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tv   Squawk on the Street  CNBC  September 23, 2013 9:00am-12:01pm EDT

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he got elected in 2001 right after 9/11. ru rudy julie annie. you don't have as many ethnic groups to help. >> thank you, steve. appreciate it. that does it for us. make sure you join us tomorrow. right now, it is time for "squawk on the street." fall is officially here. not only are the seasons changing, so is the dow. today, goldman, nike, visa are in. alcoa, hp and bank of american are out. welcome to "squawk on the street." i'm carl quintanilla with jim cramer and david faber of the new york stock exchange. we are juggling a lot. the continuing threat of a government shutdown. decent sales numbers on the iphone, pretty good economic data. the shanghai getting a lift from
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chine chinese manufacturing pmi. angela merkel wins a third tern as german chancellor. some manufacturing numbers with weak. apple selling a record number of its new iphones, recording that 200 million devices are now running ios 7. leadership here and abroad changes the dow with the addition of nike, visa and goldman sachs. in germany, no change as chancellor angela merkel wins election shares of blackberry slipping. they expect a nearly 1 million dollop per rating loss will cut some of its workforce. a vint bid with private equity netflix shares, what else, they are higher. they did have a victory yesterday at the emmys we'll start with p ale. the tech giant announcing it sold 9 million new models. apple says demand for the 5-s
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has exceeded new supply. more than 200 million ios devices are running. some estimates were close to five. hard to be off by nearly 100%. >> the street has been getting apple wrong. the street should be listening to david pogue, to what the critics said. they were just saying, listen, this is not a me too. this is very real. i think that drove a lot of people into the stores. i think that that can be a powerful influence an wall street never factors in whether something is good or not. >> how many times is this stock going to trade off on the product announcement and trade up when people start to buy the thing? >> look, i downloaded it. i didn't get the new one. i downloaded it. a lot of people downloaded it. it came automatic. it came when i am watching "breaking bad." you want to upgrade this? i figured, why not? >> i do know that this was one
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where it is so far-reaching, i want to buy ups. not many people are shipping this thing. this is a major change and you have to factor it into the consumer. that's how much this is in terms of gdp spent. i'm not kidding. >> are we still in a channel as we get close to 500 where you sell at 505 and you get it at 450? >> that has been so right. i know that's painful, because you would like to think that something can punch through that ceiling. if anything can, this can. now, all the numbers are too low. you finally have something for these analysts to say. instead of cutting numbers, they can raise numbers. we got a huge number of downgrades when people thought this wasn't so good. they should have, in speaking to the critics, because the critics loved it. they absolutely loved it. >> apparently, people will still line up and buy anything with an apple on it. >> even though the cost is very high. >> extraordinarily high. >> you weren't here, jim, on friday, because you were still coming off of the eagles game
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thursday night, which we wouldn't mention. we did a lot of coverage of the lions around the world. >> it was excellent. it showed you that the critics and the analysts acted as if this meant nothing. >> at the time, we asked questions about a supplier halo. >> everybody is doing the tear dance. >> i don't want to do the teardowns. we are about to go into earnings. so let's say you think it is up .75 cents. arm holdings has been way, way up. i find that that was another kind of vested trade from the days when you could buy something, because apple had sold products into apple but everyone has had to diversify away from apple. i keep thinking about broadcom. how many people bought it because they thought it was going to be apple's provider. that stock is horrendous.
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if you want to play apple, buy apple. >> if you want to take anything away you could broadly apply to samsung? i won't mention blackberry. that story is over. >> to a samsung or anything along those lines? >> samsung is kind of -- just a few weeks ago, samsung's ceo was going and doing interviews saying we've basically killed apple. we have killed the competition. it looks like, no, they haven't. now, in samsung's court, to come up with something a little more exciting. maybe they have got it. >> or microsoft nokia. don't count them out. >> an upgrade again today. >> a big sur fast announcement in new york. the whole world is about the phone business. >> or google. don't count that out. >> i found the surface ad funny. it has siri talking about being beaten. >> apple having taken their knocks, right, for months, is finally on the cover of business week.
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johnny iprofiled on the cover of "usa today" on friday. the headline of tim cook on the magazine. what, us worry? it is looking smarter. >> i took my cue from the analysts. they whether saying this is nothing. you had to switch directions when the actual people looked at something. tim cook has always said, if we build a superior product, people will come. this was a superior product and people came. >> until we get pack to the old worries about, until it is nothing new. we haven't innovated. how many times are we going to say that? >> poeg said -- remember what poeg said. he said the hardware, there is not a lot of room for more innovation of hardware. the software is at the infancy. i thought that cut in apple's direction. >> let's talk broader markets here. stock trying to bounce back from friday's selloff. today is the day the newly revamped dow starts trading as goldman sachs, nike and visa
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replace alcoa. cha na nfing data hitting six-month highs. angela merkel, german chancellor, wins a third term in her country's elections. >> in germany, she is loved. they talk about the grand coalitions. she is loved. there are only a couple others that ever got to third term > you' euro zone, very optimistic. china, these are very powerful numbers. there are only one country that doesn't have powerful numbers, the united states. >> pmi come pot pos sit, a 27-month high. the center, left, showings, democrats, maybe the whole ship turns a couple degrees left, jim. >> germany is already strong. the fact is greece looks like it has balanced its budget. >> say that again for people. >> greece looks like it balanced
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its budget. >> isn't that incredible? >> at a much lower level. >> what about this? what happens if you are in a situation, i'm not kidding, where we have to sell a lot of bonds because our deficit gets a little more out of control because next year, there is a lot more health care. why, if you are essential banking, you own u.s. treasuries, would you not shift it over to some kind of euro bond and not have a lot of currency risk and be in a situation where our interest rates go higher and there is no demand? >> we also have this one big buyer that will eventually stop buying. >> the biggest hedge fund in the world. it is the fed. how about these articles, yellen is tough? >> i don't worry about demand for u.s. debt. >> why? >> because there have been worries about that always and it never happens. just because something never happens doesn't mean it won't. >> but the competition is suddenly in this.
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i'm not saying that things are going to get out of control. i'm simply saying, when you hear talks of default, people don't want to buy u.s. debt. it is nice the fed has kept it back to 275. >> that will add a whole layer of complexity. >> the talk will be about default. we are not going to default. for whatever i know, the president says, i don't need your approval. i am just going to go ahead and they sue him. the debt is going to grow next year. >> it is much lower this year than anticipated. >> that is great. then, we go into health care. a series of articles we are all not talking about. maybe your health care gets inferior if you are in one of these exchanges. >> november 1st is when they begin, i believe. >> i'm glad to have a nice health care policy. i hope you guys are. in the meantime, speaking of companies moving their employees to exchanges, home depot, the dow getting a whole bunch of new members, the first 3 for 3 since
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2004. we saw a lot of action on goldman, nik can e and visa. does that continue in the morning? >> when you see an article about citi, they say the trading revenues are bad. i see goldman trading down. visa, i'm waiting for something in congress that says that they get too high fees. remember, we keep getting hit. great article by jim stewart this weekend. >> citing one james cramer. >> that was a facetious comment. >> i knew that. >> sarcasm doesn't always carry that well over the airways. >> i think jim knew. >> he got it. >> i think the general idea that these law firms are being -- getting a lot of fees and they are all very busy, because these banks are still this task force is being set up to go after the banks.
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they remind me of the bobby kennedy, get hoffa task force that i remember thinking, wow, can you believe it, if they saw hoffa leaving too soon out of the -- bobby kennedy said, i want around the clock, get hoffa. >> doesn't it feel like there is an around the clock, get jim may. >> let's hope he doesn't end up under the bleachers in the meadowlands. >> those are about as good of seats as you want for the giants. >> the old meadowlands. >> at least you don't have to watch what happens. >> the headline in the posts, disgraced. >> carl banks said at one point, this is insanity. one of my absolute favorite anal sifts. >> you are going to try for the offensive line next week. you might do a better job. >> i have won the waiver wire in fan s fantasy. blackberry sharing moving lower. you have probably heard the smartphone maker warned of a
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much longer than expected loss. it plans to cut up to 4,500 jobs. blackberry's former ceo has reached out to private equity about a possible joint bid. the price target is $8. they are both narrow to neutral. they are both now saying their risks are played out and we are left with a sum of the parts situation. >> when you listen to what we're saying about apple, it makes me less excited about blackberry. there is nothing that could. buy something from blackberry and get that thing going again. there must be something that balmer can buy. >> there is the question. is it lasrides, some large tech name, who goes after these guys or the shell of what was these guys? >> it is more of a distress situation. expecting that you are going to get a big, private equity deal may not be the case. we use the banner private equity to describe a lot of different
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firms. that are are some that have much more of a focus on distressed assets. you are not going to buy a falling knife. >> i know there are countries it does well in. it is a shrinking universe. everyone always says, listen to the subscriber list. i would rather have netflix subscriber list than the blackberry subscriber list. >> there is the i.p. and there is cash. most of the estimates seem to be somewhere between $5 and $8 a share. >> $4 for the cash and $8 for. >> isn't blackberry cash worth cash. >> the longer they go, the more they burn into it. lar largely a noncash charge for the z-10s, they have in inventory. great move on getting the plane. did you see that? >> i think balmer likes it. >> oh, we've taken over.
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we need a plane. that's our first priority. >> can i just go back to apple for a second? >> of course. >> have you noticed you no longer, when you're sending a message, it doesn't default to something that's like the wrong word. it is much more intuitive. >> he is using ios-7. >> what if i was typing to you and i said, the deal is on and it comes out balmer buys blackberry. the new one does intuit jim mentions next flicks. it has been a great year for that company with some emmy history last night. coming up next. later, all about aiming for a bigger slice of the consumer. we will talk the business of pizza and beyond with patty doyle. take another look at futures. a lot coming up. u.n. general assembly in town.
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♪ if you missed it last night, history was made at the emmy awards.
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david fencher, "house of cards." >> david fencher was named best director for "house of cards." "breaking bad" won the best drama. 1 for 14. we'll see what the stock does today. >> cold stocks, tesla, someone comes out and says it is good, stock goes higher. netflix, they win an emmy. imagine if they won four emmys, would the stock be up 25? it is kind of like that. these are these stocks that go up. obviously, they have plus 30%. the public is engaged in the stock market in a very strange way. it is in amazon, tesla and netflix. >> the strategy of releasing all of the episodes at once does not give them a huge window for public relations or to really push as opposed to a full
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season. so i think they were relying on this in part to help continue to push awareness of the house of cards brand for whatever the next one was. >> they spent a lot of money on it. it is $110 million, i think. >> on the two-years. >> if you are looking for -- if the goal is to get into the zeitgeist, kevin spacey turning the camera in the opening numbers of the ceremony. large, guys, the notion that tv is that thing you watch on your phones. that's different than past emmys. >> i watched the nfl red zone on my phone this weekend. what the heck, it is fabulous. it is fabulous. i watch espn. i watch the espn countdown on my cell phone. it is a truly remarkable time. >> we are just at the beginning of it. neilson finally trying to catch up and measure this stuff. we are starting to do that. this is just beginning.
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it is going to have seismic changes in so many different business models. we talk about it all the time, when it comes to the distributors, whether they be cable distributors or the content providers. we are just at the beginning. >> i think there are a lot of people that are going for an ipad mini. a lot of people going for a little bit bigger screen. the resolution is so perfect. you find yourself thinking, this is the way i'm going to watch. this is how i'm watching. in a car, i'm watching. it is interesting. sirius satellite is doing well. i'll put on the tv. >> as a passenger, not a driver. >> no, and no texting. five points in new york and i betcha it is going to go to seven, as it should. >> it is frightening how often you pass people on the highway who are doing that. >> fatalities up for the first time in 50 years. it is clearly linked to texting. >> at next year's emmys, if amazon, of all companies, is a
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contender in some major c categories. >> i think so many people are watching "breaking bad." that means netflix tonight. everybody has to catch up. i know people on season three. they better start binging. >> i'm on season one. we're in the middle of the bing and we're watching on the miniipad at night. >> you call yourself a patriot. >> congrats to "the voice." best reality and a great congratulations to carson daly and the team over there. cramer is going to help you turn this monday into a monday making monday. his mad dash is next. take a look at futures. moderate action as we kick off an important week. back in a minute. ♪
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time for the mad dash. let's talk about vno, jv penny's. >> this is one of the envies of the great trust envy. they recognize great management, a terrific retail play. they are like, geez, they kind of screwed up on this. >> not kind of, 2693 average price. they finally sold the rest at $13 a share. stick with your knitting.
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>> that's what people are saying. a lot of these real estate investment trusts have always viewed a quick mission. whether it be a shopping center, whether it is a mall play, simon, simon would not. people are saying, simon would never do this. so i think this is a big black mark on an otherwise really well run company. >> the rates have been hurt. >> starting in june, a lot of them haven't fully gone up. >> their user is solo. they don't have great growth to begin with. watch this. roth is a great man. they lost this way on t they can recover. >> let's talk about gm. >> gm buys a big stake. it is europe and china. what are the two stronger areas of the world going from not that strong to strong are china and europe. general motors is a buy here. >> they bought a big stake here.
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>> labor got some stock, labor getting out. this is a great situation. >> we have a lot more situations we are going to be following. opening bell here with us on monday. stay with us right here on "squawk on the street." for over 60,000 california foster children, extra curricular activities help provide a sense of identity and a path to success. joining the soccer team. getting help with math. going to prom. i want to learn to swim. it's hard to feel normal, when you can't do the normal things. to help, sleep train is collecting donations
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you are watching cnbc "squawk on the street." the opening bell set to ring in just about a minute's time. a busy monday morning taking shape a lot of economic data. some high-profile earnings names on the docket for the week. jim? >> kbh, le nar, autozone, bed bath. a lot of feds speak today, including from dudley. who is closely aligned with yellen. there is the markets overall for the month. here is "usa today" talking about the month of september, 640 points alone this week, jim. we knew it was going to be volatile. i don't think people expected this. >> i thought that was a very important piece. we are now in the situation where we keep defeating the negative. i'm sure, you will start reading about october. that's what they read. none of these things. made in september. no. the market is very strong.
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every time it comes down to our buyers, i think when you talked about these earnings, linar and k.b. homes will be very important. these are the first quarters. we are going to really see what happened to home buys once the mortgage offings were over. >> there is the opening bell and a look at the s&p at the top. thl credit senior loan fund celebrating its recent listing and ericson at the nasdaq, provider of communication doing the honors. there was a time you wouldn't need to tell people what they did. they just knew. >> i am sure they are looking at it and thinking erickson. steve liesman. >> carl, thanks very much. new york fed president, will dudley saying the two tests for tapering, economic and labor market improvement, were not met, which is why he supported
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the decision. he is looking for economic news that confirms or increases competence that there will, in fact, belabor marketing. he repeats an off-repeated phrase from fed officials saying it is not a decision to taper policy. even though the market has decided it may be. a decision to taper is not a signal of earlier rate hikes to come. he says the federal could wait a long time after they hit that 6.5% threshold before raising rates. on the economy, which is how you might get a feel for when he might support a taper. he is saying the economy is slowly healing. there are head winds that are offsetting the economic progress. he is yet to see any meaningful pickup in the economy's forward momentum. the head winds include fiscal drag as well as higher interest rates as well as financial restraint is what he calls. the rise and rates he is concerned are cutting into
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potentially housing momentum. those head winds he believes should have made going into 2014. he is, in fact, expecting faster growth in 2014 except he kind of puts an asterisk there. it depends on the outcome of the fiscal debate in washington. the economy still needs the support of easy monetary policy and policy changes should be anchored in actual economic performance. so, guys, we did have a fed for a while that was telling us it was really making policy based on the forecast but dudley is saying, wow, if the forecast is at odds with what we are seeing in the actual data, we are going to go with the actual data here. in terms of a hint of when he might taper, the best i can see here is he is looking for that improvement in 2014. and he might support it at that time when the numbers actually show there is momentum in the economy that gives him confidence. carl? >> you would call it a shade more dovish than what bullard said on friday, steve. >> i would say it is pretty much in line.
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i don't see a lot of space or a lot of light between bullard and dudley on these issues. deadly is a permanent and voting member of the federal market committee and a guy close to fed chairman, ben bernanke. we are going to have an interview at bill dudley, a one-on-one interview running tomorrow morningment i'. i'll get into some of these questions. >> thank you very much. >> a lot of real split about how strong the economy is or not. i listen to these fed people. i would get much more worried than i was. i know that rates going higher had to impact something. when i listen to them, i keep thinking they know that this is going to be a prolonged fight in congress. once the congress is done with arguing with the president, then we have the taper. once it is all away, that's when the taper is. >> their political acumen is no more or less than yours.
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they are economists. >> they know whenever you have that, there is big, big decline in economy. >> there is a chance for it. i don't think i would listen to them ballparking the chances of a government shutdown any more than i would anybody else. >> they are not vote counters. bean counters, not vote counters. >> why not wait a month and see what happens. if you go listen to the fed, he is saying, you are putting words in my mouth. >> i never said. >> at a certain point, people said, if you watch the rhetoric, they hate each other more than ever. there is absolutely no conversations going on. yes, they will solve it but it has to have this gingrich, 95, 96 thing going. it has to. they hate each other too much. >> in the nearer term, jim, the four biggest gainers on the s&p, apple, maxim, broadcom, qualcomm. >> stair-down.
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if you want to play qualcomm, do it, cirrus logic. that's the sound. skyworks, get a little amplifier, go broadcom, the first time they are ahead. go knock yourself out, everybody. knock yourself out. great. i hope someone is stupid enough to take you out tomorrow so you don't get hurt today. in the meantime, federal express is losing some steam here. they say the stock may have come up but our view about weak macro growth is not. they might add to some positions below 104. >> fedex is going from 82 to 116 without ever saying anything good. they did do this restructuring. the restructuring is making them much more valuable. by the way, look out. you wanted apple shipping a lot. ups, fedex. it can impact their numbers. >> absolutely. >> notice financials are a bit
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weak. the group down 2.6%. >> it is a trading. people are wore reried about business being that good. i can tell you, mna is pretty weak. here we are, it is monday, nothing. >> it is a big, full day. you expect something. >> this is a nice window between now and thanksgiving where efb is here. >> we are doing nothing, watching tv. >> as i've said, a board can meet any time. it doesn't mean you don't get tuesday or wednesday. >> it is more of the same. >> it is more of the same. the rest of this year looks like the year that has been, the last nine months. >> when jpmorgan says they are number one in mna, it may not mean much? >> it may mean something. >> they should have that chart.
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>> verizon vodafone will go a long way. >> it is likely that they buy vodafone. >> there is a belief that that will occur. that's going to take some time. i'm talking about the romance, not the actual signoffs on the deal itself. it is not clear that they are going to move right into it. clo cl klau, he is no hurry to get that done. we know at&t is aggressive and they may be focused on that ss et. by the way, there is a conference here in new york where i think we will be hearing from stevens this week. >> there are a lot of conferences. we are looking for news. they have moved stocks in the past. it can do it again. >> coors is worth that. >> they call coach, jim, a
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sleeping giant who is dusting themselves off. >> look, if china goes bark, i know he had have a very good meeting. they felt that the merchandise is looking good. they say that about coach but not about apple. different animals. i this i think they are high. jeffrey has downgraded ulta. i don't know if we should have led with that. >> my ulta, the ulta that i passed on long island, it was so jammed. >> the one next to the costco. >> yes. ulta, i wouldn't sell ulta, feechb the even if their inventory has doubled. >> i was on 14th street. the apple store on friday, lines all around the block and chipotle in midtown, i would know how to do it, take a picture and tweeting, i would have.
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around the block, around the block at lunchtime. >> complicated. downtown, the chipotle, cmg, people, omg, cmg. >> in the meantime, bob pisani is on the floor watching what else is moving. >> happy monday morning. you look at this debate between who is moving the market, dudley or apple. this one is easy. dudley has some very interesting comments. is it moving? apple is. >> we are mostly flat in major sectors. the exception is apple. you mentioned cirrus. micro is on the up side, rmfd, skws, they are all moving on the up side. the banks are down a little bit. there was a report over the weekend, citigroup would be witnessing a drop in q-3 trading
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revenues. that doesn't come from citi. there are some of the down sides. this is one of those weeks throughout the weekend. it is clear that traders feel wall street is going to be very much in control of the headlines. he went ahead and said the two tests were tapering, improvement in the economy and labor market had not yet been met. interesting. the fed could wait a long time to raise rates after the unemployment hits that 6.5% target rate. the real concern of everybody down here is that the two main leaders, yellen and bernanke, are sort of out of it in terms of giving speeches at this point. we may have a lot of muddled messages. janet yellen canceled a speech october 1st to the economics
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club. a bill that doesn't have obama care. we are not talking about taxes or spending in washington. we are just talking about obama care and whether that can get taken out and a clean bill passed right now. most people down here feel there is not going to be a shutdown. don't kid yourself. short-term, we could get a lot of gyrations. we are sort of inflauled thraul washington this week rick? >> the comments by mr. dudley may have had a small effect on the market. the issue is, it is more of a push on the back of a market whose yields are already going down hill as you see on the 25-year chart of five-year. most traders don't think after last wednesday that the speaker is going to come out and be super hawkish, at least not the ones that have been. richard fisher, it should be fascinating to hear his comment. if you open the chart up,
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consolidation rolling over on yields. you see the ten-year there. that is what the market is going to have to debate along with the traders. if you look at the boons, with the elections overnight, merkel doing so well. yields close to 2%. we have been watching how strong the pound versus the dollar has been. we see this market getting very close to it. 3% level, backing away. still, the leader in terms of ten-year rates in some of the major sovereigns. if we look at the foreign exchange side, we know the pound has been doing better. how did the euro do with the election returns. you can clearly see, it is giving up some ground. we are still hovering at the best level since february. it certainly seems somewhere between 135 1/2 to 136. traders not as interested in holding the euro versus the dollar. >> not only is apple in the spotlight. so is steve jobs.
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we will explain after a break. later on, the ceo of volkswag volkswagen's u.s. division. as we go to break, take one more look at how some of the newest members of the dow are trading. the dow is down 22 points. woman: everyone in the nicu -- all the nurses wanted to watch him when he was there 118 days. everything that you thought was important to you changes in light of having a child that needs you every moment.
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♪ ♪ it's autumn in new york welcome back to "squawk on the street." we are looking into the fall season and a decline in energy prices. oil prices are falling fast. a lot of the supply concern globally have eased with supplies coming online from libya and now iraq making progress as well. speaking of progress, we are awaiting the talk between the u.s. and iran that are likely to take place this week at the u.n. general assembly. that is what traders will be watching very carefully to see iran's stands on their nuclear program in light of the new
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president change in direction. we are also watching what's happening with gasoline prices, particularly gas prices at the pump falling to the lowest level since july. we are below $3.50. good news for drivers out there. back to you. >> we could use every bit of good news we could get. steve jobs childhood home may become a historical site. they are expected to hold a property evaluation. jobs built the first apple computer at his home where he lived with his foster parents. of course, the center piece have o of the movie that debuted a couple of months ago. fitting tribute. you should update your phone to iso 7. new york city police distributed fliers warning that the new security features would help keep their devices safe. what other tech recommendations
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might the nypd make. tweet us. we'll get you responses throughout the morning. they have their hands full with the general assembly. security around manhattan is absolutely amazing as we fry to make sure everybody is safe on an important week. >> in the meantime, jim, down about 14 points. a lot to watch. some have argued there is so much working against the bulls in terms of would-be head winds. that somehow you feel? >> i do. i think you have this window of negativity. where the rhetorics going to be bad and you don't know who is going to grab a mike. let's see you hear that boehner has a snippet at 2:10. you don't know who is going to win. harry reid is going to come on. you don't know when the president is going to slam the republicans. these are land mines. we did not have land mines for a
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long time. you get a chance to buy lower. congress is going to do that for you if we run the gauntlet of getting continuing resolution to fund the government and getting the debt ceiling raised, then we're going to have the taper. >> yes. >> we can get through it and say, if we believe that the fed -- at least it was part of what they were worrying about. they are obviously not thinking about the stock market. i'm thinking, you have got some nice gains. the aerospace stocks are up again. what is that saying. that's not u.s.-based. if it is not u.s.-based, it is going to continue to do well. if it is u.s.-based, you have to worry. you have to worry about retail. retail is all about the zeitgeist. >> 9 million iphones are also in retail. >> it goes to this bigger theme
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we have been talking about. >> you have to buy the iphones when they are not buying sweaters. >> best buy raised their price target to 50. the hard goods. you've mentioned bed, bath, and beyond, a combination of hard good and soft good. a lot of analysts having liked it. walgreen's is getting a little action. morgan stanley does upgrade the stock. in the next three years, a lot of the earnings per share growth comes from coverage expansion, shift toward consumer-driven health care and deal synergy. >> rite-aid, we should take a look at that. rite-aid has a new merchant. i know this from. parago ceo. it is not done going higher. >> with walgreen, the alliance boots deal, they will compete the back end. another 55% they will buy, expected in 2015 but you could maybe move that forward a little
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bit. >> i was too critical. >> it is all about increasing their buying power with the drugmaker. >> all these great power struggles. i was worried about the fracas they were having with express. they trumped over that. he is a good manager. >> he is not flailing. >> netflix record after winning their first emmys. coming up next on "squawk on the street." ♪ the stock market can be quite a circus. we have the ring master. jim cramer and his six stocks in 60 seconds taking center stage when "squawk on the street" returns.
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♪ the dow up about four points. let's get six in 60. start with three. >> people love these stocks. they just love them, stratus 2.
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this is bank of america rollout, buy, buy, buy. they are very expensive. >> a price target boost for nike. >> this is important, october 9th. this is going up, up, up. i would buy it. >> earnings later in the week. >> american electric. this is important. this is one of those 4.4%, 5% yielders. the bottom market equifl length stocks that are getting strength because of what the fed did. >> upgrade to southwest. >> the airlines are doing well. you figure that u.s. air deal with amr. this goes to 16. >> al stern on those numbers. >> they are saying, this was the wakeup call for darden management. terrible quarterback ter. >> finally, credit sweeps on sherwin-williams. >> this one and whirlpool kind of, whirlpool left this one behind. this is starting to make a comeback. we have adco which i think is the me preer and bob iger and
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we have to find out with espn and disney team parks. you have to kind of get the whole sense of how well the entertainment companies are. they are the sleeper bull market. >> after breaking up with jerry bruckheimer on friday, more discussion about the degree to which studios have ten poll pictures at all. >> that's key. i'm glad you mentioned that. every time they stray from the ten poll, long rangers, 2015, big, big year. you have star wars. you have got more avengers and the shanghai park in 2016. a lot of irons in the fire. >> everybody has talked about how surprising september has been to the up side. does that make you feel like some of october's would-be gains have been stolen. >> this is how i'm looking at this year. this year has handled the
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sequester and serious disappointment earnings and this thing keeps ticking. in october, a lot of shorts. they are going to say, it has to crash. you get to november and you are home free. kind of an amazing market. >> we will see you tonight, jim, 6:00 and 11:00. >> simon is here. >> what a morning for record. record sales for iphone. we'll talk about where apple's stock can go now. the ceo of volkswagen america will be here to talk about reversing the sales decline. the ceo of aol, tim armstrong, will also join us live this morning on "squawk on the street." ♪ nice car. sure is. make a deal with me, kid, and you can have the car and everything that goes along with it. [ thunder crashes, tires squeal ] ♪ ♪
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hp's technology helps us turn millions of tweets, posts and stories into real-time business insights that help nascar win with our fans. welcome back to squauwk in the street. we have a bull/bear debate over what to do with the apple stock. >> volkswagen is checking out the vehicle space. aou holding a first of its
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kind digital up-front presentation. tim armstrong joins us in an exclusive interview. we'll start with apple. the company reporting it recorded 9 million in iphone 5 cns increases. 200 users have upgrated to ios-7. what can we expect? david trainer and peter misik join us. david, first, to you, what's your first reaction to the numbers and what your view on the shares is? >> i think the number is better than expected. it reflects the perception versus reality we see. very loyal fans. at the end of the day, we are seeing a declining market of what apple offers and what other firms offer. a lack of innovation and a slower pace of improvement. long-term, that means you are
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not going to see stock nearly as highs anow. >> what's your view on the shares and where do they fall within your coverage universe? you guys look at a lot of different stocks. >> that's right. we have apple as a neutral-rated stock. my target price or range. i don't really do target prices. $300 is probably a fair price for where i believe apple will settle when you think about realistic returns on capital and margins. right now, they have abnormally high margins and returns on capital. if you put them at a range of microsoft and google, $300 is about what comes out. >> $300? we are looking at the shares at 487 right now. peter, is david wrong here? >> his long-term thesis isn't wrong. in the short-term, we don't see the stock going anywhere near 300 but we do see it popping out. the comparison of 9 million tos la the year is really not
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comparable. you need to include the 4-f it gets you to 8 to $9 million. last year, in the september quarter, they had around 7.3 million iphone 5s. those numbers now are showing flat ish growth, we think. >> oh, peter, can't we get more constructive? for goodness sake, this is a day when they have delivered and beaten expectations. so, there are two phones. who are we to judge whether they are innovating sufficiently? surely, these what people around the world, the consumers make. in this instance, for once in our life, surely, apple has delivered today. >> apple is delivering every day with what we think is the best ecosystem in the united states. there is no question in our mind. the problem is, outside of the united states, the ecosystem gap is closed. the phones are sort of middle of the pack in places like china
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given their price point. we think apple domestically is the titan and we wouldn't leave our iphone. >> can i change the subject and talk about blackberry. i hope you cover blackberry. tell me if you don't. the announcement we had on friday where they said they are not only going to cut 40% of their work force but blackberry is no longer going to sell hand sets to retail people, to people in the strits. they are going to rely on companies and enterprise systems and end to end. can this work? can you actually expect companies to give their staff blackberrys if blackberry management couldn't believe it could sell them on the streets? >> blackberry, it's a tough situation. it is clear they're culling as much out of that business to insure they have something positive to sell to the private equity folks. blackberry is an excellent parallel to any high-flying company and stocks. things are great until the music stops. when it stops, things come
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crashing down. there was a time when people thought blackberry was the greatest phone ever and people wouldn't be able to match it. it is what they say about apple now. with a case like blackberry, they are just struggling to survive, period. >> thanks for your thoughts on blackberry and apple there this morning. >> from apple to microsoft, the company's media event in new york where it is expected to launch a new version. our seema mody is outside with what we can expect. >> good morning, carl. that's right. microsoft expected to make another attempt at penetrating the tablet market. the street is expected microsoft to unveil its new surface tablet thinner, lighter and faster. we are also expecting a range of accessories to be unveiled as well as updates to the app ecosystem. microsoft hasn't been as
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successful. they took a $900 million write-down. according to ibc, microsoft is in tenth place with .7% share of a tablet market. apple and samsung together control about 59% of the market. limited apps are some of the reasons it hasn't selling so well. microsoft, we will show you what they are unveiling hopefully live. >> thank you very much. in the meantime, a very different look for the dow. the index trading without alcoa, bank of america and hp in it for the first time ever. goldman sachs, nike and visa, of course, are taking their plays. dominic chu is back at headquarters with a look at what these changes mean the new dow industrial average is here. let's take a look at the players. who is going in, goldman, visa,
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nike. each of these three stocks has had a nice run in 2013, gaining around 30%. that's not so say the stocks getting the boot out have done all that bad. hewlett-packard, one of the best performers so far this year, even bank of america has been an outperformer. alcoahas been down overall since 2013. goldman, visa, nike, their profile will be high in the dow, specially for visa and goldman, whose share price alone puts them as two of their most heavily waited stocks. the dow was influenced by stocks with higher stock prices as opposed to overall total market values. one of the other ripple effects comes by earnings forecast. analysts have already lowered their expectations for dow jones earnings growth over the next five quarters. it is now going to be 5%. it was 7%. the reason for that change has a lot to do with bank of america
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having higher earnings growth expectations and not being part of the dow. so the changes taking effect today and we are already seeing some of the impact from the analysts, carl. back over to you. >> thank you so much, dominic khu. when we come back, volkswagen is saying, it will bring its first lec tri car to the u.s. in two years. we are going to talk to the president and ceo about how the company plans to compete with the likes of toyota and tesla. tim armstrong will join us live and talk about his company's strategy and the future of advertising when we come back with scottrade's online banking, i get one view of my bank and brokerage accounts with one login... to easily move my money when i need to. plus, when i call my local scottrade office, i can talk to someone who knows how i trade. because i don't trade like everybody. i trade like me. i'm with scottrade. (announcer) scottrade. awarded five-stars from smartmoney magazine.
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manufacturer, volkswagen announcing plans to sell an electric car by early 2015. e-golf will have a range of 118 miles before recharging. joining us president and ceo of volkswagen of america, jonathan browning is joining us. good to have you. >> good to be here. >> fascinating how crowded this space has gotten in an awfully short period of time. one of your vps just gave i aspeech saying, we want to be the leader in the global context
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but other manufacturers have gotten ahead of the curve. how much tough sledding do you have as a result of that? >> quh you lo when you look at the industry on a global basis, there are a lot of different power trains and propulsion systems. our mission, we set out in 2008, is to take an industry leadership position on a global basis. that means executing a ten-year plan. some ups and downs in that. some points where we're leading and some points where we're slightly behind the curve. when you look at electric vehicles. we showed in frankfort, an array of electric vehicles, the first is the e-golf which will be coming to america in 2015. >> 118 miles may not sound like much but the average american commute is basically 16 miles. we kept trying to find out where the sweet spot is in pricing.
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we hear about tesla planning a car that's cheaper than the model s. we hear about gm targeting tesla's mark kelt. where do you think electric cars need to be priced for the long-term? >> as you say, they have to be in the sweet spot. they have to be right in the heart of the market. i don't think the pricing is necessarily the only terms of acceptance of e-vehicles. it is the usage people have and the confidence people have in the vehicles. there will be an array of vehicles. electrification won't be the only solution. the internal combustion engine and gas will be important and diesel and different forms of hybrid. you won't see the electric market take off and become the majority in the near future. electric vehicles quill will be of the landscape but not the only part. >> mr. browning, good morning.
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perhaps your seven-seater will be more important this morning. there is an open discussion in today's financial times about the fact that your sales were down when everybody else had bolted ahead. you are saying, maybe we need the seven-seater suv. how rapidly can you bring that to market? how rapidly can you get the attention of the consumer here to a greater extent now? >> the industry has been running pretty quickly this year. we have seen our sales essentially flatten. when you take out the rue ton, which is exiting from our portfolio, our sales are slightly up, ex cluticluding a e exiting from the marketplace. >> how is our business developing not just in one month or one quarter but really over the long-term? if you look back since 2009, we've doubled the size of our business here in the u.s. in fact, our august sales that
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were above 40,000 units, that was the only third month in the last 40 years where we've sold more than 40,000 sales in one month here in the u.s. this is about building for the future. this is about sustaining growth and making sure that we've got the right foundations in place, including a product, also, including supply and manufacturing. so we announced a $4 billion investment program in the u.s. back in 2009. we executed that despite the recession and earlier this year, we announced another $5 billion of investment into north america as a group. so we're continuing to build our presence and see the business development for the long term. >> so many of the companies seem to be in a race about self-driving technology. 2020 is a date at first they were throwing around. to bring up tesla, that's an area they are trying to be a lot more aggressive what's your own
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time frame in terms of the ten-year period for bringing pretty much self-driving or autonomous cars to market? >> i think you have to separate between a self-driving or an autopilot vehicle to the individual technologies that go into delivering that system. what you already see is many of those technologies appearing in vehicles with adaptive cruise control and different radar systems. you can see the day where these vehicles become self-driving or to pilot. that will be a small level of usage or a minority. the more important thing is how these technologies or adopted in the marketplace to improve driving behavior, fuel efficiency, and general road safety as well. >> jonathan, i can tell you are a brit. let me practice what i am going to say by saying i am slightly pulling your leg. what sort of pushback have you gotten in tennessee from the idea that you are going to put a
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works council in there, unionize in the south? are you spreading socialism to the south of the united states? >> it is important to look at what's going on in tennessee as part of our global conversation but also one that's existing here in the u.s. on a global basis, we like to make sure that all of our employees in whichever facility they are working in really have a voice in the business. what we're trying to do in tennessee is make sure we create a construct that allows our employees to have a real voice, real contribution to the business. so we've made this very clear from the beginning. our employees will decide how they want to have their representation, our employees will have a voice in the business and we're simply looking for the right structure to put that in place here in the u.s. context. finally, jonathan, there has been a lot of discussion about this ad that plays off of a video that just about anybody in their 30s knows from the musical
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group ah-hah. i guess if there was any confusion about the demographic you are targeting, that answers it. >> that's really a classic video, music video, not just of its time but also of today as well. it's amazing how that cuts across the generations just way the volkswagen brand does as well. >> i don't think even the band members figured we would be talking about it 30 members later. >> look forward to seeing the e-golf. we hope you will come back. >> will do. thank you. jonathan browning, the president and ceo of volkswagen america. >> the ah-hah pandora station is better than pandora stock, down 8% today. >> i don't think anybody expected those numbers to be as strong as show the demand for the radio service.
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>> it is also the upgrade on the ios system. coming up, straight ahead, aol ceo, tim armstrong. find out live when he joins us after the break. we'll be right back. create the . by clinging to the past. and with that: you're history. instead of looking behind... delta is looking beyond. 80 thousand of us investing billions... in everything from the best experiences below... to the finest comforts above. we're not simply saluting history... we're making it. a confident retirement. those dreams, there's just no way we're going to let them die. ♪ like they helped millions of others. by listening. planning. working one on one.
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welcome back to "squawk on the street." i'm dominic chu. check out what happened. the ios-7 is happening faster than he expected and it was pressuring pandora's stock. apple said over 11 million unique users have already used the itunes radio systems. a lot of competitive pressure assignment possibly for pandora. >> thank you. advertising week kicks off in new york. the annual gathering of marketing and communications leaders. this year, the focus will be shifting dollars to digital and print from television which we've soaken about so many
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times. joining us live from that event, tim armstrong, the chairman and ceo of aol. our own julia boorstin is with him. you kick us off. >> thanks so much for joining us. >> you guys have ia big event today. you are trying to change the whole way digital ads are used if you look back, the industry was doing about $7 billion in revenue. today, about $37 billion. it is projected by 2020 to get to $130 billion. so there is $100 billion of new revenue coming into this marketplace. aol is announcing the programatic up front. this is the first time it has been globally. it is a pivot point for the industry. the next $100 billion is going to be fueled by machines helping humans put $100 billion online. we have 900. the largest clients and agencies coming today to an event. you are going to have four out
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of the five major holding companies making announcementes about what they are doing in the space. it is about automation. it is about the same thing that happened on wall street when automation and data came to wall street. the same change is happening in the advertising industry. aol is at the forefront. they are really trying to get digital ad buyers to commit their ad spending to digital a year in advantage just like tv buyers do. if you look at what most corporations are trying to do is, it is keeping up with consumers. it takes a lot of planning and effort. with p cans like aol facilitating up front, to talk about automation and how technology can help them, they are able to get ahead of the curve. if you are a major customer coming to you're event, you are going to get a jump on where the industry is going and stay closer to consumers. there is 15 billion connected devices in the world today. in 2020, there is going to be 30
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billion. if you are a corporation trying to reach consumers, this is an important week. we want to help you plan for that. >> a growing rate in competitors. rising yahoo!. on some elements you can be with google. now, twitter, going public and facebook. why should an advertiser come to aol? >> the benefit of being a partner of ours is that aol not only has our owned and operated properties, the "huffington post," movie phones, tech crunch and gadget. we serve 30,000 other web publishers. when you come to aol, it is a one-stop shop to reach the entire internet. we reach hundreds of millions of consumers with high-targeted videos and premium formats and mobile. we are a very attractive partner for many advertisers. >> i have to ask a question about a past employer on a conference call.
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>> if you think what's going on right now is a voc ajoke, pick your stuff and leave today. the reason is, i'm going to be very specific. patch, from an experience. able, put that camera down right now. able, you are fired. out. >> what was that about? what was really going on here and what does it say about what's happening at patch? >> first of all, as ceo of aol, i have to make tough decisions about what we're doing. probably the best decision i ever made since coming to aol was to create an employees-first culture. that meeting was an hour and a half meeting that got clipped down to that level. it really was an open format for me to communicate publicly with 1,000 employees with what the company was doing and where we were going. there is 500 jobs in the balance of that meeting. that was a highly confidential meeting. it meant for me to be able to share with employees, the plans,
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nonpublic. i think that situation, i sent an apology note out about how it was handled. i was trying to be that way. patch is an important product in communities across the u.s. we were talking about it before the interview started. if you look back a year ago at sandy, patch was probably the pivotal media property to help communities recover from sandy. it is an important product. i take it seriously. i take people's jobs seriously. that was a confidential meeting to talk about 500 jobs. >> do you regret that? >> from the standpoint of how it was handled specifically, i would have done it difrm differently but everybody in that meeting knew it was
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confidential. >> toss to david faber here. tim, back to $200 million will be spent by advertisers on television advertising and only about 7 million on video digitally. i am kind of shocked by that. the demographic they want to reach is not overwhelmingly but certainly using and watching videos on their iphones and ipads. are you failing to make the sale in an effective way given that huge difference, $200 billion to $7 billion? >> david, good to talk to you again. i think it is just opposite. if you look at what we did in our video up front this year, you see the transition of people trying to make double digit moves, 10%, 20% of their tv bud jets, aol had the most successful about any internet companies. we are seeing a very fast transition from tv to digital.
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that's $7 billion in the next two years is supposed to turn into twice that amount. my guess is that as people have more phones and networks and devices, that number is going to increase faster. you don't have to go anywhere outside of your normal life to see how much video is getting consumed on phones. we are really excited. we have built up one of the largest single video networks, over 1 billion views per month. we just had the best acquisition we made as a company. we have one of the highest scale consumer businesses and digital ad businesses. that's where the industry is going. with he decided three years ago to get in front of it. we are in front of it. >> speaking of television, you have been experimenting with live tv on aol. does this mean you are trying to compete with cable? >> consumers, just like the deal with cable, want live information. they want information that they can vod and they also want live. our job as a company is to offer them the most amount of video
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whether it is vod or live. we have built the largest collection of high-quality video partners. we have 700,000 pieces of video con tint. we service 30,000. it is a facilitator in the video market. "huffington post" live is the first cable channel. that's been a big success. we are going to keep investing halvely in video. >> can i take you back to where we started the conversation? this very aggressive push you are making into real time bidding. ads are going to be sold online. it is transformative for you if you can grab a bigger slice of the growing pie. my question is, aren't you also -- it was interesting you used the analogy of the floor trading here at the new york stock exchange. isn't it inevitable that you are going to come mod size this process around internet content?
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aren't you facilitating the demise of the margin in the space in which you operate? >> simon, i'm going to take you back to when data and electronic trading hit wall street. everyone thought it was going to come mod advertised. jpmorgan has been able to transition their business from the come mod sized to the noncome mod sized. i would expect aol to facilitate. we have quickly migrating our company to the noncome mod advertised area to major structure transactions with larger global companies. they are not coming there because it is a come mod advertised business. they are coming there because they want to do large structured business modeled. i believe areas will get come mod advertised. my job and our management jobs and our 5,000 employees, our job is to my great to the noncome
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mod advertised areas. aol is leading that today and at advertising week. >> i look forward to seeing that. i'll be there. tim armstrong. thanks so much for joining us. we are out of time. i am going to send it back to the guys at the studio. we are just a week way from a possible government shutdown. we will get the latest from washington about a quick break. with centurylink as your trusted it partner, you'll experience reliable uptime for the network and services you depend on. multi-layered security solutions keep your information safe, and secure. and responsive dedicated support meets your needs, and eases your mind. centurylink. your link to what's next.
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>> lawmakers have just one week to hammer out a deal to avoid a complete shutdown. john harvard is here to see if he can spot any change of light. john? there is a chance of getting a deal in this way. the house republicans express themselves on defunding obama care last week. having had that vote, there could be some ka that are dick effect, because democratic leaders expect, after that attempt to strip out or maintain the provision which is going to fail in the senate, when they send back a clean extension of government funding that the house might be in a position then to pass that, speaker boehner could pass that. what we do know is that the american people do not want this fight. we did a cnbc shutdown poll. when we asked people should obama care be defunded, 44% say no, 38% say yes. then, when you say, is it worth,
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the defunding effort if it involves a government shutdown and a debt default, 59% say they are opposed to it. 19% say they are in favor. republicans are on the wrong side of public opinion and the wrong side of their own power. they only control the house, not the senate or the white house. republicans are doing this in the name of sparing the economy the damage they say will result from obama care. i talked to mark zandi, the economist. he says, i see no evidence that obama care is affecting the job market in terms of job growth or the share of part-time workers in the labor force. worth keeping in mind. >> thank you for that. john harwood in washington smoke is billowing out of the west case shopping mall as the kenyon hostage crisis continues into a third day. ron allen joins us from nairobi, kenya, with more. good morning. >> reporter: good morning, carl. it is really hard to know what's
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going on inside that mall building right now. the smoke has been billowing out of it for a couple of hours. caused by several huge explosions that rocked this neighborhood early this morning, perhaps six or seven explosions in succession. then, a fire and a fire fight around the mall from different position. we have been able to see and hear kenyon soldiers engaging the militants from the perimeter. we are some 300 yards away in a safety area where we are able to tell what's happening. at one point, the fire fight spilled out into the neighborhoods around the mall. a very tense situation and very unclear what's happening with the hostages. at the beginning of the day, we thought there were as many as ten remaining. the government had indicated yesterday they thought there was anywhere from 10-15 heavily armed gunman inside from the militant group which has claimed responsibility for this. at this moment, there is a lull but it has been a morning of
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explosions followed by gunfire and more explosions. clearly, the kenyon government is trying to bring this situation to an end and do it as carefully as possible, i'm sure. there is a lot of concern about the fate of ten or more innocent men, women, and children who are still holed up inside that mall. ron allen in nairobi. a horrific story over the weekend. new rules governing hedge funds and advertising. we are going to talk about what it could mean when we come back. walking the grounds. in tuscany. [ man ] her parents didn't expect her dreams to be so ambitious. italy? oh, that's not good. [ man ] by exploring their options, they learned that instead of going to italy, they could use a home equity loan to renovate their yard and have a beautiful wedding right here while possibly increasing the value of their home. you and roger could get married in our backyard. it's robert, dad. [ female announcer ] come in to find the right credit options for your needs. because when people talk, great things happen.
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♪ ad agencies might want to start calling those big hedge funds, because starting today, hedge funds can advertise. the sec rules allowing various
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outfits to accredit finally go into effect. there is a hash tag trending on twitters, hedge fund slogans. josh brown suggests chanos. >> it is not just hedge funds. small companies and start-ups starting today can also start to solicit funds publicly from investors. so, in the past, you have had to go and become public if you want to do that. they can only do it from a credited investor. it means you have to be wealthy enough to be able to take the risk and afford it. there are a lot of changes that are happening this week. >> the knee jerk is to what degree do they take advantage of unsuspecting investors who are vulnerable to advertising. >> plenty of suspecting
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investors. the fact the 2 and 20 has endured as long as it is is amazing and perhaps goes to the marketing prowess of these hedge funds. >> as we see, capital advisers was broanded on a helium balloo. not sure that is related. i imagine we will see more. >> they may not be in a position to raise any new money at this point. >> let's talk about europe. a stunning victory for angela merkel. her own party holding more than they have done in the last 20 years. she still doesn't have power. she has to unseat some sort of coalition on the left of german politics. it is a result that is ringing around europe even as we speak. josh feinman is the chief economist of deutsche management you have a woman who is desperately unpopular in greece and portugal arguably and the likes of spine and italy as
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well. yet, you have this resounding vote for her on a personal level coming through in germany. what does that say about where we are in the europe crisis? >> clearly, the creaks and protuguese didn't have a vote, the germans did. as you pointed out. they gave hr a resounding victory. it fell short of leading the government on their own. it is an endorsement of the germans of the basic approach she has taken to the euro crisis, which has been prague nat tick, moving slowly and we are going to continue to see more of that. >> there is a huge amount of mon think that's clearly gone from this couldn't interest i to europe. we see it time and time again through various metrics of the moment. people here are betting on the european recovery. now, she has to lean over to the left. they will demand a pound of fle flesh, whether it is a minimum wage or high taxes on the rich.
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what does it mean for us here? >> i think the differences between her and the sdp on europe are not that great. she is in the driver's seat. she has a pretty strong mandate from the german people. she is still going to be the dominant force there. there may be a few changes in terms of domestic economic policy, maybe a minimum wage will go through or a couple of other things. still, her ship that's going to be steered. >> another interesting angle to this story this week. greece is expected to report a primary budget surplus. this is an economy that, as you know, is in recession for several years. is there a sign here of greece turning a corner or is this just a way of saving face as they ask for yet another set of bailout funds. >> they are not all the way through. there is substantial progress made and not just in greece or when it comes to the budgets. there had been structural reforms. maybe there needs to be more. there have been improvements in competitiveness we see labor
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costs improve in places particularly like spain, even in greece. so things are moving in the right direction. europe still has a lot to do. they are going to have to hammer out some kind of a banking union. >> can i pick you up on that specific question of banking union raises a really important important. if the germans continue to drg their feet as they have done, because they don't want to bail out everybody else's banks, you may reach a situation where the stress tests identify banks that are in serious difficulty but there is no great safety net that's put under them from the rest of europe. therefore, if you like a black hole of weakness that potentially opens up. would you agree with that? >> it's a risk but i think the europeans are going to come together with some sort of a banking union. now that the german election is behind her, i think it gives merkel a little more freedom for maneuver to get that done. i think it needs to get done
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ultimately to make the monetary union more viable for the long-term. i think the germans and the yurnss recognize that. >> josh, good to see you, jo feinman, chief economist for deutsche cha management. patrick doyle will join us live to talk about the details of his business an more. stay with us on "squawk on the street." be right back. ♪ [ female announcer ] you're 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. ♪
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welcome back to "squawk on the street." check out the components suppliers for apple moving higher on the sale success of the apple 5c and s smartphones. look at rf micro devices, avago, qualcomm to the plus side in trading today. >> thank you very much, dominic. in the meantime we continue to look for headlines regarding the rollout of the new generation surface pro 2, event taking place in new york city. still looking for headlines or imagery as to what the new product looks like, guys? >> because a lot of it otherwise -- we want to see new devices, see what it looks like, see if it's enough to get people
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excited because -- there we go -- come on a week after we've seen focus on apple. >> faster than 95% of all laptops on the market, improved performance by 20%, better sound and graphics, kick stand, two positions, 75% longer battery life. those are all head leans from our producer at the media event in new york. >> what is interesting the way microsoft taking advertising on this. you've seen tv ads apple ipad against microsoft and it's a price comparison that it's $200 difference. if they're going to get into a much more competitive environment where they're going to compare the two, at the levels you've described there, carl, that would be a new thing for the area of consumer electronics. >> seema mody rolling out the market figures. apple number one, samsung number two, microsoft number ten. >> wow. >> ten. >> in tap lets? >> yes, tablets. a bull might arc there's nowhere
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to go but up. >> write-downs. >> for inventory. >> what was it, a billion last time around? 900 million. >> they have an nenormous amoun of cash flow. >> like nokia. tweet us nypd distributing these flyers telling people to upgrade to apple's new ios 7 operating system. new security features help people keep their devices safe. so we're asking, what other tech recommendations might the nypd make? tweet us. we'll air your responses throughout the morning here on cnbc.
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welcome back to "squawk on the street." monday's edition of the santelli exchange. you know, something different started to really gain gerth september 29, 2008. remember what that was? the first failed t.a.r.p. vote. though markets have always been a purveyor of how information is synthesized by then vesting
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community, it's leading indicator. watch stocks, somebody speaks, the president speaks, a federal reserve chairman speaks, you watch the stock market. but something different happened on the failed t.a.r.p. vote. the markets created their own new feedback loop. whether a good thing or a bad thing, it existed prior but it's really become a very proactive indicator that many politicians pay very close attention to. but is it a good dynamic? parents out there, think about the adolescent years of raising a child. there's what the child thinks is good for him or her at this point in time and then there's what the parents think is better for the child in the big picture. short term, long term. do we really want the level of dow jones industrial average or the nasdaq or s&p 500 to be the ultimate litmus test in a world where you have tweeting, social media, everything happening, superfast, is that what we're supposed to benchmark in is the
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primary objective to please the marketplace? because i contend that it's very difficult for some of the current issues, whether it's the sequester or whether you close down the government or what a group of elected po politicians inside the house of representatives to be appreciated by the media. voters send people to congress. we have a fed board that continually monitors interest rates as to how it deems their policy. but should the primary objective be the longer-term, middle-term health of the economy? i think this is absolutely a crucial issue because i think as we go through some of these issues this week, about whether the government's going to close or not, whether we're going to pay all of our bills, whether we're going to separate that from things that truly default, i can't tell you. but i can tell you is if the market started to move lower, a, it's going to be the predominant reason given, even though cause/effect is impossible. no memos come out by traders as
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to what moves them or if they're moved by something in the here and now versus long-term position. in the end remember, we watch the markets but we also have to watch what's best in the big picture for the country. carl, back to you. >> rick, something's moving traders to the downside right now. we are back with a 16 handle on the s&p. the dow's down, newly configured, down 71 points. train day low from wednesday, the big fed meeting and the craziness on last wednesday, 1693. so we're not quite back to a erasing all gains we got after hearing no taper but on our way there. >> some people saying it was short covering, maybe there wasn't anything substantial to it. rates, which tell us what's going to happen, indicate it might have been a little bit of the case but not the whole story the taper's coming and many people think it will be this month. >> here's what you missed earlier on.
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>> welcome to "squawk on the street." here's what's happened so far. >> i can tell you obama care is affecting the job hiring picture. with in the numbers it's a feching small and medium size business, they're not going to hire until they know what costs are going to be. >> this was one where it's so far reaching, i want to buy u.p.s. not many are shipping this thing. this is a major change and you have to factor it in to the consumer, that's how much this is in terms of gdp spending, i'm not kidding. >> you listen to what we're saying about apple. it make me less excited about blackberry. there's nothing that could -- could steve ballmer get that thing going again? something that ball mer can buy. >> i would check in with him. >> there's the opening bell. >> new york fed president bill dudley saying that the two tests for tapering, economic and labor market improvement, were not met, which is why he supported
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the ditecision at the last meeting. >> you won't see the electric market take off and become the majority in the near future. electric vehicles will be a part of the landscape but not the only part. >> really it's about automation, it's about the same thing that happened on wall street when automation and data came to wall street. the same change is happening in the advertising industry and aol is at the forefront of that. into welcome back. let's start with breaking news. just now, microsoft unveiling the second generation of its surface tabulate in new york. seema mody joins us with a live first look. she's got the device, right? >> i do. it's a surface 2 microsoft unveiling two new tablets, surface 2 and the surface pro 2, both as you can see is thinner, lighter and faster. i want to run through the specs and then take you through a
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demo. priced at $449. it's meant for personal use, the surface 2. 10.6 inch screen, 3.5 megapixel front camera, 5 megapixel rear camera, low light performance. memory size 32 gig and 64 gig options available. comes with usb drive which is not offered by some of its competitors, that is seen as an attractive selling point. switch over to the surface pro 2. this is meant for the business profegzle. it's a mini computer priced at $899. 64 gig, 128 gig configurations available. talking about a lot more memory space. battery life also increased dramatically. 60% more available than the previous version. both run on an enhanced windows 8.1 operating system. these two tablets will be available for preorder on september 24th, tomorrow. it also -- microsoft rolled out many new accessories including
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new keyboard as well as new app, it has 100,000 apps available in its ecosystem, comparable factor is apple's ecosystem which has roughly 900,000 apps. here is the surface 2 as i was pointing out before. this is the home screen. it has built-in apps, personal profile available as well. and as well as microsoft office. now, i want to run through one of the major selling points of the -- oops, we'll switch it over here. one of the major benefits of the surface tablet is the ability to run two apps at same time, kelly. for example, if you want to stream the web as well as make notes on microsoft word, you are able to do that. that of course is considered one of the attractive selling points of the surface tablet. back to you. >> nice demoing on the fly there, seema mody at microsoft surface event in new york city. thank you very much.
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for more insight, what it means for the stock price, senior columnist with yahoo! joins us. we'll have more from microsoft with the head of tech research. good to have you. >> good to see you. >> trying to go after a corporate work focused user, calling this a laptop replacement and some of the word out of the event itself on twitter, they're saying we want you to work faster. >> that's right. that's playing to microsoft's strengths, that's the pro, where it's below a light business laptop above the kind of for fun ipad style home use. i think it makes sense. the best you can say about it from an invest ter's perspective, nothing embedded in the surface. it's not something that the street is hanging on but it has to -- the company has to participate in this tier of computing. >> the post growth company who is trying to ride a wave of a
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commodity product. >> right. >> unless it's not a commodity product, mike. there is the possibility it's something special. >> if it's branned -- talking about price cuts, we're not talking about something that is changing really what we know something like this could do. >> you mentioned that this isn't the most important thing for shares right now for valuation. not much is priced in. what is? if you're trading microsoft, what's going to determine that? >> obviously, it's a ceo. the whole search process and the priorities that are expressed in terms of who gets taken in, when it comes to the structure of the company, financial engineering all of this stuff we kind of think needs to happen here. >> is steven elop worth it? >> i don't know how you put a price on it. to me it's more about the messaging that comes along with this new person and really what they expect out of a company. they keep talking about devices
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and it's now you know a gadget company. it's going to parlay monopoly in one area to that. hard to see. >> what does it say we have big companies, apple and microsoft, people are on their -- trying to follow every iteration of every new product but there's a lingering balance sheet discussion in the background. lingering activist discussion in the background, it's dividend, the a buy-back. is what the overriding dynamic for the next three months. >> what's driving all of that stuff is you have massive pools of cash out there and the market itself is not rewarding companies for being very liquid and you know, how many times can you say apple's cheap or microsoft's cheap? >> we can say it quite a bit. >> but numbers don't lie. that has not translated into return. >> mike, stay there for a second. shift to apple. for those who missed it, apple is making headlines and its shares are on the move.
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tech company sold a record 9 million new iphones over the weekend. just three days after the phones went on sale. now these record numbers surprised quite a few people on the street. josh lipton joins us from san jose to explain why. >> apple crushing estimates, sold 9 million of its new devices. some companies of course happy to sell that many in a year. also saying that more than 200 million ios devices running on ios 7, the fastest software upgrade in history, good enough for apple to give us guidance in a filing with the s.e.c. says, investors can expect total company revenue for the fourth fiscal quarter to be near the high end of the previously provided range, 34 billion to 37 billion and expects gross margin to be near the high end of the previously recorded range, 36 to 37%. two differents of this launch to keep in mind. one, apple is selling two new devices, also china, for the
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first time, is one of the launch countries. why did the street get the estimates so wrong? analysts looking for 5 million to 6 million units. rbc, he covers apple, two reasons, one, nobody thought that 5c would sell that well, not too different from the 5 or so the street thought. for the 5s, there were supply constraints heren no preorders, analysts thought that would limit sales. bottom line, worries about declining revenue and eps next year off the table. now the question, how much can they grow the bottom and the top? and apple's broader strategy, he says, focusing on profitability rather than market share seems to be working, at least for now. back to you. >> josh, thanks very much for walking us through that. s&p capital on the back of that, reiterating its buy opinion on shares of apple increasing the 12-month target price to 590 from 550. apple shares are trading at
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about 484. let's bring in scott kessler, s&p capital i.q. i.t. group director. mike santolli still with us. scott, first to you, your price target there now at 590. that is more than 100 above where apple shares are sitting now. someone on this morning telling us they're only worth 300. how did we get to almost 600? >> i don't know how we get to 300. getting to 590 for us is relatively easy. all we're doing is looking at the pi.e and p/e sectors and accounting for cash with a notable discount to account for illiquidity in terms of bringing that something back if that's something they wanted to 0 'do. think about positive catalysts you have to consider the fact it seems like all of the competition over last year has given apple their best shots and really apple still standing
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tall. now they have new products coming and the holiday season just around the corner. >> mike, i'm curious as well, apple's never been an expensive stock. always a company that even at its peak even over 600, 700 traveling low price to earnings multiple. >> high think you can get higher from here without going to, you know, some massive premium valuation. i think what you get to is a point where people have to stop saying that apple needs to create new, whole product categories every year, every two years. i think we're getting to that point. when you have a pleasant surprise on a refresh and software upgrade and realize a company has a massive installed base and can earn a good return off of that, that does get you to a higher price without having people say, it's -- that's 100 times earnings. nobody's coming along to project great growth or reinvention of an industry from apple anymore. nobody's going to buy the company obviously, too, at its
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size. i think you can get to higher price when the street realizes the story's changed from radical innovation every moment. >> to be fair, scott, there's an argument, a bear argument, that they are looking through the wrong pricing window, right, looking through the wrong geographic market expansion window. was there no part of you that wanted them to go cheap in china? >> absolutely, carl. i think that when you think of apple and the opportunities that they have overseas, one has to look at china and china mobile, and clearly was there was a disappointment when they didn't announce the deal within last couple of weeks. to be frank, this is really the first time over the last year that it seems like there's reason not just to be optimistic but have analysts raising estimates on apple. that also can, i think, get people more enthusiastic. given that we've seen so much supply in terms of the stock over the last 6 to 12 months. >> i have no doubt that if they did go cheap, then the story would be they can't command a
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premium for their product i anymore and they're going in the wrong end of the curve. >> i think that's right. we don't know what the argument would be. someone would have an argument. >> we started to see that when that was the speculation. >> exactly. >> before it actually happened scott brought up the issue of china. people were excited saying the real event isn't the phones it's a deal with china mobile and that didn't happen. is that another positive cal lift. >> potentially. why would they come out with a pricing initiative for china when they didn't have the deal in place? maybe so. >> quickly, mike, just a brief mention on the sell-off, getting back to intraday lows from last wednesday prefed mean anything? >> looks that way. obviously the one-time shock. literally we know nothing's changed thursday. that does mean we have to fine a new level. find buyers off of the new highs. >> we continue to see the sell-off. dow down 78. mike, scott, thank you. interesting discussion. interesting that it's under
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microsoft umbrella but still an apple discussion, to a large degree. nypd says update your phone to ios 7 for your own safety. distributing flyers to users warning the new features help keep devices safe. this morning's squawk on the tweet. what other tech recommendations the nypd might make? we'll get ponces later on this hour. as you saw, microsoft unveiling the latest version of its surface tablet. the question is whether consumers and investors get behind it. more on that in a moment. but first, rick santelli taking a look, closer look at german election. >> absolutely. you know, merkel had a resounding victory, maybe not enough to run the government with her own single coalition, but we're going to talk to mark brandt. is it wrong to be nervous as we stare into more bailouts for greece, portugal, spain? look at equity markets in europe.
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they didn't close up on the day. we'll dig down into yesterday's german elections with mark brandt bottom of the hour.
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welcome back to "squawk on the street." netflix shot up higher in early trading off their emmy win for "house of cards" but the high did not last. stock fallen by 4%, traders look to lock in some profits. netflix shares up over 50% from
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their lows back on september 26th. back then, carl, it was a $53 stock. back over to you. >> some of us remember. thanks, dom. among the big questions for the markets, potential for a government shutdown. according to the cnbc all america economic survey out this morning, a solid majority of americans oppose defunding the new health care law if it means shutting down the government and defaulting on debt. weighing in, joining us weigh in, shawn west, u.s. policy analyst at eurasia group and the chief market strategist at convergex group. we've been down this road a few times. some might argue, we survived it then, why not this time in. >> i think there's a lot of logic to that argument. we have seen many debates over years, we've survived them all. it's not pretty while it happens but markets understand it's a state of play in washington, it's not going to change anytime soon and we work through.
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>> the proximity between a shutdown, which ostensibly you could live with and a default, which ostensibly you cannot, has some more worried this time. >> the closeness of the deadlines makes this pretty tough to call. if you get through the shutdown rick, which we will, i don't think it's a high risk, 20% chance that we head towards a thedown here, you barrel into a more important deadline the debt ceiling. on shutdown, there's a clear way out, looks like senate's going to pass through a cr that doesn't have any of the obama care language, house has to accept it. on the debt ceiling it harder to chart the course, harder to tell you a nice story how to get through it. other than that, default is unacceptable to everybody in washington except a couple dozen house members. it's hard to see how they do it. >> do you agree it's going to come one to the debt ceiling and why is that a stickier problem. >> debt ceiling's an important problem. both are of equal importance. in our favor the economy's
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better and tax receipts are a lot better. so the gap that we're looking at just a year or two ago of a trillion dollars in a one-year budget cut to $500 billion to $700 billion, big numbers but it makes the problem manageable and creates runway for people to claim success. >> isn't the issue actually that as the facts change the argument changes? now it's come down to obama care, exchange running october 1st, deadline for making sure they can take away momentum there. is this about total spending? is it about obama care? is it politics period and the gop wanting to show its muscle? >> it does feel like politics, period in that paradigm. it does feel like folks trying to express their points of view. it's a like a classic dysfunctional couple. >> like virginia wolf. shawn, some argue, all right, nick mentions the tax receipt issues look betterer this time.
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last time we were not at a deleveraging by the fed, right, a taper about to begin. how does that change everything? >> i'm not sure it changes politics because this isn't about policy. the politics here is about -- is about house republicans knowing that they need some cover to justify increasing the debt ceil, wanting to pick a fight on health care, democrats picking a fight on sequestration, they're leverage points playing with fire in a dicey economic squa situation, they both need a way out or both wind up bearing the blame if we wind up in a missed payment or scenario like that on the debt ceiling. looking for a political solution here rather than one determined by market pressure. >> the issue of the debt ceiling as well, it's filmier of a deadline because where is it, you know the new fiscal year for the u.s. government starts october 1st. we know we have that date. when it comes to the debt ceiling it can change by a day
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or two as they look for other ways to keep things up and running. we also know the gop has indicated that they don't want to default. really what we're talking about is the government shutdown or a government shutdown. so again with the latter scenario if they focus the fight on the debt ceiling how likely is it that there's a shutdown even for a day or two to get this sorted out. >> the risk of a shutdown is low now. we're going get through this continuing resolution on 30th september, have another fight in december where you could see a shutdown if they don't get politics right and politics deteriorates in the interim over the debt ceiling, then we move to the debt ceiling 18th of october, early november, some point treasury will give us an exact date. that will be the date that focuses congressional activity. the chance of missing that deadline incredibly low. but the chance that congress does a small debt ceiling increase and we wind up revisiting these fights in three to six week increments from here until spring when everyone in
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washington realizes they have to hit the campaign trail and turn to 2014, the risk of this hangs over the markets for the next six months is real. i ultimately think we'll get a one-year debt ceiling increase out of sort of fight that takes place in late october but that's by no means a strong call. there's a real chance this is a story with the markets for the next six months and we have a set of skirmishes and small increases but no crisis. >> oh boy. >> no way to run a country, that's for sure. thanks for your time, guys. as we saw our own seema mody demonstrating, microsoft unveiling the new version of its surface tablet in new york city. straight ahead, one analyst inside the event will tell us what the new device could mean for the embattled computermaker's future. dow down almost 7235. ) scottr e r clients trade and invest their own way. with scottrade's smart text, i can quickly understand my charts, and spend more time trading. their quick trade bar lets my account follow me online
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dow down more than 74 points. goldman, the first day for the
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financial firm in the dow jones industrial average dragging the dow down, one of the -- the single-worst performing component, the camera could focus a little bit you might see what the price is. keeping our eye on nike, visa, new components of alcoa, vac. >> people joke about the dow curse that when you introduce one of the companies into the index it calls -- if you're wondering why goldman is weak, how weak third quarter trading revenue was in fixed income and currencies. jeffrey warned about it last month? microsoft, tech company unveiling the newest surface tablet moments ago. joining us head of u.s. technology research. he's at the event joining us with his reaction. good morning. what do you think? >> reporter: good morning, kelly. it looks cool. the last version that they shipped sold over 1 million
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units of surface and surface pro. a cross between eight tablet and notebook. battery life wasn't great. they now have new chips from intel with the surface pro 2, twice the battery life, seven hours, separate keyboard that has a battery as well, you can get ten hours it looks like of battery life. so it's a supermachine, very lightweight, long battery life, cool device. again, i think it's more of a notebook perhaps than a tablet. and i think it's trying to find its position in the market. and this new version with the longer battery life i think should do better than the previous version. and it has windows 8.1, which will be more commercially successful than windows 8. >> rick, is it enough to alter the valuation of the stock? >> reporter: new york i don't think so, carl. i think it's going to be a show-me, because the previous version having sold 1.2 million units didn't move the needle that much for the stock. so i think, you know, it
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launches october, i think october 20th it will have 8.1 on it. i think it's going to have to prove itself in the market because cool technology isn't quite enough. ity think it has to find its ne in the market. the market will be more receptive this time than last time but still an uphill battle to establish themselves in the hardware business. >> can there be a place for a mid selling tablet? apple has surpassed expectations how well the phone would do in the first couple of days. blackberry taking $1 billion write-down because it didn't sell enough phones. for microsoft is it going to be either this work or it doesn't? can they hang on to the middle here? >> yeah, i think if you're -- if you want a tablet, you buy an ipad. i think the mass market that wants a consumption device will just buy a pure tablet. this is more for productivity
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use. so it's a notebook that can function as a tablet but i think you have to appeal to the notebook kind of productivity buyer here, more so than the consume that just wants a tablet. >> we haven't talked to you since ballmer made his presentation last week, giving no update on a ceo search. your thoughts after that meeting with analysts? >> yeah, so i don't think we'll hear for another three to four, five months in terms of who that ceo's likely to be. it's possible he'll surprise us. they're working down a long list. they don't want to talk about it right now, obviously. meeting, i thought, was a little disappointing. hoping for more data and they were short on data. they gave us color about the reorganization. i don't think there's going to be much use of cash until you get the new ceo on board. so i think for now we've got a lot of the news already out in terms of the corporate governance issues, the
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management succession issues. so now i think it's kind of back it fundamentals for another quart or two and then we start seeing real changes with the new ceo and hopefully another view of how you use the cash that's obviously 70 plus billion in cash sitting on the balance sheet. >> if they sell more surface tablets, rick. that's rick shurland where the event was announced. bell's about to sound across europe. what do they think of merkel's re-election? we'll ask simon hobbs. details on the market's close and impact back here when we return. weekdays are for rising to the challenge. they're the days to take care of business. when possibilities become reality. with centurylink as your trusted partner, our visionary cloud infrastructure and global broadband network free you to focus on what matters. with custom communications solutions and responsive, dedicated support, we constantly evolve to meet your needs.
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it's quite significant losses today. the data, mixed that we've got there. we've got comments coming through from draghi, the european central bank president before the european parliament. he said inflation will remain subdued in eurozone and he's prepared to use any instrument to keep monetary -- the monetary policy stance, which means super loose. after we had the big move up on the euro in the wake of the fed last week, we're trading on session lows, as draghi talks about the prospect of further easing in europe. check out that data that came
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through today. first look at the pmis for september. and on the face of it, they're good. you've gone across the eurozone from 51.5 to 52.1. remember france and germany, half of the eurozone economy effectively. germany is doing great things in france, pulled above the 50 level, so it's expanding. within that manufacturing is still weak and and that's got some concerned. it contracting in france. the french oil giant total, for example, moving 75 staff from paris to london, not a friend. thing to do. it not because 0 the high taxes but you get my general point. in germany, news conferences today from all of the major players after angela merkel, to be clear, her own party did the best it's done for 20 year but was she needs to do a deal with another party in order to have majority in the lower house. if she was a republican figure, a republican in u.s. terms she's got to do a deal with the democrats to share power moving
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forward. the spd has its conference friday, maybe we'll get further details. let me take you to athens where more strike troz the public, school teachers today. the troika arrived there. remember the creditors? the finance minister says to everybody else that they will have a budget surplus, primary budget surplus this year. if they achieve that, they can unlock the further billion dollars that is due next month. >> right. an important one. surplus, finally. at least a step in right direction. >> how crucifying for an economy like greece to run a surplus. they don't run that in france. they don't run that here. what are we at, 4%, 5%? >> six years of recession. >> crazy. >> thoughts on merkel's victory, rick santelli. >> excellent. i'd like to welcome my guest, mark grant, southwest securities. thanks for taking time post election monday. >> welcome. happy to be with you, my friend. >> all right.
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i read your piece today. i want you to share that with the radio listeners and viewers. what's your perception of merkel's victory and your assessment of what we will be looking at with regard to europe and their economies? >> well, you know the commentary i write, which you read every day, out of the box goes to 5,000 institutions in 48 countries. and i have a very strong perception going into this election that this was drop-dead day. not in terms of merkel winning, which i clearly expected, not in terms of mrs. merkel having to form a coalition government, was i certainly expected, but that after this takes place, that germany will -- is going to have to face portugal, greece, spain, italy, and some very tough choices as most of the periphery countries are in bad economic shape regardless of what you've heard.
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>> you know, i look at the economies of germany, the united states, japan, the uk, and i look at them as pack horses. we've put a lot of weight on them. times we thought they were going to go down, they haven't, that is a good thing. but going from a worry of full calamity to stabilization, can you explain what that may mean in terms of how long we're going to have to monitor the peripheral countries before we put out an all-clear the way many want to at this point in time? >> yeah, rick, i mean, basically the u.s. economy's held up by what the fed has done, pumping $100 billion a month in the economy. it will help main street a little bit help the equity market a great deal, and for a while, it helped the bond market until the bond market realized some kind of tapering was coming at some point. in terms of portugal, in terms of greece, you're looking at two countries that cannot afford, under any circumstances, the
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debt that they have. so europe's done extend, pretend, delaying thing, raising debt limits, but in the end, and i think after the election in germany, europe is going to have to begin to deal with these problems in a realistic basis and it's going to be, in my opinion, very painful. >> well, it looks as though the bund market might agree with you as well as equities. bunds at three-week low yield affected by the volatility of the taper and what may or may not occur with obama care. mark, thanks for taking time today. we'll monitor all that is europe. you'll be right there with us. carl, back to you. >> thanks, rick. great to be with you. >> thank you, rick santelli. focusing on the sell-off that we've just had over the last 90 minutes on the floor. what's go on? >> the market stinks, to be honest. everybody's happy about apple, i'm happy, i i got my apple, i didn't get it i ordered it, slate gray, those who want to
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know. what happened to black? anyway, don't get me started on that. take a look at apple. okay, don't kid yourself, this is masking, the crumminess of the stock market. these are all of the names underneath apple. we all like them. look at the stocks traders talk about besides apple, stuff that you and i talk about every day. put up the other market leadership stocks, yelp or zillow, for example. linkedin or tesla, names we talk about. terrible, 8%, 4%, 2.5%. these are stocks that animate the market. a chinese internet name, facebook, amazon, there's zillow, down 2%, 3%, 4%. i don't care what apple's doing overall. seeing breakdowns in other sector. biotech. my friend calls these the fab four of biotech, they've been market leaders pushing them into historic highs.
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gilead, biogen, reagainer ron, celgene. seeing breakdown in financials. this worries me. the biggest sector in the s&p 500 puall year beating everybod else. in the last month it started slipping. now notably underperforming. trading activity in citi group. this has been going on for several weeks now. you see the decline. here what happens i'm worried about this week. we don't have a lot of positive catalysts. we're enthralled to washington and traders hate it when washington moves the stock market. lack of leadership here. yellen, cancel the speech for october 1stst in new york, bernanke on the sidelines and deal with the clean spending bill whether it's going to pass the house and senate. it's not a lot of positive catalysts for the market and it's showing in today's action.
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>> a heck of a month so far. amazing september. thanks, bob. problems for carnival cruise lines, the ship christened by kate middleton taken out of service for repair. experienced a power outage sailing in the mediterranean. it does not know whether the ship will be ready for its next scheduled departure on september 27th. carnival ed scheduled to report earnings tomorrow, before the bell. stock up 11% over last three months. added new pricing initiatives, trying to get people back on the ships after mishaps. >> absolutely. >> the consumer appears to be strong with consumer spending climbing the last three months in a row. when it comes to the restaurant sector, are people spending on the king of comfort food, pizza? the ceo of domino's which kelly called doma-yes, hopes the answer is yes.
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the best place to put your money now, we'll go bargain hunting across the globe with a top fund manager. >> win the emmy but not the herbie. >> well said there when it comes to consumer spending the restaurant sector has been mixed bud domino's rolling in the dough. shares up 90% over the last year, outperforming all competition. what do pizza profits say about the health of the consumer? here for cnbc exclusive, patrick doyle, ceo of domino's pizza. great to have you back. good morning. >> thanks, carl. appreciate then i havetation. >> you wouldn't know it by looking at your stock this year, but we keep hearing about this challenge consumer and we get these anecdotes from the likes of a darden or ruby tuesday in the casualka casual area. how are you seeing that picture, if at all? >> i mean, first of all i think there's a big difference now in qsr versus casual dining.
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casual dining has been tougher, higher ticket, higher check. and so i think they've been -- they've been having a tough time than qsr in general. we're keeping the value story right. we've been focused on that over the last three years. consumer may be better right now, but you know, it's still kind of choppy out there with the consumer. so we've got to get value and i think until we've got things kind of wrapped up in d.c., long-term budget deals done that sort of thing, i don't think you're going to see a real strength from the consumer in the near term. >> patrick, i'm curious as well. you have expanded so much beyond pizza. you offer sandwiches and bread sticks and pasta. is innovation the key to how your shares have done? how are customers responding? magic products or price points that appear to be working now? >> yeah. we've been on, you know, two medium, two pizzas for $5.99 for
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almost three years and that's working very well for us. innovation, interestingly, is for us now as much about technology and new ways the consumers can access the brand. so, our pan pizza has been doing very well for us, but you know even head to we launched pizza profiles. so people can save their profiles, save their credit card, last order, they can now order in 30 seconds or less as few as five clicks so order from domino's. innovation can be about the food. it can also be about the way they're accessing our brand and it's those combinations of innovation and consistent value that's getting it didn't for us. >> you're not the only one innovating, though. everybody's talking about mcdonald's and entry into wings. wendy's still getting mileage out of the pretzel burger which kelly's had, i have not. do you get the feeling over all qsrs beginning to get their act together and might be playing
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catch up with you guys, no pun intended. >> you know, i think -- i mean the mcdonald's wings launch, they said that's through november. clearly a lot of players out there in wings, you know, we'll see. but you know i think overall, the restaurant category is recognizing they've got to give good value. some news coming in there is always going to be helpful if they can generate that. but you know, we have been running pretty well for quite some time now, so we're pretty confident with our position. >> you run a franchise model. but still curious as to your thoughts about the minimum wayne dispute across the country, and there are a lot of people agitating for a higher minimum wage, some states moving in that direction. how much does that affect margins at end of the day and do you think paying people more could be good for business? >> it's really -- first of aller as you said, we're over 90% franchised in the u.s. that's kind of the starter.
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i think from a minimum wage standpoint right now, you know, there's clearly going to be the discussion about that, there's been some movement out there in a few places with the economy where it is right now, with jobs being the most important thing, you know, that's -- that's a little bit of a concern right now, if you're going to start driving that before you've got real health in the economy. so i am kind of cautious about that. >> what about the other big policy move at the moment? that is obama care. how is that affecting the health care that you provide to employees or the amount of hours that these employees are working, again with the understanding that a lot of your operations are under the franchise model? >> right. i think, you know, first of all, the business mandate was put off a year, we're still watching, you know, the way this is all playing out. there's still a lot of changes that may happen. you're seeing the individual mandate coming through right now. the exchange is coming up. i was having a conversation
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about it this morning with our team. we're just seeing things evolve and really i think it's going to take some time before this will all settle in, we'll see the final rule, we'll see how consumers of insurance are reacting to it, the decisions they're making, and then we'll get a better sense, really, of how this is going to play out. but you know i think you've still got another good 18 to 24 months before really going to see the way this plays into the market. >> finally, patrick, is it common for college students to call you doma-yes as opposed to domino's? >> order more pizza that way, we're in. >> yeah, we knew exactly what the last time we could order a pizza was, 1:46 a.m. where i went to college, patrick. thank you for all of -- i don't know if i want to say thank you for all of the pizza over the years. >> good to see you. thanks again. patrick doyle, president and ceo of domino's pizza. >> future of online video is here and looks look a winner.
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shares of netflix opening at a new high a day after its original series "house of cards" won last night, the first ever emmy win for a seb series. a closer look at what this means for the company and the broader industry when we come back. ♪ [ male announcer ] some things are designed to draw crowds. others are designed to leave them behind. ♪ the all-new 2014 lexus is. it's your move.
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welcome back to "squawk on the street." another high flyer coming down to earth today is tesla, the electric carmaker stock taking a
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leg lower fresh off hitting a record high friday. traders are taking profits and not helping matters is a story in "forbes" saying the stock could be overvalued. turning our attention to shares of video streaming service netflix. take a look at what's happening this morning, a day after making history with "house of cards" the first web-only series to win an emmy award, david fincher outstanding director for a drama, netflix shares down 4%. for more, managing director of internet equity research at oppenheimer. good morning. >> how are you? >> great. what's go on with the shares here? why isn't there a positive response? what seems to be a specifically negative response, that is because of the emmys or something else happening here in. >> look, i think the stock initially reacted on the nominations, as well we already know that netflix has renewed all of its originals for a second season. so in our view the market was already pricing in that.
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they are successful with originals. last night was probably good from a pr standpoint, for netflix i'm not sure it has a meaningful impact on its stock given that it's going the direction of original. >> that said, when you get netflix talked about even obliquely, jason, at the beginning of the emmys, right i wonder how much is going to filter through into the different way content deals will look over the next 12 to months. >> it's very interesting. "house of cards" was their first on a big deal. actually the way the deal was structured they don't own then tire property. they got the rights for the streaming, they don't own the dvd. i believe they don't own all of the library value. but ultimately, if they're going to go in this direction, they're going to want to own all of rights around the shows similarly to hbo does which means, i would imagine over time, netflix will look to spend less on nonoriginal shows. if you think about it, hbo
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doesn't have children's content right? doesn't have television content. it's two movie studio deals and then the original shows. and i think what it ultimately means if subscribers stay on netflix for the original content, you'll probably see other providers, such as amazon be able to get their hands on more library content. >> jason, just curious, given all of that, is your price target on the shares still at $259? looks like they're above 300. >> that was our last update. it's hard with stocks like this. we try not to update each week. we look to have an update around earnings. but, in our view the company's doing a terrific job but the market's pricing in a lot of success. your point on the fact that the shares are down after was obviously a very good night for them last night, suggests that investors were already expecting good news on this front. >> all right. jason sharing his thoughts
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there, as netflix trades lower after a big win at the emmys last night. when we come back, the nypd says update to ios 7 for your own safety. police disputing flyers to apple users advising new security features keep your device safer what happen other tech recommendations? we've gotten good ones today. answers are next.
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squawk on the tweet on a monday morning. update your phone to ios 7 for your own safety according to nypd. distributing flyers to apple users warning the futures keep your devices safer. what other tech recommendations might the nypd make? ivan the k, to reduce odds of someone stealing your new smartphone, buy a blackberry. jessica, register fingerprintans your new ios 7. a texting and walking ban, it's like playing frogger, have you
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tried crossing the street lately? having served on grand duty here, apple makes up i disproportionate of the number of cases nypd deals with. >> a contributor to crime, especially mass transit. back to headquarters. scott wapner and the halftime. carl, thanks so much. welcome to the halftime show. four hours until the close. find out how monday looks on street. dow down 62. s&p and nasdaq also in negative territory. here what happens we're following on the half. risk watch, merkel wins, china beats, where does the market go now as a government shutdown looms? and the winner is -- after netflix wins first prime time emmy, can the stock keep scoring big. top story, blowout weekend for apple as the company sells more than 9 million i


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