good morning. welcome to squawk alley. a pretty interesting market day. markets took a spill at the open. down 150 on the dough. a lot of financials getting beaten up. we've claude back come but we're still getting triple digits. there are some outliers this morning. go pro at a new all time high. >> go pro has been able to best the tape like no other stock we've seen in the last several months. >> knocking on the door of 100 bucks. got a nice price target here go pro four hero plus the highest

end model is selling well. >> but there is still a lot of critics about go pro's valuations. so that continue to be a story with that stock and tech stocks over all. >> our next guests. venture capital investments have reached the most since fourth quarter of 2000 but some recently have warned about silicon valley's cash burn rate. the environment where money is always easy to raise as higher valuations will not last. joining us is the venture capitalist and founder of the dfj and draper university, tim draper. good morning you do. >> good, good morning to you. >> talk about valuations in our own words and what you are seeing out west. >> i think when people start talking about a bubble you are not anywhere near the top of a

bubble. i think we got a long way to go. and i think both gurley and andreesen are very bright guys but i think companies needs to figure out their burn rate on a case by case basis. i don't think it's necessary you just take a blanket statement and say hey everybody cut back. there are plenty of opportunities out there if and if you know what you need do with your money, pour it on. >> are you seeing any sign to s toruss or tends? >> that happens all the time in our business. but it's actually pretty moderate for where we are in the cycle. i don't think there are crazy

prices right now. >> tim, i'm wondering how you look at this burn rate issue? i remember back in the dotcom bust or prebust people were spending too much on offense furniture, and offices that are too big. spending that money too soon. spending on the employee perks and not being conservative enough with that. so when you look at what is appropriate for what kind of company what sort of spending are you see that is smart and what kind of spending reminds of you 15 years ago. >> as draper associates we are always focus tond early stage. and during that time everybody has to watch every penny. they have to look at that money as their last gasp of air. and i think that is pretty much the way most of the companies that we have funded operate. and they operate that until the point where they have a customer and they know that an extra

dollar in, brings five back. so then they will pour it on. so i think in general the companies in our portfolio are very cheap. >> anecdotely tim, there seems to be a few signs cropping of the silicon valley excess. someone said i have one ceo building an octagonal mixed martial arts cage ring because one employee asked for it. >> there is a great spirit of fun in entrepreneurship and they should continue that. because the more fun you have, the more spirited had company and the more creative it can get. and it can create things that are so amazing, like tesla and

bit coin and skype and all of these companies were created out of a sense of great fun. so i think it's perfectly fine for people to throw things into the mix. because that is where all that creativity comes from. >> people who invested in bitcoin at 1200 aren't having a lot of fun. at one point it was the worst performer of the year. there is more talk about the number of transactions falling? are we at some near term bottom on bit coin? >> i don't think they are measuring transactions the right way. because most of those transactions are happening within the wallets. and so -- and i know those transactions are going up pretty quickly. i think bitcoin is aase mmazing. as the internet was to communications information and

immediate yarmedi media, bitcoin will be to finance and commerce and banking. i think we are actually in the lull right now before the big huge storm. we've got -- i think there are 5 or 600 bitcoin companies creating an amazing infrastructure out there that will really transform the economy and make it so the credit card -- i mean i think the banks and the credit card manufacturers are going to need to really rethink their business. and it is interesting, the first banks are starting to step out and say okay we're going to accept bitcoin. the other thing is the first governments are starting to say we're going to allow bitcoin to just be a service here. we're not going to regulate it. and i'm hoping the u.s. recognizes that is a good idea too. >> what would happy if paypal finally went through and said it

would formally except bitcoin? >> as i understand it paypal is already accepting bitcoin. you can use bitcoin through a couple of of different services. you can use bitcoin for ecommerce. you can lose bitcoin. atlas has a bit coin credit card you can use. there are many, many applications. and it is just people have to start to use it. there is still some friction to getting to the point of putting together a wallet and using bit coin. but once you start using it, you realize that it is much cheaper, much easier to use. much safer. and if i were sending money to somebody in another country to my mother in pakistan or philippines, i would certainly be using bitcoin because it is a lot cheaper than using western

union. >> tim thanks so much your full-time. >> thanks for having me. >> samsung taking a nose dive in the third quarter with a drop nearly 60% year on year. the drop comes after apple made a big slash with the new iphone 6 and 6 plus. and joining me, recently named the top analyst of 2014 for the technology supply chain by institutional investor. jim, good to have you. >> good to see you today. >> i houmw many times can they this. >> information is key to technology, on the hardware and what they are bringing to consumer prices. >> innovation is the key. we continue to like apple. >> and as far as samsung goes, repeated warnings now. getting hit on the low end, on the high end. what is the exit for them. >> i think what's really important is to realize of whose

leading and whose innovating and gaining more share and who the consumers are the really adopting. and right now it points to apple. >> jim, i'm interested in your read through to google and eqqu come here r. they are not running a the version of the android that links into google services. can the on the high end you have apple and a lot of people use google services on apple but not to the same extent. but so if we see samsung being pressured in this way, what does it mean finish google and for qual com. >> very smart question. important to realize you are talking about the a software company and also a semi conductor hardware company. on a software front apple controls all the software

experience. that on the hardware side it is important to note there is a lot of change going on. some innovation, and competitiveness. on that front we should shift attention to some of the connecter supplier companieies whose more positioned. so regarding that, that is the way we like to look at it. is both the user experience apple controls and the supplier companies who really doesn't matter who win os for loses as long as they continue to be connected. >> can you explain what happened with gt advanced? >> what i can say is this. apple is coming out out with the apple watch in the first part of next year. there are lots of different covers that go into smart phones as well as watches. some of them are sapphire glass. some are gorilla glass. lots of products out there.

what is important is to realize this innovation has yet to be completely adopted by consumers and we are seeing some companies, you mentioned one of them, that are struggling to get the product to market fast and on time. and right now we don't know exactly with the apple watch if it is going to sapphire or gorilla glass or what. so there are some groups really struggling to get their products out. >> people felt blind sided by that. we thought we had a handle on how apple dealt with suppliers. going from a market cap of that size to basically almost zero was a surprise. >> we don't cover the company that you mentioned. so i'm going stay away from this particular stock. but it's important to know that as of today every product you buy with apple does not include that type of product that you are referring to. apple has a very high quality of expectations for their products. they want to keep it so the user experience, the hardware and a

software is a premium level. and importantly some companies are going to make it. others may have ideas and may not make it. and you are correct there are some companies that aren't quite making it. >> my understanding is that gt advanced sapphire is not going into any currently shipping apple product and apple wasn't necessarily counts on this for the apple watch either. they are other suppliers of the sapphire. important to note. >> jim, thanks. great to have you. jim suva joining us this morning from citi. >> bend gate, then hair indicate. iphone complaining that your head or facial hair is being yanked out. hair gate, fake razor ads.

we're trying not to take it too seriously but when it is on nationwide broadcast television. >> i haven't had that problem at all. >> that eex what roker said this morning. >> i think people should come up with a little more creative name than just something gate. >> yes. >> dow is down 136. here's domonic chu. >> i wonder if i should get an iphone six if i'm doing they are -- anyway. morgan stanley cuts gm. they are moving lower. you can see the stock is towards session lows off by about 4%. so gm one of those stocks we're going to want to watch. >> when we come back we still have our eye on the markets. down triple digits for most of the morning. and samsung's pain really

apple's gain? walt mossberg brakes it down. and myspace co-founder chris dewolf coming up later on this water. yo, bro, you on woo-woo? are you kidding me? everybody's on woo-woo! [elevator bell rings] woo-woo? lock and load, people! we're going all in on woo-woo! ok? mark! comp us up a profile page! copy! susie! write us some posts! ready! grace! upload some videos! uploading! i want sponsored woos. i want targeted woos. we want to be all up in your woo-woo feeds! gordon! register our woo-woo handle! janice?! we need an ethnically ambiguous woo-woo mascot. we're cashing in the q4 budget, people, and we're buyin' some followers! hahaha! yeah! [applause] woo!

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a quick check to be markets at this hour.

dow down triple digits, 147. s&p down 15, to 1950. nasdaq down about 37. and here's morgan. >> as you mentioned had nasdaq trading near lows of the day. down about.8%. and what we're seeing is traders repositioning portfolios ahead of earnings. and it is earnings that is driving one of the biggest laggards on the nasdaq today. soda stream down today after a revenue warnings for the third quarter. the company seeing slumping demand in the u.s. but a slightly different story for apple. it's outperforming today. trading about flat, better overall than the larger nasdaq. and that's because two positive reports.

bank of america and susquehanna. and green mountain hitting all time highs after a goldman sachs buy rating on that. >> another voice speaking out on the icloud photo healthcare. jennifer lawrence saying quote just because i'm a public figure and actress, does not mean that i ask for this. it's my body and it should be my choice. the it is not a scandal. it is a sex crime. and it needs to be changed. that's why these websites are the responsible. >> lengthy interview and very eloquent in dealing with a terrible thing that happened. >> yeah. and there's been a lot of press how many of these celebrities are the banding together potentially putting up a class

action lawsuit. it's something something that is on our radar. when we come back are you looking to get a mortgage? going online might be your best bet. we'll explain why in a moment. plus keeping a close eye on the markets as we approach 11:30. during this all this volatility overt the last week. and the european close has been the biggest driver on the markets. we'll have that when squawk alley comes back that's right. it's just that i'm worried about you know "hidden things..." ok, why's that? no hidden fees, from the bank where no branches equals great rates. revolutionary by every standard. and that became our passion. to always build something better, airplanes that fly cleaner and farther on less fuel. that redefine comfort and connect the world like never before.

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big developments in the peer to peer lending space. >> for the last decade it's been a nascent industry in which most have focused on helping customers refinance or consolidate existing loans but now one company is entering the housing market. the san francisco based market is a mortgage originator for six

states and d.c. will go up to 3 million with as little as 10% down. they will do about 150 million in mortgages this year. about a billion by next year. target i targeting 35 to 40-year-olds with little credit history. kagny says it doesn't take shortcuts in underwriting. it just requires less paperwork. >> credit cycles always swing and we move from excess to the precrisis to too much co conservativism now. we've created a process where we're asking for little information. employment, six month ofs mortgage coverage. no treating you like you are a money launderer until you approve you are not. >> they want six months. most say they want 12 months but

they are the highest credit borrower. due to the fact that its original customer is highly educated. and lives in a large city where housing prices stay afloat. average fico of 776 is extremely high. but never say never. >> solved ben bernanke's mornings problem. >> i was getting an e-mail from the mortgage brokers, if the former chairman of the fed can't get a simple refie, what chance does the average joe have. >> certainly a problem that if bernanke is having it. many others are as well. >> a sea of red in europe. simon hobbs wrapping up the market. >> we sure do.

further evidence the largest economy is in difficulty. production fell sharply in august. it comes off. repeating data basically that we had yesterday. good july, august looks bad. there is a problem with the holidays and adjustment there. but seriously some corn serns over where we are with germany. i wouldn't break into tears for the germans. this is worth bearing in mind. a current account surplus of 7%. a surplus of 7% and they really stand accused by a lot of others of not doing enough to inflate their own economy and certainly not aiming to run a budget deficit at the federal level. and that is given rise to a new term from deustche bank over night called euro glut. the lack of domestic demand is now running every year $400 billion current account surpluses the a bigger offender then china in the 2000s and this

century's largest capital expecter. that is where the excess reverse will now come from. and you could see the euro fall from 1.26 to 95 u.s. cents. so a 30% further move down on the euro. of graver concern is when in spain you know we had the first case of ebola to originate outside of the africa. now three others have been hospitalized there in connection with that. and obviously they don't know for sure at this stage but you have seen a lot of airlines. this is british airways which also has bought iberian the spanish airlines. and through the session you have seen other travel-related companies also falling. carnival has huge operations within europe. and you are beginning to see

some of the groups get caught up in this. accor the french hotel group and others in negative territory. and you can see other stocks, mining stocks, have risen in sympathy with rio. glencore is in -- >> thanks simon. also the european markets are set to close we are now hitting session lows. dow down 160. in the meantime, tech devices keep shrinking while at the same time packing more punch. two crowd funding projects set out to create some of the world's smallest products for every day use. now you get the vote which you would fund. >> charger eto it.

claims to be the world smallest charger. wire free and has built in bottle opener. find ster, a small no fee gps tracker. users can keep tabs on the location of anyone or anything like pets or children via smart phone. also allows you do track levels of activity. it's surpassed it's goal raising nearly 68 thousand. who should be this week's tech crowd leader. vote now at cnbc.com/tech crowd. >> when we come back the next act for myspace co-founder chris

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samsung says it expects third quarter profits to take a hit as competition grows

overseas. samsung still the global leader if smart phone sales but is the company losing its edge? walt mossberg joins us. >> hey carl. >> we keep having this conversation. what is the answer for these guys? >> i'll tell you one answer in my opinion having reviewed all of their major phones is that they just have to get way better at software. they are a pretty good hardware company. but they are kind of a fast follower. and when they do try new features, they don't work very well in my experience. or they don't settle on one way to do things. they give you 16 dways to do it. i really think they need what steve jobs used to call puration in the software. it's important. >> walt, i can't help but notice samsung out spending apple in marketing, hard to do, by about

2 x. it seems like thit might be har to stop that spending when they are trying to push q 4 also. we've seen a number of companies run into this issue. could this really get bad for th them? >> i don't think we are in the blackberry or palm tart rir. they are still pretty popular. the only android phone maker with really significantly profit and significant share. i just think they have to take a breathe. think about their software and also think about how many models they make. i think there is a certain amount of confusion. they tend to make things for carriers in markets. apple tends to make things for users. and the carriers have to carry them. those may be two extremes and maybe they are somewhere in the

middle but i think samsung has to think about rationalizing its product line. >> that said walt, a lot of the commentary this morning on the back of earnings talked about how samsung now needs tofecti f on earnings of its chip business. do you think that is where we'll see company going in years to come? >> well you make a great point. and it is that this is a giant conglomerate. we always compare to it apple. but apple is -- and apple a huge company but apple is very focused. makes a small number of products. anyone who's been to korea knows samsing is in construction and does all kinds of things. and chips are an enormous part of it. what they have to do to consolidate on the chip business is not something i'm very much schooled in. i don't know. but on the phone business,

obviously they are going to go low end because they are being challenged there too. but there are statements to me seem to express continuing concern about high end, high margin phones which is why where they compete with apple. >> a lot of viewers drawing parallels betweens some i samsu what a sony he has probd with in music business. but that's another day. >> right. >> you reviewed had cano. this is a kit that essentially allows kids to build their own computers. when i was a kid it was a microscope or something else. >> a perfect analogy. that is what this is. it's 150 bucks. you get this fully done board called a raspberry pie which people use for experiments and so forth.

but you get to put that together with a case and wifi and keyboard and a bunch of other parts and then the fun begins on the screen, which you have to supply yourself by the way. on the screen you get to coding. you get to modify common popular games like mine craft and even the old game pong. you can change the colors. change the speeds of things. change the behaviors of the games. and you do it with a visual programming language. so the kids learn something about the hardware inside the computer. it is their project. and they learn coding. and for 150 bucks, i think it's a great idea. >> how wou >> how old does a kid need to be for this. >> that is a fantastic question. and what i discussed with the company. when they sent me their press material, some of them said 8 to

14. some said 6 to 14. i said which is it? there is a big difference between a 6 and 8-year-old. and they actually said they would kind of market 8 to 14. and then they discovered in their betas that kids 7 and 6 were actually getting a lot of use out of it. so they lowered to it 6. and obviously i think with a 6-year-old it may involve more help from mom or dad. but they say 6 to 14. >> amazing and it's fantastic. one last question, walt. have you had any of that go tee hair pulled by the iphone 6? >> no i don't think what this thing is about. i've had this iphone 6. i had it as a review unit the day they announced it. and i have my own now. and i've just never had any of that happen. maybe with the plus, which i don't use.

i don't know. >> walt, we'll see you soon. thanks again. from re/code. >> back to the markets now on this tuesday morning. dow still down triple digits. j and j goldman sachs and boeing the largest contributors. what sources are moving the market in a very swiflt fashion. >> global deflation concerns. here in the u.s. our economy is better but we are seeing real bifurcation, particularly what is going on in europe. but the major sectors here. industrial, financial, materials are, all the major growth areas to the downside. a risk off today. if you look another the s&p, europe is closing now and once again suspect some of the raekness is coming from selling in europe.

and germany the weakest output in four years. and we'll see how the market responds. deflation, not just for europe but germany. rest of the eu, russia, as well as china with slower growth. lower commodities and weaker currencies. all that. you can see the gold, going nowhere. but they are to the downside again. 2, 3 and 4% declines. retail stocks on a somewhat slower growth outlook in the u.s. although they have an't been terrible. travel stocks go up and down. depending on the news. today generally to the downside. we're watching the cruise ships and the airlines on that one. oil and gas. oil moving to the downside again today but the oil and gas stocks are rebounding. i suspect here we are going to get a modest bounce now that

europe is closed. we'll see if that pattern happens so far today. >> thanks. over to dominick chu. >> check out ibm, apple and intel. the reason why according on investor survey by bern stein, the three are the best tech stocks to bet against. intel rer relies a little too much on the pc sales. the pressure on apple could be on profit margins and ibm could be hurt by slow are growth in terms of the cloud computing and that competition. all three are lower overall on the day but three very large cap tech companies that bernstein investors say are the best to short. >> we'll keep on eye on the markets and see whether or not the european close makes a difference for the afternoon session. allows of the day on the dow

16,8 16,829. we're not that far right now. >> i'm watching the european markets and suspect the fed and bank of japan and the ecb are watching those markets were closely as well. how much effect can the markets and their sofsness have on fed policy? we'll talk about it after the break 6 twhat do i do?. you need to catch the 4:10 huh? the equipment tracking system will get you to the loading dock. ♪ there should be a truck leaving now. i got it. now jump off the bridge. what? in 3...2...1... are you kidding me? go. right on time. right now, over 20,000 trains are running reliably. we call that predictable. thrillingly predictable.

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. coming up at the top of the hour. pzena is putting money to work in a beaten sector that migrate might surprise you. and traders got out of the soda stream before the big drop but is it time to get back in? and we're going talk to one of the analyst who is made the list in a few. >> let's get to the cme and get tot santelli exchange good morning rick. >> good morning carl. yeah these are fascinating times. and whether the imf's forward guidance on the market or trends. or the federal reserve or any analyst it is always dicey to try to predict the future. and to be quite frank on this floor imf isn't held in high regards with what they are

liking at down the road. but today was different. and many traders think the imf is now on the same page traders have been for a while. despite what many smart economists and the analysts and the fed officials may say regarding the outlook of the monetary policy in the u.s. will there be another qe, will rates go up in 2012015. howe how important the 2 global economy. and the now i guess there is two charts way tonight show you that seem so easy to contemplate. but yet when you see them, it is very compelling. the first chart is let's start july 1st. two directions in the market and put the dock against ten year note rates and this is compelling because ten year notes are headed higher and seems that the dax has an influence of turning that

market. to lesser extent let's match up the s&p cash against the dax. and we can see obviously they correlate. and we can see also there is a bit of a premium to u.s. markets but to be sure there is no doubt that correlation is in effect on the way up and on the way down. having said that we've talked many times. stimulus is fundable. meaning if there is liquidity in one of the globe it effects all the global metrics of economic horsepower. the bank of japan throttling in big time. mario draghi champened that he wants to chip in more. and janet yellen, october we're supposed to be end of qe. but in the final analysis where is the ball going to be picked up to keep markets at the current rates, considering the shifting dynamics of not only europe but japan and maybe also china. so interest rates under 240 and data we had friday, it seems easy to me.

that if fed policy is data dependent, there is little doubt the data is going to be effected in a negative fashion considering what is going on in europe. >> rick santelli. dow is down 134. a market flash. >> update on the previous wort that walmart was cutting health benefits for some part-time workers. they are celling cd krerks the change in eligibility effects less than 2% of the employee base. for associates who do qualify, preem ms will rise by 16%. so if you qualify, you are getting a the 16% rise. walmart shares just about flat on the session. >> thanks dom. we are still keepingen eye on the markets. the dow did get a slice bounce

back you have to european close but this is the 8th day that the dow hawes moved in a triple digit range. we'll be right back. see things in a whole new way. it's in this spirit that ing u.s. is becoming a new kind of company. ing u.s. is now voya. changing the way you think of retirement. ghave a nice flight!r bag right here. traveling can feel like one big mystery. you're never quite sure what is coming your way. but when you've got an entire company who knows that the most on-time flights are nothing if we can't get your things there too. it's no wonder more people choose delta than any other airline.

markets down triple digits but off the lows. watching the ten year, watching the dax. what's it mean now that europe is closed? >> well the early morning rally

attempt got killed as we went into the european close. there was a new round of selling. some may have come from europe. and that took us down to a potential retest of the morning lows which is a critical area for the viewers to watch. as you pointed out the s&p got down to 1947 on the european close we got back to 1948. if they hold and if they do begin to bounce, then the bounce could get real meaning because it will look like a successful retest of the morning lows. the next 20 minutes to an hour are going to be critical. >> we expected when earnings ramped up it would positive for all the major corporates but we expect we meet get worse from companies. do you think we'll start to see divergence among soft to

companies? >> there is a great potential. and as i said earlier i haven't seen the companies so much changing things but the analysts who cover sectors are beginning to talk down the fourth quarter and say that the currency strains are going to begin to really hurt these guys. >> when you look at the overall sentiment, the volume we're seeing heading into q 4, what is your expectation for how people are going to feel about the guidelines? does it need to feel strong? or will just in line be enough. >> i don't think so in line will be enough because we have currency concerns and thankfully geopolitics has been off the course so far this week. this that returns things can get difficult. the viewers carefully want to watch that 1947 level again to see if we retest it. if not we might have a pleasant early afternoon aanyway.

>> and this is an issue for tomorrow but dox 9,000. has been strong support going on more than a year now. >> i'm watching that and also as i ashrewded to this morning t russell ha a large rectangle ler formation back for almost a full year. and if bebreak that, that would be around 1070 or so, that and the dax could probably look like a set of domino's. >> surprised that go pro is higher? why would a short squeeze exist in this environment? >> for strange things the viewers don't uchb see. you have to borrow the stock if you are going to be short. and when it becomes a difficult borrow words are spreads. and nevin a triple digit down day you can get an up move. >> what level are you watching for? >> i think it could go down as i

said to 2.2. >> wow. >> well, you know, it has a lot do with the currencies. and a variety of things that will be putting extra pressure on. i don't think the fed is going to be too quick to raise rates and i think the markets sense that. some was the imf downgrade and some is germany. so it it is am coming together. >> thanks a lot. of course we'll continue to keep an eye on the markets. the dow still with the 128 point loss. we'll bring you the biggest losers a lot in the financial space when we come back. whenwork with equity experts

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apple, starbuck's, you have some company. the eu has added amazon to the list of companies whom it is investigating for illegal tax dealings. the investigations are focused on the quid pro quo tax incentives given to multinationals which the eu amounts to illegal state aid. apple in ireland, starbuck's in the netherlands and now amazon in its dealings with luxembourg. we seem to have a some form of this conversation every day. >> in a way the more companies

they add, does it weaken the case? because if they are all supposed to get special deals but all. >> not so special anymore. >> they obviously found whatever haven of their choosing. but it issing the to see the target being tech. we don't don't hear this about pharmaceutical companies or other companies that funnel a lot of profits or set up special deals through europe because of the tax friendliness. so certainly amzing azon denies allegations. but will be interesting. >> lawyers thinking who i talk -- they know that eventually some government is going to get their hands on some of this tax revenue. it is just a question of who does it first and who basically gets the money. >> sure. >> so maybe the u.s. ought to really work on that corporate tax law thing that everybody.

>> a good while it lasted think. >> the money is there. somebody is going to get it eventually. >> someone is going to open the piniata and the candy will spill. >> two market stocks taking bi. soda stream and container store. both down 20%. these were high flyer names earlier in the year. soda stream was one point a take out tact target. you can see the third quarter at least for those two companies was not pretty. >> and soda stream by the way, the 15th most shorted name on the nasdaq. we knew there were a lot of soda stream haters and some were

hoping for a deal which has been long rumored but a others hoping for a demise. and we'll see what the afternoon session brings now that europe is closed. that it for here on squawk alley. back to hq, and get the half. >> welcome to the halftime show. let's met our starting lineup. joe terranova, steve weise, peat najarian, josh brown, and we also have a special guest. rich pzena. he managers $27 billion. news out of europe, the