fargo. >> wow. >> and we kept it in business without a contract. >> okay. sandy weill, thank you for being here today. >> it's good to be back. >> it was great and we hope to have you on more frequently. we appreciate it very, very much. you looking for a job? i'm sure we can give you a job. make sure you join us tomorrow. "squawk on the street" begins right now. good tuesday morning. welcome to "squawk on the street." what a day we have ahead of us. the president speaking tonight on syria, futures reflecting hopes that war perhaps is little less certain, an apple announcement, a shake-up in the dow jones, in asia, more upbeat economic data from china and take a look at oil as well. big selloff as traders try to

hedge the geopolitical dynamics this morning. we begin with a big shake-up in the dow jones industrial average. nike and visa replacing alcoa, hp and bank of america in the benchmark index. >> but the markets dow included still facing head winds. president obama making his case for the nation tonight for action in syria. >> mcdonald's same-store sales handily beating expectations with europe leading the charge. >> and just hours from now apple expected to unveil new versions of its iphone and other select products but could it have something else up its sleeve? >> but we'll begin with goldman, visa and nike being added to the blue chip index at the close of trading september 20th. they'll replace bank of america, hewlett packard and alcoa. the indices says the changes were because of the low stock prices and the desire to

diversify the sector and industry representation in the dow. interestingly, although goldman, nike and visa are all beating the doubt for the year, hp is the best performance component this year. >> and one of the things that we've seen is that people buy these stocks in the premarket and there's not a lot of money, meaning very little index to it so they tend to give it up. that's one of the reasons why people say, hey, every time they're added they go down. well, no, they're added, they go up because of this mistaken idea that it really does matter. it's, as sandy weill said, great to be in because it's a great hall mark. don't trade premarket in these stocks. >> and it may be a reflection of sentiment in some larger way or history or the place for these companies at a certain point in time. as you said, there's no money indexed against djia.

the higher the price the more effect on the dow jones. that's the other reason why nothing's really indexed against it and it also makes it statistically almost meaningless. and that's part of the problem. but they started it that way so they got to keep it going that way because you can't change it. >> no, and, look, let's talk about the ones that are in. visa. they are doing fabulous. better than -- this is visa's time. we've been talking about the comeback of m & a. >> they took out the makers and brought in the takers, meaning the manufacturers, producers like alcoa are out and those who take a percentage of a fee like a visa or goldman are in. >> now i think i'm getting a sense of why this did this

today. it's your birthday! happy birthday, carl! >> there you go. got it in there. >> that and a champagne phone. got it in there. >> they are adding a lot more market cap. certainly alcoa is. we've wondered why that was in there for a long time. >> don't say that. alcoa was at $40 before the crisis. it's a metal that is used in -- you know i like claus -- after this kleinfelt is just a place to buy a wedding dress. they are in turbines for cans, they make the skin for the apple tablet, they're a huge aerospace play, a big construction company play, unfortunately many of those are bad, except for aerospace. did you know there are 3 million

screws in -- >> no. >> before you diss alcoa. >> i did not diss alcoa. >> what does visa create? >> some share appreciation. some capital. >> yes, yes. >> visa will be the second most important stock in the index and goldman will be the third most important. >> goldman? >> yes. >> it's a tribute to lloyd, right? lloyd dow jones blankfein, right? at first i thought it was because his kid's in business school at harvard. they mentioned in the article about gender problems at harvard business school. everyone should read that piece, it's amazing. >> you want to move on? we didn't say anything about

nike. is china coming back? nike and u.s. have been strong. i bet you nike is going to be strong in china. >> do we have any statistics, by the way, in terms of how well the stocks have performed? the dow once they've been picked for the dow? >> the ones that leave do better. the ones that leave are the ones that perform apparently better. >> so better off buying the ones that are going out as opposed to the ones coming back. >> should we call meg whitman? >> i actually did wonder what she had to say about this today. >> you always say it's a dow jones company. >> it's a little bit of a blow to psyche. >> yes, ego. >> ego, psyche, but that's it. >> i don't know about rg3's feelings right now. >> no gloating. >> there's 15 games to go in the season. >> new york the season is over.

1-0 is all i care about. we've lost all the opening games in the last 72 games. sorry about that. had you a good game last night, it was a forfeit game. weren't you 9-0? isn't that a forfeit? >> in little league, it's only three runs. >> president obama is going to address the nation in primetime in an effort to convince the american public to support military strikes against syria. the latest nbc/wall street journal poll suggests he is facing an uphill battle. 60% of americans want congress to vote no on syria while 24% believe that striking is in the country's interests. >> i think what we're seeing is a credible threat of a military strike from the united states, supported potentially by a number of other countries around the world, has given them pause

and makes them consider whether or not they would make this move. and if they do, then this could potentially be a significant breakthrough. >> of course we'll have live coverage tonight on cnbc, the president's address to the nation. that's the 9:00 p.m. eastern. >> to me this is still in flux. i think it's kind of like everyone's waiting for assad to do something bad again and then it not even goes to congress. >> but there is now this potential diplomatic track, backtrack available, if you will, that the syrians are saying we're going to go along with the russian plans and it is possible that there will not have to be military action. >> i think ronald reagan would have a good laugh at this, right? the russians are going to do a really good thing and protect us from the -- i mean, come on. russia, syria, these are now -- we're back to the era where

that's brezhnev saying, listen, don't worry about it, we got your back covered there, jimmy carter. >> there is a bit of a cold war element. >> isn't it? >> reuters says that the president will still make the case that congress needs to authorize force. whether or not he needs it in the end is a different question. but that issue of verification is increasingly coming into play. would you argue it's the single most important reason we gained 140 snounpoints? >> yes. we know war historically has been good for stocks. there was a notion that oil is going to go through the roof, even though syria is not a big oil producer. actually, it's been an importer. uncertainty versus that nothing happens has moved it up. we're in a weird -- look at the mcdonald's sales, that was

europe that turned around. >> mcdonald's did have better gains in europe. the company says its mcdnld's promotion offsetting what it calls a persistently challenging environment. a year ago the u.s. was 3% and now .2. >> what is happening? >> difficulty in the disparity of competition has changed. a year ago we didn't have the smash burgers to such an extent or the chipotles or -- >> wendy's. i've had the bacon cheeseburger. i went to the cardiologist immediately after. no particular -- hey, i had a two-hour workout from 4:15 to 6:15. what do you? >> i was sleeping. >> i was pumping. i can have seven of those bacon cheeseburgers and no one will no the difference. >> have you tried the blitz box?

>> i would not have seven bacon cheeseburgers. >> the blitz box is $14.99 special, two quarter pounders, two chicken mg nuggets. >> i can eat that. there is a weird dichotomy going on here now. sprouts market, which is all about what's good for you gets a couple of holds and a sell when it comes public today. suddenly everybody's taking wendy's through 8, mcdonald's has the wing promotion. now that i'm entering this restaurant business, you don't make a lot of money on the food -- >> it's about the booze. >> it's all about the booze. thank you for knowing that. >> if you have the liquor license. >> i'm working on it. >> you didn't mention the burger king french fry burger.

have you tried that in. >> no, i haven't. there's a lot of sense that you can kind of eat what you want from some people and then the other is, you know, you got to be vegan. >> by the way, the mcdonald's numbers came out almost an hour early this time around. maybe because they felt they had some good news and just couldn't wait. the timing was almost 58 minutes before they normally come out. >> by the way, you want to play on this? mcdonald's had very good number in u.k. starbucks i think goes through 73 today. it's a terrific place to be. europe coming back there. >> all right, let's move on to apple. yes, about four hours from now apple will hold an event at the company's headquarters in california. there's been speculation that apple will release a newer version of a iphone 5, as well as a cheaper version and that they will be available in colors other than black and white.

the key question, do we get something unexpected here that would move the needle so to speak. >> wouldn't that be something to get something unexpected. >> no, we're not going to. these guys are not unexpected. they don't have drama. drama is good and bad. i do point out the cheaper phone is a great way to get into china and that china is the story of this market right now. china. >> china, which is coming back. >> isn't it funny how everyone wrote off china? >> people have always questioned the numbers and there certainly was a decline. let's not forget gdp is going to be lower than it was not very long ago. but to your point, i think it has really started to rebound in a way and the things you can measure, electric power, for example, which is a favorite of many people -- >> i love that. that's why joy global has been moving up.

the imports 25% and exports go to europe say to me there will be an up year. caterpillar, sorry, it soars higher, even though they've made many miscues in china. a rising tied lifts all boats. >> as far as capital, apple, looking at at 4 the came, down, the 3, down 4%, the 2.2, down. >> maybe drama doesn't play. >> one guy who loves drama is carl icahn. it's still a cheap stock. >> it is a cheap stock. >> any way you want to mention it it continues to be.

we'll see what his dinner with mr. cook brings. >> where are they going? >> i don't know it. >> do you think it will be wendy's? >> i don't think so. >> a lot of analysts are below of price targets. that gives them something to say. i don't want to go out there and say i was wrong. china, i'm going to raise numbers and the stock goes to 650 and that's how you get these ping-pong moves. >> a lot to talk about today. when we come back a warning for the financial sector. former chairman of citigroup, sandy weill, says things are worse today than they were. that's next. and senator johnson will be with us when we come back. a look at futures here. pretty good action and they've

been steady all along. >> europe's all up and we just carried along about that. >> a lot more from "squawk on the street" in just a moment. . with fidelity's guaranteed one-second trade execution, we route your order to up to 75 market centers to look for the best possible price -- maybe even better than you expected. it's all part of our goal to execute your trade in one second. i'm derrick chan of fidelity investments. our one-second trade execution is one more innovative reason serious investors are choosing fidelity. now get 200 free trades when you open an account. in a we believe outshining the competition tomorrow requires challenging your business inside and out today. at cognizant, we help forward-looking companies run better and run different - to give your customers every reason to keep looking for you. so if you're ready to see opportunities and see them through,

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take a look at what has come to be a familiar occurrence on the day of the apple release, the istore goes down.

you'll be seeing more action on that page in perhaps a few hours. that event at 1:00 p.m. eastern. >> if you think it's going to be a big launch, ups has historically done well with a big launch by apple. might be an interesting play here. >> that's a good one. >> this morning sandy weill returned to cnbc more than a year after appearing on squawk calling for a breakup of the banks. earlier this morning, the former chairman of citigroup said breakups would not be necessary if we have what he calls the right regulation but he's concerned some regulations have yet to be finalized. >> if the way the regulations come down do not allow entrepreneurship and do not allow people in the financial industry making mistakes, and because of risking taxpayer money, i think that's going to make our financial industry completely ineffective.

>> some of trying to make this a walk back of his previous comments. jim, what do you think? >> i think it was a walk back of his previous comments. you took the word out of my mouth. it was almost like that july interview didn't occur. it was mystifying to me. >> if you don't want to risk taxpayer money, then maybe you do break them up to entrepreneur because none is too big to fail? >> it was an enigma. >> wrapped i in a riddle. >> yes. >> he was talking about wachovia bought by wells fargo. we had this amazing bank concentration but not a lot of people worried about it. not a lot of people worried that wells fargo was 30% of the mortgaging market. i don't know. >> we had just a couple of weeks

ago layoffs in wells' mortgage business because of what they're calling a weaker refi market. that sentiment was echoed earlier this week. >> they started taking up the housing -- >> wells fargo yesterday at the financial conference was making comments about the weakness in mortgages. not a big surprise. most of it centered on refinancings, seemed to have run their course. >> i had russell goldsmith on "mad money" last night. they're seeing commercial, actual lending, he did talk about in california there's only less than three months inventory left, prices are up. be careful, california's too hot. ninth largest country, california. >> after yesterday's rally, how can we keep the momentum going in your portfolio?

cramer has you covered as mad dash is next. we're "squawk on the street" from the nyse straight ahead. ♪ ♪ [ female announcer ] you're the boss of your life. in charge of long weekends and longer retirements. ♪ ask your financial professional how lincoln financial can help you take charge of your future. ♪ ♪ [ male announcer ] the parking lot helps by letting us know who's coming.

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i would have to say it's tougher than we hoped. when you look at the data, you would expect it to be more robust.

right now the apparel area seem to be a little soft. >> we're about let's call it five minutes or so from the opening bell. he always gives you a very good sense of what was important there. >> it was just a bummer. last ten days, not that good. end of summer not that good. well, going into back to school, really a sense that the u.s. apparel is not that weak but man tirico, it's tommy hilfiger, it's -- he was so down, i was trying to cheer him up. >> it's important to make the distinction the consumer does not seem to be as weak as apparel. >> yes. they're spending on different things because best buy is doing better, restoration hardware. that could be a tell of what

they're spending on. >> what do people make a decision together, suddenly i'm not buying any more clothes, i'm going to buy shovels? >> that's what i talked about with manny. i said how does the country collectively decide they're not buying apparel. i felt better about penney after speaking to him. now ralph lauren had a not great quarter and that's a fantastic company. i think you ought to be careful. manny tirico is the best there is. >> we'll watch those names right there. coming off the first close about 15,000 in two and a half weeks. we'll see if we can get more green in the markets today. opening bell just a few minutes away. nt

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♪ [ indistinct shouting ] [ male announcer ] time and sales data. split-second stats. [ indistinct shouting ] ♪ it's so close to the options floor... [ indistinct shouting, bell dinging ] ...you'll bust your brain box. ♪ all on thinkorswim from td ameritrade. ♪ you're watching cnbc "squawk on the street," live from the financial world. the opening bell expected in a few minutes here. after losing over 5% off the august high, we're up 6 of 8 sessions, a lot as a result of better economic data around the world. the hopes tonight, jim, that

today the president's speech will prevent us from war. >> this happened when interest rates went up dramatically. it almost confirms if business improves, it probably can offset it. it's different stocks going up now, international stock, but i think that's important. we've made great progress in this environment. >> there's a look at the opening bell. crane funds adviser celebrating the five-year china plan, $ telecommunication provider celebrating its first day of tradi trading. remember how bad august was on the s&p? >> it was terrible. >> we've recovered 73.4% of it, the dow has only recovered 36%. nasdaq has blown it away. nasdaq is up 116 points for the month. >> i saw the nasdaq in september

of 2000, september is supposed to be a bad month. we came in thinking u.s. might not be that strong, europe and china gathering a head of steam. it's just a different set of players that are making people excited. tech looks good, too. >> we'll keep a close eye on some of these dow components. the dow jones not so industrial average, as someone just called it, of the six -- of the 3 for 3, which are you most interested in watching? >> i think visa is amazing. i think it's a fantastic company, one of the best run companies in the world, welcome. it's a fantastic company. deserving. it's just so well run. >> and it's a price weighted index, it will have the largest impact of the stocks because it has one of the highest price and has one of the highest values. >> some discussion of the curse

of the dow. since '04 the new dow members have fallen by an average of 10% a year after being added to the index. classic, right? >> i do think you go bank of america, wow. timing. remember citi? gees. financials, let it not happen to -- i'm an alumnus of goldman sachs. i don't want that to happen there. >> march of '09 citi was below a buck. it was a reverse split but still. >> well, also corvette is starting to come back. >> it's almost like they said let's reset everything. let's go back in and yesterday with the housing stocks moving up, let's go back to what we forgot and let's go into the

internationals that are doing well and who's selling in china and let's by cummings, how's cat doing? >> at 1680, do you have a near term profit objective? we still have a taper on our hands potentially, minimal top line growth. congress -- the journal had a great stat, when they're in session, annualized return is minus two, when they're in out of session, plus ten. >> companies are more dependent on global growth. conagra is down 4% today. i still don't trust the home builders at all. but i think the big international companies are doing fabulously because they're levered to china. 3m is doing quite well. united technologies doing quite well. boeing fabulous. these are not u.s. companies. they just happen to be here

making a top here. they're domicile. eaton, by the way, isn't even domiciled here. eaton is an irish company. >> that works out very well. >> you don't think of that as an irish company. i tend to view it as from cleveland. but when i looked at how the browns played this weekend, i, too, would move to ireland. >> a lot of discussion that home gamers like to play, i'm thinking of the crocs, and the big story in the "times" today, looking at lack of sales, industry shuffling. >> and herb raised a lot of those concerns, jesse, a one of the first people i hired, did a good story. green mountain has been an amazing stock s it first got knocked by short sellers. let's go to hlf. how's that doing? there we go. hlf -- >> i did want to mention shares

of netflix, which are above $300 a share. virgin media, which was recently, you may recall, purchased by liberty global, is going to include a netflix app in some of its set-top boxes. it will start with a small number of customers. but it is interesting to note. i think it said tivo made set-top box -- >> don't get in front of that thing. >> $300 is a new 52-week high. >> carl icahn said he has not made a dollar. >> and nokia -- why not buy netflix. it's not too late. they are going to have so many -- >> now that it's gone to 300. >> well, i've been saying it

since 200 points. 200? >> maybe. >> i rest my case. >> i don't like orange is the new black. >> i'm not a fan either. i tried to get through the pilot. watching it with your parents -- >> remember that game of throwns? that's a pornographic show, david, that's a pornographic show. >> but it's so long ago. >> did you see "criminal minds"? that's a criminal pornographic show. >> and the sales trends at anthropology taking wind out of the urban sales. >> williams sonoma, has that recovered since that quarter? restoration hardware not doing badly. look, urban outfitters three weeks ago was being anointed.

i appoinointed it, heck, i thou it was good. the stock lululemon is doing well. >> there could be outlier surprises. a lot of people point out this is the first time they are showing the new ios-7, more than just showing you the look, right. this is a product that will run on a revamped process. >> we want long battery life. we want 4g everywhere, instant verizon red zone. >> we want it all. >> david's right, we want it all. we're selfish consumers. >> we don't want to move either.

we want our cars to drive themselves. >> when is that happening? >> soon enough. >> i saw mercedes-benz -- >> how's tesla doing? i freaked out tesla was weaker. trying to maintain its gains, not easy. tesla seems to have cooled. >> i want to mention yahoo! if i can briefly. those shares, if you look at tesla. take a look at yahoo!. it is up again, approaching a 52-week high. >> and did not get the best price then. >> maybe not. >> a lot of talk of this initial offering of ali baba. yahoo! gets the price, whatever -- that is where half of their 24% stake will be sold. they'll still own another --

they'll still own a 12% stake of ali baba. i'm hearing $100 billion. >> $100 billion? >> yes. those pitching it for its public offering are talking $100 billion. we'll see. that's the number. you got to tax it at least the 12% they would sell at the ipo price. then could they figure a way to tax the other 12% in a more efficient manner? >> there's 100 thieves. it's not 40 thieves, it's 100 thieves. 100 billion thieves. >> it's a nice tail wind for a new ceo to have. >> i think she's done a fabulous job. >> fabulous job getting ali baba's valuation up. >> you know what, it's okay,

some people win. some people are winners. >> i want to see a real turn in the core business before anoint anybody a winner, see to speak. >> you have always since i've known you let the facts get in the way of the story and it's one of the things that disturbs me about you. >> goldman has a statement about being added to the dow 30. we are pleased to join this significant market benchmark and remain dedicated to delivering value for our shareholder as a member of the dow 30. >> let's see meg whitman put out a release. what would her release look like? >> i'm sure it would be very statesman-like and diplomatic. that's her nature. >> you don't just say listen, you are jokers, how dare you poll me? will it sell more shoes? that's what they're saying at nike right now. how many more pairs will we sell

now that we're in the dow? i don't know. but we have underarmor on tonight. let's see what they have to say. >> dow is up 65 points. bob is on the floor. >>. >> industrial production up 4%, industrial sales up 10%. whatever happened to sell in may, go away. september is supposed to be a weak month, we're up 2, 2 1/2%. a lot of these old wall street pieces of wisdom aren't working very well in the last couple of years. we were talking about apple. i was out with some hedge fund traders last night, i was surprised how enthusiastic they are about all of this fingerprint technology. yes, potentially it could mean the end of passwords. i think that's a great idea.

i do not want apple storing fingerprint information on some massive server somewhere that they can do who knows what with. if they do it, store it locally on the iphone. i'd be a big supporter as long as they don't go scoring the fingerprint information. other than that the big story is about china mobile. 745 million subscribers they've got. they need to add china mobile, apple does, to their subscriber list, to the people that they're selling iphones with. i've heard estimates that 11%, china mobile, 11% of all subscribers in the world. that's going to be a big one. they've got a separate event, apple, in beijing today. that's why last night everybody thought this thing with china mobile was going to happen. my personal wish for apple, how about making seri into a true

assistant? you can talk to it and it can talk back to you. by my guess, 20% names a digital personal assistant as its best friend. finally, there's a lot of other companies providing updates today. seagate is having an analyst meeting today. texas instruments, providing a mid quarter updates, a whole bunch of sell side reports going on. apache, morgan stanley holding a big health care conference, goldman a huge retailing conference, tiffany is speaking, lumber liquidatorliquidators, g. management is at that conferences. jim, it's going to be a big day today. >> lumber liquidators, tractor

supplies, by the way. let's head to the bond pits. rick. >> you know, if you don't scratch the surface or think about the fedder, think about the taper and just look at the markets, it looks like a good global economy day and interest rates are going up, equities are going up. look at a chart at the tens, you can see we have pushed back toward higher yields. if you open the chart up to august 1st, you'll see that we held that 289. should we close in the mid 2 e the -- 290s, this our highest close. many say if you want a true signal of how the market's trading, pay closest attention to the five year. look look at the japanese stock market pod. s japanese stock market is doing well.

look at the dollar yen. dollar yen back over 100. a lot of talk about the emerging markets, correct? hey, when the rest of the world, especially the big developed economies start to do well, of course the emerging markets do well as well, look at the rupe, the rupe has the rebound. that's the dollar versus the rupe. you can see the dollar has reversed a bit. you can see the dollar is still struggling. >> when we come back, another headache for jc penny, the retailer getting slammed with a lawsuit. and is lifting the curtains helpful or setting the stage for more disappointment? more "squawk on the street" in just a minute.

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that goes for coca-cola, and everything else with calories. finding a solution will take all of us. but at coca-cola, we know when people come together, good things happen. to learn more, visit coke.com/comingtogether . syria accepting a proposal to put its chemical weapon under

international control. this is one that traders in the oil markets have been watching very carefully. we've seen a big slide in oil prices as a result, down about $6 in that time. and look at the drop that we've seen since the end of august as it looked like the u.s. may in fact have a military strike against syria. as those concerns were raised, we saw the rally to $117 a barrel for brent crude and a lot of players say a lot of the length in the oil market is coming out very quickly here as it looks like the risk premium has been reduced and we're seeing a selloff in gold, with gold prices down more than $20 here on the session. back to you. >> thank you very much for that. jcpenney is being sued. the coffee press maker is suing

jcp, saying they missed the march 2013 launch date and haphazardly placed the merchandise throughout the stores. >> people want them to win, don't they? i get the sense people like you want to give them a chance. >> absolutely. he's a veteran in retail. some people felt the way he was treated was unfair and the way the company was treated was unfair. it belongs on the landscape. >> a new version of its iphone with a fingerprint sensor. calling all conspiracy theorists, what might apple want to do with your fingerprint?

tweet us. an unreasonable privacy concern? >> i think the nsa would probably go to apple and say i want that. the nsa very nixonian, right? >> it was scott mcneeley who said privacy is dead, get used to it. that was 12 years ago. >> sun micro. >> before we had any idea of the things happening now. >> the nsa is very powerful. let's leave it at that. i'm not a political guy. >> if they had two choices, one you unlock with the four-digit code and one with fingerprint, would you go with the four-digit code? >> i'd go with the fingerprint. people might know the number i have in my head. >> i'm not a bad guy so i don't mind the nsa. but the bad guys and marginal guys are the issue.

>> i'll see homeland and what the nsa is up to and make a judgment. >> meantime dow is up 80 points. here's what's next on "squawk on the street." coming up, do you think you have what it takes to train the dogs of the dow? it may be harder than it looks. but with jim cramer, it may not be so ruff. "squawk on the street" will be right back.

dow's up 84. start with palo alto. >> palo alto, it's an internet security play. it works. >> good numbers from 5 below. >> this is a play that is going to be building store after store after store. this goes much heighter. >> a lot of people are talking about hlf. >> know what you own. don't just buy it because of the squeeze. >> don't sell this stock. jeffreys ups raytheon. >> this is international orders. a lot of people want to protect themselves from missiles.

>> and needham on jaybull. >> that is the hottest sector. >> juniper and jvsu. >> great show last night. what's coming up tonight? >> one of my absolute favorites is coming on tonight. i don't think the ravens were so bad, they ran into peyton manning. this is one of the highest yielding master limited partnership plays. that group has been under fire from some sources. this one may be an interesting play because it seems very safe. it's got to commodity risk. >> reports are saying the president is in perhaps in the process of adjusting his speech tonight. how would that come into play in your trading today? >> now you have this up side. maybe he just says you know what, if they embrace the russian plan, i'm fine. either way i don't think he's getting congressional support. but if assad does anything wrong, all right, just forget

about it, no congressional approval, just in. >> that's been your thesis for quite a while. we'll see you tonight, jim. >> happy birthday again. >> thank you very much. >> simon? >> we've got two huge major events we're counting down to. republican senator ron johnson of wisconsin will be here to say what he needs to hear from the president tonight to reverse his no vote on syria. we're live from coopertino, california. and the man with $6 billion to invest. howard marks, the chairman of oaktree capital will join us live.

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and what if that person were you? ♪ when you think about it, isn't that what retirement should be, paying ourselves to do what we love? ♪ welcome back to "squawk on the street." our road map begins with the biggest shake-up the dow has seen in nine years. alcoa, hewlett packard, bank of america are out, nike, visa and goldman are in. find out what this means for the 30-stock index.

>> and the markets are watching closely the white house on syria. president obama making his case for action tonight. we'll talk to one senator who has already voted against military action in a committee vote. find out what he needs to hear from the commander in chief this evening. >> and apple set to reveal new products at its headquarters in coopertino. and we're awaiting a conference, we'll wait to see if the speaker makes any comments on syria. we'll take you there live as soon as it begins. how do you keep your money safe in uncertain times? howard marks joins us, the chairman of oaktree capital. good to you have here. >> thank you very much, carl. uncertain is the word of the day, isn't it? >> it certainly is. >> what do you make of where we are? >> i think we're in the most uncertain times of my career and

there are so many loose things out there that could happen. the good news is that everybody knows we're in uncertain times. you know, the riskiest thing is the belief that there's no risk. that's what people felt in '07, that's what brought on the crisis. they acted as if there was no risk. i don't think anybody's acting that way today so that's a positive. today things are in pretty good balance. >> you address what central banks have done around the world. i assume you're looking at where top line growth is coming from in corporate america. what is your best thinking about where central banks go from here? >> central banks have had a profound impact on the market over the last five years. by bringing down interest rates, people can no longer get a substantial return on safe investments. so they've had to go at the risk curve to make some money. that's what the central banks wanted them to do, to reignite risk bearing, which is the only way to get out of a crisis.

they've accomplished that. so risk bearing has been the order of the day in the markets for the last few years. and we all have to be conscious when risk is being embraced. we all -- and so i argue that caution, it has to be a very important part of our actions these days. >> howard, i'm surprised to hear you say that this is the most uncertain time in your career. i mean, you've written many times, i rathemember in '09, or '08, that was uncertain. what about now during the height of the crisis makes it more uncertain now? >> i guess you're right. by now i mean the last five years. >> okay. >> but i think that a profound change that has happened in the world, go back to '06, '07. what did people believe? people believed they knew exactly what made the world tick, exactly what it would look

like five years later and how anything that went wrong could be fixed. nobody thinks that way today. there is not that certainty. >> no. >> i think on the one hand it's in response to uncertain realities and on the other hand it's a positive because the world is safer when people are not so cocksure. >> doesn't it diminish some of those animal spirits and the willingness to take risks among ceos to spend money, which would result in economic growth? >> that's a good point. my last memo was on the subject of confidence. when there's more confidence, everybody acts more expansively, we get more growth. sometimes we get excessive growth if there's excessive confidence and then we get into the trouble of boom and crash. but you're right, i think the world is being held today in many ways by a lack of confidence because people are feeling the uncertainty that i'm talking about. if you are a ceo today, you're

not going to run out and build a new factory because you're highly confident we're going to have the top line growth that carl talked about in the next three years. >> yet for those people that are paid for take risk and take the reward for that, there was a note out by morgan stanley where an equity analyst went positive and he did that because he said there was no real big convincing bear case for equities out there. you and i can write a long list of things that might happen, but is there a really big stalking bear? answer possibly no and no distress debt. b but would you agree with the equity market, that it would continue to reset and grow? >> i would. equities have not been ground zero for this strong cash inflow and optimism. that has flowed to credit because people are looking for

income. after the '00 to '03, people flooded into bonds, bonds went up, that made equities cheaper. on balance i think equities are more cheap than credit today. there are still plusses and minuses, but i'm attracted to the fact that, for example, many institutions moved out of equities and i don't think have moved back in yet. >> finally, howard, we keep hearing about anecdotally players who want to take money off u.s. and into europe where they think returns are going to be a little better over the next couple of years. is that where you are? >> we're not stock investors, we're credit investors. we're finding credit opportunities in europe but i would mention in the u.s. we have an economy which is doing pretty well, which is pretty sure to do pretty well. so we have a narrow range of outcomes and they're mostly pretty good. in europe we have a broader

range of possible outcomes, some are not as good as what we face in the u.s. so maybe more up side in europe, maybe a lower starting point but certainly more uncertainty. >> it's good to have you back. see you next time, howard marks. >> let's talk about syria. a new nbc news/wall street journal poll shows president obama is facing an uphill battle convincing people to take action. john, what are you hearing this morning? >> reporter: well, simon, everybody is breathing a sigh of relief about this proposal that was floated first by john kerry, whether intentionally or not, and then taken up by the russians, taken up by the syrians. the reason everybody's relieved is that nobody wants to do this. you see the reaction of members of congress who were speaking out and saying they didn't want to vote on it, they didn't want to vote for authorizing force and now in our nbc/wall street

journal poll, you see why. if you ask americans do you want your member of congress to vote for, this 6 in 10 say no, only a third say yes. should president obama strike without authority from congress? 6 in 10 say no, only 1 in 3 say yes. even if you temper it and say this will only be missiles launched from navy ships, you still only get around 4 in 10, a 51% majority saying not do it. i think the president got lucky after some stumbling diplomacy over the last couple of weeks and this may be the birthday present to carl and everybody else in the congress, which is that they may not have to vote on this any time soon and may be able to avoid another military entanglement. >> i think lindsey graham is on the tape saying the russians have played us like a fiddle. is that a common view in the beltway right now?

>> reporter: i don't know if it's that the russians have played us like a fiddle, but it's that the president has not been very effective over the last couple of weeks. he took a last-minute decision surprising his staff to go to congress for authority. surprised members of congress. they weren't ready for it. if you talk to some close advisers to obama, they agree with the fact that if he was going to take that course, he should have taken it a least a year ago when he started talking about the red line. so this has not been an effective period for him, he had difficulty getting domestic and international support. now he seems to have an out. they have to see if it's credible, if they can have an inspection regime and a transfer of weapons that work. for the moment they're going to pursue this and take the pressure off the congress. >> john, thank you. don't miss our special coverage

of president obama's address to the nation tonight. it all starts at 9:00 p.m. eastern tonight on cnbc. you'll be hosting that, won't you? >> i'll be there around the time the president is going to speak. excellent birthday present. thank you. >> nike, visa, goldman sachs will be coming into the dow. dominic has more about what that means. it's more than a lot of people might think. >> it is. this changes the way that we view a huge part of the market. a lot of investors still look at the dow jones industrial index as a market of how the market performs. ve visa, goldman sachs and nike. bank of america, a financial. so goldman sachs replaces them. hp is a tech company, so visa

replaces them and alcoa is again, a materials company. that's big. >> thank you, dom. let's go to d.c. and listen to the speaker of the house. >> as friday's dismal jobs report indicates, the economy still is not producing enough jobs. and the house republicans are going to continue to stay focused on the issue of getting our economy going again, allowing america's wages to increase and better prospects for a better job. we know the president's health care law is driving up costs and making it harder for small businesses to hire new workers, and tomorrow we'll vote on congresswoman black's bill that would require a verification for those who would be eligible for a voucher at one of these exchanges. the idea that you could go to one of these exchanges and just promise this is what i made last year is problematic.

our job is to spend the american people's tax money wisely, and i believe that this will lead to an awful lot of abuse and it really should not occur. we're going to continue to do everything we can to protect americans from this harmful health care law. this is not good for the country, it's not good for the health care system, it will bankrupt us and ruin the best health care delivery system the world has ever known. >> good morning. i, too, anticipate and look forward to hearing what the president has to say to the people of this country who have yet to understand what the position the administration -- >> that of the speaker of the house john boehner. some might call those comments off topic. they are steering clear of whatever the president is going to say from the east room tonight. hard to imagine they're going to be as averse to commenting it

after the fact. >> boehner and kanter backed the president when he first came out with the vote and for congress to do something, a feeling that they had to push something through. >> those felt more akin to comments you'd expect for the budget debate and the debt ceiling as opposed to tonight. >> yes. >> at any rate, it hasn't moved the dow very much. we're still up almost triple digits here. close to highs of the session. >> and we are just hours away from apple's big unveil in coopertino, california where everything from a cheaper iphone to iphones radio is being rumored to be unveiled. our own john fortt is live with what we can expect. >> reporter: the phones themselves, iphone 5 c expected

in multiple colors. then the 5s, the new flagship phone, more details on ios7 could be released as soon as today and itunes radio, as you mentioned, a pandora-like service. let's talk about that for a minute. itunes radio could boost apple's revenue both from the advertising that comes in that channel an ad every 15 minutes and from subscription revenues because itune subscribers will get that without ads. say a quarter of those use itunes radio, listening to it in the free version or paying for itunes match, it's conceivable that revenue could reach around $1 billion a year. talk about the 5c, the question is whether it will be cheap

enough to expand the iphone's market versus android but expensive enough to maintain decent profit margins. on the 5s, will it have the fingerprint sensor that's been rumored, offering a different level of security and a new way to log in, will it have an improved camera and graphics and battery life as the s updates have had. we expect the pricing to be $650 at the top end and $100 less as you go down. question on whether the 4s might remain in emerging markets to give apple another tool to battle android there. >> when apple goes dark, it's like going on the dark side of the moon knowing you're going to come out on the other end in a few hours in this case. the dow is up 100 points. when we come back, rumors have

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we are 92 points higher on the dow as things stand at the moment, awaiting of course the

apple unveil, at 1:00 this afternoon. >> that's 1:00 eastern time. as john fortt said, so much has been telegraphed. whether or not the cat has been let out of the bag, and whether there's any bang for the buck, we talked to jim about how past stock announcements and how the stock fares poorly on those days, because people know. >> it seems as though there are more and more leaks coming out and, therefore, there's very little surprise left in these announcements. but we can always hope we'll learn something we don't already know. >> here's a look at what apple has done intra day. i think goldman is an interesting story as we talk about the 3 for 3 switch on the day. goldman is up on the day. >> the stock has had a good year, up already 20-some-odd%.

it's up 6% this week. visa is a financial so to speak and goldman replacing alcoa, hewlett packard and the like. nike certainly not. but it will be interesting to watch. we talked this morning about the performance of stocks that leave the dow versus those that come in. certainly in their first year it would auger for those exiting as opposed to those entering. it is a price-weighted index, let's not forget. they started it that way, they can't stop it, but it does tend to make it rather statistically -- >> there is something call ra l culturally, the high street, main street banking as not as valuable as a goldman sachs.

>> what's not faring well today is oil. it's down almost 2.40. i asked our producers is this the biggest decline in one period of time at least a couple of weeks, but those who were long oil on the prospect of action in syria are getting hurt today and gold off $27, that will get your attention. >> it certainly will. that move in oil doesn't have anything to do with us hitting the highest mileage average on the fleet but perhaps it should. you go furthest on a gallon of gas than you ever have. >> senator ron johnson voted no against action in syria. can the president change his mind? he'll tell us what he needs to hear tonight to be convinced.

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make it happen with the all-new fidelity active trader pro. it's one more innovative reason serious investors are choosing fidelity. get 200 free trades when you open an account. the apple store is down. the reason, apple is holding a media event at its headquarters in california in about two and a half hours time. lots of rumors and expectations about what apple will unveil at 1:00 p.m. eastern. joining us from the press corps at coopertino is tim stevens and

steven levy. gentlemen, welcome to the program. nice to have you. >> thank you. good morning. >> tim, let me kick off with you. we kind of know, we think, what's going to come, a new iphone with fingerprint entry, longer battery life, a cheaper iphone for china. is there a fear we might be overwhelmed or are you generally overcome? >> there's always a possibility. we're expecting a new phone and possibly new apple tv device but nothing that exciting. the fingerprint sensor is something we've been waiting to see on smartphones for a while. but there's nothing that exciting we're expecting today. >> stephen levy, it's been a year since they unveiled the

ipad mini. are you so good at your job now that everything is squeezed out before we get there? >> we've had the experience the last couple of events where the rumors have been pretty accurate. it's a self-perpetuating spiral. the rumors spur more rumors and sooner or later they generally get it right. but we are hoping for one more thing that will surprise us here. that's why we come to coopertino so early or so interested because apple is able to pull off the big shot. >> so they can still keep a secret in your view? >> well, i think it's possible. we're hoping here. but meanwhile even the little stuff they do, it's just fascinating to see the way they roll it out and the way they play it. they really are in a category of their own when it comes to orchestrating these events. >> tim, a lot of people talk about what they call a device

fatigue, this idea that there's really no more you can do to a phone. there's a critical mass of bells and whistles that really the only areas of growth to go in are to go international or to change your price point. i wonder if you think that's a fair characterization of where apple is and where the industry is as well? >> it certainly is true. we're seeing so many great devices with great functionality it's difficult to stand out in this history. if you want to maintain the growth apple's been seeing, you need to concur these markets. the 5c that we're seeing today should help in that regard. we're all expecting technology will come in and be what next big category. i think it's unlikely we'll see an iwatch today but there's a lot of expectation for that device. if they could pull that out today that, would be a great surprise. but unfortunately it seems like it's looking like something

we'll have to wait until next year to see. >> i think it's a mistake to think we've seen all the innovation that's possible with smartphones there. i think apple probably isn't thinking that day. sooner other later someone's going to do more innovation on the phone and apple i'm sure wants to be that company. >> in the meantime, steven, the more you look at the mobile operating system, ios7 that presumably comes out this afternoon, there's quite a lot in that. it not just the itunes music library that can compete with pandora, but a siri that can search the internet, wikipedia. we are moving mobile and that has huge promises down the line, steven, surely. >> absolutely. the reason why we're not talking about it so much is because apple gave a pretty good outline of it in june at the worldwide developer's conference. but the bigger story that's

happening is not just in hardware but in software. apple has its own ecosystem here and it's difficult to say whether the apple product is the software or the hardware. it all blended together. and, you know, the idea is that you have to choose between when you buy your phones and not just between what hardware device you have but what system you're signing up, which dictates how you get your entertainment, how you listen to music and how you work. >> for all of those, for you as journalists, for the shareholders and consumers, i hope we're all surprised at 1:00 eastern. thank you for joining us. >> i do want to check shares of netflix. this is not a 52-week, this is an all--time high on nflx. this is before quickster, before they did their u-turn to 60 and

back. >> amazing. i think the reason today a strong broad market but also the inclusion of an app for netflix or the set top boxes of the provider in europe, virgin media. the idea that it could be concluded on the set top boxes. it may be the future and it may be here sooner than we think. that's a positive. 38 million subscribers here in the u.s. >> and there's the notion of what les moonves has accomplished at cbs, his ability to attain the right to sell products and sell to netflix. >> they already do that. they've already started to do that. >> absolutely. these are a huge -- i mean, we might not have anticipated it as an investor in this area five

years ago the incredible amount of revenue that has accrued as a result of netflix, amazon and other services that are trying to compete. >> and good content. fundamentally good content. >> it spent $110 million on house of cards. that's a lot of money. >> that's more than the cost of production, i guarantee. although you probably wouldn't expect it, the competition for in-store retail is heating up. courtney reagan is here with that. >> 54% of consumers expect to trade in a phone. 62% say they'll consider a different retailer if it means getting a better deal. walmart wants to be that purchase. consumers can trade in their old smartphones to receive an instant credit ranging to $50 to

$300 immediately applied to a new phone. >> what's great is the simplicity of it. when a customer comes in, they're going to be asking basic questions. we're not going to nitpick on is it scratched, does it have stickers on it? we're going to have five simple questions. >> the discount retailer has taken wireless share in each of the last six three-month increments. walmart isn't the first to offer a trade-in program certainly but it will be the largest. verizon, at&t also offer trade-ins. ebay helps people track the price of their electronics and sell them when the price peaks. >> ebay is the best play to realize the best price for a

phone today, iphone going for $534. >> i wonder where the old stuff is going to go. where i wonder with the population won't buy new stuff, they buy refurbished stuff. >> that's probably something apple didn't anticipate. the resale value is very high. we'll see exactly what happens years from now. >> courtney, thank you very much. up next on the program, he voted against military action in syria in a foreign relations committee vote. now senator ron johnson from wisconsin will tell us what he needs to hear tonight from the president to make him change his mind on the strike in syria. we're back after a quick break.

a year after famously calling for a breakup with the banks on cnbc, former citigroup chairman sandy weill says they doesn't have to be split if the right regulations are in place. it was a fascinating interview. >> it was. he said he had been thinking about his comments for the last 15 months and he's taken a more nuanced view on the fate of wall street this way around. >> we don't have to if we have the right regulation. if we have regulation that

precludes investment banking operating in a way that it can be constructive, then i think we should do something different and let them split up, if they figure that's the best way that they can provide their services. >> a breakup would now be a last-ditch effort and the right regulation that wouldn't impede business according to weill would include a more transparent verse of dodd-frank, limits to how leveraged banks can be and more capital in the system. even so, high finance is still suffering a reputational problem. weill said it's still unfashionable to be a banker. >> i think that jp morgan did better than any company through the recession and came out of it stronger. i think jamie dimon made some

mistakes in statements he made about there's a tempest in the tea pot and stuff like that, so he got people coming after him and i think it's very fashionable to go after bankers. so jamie's turn at bat is now. and he's got to, you know, learn how to handle it. >> he maintains dimon knows the banking industry better than everybody. he's also bullish about citi's new ceo michael corbat. >> i think he's terrific. i think he's the right person for the job at this time. i think he knows all of the businesses, i think the leading, top people in the country respect him. >> weill ended his guest appearance this morning with a dig at former ceo vickrim pandit. while not naming his personally, he lamented his deal with

wachovia. >> thank you, kayla tausche back at hq. >> chuck hagel testifying now that the threat must be very real and credible. one senator who disagrees about action in syria is senator ron johnson. good morning. >> good morning. >> you've been opposing this for a while. hard to think there's anything the president can say anything to change your mind. >> i think there's an opportunity to galvanize world opinion about this heinous regime. military action that does not have that world wide support with divert attention away from those war crimes and really give our foes and adversaries an

opportunity to really direct attention on what would almost be unilateral action by america, which would not be particularly effective. i think we need to really push the russians, anybody that would support the assad regime. now that the russians have come out against the use of chemical weapons, this is one way of achieving the deterrence, we need to really push for as strong a u.n. resolution as possible to deter that future use and see whatever we can do to secure those chemical weapons stock piles. >> it sort of does put us back in an echo of past periods, doesn't it, where the u.n. was there to try to enforce some of these rules. it's very difficult to verify. how do you get your arms around that? >> what you have to do in these situations is you have to garner public support for any kind of action you take. the sad fact is this administration has sat back for the last two and a half years as this tragedy has unfolded, 100,000 people slaughtered, 2 million refugees now spilling

over the borders. so you can't garner that public support in just a couple weeks. it takes weeks, it takes months. so now we're in that process and i think we're having some success. obviously because we've been talking about possible military action, russia's responded, syria's responded, let push that opportunity as hard as we possibly can. if we can avoid military action, that's the best case scenario. now is the time to really kick diplomatic action into high gear. >> senator johnson, how do you know that russia isn't bluffing with the proposal that it has now, that it's a chess game in order to set up lengthy negotiations that will continue with no action from the u.n. in the meantime, the syrians can prosecute the war against their people and possibly win, the present regime could win and therefore they've used chemical weapons, they've have gone unpunished and the united states and the international community will have done nothing? >> of course we don't know to what extent they're serious but,

again, they've given us an opening. we have to garner world support against making sure that chemical weapons use doesn't occur again. that's one of the objectives, deterrence. i think we're in a state of possible deterrence. and we need a far more robust and overt effort to identify the -- i totally agree with the obama administration. we don't want a failed state in syria. we want as much as possible to keep the government operating in syria but we've got to obviously totally remove the assad regime away from syria. the only way we do that is with russian help and support. we've got to push this diplomatic button hard right now. this is a good opportunity. >> finally, senator, i wonder what you say to people who say, oh, so can you go around killing your own people as long as you hand over the gun when you're done. why does this not set that precedent?

>> well, again, we -- the baoba administration had not garnered that worldwide support when it set that red line. we're garnering that support today. russia has made the statement that they're opposed to chemical weapons use, i think we can push them hard, get a -- i think a strong resolution out of u.n. we should push that first. but obviously the world has to respond to that heinous war crime. the best response is diplomatic at this time and find those elements in syria we can support to drive this to settlement. >> senator ron johnson, thanks for your time. have a great day. >> up next on the program, the country is getting more few efficient, even as sales of what they call gas guzzlers soar. how is that possible? we'll explain right after the break.

you really love, what would you do?" ♪ [ woman ] i'd be a writer. [ man ] i'd be a baker. [ woman ] i wanna be a pie maker. [ man ] i wanna be a pilot. [ woman ] i'd be an architect. what if i told you someone could pay you and what if that person were you? ♪ when you think about it, isn't that what retirement should be, paying ourselves to do what we love? ♪

paying ourselves to do what we love? 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. that's why we partnered with hp to build the new nascar fan and media engagement center. hp's technology helps us turn millions of tweets, posts and stories into real-time business insights that help nascar win with our fans. welcome back to "squawk on

the street." urban outfitters taking a big hit this morning, the teen retailer revealing in a filing same-store sales for the current quarter trending only in the mid single digits. investors pushing the sell button. stock down more than 10%. analysts cutting its profit outlook on the company and sending its price target down. simon, back to you. >> thank you very much for a new report out this morning. fuel efficiency in new cars has hit an all-time high. phil lebeau has the news. gong, phil. >> good morning. we are seeing the new average being 25 miles per hour. the chart for august new vehicle average fuel economy has hit an all-time high of 24.9 mpg. now, that is a 19.7% increase since august of 2008.

you clearly see that the vehicles are becoming more fuel efficient. what's interesting is when you look at what was selling last month, 31% of the vehicles sold in august were either suvs or cuvs, clearly the vehicles that chew up a lot more gasoline than your small cars. how is that possible? they're becoming more fuel efficient, many are running on smaller engines. the industry has to hit 54.4 miles per hour by 2025. i want to show you guys shares of ford today because this stock is close to hitting a two-year high. if it goes up another 11 cents, it will be at a two-year high. we haven't seen ford trading that high since early 2011. morning in germany, bmw announced a its price of it's

plug-in at $135,925. we're seeing more of these super cars going into the hybrid direction. >> that's big news at tesla headquarters. i'm sure they're talking about it. thanks a lot. >> every time there's a new apple product, it seems like the accessories his the market just as the phones do. how do they do it? do they know the specs of the phone in advance? we'll talk about that. we'll be right back.

time for the "santelli exchange." let's check in with rick. >> well, thank you, carl. let's just look and at the trading environment around us. because it certainly seems as though the markets have been kind of digital. either everything is bad or everything is good, and right now, we're in the better side of that. and of course, there's easy ways to tell. so many analysts are constantly recommending or afraid of the emerging markets. i look at the emerging markets as an extension trade. if things are going good with the liquidity provisions currently out there by the european union, by u.s. -- although that may be under review, but only in a small

way -- or, of course, japan, and japan is raising taxes, and in lieu of raising taxes they're going to add more stimulus in, which may be one reason for the better interpretation of late to the japanese markets. but in the end, if everything goes well with the bigger countries, the emerging markets, whether it's the rupee, whether it's how some of the stock markets have moved -- and this is an important dynamic, because i think first of all, it affords great hedges, but it underscores a leap of faith. much of the goodwill we see in the markets of late is on a foreign policy issue where we're more and more becoming a buy standard of and data out of china, which has a huge roger marist asterisk after it. we've all talked about rates. we talked about how it will affect housing. and it has. look at the headlines. now, let's put up a chart of the 10-year note rate starting at the beginning of 2011, because i'm going to give you the data points i see. and even if stocks slow down, i

think that the foot on the spring of interest rates is going to really obscure it where they should go and possibly push down the area that will overcompensate. based on this chart, specifically, i would think the next three areas to pay attention to, of course, the 3% close, which i think we're going to get this week, maybe today. the 3.17 would be next. 3.33 would be second. and the big resistance, yes, around 3.55. through 3.50%. you know, it's all about jobs. jolts today in the labor statistics friday show me more of the same, which may be a slight downward trajectory on levels we were looking at on job creation several months ago. but there was an op ed in the "journal" today i would like to reference, and it's called "more on fracking and the poor." a couple of areas here caught my eye. first is, fracking added the equivalent of a cool $1,200 to real househood disposable income in 2012, from ihs, global insight. the next one, overall, the

industry lifted economic growth by just show of $300 billion. and on a scale of 1 to 10, how much did the government help, with tax credits or money? probably a minus 5, whereas solar would be a plus 5. simon, back to you. >> okay, rick, thank you. up next on the program, tweet time among the new apple products widely expected to be unveiled at 1:00 p.m. eastern is a new iphone with a fingerprint sensor. so we want to know what might apple want to do with your fingerprint. tweet us @squawkstreet. we'll read your answers after the break. my mother made the best toffee in the world. it's delicious. so now we've turned her toffee into a business. my goal was to take an idea and make it happen. i'm janet long and i formed my toffee company through legalzoom. i never really thought i would make money doing what i love. [ robert ] we created legalzoom to help people start their business and launch their dreams.

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the dow's up 115. a nice session. let's get to "squawk on the tweet. "among the new products apple is expected to unveil in about two hours' time, a new version of the iphone with a fingerprint sensor. it brings us to this morning's "squawk on the tweet," calling on conspiracy theorists. what might apple want to do with your fingerprint? john writes, after you die, apple will clone you into five new customers. mary beth writes, apple will use my fingerprint to commit museum burglaries worldwide. and link your fingerprint to the

ultimate secure payment system. oh, there's one more. ace writes the only conspiracy theorists are the girlfriends and boyfriends who are not able to break into their phone. guys, we don't do that. >> maybe there will be a two fingerprint option. >> a three-step verification? >> why if -- >> well, people can get an extra phone. more communal. >> just make sure i can look up my kids' phones. that's what's important. >> as a relatively new dad, you learn early on how important parental controls will be down the road, especially with the twerking videos that are popping up around the internet today. up 115. guys, we could be looking at our first back-to-back triple-digit gains for the dow since? end of june. you have to go back a ways to see the dow up triple digits. >> is that true? >> yes. >> it's interesting how international markets react with greater excitement to the prospect of no action in syria. again, as you heard last monday during labor day, europe has

rallied strongly on the idea that there won't be military action. i guess because they're closer. >> we will see. the president speaks 9:00 tonight from the east room. we'll talk europe a little bit. david, a little later on? >> yes, sir. >> if you're joining us, here's what you missed. welcome to "squawk on the street." here's what's happened so far. >> i think that if the rules come down so that banks can't really perform this function, or investment banks or parts of the bank can't, they should have the option of being able to split apart. is alcoa representative of anything really in this economy? nike, the biggest apparel maker on the planet. nike goes in. nike, goldman sachs, and visa. this is visa's time. we've been talking about the comeback of m&a. that is goldman's time. nike is china. it is nike's time. these are going to add to the dow. the dow will go higher.

key question is do we get something unexpected here? >> you know -- >> that would move the needle so to speak -- >> wouldn't that be something, you get something unexpected? >> not this time, right? >> no, this is not -- look, these guys are not coming through with a surprise ending. >> there's the opening bell. >> the riskiest thing is the belief that there's no risk. and that's what felt in '07. that's what brought on the crisis, because they acted as if there was no risk. i don't think anybody's acting that way today. this is not a 52-week high at 305. this is an all-time high on netflix. >> you need to push for the strong u.n. resolution as possible to deter that future use and see whatever we can do to secure the chemical weapons stockpiles. good morning, we're live here at post 9 of the new york stock exchange with a check on the markets. the dow putting together two

back-to-back triple-digit rallies, something we've not done since june. we'll see if it holds with the dow up 112 and the s&p back to 1,683. the nasdaq continues to power forward. take a look at oil and gold, though. both are moving to the downside this morning as the russian proposal to ostensibly avert a u.s. strike on syria appears to be gaining some steam. the price of oil has been moving steadily higher in recent days over worries of u.s. military action in syria. two big stocks hitting all-time highs. netflix an all-time high of 305 and change. and, of course, nike being added to the dow jones industrials average, along with goldman sachs and visa, two big stories today. three up, three down, as we said. a big-time shake-up in the dow. hp, alcoa, b of a, moving out. nike, visa, moving in. we'll tell you what that means for your money. the markets are breathing a sigh of relief. stocks in the green after a russian plan to put syria's weapons under international groel, gaining some traction. can the plan work? we'll take a closer look.

plus, today is the big day for apple watchers. in a little less than two hours, apple is expected to unveil new phones, maybe something else. we'll see. we'll go live on the ground to see what apple might have up its sleeve. first, the shake-up in the dow. as of september 23rd, goldman sachs, nike, visa will be added to the djia, replacing alcoa, b of a and helicopter. -- hewlett-packard. guys, good morning to you. >> good morning. >> bob, we were chatting off camera, whenever there's a change, you have to go back and explain how this all works. >> yeah. the important thing is that this is not a judgment that one company's better than another. this is not a judgment by dow that goldman is more viable than bank of america. not at all. it's, number one, about index construction. its price-weighted index. you don't want -- too many low-priced stocks. those are the three lowest priced they're taking out. just like you don't want high-priced, and that's why apple and google aren't in there. they're trying to keep them within a range of each other.

secondly, it's about sector diversification. nike is in a growing consumer space. makes sense to put them in, alcoa out. visa is representative of technology as more than hewlett-packard. if you think about what their ideas are, they want to keep the prices in certain range. secondly, they want diversification. it makes some sense. >> jeffrey, you know, someone today called it the dow jones not so industrial average. does this reflect where the economy is and where it's goings? >> it does somewhat. in the older days, the dow, the changes were representational of the changes in the economies, dying industries, the expanding industries. i think lately, you know, since 1960, even more recently, a lot of it has to do with trying to keep the rally going, and i think that's part of what the motivation is right here. though i do think the three new companies coming in are pretty solid and the ones that are going out have been down. except bank of america baffles me. i'm not sure why the switch from bank of america to goldman sachs. >> i can tell you what they think. they think goldman sachs is a

little more representative of the broader financial sector right now than bank of america. >> right. >> i'm not sure i necessarily agree with that. i think that was sort of the thinking right now. >> maybe something with the jobs act and goldman being closer to the hedge funds and being an investment bank, of the prop trading bank, versus bank of america, a lot like jpmorgan chase, big commercial and full-blown services bank, in addition to investment banking. >> bob, you mentioned the price-weighting aspect. hp is the best performing component of the year. >> yeah. >> bank of america was the best performing component of last year. >> yeah. >> why throw out your winners? >> because of the politics of index construction. when you're a $12 stock and you only move a couple dollars, then you can have a major impact on your own percentage of your price change. you don't have any impact on the dow jones industrials average. and when you get these kinds of stocks that don't move much, or don't move the indexes, you get a little bit of a problem. that means the other stocks that are in the index, they have to sort of bear the weight of being representative. what are you representing here? you're representing the big-cap

sector. by the way, this is not an industrial. they've never claimed, not for years, this is the industrial sector. they have claimed that this represents big-cap america. that's what they've been claiming. and in order for them to be able to do that, if you have four, five stocks low-priced, no impact on the dow, the other 25, 26 have to do all of the work, and that's a problem. then you start getting misalignments. >> right. >> the s&p starts diverging from the dow. as it has. >> and, also, big-cap global. you're getting more global with the companies, which is what dow is supposed to be. one of the interesting things is they're doing the triple witching, which seasonally, as you may remember, the week after triple witching is in september, is the worst, down 19 times in the last 25 years. it sets up an interesting point. the timing of this. >> there's also, jeffrey, this notion of the curse, right? and we know that some of those who construct the dow have been a little star-crossed when they put something in, and how -- what trades after the fact. >> yes. >> is that just coincidence? >> we look back at it. my initial remembrance was that

the stocks that get knocked out do well, because they're being sort of sold off the index at the low. but there's plenty of instances like woolworth's, bethlehem steel, things like that, that got destroyed afterwards, and those that come in do well. i think it's less -- there's less consistency there and more coincidence as to where the market is, where the stocks are. the three coming in, at new highs, the three going out, the lowest-priced ones, there's some sort of thing going on, kind of like what they do with the cpi and other economic stats. they keep tweaking it to sort of smooth things out and make it a little bit better. >> that makes some sense, though. you're taking out the lowest-priced stocks. they're low priced for a reason. they've had a terrible time. >> yeah. >> yes, they've bounced off their lows. >> sure. >> taking them out, given the weighting and the fact that lower-priced stocks have less impact, makes some sense. the fact you take them out, well, they're low priced. unless they're going to go out of business -- >> which some have. >> -- they'll find a way to rebound. it makes some sense if you

understand the politics of indekz construction. >> i would say the hp is the most troubled one there. perhaps the cover of "baron's" was a telegraph in hindsight with the pc industry being on the outs. >> yeah. jeffrey, bob, thank you guys. what can be a confusing process, it's been a while. >> thank you, gentlemen. now to new developments on syria. the president has agreed to u.n. talks on russia's proposal for syria's chemical weapons. our john harwood is in washington with more. john, what does this mean? >> reporter: well, carl, it means everybody from the administration to capitol hill is embracing the possibility that diplomacy can let them avoid military action, and the reason it's clear is because members simply don't want to vote for this. we heard from speaker boehner, said he's skeptical of the russian-syrian outreach, as the administration has said it's skeptical. but they are going to let it play out for a while and scrutinize it, because members aren't ready to authorize military force right now. here's the speaker.

>> clearly, members tend to reflect their constituents. the american people have not been supportive. he's not made the sale to the american people. that's why i think tonight is so important. >> reporter: well, and that speech comes against the backdrop, as he suggested, of the new nbc/"wall street journal" poll, showing if you ask americans, do you want to strike syria? 6 in 10 say no. only 1 in 3 say yes. that's why the administration is delighted to pursue this. they're going to scrutinize it, though. but john kerry, the secretary of state, was on the hill testifying before the house armed services committee. he said the military action will not be on an indefinite pause. >> this cannot be a process of delay. this cannot be a process of avoidance. it has to be real, it has to be measurable, tangible, and it is exceedingly difficult -- i want everybody here to know -- to fulfill those conditions. but we're waiting for that proposal.

but we're not waiting for long. >> reporter: so i think the bottom line here is that we've got at least a week or two for this to play out, which is a reprieve not only for the white house but also for the members of congress who were not eager at all to cast a vote on this issue if they were in favor of it. the "nos" wanted the vote, the "yeses" did not. >> all right. we'll see you tonight before the president's speech. thank you. we want to get more insight on syria ahead of the big speech from the east room. colonel jack jacobs is a med sal of honor recipient and msnbc military analyst. richard murphy is a former ambassador to syria. good morning to both of you. >> good morning. >> is this a play by russia, or are they actually interested in diffusing this? >> i think it's a little bit of both. it's stalling for time. but over the longer term, putin doesn't -- there's no benefit that accrues to either russia or to putin for the united states to get intimately involved with destroying assad.

so i think they're regrouping and trying to figure out what to do next. instability in the region is no help to anybody, including russia. so this may be an opportunity for the president to get what he wanted, which was to have somebody else make a decision for him. >> adam because d-- ambassador,d the outcome is a prolonged stalemate. is that what we're in for? >> it could be. but i think secretary kerry is very conscious of that, and he said we're not going to allow an indefinite stalemate. this has taken the pressure off the president tonight when he makes his case for action. he's going to have to amend what he planned to say a few days ago, obviously. but when you look at the syrian government and their decision making, the speed with which this proposal was made and accepted is a little curious. >> yes.

i mean, you have to -- we're talking a matter of hours, i think is what you're trying to say, not days. it happened in a hurry. colonel, how much of u.s. credibility pivots around a strike and nothing less than a strike? >> oh, there's a great deal of credibility we've already lost with saying there's going to be a strike, and then there wouldn't be a strike, and then there's going to be a strike no matter what. so our credibility is wafer thin around the world, and particularly in that region. the waffling of the president makes it extremely difficult for the united states, and in particular the secretary of state to operate in the halls of power in other countries, because unless there's some resolution that makes us look like we know what we're doing, it's going to be very hard for the secretary of state to convince other leaders that, in fact, we mean what we say. very tough for him. >> yeah, you think -- i mean, people said he was thrown under the bus earlier on, colonel.

you think there's a risk he might actually leave after this situation. >> yeah. my -- i'm trying to make believe i'm him, and i probably shouldn't. but in any case, i think when this all -- this whole thing resolves itself, which it ultimately will one way or the other, i think he'll -- he'll wait for a decent interval, and he might decide he wants to spend more time with his family. the whole setup is very frustrating for him. >> i think everybody knows what you mean. finally, mr. ambassador, are you willing to put some odds on the likelihood of any strike at any time in the near future? >> in the near future, no, because certainly the president would want to get the presentation thrashed out, discussed in the congress, and the senate has delayed it a week further now. so it won't -- it won't be immediate. but i think he has to keep that as a serious possibility in front of the russians, in front of the syrians and in front of

the world. >> can't ask for better insight than you two gentlemen. colonel jacobs, ambassador murp murphy, thank you so much for your time. >> thank you. >> tune in tonight. we'll carry the president's speech to the nation live at 9:00 p.m. eastern time here on cnbc. future of apple coming soon. the tech company's going to set to reveal, well, something, at a media event in cupertino, in about a little more than an hour and a half. why wait until then? we'll go live on the ground to find out what apple might have in store. first, rick is looking at mutual fund flows today. hey, rick. >> yes. with mutual fund man himself, beaderman, will be here. we'll discuss fund flows, and he's bullish in the short term but still mentions the "r" word. you don't want to miss beaterman, six minutes. be there.

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the dow hanging onto a triple-digit gain. let's look at financials and industrials. you can see a fair amount of green boxes. sheila is back at hq with more on that. hey, sheila. >> hey there, carl. a lot of green on the screen. the rally being led by both the financials and the industrials. both sectors up by more than 1%. in fact, industrials up by nearly 1.5%. looking at some of the individual movers. e-trade up more than 5%.

it's the biggest winner in the sector after an upgrade by an analyst. and industrials, you have ingersoll, all up more than 10%. there is, of course, one notable red spot on everyone's screen. that is energy, of course, taking a hit. really, industrials, financials, leading today's rally. >> all right, sheila, thank you very much. the wait is almost over. in a little under two hours from now, apple will begin a media event at its headquarters in cupertino, california. will the new iphone rumors be true, and could they have something else up their sleeve? jon fortt is live and joins us with a lot more. good morning again, jon. >> reporter: good morning again, carl. we already talked about what we know we're probably going to see. iphones. if we don't see those, you know, the sky's going to fall. what are some of the longshots, the stuff we probably won't see? let's run down a few of them. the watch that everybody's talking about, probably not going to see that today or the tv. we probably won't see ipads, so

we expect them soon. we might very well, actually, see macbook pros, mac pro, got a tease a few months ago, and i c imacs, given those haven't had a refresh in roughly a year. we know an iphone-c, a cheaper version of the plastic case, five colors. we know the iphone 5s is something we should look for. ios 7 launch details and itunes radio, as well. the 5c is something that apple wants to make cheap enough to expand market share, but expensive enough to maintain decent profit margins. and with the 5s, we expect to see an improved camera, perhaps a better screen, improved battery life, and graphics, as well. now, this is very important for apple, of course, because the iphone and the ipad are largely responsible for the bulk of revenue. the iphone, especially, for profit and profit margins. carl? >> jon, you know, people are

looking back at past product releases, and they say, you know, the stock doesn't fare very well on that day, or shortly afterwards. others argue because of ios 7 and sort of the detail that we'll get, maybe today will be different. what do you think? >> reporter: well, i think there's going to be a way for lots of people to be disappointed no matter what. if they price the 5c low, people will say it will kill margins. if they price it high, people will say it won't expand market share. the real interesting action will be in the first days that they're selling this device. and i expect the stock could move if the release date is earlier or later than people expect. and if the launch countries are numerous. that's what happened last time when they launched in more countries and sooner. that gives people a pop in expectations for the quarter's numbers. >> yeah, trying to cram as many days in the quarter as you can. you've made that point a couple of times. a good way to go. our jon fortt in cupertino. see you soon. let's stick with apple.

among the new products we expect to see, a new version of the iphone with a fingerprint sensor. it brings us to this morning's "squawk on the tweet." all of you conspiracy theorists out there, what might apple want to do with your fingerprint? tweet us @squawkstreet.

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♪ welcome back to "squawk on the street." i'd like to welcome my special guest, biederman! charles biederman of trim tabs. sorry about friday's snafu. here you are on tuesday. i have four, five topics i want to go over with you. give me a trim tabs cadillac summary of flows. >> well, flows are actually bullish, as the way we look at it. they continue to be heavy

outflows from u.s. ets, and that's always been a robust contrary indicator. we're also seeing selling of long -- leveraged long etfs and buying of short etfs, and that's an even more powerful short-term contrarian indicator. for the short term, we're quite bullish, and have been and are quite bullish. >> all right. shift gears to rates. what are you seeing on the rates side? >> well, as we talked many times, ever since the fed said that they're going to stop buying as much as they had been, well, interest rates have been going up. why are interest rates going up? because bond prices are going down as the bond market says, hey, if the biggest buyer is going to stop buying, why should we buy? so if the fed actually does taper, interest rates are going to keep going up, and that's going to lead to bad things. >> all right. jobs. you weren't here on friday. but i've spoken with you since.

and you think that the jobs numbers are highly overestimated based on what you do withholding. give us the short version. >> the short version is we track withheld income and employment taxes and adjust for higher tax rates and other stuff to come up with year-over-year wage and salary growth after inflation is growing below 1%. there's no way we're generating over 100,000 jobs with only 1% after-inflation wage and salary growth, unless the bulk of those jobs are 30 hours at minimum wage. >> well, and i think you're getting a lot less debate on that topic today than you would have a couple of years ago. the final topic, and this is a biggie. on a scale of 1 to 10, knowing your short-term contrarian bullish on stocks, what do you peg the chances of the "r," the recession, over the next year, 10 being the highest probability? >> well, i would say by the end of next year, i'd say at least a 60% chance of a recession,

assuming the fed actually stops buying treasuries over the next year, and interest rates rise. remember, the only strength in the economy now, in a 1% growing economy, is anybody who's alive and doesn't have an arrest warrant out can get an auto loan. you don't need to be making money. you can get an auto loan. it sounds like '06. buying a house. you just needed to be able to sign your name and you could buy a house. >> well, listen, chuck -- >> go ahead. >> -- we're out of time here. to summarize, he's bullish on stocks near term. he's a little bearish on the housing market. and he actually thinks 60% possibly recession one year. you got my heart racing. charles, it's a pleasure. thank you for taking the time. gang at "squawk on the street," it's all yours. >> all right, rick, thank you very much for that. this major shake-up in the dow this morning, bank of america, hp, and alcoa being taken out. visa, goldman, and nike going in. we have more on what this means for your money in a moment.

plus the bells are about to sound across europe in two minutes or so. we'll get the close from simon, some of the details on its impact here, the dow up 105 points. back in a minute.

simon here to walk us through green arrows. >> a lot of green arrows. dense green arrows. three-month high. it's not just the action in syria could be postponed. it's the good data in china.

what it means is the world markets can continue to potentially rally and, therefore, for european equities, to make up the underperformance for the year. and that's partly why today you see a greater bounce in europe than you see here in the united states, if you check out the percentage moves. of course, the price of oil has fallen through the last 24, 36 hours. and internationally on brent, and that's the quote you're most concerned about. perhaps the one most susceptible to any action in syria. that's meant a big difference for the airlines. some of the airlines have rocketed today. lufthansa, air france, british airways iberia, bank of america, repeating the buy recommendation on that. frankfurt automotive show is under way. you've seen a lot of those stocks doing well today. porsche saying it won't cut prices. it is off its highs. partnering wi partnering with ibm with self-drive vehicles. let's have a look at the quotes, some of the more troubled banks are doing well, because

obviously, less prospect of military action, more confidence, and, therefore, growth and getting ourselves out of trouble in europe. the last thing i want to mention is berlusconi, again, yesterday, the senate met, and they will reconvene at 2:00 p.m. our time, so in about 2 1/2 hours. the latest analysis from the market participants is they may vote berlusconi out of public office, but the coalition can hold together. they say the greatest concern is you won't get the sort of deregulation of the labor market and the banks that you need to spur growth in italy. it is a major problem for the euro zone, and today, carl, we found out that the contraction was greater in the second quarter in italy than we thought. >> a very big player. >> yes, they are. particularly in bond issuance. the biggest bond market, of course, in europe. >> thanks, simon. back to today's big story. alcoa, bank of america, and hp moving out of the dow while

goldman, visa, and nike are moving in. bob? >> we do this every few years because the dow makes the changes. it's important to understand why they're making their changes. so here's what you need to know about the dow jones industrials average and about the changes that they're making today. number one, put up the full screen. the dow jones industrials average is not an industrial average. it was a long time, when we were transitioning from agriculture to industrial. that was the 1900s, 1920s. they haven't claimed it is industrial for years. it's the large-cap sector. that's what you need to know. it's not a judgment on the components. they're not saying goldman is better than bank of america. they're not providing investment advice. they're not making recommendations to buy anything at all. what's really going on here? here's the things that are important that's behind the dow moves. number one, it's index construction. the dow, as you should know by now, is price-weighted. s&p is market cap-weighted. that's different. when you have three very low-priced stocks, and the three stocks being taken out are the

lowest-priced stocks in there, that is a problem. because the three lowest-priced stocks in there don't do anything to the index. they don't move it at all. you don't want stocks in the index that don't have any influence when there are only 30 stocks. the opposite is also true. you don't want really high-priced stocks, like apple or google, because they'll have too much influence on t the other thing -- put up back the full screen. i want to point out the sector diversification, very important here. nike is a good job representing the growing consumer sector. and they think visa is better at representing technology than what you've got in there right now, which is hewlett-packard, okay? this is why the money people aren't excited about this. the dow is not indexed to a lot of money. put up the last full screen. right now, only $30 billion, carl, indexed to the dow jones industrials average. i mean, etfs and people who have indexes related to the dow. there's $1.6 trillion in the s&p 500, and that's why the real traders pay a lot more attention

to when there are big moves in the s&p 500. >> that is the statistic of the day. thanks, bob. let's get to kayla back at hq. breaking news, kayla. >> i want to give you an update on the mega bond that's currently being built by verizon. of course, to fund its big acquisition of verizon wireless from vodafone. it's, of course, $130 billion, to fund part of that, verizon was in the market with what was supposed to be a $20 billion bond, building its order book. i'm told from sources the order book has exceeded $50 billion. it's already oversubscribed, even at the middle of the trading day today. it's likely at this point that verizon could look to upsize that offer, possibly to $25 billion or higher. of course, the bond issue is not expected to price until tomorrow, depending on demand. that could be moved up, also. but i'm told that that is still expected to happen tomorrow. of course, the pricing does depend on demand. i'm told all of the bonds are expected to price at a slight premium to verizon's existing

bonds, but the more demand there is the tighter the spread, over treasuries, and certainly looking to be a successful order book being built for verizon, what could be $25-plus billion in debt. carl, back to you. >> you've been all over this story since the beginning. thank you so much for that, kayla back at hq. british cable giant virgin media, netflix striking an unprecedented deal, sending shares of netflix to an all-time high today. this surpasses the 2011 high. julia boorstin has more from los angeles. hey, julia. >> reporter: good morning, carl. it's the first time a cable operator is bringing streaming netflix directly to its settop box, a landmark breaking down the wall between tv and streaming, and showing netflix's increasingly viewed as another network, and not necessarily as competition for cable. now, netflix streaming will be available to virgin media subscribers in the u.k. using tivo-set top boxes. integrating netflix with cable tv, so it's easy to seamlessly browse and search across streaming and television content. so searching for kevin spacey

will bring up netflix's "house of cards" as well as his movies playing on tv. all of this without switching remote controls or even tv inputs. virgin will start with a pilot of 40,000 households, rolling out to 1.7 million. virgin media tivo homes by the end of the year. to access netflix, user also still pay a standard netflix subscription. netflix shares hitting an all-time high today, up more than 4%. jpmorgan's doug anmuth says it should help strengthen netflix's europe position. and netflix hoping to make it more compelling to its rivals. one analyst calls the news incrementally negative for traditional networks, saying netflix's content is a click away and we expect to see higher utilization of the netflix service, which we believe will come at the expense, at least in part, of traditional tv

networks, particularly for lesser-watched programming. now, netflix says it doesn't currently have any plans to roll out anything similar with u.s. cable carriers, but we could be sure, carl, that everyone will be watching this partnership. back over to you. >> as they do with all things netflix, julia. thank you so much. the president has a tough task tonight, as he speaks to the nation on syria from the east room this evening. and that speech is probably undergoing some major rewrites after russia's proposal to put syria's chemical weapons under international control. we'll take a closer look at what the president's speech might look like in a moment with a former speech writer to george w. bush. with fidelity's options platform, we've 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. i'm greg stevens, and i helped create

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ishares by blackrock. call 1-800-ishares for a prospectus, which includes investment objectives, risks, charges and expenses. read and consider it carefully before investing. risk includes possible loss of principal. coming up next, the new dow. what does today's big shake-up mean for your money? it's almost showtime for apple's big event. plus, after trailing the market all year long, is now the time to buy target? big "halftime" debate ahead. carl, we'll see you in 15, 20 minutes. >> all right, see you soon. alcoa out with a statement on its removal from the dow jones industrials average. it says, in part, the composition of the dow jones has no impact on alcoas ability to successfully execute our strategy, and we remain focused on delivering shareholder value.

as we await more comments from some of the other companies affected today. meantime, the president getting ready to make his case for military action in syria in a prime-time address tonight. how will the president's strategy change after russia's proposal to put syria's chemical weapons under international control? mark is a former speech writer for george w. bush during the iraq war. ed rendell, the former democratic governor of pennsylvania and a cnbc contributor. gentlemen, good morning. >> good morning. >> mark, give us a window into how this is working in the oval office today. i mean, to what extent is there a rewrite, and how difficult is that? >> oh, it's -- i'm sure they're scrambling right now. probably even as we speak with edits. because the situation on the ground, and then diplomatically, it's changes as we speak. it's a very different speech than it was 24 hours ago. 24 hours ago, the president was coming before the country and pleading with congress not to reject the authorization for the use of force. if he does the right thing, the speech won't be directed so much as congress as it is to the assad regime, and an ultimatum

speech. the president needs to stand before -- look into that camera and said to the assad regime. here are the things you need to do. a, b, and c. these are the world's demands. the demands are not negotiable. here is a deadline for you to meet them. if you do not meet them, then there will be military action. now, that would take it from a speech of weakness to a speech of strength. the problem is is that he's -- he's handed over a veto to congress over whether there can be military action or not. if congress doesn't go along with that and undercuts him, then he won't be able to deliver on those demands. >> governor, this has been a difficult process to watch, politically, tactically. i wonder what you think the best path is starting tonight. >> exactly what mark just laid out. i think he gives the speech -- that very speech and says, look, this is the last chance for assad, and really the last chance for syria. you've got to do this. you've got to comply. you've got to comply quickly.

no stalling. no delaying action. it has to be thorough inspection to make sure that you have turned over all of your chemical weapons. and once you've done that, you have to realize, if you violate, there will be swift and effective reprisal immediately by not just the united states, but by the entire international community. look, the president got lucky, in my judgment, politically. i think it was going to be a very difficult task to persuade enough republicans and democrats in the house to vote to approve military action. i've heard over the weekend a lot of republicans even say, well, why didn't we bring this to the u.n.? why isn't the u.n. taking action? why doesn't the world community get involved? well, now he's got the perfect out, the president. we're going to do this, but we're going to do this, as mark said, from strength in the u.n., a united world saying, okay, turn over all your chemical weapons, make sure it's fast, verifiable. and if you violate, we're going to come down on you the entire international community with

force. i think that makes it an easy resolution to vote for it. and i think senator shurmur and senator mccain are working on something to that right now. >> right. >> there's one problem -- yeah? >> i was going to say, we talk about the speech being rewritten. it does seem the box they've been put in has come largely because of ad-lib comments, right, a comment about a red line, a comment about unbelievably small, which you've said was unbelievably stupid. >> yes. yes, it was. i mean, the problem with -- i think ed and i have given the president the right advice. the big problem he is is that obama needs this way out more than assad does. the reason an ultimatum will work is you're trying to give the person an out in order to have a peaceful solution. but obama needs the out more than he does. i mean, assad faces what secretary kerry called an unbelievably small attack. but the president faces an unbelievably large defeat in congress. and the fact is the president

going out and saying, well, this is because -- we're at this point because of the show of strength. what show of strength? the president took this to the world and the world said, no. the british parliament said no. and the u.s. congress is about to say no. he is in the weakest position of an american president has been in a face-off with a dictator in modern times. so the president is in a weak position, and it's assad in a position of strength and is giving, if anything, assad is giving obama a way out, not the other way around. >> governor, one final point on secretary kerry. some have said he's the one who's been truly emasculated here, as policy pivots to where he was headed. do you think he sticks around? >> oh, absolutely. i think in some ways he can take -- whether it was accidental or intentional -- he can take credit for this solution, a solution that i think is going to be resoundingly praised around the world. and from a political standpoint, what mark said is right. but then you make the argument to the american people.

hey, give the president some credit. if he hadn't said we're going to take strict military action in reprisal here, why would assad have done this? would he have done it voluntarily if there was no threat of force looming, regardless of how difficult it seemed to get that threat of force effectuated? why did he do this? why is he giving up what is an effective military weapon? >> he's not giving up anything, ed. >> he is. he's giving up his chemical weapons. >> he hasn't agreed to that. they're stringing us along. they don't want us to do anything -- but when the united states -- >> if he doesn't agree to it -- if he doesn't agree to it -- >> -- what are the costs going to be? >> no, no, i agree that the secretary misspoke there. look, if he doesn't do this in a short period of time, then i think congress will agree to take action, because this is what congress wanted. the international community coming together with a proposal

that reasonable people could say, avoid the bombing. if he turns his nose up at us, i guarantee you the president wins that vote and he wins it big. >> all right. thank you so much. we'll see what he says tonight. thank you very much. make sure to join us for the president's speech tonight at 9:00 p.m. eastern time. we'll cover it here on cnbc. the wait is almost over. apple expected to unveil two new phones at an event in california in about an hour. does apple have anything special up its sleeve? we'll talk to walt mossberg for his take next. a free checked bag with my united mileageplus explorer card. i've saved $75 in checked bag fees. [ delavane ] priority boarding is really important to us. you can just get on the plane and relax. [ julian ] having a card that doesn't charge you foreign transaction fees saves me a ton of money. [ delavane ] we can go to any country and spend money the way we would in the u.s. when i spend money on this card, i can see brazil in my future. [ anthony ] i use the explorer card to earn miles in order to go visit my family, which means a lot to me. ♪

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>>. >> in a little over an hour, apple will unveil what is widely expected to be new versions of the iphone. joining us from apple's headquarters is walt motberg, the columnist for the "wall street journal" technology column. walt, good to see you again. good morning. >> good morning. >> after days and days, walt, of the coverage and the speculation getting more specific, i want you to handicap for us this morning the possibility of surprise. how much could there be? >> well, obviously, with apple, they try to surprise, but that only encouraging a colossal amount of digging. and so, there's -- i think there's some possibility for some surprise here, but it's really hard to handicap how much. and i think -- i think it's

really important to remember that something they've already announced could wind up being the biggest change for iphone users, and that is the new operating system and all of its new features. >> that's right. a lot of people are pointing to that as a reason why today's product launch might be better for the stock than past product launches. why is that, walt? because we've already gotten a look at it. what would be different -- what would we learn today that's new? >> well, in terms of learning, they always hold back one or two features from things they've announced in the -- you know, in the previous few months. so it's possible that we'll see something in ios 7 we didn't know about. but even if we don't, remember, when you pick up a phone and use it, part of it is the hardware, and apple is always very careful about its hardware being kind of well-built and attractive. but most of it is the software experience you have on the phone.

and, yes, hard-core tech can is and developers have been fooling around with the new ios, it's gone through its beta stages. but the mass population of smartphone users haven't seen it. and it really -- it is what affects the whole personality of the phone. >> walt, you've written about -- better than just about anyone sort of the wave of innovation that has come and gone, some argue, with apple. do you see today in any way as the beginning of a new chapter where they once again demonstrate their innovation chops? >> you know, no, i don't think this is one of those giant inflection moments. i think there will be innovation. there is innovation in ios 7. they're continuing, for instance, to drive down the path of artificial intelligence and voice recognition and other things. but really -- apple is like a movie studio.

and the steve jobs' era, they had the history of making these big hits that changed the game. and, of course, an evolution of the iphone doesn't necessarily qualify as one of those giant game-changing moments like the original iphone, like the imac or the ipad. >> we have a busy couple of hours. thank you so much, walt mossberg, talking apple in cupertino. how do the new product law enforcement -- launches help the other companies? we have the ceo of zag, that makes covers, scratch protectors. randall, good to have you with us today. >> thank you. good to be with you. >> a lot of people curious about how much lead time you get. you guys have to prepare, too. what is that process like? >> you know, we're fortunate in that we have a terrific group of manufacturers and suppliers that

we work with, all of whom get little bits of information here and there. we use that information and kind of trian late back to what we think the spec will look like. and then we risk build accordingly. we have product ready to go and on the shelf with the apple device shipments. >> so do they give you exact specs? because i can't imagine launching a new product on your part without knowing exactly, for sure, what that phone is going -- how long it's going to be, how wide it's going to be. >> we never get exact specs. as i mentioned, we have to kind of trianulate back. we risk build most of the time we've been right, over the last several apple product launches we've been right on. but we have contingency plans in place, also. if we're off a little bit, our manufacturers and suppliers are lined up ready to respond quickly, so that we still have product on shelf by the time the apple products hit. >> man, you must have some gray hairs once that process is over with.

just in general, randall, the phone's been with us for a long time. how has the industry of covers and protectors changed, if at all? >> you know, i think we've seen a great evolution. if you look to back when zag was founded in 2005, we launched on our flagship product, the invisible shield. we're now in our fourth generation of that screen protection. it gets better with each evolution. and so, i believe that that's probably true in cases and all of the other accessories that support these type of smart devices. >> well, i know you'll be tuned in for one at 1:00 eastern time as we await the news out of cupertino. randall, thanks again. >> thank you. >> randall hale. as you know, apple expected to unveil the new phone possibly with the fingerprint sensor. what might apple want to do with your fingerprint? tweet us @squawkstreet.

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"squawk on the street," apple is expected to unveil a

phone with a fingerprint sensor. dennis writes, i envision a market with four-fingered gloves. one is from quantum croan graph, they would use it to clone a rich version of me that could afford to buy their products. let's get back to headquarters. scott wapner, a busy afternoon and "the halftime." yeah, thank you so much. welcome to the "halftime" show. four hours until the close. we're backing up yesterday's good move with another good one. the dow up. the s&p, nasdaq higher as well. here's what we're following on "the half." the apple trade, one hour before the big unveil, an analyst weighs on whether you should sell the news. target shares. the bull's-eye checking out shares. is there any reason to check in? one trader says yes, the other says no. the new