need to put a ring on it before merging their finances. half of them merge finances before marriage. that compares with a third of the boomers who did the same thing. >> i don't know. >> donald trump says get a prenup. >> make sure you join us tomorrow. "squawk on the street" begins right now. michelle, thank you. good thursday morning. welcome to "squawk on the street." i'm carl qintanilla, simon hobbs, david faber. sarah e sar sara eisen is in washington. we kick off the third quarter with a decent market. we are keeping our eye on the ten-year where the yield is now below 203. that is the lowest in a month. our road map begins with twitter. tara swisher reporting that jack dorsey expected to be named

permanent ceo. >> glencore, stops are dropping. >> we are waiting on sales numbers from ford and gm. with he will bring them to you as they break. >> first up, futures on the rise as we enter the first trading day of the fourth quarter ahead of tomorrow's key jobs number. jobless claims up more than expected, up 10,000. that four-week moving average did fall slightly as they look to move on from what was the worst quarter of stocks in four years. >> the biggest loser was the dow. at nearly 7.6% drop. we know, guys, the s&p didn't fair much better. down, 6.9. nasdaq, down 7.4. everyone talking about october. it has been pointed out today, the past five octobers, only one has been down. the ones that have gone up have been to the tune of 4%, 11%,

3.7% back in 2010. >> the classic thing is to say it is difficult to get up-side leverage in the first half of october. if you look at what we have experienced since august, did we bring forward the pessimism? i thought jim reed at deutsche ya said, if you think you are going to have recession refreshers and a slowdown in china, risk assets could fall. if you think you could start printing positively an around the world and in this country, they, arguably, they can write if the fed is can slow on interest rates. do what they are expected to do with expanding q.e. it is all about the feds in china. >> it is also about the credit markets, simon. one of the key things is the widening that we saw in high yield versus investment grade versus the benchmark treasuries.

that has been painful for many credit-related hedge funds. it has had an impact as it often does. i'll be curious as it continues to play out. high yield has moved up to an 8% average rate. what had been a lot lower than that a long ago. >> let's get more news on the markets as we await the open. brian jacobson is chief portfolio strategist and michelle myers joins us, deputy head of economics, bank of america, merrill lynch. brian, where do you think the markets will go from here? >> well, for the month of october, i'm really looking for the markets to stage a bit of a rally. i think that upside might be capped. there are still a lot of unknowns. i have been calling this a will they, won't they type of market.

will the feds hike rates at the october meeting? there are enough unknowns that there is so much skepticism that we could cap the up side at 2100. i think the up side is limited. >> anecdotally, there seems to be an awfully lot of negativity, for obvious reasons, perhaps. isn't it a primary objective to be contrary in that environment? >> that is typically a good idea. however, what i like to see is some of the reason why people are negative, some catalyst to make it go away. i am just not sure if october is the month in which we are going to see a lot of that uncertainty move away. we do have that in china. i am looking for the chinese government to reaffirm their commitment to market opening. the federal reserve, they might decide to punt a rate decision to december, perhaps first quarter of 2016. i think the data supports them to hike in october. that unknown might still be

dangling out there almost like the sword of damaclese. michelle, what about date tachlt the continuing unemployment claims reaching a 15-year low. chicago pmi has been soft. always have been rather suspect. what picture are you painting for the very latest exit? >> the manufacturing data has been weak. i am a bit concerned about what is going to happen today at 10:00 at the ism. the regional manufacturing is in negative territory, weaker than the consensus was looking for. it is distinctly possible we find the ism slipped below 50. it wouldn't be that big of a surprise when you think about the forces that are hitting the u.s. economy from abroad. there has been greater weakness from the global economy. >> michelle, the difficult ver

generals between the stuff we are selling around the world and the stuff we are selling to ourself is amazing. auto, jeep sales up 40%. how does that square with so much global weakness? >> if you look at the ism survey, the services survey versus the manufacturing survey, the services reached a new cyclical weakening. we have been creating jobs and seeing the job unemployment rate, consumer confidence is stronger. the challenge that we face is that there is weakness abroad. we are importing that weakness. >> within the market abroad, where do we churn? >> jpmorgan is out defending the farmer's space.

the markets come down in valuations. consumer discretionary could be quite interesting. one way or the other as we work our way through to the holiday season now. >> absolutely. i think that if we see consumer spending stay robust for the holiday season, you could see a nice surprise there. i am really looking for where the earning surprises are coming from and i think they are going to be in the energy sector. that's where i am looking at the moment. mainly, because the expectation is for a decline around 60% on year on year earnings. i think it is only going to be 30% decline. that would be estimates. there is up-side surprise potential in consumer discretionary and health care. the valuations are much more attractive there. >> is that a green light? are you just kind of noticing there might be an opportunity or are you saying go for it? >> no. right now, i am saying go for it. i actually think that one of the best strategies would be to go global with your portfolio, look at international, because that's

where the expectations are the lowest. >> guys, nice to see you. thank you you very much. brian jacobsen from wells fargo, michelle myer from bank of america. >> tweet us your positions. use the #nailthenumber sweepstakes. he will have one minute before the jobs report tomorrow to tweet us your predictions. good luck. claims today were a little higher. 277 versus a 271 estimate. the estimate for tomorrow remains about 200. we'll see what happens. and whether it is moving or a snore. >> sources telling rico that they are expected to name dorsey as the permanent ceo. that time frame could change and he will apparently continue to run the payments company square.

rico adds it is not clear if they have voted on dorsey's appointment. it is still settling the status of other key executives this week. we are going to talk to outspoken chris sacca. we are also watching the potential for a square ipo in "q" 4, which appears to be happening sooner than we thought. originally, the board said we couldn't do both. there was a reference that dorsey remain or stay or become permanent ceo. what i had heard numerous times was, we can not allow that to happen along with him being ceo of square, particularly, as you mentioned, this is going to be a public company in the not too distant future. an odd thing having somebody running two companies in that way. clearly, it changed that opinion on the board. the fact that they haven't voted

yet, take that for what it is. i had nothing to offer other than what i know from previously. they had said numerous times, no. i am not sure what it means for the search itself. it leads a lot of people to speculate, one company gets bought by someone or somehow the structure of having these two stand-alone companies changes. that fundamental change quite frequently. the idea they would go beyond more characters is set to come from him and the idea that he is looking from a clean sheet what they must do. i thought it was interesting that adam bain has said this is the revenue guide that he would not take the job until jack said that he didn't want it. which leads me to question why

they are still negotiating how the team is going to stay as it is. and whether it is about the cfo and he is now key as to wrapping the whole thing up. that's according to the rico report. >> jack is going to be busy no matter what. he is on the disney board. a lot going on. >> trimming that beard alone must take a long team. >> or blow drying it every morning. >> oh, my word. >> when we come back, we are expecting ford's auto numbers. >> the shake shack surged. shares at the burger chain are more than doubling since the january ipo price. and chip filet opens for the first time in new york city. take another look at the pre-market as we quick off q-4. more "squawk on the street" from post 9 in a moment. ♪ ♪ (under loud music) this is the place. ♪ ♪ their beard salve is made from ♪ ♪ sustainable tea tree oil and kale... you, my friend, recognize when a trend has reached critical mass.

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the open in 15 minutes time. we are substantially higher, 46.62. engineers, oil and gas suppliers have surged on international markets, certainly in europe and you may well see that happen again at the open. the energy didn't do too bad

yesterday. >> commodities, a good story, whether it is oil or copper, off from these post pmi highs. tried to stay above the 50 dma. we are expecting numbers from ford and gm for september. our phil lebeau is in chicago. >> these are strong numbers. the final number i am going to give you from general motors is one you need to pay close attention to. ford, reporting september sales increasing 23%. that is better than the estimate that we received from edmonds.com earlier today of an increase of 21.9%. no surprise. we are seeing a surge in sales for pickups as they see more inventory coming in with the f series. an increase of 23% for ford. general motors reporting very strong sales for september. september included labor day weekend, traditionally one of the strongest for auto sales. up 12.2% or 12.5 for the month

of september. well above the edmonds estimate of an increase of 7.2%. the most interesting piece of news from general motors is the estimate for the monthly sales pace. for the industry, general motors is estimating the monthly sales pace will be 18.3 million vehicles for the industry as a sams pace. guys, that would be well above what everybody else is estimated. most people believe the sales pace will be 17.7, which would be incredibly strong. if gm's projection is correct, 18.7 would be the sales pace for september. >> one question was whether or not we would be able to hold 17.7 from august, which was a ten-year high. we'll see what happens. you expect 18.3 to stick? >> you have three big ones already in. two of the three, gm and ford, well above expectations. chrysler was close to

expectations. toyota will be another determining factor. i've already -- jim lens was out yesterday, the head of toyota north america saying he expected a strong monthly sales pace. i wouldn't be surprised if we get close to or at 18 million. not when you have gm coming out and saying, 18.3. i think we could hit that. >> why are we accelerating, phil? what's the story there? >> you have a couple of things, strong economy and strong demand, pent-up demand. you still have an old fleet of vehicles out on road and one other thing that's happening in the month of september, labor day. that is traditionally, one of the strongest weekends for auto sales. it is usually in the august numbers. this year, september. fis, when you look at the number of new vehicles with suvs and pickup trucks that are rolling into showrooms, the selection has never been better in terms of people looking for a new

vehicle. you can debate whether or not they need a new vehicle or they should buy a new vehicle. if you are out there and you want a new vehicle, the selection has never been better. >> you can understand why the labor unions want more. >> absolutely. >> phil, we'll talk about that. phil lebeau in chicago. the imf world bank meeting kicks off ahead of the global event. sarah eisen is there watching our eyes and our ears and, yes, beards of that length do have to be blow-dried, sarah. >> reporter: well, that's up for debate, simon. the current debate in washington as it relates to the global economy is on the pain being felt in emerging markets. we got some new data which shows how acutely these emerging markets are suffering. money is getting yanked out of emerging markets. the institute of national finance says emerging market

flows are set to be negative for the first time since 1988. that group is expecting $541 billion in net outflows from emerging markets. the problem is twofold. number one, the china slowdown and how the rest of the world is adapting to that. china has been a big trading partner for some of these companies. the fact that the fed is on the brink of raising interest rates, that's something i'm going to talk to the world bank president about. they have been very carb yis on the idea that the fed should raise rates. she says, now is not the time to raise rates. i said, yellen is still talking about a rate hike this year and asked christine lagarde if that would be a mistake. >> i wouldn't say that. i would say that, again, let's make sure it is data dependant. if the data are not telling that story of inflation rising a bit, by december, then why do it in

december? i think chairman yellen was absolutely right it should be data dependant. she has gone into great details to explain what data and how it should be and so-and-so forth. we were very impressed and happy with that. >> lagarde also applauded janet yellen for paying attention to international factors. that's really the concern of these global institutions like the imf and like the world bank. we are also going to ask president kim of the world bank whether it would be premature to raise interest rates given what is happening in emerging markets and the ripple effects around the world. another risk factor she did mention was corporate defaults. so many companies borrow in dollars. the dollar is going up and interest rates are rising and both organizations are telling emerging markets to brace for more pain ahead. >> sar have ah, with he will se in a few moments. when we come back, art cashin

will take a gander at the markets. one more look at the pre-market. we are expecting more auto sales, including volkswagen. i wonder how september turned out for them. more "squawk on the street" from the nyse, straight ahead.

just about seven minutes until the bell. let's get to art cashin, director of floor options. i want to explain what's behind two things, the ten-year yield and oil today. >> oil is the really pleasant surprise. that's putting a bit under equities. oil looked like it might be getting ready to break down yesterday. it held nicely above $45.

i think when it did that in the face of the big inventory number, it impressed a lot of people. so i can't be sure but it looks a little bit like this is short covering in oil here. >> also, russia, air strikes are on the cover of every major paper. the white house said, we don't support lifting the ban on exports. those are probably bullish as well. >> yes, they certainly put the underbid in. as i said, the severity of it, the sharpness of it makes it look like it might be a short covering. >> paul mentioned where we were with the ten-year. what are your thoughts on that central question of what the fed is doing or where markets might react? >> depending on what the number is. i am still in the camp that believes that the fed will not raise this year. i think -- >> does that make tomorrow's employment report better, because you are focused on other things? >> i think it will be important.

i suspect it might come in a little short. there are some indicators that it may be a little bit less. given what christine lagarde said, she was being very politically correct, she said it should be data dependant. she believes the data will not support a hike. >> auto sales are going to be strong for september. there is no doubt about that. challenger layups were up 50%. conagra is laying off 50%. do you think layoffs will be a key q-4 story? >> unfortunately, it may be. as we are getting into the christmas season, you don't like to think of layoffs coming up. it does look like people are pairing back. this is part of the financial engineering that we have been seeing. you buy back your own shares. you take a look around. you can't get revenues up. you start to pair back some of the help. it is unfortunate. we have been seeing it despite the, quote, unquote, recovery we are in.

>> we'll see what the date brings. art cashin, the opening bell is just about four minutes away.

you are watching cnbc "squawk on the street" live from the financial capital of the world. the opening bell from 60 seconds. an awful lot to work with today as october begins, including some manufacturing pmis out of china, inline although they did show contraction. still, the lowest on record. some of the european pmis, also, not terrible, european auto sales, 25th straight month of growth. spain, auto sales up 23 and then, of course, our own domestic auto sales would be something to work on today too. the geopolitical concerns, oil, a bit of a short cover today. this is everywhere. you have to imagine that the risk of something going on between the united states and russia, to think that it might be fully established. >> it is going to be stronger

into that sector. all major oil services. >> let's get to the opening bell and the s&p and the bottom of your screen. madison square gardens celebrating the first day of trading in separate companies. madison square gardens has a portfolio of sports franchises and venues. msg is the actual pure media play. the maker of diagnostics and medical imaging systems. hologic. >> msg is interesting, still controlled by the dolan family, which, as we know, had made the decision to sell cablevision to altese a couple of weeks back. also interesting is how this split came about. while it is a family-controlled company, msg, it was under pressure from john failer. i think his hedge fund e is

wrapping things up with j.a.d. they managed to get a family controlled company that would do something they didn't necessarily want to. agree to split the company and move down the road and investigate it and agree it should be done. we see what has occurred as a result of that. it did start with an activist in a family controlled company, which was not something we often see. >> nice to see the rockets. >> the energy trade is going to be seen all across equities, top gainers, trans ocean, diamond offshore, murphy oil, southwestern, apache, mobile. the top 20 gainers, probably 19 are in the energy space as we see crude oil up almost $2, getting close to 47 here. even after those bearish inventory numbers out earlier in the week. we will get nat gas inventories later on today. it has an effect on some of the

airlines. the united ceo, oscar munoz, has a full pays ad in many newspapers saying the journey hasn't always been smooth, simply put, we haven't lived up to your expect taeations or to promise and potential of that day. that is going to change. we are committed to reearning your trust. it comes a day after goldman downgraded american airlines. >> concerning the port authority, now this great kind of, there is a lot of the staff that were not so happy going around the country meeting 35,000 staff, talking about the i.t. systems not being good enough, not being integrated well enough. why suddenly this breaks out from nowhere. they wanted the last ceo out, had a feeling things were going wrong and it was perhaps coincidental the port authority came around and gave thecm an

excuse to do that. he is coming in very much as a clean sweep in a very broad clean sweep. in eight newspapers this morning, not just journal. >> the interview he gave to the "wall street journal," simon, you don't typically see a ceo be that blunt, admitting their mistakes. yes, he was not in management capability with the company but he was on the board of directors during that time and did actually take some responsibility as well as a board member for saying we perhaps should have been more aware of morale. they have tole fe go public. the satisfaction rankings are solo for the airline that they have to appear to tell people they are going to breakthrough. >> it is not like you can turn a switch on and that will suddenly happen. you are talking about reservation systems and all sorts of different things that will take some time to make work better.

>> they are on old different contracts. >> some corporate moves. conagra is cutting 1500 jobs. they are going to move their headquarters from omaha to chicago taking a $300 million charge. we are watching that name. gap continues to see news after the fallout of losing their stephon larson to ralph lauren, of course, who is going to replace ralph lauren at ralph lauren. they cut to negative. this is a big loss. >> a one-third chance s&p says they will down grade the ratings over the coming year. it seems astounding that in such a big company, one person can make so much difference and be such a rainmaker.

it is a huge loss for the gap. old navy has come up with comps that were far better than that. we have done things with the supply chain. the rest of the company acknowledged he was doing things right and they were copying and moving forward. s&p says the bench of management is very wide here. they still have a lot of talent that can pull the gap through. the mere fact they come out with that negative revision is an indication this guy was overly important, carl. >> we continue to keep a close eye on shares of glen core, the giant commodities trading and mining company whose shares were down as much as 29% on monday on fears given the commodity collapse that has taken place and a lot of other things that it did simply not have the financial wherewithal to keep and maintain as much liquidity as it perhaps needed. they have been fighting back. one would expect you have to. i was somewhat surprised it took them 24 hours to become morie

aggressive. the stock did rebound on tuesday and wednesday. you can see down today citi, which has been notable in its defense of glencore. comes out and talks about 10.5 billion of committed undrawn credit facilities including 3.1 billion in cash as of the first half of 2015 unrestricted bank cash and bank accounts. 6.5 billion. they say dead maturities are covered. they are in the camp that says, not to worry. in this case, certainly worry. that's been great. credit rating is so vital to carry on doing trading with counter parties. that was a key consideration as we watched the cds fall to what would imply a triple "c" rating earlier this week. not out of the woods. i would expect glencore to be even more vocal. confidence is the key for these kind of companies.

it was somewhat surprising to me that perhaps they weren't right out there right away. >> can i mention where we are on apple? apple is down 2% of the open. digital times is reporting industry sources suggesting that within the industry, the apple supplier universe, there is a concern, a possibility that apple could adjust downward its chip orders. i have no more information other than that report. it is taking its toll on apple. 108.64. we have an ipo trading. we'll look at that in a moment. >> sop of the large cap upgrades, citi, over at ups, mcdonald's was at credit swiss and jvj and today, b of a and microsoft, taking from this underperformed to neutral,

looking for a price target. not seeing it. we are seeing some sides making big calls on large companies. >> that's a long-term underperform for the end of last year. what they are saying is a lot of the assumptions they have made at the time have now wayned. there were a lot of analysts that were very bullish on the stocks and they say that has faded. >> they were coming up with the refresh cycle. it is a move why underperform to neutral on microsoft and bank of america. >> let's get to bob pisani on the floor with the dow 11 points. >> we were up modestly. we were up a lot more. we were up 18 handles on the futures just a while ago when europe opened. let me show you germany. germany had a great gap up from yesterday. this is a two-day chart. it sort of slowly slid down. very orderly decline. germany has turned negative.

great start, disappointing middle part of the day. in terms of sector, carl is right. energy is the leader here. consumer discretion and materials are strong. technology is lagging a little bit here. in the energy group, exploration, production are strong. the layoffs are continuing. chesapeake, late last night announced a 15% reduction in head count. they also amended their credit facility. the bottom line is they had maybe 5700 employees in mid 2013. with the most recent cuts, they will be down to 4,000 or so, quite significant job cuts going on in the emp group. you see chesapeake slightly to the down side right now. one of the big questions is what happens in october? it is true. it is traditionally the month where stocks bottom right here. it is called the bear killer several times. stock traders almanac has used that phrase. 12 post world war ii bear markets. it has ended the worst six

months of the year peer. with he start the best six months, november to april in the beginning of november. certainly, traditionally turns around october. also, a lot of big market drops. so the question is, what would turn things around? what do we need for a bottom? i have polled a lot of the traders and there are five or six things we need here. first thing is some kind of growth stability in china. any kind, no the even stimulus. second is oil stabilization. these are the two biggest things that were mentioned to me. third is the clarity on rates from the fed. the fourth is a stable doll are a. the fifth is continued job growth. i don't think we need all of these but we certainly need at least a foo you ew to get a bot here. the rest of them are a little bit shaky. we have some stability in the dollar and oil. most of the traders i have talked to feel this is a very tentative feel right now. >> the important thing is, we need a few more of these to work. >> finally, just want to point out, standard pacific is no

more. there is a new company trading here, caa, right here by my desk. calatlantic. first day of trading. remember, ryland and standard pacific in one company. >> we are watching performance food, priced 14.5 million, common and opens at 19, a shade below at 18.80. we'll watch that as well. >> thanks, simon. >> one name we watched closely some time back was macerich. a real estate investment trust that was under siege from the simon property group, which did not succeed in buying the company. late yesterday, they announced a fairly large transaction worth noting. it is not having that big of impact on shares of that. it forms a joint venture for $2.3 billion. taking in $2.3 billion from a

couple of different investors and announcing a significant buyback of shares as well. a $1.2 billion buyback, the buyback more than had been anticipated and a larger deal than had been anticipated from some of the company's investors. many of whom are down. the key question here is, what's the cap rate? the so-called cap rate is the yield from the properties themselves? the lower the cap rate, the higher the implied price. the willingness on the part of buyers to accept lower yields. citigroup saying anything above 4.3 would be bad. they came out and said it is 4.25%. we'll find out from the company itself what the actual cap rate was. we don't know. many speculate it was around 4.2. we'll see. that will have an implication for the overall value of the company, of course. it's continue d 100% owned portfolio and what it is worth. broader implications for the

real estate investment trust industry as a whole. you can't say here is the latest large transaction. this is where it got done. as you see, those shares not responding that positively too too. simon is gone at least for now. they have sold their shares and moved on. it would seem. nolg says one day they may not revisit this name, not now. didn't want to make light of what is a fairly large transaction in the real estate industry. let's head to the bond pits and check in with rick santelli at the sme group in chicago. rick? good morning, david. a lot of interesting aspects of the treasury market we should pay attention to. historically, flattening is associated with the potential of more tightening from the fed. as you look at what's going on, you see definite flattening.

third week, second week in april, if you actually look at the august start to a two-year note yield, what you see is even though it is flattening, which normal normally means you should see more stubborn two-year note yields, they are moving down rather dramatically. >> let's look at the next maturity out and skip over threes and go to fives. what's interesting about fives, they are dropping even faster. right now, hovering at what could be the lowest yield cloth close since the curve was this flat? if you look at april, you can see it isn't falling as fast. there are a lot of combinations on how a curve can flatten. when it is all rates going down, the interesting aspect of that is it may have less to do with fed implications. if woe look at what's going on with bunds, they violated the

august basis points on an intraday basis points. let's see how they close. you can clearly see what i'm referencing. a two-day of the euro versus the dollar, we are not getting any of the short covering based on the carry trade. the euro is a little slippery but sort of at the bottom of a range. carl, back to you. >> rick, thank you so much. with an expanding brand and a stock that's more than doubled since its ipo, what will shake shack do for an encore? an interview with the burger cha chacha chain's founder, danny myer.

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it's been eight months since shake shack made its debut. our sara eisen spoke with chairman, danny myer and has a lot more this morning. hey, sara. >> hi, carl. i did have a chance to catch up with meyer in cincinnati where he was a featured speaker. it was one of the first times we have had a chance to talk to him. the stock has done well and come off the highs. it has been cut in half from recent highs. the first question i had for him, what is it like to watch this roller coaster ride that is your stock price? >> it dined kind of reminds me n we first opened shake shack and we would watch the line outside. 100% of everybody would tell us, i love shake shack. some people would say, but i don't want to wait in line. we would always say, it is kind of your choice if you want to stand in line or not. we are just going to try to take

the best possible care we can, which i think we do. the stock price is sort of reminded me. almost 100% of the people are thrilled with the performance of the company. sometimes more people want to stand in line and sometimes others don't. we are focused on making one burger and serving one guest at a time. >> reporter: if you look at people that look at the valuation of your stock and look at habit burger and five guys and say there is a burger bubble? >> that's what they say. the good news about being in the burger and frozen custard and wine business, they are concepts that we did not event. i would be concerned if we were coming up with some new idea and then all of the sudden you went from zero to 100 of them. it kind of is a fad but last time i checked, burgers have

been around the '40s, '50s, '60s, '70s. they are not going anywhere. >> you are adding fried chicken. >> we have added a fantastic fried chicken sandwich in our three brooklyn shaks. we are learning how to make it consistently well. people seem to love it. i am telling you, i'm a consumer right now, not a chairman of the company. i hope it works, because i think it is an absolutely fan it is tick alternative when i have a craving for shake shack but maybe i want chicken this time. >> because we were in the midwest, we also talked about this idea that midwest earners have that shake shack's expansion might not be so great. specifically mentioned the fast growth they are seeing in the chicago market. i also asked him about the mcdonald's turn-around plan,

all-day brecks akfast. i hope they succeed in this turn-around. i don't think that families are going to have to choose between shake shack and mcdonald's. he sees it as a totally different customer. i thought that was interesting. back to you, simon. >> you recall shoo, if you have stanley in manhattan, you would have stanley in cincinnati and cache, would you not? >> they don't have one in cincinnati. i asked him when that was happening. >> up next on the program, a look at a different type of market that's red hot. lead to outspoken twitter investor, chris sacca on the buzz surrounding the company's ceo search. we'll be right back.

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sacca it will soon be home to one of new york city's most expensive listings. a look at property and what it means for the luxury real estate. >> 520 park is still mostly a hole in the ground. this is the sales model that opened last night touting the 33 condo units in what will be a 54-story tower. this is another collaboration

between developer, bill zekendorf. they are behind where apartments sold for a collective $2 billion and are commanding enormous retail values. they will start around $30 million depending on the floor and the view. they rise from there. for a full floor. 5100 square foot apartment with 360-degree views. there will be five duplex penthouses at 9100 square feet and up top, a 12,400 square foot apartment with 1700 outdoor space. a cool $130 million. zekendorf says he expects to get it. median prices in the luxury sector, the top 10% of the market in new york city, are up to about 5.5 million. that's up 10% from a year ago. listing inventory is down 9%. there are thousands of units under construction. i asked mr. zekendorf if that

concerns him? >> supply is low. demand is high. then, the question becomes on the new development side, what will that do to the overall market? given the size of our market, i'm not convinced, 1,000, 2,000 units, it might not impact that. >> he has seen an increase in the last 30-60 days. carl? >> diana olick, thank you so much. amazing numbers. when we come back, ism data, construction spending. plus, the chief commits and strategist, david rosen burg when we are back in a moment.

good thursday morning. welcome back to squawk in the street. i'm carl quintanilla with simon hobbs and david faber. sarah eisen is in washington. rick santelli has breaking isn data for us. rick? >> wow. this is big-time. september, ism, falls to 50.2 from an unrevised 51.1. now, that might not seem like a

big move but it is. 50.5 to 50.7 was expected. the last time we had a number in this area of 50.2, you have to go all the way back to may of 2013 when it was 50.1. so far, the low read for this year prior to this number was actually last month at 51.1. let's move backwards through time for august construction spending. this one is interesting. it came out .7, which is what it was last month. last month moves to .4, which was expected this month. you confused yesterday? sequentially, with he move from .4 to .7. in the reality of things, it isn't a big rise. do keep in mind the range for the year is 3.8. the high watermark in april. the low for the year was the first month of january at .1. it is not a terrific number. in a certain way, it was a bit petter than expectations and with the revisions sequentially,

it moved higher. ism employment, tomorrow is the jobs report. it moved to 50.5 to 51.2. new orders moved lower as well. 50.1 versus 51.7. we are getting a lot of very close levels to the expansion, contraction line at 50. we need to pay very close attention. carl and the gang, back to you. >> we are going to watch all that closely, rick, thank you very much. september auto sales are coming ott this morning from ford, gm, f fiat chrysler. let's get back to phil lebeau. >> carl, we told you we would be expecting strong sales numbers for the month of september. that's what we are getting, double digit increases for almost all of the major automakers. take a look at big three in addition to nissan. ford up 23% in the month of september. you have nissan reporting an increase of 18% and then chrysler a little bit below expectations with an increase of

13.6% and general motors, the news of the day, an increase of 12.5% in the month of september, well above expectations, which was calling forren aincrease of 7.2%. so what was driving sales growth last month? a couple of things. first of all, september rarely has labor day included in the monthly auto sales. thats wa not the case last month. it was part of it. that's always a big driver of business. so we knew that the numbers would be strong because of labor day being included. truck, suv demand remains very heavy. that was the case last month. fifth straight month that the sales pace will be at least 17 million vehicles for the industry overall. when you look at the industry sales pace, two things to pay attention to. going into today, most of the industry estimated that the sales pace would be about 17.7 for the month of september. general motors, within the last hour, has come out and said, you know what, we think the industry sales pace will be 18.3 million

vehicles for the month of september. if that happens, if the pace is above 18 million. it will be the strongest monthly sales pace since july of 2005. quickly, as you look at shares of general motors, the company out this morning giving an update on its business outlook for the next year, a km of headlines from ceo, mary barra, in michigan. the company is predicting double digit growth in earnings per share. it's guidance is between $5 and $5.50 per share. that's the latest coming from gm executives who are holding a briefing in detroit are o the detroit area today. guys, very strong numbers. with he still have toyota and a few others to go. we could top 18 million, which is going to be a big headline. >> phil, thank you very much. phil lebeau on that breaking news on auto sales. while phil was talking there in the last four minutes, we have had a huge amount of volatility in the dow. we plunged to a loss of 100 points as we had the ism

manufacturing figure coming in at 50.2. that means that manufacturing across this country is still expanding, albeit marginally in a market where the studies are plunging. david rosen buburg is the chief economists. why would the market fall 100 points on good news that manufacturing isn't contracting. it all points to the feds and what it might do? >> 50.2 is basically at the cutoff level for contracting and manufacturing. it is signaling stagnation. it is a knee-jerk reaction by the marketplace. the bottom line is that we already know that 10% of the u.s. economy is struggling. the areas that are hitched to the overseas economy or to the strong u.s. dollar are clearly flat on their back as the ism

would tell you. auto sa auto sales coming in nicely. the domestic spending side is doing just fine. anything that is touching the overseas economy with the strong dollar manufacturing. t that 10% is clearly stagnating. that's what the ism is telling you it is not a pretty picture. >> in a headline sense, were the fed to hike, it would be quite difficult to answer the question why are you hiking when manufacturing is contracting simon, the question back to you, who is talking about the fed tightening? the futures market is priced less for the fed to move now than it was before the september meeting. look what the bond market is doing. it is certainly not pricing in the fed to do anything. so maybe people are misreading what janet yellen had to say. she didn't say she was going to raise rates.

at one of the last two meetings of the year, she said if things unfold the way she thinks they will unfold but they may not. i think right now the better odds bet is that the feds are on hold through year-end. >> are you surprised if so many people are of that view that the equity market is not able to better rally? >> well, look, it has been a struggle all year long. we went into the year with the markets trading really, you can call it a full davation above historical norm. we had valuation constraints. we came in and had a negative first quarter gdp that turned out to be a hoax. we had concerns over greece that seemed to never end. we had the chinese stock market plunge and signs of greater than expected weakness coming out of there and emerging markets. we had the fed bumble markets.

whether it was valiant or volkswagen or whether it was glencore. i think there is still this cloud of uncertainty that probably isn't warranting a market multiple of 15, 16 right now. i think the u.s. economy is doing fine. i think we are going through a period of uncertainty. that leads to a lower market multiple. >> you have been keeping an eye on it and i have been keeping an eye on it. how important is that impact on general sentiment if you will on performance of various hedge funds and their decisions in terms of what to sell? are you closely watching it? >> when they say the bond market is leading indicator, the high yield has been that. you are 100% right that the high-yield spread is starting to widen out well in advance of the problems we had in the stock market.

it is very center specific. a lot have o tof the widening. more recently spreading to telecom, a lot because of the large supply issue ans. there are some other areas that are tied to the consumer that have hung in reasonably well. just like the stock market, very interesting product. the high-yield market, is it telling you a message for the economy like it has in the past. when you consider that, there is a lot of liquidity constraints right now. we are basically stress testing dodd/frank and the implications on liquidity, small moves in terms of volume and wide j gyrations. the fed looks at this as a tightening. the domestic side is going to be doing just fine. i don't think it is a nefarious

domestic message. this has not been a generalized massive widening in spreads. they have moved up. the big increases have been in the problem child area, which we already know have been energy and mining. >> more importantly, david, perhaps correct me if i'm wrong, we haven't seen the major funds flow out of that area that might worry people. >> actually, when you think about it, tremendous outflows out of fixed income. there has been no general participation all year long even in the equity markets. a lot of this has been driven more institutionally, program trading, things along those lines. you have seen in terms of flows, that loss of risk even in the fixed income market. i think the way you want to play it now, be very selective. there are opportunities that are taking place. because of liquidity constraints, what we are doing is focusing on credits that have short duration, keeping in mind

liquidity constraints. you want to be of short duration. if you add some leverage, they maintain their credit quality. you could many could out of this making some decent returns from these levels to the fixed income market. >> hey, david, i know you are saying that these things are not sending nefarious signals in your view. i saw a headline arguing that you were working harder to stay positive. can you expand on that? >> is your confidence shaken? >> my confidence isn't shaken. i would say that the commentary and sentiment is so negative. we have investor's intelligence down to 24%, bulls on the stock market. that takes you back to the lows we had in that other 20% correction, near 20 percent correction in the third quarter of 2011. a lot of what i'm seeing right now reminds me of 1997, 1998.

everybody says we are much more interconnected globally. we have a third of the worl going banks rurupt. we had the long-term capital. maybe glencore is the long-term capital of yesteryear. we have a highly volatile equity market. in the summer of '98, the stock market went down 20%. everybody thought that was going to be a bear market. that's what holds my feet to the ground knowing that's a very useful template for what's happening today. we are talking about ism falling below 50. the bottom line is that ism fell below 50 for every single month for the last several months of 1998. i would take that configuration

any day. >> we don't know the counter factualist, whether we need it. the fed cut rates three times and then was so slow to take it back. that's what fed the dotcom bubble. the fed cut rates, left it there too long and created the bubble in commercial real estate. the bottom line here is that what's interesting, if things turn out to be far more negative than i think, the fed is going to act. will they have to do more q.e.? will yellen have to do more q.e. if something nefarious happens? they will. that's what's so interesting in the fmc meeting that caught everybody's eye was that negative dot. that's when people started

thinking, does the fed know something we don't know? why would there be a negative dot between now and december? that might have been planted deep out there, the notion, we stand on guard to become more aggressive if we have to be. >> whether qe would work, a lot of people would question. we have to leave it there. david rosen here. >> when we come back, donald trump takes on the real estate market and john harwood's latest speak easy. we are keeping our eyes on shares of twitter. look at that. down 5%. dorsey will be named permanent ceo. we are awaiting an announcement. hurricane joaquin gaining strength in the caribbean. expected to hit the u.s. east coast with some record rain. we'll keep you updated on that when "squawk on the street" comes back. [announcer] you're on the right track to save big

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welcome back to squawk on street. i'm seema mody. want to point your attention to shares of dunkin' brands. the coffee and doughnut chain says u.s. sales grew just 1%. analysts were expecting to see 2 to almost 3% growth. the full-year outlook missing forecast. in addition to that, dunkin plans to close 100 u.s. stores this year and next. shares down about 20% in the last three months but still up about 3% this year. simon, over to you. >> thank you very much.

presidential candidate and gop front-runner, donald trump, giving his take on the real estate market that was with john harwood, our chief washington correspondent. take it away, john. >> some people accuse donald trump of not being deep on policy. real estate is his wheelhouse. i talked to him about new york real estate and a big challenge to the business. >> new york real estate? >> the market is heading up or down. i can tell you how the world is doing by how the world is buying apartments. i am waiting for it to go down. selfishly, i like that. depending on what happens with my presidential run, obviously. in one way, i sort of would like to see it go down and i would pounce, which i have been doing very successfully for a lot of years. in the meantime, the market is still very high. >> you were a disrupter in the football business a while back, usfl, you owned a team. i wonder what you think about

one of the signal disrupt tors that we see in the real estate business which is air b&b. do you like that model? do you let them in your buildings? should they be regulated? >> it is a very interesting thing that's going on. a lot of people like it. a lot of landlords are liking it a lot. there are some groups, hotels in particular, that aren't. as to whether or not it should be regulated. i don't like regulation. i'm not a person that believes too much in regulation. >> do you like air b&b? >> i think the concept is great for some people and probably will be successful over a period of time. >> do you let that happen in your buildings? >> i will not let it happen but sometimes even if you say it can't happen, you never know what people are doing behind your back. >> of course, simon, air b&b has to hope their disruption innovation fairs better than that donald trump was involved in in the 1980s.

the united states football league and the new jersey jerrells generals no longer exist. >> the kids have the trump hotel collection which they are presumably not big fans of air b&b. john harwood with donald trump. >> an early test of the ipo market. performance food group opens. as you can see, the ceo will join us next on cnbc.

celebrating their ipo today, performance food group, fgc is traiting at 19.31. it priced at 19. joining us, george holm, the ceo. you distribute the equivalent of two weeks of beef, poultry in this country.

>> a little over $15 billion in revenues. about 12,000 in employees. 68 distribution centers. >> you are a black stone company. >> we are. that's our primary owner. we also have well spring is a smaller rye vat equity firm. >> what stands out here is that we have had a huge amount of market volatility. a lot of ipos have been canceled. we know there are a lot that are waiting in the wings. you are one of the first big ipos to come to market. can you talk us through the decision to pull the trigger in what are clearly quite difficult circumstances in general for the markets. >> a tough time. a tough time to do it. >> our investors weren't selling any of their shares. this he were doing all primary shares and just a reason not to go through. >> if you came through at $22 to

$25 a share and priced at $19, there is an immaterial impact. do you feel there is? >> we are using the proceeds to pay down debt. we just don't pay down as much debt as we expected. we're happy. our investors are feeling good. i feel good. >> you do now have a currency. i mentioned that, because in your area, number one and two, trying to get together. the ftc said no. they prevailed. u.s. foods and sisco dropping their plan to merge. >> correct. >> what about your ability to continue to consolidate this industry. do you expect that you will make deals no you that you do have a currency namely in new stock price that you could use to do it if you chose to? >> we not only have that. we have a much-improved balance sheet using the proceeds to pay down debt. we have made 13 acquisitions since the acquisition of the pfg and we want to continue. >> we want to continue. >> it would be beneficial if that deal had been allowed to go through. they were going to divest a lot

of stuff to your very company z that was disappointing. >> it was? >> yes. >> what does it mean now? you have to do a lot more smaller deals than doing that big one? >> that's correct. >> you expect you will? >> we expect to. >> what about the owners, what do they exit? >> that will certainly be their decision. >> have they told you? is it in the paperwork? >> they will do a secondary sometime after the lockup period is done. i think as long as we are trading well and continue to improve, it will be successful and they will probably get out in a year, 18 months or something like that. >> we have a lot of casual dining customers. >> we sure do. >> we have seen the split between the pro-tetein-based companies and nonprotein. steak is huge. do you see consumer taste changing any time soon? >> people are getting a little more adventurous with what they

eat? still, the comfort foods are the big sellers. we are very large in beef. it is a big part of our business. it just continues to grow. people still eat beef. >> you have dunkin today blaming egg prices, among other things for their weak comps. stocks down 11%. are you expecting more of those big disruptions in supply and price. >> we have gone through a period of deflation right now. probably not. the egg, that's kind of a one off. difficult for everybody, us included. today, i mean, food pricing is actually very soft. >> the outlook is bright for the industry. >> the consumer is doing better. employment is getting better. what's particularly good for us is the two-income family. that's when eating out goes from being discretionary to being a necessity. we have a great outlook right now.

>> good to meet you, george. thank you for your time. george holm, the ipo of performance food group company. >> awaiting some sales numbers from toyota and volkswagen. we have already gotten audi, a surprising number. we'll get to that after the short break. here at the td ameritrade trader group, they work all the time. sup jj? working hard? working 24/7 on mobile trader, rated #1 trading app in the app store. it lets you trade stocks, options, futures... even advanced orders. and it offers more charts than a lot of the other competitors do in desktop. you work so late. i guess you don't see your family very much? i see them all the time. did you finish your derivative pricing model, honey? for all the confidence you need. td ameritrade. you got this.

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i am jackie deangeles reporting. the we have an inject of 98

billion cubic feet. this is what traders were expecting for this number. we were trading at 2.49 before this. this is a solid injection for this time to have year. typically, traders do expect to see demand falling off. we are not using heat and air-conditioning. that appears to be what's happening. also, tracking the hurricane very closely as well. depending on with are where it hits, if there is no disruption in terms of production, it will keep people at home and demand production further. overall, we are in good shape. we tested that $3 mark several times this summer. but, again, this is a low price for nat gas trading at 2.49 right now. back to you about the business news updates. >> here is the cnbc news update at this hour. hurricane joaquin is gaining strength as it crosses over the bahamas. the now category 3 storm is packing winds of 120 miles per hour. forecasters are still unsure if

the hurricane will make landfall along the east coast. russia launching a new wave of air strikes inside syria as questions mount over its targets an civilian casualties. vladimir putin denying reports that russian bombers have killed 36 people. pentagon claims that they are targeting u.s. backed rebel sites. a federal law that provides medical monitoring and treatment for 9/11 first responders expired today after congress fails to act. the program that serves 72,000 emergency personnel could run out of money by next september. they hope to make the program permanent before it runs out of money. residents of a quiet north london neighborhood woke up to a giant 66-foot sinkhole. luckily, no casualties were reported. several families did have to be evacuated. many are still without power or without running water. >> that's the cnbc news update this hour. that is no the a good way to start your day in any way, shape, or form. >> thank you very much, sue

herera. shares of twitter dropping more than 5% after news that the company is expected to end these three months of uncertainty according to ricoh. and name jack dorsey as permanent ceo. thoughts on twitter and venture capital. jeff lewis, it is good to see you. good morning. >> trying to work our arms around this dorsey story given all the seeming obstacles that were in place when they left. do you believe this is really happening? >> i'm not sure whether it is happening or not. if it does, it is going to be a positive development for twitter. jack is undoubtedly the founder of that product, the creator of that prod duck. he is the best person in the world to fix the problem of not enough innovation.

>> they have talked about elongating the tweets and having more bye buttons. do you see any progress at all or is that something that can only come after a success plan is in place? >> i think there has actually been some progress over the past few months. the uncertainty of not knowing whether jack is going to be there full time has really taken a toll on the team. i think that's been the other big implication of all this uncertainty is morale at that company is extraordinarily low. the rank and file employees are leaving left and right. i think having jack in there as permanent ceo will go a long way towards morale. >> the stock is down, which may indicate that people outside the company thinks that there needs to be so bigger reinvention, some new broom. there must have been some hope that that would come forward. dorsey has been around an awfully long time. the product has not shifteded to give it the scale investors would like.

>> he has been around a long time. he hasn't had twitter as a primary focus for a very prolonged period of time. i think that one of the reasons the stock may be down, a lot of investors are skeptical that one person can be ceo of two companies. to that, i would say, it has been done before. it has been done successfully by people like elon musk. it was done by jobs for a period of time. it is not for anyone else to judge whether jack has the ability to do that or not. the proof will be in the putting. we will see if he is able to execute on both companies as ceo. i really hope he is going to be able to. i don't think there is a better ceo out there right now for that company. >> interesting you mentioned musk and, of course, jobs. i guess that was pixar and apple at the same time or maybe it was next. you as an investor then are not necessarily dissuaded from owning twitter because the ceo has two public companies. they may be public before the

end of the year. >> it wouldn't be a factor for me. i have not owned twitter. i have been somewhat bearish on the company since the ipo. primarily, because of the product issues that i have mentioned. frankly, i may look at getting into twitter if jack is made permanent ceo. i think he is the person to fix that product. he has the moral authority to do it. >> jeff, it has been a year where we have had all kinds of conversations. you have had the dudley's of the world, the bill dudley's, talk about and warn about cash/burn rates in silicon valley. the rise of the term unicorpse. people expect a lot of start-ups to go away. do you think silicon valley is coming around to that point of view? >> it is really hard to talk about these things categorically. you need to look at these on a company by company basis. burn rates, if they are very high, are no the necessarily a bad thing if that cash is being invested in high roi areas that are really going to drive the

business. if you have a business where the eunuch economics fundamentally work. if you burn cash, you are going to get more than you are burning back in return. total will i fine to have a high burn rate. another fact pattern is you can spend a dollar to make 85 cents. there are certainly a lot of companies that are doing that. it turns out it is not very hard to spend a dollar to make 85 cents. in the long-run, those companies are going to go away. i certainly think we are in an environment where the late stage private investors have not done a great job of discerning between the durable companies that are going to be there for the long-haul and the companies that may have great growth but not sustainable hyper growth. hyper growth that is not going to last an result in a profitable business. we are going to see those companies go away over the next few years. >> that's going to be a conversation for, if not the coming quarter, but then maybe the coming year. jeff, we hope you will come back. thank you. >> thanks for having me.

>> jeff lewis joining us there from the founder's fund. an exclusive interview with chris sacca who has been an advocate for naming dorsey permanent ceo. that's coppiming up at 11:00 a.. in four weeks, the next gop debate october 28th in boulder, colorado. the dow is down about 69 points. we are back in a couple of minutes. (vo) what does the world run on? it runs on optimism. it's what sparks ideas. moves the world forward. invest with those who see the world as unstoppable. who have the curiosity to look beyond the expected and the conviction to be in it for the long term. oppenheimerfunds believes that's the right way to invest... ...in this big, bold, beautiful world.

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outperforming. seema has more at hq. >> the s&p 500 struggles to hold on to gains. it is energy that is standing out as the leading sector up about 1%. as crude sournlgs to over 3% to near $47. energy lost about 18% in the third quarter. the worst performing sector. powering today's game. exploration players. eog and apache all up just about 3%. >> thank you very much. >> coming up, the deadline has arrived credit cards adding chips for increased security. the risks that some of them assume for not having put the new technology in play.

we're getting breaking news from the fomc committee. >> it concerns richmond's jeffrey lacquer, the fed president in that district. he says that an october rate rise is possible. the strong consumer spending shows the race rise is needed. in fact, he says, in an interview with "the wall street journal," american consumers aren't spooked. they are not pulling back. american businesses aren't pulling back. we are on track. he made those remarks to the journal. he says the october rate rise is still possible. he says that perhaps the markets are testing the resolve or doubting the resolve of the federal reserve. so he thinks that a rate rise is still on the board for october. simon, back to you. >> though, in fairness, he was the one member that said there

should be a rate rise in september an the general tone was hugely dovish. >> absolutely. he is saying they will have another employment report under their belt, which comes out friday. so they will have a lot more data in his opinion that might justify a rate increase. >> nonetheless important, sue. let's send it over to the cme group and rick santelli. >> what a segue. >> who is running the joint here, jim? you her lacker. it is coming and coming and it doesn't come. we are slipping in terms of economic data point. we are slipping from i alevel of growth down to a level of growth. this is a tough one. mr. lacker, you and i believe they should tighten. is that reason going to change dramatically in between? >> it is not going to change. the inmates are running the

asylum. what the fed has been doing is begging the market to allow them to raise rates. september 17th, it wasn't priced in. the market didn't want it. the fed caved and didn't give it to him. >> pricing percentages are way lower. 16% they are going to raise in october. please, price it in so we can do it. if the market doesn't price it in, they don't have to resolve to go against the market. they don't want to raise rates and see a bad reaction in markets. they are trying to get the market to price it in is what they are doing. so far, the market is not listening to them. >> you want to wax a little cynical here. if i get you right, the market is the boss. the fed acts like the boss but they are afraid of the markets. you have written lately based on a risk magazine expose that now the definition of the markets in terms of some trading is just a couple of hft firms. expand. >> i don't know if anybody realizes this. here in chicago within shouting distance of you is the majority

of treasury trading in the world. it is run by four firms in chicago that run off of servers. they are trading the technology. citadel securities and drw. that is the in you way the market goes. risk magazine said 80% of all treasury trading is not human beings but computer to computer. >> it is nonbank. only two banks in the top ten of all trading. the other eight are. >> what it is, there isn't any more humans involved in it. it is all computerized trading. >> my next question. this is really cynical. it has been bugging me. who is the biggest regulator in the planet? who has been upgraded on every month as a regulator since the credit crisis? >> the federal reserve. >> why did risk magazine uncover

this? is this not integral on how the market prices? if the fear is the hark ket isn't listening, shouldn't they know who they are not listening to? >> i would agree. they should know who the traders are in this reserve. do they know that what's happening -- sfwhoo the inmates running the asylum is perverse. >> thank you. >> thank you. >> simon, back to you. >> good story on. >> our own courtney reagan is at a target in edgewater, new jersey, bringing in the changes. are they ready, courtney? >> when you are shopping and go

to check out, use your credit card a little differently. more retailers, including target, will ask you to dip or insert your card rather than to swipe it. >> they use it with the duplicate and stolen information. if merchants aren't ready to accept the chip-embedded cards today, the liability for that type of fraud and those losses will shift from the credit card company to the merchant. most big retailers are ready. wal-mart, in fact, has been ready since last november. however, 40% of total merchants are ready.

>> we're talking about merchant from doctors, to taxis, to dry cleaners, and only 20% of credit cards have been replaced you may not notice a difference at all because have you to have that new chip card and be shopping at a place that accepts it. for most major retailers, you'll be able to today. back to you. >> thank you very much. >> today has been described as more of a call to action than a hard deadline for retailers and for credit card companies. still, only 20% of cards have transitioned. why? is. >> we know it takes any money about two or three years after they kick off to get to 60% to 70% of the domestic payment volume being a chip card at a chip terminal. really starting today, and we've seen great momentum. there's already more chip cards in the u.s. than any other cult around the world. we're actually starting from a

really good place. >> it's sort of a chicken and egg problem because you have to have the card. >> many will be doing pilots and then rolling out nationwide starting today and the rest of this month and into the holiday season. >> we've been actually doing a lot as an industry to collaborate though, and we know it takes several years to get there. we've got about 315,000 merchant locations already up and running. half of them are small business merchants, which has been really good, and half of them are major retailers as well, and we'll see even more momentum as we head into the holidays. >> that's still just about half of the number of merchant locations that accept apple pay or less than half. i mean, what is a consumer to do when they're faced with either using a piece of plastic or

their phone which is accepted at more terminals and they're probably more familiar with it. >> well, some people are not very used to using the apple pay or google wallet, but some people -- >> they're more secure than moving forward. >> the type of chip cards that we have seen rolled out here in the u.s. -- it means you stick your card into the terminal, and you still have to sign for the transaction. if you had to enter in a pin after using the chip, that's even more secure. why are we still so far away from that? >> it's great to remember that in the u.s. today, more than 60% of the time is where you swipe your card and you don't even have to sign. many of the countries that have previously moved to chip and

pin, are moving to more and more transactions without a pin because they're realizing that chip code gives them the protection of validating which is the largest fraud. >> the u.k. is moving to more without a pen. it's more towards mobile and biometrics and tokenization. >> your title is head of risk products. today marks a shift in liability. if someone is using a visa card with a chip and the retailer doesn't have it, the retailer will be on the hook for that fraud. it's the issuing banks who do. today it's the credit unions or banks who hold the liability for that counterfeit fraud, which there's different estimates around many different analysts as to how much actually counterfeit fraud there is.

we've seen from the countries that have moved to chip technology, around two careers after the kickoff date, they get to 60%, 70% of the volume and kousht fit fraud goes down by 60% or 70% or more. it's a really great advancement to reducing fraud. >> it is a marathon, not a sprint. we appreciate your time this morning. stephanie erickson is vice president of risk products at visa. now, let's send it over to david faber with news on apple. >> it is worth pointing out because shares of apple are down 2.5% so far this morning. certainly far more than the broader market. >> there's various blog posts and perhaps things out there questioning demand for the latest version of the iphone. the stocks and this company 615 billion market volume, even a move like that is 16 or plus

billion dollars in market value. right here it's lows at the beginning of september. >> good morning, john. >> good morning, simon. a little apple news. the new board member, james bell, we might touch on that, but we have a number of other things to get to, including twitter. s chris, the outspoken investor in twilter will join us as we count down the days perhaps to announcement of the ceo we expect. also, world bank president jim young kim. also, loan refinancing start-up, sofi will join us. just raised $1 billion from soft bank. what are they going to do with all that money? that's all coming up on "squawk alley." it's one of the most amazing

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