let's wait and see what develops over the next year or two. >> were you hoping honeywell was going back in the dye yesterday? >> i would like to have seen it go back it, deserves to be there. >> do you want ten seconds on yellin? >> if i had a preference, i'd pick yellin. >> you've had some personal experience there. >> never mind, i just think he's the better choice. >> all right. thank you. we'll see you tomorrow. "squawk on the street" begins right now. good morning on this 12th anniversary of the september 11th attacks, as we pause to remember those lives that were lost, this is "squawk on the street." i'm carl quintanilla with david faber. we're going to keep our eyes on futures as well. s&p is on a pretty nice six-day

win streak, the best since june. ten-year yield this morning as mortgage apps basically collapsed last week, refis down 20% and we'll keep an eye on the mix of red and green arrows today. this is the best start to september since 2010, as the president announces he will delay the vote on a military vote in syria and give diplomacy a try. >> are investors giving up on apple? no big surprises at yesterday's event. no big deal announced yet with china mobile and shares falling in the premarket. >> and netflix share at an all-time high. the deal with virgin media could change the relationship between netflix and the cable company. >> the president last night laid out his case for a military strike on syria saying it's in

america's national security interests to work with allies to put chemical weapons under control. >> my administration has tried diplomacy and sanctions, warnings and negotiations but chemical weapons were still used by the assad regime. however, the last few days we've seen some encouraging signs, in part because of the credible threat of u.s. military action, as well as constructive talks i've had with president putin, the russian community has joined in push ago sad to give up his chemical weapons. >> with that, secretary of state is going tomorrow to see if he can hammer out some kind of u.n. resolution that would be binding, that would be backed by force. where does that leave this market, jim? >> one of the things that was

absolutely certain from that speech is the russians acted because we made a credible threat. i think they felt listen, we're going to go in and with a lot more than just a couple of missiles and they wanted to preserve this assad regime. sometimes i sit back and say between 9/11 and the president, i watch the president, it's a good speech, so what. i'm jim cramer, 9/11 overwhelming, too. i come back and say market's overbought, refinances aren't that hot, feels like we had a very big run and apple is not that good and i say, gees, what's the next thing here? we've been so fortunate having a great stock market. just doesn't feel like -- maybe it's had a bit of a run here. >> it may have had a bit of a run. it's funny, in speaking the last couple of days, having reacquaint myself over the summer having ended, trying to talk to bankers or senior executives, people seem to be rather positive i will actually

tell you. >> business is better but it seems like we handed off somehow -- >> the interview with sam zell in the journal this morning has taken his personal percent and in his personal account that's devoted from real estate to 50% in 1990 to 40% seven years ago to 30% now. he said i'm not singing kumbya. >> it's so great he said that. if it's so great, where is the inventory. we're a housing bubble in different areas. it's hard to imagine that the fed does something drastic here after what looks pretty drastic.

let's say you're the fed you're saying we really fear tapering because maybe mortgage applications will drop. hey, guess what, i don't know how you drop more than they dropped. refis down 20%, the jumbo goes to 4.84. that's where a lot of people were originally. the incentive to refi, where did that go? >> well, you had your chance. >> you did have your chance and it went on for a long period of time. >> it's irrational. >> it is. you've mentioned housing as a sore spot, a worrying point, which is a fair point. but to the extent other parts of the economy were to get rolling and that jobs number does not point to that occurring necessarily but i will tell you again there does seem to be a positive tone perhaps, an idea of if you look market, we're not talking about europe for the

last four years. >> you get these upgrades at jpmorgan. ingersoll rand looks like a biotech stock. great international companies are really flying here, anything with aerospace, many of the big dow stocks, united technologies, boeing. you come back and say, listen, we are not that good maybe. which is bigger in the end the big industrials can carry us higher. is retail in a cross hairs? i don't know. >> getting a little catalyst here. i had underarmor on "mad money." could be going stronger. nike is doing well, nike and the dow. we have some big cap stocks doing better. your world is a world where guys are doing the verizon deal. they have to say you know what,

58 billion is right there. >> their ability to borrow is incredible. $49 billion. now they're going to actually try and do all $49 billion of the financing that's needed like that. amazing. amazing. but that's been the story, the largess of the capital market, particularly on the debt side, has been one of the key stories for years now, maybe not to this extent. >> and then people are going to say bubble that you could raise $50 billion overnight. double. i remember a long time ago goldman sachs $5 billion is a lot.you had a deal like this, y be calling all your customers saying please, please take that, please, please. >> all this for about 2.5% over the corresponding treasury. amazing. one big cap stock that is not going to be up is apple.

they did not announce a deal with china mobile that had been anticipated. it is set to receive a license to run on china's network. this after two upgrades. but some on wall street unimpressed. ubs downgraded apple this morning. the china mobile deal, to be fair, people are saying there's an expectation perhaps that will be announced in november. we shall see. a lot of analysts waking up this morning and investors saying, all right, it was nothing that i didn't expect and you didn't wow me. >> no. i thought the "financial times" put it best, apple puts color and security before price. these other countries that don't have these packages, these plans. if you're in one of these countries where you have to actually go buy the phone, the price was not right.

why don't you just say it clueless on the air. >> i don't know it's clueless. you do away with the 5, you bring in the plastic phone, lower your cost, protect your margin. in the end, it's about moving around the chains, it's not about innovating a new phone. >> people have to accept the fact that they're not samsung. samsung is the cheapest -- >> people love that big screen, man. love it. >> is apple gm and samsung -- >> could that happen that quickly? >> no, but the idea that at a certain point -- i remember when the toyota came out people were look that's cheaper, who cares. next thing it's cheaper and better. next thing gm is doing saturn and then gm is bankrupt. we have to get rid of the halo i

guess. >> even the guy who backed up their buys today at btig still called their reticence to go into a lower tier market a miscues. there's hope that now they just had a release but maybe it does happen eventually. >> i remember when microsoft was the collosus. you end up thinking maybe that's more who they are. >> people did that with microsoft software? people went "ooh, wow"? >> yeah, because you had no icons and it was exciting. >> that was before the internet. >> they destroyed netscape and they were taking on the attorney

general of the united states, giving her a smackdown. that wasn't so smart. in the end -- there was an excitement to it. then we realized microsoft was no more excited than duke energy. >> the stock hasn't done much. it has an incredible free car yield. who knows where we're headed with microsoft. >> well, they split it up. meanwhile netflix -- if intel had bought arm holdings. look at arm holdings today. >> we're going to talk netflix later on. what a story. shares of p & g are down. suntrust says they go from a neutral to a buy saying they need to show consistent top-line growth. it's in the trading range for the remainder of the calendar

year. what do you think? >> i think procter is putting color and security before price. >> color is all the rage. >> talk to mickey drexler. >> everything is color. >> procter has to cut prices and get the emerging market back. colgate has innovation going. a lot of people feel procter has lost its way. i used to feel that way. it's a big cap company. it's hard to innovate. colgate is innovative. procter's been kind of stagnant. plus, i don't know, have you guys bought a razor lately? it's like $475. i need walgreens and cvs to do

what walmart does, subsidize. >> i bought a schek because i was mad at heck. you know what, shaves very similar to a gillette. second best that man can get is fine. >> it is very expensive to shave. >> it's a huge cost. >> they sell you the razor but then they sell you the razor blades. how crazy is that? what a business model. >> hair and grooming has not been that good. >> but isn't it ironic that some analysts are mad at apple for not doing a lower price item but at p & g, they're doing a -- >> you're mr. split up. >> have you noticed what happens when a company is split up? it goes higher. >> that's what the bankers call

it now, shrinking to growth. >> i like that. >> they always think of such great things. >> split equity. shrinking to growth. >> i feel like what's happening here is you get a company like procter and it like, i don't know, if you did a hair and grooming corp, a cleaning detergent corp, we like all these pieces like what sara lee did. nobody doesn't like sara lee. they sold off the coffee business for a huge amount. like a pfizer. zoletis. this shrunk to grow. >> they shrunk to grow.

>> when we come back, the netflix juggernaut. can a stock that has more than tripled this year look at that, it's at 313. >> they're not shrinking to grow, they're just growing. >> and ed lazear will join us. we do have a moment of silent here at the exchange right before the bell. we're back in a few moments. and at the center of it all is a surprisingly low price -- just $7.95. in fact, fidelity gives you lower trade commissions than schwab, td ameritrade, and etrade. i'm monica santiago of fidelity investments, and low fees and commissions are another reason serious investors are choosing fidelity. now get 200 free trades when you open an account.

netflix announcing it's launching its streaming service in the netherlands. that will make that market's the country's 41st operation. that on news that u.k. operator virgin media is to imbed media on that box. here's what he said to me in an interview earlier this year. >> i could consider reed coming to the cable industry and saying why don't we have a wholesale

resale partnership instead of being adversaries and all of a sudden cable is distributing and promoting things doesn't have a lot of sports on it. maybe it's a bundle or netflix with video or with cable or broad band and you see the traditional video shrink. >> this will happen. we ran that right on april 10th because the thoughts of this were of significance. malone and liberty control to a certain extent charter, which is one of the largest cable companies through their 20% ownership of that. this is fascinating that you would keep the video product but probably getting rid of a lot of your pay servicing, allowing people to do a different kind of

bundling with netflix being delivered to the set top box. >> is this man really able to think that young? this is the way people think that are much younger than he is. a visionary thought that way about sirius satellite. i mean, he just has the pulse. >> he's certainly an extraordinary thinker. you have to be aware as a cable provider is how do i potentially keep that video going into the home along with that product. but again, that may very well be provided by their cable provider. >> i was watching the mexican world cup. i like soccer -- >> as we all were. >> it's very exciting. i'm watching on my cell phone.

es espngo. >> doesn't that get expensive? >> i don't know. i liked it. i was watching the president. >> and the idea of you're blowing apart the bundle. what i think is fascinating about netflix is this is the beginning of a new era. >> but your point about the young is key. these are kids and i mean kids, who didn't grow up. they don't have the experience of coming home and turning on the television. it's hard for us to exit that mindset. malone thinks not only strategically long term but can package it tactically. his genius with balance sheets and billions with accounting. >> and a way to avoid taxes at all costs. >> visionary. when we come back, it's shaping up to be a rough day for apple, as we said. take one more look at futures.

we'll keep our eye on g geopolitics today. oil finally has a rather calm day and we'll have a moment of silence at the new york stock exchange when "squawk on the street" comes back. building animatronics

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united 175 had already crashed into the south tower. of course it's a day that changed life for everyone in this country in ways that we cannot even understand at the time. there will be several moments of silence around the country. the president is now making his way to the pentagon. here's the moment of silence. ther

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it's not rocket science. it's just common sense. from td ameritrade. you're watching "squawk on the street," live from the financial capital of the world. the opening bell set to ring in just under a minute's time. we just had a moment of high sense here at the new york stock exchange as we recall the 12th anniversary of the september 11th attacks. it important to remember 2,977 victims, 242 on plans, 125 at the pentagon, 2,606 here in new york and the president is at the pentagon where they'll have a moment of silence in just about seven minutes. it is being remembered, as it should, all around the country today. meantime let's get the opening bell and get this trading session under way. a lot going on, a lot of discussion of apple, the

president's speech on syria last night, big high profile downgrades of procter & gamble. the big board, nonprofit organizations, my good deed and tuesday's children playing tribute to the victims, at the nasdaq, the new york p.d. and children and widow's fund. >> a good interview yesterday. >> one of the things of charitable trust in morgan stanley, it's lagged. they've made a lot of changes that's not really recognized.

this is a little better than m & a. >> and fixed income is very important for these firms. the lead underwriters for morgan stanley and for verizon, for the huge bond offering, that's going to be some nice fees for all of those banks. >> not worrying about mortgages with morgan stanley. i think a lot of it is the reversal of the -- if housing's going up, everything they have that's under water is not as underwater. it does matter. it's kicking around somewhere. i like the morgan stanley call. we didn't mention there was a lot of fear among these banks that if eliot spitzer was elected, they would have the new sheriff. stringer not a sheriff? >> scott stringer defeats eliot

spitzer for the controller's race here in the city of new york. why would that be important broadly? because if spitzer was in there as an owner of a share of many of these companies, he would have been owner, he would have been defeated. >> the headline of the "new york times" today, "sleazy come, sleazy go." >> i happen to like the hotel business. starwood. windham, mr. holmes has done a great job, steven holmes. this group has been good. travel has been good. priceline has been good. people are still going places. again, maybe that was a tell. all of those in travel good versus housing in some parts of retail. hey, listen, vacations important

part of america. >> very important. i try not to ever miss a vacation. never miss a vacation day. that would be my advice. >> apple is the biggest loser on the s&p. this is a 5% decline. combination of the downgrades, three big ones and the lack of the more secure announcement in beijing after setting up expectations with that event. >> i know! carl better tweet something soon. >> not this carl. >> icahn. >> not that our carl wouldn't have influence. >> if icahn tweets he's not going to only have dinner but breakfast. >> where they have herballife supplement shakes. >> i want to mention shares of gm, 30 million of the canadian government's 140 million shares being sold this morning right now b of a taking care of that,

that's frustrating the stock. >> what a buy. >> that's a buy you think? >> they've got a big chinese business. this is the way to play a turn where you don't -- where america's stable because, remember, we've got pretty good packages if you want to go get a loan for a car here. maybe shifting out of some housing into auto is going to work. i think that's a great buy. >> richard scholes is selling a lot of stock but the current ceo is selling a lot of stock saying it's because of a divorce but he's selling a lot of stock. >> that's a $10 million sale. >> easy come, easy go, as you say. >> i do think -- it's funny, whenever you see these big runs, like carl icahn selling some haynes celestial. i mean, why not? >> by the way, haynes celestial

very happy to have him cutting his position in half and hoping that he goes down to zero. that has been hard-fought negotiations getting him out of haynes celestial. finally, i did want to mention on the activist front bid, sothebys, not that much this morning. third point took a position, a couple of activists in that stock. they say as we've discussed in the past, we continue to eval way the return of capital strategies and/or increase in dividends while balancing the needs of the future of the company. they announce a review of capital allocation and financial policies in response to those activists or at least not unrelated to the presence of activists. >> another of these catalysts. get big to get small -- >> shrink to grow, baby. >> and other stocks, disney is

coming back. i mean, disney. just kind of percolating up. that's a travel stock, too. >> phillip morris was above forecast and now it's at 4.5. >> i'm anti-smoking. i have not tried the electric cigarette, david. you probably tried those. >> i've never done that, sorry. >> and pm, it's up, it's the international arm. didn't seem to make a statement. >> goldman has an interesting note today on oil saying despite syria cooling off, jim, they still see some risks to the up side, largely because of the pressure on opec's spare capacity, at least in the near term. interesting. >> china comes back, europe comes back. it's a big deal. a lot of oil companies have been saying some pretty big things. big find in mexico.

we're producing a lot but not enough to make up for the rest of them. >> it was on this date 12 years ago when american airlines flight 77 struck the pentagon. the president is at the pentagon this morning attending a ceremony remembering the 9/11 victims along with defense secretary chuck hagel, chairman of joint chiefs martin dempsey is schedule to speak as well. when that moment takes place, we'll take you back to the pentagon. in the meantime should we check in with bob pisani? >> good morning, guys. >> we're going to take the defense secretary, who is introducing the president. good morning. >> good morning. >> from scripture we learn of the miracle of restoration. you who have made me see many

troubles and calamities will revive me again. the earth, will you bring me up again, you will increase my greatness and comfort me again. secretary hagel, general dempsey, members of our armed forces and most of all the survivors who bear the wounds of that day and the families of those we lost, it is an honor to be with you here again to remember the tragedy of 12 septembers ago, to honor of greatness of all who responded and to stand with those who still grieve and to provide them some measure of comfort once more. together we pause and we give humble thanks. as families and as a nation for

the strength and the grace that despair has brought us up again, has given us strength to keep. pray for all those taken from us. our hearts still ache for the futures snatched away, the lives, the parents who would have known the joys of being grandparents, the fathers and mothers who would have known the pride of a child's graduation, the sons and daughters who would have grown and maybe married and been blessed with children of their own and those beautiful boys and girls beginning to find there way who would have been teen-agers and young men and women looking ahead, imagining

the mark they'd make on the world. they left this earth, they slipped from our grasp but it was written what the heart has once owned and had it shall never lose. where your families lost in the temporal, in the here and now is now eternal. the pride that you carry in your hearts, the love that will never die, your loved ones' everlasting place in america's heart. we pray for you, their families, who have known the awful depths of loss and the quiet moments that we've spent together and the moments we've shared, i'm amazed at the will and ability to carry on and lift yourselves

up again. and the greatest tribute to those that we lost for their legacies shine on in you. when you smile just like him, when you toss your hair just like her, when you foster scholarships and service projects that bear the name of those we lost and make a better world, when you join the fire house or you put on the uniform or devote yourself to a cause greater than yourself, just like they did, that's a testimony to them. and in your resilience, you taught us all there's no trouble we can't endure and no calamity we can't overcome. step forward in those years of war, diplomats who serve in dangerous posts as we saw this day last year in benghazi, intelligence professionals often unseen and unheralded who protect us in every way, and men and women in uniform who defend

this country that we love. today we remember not only those who died in solemn tribute -- >> the challenges of live television. that satellite from the pentagon is just no good. >> let's see what bob pisani sees on the floor. bob? >> the global rally, it's kind of fading a little bit. i'm rather shocked, carl, by the fact the s&p 500 is down, the dow is up. i think a lot of it has to do with apple. we've had an incredible run here in september. the s&p 500 is up 3.1%. this is the first down day we've actually had. in fact, the whole global markets have had an incredible

run overall. syria's had an impact on the trading, golden oil has reversed, stocks have rallied. we've had a lot of help from china, the better news there. the shanghai index is up again, four days in a row, up almost 6% in f in fourth days, the best in years. and the lesson here today is everyone investing in emerging markets need to learn this within. these are very volatile markets. you need to have an iron stomach. looking at a four-year chart, those are 30% moves from the highs to the lows everything six months. we've had it again here, not even the widest amplitude we've seen here. and that's typical. people investing in emerging

markets ought to understand that 30% move is typical. let's move to apple. that's one of the reasons that the nasdaq is down yet the dow jones industrials are on the upside. i looked at 45 and that was t--s able to see. 32 out of the 45 have buys on apple. the wall street journal had a great article saying there may be two other bailouts of greece coming. merkel is having a much tougher time because the german electorate doesn't want any part of any more bailouts. they want a small european union with less members. less appetite for any kind of bailout. this could have big implications in what goes on in greece. finally on this verizon mult

multi-deal here. a lot of people are saying it's going to be easy to absorb this because the bond players, this is going to be in the indexes and all the players indexed to the bond are going to buy this. there are going to be a lot of buyers for this. when stock traders talk about bond deals, you know it's a big deal. back to you. >> thank you so much, bob. let's go to rick santelli. >> thanks, jim. i'm glad everybody's talking about that big verizon deal because it is a huge whopper, blow the historic competition away-type deal and it may be impaci impacting the treasury market in taking off hedges and putting on hedges. looking at a two-day chart of five years, we're going to auction tens today, 30s tomorrow. the five-year is testing yesterday's low of the range, all are having problems breaking

through resistance. you can see it on the intra days of 10s, open it up to a two-day. the two-days are at their best. bunds seem to be holding the selling pressure, keeping their yields up still above 2% but the winner still continues to be the guild. it gets the award. it held and closed at 3% before the u.s. did. it comes back to 2011, a little longer than the 2% historic comps on the bunds which go back to 2012. the last chart, the two-day dollar/yen. some of the volatility in

foreign exchange seems to be dissipating. >> it's the kind of hat trick that apple does not like. three broker downgrading the stock this morning. one of them is credit suisse. ♪

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if you haven't noticed shares of sears holdings lately, perhaps you should have. the stock is up sharply over the last week, bringing a lot of people in the fray about the real estate value at the company and whether that value is real and will be realized at some point or whether perhaps people who are buying it are on something of a fool's errand. sears shares are down right now but look at the performance over the last week. it has been nothing short don't forget, this is a well-held stock. you have esl, 90% or so of the

shares are pretty much not trading. you've got a 10% float, a 14% short position and it isn't that hard to create quite a bit of a short squeeze. this morning gary balter says if sears holding never had a report earnings, we might be able to envision this stock well in excess of 100, perhaps returning to its old highs. to that point of course, bruce berkowicz, one of the largest shareholders in sears, was my guest right here on "squawk on the street," this is what he had to say about why he continues to

hold the company's shares. >> i may be in the minority but i think eddie lampert has done a great job. they still generate cash, real estate is amazing. we spend or lives understanding the ownership structure, leasing structure. >> and they're not alone. a fund in los angeles, baker street, has put out a significant report about its stake in sears and why it believes the value is significant, at least $7.3 billion in value. they see $44 a share if they just sell a third.

you've got this little debate going on on the real estate value. for his part balter comes back and says i don't know if i believe it. >> i like that. >> you like garrett balter.

all right, let's get "six in 60" with jim. nokia is first. >> here we go. merrill and rbc like it more than ever before. looks like they pantsed microsoft. that's what they're saying. >> jpmorgan? >> we got this sell to hold. the spanish bank is coming back. >> jefferies on con-ed. >> lower expectations. this stock gets interesting again. >> goldman on conagra. >> they're saying don't give up on it. it's going to have a better number. >> you mentioned wynn a couple of times today. >> it's a china play. deutsche bank seas they'ays theg to do well. >> what's going on with starbucks today? >> mcdonald's said europe is turning around. it's been the achilles heel for

howard schultz. he did promise they would turn the comps to go positive. this company is now is the fastest growing major retail restaurant in the world. >> 5% in three days. unbelievable. >> what's on tonight? >> we have -- this is a small biotech that's been very, very hot, nps. we've been trying to do smaller companies that we think will come great. smash burger has been doing great. i haven't had one. >> apple three downgrades this morning, including one from credit suisse. we'll talk to the analyst after the break. ♪ there'll be the usual presentations on research. and development. some new members of the team will be introduced. the chairman emeritus will distribute his usual wisdom. and you? well, you're the chief life officer.

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welcome back to "squawk on the street." july wholesale inventories up .1 of 1%. both are light. no revisions the last month. keep in mind via july data, this is the first month of the third quarter with respect to data so it doesn't impact any possible revisions to second quarter gdp

and this comes at a time when we're only a half a month away from wrapping up the third quarter. simon, back to you. >> let's get back to the markets. despite the crisis in syria, the markets coming into today have been on a roll. the s&p and nasdaq have closed in positive territory for six consecutive trading days. joining us is allison dean and rob morgan. welcome both to the program. nice to see you. >> good morning, thank you. >> thanks. >> it is an important moment for the market. six straight sessions, almost a 3% gain on the s&p, which takes us now, as you guys will know, for the year to a rise of 18% in the s&p 500. my simple question to both of you, rob, i'll kick off with you first, can you construct a serious bear case any longer for equities in this country?

>> well, simon, i would take the bullish side but i guess the things that i might be worried about that would cause me to be bearish i'd continue to look at the next earnings season, perhaps it might be disappointing, continue to look at inflationary pressures because obviously qe arguably should cause those, although it has not. so that's what i'd be worried about and watching. and i do watch. but i'm pretty bullish here. >> both of those things you mentioned are unknown unknowns. there is no sign of either at the moment. allison, let me ask you the same question. can you construct a serious negative argument -- is it possible to construct a serious negative argument for these markets at the moment? >> the concerns i would have again goes back to corporate earnings not coming back as strong as they could to sustain the market momentum, concern that the debt ceiling fight could become damaging to or bond

market. >> none of which we have at the moment. >> no. >> if we can't construct a serious bear market argument at the moment, can the market rerate from what are we trading at the moment, 14 times future earnings? will we go higher to 15 or 16 or are we fairly valued where we are, rob? >> you know, i think, simon, that we're still slightly undervalued and i think it's very important that not only do earnings estimates continue to rise, even though both allison and i are concerned about a bad season coming up, but the retail investor still over the last five years has stayed out of this market. it looked in january like perhaps the retail investor was getting back in, but as slowly and surely we're going to see retail participation and that's going to probably cause multiple expansion from the 14 times level. >> allison, is that weighted money a good enough argument for

you or are we fairly valued at this levels? will the market go higher? >> i think a market at 15 to 16 times earnings is an historical average. there is a case looking back over history for a higher multiple. poufr, if we don't see earnings momentum and there's a greater backup in interest from anything from the tapering, it's hard to argue multiple expansion. >> what is striking in the six-day period in the degree to which emerging markets have rallied very strongly, europe has rallied more strongly. what is the asset allocation, rob? >> well, i think, you know, you still have to have the bulk of your equities, at least for a u.s. investor, in u.s. stocks. but i'm overweight at the international space, which would be for me 20% to 25%. >> alison, briefly?

>> this is terrible, we disagree on everything. europe selectively is looking interesting as well. i do think you should be emphasizing a more global approach these days. >> that's why it's so very important at the moment that so many people are agreeing to point that i was making at the beginning. thank you for your time. >> thank you. >> meantime, apple falling sharply today following yesterday's event. the big unveil was not the company's only event yesterday. the technical giant held a media event in beijing as well. >> apple's beijing launch for the new iphone was a disappointment. no news on a china mobile deal but there are indications that a deal is in the offing. separate from the apple event, we learned chinese regulators have granted apple licenses to sell the 5c and 5s on china

mobile's carrier network. the deal is seen as crucial for apple to expand its footprint in the country. china mobile wouldn't comment except to say it's still negotiating with the american company. as for the 5c, reception has been luke warm. there was home that apple would bring a cheaping model and fend off competition from rivals like samsung. the 5c is only $100 cheaper than the 5s. the talk has been that maybe that is apple's strategy here, that the company wants to stay at the premium end of the market and stick with the higher margins. back to you guys. >> let's pick it up with john fortt who was at the cupertino

headquarters yesterday. where are we now? >> that no china mobile deal has analysts scratching their heads this morning. we had seen the leaked information of the new iphone with the lower price. the biggest surprises yesterday were the price and the lack of deal with china mobile. piper jaffrey was still hoping out hoped we'd get a china mobile announcement it would come later in the day. this morning he issued a mea culpa, brought down his target price to 1640. he's hoping a deal comes by the quarter. apple is now tanking this morning. there are two possible scenarios. one, the iphone 5c shocks everyone and gains share despite

its high price. it will have to overtake the 5s as the most popular model. and androids continue to gain share in the market until and unless apple introduces something to compete in that market. everybody wanted an apple net book, they delivered an ipad. maybe they're hoping a iwatch will satisfy folks. maybe we'll get to see if that strategy works again, carl. >> interesting analysis, john. we'll come back to that certainly if it comes to pass. >> credit suisse, bank of america and ubs all downgrading apple this morning. we want to bring in the managing director of credit suisse. good to have you this morning. john says analysts are scratching their heads after the pricing strategy. are you scratching yours?

>> not really. we were very disappointed apple chose not to change their pricing strategy. apple are going to price their phones probably for the next 12 months in the above $400 segment in the smartphone market. that segment of the smartphone market is not growing. it's 300 million units a year, it's no longer growing. apple have a 45% share of that segment. it's hardly going to much higher, especially with the strong competition from samsung. that means their iphone business will not grow. we're concerned the iphone is priced at $550. that's going to compete with samsung with bigger screens, better processors and better cameras. it really impacts the earnings profits for that reason that we lowered apple estimates this morning. >> you say it competitively exposes the company.

if they had gone with a lower priced strategy, though, would we not be hearing from analysts dekraaiing t decrying the lowering of margins? >> it would have had some gross margin impact on the negative side, however, the extra opportunity that you end up addressing is so much more significant, it would have been net good for earnings. right now we're thinking apple will only do $44 of earnings. had they gone after that bigger area, we'd talk about having a 50 to $55 earning power and the outcome can be very different. >> whether we like it or not, the likes of carl icahn are dragging it back. i wonder if it's time for it to embrace its size and $93 billion

cash pile. i was with a senior innovator for within one of apple's major competitors. he said to me why on earth didn't apple buy nokia? it could have maintained its own phones, tripled its market share overnight and put its own operating system into nokia and at the same time it would have wiped microsoft out of the mobile software space. it's that sort of vision perhaps do you think we now need at apple? >> i do think apple may be in need of more innovation and take more product risk, come to market quicker with new categories, whether it's the watch or the tv and bring us green phone. i think buying nokia would have been a disaster. and the reason being is handset consolidation has never worked. by the time apple would have merged with nokia, integrated

chips and integrated the u.s., it would have been two to three years from now and would have cannibalized it anyway. >> you have almost saturation in the rich markets around the world and competitors are o innovating as fast as apple. how can it grow in the way the market expects? >> the way it worked we hoped going into yesterday's event by pricing the iphone 5c in that significant mid tier of the smartphone market it, would have given them a new addressable market and that would grown and gradually they could have replicated the ipod strategy. it was a good thing for ipod, it would have been good for iphone. they appear unwilling to do that. they're more interested about their margins rather than pursuing the ecosystem.

that can become a risk. >> this issue of beijing. did you think that is still in the offing over the next few months? >> i think it will happen. china mobile is building a significant 4g network and it isn't quite ready yet. by the time it is ready, i think it's a matter of time. if i were to guess, it's something we'll hear about more toward year's end. >> you're willing to live with the downgrade until then? >> yes. the price isn't there. it's not a case of whether apple can do -- it's whether the company can bottom line and i think that's doubtful for the next couple of months down. >> gulbinder, thanks for your time. >> thank you.

>> president obama makes his case for military action in syria. we'll talk to the former defense secretary william cohen about what the markets should expect now. "squawk on the street" will be right back.

now to the crisis in syria. the president last night said he asked congress to postpone a vote on syria action while diplomacy is pursued.

but he did warn we will not tolerate the use of chemical weapons. >> i will not put boots on the ground in syria. i will not pursue an open-ended action like iraq or afghanistan. i will not pursue a prolonged air campaign like libya or kosovo. this would be a targeted strike to achieve a clear objective, deterring the use of chemical weapons and degrading assad's capabilities. >> let's get some insight now from william cohen, the former defense secretary serving under president clinton from '97 to 2001. mr. secretary, thanks for being with us this morning. so you hold off -- he asked congress to hold off on this vote and yet you still make your case for action. what do you think changed last night, if anything? >> i think the president didn't have the votes. two things happened. the russians apparently grabbed secretary kerry's thoughts about what it would take for a peaceful settlement of this

issue and they seized upon that and said let's work on that. that's going to take some time just to consider the enormity of the job that will be involved, whether you'd have to have a cease-fire, whether you'd have to have a thousand inspectors on the ground, whether you'd have to have 50 to 75,000 troops to protect them while they're on the ground, et cetera. so i think the president said let's have diplomacy have a chance to work backed up by a credible threat of force. the real issue is is there a credible threat of force if congress and the american people don't support it? then the question becomes will the president ever take action having gone to congress to request authority, would he take action without congress now? that would cause him future political problems as he would seek to go forward for the next three years. so i think he's in a box, a trap door has been pulled and he's out of the box for the moment but i think with all of the mixed messages we've had -- first it was going to be a

strong strike against syria. then pulled back, well, it would be a little strike, the littlest possible strike. then it was going to be a shot across the bow. now it going to be something targeted and really effective. i don't know what the mission is frankly. >> it's been difficult to -- the message has been muddled. it's either unbelievably small or we don't do pinpricks. do you believe that the effectiveness of deterrence has been reduced among other would-be rogue governments? what are they saying in tehran and pyongyang? >> i think they look and see we haven't had a budget in four years, we're deadlocked on a budget and to have congress basically reflect a vote of no confidence that we should take military action, i think they're looking to see the united

states' power diminished certainly in that part of the world and other parts as well. >> what's your conclusion about what is going on behind the scenes at the white house? there's been an important change in language. president obama was a talking about punishing. you said under international law you cannot punish, you can only degrade and deter further action. what do you think is going on behind the scenes during this time about who he's listening to at what point and what they're learning along the way, a process or communication policy that the "washington post" editorial describes today as stumbling, improvised and often incoherent? >> i think that's an accurate representation. i said it was something out of dr. doolittle in terms of having a push me/pull you policy. we had secretary kerry give what i would call a parakleen speech

rah rallying the nation to war. and then the president said let's go talk to congress because the arab league took a dive on this and the british voted no. so the president turned to congress. that's all dangerous. the president had the inherent authority to take action, comply with the resolution but if you're really serious about hitting assad for doing something quite heinous, you have to hit him within a short period of time. you may have few people with you if you act quickly but if you act on a long timetable, you'll have far more opponents, including the american people and others around the world. we have a situation where there's been a lack of clarity. i would recommend if he's going to take military action, follow what president clinton did in desert fox. that was to go after saddam hussein's weapons at that point

under the u.n. security authorization but to go after his weapons and for four days we inflicted real severe pain and suffering, which caused saddam to recalculate what he was doing in terms of those weapons that he was developing. so wouldi would think the presi is thinking of of that model now, not kosovo but desert fox '98 which was a limited attack in which there were no fatalities in the united states. >> thank you, secretary cohen. good news, oil prices have been slipping. we'll take a look at what could be ahead for commodities when "squawk on the street" comes right back. when does your work end?

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welcome back to "squawk on the street." i'm kayla tausche. we're watching shares of sotheby's moving up 1%. the board is reviewing policies on buying back shares and issuing dividends. it will report to shareholders in early 2014. back to you. >> thank you very much, kayla tausche. >> the nasdaq and nynex preparing to remember the 9/11 attacks. we'll be right back.

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today is the 12th anniversary of the september 11th attacks. the nasdaq and nynex now commemorating the moment when the north tower fell. [ moment of silence ]

and with that, that is the last moment, 10:28 is the time the north tower fell, guys. 10:03 is when flight 93 crashed into shanksville, pennsylvania, which is member a memorial of their own today. important to keep the day alive. can't let it be forgotten. that's the most important thing. >> and it gets you every time. every time you have the silence, it comes back, particularly for these guys. >> yes. today we're looking at the resilience of the economy since 9/11. dominic chu has that story.

>> the tragedy of that day marked a turning point on so many levels. companies had to find a way to innovate and thrive and one group that has emerged it technology specifically, the next generation of internet companies. we'll call them web 2.0. for instance, there's the world's biggest social networking site, facebook. it's taken the internet and made it into a place where you can connect with people on very personal levels. the stock may have had a glitch-filled ipo last year but stocks are up 15% from that ipo price. it's up 147% since its post-ipo lows, worth $147 billion as a company. along the same lines is linked in, tailored it specifically for professionals and allow networking that can lead to direct business relationships.

the stock is up 457% sense its ipo in may of 2011 and is worth $29 billion. pandora has found a way to make money for people who want to use the web to connect to music. that radio company over the internet is up 33% since its ipo in june of 2011 and is worth $3.7 billion and we all know that knowledge is power in today's ever changing real estate world, potential buyers and sellers want market info. zillow has found a way to give consumers access to the housing market, the share is up 390%, the company is worth $3.5 billion. these are companies that have grown into multi-billion dollar enterprising by evolving with the economy and with the country in the world since 9/11, simon. back to you.

>> thank you very much. crude oil inventory data is just in. sharon? >> good news for drivers out there. we're seeing gasoline prices come down. we are looking at crude oil supplies for the past week, which fell by 200,000 barrels. analysts were expecting to see a decline in oil supplies of 2 million barrels. we are seeing lower oil prices right now. we were expecting a decline in gasoline supplies but in fact we saw an increase in the past week of gasoline supplies of 1.7 million barrels. that's causing a selloff. and we're looking at a rise of rise at 2.6 million bares in distillate fuel supplies. we were expecting a smaller increase in distillate supplies.

and this comes at a time we're paying $3.56 a gallon for the national average for unleaded gasoline, down 3 cents in the gas week. tom at gas buddy says we could likely see a 5 cent decline in the next week in the national average due to what we're seeing in risk premium coming out with the serious situation. add to that the supply picture and perhaps we'll see even further decline, particularly in the midwest. >> we can certainly hope, sharon. >> speaking of gasoline and crude oil, look at this chart. just as the president said he asked congress to postpone that vote on military action, prices instantly drop. is that a sign of things to come? we'll talk about that in just a moment. our priority is, was and always will be serving you, the american people. so we improved priority mail flat rate to give you a more reliable way to ship. now with tracking up to eleven scans, specified delivery dates, and free insurance up to $50

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is having a good morning, the stop upgraded from neutral to buy, putting the price target from 48 to 52. marriott has underperformed its peers year to date. good news for consumers of gasoline, oil prices dropping as tensions over syria ease. let's bring in the president ira eckstein. where do you think prices are going? >> if you had asked me, maybe drop a couple dollars down but the market still has a chance to get above 110, 112, 115. >> why? why would that happen? >> well, as i said, before this whole thing escalated, crude oil

was already rising under drawing supplies. so if you have to look at the trend, the trend was trending up to begin with. i think tensions might have decreased a little bit. we have to hold 105. crude oil is a technical market. if it doesn't hold technical calls levels, i would reevaluate everything. as of now, it looks like it's holding pretty well here. >> where do you think gasoline is going to go? >> they say buy before memorial day. it peaks into gasoline season and after labor day historically sells off. there's rising supplies here a little bit in gasoline. i think we should come off a little bit, maybe 10, 15 cents nationally but then it should probably hold and possibly go higher. >> ira, one of the major determinants of where commodities go is clearly the dollar because they're all priced in dollars. it is a mystery why, as we've gone through this period of

debating the taper, you haven't seen the dollar gain more when other central banks around the world are far more dovish. and in fact, the dollar index is down 3% since may 22nd when bernanke first spoke about tapering. why is that? where do you think the dollar will go? >> that's a big question. this is what i'll say. historic -- forget everything. let's look at right now. i don't think the dollar is so weak. the dollar was a little higher and now it's come off. i think the run-up we had maybe a few years ago was correct a dollar play. i don't think that's an issue now but if the dollar does weaken, it's going to be even more bullish for crude oils and commodities. >> what's your best trade? where do you think people will make money through fall? >> as a trader's perspective, we're always like opportunity. i believe any pullback right now is continued in opportunity and i think that oil is going to be very volatile in the next weeks

or so. you know, secretary of state kerry said this is not an easy solve. so that's great if you're a trader because that means there's going to be volatility for a long time. so i would look to buy pullbacks and i would look at technical levels also. so pullbacks are a good thing if you're a trader looking to get in, i think some weak longs got out yesterday that we saw but i think it's a great opportunity to get in since we held pre-august 20 numbers. >> ira, that's interesting you say that. goldman has a note out arguing that even though syria has cooled off a bit, they think risk is on the up side and citing pressure of opec spare capacity. does that make any sense to you? >> if you look at opec, the brent is more vulnerable than we are since we have domestic production up. i think we depend on it but less vulnerable than brent. so maybe wti strengthens against

brent, that's been the trend since we've opened up cushionrbo you might see that trend in the future. >> good to see you, ira eckstein, president of area trading new york. >> apple down more than 20 points. should investors get out now in case the stock falls still further in we'll have both sides of that argument next. we went out and asked people a simple question:

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apple shares falling today. this is shaping up to the worst day for apple in about five months. should investors start to get worried here after the announcement yesterday about the iphones and what did not happen in beijing? david trainer is the ceo of new construc constructs, and channing smith joins us. channing, you have stood by apple thick and thin. how disappointed are you, if at all all? >> we were disappointed. we were looking for a one-two punch at the capital adviser's growth fund. we got it on the 5s, met

expectations, got the fingerprint authentication, increased payments going forward, we liked the improvements to the new operating system. the problem was emerging markets. that is where the growth is going to come from so we're disappointed. we think the stock will stabilize in here. we think that the new model, upper end model is enough to stabilize market share to increase the replacement cycle, but the emerging market is where you'll get growth. at a 499 wholesale price, it's too high and we think that's going to hurt demand in emerging markets. >> that was the discuss going in, wasn't it, the price point at which an international phone, a china phone would be effective. what was your take away from yesterday? >> i think it proves the theses i've shared with with you before. they're in a margins battle now. if they're going to price the phone to move in emerging markets, it's a pricing battle. they no longer have the features

and brand to command the premium price. i think china -- a lot of chinese people felt snubbed by such a high price. i think apple is going to have a lot of trouble in china. >> channing, obviously now we're left with sort of a similar tone that we were earlier in the year, right? we're back to talking about balance sheets, back to talking about cash, buybacks, carl icahn, phone conversations with tim cook. is that enough to make you stick with it? is it enough to make you buy more? >> we're clearly frustrated. we were really looking to this day to see change and a trajectory of earnings growth. we're somewhat skeptical of that. we don't want to count apple out yet. the good thing about a high price point is they can always come down on that. we were disappointed to see china mobile, we didn't see a deal there last night. we will have the ipad refresh that's coming. but, yeah, we'll probably rethink our wading in the stock. we want to watch what happens with the sales figures that come

out, product reviews. we want to see how the product sells in emerging markets. but we think the street's reaction today is probably right. there's definitely some skepticism now going into how well they're going to do in emerging markets and whether we'll see that next leg of earnings growth. we're a little bit troubled. >> can they take it up a gear with behaving like other companies with m & a, consolidation, getting into new spaces? do they simply make these very few products and rely on innovation the rest of their lives? is that what it's about? >> no, i think they're going to continue to innovate. if you look at product categories driving earning growth, it's the iphone and the ipad. we need to see something now. the iwatch and itv is great but it's way into the future. we need to see some products

here and now that sell and that kind of rekindle that earnings growth. and the point your other guest made was a good one. look, margins are going to come down. investors are going to have to realize that. as you go through technology cycles, price points come down because innovation becomes harder and harder to come by. apple is going to have to realize that at some point. if you can lower that and get volume growth, that's going to be fine because your earnings are going to come in and it will attract investors back to the stock. i think the up side is capped until we see better results. >> coming from a shareholder like channing, it's hard to ignore statements like that. what is the possibility, then, of getting some kind of reversal in pricing strategy, in overall strategy sometimes within the next 12 months? >> look, i think all this talk about pricing strategy, carl icahn, balance sheets, is just a

smoke screen for the fact that apple is not able to innovate anymore. i told you carl a month ago and a month before that that unless they come up with innovation, a improvements, not innovations. it's not enough to beat off the competition. look, android has 80% market share global. almost 80%. apple's at 13. all right? this is a margin game now. unless they can come up with that next great thing. and if they can't, look, i see the stock not better than 300 bucks. >> okay. all right, guys. >> wow. that's ridiculous. >> channing smith and david trainer, thank you both for joining us. let's send it to kayla for a "market flash." we're watching chipotle, hitting a new 52-week high. it's currently above 421 bucks, within 5% of its all-time high. it's up 41% this year. that's double the per foremanance of the s&p 500. of course, bears have been vocal

about this stock, but the market is finding several reasons to be bullish this year. among them, the restaurant's role and new catering service, a boost to same-store sales. back to you. >> all right, kayla, thank you very much. let's get over to chicago, the cme group. rick santelli and the santelli exchange. hey, rick. >> hi, carl. liquidity. one of the big issues in the crisis which we're celebrating this week, the anniversary of -- five years. but was it misinterpreted? anna schwartz, one of her last interviews, basically hinted at the notion -- actually didn't hint, was pretty clear about it -- that ben bernanke may have been fighting the '30s all over again by supplying so much liquidity. in the 1930s, it was liquidity issue. there was a run on banks. there really wasn't the same issues in the '08 crisis. there was a run on confidence as to how to price a bunch of toxic product. that was the long-and-short of it. nonetheless, that didn't stop the pendulum from swinging and having many regulations like

dodd-frank, like much of dodd-frank that isn't written, address an issue of liquidity in a substantial way. now, consider this. that liquidity is something essential in the marketplace, and even though the rules aren't done, many on wall street, talking firms here, have decided to be pre-emptive, and they are shrinking the amount of inventory they have in the fixed income markets. there's a great article to this point and the trigger for this wonderful article in "the financial times" was this whopper of a verizon $49 billion issuance. and put up on the screen, please, the title of the ftc piece wrilten by traci is markets, the debt penalty. dealer inventories of corporate debt and other non-u.s. treasured bonds have fallen, get this, 78%, since the '07 peak of $235 billion according to federal reserve data. let's take a step further. if you look at just the structure of investment grade funds, they are up since '08 about $500 billion. yeah, i think the exact number,

it might have been referenced in the article, $524 billion. that's a 42% increase since '08. let's look at it from a different perspective. if you looked at the top five etfs on high yield and investment grade, they're now standing at about $73 billion. this is absolutely huge. how big is the corporate bond market? well, anywhere between $9 trillion and $10 trillion, with a "t." so let's look at all of the pieces we have. being pre-emptive, shrinking balance sheets -- you know, when i got into the business in '80s, i did an inordinate amount of business in the futures. inventories that many of the dealers had were huge, and they were a shock absorber. here's the two issues, and i don't know how they stack up, only history and time will tell. on one hand, you have shrinking liquidity, which means instead of some of the institutions taking the risk on liquidity,

should this huge move in corporates end up going the other way, it's going to fall on the back of investors. well, that might not be bad, because investors aren't the same as taxpayers. on the other hand, we may be staring at the next liquidity trap right in the face. just think about the demand, over $100 billion on this verizon deal. simon, back to you. >> a big red flag. thank you, rick. rick santelli live from chicago. up next on the program, why the broadband access you use on your next plane ride is about to get a whole lot faster. we're back after a quick break. [ tires screech ]

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your in-flight internet is go to get faster. jane wells is live in anaheim, california, with details on that. hey, jane. >> reporter: hey, carl. you know, on-board entertainment and connectivity is estimated at piper jaffray a $3 billion market, growing 20% a year. all of the major players are coming to the expo put on by the airline passenger experience association. nothing may be more important than faster connectivity, and gogo is the leader in this market, and in a first on cnbc, it is announcing a new faster connection service to be installed second half of next year on all virgin america planes, which, for the first time, combines gogo's own

ground-based system with space it's renting on ku satellites. frees it up from the bandwidth constraints, and making sending e-mails and texts 20 times faster, 60 megabytes per second. >> our air-to-ground network's actually more efficient, for getting to the ground, and the satellite is more efficient to get to the plane. so we combine the best of each. this solution will be 20 times faster than what most of our planes do today. so it's a quantum leap here. >> yeah, so, what you will be sending goes to the ground system. what you receive comes from the satellite. what you saw was the new antenna that virgin america will be putting on all of the planes pending faa approval. we don't know the cost of the aten that, but it needs the faa approval, which is why you won't see it until next year. they say there are many initiatives in the process. right now, on the business jets, if you're a customer, you can make calls and texts on your e phones and androids. they'll roll out texts to

commercial airlines next year, not calls. they say passengers want to be able to text, not necessarily have voice. texting next year. the pricing is to be determined. and the big issue is price, but not as much as speed. carl, a recent survey by honeywell, which is also here, by the way, showed that 13% of americans said they would exchange faster wi-fi on an airplane for access to the toilet. that's how important it is. i guess it depends on the length of the flight. >> yeah, you got that right. thank you, jane. jane wells in anaheim. we'll see. we'll see how well it works. meantime, guys, even though the dow is up 43, all of the nasdaq 100's weakness is being driven by apple. >> yeah, like a stone. down almost 6%. you can -- it's falling in realtime. it's extraordinary that the company couldn't come through with more that would energize the market. maybe it's because they leaked so much in advance, and there were so many source -- i don't know if it came from the company, but we knew everything. nothing left to the upside.

>> i can already hear the chants of, boy, it's cheap, a free cash flow yield, cheap in many different ways, it's still apple. china mobile, that will still happen. probably in november. you can just kind of feel that. that being said, it is a bad day for the company. >> yeah, the second-worst day of the year, only january 24th was it down by more. >> ramped up in anticipation, a couple of good months in anticipation we would get more. >> yes. see you guys later on. if you're just joining us this morning, here's what you missed. welcome to "squawk on the street." here's what happened so far -- >> we need an international cooperative approach to dealing with the failure of large international institutions. we absolutely must get away from this nationalistic ring fencing. >> i think it's a good company. i just think that, you know, at some point they've got to have an amazing product person that could say, hey, you didn't know

you need this. >> the criticism appears to be he's a supply chain guy, right? >> yes. >> you do away with the 5. you bring in the plastic phone. you lower your cost. you protect your margin. in the end, it is more about moving around the chain. it's not about innovating to a new phone. >> prompter is one of the company, let's put the thing up, so much value here. >> that's all you're about here. missed the split up. >> have you noticed what happens when a company splits up? it goes higher. >> yes, i know. [ bell ] >> now time to go a bit more back into emerging markets, and europe selectively is looking interesting, as well. so i do think you should be emphasizing a more global approach these days. >> that's going to compete with the very best and newest offerings from, let's say, samsung, bigger screens, better processor and better cameras. what this means is it impacts the earnings growth. it's for that reason we lowered eps estimates this morning.

>> a lot of news on a very busy morning. let's get to. talk about sell on the news. right now, apple posting its second-worst day of the year. biggest percentage loss since really about five months or so. down almost 6% after investors were disappointed with the unveil of the new iphones. we'll take a closer look at apple to see where it's headed next. plus, it's been five years since the start of the financial crisis. we'll talk to a top economic advisor to president bush during the crisis, find out just how far we've come since 2007. the president making a tough sell last night, trying to convince the country that military action in syria may be necessary. but as the stalemate continues, could syria start having an impact on the debt ceiling fight in congress. joining us for the entire hour, mike santoli, works with yahoo! finance, writing about the market resilience, and certainly it's true today. >> it is. it's held up nicely. some of the things you want to look for below the surface look

good. smaller stocks, industrials leading. we've made some kind of peace, so to speak, with both rates at this level and what's likely going to happen in syria. i didn't see syria as a big swing factor, in an enduring way. >> not that you -- >> not to have it there would be good. >> not that you knew how the foreign policy would change -- >> of course not. >> -- over the course of 24 hours. you've written a lot about august versus september. we know august was miserable. worst month in over a year. >> yeah. >> as of this morning, the s&p's wiped out the losses almost completely. >> yeah. >> and you said maybe, the likelihood of a correction here is diminished somewhat? >> somewhat. i do think we kind of frontloaded a lot of the anxiety. the left scary, risky events are the known risky events. we had so many of them piled up. we still have them, obviously. debt ceiling, fed decision, all the rest of it. it seems we front-loaded that anxiety, and undoing it a little bit. i don't think it's a race to new highs. we still, i think, have a little bit of work to do to show the demand is there at these levels. >> a few weeks from earnings

season. we'll see where we go. in the meantime, of course, this is the 12th anniversary of the september 11th attacks, and mary thompson is manning a benefit over at cantor fitzgerald. hey, mary. >> reporter: hey there, carl. it's charity day at the cantor fitzgerald trading floors. this is where they raise money, all of the commissions today go to charity. they raise money for over 100 charities around the world. and we are joined right now, pleased to be joined, i say, by actress julianne moore. thank you for joining us. >> thank you for having me. >> each celebrity that comes in is here for a certain charity. which one are you raising money for? >> i'm here representing children's health fund, an organization that serves -- medical care to underserved children. they have mobile medical units. for kids that can't receive proper care, the care can go to them. >> great. you haven't made any trades yet. >> no, i'm about to. i'm going to be on the phones in about two minutes. as soon as i get off the air, i'll be on the phone. if you would like to call in, trade, donate some money to children's health fund and talk to me, i'll be there.

>> you also have a big -- a big -- >> yeah, yeah. >> -- you have two movies out and a new book. children's book. tell bus that. >> i have a move called "don john," and a book called "my mom's a foreigner, but not to me," the experience of growing up with a mom from another country. >> lastly, you've been in new york for 30 years. >> yeah, just about 30 years incredibly. >> so to come here and commemorate 9/11 in this manner, what does it mean to you? >> it means a tremendous amount. it was a terrible day. it was a tragic day. we had so many -- so many tragic losses. and so, to be able to kind of remember these people in this way by giving back is very meaningful. i think it's meaningful for all of new york. we love this city. you know, people didn't leave. we're devoted to it. we all stayed. and so, it's just -- it's a really, really special day to be involved in. >> lastly, when you come to the trading floors, there is one of your movies that everyone seems to remember. >> oh, yeah, yeah.

traders love "the big lebowski." that's what it is. >> that's what you hear. thank you so much for joining us. >> thank you. >> carl, of course, we've been speaking with julianne moore, the famed actress, and we're pleased to have her with us. >> i would love to give an order to maude lebowski. that's fabulous. thank you so much. we want to take a closer look at apple. the new touch sensor, new versions of the iphone, not exactly exciting. wall street, as we pointed out, the second worst day of the year for apple. three brokerages downgrading. the shares down almost 6%. let's talk more about it as well. tony of bernstein maintains an outperform on the stock and a price target of 600. tony, good to talk to you this morning. >> good morning, carl. >> what we're hearing from people who are maintaining their rating is even some concern. i'm thinking of btig, where they keep the buy but call this a critical miscue. where are you coming from? >> i agree. look, the announcement yesterday

was disappointment. it was a disappointment. not when that they announced but in what they didn't. i think there was widespread speculation that apple would seal a distribution agreement with china mobile and there was widespread anticipation that apple would offer a lower-priced phone to address the booming, emerging market low-priced phone segment. apple did neither of those things. in light of the, you know, $40 or so run-up we've seen in the stock over the last month in anticipation of those things, we've seen the stock give most of that back. now, on a go-forward basis, i think the investment thesis is still the same. apple needs to prove that innovation is alive and well and that it can create new market opportunities for itself. we think principle among that is a low-priced iphone, but there are opportunities in wearable compute. there are opportunities in television. there are opportunities in converged offering. if apple delivers on those, estimates will go up and the stock will work.

if it doesn't, the stock's not going to go anywhere. >> well, toni, from $700 on the stock, all the way down, the big concern was margins, and what was going to happen to margins. here you have apple preserving margins on some level. you can almost see the flip side of this, if they had come out with a low-priced phone, people would be complaining about them eating their own margin. is that a fair assessment? >> well, i think that was a worry among investors. but ultimately, the bottom line is if apple had come out with a lower-priced phone, yes, the gross margin percentage on those phones would have been lower, and that would have negatively impacted the company gross margins in all likelihood. but at the end of the day, if apple was able to do that with modest cannibalization, it would have created significant incremental opportunity. revenues would have gone up and earnings would have gone up, and cash flow would have gone up in investors' models. historically, the stock is highly correlated to earnings revisions. and so, ultimately, at the end of the day, yes, there would --

>> toni, you say they need to prove innovation is alive and well. we do hear from a lot of supporters who say ios 7 is different. the 5s, some of the photo capabilities, the speed of the processor is different. you're not discounting those, are you? >> i'm not discounting those. but really, when i talk about innovation, i think really when people think about apple and the hallmark of what it's created over the last ten years, it has been about redefining market prices, and clearly it did that with music. clearly it's done that with the smartphone market. so when we think about really significant innovation, we think about can apple create another significant market opportunity for itself? you know, we think designing something that works in the low end of the smartphone market -- which we think about be a billion-unit market in three years from now -- or coming out

with a converged tablet and pc offering, which we think also could be a very substantial market, that's the kind of innovation that i refer to. >> toni, always good to get your point of view. really appreciate it. thank you. >> my pleasure, carl. >> toni joining us from bernstein on apple today. let's talk about the situation in syria. in a speech to the nation last night, the president said he would try to resolve the syrian crisis diplomatically, but insisted that military action may be necessary to respond to the use of chemical weapons. john harwood covered the speech last night, with us here on cnbc, and he has the latest out of washington. >> reporter: good morning, carl. syrian policy, for better or worse, has been about managing competing objectives. president obama in his speech last night was trying to strike that balance again, wanting to be involved but not too deeply. yes, he said -- he told the american people we have a diplomatic option to pursue, but he argued that that is only viable as long as there's a threat of credible american military force. and he said for the good of the

u.s. national interests, we can't let up. >> if we fail to act, the assad regime will see no reason to stop using chemical weapons. as the ban against these weapons erodes, other tyrant also have no reason to think twice about acquiring poison gas and using them. over time, our troops would again face the prospect of chemical warfare on the battlefield, and it could be easier for terrorist organizations to obtain these weapons and to use them to attack civilians. >> reporter: now, we've got another week or two perhaps for the united states and other countries around the world -- our allies, france, the u.k., others -- to evaluate the russian/syrian proposal. we have to see where that goes. if it doesn't go anywhere, if it proves not to be credible, you then still have the prospect facing the president of having to either order military force without the consent of congress, or to go back for the vote that everyone is so relieved right now not to have to cast. carl? >> yeah, for now, as you point out, john. thank you very much.

john harwood. for more insight on syria, the president's speech and the looming debt ceiling fight, let's bring in howard dean, the former democratic governor of vermont, cnbc contributor, and judd gregg, former republican senator, governor of new hampshire, and a cnbc contributor. gentlemen, good morning to you both. >> good morning. >> governor dean, let's talk about our options here, and your assessment of the speech last night. you tell the military to maintain their posture, but ask congress to postpone the vote. >> well, i think this crisis is essentially over. we're not going to attack syria anytime soon. putin has basically taken responsibility for the syrian chemical weapons. and so, my guess is what happens is they have a negotiation, which is probably going to be somewhat contentious at the security council and elsewhere, and whether it succeeds or not in the short term doesn't matter. we're not going attack syria over the use of the chemical weapons. what will happen is if the russians slip back into their obstructionist mode, and if assad uses chemical weapons

again, i believe the president will attack syria, and this time he will not ask congress. so i think basically we get through this, and we've gotten through this, and i think assad will not use chemical weapons again, so the president's achieved -- has achieved his objectives and the crisis is essentially over. >> senator, if the governor's right and all of that happens and we do attack without congressional authority, what's the blowback? >> well, i can't -- as much as i admire howard, governor dean, i just can't agree with his assessment here. my view is that you're almost dealing with an alice in wonderland foreign policy. there seems to be no coherent direction to it. there doesn't seem to be a definable purpose to it. the only strategic interests we have in syria is to keep chemical weapons from falling into terrorists' hands who might use them against us. and the opportunity to do something about that has passed, because those weapons have now been hardened and moved. so the ability to get to a strategic solution, which would assist our position, is very difficult, and now you have the russians essentially taking over

the issue of how you manage the chemical weapons. well, it was just a week ago that the russians were calling our secretary of state a liar, and now we have a situation where if you go to the united nations, the russians hold a veto and the russians basically control the cards. and i really don't think it makes a whole lot of sense for us to have our foreign policy dominated by the russians. so there's just an incoherence here that's very hard to follow. will the congress get engaged? well, i think the congress has the responsibility to get engaged whenever military force is used by the president at any high level. and if howard's right, and they go to military force, then i think the president -- last night he said he would go to the congress -- he'll have to go to the congress to get that authority. right now it's not clear what's happening to be very honest with you. >> yes, i -- the front page of "usa today" is how about -- how our foreign policy is being driven by gaffes. comments like red line. comments like unbelievably small. >> and comments like going to --

well -- >> well, obviously, judd and i have a difference, senator gregg and i, have a difference. i do think there's a coherent foreign policy. i think whether it was luck or being good or both, we've gotten through something that was very difficult. and i think that the president deserves some credit for that. i do think that the president had not threatened military action, that we wouldn't have gotten this result. i think it's a good result. yes, of course, the russians are not somebody that we would trust, but this is in their own interests, too. let's remember that it's -- russia has some vulnerability on this. there is a troop of jihadists from dagestan in syria fighting on the side of the rebels. so there are no particular good guys. the good guys have been somewhat overwhelmed in this. and russia has an interest in having those chemical weapons not come back with those dagestanis to russia either. so even though we disagree with the russians and we have a difficult relationship with them, there's no reason we shouldn't work with them on an issue we both agree could pose a

threat to both of our countries. that is what i think is going on, and that's what i think secretary kerry and foreign minister are talking about right now, and i think this is -- this is a coherent policy, and we're heading in a good direction. >> there is no -- howard, i have to disagree with you. there is no coherence to this policy. the president put down a red line that he shouldn't have put down. then secretary kerry at a press conference, almost in an offhanded way, threw out a comment. the russians took advantage of that comment and basically run with it. it may work out that the russians get control over those weapons and that we are able to destroy those weapons. but the price we're going to pay here is going to be significant, because there was not a significant public -- there was not a definable public policy as to how to approach syria. if there had been, we would have destroyed those chemical weapons two years ago when we had the capacity to do it, or over the last two years when we knew where they were and we knew how to destroy them. the real issue here -- the true threat to america is that those weapons fall into terrorists'

hands who use them against us or use them against israel. and the simple fact is that this administration has basically botched the whole process of how to get control over those weapons. now, maybe they'll luck out. maybe they will actually have the russians pull our coals out of the fire here. our experience with putin is he makes -- he makes people pay a pretty dear price when you turn to him to straighten things out for you, and it's a real -- really dangerous for american policy to be -- to be the tail on this dog with the russians running it. >> we were hoping to discuss the impact on domestic policy, but there's so much work to do on the foreign side, we just haven't gotten there. it's good to see both of you, though. thank you so much, governor, senator. talk to you later. >> thank you very much. >> thank you. when we come back, another batch of new highs today. not a bad list. starbucks up 5% in three days. netflix at 313. we'll talk more about what those names are doing, and then nike, of course. rick santelli going talk to ed lazier about economic data. hey, rick. >> i am, absolutely. as a matter of fact, you know, the five-year anniversary of

kind of when all of the dominos started to fall. adam, keith, there both, wrote a great pamphlet, 40 pages, really says it all. we'll dig down deep with the primary experience and tell us what his memories are, past, and what he thinks about the ongoing future of the financial markets. you'll want to see this. ask me what it's like

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let's take a look at some utilities right now. among the worst performing sectors in the market. kayla has more on that. >> whenever there's talks of yields and interest rates rising, there's weakness in utilities. analysts have been downgrading the stocks all week, saying they're near the end of the cycles. coned, getting a downgrade at jeffries, $58 a share from $67. southern company, duke energy, in the red right now, as you can see. con ed faring the worst, down 1.9%. on the flip side of the market, a spate of names hitting all-time highs. among those, starbucks, tj maxx. netflix, of course, which struck the deal with virgin media, has also recovered from its high a little bit, though it's still near the all-time level. nike, one day after announced it would be initiated into the dow

this month, it is also hitting an all-time high. nike now at 67.23. carl? >> thank you very much, kayla. mike, you and i will talk about some of the names later on. in the meantime, it's been five years since the start of the financial crisis. our economy's come a long way since the dark days, but what have we learned since 2007? we'll ask ed lazier, chairman of the economic advisors, during the crisis when we return. ♪

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♪ let's get to rick santelli in chicago, looking back on the crisis five years later on. >> absolutely, carl. we have such an important person on this week, ed lazear, co-author of "observations on the financial crisis."

welcome, ed. >> thanks. >> it's a pleasure to have you, especially this week. why don't you tell us about some of your observations? i was just so impressed that in such a small amount of pages you synthesize pretty much everything down to about 35 points. >> well, thank you. i would say, you know, we don't have a lot of time, so if i had to make a couple of points, i would say, first, we want to distinguish between the financial crisis and the recession and the recovery that followed. primarily, the financial crisis ended by december 2008, and that was essentially under president bush's administration. president obama was then faced with engineering a recovery and dealing with the recession that followed. so those are two distinct periods. the second would be we tend to overemphasize contagion. that is, the lehman failure and other things that followed from it. my view is that, in fact, what was happening was there was a series of common factors that was really inflicting the entire system. and as a result, we saw a

failure after failure, but we need add systemic approach, and that's essentially what we used during the 2008 period. and then, the third point is if we look back and say, how did we do, you know, rate us on that? obviously, we weren't perfect, but i think in retrospect, i would say that the financial crisis was actually handled pretty well. we were able to get through that, stop a panic, which is not an easy thing to do. and get back on track. obviously, the recession/recovery have not been great. but that's what i would say we need to be focusing on now, which is growing the economy and getting us back on track. >> all right. let's switch gears, put on another hat. you just gave us some fairly clinical set of observations. now, tell me more from the heart. what was it like during this crazy time? be the chairman of the economic advisors, all of the meetings with george w. bush. tell us about that. >> well, you know, this is a situation where there's no playbook. you know, we're going into a crisis, and we have never seen anything like this before. obviously, there have been other countries that had crises, but

none is identical. and we looked at their histories to see what we're going to do. i remember the first meeting that we had right after lehman failed, so it was probably monday, september 15th. and i remember ben walking into the meeting and saying, mr. president, we're on the verge of total financial collapse. that's not the kind of thing you want to hear from your fed chairman. and, you know, the president turned to me, eddie, what do you think? i said, yeah, i agree. turned to keith, hank. we had had the same view. so we were trying to piece together a series of plans and remedies that would deal with an unprecedented event. you know, to be honest, we were very nervous about it. the president was a calming force, and i think he got us back on track and we probably ended up doing the right thing. >> you know, we're out of time. the one other thing, and i urge everybody to get this pamphlet if you really are interested in that time period, but george w. may not have been some's favorite president, it doesn't matter. what i learned from this was how classy he was in the handoff,

during a crisis, right in front of an election, just about the gm auto loans, to give the new president, whoever that would be, and it turned out to be barack obama, of course, an ability to make his own decision about gm's longevity and not end that abruptly before the baton was passed. ed lazear, thank you for being our guest today. >> pleasure to be with you. >> carl, back to you. >> rick, thank you very much. bell's about to sound across europe. there are a few minutes left in europe's trading day. we'll get their close in less than a minute. simon will walk us through everything that happened on the continent when we come right back. ♪ [ female announcer ] you're the boss of your life. in charge of long weekends and longer retirements. ♪ ask your financial professional how lincoln financial can help you take charge of your future. ♪

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the european markets are closing now. [ bell ] >> simon hobbs here. nice, huh? >> we're running out of steam on the rally in europe. more importantly, a big question is being highlighted in europe today. can the smaller central banks convince the market that local interest rates will stay low for long if the juggernaut of the feds is effectively cutting back on qe and is tightening? and the central bank discussion today is on the united kingdom. today in the u.k., my home country, we learned that unemployment has fallen from 7.8% to 7.7%. that sent the pound up to seven-month high against the dollar. the reason for that, local interest rates, market interest rates, are rising, despite the fact that the governor carney has said they'll keep rates there, super low, another three years, or until unemployment reaches 7%. so that disconnect will be

important moving forward. in fact, the premium you get for holding u.k. debt at the moment is 80 basis points over germany, and more than 1% above 10-year treasuries. meantime, a divergence really opening up this week between the italian and the spanish yields. the spanish yields falling below italy, as italy continues to discuss whether or not sylvia berlusconi will be struck from public office and, therefore, the coalition will potentially fail. and one note, vodafone. we have a midnight deadline tonight on vodafone's offer to take over the german pay-tv cable operator, cable deutscheland for $10 billion. this morning they said they only got 20% of the shares tendered. they need a massive 55% added to that before the deadline, or the deal fails. you have the question, what will they do with the $10 billion? vodafone widely held, carl and quoted here. >> the company will not stay out of the news. thank you. let's bring in bob pisani.

>> i'm trying to see what's going on. we just popped maybe 20 points in the dow while i came down here in the last four, five minutes. i'll check around here and see if i can get anything for you. what's amazing to me, simon is right, the european markets may be running out of a little steam here. asia has. we've had a great run. china up four days in a row. but the resilience of the american market's amazing. i want to put up apple against the rest of the market to show you something. remember last year when apple started falling apart, september/october? apple went from 700 to below 600 in october? and there was a general panic in the markets overall. look, apple's down almost 6% today. the nasdaq is only .3%. the s&p is up. the dow jones industrials is up. it's amazing to me how resilient everything is. it's true, there's some tech stocks. tech is lagging a little bit. the predictable suppliers to apple, qualcomm, for example, put qualcomm up here, and you'll see that stock's moving to the downside. but by and large, it's quite amazing how well things are holding up. there are whole parts of the tech industry up nicely today.

for example, a lot of the guys do i.t. consulting, the ibms of the world, accentures of the world. they're up, not seemed to be bothered by apple. and also how uncorrelated the markets are becoming. remember we were complaining about how correlated the markets were? everything goes up and down at the same time. traders were angry. traders seem happier now, because they can pick certain stocks and some sectors have been notably outperforming other sectors. put up the last few weeks here. since august 1st, picking an arbitrary date for an example, small-cap stocks have notably outperformed big-cap stocks. that didn't happen a year ago. everything moved together. another thing that's interesting. cyclical stocks have dramatically outperformed consumer stocks. look, by six percentage points, almost, since august 1st. that's a very wide percentage to outperform. finally i'll point out all of the interest rate-sensitive sectors have been down. it's true utilities got a downgrade today. but they've been down for a long

time now. these are unusual correlations. and, mike, and i think the important thing here is traders are very happy to see the noncorrelations go on, because they can make money. it's called arbitrage. playing one against the other. guys, back to you. >> all right. thank you very much, bob. speaking of mike santoli, you call the stocks nifty, harkining back -- >> yeah, yeah. >> we made a short list. facebook. netflix. starbucks. even a hogg. a cmg, yelp. what is it with these guys? >> traditional large-cap growth is in favor right now. it's really a narrow slice of the market that i do think is kind of getting people's attention and attracting the dollars. so i say nifty. i don't feel like they're so overheated you have to worry about it being the sort of minibhubl inside the market. it's interesting to me how localized the excesses are. you can always point to a linkedin. it's crazy valuation. facebook is expensive. but marketwide, you're not seeing that. bob's point about lack of correlation, the correlation of the average stock to the index

is at a basically post-2007 low. so essentially, you have the stock picker's market people have been looking for. the question is, does that mean implicitly the market is complacent about macro stuff all of a sudden? i don't think we're there. >> we never seem to be happy. when correlation is high, we think people are whistling past graveyards. >> right. >> it's happy to find the happy medium. interesting thesis in some of the names. when we come back, unlock your phone, using only your fingerprint. that's one of the cool new features to come out of apple's event yesterday. does a fingerprint scanner make your phone any safer than a security code? the answer after a break. ♪ norfolk southern what's your function? ♪ hooking up the country helping business run ♪ ♪ build! we're investing big to keep our country in the lead.

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♪ coming up next on "the half," with this historically bad month for stocks end be being a winner for investors? we're trading it. lululemon's chart is looking more like a downward dog. up next, our traders debate what to do now. and the morgan stanley apple analyst who says the street's getting it all wrong. she really does tv, carl. she is today. we're excited to talk to her at the top of the hour. >> that's an interesting debate, scott. we'll see you soon. as you know, apple confirmed yesterday the much anticipated fingerprint technology that offers consumers access to their phones as well as the itunes

store, but how safe will it really keep an iphone holder's information? joining us, schuman, the vice president of shape security, former click at google, good to have you with us. good morning. >> good morning. thanks for having me. >> this sounds like something you think you'd actually use. >> potentially. i think that it's a very exciting technology, and if implemented right, it can really improve the convenience of using your phone in terms of what it means as far as security implications, i think that everyone in the security industry, including ourselves, are eagerly anticipating additional details coming out. >> yeah. there are some caveats, of course. you argue, first and foremost, this has to be a hardware-only device. explain that. >> absolutely. so if this is in any way producing images, which would be accessible to software, then that's going to create a possible vector for attacks. so bad guys are going to try to harvest those images, and then use them for other purposes.

so if it's only accessible to the hardware device itself, then that prevents any type of software, even software that would compromise the operating -- the system itself, like a jail break, from being able to access the images. so that's critically important. apple has said that it won't make the fingerprint images available to software. so that's very encouraging. >> you know, these types of innovations, i guess you would call them, they create a lot of anxiety, it seems like. to me, there are so many identity trails we have everywhere, in one form or another. is it really fundamentally qualitatively different to have a fingerprint activating these things? >> the difference with fingerprints versus passwords is you don't have the ability to change your fingerprints. if your password is compromise and you reuse it on multiple sites, and you need to change it, you can do that. if the fingerprint data gets out there, then you basically have to move to a completely different form of authentication at that point. if you've got multiple systems

that have been built around the web which now rely on those fingerprint pieces of information, then that's not something that is going to be very easy to change. >> obviously, the news yesterday that it's not going to be stored in the cloud, only stored on the phone. you have imagine apple has world-class security experts working with them on this, right? having it stored not just on the phone, but in an area on the phone that is not accessible by software. >> that's right. so it was very great -- it was great to see that apple was stating up front that they're not creating a central repository of fingerprint information, because if there were such a database that was living in the cloud, then that would be a central point for attackers to try and breach that data, and then use it for other purposes. the fact that there isn't such a repository means that if attackers want to try and access that information, they have to attack the phones themselves. and like we discussed before, if that data is only available to

the hardware itself, then that's much more secure. >> you mentioned the term jail broken, which i guess is pretty standard in security circles. but explain what that means and how often it happens. >> sure. so jail breaking is quite commonly used to be able to do things with your phone that you wouldn't be able to normally do based on how the operating system has the phone set up. so what jail breaking allows you to do is circumvent the security provided by the operating system software in order to do things that the hardware itself supports. so, for example, if the fingerprint authentication mechanism was implemented partially by the operating system, if you were to jail break the phone, you might have access to fingerprint data that you wouldn't normally have access to under the default security of that operating system. >> yeah. >> now, if it truly is implemented in hardware, then even circumventing the operating

system through a jail break wouldn't allow you access to the data. >> yeah, the things we have to worry about in this brave new world. schuman, a great discussion. thank you for joining us today. >> thanks very much for having me. >> with shape security. more trouble for jcpenney. the struggling retailer is now being sued for breach of contract. we're going to talk to the company that is suing penney to find out exactly -- find out exactly what's going on, when we come back. you really love, what would you do?" ♪ [ woman ] i'd be a writer. [ man ] i'd be a baker.

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in another blow to jcpenney,

coffee press maker bodum is suing the retail giant for a breach of contract. it says it was promised a modern layout of a store within the store at jcpenneys, but never got it. when we reached out to jcpenney, they responded with a no comment. tom perez is the president of bodum usa, and he joins me and mike santoli. good morning. >> thank you, good morning. >> walk us through when the contract was signed and what was agreed to. >> the contract was signed back in november 2012. and it was agreed that we were going to roll out 630 bodum shopping shops by the beginning of -- of march 2013. >> and did that start to happen under johnson, or did everything change once johnson left and ullman came in. >> the majority changed after johnson left, definitely. the reality is the shop didn't open really before early june 2013. >> and so, jcpenney hasn't said anything to us. what have they said in response to your lawsuit, if anything? >> i mean, we're aware of a lot

of changes that happened. we're also aware it was a big commitment and a lot of, you know, things can go different ways. but the point is that we have an agreement and we have a contract, and we feel that they need to live up to that contract. and if they don't, well, i think we need to be compensated. >> right. i was going to say, are you still interested in having the store within a store? or if they're not going that direction strategically, how -- what kind of damages are you looking for? >> i mean, the concept is absolutely interesting. >> still attractive to you? >> absolutely attractive, if they can execute it. and i think that has been the main reason, it hasn't been executed properly. that's why we are where we are right now. >> when johnson first came in, people did have questions about how he could take such a hard right turn from what historically had been the company's strength, right? discounting. emphasizing category over brands. what gave you confidence that this was going to work? >> we have confidence he could turn it around, and we all felt it was an exciting and

interesting project and something really revamp the american retail scene. it was a great opportunity. and we wanted to back it up and support it. we also, i think, all knew it's not going to take three, five months to do it. it's going to take years to do it. but for a brand like bodum, design-focus, this is an opportunity we can't pass. >> now, does the agreement preclude you from doing something similar with other retailers? or do you already have stores within stores? >> the agreement -- there's a clause for (unintelligible) one of the brand, we cannot open other stores within the u.s. but bodum, we're not limited in any way. >> do you wish johnson was still around? a lot of people believe, a lot of his former colleagues at apple, believe he could have done this on his own had he been given more time, we're talking two, three years. >> we do believe it as well. we think the vision and prospect of this whole entire project was possible. but it takes a little longer

time than was given. >> it's hard when you see such big shifts in strategy in a short period of time, things like this are bound to happen. >> exactly. >> we'll keep our eye on it, tom. thank you for coming in. with bodum usa. let's send it over to seema for a quick "market flash." >> we're watching netflix, down about 2%, after hitting an all-time hide in yesterday's trade. analyst rich greenfield just downgraded the stock to neutral from buy citing valuation concerns. you can see the stock down nearly 2%. >> interesting. mike, greenfield is one of those that's -- i don't know, a proponent of the long-term strategy? >> i also would say. i also think it's an opportunistic downgrade. you get to an all-time high. nobody can say you missed it. >> yeah, that's true. at 313, our heads were spinning this morning. >> right. >> having gotten over 300 earlier in the week. when we come back, the day the world changed, and this trading floor changed forever. we remember 9/11 with art cashin in just a moment. [ male announcer ] these days, a small business can save by sharing.

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posts and stories into real-time business insights that help nascar win with our fans. today is the 12th anniversary of the september 11th attacks. we want to bring in art cashin, director of floor operations of ubs at post 9, who write as note that everybody should read today. art? >> thank you. >> reflections of that day.

not just that day, but the days that followed. you make the point, no one was in a real hurry to reopen. you talk about those who run markets being civil but somber. >> yeah. there was no sense of avoruos, let me get back in there and make some money. we had trouble with the phone lines. there was nothing wrong here. and dick grasso did a great job working with the phone company. they put it together. but those mornings after, you know, arriving in the dark, walking past checkpoints where national guardsmen stood, everybody respectfully saying, "thank you for turning out" knowing that they have -- they have lost a friend or an associate during what was going on. we lost a couple of brokers down here on the floor, too. >> and those who did survive, you point out had to deal with what you call the survivor's quandary, right? >> yeah. >> why us? >> yeah, you know, why us, it

came close. where might things have gone? as i said, the only smiles in those days were on the posters put up by the family of missing people. they had an old photo of you or me smiling at a sign that said, "do you recognize this man, please call this number." that's how desperate everyone was. >> art, among the things different back then is the exchange was not a public company, it wasn't a for-profit, before all of that happened. obviously, it's conjecture. do you think today there be any more pressure to reopen or anything like that? >> well, i think you would. there is a good deal of pressure in the sense that it brings up the argument about a single locale for a trading operation and where can you be. it's there. i tell you one other personal memory of mine. i'm chairman of something called the fallen heroes fund. and we set it up years ago to get $20,000 to the widow of a cop or a fireman who went down in the line of duty.

and when we were busy reopening the exchange, i realized i owed $6 million. and we scrambled, but grasso and the specialist the, everybody came across, we raised the $6 million in a week and we got all of those their money. >> wow. >> art, in the meantime, we're dealing with what you call a nice couple-day rally here, a sigh of relief by the bulls, led largely by ibm today. a lot of jokes about how we're going to get used to this action with goldman and nike in. >> yeah, you put in high-priced stocks. i don't know what the new devicer would be, but the multiple arguably today is eight. so ibm's up nearly four. that puts 30 points or so in the dow rally, and you've got the other titan, apple, pulling on the other side, on the s&p and nasdaq. >> so do you think -- does that mean the dow trades a little bit more like the s&p? it has been somewhat more sedate over time, right? >> oh, it has been. you can see the divergence has

built. that may have been one of the motivations for making the change. i think the viewers better get set for a more volatile dow jones. we're going to see it from now on. and pay attention this afternoon when the verizon deal closes, because a lot of people will take off hedges they put on, and you might get a rally in treasuries and a dip in rates and that could bear into the stock market. >> you pointed out the last couple of days we've all been sort of focused and mesmerized by the waffling on foreign policy, the geopolitics. but in the end, you say some afternoons are driven by what the 10-year is doing. >> absolutely. and part of the surprise yesterday -- part of the move in the 10-year was a little bit of the hedging. but the other thing was it had benefited from a flight to safety about syria. and when it looked like there was going to be no immediate response, the yields went up as the treasuries went down. and that gave a little bit of a flinch to the market yesterday. >> best september since 2010. s&p's wiped out almost all -- maybe a little bit more -- of the august losses. has september impressed you so far? >> it has. i'm beginning to wonder if

whether climate change or something has made september into august, and that's where we were weak then. >> we'll see where the rest of the month takes. it's always dangerous to talk about month to date. thank you very much. art, thanks. final notes here, mike, as we continue, as art points out, some of the big-cap names leading the dow a little higher. your thoughts as we are left with a couple of weeks before earnings season begins here on october 11. >> i honestly still think the market has more work to do. it's kind of got a stretch on the short term. i don't think it needs to be anything nasty. we've had basically four incomplete corrections this year. if you want to account for it that way. and you've just been the interruptions in the melt-up. i will say that sell in may, everyone said it didn't work. the may high was 1,670 in the s&p. it did not cost you anything to sit out until now, and you missed the 6% pullback. >> yeah. finally, your point about prior

military showdowns and how the market in the end tends to yawn. >> yeah. >> the likelihood of that happening is not zero. >> in advance of it, you think that the market wants no action, but in the end, it's not an enduring catalyst. >> good to have you here. mike santoli, yahoo! finance. let's get back to headquarters, scott wapner and "the halftime." all right, carl, thank you so much. welcome to the "halftime" show. four hours to go before the close. right there on the wall, where we stand today. the dow is up. s&p's going positive, as well, up 1.5 points. nasdaq still stuck in the red, largely due to apple. and here's what we're following on the "half." sell the news. that's what investors, as i said, are doing with apple today after the company rolls out a cheaper iphone. it isn't really cheap. a top analyst tells us what's next. downward dog. lululemon down i