Transcripts For CNBC Squawk On The Street 20160908

Inventories are today. 11 00 a. M. This morning. Hillary Clinton Holding a News Conference in the next few moments. We will take that live. When it begins. Road map with apple unveiling the iphone 7, will the new features boost the companys product cycle. Getting a downgrade from wells this morning. Hp enterprise shares falling despite what was an earnings beat, servers numbers perhaps a concern. Ceo meg whitman right next to us here at post nine. And b of a Ceo Brian Moynihan said more cost cutting is coming. First up apple hoping the newly launched iphone 7 and 7 plus will revive slowing sales. The features include longer battery life, higher resolution cameras, Water Resistance and, of course, the lack of that headphone jack. Meantime wells downgrading it to market perform expects shares to be range bound since positives surrounding apple largely unknown. The journal today, though, says enough new fiereatures people w be tempted to upgrade rather than next year. Age is ignorance. I think those of us who have kids who play these games, and im not im talking about loving these games, whether pokemon go or any of these, when you plea these games, your battery life is everything. You run out in the middle of the game. The millennials this is what they care about. Gpu performance, 50 enhancement, pcu two hour improvement on the wider one, this sells for people who are younger than analysts. None of these analysts is young enough to understand why this phone is going to sell because theyre too darn old. There. I forget the number of pokemon the number of kilometers traveled as a result of that game. I know that its with a b. Its viewed as a fad but how many are behind this in virtual reality. I have been stuck at the post office, im not sure if you know these teams, i went looking for charm mander and go back to the house. This is something we dont know why do we not know this because we are all 61 all right. Some of us easy there. Younger or youngest. Still. Old. I am telling you the 22yearold phone and they inherit the future and earth and we pay bills. You think there is enough there to actually move people to meet i guess what are not particularly high estimates at this point from disapproving analysts. Thank you. In terms of the sales of the phone . Such a natural to get a downgrade. Surprised only one guy downgraded it. Another aging analyst, they do not look, i do fantasy football like 9 million other people, how often your battery life runs out by the 4 00 game. This is you need. Only people who are young or think young understand the phone. A lot of people taking shots. The New York Times a columnist talking about the design the fact that apple hasnt given [ inaudible ]. Phone today. A pentagon. I mean what is he youre still dealing with its us. A rectangle. Its not going to switch into a circle. So you dont the column that david mentioned you dont agree their design premium has eroded over time . Their products look a little more ord fairy than they did ordinary than ten years ago . I care about battery life. My wife dropped her phone in a place i dont want to talk about because its silly and i sit here and think this is the antidote to all of the concerns. But everyone is yawning because everyone by the way, tim cook, okay, not the most exciting guy in the world, but this phone is utile and thats what they want. Thats what the younger people want. Study what younger people want and you know why this phone is going to be a hit. Okay. Good angle. And asia, huge. India, huge. We are like you know aging people who look at our 5 and 6 and the glass isnt broken and say forget about it. We dont know jack. Not jack dorsey by the way, who i dont really care to know and that stock is going down. Not headphone jack because there isnt anymore. Right. You get strangled by your headphones when you work out. You swim into those of us that run free and clear in the water, nothing. I dont know. I cant wait to get it and i dont have a watch. Im getting the new watch. Lets go to meg. Go to meg who sits next to me here. Hewlettpackard enterprise announcing a spinoff and merger of its noncore Software Business with Software Developer micro focus valued at 8. 8 billion given micro focus shares increase the deal actually going up in value. As you see hewlettpackard shares under pressure this morning. Revenue came in a bit lighter than had been expected although the bottom line being the earnings per share number is better than anticipated. Joining us with all the details meg whitman, ceo of hewlettpackard enterprise. Here on the set again which is very nice to have you. Great to be here. Meg, the contrast couldnt be clearer. Yesterday, dell and emc closed their deal. Creating a far larger company. You continue to slim down. It was only less than a year ago you split the actual hold hewlettpackard and then announced the deal to spin off the Enterprise Services business to csc last may and now this new deal we just described. The question then is, is hpe going to win as a more agile hybrid infrastructure vendor or have difficult competing with the likes of a cisco and larger dell . And if you are going to win tell us why you believe thats going to be the case . Well, i believe we are going to win because whats happening now is technology is moving at lightning speed and my view is the next five years is going to belong to the nimble the fast and focused. The contrast with dell could not be more stark. They are getting bigger, were getting smaller, they are leveraging up, 60, 70 billion of debt on the Balance Sheet, we have 5. 5 billion of net cash on the Balance Sheet. We delevered. Were leaning in to new technology. Theyre doubling down on Old Technology and a cost takeout play. More of a private equity play really which might be good for the Senior Leadership team of dell about 70 of that company. Might be good for him but i dont know about customers. P two strategies. We like our strategy a lot. The enterprise side of dell if you exclude pcs is slightly larger than what will be the remaining company after the spin of the software. So it will be a 28 billion that aims to lead in the hybrid i. T. Environment in the Traditional Data Center which is still 85 of the market. The new software define data center and the fun growing area of Campus Branch and io t. When you talk about growth there still seems to be a lack of it and in this quarter in particular theres some disappointment among your investor base. We pointed out the earnings per share numbers strong, a tax benefit, better margins but Revenue Growth missing. Were talking about servers growth, up 10 , now down 2 . Storage also. What happened this quarter because it seemed as though you finally had that magical Revenue Growth . Well i would say margins as you point out, cash flow was very, very good and the growth was a little lighter than we had expected. Two reasons. One is, weve got lapping aggressive compares whether its the Deutsche Bank deal last year at e. S. , the launch of cloud line which is now a multi billion dollar business, and aruba. Were lapping aruba. But we also took only profitable deals this quarter. We saw a slowdown in the uk after brexit. It was like a bit of a pause. Now were starting to see the orders flow again. You are starting to see a rebound again . We are. That was brief in nature in terms of europe or uk. Four weeks about wait a minute think about whats doing happen here before we decide to refresh the data center. Thats what we heard from customers. When it comes to you and dell or cisco isnt it a battle for market share in what is not necessarily a growing business. All the growth seems to be in the likes of Amazon Web Services or cloud based and not necessarily in those providing the equipment . Yeah. So we play really in three market segments. The Traditional Data Center. Youre right the Traditional Data Center is under pressure but it is still 85 of the spend and our objective there is we have to gain share, not only versus dell and cisco but oracle, he novo, but were positioned in the Traditional Data Center. Then a growing segment of what we call the software define data center. Synergy our newest product is a great example of that. Its what we call composable infrastructure where you can have compute storage and network, so you get all the control and security, and it basically pulls storage, server, networking capability when that application needs it. So its a bit like its really used for private clouds, so you get the agility and cost in a public cloud but on prim. And third, of course, is a greenfield area of Campus Branch and edge and we should own hewlettpackard enterprise should own compute at the edge. Because think about it autonomous driving vehicles, sensors in hospital beds, sensors in airline engines we will have to be able to compute at that edge because you cant suffer the latency that data comes back to a center and gets crunchd and send bass back out. The internet of things which is an enormously growing potential area. The sensors issues i thought one of the highlights of the Conference Call was the ge deal. Yes. I happened to be a big believer that ge digitalization is for real. You have the best Balance Sheet in a long time. 4 billion in cash, really talking about 5. 5 billion in debt, ready to do a deal, why not double down on that particular business . Well, we are doubling down on that business with ge. That was acquisition. With an acquisition . Yes. Heres the good news with a now more focused company, a company that generates a lot of cash, and will get 1. 5 billion of cash from the csc deal, 2. 5 billion of cash from the Software Deal, we have a warchest that on a returns based basis we will not overpay, we can make acquisitions in a very focused way. And its why software and es are better with these new merged partners because we have to focus on doing a small number of things really well. We were spread too thin, and now all the investment will go into our remaining business. On the coin itself you seem to be, you know, cognizant that the storage performance was not as strong as q3 as you would like and you admit that yourself. Why should we think this next quarter will be better for that . First of all, i think the Storage Market will recover a bit as we go forward. The Storage Market overall has been under some pressure and youve seen that with our competitors. But we also have two new products at the entry level of storage. Whats happening in storage, there used to be the vast majority at the high end, and then mid tier and entry level. Its basically been cascading down and weve got great two new great entrants into the entry level, enterprise capability at entry level storage prices. So i think that will bolster our results. Jim mentions, of course, the idea of m a. I mean when you look at what this company will have in terms of cash in its Balance Sheet once the deals are completed, still a while away, the Software Deal not going to close until the end of next summer and cnc end of First Quarter next year. March. But 12 billion conceivably youll have on your Balance Sheet. Yep. Are you just going to keep buying back stock or is are you really going to consider doing something bigger or i mean are you just going to sell whats left of the company . You seem to just want to get down to nothing . Well, what we are down to is a 28 billion company. Its not exlay peanut. It is not, but not the 120 billion top line company you had a few years ago. I would say in this environment smaller, more nimble and faster, is the right strategy. That was a big moment for you when you came to that conclusion . It was. We sat here and did interviews for years where you talked about the benefits of having the big hp together and suddenly came to some moment, why . Well, we are i think one of the our industry does this every 10 to 15 years. Big tectonic plate shifts. Main frame to Client Server Client Server to web 1. 30 where i had a friend see the revolution at ebay. Web services and mobility. On the cuspp of another huge change with the implications as big as main frame to Client Server only happening much faster. And my view is we have to be nimble, fast, innovative in a more focused area. Where did you find these micro focus guys . Ya he. A lot of discussion that conceivably you would get sold to that you would sell this business to private equity. Some price tags upwards of 9 billion. Why is this the better deal . We ran a very robust process for these noncore Software Assets and a lot of interest. While they are not core to the future of hewlettpackard enterprise theyre a great set of assets. Micro focus we didnt know a lot but theyve done a remarkable job, a uk company, and what they do is they manage mature Software Assets well, and create a longterm platform for customers. They are good at managing growth assets and they have been incredible for shareholders. 39 compound annual growth rate in their stock price over the last four or five years. They are experts at this business and i think they will do a great job and our shareholders will have a chance to ride the upside because our shareholders will own 50 of this new company. By the way, ill be a shareholder because of my vested shares in hpe and im a holder of the new company. One would assume given the history with autonomy, a uk based software company, you are not the ceo at the time but you were on the board when that deal which you alleged was a fraud leapt one took place. I would assume you did a lot of Due Diligence on micro focus . We did more Due Diligence on this potential partner than ive seen in my entire Business Career for the reason that you described. I have to say micro focus was incredibly forthcoming with their earnings statements, their Accounting Firm work papers, so we feel very confident in this deal. We are you may have seen actually not a split screen anymore but Hillary Clinton about to give a press conference. You support her now. I do. In the presidency. You have been the first perhaps very outspoken critic of donald trump early as certainly from the Business Community. Yesterday on jims show mad money Howard Schultz came out, lets take a listen and love to get your take as well, on what mr. Schultz had to say about Hillary Clinton. Obviously two choices for the presidency in this november. Donald trump and Hillary Clinton. I strongly believe that Hillary Clinton is the best choice for the country and the rest of the world and we have two choices. Howard shultsz the ceo of Starbucks Coffee company at this time and thats where things sit today. In part because maybe he thought about it although he says he hadnt thought about running. What kind of heat have you gotten in the Business Community for coming out stringently as a republican by the way, against mr. Trump in supporting Hillary Clinton . So i would say the vast majority of feedback ive gotten whether through email or facebook or linkedin has been positive, thank you for the courage to stand up. Ive gotten emails 25 of the emails from Trump Supporters and no so complimentary. As a citizen, not really the ceo of hewlettpackard enterprise, as a citizen, i felt like i had to say what i thought was the best thing for this country and the best thing for our economy. And i really feel strongly that Hillary Clinton is by far and away the better choice in this election. And howard i think said it well. We have two people, one of those is going to be president of the United States. And you have to make a choice about who you think is better for the country. And my view was, i had to put country before party. Obviously, 60 some odd days to go, have you been impressed or surprised by the resilience of his poll numbers and are you starting to wrap your head around the idea that he might be around for the next four years . Im not starting to wrap my head around that. I think that would be such a bad outcome for the United States of america. And the creation of jobs and our standing around the world in terms of, you know, the rest of the world, when i travel outside the United States, heads of state, business leaders, they actually are terribly worried about donald trump as a president. So listen, i think we got another, what, nine weeks to go, a lot will happen here, but i have to say, i think hillary has the temperament, the experience, she knows what the job is and i think shell do actually an excellent job and i think she will be far better for business and the economy than most people give her credit for. Why do you believe that . I have been through her economic policy. She is i believe in her Infrastructure Projects that she wants to do. We are falling behind in the United States with infrastructure. Its far, you know, it will ease the flow of goods and people around the country. Small business, shes very focused on Small Business and understands twothirds of jobs are created by Small Business. She wants to reduce the red tape and regulation. And she has a very robust skills training program. And if this election has exposed one thing it is we have a huge group of people who have been left behind by globalization and a change in industries. And we have got to help those people get new jobs, retrain, reskill. And if we dont i think were going to be in this same situation in another four years. Meg as always we appreciate your stopping by. Thank you. Probably the last time well talk politics with you. You never know. But certainly the last quarter youll have reported at least. But meg whitman ceo of hewlettpackard enterprises. Thank you. Thank you very much. As david said we are awaiting Hillary Clintons News Conference. Third day in a row now shes taken questions from reporters in a group setting. Previously on the plane. This time on the tarmac. Well go live to the democratic president ial nominee when she begins her remarks. One more look at the premarket. Transports are up four Straight Days and talk about that and more when we come right back. Those new glasses . They are. Do i look smarter . Yeah, a little. Youre making money now, are you investing . Well, ive been doing some research. Let me introduce you to our broker. How much does he charge . I dont know. Okay. Uh, do you get your fees back if youre not happy . dad laughs wow, youre laughing. Thats not the way the world works. Well, the worlds changing. Are you asking enough questions about the way your wealth is managed . Wealth management, at charles schwab. Its not just a car. Its your daily retreat. Go ahead, spoil yourself. The es and es hybrid. This is the pursuit of perfection. Increasingly as we make our way to the first president ial debate, political commentary from the two nominees, will be increasingly important to the markets. Hillary clinton is about to hold a News Conference on the tarmac as she makes her way to North Carolina which along with florida, pennsylvania, and ohio, are turning into the four key states in this particular race. We just talked to meg whitman about her own views, longtime opposition to trump on the heels of last nights commander in chief forum on nbc which talked tried to tackle a lot of foreign snools itpolicy. No one really followed up on meg whitmans call. She, i think, was romney distanced himself from trump but didnt say im not going to vote for trump. When she made the call i believe that she might have thought other Business People would follow. She was wrong. Shes the only person. Very few have come out publicly, one way or the other, as is typical. I mean you dont typically see people, men and women who run multinationals because youre always going to be antagonizing somebody who may be a customer or a potential shareholder and so they see or potential president. I asked Howard Schultz, lets say 50 of the people are republicans they go to Dunkin Donuts . They say im not going there that guy why does schultz do it last night on your show and say he supports hillary . I think schultz does it because schultz thinks schultz is schultz one of the few people in the world who feels kf it ent enough in his confident enough in his skin he feels i dont care. Go to Dunkin Donuts i have to speak whats right for him. Yeah. Meanwhile the big story of this past week has been, trumps willingness to talk about rates and the fed in ways that Hillary Clinton finds apparently irresponsible. But well see if that becomes a broader part of the debate. That was a surprise. Yeah. It was surprising. Well bring you up to speed on her News Conference, what draghi is saying in his press conference and more on apple reaction and this downgrade of nike, lululemon a sell on tesla, when we come back. Experience the thrill of the lexus is f sport. Because the ultimate expression of power, is control. This is the pursuit of perfection. Real is touching a ray. Amazing is moving like one. Real is making new friends. Amazing is getting this close. Real is an animal rescue. Amazing is over twentyseven thousand of them. Book a sworld vacation package d eat t eemazing live. Opening bell in 3 30 minutes. Waiting for Hillary Clinton News Conference. Whats happening here . Is is my w alert system for whenever anything happens inhe market. But thinkorswim alady lets you for l ththings that are im i guess we don need the kid anymore. Custom alerts on thinkswim. Today i am helping opleverywhere do what they do. Better. I work with startups like alpha modus to predict markets five times more accately. I am helping tv networks use soci datamodus to predict what people want to wah. And i worked with marchesa to turn fan eds into a dress that thinks. Hello, my name is watson. Working together, we can outthinknything. Lets get ready for the opening bell here and the s p at the bottom of your screen if youre just joining us, pretty busy morning, ecb among the headlines making news as they leave rates unchanged. Draghi does see rates at a present or lower level. Even as they move beyond the qe horizon. The case is the Downside Risk that remain the main narrative for europe. At the big board, Anheuserbusch Inbev kicking off the season tonight. The Denver Broncos hosting the panthers on nbc. Over at the nasdaq, bio nj a trade association in new jersey, big industry in the garden state. Yes. Probably are most robust. Lets get cramers mad dash later than usual as we had meg at the table. Theres two calls i think are confounding people today. Because they represent stocks that had been hot that have cooled and one of them is a downgrade of lululemon from jaffray. This comes down about a quarter that i liked. But i didnt like the thesis of the downgrade which is that athleisure is starting to peak. A lot of people feel that lulu is a one trick pony. I disagree and think theyre expanding into mens and theyre spending more money on the supply chain and this is a not great call but i pass it on. And then a call that has a lot of people upset, piper, including brad gilbert today, pipers call on the situation with nike. And a lot of people are worried about nike. What are they worried about in adid adidas, making a comeback. I have to tell you adidas is renewed. This stan smith sneaker is back. But to underrate nike, is a mistake. I think both calls are late. I think that both nike and lulu have been hit enough but i dont expect that back to school will be that strong. There is something wrong with the shopper right now. I just keep getting that. You delved into this earlier in the week on restoration which were going to get tonight. Yes. And other furniture makers trying to explain lazboy a couple weeks ago. Gary freeman did plunk down a million bucks. A lot feel in the industry that was a jamie dimon buy, being like the best buy that weve seen in ages. But you know, its like dave and busters talked about people not being they werent going out as much this quarter. Talked about a calendar shift. What is going on . A lot could be related to its cheaper to stay at home and cook because the food deflation is rather remarkable. But there is a new frugality that suddenly came upon us and i dont know if thats because theyre spending more money on amazon or spending more money on devices, but there is something that is really confounding even great ceos in the business, Couple Stores in the mall doing a little better. L brands which has always felt that lulu is one trick. Urban. Urban outfitters. Geez, you know, im looking at apple and thinking maybe device sales, not im a believer but a funk. People are playing too much pokemon go, walking all over the place. They dont have time to eat. Did peak but gaming has not peaked. Look at activision and stocks of take two and ea. But theres not a broader Macro Economic reason that people would suddenly i mean, employment is seems to be okay. No. No. I mean we didnt talk about pier 1 but pier 1 is theres nothing gas prices havent shot up. Best buy did talk about sp d spending more money on hard goods so did home depot. Home depot going to go down because of hd supply. Thats a bad read through. Did not deliver the way i would have liked them to and tractor supply. Why . Tractor supply is ag and texas. A bad read through to home depot. But there is a more of a funk in the stocks than there is in actuality. But there is like everyone is puzzled about it. General mills gave an outlook on mad money a month ago and took away the outlook yesterday when they spoke. Right. At the big consumer conference, right . Yeah. Thats a high multiple stock so when you do that one would expect you get punished. Down yesterday. Apple release of i phone will not give you the metrics there. Maybe that was confusing people. I never like to be befuddled expee except when i speak to ceos befuddl befuddled. A lot asking me what happened during july and august. That is the story in some ways when you get asked that question. Because you dont want to hear that. Because that means they dont know. And what they dont know look, walmart is stronger, amazon is just so hard to read but amazon is hurting everybody and i think this is going to go down as a quarter people will find difficult to understand, employment growth versus sales in cars. Employment growth versus a lot of different retailers not doing that well. I am not as negative as the stocks are indicating. But i am as confounded as others given the fact that they asked me only pvh came on mad money and said back to school is good and thats apparel. Apparel. Right. You mentioned food deflation, kroger in the red once again. As journal writes up the ancillary effects of the sprouts warning yesterday. Kroger moved aggressively into natural and organic using tree house. Theres a price war on Natural Organic that people arent talking about. Also, i believe kroeg fer you look at walgreens, trading up because the ftc said 500 to 1,000 stores probably less, i believe kroger is the buyer of the the stores and that wall greens store goes through. Private equity guys have blown out of the stock at a lower price. Ftc did want to see that you didnt have a situation like hagan, this just horrible thing happened at the ftc when you did the albertsons deal, one store my daughter they call it the hagway, safeway went to hagan and then it went out of business three months later. What the heck. The ftc wanted a strong buyer, kroger would be a strong buyer but thats way on the shares of kroeger. Pier 1, 16 here. Alex smith, leaving after ten years. Comps down 4. 3. Warn on the quarter we will hear next week the 15th. You know, as a shopper of pier 1, i am a believer but they talked dont smirk at me. Have you seen the bargains they give . I have not. We discussed pier 1 in the past. I have not bought wicker or been in a pier 1. Theyre campbells. Anyway. Not buying candles. They have very low costs. What gets mentioned, the web. Internet. Internet home spend on amazon. You ought go to a pier 1 seasonally when you have thanksgiving at your house only place you get seasonal merchandise better than home goods is pier 1 but does not shock me because the online competition on this particular end, delivered to your house, its a lot better. That was the downfall of pier 1. Their lighting is good, candles are good, chairs are good. Okay. Seasonal merchandise. Got it. Dont know if you are fans of formula 1 driving. Yes. Pier 1 to formula 1. Yesterday more expensive. We did get the announcement that Liberty Media going to be buying formula 1, 4. 4 billion equity value, 8. 4 or so, 8. Little over 8. 5 billion overall because they got 4. 1 billion in debt outstanding, and somewhat complex deal in which the current shareholders of formula 1 will get a package of 1. 1 billion in cash, 138 million lmck shares and exchangeable piece of debt instrument that will be exchangeable into lmck. Lmck is nonvoters so while the current shareholders including cbc a big private equity firm will own 65 of the economic of the new formula 1 if you follow me, by the way going to change lmck, Liberty Media, this tracker to formula 1 group, it will be controlled by john malone. Formula 1 came back. Right. Its come back, although the idea is bring it to the u. S. In a more full way, chase carey reemerges, a man who ran 21st century fox or many of its businesses under the ceo when Rupert Murdoch was ceo. He will now be the chairman of this company and an active chairman, fulltime job. Does say live sports programming appro po of tonights denver carolina game which will be a huge game i will watch it, but i have to tell you, thats a very vanguard move. Formula 1 does come back, remember how big nascar was and is, formula 1 could be dramatic. I like formula 1. Only one with schumacher the only guy i can think of. Wasnt he a formula 1 driver. Been so long. See. You guys dont know. He was. See, chip tells me. Thankfully. Its fast. In my ear. Its fast and fun. Something happened on a ski slope. Terrible time shift. Another thing, a miserable time shift. You know, its not like i love lucy which i mention only because the puts the odds on cbs coming back with viacom 60 40. Bunch of guys driving around monaco thats what i think of. I would like to drive around monaco. I will go with you. Stop at a lot of pier 1s. Pier 1, formula 1, one in declining. Trip to the model three, under perform rating that cohen is initiating on tesla, target 160. Cheap shot. Execution risk over the next 12 to 18 risks solar city on top of gigafactory on top of model three. There are actors i respect greatly who love the stock of tesla. And ive seen them speak and i hate to go against both jay len no and Morgan Freeman because there is something about musk that is attractive to people i have not liked the stock, i have liked the car. As jim stewart said from the New York Times when he was here tesla stock owners like the stoke stock. A lot of people thought it whas circular reasoning. People no the in the stock market love the tesla stock and will not sell it and not react to the downgrade. Theyre not. I think solar city has i think that california numbers of solar city are so bad that in the interim, just change. Just change. They went down. Anyway although this will be the lowest price since late june. Im not big on Deutsche Bank, did a financing with their receivables. You know, 300 million loan there. Yep. But i have to tell you that this is a cult stock and, therefore, very hard to value. Cult stocks historically, hard to value, meaning that its not certainly not bound by the four walls of the spread sheath which is nonexistent. Musk is a revered man. I mentioned Morgan Freeman he loves teslas. Because of your interview and he speakses for a lot of people when he wants to invest in musk. In musk we must. Not me. Im not a im not a fan, im not a simulation, thats what you are. He called me a simulation. I brought it up. I dont like it. Im not a simulation. Im a real person who shops a lot. And has two rescue dogs. Its impossible. You only could be a simulation. Its impossible. Do you see my nfl draft picks by adam schefter. Thats no simulation. Shares of hewlettpackard enterprise is up now. You turned it around with your question. I did not turn it around. The second time you turned it around with your question. After it looked down. Because the revenue number was not what people had anticipated. Even with the difficult as we say compares because last year they did have a couple things that went their way. Meg Whitman Company ceo mentioned Deutsche Bank. Theres Hillary Clinton making her way to the podium. Told her story well. Yeah. She told her story well and she told you about why the server business was not as strong. She gave you an internet of things wrap that does mean something. This is not idol chatter from an executive around forever. Explain the edge in a way which was interesting. Yeah. Lets go to Hillary Clinton. Good morning, everyone. Last night i was very glad to be able to begin a conversation with the American People and offer some of my thoughts about isis, iran, and how we form the va system to provide better care for our vets. Im honored in the last 24 hours, more retired generals and admirals have decided to endorse my campaign. The focus more on these crucial challenges, tomorrow im convening a meeting of Bipartisan National Security leaders and experts, including former secretaries of Homeland Security, Michael Chertoff and janet napolitano, general john allen, former acting director of the cia Michael Morrell and former nato supreme allied commander james sav reties and others. We will discuss how to intensify our efforts to defeat isis and keep our country safe. To that end i want to underscore something that i mentioned last fight. We should make it a top priority to hunt down the leader of isis abu al bagedy and bring him to justice as we did with Osama Bin Laden. With that operation, getting al baghdadi will require a focused effort driven at the highest levels. But i believe it will send a resounding message that nobody directs or inspires attacks against the United States and gets away with it. Let me be clear, last night was yet another test and donald trump failed yet again. We saw more evidence that he is temperamentally unfit and totally unqualified to be commander in chief. He trash talked american generals, saying they have been quote reduced to rubble. He suggested he would fire them and replace them with his handpicked generals. He attacked dozens of former flag officers by saying that, quote, weve been losing for us for a long time. Thats how he talks about distinguished men and women who have spent their lives serving our country, sacrificing for us. Thats how he would act as commander in chief. Meanwhile, bizarrely, once again, he phrased russias strong man vladimir putin. Even taking the astonishing step of suggesting that he prefers the russian president to our american president. Now, that is not just unpatriotic, and insulting, to the people of our country, as well as to our commander in chief it is scary. It suggests he will let putin to whatever putin wants to do. And then make excuses for him. I was just thinking about all of the president s that would just be looking at one another in total astonishment. What would Ronald Reagan say about a republican nominee who attacks americas generals and he heaps praise on russias president . I think we know the answer. And when asked how he would spread the threat of global terrorism trumps answer, take the oil. The United States of america does not invade other countries to plunder and pillage, dont send our brave men and women around the world to steal oil, and thats not even getting into the absurdity of what it would involve. Massive infrastructure, large numbers of troops, many years on the ground, of course, trump hasnt thought through any of that. Any Republican Holding or seeking office in this country, should be asked if they agree with donald trump about these statements. Now one thing you didnt hear from trump last night is any plan to take on isis, one of the biggest threats facing our country. He says his plan is still a secret, but the truth is, he simply doesnt have one. And thats not only dangerous, it should be disqualifying. So i have a very different vision for how we keep our country safe and strong. I respect the men and women who put their lives on the line to serve america. I will work with our allies to defeat isis. And i would hold true to our countrys most cherished values. You know, even with all of the attention being paid to the campaign, we cannot forget how important this decision is. This weekend, is the 15th anniversary of 9 11. I will never forget the horror of that day, but i will never forget either the victims and survivors and the brave First Responders and Emergency Responders that i met with and served and worked for as senator from new york. Thats with what kept me working so hard in the senate on behalf of 9 11 families and who i was thinking of ten years later in the white house situation room with president obama when the decision was made to bring Osama Bin Laden to justice, thats the kind of commander in chief i will be, someone who will bring us together in common purpose, to keep our people safe and country strong. Madam secretary the latest real clear politics average has you up by an average of 2. 8 Percentage Points over donald trump. Given what you say are his historic inadequacies and qualification on the commander in chief point you made, shouldnt you just basically be running away with it at this point . Well, as i said many many times, ive always thought this was going to be a close election. Thats why weve been putting organizations in place, gearing up for these final weeks, to mobilize and turn out our voters. Thats exactly what were going to do. And i feel were in a strong position, but were not taking any place, anyone, anything for granted. Were going to keep working as hard as we can and hopefully pull out as many voters who agree with me as we possibly can muster. Hi, jeff. You said unequivocally last night you would not put troops into iraq ever again. Isnt, a, that ignoring some Ground Forces there, and b, boxing yourself in should your military commanders, if elected, advise that you, in fact, need to do that . Well, jeff, first of all, ive said that before. Ive said it on numerous occasions. I believe it. I think putting a big contingent of american Ground Troops on the ground in iraq and syria would not be in the best interest of the fight against isis and other terrorist groups. In fact, i think it would fulfill one of their dearest wishes, which is to drag the United States back into a ground war in that region. However, ive been very clear and i said this again last night, i support the air campaign, i support special forces, i support enablers, i support surveillance, intelligence and recognizance, i will absolutely be prepared to do whatever is necessary to support the arab and kurdish fighters on the ground, to take out as much of the infrastructure of isis from the air, to go after baghdadi as i said today with a very focused commitment to taking him off the battlefield. I think the approach ive outlined intensifies what we are doing, but also, recognizes that there is no, in my opinion, path forward to Ground Troops that would be in our interests. Hi, good morning. Secretary clinton, youve been criticized by the rnc for your demeanor last night, that you were too serious, didnt smile enough. Can you react to that and also you suggested that there is a double standard, do you think youre treated differently in this race because youre a woman . Well, im going to let all of you ponder that last question. I think there will be a lot of ph. D. Thesis and popular journalism writing on that subject for years to come. I dont take my advice and i dont take anything seriously that comes from the rnc. We were talking about serious issues last night. I know the difference between what we have to do to fix the va, what we have to do to take the fight to isis, then just making political happy talk and i had a very short window of time in that event last night to convey the seriousness with which i would approach the issues that concern our country. Donald trumps chose to talk about his deep admiration and support for vladimir putin. Maybe he did it with a smile and i guess the rnc would have liked that. Thank you. Madam secretary like the hat. Appreciate that. Is this a new look . Kind of an old look now. Bringing it back . Bringing it back. Been shopping in your closet . You got it. I do a lot of that. Last night mr. Trump suggested in some of his security briefings that the briefers made a suggestion or insinuation that they were not pleased the cia not pleased at the decisions the administration and president obama have made so far. Did you get that same impression in the briefings that you got and can you comment otherwise on that suggestion from mr. Trump . I think what he said was totally inappropriate and undisciplined. I would never comment on any aspect of an intelligence briefing that i received. [ inaudible ] to a different standard and what does that mean for you going into the debates . Thats a very fair question. I have been somewhat heartened by the number of articles recently pointing out the quite disper rate treatment of trump and his campaign compared to ours. I dont understand the reasons for it. I find it frustrating, but its just part of the landscape that we live in and we keep forging ahead. Look, i think this is a really important moment for everybody in our country. As you have seen by the numbers of republicans concerned about trump coming forward and saying, this is not acceptable, they are willing to put their names out there, people who have never endorsed a democrat, people who have never endorsed before, because they are so concerned about this man and how totally unqualified he is to be president and how totally temperamentally unfit he is to be commander in chief. So i know that he says outrageous things on a pretty regular basis and i know thats part of the coverage and i know that it may be difficult to feel that you know exactly how to respond to some of his behavior, but were on the brink of making a very critical decision for our country and if i were not the candidate, if i were not the nominee, if i were just a concerned citizen i would be out here to do everything i could to sound the alarm about someone like donald trump getting anywhere near the white house and i will continue to do that. [ inaudible ]. Do you think your thanks, guys. [ inaudible ]. Well, you can look on the map and find aleppo. Madam secretary [ inaudible ]. I love you, andrea. You are my kind of a woman, ill tell you what. Look at this. I know. Go ahead. I mean, the sympathy vote, the whole thing, i love it. Madam secretary you were [ inaudible ] yes. Matt olsen, right. Right. [ inaudible ] saying that isis [ inaudible ] donald trump [ inaudible ]. Right, right. [ inaudible ]. No, thats not true. Well, you know, look, i mean the republicans are just in a terrible dilemma trying to support totally unqualified nominee. I have no sympathy for them. Its their nominee. But i am not going to tolerate them continuing to make misleading, inaccurate, accusations and putting out misinformation about me. Heres the latest example. Matt olsen, the very distinguished and effective former director of the National Counterterrorism center, was so disturbed by what he has seen coming from the Trump Campaign that he wrote an article that i guess came online in the last 48 hours, pulling from public sources very clear statements by isis leaders essentially throwing whatever support they have to donald trump. They have, as matt olsen pointed out, said they hope that allah delivers america to trump. They have said that they hope that he is the president because it would give even more motivation to every jihadi, someone who has insult muslims, insultsed a gold star family of an incredibly heroic captain khan, someone who said he doesnt want to let muslims from around the world come to our country, that is a gift for isis and that is what matt olsen, who knows more about this than the republicans trying to somehow muddy the waters, very clearly state. Thats what i mean. Look, im not asking for any special treatment. I know the road that im on. Ive been on it for 25 years, and i just get up every day and keep moving forward. I love this country. I will serve it with my entire heart, mind and soul. I will do everything i can to protect america. And i will do everything i can to make sure donald trump is not president for many reasons, but this latest information coming from a distinguished Counter Terrorism expert should put every americans mind in motion to try to figure out what everyone can do to prevent trump from being the president. Thank you. Thank you. See you guys on the plane. Appreciate it. That is Hillary Clinton wrapping up her press conference on the tarmac addressing a number of different points, most pointedly at the top of it saying she has what she calls a focused commitment to go after the head of the islamic state, al baghdadi as the u. S. Went after Osama Bin Laden. Donald trump and his performance at the commander in chief performance last night, what she called his praise for putin and comments about security briefings that hes been doing. Our john harwood joins us with more to talk about this, Gary Johnsons morning on morning joe and a lot more. Good morning to you. Good morning, carl. I think Hillary Clinton had a Clear Mission today, which was to try to reset after that Forum Last Night in which she was pressed about email and donald trump made a lot of statements about having opposed the iraq war and that sort of thing. She wanted to cut through all of the verbiage from last night and make a simple point, im a serious person running for president and donald trump is not. Highlighted the things he said about praising putin and trashing trash talking american generals. Thats what she wanted to communicate with the press conference. She was asked specifically, john, why shes not doing better against trump, at least according to some national and state polls. How would you characterize her answer to that . Well, she indicated that shes always expected a close race and structurally our country is closely divided. She is ahead consistently, especially when you look at the battleground states. She is doing well enough to have the lead in a decisive number of states. Now the popular vote has gotten closer, the edge has gone off the lead she had postconvention and post the controversial statements like that argument with the gold star family that donald trump engaged in. But she clearly is hoping that in the debates and in the fall campaign, as her organization cranks up and his and the Republican Party krancranks up, is going to expand that lead. And then finally, john, gary johnson, this morning on morning joe asked by Mike Barnicle a question about aleppo, his response is, what is aleppo . Hes trying to answer that and respond to the criticism this morning. Before we ask you about that lets listen to what gary johnson said on msnbc. What would you do if you were elected about aleppo . About . Aleppo. And what is aleppo . Youre kidding . No. Aleppo is in syria. Its the epicenter of the refugee crisis. Okay. Got it. Got it. Okay. With regard to syria, i do think that its a mess. Its the only way that we deal with syria is to join hands with russia to diplomatically bring that to an end, but when weve aligned ourselves with when weve supported the opposition, the Free Syrian Army, the Free Syrian Army is also coupled with the islamists, and then the fact that were also supporting the kurds, and this is its just a mess. John, for a candidate who is hoping for a romney endorsement, hoping to get into the debates, a campaign killer . No, not a campaign killer. Gary johnson wasnt going to win the presidency and it was going to be difficult for him to get to 15 under any circumstances. It was an embarrassing moment. He was obviously caught off guard. Hillary clinton had a laugh about it at her News Conference where she says you can look up aleppo on the map. Ive reached out to the Johnson Campaign to try to get a comment. One of the spokesman wrote back stay tuned. Signaling that theyre going to have some additional thing to say about it. But theres not really much you can clarify about it. He, obviously, was sort of dumbstruck in that moment and it is what it is. And this is someone, again, hes never been on a path to win the presidency. And its a challenge for him to get to 15 . This makes the challenge a little tougher. John, dont go far. Joining us this morning to talk a little more politics, at post nine, Business Insider ceo and editor in chief Henry Blodget. Great to have you this morning. Great to be here. Safe to say our diet of fuse will get more political over the next several days and this was just a taste . Oh, my goodness. Gary johnson, more people know who he is now, thats positive. The other thing that strikes me about that moment if that had been trump he would have turned night a positive. Knowing what aleppo is, would suddenly become a sign of elitist snopery and globalist attitudes. We should just comment you know he would turn night a positive words. Gary johnson is apologizing and graveling. At least he has a policy on syria. Report cards from the commander in chief Forum Last Night, winners, losers, how would you evaluate both of the candidates performance . Whats remarkable in watching people react is how entrenched we are in rooting for your team, be whatever it is. Some of the things that trump said in particular, just astounding to the media and democrats, how can he talk like that, how can you besmirched the entire leadership of the mi military and insinuate youre going to fire them day one and not have it destroy your campaign and the other side of the reaction, its better than hillary. People are so entrenched and ultimately what is making this election close, and i think hillary could have responded to this in the conference this morning, is the economy is not great. And when you have the economy not great, people want change, and trump unfortunately for a lot of folks who are fans of hillary represents change. The economy is not great, the general kind of background noise of dissatisfaction about it, but its not so intensely acutely bad right now that we have such specific complaints about get me a job. Go back to 2012, we were in a dicey place with the economy and it was more front and center and yet neither candidate is really making that much of a case about it. Thats right. And we have started to see signs, wages are finally starting to rise. That is good. Thats what has to happen. That is actually what could get the economy humming again because suddenly the mass consumer has more money to spend that translates into growth for so many businesses so that would be great but at this moment, people are still feeling the pain. Certainly there are it continues to be a mixed bag. Data yesterday, the rate ticks up again, leads to wage increases down the road but its like waiting for gado. Its mixed as you said. We have the car sales seem to be plateauing, filling in for the recession and so forth, working a plateau there, its mixed. Interesting to see if there are big clangz over the next few months and whether it will affect the election. You did see the quit rate go up, leading indicators of growth go up all the supermarkets saying we cant deal with it, prices going down too much. You can paint this as a workers paradise but nobody feels like that at all. Let me give people a recap of Hillary Clintons press conference a few moments ago as she makes her way to the swing state of North Carolina. Take a listen. The republicans are just in a terrible dilemma trying to support a totally unqualified nominee. I have no sympathy for them. Its their nominee. But i am not going to tolerate them continuing to make misleading, inaccurate, accusations and putting out misinformation about me. John, ill ask for your reaction to that. I interrupted you. What were you going to say. Something regarding henrys point a few minutes ago about people being stuck in their corners. That is true to a considerable extent and politics has become tribal in the United States. However, this is an election where significant numbers of people, and perhaps decisive numbers of people, are being blasted out of their corners. And i want to mention two different kinds of people. One, College Educated white voters who have been a core republican constituency for decades, are gravitating toward Hillary Clinton. It hasnt resulted in a massive lead for Hillary Clinton but a consistent lead. Thats significant and if donald trump doesnt reverse that he cant win the election. The second thing is, among republican elites, there is more defection when i say elites both active politicians, former senior government officials, people like hank paulson and Brent Scowcroft who have served republican president s in the past, meg whitman, the former republican candidate for governor in california, if they are coming out and saying unequivocally donald trump is unfit to be president , were for Hillary Clinton, that is something that we rarely see in politics, so this isnt like all other elexz in which elections in which the tribal loyalties stick. Theyre changing in relatively modest ways but significant ways that will have a big bearing on the outcome. And john, what support is trump picking up . If you look at the polls over the last month to six weeks, pretty much every day the gap seems to close and the race seems to be narrowing and if you look at 538, its still a 68 chance of a hillary victory, but 90 five to six weeks ago, so if everything is so fractured where is trumps support coming from . Donald trumps core support has been for throughout the primary campaign and now, is nonCollege Educated white voters. That is not a sufficient constituency but if you pair that with enough support from College Educated whites hes getting very, very little from africanamericans, a bit more from latinos, but those are tough constituencies for him. And thats where his support is coming from. Hillary clintons lead got to an unsustainable point after the convention, 8 to 10 points, could go back there if we get past the debates and theres the bottom falls out of trump, people look at him and say, no, hes not equipped to be president or if they say, yes, he is, then the race will get still closer. But some of the independents, the very loosely attached voters and some republicans who strayed from trump have come back to him and thats why the thing has tightened up. Well, john, you mentioned, of course, meg whitman, former republican candidate for the governorship of california lost that race, is currently the ceo of hewlettpackard enterprises. We had her on earlier speaking about her company, but we have tended towards politics and she first made it very clear she was opposed to the candidacy of mr. Trump as the republican nominee, this in the winter, one of the earliest voices and then following up recently supporting Hillary Clinton. We asked miss whitman whether or not she has gotten any, perhaps, negative feedback in the Business Community as a result of her outspoken support for miss clinton and against mr. Trump . I would say the vast majority of feedback whether through email or facebook or linkedin has been positive. Thank you for the courage to stand up. Ive gotten, you know, in emails 25 of the emails are from Trump Supporters and not so complimentary. As a citizen, not really the ceo of hewlettpackard enterprises, as a citizen i felt i had to say what i thought was the best thing for this country and the best thing for our economy. And i really feel strongly that Hillary Clinton is by far and away the better choice in this election. Howard schultz, of course, founder, ceo of starbucks, one who does not shy away from any sort of controversy in the public realm, last night on mad money adding his voice to the support amongst the ceo crowd for Hillary Clinton. , obviously, theres two choices for the presidency in this november. Donald trump and Hillary Clinton. I strongly believe that Hillary Clinton is the best choice for the country and the rest of the world and we have two choices. Howard schultz the ceo of Starbucks Coffee company at this time and thats where things sit today. Of course, not most ceos choose to not share publicly their views on president ial campaigns. David. Yes john. When you have meg whitman, christy whitman, former governor of new jersey, mortgage ra mittg donald trump is the demagog, phony, fraud, not a successful businessman as he claims, that is a kind of interparty criticism that is extremely rare and i suspect in the end, its going to be quite damaging for donald trump. You know, Hillary Clinton in that press conference, talked about convening a bipartisan meeting with people like Mike Chertoff who was the secretary of Homeland Security under president good morning w. Bush. When you have previous nominees, previous cabinet officials from previous administrations of the other party, saying that we only have one serious candidate for president , that was the message by the way from the Dallas Morning News yesterday which has never endorsed a democratic candidate since fdr and came out and said there is one serious candidate on the ballot and its Hillary Clinton, that is a powerful message and helps explain why meg whitman was telling you, david, that most of the feedback shes gotten is positive. There are probably a lot more people who feel that than have been willing to say so publicly. Joining us on the phone, republican political strategist and bush and reagan adviser, ed rogers. Good to talk to you again. Good morning, everybody. I would love your take on what john said, whether its meg, howard, whether its the Dallas Morning News, these shifting constituencies, do they move the electorate come voting time . Well, havent so far. And hillary has got to be worried about why doesnt she have a 12point lead. What is it about her that is suppressing more enthusiasm for her, given trumps problems. Were shaping four a race where its crooked versus crazy. And so far, it is unresolved. She cant seem to pull away from trump. Trump, one more allegation or one more factual demonstration of his, you know, lack of lack of basic information, one more example of him being off kilter, i think it sort of there has been so many of those, it diminishes any one. There is a decent [ inaudible ] to trump being crazy. If we go into the debates and its close and trump isnt a dropping lunatic, then look out. Things could things could break his way. Hillary seems stuck. She cant get out of the 44, 46 range and trump is keeping it close, despite who trump is. You know, ed, do you think that that questioning within the Clinton Campaign about why, perhaps, theyre not further in the lead, is something that actually has them revisiting some strategies . Do they just say look, we kind of lay low, in august, just been labor day, havent brought to bear a lot of what we have in terms of advantage and in terms of a sitting president campaigning for her. Do you think theyre comfortable about that outlook or rework some things . Well, i think its too early to tell. I do think they have a plan and a strategy. I think they have a campaign that is designed with a beginning, middle and end. On the contrary to that, i think trump has a campaign that will be the same on november 7th as it is today. He has rallies and he twitter feed and thats been sort of whatever the days news is and thats really about it. I do think that hillary is probably pacing herself. Maybe some panic is in order. Im going to think about that. But, what theyre doing right now hasnt worked like they thought it would. For a convention bump, she hasnt been able to maintain or build a lead. Shes going in the opposite direction. Again, shes getting heavily invested in this notion that trump is crazy and unhinged. If we go into the debates and hes not crazy and unhinged, it may play to her negative ster stereotype as being somebody who doesnt tell people the truth. And if that happens this race could flip towards trump. I was going to say on that point, ed, finally, when you look at trumps past debate performances, and clintons and look at last nights commander in chief forum, can you handicap who goes into the first debate with an advantage . I would say marginally but her performance is at times forced, seems rehearsed, typical in a year that this is a change election. She does not as change. Doesnt telegraph change. Nothing about her is change. Trump conversely by the way, trump has never been particularly [ inaudible ] in the dooebs. A couple debates he was criticized for being somewhat mute, some docile, passive, so theres no real history of him in the debates being a real nut. All of that happens with some other forums. With that said in terms of who is president ial and who can pull off a debate, based on whos sort of practiced it the most and has the best grounding in policy you have to give some sort of edge to hillary. But again, its all about expectations. And the expectations are building that trump is crazy, not crazy in those debates, the race could flip to him. Understood. Its fascinating to watch these finer points solidify as we make our way deeper into the race. Ed, thank you so much for your time. John, henry is going to stick around for the morning. As we head to break, a look at where we are in the markets. See the s p down about a third of 1 there. All the broader markets in the red. Were going to get back, by the way, to the markets and specifically to apple and the new products that were announced yesterday. A lot more ahead on squawk on the street. What would you do if you were elected about aleppo no. About . Aleppo. What is aleppo . Youre kidding. No. Some things are sily imssible to ignore. The strikingly designed les nx tbo and hrid. E v ates to goeyd utility. This is the pursuit of perfection. Day, im lping people wk bett. Analso feel beer. This is the pursuit of perfection. I am hpingospitals persalize eatments usinbiions of ta point to predi the highsnd ls diabetes, hours in advance. Use biomarkata to boost the performance of athletes. Hello, my me is watson. Woing together, we n ttnknything. Welcome back. Still reacting to the news from apple. Shares of the company are down today. Apple this morning was the worst performing dow component hoping its newly launched Iphone Models will revise slowing sales. For a Company Defined by innovation does the new model with a longer battery life and no headphone jack provide the jolt investors were looking for . Joining us at post nine, cofounder and managing partner hany nada, Henry Blodget who stuck around. This is a fascinating debate on this model, right . The idea of whether we deserve to have the jack removed and whether cords will look ridiculous in five years. What did you think . I think theres a bunch of small innovations in the new iphone and probably thousands of tiny innovations inside the product in terms of reliability, the waterproof, dust proof. Its interesting. I wasnt planning an upgrade but now im thinking about it. The waterproof feature for me very important. I always carry a big waterproof case and its bulky and heavy. I dont have to do that. I think its a good incremental step for apple. The company has been working on a lot of inside innovations. I i think you are going to see many of the innovations in the next version. My guess some more specific. 3d is everywhere and 3d is a gimmick not very compelling for many consumers but 3d as data for the device to understand the world around it will become important. For example, auto focus, having split second auto focus having a detector detect how far you are from me and tell the camera, very quickly, where to focus, will be an important feature. I think the camera is one area you will see a lot of innovation. I think a lot of companies but apple specifically. Henry, it sounds like a lot of people will be persuaded apple is playing a long game and a vision for where this might lead and great down the road. Some investors buy in that, some are playing a short game, stock down 2 because its kind of stuck in the same idea that we dont really think this is going to be some massive upgrade cycle because of the particular phone, and were not willing to bet theres a great one. Right away. Seems unlikely it is. I think the key word is incremental. Small advantages. People will buy the phone and they will sell just a colossal number of them. Is it going to suddenly restore the company to strong growth . Very hard to believe. This is still the iphone company. And i think folks who look at it expecting the growth to suddenly resume and go off to a rocket ship again, ignore the fact that the iphone really was a onceinalifetime product. They invented this new category. It is one of the most profitable products in history, but the product cycle is now maturing, were in the phase where its really small incremental adjustments, everyone looking forward to next year. Even that is maybe a slightly bigger screen, maybe looks a little sexier in some way. No big deal. Its like a new model of a car. Its not going to suddenly drive so much. So the longterm vision as you say and you mentioned wireless, you can see the early stages of apple saying were going to have a new wireless standard in which all of our devices are going to interact with everything so seamlessly that everyone will want to be in the apple ekose system and a disadvantage not to do that. Drives a lot of hardware sales and moving to services where you can see seeds of growth Going Forward where they control everything. That is a long way out. Its not going to drive the stock today. Nearer term the question youve touched on this is whether or not there are enough changes now, to tempt someone to upgrade for the 7 rather than the 8 . Yes . So heres the danger, right. I think were getting myopic on the iphone 7, right. We do that all the time. So, apple has been hiring thousands if not tens of thousands engineers in the bay area and around the world and many of them in facilities. We have no idea what the next product out of apple will be. Theres rumors about tv, cars, theres theres a lot of rumors. I do know that theres probably other products that are coming out from apple between now and say mid year next year. So the danger that you have is that you go lay, the iphone 7 is a flop and all of a sudden news leaks of a product we had no idea this was coming. Thats the danger. But where the stock is priced, it is not discounting the company just moves to the high end and gradually goes out of business at all, its also not discounting explosive growth. Its basically saying people will like the iphone 7 and maybe come up with something cool, maybe people will want to shell out 160 on wireless ear buds as opposed to the wired kind. Well see. But ultimately everyone is already looking forward to next year. Its fascinating because when you look at investors willing to put the valuation on tesla that it enjoys, on basically this one mans longterm vision for who knows what great thing will come out of this or some very Ambitious Goals on production and all the rest of it, somewhere within apple you could say we could have some valuation like that on top but its not like that. Too profitable, too much cash, too much tangible its valued on right now. Even so, like if you credit them with tesla, right now, stock doesnt go up that much. Its such a huge company. Yeah. Also the cynicism that these ear buds, what were going to lose at a higher rate, which means more replacement part revenue, more accessory adapter revenue, you mentioned camera, photos, burst will mean more cloud revenue, all are being done in a cloak and dagger kind of way . I just upgraded my icloud account from 50 megses or 500 gigs because i needed to back up my phone. My phone is much more memory and im running out. Theyre seeing more revenue out of me on the Services Side of the business than they have seeing on the hardware side. The thing two achilles heels of apple are the price point of the iphone and how the 30 tax that they charge their ecore system. The two akill lees heels. If you criticize something or have something to say whats going to happen with the price point. Theyre losing on the lowend market. One of our companies, is taking the lowend market in china and starting to see them get global and the rumors theyre coming to the u. S. As well. On watch, sophomore watch you think will be like the sophomore curse when a new band has a second album tends not to do as well no. It has not lit the world on fire, not likely to make a lot of people still dont see a need for it. Maybe when they get to the moment when it is completely selfsufficient and doesnt need a phone near it, a lot of people, okay, maybe it is a pain to interact with a big screen or lug it with you and you want that, but even then, i think a lot of people will say look, i like my big screen, i dont want to adapt to this tiny screen and apple seems to be moving towards fitness, maybe theres an application but a niche. I think if snapchat gets on the watch you will see a lot of sales. That would be a big thirdparty app. Great to see you, and henry, thanks for sticking around. Great to be here. The ecb keeps rates unchanged. Draghi says the bank studying some changes maybe to the asset buying program. Well talk about that. Dow down 58. Whmade plasticthat makehem lighter . E lubric that proved fuel ecy. Ev tecology to mak engines more effient. What company doeall this exxoobilats who. Were workg on a thesethis things to ke cs better and use ss fuel. Helpinyou saveoney anrece essions. Anand you ought we just made thgas. Energy lives here. Anand you ought we just made thgas. s not just a itsour daily retreat. Go ahthesnd es hyid. Self. This is the puuit of perction. Im sharon epperson. Heres your cnbc update at this hour. President obama and indian Prime Minister modi holding bilateral talks on the sidelines of the asian summit. On their agenda, terrorism and the South China Sea dispute with china. This was the eighth onetoone meeting between the two leaders in two years. The lone surviving suspect in the november 2015 paris attacks arriving at the main courthouse in paris this morning. Salah abdelslam under heavy security and refused to talk at a previous hearing in protest over 24 hour surveillance of his prison cell. Mazda is recalling 2. 2 million cars and suvs worldwide because of defects in the rear hatches. The recall covers 2010 through 2013 mazda 3 compact cars, 2012 to 2015 mazda 5 vans and 2013 to 2015 cs 5 suvs. A prospector in florida found a gold nugget the size of a tbone steak. Oscar espinoza was panning near jamestown when he made the discovery and the nugget weighs 18 ounces, estimated to be worth about 70,000. And thats our cnbc news update for this hour. Back to you, david. Thanks, sharon. 1849 all over again there. Wow. Coming up, apples big reveal. Will the tech giants latest products be enough to give the stock a boost. That stock is down this morning as you see right there over 2 . We have a lot more ahead on squawk on the street. Stay with us. Upgrade ur phone system and learn how you could save at vonage. Com business gomery and abigl higgins had. A tree that bore the most rare and magical uit. Gomery and anthen, in blindinge eveblof an eye,eed. Their eegiven s. But with their raymond jes financl advir, they had prered r even the unkable. And they danced. See what a raymondam advisor can do for you. Bank of america Brian Moynihan with comments about the consumer, rate hikes and cost cutting. Wilfred interviewed him exclusively and joins us with pore. I caught up with Brian Moynihan this morning as you said. The headline how strong the u. S. Consumer has been over the summer. As you look at the month of all squa august which will got the details on it will be the strongest growth. One more processing thats going to to back that up. The year to date consumers on a debit and credit cards spending more than 4. 7 than last year and the pace accelerating. The consumer is in very good shape. He also gave a clear indication that the recent costcutting trend could continue. If you think about the Second Quarter of 16 versus Second Quarter of 11 we took out 20 billion of operating expenses on an annual basis. People out there are going the other way because they thought hey, you took ought that cost out, 20 billion, you cant keep doing this and the answer is we still can. For equity market valuations heres what he had to say. Well most people think about it the way they can feel is the consumer space and this isnt something we started last year. Something many years ago, 25 years ago, with online and mobile banking and its really taken off and enabled us to basically across the course of seven or eight years reduce our branch count by 20 , increase our earnings, even in tough rate environment, were just the total people we have working at branches but more importantly have more sales going on, and its all with higher customer satisfaction. Its really helped our business model, helped us drive that expense base. In fact, the ceos comments about how dijtization is helping them with cost cutting, as for equity markets, he said the markets were where they were because people had nothing else to buy in the current low yield environment. Guys, back to you. Thank you very much, wilfred frost. On the markets, lets get back to those, the European Central bank taking investors by surprise this morning deciding to leave key rates unchanged and not extend the deadline for the trillion euro bond buying program. President mario draghi did say the bank is monitoring developments in inflation and remains ready to act if needed. Bring in pimco Portfolio Manager and Market Strategist tony and joining us at post nine Jpmorgan Private Bank Global Equity strategy steven reese. Lets start with you here, guys, you know, Brian Moynihan tees it at the end, there is no other alternative to equitys argument does that hold water when running portfolios. Stuff everyone admits is expensive called bonds so buy something less expensive. It explains the bond proxy up so much and difficult to find yield elsewhere and my explain Telecom Utilities and staples. I dont believe the entire market is driven by theres nothing else to buy. We think the u. S. Economy is strong and we are in an Inflection Point for earnings Fourth Quarter into next year. The expectation of the recovering profits taking the overall market higher. Tony, you know, we had a little bit of choppiness in the very recent u. S. Economic data as you know. Risk markets remain well supported here. Is it all because were thinking were deferring when the markets believe the fed might have to make another move . Well, the choppiness in the data look through to some extent. As you saw from Brian Moynihan at bank of america he referenced the consumer and recall in the Second Quarter personal consumption grew at a 4. 4 clip the strongest in ten years and does look like the consumer is supporting the economy. The weak data that has that most are referring to recently the production side of the economy, yet theres this torque building up in the economy with higher levels of spending and low levels of production. The way thats typically reconciled through a higher level of production, less Companies Risk the loss of market share. Looks like growth is good enough, still in the sweet spot which is good tore credit and for equities. Not too strong, not too weak. Looks like the economy will continue to grow at at 2 pace goinged for. Do you think, though, that the fed is going to be able to look through the recent noise in the data . In other words to say the economy actually is going to be Strong Enough for them to move perhaps if not in september then certainly december . Well, its highly likely the fed is looking at these data on the consumer and think of the Housing Market and the waning impact of the increase in the dollar that occurred from 2014 into 2015, of course. That subsiding of Dollar Strength will be good in terms of reducing the negative impacts from the stronger dollar on u. S. Exports and also the Capital Spending story which has been very poor relates to the Energy Sector another waning influence. When we think about the fed there is a likelihood of a rate hike this year. One could say, though, in looking at the last three years, to some extent, fed watching is dead because the fed hasnt been very active. A lot of talk but not a lot of action nor should we expect a lot of action. Globally we expect Central Banks to do little except to continue to provide high levels of monetary accommodation through the decade with ecb keeping policy rate near zero and same with bank of japan, the fed nudging up slowly but surely Walking Around like worried about like a bull the a china shop seeming to worry about its own shadow these days. All that said, theres more and more, steven, being written about cross asset contagion, assets moving in tandem, and the potential fallout if and when Central Banks decide to tighten everybody gets hurt. We saw a lot of that in terms of the macro drivers and markets but if you look at whats happened since q3 the different Sector Performance and actually feels kwilts healthy. Seeing the growth sectors outperform, industrials, energy doing okay, Technology Leading the upside, so and those bond proxy sectors are down since the start of q3 so im not that worried about it. Ultimately fundamentals driving the markets and looking forward to a better profit year in 2017 in the u. S. Would you go into this next hike, whenever we get it, with an elevated percentage in cash . Not really. I mean we think the market might pull back initially but ultimately the reason theyre hiking is because the u. S. Economy is improving. Might want to play sectors like financials, raleighed with the expectation that the fed will move in december. Its what they should do and risk assets we continue to grind higher. Thats what theyve been doing. Steven reese, thanks very much. Tony, thanks for being here. Thank you. Shares of hpe down about a little over 2 this after the Company Announced yet another deal to slim itself down and earnings that were not particularly well received, given the top line, the revenue line, less than the analysts that follow the company anticipated. Stay with us. Youre watching squawk on the street. A lot more coming right up from post nine. Could tesla be on the verge of posting its first ever loss as a Public Company on the stock charts . Were going to delve into that more on tradingnation. Cnbc. Com. More squawk on the street coming right up. Welcome back. Back to the cme group. Rick santelli is with the santelli exchange. Hello, rick. Good morning and thank you, mike. I would like to welcome my ecb day guest, jim. Your thoughts on mario draghi, what he read, what we all read in the transcripts and the press conference . I think the markets takeaway is a little negative and disappointed. Theres, obviously, a problem that draghi wants to continue to do qe at 80 billion euro a month through march of in exyear except hes running out of issues to buy and might be hitting physical limitations and he didnt address it and said in the press conference they didnt bring it up in their meeting as well. The market was expecting a little bit more. Many people i talk to, theyre trading the european markets, said, hey, this is pretty good. Theyre running out of runway, the programs are basically run their course, and i think that they think thats a good thing. I look at it exactly the opposite. Because if ecb and all central planners arent going to give up the reigns of the galloping horse and they run out of crazy things, doesnt that mean theyre going to come up with something even crazier . They still have the power, they might not be able to find the securities but they still have the power. Absolutely. If they want to give it up because they want to say mission accomplished, we dont need to be intervene in Financial Markets that would be good but if youre going to give it up because youve rupp out of things to run out of things to buy and opens the door to buying equities or reits or etfs. They were cloudy today because they havent figured out what bigger bazooka theyre going to bring is the scariest outcome of all. The mindset is still there we need to have both thumbs and our hands on the scale and continue to and not back off and let Financial Markets or capitalism do what it does best. Two things i hear, one thing i hear is that it is fool hearty to think our Federal Reserve should normalize rates when everybody else is going the other way. Thats a. B, what i always hear is that if the fed normalizes rates now at this point its not about the economy, theyre worried all this government management into the marketplace and manipulation is a bit on the frightening side, your comments on each of those . I agree with both of those, especially the second one. I think the reason the fed is pushing so hard to normalize rates is theyve concluded it doesnt work to the extent they want. Doesnt work meaning create jobs and gdp. They want to get out of this business right now. And i think that as far as where the fed xwigz, theyve got a is going theyve god a cretibility problem on your first question. Keep saying they want to raise rates, the market keeps saying were not going to price it in and the fed keeps caving, theyre doing it again now, and that if the market doesnt price it in that they wont do it. Over our shoulders where we trade the fed fund futures that might be more important than the fomc meeting in deciding when the fed is going to raise rates because they set the probabilities that the fed seems to cave to over and over again. That one cloakalism comes to mind, the inmates are running the asylum, it is true. If theyre not going to go unless the market gives it its blessings and the participants in the market gets that they will game it for profits. Reminds me of currency intervention in the 80s and 90s. The minute they announced all fought them. Chested their metal and took the other side of the trade and caved on them and the bank of japan caved time and time again until they lost credibility. Seems to be what fed hikes are in 2016. Many younger people out here watching, theyre listening on the radio, dont understand a mugs game. I use that analogy, Richard Fisher liked it this morning. To think that corporate securities in europe, theres been a couple of issuances where they now are in negative territory, whether its through the premium to price, however, it may only be a little bit, theres open one reason i could think of why any rationale investor anywhere in the globe during any point in time would buy a negative yielding corporate security and that reason is because a central bank in the secondary market will pay more for it . Absolutely. I would say corporate security, i would say negative yielding instrument anywhere. Correction youre right. The only reason you buy them and why theres 13 trillion worth of it negative is you thing that the ecb or the bank of japan or the bank of england will take it off of you at a higher price. Final question, if what youre saying is true, then as ira always says, its not market signals that move the market, its thoughts and whims of the People Holding the reigns. The problem with that is, the markets reconfigure very quickly. When they change their minds, what will happen in the markets . They will move quickly, they will move decisively. 08 was a market changing its mind. We didnt like how fast it was happening but thats how marketing change their mind. Thank you. Always interesting to hear your comments. Mike santelli, back to you. Thank you, rick. And jim, appreciate it. Sundays got better as did thursdays with the nfl season kicking off tonight well break down the big bucks game behind the game, thats next. Er hat ay, nothing stops us frodoing ght by our customers. Whos th m m in. Im in. Iin. One, two, wait, wait wait whes tina . One,inthe hand thi . Ait yep were a ifor our cuomers. Allyly it right. Were a ifor our cuomers. This car itraving er 200 mil. Toin, every millisecond matter bo on e track and thounds of mes away. Withth help of at, Red Bull Racing can share critical infoation about evy in othe car fr vtutuly anhere. Brakes are getting war confmed, danieyou ed t clicks. R akes. Rsodbrake as b2 giving thethe ility to hesp pr becae no o knows like at experice t til tusf sport. Cause the ultima expression of r, is conol. This is e pursuit of. Fresinedients, tokystepbstep recipies,s. Delivereto your door for le than 9 a m get 30 off your firsteliv atblk panthers and broncos. No Peyton Manning this season. Joining us no talk about Pricing Trends and season insights, Jesse Lawrence is the founder and ceo of what we now call ticket iq. Good to have you. Good to have you. The reason for it is. We are a data company. We licensed our data over the years and were making that Data Available to consumers through our 5 star app and giving them access to deals we source directly from teens that arent available on the secondary market. It will be a seahawks patriots three years ago rematch and theyre always one of the most expensive tickets in football. For the road games, home games, combination. Thats home. Road is a different story. Road is all about americas team. So you get the cowboys and the packers as the top two. If theres a at the bait the cowboys edge the packers out slightly on the most expensive ood games at a little over 160. We have an interesting real world experiment going on where tom brady is going to serve a suspension so you have a differential that quantify what is he is worth to fans anyway. Its 30 more to see brady at foxboro than for the games where he is not in. Two of the three most expensive games this season are what we call brady games. The first is his first game back which is over 800 and then the next one is a later game against the seahawks and the third most expensive game of the season is the vikings stadium opener at u. S. Bank because they got a big stadium and thats good news out in minnesota. Wheres the best bang for my buck. Where will i be able to go watch a game for the lowest price . Here in new york its the jets. The jets are about 100 less than the giants this year. Although expectations are are higher for the jets. Overall the cheapest ticket in football is san diego and their prices are down over 25 year over year in part because of the negative. Rams. New old stadium so not a new stadium in the coliseum so l. A. Is excited to have football back for sure and its an expensive ticket for sure. Do you think thats draw agoway from san diego . Southern california football now . To some degree. Theres a lot of uncertainty about the future of the chargers in san diego which is the big issue and the hornets nest the rams stirred up caused questions about what the future of the chargers is. Finally disciplinary con vo t controversies. The biggest increase year over year was this year. Theres a lot going on. Theyre not selling as much to the secondary market or putting as much on the market. Theyre holding it back and thats why we think our iq access product is so good. So i think teams are controlling the market in a way they havent done in the past and theres less supply, demand is about the same. Prices are up. Bring it on. We cant wait for tonight especially. Jesse, thanks again. Thank you. All right. Lets send it over to john fort now and give us a look at whats coming up on squawk alley. Take eightway john. Good morning. Apple had a bit of an announcement yesterday. Well dig into the implications of the iphone 7. Will it be a big year for apple or not . Also we have the ceo of at t mobility talking about the way theyre trying to tie in tv and the phone. And finally the ceo of Sony Interactive entertainment. The playstation 4 pro and the upcoming vr that will pair. All that and more coming up on squawk alley. 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On wall street and squawk alley is live. A big day for super mario and apple. Apple is the worst performer on the dow right now but first breaking news on Oil Inventories today. Good morning, carl. If youre watching oil prices youll see we have a 70 cent spike in wti after we were up this morning. Th