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 ♪ ♪ to "squawk alley.

i'm carl quintanilla with john ford, mike santolli. also joining us this morning, henry blogdet, as well jason callahan good morning, a lot to get to. first off, google making the $1 billion bet on smartphones with its purchase of part of htc's mobile division, as the company takes on apple deidre is in san francisco and is going to set the table on this one hey, deidre. >> good morning, carl. that's right, google is betting on talent to make that hardware push google picked up htc's pixel division, so half of its 4,000 person team in a deal worth $1.1 billion. this also comes with a nonexclusive licensing agreement for htc intellectual property. "it's still early days for google's hardware business we're focused on building our core capabilities and we're investing for the long run."

this comes just days ahead of their october 4th launch of second generation products its current suite of gadgets includes the pixel smartphones, google home, daydream view and others google's record in hardware has been disappointing who could forget the purchase of motorola back in 2012, which was then a leading smartphone manufacturer less than two years later google sold it off for less than $3 billion, with a nest, as well, google has yet to prove it can be successful at selling consumer devices, but some say this time could be different the deal is smaller, google isn't picking up manufacturing facilities, and htc already makes the pixel. perhaps most importantly, though, with this deal google gains tighter control over phone hardware and software at a time when gadgets have become critical to bigger strategic pushes like artificial intelligence, augmented reality, and digital assistance, something that amazon may be looking at, as well. saying it's getting set to

launch a pair of smart glasses for an alexa that goes everywhere carl >> deidre, thank you very much for that we're going to kick this around. john, i can see you smiling throughout the entire report >> yeah, rick at google, some don't remember, he used to run motorola and google just basically destroyed that property granted, they are trying to do some things with it, but google has also helped destroy profits in the android ecosystem for everybody except google and samsung. they are just bailing out one of their favorite brands, favorite companies that's helped them out and hasn't gotten that much out of it in htc am i wrong, henry? >> no. you are not wrong. and they are doing it intelligently, though. they are taking and effectively matching what apple has, which is the design capabilities and integration going back ten years, one of the big theories, which i advocated, the smartphone market would follow the pc market, smartphone would

be separate, you'd build on top of it. apple shattered that now hardware and software are integrated and google is, obviously, trying to compete with that. but as we know from apple, building hardware and software and great products is only one part of it now you have to learn how to distribute it. apple has the stores this doesn't fix that problem. >> jason, if google gets it right on this, can they do kind of a chromebook type of deal would that kind of pressure the entire market on pricing or are we going to be left with a similar ecosystem? >> yeah, i think they have a delicate balance here. one, they want to keep waway and samsung motivated to make android phones, but they need a phone to show off the software capabilities and drive the market, similar to the approach microsoft is taking with the surface. it's a great acquisition, not a lot of money, gets them a ton of talent and keeps them in the game right now apple is looking particularly powerful with their a.r. kit, what they've done with

the watch, making progress there, and google is just, you know, been kind of terrible at putting out a world class phone and updating the operating system so i like it as a talent acquisition and a blocker. what if samsung decides at some point they don't want to be part of the ann dry ecosystem, this is a great way for them to have the ability to build world class phones that compete. >> henry, is anybody else also feeling like google's hardware approach gets a little bit odder as the years go by you have nest over here doing its thing. >> by the way, had updates yesterday. >> nest had updates, which i think is a great idea, a space that's increasingly crowded, but one where i think there's a lot of potential, but you got nest doing things on the one side and then at the same time you have google with its own brands they are not all tied together, there's not one sprawl place to get them all can they really do that long term or do they have to bring it under one umbrella apple has beats, too, so not

like google is the only one doing this >> over time unifying will make it easier, but it's difficult. took microsoft a long time to be successful with the surface. huge skepticism around that. hardware is what apple does first and people have talked about apple's need to beef up its software business. that is where google is great. so each company is coming in with their own strength and hardware is tough, so this is google's third or fourth shot at it maybe they'll get it right this time >> everybody, amazon, facebook, right, you could draw a line from here back to google glass >> let's look at amazon. amazon is very successful now because it invented a new product category when they went into the phone market, it was a disaster. they went into the tablet market, much lower price tag, working for their strategy, but it's different they invented this category. >> we don't know how successful they are they haven't given us numbers on units or profits it feels like it's successful,

yeah >> i will have to see. meanwhile, the largest tech firms feeling pressure politically as lawmakers from europe prepare a massive tax crack down on silicon valley announced today, twitter says exec t executives will meet with senate intel committee members next week related with russia's role in the 2016 election zuckerberg on the cover of "gw" as the magazine describes multiple and growing political crises how does this feel in silicon valley >> yeah, this is a complete and utter disasterfor zuckerberg and facebook a company of this scale with this much reach, this much profits, for them to claim an election cannot be impacted, as zuckerberg personally said, by their network, when, in fact, the russians were buying ads, probably using stolen data to target it to swing states, this is a complete and utter disaster and i think it's time for us to

talk about facebook regulating, being regulated, since they have no ability to regulate themselves and zuckerberg, although he's made 50 state visits, doesn't seem to want to address the major issues and they have a horrible track record when it comes to privacy and there's specific things that can be done to regulate facebook's reach one of them is all political ads should be transparent. two, the targeting, some maybe shouldn't be allowed, and this stuff has to be audited and why can't zuckerberg release the ads that the russians bought to target minority groups and lgbt groups why can't we see them when they can cash the checks of russians and target people, i don't get it, it's a lack of leadership, and they need to be regulated. >> great point, jason. at the same time, the term disaster, it's a big term to use, especially because to me this doesn't feel like equifax this isn't something i hear people talking about, can you believe facebook

>> it's worse. >> henry, put your take on exactly the scale of this problem for facebook is it a disaster >> from a business perspective, it is small. they have all the money in the world to build systems and get it right and improve it, it's not going to be that expensive for them, but from a big picture, and jason is a great person to comment on this, this is a slow motion collision of silicon valley idealism, we're just platforms, we don't get into that media and communications stuff we don't like that, it's distasteful, to now they've become the most powerful media and communications companies in the world, they are going to be subject to the same sort of regulation the media industry always has been. it is critical imagine if nbc had been used by russia to swing our election, and it was discovered later. imagine what would happen in washington that is now going to happen here, and these companies are going to become much more regulated and watched, as they

should be. >> when it comes to the question of regulation, it's very kind of commonly thrown out there that maybe they'll ultimately be regulated like a utility and, jason, when you're regulated like a utility, it's usually in exchange for the use of some public franchise, it's the air waves, some territory. what would they be exchanging, what would they get? >> yeah, they would get to not go to jail for, you know, taking russian money and not doing their job by reviewing ads you know, if you try to, you know, buy a profane license plate, it gets stopped by incompetent government agencies. for facebook to sit there and pretend they don't have the ability to look at the ads, when they, in fact, kick back a large percentage of ads is ridiculous. and here's an easy way to regulate this. every facebook user should be able to pay to have a privacy base and ad-free experience, the equivalent of what facebook makes on advertising for users that should be mandated by the

government in other words, if they make $15 per user per year, i should be able to opt out of any targeting i want you know what, our government tends to be bought and sold on these issues and people have a lot of influence, but the american people, when they see these ads, and i've heard they are really, really troubling, when the american people see these ads, they are going to realize zuckerberg going out to these 50 states, he's on an apology tour he's not trying to understand people better. he's apologizing for what's going to come out and they must be regulated and all political ads have to be auditable by everybody in america facebookads.com, you should be able to search all these ads it's disgusting. >> it's hard to get into his head, henry, but the interview with "business week" he seems to express incredulity. he cannot believe people would think he had anything but benevolence in mind. right? >> again, the idealism in silicon valley of you will somehow be able to build the

world's most powerful monopoly on media and communications distribution and never be held responsible for what -- >> or not have to deal with people with malicious intent >> absolutely. and so these worlds are colliding. i do think facebook on the other side, sheryl sandberg handled the discovery of the ad targeting well, fell on the sword, very up front facebook can get out in front of this and i think to jason's point, if they are regulated to that extent that they have to offer certain products, it's going to be a disaster. so they have to get out in front of it. >> traditionally, the folks at silicon valley, i feel like, hate advertising, you know, kind of hate content. sort of allow for it, but really the technology, the code is what they really love, advertising is this necessary evil. feels more and more like silicon valley is being pulled into you got to learn to love content, got to learn to love advertising, and you've got to treat it as important and effective. and for me, that's the lesson from this that's going to carry. >> before we say good-bye, five

of us talking. how many of us check facebook more than, say, twice a month? >> absolutely. >> yes >> i'm not on facebook >> twitter addict. >> jason >> i'm a twitter addict, but i have to check facebook once every day or two, yeah no choice. >> you have to, yeah, in a way >> jason, henry, thanks, guys. >> thank you >> great to be here. we do want your reaction to another major hack, this time a government agency targeted am eamon javers joins us. >> yes, that's right, detailing this extensively for the first time, here's what the s.e.c. said about this hack they said the incident first was detected back in 2016, but they said it wasn't until august of 2017 that the s.e.c. learned that it may have provided the basis for illicit gain through trading. the vulnerability the s.e.c. said was related to the edgar

software system, it has a test filing component, which allows companies to test whether their documents are posting on edgar that was the sort of keyhole through which these attackers got into the system. what the s.e.c. hasn't said is exactly who did this, how much money they might have made, how much insider trading there might have been as a result of this, but this is part of a broader pattern we've been seeing of increased cyber insider trading, so in 2015 a bulgarian trader filed a false avon tender on edgar. that set off a wave of activity. in 2016 we saw three macau and china-based men were charged with stealing m&a information from prominent u.s. law firms. in 2017 we saw a ukrainian hacker sentenced for hacking into business news wires and getting access to information that way, so there are all kinds of way cyber thieves can get into systems around the financial system, around the business world, and use that information to trade, to make

elicit money for themselves, and when i talk to experts, they tell me it's very, very difficult just to prove cyber theft on its own attribution is very difficult. it's also historically difficult to prove insider trading on its own. and when you marry those two things, carl, it becomes really challenging for prosecutors, many of whom don't have expertise in both insider trading and cybersecurity and you need to do that in order to marry those things up and make a prosecution in cases like this >> we do want to get henry's quick reaction to this, because it's like a trifecta they've gone after retail credit accounts, gone after credit monitoring, and now apparently corporate disclosures and everything else. >> and it's only going to continue to escalate and certainly waiting for the time when the banking system gets broken into and trillions disappear from people's accounts that is when lots of folks thinking this is happening to somebody else are going to wake up to it, but the united states, corporations, the government,

going to have to spend a lot more combatting this >> worth noting, this isn't aws getting hacked, right, this isn't azure getting hacked these are people who have kept it in house. these aren't cloud hacks so i think we're entering this era in security people are worried security wise, should i put my stuff on the cloud. now the question is, why isn't your stuff on the cloud, because perhaps the security from these cloud providers is better than yours. >> very good point >> they've kept it in house, but there's a ton of public interaction. all these companies, all these investors can directly file, beam it right there. i don't know what that means for the level of security, but it is sort of fascinating. we're also going to hear the s.e.c.'s budget, i predict, as we get the testimony, whether that's justified or not. >> yeah, clayton is scheduled to talk to senate banking in the first week of october. that's going to be interesting henry, thanks again. when we return after a break, how apple is responding to its new watch's connectivity problem. first a check where we stand on the markets.

dow's within a pretty tepid range here, financials led early in the day we are looking for a tenth straight day of gas tinonhe blue chips more "squawk alley" in a moment. live-stream your favorite sport

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solutions there. thanks for calling in. >> thank you >> so, where does this leave us now? it seems if the market, certainly, to take it in stride would be an understatement you see a little bit of a bump up in yields does it do anything to change the equation relative to investor expectations for what u.s. stocks can do against the rest of the world, or stocks versus other asset classes at this point >> i think very little bearing in terms of expectation. markets are always driven by surprise, rather than by trend, and much of what is said in terms of magnitude, direction, everything else, has pretty much been in line with expectation. the thing that i think the markets should probably be a little bit concerned about between now and the year end, particularly the u.s. market, is you've seen a profound outperformance by a lot of the growth managers, active managers, as they seek to lock in some of those gains, you could see a sell off some time

in december as some of the large best performing stocks sell off. >> so, growth stocks certainly have had a lot of outperformance many people were trying to call the turn and go back toward value stocks, whether it's banks or energy or something like that, but you think the growth outperformance just could itself be the start of a pull back just because of flows and growth managers want to lock that in? >> i do. i do think that the basic fundamentals, which cause the growth stocks to outperform, which has been continuing concentration in the market, persistence of profitability amongst some of the larger consumer discretion and technology companies those fundamentals, i think, are still intact and i don't believe the devaluations are particularly deceptive however, if you look at history, whenever you've had such a persistent one-directional run, it tended to revert, particularly as investors do speak to lock in performance

before the year end. >> you know, there wassort of an immediate perception there was a slight hawkish turn to janet yellen's commentary, yet the dollar index today is really not waking up. it's pretty much flat. actually, down a bit on the day. how much is the weak dollar an important factor in terms of continued stock outperformance in the u.s. versus elsewhere or vice versa >> i mean, i think it's a great point, and if i had to think of the one thing that i didn't get right is the persistence in the weakness of a dollar, particularly since the middle of the year i think the one reason you may not be seeing as much impact on the dollar is if you look, again, at history. to the extent the u.s. rates were to rise, it does tend to put upward pressure on rates in other regions. so from the relative perspective, i don't think this is a huge change so even though you're right, the extent to which yellen opened

the door to the december rate hike, it may have been a modest and more hawkish statement than would have been expected, but it tended to lift the bonds across the world, which mitigated the effect on the dollar >> so, vadim, to the degree we're getting calls on individual names, i'm thinking an apple price target increase earlier in the week based on a weak dollar premise, are those calls late >> well, remember the weak dollar tends to have a lagged effect, so you tend to seek persistence of the impact of the weak currency. persists for another three to six months, doesn't start for three to six months, then continues for three to six month three to six months after the turn, so you have a bit of time to participate in that weakness or benefit from that weakness in terms of profitability >> all right well, we'll see how 2018 earnings estimates shape up in that context vadim, thanks so much for your

time this morning. >> my pleasure and as we head to break, take a look at shares of blue apron. the meal kit company up nearly 2% at one point this morning, now closer to 1.5% after grocery chain albertson's acquired plated so now after a supermarket, a better exit option over the public market. and later, disrupting payday lending. ceo ofctehrs i aivous going to join us live on set. stay with us sfx: netflix mnemonic sfx: t-mobile mnemonic sfx: netflix mnemonic t-mobile's unlimited now includes netflix on us. that's right, netflix on us. get four unlimited lines for just forty bucks each. taxes and fees included. and now, netflix included. so go ahead, binge on us. another reason why t-mobile is america's best unlimited network.

europe's going to close in just about three minutes let's get to michelle. >> hey, michelle generally positive and banking shares driving the european averages higher today in response to hints about a likely rate hike in the united states when interest rates rise, it helps the margins on the banks take a look at the stock 600 bank nice two-day move. lots of merger related news in europe reuters is reporting unicredit

has reported a possible merger, pushing commerce bank by 3.5%. also a merger with france's bnp saying it was not in negotiations to divest its 15% stake in the german lender, but clearly there's something going on over there in terms of consolidation. individual stock stories, portum down, today investors doubtful whether or not they'd succeed in buying a near 47% stake in its german counterpart uniper due to their oppositions to a take over e.on owns that 47% stake crh is up 2% after it agreed to buy a deal at $3.5 billion guys, back to you. >> all right, michelle, thank you very much. watching the markets this morning, interesting to listen

to vadim say there continues to be a sort of echo of a weak dollar play. for the time being, dow's having some trouble today, largely because of apple >> yeah, definitely. apple, some of the other big techs on the downside. nasdaq 100 is a significant underperformer, but really yields, not a lot of follow through. seems like it's another sort of range monday s&p seems to hang on to their 2500 mark. >> nvidia putting pressure on the nasdaq, down about 3%. it's been on quite a run, but i guess it can't get all the chip attention. amd had a little and, of course, intel, as well, over the past several days >> we'll continue to watch currencies, of course, with the dollar having its best two-day run in about a month and as mike mentioned earlier, december odds now 62, maybe some say high 60s, but it was 20% tw weeks ago. >> a lot of time between now and

then, but unless something comes along to disturb things, and also if you think the markets are going to kind of prevent a december rate hike, what exactly would it have to get dollar showed depressed, if it rallied, it might not matter much to the fed at this point. >> interesting to see where apple goes for the remainder of the week we do, of course, expect to see the new watch series 3 at retail tomorrow questions about how the public's going to react to this wireless controversy. does it have trouble switching between wifi and cellular, reviewers have made a little bit of a deal about this, but not clear if the consumer is going to have trouble because of that, as well. >> it is 11:30 on the east coast. let's get to sue herrera and get a news update at this hour >> good morning, carl, good morning, everyone. here's what's happening at this hour hurricane maria is battering parts of the caribbean video from the dominican republic shows the power of that storm's winds as it came ashore. the category 3 hurricane is expected to hit the turks and caicos islands next.

dramatic images from mexico city following this week's powerful earthquake. pieces of a building fell to the ground, smoke could be seen billowing from a second structure. the deadly quake has killed more than 245 people. london authorities have made another arrest in last week's london subway terrorist attack police took a 17-year-old boy into custody last night and say they are conducting a search of his home and children of the '90s will love this a 21-year-old engineering student from belgium is now in the guinness book of world records for creating the largest fully functioning gameboy. it took a month to build the three-foot high by two-foot wide device i wonder how many batteries that thing needs. that's the news update this hour back downtown to "squawk alley." carl, back to you. >> all right, sue, thank you very much. >> you got it. that new apple watch is suffering from connectivity issues, which we mentioned earlier.

as we're talking, we're getting a report out of reuters, reporting u.s. homeland security detected five critical cybersecurity weaknesses in the s.e.c.'s computers back in january. they are citing a confidential report, but this story is going to get a lot bigger before clayton makes his way to the hill >> more and more process is becoming a question in these what do you do once a breach has been discovered, who needs to be notified on up the chain of what point do you need to tell the public it's an embarrassment when you hear there's been a breach, then find out they knew about it for months, and yet they continue to have problems. >> the piece we still don't know is exactly how or to what degree somebody profited off of it. you can totally understand why these efforts are going on constantly you already have the automated machine learning things that read the filings >> this is the president >> thank you very much it's a great privilege to be

with president moon of south korea, as you probably know, we've had a few discussions over the last number of months, and i actually think we're making a lot of headway in a lot of different ways we are on a very friendly basis working on trade and working on trade agreements, and we'll see how that all comes out, but much more importantly, frankly, than trade is the other aspect of our relationship that we're working with, and that has to do with north korea. so, we are meeting on a constant basis. we'll be meeting in a little while also with prime minister abe of japan and that will be a tri meeting, so we will see, but i think we're making a lot of progress in a lot of different ways stay tuned stay tuned would you like to say something? [ speaking in a foreign language ]

[ speaking in a foreign language ]

[ speaking in a foreign language ] >> mr. president, i have met you several times and also had several telephone conversations with you, and because of this i'm becoming more and more familiar with you. over the years -- north korea has continued to make provocations and this is extremely deplorable and this is angered both me and our people, but the united states has responded firmly and in a very good way, and because of this i also believe that we have very

close coordination between korea and the united states, and because of this i am very satisfied. mr. president, in the u.n. general assembly you made a very strong speech, and i believe that the strength of your speech will also help and change north korea. thank you very much. >> thank you very much and i'm very happy that you used the word deplorable. i was very interested in that word i didn't tell them, i promise, i didn't tell them to use that word [ speaking in a foreign language ] that's been a very lucky word for me and many millions of people [ speaking in a foreign language ] so, because of the fact that our trade deal is so bad for the united states and so good for south korea, we'll focus on the military, but actually we're going to try to straighten out the trade deal and make it fair

for everybody. but our real focus will be on the military and our relationship with south korea, which is excellent, which is really excellent so we're going to start that process right now. thank you very much. thank you, everybody >> that is the president, at least the third in a series of meetings he'll have today as the u.n. general assembly meets in new york city. that's one with the south korean president moon, says we are on a friendly basis working on trade issues, also says discussing north korea, quote, i think we're making a lot of progress in a lot of ways and we do expect, perhaps, to hear more about sanctions later on in the trading session today. dow is down 22 points. "squawk alley" is back in a minute (sigh) ( ♪ )

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a couple of big stories in cybersecurity today. the s.e.c. disclosing its own details coming to light about the equifax breach, as well. so how can consumers and companies protect themselves or minimize the damage of these breaches joining us now, eric o'neal, carbon black, national security strategist and former fbi operative and mark armstead, welcome to both of you eric, starting with you.

this s.e.c. breach, these are huge institutions, part of the government, also equifax, a big credit rating and monitoring agency that are getting hit. what does this tell us about how ready these institutions are to deal with these security threats? >> i don't think these institutions are ready or have been ready for some time this has been going on for years. remember in 2015 the office of personnel management was hit that was a pretty major attack, and they've just continued to hit us again and again since then and you would think we would finally learn a lesson here, but doesn't quite look that way >> so, are the hackers getting better faster than the defenses are getting better are we just hearing about this more, or is something else at play >> you know, i think there's two mega trends that are going on. the first being there's an amazingly big shortage of cybersecurity personnel. people are capable of dealing and looking at the information

that's out there, so they could help in these situations and the second mega trend is there's been an explosion of data that comes from both the organization themselves and also the security tools that they have and so there's basically a gigantic gap that's challenging every security organization today. >> eric, i wonder if there's an opening at some point, we've been hearing for so long that, you know, companies are elevating these issues to the board level and they are really taking seriously their responsibility to have proper defenses and protocols, but is there a place for kind of a centers for disease control where you can kind of track these outbreaks, have responsibility among companies and other agencies to report them, is there any centralized way to monitor the movement of such threats >> well, this is already happening. there are a number of cooperative organizations and enterprises and endeavors

between government, for example, the major cybersecurity companies. we certainly do that at carbon black, as do all of them, to track threats, monitor threats, and proliferate them or send the threat information around the country as fast as possible, so it helps response. the problem is, and to take up on michael's point, you know, there's one more aspect to this. we keep saying hacker, but hacker is the wrong word we should be looking for spies, where so many people see hackers, i see spies because the majority of these breaches are not coming from some kid sitting in the basement they are coming from foreign intelligence services that are extraordinarily sophisticated, and that sophistication allows them to use traditional espionage methods to breach different cyber networks, and so that's why we're seeing such a massive number of these attacks and attacks that are hiding for months before they are even noticed. so, there is a good use of

getting the fact that an attack happened out, but if there's a month or three-month delay between the attack happening and knowing it happens, it may already be too late. >> mike, you wrote last month about, you know, we're dealing now with breaches in banking and potentially breaches in voting systems, but you say imagine being deprived of electricity, water, or money for food and medicine does that now qualify as grounds for alarm. is that kind of language alarmist or not? >> well, i think it bounds the problem a little bit the problem is such that, you know, there's personal information taken, but there's also threats to infrastructure, and not to be overly alarmist, but the fact of the matter is, everyone can do a better job and these recent hacks are showing that, you know, you can't build walls big enough to protect things you've got to be really good at detecting and responding, and that includes our critical

infrastructure, as well as something, you know, as personal as, you know, taking care of your own kind of information >> yeah, we got to worry about it all gentlemen, thank you we will continue to cover this, of course, eric o'neill from carbon black and mark armistead. from software to hardware, there's a lot of hardware news today, including apple watch, google's acquisition of htc. first, santelli, what are you watching >> i'm watching where the ten-year note yields are, and i'm going to show you viewers something that will give you goose bumps when i'm done, and it has to do with ten-year note yields and the election. mpd it will give you goose bus, but you'll have to wait till after the break not how your money will last through retirement. we make it easier to plan for retirement with day one target date funds from prudential. look forward to your 401k plan.

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not rebalancing your portfolio. focused on what you love, not how your money will last through retirement. we make it easier to plan for retirement with day one target date funds from prudential. look forward to your 401k plan. here's what's coming up at the top of the hour on half-time. can stocks keep going up, even in a rising rate environment the traders tell you and reveal their rate hike playbooks. plus, your call of the day on a well known tech stock that analysts say can rise another 15%. and we have our hands on the new iphone 8 and the series 3 watch. the reviews, plus trades on apple. all of that at 12:00 p.m. eastern. carl >> let's get to sme in the meantime, rick santelli and the santelli exchange. >> thanks, carl. you know, when central banks took on the heavy burden of

trying to shield the economy and their specific areas of the globe from the crisis, they stepped out and did things that may not do again, may not be able to do again, and they are tools that janet yellen, and i'm kind of reading between the lines, may not want them to use again. things like quantitative easing. does that mean they won't? i can't say. but one thing i can tell you, when all this was going on, there were big conversations about this distortion is going to make trying to figure out the next move in the market much more difficult and from a fundamental standpoint, i completely still agree with that premise, but i think i was wrong, along with many, in so far as how it would affect technicals, because when you really think it through, technicals are called voodoo by many, yet it's a record of transactions, and it's important. because if you get in in a certain place and out at a certain place, there's something

about that that doesn't get distorted, even when the fundamentals are i think the charts are pure, and i almost have some proof of that now, consider that the election november 8th, we had a big move in every market, but in ten years specifically, we had a move basically1.78 up to 2.26 what's the midpoint there? i'll tell you, it was around 2.02 when was the last time we traded 2.02 it was the 8th of september, and that was the intra day low never settled there. i think 2.05 was the low yield now look at the chart on your screen this chart starts at a very important date, the close of 2015 you know what it was it was 2.27. we traded 2.27 yesterday look at this i'm going to go to my board for that chart what's fascinating is 2.27, 2.27 the election november 9th. the amount of time is exactly

equal to yesterday 2.27, 2.27 cycle complete and the fact that that midpoint was the intraday low on the 28th is just an incredible thing. so you're probably asking, okay, how does that help me make money? i think what it tells you is we have a symmetrical cycle that is completed. it tells me 2.44 is where we settle 2016. currently around 2.63 is the high this now becomes your upside pivot. i would use 2.27 as your generic pivot. you know what the best support level would be and the violation critical to the downside you got it, 2.02 i'm done hopefully you had as many goosebumps, as many as we discussed the chart on my train ride over the last three weeks carl, back to you. >> you are -- you've got a lot of skill with that whiteboard,

rick thanks so much rick santelli. tired of waiting two weeks for your paycheck? active hours allows users to access their paycheck on demand from your smartphone the founder and ceo will join us in a moment. ♪

track your pack. set a curfew, or two. make dinner-time device free. [ music stops ] [ music plays again ] a smarter way to wifi is awesome. introducing xfinity xfi. amazing speed, coverage and control. change the way you wifi. xfinity. the future of awesome. our next guest is closing a $39 million round led by andrews and horowitz today activehours is a mobile app that gives hourly workers access to

their pay before they actually get their check, direct from their smartphones and on demand. starbucks, apple and target are on the platform. ram palaniappan is the ceo and joins us here onset. ram, this is an area that is ripe for disruption. payday lenders are the scourge of urban areas you figured out a way to get people their checks sooner here's the part that befuddles me people pay what they think is fair to get money as much as an hour after they earned it. how are you going to get money >> what we're really doing is taking people away from a rigid paycheck today you only get them once in two weeks. and with our app, you can access your pay whenever you want it's actually an interesting problem. the whole concept of a pay cycle wasn't there until a new centuries ago. society didn't accept that employers could hold on to someone's wages for a few weeks.

there is references to it in the bible as well as other scriptures that employees need to be paid before sunset so we're using technology to bring the world back to how it used to work before. when you can access your bapay, you're essentially your own bank there's no more late fees, no more overdraft fees so it takes you out of a whole range of short-term lending products. >> as a consumer, i love it. how do you and your investors have to wait to get paid >> we don't charge any fees. we let the users pay us whatever they think is fair it's really inspiring to see the whole community is coming together to support the product. they're essentially paying for each other to keep them out of bad financial products there's lots of really interesting behaviors. we have a strong pay it forward culture where users very often pay for another user pay for the cost of another user. >> how much?

>> so that's also interesting. today it's cheaper to take your wages out, to access your wages to our app than it is to take money out of your checking account through an atm t if i paid enough to pay your transaction, as soon as you come it says ram paid for you and you send a thank you message back. every day we see thousands of messages between users helping each other out. >> do you have direct access in monitoring and realtime to the hours worked how does that play out in terms of you knowing what someone has been paid or what they have already worked >> we actually show you, we construct an earnings account so you can see your accrued earnings and that increments in realtime as you work. >> what do hr departments think about this or accounts payable does this complicate their lives or make it easier? >> so the product is actually a direct consumer product. so the company doesn't really change the way it does payroll

we work in parallel to that. since i actually like -- the companies really like it it does a whole lot of great things for the employees we've seen attendance goes up, they're far more motivated to go into work. in many businesses, employees would ask their managers for like a cash advance. that's a pain to do. >> you used to do it. >> i used to do it myself which is kind of how this whole thing started. >> so quickly, are you going to do deals with financial institutions for credit card offers and that sort of thing? is that how you're going to make money longer term like credit karma, mint and some of those others >> the intention is to keep this as a business model. let our users support us voluntarily. >> wow well, andreeen horowitz thinks it's a good idea and quite a few other businesses like credit karma and mint have done quite well on models like this interesting stuff. a lot of people certainly need this thank you for joining us. >> thank you. shares of tesla are falling. business insider reports the company will officially

discontinue its cheapest model s option on sunday why is it that tesla always seems to have these looming news events over the weekend that we have to sort of brace for on a friday afternoon >> well, they keep putting out, you know, these sort of targets and goals and where they're going to get there and it's usually ambitious and they usually back up on them. it's fascinating i mean the stock really doesn't take a real bruising on something like this, but it is fascinating, especially when they moved out to october, wasn't it, another launch? >> elon musk is a master at creating news cycles, whether it's releasing a video of a rocket or some teaser of a new tesla. now, granted, he's got a lot of companies and products to stay in the news, but he does it quite well. >> overall, interesting day. obviously you might expect volume to be light with rauosh hashana but anadarko continues,

2.5 billion shares. >> companies buying back a huge percentage of its float, that will do it. >> a couple of smaller stocks making runs today. gopro up better than 5%. i mean sneakily year to date, that stock up nearly 30. >> and ge leading the dow. haven't seen that in a while let's get over to brian and "the half." ♪ and welcome to "the halftime report." i'm brian sullivan in for scott today. your top trade this hour, rates and the rally. can stocks really keep going up, even as interest rates are expected to rise it is a question literally with trillions on the line. so here is your trillion dollar lineup joe terranova, john najarian and pete joining us from his castle in the north woods of minnesota. guys, welcome. let's begin with the fed the odds of a rate hik