, the 6 plus, will be constrained for at least another month. But you know the fact that theyre able to do 10 million and we dont have china yet in numbers, so pretty good start. It was also notable that more people bought the 6 plus than the 6, the bigger one, which was more expensivexpensive. Is that a meaningful difference in terms of margins and profitability for apple . I think the 6, i think the 4. 7 inch, which is the flagship basically, is going to be the majority of sales Going Forward. I think theres a lot of interest in the larger one, the 5 1 2 inch, the 6 plus. Theyre both, you know, the larger screen is 100 higher. That will be the Premium Model but i think that the mainstream will be the 4. 7 inch. Keep in mind, too, apple cut the price of the 5s and 5c by 100 each. I think well see if you look through the december quarter, youll see lowend iphones do pretty well. Interesting, because there was commentary earlier, not only the bigger one selling disproportionately well but people that bought that were more likely to upgrade the capacity, which is no a nobrainer on profitability as far as apples concerned. If you spend an extra 100 to go from 16 to 64 or 128 gigs. 6 plus what people refer to as phablet. Half into an ipad at that point. Youre going to get more utility out of more storage. I mean, its a working product, not just a phone. So, if youre tending toward that, you will go with the higher higherenmodel. Frankly, its i think one of the reasons its most constrained is it actually has its own yields, getting enough screens, getting them made. This was going to be constrained regardless. The demands taken it further hand that. Almost out of time. A stock that famously has done very well. Over the last five months up 35, 36 . On the basis of what were getting now, on the information that weve rallied in anticipation of, where will it trade from here, do you think . So were looking for at least another 15 upside in the stock over the next year. I mean, youve got a big december quarter coming up. My estimates are that apples Revenue Growth react sell rates next year. I think things get better next year, believe it or not, versus this year. Because of the watch . The watch helps but actually over 70 of growth we have for next year is still driven by the iphone. Good to see you, sir. Thank you very much for joining us. Thank you. So now that the iphones are bigger, consumers are going to need bigger pocket tos put new phones in. Does that mean the end of the skinny jean . Jane wells has the skinny on that story. Cant wait for the data here, jane. Reporter well, heres the deal. Can apple affect abercrombie, american eagle, gap . Here are my skinny jeans. Heres an iphone 5. Heres a samsung galaxy. None of us in the l. A. Bureau were cool fluff to get iphone 6 plus. Heres our mockup of the right dimensions. That could be a problem. Look, its not a problem if you put it right in these cargo pants a found on the sales rack at the gap. Voila. Apple sells an estimated 100 million iphone 6 and 6 pluses as predicted, we could see more cargo pants and cargo shorts, maybe come back though called a microtrend. Lee jones part of vf corp, says its customers do value pocket utility and it is coming out with a pair of jeans next spring which will have 6 x 6 cargo pockets. I knew it would be bigger but not this big. I did think it would an issue because im used to this size, it fits perfectly in the pocket. Though its bigger i can put it in my purse. You have to have bigger pants or shorts to fit in there comfortably so where it doesnt feel tight or sit down worry about cracking something. For people like me that wear skinny jeans, adds a package, you know . I asked on twitter, is too big ive had no issues, fits in the front pockets, jeans pockets. Darren riv develop said it is too big. Work with jean brands. Sell as large pocket skus. Is that an iphone 6 plus in your pant or are your just happy . The successful return of the man purse. Back to you. Only a problem for men because women can put it in their purse. I mean, i, for one, am reluctant to give up skinny jeans but its a good idea if men stopped wearing skinny jeans. Why . Hello . A lot of young women dont carry purses, everything is on their iphone or theyll have their keys. This may be an issue. If you have used your iphone in the past as a watch and get it out of the pocket more of digging around, well, to get the piece of cardboard out of your cargo pants but maybe theyll buy the iwatch the apple watch, excuse me. Apple wants to be a trend setter in style. Hired fashion executives in the past. Jane wells, my favorite story of the day. Somebody len her the larger iphone, eh . Ive good a nice big purse. You, my friend, have to get rid of skinny jeans. Im sorry, jane. Ahead on the show, forminger ceo of alibaba. Com will join squawk alley, live with reaction to the ipo and what he sees at future for the company. Back after a quick skinny. [bell rings] time and sales data. Splitsecond stats. Its so close to the options floor, youll bust your brainbox. All on thinkorswim, from td ameritrade. Watch this. Sam always gives you the good news in person, bad news in email. Good news fedex has flat rate shipping. Its called fedex one rate. And its affordable. Sounds great. [ cell phone typing ] [ typing continues ] [ whoosh ] [ cell phones buzz, chirp ] and we have to work the weekend. Great. More good news its friday woo [ male announcer ] ship a pak via Fedex Express saver® for as low as 7. 50. [ male announcer ] ship a pak via Fedex Express saver® create things that help people. Design safer cars. Faster computers. Smarter grids and smarter phones. Think up new ways to produce energy. Be an engineer. Solve problems the world needs solved. What are you waiting for . Changing the world is part of the job description. Join the scientists and engineers of exxonmobil in inspiring americas future engineers. Energy lives here. Welcome back to squawk on the street. Tough day for casino stocks. Downgrading to a market perform from prior outperform. Citing nearterm uncertainty and lowered value range on mgm resorts. All lower, anywhere from 2 to 3 . The cme and Rick Santelli for the first Santelli Exchange of the new week. Thanks, simgen. Id like to welcome our special guest, former governor of the bank of canada. And the reason i think that mr. David dodge is the right man to have on today in his tenure, by the way, ended in 2008, because of some differences in canada regarding interaction between government and housing. Thank you for taking the time today, david. My pleasure, rick. All right. You know, every article i read of late talks about how the Canadian Housing market is just too red hot, many believe, analysts global, international, believe it has to take a step backward. Before we get into the granular, what are your thoughts on the state of the Canadian Housing market . Well, certainly there are some cities where the prices are very high, vancouver, toronto, and moving up fairly sharply, calgary and the other western cities. There is excess demand in calgary and saskatchewan because of the oil industry. So thats understandable. If you look at the picture as a whole, however, probably looking at prices that are at their peak or close to it, and maybe headed down a little bit. Certainly mortgage debt to Household Income ratios very high. On the other hand, and why i dont think theyre going to move down a whole lot nationally is because carrying costs, principal interests and taxes constitute almost a historic low fraction of Household Income. And so as long as you dont think were going to have a huge spike in Interest Rates, theres not really that same pressure you know, theres a huge difference, let me interrupt you there, david. See in canada, real simple differences. Your most popular mortgage is fiveyear fixed close and the United States obviously its 30year fixes open and the difference between closed and open is, you have prepayment penalties. So we dont have that free option we do in the states that you can just refinance. And the other big thing, its a full recourse loan. Cant walk way in canada as in the u. S. Will those differences except alberta. Right. Would those differences, in your opinion, should we get a retracement of prices, have an impact on the economy small or larger versus what happened in u. S. Where the government and tax deducts and recourses completely different animal in many regards . Smaller in canada. Largely a lot more owners equity in houses here. Well, owners equity, of course, important. My last comment is, without government involvement, it seems the amount of mortgages, 90 days in arrears in canada, is about onethird that of the u. S. David, thank you for taking time to as a firsttime appearance on cnbc. Sara, back to you. Thanks for bringing it to us, Rick Santelli. Next, pop chips taking on television for the very first time trying to overcome a sales slot. Can it take on likes of giants like fritolay . The ceo will be joining us after the break. Whos going to do it . Whos going to make it happen . Discover a new energy source. Turn ocean waves into power. Design cars that capture their emissions. Build bridges that fix themselves. Get more clean water to everyone. Whos going to take the leap . Whos going to write the code . Whos going to do it . Engineers. Thats who. Thats what i want to do. Be an engineer. Join the scientists and engineers of exxonmobil in inspiring americas future engineers. Energy lives here. Turns out the pop chip category is up 94 since 2010. Pop into the snack market and see how our next guest is trying to get an edge on the competition. Paul davis is the ceo of pop chips founder of kettle foods and former north american president of frito lay and starbucks. Good to have you here. Thank you very much. Appreciate the opportunity this morning. The big news today is youre going to start advertising tonight on television after the voicep. Talk about the sales environment you find yourselves in in terms of numbers, growth to this point and whats leading you to advertise . We are in an exciting category, category which really created by our founder Keith Belling about seven years ago, today a 200 million category, since 2010 been up 94 . All the macro trends are really in our favor and as we looked at our position well, thought it was a great opportunity to tell our story on a much broader scale, thus the reason we want to start our advertising. You know, it says here, im citing an article in the journal which publishes Consumer Product information, you brought in sales that was down 18 from the year earlier. At least in the 5 weeks ending september 7th. Seeing a bit of a slowdown here . Actually, that was tied directly to a new Product Launch we rolled out a bonus pack of 15 more. We took our 3 ounce to 3. 5 ounce to give consumers more of what they love. As we wept through trant igs we lost a couple months sales. Our revenue is in good shape. Were totally simulated in the marketplace in a good position to experience double digit growth again. What is your long plan here . I mean what is the future of this Company Going to look like . Do you want to sell yourselves to one of the bigger food giants in desperate need right now for growth . Or stay independent . Ipo. Whats the trajectory look like . Well, we are privately held and, you know, we plan to continue to grow internationally. We launched two years ago in the uk and had a very successful launch. Both the u. S. And uk and north america, we see broad expansion opportunities. What the plans are, i you know, not for sure yet but were well positioned to enjoy the growth and well have a Terrific Team to accomplish that. You know, paul, Keith Belling, the founder, was quite clear he wanted to do with the operation what he did with vitamin water, to sell it to a larger operator. And you, obviously, come from that background in addition to kettle food itself. So i mean what is the dynamic . It seems extraordinary to me you can have an nine hevation in this way innovation that catches on, using a celebrity, Ashton Kutcher in particular, to the point it might be bought by a Larger Company . Are they not innovating . Why is there space in a crowded market for you to do this . It just doesnt compute when the big guys have so much money and presumably so much pressure to innovate themselves . Thats a great question. We take nothing for granted. Weve been the innovator and remained number one from the very launch and we see just a great opportunity given what consumers tell us they like to snack more and more, so we deliver all the flavor with half the fat which we think is a uniquely positioned product in the marketplace that consumers will love. But my question was about the competition. Why is it why are they allowing the space in the market . How are you able to steal on th them . What are they not doing they should be doing . I think everyone is trying to innovate in this space and to leverage the trends with consumers. Whats great about being a smaller company, is were nimble and agile and were able to innovate very quickly and get products to the market, you know, within a matter of weeks or months, so i think thats a particular edge that we might have over the larger conglomerates. I know that frito lay is your competitor now, about us just a question because you used to be an executive there. Do you think its better under the pepsi umbrella or should that Company Split in two . Do you think they would be more innovative and a better operator . I havent been with frito lay for a lot of years. Its difficult to comment on that. I know youre up against them now. Thank you very much for joining us, though, to talk about popchips. Very interesting well keep an eye on it. Paul davis the ceo. I like popcorn. You know that. That was a great question. If only he hasnt been there in a while. Its fair. There is this question about what happens to pepsi now that theyre, you know, they have these two companies. More importantly popchips. Right. Im a fan. I know you are. Lets send it over to jon fortt with a look at whats coming up on squawk alley. Great show. Well talk to the former ceo of alibaba about whats coming up for that company postipo and talk to a top vc about the environment for other companies now that alibaba is public. Kevin oleary mr. Wonderful from shark tank will join us to talk about apple. Paid a dividend. Split near adjusted highs. Maybe the Value Investor in him doesnt like. Well see. 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. 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. Its monday. A brand new start. Your chance to rise and shine. With centurylink as your trusted technology partner, you can do just that. With our visionary cloud infrastructure, Global Broadband network and Custom Communications solutions, your business is more reliable secure agile. And with responsive, dedicated support, we help you shine every day of the week. Centurylink your link to whats next. 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. Lets take a look at where were trading so far today down 62 points on the dow. Do bear in mind, very importantly that we hit a record on the dow on friday. Last week that index gained 1. 7 in just one week. The s p up 1. 3 on the week. And dollars yen is above 109. Adding fuel, kayla and jon, to you for squawk alley. Thank so much. Well be keeping an eye on the markets but for now 8 00 a. M. At apple headquarters in cupertino, california. 11 00 a. M. On wall street. Squawk alley is live. Good morning. Im kayla tausche. Carl quintanilla is off today. Joining us this morning, is Roger Mcnamee founder of Elevation Partners and with us this morning john steinberg, ceo of daily mail north america will join us for the hour. Jon fortt is here as always. A record day for apple. The company saying it sold a record 10 million iphone 6 and 6plus models over the weekend. Tim cook saying, quote, while our team managed the manufacturing ramp better than before we could have sold many more iphones with greater supply and working hard to fill orders as quickly as possible. Shares of apple trading a little bit higher earlier today but now those shares have turned negative by a fraction of a percent. Roger, lets start with you because you have been very positive on apple for some time. Obviously the Record Number is a good print for the company. But tim cook saying they