now. >> good morning, everybody. welcome to "squawk box" here on cnbc. i'm becky quick along with joe kernen and andrew ross sorkin. the dow, the s&p and the nasdaq all coming off their biggest drops in a month. if you check out the futures this morning, you'll see that equities at least at this point look like they are indicated higher. dow futures up by about 46 points rights now above fair value. s&p 500 up by close to 4 points and the nasdaq up by just over 10. the bond market is grabbing a lot of attention this week. the yields on the ten heavy year treasury rising above 2.5% again finally. also, oil prices, something we've been watching closely have been a lot of pressure on oil prices in the last few weeks. this morning, up slightly 26 cents to 93.01. apple t buzz stock of the week. the stock saw nearly four times it's volume yesterday in volatile trading.

in the premarket, it's down by about 37 cents. andrew, over to you. >> thank you, becky. we're going to break down apple's big show and tell. two new iphones, the much anticipated apple watch and payment systems. u2 teams up with tim cook. on this day after, is this big reveal getting rafs or being ravished? here to give us their take, jonathan geller, founder and editor and chief of boy genius report. so if you've been living earn a rock, tell us, what -- i'll go to you, mr. boy genius first. a big take away. great, horrible, in the middle, thumbs up, thumbs down, what? >> i think it's a lot of what we expected, but i think it was three incredible announcements and two brand new areas that apple is -- >> i'm sorry, three incredible announcements being the larger

phones? >> 4.7 inch, 5.5 inch, a watch and payment. >> and of all three, which one impressed you, which didn't? >> the payments to me i think is the most important. i think it's an area that people generally haven't thought too much about disrupting and changing. so we think about what apple wants to do there and the fact that there's reports that they're going to be making money on every transaction, 10 to 15 basis points or whatever it is. >> apple has been a slumbering giant in payments for a long, long time. there are 800 million people if you have an itunes account. most of them, a little bit more than half of them, that's twice as many credit card accounts as amazon. apple has been sitting on this for a long time. suddenly there's a number of consumers who are expecting to be able to pay with their phone. now, by the way, there will be a -- >> when we come back to payments

for a second. here is the thing on the watch for me. it's beautiful, it's impressive, it seems like a technological jewel. and i see the promise of it. and i wear all this stuff. i wear my fitbit, my jawbone, all those things. i like to monitor my sleep to that's not going to do.that. and all the little things it does, i don't think it's going to change my life, at least immediately. i'm in on the 4.7 inch thing, on the 5.5. i'm buying. i mean even do payments. the watch, i don't know about. >> it was generation. remember what we thought about the iphone? when the first iphone came out -- >> was it not -- at the time, people thought that was revolutionary. >> it was truly revolutionary, but think about the things it didn't do. this is a first generation watch. think about the second generation watch.

>> is the next generation going to have something i can talk into? if i could use it as a watch or send e-mails, that's -- >> when would you have the watch without the phone, though, hypothetically? >> if you can't have a watch without the phone, i don't think it's beautiful. it's big and clunky. i'd much rather have the watch ta you're wearing right now. >> right now, it's about extending your phone so you don't have to check it so many times. you can do things effortlessly from your wrist. i don't think that they're positioning as a phone replacement because there's so many things you can't do on a watch. >> it doesn't have the chips to send a text. >> is that just the -- so you can do it in a meeting without getting caught or do it at

dinner without getting caught? why not use your phone if it's there? >> i think there's things your watching enables you to do that your watch doesn't. there's short bursts of messaging, the heart rate monitoring and sending of friends is interesting. >> that's really important, yeah. >> and it's an extension of things. >> monitor your heart rate and send it to people. friends are just begging me, please, send me your heart rate. what good is that? >> when you're going with wearables and people wanting to monitor all their levels of fitness or their activities or stats or elevations or climbs or runs or heart rate, it's not, you're collecting all this information in one central location. i think it's important. >> and you're going to have all this -- >> well, there's going to be a lot of people in really good shape, them. obviously what stheer monitoring is not exercising. >> but we're not in good shape. >> oh, i see i haven't exercised again today. >> joe, i will tell you, they say people who wear the jawbone exercise 20% more than they --

>> is it because you're sharing and you feel competitive? >> look, i have mine set up so that every 50 minutes i'm sitting it knows, it will vibrate and i occasionally say, okay, i should get up and walk around a little bit. >> so it vibrates like three times during the show? >> it does. >> you just like carrying that around in your pocket. >> thank you very much. >> i think the ipay is interesting. >> but here is the question on that. why do we work that their integration of that is going to somehow work better than -- i mean, this is available on a -- if you have a google android phone, you can do it. >> the problem is, it's so fragmented on google. it's only a couple phones. it's only one or two carriers. apple is going this with partners, they're going 234 with am ex, mastercard, visa, bank of america. >> do you understand the technology and the privacy issues?

that was one of the things that came out in that presentation. and the idea that somehow when you pay the merchant never sees your credit card number. >> it's a one-time use number that is actually -- that's what the cashier will see. we have a lot of questions about that yet, about how that all is going to work. also, you know, the business structure, how is that going to work? >> i do like the whole idea of it, though. the amazon with one quick shopping, i use it more frequently. if i could have it on my phone and be able to pass through, i would use that. >> and the second part of it is not just as merchants physically, but in line where this is stored now on the phone and you can use a fingerprint for online shopping. so you don't even in billing address and shipping and -- >> to me, that is life changing to some degree. >> when it comes to the battery, this massive phone, i kind of want to buy this large phone because it looks like i could

use it all day. >> i like the current size quite a bit. >> but i'm a little worried it's too big. >> that's the thing. we've had a long internal debate, kim lee is a really big fan of the larger screen. so we -- >> you look like a dope putting that -- it doesn't look like a cell phone. >> but no, the battery life, you're going to get a lot of work done with that thing. whether you're into the screen size or not. >> and the landscape mode where it's ipad like where you have a sidebar and you're able to go-between things. it does offer you a lot more productivity on the device. >> and joe, for you -- i think you're a very rison man, right? >> on my phone? >> on your phone. >> that's a company issue. i would unequivocally be an at&t person if -- >> let me tell you, if you have a verizon phone, you historically have not been able

to go on the internet while ooefb on the telephone at the same time. you had to talk or do the internet. now, finally, why have they taken so long to figure that out? >> voice over lte. basically, they're able to take your voice and transmit it as data as if it were internet data. that's essentially how i understand it. verizon's network which is for voice is so old that it doesn't spaert anything else. so when you make a call on at&t, it drops the 4g. so it's a vierzon network problem. >> i i was joking. doesn't cnbc have verizon? >> i have one of each. >> i'm not even -- you know, that's one of the good things. i don't see the bills for my cell phone. >> it is a good thing. finally, you said something to me that was interesting before we start. you said you would short the watch market? you said the fancy watch market. you wear some fancy watches? >> i love watches. i've always loved watches. when you look at it, if they

don't do something, where they're able to compete on this level, then it's just a collector's item. it's something that i don't think there's going to be -- >> collectors items for a long time because everything tells time. you haven't needed a watch for a long time. >> right. but now if you want something totally different where, as you said, you're able to send your heartbeat to your friends, then you're going to need something different. >> right. but right now if you look at the new generation of people, 10 to 25, no one wears a watch. >> our kids aren't allowed to bring their phones to cool. if they bring them to school, they have to leave them in their backpacks. with the watch, will these be banned from schools? >> tim cook announces this watch, the watch is not available just yet. >> will somebody else be able to

catch up within the next year and out do whatever they have just done? everybody has been trying to do this. >> samsung will probably have four more by then. >> but the cell phone has been relatively pitiful. >> you know, i like android wear. mobile has made some lgs, made some samsung. it works really well with android and it does extend your phone into places where you'd want. apple's approach is different. i think it's better and more refined. but i do like android wear as a whole. i just don't think it's ready at this point. >> are you guys going do be -- >> when we see you, are you going to wear watches and carrying these big -- >> i like wearing a watch. i'm old school. i want to try one, though. >> are people going to still buy

rolex watches? >> i think they will. >> yes. >> thank you for joining us this morning, jonathan and eric. >> microsoft is reportedly nearing a deal to buy the swedish maker of minecraft, the video game. >> oh, wow. >> price tag about $2 billion. the alalibaba, the road show is supposedly going pretty well. the e-commerce giant has received enough orders for its record breaking ipo to cover the entire deal. alibaba would raise more than $21 billion if it prices at the high end of expectations. >> dollar general is going hostile in its bid to buy family dollar. they have a deal to sell itself to dollar tree.

take a look at where those shares are right now. up next, on the eve of the 13th anniversary of september 11th, do we need a different word than anniversary? it's the best we have to talk about it. nothing to celebrate. president obama is going to make a prime time address to lay out his strategy for fighting isis and terror in the middle east. what can we expect to hear? that after the break. here. or here. or here. it's wherever this is. to get customers to come here and stay here, you're going to need an app that connects to all your systems. so they can bank, shop, do what they need to do, and you gotta do it fast. 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.

tomorrow is the 13th anniversary of september 11th. tonight, president obama is going the make a prime time address to the nation to lay out his plan at a combat the terror group isis. he will do this as pressure mounts from congress to explain a strategy that it believes is long overdue. cnbc's chief washington correspondent john harwood joins us with the details, plus the results of the latest nbc "wall street journal" poll. funny how things happen, john, that the speech is september 10th and it's total ly -- is serendipitous the right word? it's not a good thing. i don't know what you'd call it, strange coincidence. john, absolutely staggering numbers.

34% of the country is willing to put boots on the ground. i figure that's tripled in the last three months. >> no question about it, joe. the video of the two american journalists, it's changed public opinion. and our poll shows it. you see the president, having been driven down in the estimation of his handling of foreign policy to 32%, you can't get much lower than that. and then when you ask people, compared to september 111th, are we more safe or less safe? we've now seen a huge spike up to 47%, a large plurality in the number of people saying we are less safe. you also get, when you ask the american people, should we strike militarily in iraq and syria? 61% of the people say yes, it's in our national interest to do

that. 34% is a pretty healthy number, also saying boots on the ground, something the president has ruled out. so i think what we're going to hear from him tonight is a strategy designed to be aggressive without committing to boots on the ground, but making sure there are some. that's the moderate sunnis and they're going to try to work with both moderates within iraq and our allies, sunni allies in the region to try to make sure there is a robust force on the ground to go after them. and nobody knows how long it's going to take and this is going to be a defining mark of the latter two years of his presidency that he never, ever planned on. >> john, policymakers by definition are always trying to balance satisfying public opinion, doing what the country wants and doing what they think

is right. and for about five years now, it's been an easy call to not engage because of a war-weary country. and sometimes that comes back to haunt you and all along maybe it would have been better to not pay as much attention to what we want. it's gotten to the point where "the wall street journal" said dick cheney -- dick cheney on the left is just below david coke in terms of being vilified. i just wonder if there's something to that. the journal article points out that the president came in, wanted to reset the view of american hogimity or whatever it is that you wanted to call it and the reaction of the muslim world to america, wanted to reset that, and now we're seeing the results of that reset.

>> history is going to ask a couple of questions about president obama. one is did that contribute to the development of a force that was a substantial threat to the united states, is that why it happened, as opposed to broader historical forces in the region? we can't answer that question right now. but in any case, the president and the american people feel a sufficient threat to take this to a different level and this is something that republicans and democrats agree on, although i'm not sure you're going to see a congressional vote to authorize force because ewe got a lot of members -- you've got some members saying, yeah, let's vote, the president needs our authority and others saying, whoa, wait a minute, i don't want to go on record on that right now. you've got some republicans in the stay at home camp who are not eager to do that. if you did have a vote to authorization. so i think congress is in a mode

of wanting the hear the president, wanting the president to reassure their own constituents that this is a good thing and then allowing it to happen without having to say yea or nay. >> the last time it was kind of a -- the first time we were trying to decide on syria, it was a hot potato. the president was like, what about you guys? and the conch was like, no, no, you go ahead. i think it's ironic that we're now trying to figure out ways of helping the rebels in syria that aren't isis. i can't help but think that assad is -- you know, he's just got us right where he wants us at this point. john, real quickly, it wasn't your poll, but what do uveng when 42% think his presidency has been a success and 53% think his entire presidency has been a failure? 53%. it makes me think all of the job owning about being republican fault and can baing them,

constantly painting them into a corner where it looks like they're saying no to everything, you know, it still comes down to where the buck stops. if you don't exert the leadership and work with whatever the country gives us with congress, this is the presidency that you end up having. does anyone in the white house -- does anyone say that or are they all yes men at this point? >> well, everybody in the white house is a very strong supporter of president obama, so they're not inclined to -- >> you know, you need people that are willing to say, you know, mr. president -- >> sure you do. >> i don't think he has any of those. >> you know, i'm not sure about that. certainly you have -- you know, it's a group of people around the president and they're inclined to affirm him. is there somebody, dennis mcdonough, susan rice or any of the people inside, chuck hagel, his defense secretary, john kerry, are any of them telling him at certain moments, no, you're going down the wrong path? i don't know enough to say that.

hillary clinton certainly has come out and said i wanted him to arm those moderate syrian rebels that he has said, the president has said it's a fantasy to think they were going the make a big difference. but this is a tough time for a second term president when the accumulated incoming that you take from events at home and a broad really take a toll on your standing. the excitement of the beginning of your president is gone. and i think the president is going to take a long view in terms of how he would react to that number and say the real judgment on my presidency is going to be does this venture that i'm outlining tonight, does that make a difference? does the health care make a difference? did the economic recovery make a difference? >> health care is part of the problem at this point. >> but joe, that's in public opinion. again, you were talking about the balance that leaders have to strike between -- >> i know. >> what the -- >> you've always been of that

mind that you pun didn't know what was good for them and they'll come around to this. it's been about four years and they haven't -- >> it's been a year since it launched. >> not exactly. i hear what you're saying and there are grains of truth to what you're saying, but it's not exactly -- >> i never say things that are exactly true, john. and the one other thing i was talking about, i'm wondering what happens between now and november. rossenberg or whatever, it didn't write it, but at least seven seats tore republicans and it could be a wave. it could get worse. in the past, before these elections, things have happened that have turned things at the last minute in his favor. i'm just wondering what is going to happen this time. there is a lucky horse shooufr shoe somewhere. >> here is the potential opportunity for him. on a conference call yesterday, they were making this point. as low as the president has fallen, there is an opportunity here for him with this prime

time address with how he conducts his campaign over the next couple of months to change some of the opinions at least among core supporters who have shrunk away from him, maybe among some in the middle. a president this deep into his term rarely gets an opportunity to change his image and at least in the short-term if there is some decisive action and people all of a sudden look and say, oh, hey, he's doing the right thing, he's getting strong, he's leading, that could have a positive effect on him and maybe a positive effect on people in his base. >> that may be a little disillusions aren't the one that's want him to be more aggressive in terms of being a war president. he's not going to win over -- the people a that want him to be more aggressive, he's never going to win them over. he's, again, between the rock and a hard place. >> yeah, but there's some gray in there, too. >> you're maybe right. >> joe, i need to say one thing. we've gone the entire time

without mentioning, we asked americans what should congress do about companies going overseas to reduce their corporate tax bill, 59% of the people say they want congress to punish those companies. when you ask what's going to happen between now and november, congress is not going to punish those companies. they're not doing corporate tax reform. but this is one executive action i would not expect the president to defer to until after the election. i think he and treasury are going to announce some rules to take away some of the benefits and that will be popular, even amid the -- >> here is where i'll agree with you on the public not knowing what the hell they should think, john. >> i'm not surprised. >> you see the president couldn't get into the golf clubs. >> anyway, john, a reminder, cnbc will have a prime time special carrying the speech live at 9:00 p.m. eastern. ahead, investors with fears that the fed could raise rates sooner than expected.

plus, two giants in real estate teaming up to the market. also, as we head to a break right you no, take a look at yesterday's winners and his lookers.

good morning. welcome back to "squawk box" here on cnbc. i'm joe kernen along with andrew ross sorkin and becky quick. a fru fiasco, thousands of oranges covered a roadway after a truck's trailer overturned. wow. no one was hurt in that accident. look at how orange those oranges are. hence, the name. >> and it's orange juice fresh right there. >> always wondered. >> why they call them that? >> yeah. making headlines, lawmakers in nevada are going to -- >> nevada. >> nevada convene a special session today to consider a package of tax breaks for tesla. the dollar valued, estimated up to 1.3 billion, last week tesla announced its chosen nevada as the site of its new ion lithium battery factory closer to all of the brothels. a lot of factors went into that

decision, but -- >> always bringing it back to the brothels. bill ackman is speaking out today criticizing allergan's board, he's calling on investors to wake up and listen to what he says the are potential of pharmaceuticals offer and what they're trying to do that. in there a letter, ackman writes your actions have delayed enormous potential value creation for shareholders and are professionally and personally embarrassing for you. in its response, allergan is reiterating its criticism of valiant's offers. we are a week away from the next fed meeting and there are rumblings that the rate hike could come sooner than expected. joining us right now to help make sense of the signals from yellen and company is david bianco. he is deutsche bank's chief equity strategist.

bill lee and, gentlemen, welcome to both of you. >> thank you. >> david, first of all, what happened yesterday? this was the biggest drop in over a month for the dow, the s&p and the nasdaq. >> we've seen long treasury yields move up just a little bit. there's tension in the equity markets over what's going to happen to interest rates. >> we're talking about finally pushing to above 3.5%. >> precisely. the big news of 20 sh is how low interest rates are with the confirmation of the ability for long-term yields to stay low. still, there's unresolved business about when is the fed going to start talking about or onlying the stronger data or changing way it guides markets. so in the next week, we could have some change about a considerable period until they hike rates. i think they will be hiking rates around the second quarter of next year. and i would argue that's an important thing to happen. in order for long-term yields to stay rel atively low, we make te

fed to hike rates, but probably not hike rates any further than 3%. i think a 2% to 3% fed funds rate achieved maybe late 2016 and then a flatenning, that would be ideal for the market. >> that has been the fed message for a long time. but why should we think that the fed is not going to do what it's been saying all along? >> actually, you should believe what they've been telling you. they shifted janet yellen from we need lower for longer to a race increase where it will be completely data dependent. that gives them the flexible to move. >> so you think the hawks have set this up in such a way

that -- >> it's a brilliant campaign. the concern has been that we've distorted the markets, leading not only to possibly inflation, but i don't think there is much inflation out there, but there is the risk of financial stability. and that is one argument. that is a mistake to take it off the table. you can't have price stability and full employment without financial stability. >> sure. we've thought for a long time that the economy was poefd supposed to be strong enough to take over. will it be by next year? >> we think. if the trend continues and we stay on the fed forecast, we should have exactly what the markets are anticipating, which is a list out sometime the middle of next year. >> look at what happened with

the weather. that's a lesson to be learned about how difficult it is to find out where you are. and the fed has to be certain before it moves. >> when is it going to be that we finally look at good news as good news? >> i think the reality is that when it comes to good news being good news, that's what we focus on earnings. and i think the news is good enough to be comfortable in the idea that we have about 6% earnings growth for another several years. >> you sound like you think stocks are getting expensive, though. >> well, stocks are expensive. i think the pe of the stock market standing on the shoulders of these low, long-term bond yields. and that's why we're watching all the issues out there that will influence long-term bond yields over the next several

years. and it's not just the fed in u.s. and global rate markets. it's other global issues, asia, asia savings and what's going on in europe is important to long-term interest rates. >> where should we be right now? >> the idea here is that the new normal real risk free rate long termg is 1.5%. we're embracing the idea that we'll see lower long-term rates in history. >> where is the profits growth coming from? the profit share right now is historically high. and the distribution of income is so skewed that we have to

wonder, are we going to have adequate aggregate going forward? >> what happens when you see europe under pressure? >> global growth is slow except outside of the uk and the u.s. right now because of the political impasse we have in europe, it's not clear that we're going to have fiscal policy online to support things. everything is in the hands of monetary policy which in some ways is asking a lot out of one instrument. >> the real question is, what do you believe that they say? they are going to qe and how much? and do you really believe that the transmission channels of qe will be effective in sustaining

growth? if anything, they've been delays and you know with of the concerns that we have is whether or not monetary can buy them enough time. >> bill, david, thank you both for coming in today. >> thank you. >> thank you. when we return, a transatlantic real estate deal. plus, reaction coming in on apple's newest products. even celebrities are getting into t game. check out this tweet from jason baitman, is there a better day in the year than an apple announcement? we're back in just a moment.

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welcome back. it's time for the squawk planner. the biggest names in media and telecom are expected to attend communacopia. and president obama will be drifrg a prime time speech coming at 9:00 p.m. eastern time. that is today's squawk planner. a high end real estate deal is in the works and robert frank is all over it. what's happening? >> this could change the way the richest people buy real estate. 20,000 brokers in 52 countries to tell you about with the executives coming up. >> i'm trying to figure out who those are right now. when we come back, we'll try and figure out where a parking spot costs more than the actual apartment. ill you outlive your money?

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welcome back to "squawk box." it's no treated things are expensive in new york. but $1 million for a parking spot. anyone who is watching, you can pay a million bubcks for them.

a spot for your car will cost more than the apartment being sold upstairs. the two luxury real estate brokers making a transatlantic connection, and robert frank has the details this morning. >> good morning. the two biggest names in luxury real estate getting together forming a global alliance to create the largest network for homes priced at $2 million or more. so the parking spot may not make it in there. they'll have 400 office necessary 52 countries, 20,000 agents and $38 billion worth of property for sale. and they're creating a new team of super prime brokers to focus on the top 10% of real estate market and the wealthiest buyers. now, the company is releasing new data today, showing that london and new york are becoming the twin citys of the global rich, ranking number one and two among multi millionaires around the world. prices in new york up 8% year over year and 8% in london. here is what $1 million gets you in new york.

430 square feet. in london, 258 square feet. joining us now, howard lorberg and lord andrew hay of the global head of residential. guys, thanks for joining us. why this deal? tell us exactly what it is. it's not a merger, you're calling ate global alliance. what's the rationale? >> the rationale is the world is global today. what we see is our buyers and sellers want to have international exposure. the sellers want to know where we're going to bring in a client that isn't here already, a new client to the market that's going to pay them the price that they want to sell for. obviously, that changes, you know, as the markets change. but, you know, russian, chinese and so forth and also our clients are now looking overseas and are buying overseas. >> it's interesting, andrew, the wealthy shop globally when they look at real estate. they don't go to new york and say i want to buy a place

downtown. yet the real estate business has not caught up to that. is that part of this? >> that's exactly what's happening now. and we dealt with over a thousand billionaires last year and they all were considering new york and in class brokerage in new york, and we found it. >> now, a lot of people talk about an asset bubble at the high end of the real estate market. you know, a million dollars for a parking shot is the latest sign of a bubble. do you worry about that? >> well, we worry about everything, but the fact is that it's very particular in real estate. when you look at the last bubble, there was buildings every place, and the bubble was a financial meltdown more than a real estate melt down, so, today, look at united states. there's a few key cities reaching new highs -- new york, miami, l.a. the rest of the country and locally in the suburbs where we are in new jersey in westchester, the markets have not rebounded. >> what percentage of the high end real estate you're selling

is sold as an investment or sold for people to live in? >> well, in new york -- in new york, some of the international buyers it's investment, but a small amount. >> in london, this year, 55% to live in, 45% investment. >> that's a humge amount. not renting either? >> oh, yes, a lot are, absolutely, yes. >> okay. you talk -- this is a global market. where is the money right now, and, you know, russians were big buyer, especially the status properties in london and new york. has that stopped right now? >> it's fascinating. we dealt with that from 77 countries last year, and the fundamentals are so volatile at the moment. if you take russia, 300 brokers in moscow, and six weeks ago, i said the market stopped. today, in the last ten days, we have done eight significant transactions with buyers from moscow. it is a moving picture. week on week.

>> russians right now are back in the market in london. >> yes, very much. >> in new york, where the money coming from? >> the russians are not in the market in new york for the last number of months, obviously, and we see the chinese and middle east countries most of the buying. >> what about latin america in florida. you're big in florida. that's being so important to miami. is money from brazil coming? argentina? >> it's shifted. argentina, i don't think there's money there to come out. they are not buying much, but we see, for instance, colombia, a lot of buyers from colombia. south american is strong in miami and south florida. >> what do rich people want right now? they like unique properties, features, functionality. any particular things global rich want in real estate? >> best in class, transparency in the legal system, and best research and service. >> they look at finishes,

really, the quality of the product and the views. the barn buys buying high end today buy around the park, central park. >> got it, guys, thank you very much. >> our pleasure. >> straight ahead on "squawk box," apple shares all over in the big reveal. actually ended lower on the day. where does the stock go from here? a pair of top analysts tell us after the break. plus, richard branson stops by. he wants our politicians to step up and lead. i think piers morgan, brits like to tell us whatted to do. they tried it one time, and it did not work too well. "squawk box" will be right back. we needed 30 new hires for our call center.

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at a special site for tv viewers; big day? ah, the usual. moved some new cars. hauled a bunch of steel. kept the supermarket shelves stocked. made sure everyone got their latest gadgets. what's up for the next shift? ah, nothing much. just keeping the lights on. (laugh) nice. doing the big things that move an economy. see you tomorrow, mac. see you tomorrow, sam. just another day at norfolk southern.

apple making a plus-sized splash. bigger iphones, new mobile pay service, and? >> we have one more thing. >> that one more thing is the apple watch. did apple just change the world again? is the fed ready to make policy changes? today's guest host, stanford professor of economics, john taylor, the taylor rule, what his interest rate rule says about the current strength of the economy. >> how much will the prime time address affect equities and prices of oil? the second a hour of "squawk box" begins right now. ♪

good morning, every. welcome back to "squawk box" on cnbc. coming up, who doesn't want to be this guy? check this out. he's got his open airline, his own island, east going to outer space. now richard branson has another book coming out, and while he's doing that, he's setting world records in kite boarding, joining us at 7:40 a.m. europe time. >> he has all the fun. >> he's done that, by the way, with -- an image with a model, completely -- >> no clothe. >> i don't know where i'm going with that. this one, he's wearing clothes. >> that's why we can show it. >> yes. you're allowed to say she's not wearing clothes. you can say "no clothes" on the air, especially on cable. >> right. >> you get uncomfortable.

>> the buzz story of the morning? apple's big product announcement, two new iphones, a mobile system, and, of course, the much anticipated apple watch. i love tim, doesn't send me christmas cards, but i don't think the watch counts as one more thing because we waited for it. i need a thing we were not waiting for, but check out the tweets from katie perry, weakin up to hear the news that the iphone6 has 120 gigabytes has me saying, omg, like, the tweet links to a picture of a girl looking in love. i don't get that one, but apparently katie knows more about this than i do. will tweets, sorry for the blank look on my face, just dreaming about the new iphone. well-known brands jumping on. here's a creative tweet from

oroe, just like a twist, it's not wrist. all righty then. investors on edge. we go through the stock move in the big announcement. i would say that we still don't know how it's all going to play out. we'll see. a lot of ups and downs yesterday. i don't know what we do today or the next week. we'll see. >> well, to your point, joe, fist of ul, people went into the announcement thinking apple stock was due for a pull back. near record highs days back, and now a product launch, and a lot of launches tend to underrealm investors at times. look at chart intraday yesterday. we were positive. we started positive m things were going well from the opening bell all the way until just when the announcement started, right? positive territory still, and then the iphone6 was announced, and then a move down to session lows. it was negative at that point here. but we started to get momentum

back as we started to hear more about the phone. them you wratratchet up to no c and then they said "apple pay." this is where it's optimistic. we went back up towards -- towards those record highs we saw. apple up three and a half, almost 4% at one point on the day. and we thought, oh, my goodness gracious, this is bucking the trend, we could see real stuff happening here. session highs. then, the apple iwatch was announced. that represented the peak of the day, high of the day so far, and drifted down towards session lows, and, of course, we closed in negative territory. it fell into the same muted response by certain investors. where it goes from here is another issue. journtd sco underscore this, it's not bullish or bear ir. this is a stock since april of

last year is $55, submit adjusted. today, it's about $100 a share, almost doubled in value, set record highs. as much as people want to be bullish or bearish, take a view here. there's cases that are compelling. may not be the watch that's going to do things in the future for the guys, but, still, apple shares, cannot underscore what they've. since april of last year. back to you. >> thank you. big question, what will the impact be of the new iwatch, apple pay, and the new phones on the bottom line, and where is the street actually think the stock will be a year from now? joining us a the analyst will power, and brian blare, and he was at the event and talked to us yesterday morning before the big reveal. i had start with you, brian. were you satisfied with the big reveal? went home after and redid your models, anything change? >> you know what changes? everybody has to raise their

numbers for calendar 2015 because of revenue streams. primary one is the watch, obviously, and what beam do now is estimating that not just the asp, average selling price for the watch, but how much volume can they do in the calendar year? estimates all over today. some guys in the 15 million unit range. some guys are 50. if you apply it an average selling price of $450 to that, you know, this becomes a very large business, you know, a 20, 30 billion-dollar business nooegs year. could be ten billion. everyone raises numbers for next year. >> to clarify, you think the watch is where the money is? not in apple pay? i know a lot of analysts were commenting that apple pay may be the future of the country. >> near term, it's the watch. we'll see big volume right away, a high asp. overtime, it likely -- >> asp being?

>> the average selling price of the device, you know, the fact that the entry level, and tha--s >> sis there a margin with all that technology in there? >> i do. i think it's a smaller margin. where they get margin is in the steel version. we don't know how much it's going to cost. there's a gold version. there's an accessory line with a lot of margin. the payment opportunity is significant overtime, but they start with 200,000 payment locations that accept this, and it's going to take time to bill out that ecosystem. i think that's a bigger play longer term, but not in 2015. >> i want to did back to watches in a second, but the payment issue for a seg. what i don't understand about payment thing, which i think i would use, is why the credit card companies and banks want to be in business with apple because apple looks like they want to put those people out of business. >> you know what? way to look at it, apple is

making the transaction secure. look at the headlines over the three or four months, every week, i read about security braeshs a breaches and hacks. if consumers make a purchase using the device, authenticate it's them making the purchase at the point of sale, they'll want the solution. the credit card companies stand to benefit. if they do away with 30% of fraud in this situation, the credit card companies benefit. it's mutually a positive thing for both sides. >> what risk did you throw in the mix? i think to myself, if there is a problem, and let's hope there's not, but if there is a problem, we will all hot apple responsible for this. >> that'll come up. one of the things they've done, announcing this last year is they are not taking your fingerprint information and storing it in the cloud. it is stored locally on your device. they've done away with that concern, i think, by not, you know, sharing that very personal

piece of identity, you know, broadly, but, you know, if they can just let people understand, or let people understand that nobody can steal your kred card again because of that fingerpri fingerprint, you know, identity required, a lot of people are going to be -- are going to want to use this, and it's popular. >> let's go back to the rip with the banks and the credit card companies. we've seen what apple did successfully to the music industry. >> right. >> in this case, reports suggest the way the deals are structured, they will take a piece of every single transaction. >> sure. >> that's a piece all the banks won't have anymore. >> exactly right. if they can make the transaction more secure, if they do away with large percentage of fraud, don't they serve a piece of the transaction? you're right. >> not saying they don't deserve it, but surprised those in the industry will partake and what do they think five years from now when we really don't carry the credit cards at all?

>> no other way exists currently to make a transaction secure. there's no other way. a signature does not do it. that's all we have right now. we have a signature. anyone can walk into a store with a credit card. >> what is apple pay worth long term? >> could be a $50 billion business in the five years. comes down to how much it grows globally. starting in the united states, covering 5% of total points of sale in the u.s., but i think by the end of next year, you know, they could have 40 % depending on relationships. mcdonalds said they'll do it at drive-thrus. >> your sense, long term, apple pay displaces credit cards, meaning you won't use american express as -- >> no. >> as the credit in between that apple actually -- actually the apple store, if you will becomes that or no? >> no, you're 12 still using credit cards -- >> no, i know. >> people just won't carry a

physical card. that card is stored digitally on your device, and i think that is what apple's introducing, that's the future, don't worry about where the kartcards are, but yo phone is your card. there's an american express card, but it's digital on your phone opposed to a physical, you know, piece of plastic in the pocket. >> brian, back to watches. joe, i don't want to put words in your mouth, but you think this watch is a gimmick? >> i don't want it. >> i rescued myself. took me five years to get a cell phone. >> not the best guy to ask if it took five years to get a phone. >> i can see myself owning a watch in two or three years from now. i have a fitbit, a scale, into the stuff, and yet i'm still not sure i want to wear the watch, at least as it's been developed. >> i'll do it when it's a phone itself. >> there's some of that.

bottom line is this is a platform. developers from aaround the word develop applications for this in the next few weeks. as that occurs, the directions will be as infinite as the iphone and ipad. it's not what they introduced today or yesterday, but where developers take it over the years. we not the features now, but what's possible is, you know, is very wide. >> does it have a camera on it? >> a green plastic band? gauarantee i'm not wearing it. >> no camera, no. >> leather? >> you can get a leather version. >> do they have a camera? >> no camera, but a view finder. >> what's that? >> am i right? my understanding was that -- you could use your phone -- i mean, your watch as a view finder for the phone. >> what? >> so -- >> am i right. >> they didn't show the feature,

and it stands to reason to see that on the apple watch, but they -- >> why? there's a view finder on the phone. >> the idea is if you have your phone in the other room, look at the watch and see what your phone can see. >> that's creepy. >> spying on people? that's creepy. >> i can think of ways andrew would use this. >> yes. that's creepy, but also practical, i might use that. >> did you see "splash" -- >> i did oh, baby monitor. >> no, i know what he's thinking. >> drops the chain. >> oh, yes. >> 50,000 -- >> looks down, he'll have his own website. >> what is the announcements yesterday say about steve jobs' era and tim cook era. the moment at which tim cooke said one more thing, using steve jobs' line, but that it really signalled a major shift at the

company. do you buy that? >> i do. the best evidence of it was that entire room was filled with people from around the world with incredibly high expectations for what this wearable would be and what it would do. showing the video for it, the room erupted in applause and a standing ovation in reaction to the product. the focus was on the designer rt product. that said that that community who represents industry, music, tech, and a variety of other industries a, investors, said this is it. this is a meaningful new platform. this is something that looks worthy of the history of the mac, the ipod, ipad, and iphone. that's what it felt like yesterday. the sales over the next three years tell us whether that's right or not, but it was a meaningful handoff. this feels like a continuation of what apple is nope for over 30 years. >> thank you for helping us this morning and yesterday over the past couple days. >> you bet. >> i don't understand what the

big announcement means. talk to you soon. >> let's check out other news. microsoft about to buy mojang, maker of the popular mine craft game. it could be announced this week. also, dollar general has gone hostile in the bid to buy family dollar. announced they are taking its 8 $80 a share directly -- that offer directly to shareholders. family dollar is proceeding with its plans to be bought with another rival, dollar tree. we'll see what happens today. >> much more on apple, on apple pay, and, also, a way to steal business from the credit cards? how secure is your money when you're paying by phone or watch? first, though, is the fed mixing things up next week's meeting? the stanford economics professor, john taylor, gives us a central bank study next on "squawk box."

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welcome back, everybody. futures, worst day of stocks after a month, there's bounce back, dow up 40 points, and s&p up by three and a half points above fair value. if the dow is down today, it would be its third straight loss, the longest skid since the four-day drop that ened august 1. the ten-year note, yield, the story we are watching, above

2.5%, and yesterday's sale saw the highest yields in over three years. >> it's more likely the fed makes an important change to the policy statement p as soon as its meeting next week. mean there's more volatility on the horizon? let's bring in our guest host, john taylor, professor of economics at stanford university and senior fellow at the hoover institute, which by definition, john, think of hoover as an institution that maybe takes a conservative slant on government activism whether it's congress, the president, or -- >> a free market, free society idea. looking for policies that focus on economic freedom. that's the basiced idea, scores within stanford university, the hoover institution's a part of stanford, a big place with different view points. >> how does -- the feds we talk

about, the fomc, how do they fit into the philosophy of the hoover institute? >> by the way, there's no philosophy. hoover institution is a lot of people. >> a lot of people. >> just in general, there is a sense in which independent agency of governments should have limited purposes, given purposes by the congress, by the law, and when they do a lot of things, interventions in areas where they were not thought to go in the past, that makes people interested in limited governments. >> the more activists you are, the more potential for maybe helping, but also the potential for not doing it on purpose, but building locations or asset bubbles, whatever? >> we know the idea of discretionary policy works, but it frequently does not, the unintended consequences, and there's a a place where that's not more true an monetary

policies. the 70s were difficult, and in the last few years, we have the same problem. >> big numbers we are working with here. if they do something wrong, i mean, it's a baby with a hammer. they have very big guns to use, and if you're not prudent, we could really have a problem or not. >> i think there's examples where it's not used well. i mentioned the '70s, but people agree the rates are low in 2003, 2004, 2005 going into the crisis was the reason for the risk and downturn. there's a lot of examples. way we know is there's a good period like in the 1980s and 1990s, more rule-like, sticking to their limited purpose and worked well. >> you can argue unless congress changes the mandate of what they do, they are doing what they are supposed to do with inflation below argument and with unemployment above target, they are doing what they should be, right? >> using strategies that are new

and unprecedented. what the congress would like to do, at least people in congress, would be to say, what's the strate strategy? describe it to us. if you change it, that's fine. >> don't you think we hear too much? i hear z-- seems like -- >> you are making a good business trying to figure out what they'll do. i think it's a lot of speculation about what they are doing. i think if you look back at the good periods, 1980s and 1990s, you didn't have quantitative easing, forward guidance was not there, not as confusconfusing, was a period where it was more predictable. there was a sense of whatted t fed was doing. >> some say the fed should take a victory lap. it's not caught up, the bad things have not come true. when do you say, okay, maybe what knave dothey've done was o.

a stop clock on that? >> no bigger than of the fed than me in the 80s and 1990s until this peer. i think it's not. bad. we had a terrible downturn, a very disappointing recovery, no matter how you measure it. the fed tried to do these thicks, intentions are good, did not work, and i i think the strategy before was better. it's disappointing. you can say things would have. worse or could have been worse. that's the line. >> where could we be? >> a better economy, growth like in the 80s which was for several years at 4% to 6% growth. that's the great disappointment. we have not had that, andrew. >> what about borrowing cheaply is a negative for businesses recovering after the financial crisis? most people think that's what you need to do and should help.

how is it a negative? >> after awhile, the zero rate does not help. >> how does it hurt? >> in the way of price sis co r discovery. when you have one player dominating the markets, whether it's the overnight market or long term or mortgage market, it's in the way of how it works. >> you understand how people -- >> of course, i can. >> they say, okay, not helping is different than hurting. it's different for anyone to connect the dots between free money to corporations to use, wa whatever, all liquidity, that the cause of 2% -- below par growth, does not make sense. >> there's so much uncertainty about -- take undoing quantitative easing, what happened last year? the talk of the taper tantrum. see the markets at that point. they had a better strategy so that's been -- it's been better, no question. you can want say it was a positive. >> others say companies have

used it to borrow money, at zero, buy back stocks to boost earnings, compensation, and not invest long term for the future, and that's a wash. that's why we have a recovery. the balance sheet recovery. >> i think it's not just monetary policy. i think it's other kinds of policy. >> government activism. i'm just playing devil's advocate. >> they go together, actually. they do go together. the policy on the fed affects policy elsewhere. >> the fiscal policy enables the fed to go crazy, which is what they've done. they have the excuse. we have more. >> good. >> more in the hour. >> also, when we come back, nfl commissioner's first comments since the now infamous ray rice video comes to light. the league never saw the video, but did he do enough to get the video? we'll have that video when

"squawk box" comes back. this is a burrito made with 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. big day? ah, the usual. moved some new cars. hauled a bunch of steel. kept the supermarket shelves stocked. made sure everyone got their latest gadgets. what's up for the next shift? ah, nothing much. just keeping the lights on. (laugh) nice. doing the big things that move an economy. see you tomorrow, mac. see you tomorrow, sam. just another day at norfolk southern. whenwork with equity experts who work with regional experts who work with portfolio management experts

that's when expertise happens. mfs. because there is no expertise without collaboration. another twist in the ray rice drama. for the first time since assaulting his fiance. he responded to questions about

what the league knew and when. >> we had not see videotape of the elevator. >> they went through the proper channels to get the tape, but admits the nfl was not harsh enough in the initial punishment. he's been suspended. the owner of the ravens said the team did not do all it should have in the investigation. >> reminds me of -- i don't believe it was off the road, but when it was clear that maybe i didn't know about bridgegate, they shift, okay, we don't have you unknowing about it so we'll have you on creating an environment where it could happen because you're a bully. this was the same thing. he says, no, i didn't see it. >> he should have seen it. >> didn't try hard enough. we asked, no, well, we didn't ask again, didn't do this and that. you know, once one thing does not look -- the people who are going to disparage it and hate

the nfl for whatever reason, they'll second guess. >> they asked for it from the police, didn't give it to them, and the hotel said they never asked for it. >> i don't know what -- i don't know what happened. did you see -- he admitted that maybe you will see ray rice on the field again. >> admitted you might not too. >> we'll come back with richard branson and the trading block in just a moment. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group: how the world advances.

e financial noise financial noise financial noise financial noise

welcome back. among the stories this morning, mortgage applications plunging more than 7 % in the last week to a 14-year low despite just a slight increase in rates. venezuela's state run oil company reportedly seeking offers for u.s. unite and that could fetch up to $10 billion. major management changes at ferrari. many of the owners of the cars are not happy about this. what's going on? >> huge news. the ferrari chairman resigns after 23 years at the helm of the sports car maker, he was a god at ferrari.

after an increasingly public dispute of fiat chrysler. one is the performance in forpew la 1 racing, not winning a title since 2008, worst year ever this year, and the other, more important issue is around the brand strategy. he is wanted to cap production at only 7,000 cars a year. he wanted to retain the brands exclusivity. sergio wants growth and scale leading up to the company's ipo. he said, quote, i always say we don't sell a car, we sell a dream, and to sell a dream, maintain exclusivity, you have to invest huge money in innovation, new technology, but you have to do beautiful cars and classic in terms of design. that's the battle of the soul of all luxury companies. get exclusive, charge more, or do you go for mass scale? you know, whether you are looking at this, it's the same issue. owners panicking they'll expand production and make the brand worth less. >> i forgot ferrari was owned

by -- >> right. >> that's a stark reminder as well. >> yeah. and he's all about scale and getting global and ferrari was pulling in tighter, restricting production, and, you know, they have had management issues ahead of north america, went to italy to solve the problem. there was talk to sell ferrari. imagine that. that could resurface into the ipo. shareholders say sell it. >> i guess porsche, mercedes, bmw, all of them. >> the germans are why ferrari is in crisis. overman do great with lamborghini and audi. terrific sports cars. >> even a porsche is now down to 50,000. >> porsche is a problem for ferrari. >> how many more? ten times. >> more than ten times. >> it's a luxury brand.

>> it's a great sports car. that's the issue for ferrari, and, again, all the message boards ferrari owners in a panic saying are they going to ruin the brand. it's thee most respected brand in the world when it comes to cars, survey after survey. >> fiat changes how ferrari is made, no one happy about that. >> imagine the folks in italy today? >> yikes. thank you. >> thanks, guys. >> president obama readying app address to the nation nation on a strategy to defeat isis. going to be a driver for energy prices, obviously, and that could affect equity prices. joining us now on oil, dan dicker, street contributor on stocks, and, dan, you've been talking about this for a while, and that is you look at two scenarios, and you cannot believe given the risk where oil's trading. >> i cannot. one issue that nobody talks about is ebola, headed towards

nigeria, that's two and a half million barrels of production. forget the future production in places like iraq, clearly going nowhere, and what we have in the middle east, egypt, libya, go on and on, and no one is talking about nigeria, that's current production of two and a half million barrels a day, and if they get the outbreak, those foreign countries send workers home and production goes south. >> shuts down traffic. >> indeed. >> shipping. >> everyone is interested in chinese data points, strength of the dollar. i mean, overmy 30-year history, geopolitics always trumped these financial battle points. not right now. >> you are fighting -- people say, watch the market, don't put your own -- >> joe, you're a market guy. you can't fight it. this is one -- >> you are saying that the shale play is going to play itself out and not be that much of game changer for oil, i guess, is what you're saying?

>> it's going to -- it's going to run out quicker than most people believe. >> the play or because -- >> yeah. >> we are going to have oil equivalents from the shale, aren't we? >> it's going to increase and get to 10 million a day in the country, but it will find a peak sooner than most. >> and the traditional crew will not satisfy the demand? >> that's where the growth, from the middle east. >> a super spike? >> i am. it's not this year, but i think this is the most monumental fake out in prices seen in oil. i think that the super spike that goldman sachs called for in 2007 of $200, i think we're headed for something like that again because the prices for marginal barrels keeps on rising. you can't take these conventional barrels out of the ground. the number just keeps ongoing up. >> texting now? sell everything? did you just do that now? based on what dan said or not? >> no, no, i did not.

handicapping geopolitical events is difficult no matter, you know, there's events in the world, and we've been at war in the middle east since 2002, and it's been hard to discern any impact on our economy from that or our stock market, and unless we have an actual decline in oil supply or oil output from the events, and for a full on period of time, it's hard to see the impact. i think the market is skeptical and looking at a slowing growth case in china, and i think that is is important for the bearish case on oil. >> what is the most important thing that you watch for whether to stay long or add to positions in equity? >> well, it would be the outlook for the domestic economy. >> how is it? >> pretty darn cgood, and look t a gdp growth rate second half of the year that's probably flee, three and a half percent real, and there's no reason why that

can't continue into next year. you know, auto sales, auto production is booming, production at a new all-time high. housing is weak. relaxing lending standards this kwaurtd that helps. retail sales do better as employment gapes which is happening. i think there's a lot of very good things to focus on, and i think the 2% inflation, and no one's expecting that to get higher near term, 2% inflation can survive a multiple, just under 16 times next year's earnings. optimistic, looking for 2080, 2100 on the s&p by year end. approximately 16 times nerks year's earnings. >> at the end of 2015? similar 10% gain next year too? >> well, you know, so far this year, the market tracked with this year's earnings growth. you know, maybe gone more than that. you know, we have to get a better fix on what the 2016 earnings outlook will be. right now, it's too early for that, but the market's looking for 8% growth. >> staying long and adding. >> yes. >> keeping it short?

differing views, maybe, but it hinges, we'll see what happens. will be interesting tonight to see how, you know, just how hawkish the president is on all this. thank you. hawk is a different word. we have -- you know, i -- all we need -- >> not talking the fed here. >> means something else entirely like tonight. >> yeah. let's hear more from the guest host, john taylor. weigh in on geopolitics. >> yeah, i think the idea that we've been able to get through a lot of ups and downs geopolitically is the correct one, the strength of the american economy. the policy is more important than elsewhere. we had ups and downs in oil for quite a bit. i think there's a question about greater uncertainty in the upside, it's taken. be concern about that. i think the very positive view about the economy, 3% growth, i think of it slightly different, first half of the year, face it. it was disappointing when you average out the first two quarters, and i hope we get 3%.

i think it's relevant to the recoveries in the past, somewhat disappoi disappointing. that's my take. >> we'll talk more in a moment about how he's been playing in the online arena when it comes to higher education too. >> okay. when we come back, bieber, he gets booed and strips. >> what? >> we have that story after the break. out that for a tease? plus, we'll talk leadership and innovation with sir richard branson. i wonder what he thinks of bieber. he has a new book on the topic. later, paving the way for wearables 15 years ago, tech innovate. we'll talk the future of silicon valley in more. we return in a moment with bieber. a lot more. (vo) rush hour around here starts at 6:30 a.m. - on the nose. but for me, it starts with the opening bell.

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model and said, i don't feel comfortable unless i'm in my cal calvins. he proceeded to strip down to the undies showing off the six pack and tats. >> sponsored by them? >> is there a business angle here? >> might be. >> yeah, i don't know what happened there. he did, you know, did have some abs. >> he does. >> appreciate abs like that, i might do that too. i won't. >> because you don't. >> because i don't. let's talk to entrepreneur sir richard branson pushing for stronger leadership in the world, a host of business leaders on the website, urging for a peaceful solution to the russia-ukraine conflict. sir richard is here to talk about that and has a new book, the virgin way, i want to talk about that because we want to get the take on management and

innovation, and his take this morning on apple's ceo, tim cook, and how he's doing as an innovator. richard, thank you for joining us this morning. >> nice to talk to you. >> start with the role of business leaders like yourself in trying to solve global conflicts, political conflicts like that in russia and ukraine. i know you've written this letter, what do you -- what do you do you expect the impact of the letter to be? >> well, russian business leaders, ukrainian business leaders, international business leaders, and i think most of the public feel that conflict should be resolved dipmatically and not by war, and i think the fact that russian business leaders sign this and, you know, is strong, brave in coming out, saying, you know, let's sort out the ukrainian situation by

discussion. i'm going to ukraine in two or three days time, and to follow-up on the letter, at the moment, there is a cease firement hopefully will will will hold, and hopefully, in time, russia can, you know, russia is more part of europe than it has been in the last two or three months. >> sir riechd, do you have business interests there right now? >> we don't, as it turns out. they, you know, i think that, you know, i think business leaders generally should work with governments and social sector in trying to resolve situations in the world. we shouldn't be bystanders. we should speak out because, you know, people are getting hurt. i think it's the responsibility of business leaders to speak out. >> you sent another letter, recently, about decriminalizing drugs around the world? >> well, i'm on something called

the global drug commission, which has 15 ex-presidents of various nations around the world including george schulz and paul volker here in america, and with one voice, we believe the war on drugs, going on for years now, has been a disaster. it's affected hundreds of thousands of people adversely, and that the way to deal with it in the future is treat drugs as a health problem, not a criminal problem. people who do that, get on top of the problem. >> do you want to start a shop, if you know what i mean? franchi franchise? >> i think it's unlikely. you know, what i would like to see is in the same way that, you know, when alcohol prohibition

happen in america, it created al capone, the same situation's happen with drugs, and i would like to see the hundreds of thousands of people languishing in american prisons and prisons around the world for, you know, smoking pot, be released, and, you know, it's ruining their live, and it's not doing any good to society generally. >> sir richard, we talked about apple this morning, the new watch, the new phones, and we always think about apple, and we think about an iconic leader, that was steve jobs, and now tim cook taking the reigns. you're an iconic leader associated very much with your product and brand. what do you make of the transition about the new products, but also the management of apple? >> i think tim cook is seems to be a good manager. i mean, you know, i don't know how good he is at keeping

creative people below him. i think he's good. the jury is out whether or not he's going to be able to innovate in the same way that steve jobs did. the guess is, you know, he'll do a good job. we'll see. >> you have a new book "the virgin way," i read it over the weekend. question about the book. when it comes to leadership, which is what the book is about, you have to get people around you. you have millions of businesses, and i can't imagine you're in a hundred places at one time. how do you find talent and finding the team, motivating them and how it works? >> we are lucky, because we're involved in a hundred sectors, it's a fascinating company to work for, so we attract incredible people.

they will never get the credit you will. >> individually and the companies, they get considerable credit, and, you know, craig, running virgin atlantic, he's getting credit for what he's doing, but i think they find is useful to have a thicker head to get out there, help, you know, put the new businesses on the map, you know, we're going to the cruise business, the hoe it will business, and, you know, because, you know, i can do interviews like this, i talk about these things, you know, that helps give hem a leg up. >> we got to go, congratulati s congratulations, you won a world record for kite surfing with the most models wrap around you. i saw images of not just bathing suits, but wrapped around you with nothing. how does your wife feel about all this? >> well, she was on the beach watching closely. she lets me have a long leash,

but knows when to pull it. she's a very wise woman. >> the book called "the virgin way," thank you for the time. >> thanks a lot. >> john taylor on disresulting the classroom, and at the top of the hour, apple lifts the curtain on iphone6 and apple watch. what's it mean for the company's success and innovation? "squawk box" will be right back." >> tomorrow, reactions to the president's plan to deal with isis. senator johnson hour guest, andrew practices the downward dog when we roll through lulu lemon earnings." squawk box" at 6:00 a.m. eastern time only on cnbc.

future of higher education is a constantly moving target from the emergence of online courses and now styles impact the landscape. there's a new twist with the most popular course online only to stanford students and the public. the experience was led by our guest host today, professor john taylor. john, this is interesting to me. there's massive changes coming. you did this in two versions. >> right. >> how did it work? >> we did the open online, where we had thousands of from all over the world, amazing. more interesting, we offered this course for credit to stanford studentings, and they were all over the world, for

credit, paid, and it boriced worked out better. >> there were 25 students in that version? >> yes, 25 in the other. >> same course for many, many years, but online, using the new technology, they liked it, did well, very promising. and it's not disruptive, integrates well. some are positive. >> a situation with one-on-one with students, only 25 of them, e-mailed back and forth? >> yeah, of course, they could e-mail, but the and we are skype, took tests, midterm, homework, time exam. they were committed. things you worry with the open online is people are casual

learners. that's great. it's rewarding. these are committed students, students in a regular course, took it seriously, and that made -- economics is not something to watch and learn, but salespeople the subject, work out real world problems, and the students did that and enjoyed it. >> is this something that changes how we educate people down the road. it is a big change. people use google glass to find out how to help people, it's in the k-12, a big change, and so i think it's -- this is wuchb part of it, which is college, economics, and from this experience, i can see it's going to make a difference already actually because students could take this course, incoming freshman, never been there before, take the course, and they get a start on their majors. >> can't let you go without talking about the fed again. there's legislation making its

way through the house. you think it's good. describe it. >> it's positive. the legislation simply asked the fed to describe its strategy for setting the interest rate. it's the feds' job to do that. they report to the congress, and if they don't, they are violating the law, i think it's a big improvement. it doesn't get in the way of the feds' independence. it's tlir job. they have to tell us what they are doing, tell the american people what they talk about in the room. there's a focus on policy rule, so-called taylor rule, developed in the silicon valley -- >> sounds familiar. >> the fed does not have to follow it, but benchmark what it does relative to that. it's promising. we'll see it's passed out of committee so far, may pass the house in the fall. we'll see what happens after th that. >> i don't know whether we want to -- are you sure we want to know more. >> i think he could use help.

>> oh. he means -- >> i'm kidding too. >> we could all use help. >> thank you for being here with us. still to come, apple's new payment plan killed the credit card business? ask the head of mastercard. the president briefs congressional leaders ahead of the prime time address to the nation. we have the details on what he told them straight ahead. it's monday. a brand new start. your chance to rise and shine. with centurylink as your trusted technology partner,

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♪ it's an elmo song. >> welcome back to "squawk box," it's a big day for apple, and tim cook, yesterday, the company unveiled iphone6, apple watch, and a new payment system. the new offerings come at a time when apple is trying to resolve questions about the company's ability to continue to innovate. still, years after mr. jobs died. questions out. there before the big presentation, tim cook took to social media tweeting, i am backstage, and this the first tweet from my iphone6.

it's amazing. you'll love it. average tweet to me. does he mean the tweet or the phone? >> meant the phone. >> the tweet was average. >> yes. >> the rally did not last, apple finished down on the day. interesting to see where it ends today's session as well. we're awaiting to get our hands on the newest products. i am. the next guest got a chance to play with them yesterday. ed bay, certainly columnist at "usa today" get to put his hands on the phone and i believe the watch, ed. what do you think of all this? >> i think it was a big day for apple. i think it was a big day for steve cook. i mean, there's always great anticipation leading into the apple events, and more so at this one. it was a lot of pressure, you know, justified or not, on cook and apple, and they delivered in a big way yesterday. >> go not watch first. >> sure. >> put it on, touched it, saw, it is it a game changer?

>> i'm a geek. i'll probably buy one. looks better than any smart watch i've seen. there's not a high bar for that, but the early smart watches have been gooky looking. apple, as they've done in the past, paid attention to fashion here. i should point out there's different models of the watch. you know, start at $349 up from there, one with 18k gold. there's a lot of watches here. >> you can see yourself wearing one in this incarnation? i said it looks amazing, great technology there. i don't know i want this version yet, but i could see the promise of it in the future. >> absolutely. i think, again, there's been a lot of -- you know, wearable tech has been, you know, a buzz for the last, you know, couple years, everyone's waiting for the apple, what they thought would be an iwatch, of course, the apple watch. >> by the way, why that naming convention? do you know? >> i don't know. >> giving up on the i thing?

>> they had apple pay, apple watch, so stressing apple weather the "i." >> iwatch sounds funny. >> apple watch seems sfifine to. >> in sense of sales, does it take off quickly or long term? >> i see it as long term. i mean, everybody carries a smart phone, not everybody wears a watch. this might change some mind. i think they'll do well with it whether it's a blockbuster products along the lines was first iphone, we'll have to see. >> okay. one other thing. >> sure. >> take the 4.7 inch phone or the 5. i think the battery life is amazing. >> it is better. >> i don't know i can fit it in my pocket. >> i think you can. i like larger devices, samsung with the note series, referred to, and i like the larger

display, but i think it is personal preference. apple pay, do you think that's the big announcement here? >> i do. i do. i mean, again, is it -- is this going to happen overnight? no. i mean, there's, you know, people pull credit cards out of the wall lets for decades and decades. changes behavior is a difficult thing. apple seems to have lined up, you know, a lot of the right players, got the credit card companies, got the banks, the merchan merchants, paying attention to security, so if anybody's going to pull it off, i think apple can pull it off. >> okay. this it is, ed, thank you for joining us. looking toward to your columns. >> sure. >> with apple's unveil of the watch, can't help but wonder if wearable technology is as novel as we think. check out the cover of "fortune magazine" from 1997. look at this. that's scott, one the of the founding fathers of wearables. on the cover, that's a java

ring, one of the first products of the internet of things. joining us right now is scott mcneilly, himself, the chairman at weigh in and founder, scott, great to see you today. >> great to be back. charged. >> early on in the whole wearable of things, the wearables. what do you think of what apple has rolled out at this point? >> well, i think, you know, apple is the fashion king. it seemed like a, you know, an unveiling of fashion in many ways, and consumer technology, and steve jobs made technology cool. i'm not sure there was a huge breakthrough in terms of new technologies or new ideas there, but apple always does a great job of making it seem really new and exciting and fashionable, but, you know, fashion people also make people wear all of these pants that don't go all

the way down to your ankles anymore. we called them pedal pushers and capris, and now i think they laugh at us. i'm trying to get away from having to wear all that stuff. i'm wearing stanford today no honor of my son who won his first golf tournament. >> congratulations. >> thanks. >> that's fantastic. would you buy an apple watch? >> i stopped wearing a watch because i had a phone. can get rid of the phone and wear it on my wrist, or whatever, but i need a big skreep because i don't see like i used to. i want one device. we'll have -- i think the use of the watch will become clear when some developer invents something that's very useful for that that doesn't exist today. yeah, i want the dick tracy watch, a phone in it.

>> bingo. >> scott, what happened to the java ring. i have to admit, i don't remember it. >> we put java card into the smart chip that went on lots of phones, multifactor identification, do transactions without sending a password or numbers out over the network. >> huh. >> we're just back to the future here again with multifactor authentication and security that is isolate and not put out over network, so we've. doing this f been doing this for a long, long time. apple will drive it forward. apple's payment strategy is it's classic apple only, and i think what we need are multiplatform, more open architectures to run across many different platforms because we're not going to have just apple devices use iing or

implementing transactions. >> signed up a lot of partner, and i have to admit, i would use it. i have app iphone. they have my credit card, if i swipe my phone, that's something i'd be in for. it's been out for a long time, but i wonder if the public is ready too. >> swipe your phone to get on the plane, but doesn't have to be an apple phone. that's what i talk about with multiimplementations. i'd like to see someday apple open up and be less proprietary and single vendor in how they solve problems. >> i know that you were fracking yesterday with weigh in, just through social media, what people were buzzing about and thinking. interesting that on facebook, i think 2-1, all the posts this, 2-1 coming from men versus women. >> right. 18 to 34 was the demographic dominant playerment i don't

think that's a surprise. i thought there would be more women, but that's what the wisdom of the massive crowds here is telling us and weigh in is using its access to twitter feeds and facebook private apis and things like that to get at the -- you know, in the old days, running a campaign, a few monthings later you look in hiepd sight to see what happened. today, with the feeds, we have realtime insight so you see at each moment when the iwatch was announced or when he said, one more thing, when tim said, one more thing, you saw the big spike as they were -- >> something like 3,000 tweets a minute as he said that people referencing that. >> exactly. he was channelling -- doing this thing, this, i guess -- >> which thing? >> where you put your hands like this. >> yeah, yeah, yeah. >> channelling his inner steve, i guess, you you can see what

words, what topics, and, in fact, through ad age, really, i think, getting into the thing going hindsight to insight to foresight looking at conversations in realtime in being able to predict things. they were able to show one through five, the top trending products, and, obviously, the iphone6, the big trender, and i think number five was the phone. it'll be interested to be able to, in realtime, and actually predict how products are going to sell based on -- and i think that gives analysts a lot of insight and hopefully foresight as they move forward. >> based on what you saw, was it a success? was this is a successful campaign? >> you know, i -- if the stock goes up, it is, i guess, as a former ceo who was graded every day on the stock market, but this takes time to play out.

fashion is something you launch, and the watch is fashion at this point. people either buy it for the fashion or they don't, but ultimately, it's going to depend on the developers to invent something new and interesting. i think big screens is so last decade. i've been returning around with a, you know, android big screen smart phone for a long time. i love it. i would consider going back to apple with a big skreep, but i don't like the proprietary aspect of it. they are growing around the world, and it is a challenge here in the united states and, you know, we like the fashion. >> well, scott, thank you very much for joining us, and tell maverick congratulations for us. thrilled to hear he won. >> thank you, appreciate it. >> when we return, one phone, one swipe, all credit cards. a look at what apple mean for consumers in the credit card

industry. how safe will your information be? look into that, plus, tonight, the president lays out the plan to deal with isis in the middle east. speak to congressman peter king's take on what the president will say, and whether it's enough, and how he feels about it, and you watch the president's prime time address, watch it right here on cnbc tonight right at 9:00 p.m. "squawk box" will be right back. that partners businesses with universities across the state. for better access to talent, cutting edge research, and state of the art facilities. and you pay no taxes for ten years. from biotech in brooklyn, to next gen energy in binghamton, to manufacturing in buffalo... startup-ny has new businesses popping up across the state. see how startup-ny can help your business grow at startup.ny.gov there's a difference when you trade with fidelity. one you won't find anywhere else.

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as we've been telling you, apple looking to blow the doors off the mobile payment industry teaming up with leaders like mastercard, visa, and american express. to talk about how apple pay will work and how it will be keeping our data secure is chris mcwilton, and thank you for joining us. >> good morning, how are you? >> great. so why team up with apple now? >> we've been working with apple for two and a half years to make it happen, and as usual, apple is closely guarded, but this is ththeir effort to monetize and make a consumer experience out of millions and millions of card credentials on file with itunes. a glad to be part of it. >> makes sense to me as a consumer, but is this something

they siphon business away from you? >> no, we are excited about this. if you think about even the darkest days of the recession, e-commerce consumer spend grew in double digits, and people are just very uncomfortable entering 16 digit card credentials every time they make a transaction. this way they don't have to do it, no address, shipping address, it's there, cvv codes, they are done on a secure element. all this passes through to the merchant is an encrypted one-time use card number that's compliant. >> and you need my finger. >> and the finger. >> won't they take a slice of every single transaction? >> well, from our stand point, it's a master card transaction so economics remain the same for us. >> who -- >> apple entered into relationships and contracts as

big issuers. we are not privy to those. have to ask apple. >> where is apple getting the revenue? >> ask apple, but from us, it's a mastercard transaction. >> costs you nothing? >> the economics are the same. >> retailer pay? >> network economics are same regardless -- >> something amiss here. banks are paying or retailers ork both. >> well, ask apple how that works. >> but you don't care because it doesn't affect you. >> that's right. >> let's talk about what scott said. he said that he'd be more impressed if this was something that's open, meaning that everybody is on the same standard, it's not just an apple situation. do you think that's slowing things down? >> i don't think so, there's consumer choice going forward, apple phones, google phones, androids, et ceterame mecetera. you need an easy experience, feel safe using cards online, and this enhances e-commerce

activity going forward. >> how do we think about issues like the home depot breach, the target breach before that? this make it less likely? >> part of the path to security in the united states. the card credentials are e many v climate. go to the -- >> what is emv? ? the chip -- >> instead -- yeah. >> this is securing the e-commerce channel, and the physical cards in the store are actually going to be emv come pliemt as well. securing all angles. >> it's impossible for a hacker to figure out the cards that will be in the various ones? it's secure, but everybody thinks something -- you can back into figuring out the algorithm. >> they'll try. there's sophisticated terrorists that get into this secure element, but we've been working

with apple as have the other payments' networks to make it secure as possible. it's encrypted, one time use number, it's not floating true the internet, so it's strong as it could be, and we'll get better at it, and people continue to try. it's -- >> you made an interesting point. you said during the downturn of while other areas shrank. is this bigger every year? >> people are comfortable buying things on line, in app, go to stores, but the fastest growing segment is buying things on your laptop, desk top, pc, and now your apple iphone6. >> do you see a day where apple tries to compete directly with you on the actual transaction payment issue, meaning they are going to have -- once everybody starts using these things, can't they start, the apple credit card themselves? >> well, issuing credit cards is

a major undertaking. there's regulatory issues, underwriting capabilities needed, there's funding. it's not core to what apple does. they're the technology company that makes lives easier, and what apple has done is use existing infrastructures of the networks themselves and financial institutions that make credit cards work today and building on that for a better consumer experience. will they get into it? ask tim. for the mean time, i think they've been smart, very prudent and feel well-positioned where we are playing with them in the new space. >> all right. chris, thank you. >> i have a personal question before we go. do you have a visa card, american express card in your wallet? >> why would i? >> i'm curious. sometimes you go in the shop and only take would be or another. >> very rarely do they only take one card. >> you have nothing else? >> all mastercard. that's all anybody needs. >> chris, thank you. >> okay, thank you, take care. >> when we come back,

congressman king on the isis threat, but up next k an update on the mccoy tip fiasco bringing you the story first yesterday showing you the receipt with the 20 cents tip. he responded. we'll tell you what he says for himself after this. we'll be right back. (vo) watching. waiting. for that moment, where right place meets right time.

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>> we brought you a story about mccoy, leaving a 20 cent tip on a $60 bill. he posted the picture on facebook to call out the star running back. classy. the restaurant was hoping they'd ridicule mccoy. posts like this is disturbing and unprofessional. have you read yelp yet? one says, i wait the on him countless times, always tips me. the fact the restaurant posts this is absurd. i will not be going there ever. many reasons someone leaves the small tip, and according to a tweet from a local reporter, he was ticked off about the service. the teammate, thmathis saying, , don't ever sit in server rob's section.

>> wow, rob. >> anyone hoping the restaurant would apologize is out of luck. the owner says, i take complete and total responsibility for sharing this receipt. it was not our server's decision. it was mine. i'm to blame. >> i'm not sitting in rob's section. >> i'm afraid to get anyone mad when i don't know what's going on in the kitchen. >> never complain until anything. >> exactly. i don't have -- if it was bad service and the guy really was mad, i give him kudos for having the courage to leave 20 cents. >> that's worse than nothing. >> much worse. >> that's intentional. >> everybody gets 20%, and then if you really don't like it, i mean, they look at you weird if you leave 12% or 15%.

>> i leave 20% on everything, unless i'm mad, then 15 %. >> what about the tax? >> i don't take the tax off. what about wine? >> i want to know what you are supposed to do. >> same thing. >> i do 20% on everything. but i was toll you don't have to. >> by who? by what cheapskate? >> never heard that before? >> no. >> i can see that -- see i don't don't -- i never had a thousand dollar bottle of wine. >> i know. i'll take you to dinner. >> we don't think that way. >> i'm joking. i have been told you're not supposed to pay on the alcohol. or at least you're supposed to not necessarily give full value. >> on thunder bird or -- i'd tip more because they are like $3 for a quarter of wine, but it's 20 %. >> yeah. >> okay. a beer and a bar? like an $8 beer at a bar, give a buck or two or throe? >> 20%.

>> three. i used to waitress and bar ten. i would never just give a dollar. >> can you see there's been a lot of thinking into -- >> more than anticipated. >> give a $2 bill. they always remember that. >> okay. >> a little weird trivial news this morning. >> video games going the way of blockbuster? the game stop's ceo joins us to talk about it. we have a look at the u.s. equity futures, kthsedded higher, but not like earlier today. yesterday was the biggest one-day drop for the dow, s&p, and nasdaq seen in a month.

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welcome back, everyone. look at stocks to watch ahead of the morning's opening bell. dollar general is hostile with the bid for family dollar taking its $80 a share bid directly to family dollar's shareholders. family dollar has been proceeding with the deet to be bought by dollar tree. palo alto networks match estimates with the quarterly earnings, but the revenue was above estimates as its current quarter forecast was as well. also, apparel retailer, land's end with profit above estimates. spun off from sears back in april. >> president obama set to

address the nation tonight on how to deal with the isis threat. republicans call for immediate action. some saying mr. obama should not wait for congress's approval. joining us now to talk about this, new york congressman peter king. also chairman of the house homeland security committee. i'll call you mr. chairman. you said awhile ago it's not just a threat in direike, but a direct threat to the united states. september 10th, as you know, mr. chairman, you are not of the opinion it's an imminent threat at this point? >> well, we have to assume that every threat is imminent. i'm not saying there's anything out there that we know is going to attack tomorrow. but there are a number of threat streams being followed, and that include isis, al qaeda, al qaeda in the arabian peninsula. we have to be on guard. isis could attack at any time. they have thousands of foreign fighters who enter the u.s. without having to get a visa, a

number of americans who fight alongside these jihadists who go back into the country urn an american passport. we have to be on guard, especially with september 11th coming up. i'm not trying to scare people saying there's a particular threat, but threats a always being followed. 9/11, there was no threat either, and we always have to be on guard, and isis, to me, the -- way we have to be concerned about, though, is the short term and long term danger that isis presents, and that's why i hope the president has a comprehensive plan to go after and destroy isis. >> there's a different world a year ago in syria, and it seems like both sides wanted -- congress and the president -- a hot potato what to do there, give the president a way out to seek congressional approval. i don't know whether congress wanted it either. this times it's different except

maybe with the president's base. they may to the want to do the air strikes in syria, but i think republicans say, don't come to congress, you have our authority in this case. if you do what you gotted too, don't waste time getting congressional approval. is that fair? >> fair to some extent, and by the way, congress is deficient, and the president has been deficient in minimizing, not talking enough about the terrorist threat over the last several years. go through the presidential campaign in 2012, barely mentioned al all, and last year, the president was going to act on his own, and last minute he wanted to go to congress, and congress didn't want to get involved. i was in congress said i would vote for it because -- not that i'm a genius, but on the security and intelligence committee, we knew over the year the threat that isis is. the president knew it as well. he had an obligation last near to tell the american people why

he wanted to take action and not back away like he did, but now they took confidence away from the allies and the american people. tragically enough, the beheadings of the two americans probably has conditioned the american people to the need for action. i hope the president tonight does not stress what he's not going to do. i hope he lays out a broad strate strategy, use all military power to destroy isis, work with allies in the region, and try to have a a political solution on the ground, not saying what he's saying he's going to do because isis looks for weakness and allies in the middle east are afraid that u.s. may not be there for the long haul. >> mr. chairman, there's a lot of people that have skip in the game, a lot of criticism of the president. that goes back to whether, for example, he should have armed the syria rebels, the good guys initially before isis got so

pow powerful. that's one question. the "wall street journal" says it's the obama doctrine. he won the president saying the u.s. ail yep nated the world and muslims using wreckless force abroad, betrayed values by sbeg gaiting terrorists too harshly, and they hate us because we provoked them and it's our fault. is it app entire five years of flawed dock trip that got us here, or would it have happened anyway? >> i think the president has a mind set if he reach out to the islamic world, if he did get troops out of afghanistan, there's reciprocity to the other side. the president did kill bin laden, killed the top al qaeda leaders, so on that level, he's effective, on the other hand, though, by constantly talking about necessity to withdraw

troops, creating a power vacuum without having a forces agreement in iraq, that's what i believe allowed iraq to be up stable as it became. we needed troops there, not so much for the sepsz of combat, but to be adult supervision over the iraqis and move them towards -- a more inclusive government. there's been an education to the president. having said that, could be in the past. i hope the president uses that as a guide going towards the future like i supported president bush in iraq. looking back on it, one big mistake made was we were not ready for the chaos that was going to result after we went in over after hussein was overthrown. we thought it was eastern europe, curtain comes down, and people run their own countries. that was not true in iraq. we learned that from president bush. i think as a lesson to learn from president obama is what he did wrong, if you will, we can

want allow power vacuums to develop. that we have to let people know we're in this for the long haul and tell the american people it's not easy, will be tough and difficult, and this is a long, almost -- john kennedy said about the cold war, a long twilight struggle. as long as terrorism is there, no matter what we do, they fight us. we have to be ready for that. >> country seems to have changed as well in a quick period of time even boots on the ground. that's the piece in the journal today. go from the feeling after 13 years ago after 9/11 and how the country felt about using military force to where we were a year ago or so, and now to where we are today, do you think that we've now come full circle, back to where the countrimeny w to be an interventionist country and be a force, in our view, for

good in the world again? >> i think so. i would support that. having said that, though, realize that public opinion ebbs and flows. >> right. >> my district in particular was hit hard on 9/11, but even in my district, doing a poll, homeland security, terrorism, over the last several years was not that high, and yet a times square bombing, boston marathon bombing, it skyrocketed. all the fears -- i'm not a psychiatrist at all, but what happened on 9/11 has been been in the recess of people's minds, and once an attack comes or possibility of an attack, it really rises up again. i think that's what we are seeing now, beheadings were tragic 9/11. right now, they support action. there's going to be bad days, and that's when it's up to the president as commander in chief

to intervene in the manners. having said that, there's no such thing as an easy war. every war is tragic. every death is tragic. whatever plans he has, they have to change, you never know what is going to happen if the first shot is fired. we have to commit ourselves to the long haul and realize it's a tern, ruthless, enemy that never rests. >> appreciate it. must be an interesting area of new york, and -- andrew -- where is he? >> not in my district. >> he's a republican from new york, not that common -- i think he's one of the good ones, right? let's tune in to cnbc tonight at 9:00 p.m. eastern for the president's address. >> britney speers is about to do it again, and this could be a

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the pop star's open to all different kinds of ways to find love. i don't know. >> it's a business story. >> it's going to be tough to find someone better than kevin guy, whatever his name, what was his name? roger federer? >> k-fed. >> he has high bars. may join online dating service. she would not be the first well known name. reports say lindsey lo happen. >> i don't get that. i would assume anybody who is flicking through the pictures, the second you see the star, you choose them. she has to choose you too. >> i don't know how it works. >> i -- i just think about, like, the wedding where people say, how did you meet, and for me, that's -- >> oh, no, it's common now. >> i know, i know it is, but i

still would -- i would make something up. i met at a bar, i had a one-night stand. that's better. >> and, andrew, this is for you. the bundy's back together, 17 years after the last marriage. >> kidding? >> the cast reunited to celebrate the new star on the hollywood walk of fame, and i give credit to -- >> al bundy. >> he's -- he was typecast, had a hard time getting out of that role. he yell at me on venice beach because i call him al, and used the f-word and everything. >> he did? >> he was mad. i said, al, and then i went back, al, and he yell. yeah. >> oh. >> i wouldn't want to be called al either. >> no. >> you know? >> why was that for me? >> i don't know. why was that for andrew? we have no idea.

>> my generation? >> it was my show. i sit on breaks on set, i sit like that. >> get the camera on this. >> i sit like this. that's how al used to sit. >> on the couch. >> i don't understand. >> let's talk video games. gamestop hosting its annual expo to showcase the hottest video game titles of the season including destiny's. let's get more on the pulse and downloadle gaming. is gamestop at risk? it's a big question. joining us from the expo in anaheim, california, the ceo. rob, help us with this, it's the big question about it's the question of the industry, everyone down loading games now, where does that leave the brick and mortar store? >> well, good morning. thank you for having me. as a brick store, we are relevant. we have the destiny launch

yesterday, started at midnight on tuesday morning, and we have had a tremendous amount of traffic come through our stores to buy this game. it's an excitiing game expected to be the biggest new launch of intellectual process in video game history. >> think about the business long term, and i raise the issue of block buster, look at the stock, and you say to yourself, what? five years from now, people will be coming into the store because why? >> well people come in now to buy digital content. we did over $700 million last year selling digital content mostly through the stores, and they come to the stores to talk to the knowledgeable associates about what's coming, physically and digitally, and they can use their trade-ins to pay for physical and digital content, and they get their power rewards points through power up reward

loyalty program. >> is there a lesson in the blo blo blockbuster experience for you? >> absolutely. we try to seek innovation at every turn. we stay -- we have a slogan that is, our rate of change has to exceed the rest of the rate of change in the industry. if we stay ahead of that, then we can stay relevant and participate in thing like digital gaming and introducing cricket service in 2800 of our u.s. stores. >> right now, look at the pace of digital downloads for full games, what is it? what percent are not going in the store right now? how do you see that changing over the next two, three, and four years? >> it's difficult to know exactly what that pace is today because the market share data and rate of adoption is not available on the physical side. it is growing. it is easier with these new consoles, the play station 4 and 1. it is relevant in that digital market place.

again, by selling content through the stores and providing consumers what they want when they want it. >> hey, rob -- >> digital on physical. >> rob, your kids are young, and as is my son, gamer extraordinary to the point of he's one of the kids that, you know, there's a name for kids, but, rob, your store in short hills on morris avenue, arie, we go in, there's no way we'll replace that online. go in, speak to the store manager, and we know everything that's coming. we know how to play, we have a problem getting past a certain point on the game, we go to him, trade in, everything he said happens at this policlace, and o two or three times a week. >> that's great to hear. >> it's phenomenal. it is different. >> i do think it's different. >> i see where you are going, but i think it's different than blockbuster. you need help of the people to know. >> rob, before you go, though, one of the other things you do

is diversify the company. you're an at&t third party retailer. what other businesses do you imagine getting into so it's not just a gaming concern? >> well, we have core competencies to take to other retail businesses, and in the last year, we've done that. as you mentioned with at&t, cricket stores and cricket service in the game stop stores as well as with a chain of stores called simply mac, an aft apple reseller, largest in the united states. we'll continue to invo nate with concepts like that, allows us to make technology affordable and simple for the consumers. >> leaving it there, you have a customer in joe and his family for life. there's no need to worry about anything. >> thank you very much. >> very unique people. >> all right, thank you. >> unique people that play video games and, you know, a lot of them, and people who work at the stores, and, you know where i'm

going with this. >> yeah. >> specific and the gentleman there is just very, very nice and nice to my son, and it's good. coming up, jim cramer from the new york stock cramer from the new york stock exchange. getting ready for the opening of trade on wall street. "squawk box" will be right back.

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apple getting crushed this morning. okay. a different apple in this instance. just moments ago on the "today" show, this woman went for a world record trying to crush apples with her biceps. there you go. everybody, you know -- there's -- wow. >> yeah, baby. >> i do phone books. let's get down to the new york stock exchange. >> cramer has guns. he can do that. >> jim cramer, i don't think the

apple really deserved that. i know how you feel about all living things. that looked savage. anyway, you going to buy that watch, jim? >> yeah, i am. i mean, the brightling, it does nothing. i got it at canal street. >> might not be a brightling. don't want to break that to you. apple today looks like it's indicated a little lower. is it impossible to move the stock higher the day after of any of these things, do you think? >> cnbc statistics department has done the best work on this. talks about the fluctuations between the next day and next week. of course, you look at the next year and the stock is up an average of 38%. i think this could be noise. yesterday i felt that when steve wooesz man came out and said the word considerable was going to be dropped was more exciting than the watch. i'm watching both the apple display and i'm also watching

what steve's saying. you could say, well, listen, that doesn't count because they raised numbers off the watch. we have to look at this thing longer on a continuum. the stock is up over 80% since cook took over. >> i don't know. it's a different world. >> it's a new world. ali baba is going to be 200 billion. apple is selling 14 times next year. >> if i owned apple and didn't have enough money to buy ali baba, i might sell some apple. >> i said that last night. people are going to sell ali baba, facebook, and google. these mutual funds don't get the kind of money -- you remember when we were first on. they don't get the money like they used to. >> all right. thanks, jim. see you in a couple minutes.

i like al better than j. >> no, no, i like j. >> he's reinvented himself. he's a sweeter version of al. >> jay is not sweet at all. >> yes, he is. when we come back, we'll tell you about the lines for that new gadget or even video game. but what about a sofa? dad: he's our broker. he helps looks after all our money. kid: do you pay him? dad: of course. kid: how much? dad: i don't know exactly. kid: what if you're not happy? does he have to pay you back? dad: nope. kid: why not? dad: it doesn't work that way. kid: why not? vo: are you asking enough questions about the way your wealth is managed? wealth management at charles schwab it's monday. a brand new start. your chance to rise and shine. with centurylink as your trusted technology partner, you can do just that. with our visionary cloud infrastructure, global broadband network and custom communications solutions,

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prospect of free furniture prompting people to camp out an ikea store days before it opens in kansas. they've been snoozing beneath the stars, snuggling next to strangers. consumers were lured by the promise of a free sofa for the first 40 people. they're going to need all the sleep they can get to be clear headed when trying to figure out how to put that furniture together from ikea. want andrew to read this again? >> apple getting crushed this morning. this is a different apple. we showed you it a little bit, moments ago. we'll show it to you again. >> is it a metaphor for apple? >> this was on the "today" show. woman went for a world record trying to crush apples with her biceps. i don't know. >> strange that it happened today. >> is that a talent? >> she was apparently an

accountant in new york. now she's the strong lady at the -- in the circus. i don't think i could do that. >> i know i couldn't. >> i think tim cook is going to have to hire her for the next -- >> this scares me on the same day with all this apple talk. join us tomorrow. "squawk on the street" is next. good wednesday morning. welcome to "squawk on the street." i'm carl quintanilla. premarkets moderately weak this morning. the s&p is down five out of six days, although futures have gone positive somewhat during the session. a lot to get to ahead of the president's address to the nation want to. our road map begins with an apple hangover. bigger phones, apple pay, and shares did spike during that unveiling yesterday, but it's in the red this morning. >> some contentious advances this morning. dollar general's bid for family