Transcripts For CNBC Squawk On The Street 20130909

Weekend. Europes own sentiment turned positive in september for the first time in two years. Mixed arrows on the continent. Our road map begins with the president stepping up his push for a strike in syria ahead of his National Address scheduled for tomorrow night while syrian president , assad, denies the use of chemical weapons and threatens retaliation japanese gdp and chinese exports coming in stronger than expected countdown is on for tomorrows am event. Fresh reports about faster and cheaper iphones Goldman Sachs resuming coverage of walmart, target and cosco. The president accelerating his push for a military strike in syria. He will do multiple broadcast interviews today and address the nation tonight. Assad responding to question about chemical weapons being used to charlie rose. Our forces were attacked chemically in another area. They went to the hospital as casualties because of chemical weapons. In the area where they said the government used chemical weapons, we only had video and we only have pictures and allegations. We are not there. Our forces, our police, our institutions dont exist. How can you talk about what happened if you dont have evidenced. We are not like the american administration. We are not social Media Administration or government. We are the government that they would react to. When we have evidence well so, jim, obviously, this is what we are up against this week. A lot of binary questions and optionality. How do you trade it . Assume we are going in. Something is going to happen. President obama is going to go in. I have no doubt about it. I think he does it harder than anybody else would ever think. I think this is going to be a take out of the man we saw and all of his top people. I think this is going to happen sooner rather than later regardless of the vote. Thats one of the reasons the futures arent up as nearly as i would expect. Is that a short equity or long play . I think a goal is doing nothi i think oil and gold are right here. People will say. He will do the speech. People didnt think obama care was going to get through. Do not underestimate this president. He is powerless. Oh, please. President obama is anything but powerless. Are you of the belief that he will win the vote and, therefore, we will move ahead with some sort of military action but he wont but we still sfwhil. I think this man, this dictator is incapable of doing something that makes it suddenly a peacemaker. I think this man is his own worst enemy and he will be taken out. Thats going to be interesting. There has been some chatter as to whether or not the white house if the sen nalt passes a resolution, whether they withdraw from the white house and say, we are going to go with half of congress. There you go. It leads to other questions. If he foregos a fight in congress, does he go back with a summers vote. Does this decrease the chance of summers getting the job . Thats a level of linkage thats sophisticated. I do think that people who think this is one of those things where summers is somehow not going to get in, oh, please. Do you think these press reports are really about yellin winning . No one wants to step forward and say, i want summers to win, which is rather odd. He is a guy that could come back and haunt you if you are against him. I heard the president and the early opposition to summers, the letters written in support of yellen only strengthened the resolve in it being summers. We are not going to get a nomination until, as the president said, after syria is resolved in some form. I had supported summers as i was an alumnus of harvard. Supported summers for president. The women trounced that. There was a little bit of a gender gap. It couldnt be overcome at harvard. Could it be overcome in the senate with Elizabeth Warren . She is a key opposition vote. She is a very tough customer. Along with the Sharon Browns of the world. Do you feel like we are still in for a 15 handle on the s p . Why did we break a fourweek losing streak on the dow . I look at the chinese baltic freight that came out last ni t night. We are talking about staggering numbers, euro zone confidence and chinese exports. I am saying, geez, do we have some sort of boon going oversees, japanese olympics . Could we be carried up despite Mortgage Rates . I still think they are a facto. It did help the asian markets to some hefty gains. Upbeat economic news. Japanese Second Quarter numbers, what were they . Gdp was rising sharply higher, up to 3. 8 . 2. 6 growth had been what we previously were working with. There had been a consensus that number was low and we would get to a higher actual number. You have data showing chinese exports up 7. 2 in august. That was ahead of expectation. A 6 increase with consumer Inflation Holding steady last month. Yum brands, talking asia, reporting a 10 decline in stores. Kfc, taco bell and pizza hut says they expect them to resume in the fifth quarter. You mentioned better than anticipated growth in asia. It seems to be grabbing hold and getting some tracks. There is a tax issue people talk about. There is. Now perhaps they will feel more emboldened to do so with the higher gdp numbers in japan, to raise more revenue. In china, i will say, you said two key things for a while, europe bottoming and china not as bad as feared and leveling off also. So far, so good. Could be better lucky than good. Take credit when due. People give you plenty of a hard time. We did very well this weekend at the barbecue. At my cookoff on ribs. So you take it where you can get it. Im losing fantasy. 126 was the addition for the baltic freight. Here is a good example. Young, that was not a great number. My Charitable Trust says. What is the stock doing . It is up almost 1. This is the benefit of the doubt being given to overseas. Whats wa the last time . These positive articles about mexico. Mexico is taxing people. Suddenly, thats good. I believe that japan olympics cob a gamechanger. They have needed a giant infrastructure program. They have olympic quack squawk street. They need a stadium for that. We dunk each other. We saw the video when the announcement was made by the ioc. Literally, jumping up and down. What is that . It is kind of like the age of walmart, isnt it . The age of walmart, yes. Walmart buys this recommendation by goldman. They say target and costco are holds. I think they are too negative on those. Obviously, front page of the ft today, i dont know how you feel with europe. A lot of increasing anecdotal information that investors are dipping out of, taking some money off the table of the u. S. Going into europe. I thought that was my Charitable Trust owns a big position in europe. I read that article. The numbers are staggering. Ft has been doing some very good reporting. This art icle said risk is back. This isnt anything but emerging market. Every day, the data out of europe seems better and better and better. I do wonder if spain would recapitalize the tax, we would get good news out of spain. The u. K. Seems very strong. You mentioned that. You mentioned raising rates. Really . I think that mr. Carney, dr. Carney, did you notice he is dr. Carney. Dr. Carney may be in a difficult position because the uk is doing well. How many times did they say special relationship. The special relationship seems to be breaking down. Yes, it does. It doesnt seem as though our memories of our employment number on friday are very long here, though. David, you know how much happened this weekend. U. S. Open. Geno smith had a pretty good game. It was all right. That guy who shoved jim out of bounds. That was incredible. They are saying the job is his. That jobless number was a very long weekend ago because of these. Thats gone. Well forget about that. 148 average over the last three months. Well forget about retail sales being very mixed picture. We talked about it. The consumer, not so bad. What else can we forget about . I remember the labor secretary saying it was a good number. Thats what i recall. I remember him saying that every single months for the last foif years. It reminds me of Brian Cranston saying in the movie argo, it was the least bad of the least bad numbers, Brian Cranston and the Labor Department. Excuse me. Walt. Jesse finally went and called him walt. You so decco on the bottom of the screen, jpmorgan tends to elect Linda Bammann and michael neal as directors. Those who work with mike neal at g. E. Know that he is one tough ombre. Also, some changes to the corporate governs practices, establishing a lead independent director that will be able to call a Board Meeting at any time when the ceo is conflicted, not just when absent. Can approve the board agenda for a meeting and may add items. Incremental move here, david . It would seem to be. This has not been an easy period for jpmorgan, we know that. Diamond succeeded strongly in keeping the chairman of the ceo and jobs together. What that is been. The last three months have been unrelenting in terms of them taking a pounding. It goes on and on. They are the target. We dont talk about Goldman Sachs as much anymore. Goldman was in front of the senate with, listen, senate, this is wait it is going to be. They also insisted they didnt need the tarp. Jamie did the fortress Balance Sheet. Money was coming in, not going out. They think it is feeling like the fortress in bojes. Every man must do his part, dead or alive. It has been a typical time for jpmorgan. People are saying, they are showing more responsibility. I am worried about mortgages. I think mortgages are bad. One of my themes is, how can you maintain the housing market. We have autos. We do not have housing. We need Mortgage Rates down. Interest rates down. Trying to figure out why the market isnt more. By the way, this week, also busy on the apple front. A lot of anticipation surrounding tomorrow ace big apple product event. A new report says the tech giant will unveil two models, a new iphone with a faster processor and another lower price modeled which could allow apple to expand into other overseas markets. 160 million subs. Is this an answer to a low android around the world . It seems like it. This is a stealth moment for them. This is the china play. They were very defensive on the Conference Call about how they didnt have enough china exposure. This is an teens the analysts, which is basically, we are back. In the meantime, i dont feel samsung having that great edge anymore. They seemed to have that momentum. The ceo was speaking last weekend talking about taking over the world. It felt like it had more of a brain feel the way that apple has come on. How can you have a straight face. You have mentioned that a lot and i never connected to that a lot. Your kids watch pbs . All he watches is sports center. He is 11 years old. Thats it. He does this fantasy football, which he just sits there and watches while the games are on. Well, i went up against a buzzsaw of adrian peterson. Here i am sitting with andrew luck looking really good. Fitzgerald is busy. He is back. It didnt matter it. I was put to shame by kyle, who happens to be my stage director on mad money. Or was. It gets that nasty on mad money . Yes. Kyle is not going to be happy to hear that. How do you think i won the super bowl last year . Guys playing a lot of guys against me. You have had 100 turnover on your staff since then . Lets just say, there is more to life than the show. Fantasy. And tonight the eagles play. This is another reason i wont be thinking about the Labor Department number. It is called an employment number. It wasnt very good. There was no one they could find except for paris to say it was good. If you want to be that negative, go right ahead a retail hat trick. Golden making a call on walmart, target and costco. Well tell you who got the buy rating. Well talk about that. This is a good one. A lot more squawk on the street live from post 9 in a minute. With fidelitys options platform, weve completely integrated every step of the process, making it easier to try filters and strategies. To get a list of equity options. Evaluate them with our p l calculator. And execute faster with our more intuitive trade ticket. Im greg stevens, and i helped create fidelitys options platform. Its one more innovative reason serious investors are choosing fidelity. Now get 200 free trades when you open an account. Welcome back. Remember that big battle over the leverage buyout of dell . Thats going to go to a vote on the 12th of september. Of course, expect it to fly through, get approval for that deal after they change the voting standard you may recall. In fact, this morning, carl icahn, the main enemy of the deal itself has thrown in the towel, saying there is not much more i can do at this point in a letter that he just released, an open letter to dell stockholders. He will continue to look for appraisal rights and continue to say this is the wrong thing to do by icahn also says, i realize some stockholders will be disappointed we are not going to fight on. Mainly through activism, we have enhanced stock holder value. Billions of dollars, we didnt accomplish this by waging battles we thought we would lose. According to the chance report in delaware, they were perfectly legal in what they do. We congratulation michael dell and intend to call him to wish him good luck. In parenthesis, he may need it. How about the clark gable line invoked here at the end of gone with the wind. Frankly, my dear, i dont give a a damn. Friday, tkr, interest, the ceo cop seeded to the relationships. He came on air saying, i think relational is wrong. It is a mistake to split it up. The board considered it and said the ceo, you better get on the case. If there has been anything this year that has been a trend of great significance, it is the rise each more so of activism. We could have seen that the year prior and even the year prior. The Larger Companies have responded and done so. Whether it is microsoft, very interesting there. It appears they signed that stance of value act and did this incredibly unpopular nokia deal. So many large he have companies where activists have been able to potentially change even though their economics is so strong. To your point, the companies where they are able to take sizeable stakes. Icahn got you a little more money. Without carl, you would not have gotten that. I think when i see Something Like a jcpenney, there is a givup of an activist. Mark cubin, on squawk on the street, little notice, took down 1 million shares in that block. Other than us, is there any one that didnt take 1 million shares down. Thats a very chunky shareholder basis at jcpenney. Perhaps they go and buy a lot of stocks and. They are going to need a bigger closet. Taking the fast lanes towards profits. Cramer has you ready with his mad dash. Dont go away. [ female announcer ] youre the boss of your life. In charge of long weekends and longer retirements. Ask your financial professional how lincoln financial can help you take charge of your future. How lincoln financial can help you take charge of your future. Nascar is ab. Out excitement but tracking all the action and hearing everything from our marketing partners, the media and millions of fans on social media can be a challenge. Thats why we partnered with hp to build the new nascar fan and media engagement center. Hps Technology Helps us turn millions of tweets, posts and stories into realtime Business Insights that help nascar win with our fans. Time to do a little mad dashing 5 30 before the bell. Mole xcels to koch industries. This has been around for a long time, venerable company. Everyone has said it is great. Everyone has said there is two classes. You have a 56 premium. 38. 50 is the price for the people that care. Thats the one that trades. We have learned that life is unfair. Is this the type of thing that can be blocked or is that okay . You have family control. They have the vote. You are paying more for the vote. It doesnt trade. You knew that going in if you were a shareholder there. You have a controlled share hd. D 115 billion in revenues for co koch industries. The techlt ntacles reach widely. If you are going to see takeover names in tech, this might be a precursor. One of the things you get being checked on correctly are deals. They havent been that big. Jim stewart with a piece in the New York Times talking about the regrets of verizon not moving earlier. Every tick up in Interest Rates costs some money. We dont have a lot of deals but we have a lot of, a. Stay tune for that. Brace yourselves. A busy market week ahead. The opening bell coming up next. In a world thats changing faster than ever, we believe outshining the competition tomorrow requires challenging your Business Inside and out today. At cognizant, we help forwardlooking Companies Run better and run different to give your customers every reason to keep looking for you. So if youre ready to see opportunities and see them through, we say lets get to work. Because the future belongs to those who challenge the present. [ babies crying ] surprise your house was built on an ancient burial ground. [ ghosts moaning ] surprise your car needs a new transmission. [ coyote howls ] how about no more surprises . Now you can get all the online Trading Tools you need without any surprise fees. Its not rocket science. Its just common sense. From td ameritrade. You are watching cnbc squawk on the street live from the Financial Capital of the world. The opening bell set to ring in about 20 seconds time, coming off the best week for the dow and the s p since midjuly despite the worries of syria. Developing economies around the world continue to grow and even emerging markets, like china. There is an endless resilience that keeps befuddling people. Where is the big worry here other than people talking about taper . On the big board today, masonite international, the designer of interior and exterior doors celebrating their listing. At the nasdaq, the swedish minister for trade. You are going ton the presumption the president will move in syria . Are you, looking at rtns . They have been so, so strong. A lot of the strength defying the reality. There has been for the first time, a lot of overseas orders of other companies. I dont want to those stocks were up so much. I am reluctant to go there. The one you mentioned, ratheon is probably the cheapest. Sorry. You go ahead. Big week for apple. It is up 1. 5 . Facebook too. Some of these popular names. You mentioned the target from stern at 50. After the 55, we got a suntrust. People talking about montizing everything. The love for pace book now, my Charitable Trust owns it, is the equivalent of the hatred at the 25, 26 level. Lets never forget the ipo soured people. This stock is now approaching stratosphereic levels. People love growth and it is growth galore. Interesting profile of the coo of instagram, whose job it is to turn it into a moneymaker. He says that ad sales are coming in 2014. That was a big piece of the suntrust thesis. People of video, i think the instagram issue, can they do advertising that is not intrusive. Mark zuckerberg said, we will do no intrusive ads. Is he going to be true to that . So far, he has kind of amazed us for being able to develop product that has not turned people off on 1. 1 billion users. A lot of users. Lets come back to the broader market. On friday, we had a strange day. It looked like we would be up, because taper was perhaps not being tapered. Then, we had syria concerns. Then, we ended nowhere, kind of flat, completely flat on the s p. Here we are with a nice rally, early going. You say there is not a lot to be concerned about other than taper with syria. Restoration hardware reports this week, we see masonite. Restoration hardware, a very expensive place to shop. You need a big house to have some of that furniture to do whole kitchens and baths. Something you keep an eye on. There are people who are still spending. Estee lauder upgraded by city today. They had a good quarter. Is this a rich get richer . I dont know. Maybe the rich get richer and the poor are shopping at the dollar stores. The walmart upgrade, i want to see how that works for goldman. City on lu lu, another upgrade. Christine day, one of my favorites, still ceo, will be moving on. Thats an upgrade. We dont really understand why she is leaving that company. No, we dont, no, we dont. Do we . I dont think we do. The company has been great. Nike has been sneaking back. Stephanie lankan works with me. Nike is a chinese play. Dicks has a very big Analyst Meeting lately. This is sports apparel. Dont forget, pvh reports tonight. There is another company. G3 was a tale that maybe they are doing better. A lot of apparel names. Maybe apparel isnt doing that well. Your friend, david berman, came on and said, apparel is not doing that well. The cross currents are rather amazing. You mentioned sort of this final chapter on dell. People seem to want to write a final chapter on blackberry. These reports that fairfax, the board is interested in making this deal close by november. Stocks up almost 3 . I guess every dog can have his day. There is still some intellectual property value. Microsoft took major field. The unwielding nature of microsoft, very good piece in the times. Microsoft made me feel like, if you are moving, if you have a pulse, look out, money may be coming at you. The reviews continue to pour in. There were a couple of analysts trying to straddle the line between positive and negative. The Shareholder Base voted with its feet. My breakup story which i recorded as being heightened and absurd, then gets run. There is nothing the Share Holders can do to stop this. I do wonder whether you will start to see a more public campaign. I dont know. They are usually very quiet. Speaking of people last week, particularly on friday, there are a lot of microsoft shareholders. And nokia would use the term, maybe they pantsed that. Even graphically, in the times, they take the microsoft logo and you do forget the disparity of brands they have. The times calls them stress fractures, msn, bing, office, windows, xbox. It has to be worth more . The parts are worth so much more than the whole, i think. Im sure. I thought it was very interesting when you came out with this breakout idea. I want you to continue to develop that. A lot of games coming out. Obviously, gme has been great. The gaming stocks have been terrific. I dont think they will break the company, just so you knew. He probably wants to keep the company as it is too. You really think elop is he is worth a couple billion. The rest of the company is worth five. Honestly, optical business, vodaphone gets all this money. The only part of nokia that wasnt working is hand set. There you go, steve, one microsoft. One ford except for ford goes higher. We mentioned dell. Carl icahn. They werent going to win. It was over. Dell is not closing on the 12th. They are still waiting on chinese antitrust approval. They have a court system that really works. If you miss the quarer it, it is capital punishment. Cat cater pillar still ticking up on the export number. Same for yum. Mcdonalds, not only do wings go live in the regional markets today but samestore sales for august are out tomorrow. Mcdonalds has been trouble. Buffalo wild wings will probably get hit. I want to buy them on that weakness. New australian regime has come in. Enough with that global warning. We have had it with the global thing, the warming thing. Climate change. Thats what it is called. I believe you believe it is true. It is man maid but i am pro keystone if you want to know. How many jobs will keystone actually have . There are statistics that say 40,000 and there are also statistics that say from obama that nobody knew. I just think in the end, pipelines and the areas where principal source of employment, we know that pipelines can put a lot of people to work. Trans canada, they do a lot of people. You have to lay pipe. That is not something you can do with robots. Thats guys with shovels, maybe backhoes. Yes, backhoes are very important when you are laying pipe. You got that. Dell is up almost 75, a touch above 50,000 and the nasdaq is at a fresh 13year high and he with are knocking on the door of 15,000. Thanks very much, carl. Good to be back. Spent a week in San Francisco, a week with some stock friends of mine and other friends. The city is exploding. The. Comers is back. The whole city is full of good 2535yearolds. Twin peaks got an 800 to 900,000 square foot apartment. He thinks he can get 800,000 to 900,000. The whole city is back. The dotcomers are back. Hope it lasts for that city. Delta is up on word it is going into the s p 500. The big story, whats going on over in asia. The tide of japan and china, lifting all those boats beaten up badly. Jakarta, 3 , korea, 1 . Strong japanese gdp and strong chinese exports. Those are the boosters, those two countries for the entire regional economies. We also have some of the chinese financial stuff. There is word out this morning that banks could begin issuing preferred stock. That would provide alternative sources of financing for them. Another reason we are up. In the meantime, over the weekend, i heard some very interesting theories from traders about the effect of the syrian effect upon the president and perhaps on the battle for the fed chairmanship. Here is the theory. I dont necessarily describe to it. It is out there. The bruising battle overseer ya is definitely affecting the president s domestic priorities. He may or may not get a regulars solution through the house of representatives on syria. Some think he will not and will have to pull the resolution. That will hurt his battle over his domestic priorities, obama care, the fed chairmanship. Some have been speculating given his weakened status, would he be willing to have a bruising fight over other issues like obama care and Larry Summers if this doesnt go very well in syria. He may have to give up one thing or the other and some are speculating perhaps he wont fight as hard for Larry Summers. Finally, an interesting discussion with an old friend of mine over ipos. He noted they are picking up in the last few weeks, 15 to 20 since midaugust. Four in the last week despite the fact that people are concerned about the stock market. We are not far from new highs that is fueling the ipo bar and will have stories on whats coming up in the next few weeks. Particularly strong, the biotech market. We had several in registration in the last week. Back to you guys. Thanks very much, bob. We want to talk about i aname we havent mentioned as of yet. An Interesting Development for crown castle, cci is the symbol. One of the larger, 20 billion Market Company in the tower area. Providing communications. They own and operate over 30,000 sites. Basically, all of australia relies on crown castle for its wireless telecom. They want to become an reit, Real Estate Investment trust. Changing of the tax status, usually seen as favorable for the shareholders. There has been an issue as of late in terms of so many Different Companies in industries that dont seem completely related to real estate trying to receive status. Back in june, the irs said, we are going to take a closer look at lamar advertising, an Outdoor Advertising company. Or equinex. Crown castle may be safer. American tower, remember the deal on friday. Global tel partners. Shareholders of crown castle have been anticipating it will be a year or more. They have a 2. 7 billion net operating loss it said it wanted to work through before seeking status. Now, it decides to move more quickly trying to become a reit by january 1, 2014. It has opinions saying that the conversion will qualify but what it does not have at this point, jim, is a preliminary letter ruling a socalled plr from the irs. There may be a move here to get this done as quickly as possible when the irs comes out. Perhaps, it will grandfather everyone that is already out there. Interesting to note for crown castle, it is moving a lot of the rates higher, including shares of this one. About 1. 5 . Iron mountain. Early spring, really i felt that kiboshed these untraditional reads. At the same time, i happen to be a big believer in the spend issue, sprint, vodaphone, tmobile, needs more reception. You need more reception if you going to have more towers. They were slammed sayingi the ba brazilian acquisition was there. They moved it up. I did call crown castle by the way. They havent returned my call, just to get a little more insight. It is a rent tam. You rent the polls. Why dont we shift to bonds and the dollar. Rick santelli. Anybody watching treasuries this morning would think there was some big news out in the middle of the night, because, as you can see on a two day chart of fives, it wasnt that many hours ago we were hovering at a 177 yield in five and now under 170. We were 294. Here, we whoever at 288. Keep in mind, the fiveyear maturity is the hot one. It led with yields moving up and now it is leading with yields moving down, a little bit of mean reversion here. Whats the reason . Is it a weak report and this makes sense. This he closed so strong with respect to yields. Is it all about the taper and the fact we may not see it. It is very counterintuitive when you look at the next chart of boons. They are slipping under 2 . Most of the data hasnt been bad. Most of it was china and japan. It does seem counterintuitive. Lets see if the Foreign Exchange gives us any clues. If something jumps out at you right off the bat, we are dabbling with this 82 level. Open the chart up to august 1st. We are back in away from six plus week highs. Look at the dollar yen. This is really key. On the 24hour chart, the dollar is Still Holding slight gains against the yen. After their strong gain and stock performance, they must be pretty happy. They would rather see the currency weaker versus stronger, if you open that chart up, you could clearly see like the dollar index, this is reversing a bit off of six plus, weak ties in favor of the dollar. Carl, back to you. Thanks a lot, Rick Santelli in chicago. Mr. Musk going to washington. Tesla is building up its fleet in washington, d. C. Well explain why coming up next. Just in time for football season and philly redskins tonight. Mcdonalds is entering the chicken wings wars. Will they ruffle the feathers of their competition . Squawk on the street will be right back. Just by talking to a helmet. It grabbed the patients record before we even picked him up. It found out the doctor we needed was at st. Annes. Wiggle your toes. [ driver ] and it got his okay on treatment from miles away. It even pulled strings with the stoplights. My ambulance talks with smoke alarms and pilots and stadiums. But, of course, its a good listener too. [ female announcer ] today cisco is connecting the internet of everything. So everything works like never before. I put in the hours and built a strong reputation in the industry. I set goals and worked hard to meet them. Ive made my success happen. So when it comes to my investments, im supposed to just hand it over to a broker and back away . Thats not gonna happen. Avo when you work with a schwab financial consultant, youll get the guidance you need with the control you want. Talk to us today. Tesla is considering taking the battle over its direct sales model to washington. Automotive news reports this comes after mixed result in state level battles with dealers. They contend that teslas Factory Store model violates franchise and consumer laws in many states. Elon musk says it is vital the company be allowed to develop its own retail network. Following an apple store, they maintain a small number of store rooms that customers can order their cars slipped directly to them. This is an interesting battle. We had mike jackson said, i would love to sell these cars. They seem to want to keep this direct model. I visited the short hills mall, tesla. You feel like the bullgary necklace across the street. I went in to ask how much it was. She said, if you have to ask, get out of here. Tesla is an interesting model. It is incredible how well they have done despite this. Your long standing thesis has been, dont get in the way. Havent you heard people anecdotally saying, i am taking a little off here. It has run into a wall. It does feel like there is supply at this efl will. You have got basically a triple since two quarters ago when he said he didnt need any equity. At some point, you need another endorsement. National Highway Safety transportation board, someone else to come out. Incredible story. In the meantime, car company, nissan, is set to debut a smart watch. The nissan watch will be able to monitor car efficiency, register biometric data, via a heart rate monitor. Nissan getting into the smart watch business is like blank getting into blank. Tweet us. You can walk around with the google glass other than on our show. Do you have that . I didnt realize that. Are you fives . Really. Is it worth doing . I have no idea. Tomorrow, i am maybe going to take a look at this new one which has a little more power to it. I am still with the 3 g loading. I have that verizon loading thing. I did go to a best buy yesterday in jersey city. Why wouldnt you . It was fabulous. We will get six in 60 with jim after a break. Six in 60 with jim. A lot of upgrades out of citi. I see they must have something over the weekend. They missed by the penny. The last few months have been weak. Congratulations to fred lynch. Mason, doors. Key likes dominos. This stock has been stalled. This makes a lot of sense. I think patty doyle is doing a terrific job. Holly frontier. The refiners have been in a world of hurt. They will remain that way. Do you like six or fun better . I like fun more than six but six is very good. They are good theme parks. Intap. It is an incredibly undervalued stock. Seattle is an excellent company. Pbh, the largest Barrel Company and goldsmith, lets find out how the banks are really doing . What a show and, yes, i do have a big game tonight. Enjoy. 6 00 and 11 00 eastern. Lets get to simon. It is potentially a defining week for the Obama Administration. We will be live with analysis from the middle east and from d. C. Thats ahead in the show. Obviously, we have apples big up veil tomorrow. Can the stock make further gains after 20 in two months. We will also look at the stage of the housing market. What happens if the fed launches a minitaper. 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With scottrades smart text, i can quickly understand my charts, and spend more time trading. Their quick trade bar lets my account follow me online so i can react in realtime. Plus, my local scottrade office is there to help. Because they know i dont trade like everybody. I trade like me. Im with scottrade. announcer scottrade. Voted best Investment Services company. Welcome back to squawk on the street. Our road map begins with syria. President obama stepping up his push for a strike as members of congress return to the hill as syrian president assad denies the use of chemical weapons the countdown is on for tomorrows big apple event. Will it be a faster iphone, apple tv . Home builders have been hurting. Is this the Perfect Group to buy before the taper . Well show you how to play it. Congress returning to capitol hill today with syria clearly top of the agenda. Our chief washington correspondent, joe harbor. A defining week for oat bama presidency. The president is going to do interviews with all network anchors. He is not the only one doing a media blitz. Bashar al assad gave an interview to charlie rose and tried to raise doubts about the u. S. Case. Senator kerry has presented conclusive evidence. He presented his confidential and his convictions. It is not about confidence. It is about evidence. The russians have completely opposite evidence. This he were taken from areas where they were controlled. That reminds me about what kerry said about the big light that colin powell said in front of the world. He said, this is our evidence. Actually, he gave forth evidence. In this case, kerry didnt even present any evidence. He talks about we have evidence but he didnt present anything, not yet, nothing so far. Not single shred of evidence. Now, assads interview may help raise doubts in the International Community domestically here in washington, it may help the administration slightly by putting a face on the opposition as they try to gather up votes. We expect a vote first in the senate where the president is likely to prevail. Democratically controlled senate. House is much more dicey. Not sure that they will actually get a chance to vote, carl. Why are you saying that, john . Because if the vote count looks bad, it is possible the administration would take a positive senate vote, use that as its authority and never schedule a house vote. You would be in a very difficult position to act after the house has voted no. You dont know thats going to happen. House leadership aids say some of them can still get the votes to do this. It is possible the house wouldnt vote if the count looked really bad. A lot of jokes this weekend about advice and consent. Thank you for that, john harwood. For more, lets bring in borzu deragagi. He is in cairo, egypt and joins us on the cnbc line. Thanks for your time. My pleasure. We had the secretary of state in paris meeting with arab leaders. What do we know about the support from the arab leads, of the saudis of a strike . They are unlikely to give a direct statement. The secretary seems to suggest they are behind us. In fact, the arab world is split on this against intervention and saudi and libya dont stay in support of an intervention. It is across the whole air rob world. Most would like to ciba shar al assad punished or hurt. They are very suspicious of American Power . Borzou, can you add any con text or information from this central claim that he was not responsible for the chemical weapons, the rebels were responsible . How does that play in the middle east, that argument . Well, i think that most people consider Bashar Al Assad at this point not a very credible source. He is on a bit of a Western Charm offensive. He has allowed a bunch of journalists into the country. He is trying to put a safe on his government as this goes forward. Lets just keep in mind, this whole issue of chemical weapon, this is a man who has already unleashed a savage war on his own people, including on innocent protesters, very peaceful people in the first month of the uprising. If you look on balance in terms of who has been responsible for most of the violence and killing in the region and the country, it has been Bashar Al Assad. People in the region arent fooled by that. Obviously, his interview with charlie rose was met with skepticism here in the states. The white house saying anybody who is willing to gas his own people is certainly willing to lie about it. Has his interview had any ripple effects where you are . No. Bashar al assad, his interviews in english are not really broadcast here. It hasnt had a big effect at all. He does have his supporters in this part of the world, his various people who are out there propagandizing on his behalf. No. It has not had. This particular interview has not had a big effect. He has had other interviews on arabic interviews. Saying the same thing. Im a good, modernizing guys. Few people buy it. Borzou, twice when the president spoke on friday in russia, he referenced the possibility that i counted twice that the rebels might get hold of chemical weapons through syria, that all qaeda might get hold of chemical weapons through whats happening in syria. Is there there a widespread bel that chemical weapons are attain believe by the rebels . With regards to these kind of weapons, there is a certain command and control structure that these rag tag rebels dont have. There is a certain level of organization you have to transport and use these weapons. There is a lot of worry, specially in neighboring countries, jordan, lebanon, turkey, as well as as israel, that these weapons are on the loose, being used. A lot of demand and questions about gas masks in the region this last week. A lot of questions all over the world about what may happen over the next few days. Borzou, thanks so much for your time. North african correspondent with the financial times. Back here in this country, the market is extending its rally, 83 points on the dow. We v regained 15,000. Lets bring in david katz, chief investment officer. Jerry castelli is also with us. President and ceo of castle management. Jerry, you are clear that the best place to be in the stock market at the moment is Energy Stocks . Why . Is it a defensive move . Not at all. The market has been taking different sectors and running them hard to where they have gotten somewhat overvalued. If you look at where the energy has been, there has been reluctance or skepticism to say that the price of oil is fairly valued at or about 100 a barrel. The guys that have wonderful opportunities in the shale oil company, none of the stocks truly reflect the growth opportunities. As you start to factor in a 100 oil, you see an upside for names like pioneer and eog. Are you sure you can maintain 100 oil given whats happening in emerging markets and the demand destruction they will be in certain parts of the economy . It is always the theory. Yet, we have gone throughout this year and we have sopped up all the barrels that have been on the market. Inventoriri inventories are 2 1 2 year los. You dont see that nunless the demand is strong. Those areas, have taken what the markets have offered them. If you look at where the United States is going, gasoline demand is positive. Some of the other developed markets are getting stronger. You look at that in the context of, say, libya, who has dropped 1 Million Barrels a day and iraq, whose production is down. If you have a unique opportunity here, because your risk is more likely to be on the up side for oil price rather than down. Hey, david, you talked to some investors over the weekend. They say, i have no idea whats going to happen in congress, no idea whats going to happen in syria. My best bet right now is just to go long volatility. Is that a reasonable reaction . We do think there is going to be volatility. We dont think it is the best way to invest. When all is said and done, market sells off into this uncertainty. It ends higher than today. We would use any type of selloff to buy good businesses at attractive prices paying good yields. We think it might be a little by uncomfortable shortterm but thats going to be the best way to make money. You are still looking at dividends. Im looking at mcdonalds, ge, proctor and tmobile. They gave up a lot of that. We think this pullback is going to be the pause. We would take another look at those stocks. We think there are a lot of very good businesses paying 3 , 3. 5 difficu dividends going up by 8 , 10 . Are you convinced that difficult hikes can keep pace with the tenyear in the last couple quarters of the year. If you look at Balance Sheets of the corporations today, there is nothing keeping them from pushing more dividends back to shareholders. It is the logical thing to do until they let loose with a big Capital Spending cycle. Dont feel at all bashful about owning those kind of names in the neat environment we are in right now. Good advice. Thank you. Jerry castelli any and david katz joining us will the new version of an old product boost the stocks . A rough time for Home Builders. Should you be buying or staying away all together . A lot more squawk on the streets back in a minute. For over 60,000 california foster children, extra curricular activities help provide a sense of identity and a path to success. Joining the soccer team. Getting help with math. Going to prom. I want to learn to swim. Its hard to feel normal, when you cant do the normal things. To help, sleep train is collecting donations for the extra activities that, for most kids, are a normal part of growing up. Not everyone can be a foster parent. But anyone can help a foster child. Welcome back. Lets take a look at shares of yahoo up about 2. 5. Ali baba, yahoo owns a significant stake. Part of the plan was to force the ipo of alley baba. The valuation numbers out there, 100 billion, has been. I have heard from a couple of people vying for that underwriting position. You are assuming 100 billion. You can get to the math pretty quickly in terms of yahoo stakes and what it is worth after a significant tax bill. Not to mention soft bank owns 37 of alibaba. Do you know what they paid for that, about 20 million. Thats what you are looking for whether you make an investment. One reason why the shares are up softly. That has been a key debate . Will it be hong kong or here at the nyc. A lot of guys running around seeking that important business given significant fees for whoever underwriting the alibaba ipo. Many saying worth 100 billion. That being the entire company, not how much it will trade for. Thats a trade a man would make, a manmade trade. 20 million for 37 billion. We are a day away from the much anticipated event in cupertino, apple. They will launch two versions. Is that enough to get wall street excited . Glen young is an analyst with citi and walt is with btg. You look at how the stock peaked with the iphone 5 . Is there some risk here . The phones dont bring a lot thats new. The incremental addition will be a fingerprint reader which one might associate with mobile payment. I dont think a lot of innovation, and, therefore, not a lot of excitement. What about from a subscribe perspective . 11 in incremental epss. Thats nothing to sneeze at. Thats the most optimistic case. Think about china mobile in particular, which is the biggest opportunity. Apple already sells 10 million to 15 million foephones on to t network. Their market share is already approximately what it is at China Telecom and china unicom who already have sub ssidies. The successor lack of success wouldnt suggest there are a lot of new phones that are coming. Walt, where are you coming from on this one . I think china mobile has 700 million customers. 5 million or 7 million is hardly penetrating the base. Smart phone penetration, is very low. We are still at the early growth stages. The whole point is not about doing stuff that is innovative. The 4s wasnt innovative. Here we are. It is about a stock delivering products that will grow earnings and convince investors that they will grow earnings and that will get the stocks higher. I think these products will get them there. A lot of discussion about the lowend phone and the price about which it is effective. As someone says, no one ex effects them to do a 460 phone or if you do a 400 or a 300 phone, can you make the dent that you need to . You have had israel gazelle here who buys phones for 200 and sells them in china for 400. If you can get the price down, you are going to broaden the market. In brazil, maybe you need to get it sub 200. Getting that price down 300, 400, will broaden the market for apple and help them get back to earnings growth. Lets talk the stock price. We are right above 500. If you are as cautious as you seem to be, how much more up side is there at this point . We dont think much. Our price target is well below the current price. We expect the stock could trade to maybe 480. Here we have over 500. Last year, the stock hit its peak as the products became available. We suspect that will happen again this time. Walt, for you . We are at a 540 price target, a 12 times earnings multiple, which is reasonable for a company returning to growth. As they buy stock back, it contracts the share base, which helps them to grow earnings further. As far as the selling on the news, the facts are that in the past two years, the stock hasnt sold on the news. There hasnt been an disappointment when they have separated the product. Carl icahn is hoping it doesnt sell on the news. One name we havent mentioned in this conversation. Thanks for the insight, glen and walt. Competition in the chicken wing business is taking off. Mcdonalds entering with the mighty wings going up against Buffalo Wild Wings and kfc. Should the competition feel like, well, chickens . Thats coming up later. First, the howto guide, howto, winding down fanny and freddie, inside the process and the problems . Well be back in a minute. Clients are always learning more to make their money do more. ann to help me plan my next move, i take scottrades free, inbranch seminars. Plus, their live webinars. I use daily market commentary to improve my strategy. And my local scottrade Office Guides my learning every step of the way. Because they know i dont trade like everybody. I trade like me. Im with scottrade. announcer scottrade. Ranked highest in Customer Loyalty for brokerage and investment companies. In a we believe outshining the competition tomorrow requires challenging your Business Inside and out today. At cognizant, we help forwardlooking Companies Run better and run different to give your customers every reason to keep looking for you. So if youre ready to see opportunities and see them through, we say lets get to work. Because the future belongs to those who challenge the present. Theyre the days to take care of business. When possibilities become reality. With centurylink as your trusted partner, our visionary Cloud Infrastructure and Global Broadband network free you to focus on what matters. With Custom Communications solutions and responsive, dedicated support, we constantly evolve to meet your needs. Every day of the week. Centurylink® your link to whats next. Welcome back to squawk on the street. Yum brands getting a little pop in trading after pizza hut, taco bell and kfc reported that august sales fell by 10 . They fell but they are optimistic about the future after they said they expect sales growth to pick up for the current quarter. David, back to you. Five years after the government takeover of fannie mae and freddie mac, the two are making money hand over fifst as Congress Tries to figure out how to dismantle them. I spoke to bruce berk cowits, a big investor in the preferred shares. Here is what he had to say about their fate. Fanny and freddie have accomplished their mission. They did it. Mission impossible accomplished. So now it is time for them to be resuscitated, rehabilitated, let the equity build up in the companies and prepare for the next rainy day. How exactly do you do that or do you wind down fanny and freddy . Diana olick is live in washington. She has that story. It is was five years ago on monday morning when thousands of these employees came to work to find a new boss. The federal government. In the next five years, they would draw 188 billion from the u. S. Treasury and fund the Mortgage Market almost entirely. Now, they are making billions of dollars in profit. The profit going straight back to the u. S. Treasury. Take a look at their market share back in 2006 at the height of the housing boom. Just 27 . By 2008, when they were taken over, it was between 30 and 40 market share. Today, 68 with fha making up the bulk with va. They cannot stay this way forever. What you need to do is build a new intrastructure that comes with an explicit government guarantee on the mortgageback securities. Thats the only way you can get a smooth transition from the Current System to a new system. There are several proposals on the table. One from senators corker and warner, that appears to have some white house backing. It does include a catastrophic government backstop. In real practical terms, how do you dismantle these two mortgage giants . Fannie mae currently employees 7200 workers. Thats up from 5800 when it was taken over. The increase due to foreclosure prevention and management, which grew to address the housing crisis. You just cant clothse the door overnight. You can keep that Core Infrastructure and protect it and have i atransition that is virtually seamless to the american homeowner and creates a safer system going forward. That would have to take many years and there would have to be confidence involved, not just among domestic but among International Investors that are so key to funding the u. S. Mortgage markets. What will they look like and the whole Mortgage Market five years from now . We are going to talk about that coming up in power lunch. There is always more. Back to you. Diana olick, thank you so much. Sfr straight ahead, the president making the final push for a serious strike as Congress Returns to the hill. Does he have a Strong Enough case to make it happen. More on that when we return. A. We learned a lot of us have known someone whos lived well into their 90s. And thats a great thing. But even though were living longer, one thing that hasnt changed much is the official retirement age. The question is how do you make sure you have the money you need to enjoy all of these years. Amelia. Neil and buzz for teaching us that you cant create the future. By clinging to the past. And with that youre history. Instead of looking behind. Delta is looking beyond. 80 thousand of us investing billions. In everything from the best experiences below. To the finest comforts above. Were not simply saluting history. Were making it. Almost an hour into trading. Shares of molex soaring more than 40 . They are agreeing to be acquired by koch industries, 7. 2 billion. 38. 50 a share in cash. Delta airlines up. Replacing bmc software. Harleydavidson among the stocks hitting 52week highs. Shares up 42 in the last 12 months as members of congress return to work today, president obama is mobilizing all the white houses Political Forces in a big push to win support for limited missile strike against syria. He, himself, is interviewing with the networks this evening and then tomorrow, of course, will make his National Address. More insight now on whether the president has a Strong Enough case to intervene. David gordon joins us. Ken timerman is a middle east expert. He joins us live. Welcome to the program. Great to be here. Let me kick off with you. Clearly, assad is attempting to put front and center with the debate with the interview he has done for cbs. This whole question of whether he was responsible for the Chemical Attacks or not saying the United States does not have sufficient evidence to actually indicate that it was him. What is your view of the evidence that we see . So far, what ive seen, weve got the goods, trust us. They have not put anything on the table, certainly not in public. What they have briefed congress, from what we know so far, has been this 13minute assembly of youtube videos that show, yes, there was a chemical attack but it doesnt give any indication of who carried it out. I think the evidence so far is unconvincing. I think Congress Must demand that the president and the secretary of state present it. What happens if there isnt actually the evidence to 100 prove that it was assad but with a highlevel of confidence you deem it to be so. You seem to be setting the bar extraordinarily high. I havent seen any evidence so far, period, high level, low level, no level. I would like to see something. There, in fact, is some evidence coming from french intelligence, jordanian intelligence that they attacked and seized sarin gas. They had the capability to carry out the attack. We are being told by the administration, that isnt so. I think we need to see this on the evidence. David, would you agree with that . No. I think ken is wrong on that. I think that the evidence is pretty overwhelming here. It is not 100 . This is the fog of war. Enter terms of the tra jek torres of the artilleries that were fired in the areas that received the hits, these were places that are controlled by the government. So i think the case, all of the allied intelligence agencies are actually quite convinced that this was an attack by the Syrian Regime forces. We dont know, of course, how high up this goes. That doesnt really matter. I do think the president will be making a case that is potentially solid but it is up to him to make the case. So i think the pressure is on the president and the key here is that he has to get democrats to support him, because the republicans are not going to come on board absent very overwhelming democratic support. Ken, some are still trying to carve out some third options, right . Tom friedman says there are still ways to arm and support the rebels in ways the International Community has not yet done. Then, there is always the possibility there are more Chemical Attacks which object sten cybilly would make it easier. It is possible there could be other ways of arming the rebels. I would not support it. The white house, the state department, is saying that the first reports of chemical weapons being used came in 90 minutes after the attacks stopped. So it is quite plausible there was a separate attack or release of warfare agent after it stopped. I agree there was shelling. That is irrefutable. There were 3600 people that were looked at by Doctors Without Borders but only 365 casualties. That could be an attack done by amateurs. My own view here is that the government was actually trying to carry out what they believed was a much more limited attack, but, again, i think some of the details here we will have to await. The important point here and contrary to what ken says is that all of aour all lied intelligence organizations, the french, british, israeli organizations, all accept the notions that this attack was undertaken about undertaken by the Syrian Regime. There will be a chorus that will say, yes, but we were here before. This is not iraq. This is the point that the president has to make, that the president isnt dragging america into war here. What were doing is we are responding to a violation of International Norms and law about the use of chemical weapons. This is not a context for any kind of fullscale attack. The president needs to make that absolutely clear. Lets see what he does say on those Network Interviews and with his address at 9 00 p. M. Eastern. For the moment, thank you. David gore godon joining us e and ken timerman. Ibm planning to offload private health plans to private exchanges. Could your former employer be next. Well find out what it means for the Health Care Company when squawk on the street comes right back. Today, thats easy. Ge is revolutionizing power. Supercharging turbines with advanced hardware and innovative software. Using data predictively to help power entire cities. So the turbines of today. Will power us all. Into the future. Into the future. Dont tell mom. Dont tell mom. Dont tell mom dont tell mom. Okay. Dont tell mom. Dont tell mom. Dont tell mom . Yeah. The best stories youll ever tell start with, dont tell. Dont tell dad. Start yours in the new santa fe. From hyundai. Like carpools. Polly wants to know if we can pick her up. Yeah, we can make room. Yeah. [ male announcer ]. Office space. Yes, were loving this communal seating. Its great. [ male announcer ] the best thing to share . A data plan. At t mobile share for business. One bucket of data for everyone on the plan, unlimited talk and text on smart phones. Now, everyones in the spirit of sharing. Hey, can i borrow your boat this weekend . No. [ male announcer ] share more. Save more. At t mobile share for business. Thats not much, you think. Except its 2 every year. Go to etrade and find out how much our advice and guidance costs. Spoiler alert its low. Its guidance on your terms, not ours. Etrade. Less for us. More for you. Well, no surprise, carl icahn has essentially thrown in the towel in his opposition to dells plans to take the company private, that being michael dell in partnership with egone durbin at silver lake. He wrote a rather dramatic letter signaling his exit from this battle. It will all wrap up on thursday in texas where they will hold the vote this time on september 12th, where shareholders to vote. They are very likely to vote in favor of that deal, which was raised a bit in price in order for the buyout group to get a change in the voting standard that let them carry the day, not to mention a change in the record date to help solidify their hopes for carrying that vote. It will not clothes, se, by the until october. The 17th of july at their conference, icahn was still in full battle mode. It reminds you of a dictatorship. They will scare you. They say things wrong with the company. They have all these lawyers protecting them. They would have got away with it. At the risk of being modest, they would have gotten away with this if i department happen to have a 3. 5 billion around and jeffries that was willing to put up 1. 6 billion. The old spare 3. 5 billion. He does pat himself on the back but it is deserved. Wous his presence, shareholders would not have received any larger consideration. The special committee having decided that the initial bid what the deal price was what they were sticking with. We were saddened at our battle to control dell but it makes the loss a lot more tolerable. What they said was their best and final offer . They did say it. In fact, they had Mark Schaefer go out and say it right here on our set as a result of this increase, all stockholders are to receive many hundreds of millions more than the board originally accepted. All true. When we talk hundreds of millions, icahn, i dont know if his profit is going to be ha large but he did buy that stake at 13. 50 a share. He has made a lot more in his netflix share. I reported on march 6th, the likelihood of a fight coming up. He has made 600 million just only 5. 5 million shares of netflix, a lot more than he made on dell. That helps when you have 3. 5 billion sitting around. Brad is getting the favorable coverage on that one, lets call it. Home builders taking a hit in the last few months as youll be aware. Should you be buying those stocks ahead of what could be a taper light . A weaker taper than we expected as a result of fridays jobs report . Thats next on cnbc. Looking at covered call strategies to generate income . With fidelitys options platform, weve completely integrated every step of the process, making it easier to try filters and strategies. To get a list of equity options. Evaluate them with our p l calculator. And execute faster with our more intuitive trade ticket. Im greg stevens, and i helped create fidelitys options platform. Its one more innovative reason serious investors are choosing fidelity. Now get 200 free trades when you open an account. Welcome back to squaub on the street. Shares of Isis Pharmaceutical surging today on the heels of a partnership to develop treatments for neurological diseases. Isis will be entitled to licensing and royalty fees for any treatments that result from this collaboration. Some big changes for biogen and e isis some Big Health Care changes coming to some very big companies. Time warner and ibm announcing they are planning to transfer their u. S. Retirees to private insurance exchanges. Bertha coombs with more Information Big blue has long capped its rye Retiree Health care benefits. The costs are set to triple by 2020. They are switching to provide more choice and flexibility to their retirees at an equal or better cost. Ibm will give their retirees money they can use toward plans, and part d drug coverage. A year ago, dupont made a similar move with its 80,000 medicare eligible employees moving them on to the health care exchange. Thats the largest private Medicare Exchange which handles nearly half. Providing them with agents who walk them through the process and find which plans, then them find which plans might be the most cost effective. Retiree coverage among major pl employees has dropped. Companies more than 500 employees according to mercer. Extend health ceo says his Health Exchanges is continuing to provide coverage. It looked like an exchange way to help companies that were struggling financially. Now, it has moved very rapidly to a far more efficient way to buy Retiree Health care coverage. Thats one of the reasons ibm is doing it. They are saying, this isnt going to save them money. They have already capped how much they were putting in but it is going to give their retirees a better way to access more coverage, rather than having to have bigger out of pocket costs if they continued with a defined plan. Unions have done this for a while. They were the distressed ones that moved into that space and were also starting to see some of this in the Public Sector as well. Those are some big names. We will keep on it. Thank you very much. An environment of rising rates and taper talks, the Home Builders have had a pretty nice run. Following results that did miss expectations. Lets bring in Megan Mcgrath and bob, home builder and Building Product analyst. Good to have both of you with us. Glad to be here. It is hard to tell if the group is trading on the tenyear or on employment or on a mix of everything. How do you see the space right now . The builders are pretty much a onetrip bony. They are going to trade off of rates. They traded higher off of a employment number. Which is not what you want. They are training off ratsz. I i dont think they are investable right now. When did your enthusiasm start to wane . Do you think thats going to be the overriding die maynamic . We have been cautious. Uncertainty is no good. I think they are going to trade up and down and probably end up in the same place. So they are tradeable but not necessarily investable. Bob, a week a couple of days before we know something about the september meeting. Does the picture at that point get a lot clearer . No, it doesnt. Our twin concerns, which we would like to echo, are the impact and rising Interest Rates that will lead to slack demand that will translate into slower earnings growth. We are concerned about weaker evaluations. We will reinvest in Building Products that have better up side. We would like to highlight fortune brands, masco and mohawk. To adjust at this point. Im thinking it of a sherwin williams. Your enthusiasm extends to the usgs and the sherwins of the world . We like all of the companies that both have leverage to no res construction. We are enthusiastic about stocks that are tethered to increase repair, remodel and spending in the big box channel. Thats why we highlighted guys like masco. We think they have a strong tailwind headed into yearend, in contrast with tapering whether its heavy tapering or light tapering, youre still talking about the head winds facing the builders. Thats our concern. Thats why were incrementally cautious on those names, on the housing names. If you did want to play the home builder, we keep hearing about how the market is skewed to favor those with money, not a firsttime buyer, someone who is going to upgrade or buy big, maybe even urban. Is toll your favorite name in the space. Its one of the few names we have a buy rating on. Its primarily because of that. Their buyers should not be that Mortgage Rate sensitive. Theyre a niche player in the luxury market. As the lower guy start to compete, toll should be in a nice position to sustain some of the higher prices theyre getting. Thanks so much for that. Megan mcgrath and robert whettenhall. Thanks. Lets head to chicago and link in with the santelli exchange. Morning, rick. Good morning, simon. You know, im still excited over the friday jobs report. Not because it was a good report, but because there really is a lot of information there. And it was a topic of many debates. Listen, whether youre listening on the radio or watching, debates are a good thing. It makes everybody a little better. One of the aspects of the debate was no matter what you looked at, Labor Force Participation rate or the employmenttopopulation ratio, these were longterm trends that were exaggerated by the credit crisis. But as i did some home work over the weekend, just not true. These are handdrawn charts because it takes too long to get them recopied. Youll get the point here. Employmenttopopulation ratio going back to 1990 looks Something Like this. 62 say key level. We didnt violate 62 until september of 08. Wow, september of 08. Arent we talking about the fiveyear anniversary of the crisis . That is pretty much when it occurred and it wasnt trending downward. It started doing this then. If you look at the Labor Force Participation rate, pretty much very similar, except for one thing. It happened a little bit later. 65 is going to be the area that were going to focus on as the trigger. Just based on the same types of Technical Analysis that you do on a chart if you were trying to trade ibm or tenyear note yields. That trigger at 65 happened around december of 09. The point of this is, is that a major underpinning of the discussion is, that its not something about the current administration, there isnt really something about the crisis, its about demographics. I am sure demographics do play in. I think the evidence is pretty compelling and you could go to the website and find both of these very easy, whether you take them back to 1990 for 1960. In the end, these trends tell me one thing very simply. And that is, the credit crisis started something and the government in trying to address it, has failed. Now, why they failed . Well, many people think that you need to let the private sector create the jobs that the government in essence has hijacked what should be a normal recovery. This is evidence that their methodology, their plans, everything theyre doing, well, historically, theyre not cutting the mustard. I will tell you that these discussions should heat up even more. Because trying to extract the demographics may be important but these trends in the breakouts and when they happen on whose watch, tells us boat loads about how job creation is done or in this case, how it isnt done. Simon, back to you. Great charts, rick. Thank you. Tweet time now. Nissan is entering the smart watch battle unveiling a nissan nizmo watch at the frankfurt motor show. Nissan getting into the smart watch business is like blank getting into blank . Were al your responses throughout the morning. Ovide itu can rely on. With centurylink as your trusted it partner, youll experience reliable uptime for the network and services you depend on. Multilayered Security Solutions keep your information safe, and secure. And responsive dedicated support meets your needs, and eases your mind. Centurylink. Your link to whats next. Nascar is ab. Out excitement but tracking all the action and hearing everything from our marketing partners, the media and millions of fans on social media can be a challenge. Thats why we partnered with hp to build the new nascar fan and media engagement center. Hps Technology Helps us turn millions of tweets, posts and stories into realtime Business Insights that help nascar win with our fans. Amelia. Neil and buzz for teaching us that you cant create the future. By clinging to the past. And with that youre history. Instead of looking behind. Delta is looking beyond. 80 thousand of us investing billions. In everything from the best experiences below. To the finest comforts above. Were not simply saluting history. Were making it. Got a good squawk on the tweet today. Car company nissan is set to debut its smart watch, yes, nissan with a smart watch, unveiling it at the frankfurt motor show. The watch will connect with their cars, youll be able to monitor the cars efficiency and register biometric data via a heartrate monitor. Talk about a new driving experience. Wow. It brings us to this mornings squawk on the tweet its like microsoft getting into the cell phone business or Warren Buffett getting into a hyperloop or Waste Management getting into fast food which is an image i could do without. Interesting how some of the industries guys are converging, right . Yes. As technology moves along. I guess you can make a watch, an electronic watch quite cheaper. We wering them like 30 years ago. Its a question of what you can do with it. Remember the watches with the calculator, the ka is casio, we going bayh back to them. Er that uploading your data every day. It takes your heart rate, how long you walk, whatever you did and how long you slept. I assume i believe may enter that phase as well. They have hired a guy who worked on the nike fuel band. Well see what they unveiled tomorrow. Speaking of which, theres a name thats helping the nasdaq at nearly a 13year high. This icon letter, david, just to put a period on it, only he could wave a white flag but make it sound like he won. Hes become more and more entertaining the older he gets. I hope he lives forever. A lot going on with the dow up 85. Were talk berlusconi in europe in a minute. Heres what you missed earlier on, if youre just joining us. Welcome to squawk on the street. Heres whats happened so far. Congress while theyre doing syria is going to be forced to multitask here. They need to focus on the budget. They need to increase the debt limit. I think the fed did a great job putting out the fire in 0, 08. I think the fed was playing with matches in 03, 04 and 05. You think theyre playing with matches again . Yes. Do you think the press reports about yellen winning . No one wants to step forward and say i want somers to win. Which is quite odd. He could haunt you if youre against him. I dont think samsung has the great edge any more. The ceo is speaking last week, talking about taking over the world. This morning, carl icahn, the main enemy of deal itself has thrown in the towel, saying theres not much more i can do at this point in a letter that he just released. We think there are a lot of good businesses that are paying three, 3 1 2 dividends that will be going up by 8 . Thats a good place to put money, especially in uncertain times. Got some breaking news on the fed. Steve liesman with details. Steve . Hey, carl, San Francisco fed president John Williams making some notable remarks on the week which were marking the anniversary of the lehman bankruptcy. He is saying the fed needs to focus on how Monetary Policy can amplify or dampen asset bubbles. Hes saying that new theories on asset bubbles suggest a much longer impact from Monetary Policy than had typically been thought. The feds responses to the economy can affect the beliefs and behavior far into the future. Asset price bubbles and crashes says John Williams, with here to stay. Recent studies show investors and markets do not always behave rationally. Theory is more what he means. The fed needs to consider unintended affects of policy on invested behavior. Hes not making specific comments on current Monetary Policy but a guy saying stuff like this youd think would want to be out of experimental policies and quantitative easing sooner rather than later you would think. Carl . Interesting. Highly anticipated remarks. A lot more to come, both this week and next week, steve. Thank you for that. Lets move on to syria, this morning, syrian president Bashar Al Assad denying responsibility of the use of chemical weapons and threatening direct and indirect retaliation for any american attack. This comes as the president is making his case for military action in a speech from the white house tomorrow night. Our john harwood following the latest, live in washington this morning. John, good morning once again. Good morning, carl. President obama is scrambling for votes, first in the senate, then in the house of representatives. Hoping to build on core democratic support and get enough republicans to cross over and back him. But as you said, syrian president assad is out there trying to make his arguments. Hes denied that his regime was behind those chemical weapons attacks in this interview with charlie rose of cnbs, he said te Obama Administration couldnt prove he did because theyve got no evidence. Heres the president. Present what you have as evidence to the public. Be transparent. If he does . If he does . If he presents this evidence. This is what we can discuss, the evidence. He didnt present it because he doesnt have, kerry doesnt have. No one has. The administration so far has been trying to woo lawmakers with videos of people suffering from chemical weapons attacks. Theyve made the argument that they know that the assad regime was prepositioning forces for the chemical attack. They have not presented a smoking gun about the chain of custody from the chemical weapons to the use of them actually in this instance. Thats a challenge. The administration feels certain but there will be some doubt in the minds of lawmakers and thats one of the things they have to overcome. It will be an interesting week to watch congress as they come back from five weeks of recess, john. John harwood in washington. Lets send it over to ayman jabbers. Good morning. One of the most striking things about the administrations case making for military strikes on syria is their use of social media and videos posted on twitter and other places as part of the evidence for why they say the United States has got to get involved here. Take a listen to secretary of state john kerry earlier today. We know within moments of them landing in that territory, the social media exploded with videos that we also know could not be contrived. And weve done various means of ascertaining that. Maybe the first time that twitter and social media has been involved in the runup to a war that the United States is potentially involved in. Twitter and social media, of course, come with a whole lot of skepticism, none the least here from the syrian president Bashar Al Assad who told cbs earlier today in an interview released this morning that he doesnt believe any of this stuff that he sees on the internet. Take a listen. How can you talk about what happened if you dont have evidence . Were not like the american administration. Were not social Media Administration or government. We are the government that deals with reality. And dealing with reality is the key question here. When youre dealing with stuff thats unverified out there on the internet. Interestingly theres one private Sector Organization thats trying to deal with some of that. Its a group called storiful, theyre based in dublin, ireland. They try to get to the bottom of all these videos posted out there and try to verify, do the forensics on them and figure out whats real and whats not. It can be a difficult task on social media, carl. Still dealing with the overhang of past wars. No doubt about that. Thats right. As the president tries to sway the American Public to strike syria, lets bring in a panel of experts to get their take on the right course of action. Lester and doug. Gentlemen, good morning to you both. Good morning, carl. Morning. Ernesto, so difficult to get any kind of clarity here. The president argues those who have been through the classified briefings basically walk out convinced. Thats certainly not what lawmakers have said over the weekend. Do you have any sense as to how convincing these briefings have been . I think most lawmakers dont really doubt there was in form of chemical attack. The major reason youre seeing a lot of people hedging their bets and expressing ambivalence about whether or not this is the right course of action is the question of unintended consequences. What happens the morning after . You know, even if these strikes were to unfold as planned, if theres not a game changer in the conflict and yet the United States has been sort of injected as a combatant into this war, what are the longterm implications . Those are troubling questions. Doug, the president was asked about that in st. Petersburg. What happens if you strike and assad continues to gas his own people . His argument is, well, that would be a mistake essentially and that ostensively, it would be easier to build a coalition against him if that happened. Thats why the administration is trying to get a resolution that allows them to do that, so if there is another chemical attack they dont have to come back to the congress again. He has an uphill climb. Part of the issue, for two years, the administration has been talking about regime change in syria. Now when we cross the red line were talking about a very limited strike to punish the use of weapons of mass destruction. I think thats the right call but confusing in terms of their messaging. How likely do you think it is . The market is trying to deal with the binary situation, we go or we dont. Is it likely that the president withdraws his request from the house and goes it alone with the senate . I just cant say. But i think most im not a vote counter but those who are seem to think his odds in the house are not particularly good. Yes. I assume ernesto you would agree . I know you cover national security, not the hill. But to what degree do you think thats a likely political scenario . Well, i mean, i think it would open him up to a huge amount of criticism. Now that hes essentially punted this to congress, it would be very hard for him to say ill just take the senate, because the house is not looking so good, ill completely ignore that bit of congress. You know, one thing we could see, if in fact the hill is not going to be on board, can he redefine what the options would be for a response to the assad regime having crossed a red line . Are there alternatives that look somewhat different from this Cruise Missile strike that would show a Strong International response that would have, you know, repercussions but would reflect represent a different course of action . Interesting. What could that look like, earn toe . Does it have to do with arming the rebels in a different way or some other sort of tactical military strategy . Well, you could redouble efforts on the diplomatic front, for example, and place a huge amount of criticism on russia for its support of the assad regime. You could markedly accelerate what youre doing in terms of arming the rebels. This effort has been off to a very, very slow start. And you know, the Obama Administration could conceivably come up with a plan to, you know, pour more resources and a lot more bodies to this effort. Yes. Finally, doug, even those who say they agree with the president in spirit are frustrated with what they one lawmaker called it a hash of an argument, the way hes built his case, they say, has been faulty. Do you think thats fair . I think the case is not bad. Its been the politics and the messaging to decide you need congress after youve gotten way out in front and put your credibility on the line. The president has put himself in an awkward position where if the congress doesnt come along, he looks impotent and weak. Well see what his interviews say and his address tomorrow night. Thanks so much for your time. Pleasure. Thank you. Todays stocks dont seem too concerned. We were up triple digits, bounced off of that a little bit. The dow still up 95 points. 9 s p 500 up to 1664. We take a closer look at where stocks are headed next. First, Rick Santelli is looking at the Balance Sheet. Usually on thursdays. You know, carl, theres a lot of similarities between the issues of syria and the issue of the fed. Ill tell you why. Because its about strategy, what it will accomplish, what are our goals . Are we going to be better off for doing it . I think a lot of those same questions could be asked regarding the fed and their policies. Thats exactly what were going to do, bottom of the art with art nolan. Be there. Ows our clients trade and invest their own way. With scottrades smart text, i can quickly understand my charts, and spend more time trading. Their quick trade bar lets my account follow me online so i can react in realtime. Plus, my local scottrade office is there to help. Because they know i dont trade like everybody. I trade like me. Im with scottrade. announcer scottrade. Voted best Investment Services company. Got some news here. Courtney reagan is back at hq to walk us through it. It is now official, Aries Management in canada are buying Neiman Marcus from tpg for 6 billion. The transaction will close in the Fourth Quarter of 2012. Neiman marcus has 79 stores, 41 are the fullline Neiman Marcus stores but two bergdof goodman. Very Interesting Development there as thats official. Thank you very much. Markets are higher, got some good data out of china. We have the chief strategist. Gentlemen, good to have two erics on the program. Mr. Rustoven, with the dows action today, some wonder if well get any kind of meaningful correction by the end of the month. I think you should wonder. Theres a lot of reasons i believe that stocks will continue to move up. I would expect volatility because its really the taper versus the economy. We think the economy will win and that will drive stocks higher. But people are worried about the impact of the taper. I would use that volatility to buy on the dips and look for market weaknesses, a buying opportunity, rather than a sign of things to come. Would you argue that a strike on syria, whether or not Congress Approves it, however it happens, is net bullish or bearish . I think its net bullish if you look at the history. The anticipation of military action in these kinds of situations usually causes a market selloff. Once the action is engaged in, you usually see a rally. We saw it most recently in libya, a couple of years ago. Weve seen it across the board over the last couple of decades. Eriq lasalle, at the same time we have to weigh whats going on with the fed. We have a meeting next week. The jobs number on friday, left a lot of people wanting. Do you think that labor market weakness will fade here . It sounds like youre bullish going into the year end . Thats right. Absolutely. Obviously the numbers werent quite what anyone hoped for on friday. If you look at anything else that measures employment, be it jobless claims, that ism nonmanufacturing employment component, theyre showing something than the payroll survey. My suspicion is it gets better in future months or we get a vision that fixes this. The economy clearly picking up speed. I am feeling fairly good. When i look through the challenges and uncertainties that remain through the end of the year, what the fed does with the taper, the german election, syria, the list goes on, there are challenges but i think there are more buying opportunities than anything else. None of these are all that frightening in the context of where weve been. We come in on a monday and look at japans gdp, a nice revision up. Some of the china export data was encouraging. Have people underestimated the resilience of emerging markets own those developed markets that have been challenged lately . I think the real theme is one of normalization. Were seeing normalizing economies at least in the developed world. Were seeing normalizing Interest Rates on the back of the fed and normalizing valuations in the stock market. Not all of those things are good for investors going forward. I think it is something to aspire to. The one caveat id give, im not convinced emerging markets will be able to reclaim the lost ground. Lets celebrate the chinese numbers but there are structural head winds here. I think china will continue to slow as opposed to accelerate. Interesting. Finally, eric, if youre playing the u. S. , do you go into the Fourth Quarter with a defensive posture, buying some of the dividend names even with the rising tenure or do what apparently some are doing today, take a flyer on caterpillar in the hopes that china is not slowing as much as you fear . Were modestly overweight the cyclical stocks, in particular, consumer discretionary. We are caution yash about what were thinking in terms of volatility for the quarter. Were off setting that with fairly overweight health care. I would not be defensive. Getting out of september is going to be a challenge. Either way. Thank you so much for your time. Well see you later. Thank you. Lets send it over to dominick chu. S P Dow Jones Indices said it would include delta in the s p 500 index. Here are how some of the other big s p 500 additions have fared in trading so far this year, both immediately after the announcement and a month later. Back on july 1st we found out that info and Ratings Company nielsen was going to replace Sprint Nextel in the s p. Sessions were down a percent a month later. Same thing happened with General Motors on june 3rd we found it would replace heinz. Shares went up but down about a percent a month later. A couple of names carried over gains through the next month, Animal Sciences company zoetis, gained and still up 2. 5 . And 21st century fox traded up half a percent on june 21st and were still up 12 a month later. Lots of factors affect the move but shortterm rises on stock, index inclusions dont always last. Certainly something to Pay Attention to, carl. Those are good numbers. Facebook is still the Biggest Company thats not in the s p. Everybody wants to know when or if theyll get at it. Talk about a stable supply of buyers. If youre an index maybe you have to buy the facebook shares if they get included. New phones, new colors, maybe Something Else . The rumors are flying ahead of a major press event in cupertino. Well tell you what to expect from the tech join the in just a moment. Riter. [ man ] id be a baker. [ woman ] i wanna be a pie maker. [ man ] i wanna be a pilot. [ woman ] id be an architect. What if i told you someone could pay you and what if that person were you . When you think about it, isnt that what retirement should be, paying ourselves to do what we love . [ male announcer ] staying warm and dry has never been our priority. Our priority is, was and always will be serving you, the american people. So we improved Priority Mail flat rate to give you a more reliable way to ship. Now with tracking up to eleven scans, specified delivery dates, and free insurance up to 50 all for the same low rate. [ woman ] we are the United States postal service. [ man ] we are the United States postal service. [ male announcer ] and our priority is you. Go to usps. Com® and try it today. Blackberry is getting a boost today. The latest report from sunday times indicates that chairman of fairfax financial holdings, blackberrys largest shareholder has assembled billions in backing from canadas biggest pension fund, Canada Pension Plan investment board. Other canadian Pension Funds are also expected to back watsas bid. This continued buyout speculation is helping shares of blackberry move to the upside. Thank you very much for that. New colors, new phones, new prices, maybe a new tv . Just what does apple have up its sleeve for tomorrows big announcement . This day has been a long time coming, jon fortt. It will be a launch unlike anything weve seen yet. I expect to see a whole new tier of iphones. How will apple differentiate between the highend iphone or midtier. Expect to see an iphone 5c grab a lot of attention. Its case is plastic, maybe apples worstkept secret ever. Photos have been leaking out of chinese factories for month, it comes in yellow, red, green, blue and white. The things investors should care most about, what features apple will offer at the various tiers . Lets take a look at possibilities. At the high end, the iphone is slighted to start at 650 bucks for 16 gigabytes. Apple may kill the iphone 5, offers the 5s at 650, the 5c at 550. The other big question is whether apple keeps the 4 or 4s around. When will these phones be available in apples fiscal year and quarter finish at the end of the month. As many days of sales as apple can get in before then will be significant. Most important, how widely the 5c will be available in emerging mark lets by the end of this month. Watches and tvs, i dont know, that would be a bonus, carl. There have been analysts on the street, a gene munster who think that tv is a 2013 phenomenon. Carl, apple doesnt like to do a lot of big announcements at once. They would tend not to want to crowd out the iphone spotlight by launching Something Else big. They might do what they did last year, which is have a couple different events at the end of the year to give everything its own little turn in the sun. I also think the president speaking from the oval office, the dangers of it being crowded out by the syria news tomorrow are significant. You have to imagine apple was disappointed at that timing. Well see what tomorrow brings. Its going to be interesting. He was nice enough to do his talk later in the day. Yes, absolutely. Jon fortt in san jose. Nissan is set to debut a smart watch, the nissan nismo. You can monitor your cars efficiency and biometric data. It brings us to this mornings squawk on the tweet. Nissan getting into the smart watch business is like blank getting into blank. The bells are about to sound across europe. A few minutes left in their trading day. Simon will walk us through that. Well talk about berlusconi and whether he loses that senate seat. Back in a moment. Ing to the pas. And with that youre history. Instead of looking behind. Delta is looking beyond. 80 thousand of us investing billions. In everything from the best experiences below. To the finest comforts above. Were not simply saluting history. Were making it. 30 seconds until europe closes. Simon hobbs here to walk us through the action. Weve waiting for silvio berlusconi. Let me mention the front page of the times today. Lets go back to the map. I want to show you whats happening. Theyll be disappointed with whats happening today where you see so many of the countries in the red. The bottom righthand side outperformance from italy. Its in the green. The senate, the subcommittee of the senate in italy that should decide whether berlusconi should be stripped of his nmembership because of his tax conviction. The market seems relaxed with the idea that berlusconi is threatening to bring down the government but probably will not succeed in that. On both sides of the atlantic were dealing with the same problem, these rising Interest Rates that you have. This is the bunt and the london guild. One standout stock i thought you might find interesting is fiat, which is up about 5 , 5. 5 now in milan. That as we learn that sergio i beg your pardon, Sergio Marchioni is not going to attend the auto show. Theyre saying hes involved in work commitments. Perhaps the man is negotiating to buy the 41. 5 of chrysler that fiat doesnt already own from the united auto workers. Its crazy speculation at the moment but the question is why has he not turned up to the frankfurt motor show . In the meantime we hope to have more later in the week from the frankfurt motor show. Its a prime example of how the germans should be able to show off their developments as a result of increased research and development when perhaps some of those club med automotive workers have not put in that type of investment. A lot of talk that theyre looking outside europe itself to sell cars in the future. If berlusconi loses does that create instability because he could withdraw support . The question is a, would he withdraw support or say ill come back another time . Secondly if he does withdraw support, could the Coalition Fall . The analysis seems to be weve proved in europe time and time again because the situation is so dire, these coalitions are stronger than we think. Because the alternative of breaking the whole thing up and disagreeing is too great for most of them. Good analysis. Crazy story, simon hobbs. Lets get to bob pisani. Important thing about today, dow is over 15,000 again. Nice gains after essentially roller coaster ride on friday ending on the flat line. Important story is over in asia, when you get a strong gdp out of japan, exports strong out of china, the whole region moves to the upside. Those are the boosters from the entire regional economy. You see japan, the dxj, japanese stocks have stabilized. Were not at highs but not far from it. China stabilized, thailand, indonesia, india had a sickening plunge in the last month or so. They, too, have stabilized overall here. Not surprising you see some of the Technology Leaders moving to the upside, materials, technology, energy, industrials. I just want to mention, Interest Rate sensitive stocks have been rallying two days in a row, including the Home Builders. Home builders a bit to the weak side. Back to you. Thank you very much for that. Welcome back bob pisani. The olympics are heading to tokyo. You probably heard by now, the japanese capital winning the bid to host the 2020 summer olympics. What might that mean for the japanese economy . Michelle carusocabrera has the answer at hq. As with any city set to host the olympics, theres great hope that it will be a big economic boost. When jacques rogue outgoing president of the ioc turned the placard that said tokyo, there was jubilation where thousands were waiting to hear even though it was 5 30 in the morning. The reasoning behind the economic boost theory is the same as always, lots of infrastructure spending, lots of tourism. Keep in mind, japan has been spending on infrastructure like crazy for 20 years. Remember, their debttogdp numbers because of the spending make greece look good. The ioc was also apparently convinced by Prime Minister shinzo abes reassurances that the nuclear leak will not pose a threat to the games. It was an issue that is back at the forefront because of the announcement this week, they will spend hundreds of millions of dollars for a new ice wall to contain 300 tons of radioactive water spilling into the ocean every day. Japans stock market surged on this news, partly also the gdp numbers that the country won the olympic bid. Were showing you the oneweek chart to show you this 2 1 2 move that happened overnight that was pretty sharp. You can see the sharp climb at the right hand of the chart. The yen weakened as well. In part because of this announcement but also because of the new gdp data. Which for japan came in much stronger than expected. If you think a currency by shinzo abe, the Prime Minister desperately wants a weaker yen to help exports. And the Japanese Central banks aggressive moves make the feds qe moves look like child play. The thinking is the yen is weakening because the markets believe shinzo abe will be successful. He has had a few significant wins in the past 48 hours. Yes. Michelle carusocabrera, thanks so much. Lets get to Rick Santelli. We dont have room big enough to fit the whole Balance Sheet in. Before we get to that, lets get to what we learned on thursday. The feds Balance Sheet is historic levels, 3. 6 trillion. If you look at the treasuries and notes and bonds that theyre holding, its roughly 1. 9 trillion, though if you include tips it probably brings you over 2 trillion. If you look at mortgages youre in the 1. 3 trillion camp. All right. You said something before i loved. Repeat it. I think this is a taper that is looking for an excuse. Explain. Basically the fed has a whole has realized this Balance Sheet is getting so large and getting so cumbersome that they have to stop. Theyre looking for a reason to stop. Without causing the volatility that we saw in the market after may when they first started talking about it. If we think about many of the comments made over the last several years from the likes of dallas fed president , he said the mortgage arena is really finding some negative issues regarding the presence of the fed. Its swamping the Mortgage Market. Theres a good reason. What about losses . Is that like a hedge fund . I think the fed if it was a hedge fund would be the largest in the world, times 50. I think in the time period from between they started talking about the taper in may to june, estimates run anywhere from 200 billion to 300 billion for a month. They would have lost had they been about 200 billion to 300 billion in totality. In totality. I think about 30 billion from some of the more recent purchases. Just this year, probably. With the big increase in rates. We cant look at losses. Right. The debate on the floor, oh, my god, lets figure out how many basis points this would be. I this i a quarter trillion dollar loss is fair but its only accounting, isnt it. The fact of the matter is, i think a lot of the people on the fed are looking at this position. Its getting larger. Youre seeing the large swings getting larger every day, because theyre continuing the program. I think they want to cut it back to get control of their own Balance Sheet. I would not disagree. I think theyre in basketball jargon looking for somebody to set a pick to extricate themselves from this. The big news of the day, syria. You and i were talking off camera. Its similar. Theres a lack of strategy. Its not what the fed is doing or what the president wants to do, its more about the strategy. Isnt it . I think if youre going to compare it to syria, the strategy that everybody seems to be looking for is an exit strategy. To accomplish something and get out. We have to stop there. I dont know we can come to a better place being out of time. Its all about the exit strategy. Carl, simon, gang, back to you. Rick, thank you very much. On a wing and a prayer. Mcdonalds rolling out mighty wings in select Stores Across the country. Do the newa wings make mcdonals stock a buy . Well talk about that after a short break. To look for the best possible price maybe even better than you expected. Its all part of our goal to execute your trade in one second. 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At cognizant, our flexible, collaborative approach helps forwardlooking companies not only run better, but run different. To give your customers every reason to keep looking for you. So if youre ready to see opportunities and see them through, we say lets get to work. Because now more than ever, the future belongs to those who challenge the present. Snotd m man on the run man on the run up next on the half, how is one Top Hedge Fund manager playing rising rates . Hell tell us how hes investing his 14 billion portfolio. The countdown is on for apples big event. Airlines have been flying high but are the stocks hitting cruising altitude . Big debate is just ahead. Carl, see you in about 15 minutes. See you in a few minutes. Mcdonalds entering the chicken wing space with a rollout of what theyre calling mighty wings. For more on the implications, senior restaurant analyst and morning star senior restaurant and retail analyst, great to see both of you. Good morning. Thanks, carl. Morning. Does this move the needle by itself and whether its a bigger sign of what a lot of people hope is a return of innovation to the company . I think thats it. Its a return of innovation, new news. I think its a hail llo effect. It will bring them back into the discussion of a place to eat out at. I dont think it will mean direct sales of wings will be that meaningful to the business. 1 comp is 65 a day to the mcdonalds store. It should lift the comp a point. Its new news, innovation, it will bring in trial traffic as well. R. J. , they still havent been specific about where theyre going to roll it out starting today. I think it has done well in atlanta and maybe chicago. Well see where it pops up before it goes national, again, for a limited time. You think theyll come back to their longterm financial targets. I think they will. I think theyre in a tough position where comps have been soft, and in terms of innovation, i think it was deaf kneltly lacking into 2012. This is one of the signs that theyre returning to innovation this year. Theyve been investing in i. T. , restaurant renovations and whatnot. Longer term, i think the company can return to midsingle digit top line growth. A lot of it has to do with International Expansion as well as some of the movements that move things into higher pricing tiers, whether it be mighty wings or the dollar menu revamp. A lot of people paying attention to what happens with pricing. We could use a little inflation here and there. They did go back to positive comps at least domestically in july after a slightly negative june. How do you think tomorrow will goo for august . I think tomorrow will show a reflection of an improvement on a twoyear trend. I think people will be encouraged by that. I think it will be somewhat soft, possibly negative overall. The u. S. Obviously they could take more price there and that will be something to watch, how much price they do take in the u. S. Theyve taken much more in europe and asia over the prior years. That could be a driver in the back half of this year. We keep hearing, guys, about the competition, which historically meant yum, which historically meant burger king. You v you have a panera, chi chipotle. Panera, these companies that have higher price points but also less operating cost than you would find at a casual dining place, these are serious competitors. I lot of these concepts are new to the broader market. I think theyre driving a lot of traffic. At the end of the day, mcdonalds has to step up the game, bring new innovation to the docket. Thats where youre seeing competition. Have you tried the wings out of curiosity . We tried them in atlanta last year. I mean, the comment was that they i think its a premium product. It does go after more of the casual dining, pizza hut experience. Its not necessarily a value play and its not going to be a substitute for the chicken mcnugget crowd. Mcdonalds, their biggest competition is last years success. Theyre too big to really be competing against one or two smaller players like a five guys or smash. They have to focus on value, innovation and constantly outdoing their sales from the prior year. Not easy to do when youre that big. Well see what tomorrow brings, guys. Thanks so much. Some of the biggest startup names in the country gathering in San Francisco today, including the ceo of twitter, dick costello. We go live on the ground in just a moment. Some of the biggest names in Silicon Valley are gathering at the annual tech crunch disrupt Conference Today including twitters ceo dick costolo. Julia borstin is there. Good morning. Tech crunch disrupt this year is featuring the ceos of several key bigger startups, expected to file to go public in the next year. The likes of twitter ceo dick costolo. And two others, this could be one of their last opportunities to make highprofile public statements about their companys Growth Prospects before s1 filings prevent them from speaking freely. I think some of the things theyll want to emphasize are the things that have made the ipos in the class of 2013 do so darn well. Whats their growth rate, how big is their market . How much visibility do we have around future earnings . Twitters costolo is likely to stress the companys success. Meanwhile, box and draw box is likely to stress the ground theyre gaining. These companies are part of a trend of ipo activity heating up. Renaissance capital ipo intelligence estimates that in addition to the pipeline of 110 Company Looking to raise about 31 billion, theyre at least another 75 companies in the confidential pipeline estimating that at least 70 companies are poised to go public by year end. Bringing ipo activity back to levels that we havent seen since 2007. Coming up later today, linked in ceo is talking, followed by costolo and then draw boxs ceo. Interesting, julie. It comes on a day when the journal profiles the coo of instagram, talking about monitorization over at facebook, a unit there that in another life could have gone to twitter instead. Absolutely. We have to remember that Mark Zuckerberg will be speaking on wednesday. People are already talking about it here. When he spoke here a year ago, it was the first time he had spoken publicly since the ipo. People will be listening to hear what facebook says, what zuckerberg says about the progress theyve made in the last year. With facebook at just above 44, its almost poetic. I remember the tech crunch interview last year, julia. Thanks so much. The era of the smart watch is upon us. Car company nissan set to debut its first smart watch, the nissan nismo at the frankfurt motor show this week. The watch will connect with their cars. You can monitor the cars efficiency, register your biometric data with a heart rate monitor. That brings us this mornings squawk on the tweet. Nissan getting into the smart watch business is like blank getting into blank. Tweet us. Well get some of your responses, next. Thank you orville and wilbur. Amelia. Neil and buzz for teaching us that you cant create the future. By clinging to the past. And with that youre history. Instead of looking behind. Delta is looking beyond. 80 thousand of us investing billions. In everything from the best experiences below. To the finest comforts above. Were not simply saluting history. Were making it. Okay, who helps you focus on your recovery . Yo, yo, yo. Aflac. Wow. [ under his breath ] that was horrible. Pays you cash when youre sick or hurt . [ japanese accent ] aflac. Love it. [ under his breath ] hate it. Helps you focus on getting back to normal . [ as a Southern Belle ] aflac. [ as a cowboy ] aflac. [ sassily ] aflac. Uh huh. [ under his breath ] i am so fired. Youre on in 5, duck. [ male announcer ] when youre sick or hurt, aflac pays you cash. Find out more at aflac. Com. Well, samsung introduced the galaxy gear when then there was qualcomm and an unexpected player has joined the smart watch frenzy, nissan, introducing the nismo at the frankfurt auto show. We are joined by pete paschal to talk about that. Good morning, carl. Is this as crazy as some people think it sounds . Its a pretty nutty thing. At first glance, you have to think seriously . It seems like nissan has targeted this watch at a very specific group, like racers and car enthusiasts and has tailored its functional around that. Theres a case to be made here. You can imagine if you are a serious performance driver, a racer, youre going toen watt to measure, i guess your cars efficiency and i guess even your own heart rate as you drive. Did they do this on their own or have help with a tech company or a watch company . Its unclear at this point. Honestly if you look at the photography around the watch at this point, it looks like computer renderings and they use the word concept in the release they sent out. Its unclear how close this is to a finished product. They didnt say a price or release date. Because they put it out in quite a bold fashion at this time, theyre serious about it. It does make you wonder if theres a mass market for this kind of device, doesnt it . It does. I dont think for this particular device there is one but theres some features on this that could apply to a mass market device, for example, the biometric reading, one is for your heart rate. But it can also sort of check to see if youre getting fatigued which actually is a really good idea in a smart watch for a car. If you put this in a mass market device, you have basically an alert from your watch whether its audible or vibration, if you ever get so fatigued you might fall asleep which could save lives. That is interesting. For those who are bullish on wherable technology in general, or not you think this particular watch is a good idea, you have to imagine that with a player this size, its good for the evolution of the technology, right . Oh, definitely. I have to say, they designed a goodlooking watch here. If you look at the photography on the watch, its beautiful. This is kind of exactly what we imagine apples iwatch if that is a product theyre working on comes to be. Its a very good design. It could pave the way toward some other designs for a mass market device. Were looking at video of it now. Maybe not in function but in form it is an impressive looking watch. We had john pete to talk about nissan. I cant ignore the fact that apple is tomorrow. I wonder whether or not you might have thoughts of what they might roll out, eventually if they might roll out a watch of their own. I think that will happen, not at this event. Tomorrow will be all about the iphone. One of the things they talked about last spring when they rolled out a new operating system was ios in the car, which does have applications here to what nissan is doing and what the iwatiwatch might do. Ill be tuned in tomorrow to check it out. As we all are, pete. Thanks so much forever your time. Good to see you again. My pleasure. Squawk on the tweet, nissan getting into the smart watch business is like blank getting into blank . Joe writes, like smart watch getting into the car. Oh, never mind. Jerry writes nissan getting into the smash watch business is like apple getting into the fruit business which some say they already are. Krispy kreme getting into yoga pants. Thanks for all your responses. By the way, tune in to squawk box tomorrow morning, sandy weill will be on live for an exclusive interview. Hell guest host from 7 00 to 9 00 a. M. Last time he was on made marketmoving comments about the future of banks, the degree to which they need to be broken up in this country. His argument is that basically yes, they do. Sandy weill tomorrow at 7 00 a. M. The dow up almost triple digits. Lets get back to scott wapner and the halftime. Carl, thanks so much. Welcome to the halftime show. Four hours to go until the close. Lets take you to the wall. Find out where we stand on this monday on the street. There it is, the Dow Jones Industrial average good for nearly a triple digit gain, retaking 15,000 today as well. Theres the s p 500 nasdaq higher, too. Heres what were following on the half. Gaming apple, what will the company reveal tomorrow . The latest intel and how you should trade it. Friendly skies with delta about to join the s p 500, is the Airline Trade about to lose altitude . We have a bull bear debate. Our top st