Lowering their forecast for fiscal 16, citing what it calls weak supply chain data points. Everyones trying to game out not just the december quarter but the next year. Does this call make sense . It does. I think the holiday is going to be strong. Tim cook has already said expect the Holiday Season to be up unitswise and revenuewise ver versus a year ago but after that its questionable. The apple watch needs an overhaul to be a mass market success i think. Beats, i didnt like that to begin with for 3 billion. I think its still bad. The main defense for it is how do you tell tim cook how to spend 3 billion . But they have not overhauled the headphones, the key product there, in more than a year. Thats embarrassing given the demand for that kind of product so there you have it. Big product changes are what drives it. The consumer still has money for technology that they want. Thank god that they did the large form factor phone. Over the past three quarters, the large phone has gone from 26 to 40 market share. 3d touch on the s, it just wasnt enough. Most people say it doesnt make enough difference. They need new product, new innovation. This note says maybe apple needs to go smaller, maybe go to 4 inches to sell in emerging markets like india. And all the notes weve read is theres very limited market for a smaller phone. Theres little evidence the smaller phone factor is actually going to do anything. They say price conscious buyers in india. I think no matter how large of a form factor you use, after a short period time, it doesnt seem that large anymore. You realize how small the original two generations ago iphone is when you use it compared to a current 5 or 6. The problem is, theyre still selling the 4s and the 5, right, and they need that in the emerging markets. Theyve been using it to gain share. Once those products get so old that the chip sets are not relevant anymore, they kind of have to come out with something to serve that market thats cheaper with a smaller screen. Even the 5s are so cheap. I went to sell a used iphone 5 on my motherinlaws and i just got offered 20 bucks for it so i just gave it to my kids. These things go down so fast. The resale value doesnt cut. Ipad touch is 200 bucks. A 5 used, just turn off the cellular service, is 20 bucks. Taylor swift also striking a deal, apple music, to show her tour exclusively. She addressed her relationship with the company after speaking out about screaming. Quote, i was struck with this overwhelming sense of fear. Like, are they going to turn my phone off . Am i going to wake up tomorrow and all of my music will be off itunes. Like absolute terror hit. Swift saying apple showing such humility in what they did. So thats how we get to hear. Sort of a far cry from that initial letter to cook. Maybe taylor thought steve jobs was still running the company. I thought yeah, that would have been what she should have been afraid of maybe ten years ago. Steve was known to play hard ball at times. In one week, it will be exactly six months since she sent out that to apple love taylor letter. Quite a bit has changed. Couldnt come at a better time, this deal for apple, just timingwise. Third most Popular Online shopping day. If you are a taylor swift fan, even if you own all the albums, and you try to decide what Platform Technology wise to invest in, this could take you over the edge. Apple gets the exclusive because it paid taylor swift. Exactly. She was nervous like a deal killer. At some point, when she had this tussle with they, she was like, im going to come out more than neutral on this thing. I got them in a corner. They want my music. Now im going to go get a mega deal following on this reconciliation. And she did it. Shes the next steve jobs in terms of deal doing. They should be afraid of her. How much do you think they had to pay though . Do we have any estimate . Because the tour grossed more than 200 million. My guess would be tens of millions of dollars, that would be my guess. Bigger than an nfl game. Theres nfl games and taylor swift, right. You got to pay her tens of million also of dollars to show up at the company party, they probably paid her more than that. Yeah, yeah. Bunch of calls on tech. Go pro downgraded, morgan stanley. Take their price target to 12. That stocks down 15 . Square initiations getting out today. Square getting a buy or overweight from goldman. And then teslaish ish initiate. Offset by an intensifying Competitive Landscape and high cost structure. Go pro has gotten a few of these piper and city over the past few days. This is the time of year where they were supposed to shine. Theyre in a mind. Software saves go pro if anything does. Theyve got cheap chinese competitors at the low end attacking them that have products that are pretty much good enough. Youve got smart phones at the high end that are not as versatile. How many people are out there sky diving every day anyway . Not many. Theyve got to have software that makes their product easier to use, higher value, follow the apple model in that sense. The last time we heard from nick on cnbc, he talked about the problem being an awareness problem. They stopped spending on advertising after the ipo. They thought that everybody knew the brand. But i dont see that theres that much more awareness from a marketing perspective since he made those comments. So disappointing that theyre coming out. Morgan stanley note has that quote from management that its awareness. Clearly its not awareness. This company has more advertising in every possible place you could look at it. The issue is theyre getting attacked from below. I was on wish. Com last night. 40, 38, 35 for go pro. Also in the note, the software is not good. Getting your content off this stuff. Even if you make a media company, you know, cutie pies only making 12 million a year. On squawk this morning, they asked him, he said, i wouldnt bet against these guys. Even at these levels. I thought he was honest in his appraisaappraisal. I think he doesnt know go pro very well. I think people tend to be reticent about being negative about companies they dont know well. The markets pressure is going to be come out with another hit hardware product thats high margin. Strategically, what they really need to do is probably pare back, dont focus on the drone and the vr rig, but actually focus on getting that software app that nick told me more than a year ago was coming. Where is it . Thats what they need. Do they have the courage to pare back on whats going to make them money . Thats a good point. Also, management doesnt say whats obviously the truth. It concerns me, john. Saying its an awareness problem, that just disheartens me even more. Finally, some increased pressure on yahoo today. Canyon capital, one of yahoo s 15 largest shareholders, sending a letter to the board, urging it to find a buyer for the Internet Business or the entire company. Eric jackson also out with a 99page presentation on why meyer should be fired. Fred wilson was asked about yahoo on squawk box earlier this morning as well. Take a listen. It is complicated. Its unclear what theyre going to do in terms of these other holdings they have. And theres tax issues. I have a hard time wrapping my head around what its actually worth because you dont really know how theyre going to dispose of these assets. He calls it complicated. Thats the same word meyer herself used. Absolutely. I had defended her a month or two ago and said its unfixable and eric calls me out in her report saying its fixable. I agree with a lot of what hes calling for. I actually said get jon malone involved. He seems to figure out this thing. He suggested that. So i think eric is very sailing. The issue is theyre moving the goal post on Marissa Mayer now. It was to make this a hot Internet Company again, show growth. Now jackson is basically saying, well, just aol it, kind of have a cash flow die with dignity thing. But marissa is not the person to do that and she wasnt asked to do that initially. I think bottom line, this is good for marissa because if you had everybody arguing for one single thing, that would be an enormous amount of pressure on her. If you have one side saying, hey, do the reverse spin, the other side saying, absolutely, dont do the reverse spin. Well, they can say, well were going to sit back and analyze which thing were going to do. Meanwhile, she has time to try to deliver on this turnaround. Also, eric jackson says its worth 24 billion. The core is not worth 24 billion, right . Eric thinks its a transfer of value if it gets sold now. I dont believe it will be sold cheap. As said before, i think its going to be sold for well north of 10 billion. Given all the bidding that goes on. We should point out, jacksons recommendationings are not just layoffs, but to lay off almost everybody. Youre keeping a minority of the existing employee base. Thats typically it seems what happens in these kinds of situations. The people who want to liquidate it, its like sell everything off, you know. You have people saying the same things of course about apple. Michael dells quote that he hates hearing just sell it all and give the money back to the shareholders. I think bottom line is you can always turn these things around until the buzzer sounds. Its just a question of does the leader get the right running room, does luck fall into place, can he come up i dont think you can turn around an Internet Business. My professor used to say at a certain point you need to die with dignity. Which is very different than a turnaround. They should get a different ceo in. Either sell it off or die with dignity. John steinberg, daily mail, north america. Were keeping an eye on the markets today, largely driven by the move weve seen yet again in the energy complex, supply concerns over iran are exacerbating the price again today. You can see how the dow, s p and nasdaq are faring, all down by about. 5 today. Thats despite more activity in a record year for m a. A lot of action this morning. Newell rubbermaid acquiring jarden. Some interesting moves in both of those companies. Stocks newell down. Jarden is up by about 2 . We did speak to both ceos on cnbc but some hedge funds are trying to make sense of the spread between those deal prices. After dow and dupont announced their historic merger on friday, an activist calling yet again for dow ceo to step down. He would be remaining with the combined company. But those stocks down about 4. 5 . John. Coming up on squawk alley, more on the moves this morning in commodities and higher dead and what it means for the market. Plus, organized labor for uber. Why uber and lift drivers may unionize in one city soon. And a miserable year, at least not so good for tech ipos. Will 2016 be any better . When squawk alley comes back. But at t. Rowe price, we can help guide your investments through good times and bad. For over 75 years, our clients have relied on us to bring our best thinking to their investments so in a variety of market conditions. You can feel confident. In our experience. Call a t. Rowe price retirement specialist or your advisor. To see how we can help make the most of your retirement savings. T. Rowe price. Invest with confidence. No, no, no, no, [music] people are both soft and strong. Yey which is why our products are too. Angel soft. Major ripple effects in the market. Joining uscashin. All of this stems from the closing of that big third avenue fund. But really were trying to parse what this means for main street. Potentially its not limited to this company. What should we think about . Absolutely. The pain is not limited to this company. The market has been there for the better part of 18 months. So you have your returns from high yield in general suffering for a while now. In terms of this closer, this type, when theyre liquidating the assets and they cant get good prices for them, thats probably at the fringe. Thats kind of a subset of mutual funds that were really operating in much lower quality illliquid stuff. Is this about the deterioration in energy . Or is this about Something Else in a broader contagion . Its bled from high energy to the rest of high yield. You had stuff that was really not priced correctly for the risk. Now, in terms of whether it spreads more broadly or its saying something bigger about the economy, its not entirely clear. Its saying something about corporate profits which peaked around that same time. Weve long been looking at high yield and small caps as leading indicators for equities overall. Have we been missing something . Have we been missing signs from high yield for a while now. People sour on it generally and theres a rush of redemptions. Not only do you have things that are mispriced, but if everybody trying to get through that same door, then youre trying to have other people put up the gate and say you cant have your money back yet. That can help start a panic that will be contagious. At the same time as were having price discovery in the yield market, a fed is staring down a potential rate hike this week. There seems to be a certain safety in treasuries. Whats the fallout there . Well, the situation is youve got things going on in europe, too. Theres a debate whether the ecb is unified, can they move things around. So theres a general concern. I have said all year that i didnt think the fed would lift off. I suspect theyre now in a possession where they have to and i think its the wrong idea. You asked where is third avenue in the school of london whales and mf globals. I think its a good chance where its Something Like this. Mf global was about the euro sovereign debt market. It did not spill into a contagion. Both those times, you had the Central Banks helping out, in easing mode. We dont necessarily have the same transmission mechanism from high yield today to something 2008 style. Mostly because the banks have been caged, right . So it seems not yet able to bleed too heavily into the banking system. Your take on that point, art . I think thats true. The other thing is this is not enormous a universe. You know, its in the billions, but its not in the trillions. Unless it begins to spill into other areas, it becomes a problem. I think the viewers should watch. If they hear about a spike in redempti redemptions, it would be concerning. We just slipped below 2,000. Youre starting to see, look, the etfs that cover the high yield universe, have been under big pressure, theyre down another. 5 today, at least earlier. They are trading below the value. So there is a way these etfs, which make it very easy to express a view on the sector, to trade out of step. Two hours into trading, whats the prevailing thesis . As we see the major averages start deteriorating more. Volatile future session today. We seem to be hovering near the break even line for much of the open. Now what . You saw deterioration. Theres a rumor around. Let me emphasize its a rumor. We had some volatile trading earlier. The feeling is that may have been a misplayed strategy. Somebody was trying to roll a position into future months. Inead of doing that, whoever executed it, just made an outright sale. They had to come back and buy it. Thats why we saw the market go up and down. Or may be why we saw the markets go up and down. Seems in general you didnt want to see the morning as a slow bleed, right . If you thought friday was extreme, you wanted to see either a real purge or genuine buying coming in. They need to keep an eye on 1995. If we break 1994, excuse me. If we break below that, we might have some trouble. Were just a couple points away from that now. Thanks for joining us. Coming up, the feds Rate Decision comes in two days time. How will mortgages, including yours, be affected . Well have that story up next. Plus, europe is going to close in just a few minutes. Dow now down about 93 points. Well have the close of trading in europe on the back of those comments earlier this morning. Thats coming up next. If the fed does move on Interest Rates as expected, many are asking how their mortgages might be expected. Our own diana olick has the answers in washington. Hi, diana. Todays consumers have the data on their fingertips. They shop for homes on mobile devices and do the same for mortgages. Even if the move happens wednesday, it wont be dramatic. Consumers will know immediately. A quarter point hike in the rate does not mean the average rate on the 40 year fixed goes from 4 to where it is now to 4. 25 on wednesday. Mortgage rates do loosely follow yields on the longer term 10year treasury and that yield will react to what the fed does. Since the start of 2013 when rates were low, that spring, the fed just said it was going to start pulling back on its mortgage bailouts, stop buying Mortgage Backed funds. Just on the news, home sales suffered. Heres some quick math as to why. If rates were to move higher by a quarter point, 4 to 4. 25 . The Monthly Payment goes up by about 36 bucks. Rates moved more than that in 2015 but its still not a ton on a Monthly Payment. The bigger issue is qualifying for that loan at a higher rate. Because banks are very sticky now a days on the amount of debt that you can carry versus income. Now, if rates do move dramatically over the coming year, we could see more consumers actually move to adjustable rate loans, which have lower rates, but higher risks. You may remember those from the heady days of the housing boom, john. All right, thank you very much, diana olick. In the meantime, europe is extending its losses going into the session. Thats right, carl. This has been quite a brutal day as it emerged through the session for europe. One of the major reasons for that is proportionately the value of the International Bench mark for oil is falling more rapidly than west texas in this country with all the ramifications that has. Worth pointing out s p today warned the uk on its referendum to leave the european union. A bigger impact is s ps warning to them, putting them on credit marks. Basically the reason why last week they went to recover. Bleeding in red, as you can see. The majors are lower, but a lot of the banks are also lower as the high yield credit concerns move across the atlantic. On the oil majors, today, Royal Dutch Shell finally got chinese approval for the bg by 16 billion dollars. Trying to get the market more convinced this deal is a good idea as the prices fall away. Volkswagen is also lower notably today. Theyve released their second clear month of sales figures since the crisis, the emotions scandal. Perhaps no surprise, theyre down 15 saleswise in this country. Latin america, down 42 . You can see, having rebounded quite nicely, vw is heading south. Finally, just a recap. In france over the weekend on that second round, the far right fails to win any of the new super region