Transcripts For CNBC Squawk On The Street 20160907

Hours. Tim cook will take to the stage to unveil what is expected to be a new iphone. Maybe more. Bill ackman betting on burritos Pershing Square takes a large stake in chipotle shares are up this morning. Under armors push in china. Kevin going on an asian tour with steph curry. Sara eisen is along for the ride. But it is a big day for apple, in just hours from now the Company Holds its much anticipated product event in San Francisco. Is expected to unveil the newest version of its iphone and offer a first look at an apple watch. Waiting for this for a while. You did work on the apple charts last night. Looking at levels it needs to hold. I thought the chart is a classic rollover but theres a woman who nailed carla, shes the mystery to me said that the stock would bottom at 89. If you take a look the stock bottomed at 89. Went back and said this could be the breakout typically because this stock tends to go in patterns of symmetry. Now i am not a chartist. I just look at a chart there. But what it does tell me it does dove tale with the idea nobody thinks anything is going to happen. I am going over the features. I am tempted to upgrade because i take pictures constantly. Constant picture taker. I was taking pictures of the ocean this weekend because it was the great waves and not to be too anecdotal but this camera threatens to be able to have better focus and if you screw up the picture it can fix the picture. Not like adobe photo shop i can get you out and put in the kid stays in the picture. Glad to hear that. But i find some of these things sound incremental but when put altogether the idea that it could be a little more waterproof now happhow many hav phone because of water . I have not. No . I have not. Dont take it to the bathroom with me. My daughter would say to be able to play this and do that. I mean the Little Things you hear about, it does answer the i have the i was watching my ipad pro last night. Narcos. Season two. Little more uneven . Yes. A little more uneven, just as bloody but if you want to see like gore and policemen knocked off for no reason whatsoever, you want much pro, much better screen. This is a pro screen. I dont know. I think often times you dont know like apple traditionally that you need this. You put it together in a package, you might. Maybe you do. Well that is the key question. How many people will be motivated to upgrade when they dont really need to as a result of whatever their plan having as i pointed out many times and do it over again, the change thats taking place amongst the wireless carriers owe only over the last few years the equipment plans changes the approach for consumers because they reach the end of it and then their bill goes down and they may be less motivated to step up. Right. Also the theorists arguing this headphone jack removal is not just to make the phone thinner, but to create an environment in which beats Wireless Headphones become a larger part of the equation. I mean this is that whole i paid 15 yesterday to apple for the Service Treatment that apple is getting smarter about taking advantage of its ecosystem to make a profit. These are incremental. In the end, 65, 70 of this companys earnings are going to be is about the phone. You pointed out many times, first of all the revenue stream for any other company would make ate fortune 100 company or Something Like that. Yes. Which means its 28 billion the smallest fortune 100. When i talk with them about it they said fortune 100, googled fortune 100 and it was like northwestern, some company that came in. Even though 100 with 28. 7. Its going to be 28 billion. No more than that. Maybe a fortune 90. But for them being number one its not doesnt matter because its a huge company. Heres an oman. Its just kind of a etherial but for the first time, i forget to put my watch on this morning. Came to work, i was going to make a uturn what does it say . Maybe i need a new watch. Or dont need the watch at all as ive been saying all along and as our colleague sort of proved im wearing my mine. You are . And if they added gps would that change your life . Yesterday, when i was preparing for fantasy i happened to get an update that the charge is better than i thought. That was something you needed im sure at that very moment and on your wrist as opposed to to your phone . From adam schefter, the man in fantasy. Instead of doing this. Happy birthday espn today. And lets hope the commissioner comes around. Commissioner labor dispute there last night. I think the decline in the market share of the phone is duly noted. Its been hit. Fit bit has come on. One is a very expensive deprice. Its not as though theyre not trying to figure out other things to do. 8 billion in r d. That is a big number. It is a big number. That employs a lot of people figuring things out 8 billion a year. Car. Car. Without a doubt. 20 billion, 30 billion buy sirius satellite and be in 19 million cars tomorrow. They could buy a lot of things we pointed out but theyve chosen not to. Bought beats. Theirs nice. I had to throw out my crop of beats for the record. Why . Oh, the beets. They didnt come up right. I got confused for a second. Actual beets. Do better than avocado. I was lucky enough to pick up a laptop for a kid going back to school and gave me beats for free. 300. Going back to school promotion. Thank you, apple. Geez. Gave those to my daughter. Made her very happy. Yeah. What did you do with the wireless. Wireless beats are around. Wow. Chipotle the other big story, rising in the premarket as you know, ackmans Pershing Square has a 9. 9 stake in the chain says the stock is undervalued and plans to engage in discussions with management trying to recover from the food safety issues. They issued a statement saying we welcome their investment and appreciate the confidence theyve expressed in our brand. The differentiated offering Visionary Leadership and strong growth opportunities. The question is, is this another emotionally charged crusade . I have to tell you, if you go back to delivering alpha which happens to be next week, just so you know, david and i are teaming up to really just deliver a ton of alpha, i mean like mega alpha delta alpha. Dont have a word to describe the alpha. No. Delta kappa psy alpha. To the third power. Indeed. Yes. Indeed. Look at all those people. Who are you doing . Were doing best ideas panel with a bunch of really good ideas this year. And we might for a change. And then were going to team up on some other people too. Really . I dont know. Okay. Yeah, but anyway, last year i interviewed nelson peltz and bill ackman and they talked about refranchising. Ackman wanted to refranchise mcdonalds and then suddenly got involved with burger king. They adopted his model. That is the last thing on earth that clip wants s tchipotle wa. Heres something thats going to work in ackmans favor. The yum incident. Kentucky friday chicken. Taco bell incident a few years ago, 2006, then the tremendously terrible 1993 jack in the box e. Coli, four children dead, more than 150 brain and Kidney Cancer kidney damage and in each case, 12 months later, as you annualized it you saw a turn in the comp stores and had to get in between 12 and 8 months. Annualizing in november incident that wasnt really talked about the cdc until november going to buy 9. 9 million shares you want to get in ahead of that you buy it and announce it probably the first week of september . Were also talking about an activist investor who continues to occupy a great deal of Media Attention but his performance as people know has been suboptimal. Suboptimal. Down 20 last year, down about 14 this year. A good deal though not all responsible was valeant, of course, the large stake that has done so terribly for Pershing Square. This is taking him back, you saw the graphic earlier to his roots in some ways where he had success whether with wendys or mcdonalds early on, even though what he was pushing for mcdonalds didnt happen, the stock ended up going up and burger king where there was significant success sort of takes ackman back to that. He is, of course, on the ropes in some ways given that performance although he has permanent capital. He is not at risk of losing a decent portion of his capital but certainly hes seen some outflows from his overall fund but still a big activist who perhaps commands more attention than he maybe deserves given his performance, guys. And you also got a Management Team on its back. Theyre not going to fight. In fact we saw theyre not fighting, sure, welcome in. And that for refranchising that is for every aspect of what chipotle is doing. It may be incremental but it is being well received and he knew going in there most likely it would be. This Management Team is not in a fighting mode. Also the added complication that Restaurant Industry is in recession on comps. You see dave and busters today guiding lower on comps for the year. Had them on last night. I have to tell you that Conference Call it was like i happened to like to go to dave and busters but that made me feel like im the only one. They talked about macro economic, which is always strange when you think about employment growth in the country. They talked about look, theres a terrible issue here that they dont point blank spell out. A lot cheaper to eat at home. Dave and busters you play the games but they had a litany of things. I cant wait to speak to them tonight because they just i was truly depressed after i listed on to that call. Because theyre talking about cannibalization, this is not party cannibalization where people eat each other, stores nearby, i like to clarify that. That wouldnt be good for them. To serve man cookbook club. Way to lite zone. We love be that. Its a cookbook. Its a cookbook . Its a cookbook. Competitive instruction. Economic pressures related to oil. Im tired of that. But they still do that. Macro economic environment, casual dining slowed relative to the rest of the market. Wow. I mean like lets just stay at home and play games where we try to win a free game. We try to land on the moon. Win a free game. Wow. Bad there. When we come back this morning, under armors ceo kevin plank looking to boost the companys presence in china with the help of super star steph curry. Sara eisen is with them and well have a live report from tie juan. Another look at the premarket. Today could be the 50th day in a row the s p has had not a single 1 drop. More squawk on the street from post nine in a minute. Experience the thrill of the lexus is f sport. Because the ultimate expression of power, is control. This is the pursuit of perfection. Im just a guy who wants to buy that truck. Weand sustainability goals asool one of our top priorities. Mental i definitely rely on pg e to be an energy advisor. Anything from rebates, to how can we be more efficient . Pg e has a number of programs, to help schools save on energy. When i see a program that fits them, then i bring it to them. With the help of pg e weve been able to save a tremendous amount of energy and a tremendous amount of money. Were able to take those savings and invest it right back into the classroom. Together, were building a better california. Under armour has enjoyed huge growth in the u. S. Since kevin plank founded the company but now its looking to grow its brand in china. Sara eisen is live from taiwan this morning with more and has been improving her game, i have no doubt, judging from how much time youve spent with stef. Good morning, sara. Good morning. I did get a few tips, carl. Good to see you. Good evening from taipei investors looking for the next leg of growth are looking here to Southeast Asia. And for this company, that strategy is built around steph curry. Its why under armour ceo kevin plank and a group of his top executives traveled here to asia. This was their second asia tour with curry in the last year and did china, hong kong, and taipei and held clinics on basketball courts where they played with young students. Trying to cultivate this relationship with the next generation of basketball consumers across asia. He took selfies, he did events at stores in under armor where we saw lines go around the block. The fever for the nba here is really something to see and weve seen steph curry merchandise soar 150 in the last season according to fanatics. Still, the International Business for under armour is a tiny fraction of the overall sales and its a tiny fraction of its competitor nikes international and Greater China business. I asked plank to help investors understand what the strategy is when it comes to the china market and how its different when from what he did in the u. S. Listen. You really have to understand and so, you know, our growth in the u. S. Is a really organic process where we began as a company we knew who we were, we were there for the athlete and job and Mission Statement to make the athlete better. As weve evolved and grown you go to different markets and always have that point of view, that personality of who you are. Its our job to bring that and to deliver that to the chinese consumer. But you have to listen, and one thing in a market like klein with as much history as it has, is, you know, you cant think short term, cant think in one or two or three years. You need to think in decades. We need to be thinking about what does it look like and where are we evolving to in 10, 20, 30 years and our ambition is to be the toper end be in china and we think that, you know, our brand has the ability to do that. But we have work to do. It must be a given. You cant just come and take things. You cant just take revenue. You cant just take from the athlete but it has to be a gift to china. Were constantly working on that and, you know, part of what we give we say is included in every under armour product is a super power and a super power that allows a little boy or little girl to feel when they put on our top or bottom or shoe they feel like, you know, i can do anything and thats a very powerful message and one that is, you know, we hope to deliver that type of empowerment and energy to the chinese consumer. And just to underscore the importance of curry to this entire international strategy, guys, check out the top selling basketball shoe styles of 2016 globally. And youll see, common names, nba al stars lebron, kyrie, jordan, curry has made headway with his curry 2 shoe line as number four but the rest of the top five are nike athletes. And that just shows the importance of this athlete sponsor relationship. Why this tour was such a big deal and comes at an inflection point. I sat down with plank and curry together to get more insight behind the scenes as to the design process and what they fight about, what their plans are and their vision for the future and share that in the next hour including thoughts on Colin Kaepernick and Upcoming Season in the next hour of squawk on the street. Back to you. Great stuff, sara. A great live shot in taipei tonight is there. Morning here. Jim, stock still down a bit from 58. Yeah. I actually think the stock is okay here. I think that the under current is related to adidas not nike. I know and i know that phil knight when i spoke to him recently if you back certain players, certain players are worth it. And it made me think, lebron, kyrie, that may be as great as steph curry is, they may not be in the he may not be in the league of people who know how to sell. I mean its strange. Now that. Curry is loved in this country but it was incredible this last quarter. Nike is far better at picking. I know that under armour has had big wins in terms of who they anoint but foot locker went over and the big brands are nike. Theyre not under armour. You need more than steph curry. You need a big panoply because you need to have the foot lockers of the world take all your product. Nike is resurging and adidas is with the stan smiths have come on really, really hard and right now plank is the odd man out and got hurt by Sports Authority but i think that right now, is somehow nike is one of those giants that you can, you know, you can come get near them, but mark parker is maybe the most competitive person and youre looking at kevin plank. Hes competitive. He surely is competitive. But mark parker in his quiet way will not be beaten and phil knight has said, and said to me in this great book, he said to me personally, this is what we know how to do. Is figure out who is the guy to really back and who isnt. And now the undercurrent curry, no. Curry is great. Clorox told me hes great when they did the britta filter. The biggest shoes were not curry. Guess who won the playoffs . I did see that. Yeah. Right . Touche. That was no one thought that was going to happen. Now i do think that steph curry is the future and thats absolutely true. But i just think right now, nike kind of is doing a little better and hes doing better. Love steph curry. Again, but geez. I think we know where youre coming from. Hear more from sara the next hour. Cramers mad dash, count down to the opening bell, another look at the premarket on this wednesday. Were back in a minute. Today i am helping people everywhere do what they do. Better. I work with startups like alpha modus to predict markets five times more accurately. I am helping tv networks use social data to predict what people want to watch. And i worked with marchesa to turn fan feeds into a dress that thinks. Hello, my name is watson. Working together, we can outthink anything. Hello, my name is watson. With dand bold styling to to stay ahead of the curve. The lexus rx, rx hybrid and rx f sport. This is the rx, elevated. This is the pursuit of perfection. Hthis bad boy is a mobile trading desk so that i can take my Trading Platform wherever i go. You know that thinkorswim seamlessly syncs across all your devices, right . Oh, so my custom studies will go with me . Anywhere you want to go the markets hot sync your platform on any device with thinkorswim. Only at Td Ameritrade welcome back to squawk on the street. Six minutes away to trading on this wednesday. Back to the oil patch . Yesterday, in to see brian sullivan, but the dean of the permian, the ceo, of pe near stepping down which is too bad. Hes great. Telling me if you have permian acreage in the Delaware Basin your stock is worth more than people think. Apache says they have secured gas and oil acres. In they say look two years of hard work done a lot of reservoir analysis and that this is really highgrade property and they didnt have to buy. They point out look this is yorgic while others are focused on acquisitions, some have a reference to eog yesterday, sm, which did one. And, of course, to pioneer very, very inquisitive. Theyre saying we did it on our own and have great acreage and i have to tell you apache has done nothing. Longer term this was the first to fall because they had egypt assets. You made the point many times in terms of differentiating the between the permian and everything else. Only 1 1 counties. Productivity and ability to get the it out of the ground at a lower cost or cost where you can make a lot more money. Scott sheffield reminded me other than a couple sites in oklahoma the permian, delaware bas basin, only two that are profitable here. If you have them youre in. If you dont youre not. And we were talking about the ones that dont and what how cataclysmic they are and discussing when is chevron and exxon going to move. Theyre not going to move. These are all these independents doing things, cimarex we talked about being a Terrific Company but ive got to tell you, this took a lot of people by surprise. Yeah. No one knew apache put together this acreage. It was a big coup. Well be watching that stock in addition to oh, many others. Got stuff i want to get to also. Oh. An interesting letter involving net suite to oracle remember that deal theyre not happy. Ollies. I wont. Were back after this. This is the new comfort food. And it starts with foster farms simply raised chicken. California grown with no antibiotics ever. Lets get comfortable with our food again. Remember here at ally, nothing stops us from doing right by our customers. Whos with me . Im in. Im in. Im in. Im in. One, two, wait, wait. Wait wheres tina . Doing the hand thing . Yep we are all in for our customers. Ally. Do it right. Youre watching cnbcs squawk on the street live from the Financial Capital of the world. Opening bell in under a minutes time. Busy day ready for apples product event this afternoon. Well get the beige book at 2 00. Est er george. Theres a crowd at chipotle at post eight. Its significant move. Because this is a stock that is down 40 . That actually has still the best well i did an informal poll on twitter, 38 said theres lines back. 1900 people. 35 said theyre still empty the rest is a wshg in progress work in progress. We are annualizing the e. Coli outbreak. Another four weeks. To the opening bell and s p at the bottom of your screen. Dow at the big board its new oriental education and technology. Celebrating its tenth listing anniversary. Over at the nasdaq, about. Coms personal finance brand the balance. With that well get things started. You mentioned western dij one of the companies raising their guide. Last week if you listened to the hp Conference Call, this is the if you i always i wish they had made this easier the hpq kind the hp ink the printer, and, of course, the pc company the supply tightness and how it hurt the Gross Margins. Supply tightness would be equal to d ram and flash and disk drives and read it all through. San disc bought by Western Digital looking like a decent price, the king of flash other than my kron it has a lot of flash and boom there it is. Better than expected quarter. By the way grs margins because theyre charging more for this product. Cyclical businesses and if you dont add new factories, youre going to see seagate go up off that. Thats not as good because thats not flash thats hard drive. Western digital deserves to go higher. Smart purchase. Whole foods and kroger biggest laggards. Sprouts. Holy cow. Sprouts cuts its outlook for the first said flat third quarter. One of the great growth stories of the natural and organics flat quarter. Incredible comps down 3. 5, 4. 5, 1. 5, 2. 5. This whole complex of natural organic, hain where we have the accounts issue, werent sure how well, it did, whole foods, kroger coming in like mad because they have good prices and all i can tell you this is an uninvestable area for now. Just uninvestable. And the smartest move ive seen is whitewave selling out right before things really became unglued. Good to know at a very big price. Big, big. Greg engles a broncos fan and had the guts to bring me a peyton jersey. Out of nowhere what was the point . Two years ago. He was trying to be nice. What i love about the danone deal in part the bonds financing it are being bought by the ecb. By what . By draghi the ecb. The European Central bank. Theyre buying all sorts of stuff. Buying everything. Theyre happening to finance a takeover. Theyre going to be inquisiti inquisitive. The other day a crossborder deal. A lot of companies that would like to be bought by ecb bonds. And there may be more. Look im still enamored. The monsanto. I told you i throw cold water on the deal but the stock down a dollar yesterday. It was. Which actually shows the likelihood people think there will be a deal. A number of questions as to why and the main reason is, if you follow along and they dont pay even 130, call it a bit less than 130, you discount it back, the time that a deal will take to get done, the risk inherent given the antitrust and the stock price probably not that far from where we are which is why this thing did not go up yesterday on our reports that they were getting closer to a deal. We have to watch walgreens. Mentioned this last night on mad money, there were press reports last week that kroger is interested in buying rite aid, the stores, the combined entity has to get rid of to beat the ftc. The ftc got burned when safeway sold all the stores, 180 stores to a place that went under hagway what they called it. Hey guards. If you have a credible buyer the deal goes through. Watch walgreens. If the ftc would bless kroger buying Rite Aid Stores have you seen the stock. Kroger on the highway, keeps going lower. I have not seen that. Yeah. Kroger. By the way a very good company. I told people to stay away and hurt their feelings. Youve been right to do that given that. Theyre nice people. Lost a quarter of its value. Great company. I happened to love fred meyer. Anyone who has been to fred meyer knows they have natural and organic food at the same price. Theyre the ones that disrupt it. Walmart another disrupter in natural organic. Walmart doing so many things right. Facebook going the other direction. Another alltime high this morning. Morgan stanley takes their target to 160. They argue add low might be flattening out but you look at the daus and the engagement more importantly, 51 minutes a day. They think pricing has room to go. This was 57 of facebook ad revenues coming from this. I have to tell you this is one of those where theyre basically saying like the old days the street estimates are too low. We havent heard that often about companies. Its almost always the street estimates are too high. Talk about natural and organic. They raise their 17 adjusted earnings per share by 8 . This is already a very big company. That beats where are they . Theyre street high whether or not what are they looking for . They buried it this time. Sorry to ask you. You and i talked about what the number will be. Thats very inexpensive. From a growth rate. Trades at the same price as clorox, goes to 200. Right. Actually no goes to 230. Geez. Given the gross. I used clorox to kill some ants the other day. Mai amazing. Facebook is growing a bit faster i think. Buy clorox sell at a higher multiple maybe because they bought that [ inaudible ] which is brilliant acquisition. People are underestimating the acquisition. Smart. Speaking of acquisitions a few weeks back you may recall oracle sealing a deal to buy netsuite and little did we realize that Larry Ellison actually owned a lot of netsuite. Yeah. His company. We dont see this often, t. Row price coming out with a ler to the independent board meshers of netsuite saying 109, you can do better given the uniqueness of fit between netsuites business and oracles business, lack of substitutes oracle might acquire because the targets have insurmountable takeover defenses. Its clear a combination of record racle and netsuite would create incremental value and its reasonable and appropriate for us, netsuites investors, to get something. Come on. Give us a little more given the synergies that will improve. Also another favorite a long ler by the way we do not believe there is high information content in the observation that no other bidders have come forward in the week since the offer was announced. They dont see high information content in that. You dont see these kinds of lers from the largest shareholder out there other than ellison himself. That deal most likely going to stay where it is. The board has said its good. Lot of people feel that that was oracle having to go reach down in the market, small medium sized business maybe their product doesnt scale. Oracle would disagree with that. Remember, marc benioff, salesforce. Com that quarter was not that strong versus what is traditionally put up. It wasnt. There is the love of the cloud, is perhaps other than amazon, amazon is making a fortune in cloud. They are doing well. That business their most profitable. Far better than the retail and growing fast. People see that stock going up and why and the answer is the Cloud Business is growing faster. This oracle move i have to tell you, i was i looked askance at that. I want to get something else. A couple weeks back, muddy waters, put out the report about st. Jude and the United States District Court for the district of minnesota st. Jude saying defendants intentional willful and malicious scene for their financial windfall through an unethical and unlawful scheme prems missed on falsehoods and misleading statements in an august report, concerning st. Judes cardiac rhythm management devices and theyre saying hey, these were willfully and intentionally designed to influence patients and doctors by wrongfully defaming and disparaging st. Judes life saving devices. That spread tightened between st. Jude and its i acquirer ab bob. Also still potentially going to have to acquire alere for another day, that one got a ways to go fighting that out. Did want to point out that lawsuit today because that spread did widen significantly on that muddy water the report. I think this was the homeland disaster scenario where you can hack into a pacemaker. St. Jude said weve tested that. Not going to happen. It can theoretically happen. I happen to have the Cyber Security team on that tries to prove trying to hack and said it certainly is possible but this was to me blatant. Blatant. Ive had st. Jude on many times on mad money, i just think this is one of those, a crack back block. To me, if this were the nfl, it would have been 15 yards. Sure. Fedex envelope immediately i didnt like this at all. Finally, really quick, deutsch initiates a number of machinery stocks caterpillar with a buy. Yep. Deere with a hold. Cummings with a sale. Cautious on machinery. Bad timing on cummings down 8 off the infusion of money from volkswagon. I like the caterpillar call. As they say it is the next deere. Deere was a stock that was 72, 73, written it off because the farmers werent doing well. Deere rationalized the supply chain and bring down its cost. I think caterpillar will surprise you in terms of how much they make in the same sales and sales starting to pick up. I like this trade and i know for delivering alpha, it had been a big short in this stock unchanged. But i think that theyre going to beat the numbers. All right. I like what doug is doing there. All right. Interesting. Yeah. I had been critical. Yes. 100 to 70s and i say theyve got game. I dont want to bet against cat. I think that theyve got the Dealer Network back under control which theyve never been able to do and they got lean inventories. What lean inventory means, higher average selling prices. Absolutely. Dow almost flat, down 2 points. To bob back on the floor. Hey, carl. Back after a few days. Telluride Film Festival in colorado lovely town. Highly recommend it. Same market as i left about a week ago, though. S p fell shy of a my high and tech stock very much again in control going into september. You know about the nasdaq at new highs. Yesterday the big names at new highs sitting there. Facebook, yahoo for example, ebay and amazon all at new highs today. But i want to point out that tech rally its a lot broader than the fang names. Looking at etfs today. The internet, dow jones internet index one of the etfs thats followed a new high. The Cloud Computing index a new high. Cyber security index, the etf for that, new high. The robotics and automation at the bottom there, thats also a new high. The rally is very, very broad. Its not four or five big cap stocks dragging everything up with it. Pay attention to that overall. Also, of course, big plays in energy. Energy another leader today. That apache announcement stunning. Talking about potentially 3 billion barrels of oil down there in the permian, the barnett. Woodford formations alone. Thats in the ground. Even if only 10 , 3 billion, imagine a huge find for them overall up 10 . To give an idea the permian is like the best zip code in all of oil because it has so many stacks and formations potential layers where you can make money. If you have acreage on multiple stacks all of a sudden potentially hit the jackpot which may have happened right here for apache. Elsewhere talk about banks. Another sector doing well. Up about 10 for the quarter overall. A lot of people dispute why the banks should be up. Interesting moves in the last election cycles. Previous six, i can think ken show for this, banks had been the Market Leader from labor day into the president ial election day, five of the six periods the banks have been up, its been the number one performer and this particular period. Its been 6 . Excess returns over the s p 500 thats what mean adjusted return means overall. So theyve been clearly the winner. Banks names that have done particularly well, during this period from labor day, to the president ial years, zions bank of new york, key corp and wells fargo as well. There you see some of the big names. Thanks to kensho for crunching the data on that. Also lets talk about ipos. Its been lousy for ipos and horrible and i dont want to sugar coat it. Three coming this week that are interesting. A tech ipo in ever bridge they do Communications Enterprise safety applications, 7. 5 million shares, 11 to 13. Not a huge deal. Keep an eye on that for how teches are doing. A couple banks these are surprises to us because we didnt think banks would be an ipo leadership but bank of nt the biggest bank in bermuda going to go public on price thursday public on friday. Shares at 22 to 25, well keep an eye on that and then there is a southern bank, fb financial, tenney bank, i think the third biggest bank in tennessee, price thursday for friday. Remember we had a fairly Successful Bank ipo a little while ago first hawaii, just about a month and a half ago priced at 23. That stock trading at 26. So still fairly successful ipo there. Up about 15 . Bank ipo. Well keep an eye on that and see if we get the ipo business going. The dow down 12 points. Back to you. Welcome back. Thanks a lot, bob pisani. To the bond pits this morning as well. Rick santelli at the cme. Good morning, rick. Good morning, carl. Well if you look at a twoday chart it says it all. We go from 1. 62 to 1. 52. Obviously data propelled it. But a lot of notions about what may lie ahead whether its with policy or bounce, sustainable bounce in the economy, bringing gdp to a level closer to 2 . All those things were dashed yesterday. If you open the chart up to the first of august, you can really see, that we are revisiting the lower end of what certainly seems to be a fiveweek range. As a matter of fact, at 1. 52, if we were to close here, we would be closing at 3. 5 week lows last seen around the 12th of august. Now bunds, theres one market. Really, theres one market. Whether you look at equities or fixed income for the most part, look at a two day of bunds similar, minus 4 to minus 12. The only difference is the scale and just a general scariness of the fact of how negative Interest Rates are starting to be normalized like the aroma of natural gas. You just kind of get used to it. It doesnt lessen the financial danger in many minds and 8. 1 of bunds similar to the range different scale of our treasuries. As we look at this lets look at equity markets around the world and take the dax, take the cac, take the dax, the german stock market since august 1st, also in a tight range and seems as though as Interest Rates move lower the stock market moving higher. Thats got Central Bank Policy written all over it. The s p looks similar and its similar time frame. Maybe i continue to say, one of the more fascinating charts to many on this floor is the pound versus the dollar. And if we open it up to give scaling a chance to give us context, so well start at april 1st, we are now in the pound, yesterdays close was the best close since the anonounced results of brexit on the 24th jew of june. Down a little bit today but this is a barn burner. It shows on digital issues are they in or out many not only were wrong but how the market is responding and equity market is respond how uk data is responding and when you get into more complicated policy, obviously, the number of errors go exponentially wild. Carl, back to you. Thank you very much. Rick santelli. When we come back aol cofounder steve case on the state of Tech Innovation as we count down to apples product event today. Nasdaq alltime high. After that closing high yesterday. Closing the gap for the year. Now about 5. 4 for 2016. Back in a minute. What if a company that didnt make cars made plastics that make them lighter . The lubricants that improved fuel economy. Even technology to make engines more efficient. What company does all this . Exxonmobil, thats who. Were working on all these things to make cars better and use less fuel. Helping you save money and reduce emissions. And you thought we just made the gas. Energy lives here. [phone buzzing] some things are simply impossible to ignore. The strikingly designed lexus nx turbo and hybrid. The suv that dares to go beyond utility. This is the pursuit of perfection. This car is traveling over 200 miles per hour. To win, every millisecond matters. Both on the track and thousands of miles away. With the help of at t, Red Bull Racing can share critical information about every inch of the car from virtually anywhere. Brakes are getting warm. Confirmed, daniel you need to cool your brakes. Understood, brake bias back 2 clicks. Giving them the agility to have speed precision. Because no one knows like at t. Weve been hearing so much about how youre a digital company, so you can see our confusion. Ge is an Industrial Company that actually builds worldchanging machines. Machines that can also communicate digitally. Like robots. Did you build that robot . Thats not a robot, thats my coworker earl. He builds jet engines with his human hands. What about that robot . That is a vending machine, ricky. John, give him a dollar. Weve been talking chipotle all morning as pershing takes a stake trying to get a boost from millennials. Some of the tweets the company has sent out in recent months. How many burritos was the question on this poll the options 69. And 420. A history of inappropriate tweets. 50 shades of guac, for instance. Trying to make these things as suggestive as possible, guys. Well, chris arnold, the people who are behind these are have a sense of humor. And look, i believe that theyre going to get out of this. I think they would have if it wasnt for the incident near boston college. Things are starting to make a comeback and then that was one person stick sink in one store. One of the senior guys in marketing getting arrested probably didnt help either. That is illadvised on his part. It was. Drug related situation. Yes. And not the kind of drug related that chipotle doesnt like, which would be like say zoedis kind of drugs. Reiterating sell, trying to take lessons from darden who worked the tables and wondering whether ackman can you reach from the board room or not. I worked the tables last friday. Thats an old activist playbook. I remember talking to ackman, must be so many about years ago how how he worked at mcdonalds to try to understand what was going on. Its the calendar sfo spend a half day doing that and feel they have an answer. If you if four people were killed in 1990 in a terrible outbreak in jack in the box and the company came back, it has to do with the memory of people. Because of the web it keeps it alive a little longer. Its the memory and the bell tolls for the buyers, the right ones. We will get stop trading with jim in just a moment. Dont go away. Amazing sleep stays with you all day and all night. Sleep number beds adjust on both sides for your best sleep ever. Dont miss the biggest sale of the year all beds on sale with the queen c2 mattress only 599. 99. Final days ends sunday. Know better sleep. Only at a sleep number store. Time for cramer and stop trading. I could have talked negative for hd supply really not that good at all. I could talk positive for my kron which is the right synergy with Western Digital but focused on the airlines because of the Conference Today delta said things are okay American Airlines and southwest said things are okay. Now when you have a bad group and all it does is reaffirm things are okay it can take off. I had oscar munoz on last week from United Continental and he said things are okay. If everybody says its okay and its stabilizing at a negative number you can get a rally in the last group that has not moved. And remember the rails have been red hot because coal is back, chinese imported coal. See the railroads and airlines go up at the same time called the transport index and it is very strong. Dont get taking you by surprise. Go by my kron. Big night tonight. Howard schultz talking about a new initiative and talking about, you know, the tone of the world and steve king is, talk about a nightmare with dave and busters. And sleep apnea, check it out. See you tonight. Mad money, 6 00 p. M. Eastern time. When we come back sara eisens exclusive with under amours kevin plank and steph curry aol cofounder steve case talking about Tech Innovation as we wait for apples event. Dow down 18. They say the world does not revolve around you. But today, maybe it can. I am helping 1800flowers find the perfect gift out of trillions of combinations. And working with the new York Genome Center to find treatments as personal as dna. And i am helping sesame street make education unique to every child. Hello, my name is watson. Working together, we can outthink anything. Hello, my name is watson. Across new york state, from long island to buffalo, from rochester to the hudson valley, from albany to utica, Creative Business incentives, infrastructure investment, university partnerships, and the lowest taxes in decades are creating a stronger economy and the right environment in new york state for business to thrive. Let us help grow your companys tomorrow today at business. Ny. Gov good wednesday morning. Welcome back to squawk on the street. Im Carl Quintanilla with mike santoli, david faber at post nine of the new york stock exchange. Sara eisen with us, but from taipei, taiwan. Following under amour on their asian tour and will join us shortly. Market dow down about 15 points. Quiet start to the morning but things will heat up this afternoon with the apple event and beige book. Our road map does begin with apples event kicking off a few hours from now in San Francisco. We will break down the rumors and what the next big gadget means for the stock. Under amour in asia. The Sports Apparel maker looking to expand internationally and taking nba super star steph curry for the ride. Sara will join us from tie juan. Big ackmans bet on burritos. Can his 10 stake in chipotle help the company get back on track. First up, watch shares of ap until three hours the company kicks off the big product event in San Francisco. Expected to unveil the newest versions of its iphone, apple watch and mac book but for a Company Defined by innovation will todays event provide the jolt some investors are hoping for. Joining us one of americas most wellknown entrepreneurs, American Online cofounder steve case, chairman and ceo of the Investment Firm revolution. Good morning. Good morning. Good to be with you. Excitement. You have thoughts about what you want to see and excitement isnt necessarily it, right . Well i think apple has done a terrific job over the past tech cade innovating a lot of fronts but the sales have slowed down a little bit and need to reboot it and thats what people will be looking for this afternoon, what is the next generation of the phone. Beyond the phone whats the next product category it can carve out a big sector that apple can go after over the next decade. So, is it more important to get additional bells and whistles on the hardware or make it easier for you to access the ecosystem that so many families say theyre stuck in . A little bit of both. They will try to do something a little thinner. A lot of rumors ability the wireless, got an air bud technology, so theres some ways to continue to improve it. I think the reality is phones, not just apples but others have stabilized a little bit. Innovation that happens in the early phase of things, the phone or personal computer, half a center ago like the cars, the first few years theres a lot of innovation and people tend to upgrade every year or two after a while, the pace of innovation slows a little bit. For apple part of it is getting the next generation of phone right but also figuring out whats the next category and Health Devices is one i expect at some point they will take a real shot at. Theyve done a little bit with the apple watch and probably more over time. Health care onesixth of the economy, right for innovation, one of the things i talked a in my book the third wave how the Technology Industry will start leveraging the internet, internet of everything to take on sectors Like Health Care and education and food and energy and transportation. Thats the next wave. Not just about the devices and software, its about how those things play a significant role in our everyday lives. Its the title of your book weve discussed it on air, how would you evaluate apples innovation within that framework . Where do they fit on the spectrum of companies that have done better or not so good . Their focus has been on the horizontal platforms like the phone going after big sectors like music. I think over the next decade i would expect them to go after more of the verticals in the third wave as the industries really collide and what traditionally has been viewed as a Tech Industry gets embedded in every industry. Youve seen that recently with the acquisitions, General Motors buying a company, cruise or walmart buying jet, more of the m a activity with the big fortune 500 players recognizing that Digital Technology innovation internet of everything the third wave is taking hold and they need to reboot their own strategies and drive more partnership between the startups, Tech Companies and these Large Companies and also drive more acquisitions as well. With apple a couple years ago when they bought beat, for headphones, i suspect that will be part of the launch as well. Several billion dollar acquisition of something because they believe that it wasnt just about the software in that case, it was about the hardware, the ability to come new generation of headphones. When it comes to the actual r d spending itself, im curious your thoughts within a Large Corporation like apple in terms of bang for your buck and how you actually measure it. Apple on a pace to spend i think almost as much as 10 billion on r d, 8 billion last year, running at roughly about 5 of total revenues. How do you go about judging whether those that money is well spent . I think youve seen whats happened over the past decade, steve jobs went back and gave me a call, Company Worth about a billion dollar, now worth 500 billion on the back of innovation mostly through r d spending. Apple has made some acquisitions like beat but mostly bern is internal development. Amazon has done investment through their own initiatives. Other companies, google, has done a mix of internal innovation and using their currency to acquire a company. Every company has to figure out what the right balance is but i think innovation is not just what happens within your company its what happens around your company. Almost building an ecosystem around your company is going to become more important in the third wave, partnerships, more m a. Steve, you know, that seems to be the big picture but its interesting how apple still seems on this cycle of annual or two years this kind of product growth. I rain the mania around remember the mainy ya around windows 95. People lined up to buy a box of software. Will we get to the point the next version of the device is no longer an event or do you see that happening soon. A little there now. Its an event but less of an event five years ago and thats a natural kind of iteration and evolution of these markets. Technology starts is something that kind of people are fascinated by over time, something people take for granted. 100 years ago electricity was something people were fascinated by. Now they take it for granted. The car was something people were fascinated by. Now they largely take it for granted. The internet itself ive always said when we started aol over 30 years ago the internet will arrive when no longer hyphenated not email just mail, no longer ecommerce just commerce. A Natural Evolution of technology starts on the fringes and then moves into the mainstream and then gets to the point where it really is baked in such a fundamental way you kind of do take it for granted. Finally, steve, we just had the fiveyear anniversary of cooks tenure at apple. He was sort of raised as a low gistition, making the trains run on time but people still fault him for not creating some incredible new category in five years. How would you grade him . Pretty high. I dont have all the details in terms much what theyre the next generation of products and you have to be careful in judging these things. The product cycle for some of the innovations is multiyears, three, four, five years some of the things that have been done youll see the benefit for apple in the coming five years. A good job of managing that transition from steve jobs who was such a central figure within apple and apple has continued to grow and extremely valuable company with broad global influence. I would rate him highly. Steve, its always good to get your take. We lope to talk to you again soon. Thank you. Steve case, the book, the third wave a great read and is available now. Under amour attempting to expand its growth internationally and its banking on help from nba super star steph curry. Sara eisen in taipei, taiwan, saw her at the top of the show, there she is looking bright as ever somehow even with the time zone changes. Sara . Yeah. 12 hours ahead here. Good evening in tie juan. For under amour and steph curry asia represents a huge opportunity and challenge which is why we came, we followed both of them on things tour, to show what goes behind making curry an International Marketing super star because boy is the business of basketball booming across asia. There are more than 300 Million People in china, for instance, that play basketball. The nba is the top selling league and theyre seeing growth rates of 48 in a season according to fanatics. We followed curry as he did clinics on courts with taiwanese high school students, all stars really, to mega auditoriums where he performed in front of a crowd of 5,000 doing his famous threepointers. Putting on a show signing autographs, posing with fans and taking a lot of selfies. Very much part of the curry under amour tour. Guys, you know that nike has had a head start in the market like the u. S. In terms of the store count around asia and the business and sales numbers, but also in terms of its global athletes and their star power. Lebron james is coming next week. This is his 12th asia tour. Kobe is here this summer. His 11th. Theyve been coming for the last decade. This is currys second asia tour and speaks to where he as an athlete is in a global perspective and where under amour is as it tries to look for its next leg of growth. So coming up im going to bring you a conversation we had with both plank and curry about the competition, about what they see in the market, and how theyre trying to really make inroads here and about a number of other topics, vision for the curries, the shoos they make basketball across the u. S. And some of the topics like Colin Kaepernick and the Upcoming Season where curry will have to share the team with kevin durant and nike athlete how that changes the dynamic when it comes to under amour versus nike. Remember the classic final matchup lebron james versus curry under amour versus nike. Now weve got a little on the same time. Its interesting to hear what they say about that. Ill bring that all to you in a bit here on squawk on the street. For now back to you. All right. Thank you very much, sara eisen. Look forward to seeing you later. When we come back we will have more from saras exclusive interview with under amour ceo kevin plank and, of course, you see her standing there with steph curry, sitting down, were going to hear how the Sports Apparel maker expanding its business in asia and as sara told us more to discuss there. As we take you to brek, heres a look at where stocks are trading. Squawk on the street back right after this. Youre here to buy a car. What would h keeping the power lines clear,my job to protect public safety, while also protecting the environment. The Natural World is a beautiful thing, the work that we do helps us protect it. Public education is definitely a big part of our job, to teach our customers about the best type of trees to plant around the power lines. We want to keep the power on for our customers. We want to keep our community safe. This is our community, this is where we live. We need to make sure that we have a beautiful place for our children to live. Together, were building a better california. Irelands Parliament Voting on the tax appeal. Take a listen. The decision will be made by the european judicial system. Im confident we will win this case because in our view, the European Commission has made a finding here. Dealing with state aid. Which costs us the threshold into tax competency, which is clearly a matter under the european treaties for each individual country. In ireland here, the revenue commissioners have always been completely independent of the state since 1923. And they are quite adamant and quite clear that there was no preferential treatment, no special deals, no sweetheart deals and that apple paid the taxes that were due under profits here in this country. Obviously a big issue for apple and for the global debate over tax policy. Well continue to watch that and have more later. All right. Yeah. As expected, of course, ireland coming back at the eu on that very interesting decision by them. Under amour speaking of that, has enjoyed huge growth in the u. S. Since denkevin plank founded th company two years ago. Looking to expand its game internationally. Sara eisen is back joins us from tie juan with more taiwan wi more on that story. A big part of the International Story is being built around the rising star power of steph curry. We wanted to get a front row seat as the company paraded him from Southeast Asia from hong kong to taipei from basketball clinics to events to retail aga with kevin plank and steph curry together to talk about how this relationship has come to be, where it goes from here, and what the strategy is in places like china. From three years ago when i first met k. P. And the rest of the under amour team and they did some selling on me about where the brand was going and how i could be a major part in trying to take the basketball brand to the next level and the entire company and trying to do more part has been an amazing journey. Never thought three years ago from me, im sure you had a grand vision but coming to asia and doing our second tour its all come together really nicely. So kind of following k. P. s vision and passion for getting under amour to where it is and going. Its been a Great Partnership and something that i take very seriously. Mr. Vision. Yeah. Stef made us all look smart. Easy when you back it up with the performance. I will never forget before actually stefans first mvp run is when he just said to me, looked and said, under amour basketball, hes like give it to me. I got this. And thats a tough thing when youre saying we need you to go stare down the likes of kobe, and m. J. And lebron and these guys and say youre going to build a brand basically on your back and what you do. I think the last, you know, two years, three years of performance has been, you know, everything that and more. Whats been the hardest part . Hardest part . For me, when talking about the product, the best product, all the conversations and the details that go into making a great shoe, a great apparel, i want to be a part day in and day out. Theyve all been constructive and trying to make sure do you fight . We fight a couple times. Like good tooems teammates if you dont get on each other and troy to check each other time to time. Who wins in this relationship. He wins. He has the final call. We try to persuade him. So yesterday, we had a really productive time, got to go to one of our factories, and, you know, it was 18,000 people in this complex, the kind of thing you think you would want to believe that every place something is made it looks as good and well kept as the people and as happy as they are. Taking stef to the process to make a shoe where innovation comes in, its anywhere from 2 to 300 or 400 sets of shands will such a single pair of shoes. Stef is like i dont know. Ive been thinking about that tongue logo how the thing works. This is like this waterfall crescendo about to happen if we do this. Nice look behind the scenes at the relationship there. Important relationship for under amour and steph currys International Ambitions and we move from basketball shoes to nfl gear because, of course, of the controversy de jur asked about Colin Kaepernicks jersey selling off. The 49ers quarterback after not standing for the National Anthem curry actually said that he admires the move. Listen. Do you have an opinion on Colin Kaepernicks whose jerseys are sold out across america . I love that. I love that theres freedom of speech and he can stand for what he believes in. Theres going to be people that disagree with him and people that agree with him which is what our country stands for. Hopefully will drive the conversation to, you know, bettering the equal right and treatment of africanamericans and people of color so i applaud him for taking a stand and hopefully the conversation is about what his message was and not the fact that is he going to stand or sit for the National Anthem or whoever it is. The conversation is started and continues. I would add the fact that, you know, hes putting his money where his mouth is and donating what he said a Million Dollars to finding ways to better or to make his message a reality, hope that the resources and conversations and intellect will be able to figure out a way to make that Million Dollars as powerful as it can be. Which is hes on the right track. Clearly guys, we spent a lot of time with curry and plank and in squawk alley, im going to bring you my one on one sit down with curry as he discusses the asian market specifically what his ambitions are for his line of basketball shoes here and in the u. S. Especially talking about breaking into the sneaker head of design. So far his shoes have been selling out but more performance based. They dont have the high resale value like other nikes, for instance. Nike has really succeeded at this. He does have thoughts on that. Under amours plans to get into the fashion business and the season and kevin durant and well have that for you in the next hour. Back to you. Curry certainly seems like an athlete in firm control of his professional destiny and now in a business sense in a jordan kobe sense. Interestingly sara, jordan comes to mind its hard jordan taking a stand the way curry did. Jordan known for sort of, you know, very smart on marketing but that was interesting that he was willing to address the kaepernick stuff. I dont know if hes done it prior to that publicly but interesting to see him willing to sort of entertain a discussion of whats a controversial topicp. Hes feeling this out as he gains in popularity and global star dom double the entourage during this asia tour that he did last year when under armour brought him across asia. He weighed in and had a message he wanted to put out there. This was the first time he publicly spoke about it. He was more reserved. I asked him to weigh in on donald trump and the current president ial election as a team here doing business in asia and we have a president ial candidate who is really talking about America First after curry came from an 18,000 People Manufacturing plant in hong kong here to taipei to crowds of thousands. He wouldnt go there. Hes not quite weighing in on every topic de jur but it was refreshing to get through the different side of stef curry off the court in person and pretty intimate i would say and a good guy and strong opinions and hes modest and really put on a show for these asian fans. Sara, well see you in a bit. Sair a ra eisen with under amour. Ackman setting his sights on his next target. Chipotle up. Can he get the company back on track . Well discuss and the nasdaq hitting an alltime high and the s p just about 7 points from an alltime high of its own. Were back in a minute. Its not just a car. Its your daily retreat. Go ahead, spoil yourself. The es and es hybrid. This is the pursuit of perfection. Shares of chipotle soaring up more than 6 after bill ackmans Pershing Square disclosed a nearly 10 stake in the company. Pershing square saying it intends to engage in discussions with the fast casual restaurant chain board and management. Chipotle stock has been hammered by continuing fallout from its foodborne illness breakouts that hit restaurant locations across the country last year for the First Six Months of the year chipotles Comparable Restaurant sales dropped 26. 5 . That stock guys, was over 700 a year ago. Its in the 440s right now. No real specifics on what ackman might advocate for as the second biggest shareholder here. You would think the Financial Engineering playbook isnt that obvious. They dont franchise at chipotle really. Maybe sell franchises or weigh in on the Strategic Plan from here. Or try to get a couple of board member perhaps that share more relevance in the industry. This is an area hes had success in the past and success has been hard for mr. Ackman and Pershing Square to find of late. Valeant being one example of that. His performance overall has been very poor. Last year and this year. But when he goes back and looks at the highlights from his investing career whether mcdonalds or wendys or burger king, they all do share something there and perhaps going back to an area that he does at least know fairly well, one could argue, and has had success in the past. Although for so long chipotle was an outlier. A nice chart floating around on return on investing capital which for quarter after quarter was an unbelievable advantage for this company and is essentially now coming back to industry averages or below. You have to contort yourself to say this is cheap. Maybe an opportunistic move, still a short position, really a small minority of analysts saying you should buy the stock. 2017 forecast for 10 a share in earnings, only twothirds what the Company Earned in 2015. Its not necessarily a high bar in terms of its history but can they really approach that kind of success. The whole past as some have argued to get orders in the future. We will see. Stock doing well today. It is not just iphones and apple watches. When we come back were going to go live to the bill graham Civic Auditorium in San Francisco. Were going to get a look at todays unveiling of the new iphone. Much more ahead, squawk on the street is coming right back. Its scary when the lights go out. People get anxious and my office gets flooded with calls. So many things can go wrong. Its my worst nightmare. Every second that power is out, my citys at risk. Siemens digital grid manages and reroutes power, so service can be restored within seconds. Priority number one is keeping those lights on. It takes ingenuity to defeat the monsters that live in the dark. Good morning, everyone. Im sue herera. Your cnbc news update at this hour. President obama touring a Rehabilitation Center in the capital of laos saying the u. S. Has a moral and humanitarian obligation to prevent more blood shed from the remnants of the vietnam war bombing announced a 90 Million Program to clear unexploded bombs. Itt Technical Institute is shutting its doors for goods follows the Education Department banning the school from enrolling new students who use federal financial aid. That will affect about 35,000 students and cost 8,000 employees their jobs. Record rain in japan, residents in northern how i couldo alerted to watch for more flooding and mudslides. The area got about 7. 5 inches of rain over the past 1424 hours. And this may be the story of the day. Check out this beautiful picture on facebook of newborn twins mason and hawk of st. Lucie county, florida. It shows mason embracing his brother who is on a ventilator. He was born with a rare defect in his diaphragm and has undergone numerous surgeries since his birth. Thats the news update. Pass it down to you. Thank you, sue. Its apples show in San Francisco. Kayla is with us from the event with what we can expect to see later if the day. Kayla . Well, david, of the many annual events, apple holds the september event as the one always chock full of the most product updates. Of course all eyes will be on the iphone but reportedly the most noticeable iphone changes are shelved until the device turns ten next year. Still a lot of big updates that are under way. Heres whats been telegraphed to analysts on wall street and the tech press thus far. For the iphone expect at least two new colors, a duo camera lens, double the memory for the device and minus that headphone jack which weve been talking about. Also rumored potentially a new home button. The apple watch a second version of that is expected to be released today. Well see how smart siri has gotten since the Company Opened it up to developers over the summer. And some are saying maybe the mac book and ipad are due for a refresh, perhaps even the apple tv but of course all of that as of now is speculation. It is really all about the iphone. Twothirds of apples sales and this device when apple announces it and launches it in september, has always set a record for the opening weekend. More than 13 million iphone 6ss sold in the first available weekend last year. Over time that growth has slowed and the 6s is the first device not to outsell its predecessor. Of course this year, for Quarterly Results the iphone declined year over year but Piper Jeffery says the iphone 7 should return the iphone to growth because so many of the 5c and 5s tee vices are ripe for an upgrade. Analysts hoping that the calendar will help apple this year. Take a look at when the previous launches of the iphones in years past were, they were later in the month and this event is actually taking place a couple days earlier. Leading perhaps to a couple more days of sales for apple in this calendar quarter. All of that is speculation until we see what apple announces in two and a half hours time. Well be here and bring it live to you. The Company Always is sure to pull surprises out of its hat. Well be standing by to see what those are as you will be bringing them to us. Kayla tausche in San Francisco. Joining us to discuss what else to expect from apple is angelo of Global Market intelligence and channing of capital advisers. From a stock perspective as somebody who owns the stock, heading into this kind of announcement what are your expectations in terms of what its going to mean . We think the expectations are low. Weve been doing this for years, and i remember a time when expectations from a Product Development and from an earnings trajectory have been this low but from an investment standpoint we think this is good. Look back at the april quarter analysts starting to bring down their estimates and able to kind of leap over a very lowered bar in july, Gross Margins were in that 38 range which basically conveys stability, and, you know, Going Forward the analysts have not raised their estimates. We have a low bar for the remainder of the year and so we think the stock pretty much treads water in here as everyone prepares for that new launch this time next year. Well angela youre one of the stilts. Is channing right, low expectations will they be met . Yeah. Ironically i would say of all the number of changes weve seen from apple on the iphone front the iphone 7 probably has the lowest expectations going into this event. So, you know, we think thats actually a great thing for buy side investors. Because as you go into this event jauz those low expectations, theres potentially ways for apple to kind of surprise to the upside here. But very little we think from a downside perspective for apple to disappoint because pretty much everything that, you know, you would expect apple to announce here has been leaked and what we are hoping for that one more thing to kind of come out here at the event and lets hope to see it. Channing, do you think were going to get any clarity after we get this launch and the reception to it about what the upgrade cycle is going to look like . Its something wall street is struggling with. What the iphone upgrade expectation should be for each iteration . Well, its going to be really tough. I mean when you look at, you know, where we are in the product cycle and look at the replacement cycle its been lengthened. The question is, a lot of users need to upgrade. The question is will they. I think what you will see is that that replacement cycle around 30 months by a number of different estimates probably getted lengthened. Usefers you go back two years, with the six, are probably going to hold out and probably wait until we see the new model. Its going to be tough, a tough sledding here for the next quarter or two. I think all eyes will really be focused on next year. But i think apple will get a pass as everyone starts looking to what is finally going to be a ibl to rekindle able to rekindle the growth and that is the model next year. I remember back when c was the big thing and people talked about average prices coming down. If we end up with a fancier headphone jack, i wonder if you can imagine a year from now asps being higher than today . You know, as far as the headphone jack is concerned i dont know if thats if thats going to really do anything on itself. I think, you know, looking out a year from now, once we get that ola technology coming out as well as other enhancements, removal of the home button, the Wireless Charging technology, once that iphone 8 comes out at the tenyear anniversary then the potential for higher selling prices to evolve for the iphone. In the interim term, though, expect average selling prices to really kind of be in a neutral state. Channing, you know, were talking about the iphone the focus today but when you look at the company, how much are you taking into account all the other efforts theyre make which as kayla pointed out dont amount to as much as a third of overall revenues or profits but taken on their own are still very significant. Yeah. Theyre very important, right. The key at this stage which is mass adoption, is on the Software Side and on the ecosystem. Anything that apple can do to strengthen their ecosystem will keep the retention rates around 95 for the apple system and iphone. Were excited. Look at software, 15 , service about 15 of revenue we can see that going to 25 or 30 thats going to help Gross Margins and probably help offset the declining smartphone price which is inevitable when in mass adoption of a smartphone. And the technology cycle. And angelo, finally, you mentioned the idea that maybe we get something we dont expect today. Any guesses in terms of what that might be . I mean i would love to see something on the Software Front although unlikely to see it. Whether or not we see something along the lines of Virtual Reality unlikely but once again, i mean it would be great to see something coming out of left field from apple. All right. Guys, appreciate your time and insights this morning. Well see what we get later. Angela and channing. By the way, tim cook tweeted a picture of the building in San Francisco said suns coming up and we are ready for a big day. So just a few hours from now. Meanwhile a news alert out of washington, lets get over to emon vavers on this one. Hi, carl. The Mexican Government saying the mexican finance minister has resigned from that position. Now behind the scenes nuance to this according to the Washington Post he was seen as one of the proponents of Donald Trumps visit to mexico last week. And this could be seen his resignation, as a sign that the government of Enrique Pena Nieto does not believe that visit went as well as it should have. According to the dow jones, he resigns in the wake of Donald Trumps visit and will be replaced by Development Minister and exfinance minister jose antonio meade. Thats news out of mexico. The finance minister has resigned, carl. Thank you very much for that, eamon javers in washington. Shares of whole foods falling after their rival sprout cuts its outlook. Kroger, whole foods among the biggest s p laggards things morning. Coming up on closing bell arrange exclusive interview with the chairman and ceo of valeant. Joseph papa. Tomorrow again the ceo of allergen, Brent Saunders two huge interviews you do not want to miss. Dow in a tight range down about 18. Were back in a minute. Mapping the oceans. Where we explore. Protecting biodiversity. Everywhere we work. Defeating malaria. Improving energy efficiency. Developing more clean burning natural gas. My job . My job at exxonmobil . Turning algae into biofuels. Reducing Energy Poverty in the developing world. Making cars go further with less. Fueling the global economy. And you thought we just made the gas. Energy lives here. Guyhey nicole, happening here . This is my new alert system for whenever anything happens in the market. Kids a natural. But thinkorswim already lets you create custom alerts for all the things that are important to you. Shhh. Alerts on anything at all . Not only that, you can act on that opportunity with just one tap right from the alert. Wow, i guess we dont need the kid anymore. Custom alerts on thinkorswim. Only at Td Ameritrade. The worst few weeks for the stock market have begun based on historical performance. Is that a reason to think twice about buying stocks. Find out at tradingnation. Cnbc. Com. More squawk on the street coming up. Hey, jesse. Who are you . Im vern, the orange money retirement rabbit from voya. Orange money represents the money you put away for retirement. Over time, your money could multiply. Hello, all of you. Get organized at voya. Com. Welcome back. To the cme group in chicago. Rick santelli has the santelli exchange. Hi, rick. Hi, thank you, mike. I would like to welcome my guest representative and House Judiciary Committee chairman bob good lost thank you for taking the time this morning. Good to be with you and your viewers. Thank you. Listen, being in the markets, after the credit crisis there have been billions, billions of dollars of fines collected in many cases, no wrong doing has been admitted. Trying to follow the funds hans been complicated. Many periodicals and websites have tried. You are sponsoring hr5063 has a pretty forceful title its called stop Settlement Slush Fund act. Wow. Thats pretty intense. Why dont you tell us about hr3hr hr5063. As you noted a number of people and businesses that are sued, civilry or have criminal actions brought against them and settle for fines or payments, see that money not going to victims who are directly harmed by whatever action they may have taken, and not going into the u. S. Treasury, as its supposed to if its not going to victims, instead its going to left leaning organizations like laraza or National Urban league or neighborhood works, favored organizations of this administration to spend on things that they actually go to the Justice Department and propose and say hey, why dont you get some of the money from this settlement and give it to us. That is exactly what the United States constitution says the congress is supposed to do and thats why we are very concerned. This is a run around. Its all a part of the president s im going to take my pen and cell phone and do things myself, and one of the things you got to do is fund the things he wants to do, thats whats being done here. Its wrong, inappropriate, not historically what lawsuits are supposed to be about and were putting a stop to it with this legislation which will be on the floor today. Now, chairman, let me stop you here. Now, lets strip this of politicses. So whether the money is going to left center or right, doesnt change the dynamics of the issue at the epicenter here. So the department of justice must figure into this process somewhere. And when you look at whats going on in front of the president ial elections, whether its questions about the Clinton Foundation whether its donations by donald trump, money moving to organizations is a big deal. How did this occur and why is the department of justice not more forthright about the destination of these moneys . Thats a great question and we think the answer is these organizations went to them and said, we want you to divert some of the money from these huge in many cases multibillion dollar fines and settlements that are being paid by citibank, by bank of america, by goldman sachs, by jpmorgan, we want some of that money. And not only how much are we talking, chairman . Can you put a number on this . Absolutely. Its over a billion dollars just those four Financial Institutions that i just referenced, are in the 900 million neighborhood of money not going to the treasury and not going to the victims, going to other parties who are not harmed by the actions that these institutions allegedly undertook. So theyre bypassing article 1 of the constitution which says money that belongs to the federal government is appropriated by the congress. And that let me stop you again. You know, i constantly hear both candidates talk about infrastructure spending. I constantly hear all the people i interact with at home and work that sounds like a great idea but lot of that money ends up in quote unquote a slush fund type environment or just in the general coffers. Let me take it to the next step. What is your bill doing right now . In other words, whats the progress of hr5063 . Weve investigated this matter for close to two years now. Even with that, even with the intention focused on it, the Justice Department has doubled down and just at the end of august, did it again with regard to the bank of america, to the tune of another 490 million. So what the bill does, and it passed out of the Judiciary Committee with a bipartisan vote, it passed through the rules committee and now it is headed to the floor of the house, this afternoon, what it does is it simply says, that money from settlements that the Justice Department orchestrates must either go directly to victims or to the u. S. Treasury. And if it goes to the u. S. Treasury then the peoples representatives, the peoples money, their elected representatives should make the decisions about how to spend it not bureaucrats or prosecutors in the Justice Department. Let me interrupt you again. It almost seems to me kind of sue per fa lus you need hr5063. If this goes against the rule book as you pointed out why cant you freeze the funds . Well heres what happens. The prosecutors are holding over the heads of the executives of Companies Like the ones we just referenced, threats of being charged with felonies saying unless you enter into a settlement were going to prosecute you under certain circumstances and if you dont want to have that prosecution, then well settle it and go together to the judge and say, hey, weve got a great idea on how to settle this case and heres how were going to allocate the money. Theres a lot more at stake than just moving the money. That sounds like some malfeasance involved there. Listen, chairman, we are out of time but i want you to promise me, youll to the dynamics of what youre trying to accomplish . Theres a lot of interest in the United States senate. James lankford is carrying it in the senate but it needs a push to protect the peoples rights under our constitution. Thank you for taking the time today. Very interesting i must admit. Back to you. That was interesting, rick. Rick santelli and the santelli exchange. Coming up on twitter, the former ceo of twitter. His thoughts on apple, twitter and a lot more. Not going to want to miss that. Plus less than one week away from the 6th annual delivering alpha conference. Its the investor summit produced by cnbc. More details and tickets are available at delivering alpha. Com. Experience the thrill of the lexus is f sport. Because the ultimate expression of power, is control. This is the pursuit of perfection. For decades, investors have used a 60 40 stock and bond model, with little in alternatives. Yet alternatives can tap opportunities that traditional assets cant. And even though theyre called alternatives, theyre actually designed to help meet very traditional goals. Thats why invesco believes people should look past conventional models and make alternatives a core part of their portfolios. Translation . Goodbye 60 40, hello 50 30 20. Today i am helping people everywhere do what they do. Better. I work with startups like alpha modus to predict markets five times more accurately. I am helping tv networks use social data to predict what people want to watch. And i worked with marchesa to turn fan feeds into a dress that thinks. Hello, my name is watson. Working together, we can outthink anything. There is a lot at stakey hello, mhere, you know . Weve been planning for this for a long time. And well keep evolving things. Knowing you is how edward jones makes sense of investing. Hearings are underway in congress this morning on the federal reserves governance. Hampton joins us with the highlights. The hearing is underway and its the Monetary Policy subcommittee is focussing squarely on how its getting to that Monetary Policy. My friends on the other side of the aisle would like to double down on what dodd frank started. Subjecting them to the same politics that has kicked Economic Opportunity to the sidelines in the name of reinflating asset prices and promises to press the pedal to the medal and politics in office. They produced the policy for this time an extraordinary set of economic circumstances and frankly keeping it away from the vulnerability of politics. Now so far by the way we have not heard anything from either them about what might happen in two weeks when the fomc meets on Interest Rates policy and of course part of that governance structure is the beige book however and we do get those results at 2 00 this afternoon. Back to you. Thank you. Yeah. Well be looking for the beige book and also all that comes out of this hearing. Appreciate it. Lets get a look at the markets. We are hovering just below the flat line although the transport is up 1 . You have the nasdaq that gave up earlier gains is down just about less than a point right now so really not a whole lot. Tell me about the transport because somebody that is an expert on the markets, gym talked about it earlier, the airlines in particular adding to the strength there. Any underlying meaning . First of all its a training group. People serve this group a lot. It had a little bit of a tough road. Whats interesting about the airlines is that theyre treating essentially with oil. To a larger degree than you would expect. If you remember a lot of the earnings Conference Calls from the airlines said cheap fuel means price wars and price wars are not something that investors like so you have oil holding firm and thats one of the things that has people willing to bet on the airlines. If you look at price earnings multiples thats often it. But have not had a goodyear at all. Rough year and its one of those lessons that you dont want to pbuy cyclical stocks. Watching them for the rest of the day. Well send it over to kayla for a look at what is coming up on squawk alley. Theres a big event underway. Well tell you exactly what we think we can expect. Tim cook and other executives tweeting ahead of the event as the sun comes up here in San Francisco ahead of the big apple event later on. Thats coming up next on squawk alley. With dynamic performance, to help you hold the curve. And bold styling to stay ahead of the curve. The lexus rx, rx hybrid and rx f sport. This is the rx, elevated. This is the pursuit of perfection. Real is touching a ray. Amazing is moving like one. Real is making new friends. Amazing is getting this close. Real is an animal rescue. Amazing is over twentyseven thousand of them. Theres only one place where real and amazing live. Book a seaworld vacation package and eat free. Good morning. It is 8 00 a. M. At the bill graham auditorium in San Francisco. Its 11 00 a. M. On wall street and squawk alley is live