tv Squawk Alley CNBC October 5, 2016 11:00am-12:01pm EDT
it's 11:00 a.m. at the cnbc cambridge cyber summit in boston, massachusetts. 11:00 a.m. on wall street. and "squawk alley" is live. ♪ i'm waking up, i feel it in my bones ♪ ♪ don't make my systems blow ♪ welcome to the new age, to the new age ♪ ♪ welcome to the new age, to the new age, whoa, oh, oh ♪ ♪ radioactive, radioactive ♪ whoa, oh, oh, i'm radioactive, radioactive ♪ welcome to "squawk alley" for a wednesday. breaking news. you are looking at a live shot here of blue origin launching a new shepherd to test its escape system in texas. blue origin says capsule inflight escape testing has not been done really since the "apollo" program. this is the fifth time this
particular vehicle will take flight. tests expected to be anything but routine, as this feature is supposed to save future passengers on board the new shepherd, if, in fact, the vehicle fails during its climb to space. another part of the -- i think we're getting a 90-second delay, but it's another comment. sara eisen is with me here on post 9. it's about commercial interests in space and how that coupled with technology, commerce is moving all of this into a completely new era. >> right. so, blue origin is the private space flight company of jeff baseo bezos, which he likes to talk about and wrote about this shepherd launch in a recent blog post. it's a safety test, as you mentioned. there is no crew on board. and it's a question as to whether this works, of course. you mentioned four successful suborbital test flights, this particular new shepherd. and if this one succeeds, he does say they will retire it. it will have deserved its retirement. so, apparently, after 45 seconds
of flight, when it's 16,000 feet in the air, what happens is the capsule will be ordered to break off. and if it goes well, then it will come back down to earth, and they will have established -- i don't know whether that puts blue origin ahead of spacex. we know elon musk wants to send a million people to mars. but clearly, the private race for space, the biggest rocket ship competition is on. >> yeah. there's an entire spectrum of ambitions regarding space. some it of involves colonizing mars. some of it just involves moving heavy manufacturing into a frictionless, weightless environment, which is another way to leverage the advantages of space. let's see if we're going to get this lift-off in the next few seconds. we're going to come back to it. this is typical for how rocket launches work. in the meantime, i'm carl quintanilla, sara eisen at post 9, jon fortt at the cnbc cyber summit. kayla tausche has the morning off. and joining us, jason calacanis
and farraj amaju joins us. good to see you all. twitter shares on the move this morning. as you know, the "journal" says the company's expected to field bids as early as this week. among the companies named, sales force tops the list as the most likely buyer, as other reports indicate possible descension in the ranks at the top of the company. julia boorstin has details on all of that. hey, julia. >> hey, carl. as twitter fields bids, they have a lot of pushing to do. i'm told he's convincing his board that he needs more time to play out his video-focused strategy. he also has to convince anthony noto and adam bain that not is not the right time to sell. here's what the board and management are focused on. the third-quarter revenue and user numbers, they've seen them but won't release them to wall street for another couple of
weeks. th streaming deal. the video numbers are pretty good, but sources tell me the initiative has likely not bolstered. then there's the question of whether interest from sales force will drum up a bid from google, considered a better fit, and whether a bid will come in high enough. takeover chatter has driven twitter stocks higher by more than 30% over the past two weeks, but suntrust analyst bob peck warns it will be underperforming fundamentals and it creates too much downside risk. it is worth noting that the company has not done any layoffs, though they are reportedly coming due to cost pressures. a source close to this situation tells me they're trying to figure out if they can sell twitter before they have to make any cap. carl? >> julia boorstin with that news.
julia, thank you so much for that. jason, you know all these guys involved. how much credence do you put in the reports of them having different ideas? >> yeah, i think they have had two different ideas since the inception of the company, and they've obviously gone back and forth running the company. i think what we've learned from this is that halftime ceo is a bad idea. halftime ceo of a very challenged company is a horrible idea. jack hasn't been able to focus on the company enough, the product hasn't moved quick enough. and yeah, video's been great. 300 million users. it hasn't grown, but they haven't left. so i don't think it's a damaged asset. i don't think it's, you know, a growth asset. i don't think it's being run particularly well, but it's got $2 billion in revenue. and i think for disney it makes a lot of sense because of the espn assets and some of their other video assets, and i think it's obvious that google's going to buy it, especially at this price. it would be a bargain and google
would be able to run it pretty effectively. i wouldn't be surprised if facebook makes a last-minute bid on it as well. and so, it's definitely going to be sold in the next couple of months. i think it's inevitable. i don't think, you know, if jack was full-time, yes, he might be able to convince people, i'm full time on this, somebody else is running square, believe in me, let's do it. but he had his year, he didn't get it done. he was halftime. and from all reports, you know, he's been a little bit of a consensus-driven founder-manager, not a hard-driving god king let's do this. and you know, he doesn't have the time for that. and so, it's gone sideways and it's going to be sold to google in all likelihood, possibly disney. >> farhad, i'm wondering how you look at the fact that maybe, to me, one of the most interesting things is who's not that interested, apparently. you look at who's strong online right now, amazon is a name that comes to mind. microsoft certainly chose to make a bid for linkedin. they could have been sniffing around twitter instead. i mean, if you talk about google
or facebook, right now there's sure to be antitrust concerns around that, given their size, whether online or social specifically. it's not a home run to pick up this asset, given that the growth has not been impressive. what does that say? >> yeah, i mean, i think it says that it's a complicated product and nobody -- probably a lot of people don't know really what to do with it. i mean, twitter doesn't really know what to do with it. it's hard to know how it would work for sales a force or even google. you can imagine google getting a lot of the stuff it might want from a twitter acquisition just with sort of business development deals with twitter. you could imagine the same thing for sales force. so, it doesn't to me, like, make sense. it's not a home run for any of these companies to buy them. they could sort of make other deals to kind of get what they want from twitter. and you know, twitter is just, like -- i think what they have to do is kind of reset the benchmark, right? as the benchmark that they want
to grow core users? is it that they want to grow this number of people who are just viewing these streams on their app and not, you know, not regular users? i think we don't really know what they want yet, but it's possible, you know, the executives don't know what they want at this point. so, you know, maybe they'll sort of give us, you know, more information in the earnings report. but i think at this point, you know, it's complicated for potential acquirers and i think for twitter itself. >> you know, jason, i want to challenge your -- >> no, i disagree. >> i wanted to challenge -- maybe you'll answer this on obviously google, what you just said. why do you say that, given that most reports right now are indicating that salesforce really wants it and they missed out on linkedin to microsoft back in the spring? >> salesforce is, you know, makes the least sense. marc benioff loves the product. and listen, some people have built consumer and enterprise in the same company.
microsoft, obviously, has a bing asset and xbox that have done reasonably well while running an enterprise company. but generally speaking, enterprise is one set of dna, consumer is another set of dna. salesforce doesn't make a lot of sense. however, google makes a lot of sense, so farhad's wrong about that, because a lot of the problems that -- sorry, farhad. the reason is makes a lot of sense for google is because google knows how to tweak algorithms, they know how to deal with data, and realtime data is something that powers google's money engine. google's money engine is search and the ad network. also, i don't think, actually, this is going to ring a lot of antitrust bells, even for a facebook, because it's such a small number of users relative to the overall space. and really, i think what antitrust people would be looking at is the overall advertising market, of which the online advertising market, this is only $2 billion. this is a minor piece of it. so, i think actually facebook could buy this, and i think marc benioff's making a lot of noise.
it happens to be dream force's week. he's making a lot of noise to get attention of this and he's a fan of the product and i think he sincerely believes he could run it better, but it really makes sense for google and especially for disney. >> farhad, 30 seconds. >> i think people have this idea that there's a hidden trove of data in twitter. it's possible. it's possible google could do a lot with it and get a lot of information from it, but what matters, though, is, like, if people are actually using it and if the user number is growing, because without that, the data's going to go away. and i am not sure that google, you know, would be good at improving that. google doesn't have a great track record at social products anyway. >> yeah, but they did take youtube and make it a $100 billion company. they did shepherd youtube to a $100 billion company, so they are very good at managing a brand that isn't the core brand, so that makes them perfect for it. >> fair enough. one thing we've learned quickly is we could go ten minutes easily talking about this.
>> fun parlor game. in other news, guys, a good morning for bezos as amazon trades near all-time highs. the company is introducing prime breeding, giving prime members access to a library of books and magazines, eve if they don't own a kindle or fbi tablet. bezos tops "vanity fair's" 2016 new establishment list, ahead of zuckerberg and evan spiegel. farhad, how does bezos top this year? record highs. obviously dominating all of his large-scale rivals, adored by the media. i'm not sure what happens next. >> he just keeps doing better and better. i mean, the prime news this morning i think is interesting and sort of, like, the plan for them, right? just keep adding more stuff to prime. and as long as more people subscribe, they're doing amazingly well. i mean, once you get people hooked on to prime, like they buy a lot more, and they just never leave. and that's the huge thing for
retail, right? like, you get people locked in, and getting these habits, like every morning -- every week when i run out of coffee, i just ask my echo to reorder some, and it just comes. more and more of those kinds of commerce, like automatic commerce, i think it's hard to see how they can fail at this point. >> carl, i think -- >> farhad's right on this one. >> part of what we're seeing here with amazon is just a great example of this flywheel of data-driven product quality and then growth driven by that product quality from the data. i mean, from the beginning, amazon has been very open, and bezos has talked about this, about how they collect data on the user, but they're very open with the user about the data that they're collecting, and that allows them to improve at a rate that competitors have trouble matching. twitter has been very different along these lines. they've suffered with some product issues around trolls, around usability, and really didn't fix those early enough on. it's really hard to fix something down the line once
you've discovered you have a growth problem. and now amazon and some other properties, like facebook and the ones that's picked up, have this escape philosophy, and that i think is a big part of the narrative we're watching in tech, around mobile, around cloud, around social. >> jason, it does feel like this is sort of a three-pronged move, adding prime customers, getting the data on their customers. they've also got this new kindle unlimited service that they're offering for $10 a month. >> right now, 80% of people who have amazon prime are very, very satisfied with it, according to surveys. and what people don't realize is exactly how many people have amazon prime. amazon doesn't release the numbers, but it's upwards of 70 million people and it's grown 10% in the past year. this is the yum-yum product, like literally $7 billion. >> there it is. >> and who on air right now doesn't have amazon prime? please raise your hand if you don't have it. you all have it. you all use it constantly. >> like, the question is who has
not used it today? >> exactly. >> i think i used it today. >> you're financially irresponsible for not having it. at $8 a month, i think it's half price right now. i think it's a $15-a-month product. in the united states, netflix has 49, 50 million subscribers. this has 70 million and nobody even knows about this product. so, i think this has unlimited up side. he's going to keep adding stuff to it. amazon will be the first trillion-dollar company, market capital. >> guys, we've got to get you two in the same room. a great way to start the hour. jason, farhad, thank you for joining us. hedge fund elliott & associates calling for big changes at samsung. david faber has the latest on that. then, the cnbc cambridge cyber summit continues. deputy director mccabe. we'll get his take on the security threats. plus, google and killing the headphone jack. we'll get walt mossberg's take on that when "squawk alley"
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we continue to watch west texas, where you're looking at a live shot of blue origin launching a new shepherd to test its escape system. we're going to continue to monitor that. the launch has already been delayed by about 15 minutes. if we get word it's coming, we'll get back to that. meantime, activist investor
elliott management taking aim at samsung electronics, urging them to structure, among other demands. david faber has details at post 9. >> thanks, carl. yeah, interesting move here by elliott. it owns about 0.62% of samsung electronics, not a large shareholder, to be sure, but that said, of course, given the size of the company, the stake itself is not insignificant. and the hope on the part of elliott that it will be able to galvanize some 60% of samsung's shareholders that are foreign-based institutions to help promote what it now made public today. and by the way, it made public in a letter, an open letter, and had not really shared with samsung previously, according to sources. so, the first they were seeing it was when we all saw it this morning, namely, a plan to what they say would be unlock a value in a variety of ways, including a somewhat complex demerger and remerger of certain parts of the company intended to allow samsung electronics treasury
shareholding to be streamlined and realized, or i should say canceled. they own about 13% of the company in their treasury. they haven't actually canceled the shares. they also want them to make a large, one-time dividend payment, and as well commit to returning as much as 75% of free cash flow to shareholders, this for a company stock that's trading at roughly elliott says six times one-year expected forward earnings, that is when you take out the cash of the company. they say there's been suboptimal shareholder returns as a result of the capital management, that very difficult and sort of hard-to-understand structure. not to mention, of course, they want governance as well to be at the forefront. and they hope, somehow, that samsung and its significant shareholder, the lee family, which controls about 31%-plus of the vote will agree, that they'll come to some sort of kumbaya moment where they'll say, yeah, this is going to be good for everybody. will it?
well, we'll see whether, in fact, there as a battle ahead for elliott here. the key point for it would be exerting pressure at an upcoming annual meeting early next year, at which you can put proposals on the ballot to be voted on by shareholders and, conceivably, if a majority of those holders did approve those proposals, they would be binding. so, there is at least some sort of a path here for elliott to imagine as it tries to pressure samsung to realize value. >> which you would -- i mean, you think it's coming at a vulnerable time. they're dealing with the fallout from this crisis over the galaxy note 7 recalls, and yet, the stock is not too far from the highs of the year, up 10% over the last three months. so, i just wonder, the stock resilience, and yet at the same time, the damage control mode they're in, how that improves or not chances -- >> or not. they have also had an illness of their former leader, who's -- and so, they have a succession to deal with as well. but the key point from elliott is, despite that move up that
you noted, sara, the stock still trades at an extraordinarily low multiple in part because of all the reasons they cite in their letter. >> david, appreciate you bringing it to us. >> sure, carl. >> back at post 9. we have breaking news from the supreme court on insider trading and we go to hampton pearson outside the court. >> reporter: hi, carl. we have had arguments wrapped up on what some are saying is the biggest insider trading case to come before the high court in 20 years. at issue, the chicago small businessman is trying to get a decision overturned. he was convicted of insider trading based on thirdhand information passed on to him by another relative who happened to be an investment adviser. now, the question before the justices today, does proof of insider trading require just proof of a monetary benefit or could a close family relationship come in to play between the insider and the tipee? now, the general case made on
behalf of this gentleman who's trying to get his conviction overturned is that the court should really limit the law to its core, that trading by an insider is strictly related to a financial benefit. the government argued that's too narrow, the benefit doesn't always have to be financial. just the information alone can have value. now, justice ginsburg, among others, basically challenged the government, saying, okay, but how far down this tipee or tipper chain can you go, you know? where do you draw the line on the case of what the standard should be? the government solicitor general said the standard is essentially what we can prove to get a criminal conviction. now, justice kagan, however, said the current standard has been in place for 30 years, and it's really a key to market integrity. you, the petitioner, are asking us, if you will, to upset that standard, and therefore, raise
questions about market integrity going forward. so, that's the case. it's now submitted. if it's 4-4, the conviction would stand. it seems the court might get five votes to do something. the question is, what will that legal something be going forward? back to you. >> all right. we'll come to you, hampton, with any news on that vote. hampton pearson outside the supreme court. still to come, live from the cnbc cambridge cyber summit, fbi deputy director andrew mccabe. his take on cyber threats facing america. that important interview next. then, some are calling it google's first real threat to the iphone. walt mossberg's take on the new google pixel, coming up. ♪ we're drowning in information. where, in all of this, is the stuff that matters? the stakes are so high, your finances, your future. how do you solve this? you don't.
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thank you for that. you are correct, andrew mccabe is with us, and we are having a discussion about cybersecurity today with all sorts of luminaries, both in the political world as well as the private sector. one of the conversations, you spoke earlier -- thank you for being with us. >> sure. >> one of the things you and others have spoken about, too, is this idea of striking a "balance," in the context of encryption. >> right. >> what does that mean and what is that balance? when you say balance, what are you talking about? >> yeah, yeah. so, it's a great question and it's one probably that you don't want me to answer or mike rogers to answer or the private sector to answer. and that is, how do we have a conversation in this country about how do you feel about the cost of privacy versus national security? there is a balance between those two. there is no world of absolute complete privacy or a world of complete national security. we've got to strike a balance between these two competing -- >> but it's been found as a black-and-white issue when it comes to the technology itself. when you talk to people in
silicon valley, whether it's tim cook or others from apple, who was involved -- >> sure. >> -- in a debate with you about encryption. >> yes. >> the idea that we open up any kind of back door, that we let you, the government, in, in any way, i have been told by the tech community undermines the ultimate security of the entire enterprise, that that's the argument that's been made. >> right. well, that certainly has been their position in the past. i think the point is, we haven't made a lot of progress by standing on opposite sides of that divide and kind of throwing absolute positions at each other. i think what we need going forward is the opportunity to come together and talk about solutions. we were innovative enough, we were smart enough to create the very technology that's giving us the opportunities. i believe that we are also smart enough and innovative enough to come up with a solution that meets a reasonable privacy concern but also meets a reasonable national security concern. >> right.
where do you think the public is on this? eamon javers and i were talking earlier this morning about the situation with yahoo! which i understand you can't talk to specifically, but we're talking about what would be a politically palatable stream of letters that the public might say, you know, that's okay with they're searching that, but it's not okay that they're searching this? and we said, well, if they were searching the words terrorism and orlando and club, would the public think that's okay? but if they were looking for clinton or trump supporters, maybe they would think the government looking for that is bad. >> right. >> where do you think the line is? >> so, again, we are, as the law enforcement entity, we're not the folks to draw that line. and of course, i won't comment on the reports that have come out about yahoo! but i can tell you that we are, in our national security efforts, engaged in a long-running process where we go before courts of law, the fisa courts or federal courts, and we present concerns exactly like that -- a particular person or a particular phone number or a particular e-mail account that
we think is being used to conduct terrorist activity or to conduct criminal activity. and those sorts of representations often form the basis of lawful orders that enable the fbi or other entities to conduct surveillance. so, the concept of looking for something specific is not new. >> final question for you. whose responsibility is it ultimately for security? i talked with a person the other day who was literally being attacked as we were talking, and they said we're not calling the fbi on this one. >> yeah, yeah. >> yet, you think to yourself, if someone is shoplifting from a store, you'd call the police! >> right, right. so, it's an unfortunate story to hear, because we are the right folks to call, along with our partners at dhs. so, the fbi are the folks to call that will come in and assist you in understanding where is that attack coming from, who's it coming from, what's been lost? and dhs, of course, performs that role of helping secure your system. so, it is a whole of government joint approach.
we have the single portal now where folks are supposed to report that information. it gets distributed to everybody that needs to know it. so, those points of contact are out there. we just need to do a better job about communicating it. >> andrew mccabe, thank you for your time. >> thank you. >> for your conversation on the debate that will continue. >> absolutely. >> as you might imagine. guys i want to mention jerry allaire of circle talking about the currencies coming up. i'll talk to him this afternoon as well. so, wanted that on your radar. >> yes, love that. my favorite topic. andrew, thank you. >> thank you. >> lots of good conversations coming out of the cyber summit in cambridge. markets are closing in around the uk and across europe, not quite as hot as our market here. the dow's up 121. let's get to seema mody back at hq. >> sara, hello. that's right, stocks in europe snapping a six-day winning streak. this talk of the european central bank tapering, whether true or not, has brought forth an active discussion as to whether europe's recovery can continue without this massive bond-buying program. just take a look at bond yields
in europe across germany, italy and spain. you're looking at yields spiking there. and even if we look at the bond-related sectors or bondlike stocks, such as utilities, you'll see there red across the screen. we're looking at them ending lower in today's trade. deutsche bank continues to be a talk of discussion, but for the embattled lender, no news is good news, rebounding 2.8%. and with the uk pound bouncing off the three-decade lows, british prime minister theresa may sounding off today about loose monetary policy in an address to the uk conservative party. listen in. >> because while monetary policy with super low interest rates and quantitative easing provided the necessary emergency medicine after the financial crash, we have to acknowledge that there have been some bad side effects. people with assets have got richer. people without them have suffered. people with mortgages have found their debts cheaper.
people with savings have found themselves poorer. a change has got to come, and we are going to deliver it. >> so, we're keeping a close eye on britain after its uk referendum vote. but keep in mind, there is another referendum coming up and that's the italian referendum on december 4th. a new poll today by euromedia released shows that the no vote is in the lead, but only by a slight margin, 52.4%-47.6%. and of course, carl, the outcome of this referendum will likely be critical to italy's leadership and the government. >> seema, thank you so much for that. seema mody back at hq. when we return, the smartphone wars are heating up. why walt mossberg says apple and samsung should be worried about google's new pixel phone, with the dow up 117. ♪ ♪ ♪
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enjoy another day in san francisco and spend more money in the neighborhood. my guests are able to extend their stay and spend more money on activities and restaurants. - the extra income that i get from airbnb has been a huge impact in my life. good morning once again, everyone. i'm sue herera and here's your "cnbc news update" at this hour. evacuations are under way in florida and south carolina to move people away from the atlantic coastline as hurricane matthew continues its trek towards the east coast. matthew bearing down on the bahamas this morning and expected to be near florida's coast by thursday evening. it is packing sustained winds of 115 miles per hour. a csx freight train derailed in a bronx, new york, rail yard. eight cars involved. there were no injuries and no reports of any hazardous
materials. csx has crews on the scene assessing the situation, but it has disrupted amtrak service on the northeast corridor. a knife-wielding man stabbed two officers in brussels in an incident that officials say could be terror-related. the assailant was shot in the leg and detained. the injuries to the officers not life-threatening. and rival motorcycle makers honda and yamaha have announced plans to partner in a bid to boost competitiveness in the small scooter sector. they will collaborate on production and development. that's the news update this hour. let's get back downtown. carl, back to you. >> thank you, sue. we'll take a live shot here of west texas, that blue origin rocket test flight taking place after about a 35-minute delay. i'll tell you one thing, the image of reusable rockets will never get old. >> there it is, lift-off. and again, it's west texas. this is the site where jeff
bez bezos' test blue apron -- excuse me, blue origin. >> maybe that's next. sending food to astronauts in outer space. we'll continue to monitor this and see if the test is successful. obviously, talk about the implications some other time. meantime, walt mossberg's column in "the verge" this week is a state of the union on major tech players and how google's news this week will impact the industry. google releases pixel, daydream and home, what can we expect going forward? walt mossberg, executive editor of "the verge" joins us now. good morning, walt. good to see you. >> great to see you! >> so, i like how you look at the competitive landscape here, walt. it seems like google took shots at apple and a.m. sung and amazon with home. who do you think has most to fear by what we saw out of google yesterday? >> well, you know, it's a great question. i think they all have different things to worry about. one caveat, i haven't tested these google products. there's a chance they could be crummy.
i don't think they probably will be. but the key thing here, as you know, is google for the first time is going into the apple model of being vertically integrated, making it all, designing the hardware, designing the software, designing the ecosystem. and apple really has not had forever, really, a strong, rich, deep-pocketed competitor who is doing what they do. and so, i would say, first of all, the obvious one is apple. i am not counting them out. they're an amazing company. they obviously have big plans for the iphone for next year and for the mac, i think, coming up, and they have tons of experience that google doesn't have in doing this, but this is a different kind of competitor than just say microsoft, which just did software or samsung, which just did hardware.
>> walt, i wonder, though, is it too late even knofor somebody w the resources of google? we're in the post-subsidy era, people will have to dish out 650 bucks for this phone. apple and samsung are spending hundreds of millions a year just on marketing behind their smartphone hardware, let alone developing the units. and then you've got the issue of inventories. they really want to churn out tens of millions of these phones a good quarter, which would make it a scale to have a good business. that's going to be hard and distribution globally is hard. is google too late? >> i don't think so. i agree with everything you just said, everything, but i don't think they're too late because, remember, the new element here -- and it applies to all these companies -- is artificial intelligence. these things are vessels for google -- what google calls the
google assistant. obviously, apple calls it siri, microsoft calls it cortana, amazon calls it alexa. these are massive efforts which we're just at the very start of to do artificial intelligence, conversation with humans. and so, it's kind of a new or second era on phones and an all new era on other kinds of devices, and they stress that quite a bit. i do want to say one other thing. apple is going to be challenged, but apple has colossal resources here. the big -- i would be very worried if i were an investor in samsung. samsung is a hardware company. they do have some software. i don't mean to insult them. they have lots of software engineers, but they don't really own a widely adopted platform in
software. they use google. now their software supplier is going whole hog into their business up against them in a huge way. and it's been a terrible month for samsung with the recall of the note 7 and the exploding batteries. and i think it could be a bad year for samsung. i mean, i don't know exactly what they're going to do, because they were the premium, and are at this moment, the premium android choice. google is now saying we've got the premium android choice. you don't need to deal with samsung. and that's a big problem. >> it's a good point, walt. we'll leave it there, especially with that activist breathing down their necks. we mentioned that with elliott and david faber covering that one. walt mossberg, always good to see you, from "the verge." >> take care. when we come back, fireworks in virginia last night at the vice presidential debate. our john harwood will join us with some highlights. but first, rick santelli, what are you watching today? >> i'm watching 10-year note
plus, sotheby's buying back stock from an outspoken activist? why? and how should other shareholders feel today? and stocks are on the run, so are rates, though. what does it mean for your money ahead of a jobs report? that's ahead on "the halftime report." see you in 15 minutes. between 40 million and 50 million people tuned in for the vice presidential debate last night. our john harwood is live in washington with all the highlights and the morning-after analysis. john. >> reporter: well, it was a good night for mike pence. he calmed the fears of a lot of republicans who were worried that this race was going south in a hurry. both candidates, mike pence and tim kaine, had strategies designed to target the top of the other ticket, but mike pence looked a little more comfortable carrying off his strategy than tim kaine did with his. tim kaine, who's a senator from virginia, repeatedly interrupted mike pence to try to get jabs about things that donald trump had said. here's a smpling.
>> senator, he's going to release his tax returns when the audits is over. >> i need to ask you about social security. >> richard nixon released tax returns when he was under audit. if you can't meet the nixon standard -- >> gentlemen, people at home can't understand either one of you when you speak over each other. i would please ask you to wait until it is that the other is finished. >> all right, we're having fun up here. >> reporter: mike pence did a good job of staying calm and unflappable in his general approach when tim kaine would quote things that donald trump had said was to respond by saying, what are you talking about? of course he didn't say that. here's an example of mike pence. >> he says ours is an insult-driven campaign? did you all just hear that? ours is an insult-driven campaign? i mean, to be honest with you, if donald trump had said all the things that you said he said in the way you said he said them, he still wouldn't have a fraction of the insults that hillary clinton leveled when she said that half of our supporters
were a basket of deplorables. she said they were irredeemable, they were not america. >> reporter: it did leave mike pence open to this video that the clinton campaign put out today, illustrating that donald trump had, in fact, said the things that mike pence said he had not said. so, we'll see how that plays out as the post debate reaction filters through the electorate, guys. >> indeed. we'll see what the ratings are like for the debate and then ratings for those who watch the post debate fallout. our john harwood in washington. meantime, let's get to the cme group and rick santelli, get "the santelli exchange." rick? >> good morning. thank you, carl. many eyes are fixed on the fixed income sovereign market for a variety of reasons, whether it's the inventories held by various central banks, whether it's the notion of sideways
congestive-type activity for august and the better part of september, all of these things as rates rise are taken into consideration as we approach the top of the rings, but it's the age-old question if you're a technician -- is it the top of the range or is it going to punch through? let's look quickly. in u.s. 10-year. the date i'm highlighting for all the charts is brexit vote day and 9/13. you'll see why in a minute. significant events give you an unvarnished view of the market, whether it's the way gold behaved on brexit day or the markets. you see that we had kind of spiky activity, lots of consolidation. so, we had a 1.75 top on brexit day, 1.73 on the 13. these are significant. and if we go through, my guess is, with this much consolidation, that's just going to give it some horsepower as position jockeying pushes it to the up side. significant, 2%. 1.90-2 is what many traders are looking at. now 10-year bund yields, also interesting. on brexit day, they were at
positive 0.9. the historic low is minus 19. this gives it added horsepower. same congestive range. so, 09 and 07 on the 13. you can clearly see anything much above that should >> whether it's gold or the fixed income. thu didn't have nearly the consolidation. i would view this more as a resistance line than pretty much right on stop of it. where do you know you're wrong? the old days we used to say plus three basis points, so if it doesn't stop at 91, i would give it a stop around 94, but the key is knowing where the other two charts are, you need to be sympatico with all of them. if you get big horsepower in the first two charts, it's going to
blow through here. what's the definition of blow through? well, we used to have the three-day rule. if you're being noing at the door of these significant resistance levels and you that i them out within three days, they have a lot more horsepower. sarah, back to you. >> all right, rick. thank you. up next, why the u.s. currency could be vulnerable to a cyber attack, and what we can do to marngs it stays safe. we are live at cnbc's cambridge cyber security summit when "squawk alley" returns in a moment.
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i'm john forte at the cambridge cyber summit talking with jeremy, ceo of circle. you deal in crypto surgeon is. a lot of people rightfully concerned about the security of the financial system. three years ago you talked about things that government needs to do to regulate this space to make it safe. how are they done? >> you know, says the treasury department issued guidelines that companies that were going to sit at the intersection of the traditional financial system, the card networks the banks, et cetera, and this new digital currency and crypto currency based model had to be regulated and follow the rules
to protect consumers and deal with financial crime, and that went into effect, and so that's affected companies like circle. we've had to be licensed by every u.s. state. we're examined by governments and tested for being compliant with being able to deal with those risks and crimes. >> now, generally when it comes to security of financial transactions, say, on my phone, i tend to feel pretty good compared to how i feel using a credit card. usually when i end up having to rye place a card, it's because of some magnetic swipe issue. when it comes to apple pay or some other system, i generally feel good. am i naive? are there concerns we should have with about those transactions? >> i do think that the existing kind of payment methods like the traditional card models, there's a lot of risks in that. you're basically giving out the keys to your bank account to everyone you do business with. every waiter, every on-line site, and they're trying to, you know, protect all that information in a mlgds like
circle we never transmit your personal information or financial information to the people you are paying. it does improve the level of security and layers of security. >> the instant, global, free, and fun. we want to make a service that works anywhere in the world, and can you use in any message environments like i-message or other places that you communicate. >> well, looking forward to that. jeremy, ceo of circle. thanks for joining us. carl, back to you. >> all right, john. thank you very much. our john forte at the cyber conference in boston. meanwhile, dow is up 1 11. we're watching some of the action on the pound. you're going to be back --
>> for closing bell. for the big finale. energy and financials are leading the charge. off the back of better economic data. services all leading up to the jobs report. we should mention a successful landing for blue origin since we were following it all hour long. pretty amazing. the fifth time. >> let's get over to wapner and "the half." we'll talk about that for the hour with steven weiss. good data today leading to a jump in stocks. pete, this is interesting. you got stocks and rates o