good morning, everybody. welcome to "squawk box" here on cnbc. i'm becky quick along with joe kernen and andrew ross sorkin. what's left of tropical storm o did he o is dumping a tremendous amount of rain on the southwest. some areas of new mexico have been hit with a couple inches of rain. another 3 to 6 inches of rain are expected over the next couple of days. the region is at high risk for flooding and property damage. after weeks of speculation about change, the fed deciding to stick with the status quo. the central bank telling investors that it is near the end of aets purchases and reiterating that it will not hike interest rates for a considerable period. >> i want to emphasize that there is no mechanical interpretation of what the term considerable time means. and as i've said repeatedly, the decisions that the committee makes about what is the propose time to begin to raise its

target to the federal funds rate will be data dependal. >> all right. seems confusing enough. but the bulls do seem happy enough with the fed at least for now. the dow closing at another record. you can see up by about 25 points. the s&p rallying back above 2,000. if you take a look at what's happening with the futures this morning, you will see at this point the green arrows continue. about 57 points above fair value. s&p futures up about 8 points. appeared rue, over to you. >> thank you, becky. we're going to talk today because it is what we're calling alibaba day. the chinese e-commerce giant said to price the ipo after the bell this afternoon. the range has been listed to between $66 and $68 a share. due to strong investor demand. stocks then expect to start trading on the new york stock exchange tomorrow with the ticker symbol baba.

and not a bad symbol. if you haven't gotten your shares, call your broker if you're going to get them at all. anyway, the other big news happened late in the day. tim cook now taking a swipe at some of his biggest rivals. apple's ceo unveiling the company's new privacy policy. apple promises it's not building a profile based on customer e-mail content or webb browsing habits to sell to advertisers. a few years ago, users of internet services began to realize when an online service is free, you're not the customer, you're the product. but at apple, we believe a great customer experience shouldn't come at the expense of your privacy. whereas some other tech giants, including facebook and google have come under fire in the past for their privacy policies, apple trying to make users feels comfortable with its security following the recent celebrity photo leak scandal of nude images. what i find so interesting is what they're really trying to do

is differentiate themselves. it's interesting to me when an entire generation of people actually gave about giving away their information the way we do on google and facebook. but apple saying that's not the case. >> no one responded to our guy yesterday, peter? >> that was the story. >> yeah, it was -- and i don't even think -- how about alibaba and the seas? >> that was pretty good, too. >> baba, it rang a bell. do you remember bab alouis? >> i haven't thought of this guy in 40 years. quick draw mcgraw. do you know who quick draw mcgraw is? >> it reminds me of baba buoy, too. >> we're going to be interviewing some expert on alibaba and he's going to go oh,

howard -- going to get to get prints on that. becky, andrew swears that's not the same tie that he wore yesterday. >> he thinks that i'm going -- >> i think you're doing the walk of shame. i don't know where you were last night and -- >> it's a different shirt, a different tie. >> it's the same tie. >> underwear is different. >> maybe you hung up the tie and in the dark this morning you -- >> there's pink lines in it. >> i'll try to give you the benefit of the doubt. did you go home? did you sleep in the gutter? >> no. i slept in my bed. >> we're going to get a screen shot. >> i think you're colorblind. >> but the other day, you thought you had on a blue shirt and it was purple. >> he thinks this is a blue shirt. this is purple or punk or whatever it is, but it's not blue. >> all right. you can continue on. go for it. >> i want to talk about yellen, too. i mean, considerable time.

but what is considerable? >> she said the definition is vague. >> is it a month? is it three months? do you know, andrew? and they say they're being transparent, but when they say things -- >> but they're trying to back themselves out of being in this position where they're saying we're data dependent. >> they've been saying the word data dependent for the last six years. >> now they're emphasizing it again. >> when you're trying to do this, you can't actually be transparent. >> it needs to inspire confidence when 90% of what they're discussing is how to say things to throw -- >> i'm not sure why the bulls feel confident with that yesterday. i know they could have taken some measures to take some things out, but i think it's just as likely that it could come -- >> they know and they listen to what people are conjecturing about. apple isn't without its

problems. the company says its health kit apps will be delayed by a bug in its new operating system. the help kit app was a key part of apple's newest iphone. the only reason i want an apple watch is so i can hear my heartbeat on my watch. >> when i talk to you, i want to see if your heartbeat changes. >> up and down and up and down. >> you're like a drill sergeant. >> when i notice maybe you're -- >> i don't understand where you -- anyway. beautiful tie. >> it is a nice tie, but very similar. >> it's similar -- >> you are very focused on trying to remember what certain ties look like. >> why? i look at you every day. >> i appreciate that. >> i have to, you know? you sit across from me.

amazon is expanding its kindle lineup. the company announcing six new or upgraded devices among the products. there's the high end 199 daughters ereader, which is called the kindle -- i would say voyage instead of the voyage. discovery communications is reportedly seeking a controlling interest in the hub tv network. the company said they have the share of the children's cable tv network. hub is expected to be renamed discovery family. this has been a couple of years in the making. there's some good shows on hub. but you remember we went out for the haunting hour. >> yeah. was that on hub? >> that was hub. so that is a good asset. i mean -- i look at discovery

and, you know, where is that stock in public, do you remember? >> it's like 20 something. >> and he's been well compensated for how will -- but most of it has been performance based and it's an incredible asset. a lot of people think that's one of those companies that could go, andrew, that could be attractive to someone. >> i've always said it either gets bought or john malone uses it as an umbrella to try to create a mini comcast, actually. >> when malone said we need to rationalize these cable properties, like time warner, needs to be scale, it needs to go with someone, maybe we'll take it with chapter and then comcast, is it did i disingenuous for discovery to say this isn't a good idea?

would he do things like that, say one thing out of one site side of the mouth? >> he has different -- >> all of the content guys are talking to sbc about the time warner comcast, at&t saying amgzly but also they can't push it too far because they may want to do their own deal at some point. so it is very tricky. >> every little person said anything, you know, any of them said anything. we'll see. >> well, you know what? nobody gives -- >> don't give them any ideas. >> let's talk about some washington news. the senate could vote today. that los angeles passed the house with bypart sap support

yesterday, expecting to get picked up and voted as a whole in the senate. >> the markets continue to rise this week and react positively to new highs. joining us now to break that down, rich steinberg, president and cio. it's steinburg global asset management. i just feel like we're in on the -- it kind of reminds me of almost the kabuki dance. that's okay. we're in on it. i don't know what considerable means. it could mean three months, could mean six months, but it doesn't matter. as long as they left it there, they know how to massage the markets to keep them headed higher. >> well, you know, we know as long as they kept the funds rate at almost zero that you've had a good stock market. if the theory is to whether you'll continue to have a good

market when rates start to rise. so it hasn't been proven that you could have a good market when rates rise. it's about continuation of an environment where we pretty much know what's going to happen instead of going into this great, new world where the rates would be going up again. >> the fed is there until the economy can do it on its own. and then if rates are rising for a good reason, then you figure there won't be any interruption. but that's the problem is i think if fed at this point still isn't absolutely convinced that the economy is way above -- at this point. how do you pass the baton if you're not sure that it's going to hold? >> and i think one thing that is bothersome to the fed is the type of news we had yesterday where you didn't have any

movement in the cpi that your core -- your nonfood, nonenergy cpi was essentially unchanged. they're concerned that if there's absolutely no pricing power, you can't be having a very strong economy. so one of the prerequisites for the fed to move is to see this inflation start to at least pick up somewhat is and they sure did see that in august. >> some poem don't like the dual mandate, but i think the fed probably figures, well, if the biggest negative to all of our accommodation is inflation, that's what we need to worry about and unemployment still isn't where we want it, and there's no inflation and let's just keep going. if we're not seeing any negative consequences, how can it hurt to stay at zero? that's what they're thinking. >> i think you're spot on, joe. this period, i think we're going to start to go through is a period of digestion with some doubts of indigestion. i went back and watched the q&a

from steve liesman with yellen and his aunt. i felt like an nfl review going back and watching the body language back and forth. and essentially, the messaging that i got was, yeah, we're going to have to see how things are going, not only in inflation and gdp, also up at the labor market. but don't put words in my mouth. you can see the body language from her which is we're doing what we're doing and is we're going to have to see how it goes. don't jump to conclusions. >> so whether do you date the beginning of zero interest rates, rich? how many years has it ben been? >> gosh, you know, i think we're going to end up -- >> it doesn't matter. >> it's been a long time. the question, really, though, joe, is how much of a bump in rates will either the fed give us or will the market give us to be acceptable to equity investors to continue to put money to work? one of my big concerns is the

group thing that's going on with the strong dollar, overseas investors are going to continue to buy the ten year because even if they lose money in price, they're going to get it in currency. my career has always showed me group think can be dangerous. >> did you try to buy any alibaba, rich? >> we are not participating in alibaba. it doesn't fit our criteria. >> why, is it going to go up a lot? >> first of all, i think it's very hard for investors to get it. second of all, in our world -- you can buy as much as you want after it opens. >> yeah. i think it's going to be a name that we can watch and once it's seasoned, we can evaluate how to vault. >> are you watching scotland? >> yes. >> and we don't know, do we? i don't trust holes. i don't know what it means. and there is a very caharismati national leader that is saying,

let's seize the moment. he reminds me of medical gibson or something, like william wallace. how do you get to where it's too close to call without making a compelling case? what would that do if it surprises everyone and they vote for independence? >> well, the pound has weakened. it's going to weaken considerably more. it generates the type of uncertainty that would give you a general flight to the dollar and probably be good for the u.s. bond market. they're letting 16-year-olds vote for the first time and who knows what these kids are going to do. >> and foreigners. >> right. you never know. scotland is an important golf course, too, andrew.

>> is your worry about scotland or the domino effect that some people talk about, whether it be in spain or other places inside europe? >> well, you worry about catalonia because they're going to vote. they have a referendum vote, too. so it raises questions about the stability of the eurozone in general. >> but if scottland chooses to stay, does that mean the catalonia thing is off the table? >> oh, no, the catalonia situation is still on the table. even if scotland votes to stay in the union, to stay with the uk. >> and, rich, it's just texas, right? florida seems to understand that low income rates are good for attracting business.

that is a heck of a state. >> maybe miami would carve itself off in florida because it's a different world, but i think florida stays in the u.s. >> and a great world down there. a lot of pastel colors and, you know, attractive policemen. they were detectives, i guess. thank you, richard. and thank you, maury harris. >> you will see that you are colorblind. the vote is on now. will scotland decide to stay or will it go? our own michelle caruso cabrera live with the latest read on the referendum for independence. and and the nation's energy boom is creating more than oil and gas. how about a boom of millionaires? we have the wealth report later this hour. we're back in just a moment. es l powers when she has the shroud? no. guys? it's the woven one the woven one.

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welcome back, everybody. voting under way at this hour throughout scotland. will the scotts vote for independence? it could do down to the wide. michelle caruso cabrera is live with us. people are getting nervous about this now. >> yeah, because it's so close. too close to call, many believe. 4.2 million stocks are registered to vote.

that's 97% of the population. they are expecting high turnout, more than 80% of the more than 2,600 polling places across the country. there's only one question on the ballot. should scotland be an independent country? guys, you know i love to show you the local newspapers, the local sentiment, we have day of destiny here. this one of my favorite from london, which is the daily mirror where they say, don't leave thus way. we went to several polling place these morning. here is what we found. the yes vote is much more passive, some people bringing their children when they were voting yes, taking pictures because they felt they was going to be potentially a momentum and historic day. here we see angela with her three children and her husband. we asked her, why did you bring your kidsyou?

>> we wanted the kids to remember when we vote. we want our kids to remember this is part of something historic and hopefully will change everything forever, really. >> when you look at the signs, their slogan is literally, it's not worth the risk. it's tough to get excited about that. guys, we're cnbc so we did a lot bit of cnbc sight seeing. we went to the tomb of what we think is one of the most important scottsmen ever, adam smith, the guy mind the invisible hand, the belief that a noncoercive agreement between buyer and seller and a wonderful way to attribute resources in a society. back to you. >> we need to keep him front and center. now more than ever, god all mighty, it should be mandatory instead of some of the other

stuff that seems mandatory. it's like it's not worth the risk. it is like could be really good. i mean, the rewards could be -- the rewards could be huge, but it's probably not worth the -- although it would be great it's probably not what -- you know, it worked out pretty well for the united states. didn't we, like, split from england at some point? >> it didn't go quite as smoothly as this. >> the united kingdom has been getting smaller and smaller and smaller ever since 1776, quite frankly. >> i saw one of the other signs said no thanks. no thanks. >> it's not worth the risk. if we knew for sure it would work, it would be great because it would be much better, but let's not take the chance. that is a terrible, terrible slogan. >> but the original one was better together, but that's still not quite emphatic, is it? >> i noticed there weren't a lot

of other media and cameras around the polling places. that's because the rules are different, right? americans can voet vote on this, but you can't if you're the uk. >> there's a lot of rules about what you can say on television locally today. we are not subject to them. in the next hour, i'll show you one more newspaper, too. there was tons of international media, chinese media covering a democratic vote. found that europe interesting. >> what can't you say? >> you're going to see a limited coverage. they will only do basic stuff, the polling on the balanceon, this is very, very simple stuff. >> do you have people around you

there? do you have like a crew with you? >> oh, yeah, of course. >> you're not alone standing there, are you? look behind you. have you seen like a wear wolf in london or something like that? that looks like the -- that is really spooky. >> wuthering heights. >> you hear the soun of the wolf and it comes from -- you're not sure where it's coming from in a fog. >> nowhere to run. >> how many people do you actually have there? does anyone have any garlic? >> there's tons of tourists. we're high up on a hill. theoretically, you should be able to see edinburgh behind me. >> how many crew members?

>> yeah. because they only use one or two normally. next month is october, by the way. love that shot. >> michelle, we will see you again in just a little bit, we hope. >> yeah, we hope. up next, the countdown to the biggest ipo is on. we'll ahead to china to find out why allibaba is so popular and how it's bringing millions of dollars to the users on the mainland. before we head to break, here is a brief look at what exactly alibaba is all about. >> former english teacher jack mob founded the alibaba group utah of its apartment in 1999. it's now china's largest e-commerce company, connecting 279 million buyers with 8.5 million sellers. alibaba customers have spent nearly $300 billion. more than ebay and amazon combined. the website brings in the most

cash from businesses selling everything from -- to pet supplies, from halloween costumes to sex toys. the other cash cow is a virtual mall. alibaba also owns part of the shipping company used to deliver the products it sells and a payment service online shoppers pay. issuing loans and even money market funds. but even though alibaba's online mer chance ves sold four times as much as ebay, they bring in less revenue and what alibaba is really offering in their u.s. ipo is shares of a variable interest entity, which means the u.s. investers won't own a piece of the chinese company. they'll be buying into a cayman island entity named alibaba

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good morning and welcome back to "squawk box" here on cnbc. i'm joe kernen along with becky quick and andrew ross sorkin. we are wakting up to news of another nfl player in trouble with the law for alleged domestic violence. arizona cardinals running back jonathan dwyer was arrested at the team's training facility. he's been charged with several

counts of aggravated criminal assault, damage and preventing the use of a cell phone in an emergency. the cardinals deactivated dwyer in the meantime. >> a lot of commentary yesterday, people saying how could you do this now after the -- i'm sure that was his first thought. >> the timing of this, though. >> there's usually other things involved. >> the timing is weird, but i'm sure it didn't enter his mind, if you lose your mind and go berserk -- this happened over the summer. >> oh, it didn't? >> by the way, there are questions and people online questioning the timing of the arrest. because this has been out there. the charges relate to something that happened in july that weren't brought to the attention of the police until september. there's a suggestion about this has to do with what's happening elsewhere in the nfl. >> the nfl notwithstanding, you would say that -- and you would

be right, that i'm sure there are times when law enforcement is star struck and gives preferential treatment to local athletes, probably, too. >> if you're rethinking that in light of everything that's coming out. >> i would say so. a lot of parties here and you know how that works, where if you're in arizona and everybody watches you and you're like a local hero, out mipth more flack than just a normal guy. >> we'll see what ends up happening there. >> so the coddling that you talked about with nfl players or athletes in general, they get caught up by everyone. >> other headlines this morning, corporate headlines, elon musk saying tesla needs to build more service centers before it can increase car sales. in an interview, musk suggests

major car companies have been slower than he anticipated. it would be to develop electric vehicles. tesla has thomass to do in his words quite a bit of development on a fully autonomous car, as well. so it's not just google. now you have mr. musk jumping into the ring. a senate panel says hackers associated with the chinese government have repeatedly infiltrated the computer systems of usair lines, technology companies and other contractors. senate armed services xhs found a lot of these companies that had not said to the public that they had been hacked. not even sure if some of these companies knew about it. but the fbi is able to trace some of those things and is coming out with this report. you'll see futures are indicated higher once again. dow futures up by about 6/0 points above fair value. nasdaq up by 16 above fair value and the s&p up by about 8.5. in europe in some of thor trade, as we watch this voting with

scotland, whether or not it will secede, you can see there are green arrows there, as well. in germany, the dax is up by about 1%. ftse is up by 0.5% in london and the cac is up by just over 0.6%. in asia overnight, the nikkei was up by better than 1%. is shanghai composite was higher, as well. but the hang seng was down by just over 0.8%. if you're watching oil prices, we did see some moves higher at this point, though, barely changing direction, down about 4 cents to 94.38 for wti. still, that's at a rather high level for crude relative to what we've seen over the last week or so. at this point, the ten-year note is yielding 1.22%. the dollar looks like it is down against the euro. still, the euro is all the way down at 1.2877. gold prices yesterday dropped to around the lows of the year. you can see this morning, they're down another $12.

1,223.90 an ounce. >> we're going to talk a little morally baba right now. more and more than 200 billion dollars. eunice yoon joins us from bay joining. >> good morning. if you want to know why the chinese government is so keen on alibaba -- john hung used to sell sesame buns. now he's an entrepreneur generating $8 million in annual sales of camping gear. >> our goal is to become the number one outdoor equipment brand in the world. >> big aspirations from what's known in china as a cowbell village. towns where farmers are trading in hoes for computers and mobile phones to sell goods on alibaba's consumer to consumer site. in beishon, one-six of the 2300

families sell on cowbell. rou started by taking orders from nearby factories from a 100 square foot room which he shared with his brother. >> some people would think, come on, these brothers always working until very late every day, what are they up to? >> today, his company, bs wolf, ships 1,000 packages a day to china's increasingly wealthy consumer. as wu's business grew, other villagers asked for his advice. now, they buy bikes, cars and homes. and alibaba is helping the chinese government solve a long time problem. that is creating jobs in parts of the country where there weren't any before. that's mainly in the countryside. so you can see that alibaba and the government have a very close relationship. >> hey, eunice, i follow the way of the dow sometimes as far as

dowism, one of the seven great religiouses in the world. it starts with a t, but it's pronounced dow-ism. there's a restaurant in new york mispronouncing calling it tao. is this taobao or dowbao? i need to know. >> no, no, no, that means the way. taobao means search for tresh i didn't itreasure. that settles it. that settles that. it's a different -- it's weird. it's insecretble like so much of the far east because it's spelled the same way. but they spelled the bar letters here. they have totally different letters, apparently. >> it sounds like it's our fault. >> it might be our fault. >> now, the question is is the restaurant tao or dow? >> i'm going to call and find out for you.

>> eunice, thank you. thanks for putting up with that. it's hard to do this with that delay, right? >> she does well, she compensates well. and listens to our idiotic babbling. >> what? you didn't say anything. >> oh, yeah, i did. that's not what i was saying. but she does a good job because we're constantly talking. >> she does. we didn't tell her what we were going to ask her. >> did you hear what it meant? way to treasure. we'll see whether that's true for investors today. >> wow, you could write this stuff. you're good. up next, what impact is the nation's energy boom having on the creation of new millionaires in america? and what city tops the list for the most millionaires in the united states? a trip inside the numbers when "squawk box" returns. right now as we head on a break, take a check off what's happening in the european market right now. there are green arrows for equities there.

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news making money in america is out this morning and there's a an interesting twist on where new millionaires are popping up. robert, what's going on? >> good morning. america created 600,000 new millionaires last year, the fastest growth since at least the early 1990s. increasingly, they're coming from the oil states. dallas was the fastest growing city in 2013 when it comes to creating new millionaires. its millionaire population up 20% to 113,000. those dallas millionaires control $457 billion in wealth. just behind was houston with 18%

growth in millionaires, adding another 20,000. houston millionaires with a total wealth of $496 billion. and when it comes to the total number in new york is sill the millionaire capital with 894,000 millionaires, or one in five in the country. new york millionaires have 3.2 trillion in wealth. but the report is saying that the geography of wealth is shifting towards energy and the tech. a new pattern of wealth creation is emerging. the new emergence of smaller cities indicates u.s. wealth is shipping to a broader mix of geographies. >> this begs the question, i think, andrew, that we were talking about, what can be done to stop this or slow it down at least? and could we perhaps put that measure with wsh li, like, a vea package to get through congress to somehow stop -- >> thank you. thank you, joe. >> to somehow stop the tide of this income inequality. >> is there anything that can be

done, robert? >> what's interesting is that obama has created more millionaires than bush w. or we think clinton. >> is it obama or is it the fed? >> well, okay, so during the obama term, right, and the fed is -- but the interesting thing about this report is it shows it's not all fed wealth creation because oil is not a phenomenon of the fed. and silicone valley was the number three in terms of growth. tech is not a function of the fed, either. so the top three seeds of growth had nothing to do with the fed. >> i think you should dig in more. come on. >> no, no, i'm finished pretending to -- no one would really believe -- don't millionaires pay more taxes? they're in the top bracket. doesn't it generate more for the government to blow on things that don't -- i mean, it does, right? it does generate more revenue. so it's a good thing. but -- no, no, my next question -- oh.

the other thing -- >> i don't know where he's going now. >> it's ameritocracy, too. it's not money stuck in one place, where you're a futile system where you're a duke and it goes to his son and it goes to his son. most of these people were self-made, right? maybe they were born where they could get a good education, but they did it through hard work and through succeeding. >> yeah. over the last eight years, we've had more than 1.5 million people get into the millionaire's club. now, this is investable assets. so this doesn't include your house. if you start adding in houses, everyone in new york who has an apartment would be a millionaire. so you have to take that out. but this is 1.5 million people rising into those ranks. but the wealth group, whether you look at a million, ten billion, it's a fluid group in the u.s. >> the numbers on poverty that looks like it's starting to break down on poverty, which is great news on this. >> that is a tragedy, is the

people that he's talked about the most are the ones that have not been helped at all. >> but the ameritocracy thing, the ability to get into the club -- >> well, you know, measures of mobility have remained stable over time. so people think as inequality increases, your ability to get into that club decreases. that has not been the case. mobility right now is exactly where it was ten, 20 years ago. >> it's not great. it's not great. >> is it stable or stagnant? >> it depends on how you look at it. >> it's flat. it's not great compared to other countries, including europe. >> can't with feel guilty and bad about america if we call it stagnant? i would prefer to call it stagnant, just to feel bad and to feel guilty. that's where it comes from. coming up, the great time mystery solved. plus, comfort foods that

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i say andrew's wearing the same tie he wore yesterday. >> i'm saying you're color blind. >> whether that means there's a walk of shame involved or you never made it home. >> what is that? go back to the other one. go back to the other one. the there. now tell me those aren't the same tie. >> go closer on the ties. >> different. >> go closer. it looks the same from here. >> not that one, the other one. >> see, they won't play with me. i ask them, i want a double shot of today and then i'm going to prove that it's -- and they won't do it for me. >> you see how they're different? >> joe, you're very observant. >> if you're far away, that looks -- there can you see? that one's blue and has a little brown in it from yesterday. >> it's a little different. >> this one has black and white and purple. >> they insisted on doing --

>> how did you even notice that? >> i wanted to just do two shots from today. see you try to weasel your way out of that. but they were different. >> close. >> and the shirts were different. >> thanks. >> people at home are maybe not really wondering -- they're not probably that happy. it's the chair segment anyway. it's frivolous. >> can we talk about frivolous stories. facebook apparently has been dressed down, excuse the pun, over what they're calling their real names policy. by some people who have interesting names known as drag queens -- you said we're not allowed to say drag queens. apparently there are people on facebook that signed up under names like lil miss hot mess, for example. or sister roma on facebook. and facebook tried to take their sites down or our pages down

saying they are not using their real names. >> a lot of people don't use their real names. >> facebook wants you to use your real name. apparently there's been a huge debate among this community who want to use these other names. they say by disclosing their real names it would put their jobs, relationships, and health at risk if they did that. >> so facebook says go away. >> they made the accounts active for two weeks for people to decide whether to use their real name. >> can you imagine if twitter made everyone put their real names? >> that's the difference between them. >> i have a thing that says verified and there's a certain amount of people that follow me that -- i don't know. most of them are not. and some of them are. >> verified, you need to have it so people can't come up with parody accounts of you. pretending they're you. >> i'm worried i'm getting duped

again. i got another taye diggs type. i was excited because meki pfeiffer is following me. >> is he verify snd. >> yes. >> then he's real. >> i like his work. >> excellent actor. he is. let me ask you guys. comfort foods. when you feel bad, does it make you feel better if you eat ice cream, mac and cheese or any of those things? >> what's that? >> does it make you feel better to eat comfort food. >> at the time it does, later it doesn't. but yes. >> there was a study that just took place that says what's really happening is something that naturally occurs anyway. you feel better over the passage of time.

they gave subjects comfort food. they thought that made them feel better. then they did a study where they gave them other food and they still felt better. basically don't binge. that's the cool study. >> i do think that macaroni and cheese can -- >> calm you down. >> you have that feeling of emptiness in our stomach. >> what if it's mom's soup that she made you, something that reminds you of being safe when you were a kid. >> now you're a mother too and you make stuff for kyle. >> youicookies. >> i made cupcakes yesterday. coming back, the shocking report of people showing up to work stoned. we'll be right bab. ile plans for business. run the numbers on that. well, unlimited talk and text, and ten gigs of data for the five of you would be...

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the fed sticks to the script, but are the hawks starting to circle? did jan el yellen give the bulls another green light. investing in china. >> china is going to try to compete more aggressively with the years and decades ahead. peter thiel giving us his take on china. should you think twice before money is put there to work in that economic powerhouse. high at work. >> it ain't always good to get high before you have important things to do. >> more people are smoking pot before heading to the office. what can employers do to keep their staff from being stoned at work? the second how were of "squawk box" begins right now.

good morning. welcome to a baked version of "squawk box" this morning here on cnbc. i'm andrew ross sorkin along with joe kernen and becky quick. that's not true. on a day that we're talking about new stats on the number of americans going to work high, though, it is only fitting that we discuss junk food. here's the skinny. pizza hut now testing a 30% lower calorie pie. we're going to have the details on how they do it a little bit later. >> i'm suspect. >> that it's doable? >> low fat cheese? thinner bread. >> less bread. less carbs, maybe. could be gluten. >> i eat pizza for a reason. >> to get fat? >> because it makes me fat. i'm interested in this marijuana story now. are there corporate guidelines or bylaws that would preclude an employee from -- >> yeah. at ge, had to get drug tested. >> that was before it was legal though. >> it's only legal in some

states. >> ro r you allowed to have a mimosa before you come to work? >> i think it'd be frowned upon. >> you don't think you're allowed to do that? >> we drink on air here. >> how about kathie lee and hoda? >> they drink a lot on air. >> we've had beer in segments. >> but we don't drink typically before -- >> i think you're not allowed to come into the office sloshed. >> but now pot's legal and you can do it in moderation, i mean -- >> the problem we talked about is when you smoke pot, it gets -- first before we talk about getting sloshed or baked or whatever it is, following a record close for the dow yesterday, take a look at how the market setting itself up this morning. looks like it's going to keep going on. the s&p 500 higher as well. the nasdaq looks like it would

open higher if it did thagt right now up about 16 points. look at the 10-year note as well. 2.618 is the number to beat at the moment. >> a number of key economic releases ahead this morning. at 8:30 eastern we're going to get the jobless claims number as well as august housing starts. claims are expected to have fallen from 315. they've been in that range. and housing starts are expected to see a slight decline. and the philadelphia fed index is expected to come out. polls in scotland have been out. there's only one question on the comment. and michelle caruso-cabrera is alive. and is if she has the sign of the wolf, she may already be turning or something. no trouble since last time? still foggy. >> reporter: no sign of

werwolves. 4.2 million registered voters. should scotland be an independent country? let me show you headlines today. this is a scottish newspaper and it says don't let the sun set on our union. so this is a pro-union scottish paper. this is a london paper. very well known. d-day for the union. we went to several polling stations this morning. they're pretty busy. not long lines. they have 2600 polling stations across the country, what you want to call it. the region. and we found lots of media at the second one we went to. we found reporters from taiwan, from china, and then one voter that we talked to told us how many people she had been interviewed by. >> i've had journalists from the uk, china, taiwan, germany, and

yugoslavia i think as well. >> reporter: i spoke to an intern in particular and said is this going to air on chinese television? he said, oh, yeah, they're interested in the concept of democracy. we don't have it and they want to know more about it. and maybe some day we'll have it. i'm sure i'll be covering that vote, i hope. that would be very, very interesting. but back to scotland, polls will close in about ten hours. by the time you wake up tomorrow morning, we should have an answer. very simple majority here. one vote, every single vote matters in this case. so it could be very close down to the wire. supposedly they're going to announce it locally 7:00 a.m. >> that's the difference between us and china. china has no democracy, but they have capitalism. and we have a democracy here but unfortunately we -- unfortunately capitalism is

under assault by the government. >> reporter: it's not in favor at the moment. >> and then i thought about something else like when we broke away -- that was a good thing when we broke away from england. but remember we thought about secession with the south and we fought a war about that. and that was very important that we stuck -- that was very important that the union was preserved. and now i can see it that way in terms that the scots kind of belong in the uk, don't they? i mean, that's like losing southern states or something. i don't know. >> reporter: joe, you know what? there's another major decision being made in scotland today of particular interest to you. you've heard about the st. andrews ancient golf society is going to do today. they may announce that women can join. >> that would be a huge change and a -- you know, it is 2014, i think. right? >> reporter: yeah. yeah. the golf channel is here to cover that. >> are they really? that's not on the actual --

that's not on the ballot, right? >> reporter: no, no. that's not on the ballot. that's a private club they vote. yes. >> is that where you're playing? >> yeah. >> historic time to be a visitor. >> it is. i know. i'm wondering -- i don't want to go over there if all hell is breaking loose. >> reporter: it's so beautiful, joe. it is just so gorgeous. here. i could work for for the chamber of commerce. >> those pot bunkers aren't beautiful. you've got pot on the mind. these are big -- all right. thanks, michelle. >> this is big. by the way, we're going to find out the results tomorrow morning on "squawk box" too. >> that's when it comes out? >> yeah. so we'll talk more about it. in the meantime, the markets have been reacting positively to janet yellen this week. low interest rates far considerable period as widely expected. but were there any surprises? joining us is larry cantor and

vincent reinhart and our guest host for the next two hours jeff rosenberg. gentlemen, we have a lot to talk about. larry, let's start with you. what happened yesterday? >> not much in terms of change. basically the fed as you said kept the considerable period language. i think that was the thing that markets were watching for. last press conference fed chairwoman yellen sort of indicated that considerable period was about six months. she backed off of this since then. however, i think they're very nervous about dropping that -- indicating they'd be ready to hike rates in march. and i think the focus of the fed right now is to gradually remove qe which they've been doing and then gradually set the stage for tightening. they didn't want to rock the boat too much. not much happening. they did discuss details of the

exit strategy, how they would do it. that was interesting, but no real surprises there. >> vince, the market had been moving with the expectation the fed would strip that language. did they miss an opportunity? >> they could have. but the opportunity vl in october. the phrase "considerable time" is in a sentence about asset purchases. asset purchases disappear in october. they can strike the sentence out, prepare markets beforehand and smooth their way into the new world. the new world of not unconventional policy. they don't want to do that any more. they want to get out of that and just speak with their forecast. that's the direction they're headed. >> vince, i thought one of the issues was in october after that meeting there's not one of these press conferences with the chairwoman. that she'd be able to talk

people through what they were thinking. does it make or more or less likely they would strip that away in october when there isn't the opportunity for the press conference? >> i'm not sure central bankers view it as an opportunity to have to be asked questions by reporters. october's actually an opportunity. because, well, when they take considerable out on a press conference day, that's all the press conference will be about. and as larry mentioned, janet yellen's first misstep at a press conference was about the word "considerable." you don't mention in the house of a man that's been hanged. just get it out. prepare markets in advance. use the minutes in three weeks. then you don't have to explain after the fact. >> that's an interesting take. j joe, what happens now? after listening to what she had to say, i'm not more convinced this is a dovish plan. therest a little confusion, i

think. >> there was a mixed message yesterday. she left the key statement statement in the statement. what was embedded in there was a bit more hawkish. that was the market's reaction. so where we go from now as vince was just talking about, what's going to happen in october and december. but if you take a step back, it's very clear here that the fed is moving towards normalization. the market is beginning to price that in. the biggest change in the bond markets yesterday were the real interest rates. it went up 15 basis points. you see that throughout the market that you're repricing idea that real interest rates have to go higher. >> i've been working under the assumption there has been a point the markets will panic a bit that they figured the rug would be pulled out from under them. that investors slowly, gradually rip off the band-aid and everything's okay and there's not some shock? >> there's certainly a chance of that. obviously the fed is going to do its best to do that.

they're going to remove policy accommodation slowly.incrementa. the problem is what you have in the bond market yesterday is a larger disconnect between what the fed is telling you and where the market's pricing. and so they are going to have to manage that. that question came up yesterday. she said she didn't see any disagreement. obviously a paper out of san francisco is arguing the difference. >> so larry, what now? what do you think just watching from a market perspective is the next step? how uncertain does this leave things? or do you feel pretty good about things? >> i think the signal yesterday was sort a a green light. we're not ready to make a big challenge now. there's a big sense on what the fomc members are projecting for the rate. and i think that goes to the fed is focused a lot on the labor market. they've pointed everybody to the

labor market. and the labor market to me has been unambiguously strong. we have 1% growth in the first half of the year. and the unemployment rate fell three quarters of a percent. so jobless claims are down. just about everything is strong. and that suggests to me that tightening is probably going to come in june or maybe sooner and the market's pricing somewhat later. you're right, becky. there probably will be some reckoning. i don't think it's going to be like the taper tantrum. yields aren't as crazy low as they were before. but i think there will be some adjustment. but remember, if the fed's tightening because the economy's strong, that's not usually bad for the stock markets. if it's because inflation's high, that's real bad. >> i know that we all seem to think and janet yellen has been honest about this. she's also been adamant about when she does start raising rates, it won't necessarily come

at a fast pace. do you buy the argument? >> no. in fact, yesterday the numbers start looking hawkish. they're actually a half point below the natural rate of unemployment in 2017. and they miraculously have inflation below at the same time. the numbers in the charts suggest once they get going, they're going to have to raise rates at every fomc meeting. but if you have to go fast, you wait a little longer. i think that's janet yellen's strategy. lower for longer, but faster there after. >> vince, larry, thank you both for joining us. jeff will be with us for the rest of the show. coming up next, jeff bezos didn't want to get left out of the new product front. the new high end kindle reader. plus wake and bake. your coworker sitting right next to you, they might be high right about now. some crazy stats about weed at

work. "squawk" returns in just a moment. the performance review.

that corporate trial by fire when every slacker gets his due. and yet, there's someone around the office who hasn't had a performance review in a while. someone whose poor performance is slowing down the entire organization. i'm looking at you phone company dsl. go to comcastbusiness.com/ checkyourspeed. if we can't offer faster speeds or save you money we'll give you $150. comcast business built for business. welcome back to "squawk box." apple has rolled out its new ios operating system. there was a software bug

apparently. it is working on that bug and hopes to get it out by the end of the month. amazon unveiling new tablets. jon fortt joins us with more on that. >> i got my hands on those yesterday afternoon here in new york. it's an interesting group of products. amazon doubling down on hardware and its unique strategy of selling off hardware at cost looking at these pieces of hardware as a vehicle for services. so here's what we got. basically three kindles and a deal. $ $379. topographics and audio specs. then we've got kindle voyager. this is the e-ink top end new reader. it's the one where if you're reading books, you're into this. $199. pretty high price point for this, but it's also got really great sharpness. 300 pixels per inch. then the fire hd 6 and 7. starts at just 99 bucks.

this is a tablet. for the 7 inch that starts at $119. 149 for the deal if you get the kids edition. it's got a foam cover around it. you can drop it on a concrete floor. they demoed that. it comes with freetime. and amazon promises if anything happens to this, they will replace it no questions asked for two years. now, amazon has never said exactly how many kindles they've sold, but i did try to grill one of the vps at this event and he did say that amazon has now said they've sold tens of millions of tablets at this point. so maybe they just recently passed that 20 million park. anyway, they are going strong into this. and it just sort of shows that right now we're beyond the hardware phase of this into the ecosystem phase. this is about streaming. this is somewhat about audio. it's certainly about gaming and

driving the digital ecosystem more than it is just about pure hardware. >> the thing for your kids, they can order books on that and download videos and stuff too? >> what's nice about the way amazon implemented this, you have parental controls. you can say they have to read for half an hour before they can play games. it will police that for you. >> i'm lost in terms of the timing. it seems very strange to me. not that i should be advising them on their own strategy, but given we are still within this sort of apple vortex of these new phones coming out tomorrow and all the reviews that came out yesterday and all the focus on that, i don't understand why you would announce in the midst of this. wouldn't you wait a couple of weeks? >> i think that's why. >> in the middle of all this? you're thinking people are going to buy this stuff and maybe they hold off -- >> this is a deluge. people are making their buying decisions now. sure apple is coming out with

the phones right now. but their ipad announcement we don't expect until next month. >> exactly. i would do it a week from now. >> this is getting ahead of pit. >> i think it's lost in the midst. >> these things aren't available until october. so they're pre-announcing a bit. >> even worse when it's not available. >> well, it's kind of like apple's strategy. announce the iwatch. say it's not available until early next year. then if you're thinking about buying a watch, you say should i wait for the iwatch? >> thanks, jon. coming up, we talked about this one earlier. the skinny on is a new slice from pizza hut. lower calorie. "squawk box" will return in a moment. take a deep breath in... and... exhale. aflac!

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all right, folks. here's the skinny on the story we mentioned earlier this hour. pizza hut testing a lower calorie pizza. yes, this is the key. it's made with the same ingredients as the original, only with a thinner crust and lighter cheese and toppings. a skinny slice has 210 calories. >> there you go. every calorie counts. coming up next, peter thiel told us yesterday that he thought some of the twitter problems might be because too many managers might be smoking pot. he may have been kidding, we think, but a new study is no joke. staggering numbers from a new report right after the break. [ male announcer ] automotive innovation starts... right here. with a control pad that can read your handwriting, a wide-screen multimedia center,

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dwyer arrested for alleged domestic violence. the team has deactivated him. also the senate is expected to vote today on president obama's plans to arm syrian fighters to fight isis. and boeing's plans to develop a space taxi for nasa astronauts includes a seat for paying tourists. that would be a first for the u.s. space program. also check out this chart. shares of rite aid getting hit hard. the drugstore chain's earnings siting lower than expected pharmacy margins. down by 10%. yesterday on "squawk box," peter thiel took a shot at twitter's management. >> twitter's hard to evaluate. they have a lot of potential. it's a horribly mismanaged company. the people, you know, probably a lot of pot smoking going on there. >> twitter ceo apparently wasn't that offended by the comment and in a nod to marijuana users'

tendency to get the munchies, he tweeted, working my way through a giant bag of doritos. i'll catch up with you later. i need more info. >> got a sense of humor. >> regular doritos? there's different flavors. >> you need to tweet him and ask. >> anyway, sticking with the pot theme, a new report out today revealing just how many americans are showing up to work high. i'm high on comcast. that's all i know. the newest member of the cnbc team kate rogers is here with the munchies and the details. are you high on cauomcast. >> i am. but i did not bring doritos. >> i've got muffins over here. >> i'll wait until after the story. >> all right. get through this. >> so nearly one in ten americans stated they smoked

weed before heading to the office. what's more, over 80% say they scored their cannabis illegally. a separate survey from small business employers also found that 10% of small businesses in 2013 had their workers show up under the influence. but with marijuana sales taking off as colorado and washington have legalized the drug for recreational use, employers are still trying to kwig our out what to do with workers stoned on the clock. they can test for a variety of substances according to the labor department. outside of that, the vast majority of u.s. employers aren't required to drug test with the exception of state or federal regulations for certain jobs. and in colorado, businesses told me that they are very much still figuring it out. because testing technology will show if a person has used in the past 30 days which is not exa

exactly helpful. but if you show up high, you can be fired. >> so smoking before work, is after midnight considered the morning? just by -- have they thought about that? >> timing is really in there. >> how long it lasts. he asked a question top of the 7:00. you can't show up to work drunk. >> can you have a mimosa before work? i think you could. >> you could have a drink. well, could you? >> people go to business lunches and have a drink and come back. >> they do. but it's easier to tell if you're drunk on the job than it is to tell if you're high, the employers told me. so they have a harder time on who to test. >> they may be high. maybe they took drugs or something. >> the key is if you have one drink or two depending on your weight, that's totally different than even one hit of the kind of president, i'm told, that is out there now. that's 20 times, 30 times more

powerful. >> exactly. which is why this is so important. >> so there's no moderation. you can't have one drink when it comes to pot. >> depending on the pot. there are stronger varieties out there. until they get the technology out to see if someone smoked within the past 24 hours -- >> are you allowed as an employer to force someone to take a drug test if you suspect someone has been. >> private employers can spot test if they want to. but as we said in colorado they're still trying to figure out. i talked to a financial services company. they're a start-up. so they have people's financial data there. they wanted to be protected. they have to comply with what banks say they need to do. but they haven't instituted a new drug testing policy. >> i wonder what the cops even dr they pull you over, do they have a way of figuring out if you're under the influence. >> remember when we had somebody come on and had an app that you could -- >> that was for the breathalyzer.

>> for alcohol. someone should create a -- is there an app? >> not that i know of. >> well, let's invent it right here. >> i want in on that because i'm here. >> even with alcohol, you can test the .08. if you're below that, that's not considered driving under the influence. but with pot if you have -- once again, nobody that smokes any pot at all should be driving. >> correct. >> because they go 20 miles an hour and cause axes with people trying to get around them because they're so paranoid. >> i think we have a smart audience. we have developers and engineers in the audience. pee on your phone. not breathe on your phone. >> maybe we should figure a way to do it with your breath. that would be the key. >> they are working on blood testing. >> who wants to get their finger pricked, though? that hurts. i'm a baby. i don't want to that. >> it's a huge can of worms it

opens up. really no one should be -- there would be an explosion in dwis if everybody's high. i don't know how they can do it. i think they should -- i'm not sure. it's a slippery slope. i know how prohibition was, but i'm not sure this is the same thing. eventually will probably be a federal thing, right? >> it may become a federal thing. yeah, between -- >> it is a federal thing. they're just not enforcing it. it is a federal thing you can't do it they're just choosing not to enforce it. >> all right. >> then there's texting which we have to do something about too. >> that's huge. >> when did you start? >> this is my second week. >> are you on other shows? >> i was on a few other shows. >> nothing like this though. >> this has been a great time. thank you for having me. >> this is paris. those other shows are like back on the farm somewhere. >> i do want to get on other shows though. so all the shows are great. >> oh, wow. >> pure politics. >> you hit your wagon with this place here. up next, alibaba coming to

america is just the latest big bet by the chinese here in the states. silicon valley is now filled with chinese companies hoping to set up shop in this country. is it a good thing for american start-ups or something to fear? we'll have that. plus a live report on the scotland vote for independence. you're watching "squawk box." we're first in business worldwide.

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welcome back to "squawk box" this morning. take a look at futures. they are looking up after a big day yesterday that was up, up, up. the dow looks like it would open up close to 60 points higher this morning. the s&p 500 up about 9 right now. the nasdaq up about 18 higher. conagra numbers were in line and they are pleased with its start to the fiscal 2015. chinese e-commerce giant alibaba is set to hit the u.s. stock market tomorrow. yesterday peter thiel warned of the dangers of investing in china. >> china's been very off limits

for u.s. investors. even yahoo! had a somewhat mixed experience where the pay got confiscated and alibaba came with the 40 thieves as far as yahoo! was concerned. >> tough talk. joining us to talk about investing in china, gordon chen and john rutledge. gentlemen, welcome to both of you. john, let's talk a little bit about jack ma. i know you met him years ago. what did you think? >> of course. well, he's a las vegas act. the man can mesmerize an audience. and this is one where although it's an interesting company, i think it's best to stand back and watch the show and not participate in the show. >> what concerns you about it? >> well, china -- there's three things. first of all it's an ip o rks. ipos are difficult to understand. it's where underwriters reward their big clients. second, it's a tech company. and third, it's in china where it's really not ready for

primetime institutions for investors. all those things add up to for most investors including me don't buy something you don't understand. and this is one that's very complicated. and i think too tricky for most investors. >> gordon, i know you're skeptical. what concerns you? >> i think the most important thing is china -- alibaba is an e-commerce play and chinese consumption is lagging. that's why jack ma recently has been talking about growth aspects in u.s. and europe. to me that's a signal that he knows that the market is not that enticing. alibaba is locked in this struggle with tense holdings which is a better managed company and easier path to glory. we've got to remember that margins at both of these companies are going to be seriously eroded when they have this slugout with each other. that's happening right now. i think alibaba's prospects are really not that good. just from a business point of view and all the other

considerations we've just heard about. >> i know you're skeptical of alibaba, but would you invest in china in general? you spent a lot of time there. it's a place you understand. >> there are times when investing in china makes sense. those are times when american investors get really scared about something that's not a real issue and the market drops sharply. but in general, that's a market i prefer not to take the institutional risk. if i want to bet on the growth of china, i'll bet on an australian copper producer or some other company located in a country with judges in long black robes where you can sue somebody. in china, the property rights, the laws, the audits, the judges. they're just not in your favor. and so i don't like the idea of investing in china. with that said, i have private equity investments in china. where you do get down on the ground and you know the

property, you can sometimes make a pretty good investment. but with the public stocks, i think it's a very difficult place to invest. >> gordon, this is jeff rosenberg here. i want to get your take on that. you wrote a couple of years ago during the middle of huge disappointing shifts, what do you make of the new government's changes and the impact on china going forward? >> well, i think the most important thing for business is to look at the environment there where we had for more than a year a highly discriminatory anti-monopoly investigation of u.s. and other companies. this is an indication that china is closing down because state enterprises which had become politically powerful over the last half decade are now starting to close out the opportunities for their competitors which are the foreign companies. and you know, you look another at the chinese stock markets. they have not kept up with chinese growth. which indicated this is not a good place to invest at this point. >> john, your response to that?

>> well, in addition to gordon's points, there's really a growing tension between china and what i'll call the u.s. client states in the region. japan, philippines, vietnam, and others. we hear about it in terms of off-shore drilling. and the rights to the senkaku islands and so forth. but basically china's growing as a power. they have to face the world as a growing, large power. the u.s. is difficulty in financing our foreign policy. and it's a very difficult -- it's a difficult time. so i think that that conflict is showing up and some of the things gordon was talking about where there are face-offs between u.s. and chinese policy in the economics area. so it's not a good bet for an american investor. >> gordon and john, i actually want your take from both of you. this is an alibaba question.

one of the things that's happened here is alibaba going public in the united states opposed to hong kong. do you think the chinese are going to look at this jealously and change any of their policies to try to make china more open or potentially to allow transactions or ipos with these type of issues that alibaba has introduce s introduced? >> you know, alibaba listed in the new york stock exchange is in china it's one vote. i think hong kong will relax its rules because the loss of alibaba really stung the financial community in hong kong. in china, they're closing the country up. they're not -- you know, they're not doing what ping did which is opening the country up, allowing foreign capital in. you see foreign direct investment is falling in china for the last two months. this is a real indication that the investment community, the global community is now starting

to sour on china. you have a country lashing out as we just heard. and this is very difficult. >> what would change your mind, gordon? what would change your thesis on investing in china? >> what you would have to see, i think, is a lot of reform which they've been talking about for the last two years. but they have not been able to implement this reform. and that's the problem. you go back to the third of last year, they laid out a great plan, but they haven't put any of it into action yet. as a matter of fact, china has been going backwards with closing itself off from the investment community. also massive amounts of stimulus. which means they're going back to state investment. these are not good signs for reform going forward. >> all right. gordon, john, thank you both for joining us. >> pleasure. when we come back, america's love for trucks plus some breaking economic news. housing starts data and a look at the industry. plus what is alibaba and why should americans care? we'll take a closer look at the

company and what it does in china. "squawk box" will be right back. cute little guy, huh? this guy could take down your entire company. stay with me. on thursday a hamster video goes online. on friday it goes viral - a network choking phenomenon. why do you care? he's on the same cloud as your business. the more hits he gets, the slower your business may get. do you want to share your cloud with a hamster? today there's a new way to work. and it's made with ibm.

let's take a look at stocks to watch. kohl's. the company's loyalty program and other factors were cited. earnings and revenue at pier 1,

profit margins are shrinking. and sears holding is in focus. a credit swiss report calls liquidation the best strategy. that operating the company itself is taking away more than $10 a share in value each year. i bet you could go back and that might be about right. >> yeah. >> you look at a longer term chart. and watch the shares of united natural foods. the key supplier for whole foods. beat earnings estimates by 2 cents. slightly above forecast. the distributor specialty foods was helped on kale sales on the upper west side. and from recent acquisition. >> yoe, before you go on, i want you to know there's a company to invest in. i saw it on twitter. it's called the cannabis

breathalyzer recognition system. the company is cannabics. they have a pending breathalyzer test. >> so there a science behind that. >> i don't know. that's what it is. another stock to watch this morning. it's a private company. >> united natural foods didn't really cite increased kale sales on the upper west side. you looked at me like i was really reading the prompter. don't you love the kale chips? >> i don't like kale. seaweed. >> i'm sorry. i'm sorry, you like seaweed chips. not kale chips. >> i brought it home to weeks ago. tried. >> how about seaweed chips. >> they were terrible. they're awful. >> are you still juicing? >> no. no. >> you're not? >> no.

>> oh lincoln log production is headed back to the u.s. the popular toy will be made by wood products company pride manufacturing. that's up in maine. the toy had been head in china before. but production in november starts, 80% of the product will now be made in the u.s. some of the plastic pieces -- a lot of the plastic comes from china. but the solid stuff from maine. if you guys always wanted some olympic gold but aren't quite a world class athlete, we could have a solution? 14 gold, silver, and bronze olympic medals go on auction today. the medals date back to the 1908 london games. >> they're different every year, right? >> apparently, yes. >> just the outer. >> it's not solid gold, right. >> maybe the old ones were solid gold. >> it would be weird to have one you didn't win, right? >> yeah. >> the only way most of us are

going to get anything like that. unfortunately. amazon.com has rolled out new versions of its kindle e-reader. it includes the voyager and a revamped basic kindle that will include a touch screen for the pirs time. new devices will begin shipping next month. boeing's plans to create a space taxi for nasa will include tourist seats. a lot of people getting into this. this is one government-run organization maybe i might feel safer with. >> before we go, i wanted to tell you there is a letter out -- these are comments from pepsico's ceo. we always talk about sponsors of the nfl. she is saying violence is casting a cloud over the nfl's

integrity. she says i am a mother, a wife, and a passionate football fan. i am deeply disturbed that the repugnant behavior is klaasing a cloud over the integrity of the league. that was a statement that pepsico has put out. and she has urged the company of the nfl and roger goodell to, quote, seize this moment. >> did you see the piece today that says female ceos need to -- so -- >> and here she is. >> so the journal says the lady ceos need to step up to the plate to address this. and the mentioned her specifically as someone who needs to -- i guess who's the guy we knew at pepsi? put together a statement for and sent it out two hours after -- >> i don't think that's how this happened. >> pepsi had spoken on this earlier. they had last given a statement on september 11th. so i think there's probably --

>> everybody should speak out against domestic violence. i have no doubt about that. when budweiser, you know, acts holier than thou in terms of what happens in the nfl with -- they would never market to teams ever. >> why are you so dismissive of the idea that sponsors would -- >> with you, if it was budweiser had done something, you'd be all over them. suddenly you're on their side because they're all over the nfl. it's a way to just disparage a company or entity. you're always on board. >> sponsors, though, you're paying good money for bad publicity. that's where the situation changes. >> still the best thing on television. >> it's different. he's making money -- >> this is all going to eventually pass. football's not going away. sponsors aren't going away. there's a game on tonight i'm interested in. every sunday i'm going to watch.

>> the sponsors will be in continued pressure. doesn't mean it changes everything. [ overlapping speakers ] >> every one of these sponsors concern to underwrite something that's getting them bad publicity. absolutely. >> probably the pc group wouldn't like market it either in terms of obesity and everything else. >> we can't talk about sponsors being -- you get mad every time we bring this up for the last week. >> to me it looks like they are succumbing to the political correctness pressure. >> i don't want bad publicity from something i'm putting money on. if you now have the people mad about this turning on you. >> i think most people understand there's going to be bad behavior in any group of people. >> you mentioned les moonves. you put the cards on the table why everybody thinks what they think. les moonves runs cbs. he is a major horse in the game.

there are rights up for grabs right now. >> i understand that. >> by the way, nbc wants them too. other people want them. so when people come out to support either the network or the league -- >> you're telling me there's big money involved in football. thank you, thank you, andrew. >> but there's a huge reason why everybody has a motive to say what they're saying. >> stop the presses. >> right now for pepsi to say something significant. >> i understand there's money involved. that's why they're saying thing. >> we'll talk more about this after the break. ant to me. like, with my crew, i use shorthand to talk to them and tell them what i need... and when i need to talk directly to my fans... but the most meaningful shorthand of all is the one i use when i'm about to drive: "#x." it's an easy way to tell everyone that i'm about to drive. and i do it every time before i get behind the wheel. use #x to pause the conversation before you drive. because no text is worth a life

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. it's in this spirit that ingu u.s. is becoming a new kind of company. one that helps you think differently about what's ahead, and what's possible when you get things organized. ing u.s. is now voya. changing the way you think of retirement.

alibaba's big day. the chinese e-commerce giant ready to price. a closer look at what exactly the company does and who will be cashing in on the ipo. how close are we to a fed exit? we break down yesterday's fed speak and tell you what it means for your money. and breaking up is hard to do. why america's love affair with the suv and trucks is stronger than ever. as the final hour of "squawk box" begins right now. welcome back to "squawk box" here on cnbc, first in business worldwide. i'm joe kernen along with becky

quick and andrew ross sorkin. i think it's a good combination. i think it elevates -- that guy is really -- >> he's done well for himself. >> major player. >> you can see that people are homeless -- no, no, no. those are people lining up for outside the apple store in new york city. is the umbrella for the sun? didn't he have an umbrella? >> i think so. >> was it raining? >> it was yesterday. maybe they've been there since then. >> people are already waiting in line for the new iphones which officially go on sale at midnight but you're not going to get them for awhile, right? >> this doesn't look like the line that we're used to. speaking of apple, tim cook is taking a swipe at some of the biggest rivals he's got in a new post about its privacy policy. apple promising it's not building a profile based on e-mail content or web browsing contents. a few years ago users of

internet services began to realize that when an online service is free, you're not the customer. you're the product. but at apple we believe a great customer experience shouldn't come at the expense of your privacy. some other tech giants including facebook and google have come under fire in the past for their privacy policies. yesterday we asked venture capitalist peter thiel this question. if you have $1 to invest, do you buy google or apple? >> i'd probably still go with google. the risks with apple are that at some point they lose the pricing power on phones. the risk with google is the eu antitrust stuff. those are the basic risks. but there's probably more upside with google over the next decade. >> it appears the other risk that apple's tim cook is trying to raise is the privacy risk. which is we effectively do give a remarkable amount of information to google and facebook. to some extent we are the product and apple is trying to take a different approach.

the question is whether consumers care. and i've always been surprised we are so willing to give it over. >> i get worried every once in awhile. >> but will that ever manifest itself to the point people say i'm only working with apple. i'm not going to work with google or facebook anymore. i think it's a hard -- >> i would say younger generations have less and less concern the further down you go. >> everybody wants to put it all out there. transparency, i guess. let's get a check of the markets this morning. you'll see trends continuing today. green arrows across the board. with the dow up 46 points. the s&p up by just 7 points. overseas in asia, japan had a pretty good night. the nikkei was up by more than 1%. and the hang seng down lamb percent. in germany the dax is up by a

percent. >> voters in scotland going to the polls to vote for independence. michelle caruso-cabrera joins us now with more. >> reporter: only one question for the voters today. should scotland become an independent country? they've had months to consider the decision, harsh through the issues of currency, their future economic situation, and today is the day. turnout is expected to be very heavy. let me show you the last two newspapers. the guardian going with a satellite image of what is still a united kingdom. day of destiny is the headline there. then let me show you the daily telegraph using the national poet of scotland. i'll read it in american. be britain to britain true, among ourselves united. for never by british hands must british wrongs by righted. that's an elegant way of saying i'm sorry i'll make it up to

you. and the scots have been given many promises about what they will be given if only they vote no. gordon brown is the former prime minister of the united kingdom and he is a scotsman. and then alex samon also went in the vote no campaign. these were his final words to voters. >> in the hands of the scottish people. there's no safer place to be. i think the message is for scotland, let's do it now. >> he mentioned andy murray. what's he talking about? andy murray tweeted out, support for independence. he said huge day for scotland today. no campaign negativity last few days totally swayed my view on it. excited to see the outcome.

let's do this. so we're about nine hours away from the polls closing and then by the time you guys wake up tomorrow morning, we're going to have the answers. 2:00 a.m. your time is when -- our time, 9:00 p.m. your time. sorry, the time changes are killing me. we'll start getting results. and in the middle of the night your time is when we'll get the final. we'll tell you on "squawk box" tomorrow morning. >> thank you for that. we look forward to it. now we're going to talk a little china. most americans have never heard of alibaba but today the shopping giant -- what exactly is it alibaba? give us a breakdown. >> good morning to you, andrew. let's tell you about alibaba one last time. you can think of it as an amazon and ebay combined into one. they basically dominate e-commerce. you have to go through alibaba. 80% market control. so let's go through some of their lines of business for you.

they have multiple lines of revenue. they took a back private just last year. and this connects buyers and sellers of industrial and commercial goods and services in china. you can think of it like the ebay portion of their business. then we get into the amazon portion. that includes taobao. and alipay as well. this does not include the ipo. it's been stripped out which investors were unhappy with. that's more than amazon, ebay combined. but kind of similar to facebook in that it's still a pc-driven business. they had a acquire a leading

software to mobilize on the platform that is half the rate they're doing it right now. >> all right, susan. thank you very much. yahoo! is just one investor ready to embrace the alibaba ip o rks. they own 22% of the company. joining us to tell us what it means for the company is josh lipton. josh, good morning. >> good morning, becky. we are actually here at yahoo! hq in sunnydale, california. where this company is about to make a lot of money from that ipo. alibaba is going to sell 27% of its stake. should that price at 68, then yahoo!'s after-tax haul would be $6 billion according to the team at b riley. ceo marissa mayer has to decide what to do with that. as the core business remains challenged. yahoo! says it will return half of this money to shareholders. but it hasn't spelled out how

analysts who cover yahoo! want to see dividend and a bigger buyback. >> a dividend gets some different type of investors into the stock. they are more sticky. they hold onto it for awhile for the income potential. and the share buyback supports the value of the stock in case a number of shareholders decided to sell it. >> now, mayer, of course has been on a buying spree. so another question is what about acquisitions? he would like to see mayer use this money to make an acquisition, maybe a play in content. either way he remains a buyer of yahoo! in part because yahoo!'s going to have a 16% stake in alibaba ipo. guys, back to you. >> all right. for more insights on the view of alibaba, neil doshi is head of

tech and media at crt tech group. and a $95 price target. neil, you have a buy rating on the stock after it opens or where it's being priced? >> i have a buy rating on the stock after it opens. >> after it opens. >> after it opens. >> what if it opens at a hundred and you have a target of 95? >> there's some variability that will happen. so we'll have to revisit our target at that time. >> you don't think that there's going to be so much froth in the actual ipo that it's going to take away the upside for people that buy afterwards? you would urge people after it opens to buy? >> i would. this is ultimately the largest e-commerce play in the world. this company has a proven track record for revenue growth and profitability. we looked at a number of chinese companies that have gone public

recently. they don't come close to how profitable alibaba is. even a lot of u.s. internet companies that have gone public, profitability is significantly lower than where alibaba is. we're excited about the prosp t prospects both in china and outside of china for alibaba. >> given the that business is conducted to some extent in china, and not so say there aren't problems in london or problems in, you know, as far as new york goes. but would you say you're taking more of a chance at all in believing the numbers that you see and the business practices, good and fair business practices being conducted by this company? >> well, that's definitely a risk. we called that out. i mean, there's -- we've seen a lot of counterfeit and fake products on alibaba. in fact, i think we saw some cnbc products that were licensed. and i think ultimately alibaba

management will have to go through an extensive process. and that may hurt short-term revenues, but i think in the long-term that's going to be positive. >> you know the expression, if it's too good to be true it probably is. how does amazon get zero margins and this company gets 45% margins? it seems like something there is, you know, i don't know either illegal or they're -- they've got a stacked deck because of their partnership with the chinese government. how do you explain that? >> well, you know, if you think about alibaba's business, they're not in the business of holding inventory. it's really more of an advertising platform. so think about it as a google product listings plus an ebay commissions model. so amazon takes a bunch of inventory risk. they own their own distribution centers. alibaba takes no inventory risk. so this is more of an advertising play, less of a true

e-commerce, i own my own inventory and will ship it to you. that's why the margin is vastly different. they're not investing in -- so far they haven't been investing in cloud and, you know, building out their own studios to the extent that amazon has. that could change over time, but for now it's been a fairly profitable business. >> everybody wants to jump on another google or another apple early and ride it. it just seems like, you know, the issuers, the selling shareholders, they all understand this. and they're not stupid. and no one's in the business to give something away that's going to give that away. >> in two or three years, it depends on what management does. but so far they've shown great track record of growing the business. and let's not forget, alipay,

when that becomes public in two, three, four years that will be a nice windfall for alibaba. over the long run, i think there's a big opportunity for this company to grow. if it's going to be a triple, i'm not sure, or double, i'm not sure. but a nice opportunity in the next 12 months for investors to make a decent runt. >> okay, neil. thank you. >> thank you. >> one of the few guys that -- i don't know, maybe some people are saying buy on the open. i haven't seen too many. >> we will see. >> most guys like cramer or -- >> they say wait. >> see what it's going to be. and other people say if you can get the ipo price, sure. but do you buy when it opens? >> the expectation is this will bounce. >> i mean, i wouldn't be surprise if it tripled. jim said 90 to 100? >> peter said yesterday he thinks it will go higher, but he also said because everybody thinks that, it's going to jump at the opening, that maybe it's a counter. he never feels comfortable with

consensus thinking. but he did say he thought that would be what happens. >> we will see what happens friday. coming up, digesting the fed statement. what investors should take away from yesterday's meeting. and later, the housing market on a bumpy path the last several months. what the future holds for home builders, what it actually says about the state of the economy. "squawk box" returns in just a moment. wait, wait, wait, it's wait, wait, wait...whoa, does she have special powers when she has the shroud? no. guys? it's the woven one the woven one. oh, oh that gives her invincibility. guys? no, no, no...

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welcome back, everybody. steve leisman joins us with more on what to take away from the fed statement. >> is it just me are is there a lot of confusion? >> that was mine too. >> we've got currency markets seeing hawks and then we've got the stock market seeing doves. i'm just going to lay a bunch of numbers on you. we've got jeff rosenberg, he's going to make sense of it all. first of all, the change in the rate forecast. this is where you get the hawkish idea here which is they raise now -- they're using eighths now. i think it's roughly comparable. add a quarter point to 2015. add -- what is that? .375, .4 to 2016. then 2017 we didn't have before but it's .375 which is the long

run. and as we'll see in a second, despite yesterday's bump up, if you guys roll the futures chart. you can see we've got about six or eight basis points. what did you see yesterday, jeff? it's 80 now for the december 2015 fed funds futures. that's up five from where it was. so there is some, but still well below. >> there was a little reaction, but nearly not as much relative to the new change. there's a big gap there. >> the market is still not pricing in enough. so i've done additional math for you which is if the fed's going to try to get to 1.3 in 2015, when do they have to start? i want to thank the wealthy and smart investor who doesn't want to be named who turned me onto this concept here. if you start in march, you'd do .2. in april, .23. they can practically start anywhere they want and still get to their -- if 1.40 is the goal

for the end of the year. >> if they start later, they have to go faster. and a faster tightening fed goes against the dovish interpretation which is gradual and slow. there's a disconnect going on. >> so earlier is better if you want to be shallower and easier. >> i think so. >> otherwise you've got to tight and faster. fascinating. i'm not saying this but reporting it. comparing janet yellen to a comment that humpty dumpty made. when hump-- >> i know considerable time sounds like it's a calendar concept. but it is highly conditional and it's linked to the committee's assessment of the economy. >> so it's -- jeff, you take that. i'm not comparing yellen to

humpty dumpty. >> they have to know what the market's interpretation is. the market interprets a considerable meaning as six months. if they change the language, there's going to be a reaction. that part was really disappointing. >> and one thing, i know we got to get out soon. but to me the most important next speech that's made is made by loretta mester. because i read her first speech as the new head of the cleveland fed. i saw a person this close to descenting. she said two was not a lot. is she willing to go forward and do the current policy with three dissents? and what's the headline the next day? is it revolt at fomc? >> the committee is divided. you had a second yesterday. this was a reflection of what's going on in the market, in the economics profession, there is huge division.

most importantly there's a big gap between the stock market and the bond market. but we're going to have normalization. in the bond market, that's not really what's anticipated. >> who's right? >> i think the bond market is right. the stock market can be right as well. if they do it slowly as we talked about a minute ago. raising rates. we're not talking about tightening policy. we're talking about getting off of emergency levels of easing to a little bit normal level of accommodation. >> right. mind the gap. i like that idea. thanks, guys. coming up, this is kind of a little awkward to say. feel like making love. well, if you do -- actually, i'm not going to make the joke here. a new e.d. drug could cut your wait time. those of you still waiting. wait about a minute and a half and we'll be right back. so what we're looking for is a way to "plus" our accounting firm's mobile plan. and "minus" our expenses. perfect timing. we're offering our best-ever pricing on mobile plans for business.

run the numbers on that. well, unlimited talk and text, and ten gigs of data for the five of you would be... one-seventy-five a month. good calculating kyle. good job kyle. you just made partner. our best-ever pricing on mobile share value plans for business. now with a $100 bill credit for every business line you add. 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. i know what my money is doing. i rebalanced my portfolio on my phone. you know what else i can do on my phone?

place trades, get free real time quotes and teleport myself to aruba. i wish. this guy could take down your entire company.h? stay with me. on thursday a hamster video goes online. on friday it goes viral - a network choking phenomenon. why do you care? he's on the same cloud as your business. the more hits he gets, the slower your business may get. do you want to share your cloud with a hamster? today there's a new way to work. and it's made with ibm.

shares of vevus soaring this morning. the company's new erectile dysfunction drug stendra, it cuts in half the time patients need to take the pill before engaging in sexual activity. which is about 62 minutes most of the time. so this would cut it to about 31

minutes. >> what is this doing to pfizer? >> good name. good name. stedra. >> i heard that too. >> our producer, one minute hard which means we have a hard break coming up. >> i caught that. >> yeah. remember exxon did all the computer models to find the name nobody else had? not bad. it conjures up extend, extend time, stamina, length whatever. up next, we have breaking economic news. and later breaking up is hard to do. why america's love affair with trucks and suvs are stronger than ever. look at the u.s. equity futures. looks like green arrows. we askedquestion,

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find new ways to save energy and money with pg&e's business energy check-up. welcome back, everybody. we're seconds away from jobbing claims and housing data. we've been watching the futures this morning and all day despite what we saw yesterday with some higher moves yesterday, you continue to see that this morning. dow futures up right now about 47 points above fair value.

s&p futures up 7 points. and the nasdaq up 14.5. this would build on those gains. also look at what's been happening with the 10-year note. the yield stands above 2.6% at 2.629%. rick santelli, the numbers, please. >> all right. initial claims made a fairly substantial drop of, what? 36,000. yeah. 36,000 from 316,000 down to 280,000. it's been a considerable period of time since we've seen that number. continuing claims, 2.42, almost 2.43 million. so that's taken a drop. let's get to starts for august. 956,000. that's easily adjusted and it's an analyzed rate. that's down just a little over 4% from our last look. and if we look at starts, maybe a more futuristic glimpse. that also dropped under the

significant milestone of 1 million to 998,000. that's easily adjusted. the last time we were down here in june then popped back up in july over a million. we've seen these numbers recently but the million milestone is significant. fraction of what they were in the '03 to '05 era. so we continue to monitor, of course, the aftermath of yesterday. you know, 2.62 on a 10-year yield. same is true for the 30-year bond. the clear winner which hasn't been up at these yields for a considerable period of time is the 5-year note yield. this is the keeper in my opinion to higher interest rates. it's the most important part of the curve. it's flirting with levels we haven't seen since september of 2013. so you want pay very close

attention here. joe and the gang, back to you. joe, what would you say if your auto insurance guy said if you had an accident we'll keep your insurance the same for a considerable period of time. your health care, at this rate for a considerable period of time. >> i just like they're striving for transparency but when they say things, it's totally undefined what the hell they're saying. >> you can't be transparent though. >> then why claim that you're going to be transparent? >> steve kicked the tires on the fed. it's been a considerable period of time. >> all right. what was the other one? the other comment -- oh, yeah. data dependent. thank you. thank you. why do they have to tell us that again? what else would they be making decisions on? >> you know, i long for the old days where the markets were grownup, the fed didn't have to say anything. you had to do your homework.

which meant they didn't have to flag things and the markets weren't like the pavlovian dogs salivating. >> with us strategist jeff rosenberg. is there anyone in the world that didn't know that they are going to watch the data to decide what to do? it just seems to me like they need to say something so they throw that in there. we know this, right? of course they're data dependent. they're looking to see whether the economy is recovering. >> the thing -- under bernanke they toyed with and worked on this idea of forward guidance. and this thing was once you're at zero, how do you go lower? one way to go lower is to promise to remain low into the future. and that would have ab effect. you sit there and you strap yourself to the mast and you say do not release me. now, they're -- the question is

are they failing that test? are they moving away from this forward guidance? i think they started under bernanke. i think what we're learning here is yellen is less comfortable with forward guidance. so they're kind of backing off of that. >> and the other part, joe, is forward guidance and data dependence is also about what's called the reaction function. how they will react to the data. >> answer that question. do you -- you're the guy. you're the market. you're half of the market by yourself. >> with a large fixed income investor. this is and understatement. but this is the problem. there's a disagreement not so much about being data dependent but on what is the interpretation of the data. is the labor market as impaired as the fed views it to be? >> i think it's an important point. when you are looking to ease things, you want to be as transparent as possible so that your moves have as much bang for

the buck as you can get with them. when you're trying to tighten again, maybe you get more bang for your buck. >> how transparent can they be? if you ask me definitively, i'm going to be no. next week, three weeks from now, i don't know. >> they were telling us they could be transparent for the longest time. >> they did. but that was an idea they had that was -- i mean, it'd be great to get bernanke in here. what happened to forward guidance? is that still eroded? this notion we're going to promise to remain lower for longer. >> it's like saying -- no, no. what gives me a headache is it's a binary choice. they either do or they don't. >> do or don't what? >> start raising or don't start raising. you had that fancy term you came up with to factor in and all this other stuff. and what they're really telling us is, we're planning on doing it here unless something changes which we won't.

>> what would you have them say? >> i don't know. maybe they shouldn't even try. i think rick may be right. maybe they should just base it on -- have their own discussions about what to do and then -- >> that's what they're going to do eventually. >> it's a little bit like you're in the dark, don't know where the furniture is in a new house. being in the zero bound a not something that anything but japan had ever been in. and how to get out of it is totally unclear. japan tried over a period of two decades to get out of it. >> you're trying to make me feel better over the fact they don't know what they're doing? >> they don't want a repeat of last year where they tightened financial market conditions. so part of the transparency, part of the communication is to guide market expectations. >> the market went down like 3%. so it wasn't the stock market. the rates went up -- >> it was the interest rates. and we're still feeling that.

>> it was a big move. >> a sloppy move. >> you're still feeling it in the housing market. and that was exactly what they didn't want to have happen. so they're trying to avoid that. >> can i say something about the housing numbers. the best number i think since november '07. >> more on housing coming up in a minute. >> i think it's a wash you didn't make your number in the last month but you have this massive uproot of divisions. >> part of the problem is this fed for years has tried to really lessen any pain we have anywhere. now again, they're cognizant of what happened. they're constantly trying to let us down gently so that there's no -- but that doesn't clear markets. that's the problem. >> it is absolutely the problem. >> the world isn't perfect. and there's times when things need to happen because things were out of kilter. >> and there's a lot of unintended consequences of what

the fed and global central banks have done. and the unwinding of monetary policy may reveal that. and that's what they're worried about. it's going to be a very difficult time. >> jeff, can i just share with you the survey shows that there's enormous confidence right now in yellen's ability to navigate out of this. even more so than bernanke. the amount of confidence this will not end badly has really changed in the last couple months. >> thank you. we're going to get a little bit more on the home building numbers and the state of the housing market. let's hear from someone with boots on the ground. steven paul is vice president of home building operations in bethesda, maryland. your take this morning on the number and put it in context. every survey throughout the past couple months suggested there was more and mf confidence. yet there was anxiety the

confidence was unfounded. >> we have seen strong markets since march. some of the numbers you talked about, our july was the best we've had in i don't know how many years. then august, we expect it to fall off because of vacations and things like that and it hasn't come back since. we're constantly having our expectations pulled out from under us because we think that the market might finally be in a more permanent recovery and now we go into a slowdown again. it's hard to figure out and plan with this kind of economy. >> when you think about we've been having a debate about janet yellen and her impact on all of this. you would like her to do what? >> i guess part of me wants to leave interest rates just where they are and then part of me would like to have them go up a little bit to get people to go, oh, i guess things are going to change. people usually react to changes. if things are constantly the same, then there's this malaise

and lackadaisical attitude about the home purchasers. they don't feel compelled to buy because they don't think anything's go toiing to change. but if they have a fear rates are going to go up, they be l get in the market. >> i see. i understand what's going on here. seasonally, just explain this to us so we understand. coming into the fall, what do you expect over the next three months and then what does 2015 look like as a result? >> well, had it not been for such a slow september, i would expect to have a nice third quarter. our sales are strongest september, october, and part of november. and i'm still hoping that will happen. there's nothing that's changed in the market place that anyone should be, you know, worried about. the economy is improving, jobs are getting more plentiful. so hopefully it's just a pause. we're expecting a strong 2015.

we're gearing up. i've got six projects on the books that are coming out of the ground with model homes. some of those were gearing towards higher density town home products which we think will be catering to a lower price point. behind me i'm in maryland with infield projects. we have high price points. we're very sensitive to changes in interest rates. >> fair enough. stephen, thank you very joining us this morning. >> my pleasure. >> i like both of this answers. i understand why he wants them to stay and why he also wants them to move. coming up next, though, america's love with the suv and trucks putting a dent in sales of fuel efficient cars. we're going to take a closer look at what's driving all of this when "squawk box" returns. know that proper allocation could help increase returns so you can enjoy that second home sooner. know the right financial planning can help you save for college and retirement.

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welcome back to "squawk box." it seems that america's love affair with small, fuel efficient cars, apparently it's over. i'm not sure if it ever really started. we like our automobiles like tvs and tablets. bigger the better. phil lebeau is here with the comeback of the trucks and suvs. good morning. [ no audio ] >> uh-oh. >> -- true love affair with trucks and suvs versus cars. it is this year and then go back over the last two years, it has flipped completely. now you have trucks and suvs out-selling cars. it was a complete opposite just

two years ago. you go back into the recession, cars had stronger sales there. sales of suvs and crossovers, they're up 12.1% this year. especially small suvs. that is the hot market in the auto industry right now. couple of reasons. more models, better fuel economy for the largest automobiles. that's driving crossover command. meanwhile when you look at cars, it's harder and hard tore find the small cars. small car sales are up 4.7% year to date. that's slower than the industry which is up 5.6%. and their sales are limited by buyers shifting over to crossovers. and two brands show this clearer than any other. look at sales of jeep this year which has been red hot. really every vehicle in the lineup is hot right now. up 45.8%. and volkswagen by comparison, they're hurting because they are primarily sedans. and that's why sales are down

5.6%. as we look at ford, gm, and toyota. the reason we're putting up ford and gm here predominantly is you've got trucks being the bread and butter there for those guys. toyota also is playing in the suv and truck market as well. one more thing to keep in mind, guys. a lot of people sit there and say why are crossovers so hot right now? i was talking with true car.com. he has a great theory. a lot of people are used to the higher seating level, the higher position. and they like that in a crossover. you get a higher position, more of a sense of control of the road, but you're driving something that's on a car platform. so it handles more like a car. that's why you're seeing crossovers and small suvs, red hot right now. i would be surprised if we see cars come back any time soon. >> and it makes you feel safer when you're driving with big trucks on the road too. >> absolutely. >> how much of this is because gas prices are down? >> that's a huge factor. that's a huge factor. if we saw gas spike up to $4.50 a gallon, you would see a drop

in sales of suvs. maybe not pickup trucks, but definitely suvs you'd see a drop in sales and an increase in hybrids and smaller cars. so moderate gas prices have definitely helped. >> we had mike jackson and he had cars out for us a couple weeks ago. andrew said there's no electric car, no hybrid car. and mike actually came back and said they peaked at what? what's the number of hybrids now? 2% 3%? >> it's a little under 2.3%. it's actually slightly lower than last year. >> and you look at europe. every car they have over there looks like one of those crappy little fiats. every one of them. and they have high pitch engine noises. i feel sorry for them. that's all they can drive over there. >> hey, joe, i hope they're rolling the tape. when we have sergio come on, i'm going to use that line. crappy little fiats. i'm going to play it for him.

>> what's fiat stand for, phil? >> i'm not saying it. >> i ain't saying it. i'm not saying it. nobody's saying it. >> fix it again. >> joining the story now is managing editor at reuters. i'm not sure you heard that whole conversation, but it doesn't surprise me to see big cars, big trucks really making a comeback. how about you? >> not at all. what's remarkable is if you look at the comeback of the detroit three auto companies the last few years, people tend to forget because hybrids get all the hype. but 60% to 70% of the profits of all three of those companies come from big pickup trucks or suvs. and so that's still the heart of the profit center. it was the heart of the profit center before the bailouts and bankruptcies in gm and chrysler. and it's the heart of the profit center now. >> well, in terms of americans, i mean, if you have more than

two kids, it's really tough to be in a smaller car. it's just the reality. when you've got everybody in car seats, you can't do it. >> it's not only the kids, but also the gear. you've got to have the stroller and the child seat and the footballs and the baseballs and whatever else. kiddie gear is a big thing. so the vehicles that can hold all this stuff, the convenience factor is enormous. >> is there a pressure point on the big three automakers if you start running into some of the federal guidelines that are put in in terms of what you have to have in your fleet at this point? >> well, certainly the push for fuel economy is an issue here. but don't forget that ford is really trying to sort of head that off a little bit by making the next generation of the pickup truck, an aluminum body truck. that's a big step technologically. it has pricing implications and

all that. i think when push comes to shove, americans like their trucks so much that the truth is that politicians are going to be responsive to that. >> okay. thank you so much. it's great to see you. >> okay. good to be back. when we return, jim cramer from the new york stock exchange on what to expect at the open. tomorrow on "squawk box." tom donahue on the state of the economy. tax inversions. maybe a little bit on xm. they support main street guys. it's a weird dynamic with the republican party and chamber of commerce. financial noise financial noise financial noise

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let's get down to the new york stock exchange. jim cramer joins us now. a day before the alibaba ipo? do you have any new views? >> i would like it to open around $80. there i can justify it and say it's got a 32 price-to-earnings multiple. that would be a nice price. i don't think it would shock anybody. people would make money. an article in "wall street journal" how insiders could be selling, can sell. like more supply. don't want things to pop over $80. then you start getting into the

comparisons of previous years. it would be relative to the others, it would be decent. baidu is roughly at that level. people have no problem paying for baidu. >> you don't think it's opening as low as $80 do you? >> i don't wanted $100. $90 would be bad. $100 would be a disaster. can't have $100. i would say the's a disaster. you can justify $100 using some of the multiples of some of the more expensive stocks. you can stretch it and say if earnings are going to be higher than people think, that is a facebook multiple. you don't want it to start there. if it starts at $100, it's probably going to go down and make people angry. >> we'll leave it there and watch all this and see where it lands. we'll see jim cramer in a couple of minutes. >> thank you. still to come, why your favorite diet soda could be putting your health at risk. know that chasing performance can mean lower returns

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sweeteners can raise blood sugar levels instead of reducing them. they can change the population of bacteria in your gut. that in turn could lead to changes like higher blood glucose levels. blood sugar levels are a risk factor for diabetes. >> is it the chemicals doing that or there's always been an argument those type of fake sweeteners make your brain think that you are having sugar. >> this suggests the bacteria in your gut. >> aspartic acid is a key. all i thought in reading that, i was gratified that everyone has a gut. a lot of times people say you have a gut. >> it's the size of the gut. you say wow, i've got to get rid of this gut.

you don't want to get rid of it. >> is that it? >> this it what you do for a living. do you feel all the fed speak, you're in all the minutia. we discuss it seriously. a lot of times it makes me wonder. >> is there a force you are missing through the trees? >> we pars every little word and look for meaning when there is no meaning. a lot of what i try to do is take people and take a step back. the step back is fed is going to raise rates. maybe it didn't happen yesterday. maybe it's not going to happen october. but the economy is doing better. you've got to get ready for normalization. how that works through the markets. >> wasn't there a time in the united states where the economy, we didn't think about the fed with every waking breath? >> absolutely. the last six years have been one

in which financial markets have been uniquely distorted by policy making. i'd like to go back to a world where that wasn't the case, certainly. >> thanks for being here. >> thanks for having me. "squawk on the street" begins right now. ♪ tomorrow tomorrow i love you ♪ tomorrow you are only a day away ♪ >> you bet your bottom dollar tomorrow there will be sun for alibaba and scotland. welcome to "squawk on the street." i'm carl quintanilla with jim cramer and david faber. for now, the premarket is up. the dow with its first closing high in two months. a swipe at its neighbors saying apple builds great