headquarters. 11:00 a.m. on wall street and "squawk alley" is live. ♪ no . welcome to a friday edition of "squawk alley." joining us, henry blodgett, good to see you. kayla tausche, jon fortt at post nine as well. first up, closer to apple's big launch event, ceo tim cook speaking out on the celebrity photo scandal. cook said apple will add new security alerts and notifications for icloud

accounts saying none of the leaks came from company serve rs. looking at the hacking situation, when i step back from this terrible scenario that happened and say what more could have been done i think about the awareness piece. we want to do everything we can to protect our customers because we're as outraged if not more so than they are. joining us this morning the writer of that piece. joining us here from san francisco. good to have you back on the program. good morning. >> good morning. >> sounds like he's saying not the engineering. it's the communication between the company and the consumer. can you round out exactly what he told you? >> yes. i think one of the messages he had was that you know, a lot of the security measures they had in place were, would have tried to -- prevented this from happening. one thing is something called two-factor authentication. at this point, that two factor authentication, most of apple users do not have that in place. so i think they believe that if they had something like that in place, maybe some of this would

have been preventible. >> well, but two factor authentication doesn't keep someone from downloading your icloud as you note in the story. it does keep someone from guessing your password based on those questions. i wonder, did tim cook address at all the fact apple could have had precautions in place before the scandal and might have prevented it. it's not as if apple couldn't have done this sooner? >> a good point, jon. i think one of the issues is that they are getting kind of criticized and i think they came out to say i think they walked a fine line. i think maybe, i'm not sure, they don't want to come out and say, look, it was our fault. but what they want to do come out and say we're going to do more to notify people when in are changes to your account. basically if something happens to your account, that you will be notified more quickly and that you can take action more quickly. i think one of the concerns was that maybe some of these people were able to change passwords on

celebrity accounts and able to sit in their accounts for an extended period of time. >> beyond notification, an idea apple should be the innovator in security, and cook talks a little about touch i.d., the fingerprint sensor in the most recent iphone model. do you get a sense there's any enhancement coming to that technology when we see new products rolled out? >> tim didn't really talk about that, but i did ask him a question, saying there is a perception out there that maybe apple doesn't focus as much of its energy on security in the same way that it does for ui or kind of its hardware design and tim disagreed with that. he pointed to the touch i.d. and the integration and how a lot of that data is stored locally on the device. and certainly that's going to e been issue going forward getting into things like health care, digital payments and certainly apple will try to facilitate that through the device. i don't know. an interesting question and one i think apological ha ologicapl

answer going forward arrangements big event coming up tuesday. and a lot of people trying to handicap exactly what they need to do to meet or beat expectations in terms of product. you got thoughts on that? >> yeah. it was an interesting thing that happened during the middle of our interview where the phone rang and i thought for a second it was my phone and panicked a little, but it was actually tim's phone. he looked down. it was his nephew calling. he kind of jokingly said, probably wants to know what's going to happen on tuesday. and so i said, well, you know, feel free to take that call. i'm happy to listen in, and he said, well, i don't tell him anything either. so you know, i think part of it is, i think a lot of leaks are out there. certainly a bigger iphone. iwatch, all that stuff is out there. but i think more than anything, than just the announcing the devices, it's just kind of how all of that will work together and the experience of it all, and i think that's the part where certainly smart watch is

not a new thing on the market and i think part of what apple's challenge will be, to show how the vision of why people should get a smart watch, you know. i guess when it comes out next year. >> that's going to be the test. convincing us we actually need these products. going to be an interesting week. thanks for your guidance. congratulations on a good scoop. >> thanks. joining us from the "wall street journal" today. next up, tesla and the state of nevada officially announcing that new $5 billion giga factory bringing in about 6,500 new jobs to the reno area. our phil lebeau caught up with ceo elon musk who said the biggers factor in choosing nevada time to execution. musk also had interesting things to say about tesla's stock price. take about listen. >> i do think people sometimes get carried away with our stock. you know? honestly. and because i think our stock surprise kind of high right now, to be totally honest.

or rather, put it this way. if you care about the long-term tesla i think the stock is a good price. if you look about the short term, it's less clear. >> interesting. got to have thoughts on this. not the first time he's said that. not the first time a ceo of a high multiple name has said this. >> no. it's great. handled it perfect. long term, you'll be fine. didn't say run for the exits. an all-time peak or anything like that yet he's tamping it down. that's helpful. they don't want it to spike to insane heights, because then it screws up to the extent there is options, all that. screws up that piece of it. so wants a more stable stock price. >> seen a lot of sale side research. bullish on the long term. prospects, this plant will make batteries more competitive. rivals aren't jumping in like people thought. why? >> why are people not jumping in? >> yeah. >> because it's hard. they've figured out something companies have tried to decades.

what is it? what's the formula that works? went after the high-end of the market first. brilliant. buyers of the s and roadster, pride themselves on, hey i have a cool electric car. by the way, it's my fourth car but i won't tell thaw. i have the suv to take long trips use all the gas. went after a perfect part of the market. learned ho to make the cars somewhat more cost effectively and this big step should take them into making them really cost effectively. suddenly you remove the big barrier. good range at a reasonable price. >> if you're a trader and care about insider buying and selling, this is the closest you get to it without insider selling. right? basically telling you in the short term, maybe medium, stock expensive. down around 4.5%. i wonder if he had lunch with janet yellen after that? i don't know. >> the big question, output. visits the california factory and believe output will be better than expected.

i took this as musk saying, actually maybe it won't. i don't know. >> nobody knows. put together models to build a factory like this. will costing be down to where they say they'll get them down? you don't know until you get in there. what folks are betting, look, over time they've been able to deliver on what they wanted to. they didn't know how they were going to get there but figure it out over time. a good bet thus far and you can pick any price you want for a stock, as we know. >> giga factory made its way into political discussions. gop challenger neil cashkari last night. >> i don't think governor brown did nearly enough on tess wil and any number of businesses. governor brown says businesses come and go. it's not businesses coming and going. it's tesla, toyota, it's schwab, it's nestle, on and on and all going. we have to rebuild the middle class of california and that means we need positive bring good jobs to california. tesla one of many examples of the failure of this administration. >> after all that, states

fighting over them. right? >> played it perfectly. said, hey, we're going to build a massive factory. lots of jobs. anybody who wants it, come to us with offers. nevada made great offers. one thing to say, read the accounts. so expensive. $1.25 billion. people realize that if the plant had been built in california they would get zero. now they're actually going to get taxes sometime in the future. it cost them nothing. they did thought pay any money to tesla. just said, hey, we'll defer taxes for a while. all the people who work there will buy thing, pay taxes in the state. this is good for nevada. more states need to think this way. >> even nevada isn't getting away without its critics. the group good jobs first saying, look, this is 20% of your k-12 education budget you're basically giving away. a race to the bottom. >> because the whole thing is framed wrong. they did not pay money to get the factory. they just simply provided incentives to have other revenue streams come their way.

california has to look at it this way. other states have 0 look at it this way. our corporate tax system is screwed up. now doubt about t. a different discussion, but absolutely true. >> we want to look at markets now. off the lows of the session but job growth really disappointed this morning. our economy only created 142,000 jobs. speaking of jobs, in the month of august. that, of course, far below expectations for 220,000 jobs. the silver lining, the jobless rate did fall to 6.1%. but, of course, there are questions about whether this is on outlayer or trend-setting data point. of course, we're talk to art cashin and several others to make sense of the number of course moving markets now. also shares of gap slipping this morning after a 2% drop in same-store sales last month. old navy posted a gain, overall that miss in comp sales leading the stock down about 5% at this hour. morgan stanley also falling

after mcquarrie downgraded to neutral. further upside may be difficult to achieve. an owner, you know the stock has been one of the best performers of the financial sector in the last two years. today, down 1.5%. when we come back, our next guest was vp of mac engineering at apple and the only person to work both under both jobs, gates and michael dell. he'll join us to talk about apple's big i vent next week. and the head of espn speaking out on twitch and watching sports online at the code media conference last night. care ra -- care ra swisher is here. and awaiting president obama's news conference in wales. we'll take to you that as soon as he starts speaking. "squawk alley" back in a minute. and you'll see just how much it has to offer, especially if you're thinking of moving an old 401(k)

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welcome back to "squawk alley." i'm morning brennan. check out price line, taking a hit after down graded to equal weight and cut its price toorgt 1350 from 1450 saying revenue in ebitda estimates, 2016, bow lel. back to you. >> i'll take it. thanks. telling you, several celebrities digital lives invaded, high fones hacked. personal pictures distributed on the internet.

our next guest is the only person who have ever worked directly for steve jobs, bill gates and michael dell. also the chaeirman of the gramm foundation and joins us today. great to have you with us. >> hi. great to be here. >> cook talking to the "journal," better push notification and better awareness. less about the engineering. is that how you see it? >> well, i mean, i think he's partially right, although i think that a lot of the policies they could have put in place could have been done a long time ago. a lot of companies have two-step authentication when accounts are created or devices added to accounts. that's something apple could have had in place in a more easy way for consumers earlier. >> tim, it strikes me the cloud probably requires brand new approach to security and a lot of the security process apple has in place was more from the ipod connecting to your mac

days. what sort of approach really is necessary? railroad we going see become mainstream neighbor three years that's going to actually make people feel secure about storing sensitive information in the cloud? >> well, i think there's a lot of different technologies. we're already seeing things like the fingerprint, you know, recognition on phones. and it's both in the iphone world as well at the android world and those kind of things, retina scanner, fingerprint, and also devices that actually have codes on them. there's these things ca s calle keys a rotating number. for my bank, rsa key, put user name and passworld and also a number generated off of this little device, which is in zisy with the service. you'll see a proliferation into the consumer kind of cloud

services with these things. >> tim, as we learn about what security apple had in place, it does seem like it was a little bit laxed, too easy to guess passwords and security confess, but in their defense, presumably they're trying to make it as easy and convenient at possible for the users. how do you think they think about that internally and how do they go forward striking the right balance between ease of usa and convenience versus rock, solid security? >> you're dead-on. that is what apple was trying to do is not have a person when they did anything to their account have to then verify it in an e-mail that comes to them or things like that, because two-step authentication in whatever form it takes, most common being e-mail is a bit more cumbersome. i think in the case of apple, though, they could have made their -- their consumers more aware that there were options available in icloud. it's fairly buried, and you know, today privacy is such a big issue. you know, it's -- your bank accounts.

it's obviously photos and videos. and i think that's something that most other companies were making a little more obvious to consumers. and i think ap coal have made it a little more front and center nap there is the option. not that you necessarily have to do it, but that there is the option. >> right. tim finally, it brings us to live and this notion of -- our information, our data, photos, all of our homes are split among various devices. you seem to be making a play on a product that will somehow aggregate all that. right? >> right. that's really what live minds has done, really help consumers collect their life memories. where a life memory company and have so many pictures on our different devices in our lives, whether it's laptops or even things like usb drives or flash drives. and it's really hard to manage all of that. so what live does is brings them together into a single view for consumers, and we also have a

fairly private mode. we have a device called the live home and the live home is basically, it's in your possession. right? it's not in the cloud. there is an account but the only thing that's in the cloud is essentially an index of all of your photos and videos. if somebody did hack it they couldn't do anything with it. they would see it's a picture of jennifer lawrence, or whatever, but wasn't actually see the picture itself. >> and does this -- if i were to go through a live product, does that give me an added layer of security protection or more about making it easier to access? >> actually it does both. the fact that your content is not stored in someone else's servers, essentially your own devices in your physical possession, is one big step in privacy, but the live software and service manages those device, but the content is not actually put in any cloud. >> right. >> that is susceptible to hacks. and plus we do have alerts when

anything is change and the accounts. >> tim, we'll keep our eye on that. much success. tim booker joining us from live minds and talking apple, too, in san francisco. getting color on the alibaba, kayla tausche? >> the puzzle pieces are falling together. we know what banks are going to be in what pole positions when the deal actually launches in a couple weeks. word that credit suisse will actually be leading a friends and family program for these shares. that's not a typical structure for u.s. ipos but common for international econocompanies especially chinese companies. basically an allocation of shares offered in the deal that will go to employee, go to employees' family members and go to so-called friends of the founders and the senior management. of course that group of a little bit more than two dozen manager, that make up the alibaba partnership that chooses its

board members and makes a lot of other executive decisions for the company. so this is obviously very significant for those looking for upside. we are going to get more details on exactly how big this program is, what slice of the float this will be. and, of course, that perspective that will have the price range for alibaba shares when the company starts its road show next week. expecting to get that before market close today. i'm told they're crossing ts and dotting is. >> carl will remember, popular in the 1990s. >> yeah. although gm apparently used some of this, too, right? >> they did. >> gm is one of the bellwethers. talk about facebook and twitter. those are companies that have come up in many of the discussions between the bankers and the managers at this company, but really gm is the one they're looking at, because of the size of the stock that was sold during gm, and because of the trading on the first day. it was up, but it wasn't skyrocketing out of the gate, and that's the trade they want to re-create.

we'll see if they can do it. >> right. what they want to avoid is a repeat of facebook where anybody on the planet who wanted stock, friend, family or anybody, got as much stock as they wanted and, therefore, no more demand in stock cratered. you got a big deal here coming. they're going to have to be careful about that and where they price it relative to that. >> go ahead, kayla. >> one thing facebook got wrong was the stabilization at the very beginning, when people wanted to sell shares at the open, who the bankers -- in whose hands the bankers placed those shares? net sellers? long onlies? and goldman sachs actually has that role. people asking what is a stabilization agent? the meaner decides who gets the shares at the open and is supposed to be stabilizing that trading throughout the day. that is a very important role for a bank like that to get. >> my only question to you, in terms of news structure sdshs this make the market top heavy? too reliant on anything alibaba over the next two to three weeks? >> it's a huge deal. as facebook did, it could have

the potential to change sentiment quickly if it doesn't go particularly well. they have to get it right. and what everybody looking to buy it has to understand is, there's a lot of stock. so it's not -- the idea if they underprice it and it pops 80%, they will have done a terrible job. so -- people should only be willing to pay actually just a little bit below where they hope it's going to trade. >> but have a really good story to sell to investors. 70% margins. compared to amazon's that went negative last quarter. when you look at these two comparable businesses, the numbers of this company are just so mammoth. they're going to start talking to investors monday here in new york. we'll cover that as well. >> getting down to the final innings here prp. when we come back, espn taking a big shot at google, at re/code's media conference last night. kara swisher is here to explain later. dow's down on lows. back in a moment.

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if you're just joining us, we are aweight the president expected to speak at the nato summit in wales. don't forget, reports this morning of a cease-fire between ukraine and pro-russian separatists that is supposed to take effect as early as today, just based on reports. we'll see if that holds.

stocks lower in europe. investors cautious after that cease-fire accord went into affect apparently earlier this hour. italy, stapain, germany abong t biggest. and one day after falling to 14-month low, euro. the dollar, having its best weekly win streak since the introduction of the euro 17 years ago. absolutely unbelievable. art cashin joins us to talk about that and a lot more. good to see you. this has led markets off 15 handles in the past couple days? >> yeah. x somewhat destructive. not all factored in. everybody is looking at that. the cease-fire is being greeted without a huge amount of enthusiasm, because we cynics believe mr. putin is trying to pi time until perhaps temperatures get cooler in

europe, and that will give him a stronger hand. so it will ease tensions, because it won't be on the front burner, but i don't knee it will be a solution at all. >> where does that leave the ball between bulls and bears going into next week, and taking into account the jobs number as well? >> the jobs number is another thing. that looked very much like aan nomly and you could see where some of the observers said, well, wait. this isn't fit in with ism et cete cetera, but if you drill down look at the subsets and the fusion indices and other things they indicate it won't be an easy number to throw way. whatever it does, it sends yellen back up to the watchtower. got wait another in before she thinks about doing anything. >> after the ecb's announcement yesterday thinking the u.s. looked like the best house on the block. what do you think yellen will have to look at when the fed does meet in a couple weeks? >> there's some risk in the numbers, particularly the ones i

referred to, that we may begin seeing a deceleration in the economy. that the gdps aren't going to be above 3. that we're going back to the middle 20s, maybe even the low 2s. that's going it to mean that yellen will have to stay lower longer, if you would, and we'll see how the debate pops up among the regional fed presidents. there's a small click, not a majority. a small click building there that want to move towards tighter rates sooner. >> henry, a big inflection point looking at the third of the year and into next year. does that ring whey year hearing as well? >> up to this point, looked like things were headed in the right direction. economy gaining steam. interesting report. >> you're saying nato is the wild card. what do you expect from the president and how much do you believe the headlines over a cease-fire? >> got to walk a fine line. can't look like he doesn't want

to accept the cease-fire but will try to point out to people this might be in russia's best interests and not necessarily nato's, and again, our old frenz in isis haven't been heard from in almost a week. they'll be back. but for the -- >> congress -- >> i don't know where the most damage can come from, but the viewerses should watch. we said in the morning comments that 1990 was a line in the sand for the bulls. we got down there this morning. we have bounced, but haven't gotten any bigger in that bounce. if they break below that, it will do some technical damage here. >> art, thank you so much. good weekend to you. art cashin here at post nine. henry, thanks to you as well. see you next time. henry blodgett, business insider. the president is expected to speak at any moment in wale, at a news wrchs after holding bilaterals. john harwood is in washington. good morning. >> reporter: got wait and see what the administration has to say about this cease-fire and also what sort of resolve comes

out about dealing with isis. remember, we've had tremendous controversy over the president's approach to isis and the syrian civil war in general, and whether or not he's now going revise his strategy to more actively take that fight into syria. the american public is wary over continued commitment it's overseas and so is the public in britain. so how david cameron and president obama in particular come out of this session with what kind of a program, what kind of a timetable, is going to be what we're watching from this news conference. >> you mentioned the read sinti. is there more of a clamor for firmer military action? >> there is a clamor. you know, carl, i was just down in north carolina for a debate in a big u.s. senate race and

both candidates, the republican and democrat, while criticizing the president, the democratic incumbent kay hagan said he hadn't done enough to help the moderate syrian rebels, very cautious when pressed should the united states go into syria? has is a very consequential decision and why the president is taking his time and as i mentioned yesterday on "street signs," ate of criticism of the president for saying he didn't have a strategy on isis. a lot of politicians both in europe and in the united states who don't have a strategy for how they think this issue should be dealt with, given the more than a decade of war that we've just been through. >> john, yet this morning, secretary of state kerry says containment of isis is not a strategy. that, at least, makes it seem like there's some semblance of talk of a potential strategy. no? >> oh, yes, there is. i think the president's comment was exaggerated. he obviously laid out an approach to deal wig isis that

involves mobilizing allies, involves working with rebel, although he's been criticized for doing too little too late for them, but when he talks about having a strategy, the question is going to be, how much, how hard, how often do we go into syria after them? i think that is likely to happen. but given the way this president came into office, the attitude of the american people, i think it is a difficult step to take, and they also have to figure out, okay. if we get in, the question that was not properly handled in iraq, how do we get out? >> great point, john. we await the president. soon as, of course, he takes the lectern, we'll take that live. back in a couple of minutes with the dow down about 8 points. for you, success is a starting gate, not a finish line. for you, the ats isn't just a trophy. it's a sleek, chiseled instrument of your ambition. and for you, the winner's circle is just another pit stop,

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before the competition does. it's tough out here; you better be on the right cloud. today there's a new way to work. and it's made with ibm. market settling in a flat range, as we await the president expected to 123450ek a moment at the nato summit in wale after holding bilaterals today. as soon as he begins to speak,

we'll bring it to you live. a quick market flash. morgan? >> moving lower, the company mere a licensing agreement allow generic drugmakers to manufacture lower cost versions of its ep titus c drug is a valu tracking down a little over 4%. >> dietses dicey in the middle session. and alibaba, getting clues to what the final pitch will look like, kayla? >> traditional in all senses. management teams often post a video, roadshow.com, basically give their pitch to all investors that would potentially buy in on the stock. i'm told that could happen as soon as today or possibly over the weekend. of course, going public at the new york stock exchange. i'm told the likely date for that is september 18th, with the pricing on september 17th. they're going to spend the next

just less than two weeks on the road. they're going to split up the management team, and they're going to start here in new york on monday. we'll be live there. but it will be interesting. the most important number, guys, that we will get in this entire deal is, of course, the final price on the 17th. if there's a penultimate important number, it's what we get today nap price range that will be the starting valuation for that company, which could be gearing up for what is the biggest ipo ever here in the u.s. >> when it comes to the question how big, is there a imaginal line? 200 the magic number, below that, i'm told. not told by how much. for those people who thought they were going to blow the socks off from the get-go, 230 billion, not that. below 200 billion. how conservative they will be is interesting, because they have to balance yahoo!. they have to have a price that is fair to yahoo! which is uniquely already a publicly traded company, which has been

expecting a certain valuation for this company, internally. they have to live up to that and also have to be fair to new investors buying in on the stock and promise upside, too. i wouldn't want to be in the bankers' shoes trying to balance all the interests. >> does it matter if it ends up pricing above the range or in the range given the size and all the hype? >> you don't want to be at the low end of the range, or below the range. call it a win if it's at the top end of the range or above the range. what they'd like to do is tee it up so that they can then raise the range and then price in the middle of what would be a potentially raised range to give the appearance of very strong demand. demand will be strong for this stock, though, no doubt. >> yahoo! up 12%. s&p up 2%. tells you what people are looking for. >> a dividend play, too. haven't heard that about yahoo! in a long time. shareholders expecting a pretty penny back from this. and rick santelli, "the santelli exchange." hey, rick. >> hi, carl. we're going to cover three

topics today. i'll be moving swiftly. technical analysis, sometimes it really, i mean, truly is amazing. we've talk at great lengths, many exchanges talking about significant levels in tens. 245 maybe be the most significant all year and once again right up to the water but don't get wet. it's the main reason that the hardest part of technical analysis is sticking with your plan. until we get closes above 245, you still have a burden of proof on the sellers in terms of resourcing the market. on rate normalization. you know, sam zell, we love you in chicago! why? because he gave the best example why higher rates are good. say it. higher rates are good. hmm -- normalization is good. that's the mon trau. w mantra. why? he gave an example. buy a railroad, five to ten-year project and something changed dramatically in the fed pulled the rug out from under him or the exit was messy and financing card soared, it changes the

plan. there's other investors that contact me and give you the other side of the equation. they are in the same situation, maybe a different business, but the same issues. so what do they do with that money they really want to invest? they put it in stocks. the rationale i can get out of stocks. do spdors and get out of quickly. normalization good. we don't neat 8%, 5%, 75 to 100 basis points to get the market used to it. four e-mail today and always answer my e-mails. one, listen, why are you kicking the fed here? isn't it politicians? feedback loops. okay? marpio draghi nailed it saying, listen, i'm going to do this. tell you what, you've got to do reforms. a great article today, "wall street journal," about refinely in italy operating at 25% capacity. can't close it. tell you something, nothing will get the world's attention more whether in the u.s. or whether it's inedly, or europe, that if

the fed didn't allow equity prices to be as resilient as they are and you had 1,000-point drop because something wasn't accomplished, whether health care, refinery, now you have people's attention. now the voters have an issue on whether the, running the country with, stocks up the way they are, there's no feedback loops. that's a big deal. think the dax as well. i hope everybody has a great weekend. i know the president's going to be coming up and with the weekend and the reason i mention it, geopolitical issues later in the day. my guess will have an affect on the market. back to you. >> wait for that, rick. thank you very much. rick santelli said, we are awaiting the president at the nato summit in wales. when he speaks we'll bring it to you live. back in a moment. when fixed incs work with equity experts who work with regional experts

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citi has helped us expand our manufacturing facility; the company has doubled in size since 2007. if it can be done here in san francisco, it can be done anywhere in america. president obama expected to speak any moment at a nato news conference in wales. live in washington watching for developments. getting familiar with article 5 as they say. nato's responsibility to defend all of their members. that's been pointed out again and again. ukraine is not a member. they're a partner. is he likely to talk about that distinction today? >> reporter: sure, and remember, the president has tried to draw a line around those countries that are part of nato. the baltics states. estonia, latvia and lithuania. ukraine is in a different place, but i don't think the west can afford simply to let russia, and you've seen this from their

policy, to let russia with abandon simply carve up ukraine or put ukraine's territorial integrity in doubt. they've tried to respond. it hasn't been effective. and the question is, how far are they going to go? are they going to arm the ukrainian military? give them more weapons than they already have? are they concerned that they're going to incite a greater and more consequential con flect? all those questions on the table for nato, and it's a very, very difficult problem. we don't know what vladimir putin's end game is. and he doesn't know what our end game is. >> absolutely. markets in the meantime decided to call this one even in advance of his speaking. markets almost exactly flat, although the s&p lostalities more ground over the last couple of days. john, there are still people out there arguing it's the very expansion of nato over the past many years that have provoked putin into making these incursions and defend kwhing whe

sees as borders the way they should have been. >> reporter: yes. part of the debate on nato expansion while it was going on. we've seen vladimir putin, however, respond, whether it was because of what nato was doing or not doing, or simply because he had decided that it was time for russia to recoup some of what it lost at the end of the cold war under a more hawkish, on military affairs president, george w. bush. went into georgia and put parts of georgia in dispute and under, in effect, russian occupation. same is going on in ukraine right now and, again, it's a very difficult problem and what makes it so much more difficult is that the president is dealing with so much else including the threat from isis, the obliteration of the syrian/iraqi border. what do we do about that? the violence in the middle east.

although that is temporarily stopped in gaza, and not to mention, the fact that he's got a huge political problem on his plate at home in terms of midterm elections, and got a weak jobs number today, even though people generally made the argument that the economy is on a firmer footing in terms of recovery and maybe this month was an anomaly, but certainly wasn't the news the white house wanted to hear. >> you mentioned frustration over the isis situation. the comment we don't have a strategy. the vice president saying we'll drive isis to the gates of hell. is that likely to be part of his remarks at a nato summit where the topic number one is obviously russia/ukraine? >> yes. there's no avoiding it. and we've already heard from david cameron while he has been at those meetings that isis should not underestimate the resolve of the west. britain has upped its threat level. there's the belief that not only was the murderer of steven

sotloff and the other american journalist -- >> james foley. >> a british citizen potentially but scores of british citizens and perhaps americans who have been involved with isis. that is something that changes the stakes and changes the approach of the united states. >> you want to keep your eye on the markets and the ten year as well. we were close to 245 yesterday. and, of course, after the jobs number that jon mentioned. 142,000. smallest gain of the year. back to december to see a gain that small. settled back to just under 242,000. of course a day after david tepper told the media yesterday in his view, kayla, drawingsy not going to stop in his quest for inflation in the eurozone and the beginning of the end of the bond rally is upon us. we'll see. >> that had no bearing on the market. we did see the ten year yield

rise about four basis point but the back to levels it started yesterday before the comments. if it is the beginning of the end, it's definitely not starting this week. at least with the data we have this morning. >> all right. yob usually the jobs number, although weak, does fly in the face of a lot of the other economic indicators we've gotten. auto sales, ism. some employment components of those surveys and then the gdp revision which it's easy to forget only a week or two ago revised not lower, higher, despite a good sprint. here is the president of the united states. let me begin by thanking my great friend, mr. cameron and his entire team for hosting this nato summit and the making it such a success, and i want to thank the people of newport and cardiff and the people of wales for welcoming me and my delegation so warmly. it's a great honor to be the first sitting u.s. president to visit wales. we've met at a time of

transition and a time of testing. after more than a decade, nato's combat mission in afghanistan is coming to an end. russia's agres against ukraine threatens our vision of a europe that is whole, free and at peace. in the middle east, the terrorist threat from isil posing a growing danger. here at this summit, our alliance has summoned the will, resources and capabilities to meet all of these challenges. first and foremost we have reaffirmed the central mission of the alliance. article 5 enshrines our solemn dult t duty to each other. an armed attack against one shall be considered an attack against them all. this is a bindy treaty obligation. it is non-negotiable. here in wales we've left absolutely no doubt we will defend every ally. second, we agreed to be resolute in reassuring our allies in

eastern europe. increased nato air patrols over the baltics continue. training and exercises will continue. naval patrol ngs the black sea will continue. and all 28 nato nations agreed to contribute to all of these measures for as long as necessary. third -- to ensure that nato remains prepared for any contingency, we agreed a new readiness action plan. the alliance will update its defense planning. we will create a new highly ready rapid response force that can be deployed an a very short notice. we'll increase nato's presence in central and eastern europe with additional equipment, training, exercises and troop rotations. and the $1 billion initiative i announced in warsaw will be a strong and ongoing u.s. contribution to this plan.

fourth -- all 28 nato nations have pledged to increase their investments in defense and to move toward investing 2% of their kgdp in or collective security. these resources will help nato invest in critical capabilities including intelligence, surveillan surveillance, reconnaissance and missile defense. this commitment makes clear nato will not be complacent. our alliance will reverse defense spending and rise to meet the challenges we face in the 21st century. fifth -- our awe linlliance is in force e territorial right to defend itself, backing up this commitment, all 28 nato allies will now provide security assistance to ukraine. this includes non-lethal support to the ukrainian military like body armor, fuel and medical care for wounded ukrainian troops as well as assistance to

help modernize ukrainian forces including logistics and command and control. here in wales we also sent a strong message to russia that actions have consequences. today the united states and europe are finalizing measures to deepen and broaden our sanctions across russia's financial, energy and defense sectors. at the same time, we strongly support president poroshenko's effort for a peaceful resolution to the conflict in this country. the cease-fire announced today can add stlans goal, but only if there is follow-through on the ground. pro-russian separatists must keep their commitments and russia must stop-the-violations of u vain's sovereignty and territorial integrity. beyond europe, we pay tribute to all those from our mission,y clundi i cluding more than 2,200 american whose have given their lives in

afghanistan. nato's combat mission nends three moss and we are prepared to transition to a new mission focus and training, advising and assisting afghan security forces. both presidential candidates have pledged to sign the bilateral security agreement that would be the foundation of our continued cooperation. but as we all know the outcome of the recent election musting resolved. so we continue to urge the two presidential candidates to make the compromises necessary so afghans can move forward together and form a sovereign united and democratic nation. finally, we row-of-reaffirm the door to nato remains open to members that can meet our high standards. we agreed to expand the patter in sthap is the hub of global security and launch a new effort with closest partners including many who served with us in afghanistan to make sure our forces continue to operate together, and will create a new initiative to help countries

build their defense capabilities. starting with georgia, moldova, jordan and libya. i also leave here confident that nato allies and partners are prepared to join in a broad international effort to combat the threat posed by isil. already allies have joined us in iraq. where we have stopped isil's advances. we've equipped our iraqi partners and help them go on offense. nato agreed to play a role providing security and humanitarian assistance to those on the front lines. key nato allies stand ready to confront this terrorist threat through military, intelligence and law enforcement as well as diplomatic efforts, and secretary kerry will now travel to the region to continue building the broad-based coalition that will enable us to degrade and ultimately destroy isil. so taken together i think the progress we've achieved in wales makes it clear that our alliance will continue to do whatever is

necessary to ensure our collective defense and to protect our citizens. so with that, let me take a few questions. i'll start with julie pace of the associated press. >> thank you, mr. president. i wanted to go back to the situation in ukraine. if this cease-fire does take effect and appears to hold would you and european counter parts back away from sanctions prepared or is it important to levy these sanctions regardless of the cease-fire agreement? and rapid force, can you say specifically what troop numbers will be and equipment, beyond the agreement you announced, proposed in warsaw? >> with respect to the cease-fire agreement, obviously we are hopeful but based on past experience also skeptical that, in fact, the separatists will follow through and the russians will stop violating ukraine's

sovereignty and territorial integrity. so it has to be tested. and i know that europeans are discussing at this point the final shape of their sanctions measures. it's my view that if you look at president poroshenko's plan, it is going to take some time to implement. and as a consequence for us to move forward based on what is currently happening on the ground with sanctions, while acknowledging that if, in fact, the elements of plan are implemented, then those sanctions could be limfted is more than likely for us to ensure that's follow-through. that's something that obviously we'll consult closely with our european partners to determine. i do want to point out, though, that the only reason that we're seeing this cease-fire at this

moment is because of both the sanctions that have already been applied, and the threat of further sanctions, which are having a real impact on the russian economy. and have isolated russia in a way we have not seen in a very long time. the path for russia to rejoin the community of nations that respects international law is still there. and we encourage president putin to take it. but the unity and the firmness that we've seen in the transatlantic alliance in supporting ukraine and applying sanctions has been i think a testimony to how seriously people take the basic principle that big countries can't just stomp on little countries, or force them to change their policies and give up their sovereignty.

so i'm very pleased with the kind of work that's been done throughout this crisis in ukraine, and i think u.s. leadership has been critical throughout that process. with respect to the rapid response forces, and the readiness action plan that we put forward. in warsaw i announced $1 billion in our initiative. a sizable portion of that will be devoted to implementing various aspects of this, this readiness action plan. we've already increased obviously rotations of personnel in the baltic states, for example. we have the air policing. we have the activities that are taking place in the baltic, and the black sea, but this allows us to supplement it. it allows us could coordinate it andeg