2015 and squawk box begins right now. ♪ good morning, everybody, welcome to squawk box here on cnbc. i'm becky quick with joe concke and andrew ross sorkin. >> this was a scary scene yesterday. they aborted the takeoff. there were 159 passengers and 13 crew members that scrambled to evacuate losing the slides. there were only minor injuries reported. more on this coming up in a little bit. also more of our exciting kick off on the 20th anniversary of squawk box. our special guest today is ready

to unveil a new short position he has never spoken about publicly. this puts him up against some other powerful hedge fund players and that's just the way he hikes it. the news makers will keep coming. tomorrow don't miss the exclusive hour long conversation with david tepper. you may remember the market call that lead to the tepper rally in september 2010. we'll find out what september surprise he could have up his sleeve for investors now. of course good timing on this. the fed ready to act again next week and then on friday we have bill ackman stopping by with his best bets for the next 20 years. first though before we get to today's news let's get to more of the news of the morning. >> our top story this morning is the markets. joe mentioned japan, check this out. the nikkei surging to close higher by 7.7%. the comments from prime minister

abe who told a meeting of investors he would seek to lower the corporate tax rate by 3.3 percentage points next financial year. the rest of asia closing in the green. shares are trading higher as well. also a boost from positive german economic data and u.s. futures came off of all of that news in the green as well. dow would open 153 points higher. s&p 500 up about 17 points. >> and governor bush's plan would lower corporate tax rates here by 15 percentage points. not 3. so we should be up 3500 points today or 4,000. >> there is a little bit of road to go before you get to that part. >> the other guy is in the job already. >> if he were to win getting all of these will be just like breaking -- yeah. will that ever happen again in

this country? i don't know. we actually write legislation and say i think this might help the country. >> we can have it as long as all three parties -- >> that's not partisanship. that's cramming stuff through. >> united continental replacing ceo jeff smisek amid a federal probe of the airline and two other senior administrators are leaving the administration. they're not talking about the status of a federal probe into the country's relationship with former port authority chairman david sampson but the government is investigating whether united added direct flights from newark to columbia south carolina where sampson had a home and that route was cancelled shortly after sampson re-signed from another crazy situation, the whole bridge thing from the port authority early last year

following news of a federal probe into a conflict of interest because his role of port authority interest and private law firm. >> it's the worst stuff that you think about port authority and trading. >> i immediately thought about around the world. but remember -- what goes on in china? what goes on in china right now. >> i don't think this was still happening in the united states. >> for port authority and government croanies. >> that was 30 years ago. >> remember hiring everybody's kids. it's all sort of -- >> it's pretty -- the question is whether the e-mails are going to come out. there's two other people under him, the government

communications people who are clearly communicating on this. they actually killed the flight because they were losing money and then they needed the slots. >> it wasn't just slots. they were asking for a deduction on their rent. a deduction on the rent at the airport and a bunch of other crazy things and then asking for a discount on your rent and continuing flights to atlantic city where one of the law firm partners was running things and losing money as a result. >> sampson was a lawyer, right? >> but in the airline world i think this thing has been going on for a long time. senators wanting to get home from dc. look at the flights that go from dc elsewhere. >> there was even the story with joe biden coming up from delaware every day that they would hold the train for him to come up. that's the urban legend that

floats around and is there criminal liability for them or these other people? >> i can't believe they're paying him a sevrence pay to go away. >> free flights for life. that's the real value. >> and you should leave with nothing or you did nothing wrong. >> unless what they're trying to do is insulate the company. this has been out since january. >> and instigated by the company. that was the other part about it. >> if you weed out the bad players that are involved in this maybe you save the company from actually getting hit hard. >> i have asked three sitting governors of new jersey for my own easy pass. >> you have not gotten it. >> that's never -- >> chris christie was going to get you a patrol car.

police escorts are much better. >> mcgreevy. >> the new guy, the guy they're putting in charge, his name is menunous. >> csx. >> i liked what he was saying yesterday. he was hitting all the right notes in terms of making sure that the airline focuses on customer service. >> well thought of by labor as well. >> i want to be able to get him on. >> good idea. >> >> anyway, another big story today too, apple will be in the headlines today because they're holding a new product event in san francisco. tim cook is going to be

delivering the keynote address. as always there is a lot of speculation about what might come. among the popular guesses a new iphone. one called the 6s and 6 plus s. maybe it will have a better cam ran than what's out there. also a new apple television box to stream movies and games with voice recognition. you can talk to your tv and tell it what you want to watch. they're also speculating about a new ipad. >> there's a wild car. it's a big screen ipad maybe meant for business users. that's something they've been working on and we're not sure if they'll have it this week but it's a good chance. >> shares of apple this year, a lot of ups and towns and ups recently. i saw speculation off of a new potential car. >> there was that report two weeks ago where the first time there seems to be a real car being made or something that's

actually happening in a way that you have no idea about. it's a little early though. >> recommend how long it took them to get the watch out. >> it's been a little surreal. one will be bigger and one of them smaller. i don't know about the law of returns on the ipad. the better camera, okay. >> that's why i want an upgrade. >> would you have a five or a six? >> i have a five but the new 6 has a better camera i want that. >> i wish siri wasn't so obnoxious that would help. >> why is she obnoxious. >> she never gets -- have you ever tried to dictate. >> i think siri has gotten better in the past two days possibly ahead of this thing. i'm not joking. >> how would that be possible? >> it's not -- no, siri is -- >> it comes -- >> i'm looking up into the heavens. >> it could be the vacation and

you're -- >> i don't know. i thought it was better. the irs dealing a big set back to yahoo!. they may have to pay taxes on the money it plans to get from the stake in alibaba. denying the request for a private level ruling for whether it would be tax free. they have not concluded it would be taxable. shares dropping nearly 16% when the news first hit before pairing back the loss but putting a lot more pressure on marissa mayer. >> it's not near over though. >> it's not over yet but this is a huge crimp in the plan. >> they don't know yet. >> i think they're saying bring it on and then we'll tell you. it's just not the way you want to do it. >> but they were also nervous

enough to ask for clarification. >> it's not only what this does to yahoo! and alibaba but other spin offs. >> there's a little bit of other alibaba news. they're strimitrimming sales estimates. the customers are still willing and able to spend but alibaba is seeing a negative impact of the magnitude of the spinning and we should probably talk to mr. china about all of this. >> we will. >> i argued with someone, one of our people, i don't know which one it was. it was after he just told me that you can't buy this kind of growth anywhere else so the valuation was not excessive. >> last week? >> no, this was like six months ago. it was a millennial person. i don't remember which one.

that does not narrow it down. instagram is making a big ad push. before now ads were only available in 8 countries. the facebook owned company has 300 million monthly active users and the social networking giants consumer data allows instagram to target audiences more accurately. i guess i fall privy to in my own way on twitter i do count how many favorites you get or something but i see people in my immediate family that do instagram and they live on -- if they get 100 likes their life is complete. >> that's big. >> but why? >> because it's affirmation. >> it's affirmation. that we like you. we really like you. >> you would have never imagined we'd get to -- and then there's the poor people that get no

likes. what are they supposed to do? >> i think the comments are work. >> it's a huge part of my life. i'm at negative tolerance now. even if i don't like the name itself there's no one left. how about you. you want to see what people say. >> bring it on. >> don't issue that challenge. >> i want to know. >> so you said bring it on. >> i want to know. >> i'll ask some of my people to bring it on. >> they do. i see what they say. >> netflix is expanding. it's going to launch it's streaming service in south korea, singapore, hong kong next year.

it plans to reach 200 countries by the end of 2016 including china. $40 billion is the market cap. 50 for awhile. i'm watching this closely because the media pundants that say this is the only stock they recommend but if it's going to work then every time, every market cap loss in viacom, time warner -- >> it's not a perfect hedge. >> that's down more than the other ones and now these guys haven't been on to say it's still happening. so i don't know. >> i did notice yesterday disney was up about 3 or 4 points. >> 400 point gain yesterday and some of the guys that got hatched on the way down.

>> they're greatly exaggerated again and again and again. no one ever learns. >> this is true. >> that's what the media is all about. >> except for print. >> love that too. >> let's stay on the technology theme this morning and talk about imb as well. i got the chance to sit down with warren buffet and ask him about his position in the stock. when he joined us on august 110th he hinltedded he may have been buying more shares in the second quarter. then there weren't any additional purchases of ibm and had us confused. he cleared it up yesterday. >> i owe you one on that. i thought i was buying it in that quarter. we bought it in the first quarter and normally i wouldn't tell you this but we bought some in the third quarter. i thought there were purchases in the second quarter. i wouldn't have said that unless i thought the number was going to be higher but i was wrong so

i have to tell you we have bought a little in the 3rd quarter and the 1st quarter as well. >> that was august 10th so i take it you were buying in the third quarter before august 10th even before this market volatility came up. >> i don't remember that exactly and i got in trouble getting an answer where i didn't remember perfectly before so i'll leave it at what i said which is true. we bought in the 1st quarter and 3rd and did not buy in the second quarter even though i thought we had. >> mystery cleared up if you were wondering what he was doing so you heard it here first. >> we don't know how much really. >> not yet. we'll find out in those quarterly filings. >> yeah. he obviously wants to go back up to what he paid for it so he can't say i'm not happy about it. i just don't know about ibm.

but he doesn't seem like he is buying it with two hands. i just don't know about -- 10 or 15 years from now we'll have a totally different -- >> who was that? >> it was a long time ago. >> but we have done some math and i don't know about $147 billion but when it was back in the mid to low 50s -- >> when have you ever added in dividends before. >> if you added in the dividends he was up. >> not when it was at 150. >> i thought it was mid 150s. >> i don't know who gets into your ear on this but you thought he had a much lower cost of acquisition than he actually had. it was like 170 or so was his cost of acquisition, right? the yield is 3% down here. 3.5%. i don't know. >> those wild swings that we've seen in the markets seems to be the norm in the global markets now. joining us is a cnbc

contributor. great to see you today. >> good to be seen. >> we thought the wild swings were base of the holidays and people on vacation and you look around and they're continuing. what's going on? >> it's shocking to me. i thought i had seen all sorts of wild and exaggerated movements but to see the dow down 300, up 300 it's wearing every professional out. you find yourself selling the lows and buying the highs and at the end of a week and a half market versus gone nowhere. i remember an old friend of mine. we were standing on the top of the bond pit one day and everything was going crazy and i asked what do you think? and he said i'm flat and i'm nervous. i feel the same way. i'm nervous. i was modestly net short of the market and i mean modestly net short but when i came in yesterday morning and saw what the chinese had done changing their dividend policy and doing away with taxes on dividends if

you own the stock for more than a year that was the most powerful capitalist move in a long period of time. you had no choice but to say this thing is going higher. >> is there a way to figure out valuations of things or is it being sloshed around with the ti tide? >> it's being sloshed around with the tide. it's a market without a memory. maybe this is to change their tax structure might give the market some memory and follows through on the upside. all economics is the study of people's propensity to do something and the propensity now will be for every other country to follow what the chinese have done. cutting taxes completely on dividends is an extraordinary move. >> you don't think that's going to happen here? >> i think we have to change it. no, we're obviously not going to do away with taxes completely but shall we have to follow in some manner or cut taxes in some manner? yeah we're going to have to. >> what do you think gets us to

that point? people have been saying that for years here. >> i don't know. the chinese have made the move. that's a very radical change and others will have to follow suit. >> but i don't know why. usually capital finds the best place to live but this is not going to make people invest in chinese stocks. >> no, it's not going to make americans run out and buy chinese stocks but it will make chinese buy chinese stocks. >> but usually when other people have to follow suit it's because you're going to lose your capital. i don't see that being the case with china because there's too many obstacles. >> am i going to move any money and shall this make me move money to china? >> no bit will give them a better propensity to come off the sidelines. >> what else are you looking at

at this point and factoring in or are you just waiting for the market craziness to subside before you place any bets? >> i think one of the major changes taking place is if you reading the newspapers over the course of the last month and a half and listening to the news media all you've seen is the commodity markets. those are the series of headlines that one gets as markets turn. they're extremely inexpensive. i think you're seeing the lows in oil and grains and steal and maybe even coal. that's a big change. >> that's a momentum call and not a change that things we thought were slowing down in china are not as bad as we thought. >> i think that we exaggerated the low down in the circumstances in china. if ask what china is doing, they think that china is slowing down.

no china instead of growing at 18 or 12 or 11 is growing at 4 or 3. you'll see circumstances getting better again. >> we'll be talking to him a little bit later this morning about what he sees happening in china but where do you go back in? where are you most willing to place your bet. >> one of the places you have to take a look at coal, coal prices have been so decimated. coal stocks have been decimated. many of them have gone bankrupt but peabody coal. that's a long-term leap and call on economic circumstances. take a look at coal. take a look at the place or the things that move crude oil around the world. that's the simple things to take a look at. you don't have to go to the markets and buy futures or gold

but something is taking place because it had been so disturbingly bearish that those are the hall marks of when things change. >> thank you for joining us today. >> very nice to see you, sir. >> good to be seen. >> coming up, european leaders unveiling plans today when dealing with the migrant crisis but first here's a look back at this date in history. can a business have a mind?

a subconscious. a knack for predicting the future. reflexes faster than the speed of thought. can a business have a spirit? can a business have a soul? can a business be...alive?

800,000 migrants fleeing conflict zones and expected to reach the continent in 2015. angela merkel called for quotas to ensure fair distribution of migrant acceptance in europe. what's the cost of this going to be? how would we think about this from the business context? i hate to say that but that's a real question. >> first of all, these are not sort of the most educated and white collar capable refugees that are coming in so on the near term of course it's a significant expense the germans pledged for their resettlement. there's going to be a lot of

backlash there. some of these countries over the longer term do need blue collar labor that's low cost and they'll get it with a number of these syrians and some of them don't and you're going to see more of the traditional back and forth. >> what is it going to be? >> it's like the greece debate. it's germany leading the way to do entirely too little to respond to a crisis. you just mentioned 800,000 this year. they're talking about a deal for 160,000 and to get that 160,000 resettled they have to get every single country to agree and a lot of those countries are going to engage in very significant horse trading over other things that don't matter as much to the germans like for example russian sanctions. do you think the hungarians are going to push on that in return for their assent of this vote? the greeks? absolutely they're going to. we're seeing the weakness of europe. the inability to coordinate. >> we've taken 1500 refugees here? >> no, nothing but this means we

don't care. we have a serious immigration issue we're debating in the united states. it's a wall with the mexicans that are sending far fewer refugees or migrants to the united states than in previous years. last two years chinese and indians have had far more. >> now we won't help out anybody fleeing the situation. >> to be fair the americans are spending more money in humanitarian aid to respond to the syrian crisis than any other countries so far. none of the presidential candidates is saying anything about resettling the syrians. it's very far from us but we don't have to worry about walls. we have two oceans. it's very easy for the syrians to get to turkey, 2 million of them thus far and to move from there on to greece and italy. >> we read about europe has

become all too aware of terrorist acts. it's a different place now. there's armed soldiers in every train station and does this increase the risk to europe? can people that have malice in mind, can they use this as an tun? >> of course there will be larger numbers of easily radicalized individuals. of course there will be. >> any of them already ready to go and just joining. >> if ask me if i have been talking to them the answer is no. france had the charlie hebdo attacks because of the unintegrated muslims living there. if you're bringing in millions of refugees into europe over the

coming years from syria, from iraq and this is merkel's challenge. she needs the labor. the germans from the economic wherewithal to provide these people. they're doing more in any other country than europe except for turkey you start to see individual acts of violence. god forgive you see a terrorist act that will be linked to these flows and it's going to happen. it's really going to hurt. you must be seriously negative about europe as a consequence. >> these people are fleeing war basically. does there come a point where people in countries that don't have the same tuns just decide i'm out of here? i can see how the rest of the

world lives. >> the deal we're talking about would have exclusions from country where is they wouldn't be directly fleeing war. >> it's interesting that cameron has actually said i only want to spend our money resettling syrians that are fleeing directly from syria. not if they already made it from turkey. you are no longer fleeing war when you go to hungary they're not giving you asylum status and they don't have the benefits that you would receive. say 400 plus dollars a month for benefits and housing that everyone is getting in germany. if i were the father with the child crying when i finally made it across the mediterranean would i want to do everything possible to get my little girl to germany as opposed to stuck on the island in greece, of course i would. but if you're the europeans, you would understand why they would have very little inclination to

suddenly say okay the doors are open for everybody irrespective of where you're fleeing. you already made it some place. >> do you know who used to say there you have it all the time? >> who. >> the emperor of austria. he wasn't a good character. >> thank you. >> no, no. he was the guy from farri farris bueller that had personal problems. >> morning wig for squawk box. >> you should wear one of those. >> coming up today's top corporate story united kopt nenal replacing it's ceo amid a corruption probe. the implications for the airline, next.

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welcome back to squawk box. the big corporate buzz story of the morning. y united continental replacing the ceo. >> he is chairman and ceo and re-signed yesterday. we're still trying to figure out what sparked his resignation but here's the shake up in the executive ranks that united announced late yesterday. he is out along with two of his top executives. they're tied to a federal probe of the port authority and specifically whether the former head of the port authority was using his influence in order to get united to add a flight from newark down to columbia, south carolina where the former head of the port authority has a home. that flight was cancelled three

days after he re-signed. he is being replaced at united airlines by a board member and a board member that has experience when it comes to operations in the rail industry. oscar munoz is the new united airlines ceo. he was the former coo of csx. the large rail company and he is going to be focused on improving the operation at united. they have had problems over the last three years since united and continental got together. here's oscar munoz yesterday talking about his focus now that he is running united. >> we intend to maintain cost discipline and allocating capital to share owners. united has tremendous potential and i look forward to leading this team to becoming the topper forming airline. >> take a look at shares of united versus american and delta over the last couple of years

one thing to keep in mind is the elevation of oscar munoz to ceo was so sudden that they have yet to announce what his pay package will be at united airlines and with regard to the severence package. there's something saying he has to pay back the $4.8 million. no more free flights for life and a couple of other things that are start of the package. so it remains to be seen what he will get once it's all said and done because this probe is on going. >> so one thing we know about united is there's still some some loose ends in terms of labor. this gentleman is known to labor. didn't they make positive comments that they can work with him? >> yes. >> is that one of the reasons? >> i figure the rail industry is close enough in term of

scheduling and operation and everything else so you don't say he doesn't run an airline but that's close enough. >> if you cover united as i do there's no shortage of nasty comments over the last three or four years about him from organized labor. >> the pilots too. >> the pilots specifically but other unions as well. operationally as well as labor relations at united this airline is a mess and has been over the last three or four years which is one interesting nugget in this. you talk with analysts on wall street. repeatedly they would say we think these guys are a sleeping giant. they're ready to really become a topper forming airline and yet it's never happened. that's the challenge now for oscar munoz and his expertise in terms of operations and running a company or working at a high level with a company with a lot of labor unions and government

regulati regulation. those factors work in his favor but he has a way to go with united. >> you look at the broader implications of things. number one you probably like to opine about the boards getting more power. i just wonder do we now -- do you think united is the only airline that has had these weird relationship with port authorities and slot providers? >> it must be interesting what goes on. >> there are great cautionary tails that come out of this one. the board moved quickly. they didn't put in an interim. they put the right guy in there and some interesting thoughts as to request they did this as opposed to twisting on the vine like twitter or some others have

done, they put somebody in there that knows what he's doing. he's been battle tested and very well thought of. interesting twist you bring up with phil on the labor side. they actually have the chairman of the airline pilot's association on the board. only you and i would remember the legacy of that and the employees got 55% of this company. this is a very employee invested operation so that matters but there's also big picture -- i'll take the curve you let me take on that and then as you look at the other news on the headlines today this is the board where the chairman and ceo were unified. they can still make the change.

they separate the rolls. stie sometimes it makes sense. obviously yesterday you had a great interview with warren buffet and he did the same kind of salute about him. what a great job he was doing. they separated it in 2009 and they brought it in. now you wouldn't have separated under hugh at bank of america but under ken lewis they needed to so it made sense at different times and it's just crazy and instead of paying attention to an emperor for life. here's a company that did one of the tax inversions with a weird c contrivence. there's no take over premium as

they go after the superior company, i think and he's entrenched. so you take a look at separation of roles makes sense sometimes and if you have a crisis, this board was able to act very ni , nibly. and no interim ceo. this was january when this first started percolating. but there was a problem. >> they suggested it would lead to the residengnation or depart. >> that's going on in a lot of

areas. >> this is public safety and things. there's a reason why when delta airlines got rid of leo mullins he wouldn't take it as an interim. we took a look at boeing when they had transition there is that were sudden or united technology. they is put somebody in there that was there not as an interim. >> it was a spicy one. i remember that one. >> but the whole stuff is the port authority. >> he was the clean up guy and they got caught in a relationship there. any other company wouldn't have been an issue but the notorious skirt chaser. >> yeah. >> and a lot of problems. they had to be beyond question. >> absolutely. don't forget that. >> as dean of yale. >> look at the port authority. what do you think of this guy david sampson. >> he's working it. >> he does his own hair. >> i told you i wanted my own.

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coming up, apple ready to unveil new products. speculation next. do they still do the one more thing? he does that right? got to be big? and then later, jeb bush joins us in studio. the republican presidential candidate, big piece in the op ed pages of the wall street journal outlining his tax overhaul plan. he'll talk about his ideas for unleashing growth at 7:40 eastern. the gillette mach 3 turbo

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it's a big day for apple as the tech giant expects to unveil some new products. joins us now ed lee and gene munster. and we'll obviously both get your ideas about the most earth-shattering stuff. it's tough to do this every year. >> anything apple, you know, people want to see.

>> but is there anything that's going to have that -- you know, where you drop your jaw and go, oh my god. >> they're not going to have a blockbuster announcement necessarily today. it's more of the same. it's the iphone 6s. 6s plus. >> better camera? >> better cameras. better processors. essentially the same look and feel. it's what we call the bridge model. it's the model that for those people who didn't upgrade the last time, this is your chance to upgrade. that's part of this announcement today. >> is that enough? >> here's what's interesting. give you a stat. when the 6 came out, about 28% of existing iphone customers upgraded to the 6. less than a third, basically. so there's a whole lot of room. there's a universe of people who haven't upgraded. this is their chance. >> so gene, when we talked in the past, talked about the stock maybe being priced for perfection, it's no longer

there. price for perfection, maybe. but is this going to be enough in iphone sales to satisfy, to feed the beast on what this company's got to do every quarter from now on to do -- i mean, those are huge numbers they've got to do every quarter. >> today it's probably not going to be enough because it never is enough. there's one other feature isle throw in there. this force touch that doesn't sound like something that's exciting. it's just a new way to interact with your phone. to answer your question is if they can grab fractional margin share, they've gained 2% global market share, but that adds 12% to the numbers. so i think this is going to be an incremental step. as the numbers progress over the next few quarters, it should show some upside to the street numbers which should help investors be more optimistic. >> your price target is $178 and

that has not changed as the stock's come down, correct? >> that's correct. that still hasn't changed. we're still optimistic that this market share story is going to play out over the next few quarters. >> so market share iphone story too. that's what it is. it's not ipads. it's not apple tv. and it's not -- they're not going to have a car, are they? >> well, eventually they probably will. today the other news, obviously, in the toy department is going to be apple tv. it's going to be for tech people. it's not mainstream. but it's still all about the iphone for investors. >> gene, real quick, yahoo! alibaba. what do you make of that spinoff that's potentially in jeopardy because of this non-tax decision by the government at least so far. >> i mean, the big story in yahoo! has been alibaba and at the end of the day is that this is going to force investors to look more at yahoo! core which is not exciting.

i think the reason we're holding onto our outperform rating is the numbers get easier next year. they start to grow their ad business. this is going to shift the pressure back to marissa about what yahoo! looks like. it's not about alibaba anymore. >> what's the one more thing going to be. >> with apple? who knows. i don't think -- there's no car announcement. even with the apple tv -- >> so it's going to be the push thing is going to be the one more thing or a new watch band? i mean, that's going to -- they've got to stop doing that. >> i want the one more thing to be more numbers. i want more details about how things have been doing. that will be nice if they can give us that. >> all right. thanks, ed. gene munster. got a delay with gene. >> thank you. >> oh, that's good. coming up, the short and long of it with jim chanos. he will be joining us on the set with his best ideas straight ahead. can a business have a mind?

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market alert. japan's nikkei jumping nearly 8% overnight. european shares rising and u.s. equity futures in rally mode. we'll get you ready for the opening bell on wall street. our guest host for the morning, jim chanos. his take on china and energy prices. plus he'll unveil a new short position he's never talked about publicly. and gop presidential candidate jeb bush is here. we'll ask him about the next debate, his tax plan, and his appearance on last night's premiere episode of "the late show with stephen colbert" as the second hour of "squawk box" begins right now. ♪

live from the beating heart of business, new york city, this is "squawk box." >> welcome back to "squawk box" here on cnbc, first in business worldwide. i'm joe kernen along with becky quick and andrew ross sorkin. markets in rally mode again today. i'm willing to try four-day weeks if this is what will happen. if it will go up on tuesday and wednesday. i think we all are, aren't we? we'll take every monday off. >> if it helps the market. >> but we've got chanos here. he likes it when it goes down. some men like to watch the world burn. stocks in asia climbing overnight. japan's nikkei jumped nearly 8%. the hang seng rose by 4% and the

shanghai composite was up 2%. in europe, nice numbers there. piggybacking a little off what we did yesterday and also what's happening in asia. all up between 2% average. and the u.s. equity futures up 150 points after a session yesterday that accelerated into the close. a couple of times, remember it was up. >> it was up 390 at the end. >> almost on the highs when it was all said and done yesterday. >> all right. let's tell you about some of our top stories this morning. united continental replacing the ceo jeff smisek amed a probe. reports say the government is investigating whether they added from columbia, south carolina, from where david samson happened to have a weekend home. he'd been very upset about the route getting canceled. but the route was reinstated.

then it was abruptly gotten rid of again after samson resigned last year. following news of a federal probe into a potential conflict of interest, all of this came out. united actually investigated its own -- had its own investigation laumpbled on this. in the meantime, united announcing the board member and csx chief operating officer oscar munoz coming in immediately. how to get things in order in terms of how they help customers. that stock down about 1.5%. we'll have more on this from a legal expert in a few minutes. we're also watching shares of yahoo this morning. the company may now have to pay taxes on the $23 billion it hopes to get from the planned spinoff of its take in alibaba. denying the request for the letter on the private ruling on whether it would be considered tax free. the irs has not concluded that

the transaction would be taxable, but there's no guarantee and that leaves shareholders in a bit of question about what's happening. stock is down by close to 3%. also the wait is almost over for apple fanatics. the company is expected to unveil upgrades to iphone, ipad, and apple tv. the stock has fallen ahead of the announcement. unusual move. it's the first time it's fallen leading up to an iphone launch since the original iphone in 2007. okay. we've got the perfect guest to talk about that and a lot more. mark volatility and devaluations in china sparking global turmoil since june. shares in the shanghai composite plunged this morning. our guest was the first to sound the alarm in 2009. he's joining us for the next two hours, it's jim chanos. he is the founder of pimco associates. the largest short selling fund with over $3 billion in assets. good morning. >> good morning. >> rome is burning and you're

happy about it, i assume. >> i'll take the four-day week in exchange, i think. i don't think rome is exactly burning. >> well, china's burning. >> china's not burning. >> well, here's the question though. where are we on china in terms of your call originally and where you think things stand now and where you think things will stand 12 months from now. >> people look at shanghai composite as a barometer of china. that's the wrong thing to do. i think anybody who's trying to figure out the chinese economy is looking at the wrong thing if they're looking at stock market. it's leveraged and subject to pronouncements as we know. the fact of the matter is the chinese economy since i was on "squawk" in february of 2010 was growing at 15% nominal. it's now growing at 5% nominal. it's 7% real, 2% deflation.

it has been going down in terms of the economy about 2% a year. i think that's going to continue. the model is broken. and that was the issue we've talked about for five years. this whole idea of state-directed capitalism heavily dependent upon investment. exports, secondary. no reform despite all the talking heads you've had on and others have had on about moving to a consumer and service-driven economy. fact of the matter is the investment still 50% of the economy. and they're running out of room to borrow. that's the real problem. the banking system is loaned up. they had to resort to shadow banking and now capital is leaving. that's the real sort of new story. the other big story is the rise of xi jingping. he is a different animal than the previous two regimes. china's not so open for business anymore if you're a western

company. china is more muscular and it's a different place than it was under previous regimes. in china the politics are as important as the economics. >> so what's the chance that the chinese government pulls out of this. means they figure out a solution. >> i think that basically people have felt for five years that these guys were despite the problems, they were very smart guys. >> we're still hearing it. that's what my point was going to be. you still haven't gotten any satisfaction in my mind because the same guys that we parade out and i won't mention any names but that have been on the other side of this the entire time, they're still saying the same thing. all right, 7%. but this is going to be the low. and now they're going to learn how to do it. >> have you made as much money you deserve to make on this? it hasn't happened yet. the final -- the end is still coming. >> i mean, if you look at some

of the things we've been short, it's worked out just fine. my point is that the system is still in the process of unraveling in slow motion. >> what's the end game? that's what i mean. what does a complete unravel look like in china? it's not going to be good for us. >> it's a credit event. and basically the credit event is still to come. stock market boom and bust. the property market is still sputtering along. but the key is that the debt is still growing two to three x times the economy each year. >> in terms of what it means for us back here in the united states, they've been a big lender to us in terms of buying. is that over? >> that's been over for years. they haven't been a net buyer for years. and of course now people are worried they're a net seller because of reserves, but the treasure market is the biggest, deepest market in the world. there will be buyers. >> so it doesn't matter? >> i don't think it matters. we're the country least affected by what's happening in china.

i've said that all along. >> who's the most affected? >> certainly trading partners in asia, korea, japan, and of course the commodity exporters. australia, canada, brazil. >> what's the systemic event? >> one of the worries we always had is they would lose control of the current si. that's why the markets took a sputter in august. when they make a ab announcement nast a change, you have to pay attention. even if they back track on it. they did not do that lightly when they had the press conference and said now we're going to start devaluing. of course the market immediately began to run away from them and they back tracked on it a couple days later. but that's a change in policy. and now anybody that's holding assets in china, particularly cross-border, is worried. because one of the biggest trades globally was to borrow in dollars hong kong dollars or

singaporean dollars, buy in china shadow banking paper, wealth management products. leverage it and plus you had had the currency. now it's going in reverse. >> broader question. let's just bring in europe and the u.s. to this. u.s. equity markets, we're all trying to understand what's going on. most your hedge fund friends, colleagues, rivals, what have you, had had a really tough last couple of months. thus far had a tough year. this has been a good years for you given you're in the short business. >> right. >> how long does this go on? warren buffett doesn't think the world's coming to an end. >> i don't either. >> but sort of where are we? >> well, look. markets shockingly every once in awhile do go down for a few months. that happens. i know that people think it's the end of the world, but it really isn't. you know, markets fluctuate. we've gotten so used to since 2009 this constant move with

volatility. that when you have a correction, you used to have one every year. people think meteors are falling from the sky and looking for an aspect k to it. it happens. >> long-term you're probably 20 years bullish on china, aren't you? >> what's that? as a country i think china is going to be around for a long, long time. >> okay. so you got factories where people are still employed and they got to stay employed and no one's using them anymore. and buildings no one's living in. so you've got all the over capacity. but you still have the strength of 1.4 billion hard working people who want to succeed. sooner or later it seems the capacity gets soaked up and they start moving forward again. >> i would think at some point, the credit event is still ahead of them. >> do people get laid off?

no one have a job at some point? >> no, but i think you could have a long, long period of very low or little growth. of the economy where no one recognizes a bad debt. the state stands behind everything. but consequently there's so much over-capacity. so there's no guarantee that you're going to financially prosper from this particularly if you're outside of china. >> jim, you said that corrections happen. we should get used to them. but when you see something like this happen, we're already out of correction territory based on yesterday's gain. >> see how quick it was? >> it was very quick, but did you take off your shorts based on this or move money around in other locations? >> we're always short for our clients. we're basically an insurance company as i told you. so we've covered certain things that have gone down a lot. we've added new positions. we're constantly trading positions. we have a core portfolio. >> jim chanos. he's going to be with us for the rest of the show.

and then we're going to unveil a new short position he's never talked about publicly. stay tuned for that. also still to come this morning, jeff smisek is stepping down in connection with a federal probe. we will discuss the legal implications. plus jeb bush will join us right here on the "squawk" set. he is unb vailing a new tax policy plan one week ahead of the next debate. stick around. "squawk box" will be right back. at ally bank no branches equals great rates. it's a fact. kind of like mute buttons equal danger. ...that sound good? not being on this phone call sounds good. it's not muted. was that you jason? it was geoffrey! it was jason. it could've been brenda.

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welcome back to "squawk box," everybody. if you are just waking up, the futures looking strong once again this morning. you're looking at those dow futures up close to 150 points after a gain of almost 400 points yesterday. you can see now the s&p futures are up close to 18 points and the nasdaq up by about 45. instagram opening up its platform to most advertisers worldwide today. before now ads were only available in eight countries. facebook has 300 million monthly active users. plus faster mobile internet is coming sooner than expected. verizon announcing they're going to begin field trials of 5g wireless in the next year. could role out to customers

2017. 5g speeds expected to be five times faster than 4g and more power efficient. very cool. coming up, gop presidential candidate jeb bush is here. we're going to ask him about his new tax plan and next week's debate. as we head to a break, here's a look at jeb bush channelling donald trump for "the late show with stephen colbert." >> i will build a wall between the united states and iran and make mexico pay for it. trucks are strong. i will turn the national mall into a luxury golf course and china will respect that. i promise to muput meatloaf on e $10 bill. eeep breath in. . . and . . . exhale. . . aflac! and a gentle wavelike motion... ahhh- ahhhhhh. liberate your spine... ahhh-ahhhhhh......aflac!

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company planning to cut 500 jobs in information systems and government services division. that's according to a reuters report. lockheed is planning to sell or spin off that division later this year. the layoffs are expected to be completed by mid-november. the u.s. futures trading commission deciding whether jpmorgan chase -- that's according to a report in "the wall street journal." the cftc probe claims they owned capital management. also netflix is following its debut in china with plans to expand its service in asia. the expansion is expected early next year. also exploring for expansion into china. united continental ceo jeff smisek stepping down. joining us now is jacob frankel.

jacob, what's this whole thing smell like to you? >> well, clearly the company is doing the right thing. they connected an investigation and in terms of what statutes we might be looking at, it brings back thoughts of jeffrey skilling. because on statute which is part of the mail and wire fraud statute has been used to investigate and prosecute state or local officials. so it seems like that is really the guts of the investigation. but i really have seen statutes available in play here. we don't know the details. one is on a services fraud. another is fraud using federal program funds which has also been used to charge cases where there's this air of bribery. and the other is the travel act. but a long way to go. but where we are right now is the stage of the corporation doing the investigation which is the proper thing and quality

corporations when senior executives, we talked about this many times over many years. when quality corporations have senior executives who were caught up in some set of allocations. now corporate discipline requires that they remove themselves or be removed from those positions of leadership. >> you mentioned skilling's name. that certainly got the attention of jim chanos who uncovered the enron scandal. >> remember, skilling was skilling conrad black and the third case was often forgotten as part of that triple header at the supreme court. was a lawyer from alaska who was also in the state legislature. i don't want to say similar, but those three were all affected. that's where the supreme court said on a service and fraud prosecution there needs to be a bribe or a kickback. i think that's really the guts of this investigation. >> but honestly, what they're

talking about here, i can't believe that things like this would still be taking place in the united states at this point in time. we knew that this used to happen 30 years ago. we suspect it happens all the time in foreign countries. to hear that an official in order to go ahead and give them the things they need to do at newark airport wants an entire flight line reinstated so he can get to his summer home on time? that's got to be beyond the pail. >> the case involving the governor of virginia too but we're talking about things of value. the traditional bribe which is money is something we don't see much. the most high profile case of that was congressman jefferson from louisiana with the dollars in the freezer. but the more traditional issue in the united states over many years has been something of value and really the government trying to figure out whether and now particularly with the way the supreme court reinterpreted

on a services fraud. the issue of is there something of value. was there a quid pro quo or was there a kickback? >> i want to understand the criminal liability for jeff smisek if there is criminal liability. >> correct. if. >> if. no, no. but just what would they have to prove and what would be the possible defense? >> well, the defense would simply be this is part of -- you know, this was a bona fide corporate need and there really was no quid pro quo. we had been lobbying for this for a long time. that there was a business logic to reinserting this, you know, this route into united's route system. and what the government needs to prove in which ever of the cases whether it's travel act on a services fraud or federal program funds fraud which has

the bribery component to it as well. and i digress for a moment. that's a violation of state law. what we're really talking about when we're talking about with these three sktatutes -- what might be a state driven defense. as i mentioned before, public officials from the state municipalities and liquor boards. i wrote an article about this years ago. but the fundamental issue that has been to be proven, back to your question, andrew, is there was criminal intent here. that there was something of value that was given in exchange for an official act or expectation of an official act. >> do you think united is going to be paying everybody's legal bills given how the setup so far in terms of all the benefits that seem to have gone to these

executives that are still leaving? >> in these structures there is indemnification, corporate officials. i will say yes because this is still the investigation stage. >> jacob, thank you. >> thank you. coming up, guest host jim chanos is going to unveil a new short position that he hasn't previously discussed. he's going against some major hedge fund players. we'll unveil that position right after the break.

♪ welcome back to "squawk box" here on c first in business worldwide. tivo shares getting a bump right now. results helped by higher subscriptions. also macy's planning to close 45 underperforming stores. and "the wall street journal" reporting that the ftc is now stepping up its antitrust review of the staples/office depot

merger. the request for sworn statements could signal a possible lawsuit against that deal. all morning long we've been telling you about a new short position that jim chanos will unveil this morning live on "squawk box." we'll find out which company he's talking about right now. this is a company in the lng arena. a company that carl icahn announced he's taken an 8% stake in. >> becky, we're -- >> shinear is the company. but it's a u.s. developer of lng plants. but we've been pretty negative in this space. we think it's a looming disaster. >> why? >> well, it's tied into asia. it was seen as a lot of natural gas plays a way to basically satiate the demand for energy out of asia. the problem is that everybody figured this out much like iron

ore at the same time. everybody is convinced building these huge lng plants which are immensely expensive, many of them in australia and pacific rim. the problem is that lng demand isn't growing anymore. and we already have excess kpacht. we're about to double the capacity in the next four years. we've seen this movie before. this time it's going to be coupled with incredibly expensive giant plants basically with debt attached to them. lng has been seen as a unique animal because it's going to be u.s. based. they're opening their paths later this year and it was a way in which cheaper gas, u.s. gas could be used as a feed stock. and lng went out and got long-term contracts, 20-year contracts from a number of buyers. it was seen as a safe play, this lng boom.

the problem is it only covered about 80% of their outlook. more importantly if you do the numbers the company has given you, 2.2 billion many years in the future of so called ebida. depreciates over 30 years. 30 $20 billion will be invested in this things. and pay interest on the debt. you've got about $2 a share on earnings. stock is near $60. >> for a company that doesn't have profits yet. >> and is losing lots of money and is in effect a commodity business. two interesting things. china has tried to actually now begin renegotiating certain take or pay contracts in asia. more interestingly, the government which was the largest from a supplier point of view is willing to renegotiate long-term

take or pay contracts with customers. so the whole idea that it's in a declining commodity environment i think is going to be under a lot of pressure. having said all that, with the stock at 30 times 2020 earnings with the upside coming from a glutted market, we think the risk reward on this given where other lng plays are in australia and elsewhere is completely out of whack with other places. this is a commodity. >> i assume you were building the short position before icahn revealed. >> that, i don't know. we might have krosed a few trades. i don't know. >> he just announced this a month ago. >> when did you land on this? how did you land on this? >> landed on cheniere, and the amount of capacity coming out over the weekend came out sounding the warning on lng saying this glut is coming. the problem with these plants is

they take years to build. once you start constructing them, they have to come online. it's not like shale gas where you turn it on and off. so this is really something that is going to be hitting over 2016, '17, '18 no matter what happens. and i think that's the real problem. as i learned a long time ago building a house, there's no such thing as a fixed price contract. there's ways in which buyers can get around. >> part of what carl icahn wanted to say was let's return some money to shareholders or get some value back to shareholders. they're going to need every penny they can get. >> given what e the hydrocarbon collapse in price, i mean, do e renewable represent -- there's got to be something where the story has gotten ahead of the ability to make any money. isn't there? >> yeah. there's probably a couple where i think the renewables are a

little silly. i know there's one company that is being promoted by a certain guy who's got an electric car. sfl is it a great men's aftershave you can't have too much of? yeah? >> we've talked about solar city and the solar city ceo got quite upset i called his company in effect a subprime company. he came back on later that day on cnbc and said no our fico scores are this and that. some of those agents have subprime credits but my point was he's a financing company and he admitted that. and people think of solar city as a high-tech company. no. it's akin to people going door to door selling aluminum siding. >> i got a call yesterday. >> i get this call every day. >> subsidies. you can get them for free or something. >> which is what it is. and the coe knitted it.

it's a different dynamic. and he's not competing with you till tis. he's competing with other solar companies. that's where solar city is out of whack. >> because you think they're out of whack in terms of their pricing. >> yes. exactly. >> you think that's going to catch up to them. >> commodity business. >> why hasn't -- why haven't people figured that out then? >> because it's aggressively sold door to door. >> but why is that a bad business if they continue to do it? >> ultimately people will decide they have choices. a lot of it is doing they keep the itc because they own the panels. that's going away. but that's going away. to allow the consumer to keep the itc. having said all that, it doesn't deserve a crazy multiple.

it's a finance company as the ceo admitted. >> you don't have a roof. i mean, you're dying to put up some panels somewhere. can you put one on like your n window and recharge your iphone or electronics with it? there's nowhere to put your solar stuff. >> on the plaza. >> you can't act on your greenness to the extent you'd like. you have to move to the burbs. the twins don't care about takeout chinese. they don't care about that. >> anyway, jim chanos' short he just revealed cheniere. >> isn't it more cosmo if you say cheni. coming up, jeb bush is here

and he's unveiling the new plan he has for taxes that has a prominent position in "the wall street journal" opinion page today. among the highlights, lower taxes, get rid of loopholes, and keep america competitive. and a programming note, don't miss david tepper. he had a tepper rally. how about a tapper tantrum. that could be a that imto him. exclusive tomorrow at 8:00 eastern only on "squawk box." i say we go all in on the internet... of things. what we're recommending as your consultants... the new consultants are here. it's not just big data... it's bigger data. we're beta testing the new wearable interface... ♪ xerox believes finding the right solution shouldn't be so much work. by engineering a better way for people, process and technology to work together. work can work better. with xerox.

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jeb bush. this was last night making an appearance on the premiere episode of "the late show with stephen colbert." we're one week away from the next presidential debate. this morning governor bush is rolling out his new tax plan here with us on set to talk about it. jeb bush, former governor of

florida. great to have you on set. >> thank you, joe. >> thanks for joining us. >> andrew, becky. >> great to see you. >> nice to have the journal put knit a prominent position. not everyone has seen it though. summarize the key points. >> i think we need a grow at a far faster rate than today . 2% is fine for people who already made it. but it's putting a lid on people's aspirations. more people living in poverty than the day president obama got elected. first ae foremost, dramatic reform of our tax code. what we proposed is simplifying the rates. expanding, doubling the exclusion so many low income earnings won't pay taxes at all. simplifying the code to put a cap on deductions because there's thousands and thousands of these credits and deductions

that i think create the kind of environment -- everything else would be part of the cap. we would eliminate state and local exemptions of taxes. and so that system for personal taxes will create an environment where people will save more. all people will get a tax kuts of some kind. the dramatic economic effects i think are reducing the tax rate from 35% to 20% for corporate taxes. and allowing for full expensing of all capital investment and eliminating the deduction for interest expense. >> mortgages. >> no. for capital -- for corporate borrowing. >> and capital gains? >> capital gains goes to 20%. we eliminate the obamacare tax.

so all investment would be taxed at 20% interest income, dividends. capital gains. and we would have a 20% corporate taxes as well. >> and then overseas profits. >> we eliminate worldwide taxation. >> and bring it back at a -- over ten years at 8.5% or something? >> 8.75 pr%. >> will that work for you, andrew? or will that be a solution -- this seems like a no brainer. >> this is the existential question. whether people will bring it back and what rate. >> well, we're taxing it. our proposal is it will be taxed whether it comes back or not. because it is a form of a tax liability. but going forward, there'd be no taxes. which is i think what every other country in the world has. a 20% rate when fully investing in growth is going to create more growth. we'll create the opposite of what we have today. we'll have whatever -- i'm not sure what you call a reinversion, weal call whatever

it is if we can fix how we regulate e, embrace the revolution if in the long haul, this will be an opportunity to reindustrialize the country. we need to create higher wanls and this plan would do it. this would stimulate higher growth. combined with other initiatives. you could get to 4% growth. so you get to $3.75%, fine. >> would you get this through if the next election changes and it's not a republican congress? >> in the congress we have today nothing gets done. they can't pass a budget. they pass a budget, the republicans did that. but the president has threatened any appropriations bill -- >> any deduction you get rid of, someone is going to squeal. >> on the personal side, do you get rid of the home mortgage? >> we put a cap on.

so for lower income americans, they get a bigger deduction proportionately. it would be capped. the other approach wuss to get rid of all of these things and to have the big fight you're describing. >> i think you still have the fight either way. >> i don't know. we'll see. i think when you see the lower rates, that's the tradeoff. simplicity. there'll be 13 million filers of the long form instead of 47 many l. there's a lot of benefits of this. >> to the extent you wanted to benefit the middle class and have even talked about doing that t a the expense of the wealthy with, how do you think this addressing that? because organizebly by bringing down the tax at the highest and the way you have, they will be great beneficiaries of this if not more so. >> everybody will benefit from it and we'll create higher growth. there is a dynamic effect of taxation. those who think we statically score this, they're just wrong.

that is ludicrous. people make big investment decisions based on tax policies around the world. a simplified code would create activity for sure. in our case in this proposal, people from the top 10%, the top 5%, top 1% will end up paying more than they pay today. >> that's going to be the pushback. i already saw it. >> of course it is. >> and they are -- they will not grant you that there's a dynamic aspect of this. >> they're wrong. >> they won't allow you to add any growth into whether this is revenue neutral or not. they'll say it's not. >> of course. >> would you cut some stuff? >> absolutely. this is part of a strategy to create economic growth will generate revenue for the government. growing for an extended period of time. and we need to cut spending. and we need to deal with

entitlement issues that are going to be the out-year costs that people are legitimately concerned about. >> are you going to write another op-ed or have another plan for regulation as an issue? >> yes. we've got -- i'm blessed with a lot of really smart people who are helping me with this. i'm running a policy-oriented campaign. i'm not going stob the loudest voice out there and not going to try to disparage and insult people. we're going to come up with plans that give people hope. >> that coming in question of the campaign. you're having a thoughtful discussion. but how do you get that to break through? >> by coming on "squawk box." every question is not going to begin with a "t." >> but that is the question in this environment where there is an element of trying to just get the electorate excited and interested about what you're doing opposed to even having a thoughtful dialogue about it. >> you've got to put in context that people understand. there's this new thing called

television advertising will be part of this. and you've got to stick with it. you've got to stick with it. if people want someone who disparages everybody and that's their version of a sign of strength, then i'm not going to be elected president. but if they want somebody who has the leadership skills to change the culture in washington, i'm interrupter. that's what i did when i was governor of florida. we cut taxes every year. i balanced state budgets. when i left there were $9 billion of reserves. i whacked the budget all over the place. if it wasn't part of a disciplined approach, i used the power of the executive to change the course of how we want about things in tallahassee. >> things are stuff in washington. if you come in and say it's going to be my way or the highway and you're going to argue with me about whether this generates growth. you know that 50% of the people there are going to think it

doesn't change growth. is there room for something to say we're going to get the rest of this passed. >> of course there is. campaigns are about aspirations. governing is about finding solutions. and you can be principled and actually have a dialogue with someone who doesn't agree with you. last night on the interview with "colbert" i said we haven't -- i'm going to pause. but i think he's wrong. the fact is you don't have to scribe bad motives to someone. the moment you do that, you create camps in washington. the apart from the culture of this huge government that's inept and incompetent, you'll have a conversation with someone about cyber security next. can you imagine a country like ours allowing the chinese government to hack into the office of personnel management.

this is an outrage of sheer incompetence. bringing those to washington is important. but you don't have to push someone down to make youfrs look better. >> when you think about the motive issue. trump has raised the first -- >> that was the first time it was mentioned. i knew you were -- >> he'd say hillary is owned by the special interests. look at the superpac and say there's individuals getting a million dollars each. >> look at my tax plan. we eliminate carried interest. >> and what's the response been? >> i thought that would be your first question. you gave him kudos. >> i'm looking for the investment bankers jumping out of buildings. >> you're also going to eliminate the private equity business. if you're not going to allow interest, governor, if you buy a company -- if you buy a company, would you disallow the deduction of interest on that? >> yeah. i think we need to move to --

>> i might send you a check myself. because this sounds great. >> this is a radical departure. >> it is. >> investing in hard assets. we're rewarding main street. we're not penalizing wall street. but right now wall street's done -- had a pretty good ride here engineering and using great skills to make american businesses the most come ppetit in the world. people are stuck in the middle and the poverty level is increased during this time of great transfer of payments to people in poverty. we need to move to a completely different direction. could you imagine a country that would have the lowest tax rate in the world and where you're rewarding investing in a factory. 100% deduction. and you're from rewarding equity. that's what we need. and the wall street dguys will e

fine. they'll look for high growth for the middle class and for everybody. so that's my answer. what would be yours, andrew? maybe you'll write a nice column about it. >> my view is in carried interest. kudos to you on that in a big way. he's right. it will change -- >> if people invest, put money, put skin in the game and are investing in the proposition they're doing, then they'll get treated the same way as other investors. >> you would get democratic votes on this plan, i think. >> i'm expecting to get republican votes first. >> so reince priebus, i thought this primary season the mistakes of the last one weren't -- you know, that someone wasn't going to give the democrats all the ammunition in the general election. but things don't work out as they are planned. if the last one was a circus, what is this? this is like the ringling brothers circus. >> there's a crackup in our political system. both on the left and right. people are genuinely upset and

angry about the dysfunction in washington, d.c. so i disassociate legitimate angst and anger from candidates that are praying on that angst and anger. no one is going stob elected by calling people an idiot. that's not going to work. but we're going to have to fight it out. i intend to fight it out. i believe in limited government and personal responsibility and individual freedom and all these things that have created the greatness of our country. i'm not going to let that be tarnished by people that come in and disparage these deeply held beliefs. when elizabeth warren yesterday -- i almost spit up my diet coke. she applauded donald trump for his tax policies. i mean, come on. this is alice in wonderland time here. so as the world gets turned upside down temporarily, we need -- >> was there actually a tortoise

and a hare? did that actually happen? >> some say that did happen. >> it's a great story. and in a perfect world, that's the way it works. stick to your principles. but in a social media world where you've got to make a splash, i don't know if it eventually rises to the top. i don't know. hang in there. >> we're going to find out. >> yeah. you seem joyful to me. >> i am joyful. when i'm talking about ideas that matter to people, that's why i'm aspiring to be president. this is important. >> well, and it's important that we have great viewers, obviously, that want to hear substantive stuff. so that's why you have a place here wherever you want. >> come back on the regulatory plan next month. >> thank you. >> i'm writing that down. thanks to governor jeb bush.

>> with an exclamation point. thank you for the conversation. coming up next guest host jim chanos is going to be joined by the head of fire eye. we're going to talk about the future of the threat from china. that and more. we're back in a moment. so you're a small business expert from at&t? yeah, give me a problem and i've got the solution. well, we have 30 years of customer records. our cloud can keep them safe and accessible anywhere. my drivers don't have time to fill out forms. tablets. keep it all digital. we're looking to double our deliveries. our fleet apps will find the fastest route. oh, and your

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20 years of power, money, and mayhem. >> you know, tailgating. >> 20 years of unprecedented access. >> who are you wearing? >> and 20 years of bringing wall street to main street. >> do you want people to be able to try to non-correlate a portfolio to normal risk. >> now it's time for the next 20. >> today's conversation, cybersecurity china and an in-depth look at how corporate american governments are dealing with the threats and the back actors behind them. >> we are joined by the leading security firm for fortune 500 companies and a man who's been sounding the alarm about cyber es pea joj. david dewalt ceo of fire eye. a special edition of "squawk box" conversations for the next 20 years starts right now. ♪

live from the most powerful city in the world, new york, this is "squawk box." we're back. never mind. >> where's andrew? >> he's over there. >> welcome back to "squawk box." i'm joe kernen along with becky quick. i thought it was over. it's not. we have important things to do, obviously. sorry, david. big interview of the 8:00. chanos is still here in studio this morning for the 20th anniversary conversation. kynikos associated founder jim chanos. it was like you saw god or

something. you like the idea of getting rid of the interest deduction. you think democrats could go for that? >> i think some could, yeah. i think actually simplifying the tax code, reducing deductions and focusing on equity, not debt. >> you talk of this as -- >> i think they're going to try to shoot this one down. it guts a few industries. >> we didn't have time to talk about everything, but it is a bright spot in the economy from time to time. as is actually some of the other wall street-related industries. that's been one of the arguments. is that's working. why mess with that when it's something we lead the world in? does that concern you? >> most hedge funds. >> fair isn't a word you can use. >> this isn't an issue for most hedge funds. carried interest is a way to turn in effect fee income into capital gains. >> wouldn't it affect law firms,

architectural firms? no? >> mostly private equity and to a lesser extent real estate and oil and gas. it avkts the hedge fund industry least. >> did you endorse it? >> the vice president is a friend of mine and i'm hoping he runs. >> you're hoping he runs. but you still might vote for this plan. >> well, i think that his plan is interesting. and i think it's -- >> keep an open mind. >> as an american citizen i think it's interesting. it may have a lot to it. we'll see. >> even andrew. andrew, you know, he got you at hello with the carried interest. and then he even extended that with you. >> you know, i've been an advocate for getting back far long time. he may get a column out of it. >> life would be complete if you wrote a column. >> he may get a column. >> i told him not to hold his breath. >> it takes courage to do that.

we talked about all the money he's getting. it's going to be an interesting -- >> good thing he already raised it. all right. >> let's tell you what's going on in terms of the headlines. check out this futures at this hour. looking at a higher open. dow would open 150 points. nasdaq up about 45 points. warren buffett sharing his thoughts on the recent market volatility saying he's confident markets will be considerably higher. here's what he told becky yesterday. >> i'm no good on what's going on in markets. i have no idea what will happen tomorrow or next week. sometimes they get very volatile like this and other times you get to sleep. i'm confident they'll be considerably higher in ten years. i really have no idea where they'll be in ten days or ten months. >> we have a couple corporate headlines this morning. yahoo may have to pay taxes on the $23 billion they plan to get

from the stake in alibaba. denying the request for a private letter ruling on whether the spinoff would be considered tax free. can still go ahead with it but then it has to wait for the government to tell it it did not get an advance on putting that rule in jeopardy. also apple's big event coming up this afternoon. expect iphone upgrades, new operating system, bigger ipad, and ways to block online ads. apple shares are down about 14% since its earnings report back in july. we've got a lot more on apple's event in just a couple of minutes. then the buzz story of the morning. united continental replacing ceo jeff smisek. added a direct flight from newark to columbia, south carolina, where former port authority chairman david samson has a home. route was canceled after samson resigned from the port authority early last year due to an unrelated federal probe. united is now announcing oscar

munoz is going to become the coo immediately. they called that flight the chairman's flight. shares of united right now are about $57. becky, over to you. >> thank you. right now it is time for a special "squawk" conversation for the next 20 years. sanctions against chinese companies accused of prophetipr from the digital theft could come as early as next week. that would be ahead of xi jingping's visit to washington. that's raising a lot of eyeballs. right now what corporations could be facing the next 20 years, we are joined by the ceo of fire eye. his security firm's customers include 600-plus fortune 500 companies. also with us this morning is jim chanos. he has over $3 billion in assets under management and famously sounded the alarm on the scandal that befell enron.

gentlemen, again, thank you to both of you. i think the biggest question is how frequently we have started to see these attacks. how you're talking about millions of americans' personal information being compromised in these situations. the idea that nation states are behind this more and more frequently. >> it is. we've seen nation state activity for well over a decade now. and of course we haven't seen that at all. in fact, if anything, we've seen it increase. we tracked with just within chinese military. basically stealing from american western world countries. we're watching the russian state activities now all over the world. it's kind of a major chess game and cyber space is in the middle of that with no end in sight. >> what -- how are corporations supposed to protect themselves from competing against a country that's actually sending its resources to try and break into your system? >> it's not easy. i think this is one of the

biggest challenges corporations face today. if you have a lot of intellectual property or financial assets, you're probably a target. this is the reality. we think the security breaches are inevitable and we need government help. obviously the sanctions against russia and potential sanctions against china are really just a small step guard to what probably needs to get done. we need a lot more diplomatic relationships to stop this or else military against commercial operations is an unfair fight. >> you're talking about the chinese doing things like this. i guess they all have their own footprint in terms of what they're trying to do. >> yeah. there's a lot of different motives. china, no surprise there. a lot of state owned funding using cyber activity to fuel that economic interest. russian activity is much more for financial gain. syria and iranian for terroristic type purposes.

and now north korea with sony as well. >> when you think about this back and forth war that seems to be going on in cyber land, would you ever tell a corporation effectively not only to put up gates but either to try to attack back in some way even as a defense mechanism. whoost really going on behind the scenes? you hear more and more about not just a protection element on our side, if you will, if you're protecting a u.s. corporation. but maybe even having to launch your own attack against the attacker. >> we don't. i mean, andrew, i don't think that's a strategy or a philosophy that will work well when you're up to the military might of china or russia. you're only asking for more response when you do that. so it's going to take cooperation and teamwork. this is a lot of relationships amongst corporations to work back together. we now have formed a lot of

communities that can really put a deterrent back in place. critical services has them. government has to work together with public sector and private sector and we need to be able to resolve this. >> do you work with non-u.s. companies, by the way? >> of course. we do work with companies that need to be protected in china. mostly western world companies doing business in china. same with russia. and our goal is to protect anybody globally who needs help. >> jim, you're a short seller, but you're long this industry because you think it's a growth industry. >> it's one of the few areas we're long the industry in our hedge fund. david, at what point do you think b that these actions by state actors have literally crossed the boundaries into acts of war? we have xi jingping visiting washington in a couple of weeks, what would your answer be to that question? >> my answer is we've already crossed that line. i think what we watch every day

is massive military operations stealing from corporations. even disrupting them. iranians' activities, north korea's attempts to wipe not only soernny but other companies is across the line so we need more than just diplomatic relations just to solve this. sometimes a response is required or -- >> what's a kinetic response? >> some sort of physical response. some sort of activity that helps us. you know, say this is a deterrent that's required. again, my view, we have to take a much more aggressive stance. >> should we be rolling out the red carp it and having the premiere at the white house. >> i think it's the right strategy to be honest. we have to peacefully resolve this. president obama last year had his summit in stanford which is a great step trying to educate. and part of this is naivete at times on what the problem is. and ultimately we need peace.

>> how far the government ranks how the cyber attacks are being orchestrated? >> in which area -- >> chinese. chinese, for example. >> i believe cyber is a new domain. whenever we see land, air, space, and now cyberspace. almost every country in the world is using those domains to their advantage one way or another depending what their missions might be. of course we're seeing that. if we don't resolve peacefully what it's about, it's heading for some challenges that i worry about. >> you think there's a policy from the premier on town from around the cyber attacks. >> we published a report, my service group called mandate reported. we though unit 61398 operating out of shanghai is a big

operation. you know, we track them. we know who they are. it's a injure operation funded by military. >> do you honestly not think it's being approved by the highest level of chinese government? >> i suspect it is but i'm trying to understand how high it goes. >> we believe so, obviously. but i don't have a direct tie to say that's the case. but you can see these major military operations seem like they have the support from the top. of course i think we've got a big challenge in front of us to take steps to resolve it. >> 20 years from now, what has to happen in order to make sure you guarantee our safety not only of our consumers but also our corporations? what are the three most important things that have to happen? >> think about the physical world with viruses and disease. we have world health organization operations, we need something cyber. we need an independent body to help regulate cyber space in a way that's very controlling.

and if we don't do that, one nation is always going to have a mode operandi. and so we're in the very early innings and stages of this. we probably have to evolve quickly. now we're seeing rogue nation states begin to get weaponry and begin to get activity that can put destructive forces into place. so, you know, time's now. and i think the meetings that are coming up with the chinese prime minister as well as the american is important to do. >> dave, thank you for joining us today. >> thank you. >> you have a lot of water stored somewhere in a bunker? i mean, seriously. this is scarier to me than -- i mean, the grid. what are we going to do without the grid? we had a couple weeks where we couldn't get gasoline, electricity was off because of gasoline. and i saw things that were

scary. if it was six months without the grid, i don't know -- >> i don't want to be ominous either. i think we've got to keep improving. we do get a front line seat to this. we help companies all over the world. the company has been growing. i think we can solve an important area, but it's not easy. and, you know, hopefully -- >> don't forget the can opener. you can have all this beans and then you forget to -- >> rocks. break them open. >> break them open. you're screwed. >> what am i going snood. >> just write you off. chanos you probably own an island somewhere. >> jim chanos is staying with us for the rest of the hour. when we come back, apple fans are gearing up for a big event this afternoon. and the rush to be first on line it's already begun. pictures on twitter are already popping up of campers in front of apple stores. we'll talk product bloomers later on.

and tomorrow a special guest appaloosa management founder and ceo david tepper will be joining us. we'll ask him what he thinks it's going on a week ahead of the fed's decision. "squawk box" will be right back. good. very good. you see something moving off the shelves and your first thought is to investigate the company.

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welcome back, everybody. apple expected to announce upgrades to the iphone. plus there's talk of a new television offering and ipad enhancement. it happens a few short hours from now. our jon fortt is there for the party. good early morning to you. things starting early today. >> yes, they are. good morning. and i tell you, this is a little bit unusual for apple in recent years in that usually they reserve this september event just for iphone news but we're expected to get news on more than just the iphone. the iphone b is the big moneymaker. we're expecting iphone 6s, 6s plus. may be named that or something else. force touch. you got that in the watch. actually feels like there's depth when you touch on the phone. that should open up new interface possibilities as far as how you interact with the phone. also a new front-facing camera

to help our inner narcissism to take higher resolution selfies. and a stronger aluminum in the body itself. not that bendgate was a real issue, but these should be harder to bend. we're expecting an upgraded box on apple tv. perhaps playing games with an app store, a new remote. perhaps you can speak to using siri. then on the ipad front, a larger ipad that's able to have a couple of full size apps running side by side for multitasking. these will be more expensive but apple's trying to figure out how to revive ipad sales after those have been down for a couple of years now. the unknown here, though, is how customers will react to price. carriers have changed the way they sell smartphones recently. they're off of the subsidizing them up front. this could benefit apple actually. they've got a number of legacy ios users they want to upgrade.

that's the biggest thing. the cherry on top, to get other manufacturers to switch over to ios. they've been succeeding with that in this cycle. samsung has the curvy new phones, they're going to try to keep apple from doing that. >> what time does tim cook take the stage today? >> your time it should be 1:00 p.m. that's the standard time they usually do these things. tim cook takes the stage. we expect to see the phones at the end of this month if they do things as they usually do. >> jon, thank you. we'll be watching. our guest host today jim chanos has been bullish on apple. maybe it's better to say you're bullish on apple but really using it as a hedge against something you doipt like, which is hewlett-packard. >> we're short the pc chain. we're looking for ways to be hedged in our fund.

app sl an easy way to do that. it's cheaper to do that. if you like hewlett-packard, you have to love apple or vice versa. >> what do you think about the tumble over the last month or so? there's been chaos in the stock. >> in apple? >> in apple. >> yeah. it's a so-called hedge fund hotel. i guess i've checked into the hotel too. but like anything, expectations like with any stock can get ahead of things and people sold off. they're probably also using a source of liquidity. >> have you been buying more apple? >> well, we buy more as a hedge. >> just simply as a hedge but nothing more than that. >> nothing out of the ordinary, no. we haven't changed our view on it because of the product launches. although i'm curious about apple tv. because apple tv will have a real impact on other businesses. >> is there anything that will change your view on hb, by the

way? >> yeah. if i saw business growing again. the problem with a tech company shrinking 6% to 10% a year is you lose all your people. and, you know, the people that remain there are really not the people that are going to take that company to the next level. hewlett-packard is basically a backwards looking company. >> even with the breakoffs. >> the breakoff is financial engineering. it's more of the same nonsense. you know, tell me new products that hewlett's got that people are excited about. cyber security? no. 3d printing? no. i mean, all these things that keep getting launched up in silicon valley, hewlett-packard misses. >> jim chanos will be with us through the rest of the pra m. >> sounded like you were talking about ibm. but you haven't looked in into them. >> we were short them a time ago. but same story basically. coming up, jeb bush hitting the talk show circuit including "squawk box."

his comments on the economy are next. plus we'll talk the run for the white house with jim chanos. check out the futures at this hour. still up by about 140 points on the dow. "squawk box" will be right back. they come into this iworld ugly and messy. ideas are frightening because they threaten what is known.

they are the natural born enemy of the way things are. yes, ideas are scary, and messy and fragile. but under the proper care, they become something beautiful.

♪

happy birthday to "squawk box." 20th birthday. very young. >> i'd like to say a big happy birthday to "squawk box." 20 years young. well done. >> my grandfather had a saying. you're old enough to know better, but young enough to try it one more time. keep doing what you're doing. >> "squawk box," happy 20th birthday and many, many more. peace.

♪ welcome back to "squawk box." here's what's making headlines at this hour. mortgage applications falling 6.2% last week. the drop was led by a nearly 10%

decline of refinancing applications. also a fresh read on the job market. that's about 90 minutes away. the labor department is going to be oelt with the jolts report for july at 10:00 eastern time. the measure of job opportunities in labor turnover. then japan saying mcdonald's saw sales rise 2.8% last month. that's pretty significant because that's the first time it's increased in 19 months. joe? republican presidential candidate jeb bush calling for an overhaul of the nation's tax system. proposing individual tax brackets from seven to three. he also wants to eliminate the death tax and alternative minimum tax. governor bush spoke to us a short time ago about the plan. >> a 20% rate when you're fully expensing investing in growth is going to create more growth. we'll create the opposite of what we have today.

we'll have whatever -- i'm not sure what you call a reinversion. whatever it is, if we can fix how we regulate and embrace the energy revolution over the long haul, this will be an opportunity for us to reindustrialize the country and to create higher wage jobs. we need to increase productive to create higher wages. this plan would do it. >> and the full plan is set to be unveiled this afternoon as part of a larger economic policy speech that the governor's left florida to head down to north carolina. and yesterday becky spoke to warren buffett about vice president joe biden possibly throwing his hat in the ring. >> if they think they have a reasonable chance. i'm sure that's what he's weighing. >> more about the 2016 race for the white house and why jim chanos is a joe biden fan. you said you've had a long

relationship with the vice president? had. >> i've known the vice president when he was a senator. so, yeah. and he's mulling it over as he says he is. i think it's a family issue right now. more and more people on my side of the aisle want him to run. we'll see. i mean, i think he's not hurt to wait for some certain reasons. i think in other ways he'll need to get an organization going. >> wait because you want to see what happens with hillary clinton? >> well, i think clearly he's waiting to see what happens with the investigation. i mean, people are worried about him raising money. but of course, if somebody bad happens to the hillary campaign, it kind of doesn't matter. he'll be able to raise money. it's a binary outcome. >> you're a betting man. what do you think is going to happen with the investigation? >> i have no idea what's going to happen in the investigation. i'm just reading the same stuff you are. so it's in the hands of the fbi. >> under no circumstances would

you support bernie sanders? >> i don't know a whole lot about senator sanders. so i'm just waiting to see right now what the vice president's doing before i make any decisions as a voter. >> would you support hillary clinton? >> historically i've not been a supporter of the clintons as you know, joe. again, let me see what happens with the vice president. >> under any circumstances would you vote for a republican? >> i voted for republicans before. >> that wasn't a yes. that was a, i've voted for republicans before. >> i don't know if i could vote for any of these republicans. but i've voted for republicans before. >> that big dogcatcher position out in east hampton was significant when you voted for that republican. >> i voted for ronald reagan in 1980, joe. that's going to knock you off your chair. >> most people go the other way. as they get older they get a little bit -- you've heard the expression. >> i've heard a lot of expressions, joe.

>> when push -- when actually pushed for an answer, the vice president said -- i don't know, harwood doesn't think he's going to run. our washington guy. and he says, geez, i just don't know if i have the emotional fortitude to go for it. and that doesn't sound like a guy who's going to conjure that up. >> i think he has the emotional fortitude. >> you think he might? >> i think it's a broader family issue. personally -- i don't know that, but that's a guess. i think the family's been through a lot of tragedy. i think they're weighing these things and the impact on him, his wife, his -- you know, extended biden family. >> people on the other side would like to see that just to be a witness to the -- what's another word for storm? i can't use the one i'm looking. but there will be an excrement storm if he's with the clintons.

i love the way they operate. that will be monumental if he jumps in. in terms of what they'd be willing to throw out. >> when we talked to the governor this morning, one of the things that struck me about the plan is this is -- the tax plan, anyway, is that if it's as he described, it's a plan that actually i think would interest people from across the aisle. >> didn't you get the notion that obama would lean towards biden too just from the way the press secretary sort of fielded those questions? that would -- obama would be an interesting position too. >> he'll be in an interesting position. you know, he's supported hillary, the secretary of state, when she left. remember that famous "60 minutes" interview with the both of them? i think he's also very close to the vice president. i don't think it's a secret. >> andrew, if the democrats could still win, would you support that fight just to watch it with me? just to watch the clintons versus the bidens? just as a journalist and a water cooler guy, aren't you just --

>> i like a good story. if that's what you're after. >> aren't you ready to pull up a chair to watch that? >> you just want the same chaos that's happening right now the the republican early going, right? >> i think that would pale in comparison. >> i'm more into the policy discussion. >> i know you are. much more with this. we'll talk later in the hour. when we come back this morning, we can have our cake and eat it too. a special present from a super chef. look at that. a beautiful cake. plus his endeavor in new york city. the ceo of real estate giant howard hughes and famous chef will be joining us. let's check on the european market at this hour. this is the same story we saw yesterday at this point. it looks like the cac is the major gain. 2.6%. you see green arrows across the board here. even as you saw 400-point gape b

for the dow yesterday. i should say almost-400-point gain. now take a look at events that happened in 1995. that's the year "squawk box" was launched. our special conversation continues in a moment. "squawk box" will be right back. care of my heart.

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celebrated chef behind 30 restaurants around a world is here. he joins us with dessert this morning and news he's partnering with the howard hughes corporation to open a 40,000 square foot food hall in 2017. chef jon george with us. you brought us -- we should show an image of it because we're happy about i. you brought us a birthday cake. >> happy anniversary. >> you've got doughnut there is? >> marshmallow cake. we have some grape glazed doughnuts, some chocolate chip cookie. >> is that the marshmallow you were talking about? >> no.

they do these -- you still do that right? marshmallows at dessert. superb. in a trump building, no less? >> that's right. >> let's talk about what you're doing at the sea port. this is different. >> very different. it's a very exciting project. >> the sea port in the 1800s was the epicenter of new york city where all commerce originated. and where jean-georges market will be is where the fulton fish market was originating in 1822. >> this is the first place when i arrive in new york in 1986. i run to the market. the fish market was spectacular. so much going on down there. i feel like that's where the city started. >> dare i say is there any comparison to what mario vetteli has done? >> the fish market with retail

fish as well as sushi bar. >> it's going to be a free standing building and the authenticity of reviving that building back to its original use is something that was important to us. >> and this really got wiped out during sandy. >> the building has been shuttered for awhile but the entire sea port area was damaged during sandy. >> how much you have to spend to do this? >> a lot. we're just finalizing our budgeting on it, but we have to rebuild the pier underneath it and we have to take the building apart and put it back together again. >> what's the margin on something like that compared to doing a restaurant for you? in terms of how do you think about what's the next project to do. >> try to recreate -- you know, we have so many different restaurants and concepts. this one, we're creating something. it's two years away but retail and everything will be -- >> can you ever get to a point where there's too many? >> of course not, no. that's not too many.

>> i think also the sea port's celebrated as one of the great destinations for the city. you can see the brooklyn bridge, the statue of liberty back towards the city. what we're really focused on is making the sea port relevant again for new yorkers. and at the center of that is making sure we have the best food offerings. and one of the things that was so appealing about jean-georges is his celebrated offerings from abc kitchen to his flagship. >> would you ever want to go down -- i don't want to call it down market, but you look at what danny meyers has done with shake shack. it's a different type of business. is that something you'd like to get into? >> we're looking into it. we have a few concepts already in the works. >> like? >> a concept called simply chicken. we have different places. we have a pizza place. we have a -- >> but is there an opportunity to grow those on a national level like that? >> yeah, sure.

i mean, in asia they don't eat too many burgers. >> and final self-help question for joe. he's trying to get into the restaurant, he's at the front. how much is he supposed to grease the guy? >> no, no, not that. which one is the hardest to get into where i should go now that you've been on where i can throw my weight around and come in there? can i get a waiter -- can i get a table near a waiter? which one? abc? should i come? >> abc kitchen, amazing. >> don't send had him to the mart. i hang out there. >> oh, a lot of hookers. >> i think the best ways -- >> sorry. that was bad. i'm sorry. >> really an open table? >> i think so. for sure.

>> you don't have to know anybody. usually it's between 7:00 and 9:00 p.m. you block those because you give them to people. >> we always have a few tables for -- >> i never get to go in the city to places because it's too hard to get in. it really is. >> from the burbs. >> yeah. where i'm trying to get you to come. i know. >> david, thank you for being here. thank you for the cake. we'll eat that during the break. >> happy anniversary. >> thank you. up next, we have a list of stocks you need to keep an eye on. check out the futures this morning. they are pointing to another solid open on wall street. up 390 yesterday. up 148 this morning. we'll be right back.

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welcome back to "squawk box" on cnbc, first in business worldwide. i'm dominic chu here with your morning market flash. first dave and busters shares higher in the premarket. better than expected q2 sales and profit and same store sales as well. the restaurant and arcade chain also boosted its full year forecast. analys analysts raced the stock to buy rating. we'll watch those shares for sure. also shared of mankind falling. cut to underweight from a prior

neutral rating. they also slashed their price target to $1.50 from $4 prior. man men's wearhouse that saw sales jump in the second quarter. even as their chain continues to struggle. shares are down over 5% in the premarket so, joe, some of the morning movers, all on relatively light volume at this time in the morning. >> the market is not open, am i right on that? >> you're right on that. >> okay. good. when we return, we'll wrap up our special two hours with jim. tomorrow on "squawk box," we break down apple's big reveal, and a special interview with david tepper. we will be here at 8:00 a.m. eastern. we'll be here at 6:00.

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we're wrapping up today's conversation on the future of the market with our special guest. a couple stocks we haven't mentioned that you've been short, successfully so, cat. >> we're still short cat. >> when would you close that position out? >> i think if you saw what happened to joy global, which was a name we were short, not anymore. i think cat has been slow to tell its shareholders what's really going on. i think they've been polly annaish, and i think the reality is all the end markets are hurting. this is a company, still trading at a big multiple relative to its peers. >> we talk about hp. where are you on intel? >> we're negative on that whole space. pretty much everybody in the pc chain, we're still pretty negative on. >> and how about, we talked

about solar city, but what about tesla itself? >> tesla, i talked about what you guys last time i was on here. it is sort of silly. there was a published report a few weeks ago that bmw was talking about having its entire caroli car line by 2025 electric. think about that. so tesla is being valued according to our friends at various different brokerage houses on 2025 earnings in cash flow that may or may not happen. bmw has an entire product line that exists today that they may port over to electric in 2025 with all the infrastructure and factories and dealer networks, and it trades, you know, at levels, i think below where tesla trades at. it gets how silly some of the stocks that have become momentum

and concept stocks are relative to real companies with real products -- >> did you call for that company to go out of business? do you think somebody buys it? i mean, what's your thesis on tesla? >> of all these companies, i think the one that's most problematic is solar city. they're burning $4 million quarter and putting up solar panels that may not be worth anything in 20 years. tesla, it will sell cars. >> i understand the cloud, actually, i don't. i just know it's the answer to everything, but when corporations need workstations to do things for whatever kind of data or whatever they're doing, who's going to be the winner there? not a single pc maker? >> amazon makes their own. >> so what's the future going to look like in terms of

information processing technology? there's not going to be anyone who makes hardware? >> people will make hardware, but it will be in taiwan and china. >> it will be a commodity. >> it already is a commodity. and i think increasingly, the value in the hardware chain just gets competed away. again, you look at amazon, and some of the other cloud companies, they put their own boxes together. >> what do you think of amazon? >> amazon is a great business. people derided amazon in its early years, but amazon never had any capital in this business. it was like dell. it basically, its customers financed it, so it really, you kn know, although it never reported profits, it never had any capital. that has changed. now they're becoming quite a bit in terms of bigger footprint physically. i think it's a lot less attractive today than it was years ago. having said all of that, we went back and looked because people said, well, amazon was the big

winner from dot come 1.0, but at one point it was down over 90%. and a couple of times it was down 50. i say that's great but would you have held it through those periods? it's easy in hindsight to go back and look and say, well, amazon came out of this thing a winner, but it was down 90% like all the others from 2000 and '02. would you have kept it? most people, no. much better business back then than it is now. their returns now matter because they're burning cash. >> google, who's the bigger part of my life in ten years, google or facebook? >> google or facebook for you? >> all right, google, google has a lot going on. >> i don't see you on facebook but i don't know. >>. >> i'm not on facebook.

>> they have so many crazy things at google. google is going to be in my life, a huge part of my life. >> self-driving cars. are you going to be part of that revolution? >> i like driving my car. >> are you going to be able to deal with the fact that most drivers that you curse at won't be there? >> that's going to remove -- i guess i'd have lower blood pressure, but it would take away the fun. will driverless cars be stuck in the left lane going 55? >> good question. suburban problems. >> a question about the hedge fund. given that so many of your brethren have suffered, how are we supposed to think about -- >> they haven't suffered. >> not personally, but how should we think about that. >> three bad months. >> relative to the market, though. >> the real issue is are they adding value. my problem with a lot of people

in my industry is they don't hedge. guys are coming in and running their funds 90% and 100% net long. and markets go down, they don't make as much on the way up, but they capture it on the way down. that's for the clients to determine who's adding value and isn't. >> thank you for being here. >> happy birthday. >> that does it for us. now it's time for "squawk on the street." ♪ >> bad wednesday morning. welcome to "squawk on the street." getting some follow through to yesterday's rally as the nikei sores. a lot of vague talk of stimulus in china. yahoo and united airlines in the news. ten-year at