Transcripts For CNBC Squawk Box 20140909

Last ten years. Were going to talk more about this store with the tech giant in just a minute, but first, andrew, over to you. General mills is buying organic foot Food Producer annies. 46 a share in cash is the price tag. 820 million in total. Thats more than 37 premium to annies Closing Price yesterday. Maker of cheerios hoping that deal will help it expand in the fast growing Natural Foods market. Were going to talk more about foods and the consumer in the next hour with the ceo of kellouke kello kelloggs, john brian. Analysts say global comps likely to climb by 4 last month with samestore sales have been falling by more than 2 for mcdonalds. Well see if they can turn that around. Shares down nearly 9 in the last three months. Restaurant and arcade chain dave busters is filing for an ipo. The Company Looking to raise up to 100 million, listing under as a symbol play. The company pulled plans to go public in 2012. Earlier this year, scrapped plans to sell itself for more than 1 is million. I dont know when it went private. New to you. Yes. Do you know who bought them, andrew . Was it a private equity firm . I like the symbol. Play. Play wasnt the symbol before. I forgot what it used to be. Ive never been to one. Ive been to one. Its like they combine is it greasy food with playing but its games and you know, the kids like some of the things going on. Theyve got all kinds of arcade games, fuss ball. Im sure its not on the list of approved meals for michelle. But anyway, its official, home depoint payment stms have been breached. The attack was first reported by a security website almost a week ago. The retailer says theres no evidence that debit card pins were compromised. Did you find out . I was giving you the answer. To bring us back to dave busters, owned by private equity firm welsh spring management. That deal happened in 2005. They tried to go public in 2012 and pulled it. Capital partners has a stake in it and bought it from well springs. I think they have big expansion plans, like another 65 opening or Something Like that. But also, then, i should say that oak hill came in afterwards. There was a second investor. But we used to quote it all the time. Trading in hd shares have been choppy in the last week. Theyre up more than 22 over the last year. Samestore sales, great report, this came at not a great time. And you might say that the company bears some culpability of responsibility. But tier doing everything right in terms of operating their business and then this hits. It raises the idea that security needs to be something thats addressed at the broader level. Right. That has to be you can operate the Company Great and then Something Like this happened. Its a big concern for a lot of companies rights now. Taking a look at the markets, yesterday we saw some mixed markets. The s p chosed down by about 0. 3 . But it was still the biggest drop that the s p has seen in a month. The dow was back and forth between gains and lows for the eighth straight session. At the end of the day, the dow was down 25. Relatively flat, waiting to see which direction theyre going to be trading. If you take a look at oil prices, crude oil has settled at an eightmonth low yesterday. It was below 93. Its up slightly this morning by about 47 cents to 93. 14. Check out whats been happening with the tenyear. The tenyear treasury yield rose to just under 2. 47 . That was a onemonth high. This morning, its picked up a little bit. Just below 2. 5 at this point. 2. 49 . The dollar is up bens good the euro, as well. 1. 28 is what were seeing for that euro number. Its down against the pound. And gold prices, which were down by about 1 yesterday, to a threemonth low of 1. 2552. Right now sitting at 1,257. 1,2 an ounce. The story of the morning, apple shares to watch today. Were just hours away from particular cook taking the wrap off the latest product. Brian blair is managing director and tech analyst. Hes going to be at the event and he joins us now with his expectations. Good morning to you. I hear first of all before we can tell into expectations about the devices, i hear that you2 is going to be there today. Did you hear that . I have. Thats the rumor. I was in coopertino yesterday and talking about how theyre going to be the ones to grace this big stage they built. And what do you think they are going to be unveiling in all this . Theres always been a music component to the fall events. There have been a lot of people that played from chris martin from cold play to Elvis Costello last year. If theyre going to do something with a big bang, who is bigger than u2 . I hope they shows up. Theyve done a lot with u2 over the years. Thats right. Lets talk about the devices and lets talk about these expectations which are clearly high. I think everyone expects theres going to be a phone, probably two phones, two sizes. Do we see ipads today . And do we really see the watch . We should see ipads today, but i think theres going to be a minimal refresh there. I think all well see with the new ipads is the touch i. D. , the fingerprint added. Well see the iphones, no surprises, the 4. 7 inch and the 5. 5 inches. I think everyone will be focused on this wearable, what is it called, what does it do . How is it differentiated from the products weve seen over the years. Can apple introduce something that people want to wear on their wrist that offers functionality that matters . Steve jobs could. Thats the whole thats why the wooch could be important. That samsung was underwhelming. Every one of these watches thus far has been underwhelming. You need to hit it out of the park. I want a watch with a phone. They had a phone, but you had to have your phone with you. No, but i want one thats built into the watch. Whatever they have, they believe its big. Theyre doing the event at the clint center which is where steve jobs introduced the mac 30 years ago. Thats not by accident. They believe this is something that is truly ground breaking. What it looks like theyre going to do is focus on health. It looks likes its going to have some way to monitor your Blood Pressure, your heart rate and its going to tie in with a platform they call health kit. I think theyre going to sell it as not just a place for notification and fitness tracking, but a way to measure your personal health. Can they make something thats aesthetically pleasing enough that people want to wear it on their wrist . Do you believe the stock has built in and you have modelled out a watch that nobody has ever seen before . No. Because nobody knows how big this market can be. As you said earlier, this has been been anything that people have wanted to own in big volumes. So nobody knows just how big this market is because it doesnt exist yet. So i dont think we know. If apple shows something today that people believe can sell, you know, 50 Million Units over the next year, the stock can continue to work. But the other side of this is platforms. Everybody believes, including me, theyre going to announce some type of a mobile payment platform that ties into the fingerprint reader and a payment platform. Thats another area that if they get this right, this is a 20 billion a year opportunity right now. Muirfield communications, two things, Steve Jobs Used to laugh at muirfield communications for years that they didnt want to use that technology, they didnt think it was the right technology. Android and there are more androids than iphones has the technology. Most of the phones have it and it hasnt really taken off. Whats to say this will be different . So i think the reason its going to be successful or it could be successful is it looks like its going to be nfc tied in with this fingerprint reader that can authenticate a user at the point of purchase. I agree, they did laugh about it, but they laughed about a lot of things and change their minds. They laughed about big phones and here they are doing a phablet. A what . A phone plus a tablet. People call it a phablet in the tech world. Thats what this 5. 5 inch phone is. Apple was going smaller and smaller for a while. They laughed at samsung moves towards the larger screens. But now theyre doing that. No tv . I dont think there will be any whiff or hint of it today. Brian, what is your sense of the price point of these devices . I imagine once you move to a 7. 5 screen, those are going to be expensive devices. We talked about cheaper devices for asia. This will probably be the opposite direction. So we should still see the same price point for consumers. It still should be 199 and 299 for the larger you know, for more memory. I do agree it could cost them a little bit more. But a lot of the components inside the iphone has existed now for three, four years and they havent changed much. While those prices have gone down, apple can o frd to spend more on a panel and still recognize a gross margin south of 40 . But youre right, there are going to be a lot of parts for this more expensive than the previous phones because of that larger screen. Final question, when becky was setting up the day earlier in the show, she mentioned that the stock, at least four times in the last four out of the last seven years. The stock has dropped. The expectations have been too high. People have built in magic and it hasnt got them there. Whats your sense about today . I think today it will trade up after the event. And the reason for that is nobody has seen what this wearable looks like. And i think apple is going to get it right. And nobody has seen what is possible with this payment platform. So youre potentially entering two multibillion dollar markets at the same time on the same day. If they can show their ability to participate in those meaningfully, the stock continues to work. Okay. And that was we were just showing you the countdown clock apple has on its website right now. Until that event, we will be watching and, brian, we appreciate your time this morning. You bet. Thanks. Good luck. Like the changing of the guard. This is it, this is a moment. No. I think this week there will be a changing of the guard in technology and alibaba is going to take the buzz about tech stock away from apple. And i just wonder whether some of that 500 billion or 6 500 b billion market cap that apple has, whether some of that comes out of apple and goes into alibaba. It could be a two or 250 within a month, right . Youre skeptical of alibaba. No, im not. No . No. Alibaba is the real thing. I dont know if its its not going to the way apple has . Apple is a gadgetmaker. This is an all encompassing internet play on 1. 4 billion people. The government involved where youve got 43 margin. And youve got jack mahu, who is ruthless and gets away with murder. Not murder, but corporate intrigue and whatever he wants to do, doesnt he . Im just saying, apple has had a big run and a big day in the sun and Technology One never stay forever. Novell, cisco, google, im saying this is a changing of the guard. Youre saying apple is disappointing no, im saying i think everybody who is already sort of active with their feet in terms of endorsing apple, theyre already in the stock. Who is left to buy apple stock that doesnt love it and doesnt own it already . Its totally overrun, totally overloved. Its the only tech stock that some of that money comes out and goes into alibaba. If i could buy alibaba on the offering price, you could do a spread. Would you buy it day two . I dont know how its going to its going to be hard to control this thing on the open. Yeah. I mean, its going to go above where it should. I dont know. This is one of those things where its fun to be in business news. Its not always fun. Mid summer, you know . Okay. In other tech news, which you checked out facebook . 200 billion lately. The social Networks Market cap, over 200. Shares up more than 9 since its last earnings reports in late july. And amazon has its hand now in many industries. It seems to be struggling with bit smartphone. The company cutting to price of its fire to 99 cents yesterday. I dont understand this. A twoyear contract. Whats going on here . You have to sign a contract, an exclusive contract with at t. Facebook faces a similar fate with there phone late last year. You give andrew grief every time he reads one of your reads. Was that yours . Yes. Not that i care, but i didnt even want to read that. You did it. They switched . Go back. Let me see. How does it work . It sard becky and you read right through it. What about this . Andrew, apple. I didnt want to read about am zoon. It was like we went right from go down further. No, the other way. We went from shares up more than 9 and then i think i looked down and then i think they might have gone past i wouldnt you do give andrew grief every time he does it. Ill tell you what, im going to let you im going to let you read the next few. Because no, i just saw this article in the journal and i started reading it and then i got distracted with this. This will give me the opportunity to hes going to read this. Let me tell you about whats coming next, folks. There is an unralphing controversy. This tmz video, ray rice knocking out his then fiancee and his now wife. That video was leaked. The ravens dropped him. The nfl suspends him indefinitely. Big questions facing the league and the brand. And the judge saw this . No. I dont know whether the judge the judge had allowed the felony assault the Baltimore Ravens have suspended ray rice and the nfl has suspended him indefinitely. The nfl say they never saw this part of the surveillance tape. And commissioner Roger Goodell has now instituted a more substantial Domestic Violence policy. Joining us now is dave briggs. Dave, this is painful. As a rutgers fan and a former ray rice fan, i dont understand why the nfl didnt have to see this video before. Thats whats new from tmz this morning, is the casino says to tmz they never asked for the tape and if they would have asked they would have been given it happily. In lies the problem. Everyone knew of its existence. Reporters everywhere had talked about its existence and even its brutality from Law Enforcement officials. It seems beyond comp hence but the lowest common denominato denominator, if anyone is going to get it, tmz is going to get it. The hotel is asking why didnt the nfl why didnt tmz ask for it . The sneakiest sgies that are going to want to find out and show something disgusting is tmz. Listen, if its not tmz, Donald Sterling still owns the clippers. Ray rice im not putting them down. Im just saying a lot of times theyll be the quickest entity just by definition they can go buy video and im not sure the nfl is allowed to do that. But at least you have do ask for the video. You have to ask. A new jersey district judge allowed the charges to be dropped, allowed a Pretrial Intervention Program in addition to the da, jim mcclain. Right now, theres another change thats come to light. She was pulled over and told police she had a gun in the car registered in pennsylvania though she was in neighboring new jersey, they did not allow her to enter a pretrial diversion program, but had the judge a who approved the Pretrial Intervention Program seen this tape . I wasnt there for that trial. I think we can all assume absolutely they saw that tape. If you are a judge and a da i dont know. That would be beyond and athletes always get you know, a lot of times celebrities and athletes get sort of some far treatment, even in our courts of law sometimes which isnt great. But i think we do need to hear from the judge, from the da, in addition to Roger Goodell and so ray rices wife, she doesnt need to press charges now for this to become felony assault again given the existence of this tape. Well, theyre not going to reopen the investigation. They already did the investigation. You dont think hes going to be charged with felony assault again . I do not think they are going to reopen the case. I cant imagine that thats thats double jeopardy. The tape in discovery, those things come into play. This did not become a story until the its the cover of every newspaper in the country right now. And what happens the next time when theres no individual xwroe . How will it be handled . Theres a lot of questions that need to be asked and a lot of people reneed to hear frp the. Chris christie saying its okay, hes going to allow sports gambling. Its probably great news for the Atlantic City casinos bub its a reversal of what he said he thought he could allow. Its a lifeline to those struggling casinos in new jersey. Its still going to be challenged, the nfl, nba, ncaa all will fight this, all who dont want sports gambling in any state beyond nevada. But it doesnt appear that theres any legal challenges left. It seems like the courts do not have interest in preventing tracks in casinos. But it doesnt appear that they have interest in doing so. Look, the leagues fight this because they dont want games, matches to be fixed. I think its silly to think that year going to fix a game, which is still very legal, and then walk into a casino or racetrack and put your fij prints all over said bet. If you want to do that very legal activity, youre still going to do it. Professional sports are soon coming to las vegas, then all of this changes. And fantasy football today legal in nevada why it would be legal in nevada but not other states . Youre saying its because they didnt have they dont have pro sports franchises and you cannot bet on the college there. You cant walk in and place a vet and thats something they want to prevent. They dont want to allow you to bet on rutgers. All that is a proximity issue. Its optics. Dont talk about optics, please. Theres a piece, i dont know if you saw it, kareem adbuljabbar wrote a piece, did you see this . He says i concluded levinson is a businessman asking reasonable questions about how to put customer necessary seats. If its arena was filled mostly with whites and he wanted to attract blacks, wouldnt he be asked how they could deemphasize white culture and bias towards before i agree or disagree with kareem, we have to see what Bruce Levinson wrote may be worse than sterling because they were made in a professional, public environment on record. Imagine what these people say in private. Were there legitimate concerns . Absolutely. But its disgusting. The theyre 28th in attendance. Its arguably the worst professional sports franchise town in the united states. Why is that . If youre an owner, not people are from there. There are a lot of transplates. There are a lot of college sports. Look at the atlanta braves. One of the most successful baseball teams weve seen in the last 30 years, failing to fill playoff game after playoff games. The hawks, seven straight seasons, theyve made the playoffs. Second best in the nba. They cant sell tickets. Theres a problem for whoever wants to come in and buy this team. Im sorry, i dont like the braves. As a reds fan, i have never liked the they come in and they have done a study and they came back and their study talked about the racial differences between other groups of people that they wanted to attract for the spectators. If they had said our kiss cam is a little too black. We need more white cheerleaders and some more country music. On the camera, the guy said in the email that the kiss cam was too black. And i dont want to defend the memo. The memo itself was disgusting. But there were some legitimate business concerns. And joe raised this yesterday. Is there something worse thats going to come out . Because there have been a lot of people who looked at that memo and said i dont really like that memo, but i dont know if you have to sell the company. Well, keep in mind, he wanted to sell this team in 2011. Levinson wants to get out from under this team. Its not the first time hes wanted to sell it, especially when you see the clippers fetched 2 billion. Everyone is raising their hand and say i, too, want to sell. Thats not a punishment for Bruce Levinson. I think the nba needs to levy some sort of fine before hes able to sell that team. You have to figure they fetch twice their worth on the market these days, especially if theres some thought they can move that team to seattle. And theyre not allowed to until 2018. 2017, 18, prior to venue pay a 75 million termination. Which could be worth it to the billionaire people in seattle. Could he fresh around 1 billion for this franchise . I think its within possibilities. A franchise he paid 200 million for. Right. So is that a punishment . No. Its a guy that wants out from under that bad investment. Bad sports fans in atlanta. Sorry, folks. Great college fans, they support their nfl team, but there are some concerns. Another nfl team is going down this week. Why, are they playing the bengals . They are playing the benn a bengals. The falcons are going down in week one . We didnt talk about tennis, either. We have to go. That match was too short. Didnt drop a set from the quarter finals all the way through. Serena didnt drop a set from the tournament on through. Dominant prvrms. By Cilic Nishikori was tired. Fedder he was tired. Boring. Both of those guys came off huge, grueling matches. Serena went out for drinks with her opponents. Wozniak wins people love her. Miss gone gecongenelty. Coming up, a former nba owner gordon gonden. Plus, nba commercial ner david stern is going to weigh in. Here is a look at yesterdays winners losers. Financial noise financial noise financial noise financial noise watch this. Sam always gives you the good news in person, bad news in email. Good news fedex has flat rate shipping. Its called fedex one rate. And its affordable. Sounds great. [ cell phone typing ] [ typing continues ] [ whoosh ] [ cell phones buzz, chirp ] and we have to work the weekend. Great. More good news its friday woo [ male announcer ] ship a pak via Fedex Express saver® for as low as 7. 50. [ male announcer ] ship a pak via Fedex Express saver® hi, are we still on for tomorrow . Tomorrow. Quick look at the weather. Nice day, beautiful tomorrow. Tomorrow is full of promise. We can come back tomorrrow. And we promise to keep it that way. Driven to preserve the environment, csx moves a ton of freight nearly 450 miles on one gallon of fuel. What a day. Cant wait til tomorrow. Welcome back. Im joe kernen along with becky quick and andrew ross sorkin. Check out this video, dramatic images from above an erupting volcano in iceland, a river of lava flowing out on to the surrounding glacier. Rivers of fire have been seen for several days. There was a piece yesterday in the one of the volcanos on on the big island keeps taking more and more timber after some development on the Southeast Side of the big island. And when you go there on maui. This is the most active i think its always active and the lava is starting to encroach on its getting closer and closes to kids with marshmallows. Not great. Other stories, the eu wants more concessions from google if its to end a fouryearold probe. Google has been investigating dominance in search in tigz. A proposed deal doesnt go far enough, though. And disney, sony, Dreamworks Animation are facing a wage depression lawsuit. The companies agreed tot not to approach employees from one another. The conspeakersy goes back to 1986 when lucas film and pixar agreed not to cold cut employees. Both companies are owned by disney. Tech giants whether it was apple or ghouled or facebook. Tmzs big announcement today, what has happened with central bank and europe in the 28, we have the president s speech on isis tomorrow. Hans olson, recently promoted global head of Investment Strategy for the wealth and management business at barclays. When did that happen . About a month ago. You go, guy. And alec young, investment strategist at s p oppenheimer funds, nothing to do with do you remember the company at all, s p . Absolute lit. It was a great experience. So youre not mad, youre not bitter . This was your choice . A better firm, step up, more money . I wouldnt say better firm. Different firm. Great shot, great action. Have you changed any of your viewpoints based on their overriding stance on things or youre still the same alex . Im still the same alex, its still the same job. What happened friday . It was a disappointing number. Well, that was the reason i think the market ticked up friday. The problem was we gave it all back yesterday. So i think regardless of the data, some people are convinced that were going to get a more hawkish tone out of the fed. Its probably going to be a buying opportunity. Earnings probably up around 8 this year. Streets at 10 or 11 next year. Its a healthy rate of profit growth. You combine that with reasonable valuations and we still think stocks are the best place to have your money. So if we get some volatility around the fed outlook, were probably buying that dip. With all this additional responsibility that you now have at barclays, the most important keys for the market, fed . Isis, ukraine, or apple alibaba . I think it comes back to the fundamentals, the earnings story, right . What are you thinking, apple, alibaba and more isis or the fed . Yeah, its morally baba, apple, its more ge and, you know, the main of the market. So Market Players kind of assume that the end of the world is unlikely because it could only happen once. Do you know that . It can only has once. So it cant keep happening. Youre probably going to have to return to core fundamentals of earnings for individual issues . I like the version of where gretzky used to play hockey. And the puck will it always ends up on earnings because thats what you discount back, right . If youre looking for clarity on the geopolitical front, youre not going to get it. If youre looking for clarity out of the federal reserve, you read the stakes out of jackson hole, there is no clarity. Even she admitted in a moment, a clarity uncharacteristic of an economist, which is there is no easy policy cryption here, right . In quotes. The only place youre going do get clarity, i think, would be in the earnings extreme. If youre looking at that, youre seeing revenues rising again, in big and small cap stocks. Do you attribute any of the earnings momentum to the fed . Whether that going away, in the overall economy and corporations are on their own, will it still be all right . I think it will. There is no question the fed has helped. Theres no expenses in borrowing money. We ran a correlation of earn eggs in the s p. Its 94 . The biggest driver in the market over the last four years has been earnings growth. The fed has helped. We think earnings has been the bigger driver. Theres a lot of gaming about whether did they make the first move . Theres a lot of gaming and once they hike once, theyre going to be hiking a month for every two years. It may be a tightening cycle and stocks may be able to weather it better than people think. Hans, do you know about mos bows . Mos bows . You dont know about mos bows . Im disappointed. You obviously didnt watch last week. A 12yearold boy, he sells bow ties. Nicer than that one . Really . Yes. Give me his contact information. He has shark tank. Mos bows. That cnbc show, shark tank. I will admit i watch it on cnbc. Im more of a cnbc guy than nbc guy. I think the started on nbc, didnt it . No. Its your other network. Did you buy one . Its the beginning of the alphabet. But that was just to propel it to be on cnbc prime time where it got its true thats where they got me. Gentlemen, thank you. Still to come this morning, the race to cure rare diseases. Plus, apple isnt the only company trying to make a big splash with the products release. A new video game can control the destiny of one company. We needed 30 new hires for our call center. Im spending too much time hiring and not enough time in my kitchen. [ female announcer ] need to hire fast . Go to ziprecruiter. Com and post your job to over 30 of the webs leading job boards with a single click; then simply select the best candidates from one easy to review list. You put up one post and the next day you have all these candidates. Makes my job a lot easier. [ female announcer ] over 100,000 businesses have already used zip recruiter and now you can use zip recruiter for free at a special site for tv viewers; go to ziprecruiter. Com offer2. Welcome back. Mcdonalds is expected to roll out Monthly Sales coming at 8 00 a. M. Eastern time. Analysts expect a Third Straight monthly decline. The stock is trading at its lowest level since early 2013. The Senate Banking committee holding a hearing today titled wall street reform, assessing and financing the regulatory system beginning at 10 00 a. M. Eastern time. And activisions new game, destiny, goes on sale today. This is a new series and the anticipation is hot. Industry watches say destiny could bring in close to 1 billion in sales now through the holidays. That is todays squawk plans and a quick reminder, the cfo, game stob, one of our guests tomorrow. Well see how much destiny means to the retailer. When we return, were going to meet a dad that took manners into his own hands create ago drug making a giant into a battle. Hes going so be right here on squawk when we return. Ameriprise asked people a simple question can you keep your lifestyle in retirement . I dont want to think about the alternative. I dont even know how to answer that. I mean, no one knows how long their money is going to last. I try not to worry, but you worry. What happens when your paychecks stop . Because everyone has retirement questions. Ameriprise created the exclusive confident retirement approach. To get the real answers you need. Start building your confident retirement today. Its in this spirit that ingu u. S. Is becoming a new kind of company. One that helps you think differently about whats ahead, and whats possible when you get things organized. Ing u. S. Is now voya. Changing the way you think of retirement. This guy could take down your entire company. H . Stay with me. On thursday a hamster video goes online. On friday it goes viral a network choking phenomenon. Why do you care . Hes on the same cloud as your business. The more hits he gets, the slower your business may get. Do you want to share your cloud with a hamster . Today theres a new way to work. And its made with ibm. Sometimes they just drop in. Always obvious. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. One of the hottest races in biotech right now is finding medicine for rare diseases. One dad took matters into his own hands to help his child. Meg. Thats right. Rare diseases are a big area for drugmakers. Too many dont have good treatment options. One dad left a career in finance to change that for his son. Never planning a career in drug development, two years ago, alon and his wife, annie, got the news cha changed their lives. Even looking at wikipedia, you see wheelchair advice by 10, 11, 12, and that most of the boys, you know, dont make it past the early 20s. And it was devastating. I mean, words cant describe as a parent how you feel. Their son, etani was diagnosed with a rare genetic disease. There was no treatments for the form etani has. He left hs job, moved his family from boston to london and raised 17 million. With two partners, he founded solid ventures, a company to develop drugs for his sons disease. There are thousands of rare diseases. We find it difficult times to substantiate the economic value and jump right in. That is where solid focuses to advance therapies that may be trapped in what the drug industry knows as the valley of death, a point where potentially promising medicines get stuck due to lack of funding and resources. We are left with a lot of patients that aredeveloped. We feel like its part of our responsibility to marry the two. Thats what it is all about. Reporter time is pressure. Etyani is an energetic boy now. But over time his disease will worsen. They are convinced theyll make a difference. Were aggressive. We raised enough money to do what we need to do. We have the right people. And ilans company has just done its first deals including the collaboration with pfizer and efforts in gene therapy. He joins us now to tell us more. Ilan, thanks for joining us. Thanks for having me. Tell us where you made this collaboration with pfizer, youve got another thing in gene therapy, suits to protect muscle function. Tell us about different ways of treating the disease. The way we think at solid is we only have one problem. It is this dystrophy. Were looking at everything that can help these boys. We are starting with three main approaches. The deal with pfizer which we did were very proud of. It took us time to get over impressive guy there is. We identified the experimental drug which we are going to test in fact starting on monday in a very robust way. We have a collaboration. And at the end of that process if this drug still looks like its working as well as we think it will, we will get to pfizer early next year. Thats one approach we have. And it will certainly be complimentary to have every other drug out there and part of that cocktail we hope to have. When you say go to clinic, does that mean human trials . Human trials. Probably phase two immediately because we know a lot about this molecule. What is this drug . This drug is not going to restore the protein were missing, but it will be very meaningful to deal with a lot of the symptoms associated with the progress of the disease. Almost sounds to deal with a disease of this nature and its a big one, you could address the actual core reason for the disease which is the protein thats missing. So why will that not work for most duchene . They are both working on exon skipping which we hope will work for many of the boys in the near future. Im personally friends with both ceos. How does it not work on certain cases . Its a mutation specific. Okay. It can be expanded to many different mutations, but the approach both companies took will address 13 or so of the patients. Thats it. But then theres a concept that can because of different exactly. We need a lot more drugs. And for example our gene therapy subsidiary is another disease modifying approach that were very excited about that is inserting functional short version of the missing genes to the patients. The, you know, regulators and the government you normally think theyre going to miss things up. But certain times like the orphan drug, thats very positive because you point out theres certain drugs that or certain diseases that affect small amounts of people. The amount of money it would cost is not feasible. So they came up with the orphan drug. Do we need a better orphan drug, sort of an act or Something Like that . I think theres a lot of efforts in lobbying in people working on finding better legislation. But we definitely have a good enough infrastructure that now incentivizes Companies Like mine to develop drugs for diseases. So you dont need a better orphan drug. Weve got companies doing drugs for small diseases. Diseases with fewer than 10,000 patients. They charge 340,000 a year for this. But then you get the pushback from people that dont really understand the business. They dont. But theyll push back and say the pill only costs that. First of all, many of these drugs are expensive to make. The cost of care for these patients which is really the cost you should be considering is so high and the price on the community, on the family, on society is a monster price. Things to explain to the people that so many times they dont understand. Its part of the mission. Also whats interesting what hes doing is its not a charity. Its a forprofit company. And theyve structured these deals as subsidiaries to have financial flexibility. Its an interesting model trying to fix hiccups in the drug industry. Theres so many diseases where the progress is so slow and frustrating, when i read this news, thats big. Thats something that shows promise within five years or so, doesnt it . To really be able to deal with this . We have kids on that drug for three years now and they look great. But within five years you ought to be able to expand the mutations i sure like to hope so because one of the drugs would help my son. So yes, id like to hope that all these drugs get approved and come through. Your drugmaking therapy might be more yes. Were working on a device thats easier to bring to market and patients. Theres no side effects. Could well also compliment all of these drugs. We think that this is a disease that deserves a lot of attention from different angles and were trying to do our best with some good friends and collaborators. Its an inspiring story. Thank you for joining us. Thank you. And meg, thanks for bringing it to us. We wish you the best of luck. Thank you very much. When we come back, billionaire investor gordon gunn is our guest host today. Hes bringing some friends with him. Were Getting Started with all of it at the top of the hour. Stick around. Squawk box will be right back. [ hoof beats ] i wish. Please, please, please, please, please. [ male announcer ] the wish we wish above all. Is health. So we quit selling cigarettes in our cvs pharmacies. Expanded minuteclinic, for walkin medical care. And created programs that encourage people to take their medications regularly. Introducing cvs health. A new purpose. A new promise. To help all those wishes come true. Cvs health. Because health is everything. The apple countdown. Ceo tim cook about to take the wraps off a highly anticipated iphone 6. But what else do they have behind the curtain . Setting up the squawk box breakfast table. John bryant on pleasing consumers tastes and investors appetites. And our guest host billionaire investor gordon gunn owns the stock. Find out if he still likes it at these levels. The second hour of squawk box begins right now. Good morning, everybody. Welcome to squawk box on cnbc. Im becky quick. When it rains, it pours. The drought ravaged southwest getting a deluge. Phoenix having its single worst day of rain. More than 3 inches of rain on the region. Phoenix usually gets that much rain all summer. Well have more on this later in the show and the impact of what it means for that community and beyond. Lets check the markets this morning which have been inconsistent so far during september. The dow has now alternated between gains and losses for eight consecutive sessions. The s p is down. Actually little change over that span. Take a look at futures this morning to see how the market is setting itself up. Right now we do have green arrows marginally up. And the s p 500 up almost one point. Investors also going to be getting a look at the sales figures from mcdonalds. And the expectations, not exactly upbeat. Analysts are looking for a 4 drop in sales in at least a year. And the u. S. Sales are seeing a drop of 2. 3 . Of course that company has struggled over the last couple of quarters. The countdown is on to the main event at 1 00 p. M. Eastern time. Apple is expected to unveil the muchanticipated new products including the next gen iphone. Josh lipton joins us now to set up apples big day. You got nothing to show do you have an actual apple watch with you today, josh . And if not, why not . Reporter not yet, joe. But give me some time. Hopefully ill come through for you. You know, it is 4 00 a. M. Here in cupertino, california. I can tell you, media already gathering. Security is tight here. Youre not getting near this place without one of these shiny sort of disco wristbands im wearing right here. Right behind me actually apple has this big White Building just for this event. Apple pulling out all the stops and for good reason. This is likely to be the biggest event for apple this year. Certainly for the company, consumers, and investors. Heres what were expecting to see. A new size 4. 7 and 5. 5 inches. One important question, though, apple when it comes to guarding those closely watched margins, are they going to bump up the prices of those . Analysts also think youre going to see an improved camera, faster processer, maybe also a sapphire display. Apple still does control about 12 of global smart phone shipments and nearly 60s of Global Smartphone operating profits. Thats of course a strategy in analytics. If you look at the stock price of apple this year, enjoyed a nice pop. Typically you do see apple underperform the s p 500 one, two, and four weeks after an iphone event. But analysts think this year it could be different. The dynamic could change because apple could very well introduce a wearable device this year. We know ceo tim cook has promised to enter a new product category. So could this be the day we see it . You saw analysts at Goldman Sachs this week telling their investors they dont know if itll have a financial impact, a wearable. But they think it could be another way for the company to differentiate itself from rivals. Back to you. Thank you very much. Well be watching. Our guest host this morning is gordon gund. He is the founder of Gund Investment corporation. He has been successful on investments and also been on the board of kelloggs for 20 years. Now gordon is focusing his efforts on the Foundation Fighting blindness which he founded theed with his wife. He has lost his sight more than 40 years ago. Gordon, were going to talk about the Foundation Later this morning, but id like to talk about how youre able to fund that foundation. And thats through your investments and just talk a little bit about what youve been doing over the years, what interests you. Some of your Big Investments have been in health care, but youve also been in kelloggs for a long time. Whats your investment thesis . Its mainly to look at first of all, it starts with people from my point of view. And if you like the people, thats where it has to start. But beyond that concepts that are solving problems and Meeting Needs that are unmet to that point. So looking at it doesnt matter what industry from my point of view and it hasnt over the years in venturing or even getting into sports which is certainly not viewed generally as a great investment. But it has been. Did turn out to be that way for us. So also entertainment facilities because when we own the sports teams, my brother and i, we also had buildings they played in and managed those for 365 days a year. Lets talk a little bit about kelloggs. Were going to be meeting with the ceo later this morning. What attracted you to kelloggs . My familys been invested for 85 years. It all happened when my father who was considerably older when he had us. Older for a father. And he was in the First World War in the cavalry. And afterwards, he found out about a process to decaffeinate coffee. And because prohibition was going on and so much concern about stimulants in the country, he bought the process the bought the patent rights to the u. S. They were taken over after the war. So i can thank him every time i drink decaf in the morning . Yes. Exactly right. And then w. K. Kellogg had become interested in it. He wanted a drink that was noncaffeinated. So he in 1928 contacted my father and bought the company for then mostly stock and cash. And there werent deals done in those days so much for stock. So that was fairly unusual. And weve had the stock ever since in the family. Would that be a buy and hold strategy . Longterm buy and hold strategy. And thats and i, just to complete on the philosophy that i have about investing, i look at everything on a longterm basis. Im not smart enough to do quick turns or trades. I really feel its much better to quote something you believe in. Im going to buy stock and hold it for 85 years and i want to be there when i sell it. Thats my goal. Good. So thats interesting though. So back then there was a and alcohol is a depressant although i think people thought it was a stimulant for awhile. So they thought prohibition could affect having caffeine in your coffee. Youd want to drink coffee all the time because you cant get alcohol. Who drinks coffee now without caffeine . I do now just because i got off the caffeine headache. Im trying to stay away from it. I drink decaf every morning. Why drink coffee without it . I realized i was reliant on it as a drug. I got off it. Could you imagine . You drink diet coke and coffee. Now just straight coffee. Whyd you give up the diet coke. I was told its bad at that hour. Probably bad for your stomach. Gordon, we definitely want to have i love kellogg. And i love cereal. But its politically incorrect because its carbs and its sugar and kellogg like cocacola and so many brand names with these crazy millennials that are going to change the world, theyre always at whole foods or gnci and who knows if theyll be healthier than we are. But they dont eat cereal. They wont eat sugary cereal, will they . Even though the sugar content is nowhere great as it once was or as people think it is, youre right. This goes around in cycles a lot of the time. But ask john about that or i will. We will. Ive gone back to eating i feel like jerry seinfeld. Im eating it at night. What kind . Any kind. Lucky charms or honey nut cheerios. I like the packs from kelloggs that have all the different i just get in it. I dont even care which one i pick. I just pick any of them and eat them. And you think people are going to be eating cereal forever . Are you worried at all about the trends that were talking about this sort of lowcarb thing . I love sugar puffs too. The category hasnt done a good enough job in describing how relevant cereal is to these needs that even the millennials feel they have to have. They want quick energy, protein, they want something they can hold in their hand and carry around, get off quickly. Even snacks. But john will come back and talk about that, i think, later. Gordon, i want to talk also, youre not just kelloggs. You have a wide variety of holdings including some of the social network stocks. Stocks like linkedin, facebook, google. Not in as major a way. The four main are kellogg, corning. We invested in them when they were private. So we invested in the theres a three series. You got in early. And still have it. Is there anybody else who competes with invisaline . Anybody else that figures how to do it . Nobody does it quite like they do. And so far they keep reinvesting themselves, the technology does by continually developing the digital capabilities they have. So now they have a scanner that can digitally scan the inside of the mouth and really exactly identify where the invisalines with how theyll work and how theyll shift the bite. Really their goal is to become the digital expert for dentistry. On a global basis. Now theyre now over 600 million in sales. Displacing braces. Yeah. And then the other one that we invested in right at the ipo was giliad. Thats been great. And it dropped after the ipo, believe it or not. Dropped to what market cap . Then . I dont know. A billion dollars . 60 or 70 . Is it a hundred now . Dont tell me that. Wheres my machine . Used to be back here. Its 161, is that right . No. Its impossible. I think it is. No so back to your question, the social networking ones, i dont claim to know a whole lot about that. Its almost the same as merck. Its hiv and hepc drugs. And tamiflu too. And had all the conspiracy guys. The fact he was on the board was one of the reasons i liked it. Right. Because you like people. People saying they created the virus and then created the cure. Thats how crazy some of the conspiracy theories are. Wow. Well, fortunately gordon is going to be with us for the rest of the program. We have more to talk with him about. John bryant will be joining us. In the 8 00 a. M. Hour, wendell weeks. And then the former nba commissioner david stern. You say rumsfeld to someone like andrew, and youre sure theres something no. Oh, rumsfeld . Shock and awe rummy . Im not making any political comment. I like the guy. Ill make them for you. You can make all the comments you want. Were going to come back in just a moment. Were going to talk about apples ecosystem. That iphone is on the list. But what about the watch . Other wearables . And perhaps even a tv. What will investors need to hear to keep the stock moving higher. More right after this short break. Squawk box returns. In new york state, were changing the way we do business, with startup ny. Weve created tax free zones throughout the state. And startup ny companies will be investing hundreds of millions of dollars in jobs and infrastructure. Thanks to startup ny, businesses can operate tax free for 10 years. No property tax. No business tax. And no sales tax. Which means more growth for your business, and more jobs. Its not just business as usual. See how new york can help your business grow, at startup. Ny. Gov welcome back to squawk box. Checking the futures right now. Up at this hour. Trump entertainment resorts filing for chapter 11 bankruptcy. This includes trump plaza and trump taj mahal. Lists assets and liabilities in the range of between 100 million and 500 million. How many times has that casino filed bankruptcy . Does donald own that . He doesnt own that. For years. All right. As weve been telling you all morning, apple expected to unveil the iphone 6 just a few hours from now. The countdown clock is on. The week leading up to todays event, the stock is down close to 4 . But for the year shares have climbed 20 . And where does apple go from here and what else can we expect to see . Stewart jeffrey joins us now. Hes the telecom and equipment analyst. We all think were getting phones. Two size phones. 4. 7 inch screens. 5. 5. And this is the phablet. He calls it the maxi pad. I said they cant call it that. And i dont say it when i say they cant call it that on camera. Andrew. But phablet is not much better. That sounds like some bodily function. First of all, are we sure were getting an iwatch . We think theres an announcement, but doesnt sound like production has started yet. Looks like it will come out maybe next year. So the smart watch dynamics makes it hard. So i think they need to announce a long time in advance to get the developer on board. So then there is this issue of payment. How big is that . I think mastercard, visa, 60 billion to 80 billion companies. How much of that value can apple capture . And the merchants not going to pay more. Presumably they have to try to take a little chunk out of the Credit Card Companies and how much they let them have is what we can be focusing on the next few weeks. Why are we convinced this is going to work this time . The reason i ask, androids had nearfield communication devices where you can pay on your phone and it hadnt really taken off. It doesnt replace your wallet. You still need your drivers license and the cash where people dont take credit. So i think they how they make this work is hard. Money is money. Taking a 30 cut doesnt work. I think its going to be difficult. And its a little thinner, right . You can probably thin that out just a little bit. I could. But i dont put things down in, you know, on my iphone. Do you have a wallet . Let me see your wallet. See. See . You are gordon, hes a millennial. Hes 38 years old, but hes a millennial. How do you do that, man . Im not sure what you have in there and i dont want to know either. This goes off when i go through because of this thing. I bet it does. Gordon, you dont own any apple. Would you ever think about it . I wish id thought about it several years ago. But sure depending on valuation. Right now its pretty hefty. You do, however, have a stake in corning. They do the gorilla glass for the phone. Their speculation is theyre do you have any cash . Can i have my wallet back, please . Im in the middle of an interview here. There is speculation they may move from gorilla glass to the sapphire. Do you have any insight on this . I dont. And im sure that one of your guests coming up, wendell weeks, does but he probably cannot talk about it. Oh, boy. Not directly anyway. Whats your sense . Is the gorilla glass versus sapphire thing matter . Both ways. Youre talking to stewart tho e, right . Yeah. The problem is when you drop it it sheters. Theres also layers of maybe gorilla glass and sapphire. But if you do a laminate, its tougher when it comes to being dropped. One of the things josh had mentioned in his record to california this morning is the issue of pricing. And how much these devices are actually going to cost. A year ago we expected them to come in with a cheaper price point. The margins may be thinner. So the expectation is the 5. 5 one may be a good hundred dollars more. Be if you look at the sales, its flatlined for the past six, seven, eight quarters. Theyve seemed to have exhausted the number of people willing to use that amount. Theyve exhausted their footprint to the people willing to pay that much. So i think the 5s, i dont know how they make that a cheap phone the next time out. Maybe what well see is the 250 to 300 iphone. We may have a different operating system with this new one . It was announced earlier in the year. Theyll feature that. I think theres going to be some applications and features theyve kept a little bit secret including the Health Monitoring and stuff like that. Probably hear more about that today. Do you think the health thing is going to be real . Do you think thats why people are going to buy the watch and the phone and everything . Thats what this is really about . Not initially. Just because youve got your Blood Pressure monitored 24 hours a day. I see scales all the time. The bigger screen would sell me. Do you want to check your Blood Pressure all the time . No. I know when mine goes up already. When we hang out together. When we talk about inversions of fairness or income inequality or whatever. I mean, i can feel it. I dont need it to see. Stewart, thank you. Gordon, thank you. Gordon is going to be sticking around for the rest of the show. When we come back, fire and rain. An iconic coaster goes up in rain while arizona deals with record rain and flash flooding. Both those stories here on skb. Act i. Scene 3. Open port twentytwoohoneseven on the firewall for customer db access. Install version twopointthree of db connector and ensure verbose flag is set in case of problems. clapping sound isnt the cloud supposed to make business easier . Get the one that can connect to the systems that you already have. Today theres a new way to work. And its made with ibm. Are we still on for tomorrow . Tomorrow. Tomorrow is full of promise. We can come back tomorrrow. And we promise to keep it that way. Csx. How tomorrow moves. What a day. Cant wait til tomorrow. Welcome back to squawk box this morning. Couple headlines for you this morning. The southwest inundated with heavy rain from phoenix to tucson to palm springs. At least two people have died in the tucson area. What do we have here . Weve got more coming. The forecast is going to be arriving tomorrow. But it looks like its not over yet. Also part of the landmark wooden roller coaster going up in flames. Look at this from Six Flags Magic Mountain north of los angeles. The decades old colossus roller coaster. Fortunately the park was closed. Lightning . I dont know how that happened. Up next, the nfl out with a new statement on that difficulttowatch ray rice video that led to the ravens cutting him and a league suspension. Well have that after the break. Then grab some frosted flakes and eggos. Kelloggs john bryant cominge i. Squawk box will be right back. E financial noise financial noise financial noise financial noise welcome back to squawk box, everybody. Some new developments in a story weve been following all morning. Nfl running back ray rice cut from the Baltimore Ravens and suspended indefinitely by the league. This comes after a disturbing new video surfaced of a Domestic Violence incident between rice and his thenfiance last february in Atlantic City. The nfl is just out with a statement. The league says, any videos related to an ongoing criminal investigation are held in the custody of the state police. As we said yesterday we requested from Law Enforcement any and all information about the incident including the video from inside the elevator. That video was not made available to us. So theres been different stories. The casino said they never showed it. That was our key question was to why the nfl but why didnt a judge see it . The casino said they never asked for it. The nfl asked Law Enforcement. If the judge asked, they cant say no to the judge, can they . Did the judge ask . We dont know if the prosecutor asked. We dont know the answer yet. But we will try to find out. We are going to switch gears because weve got deal news. Our next guest is General Motors General Mills buying annies. Weve got a lot of annies in my house. Thats more than 37 premium to annies Closing Price yesterday. The maker of cheerios hoping that deal with help it expand in the fastgrowing Natural Foods market. Do you like the bunnies . Do you like the cheddar . Bunnies. The kids eat the bunnies. I like the shells, the parmesan shells. Have you had those . No. You havent had white cheddar cheeses . No. You have to get out more. Kelloggs is the nations biggest cereal maker and creator of some of the most iconic brands from oldtime favorites like corn flakes and fruit loops. I love fruit loops too. To more recent additions like special k or smart start. Cereal sales are suffering. Down with people turning to yogurt, that greek stuff. And more on the gohigh protein products. So whats kelloggs doing about it . Lets ask the ceo joining us, john bryant. Also with us, guest host gordon gund. He has been on kelloggs board for nearly 20 years and he has a buy and hold strategy. His familys held kelloggs for 85 years. Thanks for joining us. And i ask it all starts going together off camera and on camera. The millennials are so politically correct. Theyre in gnc or whole foods, you know, no preservatives. Eating crap thats probably not good for them anyway. So they dont eat carbs. They dont like sugar. Its a hard sell in this politically correct world for kelloggs now. We have tremendous products with a great range. We have kashi products that are natural. And theres a wide range of items people like like frosted flakes and fruit loops wonderful to eat in the morning. You can see, even the results, revenue was revenue down . Earnings. Its tough. Theres head winds. Cocacola is having the same issues. First it was sugar. Then it was aspartame. Theres some avoiding. How do you get protein in cereal . We have some mini wheats here that if you add milk it has as much protein as many greek yogurts too. Theres protein in the wheat. We have a go lean product as well which also has a high lel of protein. You probably have guys working on even ramping it up a little more with some of this, right . We do. We have special k protein coming out and gluten free coming out. I have put Something Else on to avoid the carbs. Theres a way to do it but its difficult right now, i would think. Then input costs and everything else. Youre thinking about how to communicate the relevancy of cereal and all of the great products that kelloggs produces. Talk a little bit about that. Gordon makes a great point. At the end of the day, a nutrient dense calorie form. It provides ten key nutrients for kids. The protein in the milk also plays into this. Were talking about the simplicity of the food. The corn flake is a piece of corn thats been rolled and toasted. Very simple, very natural. Very wholesome foods. And, joe, i think in the earlier section you mentioned eating cereal in the evening or through the day. 30 of all cereal in the u. S. Is outside breakfast. Its a snack food as well as a breakfast. Its a dessert for me. John makes a good point. Theres some myths about processed food versus all natural. And you might describe kelloggs position in that regard. Clearly the level of processing is relatively small on a lot of our foods. All the nutrients and benefits are there. If you look at the benefits of the fiber, the whole grain, et cetera. Heres the conundrum as far as i see it. You have to try to tell parents that fruit loops which look processed because they have all sorts of coloring in them are going to be attractive to kids who like the sugar and all of the things that come with that. And somehow get the parents to believe that its an allnatural wonderful product. I dont know maybe fruit loops is the wrong example. But the stuff that gets advertised to kids the stuff that the kids love the most at least looks on the outside like the most processed stuff thats out there. Well, we dont actually advertise fruit loops to kids right noup. Weve been advertising to adults and its been growing. Half of the fruit loops consumption is to adults. Lets take fruit loops out of it. Frosted flakes, tony the tiger. Its those products which you have to balance the parents interest in this all natural idea with the kids who want the sugar, frankly. Take frosted flakes. A corn flake with some sugar on it. Theres just over two teaspoons of sugar in a bowl of frosted flakes. Kids who eat frosted flakes in the morning have a lower body mass index than kids who dont. It has a sugar perception issue, no question about it. Apple jacks, pops, i mean those are the ones my kids love. They dont have too much sugar in them . Theyre good. How much is international . About 35 of the company. Would you ever think of an inversion . Does it make sense for you . I dont think so. Weve been in battle creek, michigan, for that would be a tough sell. But do you wish we would do something in terms of the way we tax global profits . I think the point youre making, joe, the root cause is the u. S. Tax system. And if the u. S. Tax system is a territorial system versus the current system, i think you take a lot of this noise off the table. I believe the u. S. Tax system needs to be looked at. I dont believe it treats u. S. Companies as fairly as it should. I think its an opportunity for us, government, society, and business to work together. How do you like the new guy down in australia . Ive been out of australia for about 20 years. Youre not following whats happening now . Hes very probusiness. I like him already. How do you like the guy we have . [ laughter ] ill try to save you with a different type of question which is before the segment started we talked about this deal that was announced, this General Mills deal. Them clearly trying to diversify their business. Would you ever consider diversifying your business . What do you make of this deal this morning . Many respects we have and we acquired kashi back in 2000. It had 25 million in sales. Now it has 400 million in sales. Weve grown our business internally over the last 15 years. We have a very strong natural portfolio of brands. And we have also changed the shape of our country dramatically. In 2000 we were 70 cereal. Today were 45 cereal. 45 snacks. We are the leading cereal company, the worlds second largest cookie cracker company. And vegetarian burgers. I love those. What do you make of this General Mills deal . I think natural is a growing area. Im not surprised people are buying assets there. What about the strengthening dollar . I know the weaker dollar has affected a lot of companies. Its been a problem for multinationals. Is the prospect of a stronger dollar something that will help over the next few years . Our business is fairly regionally located. We dont make a lot of products and ship it around the world. We do for pringles. It is shipped out to asia pacific and latin america. But in general we see more translational exchange. When i dont eat carbs, so i need a snack. Okay . I need a protein snack. Will you work on that for me, please . Special k protein bars. Let me check that out. Because you know what they told me to eat . Pork rinds. I cant. I cant eat those things. Will you make a snack for me please . Tell me again. Special k protein bars. Its a meal replacement bar. I need fritos. We have pringles. Those arent protein though. No. That is some shape that is incredibly sophisticated. You could spend all day writing an equation how to make a pringle. Im serious. You like pringles . I love pringles. Thank you for coming. And thank you, gordon. When we come back, the countdown is on. This is apples website live where in a couple hours tim cook will be unveiling what many believe will be the iphone 6. Were going to talk tech and were going to talk about tech with fred davis in just a little bit when we return. So i can reach ally bank 24 7, but there are no branches . 24 7 its just im a little reluctant to try new things. Whats wrong with trying new things . Feel that in your muscles . Yeah. I do. Try a new way to bank, where no branches equals great rates. Sometimes they just drop in. Always obvious. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. I take prilosec otc each morning for my frequent heartburn. Because it gives me zero heartburn. Annc prilosec otc the number one doctor recommend frequent heartburn medicine for nine straight years. One pill each morning 24 hours zero heartburn. Whenwork with equity experts who work with regional experts thats when expertise happens. Mfs. Because there is no expertise without collaboration. And other Car Insurance companies . Yes. But youre progressive and theyre them. Yes. But theyre here. Yes. Are you. There . Yes. No. Are you them . Im me. But the lowest rate is from them. Yes. So thems best rate is. Here. So where are them . Arent them here . I already asked you that. When . Feels like a while ago. Want to take it from the top . Rates for us and them. Now thats progressive. Call or click today. Im not ready. Lets take a look at some stocks to watch. Wheres the milk . Its right here. Dicks Sporting Goods downgraded to market perform at wells fargo. It was a little meaningful upside potential. Have you guys becky, have you watching sporting events with the dicks commercials. They are long. They are almost like nikeesque. Theyre amazing. They go back in the kids entire development and slowly go back to theyre very good. Ralph lauren up graded to strong buy. Company is poised to enjoy sustainably higher profit growth. They put on a fashion show last night in the middle of central park. Dicks . No, no. Ralph lauren with a holographic fashion show they did over the pond. 3d is 3d, what is the fourth d d . You can smell it . They have stuff that moves in your seat when its going, and they blow in your face. Like the bugs come out and you feel it on your back. People rain showhave been rat this fashion show. Thank you. Little extra news. It is. Youre advancing the story. Right . Marginally. But newmont upgraded to outperform from market perform. Does not appreciate the Newmont Mining process. And then 5d is the fifth dimension, the age of aquarius. Right . Yes, sir. Crickets, please. Crickets. Find out what the fourth d is. Its called a 4d light show. Thats how its described. Coming up, guest host gordon gunds plan to change the world. How he intends to change the world and restore sight to young people losing their vision to disease. Then later, apple set to take the wraps off the latest iphone today. But among the biggest mysteries about all of this, will the tech giant replace one of its major suppliers . Reports say corning could be bumped as the maker of the devices glass screen. The ceo is going to join us at 8 30 a. M. Eastern time. Welcome back, everybody. We have a special installment for our change the world series this morning. Our guest host gordon gund. The last time you were on set with us, you announced a matching program. Youre hoping to raise 100 million by next june for your program. Tell us how its going to far. Thank you, becky. We started the gund family match. And that is for every dollar that any gives of 25,000 or more, we will match on a dollarfordollar basis. Thats unlimited and we hope we are targeting a hundred million including the match. I hope it goes beyond that. Because we really need it to drive the research that weve been working on now for 43 years. The foundation started in 1971 and there was nothing being done about retinal degenerative diseases. They affect more than 10 million americans and many times that number worldwide they include diseases retina pigmentosa that i suffer from. These are universal diseases. They dont know any boundaries. And they do lead to blindness in most cases. We hear on a daily basis from parents of children or infants who are born blind, adolescents who are losing their sight and older people going blind and losing their independence. So were very passionate about this. And have been over this period of time. Fortunately now were at a point where were in an era of Clinical Trials. Clinical trials are the last step before you get fda approval and commercialize the therapy. And we have several of them in the areas of gene therapy. One very exciting one that is in phase three now. So soon to be approved by the fda. Which is restoring sight to infants, to children that when they were born were blind or went blind shortly thereafter. Had this one normal gene replacement therapy trial. One boy was given this treatment at the age of 8. Now he can play baseball. And he doesnt need any assistance in the classroom or anything else. Its really quite a what did he have . What did the gene replace . He had something called congenital amarosis. What the normal gene does is replace the defective gene or it produces the protein that the defective gene doesnt produce. Different than the other thing. Yes. But there are a number of other diseases. With research we funded now identified more than 200 genes. We thought all this was straightforward and only a genes were responsible. But everything is more complicated than it seems. In this case this was. But now weve got them that really informs you about the disease. You learn what the then you learn what the protein does in the visual process. Gene therapy is very exciting. And a number of Clinical Trials underway. Whats the cost of the therapy . It varies. But with small market diseases, probably the preclinical is 2 million to 3 million. To get it to proof of concepts, another three. Then probably another five to ten to take it through phase three and finally get approval. So anywhere between 8 million to 15 million. And thats why with smaller market diseases, andrew, why were doing this challenge is because commercial Companies Wont pick it up until you derisk it more. You have to take more of the risk out. And that means take it close probably through phase one or two to proof of concept. Then youll then im happy to say Companies Come in and make small market diseases. Its good because we already talked about this earlier with the gentleman. And its good that the private sector is stepping up where theres a need. And maybe there isnt a need to update the orphan drug the we that we do that now. I think its good the way it is now. It does incentivize the commercial side to get involved at an earlier date than they would. Whats the problem in macular degenerative it seems that would not be as difficult a thing to figure out. One of the trials that weve funded in the early stages thats going on now is looking at stem cells for saving or restoring sight for people with macular. What happens there . The macular is the central part of your field of vision. Its where the cones are clustered. In the retina. Giving you the fine vision you need to read and so on. And that just gets old . It degenerates. In part its genetic. It also is environmental. So its a combination of the two. And theres two forms. The wet form is when blood vessels a lot more blood vessels are created and it obscures the field of vision. And work that is being done. Lusenis is a drug for that and thats based on technology the foundation funded. How important is it to raise awareness . The psas you put together with lebron james and mark he was a great player in the 80s. Does that help to get the fund raising up for your foundation too . It does. It makes people aware. A segment you had earlier, theyre competing for funds just as we are. I think hes doing a great job and interestingly is constructed the same way we are. We have a drug capability that moves a lot of these things through the preclinical and into Clinical Trial phases. Its very important. And its the only way you can make people aware of what youre going. First of all, get a lot of the people who are affected who dont know about it more aware of it and get involved in helping themselves. And then also to raise money. And you asked me earlier about the progress on this match and im happy to say in the summer months which is a tough time to fund raise, we raised over 7. 5 million. So with the match, that means were 15 million on the way. And from only 35 people. Weve got lots of irons in the fire and lots of people were talking to. Lusensis is and the government knowledge that went into that was done by our research. Gordon, thank you. All right. Coming up, he helped launch youtube, spotify, myspace, now fred davis is underwriting alibaba. Well be right back. You can do just that. With our visionary cloud infrastructure, Global Broadband network and Custom Communications solutions, your business is more reliable secure agile. And with responsive, dedicated support, we help you shine every day of the week. Centurylink your link to whats next. shouting location. Heres the location that matters the most. Here. Or here. Or here. Its wherever this is. To get customers to come here and stay here, youre going to need an app that connects to all your systems. So they can bank, shop, do what they need to do, and you gotta do it fast. Before the competition does. Its tough out here; you better be on the right cloud. Today theres a new way to work. And its made with ibm. Whenwork with equity experts who work with regional experts thats when expertise happens. Mfs. Because there is no expertise without collaboration. Welcome back to squawk box here on cnbc. First in business worldwide. Im joe kernen along with do you have the box still . Along with becky quick and andrew ross sorkin. We dont have the box. What happened to it . It was good. It was a cinnamon go lean. Kashi. 11 grams of protein in it. Were not being paid by kelloggs to endorse this. Were not. But it was good. Cinnamon crumble is the flavor. We both enjoyed it. 9 grams of fiber. Which for me, i would need a fiber con then. Still with our guest host gordon gund. 8 00 a. M. On the east coast. Its 5 00 a. M. Out west. That is info that you needed to know after i wasted all that other time that if its 8 00 here, its 5 00 out there. Thats cupertino. In just a few short hours were going to expect apple to take the wraps off the new iphone 6 and potentially a host of other new gadgets. Its the same hall where steve jobs unveiled the mac 25 years ago. 25 years ago in the same hall. Even before anythings been announced, people are camping out at apple stores. Check out this video from new yorks flagship store. Based on leaked information and the passengers. Decided theres going to be a different sized phone and a phablet. And maybe a watch. A watch which will tell you what your Blood Pressure and heart rate and i dont know. We dont know. Were just conjecturing. As we count down to that event, we want to take you back to the first time apple announced it was getting into the smartphone business. This was steve jobs back in 2007. Take a look. Today apple is going to reinvent the phone. And here it is. Jobs was clearly joking with that first image that he shows the world that day. But the iphone as he promised proved to be revolutionary. And since the first up with hit the market, nearly 600 million have been sold. Joining us now with his expectations for apples newest hardware and software, fred davis exclusively on the digital and Entertainment Media space. He was responsible for helping youtube and spotify secure rights to launch. Also son of clive davis. And i believe youre an underwriter of alibaba. So youve got a lot going on. We have a lot going on. You have a lot going on. What do you think were actually going to see today . Everyone thinks were seeing these two different sized phones. Theres the potential for the watch. I dont know if theres a tv. Whats on your radar . I dont think were going to see a tv. Its kind of funny. Were sitting at tim cook has all these presents under his Christmas Tree to unveil for us today. I think we are going to see two new larger iphones. I dont know whats going to happen with the existing iphone, but we are going to see two new ones. Well see a computer wearable device, we call it the iwatch. They havent named it yet. And i think were going to see revolutions in payments, the iwallet were calling it. Do you think theres anything musically going to happen . U2 is apparently going to be there. Yes. You are a music guy. Yes. They just bought beats. Yes. Is there something were going to see today . Jimmy and u2 have a history with apple, if you remember they once launched a youtubebranded ipod many years ago. I dont think today is going to be a day well see music launches. Theyve always had Musical Artists perform at these events. U2 is todays artist. Theres speculation theyre going to change the headphone jack. Have you seen this . Because of the beats headphones. How upset would all the apple users be if they cant use the little white ear buds that break on me anyway . No . Anyway, in terms of the watch, why is this going to work when every other watch weve seen has not worked . Its a good question. I think apple has a history of being connected with devices. The ipod and itunes worked well. With the whole watch and Health Software thats going to be on the ios 8, we expect it. Do you have a stake in jawbone . Nothing to do with these guys. Then theres fitbit and all these others. Jawbone has opened up to take advantage of iwatch and anybody else fitbit can go on it now. Do these guys go the way of the dinosaurs . Just because apple launches a new product doesnt mean its necessarily going to be successful. Remember iradio last year. Didnt make any difference to pandora. Are you betting this will be successful . Im not betting. Just as a consumer i hope i like it and wear it and its going to be fun to use. Thats what i hope. And longer term in terms of the margin issue, we keep talking about china and last year everyone thought they were going to come up with a cheaper phone. All these new phones are going to be apparently more expensive and have tighter margins. Do they have to come out with a cheap phone . I think eventually they do. But right now the market isnt asked for most of the new phones shipping in china are larger than 5 inch screens. So they have to appease that market. And i think theres still room for it to grow. The question is, is the new phablet were calling it affect the ipad sales . You want on this stock . I dont bet on stocks. You dont bet on stocks. Okay. Thank you for coming in this morning. Thank you. All right, folks. Lets tell you about mcdonalds. They are out with your august sales right now. Global comps falling by 3. 7 . Believe it or not, that was better than expected. Analysts had been looking for a 4 drop. But there are troubling signs in here. U. S. Sales were weaker than the street had forecast. They street was looking for a decline of anl 2. 3 . Sales in africa down by 14. 5 . The street was expecting something close to that. If you listen to don thompson, the president and chief executive officer, he points out that yes there are some head winds here that they have over the longterm focusing on the fundamentalal elements of service and marketing for strategic growth. In the u. S. They pointed out that they had some issues in terms of addressing the service, value, and menu opportunities that theyre doing those things to enhance customer relate advance and loyalty. But they did say it was sluggish growth and a highly competitive market in the u. S. Look at that stock right now. It is down by about 61 cents. Up next, check this out. A popular philly burger restaurant posted this photo online. Notice the 20 cent tip on a 60 check. When were you in philly . Andrew . Well tell you whos behind it next. And then deals in the rental car industry helping avis budget get over the past couple months. If you caught our series the first time around, you would have made 22 in that stock. Find out if its a name ryan is holding after the break. And here are the futures as we head towards the opening on wall street. Well be right back. Theres a difference when you trade with fidelity. One you wont find anywhere else. Guaranteed. Did you see it . In one second, he made a trade, we looked for the best price, and the trade went through. Do the other guys guarantee that . Didnt think so. Open an account and find more of the expertise you need to be a better investor. Eat it eat it if its getting cold reheat it i dont know if thats a reference to what were eating around the table or this next story. Check this out. If you want to take a look, there is a 20 cent tip on a 61 check. Pyt which is a popular burger joint in philadelphia posted the receipt on its Facebook Page after lesean mccoy paid his bill and left. Nobodys really sure what happened here. Maybe mccoy got confused trying to adhere to the 20 rule. The 20 cent tip that lesean mccoy just left our server on his 60 check is going to come in really handy for that new official nfl mccoy jersey he had his heart set on. That is a. 03 tip. New record. He signed a 45 Million Contract two years ago. This year hell be making almost 8 million. 20 times 61 would give you 12. 20. 20 is 20 . People wouldnt leave, would they . What do you think happened . 2 is 20 . If you multiply times the bill, youd come out with the right trying to give him the benefit of the doubt. By then adding it on either by giving him the benefit of the doubt there you must think hes really bad at math. I dont know if thats giving him the benefit of the doubt. Would you rather be cheap or just that bad at math . Or maybe he didnt like what he got. Could have been service. Maybe service was bad. We dont know. Right. But still. If the service is bad, you leave 10 , right . Have you ever stiffed . Ive never walked out and stiffed somebody entirely. You havent. Dont look at me. Youre not saying you havent. Im saying i havent. Have you ever walked out i dont think ive walked out completely. Actually, once. You ready for the is . I was at a restaurant and they wouldnt bring the bill. They wouldnt bring the bill for over an hour. So we walked out. And we told them three times and said bring us the bill. We have to pay. This was 15 years ago nobody recognized me now or then. All this month we are opening up our platinum portfolio. Our featured manager this morning is brian perry of the fivestar hennessey corner stone fund. He joins us now with three picks back in april on the april 28th. Avis budget has had the largest return up 22 since then. Huntington ingalls is up 3 . And his last pick, alaska air is up. Today hes sticking with his bets and joins us to make the case. Good morning to you, brian. Thanks for having me. Sorry about that. Give us the story on avis budget. One of the things i was going to ask you is what you made. Theyve been kpu cuexecuting perfectly. Theyre rolling out some new markets coming up. In regards to hertz, you know, i think brian taking over is really going to be good for her. Its brian mcdonald. But is it bad for avis though . Theres always going to be some competition between the big two. I think theres still room for avis. They roll out new demand pricing models. And i think that continues later this year. And thats going to help them do better in execution terms. I really like where they are. I think hertz has got some hurdles to overcome. Theyre a good company and certainly will do well i think longer term. They actually meet all of their criteria at this point larger in the capital. Give us the back story on alaska air. And are they a takeover target . You know, alaska is a great company. The secret is how they treat their customers. Theyve won zen years in a row for great. Customer service. Their pensions are fully funded. Theyre virtually debt free. Theyre spending money in the right areas in terms of cap backs and replacing older planes with more fuel efficient planes. They do have head winds with competition coming into seattle against delta. But we think that theyve done well operationally for the last three years. Theyll continue to do well in the future. To the takeover target idea, could delta come in and scoop them up . Well, that may be. We never buy something because its a takeover target. But it certainly looks attractive, you know, when you start getting all of these airlines together. And get some synergies. You know maybe, but thats not why we would own them. If you were as you are an owner, would you want to sell that company . For the right price ill sell any company. If somebody makes an attractive offer, our methodology is once that offer comes in, you may get a 10 or 20 in the stock. Thats when wed be a seller of it. Give me the case for hundredthington ingalls. Not really what id call a sexy story. But a great business. The companys done an incredible job in managing their costs and improving margins. You know, i think its basically in this space. We think the company will do well in the coming years. Theyve got 7 billion in new orders this last quarter. Their margins are increasing. Thats a company wed own. Were going to leave it there and keep monitoring these stocks. Appreciate it very much. Thanks for having me. Coming e ining up, the make most famous glass for iphones feeling pressure from sapphire. Were going to ask the ceo of corning about it. And now facebook shares closing yet at 77. 89. The company now valued at 201 billion. That makes it the 22nd Largest Company in the world behind verizon but ahead of toyota. Squawk box will be right back. When im working, things can get so hectic. So sometimes i need to find an easy way to express whats most portant to me. Like, with my crew, i use shorthand to talk to them and tell them what i need. And when i need to talk directly to my fans. But the most meaningful shorthand of all is the one i use when im about to drive x. Its an easy way to tell everyonehat im about to drive. And i do it every time before i get behind the wheel. Use x to pause the conversation before you drive. Because no text is worth a life sometimes they just drop in. Always obvious. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. E financial noise financial noise financial noise financial noise welcome back to squawk box. A city in europe going to the dogs. Folks in poland celebrating their dachshunds. Some rode in carriages. Its the 20th year. Its the dog. Its in my ear. Just what are you on . Im on cinnamon cereal. I want you to know those were the most normal words that im just eating this. I cant keep it together. Take a look at this. A water main break causes the road to buckle. Look at that giant whirlpool the size of the street. One nearby home was evacuated. The water is flooding some areas yards in the area too. This is good. Andrew, this is good. Read these headlines please. Just for our viewers. Lets look at some stocks on our premarket trade. Dow components mc donalds. Its not fair. No, its not. That was actually a smaller drop than analysts had been expecting. The Avon Products is sliding this morning. Citi drown graded them to neutral from buy following yesterdays departure of chief financial officer. And pep boys also posted worse than expected sales. Hurt by a decline in sales. Coming up, the ceo of corning on how big of a threat sapphire is to its gorilla glass business. And later, another bad bounce for the nba yesterday. Former commissioner david stern talks about the state of sports with gordon gund. Thats coming up in just a moment. First lets look at the futures. Dow down by about 18 points. S p futures down by just over one point. Squawk box will be right back. Welcome back to squawk box, everyone. Weve been watching the futures. Right now the dow futures down by 17 points. Apple holding a major product event in california. Thats set to begin in just more than four hours. The tech giant expected to take the wraps off the latest iphone and maybe even some other new devices maybe wearables. Well see. Apple, dell, hp, lonovo, what do they have in common . They all use gorilla glass. The question today is will apple continue to use it or will they switch to sapphire glass . Here to give us the lowdown on that but really probably wont tell us anything about it, corning ceo wendell weeks. Gordon gund was on the board of corning for 23 years. And wendell, we used to talk all the time on squawk box. And i was going to say congratulations on assuming the ceo position from coo, but that was ten years ago which is frightening to me. So i understand there are certain things about sapphire that might be better, but guerrilla put there would not be a 98 apple stock and an iphone without grilorilla glass. At least it helped apple all along. Would they be that disloyal to just totally get rid of grilori or would it be a combination . Youre right we originally invented it for steve jobs and apple. So its a great story that he tells in his biography. One of the reasons all the customers you named who are fierce competitors work with us, first were the best in the world at what we do. So if youre going to innovate, you want to work with a leader. And second, we keep their secrets. Never do customers find out what other customers are doing from us. So regretfully, im going to keep apples secrets. You only have to wait a few more hours and youre going to see a really exciting launch for them. Im excited about it. Theres some advantages to gorilla over sapphire too. If were going to talk about i am able to talk about why do we do what we do. Weve made a lot of sapphire in the past and we invented gorilla. So we can make and sell either and innovate in either. Now, sapphires good in that its scratch resistant. Thats its main feature which is why you have it on your watches. Because you dont drop watches, but you do have to be careful about scratching. And thats its main feature. And thats why to date its on around 5 million phones. Its a legitimate choice. It breaks easier than gorilla. So now lets talk about gorilla. Gorilla, first of all, customers care more than just scratch. They want long battery life. Gorilla transmits more life, therefore uses less battery power. They dont want their phone to break when they drop it. And sapphire tends to be more brittle. People care about value. Gorilla is about 1 10 the cost of sapphire. People care about how heavy it is. Gorilla glass is about 40 lighter than sapphire and some people you would say the millennials care about how green the product is. And it uses a hundred times more energy, sapphire does, than glass to produce. Wow. Without giving away too much, can you mix sapphire and gorilla together . It is technically viable and possible to do that. The question becomes what is the best composite material . Theres other ways to do different composites to solve scratch. For us thats why we have invested strongly in gorilla as opposed to sapphire overall. And to date like i said 5 million sapphire phones, 2. 7 billion mobile devices use gorilla. And going forward, theyre both legitimate choices and the question will be who can innovate the materials best. How far away are we have having a phone that we can throw a phone across the floor and it wouldnt break . We have something coming up in the back half here and its going to be a lot closer to that. Still not all the way there, but its going to be i think the biggest innovation in gorilla. Have you seen these companies that offer these, like, peels that you can put on top and then take a hammer and break it and it still doesnt smash . Yes. I would based on the Extraordinary Program that corning has and has had for a long time, im sure theyre going to come up with a lot of other Game Changing kinds of innovations certainly with gorilla glass theyre going to keep improving it. And this will be your fourth generation, i think, coming up. Youve got a great memory. And so just shifting a minute from gorilla which is a great product and just going to get better and better, when i was on the board we made some big bets on fiber to the home and diesel. How are you on those . Thanks for asking. Big investments back when you were on the board. The fiber to home, the problem is how do you build out full neighborhoods and connect fiber to all these apartments and houses . We did one where you can bend fiber and handle it just like copper. Staple it, all of that. It makes it much more wrap it around a pencil. Yes. So we did a supply chain. So a customer like verizon, all they have to do is send us the blueprints of their neighborhood, we build it all in our factory and they can plug and play. Thats really turned out revenues for us were up 14 overall in optical segment. We started with verizon. Now its all over the u. S. Its moved to canada, australia, europe, latin america. So its on fire. One thing thats never gone away, wendell, and the future is daunting for media. But big tvs. I just dont think that ill ever at least for me, maybe im not a millennial, but sports on tv at home or whatever is always going to be big. So what is the state of the art now . Are there new things youre working on . Is it lcd . Is it l. E. D. . What is it right now . I remember way back when you said i cant have a tv thats too big. No. And you also remember the way you made the stuff, you could cut. Youd make one piece and you could cut it in half so you can get a 50 or 55 inch. But if you wanted a 70 inch it was too expensive. Is it still like that . No. The product we make for lcd is a hundred square foot piece of glass thats less than. 7 millimeters thick. And theyll make ten 60 inch tvs. You can get a 70 incher and its not going to be too expensive. When is that . Were going a house and were going to need a big tv. As long as youre here, i use it for my own its never too soon to get your next tv, in my opinion. I agree. Is it going to be an lcd or l. E. D. . If youre going a large tv, it will be lcd. L. E. D. Is just another way of saying lcd lighting system. It will be corning glass. Which is a Good Business to be in. Lets talk about the economy overall based on what you see from consumers and what you see in the Automobile Industry with sales at new highs. How do you get a sense and where do you think we stand right now . For us weve experienced it as strong. Over the last two years the revenues are up over 30 and so are earnings. Were experiencing strong, but were not always the right guys to ask because so much of it is innovation based. Gordon asked about diesel. Weve invented this technology to clean up diesel emissions. If you ever rode behind an 18 wheeler. Sure. That cloud of black stuff that comes out of the top, thats diesel particularly. Its bad for you, bad for the environment. So we invented this technology that cleans that up. If youre driving around here in one of those 18 wheelers, youll have cleaner air come out of the top of the emissions than get sucked into the front. How many trucks have that now . So now that is by regulation, all new trucks are going to have that. And thats driven us to almost 40 growth in just diesel year over year. So were not the right people to ask about gdp. Were probably the right people to ask about particular innovations. I think one of the things that is outstanding about the company is its culture and values. You can see a demonstration of the values when wendell said hes not going to talk about apple announcements until after the announcement. I think thats going to be understood to really produce tremendous financial power, those two attributes of your company over time. Very important. You make the glass for tv sets all over the world, dont you . Yes. And you as far as tax policy goes, i mean, it matters to you doesnt it . Tax policy definitely matters to us. Were a big exporter from the u. S. Still. The u. S. Is not our biggest market. China actually is. How much have you left outside of the country . Well, we have permanently reinvested a couple 3 billion outside and wed certainly try to bring back more if we could. And tax policy matters. Would you build more facilities here, do more here if you do it that way . I would say without doubt putting in place the territorial system, getting a tax rate that makes sense for the u. S. Versus its global competitors will clearly lead to more exec activity and us to build more here. And theyre probably pretty good jobs. How much you pay . Hundreds of thousands of dollars . Yes, we have great jobs. We would like these jobs here, wouldnt we . You would. We invested half a billion dollars in new york state. This new diesel technology. Theyre fabulous jobs that change lives and communities all for the better. It seems like a no brainer. A lot of these people dont have brains from what i can i wont speculate on that. All right. Wendell, now you can split it up thats really good news right there. How long ago did you do that change . Just a couple years ago. So youre ready for a new tv. And i think 70 is too small for you. Id go for 75 inch. Im with you. Size matters, andrew. If youre a glass guy. How big . 75 . Wow. By the way, that will be normal. Prices are dropping and everything else. Its going to be great. Why was it so long since you were on last time . Will you come back. I will be back. If you ask me i will be back. And i will follow gordon wherever he goes. Thank you. When we come back this morning, former nba commissioner david stern on basketballs wall of worry. Well get his thought on the league, the ray rice incident, and more. Squawk box will be right back. Dave busters is filing for an ip o rks. Theyre looking to raise up to a hundred Million Dollars listing under play. Plans to go public in 2012 citing poor Market Conditions at that point. Earlier this year it scrapped plans to sell itself for more than a billion dollars. Stick around. Well be right back. Starts at 6e nose. But for me, it starts with the opening bell. And the rush i get, lasts way more than an hour. announcer at scottrade, we share your passion for trading. Thats why weve built powerful technology to alert you to your next opportunity. Because at scottrade, our passion is to power yours. No. Not exactly. To attain success, one must project success. Thats why we use fedex one rate. Right. Their flat rate shipping. Exactly. It makes us look topnotch but we know its affordable. [ garage door opening ] [ sighs ] i need help with the groceries. [ sighs ] [ garage door closing ] where was i . Oh, yes. [ male announcer ] ship a pak via Fedex Express saver® for as low as 7. 50. Welcome back to squawk box this morning. Check out apple stores home page. It says well be back. Were busy updating the apple store for you and we will be back soon. This is following what apple has traditionally done before a big product announcement. If Donald Sterling wasnt enough, there are more controversies about racist comments. Atlanta hawks owner agreeing to sell the franchise after racist emails were leaked. He brought this to the leagues attention himself. Joining us now is former commissioner david stern. Also our guest host with us gordon gund who is ceo of the gordon corps. He drafted lebron james to the team back in 2003. Commissioner, thank you for being here today. Always a pleasure. I might add i wouldnt have gotten into the nba if it hadnt been for david stern. He was Deputy Commissioner then and twisted my arm really hard to buy a team that was on its knees. Yeah. Or even further down. And in fairness to make the story complete, he made a heck of a deal. Thank you very much. And you got none of it, did you . No profit sharing. Just usual fee. He was a tough bargainer. He struck the right bargain. But we both did very well. The league having gordon who went on to be chairman of the board, chairman of this, chairman of that. You havent lived until you get a phone call from gordon on the report you sent to me on page five, footnote six. I want to argue with you about that. I said okay, gordon. Thank you very much. I dont even know whats in there. But ill listen to what you have to say. David, it seems like you got out of the hot seat just in time. Theres been a lot the league had to face this year. It just tells you sports is this place people get opportunities to discuss issues of our time really. They dont feel that comfortable discussing them at home, at the work place. So sports does engage people about important subjects. I see the next one coming and coming. You didnt have twitter and facebook either. Thank god. It sort of jump ramped up the volume, i think. That just goes to thats right. All of the pressure to get as many facts as you can and get them out there as fast as possible. We definitely want to talk about, i guess, the stuff in the nba and basketball. But i definitely want to get to goodell and ray rice and everything else. Im going to disappoint you in responding. I agreed to come on because i love gordon. I understand. But as a commissioner you try to do you can be a really good guy and you can its a very difficult thing to navigate, is it not . And in hindsight it just makes it seem so hard. And with a player not only do you want to do things that are good for the sport so youre thinking about all these different things. But you also give a player the benefit of the doubt on this. We know in hindsight what needed to be done. I have no doubt that whatever as roger i know because i read it in the newspaper i havent spoken to him said he got it wrong the first time. But theres calls for him to leave and be ousted and all this hyperbole. It doesnt seem fair. Unless the next person does something the masses think is wrong. I was commissioner for 30 years and if you think you can please everyone, you cant. If you think anything you do isnt going to get strong outrage by some camp, you cant. And theres tough issues. Concussions, all of these things are really difficult to navigate. Were on several fault lines including the issue of race. Right. Which has always been particularly with the nba. And now domestic abuse. Some of these will be here. When im sitting there watching the fact that fans are taking out bananas to taunt black players and you say are we past that and soccer. The answer were not past that. Were not past that. Were not past antisemitic rants at soccer games. Were not past a lot of things that we would like to think were past. And sports is the place where that discussion always ends up taking place. Brings out the best and the worst. One thing i think is also from a business standpoint thats important is planning for your succession. David did a masterful job with that. Adam silver is a great successor. And i think adam is you know, adams succession was free at last. Adam was we worked together for 22 years. In our sort of last dinner he said ive had five different positions, but he didnt say unfortunately. But they all reported to david. So hes doing a great job and he is going to be a great commissioner. What i wanted to ask you and we mentioned this in the 6 00 hour. Theres an article Kareem Abduljabbar has published a piece on the levinson situation. He said if the ae ree that was filled mostly with whites and he wanted to attract blacks, wouldnt he ask how to get others. How should a business person who owns a team like all this with all of the racial issues like this, how should they be discussed . Well, they should be discussed as a matter of encouraging diversity. Diversity in your audience. Diversity in your workforce. Diversity, diversity, diversity. And i think kareem is great. Hes an author, a scholar, a producer. He has a perspective. But hes also walking on a kind of a faultline because when the Old Boy Network as it is for business purposes i need to hire people that only look like my customers. If that were the case, wed never have diversity in any industry with that perspective. So this is a very interesting balancing act that could use some good discussion as opposed to going to the but i imagine the nba and other teams and leagues hire mckenzie and other consultants and i imagine there are conversations that say we need to reach a specific type of audience, a specific demographic given the affluence or the money or who the sponsors want to reach. The question of how to have that dialogue in a way that is fair, reasonable, and doesnt lead to Something Like this. Right. I think it needs a certain degree of discretion on how to express yourself. I have to say that. But youre right about one thing. We talk about wanting to appeal to an 18 to 24 demographic. We are amongst a desirebly young africanamerican audience that sets trends and the like. Discussions of race go on all the time. But on the other hand i remember stepping away from a potential sponsor who was about to fire us because they wanted only to use us to reach a very narrow, quote, special Market Segment which was only africanamericans. I said wait a minute, we want to appeal to a more diverse audience. So were always having that discussion. Didnt you press the players at one point to dress up . Wasnt that something that you enacted . What was that about . That was about showing respect for the game. That was we felt and this was a joint decision by a Diverse Group that said you cant go to a game and come walking into the arena if youre dressed like youre going to the beach. And so this harsh dress code was for a short sleeve shirt, a collar, a pair of jeans, and a pair of shoes was thought you have to wear tails. And our players went one better and now they lead fashion. They lead the developing of designer clothing. What did atlanta need, the hawks . I heard statistics earlier, ten straight years in the playoffs and they havent sold out a single game. Well, actually i think they need aggressive on the ground leadership and marketing. Onthe leadership and marketing. The current president who is new is going to provide exactly that to them. Im optimistic about atlanta. I think its a great market. It happens to be its a very diverse market. Outside of los angeles in terms of the Creative Community, africanamerican Creative Community in addition to the entire Creative Community, its a wonderful community. I think its going to see great success. Do you think levenson, this is just a way for him to sell . No. I dont buy that at all. Is he arguing there werent enough white people at the games . Is that what he was arguing about . Would increasing diversity ever mean bringing in more white people . You dont look at it that way. Well, if you go out to sell large numbers of suites and boxes and club seats and highend seats, you are going to get a diverse mix. Its probably going to skew more towards caucasians than africanamericans based upon the income distribution. Just going back to your 30 years, i think when you started as commissioner, the League Revenues were 118 million, Something Like that. When you left 5. 5 billion. Whos counting . Im counting because i was there for 23 of those and i thank you very much. I think what would be interesting to hear is what you think the future of media revenue, which is the biggest part of it. Well, the pressure is on adam and he is going to respond wonderfully. The Network Television is going to, i keep reading in the papers, its going to double. If they say that, its going to be more than double. The Digital Future of the nba is extraordinarily bright because our fans love to congregate on social media. The global, as we sit here, the talk is whether the u. S. National team and spain will meet in the finals of the fiba world cup of basketball which is taking place in spain. Nba games are in over 200 countries and 43 languages. I think the future really i dont want to put too much pressure on adam, but that number is going up by a lot. People who are saying these teams are trading at too high a multiple are wrong because the revenue flows are going to continue to increase greatly. Thank you so much for coming in today. Gordon is staying with us for the rest of the program. You havent lived until you skied with gordon. Right. Downhill skiing . And his wife is much better than he is. On so many things. Thank you again, david. Thank you for having me. Coming up, jim cramer from the new york stock exchange. Your fidelity green linea t and youll see just how much it has to offer, especially if youre thinking of moving an old 401 k to a fidelity ira. It gives you a wide range of investment options. And the free help you need to make sure your investments fit your goals and what youre really investing for. Tap into the full power of your fidelity green line. Call today and well make it easy to move that old 401 k to a fidelity rollover ira. Chocolate, soybeans, thisand apricots. Made with what kind of chef comes up with this . A chef working with ibm watson, on the cloud. Ingredients are just data. Watson turns big data into new ideas. And not just for food. Watson is working with doctors and bankers to help transform their industries. Today theres a new way to work. And its made with ibm. Lets get down to the new york stock exchange. Jim cramer joins us now. In hindsight are we going to remember what apple says today or are we going to remember how this whole ali babba thing plays out. They are both big events, dont you think . I think its going to be ali babba. A lot of what happens with apple is a new device for developers to do things on. We dont find out what they are going to do with it. A watch isnt about the watch, its about what the developers do. You unveil that. We dont know why we would want to see it and have it until other guys develop it. Alibaba, as yahoo sneaks up, its beginning to feel that its another facebook and the public is involved. Well have more with david faber. Alibaba, if its the beginning of a drop box, air b b, the market will be overwhelmed with supply. It could mark a shortterm peak in the market. It could indeed. For apple to double versus alibaba doubling, weve got no time, jim. No problem. We never have enough. Thanks, jim. See you in a few minutes. Its monday. A brand new start. Your chance to rise and shine. With centurylink as your trusted technology partner, you can do just that. With our visionary cloud infrastructure, Global Broadband network and Custom Communications solutions, your business is more reliable secure agile. And with responsive, dedicated support, we help you shine every day of the week. Centurylink your link to whats next. Got no time to thank you adequately, gordon, for being with us and bringing great guests. Glad to do it. The Foundation Fighting blindness is in business to go out of business. You can help us. Thank you. Thank you very much. Time for squawk on the street. Good morning and welcome to squawk on the street. Im jim faber with jim cramer. Apple is hosting a big event today and is expected to unveil a new iphone among other muchawaited