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

dollar goes to a tender offer. and ackman says, hey, wake up, allergen. he calls their actions embarrassing. >> and the first deal at microsoft reports they're close to a $2 billion purchase. the target, the video game maker behind mind craft. first up, apple creating all that buzz by unveiling new iphone 6 models, which are larger than their predecessors as well as that apple watch and the mobile payment system. stocks rose sharply, up more than 4% at one time, after apple pay was announced, but then lost its gains following the unveiling of the apple watch. it did finish the session lower in true apple fashion. a lot of analyst calls. a lot of media buzz today. "the new york times," their headline is, quote, apple is back better than ever. >> yeah, first of all, you are iron man. last i looked, he was there. maybe there are two carls. >> a lot of other media areas. >> when does the other carl come in? i think we ought to step back

for a second. first of all, when the watch came out, the misfortunate came out at the exact same time as we heard the word considerable might be dropped from the fed statement. people are much more concerned as we've been doing a lot of work on cnbc.com to see that the fed does the wrong thing. so it was just poorly timed, the watch presentation. but i think the presentation was good. a lot of us watched it, every minute. you know, carl, what would any other company in the world kill for to get when the front page of every business section? isn't the real takeaway here that if you're an advertisement firm, i hate those guys. now i have to go to my guys and say, i'll get you a splash, but it's going to cost you tens of millions of dollars. in the end, everyone in the country that i know is debating whether to buy a watch. who the heck ever thought that would happen? >> you said on twitter you're going to get one. >> what does this do? all it does is scratch when i do the lightning round, so i take it off.

and this isn't even sapphire. i've had it. it's heavy because the one i bought at canal street was too light. people were fooled. then they weren't when they touched it. it's heavy. so what? if i'm going to get a heavy watch, why not make it a watch that does something other than tell time? >> i'll take this one. >> i want this to be swiped so i can find out -- look, one of the things we always look at is the snapshot. will you give me my watch back? no, you can keep it. i'm getting one in the spring. when you get the apps, i'm going to be able to get espn.com and it's going to do my fantasy. >> we have them on the show today. >> you have bowman? >> bowman's back. >> i love bowman. >> can i make a point here? i'm a watch. all right, great. a new product getting kudos for it. what i'm hearing from investors is a lot more excitement about payments. >> mobile pay. >> and creating an ecosystem that could lead to nearer term

profitability, perhaps. and finally, transform what we've been talking about for many times and has been attempted by other companies not to success, but we've seen apple carve out new territory where there were very small, minor paths made previously. >> you're raising a great point. do you remember in the isaacson book where jobs just went to the record companies and rolled them. just rolled them. we know that they tried to roll the cable companies. we worked for comcast. they weren't able. david, my question to you. did they roll visa and mastercard? did they roll them? >> it's win/win, i'm sure they're saying. >> well, the record companies said win/win too. >> they may have also. i think the proposition to them is we will reduce fraud. how much are you paying right now? >> xpi reduces the fraud. it's a semiconductor. >> well, no. you're not even going to have a number anymore. it's just going to be in your phone. it's going to be protected. apple may take on some of the fraud risk. carl, you may have more details.

>> the credit card is preloaded on your phone, absolutely. >> look, maybe visa and mastercard had to do it in the same way that itunes made it. i think in the end apple has gotten in that business. once you're in that business, a lot of people saying they're not going to make enough money. people don't know anything. people don't know anything. i mean, visa and mastercard are profitable. you take a little of their cake, you're going to get a lot of money. >> that's going to add up to a big number. >> a couple million cards in russia. >> if you really can transform this form of payment. and given every other day we hear about another breach, one would expect that will only add to the momentum behind something that is going to be more secure. not completely secure, we know. look what happened to the cloud. but more secure. >> you don't want to do -- you want to go back to a paper society. you don't want to use any online stuff. if someone offers me a secure anything, i'm thrilled. >> meanwhile, all it's really

going to do is get you to buy new phones. it's the 6 and the 6 plus. by the way, for the watch, you still need the phone. >> so it's an ecosystem. i buy in. you raise the ibm thing. i wish i had heard more about it. did you hear anyone talk about the ibm? >> not really. josh lipton brought it up during the conversation. it was not a day for the ibm partners. >> yes, but i keep thinking trojan horse. once the ecosystem gets in, you buy the ecosystem. you do it because salesforce.com is writing stuff right now for your watch. this is what's going to happen. that's why the bowman interview -- what a great book. >> you made fun of pacific crest, which did downgrade as they threatened. >> listen, let me give you a little research 101, having read research since 1979. don't downgrade and raise your numbers for the reason you downgrade. we don't like the watch, but we're downgrading it. however, we're raising numbers because of the watch. you know, that's what's called

wrong research. they can have an impact. but we know that one year from now, the average apple increase since phone is 38%. you downgrade and you cut numbers. you don't raise numbers. etiquette. it's called research etiquette. that's the way it's done. >> although, it is all about which way the stock price goes. >> he may be right for up to four hours. he may be right for 36 hours. >> could be. >> wow. that's what this is -- in the end, it's about -- >> any lessons you draw from that action yesterday? the stock up over 4%. they're talking payments. they get to the watch, then down on the day. >> the lesson is you ought to be in the brokerage business every time they launch a new phone. >> we're going to talk a lot more about the payment, the economics of payments today as it applies to apple. that's going to be a good discussion. meantime, microsoft making news today as well. looking to boost its presence in the video game space. the company reportedly in talks to buy sweden's mojang, the

maker of the popular minecraft video game for more than $2 billion. the deal could be announced as soon as this week. this would be -- you're still playing with the watch. >> he likes the watch. i'm sorry. i didn't mean to -- i just gave him the watch. i don't need the watch anymore. >> i've got a watch. i can have two. >> did you see colbert smash his watch last night on his desk? >> i only watch cnbc. is that what he did? >> we'll play the sound a little later on. >> i don't need this. i'll wait until march. i can do without a watch until the new watch comes. >> i have yours in case you want it back. >> i have a $10 canal one. >> i'll wear it next to you every day. >> it has two phones on it. whatever. >> anyway, first big deal. >> is this the beginning of the spinoff of xbox that people have been talking about? why not? >> you think so? >> i think xbox gets spun off. >> they both get up with the

actual games and the console and then spin it. >> yes. >> really? >> that's what i think is going to happen. that's why this acquisition happened. you've got the biggest gaming company in the world. we know from all these different acquisitions that gaming is done by hundreds of millions of people. this gives you -- i want a share of xbox. i do. i want a share of xbox. >> don't forget when you do that -- and it's interesting to consider it. you have your own currency if you're xbox, and therefore you can continue to acquire, not just for cash, but using your stock. in this case, always interesting to note, microsoft is using overseas cash. we're going to be talking later to chuck schumer about his latest bill on curbing inversions. they're using overseas cash, which they have a huge pile of. they did the skype deal the same way. $2 billion is nothing. they find that in the couch. but they find it in the couch overseas, as opposed to here. >> absolutely. that's what's going to happen.

>> all guys you can ask. can i have the iphone? the security, which tells me what's going on at my house. i'm telling you, you got to think big, people. bowman, ralph, these are the people. >> david's got sprint. >> yes, tomorrow. >> they do the best because of the new lte. they have more bandwidth. >> not to mention, i would imagine with the new phones and sprint and t-mo and what they're trying to do, they'll just give them away. who knows. they'll pay you. maybe they'll do an amazon deal. 99 cents. and you get prime, throw it in. and still nobody wants it. >> think about the bookings. you're talking about the big-time winners off this. it's at&t, right? it could be general electric off of health care. it could be bowman. >> time to get an mri. that's what i'm going to get on my watch. >> you can't get jack with that

$3,000 bright light. >> it's going in my pocket now. >> $365. that's too much. look at this thing. all it does it tell time and it's fast. it's fast! it's not even like the naval observatory -- >> nice weight. >> david, no one knows how much it weighs unless they're wearing it themselves. >> this is the kind of watch i'm going to keep. >> jim's guns -- >> i smash apples with my guns, but you don't see me on the "today" show. my mother was the same. >> when we come back, dollar general going hostile. a wake-up call to allergen. also, pennsylvaniaer in ra jumping on the apple pay bandwagon. take another look at the premarket here. some moderate strength. nice turnaround in the middle of the session. we did start the morning weaker. a lot more in a minute. i'm type e. my golden years will not just be gold plated.

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dollar general has gone hostile in its bid to buy rival family dollar. dg announcing this morning it's taking its $80 a share offer directly to shareholders via a

tender offer. that deal, which is $74.50 a share, below the 80, but key has been anti-trust. while this does take things to another level in a sense, it also is almost meaningless because while you can tender into their offer, which will expire on the 8th of october, they cannot close that tender offer, in other words buy the shares that have been tendered to them until they receive any trust approval, which is going to be far, far, far beyond october 8th. hence, you will get a lot of shareholders tendering in. that will come before the shareholder vote on the dollar tree deal. and it will be at another time perhaps that dollar general is able to use to make sure that deal does not go through. that being said, it will give dollar general the opportunity to engage in conversations with the ftc to start to try to understand where they really would come down potentially in terms of forcing divestitures from a combination of family

dollar and dollar general. that in turn may allow dollar general to figure out whether, in fact, it could go as we've been saying hell or high water. it could offer to family dollar what it wants, which is to say we'll take on all risk when we say we're going to buy you, and that'll be it because they'll have a much better sense as to where the ftc is coming from. by the way, nothing would have stop them from filing hard and starting that process a couple weeks ago, even without a tender offer. but they have now done it at $80 a share. the dollar tree deal stands as it is right now. as we get closer to that vote and the end of this tender offer, we'll see where things stand. >> you've got a board member you reference. >> ed garden. he's been quoted in the releases when they have said we're not interested in your deal because we're worried about anti-trust. >> you're him. you see this. does it mean anything? >> no. >> wow. >> in fact, it may still go to this. what i would argue is this background notion that these guys really are much more

interested in trying to upset the deal with dollar tree rather than actually move ahead. but this gives them the opportunity to really explore in detail with the regulators what it's going to take. they won't know for certain. because it's only a couple of months. not even. it's a month. but they will at least get some sense as to a road map, perhaps. so they might be in a better position to know what risks they're willing to take if they want to go down that road of more than 1500 stores. remember, that was the last divestiture offer from dollar general. >> no reason to buy, but a reason to stay focused. >> yes. >> all right. >> not the only fight that's going on either. bill ackman sounding off and criticizing allergan. he writes, your actions have wasted corporate resources, delayed enormous potential value creation for shareholders, and are professionally and personally embarrassing for you. the smell of strong brew is in the air. now is the time to wake up.

>> one source said he's telegraphing his next position. it's going to be green mountain coffee. but no, we jest. he likes writing letters. i'm not quite sure what the effect of this is. he does bring up points we've made in the past, which you've had an enormous turnover in the base of this company. if those shareholders who had been there really believed it had a great deal of upside from here, they would still be there. that's a fair point. we've pointed out they have over 33% of the shares in favor of consent calling for that special meeting that may take place in december. perhaps a bit earlier than that. but yonbeyond that, i'm not qui sure what the point of this letter was. the key question from my perspective is, will allergan try to do some sort of acquisition that puts a stop to all this? that, i think, is -- i've reported, while nothing was imminent from what i was hearing, there certainly have been conversations that have taken place. we'll see. >> why is it always jazz

pharmaceutical? good company, but whenever i hear allergan might buy x, y, z. >> but if allergan were to do something, we don't know what it would be necessarily, but conceivably it would stop valiant in its tracks. what would the stock do? >> the reason why i like allergan on its own is they put out a $10 number. suddenly you lose the $10 number but you end up losing the cash. what i see is that i hope they don't do that. if allergan is independent, you have $160, maybe $170 stock on its own. typically 18 to 19. >> that means they have to continue to fight this fight over valuation and questioning valiant's business model and

growth. it simply comes down to, what will be that meeting? >> and allergan has to come through with these products people are saying are really big. they have a lot of work to do to stay independent. but david is still continuing to surprise people. you don't put a tough letter like that out unless you recognize he turned out to be more phorfo formidable than you thought. >> ackman says it's running the most unfriendly, hostile defense process in corporate america. >> i hope all the companies i recommend double. awful to shareholders, but the stock doubled. but that doesn't matter. kind companies. tuna with good taste or tuna that tastes good? >> we'll get cramer's mad dash as we count down to the opening

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all right. 6 1/2 minutes by my count to the opening bell. time for our mad dash. >> you and i have occasionally poked fun at research, at analysts. let's stop right now. russ at bank of america upgraded

caterpillar downgrades it just now. you know what? mining projects. they are in trouble. mining projects can get canceled right in the middle of a mining project. and they are worried about mining, and they argue their energy and transportation, the power systems business, has peaked. they think the 2015 outlook, they can't make the numbers. this is what's driving the dow stock. i salute a guy who recommended it at 80 and takes it off here. they prefer joy global, which is a mining place. i don't prefer joy. >> talk to me about mining then. is mining slowing and/or slowed? do they stop all purchases? >> watch the jjc. seems to go down every day. it's not me, it's copper. goldman comes out with the iron ore, it's peaked. look at clf. that's been a disaster. sorry to the guys who just took it over. >> well, they won the board. >> sold to you. here, have 17 board seats.

but i think mining is in trouble. caterpillar, this was an unbelievable call. no one liked cat. there are even people recommending shorting it. now is the time to get out of caterpillar. >> what else we got? >> okay. let's go from hard goods to soft goods. a company that i have -- oh, palo alto networks. this reported an amazing quarter. i have them on tonight. they say they've taken business from cisco. they've done unbelievable things taking retailers. yet, they still only have about 600 million in revenues. talk about how much money should be spent on cyber security. >> you've been getting behind these guys in a big way. every time we hear about a breach, why? >> because these guys are the guys who stopped it before. they detect it immediately. these are the guys -- i have to tell you, i know people love fire and home depot brought in symantec. in the industry when i talk to people, i keep hearing pa low

alto has the best detection software. they're spending but they're still making money. this is the play. i've been saying $100 per share since it's been in the 60s. we're getting to my price target. >> you are. all right. well, i'm interested to see where the ceo has to say tonight on "mad money." we have the opening bell in four minutes. stay withing us here on "squawk on the street." a lot of other things to get to, including worries about a slow down in advertising. i'll have that story and more when we come back. so ally bank really has no hidden fees on savings accounts?

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you'll bust your brain-box. all on thinkorswim, from td ameritrade. you're watching cnbc "squawk on the street" live from the financial capital of the world. the opening bell in about a minute. a lot to watch today. people trying to absorb apple's unveiling yesterday. the president, of course, addresses the nation tonight on isis, possible $2 billion deal out of microsoft, and a lot of analyst calls on big names. upgrade for twitter and initiation to netflix. >> the twitter call, go read that. that's basically saying, listen, this is the one that's going to monetize next. that's been the theme. that's a very good recommendation. i'm totally on board with that. >> ubs takes it to a buy. price target, 65.

they're upping their numbers for '15, '16, '17, '18. >> when i see these upgrades, i'm looking to see if the numbers are up. that's significant, well above everybody. i like that. >> there's the opening bell. the s&p at the top of your screen. at the big board this morning, wbi celebrating the recent launch of ten exchange traded funds. over at the nasdaq, aluminum, maker of life science tools, doing the honors. the netflix call we mentioned, by the way, initiating with a buy as well. >> suntrust was neutral, basically saying we love it but the stock is too expensive. you rarely read that someone says, i don't like a stock because it's too expensive. but we had a mobile downgrade. deutsch bank saying it's too expensive. >> having upgraded it in late august, which got the whole rally under way. >> we're seeing great research today. away from apple. meaningful research. >> speaking of which, i'm trying to think, there are some

upgrades of apple, right? >> some price target bumps, yeah. look, i think that when you -- don't lose focus. i think that people are going to be i-sixing themselves. the reason why is mobile payments for the six and health and wellness. there's a generational gap here. people who are 17 to 30, they want a tunup in their body. we look at maintenance required. we all have maintenance required, but we're not paying attention to that. we pay attention to that little thing, hence why you need mobile life. that avoids collision. >> it does. are they going to move into the body as well? maybe a backup camera for your insides. cardiac arrest baabout to occur. find yourself a defibrillator. >> if you can use a watch and get it -- look, there is

technology that makes wired into the health care system. saw that just the other day. there's a lot. i just think keep track. this is a health and wellness play. that's what cook stressed. everybody else -- well, you were there. you know. everyone else is stressing bells and whistles. he said, go talk to kevin plank, who i think is the foremost representative of the younger people who know what they want on organic, natural, and wellness. he says it's the only thing people really are most interested in, finding out their bodies. chip kelly, one of the top nfl coaches. everybody has to wear a little thing in practice. what's going on? and it's not the thing that ben richards had to wear, the running man. >> and there's the payments issue. ebay is the biggest s&p loser as piper cuts ebay to neutral, citing pressures from apple pay. >> and what it'll mean for paypal. >> look, there are a lot of options. we shouldn't just rule it out. we know there's room for everybody. but i do think that -- and we

know because you can wand stuff now at the airport. there's momentum here. this is itunes and all these payment companies are now, i don't know, atlantic records. a&m. right? >> i wanted to mention as i teased advertising, i was talking about outdoor advertising for the most part. although, there may be concerns raised more broadly. goldman sachs' media telecom related conference is starting today. we'll be covering it. i'll be doing some interviews from there, including the ceo of cbs. however, cbs outdoor making moves this morning in advance of the presentation they were going to make. the company said, national advertising hasning has improve slightly, but the overall market is not as strong as expected. as a result, they update their view of third quarter revenueses. they now expect to be close to flat year over year, down from

the low single-digit range of growth that they had provided on their august earnings call. this continues to include the comparison issue associated -- we'll leave it at that. so concern perhaps about a bit of softness. certainly in outdoor advertising. i would assume that's bleeding over to lamar as well and some of the other plays in outdoor advertising. that coming out of the conference. >> we hear that twitter -- putting more money to twitter, putting more money to facebook. it's got to come from somewhere. >> p&g. all the digital. not that they necessarily do billboards. but that's been going on forever. >> think about all the restaurant companies saying, listen, it's better to be on facebook. it's our favorite way to invest. then you see a lot of billboards for restaurants. >> the ads are not infinite by any means. speaking of big advertisers, mcdonald's is down again. it's within $1 of an eight

handle. stern today, or yesterday, said we believe mcdonald's has lost credibility with the asia pack consumer. you saw those numbers yesterday. people are talking a generational short. >> i did that last night on "mad money." i feel like this is about the food chain. every time you look at a chipotle, numbers are bumped. when i look at all the videos that chipotle has done, they're all about how corrupt the food chain is. if you look at the japan numbers with the problem really was, those are the china numbers, that's about people saying, listen, i can't buy this processed food anymore. i have to buy organic, fresh, natural. and that's just a secular trend. there's nothing you can do about it. they can't -- mcdonald's overnight cannot start offering natural and organic. as annie's told you, they had a 40% spike in organic wheat. general mills cannot bargain

down organic wheat, but mcdonald's cannot go organic because those burgers would cost $8. >> and hard to do. >> reports today about radio shack. no surprise. analysts pointing out that the company is very close to bankruptcy. >> an analyst, by the way, who likes big, broad opinions. >> yes, he does. and has been dead wrong on netflix for a very long time. i mentioned radio shack not because i have information to share with you about what may or may not be happening, but best buy is up about 1.5%. the idea being, hey, there's a lot of radio shacks out there. if you were to reduce the store count, as they already have, perhaps best buy would be a beneficiary. >> poorly run. a lot of different people have taken a shot at it and tried to

turn around radio shack. does feel very circuit city like. >> you mentioned sapphire glass. down again today, almost 10%. is there any way to understand what's happening in the supply chain? >> i don't know. yesterday it was eye opening to see the ceo of corning on "squawk" just saying, hey, listen, the qualities of our glass are better than sapphire. sapphire does not get the build into the phone. i think that took a lot of people by surprise. i think sapphire is amazing, but the qualities are obviously superior. no one ever talks about what's on the other side. it's aluminum. aluminum is on other side. >> do i hear klaus kleinfeld? >> listen, that stock has been a big winner. david makes fun of me because when i think of kleinfelds, i

think of the place you get the wedding outfits. what do i know about that? i don't know. i may. >> finally, philip morris raising their dividend to $1 from 94 cents. i think the yield now on pm is -- is it almost 5%? >> i was shocked at that. european -- the europeans tax tobacco like it's -- you know, let's stop sales. european sales rebounded. of course, anyone who goes to europe knows when you go to a restaurant, your hair smells of cigarettes -- well, other people's hair smells of cigarettes when you leave. that's one of the advantages of my hair. >> that's also one of the advantages of having a smoking ban as we have for quite some time in new york city and it began in many other cities. >> europe, they keep raising and it doesn't matter. the numbers don't stop. philip morris is an amazing company. >> china even more so. that's out of control.

>> i keep thinking if nixon were around, the speech tonight would be pretty amazing. he was good on foreign policy. tough. >> nixon, only he could go to china. >> he did a lot of things that before positive, dare i say. started the epa. >> how could kissinger be that smart at that age? >> dow is down about ten points. let's get to bob, who's on the floor. >> good morning. a fairly quiet open. a flat open. but bonds are moving. we're seeing yields moving to the upside. steve liesman's article yesterday about concern that the fed may change the language, promising to keep rates low for an extended period. that initiated another big discussion. a lot of paranoia out there about fed tightening. the yield moving to the upside. we also see yields moving to the upside over in europe as well. that's been going on for the last couple of days. we're still sort of flat in the markets, trying to get over

2,000 in the s&p. my good friend at raymond james had a good discussion this morning about how the market leadership is very iffy right now. of 1,025 stocks in his universe, the average stock he follows is 23% off its 52-week high. even though we're not far from new highs, there's a few big leadership stocks and a lot of other laggards out there. this is a sign that the advance is slowing a little bit. that's one of the things that technicians watch pretty carefully. in terms of what stocks are moving, i agree with you, jim, on your comments on mining stocks. australian mining stocks overnight in australia were notably weaker. a lot weaker than some of these over concerns of china continuing to slow. they've had a hard time recently. so keep an eye on that. another group that's weak again here is energy stocks, particularly the small exploration and production stocks. a lot of the shale plays are weaker. it's very difficult to justify high valuations in some of these smaller names when you have weak demand and fairly high supply, which is exactly the situation

we've been seeing. these energy stocks have been struggling for the last couple months. radio shack, you guys mentioned it. it's a very good point to mention. the comment was bankruptcy was imminent. here's the key line. brick and mortar electronics retailers will see persistent structural decline as internet sales continue. that's certainly true, but they've been wrong on best buy. they've come off their lows, so take that with a grain of salt. finally, on alibaba. after two days of a road show in new york, demand is strong. reuters saying they essentially have it already allocated and there's many days to go. take this with a little bit of a grain of salt. remember, institutions routinely ask for a lot more than they receive. in this case, there's going to be a lot of demand. to hear the road show has already covered one time, it doesn't mean an awful lot. you'll hear this three, four, five, six, seven times

oversubscribed. that's fairly common for a high demand ipo. i think you're going to hear more about this. of course, the question is whether or not they're going to actually increase are the price or the size. the answer is maybe. remember, there is a green shoe associated with this. that's an additional 15% that could be allocated automatically by the people who are running the book there. if that happens, if we get that 15% instead of $21 billion for an ipo, now we're talking about $24.5 billion. if we get there, 24.5 billion, even with that green shoe, now we are talking about the biggest ipo of all time. the old one, the agricultural bank of china back in 2010. that was about $22 billion. so my anticipation here, just based on what we're already hearing, is they'll probably exercise that green shoe because this probably will be the biggest one of all time. as to whether they'll increase the price from 60 to 66, that remains to be seen. guys, back to you. >> thanks a lot, bob.

when we return, apple's new products make their way into pop culture from colbert to fallon, justin timberlake. you'll want to see what we're talking about next. also, instacart one of the companies agreed to use apple pay. we'll talk with them a little bit earlier on squawk alley. back in a minute. kblap [ male announcer ] ours was the first modern airliner, revolutionary by every standard. and that became our passion. to always build something better, airplanes that fly cleaner and farther on less fuel. that redefine comfort and connect the world like never before. after all, you can't turn dreams into airplanes unless your passion for innovation is nonstop. ♪ my golden years will not just be gold plated. unless your passion for innovation is nonstop.

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woo! woo! woo! [ cheers and applause ] what? what? what does it do? i got to have the apple watch. >> that was stephen colbert last night obviously pumped up about

the apple watch. apple's event definitely establishing itself in pop culture. "the times" today says if there's any question about whether tim cook is managing the reigns of the world's most valuable question will likely be put to rest. >> completely. people ought to look at numbers. the stock has done great under cook. cook's done -- i said something yesterday, and i didn't mean any disrespect at all to the memory of steve jobs. but if you read the book, steve jobs had very traditional methods. i don't think that's necessarily the best, but each person to his own. tim cook has the zeitgeist of health. health and wellness, whether it be with chipotle, whether it be with under armour, now whether it be apple, it is the theme for the world, and he's captured it and jobs didn't. this is about health and wellness.

>> although, isaacson wrote jobs was frustrated by the health care community in his final days, dealing with the antiquated instruments that measure how we're living or dying. >> well, we know that this is a personal thing of cook. i think it's what -- look, i was trying for a while. i think that people have to recognize that knowing your body is a worldwide phenomenon. it has to do with the internet and the ability to be able to match your numbers at the end of the day. i have a standing desk at cnbc. why? because i know it's better for you. did you see the function of whether you've been standing for -- i mean, it was like, has he just read america's doctors' minds? cook is so far ahead on this. >> by the way, they are enlisting jimmy fallon, the host of "the tonight show," justin timberlake for their new ads. check out one of them. >> this is the iphone 6. >> and this is the iphone 6 plus. >> they come with a thing called health so they can help you track a lot of stuff. like today i walked 3.8 miles.

>> well, i ran 4.2 miles. >> well, i climbed 11 flights of stairs. >> well, i drank a smoothy that had 362 calories. >> well, i had a funnel cake that had 1230 calories in it. >> you know that's not good, right? >> it was good. it was delicious. >> got some young voices. >> i love funnel cake too. i don't want to know any of that stuff. not any of it. i'm sorry. and i don't want anybody stealing that from wherever it is. i don't want my insurer knowing and asking me to get lower rates by putting one of these things on and denying me because i went to mcdonald's, even though i don't go there. >> when you see the price of insurance and how much it's gone up, maybe you could get a better deal if you wore this watch. >> young people get old too. they may not want it either forever. >> i'm getting older too. quick song, which one?

>> grumpy old men right here. >> if he understood what younger people understood, then he'd be buying this watch. you'd be buying multiple watches as i will for my girls. >> i'll watch my kids and see if they buy the watch. >> they can't afford that. >> then i'll be able to monitor their every move, which they'll be really about. i'll know where they are, what they ate, who they're with. >> and you'll be using a phone to swipe things on your bill, as well as the chinese hackers. you better start watching your bill. >> chinese hackers, they already got me. they got me, tossed me, and left me on the side of the curb. >> it was the russians that got me. this is like 1952. >> like that documentary. crazy. every computer i touch. >> i like that documentary. >> you have bad luck with computers. >> he's brought up that documentary so many times. i'm wondering if you were unhappy with how many people watched it. >> well, it was a year and a half ago. we were early. very early. >> they were on it. >> people who downgraded apple were.

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time for kramer and stop trading. >> when land's end spun off from sears, even though they had to

pay that dividend, land's end has a great business. the ceo is excellent. by the way, david darst, his daughter is the chairman. john mcclain, the former cfo. brilliant man from jones apparel. it's incredible how well the company's doing. tonight, the president's speech. you want to buy alieliant tech. lockheed martin has a good dividend. lockheed martin is always going to be in the mix. if you go to the website, they are the unmanned company to buy. this is going to be -- a lot of it is going to have to be unmanned. the president doesn't want put boots on the ground. also, a terrific cyber security business. mark mclaughlin on tonight because cyber security is everything. after that remarkable quarter.

enterprises around the world are recognizing that cyber security is a very lasting and important and probably permanent item. it's a ceo item now. no longer cto. palo alto has the best protection. >> did you expect a more forceful discussion of security a at apple? if there's a negative argument today, it tends to be that, right? >> i don't know. i felt if i went this way, it would be less likely i'd have to worry about hacking and my credit cards. i'm very worried about my credit cards. i have someone who checks my balances every monday because i'm so afraid i'm missing something. that's what every fbi guy tells you to do. the fbi guys, by the way, they're not from ceos at companies. >> the fbi guys will go so far as to say don't even bank online. that's not a practical matter for most people. >> but jack lew, the secretary, is very worried.

when you watch mark mclaughlin, who i think is the foremost expert in cyber security, he has 598 million in revenues. his company is going to have 5.9 billion in revenues. you have to. you need this company. >> you mentioned defense. there's also, i think, a cleavage between the west coast, silicon valley, and their approach to cyber and what we're seeing in the government. it's interesting as well. they're not all on the same page. and they should be. not to mention from the defense perspective of the nation and what could be done by our adversaries. >> and then again, remember, there's always a big war on who to use. palo alto talking about they want a major retailer and taking business away from cisco. i want to the hear from cisco on the other side. i think chambers is doing a good job. cyber security is a niche business that's going to be a huge business. palo alto, way too small a market cap given what's going on. >> jim, we'll see you tonight. >> wow. welcome back, carl. i don't know how you do it. you're fresher than you were before you left. do you use muscle milk?

>> jim cramer, 6:00 p.m. on "mad money." >> could congress be about to stop the tax inversion? chuck schumer will be lives with to tell us all about it. and we'll hear from companies partnering with apple pay. what it means for you, your wallet, and ultimately for apple shareholders. hour two of "squawk on the street." looking good! trying to keep up with you! i told my producer karen that i take metamucil because it helps me feel fuller between meals. it's just one small change that can help lead to good things. now she's breaking up with the vending machine. nope. i call that the meta effect. [ female announcer ] 4-in-1 multi-health metamucil now clinically proven to help you feel less hungry between meals. and promotes heart health. experience the meta effect with our new multi-health wellness line and see how one small change can lead to good things.

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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 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.

welcome back to "squawk on the street." we begin with breaking news on wholesale trade. jim is at the cme. hey, jim. >> hey, carl. two numbers coming out. wholesale inventories and sales. wholesale inventories came out at plus 0.1 which is worse than expected. wholesale sales numbers come out as plus 0.7, which is better than expected. last time was revised up to 0.4 as well. the takeaway from this is the wholesale inventories number. economists lean on that for gdp estimates. it was definitely worse than expected. the stock market came in heavy and basically stayed where it was, down six in the futures. and yields stayed the same, ten-year at about 2.53. back to you, sarah. >> thanks very much for breaking

that number. shares of apple are higher this morning. just one day after the big unveil. will apple's new products send the stock higher? more than just a quarter percent. let's bring in ahmed from rbc capital. how do you take what we got, two new phones, apple pay, and the announcement of a watch, and then model it into what it's going to mean for revenue growth in the next quarter, which is basically what you did in your note this morning? >> yeah, no, it's definitely not an easy task given the multiple new products they have out there. ting from a revenue basis, though, the most relevant thing for them is going to be the iphone 6. two things that stood out to us. one, i think esps will move much higher. secondly, i think the content going up could also drive the market higher. we think when you look at revenues it and gross margins probably have a bit more upside

bias for apple. apple pay and the apple watch will probably be more immaterial to revenues. should become a bigger story in 2015. >> you know, we have steve milon milonovic with ubs. is it just going to be the iphone 6 and 6 plus in terms of the next boost with profit and revenue? >> i think so. i think expectations were high coming in. i think for the most part, they were met. the iphone 6 is the most financially important part, even though it was very much as expected. we think a large screen is going to be a big reason to upgrade your phone. from an innovation standpoint, the apple watch, obviously, was very important. it's only the first iteration, but i think it's got a lot of apple magic in it. from an ecosystem standpoint, i think apple pay is the glue that puts it together. >> it seems like that's what investors were thinking as well. i was watching carl breaking all the news and headlines yesterday

out of the event. the stock really popped up on announcement of apple pay. how do you factor that in, in terms of a growth driver? when does it start to really matter to the bottom line? >> well, it's certainly going to take time to replace the wallet, as tim cook indicated apple wants to do. our view has been that the services at apple are mostly there to support the devices. there might be some disappointment that they're not going to create a huge revenue stream from this. it's certainly not disruptive of the current payment structure sitting on top of visa, mastercard, and so farther. nevertheless, you're going to have an iphone 6 to use it. you're going to have to have an iphone 5 or 6 to use the apple watch. so it's very much expanding the ecosystem, even though i don't think it's a great revenue generator by itself. >> well, to your point about what tim cook wants to do, let's listen to what he said during an interview on abc last night when he was asked whether it was going to disrupt the way we use credit cards and the way we pay for things. >> there were a lot of people who said, tim cook is going to

walk on to that stage and kill the credit card. did you? >> i think that we put a dagger in it. >> ahmed, that's a bold statement. what does it mean in terms of numbers for apple? >> again, something near term that's not going to get a lot of revenue. i think apple payment is going to be the killer software application that will drive people to buy the iphone 6 in general. i think it's going to be more a driver that pulls in the hardware versus apple pay becoming the revenue in the near term. if you stretch this out, the beauty of apple pay, it's a lot more secure. it's a lot more easy to use. and it takes a lot of the theft risk away from the process. i think down the road, as they really do take out the traditional wallet, you'll see better revenues. >> i'm a great apple fan, but apple is not the first group of people to come forward with this type of technology. and a lot of them have not yet got critical mass, putting that

to one side. let's talk about the stock, which has had this huge 30% run up in advance of yesterday's unveiling. what will it do from here, do you think? i mean, presumably the temptation would be to book profits after that substantial run. >> absolutely. and i think there's plenty of historical precedents that apple underperforms after an iphone launch. it could be different this time. step one, the weaker numbers you get in a couple weeks will be much bigger than what you've seen in the past. that will be an upside driver. when they do report numbers in october, we think they could surprise on not just the unit number but on the revenues and potentially eps as well. i think the next two catalysts will be favorable. >> we have to leave it there, guys. but thank you both for weighing in. >> thank you. >> switching gears to washington now.

tonight the president will deliver a primetime speech to outline his strategy to defeat the militant group isis. obama telling congressional leaders at the white house yesterday he doesn't need their authorization to expand the military campaign into syria. cnbc will have live coverage of the president's address to the nation tonight at 9:00 p.m. eastern time. white house also upping the pressure on congress to close tax loopholes, which allow u.s. companies to avoid u.s. taxes by shifting their headquarters overseas. the administration saying that if congress doesn't act on so-called tax inversions, the president would take executive action soon. joining us this morning first on cnbc is new york democratic senator chuck schumer, sponsoring a new bill to restrict inversions. senator, good morning to you. >> good morning. >> the corporate inverters earnings stripping reform act of 2014. walk us through what it does. >> well, basically what it does is it no longer allows companies to borrow overseas and then use that deduction to avoid paying taxes on their profits here in this country. and that's only for companies

that have done inversions. it's something that affects not just companies that have a lot of foreign competition, but what really jolted congress was when companies that were largely american, such as walgrens, decided they wanted to invert. they don't have much foreign competition. almost all their revenues are u.s. yet, if they inverted, they could use earnings and borrowing overseas to prevent them from paying taxes on their profits here. >> right. although, walgreens, to be fair, did not choose to invert and is buying alliance, which would increase their foreign profits a good deal. >> yes, but they admitted it was only because of the pressure that many of us called them out against. they were intending to do it. >> is that all this really is, pressure? for example, retroactivity is a part of this bill, back to 1994. i think it's a deal breaker on

the republican caucus. are you willing to give that up? is there any real chance of legislation? >> yes, here's what i'm proposing to my republican colleagues. it's not in the bill that a whole group of democrats introduced, but we want to compromise and get this done. it's a very good political issue, but i'd rather get something done than have the political issue. we would propose to temporarily stop inversions until 2017. when, really, tax reform is the real answer here. i believe the corporate rate is too high at 35%. it should come down. but it should come down in an orderly way where you close loopholes and use that to reduce the rates. if this inversion proposal stopped inversions until 2017 and then expired, it would put huge pressure on the congress to do tax reform. and at the same time, prevent companies from inverting, which would reduce the pressure they would put on congress to do tax reform. so i'm proposing to my republican colleagues a real

compromise, both of us, a good number of democrats and republicans who want to do corporate reform. and this would be a good path to do that. >> it's been reported that the head of cvs, the drugstore chain, was on our show the other day, met with you and said, senator, you have got to do something about this or there will be scores of others. i think you suggested there would be more in the month of august. how many do you think are in the wings? >> well, there are a bunch in fact wi-- in the wings, but they're looking at us. we're not going to get anything done in the next two weeks, but the kind of compromise i proposed has a good chance of happening in the lame duck session of november. there are republicans who are interested in it. the fact that the administration may take certain actions that wouldn't be as comprehensive as legislation to put a crimp on inversions, i think it will slow down the rush to do these inversions. and let's face it, many of the corporate leaders don't want to do inversions. but their shareholders, particularly some of these hedge funds buy them and say you got

to do this because it will temporarily increase your profits. well, you know, that's how american capitalism works. but putting pressure the other way is a good thing. >> senator, can i just change the subject to foreign affairs? there's an article in this morning's journal which you've probably seen where they suggest that actually you could lose control of the senate as a result of the plunging popularity of president obama. now at 40% below what george w. bush or bill clinton was at their own midterm problems. as he addresses the nation tonight, and foreign policy is one of the major reasons why he seems to be losing popularity, as he addresses tonight the nation at 9:00, is that something he can correct, do you think? >> i'd say two things in answer to your question. first, i think the president's going to be strong. i think that's what the american people want. there's a fear of isis out in the land with some justification. while most intelligence reports say they can't hurt our homeland now, that if left alone they could, so i think americans have

given the president a permission structure to be strong against isis. i think if he does speak strongly about doing things to stop isis, particularly from isis hurting our homeland, he'll get broad support, democrat and republican in the congress. and i expect that's what he will do. on losing the senate, i know that's the prognosticators. if you look at it in a national type way, do you like president obama, do you not? particularly in these red states where we have a lot of incumbents, that hurts us. but when you compare the favorability of our candidates against the republican candidates, we're doing well. right now if you did a snapshot of all the polls, we'd keep the senate. and i think things are going to move in our direction, not only because the president will show some real strength on foreign policy, but also as you get closer to the election, the focus more and more becomes on the two candidates and who they like better, who can represent arkansas better, who can represent alaska better.

and we do better in those kinds of contests. i would predict we're going to keep the senate. >> senator, back to the issue of inversions and tax reform. i think those who are doing the inversions say, listen, we're still going to be u.s. taxpayers, albeit to your point they do take on debt and therefore are able to reduce their u.s. earnings. we may be able to repatriate cash that otherwise would sit there, bring it back, and actually hire people for jobs. and finally, they would also say, you know what, the numbers don't add up to what the likes of other companies such as apple, which transfer their ipo overseas and generate a lot of royalties in foreign countries do. you're not dealing with that. >> all of that argues not for a piecemeal approach but for a general corporate tax reform. not to let each company find whatever loophole it has, overall reduced revenues and make the tax code more unfair and more like swiss cheese. this company has an advantage over this company because of a peculiarity. but rather, we should do corporate tax reform.

and the way to do that is not allow individual loopholes to close but close those off and say now let's do tax reform. the fact that we would let our inversions bill if republicans would agree end the ban on inversions in 2017 would be a huge impetus for tax reform. if you ask corporate leaders, 95% of them would prefer broad tax reform than any particular loophole picking. >> one last thing, senator. s&p ran some numbers. in the past 12 months, there have been $5513 billion-dollar deals or more. the number that are inversions, seven. does that feel like a lot to you? >> no, but i think it will get worse. >> senator, thank you for your time. of course, the president tonight on cnbc. we'll carry that live at 9:00 p.m. eastern time. up next on the program, markets are taking a bit of a leg down this week. it's an interesting phenomenon as the dollar rises. find out what's pushing stocks

into the red and how you should play it through fall. and later, the mlb pairing with apple pay so fans can instantly buy tickets to games. we'll talk to bob bowman, the ceo of mlb.com next about the partnership. squawk on street will be right back. when fixed income experts work 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.

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the stock is soaring after preliminary fda reviews said the company's hormone replacement therapy reduced the need for calcium and vitamin d supplements in clinical trials. it comes two days ahead of meetings on where the drug should be recommended for approval in heavy trade. you can see there this is treating symptoms of something that leads to deficiency of calcium in the bloodstream and causes cramping and muscle twitching. so something to watch for sure. back over to you. >> great development. all right, dom. thank you very much. the front page of "the financial times" highlights how investors are chasing the dollar to new highs against a broadening range of currencies. in fact, the dollar index is now up a staggering 5% over the past two months with the move accelerating in recent sessions on growing talk that next week the fed will choose to spend a more hawkish signal on when it raises short-term interest rates. let's bring in the president and portfolio manager with permanent portfolio funds. also joining us, market strategist with private cline

group. good morning to you both. >> good morning. >> good morning. >> kevin, if the dollar has risen 5% over the last two months, presumably the value of the foreign earnings of these big blue chips quoted down here at the nyse has fallen by 5% over the last two months, is that why the market is stalling? >> it might be part of it. the real reason the dollar is moving higher is there's a concern the fed may begin to move interest rates higher. there was a paper out of the san francisco fed a couple days ago what warned markets are not quite pricing in the potential for higher rates. if you look at the futures market, there's nothing on the horizon. we think interest rates start to move higher by the latter part of next year as the economy gets better. the dollar would strengthen. at the same time, the ecb is looking for ways to expand their policy of buying assets, which would weaken that currency. to us, it's the improving dollar is really a function of a better economy. that's ultimately better for corporate earnings. >> would you say the same,

michael? >> i would say broadly speaking, that's true. i think rates are going to gradually go up due to improving economic conditions, but there will be a ceiling to that. i think the economy is too anemic given the current structural impediments to cause a rise or allow for a rise much more than that. i do also think the divergence between what the fed is going to do at some point, the rise in u.s. rates, and the quantitative easing and other measures in europe and japan are causing a differential there that's strengthen the dollar. in the longer term, you know, as long as the u.s. is growing, that's great. corporate profits grow, et cetera. but there will be sort of head winds, if you will, on the negative currency implications on u.s. earnings as you mentioned, which could affect pes on a longer term basis if that trend continues. >> whatever it is, the catalyst for perhaps knocking this rally off the recent high is whether it's the dollar or not. kevin, do you get concerned that bullishness seems to be rising and that every day we wake up with a new equity strategist

raising their forecast for the s&p? i think this morning it was piper jaffray. but this does appear to be more of a group think, that stocks continue to go higher, more so than what i've seen in the last year as this market has climbed. >> yeah, there's clearly a lot of bullishness. in fact, i would reframe the market. you're looking at a market that has been driven by momentum. it has been driven by a lot of bullish sentiment, really beginning before the start of the last round of quantitative easing. all of the riskiest sectors have really led higher here. this has been a beta on risk on market the last two, two and a half years now with very low negative interest rates for five years helping to support that. ultimately, that can't go on forever. so we have been in a bull market. we're looking at the s&p near 2,000. i don't think there's a lot of loss of enthusiasm for this market. a lot of money coming in and pushing this market higher. >> okay, kevin. forgive me for interrupting, but if next week the fed does just

slightly technically change its language but it is signaling that we're on the path to higher rates, do you think the market will shrug that off, or could that be a further pressure on a market that, as i point out again, has been unable to make headway over the last couple of weeks? >> a lot of the correlation between the stock market and what's been going on with monetary policy, there's a high correlation between what the fed has been doing and what the stock market has been doing. if the fed startins to indicate they're tightening, see higher rates and turbulence in the market as a result of that. >> what does that mean? is that a correction? >> yeah, i think short term this is new information to the market because the futures market is not pricing in higher rates. if they start to price in higher rates, then it means that the market will need to express that somehow. and it probably means a break in the action. but it's not the worst thing because the market just can't go on higher. a correction would be something

like 10%. 10% would be sort of the number you would expect. keep in mind, this market has had an enormous cap. big move already. >> that's the bigger point. kevin, thank you for your time. thank you both for your time. >> thankthanks, simon. up next, a home run for mlb.com pairing with apple's new apple pay system. how did it come together? mlb.com ceo bob bowman will be joining us live after the break. it's monday, a brand new start. with centurylink visionary cloud infrastructure, and custom communications solutions, your business is more reliable, secure, and agile.

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so it was a grand slam for apple yesterday as c.o. tim cook unveiled not one, but two iphones, an apple watch, and of course apple pay, its new mobile payment system. among the big names now queueing up to partner with the tech giant's digital wallet is mlb, major league baseball. fans will soon be able to use their iphone to instantly pay for tickets online using fingerprint touch i.d. on mlb's at-bat app. in an exclusive interview now, bob bowman, the c.o. and president of mlb.com, which is also importantly the owner of tickets.com. joins us live. bob, welcome to the program. >> good morning, simon. how are you today? >> i'm good. i imagine as the highest grossing sports app in the app store for now the seventh year, it was inevitable that the pair of you would kind of beat a path to each other's door to do a deal on this. >> we're blessed that apple

thinks highly of our development team and that we have a good development team. they've been out there for a while for this conference as they've done in the past with the ipad and with the iphone way back when. it was natural we're there. we're delighted to be there. this is going to be much bigger than the analysts think it's going to be. this is going to be very, very big. >> okay. let's be clear, though. the world is talking about the new antenna you touch close to a sensor on the iphone, and you transmit the payment in that manner. you presumably, as an online player, are talking about something different. this is about activating the fingerprint technology to activate a payment. not necessarily the transmitter, correct? >> no, no. but look, we're building an app that for all of our fans, 75 million fans that go into the turnstiles every year, they're going to be able to use this phone. they won't need anything at a ballpark anymore. they can walk in with their phone as a ticket. they can pay for everything with their phone. it's going to make the experience at the ballpark phenomenal. way back when, simon, it was

talk and text. then we went to content. now the final frontier is commerce. this is great news for any retailer, and we're a retailer too. online, offline, it's great news to be on the mobile phone. and it's good news for samsung who had nfc as well. >> you say this is going to be big, bigger than the analysts say. what indication do you have that consumers are going to adopt this technology and abandon their cash and credit cards? >> i just think that it isn't just the technology. it's where it is. it can't just be technology. it can't just be content. when you combine the technology with a mobile phone, that's a juggernaut that's going to be hard to beat. it's going to be transgenerational. younger kids who don't carry money are going to love this. people even as old as i am are going to love it because it's easier to do things. i think the fact it's on the phone is finally what will be the lance to the boil called a credit card. it's still a credit card, but now you're going to be able to do everything with your phone. i think the analysts are really

underplaying this. it's not just apple. it's everyone who has nfc in their phones. >> people are wondering, if it's such a big deal, what is it neck no logically that gives apple an edge? how long does that edge last once android players start thinking about their response? >> i think that's a fair question. is that you, carl? >> yeah. >> i think that's a fair question because samsung had nfc, you know, android in the galaxy 5. didn't really work well. apple will do a great job. i think samsung will be there as well. i think for all of us, android will have it, apple will have it. it's great news. as i say, transgenerational. these young kids are going to love this technology because they don't carry money and they don't carry credit cards. i think this is a home run for tim cook in every way. we're very -- we're excite kpd about it, not just for online, which we do all the time, but because people use the phones throughout the ballpark. 75 million people every year. this is very big news for our business. we're delighted to be partners with apple.

>> yeah, of course, as a new york mets fan, putting a competitive team on the field would be helpful too in the ballpark, bob. >> just wait. there's always next year. >> thank you, bob, for that. >> a lot of good young pitchers. >> yes, we do. by the way, our viewers may not understand. you've been at this a long time. you've been working back from, i don't know, 2000. i can remember meetings with you where you were unveiling technology. i'm interested in your views. give me a sense of how long this is going to play out over. it wouldn't seem to me this is going to be something that takes place next year. you're talking about years' long transition. >> i think for sure. but think about it. the itunes store is what now, ev seven years old? it does $10 billion, $15 billion a year. so it'll take three to five years. that's why they call you the brain. i think that's probably a fair estimate. it'll take three to five years. but it's going to happen.

you can never fight technology. it is the 800-pound boulder rolling downhill. embrace it, love it. i think kids are going to love this technology. i tip my hat to everybody. >> before we go, you use the expression lancing the boil at the credit card companies. credit card companies are particularly unpopular with merchants because of the huge slice they seem to still take. why do you think that in this process tim cook has kept the credit card companies on his side, still within the apple complex, if you like? is that so he can leverage something from them rather than cutting them out completely? in other words, say, look, you make great margins, stay in the game, and i'll just take a slice of that rather than challenging your position. >> i'm sorry if i said credit card companies. i meant credit cards. i apologize, simon. i meant the actual physical card. i think those are going to go by the way of the buggy whip. credit card companies serve an invaluable role. middlemen make money all the

time. credit card companies, mastercard, who's our partner, extremely valuable. tim did it right. enlarge the tent. credit card companies are still going to be there. it's the credit card that's going to go bye-bye. >> well clarified. bob, thank you for your time. bob bowman, mlb.com ceo and president. straight ahead, we're going to talk to another company getting in on the apple pay action. that's panera. we'll find out what it means for the restaurant chain when we're joined by one of its executives later on. dow is down 13 points. while every business is unique,

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a little over an hour here into trading. here is what is moving on the big board. s&p losers we're watching. ebay, valero, tesoro, caterpillar. some of the energy and resource names in there. ebay downgraded and cited apple pay. a lot of folks watching this stock yesterday. it fell after apple announced the pay. perhaps a threat to ebay. >> we know the love affair with apple. holding on to that 110 target. >> everyone else, steer clear. and the winners for today. hartford financial, i.c.e., amazon.com. it was out yesterday that amazon prime is going to be the -- the video is going to be finally

streamed on android. the other big news out of amazon this week is its phone is going down to 99 cents. perhaps people are just -- >> that was monday, wasn't it? pre-emptively. >> the stock was down yesterday. >> on that news. that's kind of bombing. here's a stock that is way down. we're keeping a close eye on it today. radio shack falling again after an analyst lower t eered the pr target to zero, saying bankruptcy is likely. the company is reporting earnings tomorrow. this is not the first zero, right? what's the future of this company, david? >> i think you're seeing it right there. telegraph by the stock. usually when you get to 79 cents, not saying too much. but the question, of course, is do they enter bankruptcy? is it a reorganization? how many stores close? best buy is potentially a beneficiary, why that stock is up. >> all right. check out shares of twitter. doing well. the company got an upgrade on improved digital advertising.

analysts are changing their tune about twitter here. >> these numbers, that's the street high. you're talking 20% to 40% increases on estimates for 2015, '16, '17, '18. it is a bold call on twitter and a $65 target. >> all right. >> and a growing sign of panic in london perhaps over scotland's referendum on independence. david cameron today canceled his weekly appearance in parliament, traveling instead to eden borrow to beg scots not to rip britain apart. >> i would be heartbroken if this family of nations that we've put together and that we've done such amazing things together, if this family of nations was torn apart. >> interestingly, cameron has so far stayed out of the campaign for fear his conservative party's long-standing unpopularity in scotland may

inflame the situation. of course, that maps out the difference between the system here, where the president will remain the president, and a party system in the u.k. where if the ruling party, the ruling coalition decides to ax its leader, they can do that. remember, that's how margaret thatcher fell and indeed tony blair. >> good bit of history. i'm just watching the british pound. that's where they say this is all going to play out if there's any risk for that to happen. increasingly strategists say if we get a yes vote, which is not -- wasn't the best case scenario before this weekend, the pound could go into the 150s, which would be significantly weaker from here against the dollar. >> good for the scottish, though. >> bad for us. >> whiskey. >> when we come back, panera customers will soon be able to use apple pay at many of its restaurants. so how did the company decide to partner with apple, and what does it hope to gain? we'll talk to panera's chief

technology officer live when "squawk on the street" continues. act i. scene 3. open port twenty-two-oh-one-seven on the firewall for customer db access. install version two-point-three of db connector and ensure verbose flag is set in case of problems.

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crude oil is down more than a dollar. take a look at energy today. one of the worst in the s&p. dominic chu is back with more. >> the worst by at least half a percent at the s&p sectors oversove overall. you have refining names leading the way. and the big ones. valero, also tesoro. those are four of the worst performing stocks in the overall sector. this as oil prices continue to fall here. brent now still below the $100 per barrel level. energy stocks overall have been on the steady down trend since the august of august, early september. that trend continues today. back over to you. >> thanks very much, dom. apple unveiling its new mobile payment technology, apple pay, yesterday. some big-name retailers already jumping at the chance to partner with the tech giant's new digital wallet, including, as you can see, panera bread.

inning us now exclusively to explain how it will work in the stores and the safeguards in place to keep your financial information secure, the chief technology officer with panera. good to see you. >> good morning. how are you today? >> well, you know, it strikes me -- i'm good -- that tim cook in an interview yesterday said it'll put a dagger through the credit cards. is this really from your vantage point the beginning of the end of plastic credit cards for transactions in places like panera? >> obviously, you know, i'm not a future teller, but it clearly will play a significant role in the future. i have no doubt about that. and just between the convenience and the security that's offered through apple pay, i think there will be a material impact. we'll see whether tim is actually right or not. but we obviously want to be on board with that trend. >> so how is it going to work? you go into panera bread, take out your cell phone and have something at the register that

enables this to just scan the information on your credit card? >> actually, it's much more even secure than that. remember, you've actually stored -- not stored your credit card, but you've associated your credit card to your phone. so literally, you walk into a panera, you place your order, and you hold your phone up to a device. you use your thumbprint to actually secure the transaction, and it charges then directly to your credit card. we don't see the transaction. apple doesn't see it per se. we see it to make sure we can make it. but it's extraordinarily secure. and then you can also use the same feature as part of our mobile application. >> so blaine, because apple has access to that chip, they're able to execute directly with the banks. is that right? >> that is absolutely correct. >> and is anybody else capable of that, or any other players be capable of that as well? >> you know, i think you'd want to talk to them, truthfully.

i'm certainly not the one. clearly, i think apple is setting the bar pretty high on this. and, you know, my hypothesis is that other people will come along. the capability that apple offers now with the integration of the banks, the issuing banks, the processors, and the merchants is unprecedented in this space. >> we see these hack attacks nearly every day, some big ones. and they're in the retail consumer space. you've seen it at target, home depot. how concerned are you about this? are you confident that this is a safer meth than the traditional magnetic strip credit cards? >> yes, i am actually quite confident that this is a solution. i think there's emerging other solutions as well, but i absolutely believe this is a solution. so for example, on everything you do in the future at panera, we will encrypt your card at the head. i will never actually see your credit card.

never, ever. so by doing that, we prevent this across the board. but clearly, this is probably the most secure because it requires your fingerprint. >> let's game it out. 12 months, 24 months? what percentage of all transactions might happen under apple? >> wow. i have no idea. we have no hypothesis, truthfully. you know, my expectation, it will build. because it requires the new device, it'll take a little while for it to get rolled out. but i do believe this will be the fastest uptake of mobile payment that we've ever seen. certainly in the united states. >> in the payment chain, blaine, who is actually giving commission to apple? presumably the credit card company is at the end internally within their system. are you also giving apple a take on the sale? >> at this point, you know, what apple does, i don't know. certainly at this point we are

not giving apple a take. >> i beg your pardon, i didn't hear that. you are or are not? >> we are not. >> interesting. >> all right. thanks very much for joining us. we will see. blaine hearst, the ceo of panera bread. >> thank you very having me. >> still ahead, apple employee number 66. he says steve jobs himself was working on the apple watch back when he was with the company. he'll join "squawk alley" a little later on. and the newly minted c.o. of sprint, marcelo claure, out with bold comments today on sprint pricing and his competitors. basically, you can have an iphone for life for $70 a month. they'll change it every two years. tomorrow he sits down with david faber.

hi, are we still on for tomorrow? tomorrow. quick look at the weather. nice day, beautiful tomorrow.

tomorrow is full of promise. we can come back tomorrrow. and we promise to keep it that way. driven to preserve the environment, csx moves a ton of freight nearly 450 miles on one gallon of fuel. what a day. can't wait til tomorrow.

everyone is looking for ways while to cut expenses.s unique, and that's where pg&e's online business energy checkup tool can really help. you can use it to track your actual energy use. find rebates that make equipment upgrades more affordable. even develop a customized energy plan for your company. think of it as a way to take more control over your operating costs. and yet another energy saving opportunity from pg&e. find new ways to save energy and money with pg&e's business energy check-up. welcome back to "squawk on the street." we're watching shares on the automaker visteon. the board is splittinging its electronics and climate units apart. the stock is up near session highs by 4% on the day and, carl, does it make us feel old

we still remember the days of visteon as part of ford motor? >> i don't think about it a lot, dom, but thanks for bringing it up. meantime, general electric's fast growing oil and gas business holding an investor meeting today. mary thompson had the chance to sit down and talk with its ceo, one of the executives to be on the short list. hey, mary. >> reporter: at 41 years old lorenzo simonelli ran the transportation business before taking over oil and gas. now this business is a growth driver for ge. revenue jumped 75% from 2009 to 2013 and it accounted for 43% of ge's top line growth in the past five years. simonelli said he was given two directives, keep the business growing and harness technologies to better serve oil and gas clients. he says these technologies from businesses as diverse and aviation and health care help compete with longtime rivals.

>> you look at the blades, the carbon fibers, we're able to take that lightweight material knowledge, bring it into the aspect of oil and gas. you look at the power and water, the capabilities on the turbines, bringing that into oil and gas. you mention health care, the monitoring, the diagnostics. we have a big focus on making sure that we can reduce unplanned down time for our customers and that means going into also analytics. >> reporter: those analytics means software so they can improve those scheduling and production. simonelli maintains it will grow at the 6% rate with demand for subsea drilling, measurement equipment, fueled not only by the shale boom here in the u.s. but the many new discoveries in developing regions around the world. >> what's happened in north america, and as you said, it's extremely exciting and we're fortunate what's takinging place

here and we're active in north america. we also see a lot of opportunities taking place in africa, as you look at the number of discoveries that have taken place. but you look around the globe. there's exploration that's ta taking place on an ongoing basis. but weigh focused in the key geographic areas, and we've placed capabilities in each of the regions and we have a regional model to really make sure that we're close to each of the customers. africa is a focus area as well as southeast asia. >> the units revenue of with about $17 billion accounted for over 11% of ge's industrial revenue last year. profits 13% of the industrial businesses total. oil and gas is the business most levered to international growth. as 100 sites around the globe. much of the business is done in countries where poll it particulars go hand-in-hand with business. >> oil and gas industry is always in places of political instability and risky areas. the first aspect is being close to our customers.

we remain very close to our customers. we talk to them on a continuous basis. we work with them hand-in-hand. we also obviously stay close from a political standpoint, understand the political situation. in russia we're monitoring 0 the situation closely. understanding what the impact is of the sanctions. also abiding by the sanctions. and we do that on a global basis. >> reporter: now going into today's investor presentation, the key question he is how does simonelli plan to increase margins at 12.8% lag those of rivals last year? he points out while margins improved this year boosting them is an ongoing effort. >> we're focused on bringing down our product costs not only for our customers but the returns of our shareholders. and that's really what we're bringing from the rest of the portfolio of ge as well, personal execution, the simplification and adopting fast works. fast works is an initiative that allows us to get things out there faster and lean er.

>> reporter: it will be critical as capital expenditures are seen slowing in the coming years. investors will be keeping a close eye on what he does. he's often mentioned as a possible successor to jeff immel. >> now over to kayla tausche with a look at what's up next on "squawk alley." good morning, sarah. the apple conversation continues. we have early apple employee bruce tognazzini who has had an inside look it at the process to build out apple's wearables. he will join us to tell us all about that. fin finally will mossberg writes this is a new direction but the question is about execution. mossberg will join us as well to talk about that. only one analyst so far that has put a price target and valuation on alibaba. we'll have that analyst live to tell you how big that ipo could be when it goes public next week all up next.

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i just want to check on markets as we round out the hour. simon, we are seeing declines across the board, fractional in thames of percentages.

the dow down 38 points. did want to point this out as you can see the nasdaq in positive territory. apple, 11% of the nasdaq. the dow if it does close lower would be the third session in a row. we actually haven't seen a losing streak that long since july or august. >> treasury yields are rising. the dollar continues to inch higher and the talk is that the fed is going to change its language on interest rates next week. >> that will will be exciting, a two-day fed meeting, janet yellen all coming up next week. "squawk alley" and carl quintanilla, over to you. over to dublin, ireland, u2 faithful wondering why they gave away their latest alabobum for free.

that music you were listening to, the first ad for the iphone 6 starring jimmy fallon and justin timberlake. with us this morning kayla tausche with me. jon for ittt is live having wor on the apple unveiling with us all yesterday. apple shares back in the green today, up 77 cents after closing slightly lower yesterday following the big unveil. joining us this morning the great tony sagonaki. good to have you back, tony. >> happy to be on, carl. >> you stayed very much if line with expectations, but some reason to at least start thinking about impact on gross margins. explain. >> yes, so i think the