Win streak, the best since june. Tenyear yield this morning as Mortgage Apps basically collapsed last week, refis down 20 and well keep an eye on the mix of red and green arrows today. This is the best start to september since 2010, as the president announces he will delay the vote on a military vote in syria and give diplomacy a try. Are investors giving up on apple . No big surprises at yesterdays event. No big deal announced yet with china mobile and shares falling in the premarket. And netflix share at an alltime high. The deal with virgin media could change the relationship between netflix and the cable company. The president last night laid out his case for a military strike on syria saying its in Americas National security interests to work with allies to put chemical weapons under control. My administration has tried diplomacy and sanctions, warnings and negotiations but chemical weapons were still used by the assad regime. However, the last few days weve seen some encouraging signs, in part because of the credible threat of u. S. Military action, as well as constructive talks ive had with president putin, the Russian Community has joined in push ago sad to give up his chemical weapons. With that, secretary of state is going tomorrow to see if he can hammer out some kind of u. N. Resolution that would be binding, that would be backed by force. Where does that leave this market, jim . One of the things that was absolutely certain from that speech is the russians acted because we made a credible threat. I think they felt listen, were going to go in and with a lot more than just a couple of missiles and they wanted to preserve this assad regime. Sometimes i sit back and say between 9 11 and the president , i watch the president , its a good speech, so what. Im jim cramer, 9 11 overwhelming, too. I come back and say markets overbought, refinances arent that hot, feels like we had a very big run and apple is not that good and i say, gees, whats the next thing here . Weve been so fortunate having a great stock market. Just doesnt feel like maybe its had a bit of a run here. It may have had a bit of a run. Its funny, in speaking the last couple of days, having reacquaint myself over the summer having ended, trying to talk to bankers or senior executives, people seem to be rather positive i will actually tell you. Business is better but it seems like we handed off somehow the interview with sam zell in the journal this morning has taken his personal percent and in his personal account thats devoted from real estate to 50 in 1990 to 40 seven years ago to 30 now. He said im not singing kumbya. Its so great he said that. If its so great, where is the inventory. Were a housing bubble in different areas. Its hard to imagine that the fed does something drastic here after what looks pretty drastic. Lets say youre the fed youre saying we really fear tapering because maybe Mortgage Applications will drop. Hey, guess what, i dont know how you drop more than they dropped. Refis down 20 , the jumbo goes to 4. 84. Thats where a lot of people were originally. The incentive to refi, where did that go . Well, you had your chance. You did have your chance and it went on for a long period of time. Its irrational. It is. Youve mentioned housing as a sore spot, a worrying point, which is a fair point. But to the extent other parts of the economy were to get rolling and that jobs number does not point to that occurring necessarily but i will tell you again there does seem to be a positive tone perhaps, an idea of if you look market, were not talking about europe for the last four years. You get these upgrades at jpmorgan. Ingersoll rand looks like a biotech stock. Great International Companies are really flying here, anything with aerospace, many of the big dow stocks, united technologies, boeing. You come back and say, listen, we are not that good maybe. Which is bigger in the end the big industrials can carry us higher. Is retail in a cross hairs . I dont know. Getting a little catalyst here. I had underarmor on mad money. Could be going stronger. Nike is doing well, nike and the dow. We have some big cap stocks doing better. Your world is a world where guys are doing the verizon deal. They have to say you know what, 58 billion is right there. Their ability to borrow is incredible. 49 billion. Now theyre going to actually try and do all 49 billion of the financing thats needed like that. Amazing. Amazing. But thats been the story, the largess of the capital market, particularly on the debt side, has been one of the key stories for years now, maybe not to this extent. And then people are going to say bubble that you could raise 50 billion overnight. Double. I remember a long time ago Goldman Sachs 5 billion is a lot. You had a deal like this, y be calling all your customers saying please, please take that, please, please. All this for about 2. 5 over the corresponding treasury. Amazing. One big cap stock that is not going to be up is apple. They did not announce a deal with china mobile that had been anticipated. It is set to receive a license to run on chinas network. This after two upgrades. But some on wall street unimpressed. Ubs downgraded apple this morning. The china mobile deal, to be fair, people are saying theres an expectation perhaps that will be announced in november. We shall see. A lot of analysts waking up this morning and investors saying, all right, it was nothing that i didnt expect and you didnt wow me. No. I thought the Financial Times put it best, apple puts color and security before price. These other countries that dont have these packages, these plans. If youre in one of these countries where you have to actually go buy the phone, the price was not right. Why dont you just say it clueless on the air. I dont know its clueless. You do away with the 5, you bring in the plastic phone, lower your cost, protect your margin. In the end, its about moving around the chains, its not about innovating a new phone. People have to accept the fact that theyre not samsung. Samsung is the cheapest people love that big screen, man. Love it. Is apple gm and samsung could that happen that quickly . No, but the idea that at a certain point i remember when the toyota came out people were look thats cheaper, who cares. Next thing its cheaper and better. Next thing gm is doing saturn and then gm is bankrupt. We have to get rid of the halo i guess. Even the guy who backed up their buys today at btig still called their reticence to go into a lower tier market a miscues. Theres hope that now they just had a release but maybe it does happen eventually. I remember when microsoft was the collosus. You end up thinking maybe thats more who they are. People did that with Microsoft Software . People went ooh, wow . Yeah, because you had no icons and it was exciting. That was before the internet. They destroyed netscape and they were taking on the attorney general of the United States, giving her a smackdown. That wasnt so smart. In the end there was an excitement to it. Then we realized microsoft was no more excited than duke energy. The stock hasnt done much. It has an incredible free car yield. Who knows where were headed with microsoft. Well, they split it up. Meanwhile netflix if intel had bought arm holdings. Look at arm holdings today. Were going to talk netflix later on. What a story. Shares of p g are down. Suntrust says they go from a neutral to a buy saying they need to show consistent topline growth. Its in the trading range for the remainder of the calendar year. What do you think . I think procter is putting color and security before price. Color is all the rage. Talk to mickey drexler. Everything is color. Procter has to cut prices and get the emerging market back. Colgate has innovation going. A lot of people feel procter has lost its way. I used to feel that way. Its a big cap company. Its hard to innovate. Colgate is innovative. Procters been kind of stagnant. Plus, i dont know, have you guys bought a razor lately . Its like 475. I need walgreens and cvs to do what walmart does, subsidize. I bought a schek because i was mad at heck. You know what, shaves very similar to a gillette. Second best that man can get is fine. It is very expensive to shave. Its a huge cost. They sell you the razor but then they sell you the razor blades. How crazy is that . What a business model. Hair and grooming has not been that good. But isnt it ironic that some analysts are mad at apple for not doing a lower price item but at p g, theyre doing a youre mr. Split up. Have you noticed what happens when a company is split up . It goes higher. Thats what the bankers call it now, shrinking to growth. I like that. They always think of such great things. Split equity. Shrinking to growth. I feel like whats happening here is you get a company like procter and it like, i dont know, if you did a hair and grooming corp, a cleaning detergent corp, we like all these pieces like what sara lee did. Nobody doesnt like sara lee. They sold off the Coffee Business for a huge amount. Like a pfizer. Zoletis. This shrunk to grow. They shrunk to grow. When we come back, the netflix juggernaut. Can a stock that has more than tripled this year look at that, its at 313. Theyre not shrinking to grow, theyre just growing. And ed lazear will join us. We do have a moment of silent here at the exchange right before the bell. Were back in a few moments. And at the center of it all is a surprisingly low price just 7. 95. In fact, fidelity gives you lower trade commissions than schwab, td ameritrade, and etrade. Im monica santiago of fidelity investments, and low fees and commissions are another reason serious investors are choosing fidelity. Now get 200 free trades when you open an account. Netflix announcing its launching its streaming service in the netherlands. That will make that markets the countrys 41st operation. That on news that u. K. Operator virgin media is to imbed media on that box. Heres what he said to me in an interview earlier this year. I could consider reed coming to the cable industry and saying why dont we have a wholesale Resale Partnership instead of being adversaries and all of a sudden cable is distributing and promoting things doesnt have a lot of sports on it. Maybe its a bundle or netflix with video or with cable or broad band and you see the traditional video shrink. This will happen. We ran that right on april 10th because the thoughts of this were of significance. Malone and liberty control to a certain extent charter, which is one of the largest Cable Companies through their 20 ownership of that. This is fascinating that you would keep the video product but probably getting rid of a lot of your pay servicing, allowing people to do a different kind of bundling with netflix being delivered to the set top box. Is this man really able to think that young . This is the way people think that are much younger than he is. A visionary thought that way about sirius satellite. I mean, he just has the pulse. Hes certainly an extraordinary thinker. You have to be aware as a Cable Provider is how do i potentially keep that video going into the home along with that product. But again, that may very well be provided by their Cable Provider. I was watching the mexican world cup. I like soccer as we all were. Its very exciting. Im watching on my cell phone. Es espngo. Doesnt that get expensive . I dont know. I liked it. I was watching the president. And the idea of youre blowing apart the bundle. What i think is fascinating about netflix is this is the beginning of a new era. But your point about the young is key. These are kids and i mean kids, who didnt grow up. They dont have the experience of coming home and turning on the television. Its hard for us to exit that mindset. Malone thinks not only strategically long term but can package it tactically. His genius with Balance Sheets and billions with accounting. And a way to avoid taxes at all costs. Visionary. When we come back, its shaping up to be a rough day for apple, as we said. Take one more look at futures. Well keep our eye on g geopolitics today. Oil finally has a rather calm day and well have a moment of silence at the New York Stock Exchange when squawk on the street comes back. Building animatronics is all about getting things to work together. The timing, the actions, the reactions. Everything has to synch up. My expenses are no different. Receipt match from American Express synchronizes your business expenses. Just shoot your Business Card receipts and theyre automatically matched up with the charges on your online statement. Im john kaplan and im a member of a synchronized world. This is what membership is. This is what membership does. You really love, what would you do . [ woman ] id be a writer. [ man ] id be a baker. [ woman ] i wanna be a pie maker. [ man ] i wanna be a pilot. [ woman ] id be an architect. What if i told you someone could pay you and what if that person were you . When you think about it, isnt that what retirement should be, paying ourselves to do what we love . [ male announcer ] 1. 21 gigawatts. Today, thats easy. Ge is revolutionizing power. Supercharging turbines with advanced hardware and innovative software. Using data predictively to help power entire cities. So the turbines of today. Will power us all. Into the future. The New York Stock Exchange about to hold a moment of silence, remembering the victims of the 9 11 attacks which occurred on this date 12 years ago. At this time on that day american flight 11 had already crashed into the north tower. United 175 had already crashed into the south tower. Of course its a day that changed life for everyone in this country in ways that we cannot even understand at the time. There will be several moments of silence around the country. The president is now making his way to the pentagon. Heres the moment of silence. Ther [scream] dont tell mom. Dont tell mom. Dont tell mom dont tell mom. Okay. Dont tell mom. Dont tell mom. Dont tell mom . Yeah. The best stories youll ever tell start with, dont tell. Dont tell dad. Start yours in the new santa fe. From hyundai. Nascar is ab. Out excitement but tracking all the action and hearing everything from our marketing partners, the media and millions of fans on social media can be a challenge. Thats why we partnered with hp to build the new nascar fan and media engagement center. Hps Technology Helps us turn millions of tweets, posts and stories into realtime Business Insights that help nascar win with our fans. Bob will retire when hes 153, which would be fine if bob were a vampire. But hes not. Hes an architect with two kids and a mortgage. Luckily, he found someone who gave him a fresh perspective on his portfolio. And with some planning and effort, hopefully bob can retire at a more appropriate age. Its not rocket science. Its just common sense. From td ameritrade. Youre watching squawk on the street, live from the Financial Capital of the world. The opening bell set to ring in just under a minutes time. We just had a moment of high sense here at the New York Stock Exchange as we recall the 12th anniversary of the september 11th attacks. It important to remember 2,977 victims, 242 on plans, 125 at the pentagon, 2,606 here in new york and the president is at the pentagon where theyll have a moment of silence in just about seven minutes. It is being remembered, as it should, all around the country today. Meantime lets get the opening bell and get this trading session under way. A lot going on, a lot of discussion of apple, the president s speech on syria last night, big high profile downgrades of procter gamble. The big board, nonprofit organizations, my good deed and tuesdays children playing tribute to the victims, at the nasdaq, the new york p. D. And children and widows fund. A good interview yesterday. One of the things of Charitable Trust in Morgan Stanley, its lagged. Theyve made a lot of changes thats not really recognized. This is a little better than m a. And fixed income is very important for these firms. The lead underwriters for Morgan Stanley and for verizon, for the huge bond offering, thats going to be some nice fees for all of those banks. Not worrying about mortgages with Morgan Stanley. I think a lot of it is the reversal of the if housings going up, everything they have thats under water is not as underwater. It does matter. Its kicking around somewhere. I like the Morgan Stanley call. We didnt mention there was a lot of fear among these banks that if Eliot Spitzer was elected, they would have the new sheriff. Stringer not a sheriff . Scott stringer defeats Eliot Spitzer for the controllers race here in the city of new york. Why would that be important broadly . Because if spitzer was in there as an owner of a share of many of these companies, he would have been owner, he would have been defeated. The headline of the New York Times today, sleazy come, sleazy go. I happen to like the hotel business. Starwood. Windham, mr. Holmes has done a great job, steven holmes. This group has been good. Travel has been good. Priceline has been good. People are still going places. Again, maybe that was a tell. All of those in travel good versus housing in some parts of retail. Hey, listen, vacations important part of america. Very important. I try not to ever miss a vacation. Never miss a vacation day. That would be my advice. Apple is the biggest loser on the s p. This is a 5 decline. Combination of the downgrades, three big ones and the lack of the more secure announcement in beijing after setting up expectations with that event. I know carl better tweet something soon. Not this carl. Icahn. Not that our carl wouldnt have influence. If icahn tweets hes not going to only have dinner but breakfast. Where they have herballife supplement shakes. I want to mention shares of gm, 30 million of the canadian governments 140 million shares being sold this morning right now b of a taking care of that, thats frustrating the stock. What a buy. Thats a buy you think . Theyve got a big chinese business. This is the way to play a turn where you dont where americas stable because, remember, weve got pretty good packages if you want to go get a loan for a car here. Maybe shifting out of some housing into auto is going to work. I think thats a great buy. Richard scholes is selling a lot of stock but the current ceo is selling a lot of stock saying its because of a divorce but hes selling a lot of stock. Thats a 10 million sale. Easy come, easy go, as you say. I do think its funny, whenever you see these big runs, like carl icahn selling some haynes celestial. I mean, why not . By the way, haynes celestial very happy to have him cutting his position in half and hoping that he goes down to zero. That has been hardfought negotiations getting him out of haynes celestial. Finally, i did want to mention on the activist front bid, sothebys, not that much this morning. Third point took a position, a couple of activists in that stock. They say as weve discussed in the past, we continue to eval way the return of Capital Strategies and or increase in dividends while balancing the needs of the future of the company. They announce a review of Capital Allocation and financial policies in response to those activists or at least not unrelated to the presence of activists. Another of these catalysts. Get big to get small shrink to grow, baby. And other stocks, disney is coming back. I mean, disney. Just kind of percolating up. Thats a travel stock, too. Phillip morris was above forecast and now its at 4. 5. Im antismoking. I have not tried the electric cigarette, david. You probably tried those. Ive never done that, sorry. And pm, its up, its the international arm. Didnt seem to make a statement. Goldman has an interesting note today on oil saying despite syria cooling off, jim, they still see some risks to the up side, largely because of the pressure on opecs spare capacity, at least in the near term. Interesting. China comes back, europe comes back. Its a big deal. A lot of Oil Companies have been saying some pretty big things. Big find in mexico. Were producing a lot but not enough to make up for the rest of them. It was on this date 12 years ago when American Airlines flight 77 struck the pentagon. The president is at the pentagon this morning attending a ceremony remembering the 9 11 victims along with defense secretary chuck hagel, chairman of joint chiefs Martin Dempsey is schedule to speak as well. When that moment takes place, well take you back to the pentagon. In the meantime should we check in with bob pisani . Good morning, guys. Were going to take the defense secretary, who is introducing the president. Good morning. Good morning. From scripture we learn of the miracle of restoration. You who have made me see many troubles and calamities will revive me again. The earth, will you bring me up again, you will increase my greatness and comfort me again. Secretary hagel, general dempsey, members of our armed forces and most of all the survivors who bear the wounds of that day and the families of those we lost, it is an honor to be with you here again to remember the tragedy of 12 septembers ago, to honor of greatness of all who responded and to stand with those who still grieve and to provide them some measure of comfort once more. Together we pause and we give humble thanks. As families and as a nation for the strength and the grace that despair has brought us up again, has given us strength to keep. Pray for all those taken from us. Our hearts still ache for the futures snatched away, the lives, the parents who would have known the joys of being grandparents, the fathers and mothers who would have known the pride of a childs graduation, the sons and daughters who would have grown and maybe married and been blessed with children of their own and those beautiful boys and girls beginning to find there way who would have been teenagers and young men and women looking ahead, imagining the mark theyd make on the world. They left this earth, they slipped from our grasp but it was written what the heart has once owned and had it shall never lose. Where your families lost in the temporal, in the here and now is now eternal. The pride that you carry in your hearts, the love that will never die, your loved ones everlasting place in americas heart. We pray for you, their families, who have known the awful depths of loss and the quiet moments that weve spent together and the moments weve shared, im amazed at the will and ability to carry on and lift yourselves up again. And the greatest tribute to those that we lost for their legacies shine on in you. When you smile just like him, when you toss your hair just like her, when you foster scholarships and Service Projects that bear the name of those we lost and make a better world, when you join the fire house or you put on the uniform or devote yourself to a cause greater than yourself, just like they did, thats a testimony to them. And in your resilience, you taught us all theres no trouble we cant endure and no calamity we cant overcome. Step forward in those years of war, diplomats who serve in dangerous posts as we saw this day last year in benghazi, intelligence professionals often unseen and unheralded who protect us in every way, and men and women in uniform who defend this country that we love. Today we remember not only those who died in solemn tribute the challenges of live television. That satellite from the pentagon is just no good. Lets see what bob pisani sees on the floor. Bob . The global rally, its kind of fading a little bit. Im rather shocked, carl, by the fact the s p 500 is down, the dow is up. I think a lot of it has to do with apple. Weve had an incredible run here in september. The s p 500 is up 3. 1 . This is the first down day weve actually had. In fact, the whole Global Markets have had an incredible run overall. Syrias had an impact on the trading, golden oil has reversed, stocks have rallied. Weve had a lot of help from china, the better news there. The shanghai index is up again, four days in a row, up almost 6 in f in fourth days, the best in years. And the lesson here today is everyone investing in emerging markets need to learn this within. These are very volatile markets. You need to have an iron stomach. Looking at a fouryear chart, those are 30 moves from the highs to the lows everything six months. Weve had it again here, not even the widest amplitude weve seen here. And thats typical. People investing in emerging markets ought to understand that 30 move is typical. Lets move to apple. Thats one of the reasons that the nasdaq is down yet the Dow Jones Industrials are on the upside. I looked at 45 and that was ts able to see. 32 out of the 45 have buys on apple. The wall street journal had a great article saying there may be two other bailouts of greece coming. Merkel is having a much tougher time because the german electorate doesnt want any part of any more bailouts. They want a Small European Union with less members. Less appetite for any kind of bailout. This could have big implications in what goes on in greece. Finally on this verizon mult multideal here. A lot of people are saying its going to be easy to absorb this because the bond players, this is going to be in the indexes and all the players indexed to the bond are going to buy this. There are going to be a lot of buyers for this. When Stock Traders talk about bond deals, you know its a big deal. Back to you. Thank you so much, bob. Lets go to Rick Santelli. Thanks, jim. Im glad everybodys talking about that big verizon deal because it is a huge whopper, blow the historic competition awaytype deal and it may be impaci impacting the treasury market in taking off hedges and putting on hedges. Looking at a twoday chart of five years, were going to auction tens today, 30s tomorrow. The fiveyear is testing yesterdays low of the range, all are having problems breaking through resistance. You can see it on the intra days of 10s, open it up to a twoday. The twodays are at their best. Bunds seem to be holding the selling pressure, keeping their yields up still above 2 but the winner still continues to be the guild. It gets the award. It held and closed at 3 before the u. S. Did. It comes back to 2011, a little longer than the 2 historic comps on the bunds which go back to 2012. The last chart, the twoday dollar yen. Some of the volatility in Foreign Exchange seems to be dissipating. Its the kind of hat trick that apple does not like. Three broker downgrading the stock this morning. One of them is credit suisse. [ male announcer ] staying warm and dry has never been our priority. Our priority is, was and always will be serving you, the American People. So we improved Priority Mail flat rate to give you a more reliable way to ship. Now with tracking up to eleven scans, specified delivery dates, and free insurance up to 50 all for the same low rate. [ woman ] we are the United States postal service. [ man ] we are the United States postal service. [ male announcer ] and our priority is you. Go to usps. Com® and try it today. If you havent noticed shares of Sears Holdings lately, perhaps you should have. The stock is up sharply over the last week, bringing a lot of people in the fray about the real estate value at the company and whether that value is real and will be realized at some point or whether perhaps people who are buying it are on something of a fools errand. Sears shares are down right now but look at the performance over the last week. It has been nothing short dont forget, this is a wellheld stock. You have esl, 90 or so of the shares are pretty much not trading. Youve got a 10 float, a 14 short position and it isnt that hard to create quite a bit of a short squeeze. This morning gary balter says if Sears Holding never had a report earnings, we might be able to envision this stock well in excess of 100, perhaps returning to its old highs. To that point of course, bruce berkowicz, one of the largest shareholders in sears, was my guest right here on squawk on the street, this is what he had to say about why he continues to hold the companys shares. I may be in the minority but i think Eddie Lampert has done a great job. They still generate cash, real estate is amazing. We spend or lives understanding the ownership structure, leasing structure. And theyre not alone. A fund in los angeles, baker street, has put out a significant report about its stake in sears and why it believes the value is significant, at least 7. 3 billion in value. They see 44 a share if they just sell a third. Youve got this little debate going on on the real estate value. For his part balter comes back and says i dont know if i believe it. I like that. You like garrett balter. All right, lets get six in 60 with jim. Nokia is first. Here we go. Merrill and rbc like it more than ever before. Looks like they pantsed microsoft. Thats what theyre saying. Jpmorgan . We got this sell to hold. The spanish bank is coming back. Jefferies on coned. Lower expectations. This stock gets interesting again. Goldman on conagra. Theyre saying dont give up on it. Its going to have a better number. You mentioned wynn a couple of times today. Its a china play. Deutsche bank seas theyays theg to do well. Whats going on with starbucks today . Mcdonalds said europe is turning around. Its been the achilles heel for howard schultz. He did promise they would turn the comps to go positive. This company is now is the Fastest Growing major Retail Restaurant in the world. 5 in three days. Unbelievable. Whats on tonight . We have this is a small biotech thats been very, very hot, nps. Weve been trying to do Smaller Companies that we think will come great. Smash burger has been doing great. I havent had one. Apple three downgrades this morning, including one from credit suisse. Well talk to the analyst after the break. Therell be the usual presentations on research. And development. Some new members of the team will be introduced. The chairman emeritus will distribute his usual wisdom. And you . Well, youre the chief life officer. You just need the right professional to help you take charge. Like carpools. Polly wants to know if we can pick her up. Yeah, we can make room. Yeah. [ male announcer ]. Office space. Yes, were loving this communal seating. Its great. [ male announcer ] the best thing to share . A data plan. At t mobile share for business. One bucket of data for everyone on the plan, unlimited talk and text on smart phones. Now, everyones in the spirit of sharing. Hey, can i borrow your boat this weekend . No. [ male announcer ] share more. Save more. At t mobile share for business. At t mobile share for business. Nascar is ab. Out excitement but tracking all the action and hearing everything from our marketing partners, the media and millions of fans on social media can be a challenge. Thats why we partnered with hp to build the new nascar fan and media engagement center. Hps Technology Helps us turn millions of tweets, posts and stories into realtime Business Insights that help nascar win with our fans. Welcome back to squawk on the street. July wholesale inventories up. 1 of 1 . Both are light. No revisions the last month. Keep in mind via july data, this is the first month of the Third Quarter with respect to data so it doesnt impact any possible revisions to Second Quarter gdp and this comes at a time when were only a half a month away from wrapping up the Third Quarter. Simon, back to you. Lets get back to the markets. Despite the crisis in syria, the markets coming into today have been on a roll. The s p and nasdaq have closed in positive territory for six consecutive trading days. Joining us is allison dean and rob morgan. Welcome both to the program. Nice to see you. Good morning, thank you. Thanks. It is an important moment for the market. Six straight sessions, almost a 3 gain on the s p, which takes us now, as you guys will know, for the year to a rise of 18 in the s p 500. My simple question to both of you, rob, ill kick off with you first, can you construct a serious bear case any longer for equities in this country . Well, simon, i would take the bullish side but i guess the things that i might be worried about that would cause me to be bearish id continue to look at the next earnings season, perhaps it might be disappointing, continue to look at inflationary pressures because obviously qe arguably should cause those, although it has not. So thats what id be worried about and watching. And i do watch. But im pretty bullish here. Both of those things you mentioned are unknown unknowns. There is no sign of either at the moment. Allison, let me ask you the same question. Can you construct a serious negative argument is it possible to construct a serious negative argument for these markets at the moment . The concerns i would have again goes back to corporate earnings not coming back as strong as they could to sustain the market momentum, concern that the debt ceiling fight could become damaging to or bond market. None of which we have at the moment. No. If we cant construct a serious bear market argument at the moment, can the market rerate from what are we trading at the moment, 14 times future earnings . Will we go higher to 15 or 16 or are we fairly valued where we are, rob . You know, i think, simon, that were still slightly undervalued and i think its very important that not only do earnings estimates continue to rise, even though both allison and i are concerned about a bad season coming up, but the Retail Investor still over the last five years has stayed out of this market. It looked in january like perhaps the Retail Investor was getting back in, but as slowly and surely were going to see retail participation and thats going to probably cause multiple expansion from the 14 times level. Allison, is that weighted money a good enough argument for you or are we fairly valued at this levels . Will the market go higher . I think a market at 15 to 16 times earnings is an historical average. There is a case looking back over history for a higher multiple. Poufr, if we dont see earnings momentum and theres a greater backup in interest from anything from the tapering, its hard to argue multiple expansion. What is striking in the sixday period in the degree to which emerging markets have rallied very strongly, europe has rallied more strongly. What is the asset allocation, rob . Well, i think, you know, you still have to have the bulk of your equities, at least for a u. S. Investor, in u. S. Stocks. But im overweight at the international space, which would be for me 20 to 25 . Alison, briefly . This is terrible, we disagree on everything. Europe selectively is looking interesting as well. I do think you should be emphasizing a more global approach these days. Thats why its so very important at the moment that so many people are agreeing to point that i was making at the beginning. Thank you for your time. Thank you. Meantime, apple falling sharply today following yesterdays event. The big unveil was not the companys only event yesterday. The technical giant held a media event in beijing as well. Apples beijing launch for the new iphone was a disappointment. No news on a china mobile deal but there are indications that a deal is in the offing. Separate from the apple event, we learned chinese regulators have granted apple licenses to sell the 5c and 5s on china mobiles carrier network. The deal is seen as crucial for apple to expand its footprint in the country. China mobile wouldnt comment except to say its still negotiating with the american company. As for the 5c, reception has been luke warm. There was home that apple would bring a cheaping model and fend off competition from rivals like samsung. The 5c is only 100 cheaper than the 5s. The talk has been that maybe that is apples strategy here, that the Company Wants to stay at the premium end of the market and stick with the higher margins. Back to you guys. Lets pick it up with john fortt who was at the cupertino headquarters yesterday. Where are we now . That no china mobile deal has analysts scratching their heads this morning. We had seen the leaked information of the new iphone with the lower price. The biggest surprises yesterday were the price and the lack of deal with china mobile. Piper jaffrey was still hoping out hoped wed get a china mobile announcement it would come later in the day. This morning he issued a mea culpa, brought down his target price to 1640. Hes hoping a deal comes by the quarter. Apple is now tanking this morning. There are two possible scenarios. One, the iphone 5c shocks everyone and gains share despite its high price. It will have to overtake the 5s as the most popular model. And androids continue to gain share in the market until and unless apple introduces something to compete in that market. Everybody wanted an apple net book, they delivered an ipad. Maybe theyre hoping a iwatch will satisfy folks. Maybe well get to see if that strategy works again, carl. Interesting analysis, john. Well come back to that certainly if it comes to pass. Credit suisse, bank of america and ubs all downgrading apple this morning. We want to bring in the managing director of credit suisse. Good to have you this morning. John says analysts are scratching their heads after the pricing strategy. Are you scratching yours . Not really. We were very disappointed apple chose not to change their pricing strategy. Apple are going to price their phones probably for the next 12 months in the above 400 segment in the Smartphone Market. That segment of the Smartphone Market is not growing. Its 300 Million Units a year, its no longer growing. Apple have a 45 share of that segment. Its hardly going to much higher, especially with the strong competition from samsung. That means their iphone business will not grow. Were concerned the iphone is priced at 550. Thats going to compete with samsung with bigger screens, better processors and better cameras. It really impacts the earnings profits for that reason that we lowered apple estimates this morning. You say it competitively exposes the company. If they had gone with a lower priced strategy, though, would we not be hearing from analysts dekraaiing t decrying the lowering of margins . It would have had some gross margin impact on the negative side, however, the extra opportunity that you end up addressing is so much more significant, it would have been net good for earnings. Right now were thinking apple will only do 44 of earnings. Had they gone after that bigger area, wed talk about having a 50 to 55 earning power and the outcome can be very different. Whether we like it or not, the likes of carl icahn are dragging it back. I wonder if its time for it to embrace its size and 93 billion cash pile. I was with a senior innovator for within one of apples major competitors. He said to me why on earth didnt apple buy nokia . It could have maintained its own phones, tripled its market share overnight and put its own operating system into nokia and at the same time it would have wiped microsoft out of the mobile software space. Its that sort of vision perhaps do you think we now need at apple . I do think apple may be in need of more innovation and take more product risk, come to market quicker with new categories, whether its the watch or the tv and bring us green phone. I think buying nokia would have been a disaster. And the reason being is handset consolidation has never worked. By the time apple would have merged with nokia, integrated chips and integrated the u. S. , it would have been two to three years from now and would have cannibalized it anyway. You have almost saturation in the rich markets around the world and competitors are o innovating as fast as apple. How can it grow in the way the market expects . The way it worked we hoped going into yesterdays event by pricing the iphone 5c in that significant mid tier of the Smartphone Market it, would have given them a new Addressable Market and that would grown and gradually they could have replicated the ipod strategy. It was a good thing for ipod, it would have been good for iphone. They appear unwilling to do that. Theyre more interested about their margins rather than pursuing the ecosystem. That can become a risk. This issue of beijing. Did you think that is still in the offing over the next few months . I think it will happen. China mobile is building a significant 4g network and it isnt quite ready yet. By the time it is ready, i think its a matter of time. If i were to guess, its something well hear about more toward years end. Youre willing to live with the downgrade until then . Yes. The price isnt there. Its not a case of whether apple can do its whether the company can bottom line and i think thats doubtful for the next couple of months down. Gulbinder, thanks for your time. Thank you. President obama makes his case for military action in syria. Well talk to the former defense secretary William Cohen about what the markets should expect now. Squawk on the street will be right back. Now to the crisis in syria. The president last night said he asked congress to postpone a vote on syria action while diplomacy is pursued. But he did warn we will not tolerate the use of chemical weapons. I will not put boots on the ground in syria. I will not pursue an openended action like iraq or afghanistan. I will not pursue a Prolonged Air Campaign Like libya or kosovo. This would be a targeted strike to achieve a clear objective, deterring the use of chemical weapons and degrading assads capabilities. Lets get some insight now from William Cohen, the former defense secretary serving under president clinton from 97 to 2001. Mr. Secretary, thanks for being with us this morning. So you hold off he asked congress to hold off on this vote and yet you still make your case for action. What do you think changed last night, if anything . I think the president didnt have the votes. Two things happened. The russians apparently grabbed secretary kerrys thoughts about what it would take for a peaceful settlement of this issue and they seized upon that and said lets work on that. Thats going to take some time just to consider the enormity of the job that will be involved, whether youd have to have a ceasefire, whether youd have to have a thousand inspectors on the ground, whether youd have to have 50 to 75,000 troops to protect them while theyre on the ground, et cetera. So i think the president said lets have diplomacy have a chance to work backed up by a credible threat of force. The real issue is is there a credible threat of force if congress and the American People dont support it . Then the question becomes will the president ever take action having gone to congress to request authority, would he take action without congress now . That would cause him future political problems as he would seek to go forward for the next three years. So i think hes in a box, a trap door has been pulled and hes out of the box for the moment but i think with all of the mixed messages weve had first it was going to be a strong strike against syria. Then pulled back, well, it would be a little strike, the littlest possible strike. Then it was going to be a shot across the bow. Now it going to be something targeted and really effective. I dont know what the mission is frankly. Its been difficult to the message has been muddled. Its either unbelievably small or we dont do pinpricks. Do you believe that the effectiveness of deterrence has been reduced among other wouldbe rogue governments . What are they saying in tehran and pyongyang . I think they look and see we havent had a budget in four years, were deadlocked on a budget and to have congress basically reflect a vote of no confidence that we should take military action, i think theyre looking to see the United States power diminished certainly in that part of the world and other parts as well. Whats your conclusion about what is going on behind the scenes at the white house . Theres been an important change in language. President obama was a talking about punishing. You said under International Law you cannot punish, you can only degrade and deter further action. What do you think is going on behind the scenes during this time about who hes listening to at what point and what theyre learning along the way, a process or communication policy that the Washington Post editorial describes today as stumbling, improvised and often incoherent . I think thats an accurate representation. I said it was something out of dr. Doolittle in terms of having a push me pull you policy. We had secretary kerry give what i would call a parakleen speech rah rallying the nation to war. And then the president said lets go talk to congress because the arab league took a dive on this and the british voted no. So the president turned to congress. Thats all dangerous. The president had the Inherent Authority to take action, comply with the resolution but if youre really serious about hitting assad for doing something quite heinous, you have to hit him within a short period of time. You may have few people with you if you act quickly but if you act on a long timetable, youll have far more opponents, including the American People and others around the world. We have a situation where theres been a lack of clarity. I would recommend if hes going to take military action, follow what president clinton did in desert fox. That was to go after saddam husseins weapons at that point under the u. N. Security authorization but to go after his weapons and for four days we inflicted real severe pain and suffering, which caused saddam to recalculate what he was doing in terms of those weapons that he was developing. So wouldi would think the presi is thinking of of that model now, not kosovo but desert fox 98 which was a limited attack in which there were no fatalities in the United States. Thank you, secretary cohen. Good news, oil prices have been slipping. Well take a look at what could be ahead for commodities when squawk on the street comes right back. When does your work end . Does it end after youve expanded your business . After your companys gone public . And the capitals been invested . Or when your companys bought another . Is it over after youve given back . You never stop achieving. Thats why, at barclays, our ambition is to always realize yours. I love having a free checked bag with my united mileageplus explorer card. Ive saved 75 in checked bag fees. [ delavane ] priority boarding is really important to us. You can just get on the plane and relax. [ julian ] having a card that doesnt charge you foreign transaction fees saves me a ton of money. [ delavane ] we can go to any country and spend money the way we would in the u. S. When i spend money on this card, i can see brazil in my future. [ anthony ] i use the explorer card to earn miles in order to go visit my family, which means a lot to me. Welcome back to squawk on the street. Im kayla tausche. Were watching shares of sothebys moving up 1 . The board is reviewing policies on buying back shares and issuing dividends. It will report to shareholders in early 2014. Back to you. Thank you very much, kayla tausche. The nasdaq and nynex preparing to remember the 9 11 attacks. Well be right back. Nascar is ab. Out excitement but tracking all the action and hearing everything from our marketing partners, the media and millions of fans on social media can be a challenge. Thats why we partnered with hp to build the new nascar fan and media engagement center. Hps Technology Helps us turn millions of tweets, posts and stories into realtime Business Insights that help nascar win with our fans. Today is the 12th anniversary of the september 11th attacks. The nasdaq and nynex now commemorating the moment when the north tower fell. [ moment of silence ] and with that, that is the last moment, 10 28 is the time the north tower fell, guys. 10 03 is when flight 93 crashed into shanksville, pennsylvania, which is member a memorial of their own today. Important to keep the day alive. Cant let it be forgotten. Thats the most important thing. And it gets you every time. Every time you have the silence, it comes back, particularly for these guys. Yes. Today were looking at the resilience of the economy since 9 11. Dominic chu has that story. The tragedy of that day marked a turning point on so many levels. Companies had to find a way to innovate and thrive and one group that has emerged it technology specifically, the next generation of internet companies. Well call them web 2. 0. For instance, theres the worlds biggest social networking site, facebook. Its taken the internet and made it into a place where you can connect with people on very personal levels. The stock may have had a glitchfilled ipo last year but stocks are up 15 from that ipo price. Its up 147 since its postipo lows, worth 147 billion as a company. Along the same lines is linked in, tailored it specifically for professionals and allow networking that can lead to direct business relationships. The stock is up 457 sense its ipo in may of 2011 and is worth 29 billion. Pandora has found a way to make money for people who want to use the web to connect to music. That Radio Company over the internet is up 33 since its ipo in june of 2011 and is worth 3. 7 billion and we all know that knowledge is power in todays ever changing real estate world, potential buyers and sellers want market info. Zillow has found a way to give consumers access to the housing market, the share is up 390 , the company is worth 3. 5 billion. These are companies that have grown into multibillion dollar enterprising by evolving with the economy and with the country in the world since 9 11, simon. Back to you. Thank you very much. Crude Oil Inventory data is just in. Sharon . Good news for drivers out there. Were seeing gasoline prices come down. We are looking at crude oil supplies for the past week, which fell by 200,000 barrels. Analysts were expecting to see a decline in oil supplies of 2 million barrels. We are seeing Lower Oil Prices right now. We were expecting a decline in gasoline supplies but in fact we saw an increase in the past week of gasoline supplies of 1. 7 million barrels. Thats causing a selloff. And were looking at a rise of rise at 2. 6 million bares in distillate fuel supplies. We were expecting a smaller increase in distillate supplies. And this comes at a time were paying 3. 56 a gallon for the National Average for unleaded gasoline, down 3 cents in the gas week. Tom at gas buddy says we could likely see a 5 cent decline in the next week in the National Average due to what were seeing in risk premium coming out with the serious situation. Add to that the supply picture and perhaps well see even further decline, particularly in the midwest. We can certainly hope, sharon. Speaking of gasoline and crude oil, look at this chart. Just as the president said he asked congress to postpone that vote on military action, prices instantly drop. Is that a sign of things to come . Well talk about that in just a moment. Our priority is, was and always will be serving you, the American People. So we improved Priority Mail flat rate to give you a more reliable way to ship. Now with tracking up to eleven scans, specified delivery dates, and free insurance up to 50 all for the same low rate. [ woman ] we are the United States postal service. [ man ] we are the United States postal service. [ male announcer ] and our priority is you. Go to usps. Com® and try it today. The lodging giant marriott is having a good morning, the stop upgraded from neutral to buy, putting the price target from 48 to 52. Marriott has underperformed its peers year to date. Good news for consumers of gasoline, Oil Prices Dropping as tensions over syria ease. Lets bring in the president ira eckstein. Where do you think prices are going . If you had asked me, maybe drop a couple dollars down but the market still has a chance to get above 110, 112, 115. Why . Why would that happen . Well, as i said, before this whole thing escalated, crude oil was already rising under drawing supplies. So if you have to look at the trend, the trend was trending up to begin with. I think tensions might have decreased a little bit. We have to hold 105. Crude oil is a technical market. If it doesnt hold technical calls levels, i would reevaluate everything. As of now, it looks like its holding pretty well here. Where do you think gasoline is going to go . They say buy before memorial day. It peaks into gasoline season and after labor day historically sells off. Theres rising supplies here a little bit in gasoline. I think we should come off a little bit, maybe 10, 15 cents nationally but then it should probably hold and possibly go higher. Ira, one of the major determinants of where commodities go is clearly the dollar because theyre all priced in dollars. It is a mystery why, as weve gone through this period of debating the taper, you havent seen the dollar gain more when other Central Banks around the world are far more dovish. And in fact, the dollar index is down 3 since may 22nd when bernanke first spoke about tapering. Why is that . Where do you think the dollar will go . Thats a big question. This is what ill say. Historic forget everything. Lets look at right now. I dont think the dollar is so weak. The dollar was a little higher and now its come off. I think the runup we had maybe a few years ago was correct a dollar play. I dont think thats an issue now but if the dollar does weaken, its going to be even more bullish for crude oils and commodities. Whats your best trade . Where do you think people will make money through fall . As a traders perspective, were always like opportunity. I believe any pullback right now is continued in opportunity and i think that oil is going to be very volatile in the next weeks or so. You know, secretary of state kerry said this is not an easy solve. So thats great if youre a trader because that means theres going to be volatility for a long time. So i would look to buy pullbacks and i would look at Technical Levels also. So pullbacks are a good thing if youre a trader looking to get in, i think some weak longs got out yesterday that we saw but i think its a great opportunity to get in since we held preaugust 20 numbers. Ira, thats interesting you say that. Goldman has a note out arguing that even though syria has cooled off a bit, they think risk is on the up side and citing pressure of opec spare capacity. Does that make any sense to you . If you look at opec, the brent is more vulnerable than we are since we have Domestic Production up. I think we depend on it but less vulnerable than brent. So maybe wti strengthens against brent, thats been the trend since weve opened up cushionrbo you might see that trend in the future. Good to see you, ira eckstein, president of area trading new york. Apple down more than 20 points. Should investors get out now in case the stock falls still further in well have both sides of that argument next. We went out and asked people a simple question how old is the oldest person youve known . We gave people a sticker and had them show us. We learned a lot of us have known someone whos lived well into their 90s. And thats a great thing. But even though were living longer, one thing that hasnt changed much is the official retirement age. The question is how do you make sure you have the money you need to enjoy all of these years. Ask me what its like to get your best nights sleep every night. [announcer] why not talk to someone whos sleeping on the most highly recommended bed in america . Ask me about my tempurpedic. Ask me how fast i fall asleep. Ask me about staying asleep. [announcer] tempurpedic owners are more satisfied than owners of any traditional mattress brand. Tempurpedic. The most highly recommended bed in america. Now sleep cooler with extra cooling comfort on our bestselling tempurbreeze beds. Visit tempurpedic. Com to learn more, and find a retailer near you. Apple shares falling today. This is shaping up to the worst day for apple in about five months. Should investors start to get worried here after the announcement yesterday about the iphones and what did not happen in beijing . David trainer is the ceo of new construc constructs, and Channing Smith joins us. Channing, you have stood by apple thick and thin. How disappointed are you, if at all all . We were disappointed. We were looking for a onetwo punch at the Capital Advisers growth fund. We got it on the 5s, met expectations, got the fingerprint authentication, increased payments going forward, we liked the improvements to the new operating system. The problem was emerging markets. That is where the growth is going to come from so were disappointed. We think the stock will stabilize in here. We think that the new model, upper end model is enough to stabilize market share to increase the replacement cycle, but the emerging market is where youll get growth. At a 499 wholesale price, its too high and we think thats going to hurt demand in emerging markets. That was the discuss going in, wasnt it, the price point at which an international phone, a china phone would be effective. What was your take away from yesterday . I think it proves the theses ive shared with with you before. Theyre in a margins battle now. If theyre going to price the phone to move in emerging markets, its a pricing battle. They no longer have the features and brand to command the premium price. I think china a lot of Chinese People felt snubbed by such a high price. I think apple is going to have a lot of trouble in china. Channing, obviously now were left with sort of a similar tone that we were earlier in the year, right . Were back to talking about Balance Sheets, back to talking about cash, buybacks, carl icahn, phone conversations with tim cook. Is that enough to make you stick with it . Is it enough to make you buy more . Were clearly frustrated. We were really looking to this day to see change and a trajectory of earnings growth. Were somewhat skeptical of that. We dont want to count apple out yet. The good thing about a high price point is they can always come down on that. We were disappointed to see china mobile, we didnt see a deal there last night. We will have the ipad refresh thats coming. But, yeah, well probably rethink our wading in the stock. We want to watch what happens with the sales figures that come out, product reviews. We want to see how the product sells in emerging markets. But we think the streets reaction today is probably right. Theres definitely some skepticism now going into how well theyre going to do in emerging markets and whether well see that next leg of earnings growth. Were a little bit troubled. Can they take it up a gear with behaving like other companies with m a, consolidation, getting into new spaces . Do they simply make these very few products and rely on innovation the rest of their lives . Is that what its about . No, i think theyre going to continue to innovate. If you look at product categories driving earning growth, its the iphone and the ipad. We need to see something now. The iwatch and itv is great but its way into the future. We need to see some products here and now that sell and that kind of rekindle that earnings growth. And the point your other guest made was a good one. Look, margins are going to come down. Investors are going to have to realize that. As you go through technology cycles, price points come down because innovation becomes harder and harder to come by. Apple is going to have to realize that at some point. If you can lower that and get volume growth, thats going to be fine because your earnings are going to come in and it will attract investors back to the stock. I think the up side is capped until we see better results. Coming from a shareholder like channing, its hard to ignore statements like that. What is the possibility, then, of getting some kind of reversal in pricing strategy, in overall strategy sometimes within the next 12 months . Look, i think all this talk about pricing strategy, carl icahn, Balance Sheets, is just a smoke screen for the fact that apple is not able to innovate anymore. I told you carl a month ago and a month before that that unless they come up with innovation, a improvements, not innovations. Its not enough to beat off the competition. Look, android has 80 market share global. Almost 80 . Apples at 13. All right . This is a margin game now. Unless they can come up with that next great thing. And if they cant, look, i see the stock not better than 300 bucks. Okay. All right, guys. Wow. Thats ridiculous. Channing smith and david trainer, thank you both for joining us. Lets send it to kayla for a market flash. Were watching chipotle, hitting a new 52week high. Its currently above 421 bucks, within 5 of its alltime high. Its up 41 this year. Thats double the per foremanance of the s p 500. Of course, bears have been vocal about this stock, but the market is finding several reasons to be bullish this year. Among them, the restaurants role and new catering service, a boost to samestore sales. Back to you. All right, kayla, thank you very much. Lets get over to chicago, the cme group. Rick santelli and the santelli exchange. Hey, rick. Hi, carl. Liquidity. One of the big issues in the crisis which were celebrating this week, the anniversary of five years. But was it misinterpreted . Anna schwartz, one of her last interviews, basically hinted at the notion actually didnt hint, was pretty clear about it that ben bernanke may have been fighting the 30s all over again by supplying so much liquidity. In the 1930s, it was liquidity issue. There was a run on banks. There really wasnt the same issues in the 08 crisis. There was a run on confidence as to how to price a bunch of toxic product. That was the longandshort of it. Nonetheless, that didnt stop the pendulum from swinging and having many regulations like doddfrank, like much of doddfrank that isnt written, address an issue of liquidity in a substantial way. Now, consider this. That liquidity is something essential in the marketplace, and even though the rules arent done, many on wall street, talking firms here, have decided to be preemptive, and they are shrinking the amount of inventory they have in the fixed income markets. Theres a great article to this point and the trigger for this wonderful article in the Financial Times was this whopper of a verizon 49 billion issuance. And put up on the screen, please, the title of the ftc piece wrilten by traci is markets, the debt penalty. Dealer inventories of corporate debt and other nonu. S. Treasured bonds have fallen, get this, 78 , since the 07 peak of 235 billion according to Federal Reserve data. Lets take a step further. If you look at just the structure of Investment Grade funds, they are up since 08 about 500 billion. Yeah, i think the exact number, it might have been referenced in the article, 524 billion. Thats a 42 increase since 08. Lets look at it from a different perspective. If you looked at the top five etfs on high yield and Investment Grade, theyre now standing at about 73 billion. This is absolutely huge. How big is the Corporate Bond market . Well, anywhere between 9 trillion and 10 trillion, with a t. So lets look at all of the pieces we have. Being preemptive, shrinking Balance Sheets you know, when i got into the business in 80s, i did an inordinate amount of business in the futures. Inventories that many of the dealers had were huge, and they were a shock absorber. Heres the two issues, and i dont know how they stack up, only history and time will tell. On one hand, you have shrinking liquidity, which means instead of some of the institutions taking the risk on liquidity, should this huge move in corporates end up going the other way, its going to fall on the back of investors. Well, that might not be bad, because investors arent the same as taxpayers. On the other hand, we may be staring at the next liquidity trap right in the face. Just think about the demand, over 100 billion on this verizon deal. Simon, back to you. A big red flag. Thank you, rick. Rick santelli live from chicago. Up next on the program, why the Broadband Access you use on your next plane ride is about to get a whole lot faster. Were back after a quick break. [ tires screech ] [ male announcer ] 1. 21 gigawatts. Today, thats easy. Ge is revolutionizing power. Supercharging turbines with advanced hardware and innovative software. Using data predictively to help power entire cities. So the turbines of today. Will power us all. Into the future. [ indistinct shouting ] [ male announcer ] time and sales data. Splitsecond stats. [ indistinct shouting ] its so close to the options floor. [ indistinct shouting, bell dinging ]. Youll bust your brain box. All on thinkorswim from td ameritrade. From td ameritrade. Nascar is ab. Out excitement but tracking all the action and hearing everything from our marketing partners, the media and millions of fans on social media can be a challenge. Thats why we partnered with hp to build the new nascar fan and media engagement center. Hps Technology Helps us turn millions of tweets, posts and stories into realtime Business Insights that help nascar win with our fans. Your inflight internet is go to get faster. Jane wells is live in anaheim, california, with details on that. Hey, jane. Reporter hey, carl. You know, onboard entertainment and connectivity is estimated at Piper Jaffray a 3 billion market, growing 20 a year. All of the Major Players are coming to the expo put on by the Airline Passenger experience association. Nothing may be more important than faster connectivity, and gogo is the leader in this market, and in a first on cnbc, it is announcing a new faster Connection Service to be installed second half of next year on all Virgin America planes, which, for the first time, combines gogos own groundbased system with space its renting on ku satellites. Frees it up from the bandwidth constraints, and making sending emails and texts 20 times faster, 60 megabytes per second. Our airtoground networks actually more efficient, for getting to the ground, and the satellite is more efficient to get to the plane. So we combine the best of each. This solution will be 20 times faster than what most of our planes do today. So its a quantum leap here. Yeah, so, what you will be sending goes to the ground system. What you receive comes from the satellite. What you saw was the new antenna that Virgin America will be putting on all of the planes pending faa approval. We dont know the cost of the aten that, but it needs the faa approval, which is why you wont see it until next year. They say there are many initiatives in the process. Right now, on the business jets, if youre a customer, you can make calls and texts on your e phones and androids. Theyll roll out texts to commercial airlines next year, not calls. They say passengers want to be able to text, not necessarily have voice. Texting next year. The pricing is to be determined. And the big issue is price, but not as much as speed. Carl, a recent survey by honeywell, which is also here, by the way, showed that 13 of americans said they would exchange faster wifi on an airplane for access to the toilet. Thats how important it is. I guess it depends on the length of the flight. Yeah, you got that right. Thank you, jane. Jane wells in anaheim. Well see. Well see how well it works. Meantime, guys, even though the dow is up 43, all of the nasdaq 100s weakness is being driven by apple. Yeah, like a stone. Down almost 6 . You can its falling in realtime. Its extraordinary that the company couldnt come through with more that would energize the market. Maybe its because they leaked so much in advance, and there were so many source i dont know if it came from the company, but we knew everything. Nothing left to the upside. I can already hear the chants of, boy, its cheap, a Free Cash Flow yield, cheap in many different ways, its still apple. China mobile, that will still happen. Probably in november. You can just kind of feel that. That being said, it is a bad day for the company. Yeah, the secondworst day of the year, only january 24th was it down by more. Ramped up in anticipation, a couple of good months in anticipation we would get more. Yes. See you guys later on. If youre just joining us this morning, heres what you missed. Welcome to squawk on the street. Heres what happened so far we need an International Cooperative approach to dealing with the failure of Large International institutions. We absolutely must get away from this nationalistic ring fencing. I think its a good company. I just think that, you know, at some point theyve got to have an amazing product person that could say, hey, you didnt know you need this. The criticism appears to be hes a supply chain guy, right . Yes. You do away with the 5. You bring in the plastic phone. You lower your cost. You protect your margin. In the end, it is more about moving around the chain. Its not about innovating to a new phone. Prompter is one of the company, lets put the thing up, so much value here. Thats all youre about here. Missed the split up. Have you noticed what happens when a company splits up . It goes higher. Yes, i know. [ bell ] now time to go a bit more back into emerging markets, and europe selectively is looking interesting, as well. So i do think you should be emphasizing a more global approach these days. Thats going to compete with the very best and newest offerings from, lets say, samsung, bigger screens, better processor and better cameras. What this means is it impacts the earnings growth. Its for that reason we lowered eps estimates this morning. A lot of news on a very busy morning. Lets get to. Talk about sell on the news. Right now, apple posting its secondworst day of the year. Biggest percentage loss since really about five months or so. Down almost 6 after investors were disappointed with the unveil of the new iphones. Well take a closer look at apple to see where its headed next. Plus, its been five years since the start of the financial crisis. Well talk to a top Economic Advisor to president bush during the crisis, find out just how far weve come since 2007. The president making a tough sell last night, trying to convince the country that military action in syria may be necessary. But as the stalemate continues, could syria start having an impact on the debt ceiling fight in congress. Joining us for the entire hour, mike santoli, works with yahoo finance, writing about the market resilience, and certainly its true today. It is. Its held up nicely. Some of the things you want to look for below the surface look good. Smaller stocks, industrials leading. Weve made some kind of peace, so to speak, with both rates at this level and whats likely going to happen in syria. I didnt see syria as a big swing factor, in an enduring way. Not that you not to have it there would be good. Not that you knew how the Foreign Policy would change of course not. Over the course of 24 hours. Youve written a lot about august versus september. We know august was miserable. Worst month in over a year. Yeah. As of this morning, the s ps wiped out the losses almost completely. Yeah. And you said maybe, the likelihood of a correction here is diminished somewhat . Somewhat. I do think we kind of frontloaded a lot of the anxiety. The left scary, risky events are the known risky events. We had so many of them piled up. We still have them, obviously. Debt ceiling, fed decision, all the rest of it. It seems we frontloaded that anxiety, and undoing it a little bit. I dont think its a race to new highs. We still, i think, have a little bit of work to do to show the demand is there at these levels. A few weeks from earnings season. Well see where we go. In the meantime, of course, this is the 12th anniversary of the september 11th attacks, and Mary Thompson is manning a benefit over at Cantor Fitzgerald. Hey, mary. Reporter hey there, carl. Its charity day at the Cantor Fitzgerald Trading Floors. This is where they raise money, all of the commissions today go to charity. They raise money for over 100 charities around the world. And we are joined right now, pleased to be joined, i say, by actress julianne moore. Thank you for joining us. Thank you for having me. Each celebrity that comes in is here for a certain charity. Which one are you raising money for . Im here representing Childrens Health fund, an organization that serves medical care to underserved children. They have mobile medical units. For kids that cant receive proper care, the care can go to them. Great. You havent made any trades yet. No, im about to. Im going to be on the phones in about two minutes. As soon as i get off the air, ill be on the phone. If you would like to call in, trade, donate some money to Childrens Health fund and talk to me, ill be there. You also have a big a big yeah, yeah. You have two movies out and a new book. Childrens book. Tell bus that. I have a move called don john, and a book called my moms a foreigner, but not to me, the experience of growing up with a mom from another country. Lastly, youve been in new york for 30 years. Yeah, just about 30 years incredibly. So to come here and commemorate 9 11 in this manner, what does it mean to you . It means a tremendous amount. It was a terrible day. It was a tragic day. We had so many so many tragic losses. And so, to be able to kind of remember these people in this way by giving back is very meaningful. I think its meaningful for all of new york. We love this city. You know, people didnt leave. Were devoted to it. We all stayed. And so, its just its a really, really special day to be involved in. Lastly, when you come to the Trading Floors, there is one of your movies that everyone seems to remember. Oh, yeah, yeah. Traders love the big lebowski. Thats what it is. Thats what you hear. Thank you so much for joining us. Thank you. Carl, of course, weve been speaking with julianne moore, the famed actress, and were pleased to have her with us. I would love to give an order to maude lebowski. Thats fabulous. Thank you so much. We want to take a closer look at apple. The new touch sensor, new versions of the iphone, not exactly exciting. Wall street, as we pointed out, the second worst day of the year for apple. Three brokerages downgrading. The shares down almost 6 . Lets talk more about it as well. Tony of bernstein maintains an outperform on the stock and a price target of 600. Tony, good to talk to you this morning. Good morning, carl. What were hearing from people who are maintaining their rating is even some concern. Im thinking of btig, where they keep the buy but call this a critical miscue. Where are you coming from . I agree. Look, the announcement yesterday was disappointment. It was a disappointment. Not when that they announced but in what they didnt. I think there was widespread speculation that apple would seal a Distribution Agreement with china mobile and there was widespread anticipation that apple would offer a lowerpriced phone to address the booming, emerging market lowpriced phone segment. Apple did neither of those things. In light of the, you know, 40 or so runup weve seen in the stock over the last month in anticipation of those things, weve seen the stock give most of that back. Now, on a goforward basis, i think the investment thesis is still the same. Apple needs to prove that innovation is alive and well and that it can create new Market Opportunities for itself. We think principle among that is a lowpriced iphone, but there are opportunities in wearable compute. There are opportunities in television. There are opportunities in converged offering. If apple delivers on those, estimates will go up and the stock will work. If it doesnt, the stocks not going to go anywhere. Well, toni, from 700 on the stock, all the way down, the big concern was margins, and what was going to happen to margins. Here you have apple preserving margins on some level. You can almost see the flip side of this, if they had come out with a lowpriced phone, people would be complaining about them eating their own margin. Is that a Fair Assessment . Well, i think that was a worry among investors. But ultimately, the bottom line is if apple had come out with a lowerpriced phone, yes, the gross margin percentage on those phones would have been lower, and that would have negatively impacted the Company Gross margins in all likelihood. But at the end of the day, if apple was able to do that with modest cannibalization, it would have created significant incremental opportunity. Revenues would have gone up and earnings would have gone up, and cash flow would have gone up in investors models. Historically, the stock is highly correlated to earnings revisions. And so, ultimately, at the end of the day, yes, there would toni, you say they need to prove innovation is alive and well. We do hear from a lot of supporters who say ios 7 is different. The 5s, some of the photo capabilities, the speed of the processor is different. Youre not discounting those, are you . Im not discounting those. But really, when i talk about innovation, i think really when people think about apple and the hallmark of what its created over the last ten years, it has been about redefining market prices, and clearly it did that with music. Clearly its done that with the Smartphone Market. So when we think about really significant innovation, we think about can apple create another significant Market Opportunity for itself . You know, we think designing something that works in the low end of the Smartphone Market which we think about be a billionunit market in three years from now or coming out with a converged tablet and pc offering, which we think also could be a very substantial market, thats the kind of innovation that i refer to. Toni, always good to get your point of view. Really appreciate it. Thank you. My pleasure, carl. Toni joining us from bernstein on apple today. Lets talk about the situation in syria. In a speech to the nation last night, the president said he would try to resolve the Syrian Crisis diplomatically, but insisted that military action may be necessary to respond to the use of chemical weapons. John harwood covered the speech last night, with us here on cnbc, and he has the latest out of washington. Reporter good morning, carl. Syrian policy, for better or worse, has been about managing competing objectives. President obama in his speech last night was trying to strike that balance again, wanting to be involved but not too deeply. Yes, he said he told the American People we have a diplomatic option to pursue, but he argued that that is only viable as long as theres a threat of credible American Military force. And he said for the good of the u. S. National interests, we cant let up. If we fail to act, the assad regime will see no reason to stop using chemical weapons. As the ban against these weapons erodes, other tyrant also have no reason to think twice about acquiring poison gas and using them. Over time, our troops would again face the prospect of Chemical Warfare on the battlefield, and it could be easier for terrorist organizations to obtain these weapons and to use them to attack civilians. Reporter now, weve got another week or two perhaps for the United States and other countries around the world our allies, france, the u. K. , others to evaluate the russian syrian proposal. We have to see where that goes. If it doesnt go anywhere, if it proves not to be credible, you then still have the prospect facing the president of having to either order military force without the consent of congress, or to go back for the vote that everyone is so relieved right now not to have to cast. Carl . Yeah, for now, as you point out, john. Thank you very much. John harwood. For more insight on syria, the president s speech and the looming debt ceiling fight, lets bring in howard dean, the former democratic governor of vermont, cnbc contributor, and judd gregg, former republican senator, governor of new hampshire, and a cnbc contributor. Gentlemen, good morning to you both. Good morning. Governor dean, lets talk about our options here, and your assessment of the speech last night. You tell the military to maintain their posture, but ask congress to postpone the vote. Well, i think this crisis is essentially over. Were not going to attack syria anytime soon. Putin has basically taken responsibility for the syrian chemical weapons. And so, my guess is what happens is they have a negotiation, which is probably going to be somewhat contentious at the Security Council and elsewhere, and whether it succeeds or not in the short term doesnt matter. Were not going attack syria over the use of the chemical weapons. What will happen is if the russians slip back into their obstructionist mode, and if assad uses chemical weapons again, i believe the president will attack syria, and this time he will not ask congress. So i think basically we get through this, and weve gotten through this, and i think assad will not use chemical weapons again, so the president s achieved has achieved his objectives and the crisis is essentially over. Senator, if the governors right and all of that happens and we do attack without congressional authority, whats the blowback . Well, i cant as much as i admire howard, governor dean, i just cant agree with his assessment here. My view is that youre almost dealing with an alice in wonderland Foreign Policy. There seems to be no coherent direction to it. There doesnt seem to be a definable purpose to it. The only Strategic Interests we have in syria is to keep chemical weapons from falling into terrorists hands who might use them against us. And the opportunity to do something about that has passed, because those weapons have now been hardened and moved. So the ability to get to a strategic solution, which would assist our position, is very difficult, and now you have the russians essentially taking over the issue of how you manage the chemical weapons. Well, it was just a week ago that the russians were calling our secretary of state a liar, and now we have a situation where if you go to the united nations, the russians hold a veto and the russians basically control the cards. And i really dont think it makes a whole lot of sense for us to have our Foreign Policy dominated by the russians. So theres just an incoherence here thats very hard to follow. Will the congress get engaged . Well, i think the congress has the responsibility to get engaged whenever military force is used by the president at any high level. And if howards right, and they go to military force, then i think the president last night he said he would go to the congress hell have to go to the congress to get that authority. Right now its not clear whats happening to be very honest with you. Yes, i the front page of usa today is how about how our Foreign Policy is being driven by gaffes. Comments like red line. Comments like unbelievably small. And comments like going to well well, obviously, judd and i have a difference, senator gregg and i, have a difference. I do think theres a coherent Foreign Policy. I think whether it was luck or being good or both, weve gotten through something that was very difficult. And i think that the president deserves some credit for that. I do think that the president had not threatened military action, that we wouldnt have gotten this result. I think its a good result. Yes, of course, the russians are not somebody that we would trust, but this is in their own interests, too. Lets remember that its russia has some vulnerability on this. There is a troop of jihadists from dagestan in syria fighting on the side of the rebels. So there are no particular good guys. The good guys have been somewhat overwhelmed in this. And russia has an interest in having those chemical weapons not come back with those dagestanis to russia either. So even though we disagree with the russians and we have a difficult relationship with them, theres no reason we shouldnt work with them on an issue we both agree could pose a threat to both of our countries. That is what i think is going on, and thats what i think secretary kerry and foreign minister are talking about right now, and i think this is this is a coherent policy, and were heading in a good direction. There is no howard, i have to disagree with you. There is no coherence to this policy. The president put down a red line that he shouldnt have put down. Then secretary kerry at a press conference, almost in an offhanded way, threw out a comment. The russians took advantage of that comment and basically run with it. It may work out that the russians get control over those weapons and that we are able to destroy those weapons. But the price were going to pay here is going to be significant, because there was not a significant public there was not a definable Public Policy as to how to approach syria. If there had been, we would have destroyed those chemical weapons two years ago when we had the capacity to do it, or over the last two years when we knew where they were and we knew how to destroy them. The real issue here the true threat to america is that those weapons fall into terrorists hands who use them against us or use them against israel. And the simple fact is that this administration has basically botched the whole process of how to get control over those weapons. Now, maybe theyll luck out. Maybe they will actually have the russians pull our coals out of the fire here. Our experience with putin is he makes he makes people pay a pretty dear price when you turn to him to straighten things out for you, and its a real really dangerous for american policy to be to be the tail on this dog with the russians running it. We were hoping to discuss the impact on domestic policy, but theres so much work to do on the foreign side, we just havent gotten there. Its good to see both of you, though. Thank you so much, governor, senator. Talk to you later. Thank you very much. Thank you. When we come back, another batch of new highs today. Not a bad list. Starbucks up 5 in three days. Netflix at 313. Well talk more about what those names are doing, and then nike, of course. Rick santelli going talk to ed lazier about economic data. Hey, rick. I am, absolutely. As a matter of fact, you know, the fiveyear anniversary of kind of when all of the dominos started to fall. Adam, keith, there both, wrote a great pamphlet, 40 pages, really says it all. Well dig down deep with the primary experience and tell us what his memories are, past, and what he thinks about the ongoing future of the financial markets. Youll want to see this. Ask me what its like to get your best nights sleep every night. [announcer] why not talk to someone whos sleeping on the most highly recommended bed in america . Ask me about my tempurpedic. Ask me how fast i fall asleep. Ask me about staying asleep. [announcer] tempurpedic owners are more satisfied than owners of any traditional mattress brand. Tempurpedic. The most highly recommended bed in america. Now each of you can personalize your comfort at the touch of a button with our new tempurchoice. So both of you can get your best nights sleep together. Lets take a look at some utilities right now. Among the worst performing sectors in the market. Kayla has more on that. Whenever theres talks of yields and Interest Rates rising, theres weakness in utilities. Analysts have been downgrading the stocks all week, saying theyre near the end of the cycles. Coned, getting a downgrade at jeffries, 58 a share from 67. Southern company, duke energy, in the red right now, as you can see. Con ed faring the worst, down 1. 9 . On the flip side of the market, a spate of names hitting alltime highs. Among those, starbucks, tj maxx. Netflix, of course, which struck the deal with virgin media, has also recovered from its high a little bit, though its still near the alltime level. Nike, one day after announced it would be initiated into the dow this month, it is also hitting an alltime high. Nike now at 67. 23. Carl . Thank you very much, kayla. Mike, you and i will talk about some of the names later on. In the meantime, its been five years since the start of the financial crisis. Our economys come a long way since the dark days, but what have we learned since 2007 . Well ask ed lazier, chairman of the Economic Advisors, during the crisis when we return. [ male announcer ] staying warm and dry has never been our priority. Our priority is, was and always will be serving you, the American People. So we improved Priority Mail flat rate to give you a more reliable way to ship. Now with tracking up to eleven scans, specified delivery dates, and free insurance up to 50 all for the same low rate. [ woman ] we are the United States postal service. [ man ] we are the United States postal service. [ male announcer ] and our priority is you. Go to usps. Com® and try it today. I put in the hours and built a strong reputation in the industry. I set goals and worked hard to meet them. Ive made my success happen. So when it comes to my investments, im supposed to just hand it over to a broker and back away . Thats not gonna happen. Avo when you work with a schwab financial consultant, youll get the guidance you need with the control you want. Talk to us today. Lets get to Rick Santelli in chicago, looking back on the crisis five years later on. Absolutely, carl. We have such an important person on this week, ed lazear, coauthor of observations on the financial crisis. Welcome, ed. Thanks. Its a pleasure to have you, especially this week. Why dont you tell us about some of your observations . I was just so impressed that in such a small amount of pages you synthesize pretty much everything down to about 35 points. Well, thank you. I would say, you know, we dont have a lot of time, so if i had to make a couple of points, i would say, first, we want to distinguish between the financial crisis and the recession and the recovery that followed. Primarily, the financial crisis ended by december 2008, and that was essentially under president bushs administration. President obama was then faced with engineering a recovery and dealing with the recession that followed. So those are two distinct periods. The second would be we tend to overemphasize contagion. That is, the lehman failure and other things that followed from it. My view is that, in fact, what was happening was there was a series of common factors that was really inflicting the entire system. And as a result, we saw a failure after failure, but we need add systemic approach, and thats essentially what we used during the 2008 period. And then, the third point is if we look back and say, how did we do, you know, rate us on that . Obviously, we werent perfect, but i think in retrospect, i would say that the financial crisis was actually handled pretty well. We were able to get through that, stop a panic, which is not an easy thing to do. And get back on track. Obviously, the recession recovery have not been great. But thats what i would say we need to be focusing on now, which is growing the economy and getting us back on track. All right. Lets switch gears, put on another hat. You just gave us some fairly clinical set of observations. Now, tell me more from the heart. What was it like during this crazy time . Be the chairman of the Economic Advisors, all of the meetings with george w. Bush. Tell us about that. Well, you know, this is a situation where theres no playbook. You know, were going into a crisis, and we have never seen anything like this before. Obviously, there have been other countries that had crises, but none is identical. And we looked at their histories to see what were going to do. I remember the first meeting that we had right after lehman failed, so it was probably monday, september 15th. And i remember ben walking into the meeting and saying, mr. President , were on the verge of total financial collapse. Thats not the kind of thing you want to hear from your fed chairman. And, you know, the president turned to me, eddie, what do you think . I said, yeah, i agree. Turned to keith, hank. We had had the same view. So we were trying to piece together a series of plans and remedies that would deal with an unprecedented event. You know, to be honest, we were very nervous about it. The president was a calming force, and i think he got us back on track and we probably ended up doing the right thing. You know, were out of time. The one other thing, and i urge everybody to get this pamphlet if you really are interested in that time period, but george w. May not have been somes favorite president , it doesnt matter. What i learned from this was how classy he was in the handoff, during a crisis, right in front of an election, just about the gm auto loans, to give the new president , whoever that would be, and it turned out to be barack obama, of course, an ability to make his own decision about gms longevity and not end that abruptly before the baton was passed. Ed lazear, thank you for being our guest today. Pleasure to be with you. Carl, back to you. Rick, thank you very much. Bells about to sound across europe. There are a few minutes left in europes trading day. Well get their close in less than a minute. Simon will walk us through everything that happened on the continent when we come right back. [ female announcer ] youre the boss of your life. In charge of long weekends and longer retirements. Ask your financial professional how lincoln financial can help you take charge of your future. How lincoln financial can help you take charge of your future. Nascar is ab. Out excitement but tracking all the action and hearing everything from our marketing partners, the media and millions of fans on social media can be a challenge. Thats why we partnered with hp to build the new nascar fan and media engagement center. Hps Technology Helps us turn millions of tweets, posts and stories into realtime Business Insights that help nascar win with our fans. The european markets are closing now. [ bell ] simon hobbs here. Nice, huh . Were running out of steam on the rally in europe. More importantly, a big question is being highlighted in europe today. Can the smaller Central Banks convince the market that local Interest Rates will stay low for long if the juggernaut of the feds is effectively cutting back on qe and is tightening . And the central bank discussion today is on the united kingdom. Today in the u. K. , my home country, we learned that unemployment has fallen from 7. 8 to 7. 7 . That sent the pound up to sevenmonth high against the dollar. The reason for that, local Interest Rates, market Interest Rates, are rising, despite the fact that the Governor Carney has said theyll keep rates there, super low, another three years, or until unemployment reaches 7 . So that disconnect will be important moving forward. In fact, the premium you get for holding u. K. Debt at the moment is 80 basis points over germany, and more than 1 above 10year treasuries. Meantime, a divergence really opening up this week between the italian and the spanish yields. The spanish yields falling below italy, as italy continues to discuss whether or not Sylvia Berlusconi will be struck from Public Office and, therefore, the coalition will potentially fail. And one note, vodafone. We have a midnight deadline tonight on vodafones offer to take over the german paytv cable operator, cable deutscheland for 10 billion. This morning they said they only got 20 of the shares tendered. They need a massive 55 added to that before the deadline, or the deal fails. You have the question, what will they do with the 10 billion . Vodafone widely held, carl and quoted here. The company will not stay out of the news. Thank you. Lets bring in bob pisani. Im trying to see whats going on. We just popped maybe 20 points in the dow while i came down here in the last four, five minutes. Ill check around here and see if i can get anything for you. Whats amazing to me, simon is right, the european markets may be running out of a little steam here. Asia has. Weve had a great run. China up four days in a row. But the resilience of the american markets amazing. I want to put up apple against the rest of the market to show you something. Remember last year when apple started falling apart, september october . Apple went from 700 to below 600 in october . And there was a general panic in the markets overall. Look, apples down almost 6 today. The nasdaq is only. 3 . The s p is up. The Dow Jones Industrials is up. Its amazing to me how resilient everything is. Its true, theres some tech stocks. Tech is lagging a little bit. The predictable suppliers to apple, qualcomm, for example, put qualcomm up here, and youll see that stocks moving to the downside. But by and large, its quite amazing how well things are holding up. There are whole parts of the Tech Industry up nicely today. For example, a lot of the guys do i. T. Consulting, the ibms of the world, accentures of the world. Theyre up, not seemed to be bothered by apple. And also how uncorrelated the markets are becoming. Remember we were complaining about how correlated the markets were . Everything goes up and down at the same time. Traders were angry. Traders seem happier now, because they can pick certain stocks and some sectors have been notably outperforming other sectors. Put up the last few weeks here. Since august 1st, picking an arbitrary date for an example, smallcap stocks have notably outperformed bigcap stocks. That didnt happen a year ago. Everything moved together. Another thing thats interesting. Cyclical stocks have dramatically outperformed consumer stocks. Look, by six percentage points, almost, since august 1st. Thats a very wide percentage to outperform. Finally ill point out all of the Interest Ratesensitive sectors have been down. Its true utilities got a downgrade today. But theyve been down for a long time now. These are unusual correlations. And, mike, and i think the important thing here is traders are very happy to see the noncorrelations go on, because they can make money. Its called arbitrage. Playing one against the other. Guys, back to you. All right. Thank you very much, bob. Speaking of mike santoli, you call the stocks nifty, harkining back yeah, yeah. We made a short list. Facebook. Netflix. Starbucks. Even a hogg. A cmg, yelp. What is it with these guys . Traditional largecap growth is in favor right now. Its really a narrow slice of the market that i do think is kind of getting peoples attention and attracting the dollars. So i say nifty. I dont feel like theyre so overheated you have to worry about it being the sort of minibhubl inside the market. Its interesting to me how localized the excesses are. You can always point to a linkedin. Its crazy valuation. Facebook is expensive. But marketwide, youre not seeing that. Bobs point about lack of correlation, the correlation of the average stock to the index is at a basically post2007 low. So essentially, you have the stock pickers market people have been looking for. The question is, does that mean implicitly the market is complacent about macro stuff all of a sudden . I dont think were there. We never seem to be happy. When correlation is high, we think people are whistling past graveyards. Right. Its happy to find the happy medium. Interesting thesis in some of the names. When we come back, unlock your phone, using only your fingerprint. Thats one of the cool new features to come out of apples event yesterday. Does a fingerprint scanner make your phone any safer than a Security Code . The answer after a break. Norfolk southern whats your function . Hooking up the country helping business run build were investing big to keep our country in the lead. Load we keep moving to deliver what you need. And that means growth, lots of cargo going all around the globe. Cars and parts, fuel and steel, peas and rice, hey thats nice Norfolk Southern whats your function . Helping this big country move ahead as one Norfolk Southern hows that function . [ male announcer ] 1. 21 gigawatts. Today, thats easy. Ge is revolutionizing power. Supercharging turbines with advanced hardware and innovative software. Using data predictively to help power entire cities. So the turbines of today. Will power us all. Into the future. Into the future. [ bagpipes and drums playing over ] [ music transitions to rock ] make it happen with the allnew fidelity active trader pro. Its one more innovative reason serious investors are choosing fidelity. Get 200 free trades when you open an account. Coming up next on the half, with this historically bad month for stocks end be being a winner for investors . Were trading it. Lululemons chart is looking more like a downward dog. Up next, our traders debate what to do now. And the Morgan Stanley apple analyst who says the streets getting it all wrong. She really does tv, carl. She is today. Were excited to talk to her at the top of the hour. Thats an interesting debate, scott. Well see you soon. As you know, apple confirmed yesterday the much anticipated Fingerprint Technology that offers consumers access to their phones as well as the itunes store, but how safe will it really keep an iphone holders information . Joining us, schuman, the Vice President of shape security, former click at google, good to have you with us. Good morning. Good morning. Thanks for having me. This sounds like something you think youd actually use. Potentially. I think that its a very exciting technology, and if implemented right, it can really improve the convenience of using your phone in terms of what it means as far as security implications, i think that everyone in the security industry, including ourselves, are eagerly anticipating Additional Details coming out. Yeah. There are some caveats, of course. You argue, first and foremost, this has to be a hardwareonly device. Explain that. Absolutely. So if this is in any way producing images, which would be accessible to software, then thats going to create a possible vector for attacks. So bad guys are going to try to harvest those images, and then use them for other purposes. So if its only accessible to the hardware device itself, then that prevents any type of software, even software that would compromise the operating the system itself, like a jail break, from being able to access the images. So thats critically important. Apple has said that it wont make the fingerprint Images Available to software. So thats very encouraging. You know, these types of innovations, i guess you would call them, they create a lot of anxiety, it seems like. To me, there are so many identity trails we have everywhere, in one form or another. Is it really fundamentally qualitatively different to have a fingerprint activating these things . The difference with fingerprints versus passwords is you dont have the ability to change your fingerprints. If your password is compromise and you reuse it on multiple sites, and you need to change it, you can do that. If the fingerprint data gets out there, then you basically have to move to a completely different form of authentication at that point. If youve got multiple systems that have been built around the web which now rely on those fingerprint pieces of information, then thats not something that is going to be very easy to change. Obviously, the news yesterday that its not going to be stored in the cloud, only stored on the phone. You have imagine apple has worldclass Security Experts working with them on this, right . Having it stored not just on the phone, but in an area on the phone that is not accessible by software. Thats right. So it was very great it was great to see that apple was stating up front that theyre not creating a central repository of fingerprint information, because if there were such a database that was living in the cloud, then that would be a Central Point for attackers to try and breach that data, and then use it for other purposes. The fact that there isnt such a repository means that if attackers want to try and access that information, they have to attack the phones themselves. And like we discussed before, if that data is only available to the hardware itself, then thats much more secure. You mentioned the term jail broken, which i guess is pretty standard in security circles. But explain what that means and how often it happens. Sure. So jail breaking is quite commonly used to be able to do things with your phone that you wouldnt be able to normally do based on how the operating system has the phone set up. So what jail breaking allows you to do is circumvent the security provided by the operating System Software in order to do things that the hardware itself supports. So, for example, if the fingerprint authentication mechanism was implemented partially by the operating system, if you were to jail break the phone, you might have access to fingerprint data that you wouldnt normally have access to under the default security of that operating system. Yeah. Now, if it truly is implemented in hardware, then even circumventing the operating system through a jail break wouldnt allow you access to the data. Yeah, the things we have to worry about in this brave new world. Schuman, a great discussion. Thank you for joining us today. Thanks very much for having me. With shape security. More trouble for jcpenney. The struggling retailer is now being sued for breach of contract. Were going to talk to the company that is suing penney to find out exactly find out exactly whats going on, when we come back. You really love, what would you do . [ woman ] id be a writer. [ man ] id be a baker. [ woman ] i wanna be a pie maker. [ man ] i wanna be a pilot. [ woman ] id be an architect. What if i told you someone could pay you and what if that person were you . When you think about it, isnt that what retirement should be, paying ourselves to do what we love . In another blow to jcpenney, coffee press maker bodum is suing the retail giant for a breach of contract. It says it was promised a modern layout of a store within the store at jcpenneys, but never got it. When we reached out to jcpenney, they responded with a no comment. Tom perez is the president of bodum usa, and he joins me and mike santoli. Good morning. Thank you, good morning. Walk us through when the contract was signed and what was agreed to. The contract was signed back in november 2012. And it was agreed that we were going to roll out 630 bodum shopping shops by the beginning of of march 2013. And did that start to happen under johnson, or did everything change once johnson left and ullman came in. The majority changed after johnson left, definitely. The reality is the shop didnt open really before early june 2013. And so, jcpenney hasnt said anything to us. What have they said in response to your lawsuit, if anything . I mean, were aware of a lot of changes that happened. Were also aware it was a big commitment and a lot of, you know, things can go different ways. But the point is that we have an agreement and we have a contract, and we feel that they need to live up to that contract. And if they dont, well, i think we need to be compensated. Right. I was going to say, are you still interested in having the store within a store . Or if theyre not going that direction strategically, how what kind of damages are you looking for . I mean, the concept is absolutely interesting. Still attractive to you . Absolutely attractive, if they can execute it. And i think that has been the main reason, it hasnt been executed properly. Thats why we are where we are right now. When johnson first came in, people did have questions about how he could take such a hard right turn from what historically had been the companys strength, right . Discounting. Emphasizing category over brands. What gave you confidence that this was going to work . We have confidence he could turn it around, and we all felt it was an exciting and interesting project and something really revamp the american retail scene. It was a great opportunity. And we wanted to back it up and support it. We also, i think, all knew its not going to take three, five months to do it. Its going to take years to do it. But for a brand like bodum, designfocus, this is an opportunity we cant pass. Now, does the agreement preclude you from doing something similar with other retailers . Or do you already have Stores Within stores . The agreement theres a clause for unintelligible one of the brand, we cannot open other Stores Within the u. S. But bodum, were not limited in any way. Do you wish johnson was still around . A lot of people believe, a lot of his former colleagues at apple, believe he could have done this on his own had he been given more time, were talking two, three years. We do believe it as well. We think the vision and prospect of this whole entire project was possible. But it takes a little longer time than was given. Its hard when you see such big shifts in strategy in a short period of time, things like this are bound to happen. Exactly. Well keep our eye on it, tom. Thank you for coming in. With bodum usa. Lets send it over to seema for a quick market flash. Were watching netflix, down about 2 , after hitting an alltime hide in yesterdays trade. Analyst rich greenfield just downgraded the stock to neutral from buy citing valuation concerns. You can see the stock down nearly 2 . Interesting. Mike, greenfield is one of those thats i dont know, a proponent of the longterm strategy . I also would say. I also think its an opportunistic downgrade. You get to an alltime high. Nobody can say you missed it. Yeah, thats true. At 313, our heads were spinning this morning. Right. Having gotten over 300 earlier in the week. When we come back, the day the world changed, and this Trading Floor changed forever. We remember 9 11 with art cashin in just a moment. [ male announcer ] these days, a Small Business can save by sharing. Like carpools. Polly wants to know if we can pick her up. Yeah, we can make room. Yeah. [ male announcer ]. Office space. Yes, were loving this communal seating. Its great. [ male announcer ] the best thing to share . A data plan. At t mobile share for business. One bucket of data for everyone on the plan, unlimited talk and text on smart phones. Now, everyones in the spirit of sharing. Hey, can i borrow your boat this weekend . No. [ male announcer ] share more. Save more. At t mobile share for business. At t mobile share for business. Nascar is ab. Out excitement but tracking all the action and hearing everything from our marketing partners, the media and millions of fans on social media can be a challenge. Thats why we partnered with hp to build the new nascar fan and media engagement center. Hps Technology Helps us turn millions of tweets, posts and stories into realtime Business Insights that help nascar win with our fans. Today is the 12th anniversary of the september 11th attacks. We want to bring in art cashin, director of floor operations of ubs at post 9, who write as note that everybody should read today. Art . Thank you. Reflections of that day. Not just that day, but the days that followed. You make the point, no one was in a real hurry to reopen. You talk about those who run markets being civil but somber. Yeah. There was no sense of avoruos, let me get back in there and make some money. We had trouble with the phone lines. There was nothing wrong here. And dick grasso did a great job working with the phone company. They put it together. But those mornings after, you know, arriving in the dark, walking past checkpoints where National Guardsmen stood, everybody respectfully saying, thank you for turning out knowing that they have they have lost a friend or an associate during what was going on. We lost a couple of brokers down here on the floor, too. And those who did survive, you point out had to deal with what you call the survivors quandary, right . Yeah. Why us . Yeah, you know, why us, it came close. Where might things have gone . As i said, the only smiles in those days were on the posters put up by the family of missing people. They had an old photo of you or me smiling at a sign that said, do you recognize this man, please call this number. Thats how desperate everyone was. Art, among the things different back then is the exchange was not a public company, it wasnt a forprofit, before all of that happened. Obviously, its conjecture. Do you think today there be any more pressure to reopen or anything like that . Well, i think you would. There is a good deal of pressure in the sense that it brings up the argument about a single locale for a trading operation and where can you be. Its there. I tell you one other personal memory of mine. Im chairman of something called the Fallen Heroes fund. And we set it up years ago to get 20,000 to the widow of a cop or a fireman who went down in the line of duty. And when we were busy reopening the exchange, i realized i owed 6 million. And we scrambled, but grasso and the specialist the, everybody came across, we raised the 6 million in a week and we got all of those their money. Wow. Art, in the meantime, were dealing with what you call a nice coupleday rally here, a sigh of relief by the bulls, led largely by ibm today. A lot of jokes about how were going to get used to this action with goldman and nike in. Yeah, you put in highpriced stocks. I dont know what the new devicer would be, but the multiple arguably today is eight. So ibms up nearly four. That puts 30 points or so in the dow rally, and youve got the other titan, apple, pulling on the other side, on the s p and nasdaq. So do you think does that mean the dow trades a little bit more like the s p . It has been somewhat more sedate over time, right . Oh, it has been. You can see the divergence has built. That may have been one of the motivations for making the change. I think the viewers better get set for a more volatile dow jones. Were going to see it from now on. And Pay Attention this afternoon when the verizon deal closes, because a lot of people will take off hedges they put on, and you might get a rally in treasuries and a dip in rates and that could bear into the stock market. You pointed out the last couple of days weve all been sort of focused and mesmerized by the waffling on Foreign Policy, the geopolitics. But in the end, you say some afternoons are driven by what the 10year is doing. Absolutely. And part of the surprise yesterday part of the move in the 10year was a little bit of the hedging. But the other thing was it had benefited from a flight to safety about syria. And when it looked like there was going to be no immediate response, the yields went up as the treasuries went down. And that gave a little bit of a flinch to the market yesterday. Best september since 2010. S ps wiped out almost all maybe a little bit more of the august losses. Has september impressed you so far . It has. Im beginning to wonder if whether Climate Change or something has made september into august, and thats where we were weak then. Well see where the rest of the month takes. Its always dangerous to talk about month to date. Thank you very much. Art, thanks. Final notes here, mike, as we continue, as art points out, some of the bigcap names leading the dow a little higher. Your thoughts as we are left with a couple of weeks before earnings season begins here on october 11. I honestly still think the market has more work to do. Its kind of got a stretch on the short term. I dont think it needs to be anything nasty. Weve had basically four incomplete corrections this year. If you want to account for it that way. And youve just been the interruptions in the meltup. I will say that sell in may, everyone said it didnt work. The may high was 1,670 in the s p. It did not cost you anything to sit out until now, and you missed the 6 pullback. Yeah. Finally, your point about prior military showdowns and how the market in the end tends to yawn. Yeah. The likelihood of that happening is not zero. In advance of it, you think that the market wants no action, but in the end, its not an enduring catalyst. Good to have you here. Mike santoli, yahoo finance. Lets get back to headquarters, scott wapner and the halftime. All right, carl, thank you so much. Welcome to the halftime show. Four hours to go before the close. Right there on the wall, where we stand today. The dow is up. S ps going positive, as well, up 1. 5 points. Nasdaq still stuck in the red, largely due to apple. And heres what were following on the half. Sell the news. Thats what investors, as i said, are doing with apple today after the Company Rolls out a cheaper iphone. It isnt really cheap. A top analyst tells us whats next. Downward dog. Lululemon down i
comparemela.com © 2020. All Rights Reserved.