>> that's right. i value your question, the a 12 minute route that we're 12 instead of an hour >> a state approval. next time you come back, if singul is 25 years away. >> make sure you join us tomorr "squawk on the str is next ♪ ♪ do you remember good thursday morning. welcom to "squawk on the street i'm on quintanilla

future just unchanged. we begin that balance sheet roll off. dollar had its best two day game claims come in lower than expect philly beats the ten year yield 226. more record highs. dow looking to make it ten in a >> plus google parent buying google in hardware >> apple's shares at a low new products go on sale tomorr a ten day win streak after duringwednesday's session the they hint they could hike rates

myster federal funds remain >> we can't explain it we might that w big part of it. also it reflects th lowered kind o doesn't disturb the big much >> the divergence between the reacti in the ten we're note as far were concerned impact 2.289 is what the yield hit. if you back that out since of at a ten month low. then we shot up by that much so

quickl so the mood over the past few in terms of the treasury market. >> a lot of move on the ten and two. the curve flattening what is the financial trade? >> that's a question two year note is really where outloo is. the overall stock marke tends we get a lot flatter it's a this level, 80 basis points it's okay financ trade has been -- you ral if we back off what happen to say what you want about the financ yes the balance

whole host of things, the ten pressu >> we'll see if the fed changes month. some suggested if there's commit yester the grand scheme 10 billion net nothin >> it is in the system versus that's context for this move as well. for more on the markets let's robert did you make of the swings we saw yesterday in fixed income >> a little bit of

decemb when y back up to 40,000, what we're really seeing is a much thing. the bond market is happy with that the curve is flattening. the back end is sanguine i think different from past this fed is very cautious. not just the fed but the ecb, >> is this good enough for run? >> we see finally, you know, equiti

intere rates as long as it's you mentioned banks how they the weaken cigarette what we with a little bit of lag that boost profits there will be speed bumps along remove some of the unconv policy. but there's no reason to see why the trend shouldn't remain higher >> robert, curious you say the long end has from a bone manager's perspe should we hope for the long end are rates roughly where they >> i think they are. but what you can see is nobody

perspe opening up the fed. so, they issued their dot plot there' a big space at the last you a couple of dots filling in they a realizing we're in a differ world in demographic, intere in germany are at 40 basis points, rates in japan in japan last night -- >> yes ten year government bond yields you kn this whole trump trad from year, some stimulus 265 may just be too high this fed cycle will run out of cycles people staying engaged in the >> a lot of market watchers are

questi in two parts one is do you believe that qe way? what's answer. >> the answer to part one is i woul the answer to part we've done great work on this. for calendar year 2018 the reinve drown out the so next year you really won't might be a 2019 story that qt prices again, you're making a great the unwind of the balance sheet are your saying your work points

to that it's not effective >> no, it's tightening you have to consider it in the you have to consider what the keep it in the context of what centra doing >> i guess, robert, the question is there any real day-to-day was $900 billion before the level. we think about it too much >> everything matters but the so a lot of the benefit that they w buying bonds, inject liquidity, being low now they are being very measured and withdrawing. they a going make the markets

exposu bigger questions will be asked two, three years when the these things do matter and at in govern will be crowding in taking of money out of the testim we'll what happen with >> on the dollar, would you -- dollar >> yes if you look at the fed reiterate that hike which the market are not expecting but starting the dollar rally >> samer, what sectors do we >> we think if you look at where the earnings benefits are

techno health care, that will be the group that gets the majority of the gains going >> what happen to bonds overal >> i would say on the dollar, too inned in diving into the dollar >> robert, sameer, thanks so apprec it. >> when we come back this on smartphones cou apple. a lot of individual markets to tesla, facebook, twitter and more "sawonhetr ctiesquk t sonnu in a moment. we took legendary

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smartp striking a $1.1 >> rep that's right. bettin big on smartphones for the company has picked up htc's

person in a deal worth $1.1 billio the deal comes with a non-ex agreement for google ceo said it's early busine the current cast of products google will have to shake off two years later it sold that off to lenovo for less than $3 billio this time could be different the de is smaller. google isn't picking up htc already makes the pixel. google will gain tighter control over phone hardware and

softwa increa sales of its own task the picks simple very small. about half a million units its first quarter. anothe question is what happen to htc now, once one of the world' top smartphone makers, said it will remain in the releas a new flagship phone fo 2018 >> deidre had mentioned what but it's been making a bigger this could be a bigger vision >> if something like this is whethe it's just to solve a

don't know >> you make it sound like a moonsh 1% market share. >> obviously it's not something but it has to solve some sort of whethe it's data collection. being on the ground floor for softwa >> there's some thinking by for $1.1 billion that's a >> change in their couch we do want to keep you on maria. destrohomes. knocke down power. litera across puerto rico. we go to san juan important the latest bringi military helicopter today to help with the rescues we're in san juan which is a

imagin what is it like in some that we visited, towns we many of the roads have become rivers the freeways leading ou that way are impassable because there and we know many homes are destro roofs been lifted off of them peeled off like tin cans window shattered at this point the big question how ma people need rescuing. how ma people need help. carl >> tammy we'll come back to you when we come back more major data breach. plus a hacking story that now an unbelievable story. future in a tight range

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the information was discovered incide the government agency reports its electronic systems they didn't i've the date of the intrus and what sort of data

the troubling thing is the on march 8th is when the hatch a two day period in which they >> sure. obviou a lot of time the public gets it -- that's the window perhaps that the hackers inform wells fargo, tim sloan will octobe financ information, your

>> no safe place for any of this data it comes to digitally pentrabl >> keep your eye on frey market. we might expect lighter market

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openin bell in just about four let's bring in our director of art, get your reflexes on the >> they are getting close to perfec the fed doesn't hike unless we're getting awfully close to that i think what i'll keep an eye on for the next couple of weeks is the dollar starts to strengthen

multi- what will you know me for a year i said, i still have suspicions for they a going three hikes next year we got to remember that we'll this you're going to have fisher out. severa vacancies that will be replac so it's nice to know what the may not be around to make those decisi >> does this mean you're worried about the rally. the dow did have nine straight sessio fresh record highs here >> and then 42 record highs for so, i'm going to look at it with think. i want to see what they are i think what they are driving on now is hopes that there is still some possibility for a trump agenda that we may see a tax cut.

we may see some other things along. you got to balance out what happened in p power for weeksor months that's a huge economic drag. we'll have to wait and balance i don't think they are all fully priced to the market quite yet. >> wha interesting yesterday effect almost as a way of building a inflat puzzling inflation happen that w takeaway. >> i think they would like to but we haven't really started so there's an awful lot of that's why i think initially

confer you saw the markets the yield on the ten year go up all of that is beginning to people are starting to rethink, they made it took. >> this trickle of 10 going. >> i know it's a trickle but availa i'm worried about the mortgage they w a formidable player i goes and what does that do for >> mike, you made the point a who were saying qt would be whenqe ended markets up by 25%

now central ban have stepped seems like it's not the one >> i agree i think you have to watch very >> there's the opening bell. and the s&p at the bottom of the travel company in latin and zai based in china one last thought on this roll off. to the degree you see disruption over the next few months in what market or asset class would it >> i think probably in bonds and rates and mortgage yields. even before stocks stocks will keep living on

can vote ornot >> we'll see yields go much yester >> i think -- i'm going to watch the ten year if that moves above 2.3, then >> we're right up there. right up there >> the other thing to watch is so if the credit markets have met, you know reached their >> i don't think you'll see one it will come in unison, have to the yen is beginning to weaken the bank of japan isn't quick to move a of pieces in this puzzle >> art cashin.

openin bell just happened of amd. tesla work with amd to develop cars which is obviously not only good for amd but bad for nvidia. >> followed intel's deal seemed like a little bit me too you wa to lock up your i wonder, i have to look at if you're talking about

>> the bigger picture for tesla along the lines of apple making is tesla trying to keep their accord to the reports build as far the move for nvidia they a the market leader in genera they h tie ups with google a well as toyota so they are still okay in terms transa >> can you certainly make the how mu of this huge run was you don't know exactly

nvidia >> yes >> apple continues to struggle here now below 155. as we said earlier in the show basica crossing th levels suppor issues with the watch and say apple remains a big one. >> it's interesting. seemed to escape that kind of now it's acting like it's just this window between and it's a noisy kind of fundamental situat for the next few months

pre-or that helped weigh in the bigger question apple had what h to september? there could be a 5% to 10% pull we're down a three quarter >> divergence is between apple keep your eyeon facebook mark zuckerburg is on the cover fake news. the russia investigation now this ad category that raf racist views

carl sandberg wrote a letter these problems which they then to prior >> i found it interesting the if you created the technology contro that's on you not on us so you have to bare the cost i think the best case scenario >> leadership in fighting. we're leading a lot of wonderful afghan troops who are fighting we wer just discussing that. and progress is being made so it's an honor to have you and all of your representatives with us thank much >> thank you, mr. president. >> mr. president, first of all,

paid the ultimate sacrifice. that sacrifice can now result in a stable afghanistan i want to thank you on behalf of story. you asked very fundamental questi you've made this decision on the basis of courage and determ we salute your courage since decision, there's been an immense change on the ground. i've been to six of our seven and officers who worked soldier it's a difference of day and night. the cloud of uncertainty has

what we want to assure the you made that krystcys crystal the additional troops that have role victor political and military instru of american power, milita diplomatic and a coherent plan of action to

of crisis and to make it a prospe and because of this, we equally, mr. president, understand and we do not ask for a blank check. we are determined to do what is ours fight corruption ensure that there's no waste of resour full accountability for the result and significant momentum so that the american people can know grasp will now be achieved thank much >> thank you vmuch, mr. presid afghan doing the fighti

fighti i've also heard not only this rules of engagement are now hearin from everybody, differ place but the spirit is tremendous people don't realize you had 20 this is where the world trade this is what happened. you ha groups. more than any place else it's really a -- it's a hornet's nest that standpoint we're hitting them very, very and we really have no choice but

to do it so, honored to have you. and i'm very, very happy with and i think we're going to be organi which for so we're doing our job i think we're doing it very effect and we'll see what happen but think going to be good. thank you all very much. thank you. that is the president saying the u.s. military is doing more afghan reuter is saying he'll make an

but the white house adding that north denuclearize in he has several meetings once genera assembly continues. as for the dow we hit another leadin goldma j.p. and travellers are the top performers >> there was a quick pop in all they settled down by the close withou much help from treasury yields >> fargo is up by half of we learned that the ceo tim of the and janet yelle confer she wo not comment about

busy morning on the floor. let's get to bob pisani. >> happy thursday. banks up despite the fact that look a sector. kind of strange opening. almost everything was down gold down. energy is not doing anything oil over 50. semico in banks on the upside. volati this is thi a problem i don't tuned concerns about it. i don't see a worry. i called my old friend who had he's getting these calls and

i tell them to stop whining. there' no law that says the he's got a very good point the market is very dynamic under the surface if you look past the s&p 500. so he called it very well. he called 2,500 on the s&p in he's got a few things to crow about. leader has been terrific we've seen rotation. biotec stocks and energy stock have been coming back. semico have moved sidewa retail has been doing better recent we talked about the commodity rally, stocks on the upside banks which have been laggards the s&p in the last month. a lot of things are happening the problem is so many people

off the action of what's let's call this a dynamic market no signs of deterioration. check out my trader talk for tradertalk.cnbc.co oasis has a big yield. 7.5% people buy these mlps for the if yields are going up for other instru that puts pressure not very successful with mlps. antero is down sec hack, guys were just talking

sec says their edgar filing edgar houses the filings on corpora corpor disclosures if a company says i won't make to know that on a thursday i think so back in 2014 the sec issued a they told all of wall street get your act together, update your system monitor what's going on, be vigilante on cyber if you got hacked. irony here is the company in hacked he'll hear more about this and right the dow down eight points guys, back to yo >> no one is immune. let's head to the bond report.

hi, rick >> good morning. you know it's fascinating. if look up at the boards yester both in the index. but the treasury givebacks are especi if you're looking at let's look at some two day charts look at just the move pretty on the two day chart they moved tens moved about six 30s yeah you need a magnifying glass. hardly moved at all. five versus 30s. everyb likes to pay attentio to tens versus twos. it's flat but didn't make new flats. look at a ten year chart of 30s

level. this is virtually the tightest realiz the long end seems kind on that's an indicator if you're if we switch gears let's go overse bunds had a response their markets gapped a bit we didn't quite crack the level. on the dollar/yen many are econom like japan and things we're slowing down on now the dollar did move. dollar nice move but the how mu things moved. consid this. dollar yesterday closed around 92.5 it's down a quarter of a cent.

the last time it settled that the last time it closed above 2.25 was the 15th of august. that sums it up. intere rates are definitely firmin but the dollar index and then it firms it seems to give back and pay quite close attention to carl, all yours. nice breakdown thank you for that rick santelli. oil is off let's look at the commodity desk >> we're seeing that 50 mark as intere because there's dollar low when you meanti vince yesterday more color that it was balanced by the draw on gasoli total petroleum stocks saw a

petrol demand rose that's a good sign heading in to typica sluggish season post-s spike still u.s. production over 9.5 that's a little concerning just shieft peak of 6.9 million big slide. takeaw here things are they could offset the rebalance again. >> coming up the bank stocks august we'll get a take on what an "squawk on the str will be

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this a recording surfaced acincr ckathy griffi and her

boyfri >> hey randy go [ bleep ] yourse seriou you call on my grandkids at 9:00 now you're calling the cops? [bleep you and [ bleep ] kathy, you're metzge kids. litera a neighbor to neighbo disput that will cost him a >> interesting in the board's >> bad behavior, bad judgment. >> when we come back the sec 'lha an update on that dow is down 27 points. when you look at the mercedes-benz glc...

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rick s here live on the cme floor. breakinews our au read leading economic indica expecting up .3 got more than expected up.4. high watermark for the year is

severa weakes is april.2. this in. i know if it gives you a index ticks. pay close attention and keep you inform carl, back to yo >> good thursday morning welcom to "squawk on the street i'm carl quintanilla with market started out with some dow down 28 points >> road map this morning fed unveiling its plan to sling reacti the street is next >> another day another cyber attack sec announced it was hacked. >> apple stock slumping. the company conceding its new what it means for investors.

off it's $4.5 trillion balance unchan settin off a pop in the bond yield. bank stocks moving higher on the announ with financials we're joined by the ceo and tom, to see you. >> good morning. if you talk about the case for fed is lifting interest rates, deregu some level is more dividends and share of your purcha group hasn't been an outper >> wha immediately up to march 1st. since they traded off mainly some of these developments the

as wide as investors thought growth slower. regula reform is still those are some of the factors. >> you sound like investors banks. >> i look directionally. the economy is getting better. regula reform and recali is coming and the economy and forward for we have a 13% next it might be ten or if it was eight i until think that positive things are happen >> go the other way and be negati the only thing i always worry if you start talking about reasse earnings estimates.

what i can tell you now credit while you hear bumps and bruises along nothing material to talk years. bank are trading below happen we think it's an opportunity >> if those things don't happen, is the environment still such banks. like the universal banks or earnings estimates are econom we have not put in regulatory reform in or tax rein the form if those things happen it's a yet the stocks trade cheaper we think that's a good bargain plus you got a significant repurc to come we think it's a good bargain >> when you say the stocks trade

cheape than they typically do, if i look at jpmorgan, holding >> jpmorgan is not our favorite i can talk about the one that is with r to jpmorgan is we so we do think that there's an be >> you getting any populist pressu she's there talking but is >> it's an interesting question indust to be an unsound positi the question is the group that

genera still been in play even barney frank thinks that has called for that review the question is what's the right amount of regulation in many cases the american banks are regulated much more strictly than the european banks. and that the interpretation has conser the banking companies will do better if you get some of this recali and i personally on that point, the nominations i think it's been slower than in prior administrations. so the reality is we haven't bluepr >> systemic risk from european banks? >> the amount of capital that's extrao the 30 or so globa civili are i

a safe position. europe is rebounding there' some good pro growth my view the direction is positi just been too slow that will change invest should be patient >> bank merger will be part of >> they are. sointerstate banking came in happen since what chapter are we in the chapter we're in right now champi the big banks have been out of the biggest because they can't bigger banks will return slowly. if remove the $50 billion everyb plan you'll see mor region consolidation in the future >> why do you thin investors financ we're seeing it again in today's

sessio yesterday when it speck. >> it' incredible. if you look at the performance the 10 year. it has to do with net interest when it's flat you get less when it's wide you get more it's not the only story in town. i think it's going to ge better the question is how fast >> is that right is net interest -- it's import is so important to banks tha banksdestoev sold when the ten >> there's more to it. i'm a finance geek the dcf model matters the most story. >> trading, when we start seeing quarte numbers, i mean would

quarte >> i read jamie dimon. >> i'm not sure he was serious >> yeah. i think the market should expect this is not going to be the i don't think necessarily this it's not you're an investor that's not this quarter won't be trading loan growth is slower than folks though look at bank of america which is a stock we're recommending things are getting -- they are improv performance intern reasons to ow these stocks >> all right calm markets is something we've thank much >> good morning, everybody we are continuing to follow the storm is regaining strength

we go to san juan for the latest >> rep can tell you now busine let's take a look at the the roof was ripped off and it's just a twisted mangled mess carl, we're in old san juan this is a very populated area. once you get to some of the more rural areas that's where you'll in fact, rescuers have not been at this point we know roads have turned to rivers highwa are flooded trees are down power lines. so it's making it impossible to the big question is how many need to be rescued carl >> some incredible pictures. we expect to see a lot more in

all state releasing its irma. just how big were the losses >> all state reporting that just for the month of august $593 million net of re-insurance recovery hurric accounted for estima pre-tax net loss of $553million more than half of that, 55% auto related since hurricane irma struck in this is just harvey. all state joins a growing list on tuesday progressive said it largel due to harvey with earlie this month travellers

other reporting numbers or hci group, and expect more to follow analys say while these losses adequa could make the that's a reason these stocks are tradin higher today. albeit very modestly despite we'll leave it atthis. hurric season is not over yet. anothe and a half and tw months the risk is we can back t >> when we come back cyber more details emerging on that the sec says it was also hit we'll speak with a former fbi be

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eamon joins us with detail >> rep the official press 8:00 p.m. last night detailing

here's what the sec said about intrus basis for illicit gain through tradin the vulnerability here they say system that's the system that companies use to reveal their new it was the test filing component of that they say was the exploi there' a lot that the sec last night a lot of unanswered questions happen insider is of any illegal trading and they know about who did it they say there was an internal

why. how mu money, how much of all this. guys we talked to cyber security expert they do tell you this inside trading has been prosec when you marry those two >> unbelievabl don't go anywhere. in other hacking news, compan computer network for securi team uncovered that joinin us is special fbi agent le jobs good to have you back.

on the sec edgar side what's what this does to financial exploi there' a lot of informatio the sec has provided as to that's my first question what i need to know in order sec was exploited. affect any investigative phase they but also the cyber fingerprint if this is an insider case one of the companies that has should be too difficult. the challenge will be if this is a foreign criminal group that

>> leo, what's the worse case scenar if these hackers maybe they so the sec has said in their to operations. it's very clear at least from but the real question for the and preserving that somarket confid so that our invest retail and otherwise this type of activity undermines that >> eamon javers, i can questi

defens is the information shared. they all have different protec >> rep you have a lot of regula of guidance to companies about breach they'v encouraged them to possib intere in this hack the a big profit if you're a cyber crimin we've seen entities get into that's something that the sec

>> leo, on the equifax side it for that delay and disclosure. why? >> we don't know exactly what they may have discovered there data was lost and whether or not it was important data. so we have to have a better one of the risks a company faces after a breach is disclosing inaccu information that leads to more questions and that leads to more oversight, so equifax had to have time to on their systems and in complex >> from a consumer standpoint i

immedi it sound like you're almost would faced a lot of that has gotten breached >> right i'm not sure there' a balancing between victim at equifax i can tell you from past xtera there are steps to be what you don't want to do is overst or understate i don't know if they took the my poi is it does take some time you just can't go out and say follow >> leo, eamon javers, thank you.

take to you the president. >> getting better and better on i hear very good things. ukrain coming along pretty well pretty well. and at the borders maybe you'll thank you. thank you for being here >> thank you very much indeed, great honor for me to be here in i'm really happy to hear the demons after our last meetin but first of all i want to respect the great sympathy people because of the sequences and i really think that our

econom operation i just mentioned one single figure the turnover between the united and is, again, the symbol and this is really delivered >> that's right. that's a story that's pretty untold but i think you'll see it more and more. compan are going very ukrain they tremendous potential there. okay take good care of them i do want to report that with

those people are working hard and texas is really coming out harvey really really well florid very similar. great governor rick scott spoke with him florid was -- they were hit hard but they are doing very, very well ahead of schedule. the power is back on almost for the most part outside of the keys where you have a florid doing really well texas, florida we give it an a-plus puerto was absolutely oblite puerto hit with

they got hit by a category 5 puerto in very, very their electrical grid is destro it wasn't in good shape to start off with but their electrical we're starting the process now andrico. puerto is a different in many ways but it is -- in fact all you levele it's incredible the the power of that wind. was a very unique -- not for piece of land like that. so puerto rico will start the proces

we havbosset in the other room. we'll start it with great gusto. but it's in very, very perilous shape. very what happened to puerto rico that's an update on the three primar virgin islands are -- i don't do is take a look at a picture they a flattened areas around there have been flatte so these were storms they verysad, actually to see it. we'll start the process. as we've proven we have fema has been beyond -- who place too. louisi took a little bit of hit and they recovered really well they'v done a fantastic job in louisi alabam took a hit but they recove alabam has been fantastic. so many people went to alabama

georgi handle it. so, we are going to start the we'll have further updates on it but it was one of the most seen thank you all very much. >> will you visit puerto rico? >> yes, i will >> we have cooperation with the sector very m >> thank you very much all right. that is the president commenting on the devastation out of obviou puerto rico recovery the president did declare some rut serious continuing to quote

we'll for that >> all right and when we come back apple produc get ready to hit the shelve what's worrying investors next "squawk on the str will be i'm having breakfast in uganda. uganda be kidding me, elton! it's a... it's a joke. james, we're going to look for gorillas! hang on, what? that's a real silverback gorilla. look at it! no, don't look at it. shhhhh stay. okay. i'm freaking out! sapphire reserve, from chase. make more of what's yours. ♪ ♪ keep your insights from prying eyes, so they won't be used by anyone but you. the ibm cloud. the cloud for enterprise.

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i'm sue herrera. here's cnbc news update. nbc news learned president trump is leaning towards decertifyin doing so would give congress a to keep the obama era sanctions terms. rescuers in mexico city are rubble of her school since tuesda earthquake. emerge responders spotted he hand in the debris overnight so far at least 21 children have died at that school.

a new poll by nbc news and 70% of americans approve of only 30% supported his handling care we're gets our first look at what olympic gold will look at pyeong offici say the designs were and they are beautiful that's the news update this hour over to jackie d. for the we see natural gas prices buildi stocks of 97 bcf larger larger than what we saw this larger than the five year averag just couple of days ago 3.15 this s $3 momentarily. we're in that dead zone where

heat so we're seeing that happening today. back t of apple lower again the set to release its earlyreviews raised some betts bring in brian white and the stretch it's had is this your post-product announcemen sellof >> i want to buy this nonsense there' a lot of drama trolls that's what we're seeing this is a very minor issue >> the watch >> the watch

it won't connect to unauth wi-fi networks >> the iphone 8 doesn't it have no one was looking at the watch. no one was looking at the watch you have general dislike of the >> who is saying general dislik >> internal. the verge. >> so i think if you're at the on this. the iphone 10 will be the bigger upgrad for sure. iphone 8 and 8 plus are solid upgrad the spring is better proces faster. suppor ar better glass is back. differ look and feel to it i think it will be a solid upgrad iphone 10 is where the juice is.

that's where the asp that comes out in late october >> isn't it about the pacing and streng of the upgrade cycle? does it matter for investors replac order flow? how does that filter into the price? >> absolutely, carl. i kind of respectfull disagree i think this is all about mentio it's the cadence when produc adopted you're right whethe units sell in the we firmly believe what matters have, what kind of long term upside they get. from that we won't have data >> yet you still have a 150

you think the stock is fairly >> absolutely. what seeing is iphone 18 nothin exciting for people to it's t replacement demand for iphone 10 i agree with brian nice phone a lot of initial demand. we have to see whether that and whether it attracts new use those data points won'ting quarte until then we think the stock >> are you concerned at all, robust universe of apps for ar

people not understand why corpor will think out of dollars for carl and others >> in developing parts of the they will go for iphone 8, 8 plus in china the very wealthy people will definitely go for the 10. this is an acceler we have 14% iphone growth in stock is 12 times x cash everyb is bullish on these apple in one quarter has talk about not being held accoun >> that is true but i almost everyt why is the mostly

discou it is because we're having this every two or three years to valuat >> if you look at the track record it's about eight times discou so it's very, very inexpensive this whole narrative has been margin will go down. apple will get marginalize we talked about it before. slowly i think that's dissip plus new opportunities are there' still a lot to be their iphone market share >> we would call them moonshots apple doesn't believe that they >> absolutely. we need more information

there a lot of excitement came out what happened? nothin a lot of excitement what they what have we seen? note a whole lot yes tons of cash yes they have a lot of smart can they do a lot of things? absolu have we seen anything from them? no the bottom line it's hard to but we've not seen any signs of. >> we'll see how the stock when we come back stocks one sector feeling the pain again. retail 'ldo the bright and "squawk on the str will be

unwind might derail this more "squawk on the street"

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retail to feel the guys good to see you with us in terms of bed, bath & beyond will we take a look back at that moment and say that was the payles et cetera >> i've been saying that about bed, bath and beyond as long as i beli it was a they got plenty of competition they a just not the cool fun i'm not surprised it's going the way it's going >> if take what is working in are there any themes this is the kind of retail that

threat how do you complete in retail. what we like is deep value we like luxury goods people want low price. discougoods. that's a theme that should work. third theme is how can retailers meld clicks and tricks how do you mld the physical and online >> where can investors go and >> we like lululemon and walmart and tiffany and company. t.j. and ross are good for invest experi so there's a qualitier t there >> you had a great note yester

playin around with what brand macy's to you is not out of the >> not out of the realm of who wa be on the mall. if i was going to do it i would they h 1100 boxes. off mall they cover the whole country 87,000 square feet in size and they are a thing that you they have all this room around them easy format. if i was going to whole foods, i do it with nordstrom i think that would be an easier choice i don't know if they want whole do it you need a bunch of boxes. you just can't do it online. amazon knows that. they figured it out in grocery they willfigure it out in

appare >> kohl's this week allowed do you that more or les >> they are friend i describe it as first date i thought it was a great analog but, sure. they first say well we're going >> because you won get enough of you to have that volume >> interesting amazon and kohl's customers. when we survey people 70% still and as we've done work on amazon you want to go to a furthe good attachment rates. when you return and i temple in items. intere marriage. kohl's has tested these concep it takes one to three years. so we'll see

but the rules are changing in retail retail is getting redefine there' a revolution. we have to see who gets married. >> i didn't know the overlap was so great thank you very much. >> let's get over to the cme rick santelli. >> thanks, carl. we have a great guest today dr. dr. judy thank you for taking you are in paris you read about what the fed did much japan doesn't seem to be concer they a still going in there we can control and guide jgbs mario speaking this mornin maybe laying the ground work for octobe 26th meeting where he fed. in thi world, this one world, what did you think of the fed yester

they a going to start when portfo i get the same message a least not yet from mario draghi. you start thinking in this wag exchan rates through interest next, you just wonder if it's you just have these distortions monetasystem and so sometimes central banks other they are rivals. you just wonder what that does

where do we get a meaningful to see how it plays out, but i feel like now it has started >> all right, now to a bigger question you were a former adviser to donald trump during the transition you've written that maybe he's going to reappoint janet yellen just for global reassurance, but you've also written the fed needs a bit of a kick in the pants, need some shaking up, and to that end you think maybe somebody like a conservative ceo, john allison, formerly ceo of branch banking and trust, so what are your thoughts and have you communicated in any way with the white house to end up with some of these opinions you finish us out. >> well, i can't elaborate on

what i have communicated, but i certainly do think that president trump has the luxury of appointing someone who would be a bit of a disrupter to the federal reserve. for continuity's sake, i can see why he might want to keep janet yellen in place. that will reassure global markets, but the point is, you really need someone to ask some of these questions such as, does the federal reserve do more harm than good >> you know what, dr. judy, we're out of time. do more harm than good is a perfect place to leave this conversation, and, of course, with other big central banks still doing lots of stimulus, maybe that's why the market didn't have a huge move yesterday. thank you, dr. judy. mi mike, back to you. >> thank you, rick santelli, very much. let's look at what's coming

up on "squawk alley. john >> where google is paying $1.1 billion to htc, getting some people, getting some technology, but what's this really about and more important, what does it signal about the androidart? mke we'll dig into that coming up at the top of the hour on "squawk alley"

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the trump administration is pushing its agenda for tax reform, including parody between corporations and small businesses with a top rate of 15%, but could the proposal point to what went wrong in kansas, where a tax experiment was recently reversed? kate is in kansas city, kansas, with what went right and what went wrong for small business there. kate >> hey, melissa, that's right. nearly five years ago the state of kansas went under a live experiment in tax reform as personal income taxes were reduced and got rid of them all together for businesses, like amazing smiles of kansas city, where we're live today, but the experiment didn't go as planned. the state wound up with a budget deficit in the billions and the state legislature earlier this year wound up reversing those cuts, making small businesses like this one responsible for retroactive tax payments for the entire year of 2017, and now entrepreneurs are figuring out what comes next.

>> when just even a few thousand dollars alters your usable income for the year, it greatly impacts these decisions that we made just months ago without the knowledge that this was going to be coming, you know, in the future. >> but not all small businesses thought this was a success, even though they saved money. car miller, owner of lark label in wichita, he says this wasn't enough to make a difference to his bottom line. >> it was, like i said, nice little pocket change, but i couldn't for $1,200 or $1,400 a year hire a new employee, so it didn't affect us that way. >> back in may before the repeal, governor brownback said the system did need some refining in kansas, but the 15% number trump has proposed might be able to strike the right balance, but critics are telling the administration they should pay attention to what went right and wrong before they implement the steep cuts back to you.

>> interesting episode in american tax policy and is getting more and more relevant every day. kate rogers in kansas, kate, thank you so much for that when we come back, google betting big on smartphones we have the details on its billion dollar deal with htc dow is down about 12 points. "squawk alley" is up next. i'm here at the td ameritrade trader offices.

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welcome back to "squawk on the street." i'm dominic chu. tech stocks are lagging the most with chip makers seeing the biggest declines so keep an eye on technology that does it for this hour of "squawk on the street. let's send it back downtown for the start of "squawk alley." back over to you guys. >> dom, thanks good morning, it is 8:00 a.m. at google headquarters, 11:00 a.m. on wall street, and "squawk alley" is live ♪ ♪