>> treat to be here. >> josh steinberg and of course, kayla tausche as always, jon fortt is live at the samsung event in new york city, and jon, we start with pup what have we seen so far this morning? >> well, i just ran in there for you, guys. got my hands on pretty much everything they would let me get my hands on. the galaxy is about what you expect. an update to the note line. the screen is nice. the note edge is probably the most notable phone of the two, because it's got that screen, that slightly wraps around the right side of the device. you can do numerous things with it. a center meter inch ruler to use if you want to measure something. acts as an extra navigational ping. operates completely separate from the main screen. so it's possible that software developers can come in and do things with that little piece of screen to enhance the operation of their apps. i also tried on the headset. the samsung gear vr. interesting experience. you can see the pixels in the headset.

this isn't going to trick you into thinking you're in an actual environment, but it is still immersive. running a demo of tony stark's lab in there. i can turn around completely, navigate from the side of the device. turn the volume up and down and view content. it's interesting. i think people will earn jnjoy . a line for people to see that. the gear s watch, that's samsung's own os, not android. and it works in a way that i think is competitive of what i've seen from android ware thus far. google's flavor of an droipd specifically for watches. a number of different products now coming on to the scene at the end of the year, not just from samsung, of course, we expect from apple as well. consumers will have a lot of different items in front of them. probably ranging from $200 all the way up to $600, $700 to temp wallets. don't forget, beats headphones in the mix with those as well. apple pushing those new this

season. >> a lot more from you throughout the hour, of course. walt, turn to you first. you've actually gotten ahold of some of the new products already. right? >> right. >> what's most important? >> the most important thing from samsung to try to light a fire again under the premium smartphone market, which has are been oh successful for them and where they saw a falloff last quarter, and they also know apple's coming with a bunch of stuff and apple's thought of as innovative. they wanted to say, i think, hey, we can innovate and we can make you want to pay for these premium phones. my judgment in looking at all of these things, they're interesting and certainly do show that samsung can do interesting things, but i don't know. i don't flow aboknow about the impact. >> no pricing or specific release dates. do you get the sense they're ready for primetime or just to whet the appetite of the apple

watchers so busy next week? >> kayla, a little of both. i think they are coming out this fall. i think they're scrambling, know. the note 4, jon said, the -- that's a big, big seller flagship outside of u.s. that has a date. it's october. the exact price, i don't know, but it will be more than, say, the galaxy s-5. the one with the curved screen, curved, the edge, will be even more than the note. so you're really -- talking about premium and then premium on premium for a feature that, hmm, you know, some people may want and some may not. >> disclosure. samsung historic perspective advertiser of ours. when you look at the market overall, what's exciting. henry blodgett did a report, the market will go from 35 to 59% of all smartphones by 2019. lots of people want the faplets, not all want ios.

appletremendous durability, almost no refresh. people will want android and they have it in android. wouldn't you agree? >> i would, but ooo-ey have a i, that drop last month may have to do with how much money are people everywhere going to spend on these? not talking about the low-end phones for emerging markets, but how much money will people spend on the expensive premium phones and how often? >> jon, your take on walt's comment about the features being interesting, but uncertain about the overall impact. also, samsung for a while said we overdid it with the bells and whistles. now seem to be reversing course on that. >> well, i think, of course, walt is right, but a couple points i want to lay out there. i believe samsung's last galaxy note, the galaxy note 3 did 10 million units in two months a year ago. which is an interesting figure for a phone of that size. it's so big, it's not the mainstream phone. i think apple did close to 10

million units. i think it was 9 million of the iphone in the first few days, you know, weekend, of pre-order. so they're operating on a different scale, but with apple moving into the large phone category, it is important for samsung to have a product, a new product in that category to kind of create a halo effect. important nor marketing as much for actual sales. samsung can say we're not resting on our laurels, we have a screen out that's probably going to be better quality than apple's screen, because samsung has better sourcing on screens than apple tends to. they tend to go for higher resolution. they can at least make a spec's argument, this phone, feel of it, leather back, a step up from the note in the past. they've got a good arguing marketing argument to make, versus apple. how that translates into unit sales, yet to be seen. remember, this is a battle that will continue not just over the next couple of months but throughout the year and samsung has a story to protect here.

>> jon, quick word, though. last week you said that all of this hardware is putting samsung at risk of becoming sony. after seeing these devices what call would you make today? >> i stand by that. i was specifically talking about smart watches here. that landscape is confusing and going to get increasingly so as we see new watches from the lg, from motorola and from samsung on a couple of different operating systems. somebody's going have to explain this to consumers, not only what they do but why they need one and how to make a decision between the different shape, the different software. on phones specifically, samsung and apple have the megaphones here in terms of marketing dollars and in terms of brand. so this isn't that complicated from sang seumsung. note is the any one and have many to show people. >> from 5.3 inches to 5.5 inches to 5.7 inches and keeping it at 5.7 inches.

apple coming out with with think with a 5.5 inch. what is the right big phone? >> there is no one right big phone. to be honest, not when i'm testing things, i'd go under 5 inches, for my uses. when you consider everything. but, you know, i suppose you could get to a 7 inch device, like a 7-inch tablet and call it a phone because it makes phone calls. so obviously, consumers ' response will dictate a lot of this. it seems like they're holding at a little bit under 6. some people have ones that are bigger than 6, but looks like they're holding at a little under 6. i presume though theso they can like a laptop. >> more later on "squawk alley." shift over to apple. a day later, how hackers were able to break into the icloud of

some accounts. apple said they were individually targeted, the pie cloud wasn't actually breached. the copiy is outraged by the breach and working with law enforcement to uncover more information. competitive landscape, also pacific crest out way note saying their target's $100. walt, their argument, you got a stock analyst. unless there are massive new revenue opportunities unveiled on tuesday, they just don't think that the stock's worth where it is right now. >> you're right. i don't know what the stock's worth, but i will say that for the first time since steve jobs' death they are going into new categories. from the best reporting we have at re/code. of course, they haven't announced it, but they're going into, we believe, payments, mobile payments. where they're uniquely well positioned. both because they have so many

credit cards, and you may have noticed if you have an iphone 5s it has a fingerprint authentication system in it that really does work. and they're going into wearables. and they, as you know, from june, there is a software base for that. they announced i think the mayo clinic is one of their partners. see they're going into new categories. that means potentially more revenue, if they handle it right. >> we've seen what they did with the ipad. tax were a new category when they first went in. now revenue quarterly revenue for ipad is bigger than many other entire companies. so do you think that the billions of dollars in revenue and in operating profit is something that they can still create at this point in the cycle? >> i really don't know, but i think a -- nobody has made a successful phone base payment system, but you know in your gut that if somebody does it, it's a huge business. i'm not saying apple will do it right. i haven't seen it. i don't even know if it's real yet, but if they do it and they do it right, gee, you know,

that's not a piece of equipment necessarily. boy is that a, could that be a revenue opportunity. >> i think most analysts still think the stock is reasonably priced at this level. they don't have is a watch, you know, come the 9th, we have a problem. right? if the watch comes out, people will be excited. see that opportunity there. one note on the icloud thing. it really is an issue with the passwords. it really isn't an apple breach technically. people to brute force hacking, i disagree. >> benedict evans, who i think is brilliant had a great tweet out. he said didisco error security s not holding up with 2 million people. we haven't changed how people do security since on mainframes at m.i.t. in 1970. agents bui a little bit of a problem. >> i don't think apple can completely duck responsibility

for a couple of reason. they're so big. defined the smartphone category for all intents and purposes. they have become the leader in consumer electronics. they invited us to take photos with this thing. to share our lives with it. and that information is highly sensitive. the way apple has architected security on ios has not changed. apple did as well. i think we have to see increased security measures from apple. a wake-up call. sure, yes, problem with users names and passwords but absolutely take the lead in product and it's fair to take the lead innovating with security. >> jon is right. if you're going to say apple is a great innovator and they have been. >> yep. >> an amazing innovator. why not take this as a tart fger innovation and make it more

secure and simpler and easier for people to be more secure. one of the problems is, everybody has a two-factor authentication. i don't know how many of you use it every day for everything, but i bet you don't. >> even that, one of the factors is security questions that authorize that you are who you say you are. new york mag has an article, tata, barack obama's city and stay and first of grandmother and all available for celebrities including public figures on the internet. the fact apple innovative in so many of these areas. >> we'll see. you have to -- i got remind you again, they have the only -- the only really successful, and it's not a perfect solution. the only really successful fingerprint recognition and firnlfingerprint rec nix. >> it's recognition. not security. >> sure it's security. you unlock your phone with it. of course it's security. >> quick primer on factors of awe then kags, quick and dirty.

security experts, don't jump all over me, but one factor is something you know. a second factor, something you have, a third factor, something that you are. okay? two things you know are not two factor authentication. the other fact hear to be something that you have. for instance, my gmail protected by two factor authentication. a password and either a phone number that i have that gets a text message with a code, or the going's authenticator app i have on that that shows me a different code, and -- that you carry around. >> right. >> it's not easy enough. >> it doesn't protect for backups. doesn't protect the backups that -- >> that's a problem. >> understood. finally, strong words from the chairman on google glass. in an interview with the ft saying, "i've not used google glass. it would embarrass me going around with that on my face. it would be okay in the disco." what's up with the disco reference? but i no longer go to the disco. entered into a pargher inship to design new glass collection earlier this year. this has been a constant

marketing challenge. walt, how to make this acceptable in social circles nchtsds remember, it hasn't really been released. these explorer, early versions. we did a story on re/code. we sent a very -- smart and attractive reporter around to bars wearing google glass to see what would happen socially. it turned out it's -- it's not exactly a help. >> you can stay they sent you. >> no. we did better than me. and you know, there are bars that say you can't come in here with a computer on your face. so -- and that's in san francisco. so -- you know, who knows. maybe in two years it will seem like a silly conversation i. think the watch. look, hedged bets. just as they hedged their bet between chrome oh a chromo apps.

i think the glass will be more of a specialized use case. construction, surgery. possibly while doing a specific job, and the watch will be what you wear everyday. i was a huge glass proponent early on. thought everybody would have it. thought that about the segue, too. as a kid i tried to sign up alleyways. >> basically, we're -- we're going to bet against whatever you immediately think is going to about good tool. >> which means drones are dead. >> i don't get credit for drones. >> wait six months, you'll be right. >> it's not a good sign. >> i would love to take it from you. >> jon, close it up. >> not a good sign. south of chelsea at a samsung event, lots of android gear. only one person wearing google glass. that's a problem. >> wow. that is a problem. walt, please come back. love having you here. >> loved being here. >> from re/code. jon will stick around and jon fortt see you later as well. >> we will indeed.

check on the markets. that pacific crest note on apple is moving the nasdaq to the down side even as the dow and s&p 500 have stayed remarkably in the green. the dow up by 56 points at this hour. the s&p 500 up by 3. the nasdaq down 12, of course we did have factory orders for the most recent period that soared 10.5%. that sort of offset the flagging auto sales from gm and ford and, of course, the markets are still watching what is going on between ukraine and russia. check out shares of gopro also rallying during trading this morning. shares of the cameramaker have risen 13 of the last 14 days. those moves good for a gain of about 40%. and shares of toll brothers slipping even though earnings and revenue beat analysts estimates. the home builder said it benefitted from selling more homes a the higher prices. that stock down today. also more good afternoon applications not really seeing the lift from lower rates as maybe some expected. also a programming note. toll brothers ceo will be on

f. "fast money" 5:00 p.m. eastern. the ceo of toll brothers. carl? when we come back, new phones verch you'll realiphone s verch you'll virtual security. and former ceo of barnes & noble tells us why the home automation business is more affordable than ever. that's coming up. and fantasy football for those with a short attention span. talking about the new way you can play a little later on "squawk alley."

welcome back. kkr, investing about $90 million for a 35% stake in savant systems. reportedly valuing the company at about $215 million. savant sells systems allows users to control everything from thermostats to lighting, sprinklers all from a smartphone. joining us at post known, the ceo. good morning. >> good to be here. thank you. >> tell us how the relationship with kkr evolved to the point where the they're investing in your company today? >> we were running a process to raise money to fuel the growth of the company. savant systems has been the leader in the market for luxury home automation. we were running a process to

raise funds and we selected kkr because they really understand the connected home space. they made an investment in sonos, as you know, a distributed music company doing quite well, and we feel like their growth trajectory is relevant for what we're doing with savant bringing their technology solution to more and more, making it more affordable, bringing it to more customers. >> savant is essentially a platform allowing users to sync all home automation. we mentioned sprinklers, home theaters. how does it work? >> you can -- we talked over 7,000 devices. you call one of our certified integrators. we put in software into the home and allow the homeowner to control virtually anything in their home through one easy to use interface, and so let's say you're having a cocktail party and want to set your stream pandora in a few different rooms. set lighting to a specific dimming setting. you want to have the temperature at a certain level. you want your kids distracted

with nickelodeon down stares watching apple tv, we can do that with literally a press of the button if you set a scene. we automate all that. >> the impress i have of saw vaurnt, you have to be a kkr arter in to afford is a saunt. in the "wall street journal" article, savant installed technology in yachts, european castles and california mansions, you're trying to go more mass market. right? >> right, jon. so traditionally, it's true. we've been the fattest grst et rich and famous homes but increasingly we're bringing it to more affordable pricepoints. powerful savant technology. now can you get in for that $1,000 to $3,000 price point and we'll continue to do that, make it more actionable. >> what does $1,000 get you? >> it gets you the software and interface and ability to control your av. so tv, vcr through one universal remote and start to add lighting, climate, sprinklers. we've done bowling alleys

before. you know, as i said, virtually anything. >> know sin sonos, you can imag yet, but the glue. we talk to them quite a bit. >> could have gone into many different areas after barnes & noble. why automation? why was this more attractive than any other field for you? >> seeing a lot of capital pouring into home automation. research, 76% of consumers think smart homes will be mainstreamed, carl, wirth the next five to six years. i believe that's true and savant had the best technology in home innovation. i'm thrilled to be the ceo. it's a great team. >> with breaches of various kinds in the news seemingly every day, does that affect the marketing pitch? how do you convince people their front door lock is not going to be breached by someone with evil intent? >> a good point, carl. privacy concerns not only data

privacy on people's home, access to the home is paramount to us. we've nerve hver had a breach ww of. take it very serious. access encryption between the host, app and the cloud. without boring viewers to death, we do a lot with the technology to make sure it's stable. >> but you work exclusively with apple. i'm wondering, any thoughts about home kit coming out? >> well, yeah. i've got thoughts. you'll have to talk to apple about home kit. they haven't released a lot of information. we've been in discussions with them. we, kayla, you say work exclusively with apple. true we're built on their software and have an app for android users as well, though. >> all right. keep an eye on savant. hopefully see you going public at the nyse. at some point you'll come back and join us, william. >> appreciate you having me. >> william lirchynch, ceo of sa systems. and rallying, thanks to batman. we'll explain. and samsung releasing a

curved smartphone and virtual reality headset. is it enough to take on apple? we'll have samsung in a cnbc exclusive later on in this hour. you, my friend are a master of diversification. who would have thought three cheese lasagna would go with chocolate cake and ceviche? the same guy who thought that small caps and bond funds would go with a merging markets. it's a masterpiece. thanks. clearly you are type e. you made it phil. welcome home. now what's our strategy with the fondue?

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in case you missed it, cheshg out shares of netflix. stock in the green, up just below a percent. at a record high after striking a deal with warner brothers to run the new tv series "gotham" following the first season. the deal is unique, because netflix is buying rights to air a series that hasn't even started yet, and because it's licensed on a multicountry basis. normally netflix agrees to programming deals country by country. gotham starts on fox this month and is about a young bruce wayne before batman, and police commissioner gordon. guys, we know international is the play for netflix. perhaps that's why they're doing this. going on a spree, though, recently. the "blacklist" for $2 million an episode. >> yi. warner brothers is an

advertising. amazing about this actually is the fact they've done it multi-national at once. windowing in an irnd net age with netflix is ridiculous. the fact they're doing it after one season, it's exactly the kind of show with a cold following around, you know, characters and superheroes. make it global. go at it at once. makes a lot of sense. and no cannibalization. the severe they have. these tv shows, oh, we don't get them on television we'll lose them. the people that want to watch this over the top on netflix are not the same that watch on television. >> talked which network"dallas" which is "nypd," now which does amazon have and netflix? changing quickly. >> the funniest line about this, i have a friend who works a the viacom talking about the children's shows i like. you have mickey mouse clubhouse, too. he looked at me like, are you out of your mind? you get this on-demand view, you go to the guide and pick a show. >> post add link from vulture.

1994. the last great on-air television season. >> how today's broadcast shows would rank in '94, in terms of, i think in terms of share. >> yes. >> like the "big bang theory "a most watched on television, comes in 30, something like that. >> yes. incredible. >> what is amazing about it, when you see an article on the web get 1 million views and then a television audience get 100 or 150,000, seems bigger than it is. not saying that because i'm on-air with you. the fact it doesn't equate is something i think for advertisers makes them love television and not move the dollars to online as quickly at you would expect. >> thanks for making the half-hour break. joining us today, jon steinberg. and hopes ukraine and russia can, in fact, reach an agreement to resolve the conflict in eastern ukraine. meantime, worries about ukraine wagd on you'eurozone pmi. ahead of tomorrow must

anticipated policy meeting from the ecb. stocks with exposure to russia a much needed lift. including danish brewer carlsberg. some of that came off once a dispute whether or not a cease-fire had in fact been reached. keep your eye on russia over the next couple of days. when we come back, between a curved smartphone and virtual reality, a nice look at the future of samsung this morning. of course, the iphone 6 launches next week, we think. is that enough to take on apple? we will ask that question in a cnbc exclusive with the vp for samsung in just a moment. opinions. there's no shortage in this world. who do you trust? whose analysis is accurate? how do you make sense of it all? a simple, unbiased stock score consolidated from the opinions of independent analysts... is that too much to ask? nope. equity summary score, powered by starmine, will help you execute your ideas with speed and conviction.

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samsung unveiling a fleet you new products ahead of apple next week. jon fortt is at the event with the vp of samsung, products and strategy. >> thanks, carl. here with justin denison, vp of products and strategy at samsung. first a question of security top on of mind for everybody. apple and samsung, leaders in the smartphone space. icloud hacked a number of high-profile people. are samsung users any safer and what kinds of security measures should consumers expect from you? >> certainly i can only speak from the samsung perspective. we offer different levels of security for our devices. give consumers a choice.

fingerprint unlock on your dwris. other mechanisms, using other mechanisms and allow people to perhaps use a kill switch. working with carrier partners in the u.s. for a kill switch. if you lose your device or if it's stolen, you can wipe your phone and make sure it doesn't fall into the wrong hands. >> not the last word talking about that, for sure. talk about big screens. also big this season's we expect to see them from apple. samsung pioneered those. you come out with a couple of new products, taking advantage of that. start with the edge, which has a screen that wraps around the right side of the device and creates a new navigation panel. why did you decide to do that in particular? how much of a differentiator do you expect to be? can others copy it? >> tried to listen to consumers trying to understand what they wanted. they love the big screen. on top of that, they wanted an unsbrepted experience. the edge literally pushes that experience to the edge and allows them to move notifications in an undestructive way to enjoy their

video or game and receive a phone call, that appears at the edge. doesn't take over their screen and cause them to lose their high score on their game. >> last year i believe you did about 10 million units of the note 3 in the first two months. i think you announced that in early december. as you've seen the large screen market develop and get more popular, how much better than that do you think you can do? >> we announced today we sold 5 million units of note 3 in one month. that was compared to when we launched the note 1. 5 million units in five months. we've seen an acceleration of an uptake in the market. note users of the most loyal and satisfied users of samsung devices. we're trying to build on more of the success of what they love and appreciate. so we focused on screen, camera and battery life. the hallmarks. introduced the edge, providing a new experience, and excited to bring that to our consumers. >> also talk virtual reality. your vr headset uses the note 4 as the provider of screen, and it's got a qhd screen. you can see pixels in there.

not quite as sharp. some people would say, as the dedicated sony and oculus head zets that have to be tethers to work. what is your place in this market going to be? you're working with facebook's oculus unit on this. do you expect this area with the phone attached to be the most popular segment? >> the screen is beautiful on a net floor. it's a quad hd, super analog displace, first of its kind in the market. incredible resolution. some people ask, why did you make it with such fine resolution? part of the reason, because it, woulds ins that headset. clip it in. look at that screen and get to enjoy the beauty of that screen in the virtual reality space. we think it's a perfect marriage. what makes us different? frankly speaking, it's a truly self-contained smartphone powered mobile experience. we think that's the beauty of the headset. >> my expectation is real estate, autos, some prime markets for this, where you

really have a premium opportunity, if you give the customer a high-end experience. is this a b-to-b thing or consumers will shell out the thousand buck, whatever it costs, to get the headset to put it in? >> exciting. many b-to-b opportunities. just starting in the space to understand what new experiences to bring to bring new value to those value chains. on the consumer side, obviously, you can see it in the people's smiles when they sit down, experience the vr for the first time. they love it. they get it. working with content providers to continue to deliver relevant content to them to continue to experience that. >> okay. and timely, this holiday season, you've got apple coming out we expected with new tablets as well as phones. i believe samsung stated last year you wanted to be the unit leader in tablets by the end of the year. able to do it? >> we didn't announce anything on tablets today pap wonderful and important market for us. we kbont to innovate.

excited about the platform we launched earlier, likewise, a similar display. best tablet screen on the market. >> justin denison, vp of product and strategy with samsung. thanks for joining us on this announ announcements. back to you. >> thanks, jon. hearing a little more from you from that samsung event later today. did the samsung device announcement spook apple investors? apple shares now down more than 3.5%. they're back below $100 a sharp at this hour. $99.58. joinings now on the phone, scott kessler, head of tech equity research at s & p capital iq. good morning. >> good morning, kayla, thanks. >> we have a one-two punch. on one hand a suite of samsung products. the other hand, the specific crest note that says basically sell apple. downgrading price argument to 100. do you agree? >> our 12-month target price is $103. obviously the stock closed a the that level yesterday. we think the shares are fully valued at this point and frankly i don't think a lot of people are accounting for potential

disappointment coming out of the event scheduled for next week. that obviously seems to be what people are thinking about and perhaps worried about at this point. >> there's this idea that the iphone 6, because we know how popular and how much market saturation the iphone as a product has, that the iphone 6 a already priced in, but that the potential for new product categories whether wearables or payments, that's going to be where any upside surprise comes from. have you put a number on what you think that market could be for apple? >> we haven't put numbers related to those potential categories, in part because apple hasn't announced them and i think a lot of people have made premature prognostications about the potential for apple to get into a whole host of new areas that they end up not pursuing. so we're going to wait and see what they have to say next week. i do think it's fair to comment, however, on two thing. one is, if you look at the valuation, at least on calendar year 2014, apple looks maybe

slightly discounted on a p basis compared to the technology sector of the s&p 500. on a pe to growth basis, actually now trading at a premium, and i think people are realizing that maybe the valuation has gotten quite full, and then secondly dovetailing with that comment about the valuation, is that this is a stock that's done tremendously well. i mean, if you look year to date, apple even with today's decline is up over 30%. the s&p technology sector up 15%. doubling of the performance basically. >> finally, scott, some argue even if we do get the products we're all expecting, opening weekend, which is obviously always fraught with answer-thgs have to be pretty good given how well the 5s and 5c did last fall. sthap true? >> yes, carl. absolutely true and a lot of people are worried about the amount of supply that's going to be available in the channel. especially over the near-term. if you don't get let's say the

number of products announces available, and the amount of those products, suddenly people start worrying about apple's execution coming after the holiday season, and we saw obviously in recent years that we do have the potential for the stock to underperform, if there aren't continuing product announcements and related anticipation. >> less than a week to go, scott. that run-up seems to be losing a little steam. dragging the nasdaq down. we'll see how it continues from here. thanks for joining us. >> thanks a lot. >> scott kessler of s&p capital i q. daily dose of fantasy football, still to come. a very real side of $70 million. we'll explain in a moment. ji first, rick santelli, what are you watching today? >> looking at the dax. basically gone up pretty must straight up since the beginning of august. i'm looking at what's going on in the dollar yen. and, of course, headlines. geopolitics, sam zell. i've come to realize that at the end of the line, qe is the new

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and stocks hitting record highs. are they being too complacent. samsung relacing a product days before apple's highly anticipated releases. which technology is the best bet? morning star's fund manager of the decade is here with his latest picks. you'll be surprised where he's finding opportunity these days. it's all straight ahead on the "half time show." carl, see you in a bit. >> sounds good, scott. thanks. over to the cma and check in with rick santelli. hey, rick. >> hi, carl. indeed, you know, there's so many sharp guests we had on today. the conversation really is geopolit geopolitics. jo wa i don't want to beat a dead horse. humanitarianwise we need to monitor this. 23 you're an investor you need to remember who brought you to the dance. the markets remember and are clear. look at a chart since august 1st of the dashgs, when all the stories were out is it good, bad, how do we transfer it?

basically, gone straight up. look at the dollar yen and remember on the dollar yen, as mr. o'neill pointed out, former head of goldman, when we were talking about low interest rates in qe, why would europe do it? because it's an reflation. i'm getting ahead of the steeor. okay? when it comes to geopolitics he a agreed with sam zell. the operative word -- potential to shake up investors. but until we arrive at that potential intersection, it certainly seems the reason the dollar yen is flying is because they had a horrible gdp number. so what's the market pavlovian condition to expect? more sugar, mosh qe. hence the driving force in the marketplace. now, is it necessarily a good thing? well i can't tell you, but i can tell you this. it certainly focuses everybody on debt instead of equity. you know, phil lebeau is doing great pieces on autos today.

here's what i hear when i listen to phil. that autos may have disappointed a bit, but we're close to 17 million on an annualized base. terrific historically. a couple other things that are historic. that the number of loans whether new or used, the size of the loans, whether they're new or used and the length that they stretch them out are also at historic levels and that is worth paying attention to, and as for this deflation that's going to fuel what europe's going try to do to reflat, there's real fur and faux fur. milton freeman said a monetary phenomenon. in an upside-down faux world i don't think you can make faux inflation. quickly, the st. louis fed agrees with me, because they say it's money hoarding. put it on the screen. sorry i'm late. the nominal interest rate on short-term bonds decline essentially to a goose egg. the best form the risk-free liquid asset is no longer short-term government bonds.

the money. they are now the problem. back to you. >> all right, rick, thank you so much. rick santelli this morning. when we come back, fantasy football fans already know, but the nfl season kicks off tomorrow night. now let's say you have your whole team set and in week one your top player is injured. you're out for the year. normally your season is done. not if you play on one fantasy sit pop we'll tell you how that works. next on "squawk alley." o made wh chocolate, soybeans, and apricots. what kind of chef comes up with this? a chef working with ibm watson, on the cloud. ingredients are just data. watson turns big data into new ideas. and not just for food. watson is working with doctors and bankers to help transform their industries. today there's a new way to work. and it's made with ibm. we're changing the way we do business, with startup ny. we've created tax free zones throughout the state. and startup ny companies will be investing

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fantasy football, 41 million fantasy players in north america. a booming business. case in point. the dai lily fantasy fan site f duel. joining us, nigel, great to have you here. good morning. congratulations on the funding. >> thank you. >> for those, talking ak essentially a new industry here in daily fantasy. >> yes. >> how do you describe it to people who have never heard of it? >> simple. if you've played traditional fantasy, exactly the same. games only last one day. pick a team under salary cap and they play in football this weekend. >> next week you start fresh. >> exactly. not locked in. say for example this weekend you picked welker, things look going. you're not stuck with him. you can swap him out and haven't a whole new team. >> how much is this business growing? >> phenomenally. a if a phenomenal rate. >> my beef. many women, significant others sit through multiple hours of

these fantasy drafts. many of us last weekend, not saying i did. do we have to then do that every single week? how does this work? >> our players love it. so, i don't know. >> i'm sure the players love it. >> a really hard core players. also casual players. a good female audience as well. you don't have to commit to an entire season. i don't know if it's benefit. play just tonight or just this weekend. so that's definitely a nice thing for the game. >> is it a full draft, like the ones -- >> no. quickly. do a draft -- did one in five minutes. not a very good team, but -- >> not going to win this week. >> it doesn't have that time commitment. >> the funding from big players. shamrock, nbc sports ventures, kkr. >> yes. >> what did they see in the business and then more importantly what do the leagues, their stance on daily fantasysoh far? >> those investors, huge growth opportunity. 41 million play fantasy sports. this is the new way to do it. the younger generation coming in. in terms of leagues, mlb a

sportive, and it brings in younger players. average player is early 20s. >> a player who traditionally has done season-long fantasy or completely new to fantasy in general? >> both. players in leagues and those that haven't played before. >> potential to be a profitable business. should a media company want to use it in this acquisition do you see that route? >> not our focus. we want a strong, independent company. what we're doing is transformational. that's the company focus. >> i imagine nfl in terms of participation is your hottest time of year, right? >> yes. >> how is activity increased over the past few weeks? >> this week's exploding. we are acquiring more players today than we did, you know, in the fourth quarter of last year. so it's just a huge numbers. >> with constant, basically high frequency fantasy. >> yes. >> say you win a given sunday,

how do you get paid out? >> oh, so it's paid straight into your card. back to paypal or check. very, very fast. >> and then use proceeds? going to winnings, marketing? >> a lot of product investment. we also have a very big live e's vents business. we have the world's fantasy football championship in las vegas pap $10 million prize pool. we have -- >> $10 million? >> $10 million, yeah. awarded in one day. $7 million awarded in one day. 100 final s at that event in mid-december. >> beyond football, basketball, any one sport you see just exploding in growth? >> beyond football, then basketball is exciting. it's kind of the younger demographic. it's got a really nice, long season. then after that is bs ball. loser, one, two, three. >> not the last we've heard of daily fantasy. guarantee you that. we'll talk more during the course of the season. thanks for coming in. joining us this morning from fan duel. first lady michelle obama

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fon the nato summit. first lady michelle out with a different message making a cameo. featuring young actors, and called snack apocalypse, about healthy eating. check it out. ♪ >> don't you hate when trailers give away the whole movie? >> yeah. >> can we just watch "frozen" again? >> she knows how to live raf her message in a variety ways. >> that, of course, a parody of "the hunger games" play on word there. >> but all directed towards leading awareness to move on. which has been her leading charge throughout the course of

her teen nuer nure at first lad >> and the president, taking a similar approach with this message. getting a lot of buzz. >> yes. >> close to session lows here. session low, back to 2000. see it thf that holds. meantime, scott taking over "the half." joe terranovaterranova, and najarian, also steve weiss, and josh brown, and welcome. we begin with a familiar story. stocks hitting record highs today and investors seemingly paying little attention to a series of simmering flashpoints. question is, are the markets too complacent positive what's going on here and abroad? michelle caruso-cabrera is