company. if you're a drinisrupter, you'r defining yourself against people you're competing with. you should be doing something new, fresh, and strange. >> should most people still go to college? >> probably, but they should think really hard about why they're doing it. >> thank you so much, peter. it's been a pleasure having you. >> this is fantastic. >> go buy the book. peter thiel's new book. >> "squawk on the street" is next. good wednesday morning. welcome to "squawk on the street." i'm carl quintanilla at the new york stock exchange. we have got it all this morning. a falling cpi earnings from economic bell weathers. activism at dell components. and hours away from fed's statement and press conference later this afternoon. our road map is going to go like this. investor nelson peltz calling for dupont to break itself up. >> the markets looking ahead to the fed decision today after a

100-point rally on the dow. >> fedex and general mills moving in the premarket, but in opposite directions after the shipper beat and the food company missed. >> and reviews are out for the iphone 6 and 6 plus. we're going to show you the critique and the actual phones themselves live. >> first up, activist investor nelson peltz says dupont needs to break itself into two companies. he sent a letter to the dow component's board saying the current corporate structure is destroying shareholder value. dupont says it welcomes open communication with shareholders. speaking of which, guys, peltz says stock will double in about three years if they take on his plan. >> you want to start? >> sure. i've been doing reporting on this, as you might imagine, this morning, having spoken to people close to both sides. trying to get a sense here as to what's going on a battle now into a potential proxy fight.

the entire board is up. not clear how many board seats they'll go after. 13 members of that board. in fact, interestingly, it was only after when dupont pulled guidance down earlier this summer that trian tried one last time, from what i understand, to ask for one board seat. they were rejected. that's sort of setting the stage for this battle, which many may have known was coming for some time. trian is very focused on a simple premise when you boil it down, which is simply that dupont's conglomerate structure is destroying value. they'll go through any number of things in a letter, white paper, and their press release. one of the key things they come back to is the sale of the codings business back in 2012 to carlisle. why? because it's now coming public again. they're using publicly filed information by carlisle for taking this business public

again to point at the number for 2011. a number that carlisle in the s-1 for this codings business has at $568 million but was at $339 million when originally reported to dupont. this is what trian will claim as a reflection of excessive costs at this company, both allocated and unallocated. when you take those costs out, you're left with a great deal more value. as always, there's a response to things like this. and by the way, it gets somewhat complicated to go into codings in particular and talk about -- >> you have to look at the s-1 versus the dupont numbers, allocated, unallocated. >> and contracts that make have changed. strapp stranded costs that were done away with. that's what this is going to come down to. this basic idea that you're running a conglomerate, you have costs well above what they should be. make it simpler, separate certain businesses out t and

don't give us this basic line that you've created more value from the s&p because your peer group has created a lot more value over the same time period. >> and that's very tough. they came in, in 2009 in january. the stock has outperformed. i'm going to play devil's advocate. agriculture has been tough of late, so therefore you can guide things down. >> that was the thinking coming out of the winter. the question was, what were they warning about, even after the weather turned warm. >> the answer to that, i think, is peltz has cracked in talking about the unallocated capital. it's showmanship, but the will m willment ing -- wilmington hotel. if you break it into growth, agriculture, nutrition. health and nutrition has not done as well as they thought. go back to that, to what you

talked about carlisle. why didn't they spin that off? there's big banker fees, right, when you do it the way they did it. they're spinning off the commodity. >> i buy it to a certain extent. as with all of these things, these are fairly complex transactions. i'm not willing to say it's all apples to apples, but clearly they're going to be out there speaking to shareholders. which, by the way, they have yet to do at trian. this is an example of something we've seen for a number of years, which is an enormous cap company that's being attacked. nonetheless, what they'll claim is at some point they're speaking for shareholders. they're going to be talking to those very shareholders in the weeks and months to come as we head towards potential proxy fight here. they're going to be talking about this basic theme. you're going to be better if you

operate these businesses and separate out businesses and get rid of what they claim is a bloated cost structure. what are they talking abouting? holding company costs of $2 billion to $4 billion. >> big window. >> which is it, guys? >> at the same time, the sustenance of it, it's too big. now, sandy cutler, the lead director, i know had meetings with them. they felt sandy cutler didn't represent the company as well. coleman, the ceo, is digging in her heels. did they ask for too much versus what they've done with heinz, with wendy's, with kraft? i don't think so. >> you're asking for one seat. it's not a lot. but a board may very well be committed to their own vision of what the company is doing and capable of doing. they'll tell you -- i mean, we've cut a lot of costs. we continue to. she's going to take another $1

billion out of costs. >> this is going to come out wrong, but do you think it's a coincidence he's gone after coleman, rosenfelt, and nuye? >> i haven't thought of that. it's a touched on point. i think he goes after people who have underperformed. there was definitely underperformance in kraft. that made a lot of sense. ppg, i know chuck bunch knows nelson very well from the heinz. chuck bunch is a brilliant executive who's led ppg down the path that i think nelson peltz would like very much for dupont to do. the thing that really stuck in my head when i look at dupont, there was a november analyst meeting when they were talking about pioneer hybrid, okay. >> when was this, last november? >> i know i had ms. coleman on "mad money" to talk about science.

he wasn't allowed to go to the meeting. now, when you speak to dow chemical, who's dealing with dan lobe, who's a caged tiger, members will tell you over and over, he's a shareholder. got to spend a lot of time with him, welcome him. i think peltz is saying, when you welcome me, i bring out value. when you don't welcome me, i don't. >> interesting. by the way, it's interesting you mention dow, which has been a poorer performer than dupont. and which i would argue is conceivably going to see a proxy fight in its future. >> do you really think so? even after all the things -- >> i've had some conversations with some large shareholders. i i think it's a distinct possibility dow will be going down the same road. by the way, dow putting up a higher growth fact sheet this morning. growth of more than 8%. operating margin improvement up 65% from '08 to 2013.

again, as you pointed out, created a lot more value than the s&p 500. 220% versus 144%. they're going to come back to this, jim, many times in the fight to come. >> this stock is where it was when andrew sorkin interviewed him. this is where it jumped to when nelson peltz talked about paint. in the report, they're talking about how this thing has done quite poorly once dupont brought it in. yet, that was the health and wellness. that was supposed to be the noncyclical portion. i think this is a great american company that's going to be under siege for a long time given the fact that trian is laying out a case that says they shrink to grow, which i know we can make fun of, but that's what this is about. then you would be able to break this company up. how do you get from 60 to 120? a series of acquirings of the dupont pieces. basically, dupont should disappear. >> all right. let's quickly move on to fedex. better than expected quarterly results. higher volume in express and ground. also, general mills q-1 misses

on the top and bottom line, even as they try to cut costs. fdx is going to institute a price increase in january. u.s. volume up five. pretty good number, even though bought back a lot of stock in q-1. >> they nailed it, okay. fedex operating margin. remember when we talked about the need to restructure and they weren't getting enough out of the company? fred smith, listen. this is what you want to hear if you're nelson peltz at trian. operating margins go from 7.2% to 8.5%. that's gigantic. how about the numbers for fedex the express segment? beautiful. 4.1% to 5.4%. the priority business is on fire. when you remember when they reported the last time, people were very concerned the priority, which is like overnight, immediate, that showed a slowing in the united states. 13% increase in priority. this was a beautiful quarter. it is what executives want to see. this is a major restructuring

from when you and i laughed at each other. they announced it the second time. wait a second, how many times do you have to preannounce? they were setting the stage for a remarkable comeback. beautiful quarter. >> and their guidance backing the full year absent any impact from fuel, which has we know has gone from 100-plus back to the low 90s. >> how interesting they raise rates after close. people want to read a release that drives the stock up. the stock has been going up. i'm sure there's someone saying, listen, all this was anticipated. i have to tell you, ground business up 8%, i was not anticipating that. i was not anticipating the 4.9% rate increase. i was not at all anticipating the remarkable margins and the growth here. >> remarkable. >> remarkable. david, do you know how hard it is to move your margins from 7.2 to 8.5? that's why i say dupont -- you incident get ppg, how they raise the margins. remember, that is the solution that trian was looking for. a ppg, get rid of the cyclical

but make money for the shareholders and explode the margins. >> right. although, fedex is not doing as much r and d as dupont. >> it's not about science. it's about logistics. >> that's the other guy. >> planes are expensive. >> planes are a fortune. but when you come out and say you're going to get more money out of sales and then you do it, hallelujah. well done. >> more than a week after its unveiling, reviews of the new apple phone are in. wait until you hear what tech watchers are saying. take one more look at the premarket as we await the fed statement in just a few hours. more "squawk on the street" from post nine in a moment. you probably know xerox as the company that's all about printing. but did you know we also support hospitals using electronic health records for more than 30 million patients? or that our software helps over 20 million smartphone users remotely configure e-mail every month? or how about processing

nearly $5 billion in electronic toll payments a year? in fact, today's xerox is working in surprising ways to help companies simplify the way work gets done and life gets lived. with xerox, you're ready for real business. chocolate, soybeans, thisand apricots. made with what kind of chef comes up with this? a chef working with ibm watson, on the cloud. ingredients are just data. watson turns big data into new ideas. and not just for food. watson is working with doctors and bankers to help transform their industries. today there's a new way to work. and it's made with ibm.

welcome back. i'm ayman javers in washington where attorney general eric holder is getting set to call for an increased whistleblower payouts for people who reveal financial crimes to the department of justice. nbc's pete williams says eric holder is going to call for an increase to those whistleblower payments, which are capped at $1.6 million. holder will make the argument that's simply not enough money

to get a wall street executive to give up his or her career in exchange for that amount of money. they might need to raise that cap significantly. holder is also going to say that he wants the fbi to be allowed to hire more agents. since september 11th, it's focused entirely on counterterrorism, or more on counterterrorism. he's also going to say that department is conducting active investigations right now that are focused on potential illegal conduct by individuals at major financial institutions. carl? >> yet another piece of news we'll wait for this afternoon. thanks a lot. it's been more than a week since apple unveiled the iphone 6 and 6 plus. presales topped 4 million in the first 24 hours. now the reviews are coming in. here's what walt mossberg said. the iphone 6 is a great upgrade for current iphone owners or anyone really. it's my recommendation for the best smartphone you can buy.

tim stevens at cnet, the iphone 6 plus is too big for everyone to love it, but it's apple's best phone this year. "usa today" saying go big, you're not going to regret it. hard to find a bad review today in all honesty. >> i went through the "usa today." that's often who i've been relying on. i feel very strongly. you got to get it. people obviously got to get it. i think this whole focus on china yesterday was a dodge. it was a dodge. it was the type of thing you do if you want the stock lower. once again, i reiterate that tim cook has conquered china. so you put out that -- they're in 120 countries. you want the stock to go down, you spread the china news. you want the stock to go up, go buy an iphone. this is obvious. talk about more advertisement. i have to tell you, they're critical of the watch. they make components for wearables. they're saying the wearable

numbers they're hearing means that you have to have one on your right and left arms. two watches. >> you got to have two? the numbers they're hearing, meaning the expectations? >> yeah, that everybody -- that wearables are really a jump ball. we don't know if that category is going to take off. but the iphone, it's taken off. i just question wearable because that was the second part of the presentation. remember, the stock went down during the second part. there was also word they take the considerable out for the fed, which we hadn't even got to. i do believe the apple negativity was about people who needed apple down. >> all right. when we come back, we'll get cramer's mad dash. we'll count down to the opening bell. we'll talk about the fed and the action yesterday. we'll get to the analyst numbers and notes we have not gotten to. take a look at the futures. we had a high on the dow yesterday. we had one on september 4th. we've not had a closing high since july 16th. >> transport people want to see confirmation. you're absolutely right.

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♪ all right. we have about 8 1/2 minutes before the opening bell. let's get to more earnings and disappointments. start off with general mills. >> this is a shocker, even though we knew things were weak. by the way, i want to say up front, because of the yield, this stock will not get killed as badly as it should. but i regard this as bad.

u.s. retail sales down 4.5%. yet, they're still doing all the things people get angry about when saying things about corporate america. ken is a great corporate executive. >> nobody's eating cereal anymore. don't worry. we're okay. >> natural and organic. >> how often are they going to keep telling us everybody should keep eating cereal when they're not? >> they shouldn't have just bought annie's, which is a little company that's not going to move the needle as much. this is the twilight of these kinds of consumer processed goods companies. raw costs aren't that good either. i will point out again, the last time they told you things weren't so good, last time they said some negative things, stock got down to here and bounced. will it bounce again? if treasuries continue to do their course today, which i'm kind of not expecting. they're going to say, you know

what, general mills is a bond. and i like the bond. >> the yield will hold that stock up, even though it appears the underlying business fundamentals are -- >> faltering. people like yield. they like dividend. that's why i think sony may be going down. >> let's keep an you on that. of course, we talked about dan lobe earlier with dow chemical. i was talking about other shareholders and wondering outloud wether or not we're going to see a proxy fight. but here's another one. oh, man, he's in there. he wanted them to spin off. that's not the problem, as we know. the problem is a lot deeper than expected losses. it would appear in wireless phones. >> yes, they had to write off some things. david, is this a question of management itself? is management just not as strong as we think? >> maybe not. some people are wondering that as well. >> well -- >> even laughing perhaps. >> this is a great company.

by the way, if we put a chart against apple, this is the company that apple destroyed. i remember when sony destroyed consumer products in this country. apple destroyed these guys. samsung is still reeling from apple. i continue to believe apple should be owned. sony i have no feel for other than fact they seem to be a bunch of -- a lot of people feel like i look like bozo the clown. now, that's not true because i keep my hair short. >> that's not true in any way shape or form. interesting story today in "the new york times." cds are still huge in japan. reflective of nothing per se except sony of course. >> cds in japan, i still want -- what is with -- >> and downloads are down in that country. it's hard not to innovate when your domestic population is thinking it's 1997. >> you tell me it's a lost millennium. >> i'm not sure what to think of that, but i thought it was interesting. >> by the way, alibaba. i had to say it before the bell.

>> that's a rule. we just made it. we got a lot more. of course, we'll talk about ali baa pa. we'll talk about sony, fedex, dupont. >> how about letter x? >> on letter x. >> back after this.

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with thinkorswim from td ameritrade. you're watching cnn i kn iik on the street" live from the financial world. so much going on as jim has alluded to. earnings at fedex. fed meeting this afternoon. cpi sub-1% for the 74th straight month. that's the longest streak since 2005. actually, the first decline in month-on-month cpi since 2010. >> a couple months ago, janet yellen said that spike up was noise. everyone laughed at her. oh, we have a new lightweight fed chief. really, one of the great calls.

you could have shorted the inflation rate right there. you would have nailed it. why is this fed chair not getting the respect of the hedge funds when it's quite obvious that the actual guys who trade bonds, not hedge funds, feel pretty good about her? >> so we had the headline yesterday, the considerable time stays. what do you think happens this afternoon? >> i was hoping she would get away from this whole considerable time and not considerable time. business round table said there's going to be a cutback in spending. if tomorrow's employment number is weak, why is she going to say it's accelerated? it doesn't matter what i think. i just think the inflation numbers are good, and i worry about europe and china. look at china last night. do you know how important that china 81 billion infusion was to the banks? do you know they have an equivalent of fed funds rate? >> 500 billion yuan. >> are they panicking?

maybe. china is not doing well. >> no. >> that's important. >> yeah, it's important to every single mineral company, really. >> well, we already talked about mining and how weak it is. >> and coal. uh-oh. coal is doing well. >> there's the bell. a look at the s&p down here at the big board this morning. civitas solutions over at the bell today. speaking of rates, linar did come out and beat by 9 cents. >> i love that. >> it's going to be a two-month high. >> i love that quarter. you're starting to get a little differentiation among home builders. the ceo has really come on. you're talking about a home builder that's very close to its high despite the fact everyone was saying rates were killing them. he's killing it, and he's done a great job. the orders are good. by the way, once again, the

margins are good on the orders. so you're getting terrific leverage. >> by the way, lennar, the first home builder that essentially reports for the summer months when we all went through a big gut check on housing. >> yes. now again, i'm saying that everyone likes to trade these things as if it's just one big xhb. the etfs are not the play to play housing. one of the best is what stewart miller has put together. >> kohl's is going to hire 67,000 seasonal workers for holiday. last year was 50,000. you saw u.p.s. yesterday. 95,000. you feeling good about employment? >> i feel good about kohl's. what makes me feel good about kohl's? pvh. >> why? >> because kohl's is having a renaissance. it's a resurgence. i cannot believe how aggressive they've become. i think they gained from targets. if you go to kohl's, you'll find great private label bargains.

i find that kohl's is back. it was a great american growth company. they are putting up some good numbers. it's a buy, even up here. remember, it's still in the 50s forever. kohl's. >> we haven't mentioned microsoft's div hike, 11%. the smallest increase since 2009. a couple new board members over there. >> a little disappointing. you know, i come back and say, well, wait a second, this is a company that i regard as a breakup company. they only have a 40% payout. what are they doing with the money besides buying the bad part of nokia? >> it gives them a lot of opportunities to do bad m&a. >> it's true. >> they'when have they done a d people said -- well, skype. >> skype they had monetized. >> nokia, clearly not. >> no, not a good deal. oh, yes, when they bought the

clippers. >> no, that wasn't them. >> that's right. >> that was only 2 billion. >> he likes to overpay for things. you know, he can buy the vikings tonight. >> you never know what headline could cross in the middle of the night. >> geez, that was an amazing reversal. the running back was taken immediately in our league. >> a couple stories that hit after the ball yesterday, one is rack space. it's been for sale for quite some time. morgan stanley looking at alternatives. coming out after the bell yesterday saying, we're done. they were close to a deal. what i hear is they tried to retrade the deal. they didn't get there. that's all you need to know. they didn't get there, and the stock is suffering as a result. >> no buyback. maybe a belief this really is a faux cloud play, i think. i'm putting it in the category

of down five. i'm still not asking to buy the stock. don't buy it. >> then you've got auxillium pharmaceuticals. a little over a $1 billion market. well, a little more than that, given it's up 40%. endo, which is already an inverted company. remember when i did the story? you had a u.s. company, a canadian company that end the up in ireland. that was one of my favorites. endo's already inverted. auxillium trying. as for breaking out of that other deal, you know, they put a poison pill in. not sure how that helps them. at this point, it sort of is, all right, what are these guys going to be able to put on the table that's going to get everyone to agree? >> include the notion there's

great synergy. urology, testosterone. endo has been creative. >> and they now benefit from a lower tax rate and from all the other attributes of being a company that's not incourtincor in the u.s. and not under a u.s. tax regime. that puts them in anned advantageous position in terms of being able to get costs out. they may take auxillium off the table. >> if they were to move to scotland and we got a yes vote, what would happen? >> not sure. not sure about that. i know a lot of people are weighing in on that. >> president clinton weighed in. >> they got oil, they got nukes. >> maybe they have 16 billion barrels off the coast. staying focused on that, only if everyone commits now on what happens. you would have a black swan so to speak. >> sure. >> how about the steels? have you seen the steels?

it's remarkable. letter x, u.s. steel. >> steel and housing this morning. >> it's old economy comeback. steel has done it a little bit by saying, listen, we're not going to spend all this money on cap x. we're going to make more money. now this stock has been going up day after day after day. it's not like suddenly you woke up and said, wow, look at u.s. steel. but u.s. steel has done a lot of right things. i visited their really beautiful new facility in louisiana. new core nucor is doing a lot of right things. very well done. >> keep your eye on under armour. poised to take market share, especially in women's and footwear. they think market cap can go 2x. >> well, kevin plank, who's the founder, has been going around telling people, look, it is going to be a much bigger company. and a lot of people thought it

was value. i agree with the 2x. it wouldn't take ma muthat much. china is on fire for them. if people went to the soho store, they would see it's a women's fashion play. we remember why he created that fabric. when he was at the university of maryland, he was the self-proclaimed world's most sweatiest man. he needed to develop a fabric that made it so he didn't sweat as much because he wanted to be a chick magnet. he wanted to be more appealing. >> did it work? the chick magnet part. >> i don't know. >> i'm sure he does very well. >> we're going to have to ask. >> the money helps. >> no. >> s&p is hanging on to 2002. bob is back on the floor. >> good morning, guys. happy to be back here. nice day here. bond yields dropped on that lower than expected cpi. i want to emphasize what jim was saying about china. you've been watching what's going on with the shanghai composite. it's a big leader globally.

it's been terrible for years now. but it's up 4% this month. i think it's up 8% or 9% on the year. good numbers here. of course, they're up on that announcement by people's bank of china injected $81 billion into the five largest chinese banks. that's a big mover globely. that's been helping us as well. we've had things here helping as well. home builders having a great morning. i was very impressed with the lennar numbers. why? because other guys had some lousy comments not so long ago. orders up 23%. that's huge. do you remember the last two guys who reported, jim? they were down. their orders were down 6%. so that's a huge reversal. i'll tell you what did that. they're building a lot of new communities, particularly in texas. texas had the hottest home building community in the united states. they have a very strong presence. they're starting to get some by fur kags. the northeast is doing okay but not great. texas is on fire. that's the kind of bifurcation a

company like lennar is taking advantage of. you see that drop? ju -- in july? that was dr horton. they said, oh, we might increase the incentives just to drive sales. you know what that did to the stock? look at that drop. the stock dropped 10% on that day. all the home builders completely lost their momentum because everybody was afraid. oh, now all the other companies are going to have incentives to drive sales. the margins are going to fall apart, blah, blah, blah. well, guess what? lennar is now reversing that. they've said nothing at all about increasing incentives today. the conference call is at 11:00. everybody is going to watch for that. but the betting is they're not going to talk about increased incentives at all. what does this mean? lennar may reverse a lot of the negative sentiment that's built up around the home builders because exactly what was being said by d.r. hor toton earlier. i'm pretty optimistic they're not going to talk about dramatically increasing

incentives. i think they saw exactly what happened to d.r. horton. i'll say one thing simple about fed fedex. historic highs. they're getting away with those price increases. that's an historic high for them. we have a little crowd around me, if you'll notice. two days ahead of the alibaba ipo. civitas priced 1.7 million shares at $17. the stock did just open at $17. again, this is a special needs provider. as for alibaba, opinions are all over the place about how this is going to trade. it's very interesting about some of the comments. ipo boutique, an ipo commentary company, they said this morning they believe the top 50 institutional accounts got the ipo. if that's the case, there's a lot of small accounts that got little or nothing and an awful lot of retail demand that's going to be out there.

i don't know. opinions are all over the place. i wouldn't be surprised if something like that happened. so right now there's all sorts of speculation. of course, we're going to be here behind the scenes for the entire time it takes for this to open on friday morning. we'll give you another historic look, similar to what we did with twitter, on how an ipo opens, how a book is built. we'll walk you through the entire process up to and including the very minute that alibaba goes public. that's friday. back to you. >> bob, make sure you take care of your voice there. rest up a little. got to be able to hear him. hey, what would a day be without mentioning family dollar or allergan? family dollar, they rejected that tender offer from dollar general. remember, $80 a share doesn't mean much of anything in the sense of changing the landscape at this point. the tender offer moves ahead.

most importantly, dollar general will be able to potentially at least get a temperature read on the anti-trust regulators and how much it really will take for them. then therefore be in a better position to decide what they're willing to do in terms of store divestitures. they're at 1500, if you recall. that has been rejected by family dollar as not being enough. they're going to want something in excess of 2500 when you look at the overlaps. direct overlap, about 6,000 stores within three miles of each other. then you go through all the different numbers. this morning, this guy at trian is a busy guy. he's on the board of family dollar. he's also dealing with the dupont thing with of course nelson peltz. this morning, you know, i pointed to his quotes before. i'll do it again here in the release that family dollar put out. he says, dollar general's misrepresented, that its tender offer was a prerequisite to make hsr anti-trust filing.

this has to do with -- they said, hey, go to a tender so we can do the anti-trust filing. dollar general knows they could have filed with any trust regulators. dollar general's repeatedly stated any trust is not a risk if they have put forth proposals that require share holders to bear the ultimate risk. that's where all this comes down to. it has nothing to do with $80 a share, which clearly is much better than $74.50 with dollar tree. of course, could you get a vote on the dollar tree deal with this out there? a lot of them say you could. but we'll see. the key is what will dollar general be willing to do in terms of anti-trust. and of course to remind you, you can put a tender offer out there, you just can't close it. it's the closing that's important. you have to get anti-trust approval to do that. >> missing piece of puzzle here. maybe you can explain it. why is dollar gen not going down at all despite when they said they're going to buy it? >> because their shareholder base believes they're going to prevail. >> well, i'm not going to go against that.

this stock is telling you this deal is going to happen. and this is all kabooki. but sometimes people are wrong. >> you can't pay for that kind of insight. >> i save them for key moments. >> did you go to college to get stupid? >> stupid is no way to go through life, son. hey, oh, i get this one. let's go to rick santelli at the cme group in chicago. rick? >> well, good morning. if you look at an intraday and two day of tens, you can see that we've stopped several sessions before we get into that 260 zone. yesterday and today may be one of the dynamics that helped that along were the notion we didn't have a lot of building pricing pressures, whether it was ppi yesterday or cpi today. if you open the chart up to june 1st, very enlightening. we basically jumped about 25 basis points since the end of august in terms of yields.

if you contrast that with our partner overseas, yes, their yields jumped a bit, but the distance continues to widen. as a matter of fact, if you open the chart comparing boone yields to ten-year note yields, we have to go back to mid-1999 to see the last time we had over 150 basis points' distance, meaning they're at 106. 106 you have to add 151 basis points to get to our yield. the relative value trade obviously still quite healthy. when it comes to foreign exchange, there was a time all we talked about was the weakness in europe, the weakness in southern europe. if you look at a chart, it certainly has stabilized and volatility has gone low in this trade. where has the new foreign exchange trade been? the dollar-yen. the gdp in japan had that big reversal due to taxation. there's a lot of issues in front of the japanese economy right now, but there's no denying that

in this instance, it is the big trade in foreign exchange. the dollar is closing at levels against the yen we haven't seen. look at this chart going back to the summer of 2008. carl, back to you. >> all right, rick. thank you so much. when we come back, alibaba's road show rolls on. we're only two days away from that big wall street debut. coming up, more on what you need to know about that massive ipo. later on "squawk alley," 11:00 a.m. eastern, john zimmer, co-founder of lift. alibaba is betting on his ride sharing company. we have the industrials at record highs. and the fed meeting just hours away. don't go away.

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they will price tomorrow night. for friday morning. that's going to be very exciting. bob posani touched on this as well. starting to get some sense of allocations. remember, that has begun. what we all seem to be hearing is you're going to be getting some very large allocations to the large strategic owners of the stock. sovereign funds, for example. i don't think we talk about them enough. they're such enormous players. norway, singapore, china. you name it. they are enormous. of course, norway is the largest. they're going to be taking -- i mean, i'm hearing perhaps billion-dollar stakes. and they're not going to be selling. so you know you're planning that stock there. it's just going to be there. you want to create some liquidity. all these hedge funds put in for half a billion or a billion.

they may -- not shut out, but given very small allocations. some hedge funds out there hold things for a long time. >> you understand why i was saying so many stocks shouldn't be selling off because of people who really do hold great growth stocks. i'm talking about the fidelities of the world. the allocations were big. they got to take it down. maybe they buy more in the aftermarket. get 80% of the allocation. they come in and buy 20%. use that range to top to 75, 76, which i think is sanity. this shock should open 75, 76 if they want sanity. >> the journal today talks to some individual investors about would you buy at the open? one guy says i would buy at any price to put my kids through college. >> 100 is the number you don't want to see. at 100, i'm going to say, listen, it's too ludicrous. somewhat disparaging comments

about twitter. i did not like those comments. i'll be very honest. >> $5 a share for alibaba by 2018, some say. throw a 20 multiple on it. i know it's three years out. you get to $100. >> let it creep up there, not let it open there, please. >> they'll say, hey, that's 10 cents trading. >> don't groupon me. don't you do that. don't web van me. >> we'll get to trading with jim in just a moment. "squawk on the street" will be right back. nted program that partners businesses with universities across the state. for better access to talent, cutting edge research,

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time for cramer and stop trading. >> people are all talking about the transports. i don't blame them. i said that fedex quarter was a model. you have to watch a little story that came out about a company called greenbriar. they had 10,300 orders for rail cars, which is just monumental

in the fourth quarter alone. that means union pacific. that means norfolk southern. what does it really mean? it means stick is to keystone. you've got to get oil to the gulf where the refineries are. the way you have to do it is through oil tanks. the way to get oil tanks is to put orders with trinity and greenbrier. it's a great manufacturing story. >> also, zicon enterprises. >> yes, indeed. thank you. saw it coming. >> buffett too. kansas city southern. >> kansas city southern brings those cars in every day. three train loads go through the town i have a house in. that's because it's very close to where many of the plants are. remember, oil is shipped by rail because pipelines are hard to get through because of -- unless you're in texas and louisiana where they're rolling down a pipeline right through your school. >> very true. what's on "mad" tonight?

>> we have isis. thank you, mr. president, for calling isis, isil. isis pharmaceutical, a new medication for cholesterol. it's amazing. t.j. rodgers makes every single piece -- when you hear things on the internet, thing of cypress. but they have a division within them that could be worth a great deal of money. t.j. has big yield. he's a tough guy. whenever i have him on, i spend three hours studying and still get blown away. i apologize to him. i'm sorry i didn't study harder. >> shame on you. see you tonight, jim. >> thank you, guys. >> home builder sentiment after the break. so ally bank really has no hidden fees on savings accounts?

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♪ the all-new c-class. at the very touch point of performance and innovation. ♪ welcome back to "squawk on the street." breaking news from the builders. home builders confidence surges four points in september to 59. that's the highest level since november of 2005 and the fourth straight consecutive jump in home builder sentiment. we were back at 45 in may. so it's been quite a summer. home builder sentiment 50 is line between positive and negative, so we're well into the

positive range. of the three component indexes, sales is rise. buyer traffic also up five points to 47. and future sales, expectations rose two points to 67. regionally, we saw gains in all regions of the nation. the best for confidence was in the midwest. the worst was in the northeast. the home builders say they're seeing improved buyer traffic. a lot more people through the models. but the biggest concern is the younger, first-time home buyers, the millennials. they're concerned they're still not seeing those coming through the models. sarah? >> all right. better confidence follows those better results from lennar. the federal reserve will deliver its decision on interest rates in a few hours followed by chair yellen's widely anticipated press conference. steve leesman is live in washington for all of the excitement with what we can expect. steve, what's the biggest wild card going into today? is it the statement? >> i think the statement is a big wild card. this is a potentially new stage for the federal reserve. maybe they take baby steps.

we're going from the clarity of qe ending in october, barring some major event. it'll end in october. then the uncertainty over the interest rate guidance. maybe we start to get some of that today. that's why one of the big debates is in the statement here and the things you're watching for are, does the fed drop that considerable time language from when qe ends to when it would hike interest rates, or forecasted it would hike interest rates for the first time in eight years. the issue of significant labor market underutilization. do they drop the word significant? most people think it stays. we're going to get the first look at the 2017 economic forecast and their rate forecast. how does it compare with the long run? do they get to that 375 long run in 2017? that's something we've been talking quite a bit about. the markets pricing underneath where the fed is on interest rates. on that considerable time debate, we did a quick survey thanks to dot-com who put this together. jpmorgan, bank of america, deutsch bank, hfe basically

saying it will be dropped by goldman, barclays, and rbc say it remains. pretty much a split decision on that. we don't have to wait too long to actually get it. here's what our fed survey says. 41% thought it would be dropped of the 37 respondents. 59% think it happens sometime after this meeting. so there's quite a bit to figure out. here's that issue of the fed funds rate path. the market is below where the fed is at each of the critical points. 2015, 2016 and in the long run. we got the cpi data today, something for the fed to chew on. it was minus 0.2 on the headline and unchanged on the core. so the key right there is how does this factor into the federal reserve? bank of tokyo mitsubishi has a good comment. it's all energy. in other words, the entire decline was energy. but we can hear the doves on the fomc already. why take a risk on snuffing out the recovery by telling the markets we're inching closer to

raising interest rates? what's the hurry? indeed, these inflation numbers we have today do give the fed and the doves, guys, some room to take their time and figure out what the best course is for raising rates in the next year ahead. simon? >> okay. steve, remind us of the timing. statement at 2:00, news conference 2:30 eastern. >> we'll also get those projections at 2:00 straight up as well, simon. and the press conference goes on for about an hour. >> all right. busy day for you, steve. thank you very much. let's keep up the conversation on the fed and the markets. u.s. stocks higher ahead of the fed decision. of course, we got that late rally yesterday. let's bring many michelle meyer. david speaker also joins us, senior vice president and senior portfolio specialist with the westward funds. both of you, good morning. david, i guess one thing is for sure. whatever the technical change in the language that we get in the statement at 2:00, come 2:30,

janet yellen will be standing there being as dovish as anything, telling us it doesn't really matter, rates aren't rising any time sooner than they were yesterday. correct? >> well, yeah, the thing we need to recognize, simon, is that when the rate hikes begin is not nearly as important as the pace and the end point. so whether they begin in march, april, may, the real point is what's that end point? is it 350, 375? does it take until 2020? those are the main things that the market is going to be focused on. >> and that's very important. because what you're referencing there, david, is the fact we're going to get obviously a new version of the dots where the members of the fed think interest rates will go. but also we'll get 2017 for the fist time. so we might get an idea of what they call the terminal rate, the rate at which we'll top out at. >> that's exactly right. that terminal rate is really going to be critical. importantly, we need to remember

that the market's got to adjust. we have to adjust from a period where stock prices have been driven by fed policy to one where stock prices are going to be driven by economic growth. that's going to create some volatility. >> michelle, it's your job to get in the thick of whatever language they use today. what did you think of the hilton rath blog yesterday, which moved the market? we close up 100 points on the dow. it's his view the fed will keep the words considerable time in the statement but will qualify them for fear of upsetting the markets. >> obviously, it's a close call, as steve said before. the market is pretty split on whether or not they'll change it. we're in the camp that they are likely to tweak the language. mostly because of the fact the phrase time is making a number of fed officials uncomfortable. it's perceived calendar guidance. the fed is set to end qe in october, at which point they should be thinking about moving the emphasis from the balance

sheet in the statement to forward guidance, the interest rate policy. perhaps this is an opportunity to shorten, to simplify the statement. along with that is also to make the forward guidance a bit more qualitative and data dependent. >> michelle, just to put it in a global perspective here, we're just learning china is pumping how much more? >> $83 billion. >> into its economy. the ecb and bank of japan are also in stimulus mode. does it matter that the fed is increasingly sort of going at it alone beyond just the currency market? >> well, i think you have to consider that the central banks are all fighting slightly different scenarios in their own economies. the fed is fighting an environment where we're further along in the healing process. unemployment rate is coming down. you can argue there's slack in the labor market, but we're making progress. inflation, albeit today's number was weak, should be turning back

to the dual mandate. for the fed, they're at a different stage. they're deciding at what point do we normalize, what point do we exit? they are taking into account what's happening globally. the fact that other central banks are adding liquidity and adding accommodation, i think in a sense suggests maybe the fed doesn't have to be as aggressive because the ecb, for example, they're looking to fight deflation risks. >> we will leave it there. big day for you guys. nothing as important as a fed day. michelle meyer, david speaker, thank you for your time. >> thank you. meantime, the alibaba road show hitting london today, days before it goes public. seema mody is there with the latest. >> that's right. it's here in london, the financial hub of europe, where investors from london, paris, barcelona, and berlin are in town meeting with alibaba's top management to learn more about the chinese e-commerce giant.

sources inside this building right now say the focus of these meetings not only on alibaba's growth prospects in china but its ability to expand internationally and at some point compete in markets like the u.s. as well as europe. another talking point at these meetings that we're hearing about, valuation. alibaba is deliberately pricing below market expectations to leave room to run. as appetite grows for the ipo, we're told plenty of hedge funds based here in europe are trying to get a piece of ipo, but it's not certain if they'll be allocated shares. the onus really on institutional sales. book runners fighting for their clients to get them an allocation. this comes during a time when europe is facing its own economic slowdown. sluggish growth across the region. one investor, in fact, who was coming into this meeting said, alibaba, a breath of fresh air. carl, sending it back to you. >> seema mody watching alibaba

for us today. when we come back, the new iphones are here. we're going to get our first look at the 6 and the 6 plus. cnet's scott stein will give us his review when "squawk on the street" comes right back. (vo) watching. waiting. for that moment, where right place meets right time. and when i find it- i go for it. (announcer) at scottrade, we share your passion for trading. that's why we give you the edge, with innovative charting and trading features, plus powerful mobile apps so you're

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welcome back to "squawk on the street." we're watching shares of gilead sciences. news that its trials to treat pancreatic cancer failed. a downward trend over the last

several months in the use of the company's infamous $1,000 a pill hepatitis c treatment. shares down on the day by about 0.5%. another biotech you want to pay attention to. >> absolutely. thanks a lot, dom. consumers will have to wait until friday to get their hands on the new iphone 6 and 6 plus, but we obviously could not wait that long. here with apple's two new phones is scott stein, senior editor at cnet. >> good to see you. >> thanks for bringing these in. what's the headline here? >> you have to decide. usually you say, oh, this is the phone, get that phone. now they have these two models, and they're both bigger screens. so which one do you go with? which one fits better in your hand? >> this is not just a bigger screen. this is humongous. >> that's top of the line in terms of sizes. that's like a samsung note 3. really, really big. for post people, i think you go with the 6. >> we're showing the bigger one is one sarah's got.

>> i have the bigger one and very small hands. >> that's the one that controversially may be too big for people. >> it might be. in the tech world and people that i know that are prousers, they're all flocking to that. they think that's great. they may be used to it, have grown into a larger screen phone. for any iphone user, i think that will be pretty shocking. >> this is the 6 i've got. >> i wonder if it's a male/female thing. if you have a handbag, you can take the 6 plus. if you're a bloke, you'd be hard pressed to get that into the back pocket of your jeans. >> it would be hard. i have deep pockets. >> we know. >> but some people might have a hard time. it is something you're going to want to stow away differently. that's much more hand friendly. >> how about battery, camera, speed? >> yeah, so speed is the same. they're running the same processor, same r.a.m. >> even on wi-fi? >> even on wi-fi. a lot of the same tweaks and features and connections. battery life is a few hours better on the plus. it's not a huge leap. you're not talking about, oh,

you're getting two days instead of one. although, some people anecdotally have gotten there. talk time is better. i would have liked to see more like the macbook air last year where you get this dramatically big battery life leap. that's hard to achieve. the other difference is optical image stabilization. in the camera area, that's important for low light, but i think using them side by side, you're probably not going to notice that unless you're a serious photographer on the phone. >> i mean, i hate to say it, but they feel beautiful. the rounded edges, they're thinner, solid. what is the chief competitor to the plus? the samsung galaxy? >> sure, samsung's lines of phones. >> how does it compare? this one is bigger. apple has the home button at the bottom, doesn't it? >> it's physically bigger. they have more bezel space. if you're comparing, a lot more android phones go more edge to edge on the screen. the 6 is a little bit bigger. the materials are very sleek and wonderfully done here. few android phones take that material attention. you know, htc1 may be in that

territory. so they feel great. they're very thin. >> do you need -- it's a new sapphire coating on it. >> no sapphire on this. it's a polished curved glass. . >> so do i still need to have a protector over it? despite the fact it feels good, i'm going to cover that up. >> we haven't done a lot of intensive drop testing yet. i'd feel nervous. it's thin. it feels very solid, but i feel like i want to coddle it. you want to put that right into a leather case. >> i keep thinking of peter thiel who was on "squawk box" this morning talking about apple. he was saying, look, this is $150 billion product. that's actually the problem for apple. these new i-watches, new mobile pays. they're not going to move the needle enough when it comes to diversifying apple's revenue base. so are these enough to keep that going? >> well, i think they're looking at this as, you know, it's a commodity product. it's like a laptop. they want to deliver stuff that you're going to want and that you're going to need. >> i would disagree with sarah because i think apple comes from the point of view that the very

small changes in the product are enough to move the needle for the consumer. they don't have to have a new huge product launch. >> but do they have to have something outside of the iphone when we're saturated in phones? >> apple pay is the biggest technology. that's not launching until october. these are the first devices that use apple pay. that alone could be the biggest factor in these phones. i think a lot of people not into tech are interested in that idea. maybe it's the apple watch that's exploring new technologies that might go into this. that has a four sensitive screen on watch. that would be cool to see. >> people are saying the watch at high end could cost thaousans of dollars. >> the fact they have different materials and lines, they're trying to create this like collector shoe experience. >> and it's 14 karat gold. >> not just plated. >> they may have a limited

edition version. i think they're going to try to create one that most people can afford, but you'll have ones unlike the iphone that will go into the stratosphere as far as what you want to pay. >> i'm going through your calendar now. >> you can tweet as me. it's dangerous. >> scott, i love having you on always. thanks for coming in. >> thanks. great to be on. >> up on the show next, the vote for scottish independence tomorrow going down to the wire. we're live in edinborough. plus, u.s. steel sharply higher on restructuring news. find out what the ceo had to say to sarah about staying competitive. we'll be right back. new york state is jump-starting business with startup-ny. an unprecedented program that partners businesses

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check out shares of u.s. steel. surging this morning after announcing last night a new move to juice profits. the company saying its canadian unit will go into creditor protection. it'll scrap some plans to expand its iron ore pellet operations in minnesota. it's all in an effort to save money. the latest from the ceo's plans. he's been on the job for a year, trying to cut costs and focus the business towards modern use, like auto production. it's something we talked a lot about in washington, d.c., yesterday at the u.s. competitiveness forum. i interviewed him actually just before this release went out after the bell. i asked him about the industry and the consolidation that we've seen recently, the fact that his rival nucor unseated him as the

number one steel producer. >> it's lacking to totally show the power of our ability to compete is a lack of growth. growth is essential, and i think we are at our best when we're creating growth. so i think we have all of the essentials in place. >> and that was actually him talking about what's missing in the steel industry. i asked about the competitiveness of it. he would like to see growth. the stock has been booming. it's up more than, looks like, 50%, 40% this year. the company actually put out a surprise profit in the last quarter after years of losses. clearly ceo is making moves to keep things going. those profits going, like this canadian restructuring that was announced. investors are certainly applauding the move. shares up 9% as we speak. >> it's amazing how those stocks can come back. alcoa springs to mind.

meanwhile, it's the last day of campaigning in scotland for both sides of the argument over independence. polls right now for tomorrow put the two sides virtually neck and neck in that referendum. cnbc's chief international correspondent michelle caruso-cabrera is live now in edinburgh. >> let me show you some of the newspapers with one day to go. this is a u.k. english newspaper. one day to save britain. they highlight one of the events that occurred last night where they say some of the nationalists, the supporters of independence got very, shall we say, touchy with some of the anti-independence folks. here we have a pro-independence newspaper. looks like it says keep the hide. i'm told that actually says keep the head and carry on come paining. right now the nos have the lead by a small percentage point. they're not acting like they've

got it in the bag at this point. the campaigning on both sides is very intense here in the last 24 hours before the polls open tomorrow. from what we can tell, the vast majority of the business community, not all the business community, but most of the business community does not support independence. they're very concerned about the uncertainties that would come with a vote for independence. in particular, for example, the whiskey industry, which is the third largest contributor to gdp here in scotland and generated $6.5 billion worth of revenue for scotland last year. we spoke with a representative from the scottish whiskey association. he said one of their major concerns is, would scotland remain a member of the european union? >> the protection of scotch whiskey is written in european law. any break in the continuity of an independent scotland's membership of the eu would be a real risk to the success of the industry in the future. >> now, like i said, not all business people are against

independence. we met with graeme blackett who works for business for scotland. they would like to see reforms. he believes it scotland had its own government, it would be easier to instill those reforms because it would be closer to the government. he quoted a famous scottish poet for his belief. >> i live close to a famous scottish poet. he had this phrase that said a parliament should always be within marching distance of the people. >> a parliament should be within marching distance of his people. so he says he is going to vote yes, though not all members of the group he works for would necessarily vote yes. so there's arguments to be made obviously on both sides. we're going to find out tomorrow, guys, what the decision is. back to you. >> in the meantime, michelle, it is bizarre who's eligible to vote and who's not. so scots lives in london or the united states have no vote.

you have to be resident in scotland. you don't need to be scottish. you could be english. you could be french. you could be any member of the european union just living in scotland and you get to vote. >> yes, absolutely. and you can also be as young as 16 years old as well. so that's been quite controversial. this is the first time people so young could vote on an issue like this here in scotland. >> certainly investors are watching it. we'll be checking back in with you. thanks very much, michelle caruso-cabrera in scotland for the vote. >> straight ahead, the president for the nasdaq in her first ever u.s. tv interview. find out what she had to say about her competitor getting the prized alibaba ipo. we'll be right back.

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less than that. now what's interesting is that retail gas prices have been declining. the national average, $3.37. some expecting to see this dip potentially another 10 to 15 cents throughout the rest of the month and potentially in october that's good news for consumers. again, seeing a little bit of a draw down here may hold gasoline prices a little more steady. >> thanks very much, jackie deangelis. well, while the new york stock exchange prepares for what could be the largest u.s. ipo friday, i spoke with the nasdaq's ceo who came back from carlisle group where she was cfo about losing out on this big opportunity. >> we compete for every ipo. every ipo, whether it's a big ipo or a small one, we're there competing for the business. as you know, we compete fiercely with new york. so it's always a disappointment to lose an ipo. alibaba is obviously a big company coming to market. but we obviously see this as a great opportunity for the markets. if alibaba can have a strong

performance, it creates a nice tail wind for the rest of the year. we're looking forward to seeing how they do. we wish them very well. then we're going to hopefully see a great win rate and a very large pipeline for the rest of the year. >> what was the process? i mean, obviously you pitched yourselves hard. >> we did. >> to alibaba . how cloes did you get? >> the team definitely did everything in their power to try to attract alibaba to nasdaq, as we do with all of our ipos. certainly the team met with jack maw and the rest of the team. at the end of the day, it's their choice. every company makes their own independent choice and have their own story. they chose to go to new york. we certainly wish them well. >> we hear it's the facebook debacle from 2012. that was a major reason for them not choosing the nasdaq. >> well, first of all, all of their choices are confidential. and so we don't try to speculate on what was it that caused their decision. but at end of the day, we feel very confident we can manage any ipo coming to our market.

we certainly conveyed that confidence to them. but they can make their own independent choices. >> the blockbuster technology, ipos. if you go back, traditionally they've been at the nasdaq. amazon, google, ebay, all nasdaq. facebook. and then if you look at the bigger ones lately, linkedin, twitter, and alibaba going to your competitor. you have work to do when it comes to defining yourself as the big technology hub. >> i think we try to define ourselves as a natural home for any company. and we compete fiercely all the time for every company to choose to come to nasdaq. so i think that when we look at it, we look at the entire -- all of the sectors. we've been very strong in health care, very strong in tech and in financial services this year. so our view is that we tend to attract companies from every sector, and we compete for every single one of them. >> what's the pitch? what is your edge over the new york stock exchange? >> sure, the first thing is that we are the most global exchange on the planet. in terms of the composition of our revenue, the businesses that

we manage, we have business all over the world. asia, europe, and the u.s. as a global market, i think that we're a natural home. in terms of looking at us as companies that have very good peer groups across the sectors, we're strong across every sec r sector. we can show natural peers across all of our sectors. >> i noticed health care was number one. that seems like a good target. >> we're a natural home for a lot of health care companies. >> and a lot of chinese companies. >> of the 11 ipos that have gone so far leading up to the end of this week, seven have come to nasdaq. t we have some great wins in the chinese companies as well. so we look at it and say we're the most global, stronger across every sector, and we're the best value. in terms of both our pricing and the services we offer to our companies. we work hard to partner with our companies. we give them great visibility in times square, great visibility in terms of marketing access.

we also provide them a set of tools we own, operate that help them become better public companies in terms of investor relation services, pr services. that really does distinguish us. >> do you expect this feverish pace of ipo activity to keep up? >> we definitely see a very strong pipeline through the end of the year. it's really hard to predict more than a few months out, but certainly in the environment that we're seeing and the way the markets are very open, there's a lot of money looking to be put to work. i would say that we're seeing a lot of companies really focusing on ipo opportunities because of getting in early. i think that's something they're really focused on right now. so the pipeline is very strong. we expect a vibrant environment in the fall. >> what about your trajectory? so interesting you've been brought back now in june, returning to the company. you know speculation that you're next in line. do you have any update for us? >> well, i've come in to be the president of a big part of the business. i manage all of the businesses other than the trends action businesses. it's about 70% of the revenue.

i have a huge opportunity and frankly a huge responsibility in front of me. i'm really focused on that right now in terms of being the president of nasdaq and providing great value to the firm. >> is there any indication he would leave before his contract is is up in 2017? >> i've always been a great partner to bob. i don't try to speculate on that. >> adena friedman, who was just named president of the nasdaq, coming back to the nasdaq from the carlisle group. obviously it is a big loss for them. aliba alibaba. but it's a big market opportunity as well. she wants it to go well. >> i thought it was a great interview. i thought you asked all the right questions. but i think it's a missed opportunity on her part. what she should have said was, look, we messed up facebook. this is the reason we messed up facebook. this is why that will never happen again. because that must be the pitch they're giving to alibaba behind the scenes, rather than saying we can cope with it. >> as reports indicate. >> to be specific and say, this is what went wrong, it won't happen again, and this is why would have put her in better

standing. >> and they pitched hard, as she indicated. i mean, she said service confidential as to why. >> reuters has reported sources are saying they were basically scared to go in nasdaq. they can't have that happen again. >> absolutely. that's what we hear, why alibaba decided to go with the competitor. >> also a big day for activism today involving dupont. a fight has broken out in the large chemical company involving trian and of course, as you might expect, dupont's management and conceivably its board of directors. now, trian has been a large shareholder for some time. in fact, over a year. but this morning the company comes out firing at dupont and at its board saying that the board is not holding management accountable and arguing that essentially there is a bureaucracy at dupont that is causing a conglomerate formulation at the company on

structure that is destroying value and causing cost to be far in excess of what they should be. as you might expect, dupont has a number of responses to that criticism. but with the $1.6 billion position that trian has amassed and has planned to go to share holders to speak to them about its concerns and argue for essentially what would be a split of the company into its growth and nongrowth or more cyclical businesses, there is going to be quite a debate coming in the weeks and months ahead as we lead up to what is likely to be a proxy fight in which trian tries to maintain or i should say obtain board seats at the company. 13 board seats will be up in the next go around. the arguments, well, they center on a lot of things that i said, but particular to dupont's conglomerate structure and this point that at least trian says that it is destroying value. and you can look at some of the performance of the company in

terms of its stock against some of its peers and say they'll say, yes, while it has been a strong performer against the s&p, it has not performed as strongly against some of the key names that at least you could argue in its peer group, including those you're looking at there. in its letter to dupont this morning, trian talking about inefficiency in the business, characterized by excessive holding company costs, disparate business businesses, bureaucracy, lack of accountability, inefficient capital structure. it's using as its smoking gun the codings business sold by dupont to private equity firm carlisle. reporting a number before it was sold of roughly $340 million. carlisle has now file for that company to go public and reported that same number from 2011 at about some 60% more. trian says it's because of all the costs they were able to immediately get rid of in taking control of the business. dupont has answers for that.

also other answers as well. talking about its own execution for example, and saying, hey, we created the leading position in agriculture. we acquired an additional growth driver in danisco. we also have a $1 billion cost reduction program under way. not to mention, our total shareholder return from december 31st of '08 until june of 2014 is 220% versus the s&p. this argument, of course, will be brought to shareholders by both sides, and we will see. certainly an important battle. >> is it going to get messy? >> it will. they wanted one board seat. this summer they asked for one board seat at trian. they did not get it. now we'll see whether they end up with a lot more. >> good to see that dupont still manages to have a corporate theater, a country club, and its own hotel. good to know some companies still have that. >> did you read that in the white paper? >> i didn't. i read it from an article today in "the journal."

cost savings and a breakup of the company. that's interesting. >> as much as $2 billion to $4 billion can be saved. and they want it split. >> all right. when we come back, just a few hours away from the results of this week's fed meeting. "squawk on the street" will be right back. [ hoof beats ] i wish... please, please, please, please, please. [ male announcer ] the wish we wish above all...is health. so we quit selling cigarettes in our cvs pharmacies. expanded minuteclinic, for walk-in medical care. and created programs that encourage people to take their medications regularly. introducing cvs health. a new purpose. a new promise...

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take a look at home building today. what a morning for that sector. one of the best performing sectors in the s&p after great numbers from lennar. dominic chu is back at hq with morning. >> good morning. housing stocks certainly on the move this morning. this after lennar, the country's second largest home builder, reported that better than expected 47% jump in quarterly

profits. this as it sold more homes, and yes, at higher prices. better yet, orders jumped 23%. other home builders are moving higher on the news. all in the green. home builder sentiment numbers certainly echoing that as well. overall, you have to look at some of these home builders as an industry group to watch today. >> thanks so much, dom. let's check in with rick santelli. >> good morning, carl. i'd like to welcome our very special guest on this fed decision day, robert mcteer, former fed official. thanks for taking the time this morning, bob. >> my pleasure. >> i guess we have to start at protocol. that is what everybody seems to be talking about. do you think the language of considerable period will be taking away from the statement, or do you think it will be left in? >> i think it will be probably be left in, but i think there might be some added language

designed to weaken it a little bit. it's becoming an al bo trosz because time is passing and you can't keep on saying a considerable period. it's got to be converted to something that's data dependent rather than time dependent at some point. >> now, i know it's just me and you, even though we have a lot of people tuning in, but quite honestly, i'm a little embarrassed to even think that here we are discussing words in a statement this many years after the crisis. do you feel that instead of talking about some of the issues i would think are more financially important, we're parsing words in a statement where there's kind of a bureaucratic undertone to the federal reserve process at this point. am i off base? >> no, you're not. before the crisis, alan greenspan started using the same language over and over. i argued against that within the committee because it just locks you in.

but this is not really new coming from the crisis. it's kind of code, you know. the fed uses a word, and people decide what it means. then they're afraid to move away from it. that's why i think janet yellen is going to kick that can down the road again today. >> you know, i think that we had a bit of data today that really, in my mind, underscores how far away from the norm we've gotten. we have the national association of home builders sentiment index. it came out at 59, the best level since 2005. but here's what i saw. we now have home builders as confident with 412,000 single-family homes being built as they did in 2005 when they were at 1.2 million. that speaks volumes as to how we've kind of downgraded or diluted the american dream. but yet, the numbers don't really reflect that. any comment? >> i believe, rick, that i

remember that housing starts used to be around 2 million per year. they're roughly half that now. you're certainly right. our normal is certainly degraded. >> now, when it comes to inflation, myself included, we've been taken to the wood shed, so to speak, that we've been wrong. but i don't know if we've been any more wrong than the federal reserve. you've written on this extensively. the unintended consequence of all this fed policy to reinvigorate and reflate the economy has ended up in large portion as excess banking reserves. isn't that where the inflation is being hidden at this point? is there any doubt in your mind that when those reserves actually hit the u.s. economy and we can only hope they'll hit at some point, that that's when you're going to see the pricing pressures that have eluded many of the inflation hawks up to this point? >> you're right. qe was supposed to be a milt and

friedman type policy that would expand the money, supply faster, and cause people to spend more. but the hoarding of excess bank reserves by the banks prevented a lot of that money from being created in the first place. velocity of money has declined, but the velocity of reserves of decline a lot more. so if the government will get off the bankbanks' back and the start lending at a normal rate and turn those excess reserves into money in the economy, that will be inflationary unless the fed is deft enough to shrink that reserve base at just the right pace to offset it. >> thanks for taking the time this morning, bob. of course, we will parse the statement. i call it the biggest ror shack of all time. carl, simon, back to you. >> rick, thank you very much. up next, fedex spiking higher today, benefitting from growth in online shopping. what should you do with the stock now? more on that after the break. i was just looking at your credit report site.

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welcome back to squawk on the street here.

a strong debut for an ipo, takai pharmaceuticals, focussing on the prostate cancer and other vehicles. it's soaring. you can see there currently up about $26 on the day's trade. >> wow. shares as fedex are doing well. not as well as that but they are jumping a 4% game. the news after fedex plans to raise rates on express ground and freight services beginning in january. joining us is city transportation analyst christian weatherby. welcome to the program. >> thank you. >> before we go any further, because of the share buy back, they say themselves that that is flattening the earnings per share figure by 15 cents. so if you strip that out, how good does this look? >> this was still a very strong performance across all three of the company's transportation

segments. they beat us on operating profit in the express business ground and freight. freight in particular has a very strong quarter on the back of improving fundamentals in the trucking market. but overall the buy back did help but the fundamentals are getting better and some of their cost improvement initiatives have bearing fruit at this point. >> also they are going to raise prices i think by 4.9% more or less across the board. you keep talking about the environment being good. is whole of the sector doing well? or is fedex in particular doing well in its position? >> well we think capacity is getting tighter within the small package business. and i they this will benefit ups over time. as we go into the holiday season our call has been that fedex is better positioned from the competitive standpoint relative to ups. ups is more inwardly focused going into the holiday season making sure on the service piece. fedex had a better service peak

last year than people give it credit. so it think it feels relatively free to go after other areas this holiday season. so i think they are in a better picture in this holiday season. >> interesting. so when you see rival ups saying it is going to hire 95,000 seasonal workers to make sure its holiday season is executed on properly, you would say that's an indication that fedex will outperform moving through that time period. >> well, that's one of a number of things that we are looking at that would i think impact our view on how each company is preparing if are the holiday season. fedex announced the seasonal workers on the conference call this morning. more than 50,000 starting as we get into the peek season. so both are making efforts to ensure packages get to people on time for the holiday. but the reality is i think fedex is taking a leadership from a

pricing standpoint. typically they don't increase before ups. but this year they moved it three months and i think they are frankly becoming a leader in that respect because they didn't have the service problems that ups had last year. >> and let's see if we get a share buy back perhaps announced in later in september. christian, thank you. >> this thank you. >>lest head it over to john. on squawk alley. >> lots of good stuff. iphone 6 and 6 plus. the reviews are out. we'll have walt mossberg to grill him on whether they are cracked up to be what they are. and uber. the revel alinions and the co-founder of alibaba. coming up next on squawk alley.

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welcome to squawk alley for this wednesday. busy day as you might imagine. with us as always, john forte. first up the review of the new iphones. straight to walt who is the investigative editor from recode. and had several reviews last night. great to see you as always. >> great to see you carl. >> you said this was probably going to be a winner and it sounds like this is exact what happened. >> i actually think this is the best smart phone you can buy. and i'm unequivocable about that. >> back us