good morning, it is 8:00 a.m. at amazon headquarters in seattle, washington, 11 sclk a.m. on wall street and "squawk alley" is live. ♪ ♪ ♪ ♪ ♪ ♪

welcome to "squawk alley" for a thursday morning. carl is out today. joining us is henry blodgett, founder and ceo of busine"busin inside insider". what a treat we're joined for the hour by david faber as well. let's start with the markets in the green after the dow posted one of its best days in history yesterday. it finished up 619 points and right now it's up 277 points. right now major averages are close to break-even for the week. hard to believe that the f.a.n.g. stocks are leading the way. facebook, amazon, netflix and google seeing nice gains. perhaps amazon because it was upgraded to a strong buy at raymond james this morning. the firm saying the recent pull-back creates an attractive entry point for that stock. henry, amazon's jeff baezos is n

investor in "business insider." you've been looking for a sell-off for some time. what does it say that we got that and we're basically at break-even for the week? >> unfortunately not much. if we're rolling over and we're going into prolonged sell-off that takes us down 30 to 50%, which valuation indicators would suggest is certainly possible. it doesn't have to happen, maybe we move sideways, or go to higher levels which happen before 2,000. these are the kind of market action that you do see. i remember very distinctly in the financial crisis, david i'm sure remembers all of this these incredible 300-point up days in the middle of it we would hit bottom and roll over and go down again. >> the economy was in much worse shape and as we pointed out time and again. the debt markets of course which really led us into the crisis were a disaster. none of that is true right now. >> that's true. >> in the beginning, it's hard to see, markets will move, things look kind of okay and

then things move and you see say that's why they move and things get worse. the only thing i'm looking at is valuation, that's what scares me. >> there was all the commentary as things were plunging. people saying it's going to be hard to regain the levels, even of last week you know all the pundits come out and now here we are back, it makes you wonder, is this actually a sign of strength that we've come back this far. saying it's going to take more than what we've seen so far to really knock the markets down. is it a sign that it's going to take signs of a recession or something else? some further catalyst to really make it go down from here? >> it's certainly possible. look, the fed has been scared into just staying put forever because the market is going to crash if they do anything, okay, maybe that extends things for a little while. lots of comparisons to 1997, which i know david remembers as well. i remember them all well, unfortunately. >> it's okay. >> i'm old. >> we look at what happened last, after that in 1998 so

forth we had this blast-off for 18 months, it took these incredible record highs, it's wonderful to be involved in that. and then we had a major crash after that. and so i just worry about we get into this adrenaline high if that's what drives the market even higher is that healthy. is it good for long-term investors, does it suck people in? >> but henry, when you talk about valuation, i would like to understand what you're focusing on. i know you talk about technology. but there's parts of the market far from overvalued. >> you can always find that i'm talking about the market as a whole, cyclically adjusted. the shiller pe ratio, the buffett indicator, market valuation to revenue and gdp. everything you look at suggests that we are one of the most highly valued markets in history. not quite as high as 2000, but that was very temporary and i'm certainly not saying the market can't can't go a lot higher, it can and maybe what will happen

is the valuation will become more average by us just moving up and down and sideways for a long time. >> what seems different is you have big hedge funds, you talk to any prime brokerage desk and they'll tell you that big hedge funds selling futures and buying amazon, google. it's those names that we've seen powering some of these major indices. so it doesn't necessarily seem like there's that much bullishness underpinning the overall valuations of the entire market. there are a few bets that of course jim cramer has termed them f.a.n.g. >> couldn't he have come up with a little more attractive name? they're very innovative fun companies, have to be called f.a.n.g. but yes, they're all in great position, they're all carrying pretty high valuations relevant to current fundamentals, with stocks like this you have to look out five, ten years, saying what could the company earn.

is the valuation reasonable in that context and for several of them, it is. if you think they continue to do what they have done over the last several years. >> apple pay announcing it will accept pay anywhere. a credit card reader serving 300,000 locations and josh lipton spoke with the head of apple pay about this news. josh? >> well jon, it's one more way apple is hoping to win this war in mobile payments by expanding with pay anywhere. remember apple pay now accepted at one million locations in the u.s. we know competition in mobile payments is fierce. android pavement samsung pay soon coming to market. jennifer bailey, the head of apple pay tells us she isn't concerned. >> we have the best customer experience out there. i think we have the most secure solution out there in terms of protecting people's private and credit card information. >> now this is a fast-growing

market. consumers made $52 billion in mobile payments last year. they'll ramp up their mobile spending to $142 billion by $2019 according to forester research. apple pay will continue to evolve as a product. for example i asked her whether she would be interested in making apple pay compatible with buying online. through a desktop browser and take on pay pal or even offer peer-to-peer payment services, she didn't rule out either option. >> we don't talk about what we're doing in the future. i think apple pay, what we want apple pay to be very broadly accepted in all types of transactions that customer does today. >> the apple expects apple pay will be accepted at 1.5 million locations by the end of the year. today's news, one more step toward that goal. guys, back to you. >> all right. thank you, josh. and as we're speaking about

apple, that stock is sat session highs. up 2.5%. and the dow, which apple is a part of also at session highs crossing 300 points, guys. so apple pay still down. >> still down about 14% in the last three months. does the fact that it's going to be accepted at 1.5 million locations by the end of the year move the needle for you? >> it was 200,000 when they first launched. >> it's a step in the right direction, very incremental. it's exciting the idea that they'll move into other transaction platform, the big problem with apple pay, it's not much more convenient to wave this or a watch than it is to wave a credit card. and the credit card company is taking a huge fee, a little bit less friction in the paste process. if they can get to the point where it's saving the merchant a couple of percentage points on the transaction and the consumer can share in that? suddenly it starts to make a big difference.

>> we just saw the head of apple pay outside a taco truck in silicon valley. it's interesting how apple is messaging differently than they used to be. when is the last time you saw apple put out a female executive, put forth to make statements this is apple's dead season. it's august, it's right before the big announcements kol in secretary. samsung is trying to come out with samsung pay, apple is getting aggressive about defending its stock. touting services that are a bit long in the tooth saying there's new stuff coming. >> let's ask david fab another seems to be a long memory about apple messaging. it's such a different company in recent years over these new products and more crowded playing field that it's operating in. >> certainly tim cook's company not steve jobs. >> i think you see this a lot with the ceo, gets bolder as they gain confidence over time. and certainly, i thought it was very interesting thaw mentioned the messaging, jon, i'm not sure

what the significance of the taco truck is exactly. >> it's an interesting back drop given what they're talking about. i suppose that the taco truck was taking apple pay. apple is a very stage-managing company. so that visual and putting forth various executives to talk about various things, tim cook has been good about. it's interesting, especially during this season where they need to defend the gains that they've had in market shamplt heading to a very strategic fall for them. >> when it comes to apple and the increase in security. i know there's debate about that. that can end up saving the credit card companies a great deal of money and therefore be a value proposition as well. >> they give it back to the merchants in terms of lower fees, it starts to make sense. but right now it's a big fee. it adds up to a lot of money. the silicon valley start-up payments are trying to do is

find a more convenient way to do it. >> consumer reports calling the newest tesla model s, the best car it's ever tested. phil lebeau is live in chicago with details. i guess they managed to get the door open this time, huh? >> they did. a few months ago that consumer reports said we're having problems getting into our model sp 85 d and the tesla haters said aha, they're having problems with their p-85 d. not too many ratings, look at the rating they've given that car, a 100, mainly because the dual motors means greater performance and it means greater efficiency. here's jake fisher with "consumer reports" explaining why this car is so impressive. >> it really does almost everything better and it's something we all right used to seeing from cars at all. it's more like something you see in electronics. so it really kind of blew up our system, really. it scored actually above 100

before we actually had to make some changes to our scoring system to account for this car. >> actually scored 103 and then they had to modify the calculations. tesla when we notified them about this said the model s being the first car to receive 100 out of 100 points is a testament to our toward give our customers enhancements in range and performance and value and ultimately a better driving and ownership experience. you might be saying how many cars have rated close to 100? here are the top five models ever tested by consumer reports over the last 80 years. you see the two tesla models at the top there. followed by bmw 235-i and a porsche, this is a nice feather in the cap for tesla as it heads into what will be a very critical end of the year for the company. they're in the midst of expanding production as they get ready for the rollout of the model x. their next model. it's an electric suv.

highly anticipated. it's expected to begin deliveries or they're expected to begin deliveries of the model x by the end ofself today's shares of tesla getting a nice pop. the entire market coming back. shares up about 8% most of the day now up more than 7%, trading back above $240 a share. guys, back to you. >> thanks so much phil lebeau. month of those top five cars are rated on affordability. but maybe that's for a different discussion. >> henry, 0-60 in 3.5 seconds. the only car ever to get a perfect score. >> it's an awesome car. we should celebrate that. >> wonderful to see great products. >> the fact that there are reports that tesla loses thousands of dollars per car it manufacturers it could miss this delivery target later on this year. i mean -- does this overlook some of the challenges ahead for tesla? >> i don't think it does. i think you got to take the positive data points and the negative. they lose thousands of dollars per car.

they've got all of this infrastructure to build up. they're building this giga factory. i think it's kind of a silly metric to focus on. the question is, they're going to be able to set up this battery manufacturing? roll out these new models in a way that's consistent enough to match the story that they need to tell in order to get to scale? the question is can they get a 35, $45,000 car out the door that most people or more people will be able to afford and then achieve profitability down the line. because if they can, they're going to be a powerhouse. >> these kinds of stories are helpful and these reviews are helpful. you have to fund a business that's not free cash flow positive at this point and therefore they need to sell a lot of equity which they've done dramatically and successfully almost every single time. as jim cramer likes to say, he's an incredible promoter of his own stock. >> you got to be able to tell a story. when you got a company like

this. if somebody had said 15, 20 years ago, this guy is going to try to start a car company. a car that runs on batteries. everybody would have thought about delauren and the huge flp that was. >> the story has been a galvanizing stock. the shorts have a lot of conviction, the longs have a lot of conviction. especially those buying into the equity issuance. what do you think say head for the stock and do you think it's emblematic of some valuation concerns. >> this is one of those stocks, depending on what you think is going to happen over five to ten years, you have hundreds of dollars of swing in current fair value. you can't get any more precise than that if john's story is correct, the model x comes out and they start selling ten of thousands of them. it's a car that everybody wants, that radically changes things. the batteries they're selling, if that business comes along.

suddenly they do have something that can justify the current share price or more. if they can't, they can't break out of the super high-end market where this is often a second or third car for very wealthy people who like great cars. it doesn't matter. it only goes 300 miles because i'll get in my porsche to go the 500 miles the then it's much tougher. and they are not accelerating the number of cars that they're selling yet. it's very important down the road. i wish i could tell you in finance you could get closer to a precise current value. it's very hard. right now, there's a $30 billion market cap. eventually if it's profitable. tesla will trade at 15-20 times earnings. you have to come up with a scenario that gets them to a billion and a half to $2 billion in profit. >> henry it's not the last we'll hear from you on tesla or the markets, thanks for joining us today. internet stocks helping to

lead the raly. did you miss your chance to buy low? with all the volatility lately, could a downturn be a good thing for silicon valley? "the new york times" farha farhan monju says yes. and we're watching the markets trading up 2%. the dow is up 272 points. "squawk alley" will be back. want to survive a crazy busy day? sfx: cell phone chimes start with a positive attitude... and positively radiant skin. aveeno® positively radiant moisturizer...

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tech stocks as the overall market is in the green today, meaning up sharply. take a look at the so-called f.a.n.g. stocks, facebook, amazon, netflix and google, they're all up rather sharply this morning. joinings us is cantor fitzgerald's head of global media. i want to start with others, namely alibaba. because that more than any has been hurt. traded below the price at which it went public earlier this week. it is up today. a rare positive showing. what's the future for that company, particularly given it's in the hot zone so to speak. actually selling all this stuff in china? >> it is. it is in the eye of the storm. but remember, alibaba is still the market leader, they had over 80% e-commerce market share in

the country. they're going tearily faster than the whole entire sector and you know you look at the valuation, we may have had christmas happening earlier this year. so yesterday were you able to buy alibaba not only below the ipo price, but roughly one-time pe to growth. which we always think is a great price to own a strong franchise like that. >> so amongst this group including the f.a.n.g. stocks i mentioned earlier, this is the cheapest at this point, right now? >> it is. so yesterday we actually put out a note identifying the top five names to own in this carnage and alibaba was definitely one of the five. we didn't have netflix and we can probably talk about that, but we do have alibaba and priceline that are now part of the f.a.n.g. list. i want to get to netflix. one more question related to china, i notice that baidu, are

among the strongest, up 3.5%. is that a signal that investors are less concerned about china? those had been down more severely as we got the china-related volatility over the past several days. >> i think so. i think there have been a number of people that have stayed on the sidelines. i think this pull-back has given them an opportunity to jump in. chances are people are probably not filling their full position, just nibbling at it because we don't know know where the trough is people are look at these as good opportunities, grid opportunities over the next couple of years. >> tell us about netflix. why is that less favored than some of the others as you look at it? >> yes, so if you look at, we've basically identified the five, using three things. one, market dominance, two, growth rate well in excess of the market. and netflix actually fits the bill on both.

the third is valuation and we just want to in this trough kind of focus on those that have valuation floor if you will. so google for instance is kind of a no-brainer, trading at below the average of the market on a pe basis, adjusted for cash and with some strong catalysts, same thing with facebook. we couldn't make the same argument for netflix, which is trading somewhere around 300 times pe. somewhere around 75 time ebita to cash flow. to set the record straight, we do like netflix over time. we have $125 target. buy on it, it was not able to make it to the top five. >> what don't you like? anything out there you're kind of saying you know what, this is overvalued? >> so if you ask that question before, to earnings, that would have probably gotten a different answer, i think because of the rapid pull-back we've seen, a number of the companies have

come back to attractive price levels or some of the companies that were slightly overvalued, shorter term, have gotten just completely whacked. particularly in the smid-category, the small and mid cap names, those have been completely obliterated after they reported this past earnings season. so because of that, at least within our universe, we don't have really a sell. we have a hold on a bunch of those. but we're not recommending a short on any right now. >> all right. >> well youssef squali from cantor fitz. rally mode with stocks trading close to session highs. dow is up 292 points. it's up more than 100 points on the week. the nasdaq is faring good, up 2% on the week. the big catalyst is the european close. it's coming to you live in a few moments. ♪

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a decidedly different take in europe than we've seen throughout the week. simon hobbs is here to walk us through. >> strong gains that's for sure. europe was catching up from the beginning of its session from last night's big rally we had here in the united states. we've gained during the session as well. and i'll show you some of those movers in a moment. i want to mark the red-hot data that's coming out of spain with 4% annualized growth in the second quarter. building on almost that in the first quarter. the spanish economy reaping quite strongly. let's get to the price action today. it's notable that during the session the oil majors still heavyweights in many national indices have made gains. there was a concern about dividends, it looks to me generally through this. as in the second half of the session, a lot of the shorts have been knocked out and that's what you're witnessing. bp is higher.

royal dutch shell, the basic resource stocks have also moved further to the upside. now the big miners were up, anyway, in response to what had happened overnight. the steel makers are in there with thiessen krupp in germany. it looks like short covering to me and the european banks interestingly at the beginning of the session it was the peripheral banks, but as we've gone through hsbc has made gains, barclays has moved further into positive territory. a lot of the people seem to have read the article. today perno took a half a billion charge on its absolute brands here in the united states. as a result of depressed sales. perno is still in bear market territory as you can see and still a lot of concern about china. pras that's the bigger issue. let me take you finally to greece where today is the last day in power of the greek prime minister as a result of him basically engineering this snap

election. we're thinking that the election will be called officially tomorrow. importantly he appears to be softening his position on the debt write-off. saying you don't have to write off the debt, you have to smooth the path or make the loan softer. that's helpful for the rest of europe moving through the election campaign if that's what he'll be campaigning on. at the same time he's ruled out a coalition with the other main parties. that may be grandstanding as he attempts to keep it together. the aim of the process is to shore up support and some sort of parliamentary majority to put through the deal that he's struck with the rest of the european union. back to you. >> simon hobbs, thanks so much. coming up, stocks still in rally mode. that monster gdp revision for the second quarter building on some strong gains out of shanghai. helping to drive action here in the u.s. can you see how the major averages are performing. our next guest is a top vc investor across china and the rest of asia. he'll tell us how things are looking on the ground in a moment. i asked my dentist

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good morning, mp, i'm sue herera with your cnbc news update at this hour. a moment of silence at roanoke station wdbj, at the time the two of their journalists were killed during a live interview yesterday. shortly after 6:45 a.m., the news team joined hands before pausing to remember reporter allison parker and cameraman adam ward. who were gunned down by a former

disgruntled employee. austrian police finding the badly decomposed bodies of at least 20 migrants in a truck on the site of the highway near the hungarian border. the state of the bodies suggests the migrants had been dead for several days. the secretary-general of nato visiting the former soviet republic of georgia for the opening of a joint nato/georgia training center. and the maker of sara lee, nature's harvest and other brands is recalling thousands of loaves of bread, bimbo bakeries recalling them because they may contain broken glass. they are labeled with the bakery code 1658. that is your cnbc news update. let's get back to kayla and "squawk alley." now let's hand it off to the

cme group, rick santelli and the santelli exchange. rick? >> there's so many things we could go into. but i want to start on one thing. one particular maturity we've talked a lot about. 30-year bonds, as i look up at the screen i see it's 292. what i want to talk about is all the santelli exchange that concentrated on how important settlement was on the long end of the market, 275 and if you look at last thursday of course close call. we basically had a couple of days, the big friday, the big monday when you had the big downgrades, the big drops in equities. for most part there's a lot to learn by the way this looked. as i'm talking to you, you look at a bigger chart on the screen a couple of months. in the end, when you see a two-year note yield that's hovering basically unchanged, and you see the other polar end of the curve, and see a 30-year bond yield holding on change and realize that most of the true financial structure trading in the belly, maybe the five-year,

it speaks volumes about how 2015 is so much different than 2009 through 2014. when you look at the s&p and the dow being slightly negative, they were much more negative 48 hours ago, the nasdaq fayed fighting to stay, we could take a step back and say unchanged. normalization is going to be bumpy. but it's going to be bumpy for a variety of reasons. not the least of which of course is the ongoing debate and the emerging and developing economies, like china as to how they respond. how emerging markets respond to the big wash-up of liquidity and then the big receding of liquidity that's going to be caused by the larger central banks. big economies, whether it's the united states or even the uk. but there's nothing that can be done about that. the calibration has changed. we talked about recalibrating. it sounds so -- well ha does that really mean? it's pretty simple. whether you live in another country and you come here and you're not really a citizen, it's going to be hard to deal with that issue.

we know immigration. we know if you give money and programs, needed programs, entitlements, it's hard to ever take that money away. recalibration on any level is very difficult to go back, and go back to where you were. simon hobbs, i thank you, this is gdp in spain. a big number at 1% this is going backwards in time, .9, here you see all of 2014. you see the last time we ha negative number, minus .3, 2013. a nice steady improvement, right? look at the screen and look at a short-term chart of their 10-year yields and a longer-term chart. the point of this is when you see this type of improvement. i understand there's a variety of other issues like employment still running high. the signal to the marketplace should be those spanish 10-year yields should be going up. we know there's quantitative easing going on throughout europe. and if mario draghi's big

statement, do whatever it takes, is true to his word. how is any investor supposed to understand the recalibration when all the signals are out of kilter? if this was krek and i believe it is, spanish yield should be close to the highest they've been all year. these are the things investors are going to have to contend with and there's going to be a lot more of it. that's my opinion. jon, back to you, buddy. >> up next, stocks still in rally mode, though off the highs with china continuing to drive action here in the u.s. a top vc investor in china is going to tell us how things are looking overseas, that's next.

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coming up, despite the volatility we've seen, we're black for the week. our desk will try to make sense of the moves and gyrations, how you should trade it and the analyst that says amazon is headed for a massive double-digit rally. is he being too bullish? and amidst all the roller coaster ride, which company insiders are buying their stock and which ones are selling? all of that coming up on the halftime report at the top of the hour. meanwhile, it's been a roller coaster ride for asian

markets this weekend. in part that has driven what we've seen here in the states, but what dot moves in china mean for investors right now? david ciao is co-founder and general partner of dcm ventures, david, great to have you. we often hear that the stock market in china is different from the economy. but then there's a lot of importance placed on whether shanghai is down 7% or up 5%. how much does sentiment change depending on what the market there does? >> well you know, the domestic chinese stock market, kayla, is a lot about the retail, much more there's more consumers involved in the selling and the buying. much more so than the u.s. where large financial institutions and pension funds play a role. so i think the volatility by nature is included. but i think the sentiment has been well, you know, on the one

hand people are saying it's about time. because it was trading at about you know, 40, 50, 60 pe ratio. which is just unsustainable. and i think people kind of knew that it will pop one day. the question was when. and i think now they're going through the volatility of the hard landing. >> david, we knew that heavy industry was hurting. has been hurting since 2011. but what sort of cross-currents have hit your portfolio in the last three months? >> well you know, many of our portfolio companies like vip shop, five-one job. these are companies being traded in the new york stock exchange and nasdaq. basically in terms of chinese technology companies, the elite companies definitely go public in the united states. where it's being affected less by the domestic stock market turmoil.

i think the second-tier technology companies that are going public in the domestic market in china, those are the ones that's really being impacted a lot. >> david, what's the impact of this volatility really, the huge drop of the shanghai composite? as far as people on the street, their mentality toward business, toward the markets, has this shifted anything? has this shifted the attitude and the appetite for risk? >> i believe that right now they're going through the shock phase. i was in japan in 1989 when the stocks did something similar. when the bubble popped in japan as well. it takes about six months for people to kind of understand what really happened. i think the china market at least for the calendar year and fiscal year, it's still a little bit up. and so i think those who have been in the market for you know the last couple of years are

still okay. i think the ones that who are really hurt are the average consumers and retail who are really signaled by both the government and the private sector in march and april. that things are going to be going great. those are the people who lost a lot of money. and i think the affinity of you know, playing the stock market is going to decrease and because china is a very retail oriented market, i think a lot of people are going to -- run away. going forward. >> interesting, i think the 1980s japan comparison hasn't been made enough. david we'll have to have you back soon to continue this conversation. >> all right. thank you. >> meanwhile, amazon is cutting back on development of consumer products according to "the wall street journal." the journal saying amazon has dismissed dozens of engineers who worked on its fire phone in

the past few weeks. when the layoffs have been taking place. the company is also reportedly scaled back or halted other ambitious projects, including a large-screen tablet. amazon declined to comment on the story. but it is the first round of layoffs to hit this unit in more than 11 years of its existence. >> and i think part of it is just the danger inherent in zero-margin hardware. which is what they're trying to produce a hardware that's really more a service, they get paid when they use a service connected to the hardware. rather than selling the hardware itself. i'm not sure it's a huge deal. amazon has plenty of ambitious projects still going on. but certainly is a caution for anybody who is going to go out on a limb, be an early adopter of an amazon hardware product. you got to be kampl because they might not continue. >> do you see them putting all of their eggs in a kindle backcourt? >> no, they've got these buttons that you can get and get more

laundry detergent or milk. maybe not milk. but whatever it is that you've ordered. milk i guess if you're in the grocery store. >> if you want to be in your interconnected home. want to be inside your refrigerator, filling it up somehow with something that goes -- i mean i'm kind of kidding but -- in all seriousness -- >> they're moving into groceries, more of the local commerce, this isn't the end for them for sure. >> there are some investors that may take heart in the fact that they can view this as a view on cost and paying attention to it. i don't know that that's the case. we all now that amazon invests and doesn't seem to care a great de deal about earnings per share. >> they have to have dry powder for all this spending on content. all right. i'm reading it up next in the midst of volatility, a slightly contrarian take from "the new

york times," the upside of a downturn in silicon valley next.

welcome back. as the latest tech boom made silicon valley too soft for its own good? that's another question to ask in today's "new york times." looking at the possible upside to a downturn in silicon valley.

joining us is the reporter behind that story. farhad monju. from what you see what's been the impact of all of this volatility the major indexes are coming back to levels we saw on friday, i mean some stocks, yelp, linkedin, fitbit and others are still down significantly. haven't come back as strongly, do you think this is the end of the heady good times? it's hard to say if it is the end. it looks like the end will start with something like this. some kind of external shock that kind of causes people to panic and stop pouring in so much of the money they have been pouring in with tech stocks. there's been a huge sort of difference between the private market valuations of the tech companies and public tech stocks, so it seems like it can't continue much further. the marketing budgets are usually the first thing to go when the companies around

silicon valley start getting serious, no more open bar at these parties for start-ups, that sort of thing, are we starting to see anything like that yet? are you seeing any rumblings? i know you mentioned some of the previous concerns during periods in your column. are you seeing any, any sign of that yet? >> no, not really, i mean things still seem pretty go-go here. but it's only been a couple weeks. i think the main part of the budgets here are salaries for engineers. you know, and the other part is obviously leases like that is a really, really expensive part of these start-ups' budgets and it it gets ever more expensive during a boom. that's what i've argued is could be better. if some of the money pours out. some of the kind of more frill louse tech ideas aren't funded any more and then kind of the more established ones will be able to get engineers for less money. get better office space or not pay so much for it that's sort of the real kind of expense line

in these booms. >> some of those established companies, farhad, have been able to raise an astounding amount of money. but the thinking is that maybe a lot more start-ups this time around will be able to hibernate for longer because they have so much money in the bank. how much will that play into this cycle? >> i mean the really smart ones that could have raised money over the last 18 months or so they've raised a lot of money. you know, there's a term out here called like the quasi-ipo. they've raised enough so that they don't need to go public for a long time, years. and those companies are going to be fine, right? like they, especially if kind of the general price of things comes down, they'll be even better positioned because they can buy up all the engineers, perhaps acquire some of the companies that are going out of business to buy their technology. so it could be really good for them. the ones that are in trouble are the ones that were planning to raise money in the next year,

maybe less than that. and if things become more uncertain they'll either face lower valuations or may have trouble raising money. they're going to be sort of in big trouble. so i think you know one of the things we're see something people are trying to like finalize their funding now. while it's still pretty good. before any kind of sudden shock comes along. >> what do you think is going to be the symbol of this era of silicon valley excess? is it yo, the app we saw several months ago that let you say yo to people? what's the sock puppet of this time around? >> it's got to be kind of the delivery companies, right? it has to be, the companies that are just delivering you food out here, there are probably half a dozen at least. and then they're trying to deliver you a whole bunch of other things, sort of do things like you know, there's, there was an app out here that seemed to be a joke, but no one could tell. they would take your garbage out. it's like those kinds of apps, the pretty silly on-demand apps.

and you know most of them, there's this huge competition in the delivery space. so you know, it's not a silly idea, but it might be kind of silly to have half a dozen of them delivering your takeout. >> taking out the garbage. which sounds good until investors take out the garbage. farhad monju of the "new york times," thanks so much. worries over the apple watch a little bit premature? we'll explain in a moment. ♪ no student's ever been the king of the campus on day one. but you're armed with a roomy new jansport backpack,

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apple might be catching up to fitbit in wearables according to a new report from research firm idc. it estimates apple shipped 3.6 million apple watches in the second quarter while fitbit shipped 4.4 million wearable devices. idc saying quote about two of every three smart wearables

shipped this quarter was an apple watch. apple is poised to become the next market leader for all wearables. fitbit's number is bigger but they're saying apple's growth is faster. >> and definitely you got to consider some of fitbit's devices are actually these little clip-on deal. $79 you clip it on to your belt. it's not a watch. one could argue, if the numbers are correct, that apple is already in the lead when it comes to watches. >> i've ditched my apple watch and my fitbit so perhaps i'm not the core user here. >> why? >> i don't know. just -- cumbersome. just cumbersome, i don't know why. >> it's a good look. >> fitbit shares we should mention came off an earlier high on the report. something to watch as we get into the middle of the day. we've seen the markets pull back to the middle of the section. yesterday we saw strong momentum into the close, we'll see if we

can recreate that again today. dow, s&p and nasdaq break even for the week. we're on pace for the best two-day gain since 2009. more statistics we can throw at you. >> you harken back to the period and people get scared again. >> times are very different. >> david thanks for being here. time to send it over to michelle and the halftime report. ♪ ♪ do i sound old if i say i love ac/dc? >> no, we all do, too. >> we're "back in black." let's meet the starting lineup, joe terranova, steve weiss, jon najarian and our fresh meat of the day, rob searchen, one of barron's top 100 financial advisers. our game plan looks like this, inside job, what are company insiders doing, are they buy or selling their company's k?