it's thursday, september 10th, 2015 and squawk box begins right now. ♪ >> live from new york where business never sleeps, this is squawk box. >> good morning, everybody. welcome to squawk box here on cnbc. i'm becky quick with joe kernen and andrew ross sorkin. our guest host is larry. it's great to see you. >> nice to be here, beck. >> it's a huge day for sports fans today. the nfl season finally kicks off tonight on nbc after an off season dominated by deflategate controversy the new england patriots are taking on the steelers. tom brady will be on the field. we'll talk about everything that's happening with this. meantime at the u.s. open tonight serena williams will be

playing at the semifinals. this was on her request for the calendar year grand slam. only one year left to go. there was a lot of excitement last night. much of it happened off the court. although what happened on the court was good too. check that out. jimmy fallon and justin timberlake watching federer play. first the market news of the morning. the u.s. equity futures. yesterday it was a huge sell off. it was a decline of over 400 points. from the highs to the lows of the day. the dows closing at the lows. things are already turning up. nasdaq up by 49. we also have a news maker for you this morning. david tepper is going to be joining us for a squawk box exclusive. this is the guy that called for the federally. the fed put. we're going to see what he thinks right now a week before the fed makes his next decision

coming up at 8:00 a.m. eastern time. >> let's tell you about the other big stories we're watching this morning. economic worries coming from asia. japan's machinery orders falling and in china falling 6% and missed expectations and in the meantime in china, chinese premiere spoke with the world economic forum today, they call it the summer davos. that's what they call it. china's economy faces challenges of downward pressures but suggests there's no risk of a hard landing because the government is capable of supporting growth. new zealand bank cutting it's interest rate. here's how the major asian markets close today. we'll show you that board right now. everything down 2.5% except the shanghai down 1.5% right now. and in europe, kicking off some of the trading, sort of a mixed picture right now. it's sort of hard to call and we'll see where the futures here

in the united states end up. >> well, that's it in a nutshell. premiere. and people say either the government can support it. they're that adept at supporting the economy in china or they can't. we argue about it every day. we have people one on side that say one thing and people on the other side that say the other thing. state run capitalism can work or do you eventually mess it up because it's state run capitalism. >> these provinces get stronger and larger and they have a lot of resources. they'll have to have a lot more authority overtime. they'll get through it but i don't think the simply controlled economy is one that can sustain itself overtime. >> it's interesting to think about running a huge experiment on capitalism too. being experts in the matter. >> they have overcapacity right now. it's overbuilt. there's factories that are turning out stuff they don't need but that could all be sl slowly sopped up.

>> consumer debt is concerning. china will go through periods like this. we did too in this country. this is a big economy and i don't think it's disastrous but there will be changes as a consequence. >> the idea of thinking that you can keep an economy that large moving along more than you could keep ours. >> it's just when a policy maker says look, i'm the government we can handle this. we can handle this economy because we're the government. >> that's been proven every day now that they can't. >> and we have people in this country saying that too trying to get elected. i'm the government and we can handle this. i'm hoping we make a change this time. >> do you see the story by the way about when he is here how he's going to go see the president but then there's a worry that he's not going to be able to meet with all the ceos and how that could undermine what the president is trying to do. >> no. >> the issue is, he's coming

here. we're supposed to be giving him a hard time -- meaning that obama is going to try to give him a hard time and then at the same time, 15 or 20 ceos. >> there's a concern in the country that americans aren't as welcome over there in business anymore and that's beginning to bother the president too. so he's going to give him some reassurance that that's not the case. but it is the case. >> particularly american business. >> is the president in good position to speak for the private sectors and ceo? >> no connection of the two. >> who is closer to the ceo? >> unfortunately anyway and stop the presses, might be siding with one side or the other. anyway, stocks to watch today, spo logistics is buying trucking and logistics company con-way for $47.60 a share.

a lot of con-way trucks out there on the road. that's a 34% premium and palo alto networks beat the street and offered upbeat sales guidance. posting the biggest revenue increase in ten quarters. palo alto benefitting as governments and companies spend more to protect themselves from hacking attacks which we talk about more and more every day and cloud storage provider box posting better than expected results and the company is raising it's full-year revenue forecast for the 2nd time. more customers subscribed to its content sharing platform. do they even have a place where people go and work or does anybody work at home? >> no, they all head back to work after marissa mayer changed things at yahoo!. >> but are cloud companies operating in the cloud.

>> they have big marketing forces. >> krispy kreme donuts shares getting crushe they're issuing weak full year earnings guidance. so andrew you introduced him yesterday and didn't even give it a shot. you figure everybody knows him. >> it's like madonna. >> why even get involved with the last names. >> but did you try one of those donuts? >> they were the best ones i've ever tasted in my life. >> i wonder how much they cost. >> i wonder how many calories. >> we squared a quarter of one. >> but then i went back and ate another half. >> you did? >> when you weren't looking. >> you're only cheating yourself. >> i know. i know. it's awful. but it was so good. >> it was worth it. >> and it had raspberry theory. and covered in sugar and really

squishy. >> i haven't had a doughnut in so long. >> warren buffet i'm going to talk about now. berkshire hathaway bought another per cent. >> the lead story today is how the department of energy's computer systems were hacked more than 150 times between 2010 and 2014. and that's when you start thinking about the grid. that's when you start thinking about our vulnerabilities. we had that conversation yesterd yesterday. i think about the grid or money transfer and stuff like that. think if the millennials didn't have wifi for an hour. there would be rioting in the streets and social unrest. >> you yourself said you would turn around for your iphone because you need access to

your -- >> there's nothing i could have forgotten that i couldn't have gotten by without and now suddenly i have to go back 30 miles if i forget a stupid phone. >> there's one thing happening in the cyber security stuff, companies are going to be held more accountable. now they just say we can't help it and sorry. but that's changing now. there's going to be some liability associated. >> i think it's very difficult for a company to defend itself against a nation state but if you have put up no safe guards, if you have been lax and you have ignored warnings then you're right, there's going to be liability that comes down on the corporate front. >> and that's probably appropriate. >> right. let's talk about the economic agenda today. three reports of note coming up. 8:30 eastern time its the weekly jobless claims. also august import-export prices and then at 10:00 a.m. eastern time july wholesale trade. in other market news a big jump in corporate bond sales. with more than a dozen companies selling yesterday, they launched

a $10 billion deal. it's notable because it signals that investors believe the economy will continue to grow. sales come before the fed meeting when the central bank could raise benchmark rates for the first time in over a decade. maybe that's part of it too. they're trying to move and get some of these in before we see what happens with the federal reserve. >> take a look at the futures. you are looking at triple digits gains once again for the dow. this could be a fake out because remember yesterday at this time we were looking at big gains. bigger than this for the dow futures. by the end of the day the dow was down 239 points. that's a big reversal that wiped out the gains as the losses accelerated for the afternoon. the dow was down 411 points. s&p futures up by 21 and nasdaq up by 44 this morning. also check out oil prices. crude oil was down by 4% yesterday. it settled at 44.15. this morning it's bouncing back

ever so slightly. it's back by 44.64. take a look at the bond market. you mention the corporate bonds but it's yielding 2.222%. when it comes to the dollar in the currency marks the dollar is up against the euro. 1.1185. dollar is up against the yen at 12118 and gold prices at $1,105 an ounce. >> alibaba's executive chairman addressing the company's stock price. earlier today he said he's not thrilled that the share price was below the listing level a year ago but he's confident that they are in better shape than a year ago and shareholders should see them as a long-term investment. dell planning to invest $125 billion in china in the next five years. the internet is the new engine for china's economic growth and has unlimited potential. he'll sustain more than a

million jobs in china. >> apple had some big show me all this stuff new -- and we talked about it. it wasn't going to meet expectatio expectations. >> it's hard. >> it's ridiculously high. the biggest most important unveil in history. >> tim cook introducing new iphones. the 6s and 6s plus both look and feel the same but completely upgraded on the inside. he also showed off a new giant ipad called the ipad prothat has a 13 inch display and a new keyboard and stylus plus a siri integrated apple tv. i saw something that said apple tv is still a long way off. >> yes. >> what was that? >> that was a hollywood reporter

piece you were reading. >> could come from anywhere. >> when you're scrolling around. >> i used to know what i read from where and now i'm a jumble. >> if it's in print it's true and i have all of this stuff i find out and if it's on the internet it's definitely true. so i have all of these things that may not be accurate. here to tell us if we should be impressed with offerings is usa today offering and he's also the author of iphone for dummies. >> did you bring a copy? >> i can get you one. >> i have a friend that qualifies. he is a cnbc contributor. he's flush. you don't do anything else at this point? >> that's all i do. >> all your retirement stuff you can leave alone. you don't need to tap any of it. huge stipen. was there anything that i should get excited about? >> these are improvements to all

the main product lines. the iphone will be a better iphone. it has this force touch technology they call touch 3d. might be a learning curve there but it will be a better iphone. is this going to make everybody line-up on the streets? i don't think so. apple tv, you mentioned, again they added the siri voice search. we've seen voice search before. it comes down to what you want to watch. is there content there? opening up to apps and developers is a big deal but i think it's a ways off. >> what about the ipad pro? john steinberg says it's the new laptop. it doesn't come with a keyboard. >> exactly and it's got that keyboard built into the cover. we've seen that with microsoft surface tablets. i don't know. for me as a writer i like the good old fashioned laptop. maybe i'm old fashioned on this. >> we understand that too. >> yeah, exactly. it looks like a very promising

product. i don't know that they're going to be a huge sell here. we've seen large tablets before. none of them have been huge in terms of performance or how they have done in the market. >> maybe the most interesting is what apple is doing now in term of break agoway from specific allegiance to any of the carriers. the journal points this out today and that's a huge move because for the longest time it was that exclusive relationship with at&t that helped the iphone flourish and now they're saying you can go directly through us and we'll lease a phone to you. >> that's a big deal. >> i think it's a big deal too and we have seen the carriers that move away from the two year contracts has already happened. t-mobile and others have kind of led the way there and now go right into the apple store and do it and pay your $32 a month or whatever it is.

>> the product revolution in apple is remarkable. even though these are just enhancements it's remarkable. i'm surprised they're not involved in the self-driven cars. when is that going to happen? >> i don't know. but you have to believe somebody is going to be driving one around very quitely. i think they're working on it. i can't tell you when it's going to happen but the rumors are out there and i would not be surprised if those rumors are are true. >> they do have amazing products and when you get close they're not at a trillion now but when you start closing in on a trillion dollars in market cap it's a given you better have good product introductions all the time and the question i have, i'm hitting up revenue estimates to figure out what this company needs to do every quarter. that's the big deal. >> i can remember being a

stockbroker and thinking i need to do a certain amount of commissions or i don't get paid every month. they're supposed to do $322 million in revenue. >> which is how much a day. >> yeah. so okay i understand you need to sell a lot of upgraded iphones but you also need the market share gains from around the world to do it. can you do this every quarter? >> i think you hit it on the head. there's high expectation. maybe unrealistic expectations. >> who doesn't own apple that doesn't know it's undervalued and everybody says i'd rather own apple and everybody says the same thing though. really? so i can guarentee that i can

get 50% over the next year in apple. >> i don't think you can guarentee anything but certainly -- >> that's what i have been saying since $800 billion in market cap and now we're at 6. we got under 6 in the sell off. looked better at 550 than 785 but i don't know. there's always somebody gunning for you. >> smart guys. >> there's a lot of smart guys. >> just got out of school and working for somebody and want to make a name for themselves. >> i don't know if that's evidence that can be marketed. >> the chinese companies are coming here too in the u.s. there's a lot of competition in china. for the most part the iphone set the standard.

it is the standard. >> that's what i was going to say. we can talk about how big the market share will be or this or that but from the straight up innovation is there another company that we're not paying attention to or talk about enough where they say those guys over there they're doing something you have to pay attention to? not so much. >> i don't see that. >> people are doing it. >> of course they are but apple clearly remains the leader here and whatever you think about it incremental improvement. you can't reinvent the wheel every quarter. >> apple says they were going to come out with a phone. i have a phone. what can apple give me in a phone? it was life changing. >> computer in your pocket. >> i have to say even the camera is enough to get me to upgrade because i want the best camera i can get.

>> 4k video looks very sweet. >> it's going to push me over the edge. >> all right. >> thank you. >> so you're going back to usa today? >> i am. >> today you are? >> what are you working on? >> more apple stuff. >> keep us updated. somebody tweeted in the trouble with quotes on the internet is you can never know if they're genuine. abraham lincoln said that. donald trump has not so nice words about carly fiorina. but first though, here's a look at this date back in history.

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.

i was going to the library to do my homework. it was a little bit of a walk to get to the bus stop. i had to wait in line to use the computer.

took a lot of juggling to keep it all together. what's possible when you have high-speed internet at home? the library never closes. it makes it so much better to do homework when you're at home. internet essentials from comcast. helping to bridge the digital divide. welcome back to squawk box. making headlines this morning, the cover story in the new rolling stone getting a lot of buzz today. the published piece quoting donald trump mocking carly fiorina's look. he says look at that face. would anyone vote for that. can you imagine that? the face of our next president.

he continues saying she's a woman and i'm not supposed to say bad things but really folks, come on, are we serious? i wish i didn't have to say that myself. >> that's nice. >> nothing surprises me at this point. >> even reading it hurt your sensibility? >> i have written terrible things about carly's business record. so it's not that i have a particular view that way. >> and the guy took issue with everything you wrote in that column. >> they took out a full page add in the new york times. he took out a full page ad. >> to say you were full of beans. >> which is bizarre because he fired her. that was a very strange bedfellow's ad to see. >> if anyone googles carly fiorina's business record, new york times on record, she sucked. cross her off the list.

>> all right. let's move on to the markets and talk about what's been happening with china. if famed short seller and china bear is sounding the alarm on china's economy saying that beijing is running out of room to borrow. >> the system is still in the process of unraveling. stock market boom and bust. the property market is still sputtering along but the key is the debt is still growing every year. >> how big of a red flag is china for investors? let's get more on the global markets right now. thank you for coming in today. >> good to be back here. thank you, becky. >> are the markets giving china enough credit for the slow down that's happening there? >> the slow down and the importance of china are not really in u.s. equity prices or

financial markets. there's going to be a further fall out. what prompted the chinese devaluations especially after this in 1997 during the asian crisis, 2008 global crisis, the chinese did not devalue. they're suffering significant growth pains. they feel they have to promote exports in order to put exports and economic growth up again. so this is not going to end. currencies have devalued after china's august 11th devaluations. you're going to see a send and third round set of moves taking place. you ask what implications are. >> we've had a lot of people that have come in and argued even if you think things are slowing down in china it's not that big of a deal for us here in the united states because we don't trade that much with them. >> that is the strong conclus n

conclusion. china happens to be the third biggest trading partner for the united states after canada and mexico. so that's number one. it's about 5% in terms of importance. second you have a fall out in the global financial markets, becky, even if it's not directly an export impact and that has to be taken into account and now if you have second and third round account for other currencies devaluing that puts pressure on the federal reserve not to hike interest rates. on your program several months ago i said the fed is not going to tighten in september or december. >> do you think that's still the case even when we're looking at unemployment at 5.1%? incredibly low levels? when you're looking at strong jobs numbers still being put up every month and things like auto sales that give you the sign of the strength of the consumer? 17.8 million on an annualized basis? >> the auto sales are suggesting the higher income groups are doing a lit better than lower income groups but the age

increase in the labor market has been minuiscule. as far as the 5.1% unemployment rate is concerned i don't think it gives a good picture because it's the broader unemployment rate still over 10%. >> you don't think they'll rais raise in september or december? >> i don't think. >> you're not waivering at all on that? >> no. joe i'm starting to think when i said in early 2015 there won't be any raise and i stuck to it for the past year now i'm starting to think you're going into 2017 for the first raise. wow, no interest rate increase for ten years. >> don't you think that the devaluations of the yuan and the devaluations of surrounding countries has done a lot to increase the strength of the dollar and has the dollar increases our exports weaken,

that means jobs come off? is that going to be a major factor? >> you are spot on, larry. i think what is happen as good that other currencies have depreciated along with the chinese yuan. now if you have the increase in interest rates take place you'll see it go from 110 to 111 with past parity. and that's it for the exports and the impact on u.s. economic growth because keeping in mind u.s. exports are about 13% of gdp it's not as big as china or germany but it's still significant and you're right on at the time of slowing economic growth and still significant problems at the unemployment front it's a political entity and cannot afford to increase

interest rates now. did you have a view on greece that they were going to exit. >> no, i took a view and i still have the same view. everybody said it was all done. >> but you didn't say that this was going to end badly and not get a deal this time? >> i think it is not going to -- there will be a deal but the europeans have been kicking the can down the road all the time. i'm going to be in greece again and china later this week and greece in two weeks. these two countries are critical for the u.s. and the world economy. >> does that mean you think the entire global economy is going to be slowing down or central banks will be playing off each other trying to make sure that they don't push higher valuations to their currencies as well. >> they're great questions becky because they reinforce each other. the global economic growth is

slowing. i have been tweeting out saying that the world bank and imf in their forecast of a year ago have been overly optimistic and looking for them to downgrade their expectation which is they have since been doing that causes the exchange rate changes to take place. i think i can get an advantage in growth by putting you down and your exports down and mine going up and then you retaliate and that further reduces the pace of economic growth so i don't think there is an end to it. you need an anchor. one country would say we're going to except a strong exchange rate, strong currency and in 2008 -- >> u.s. does that though. >> u.s. should have done it but u.s. started the currency war in december of 2008 with the qe program and zero interest rates so i don't have high hopes for the united states leading the whole group. there's nobody else.

china used to be that entity but that's given up as well. >> thank you for coming in today. >> thank you so much. >> still to come this morning our news maker of the day, david tepper is here and if you followed his first call on squawk box five years ago he made a lot of money and now he's back with new predictions and comments. don't miss it. that starts at 8:00 eastern.

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welcome back to squawk box. mondelez set to make some big announcements to investors today. sarah is here with a first look at the details from the global snacks giant behind oreos which i watched on tape. >> trump is on a war path against oreos but separately we're talking about mondelez stock. it's being rewarded for its fierce cost cutting spree. it's laying out a much anticipated plan to grow it's business so we have the details on the plan first. mondelez is planning to boost spending from 8 to 10% of total revenue on power brands like oreo, cadberry, honey made and

they're planning a bunch of changes to the portfolio aiming for 50% of the snacks to be in the wellbeing category by 2020 executives will reaffirm the outlook and that target which is so important for investors and they'll promise what they call aggressive cost management. this will all be further detailed in an announcement and presentation at the back to school conference in new york today but so far the strategy has been rewarded. the stock is up 16% this year and for consumer staples in general. the absence of growth meant strategies with very in vogue like mergers, draft heinz for example or cutting cost. a lot of that is what is going on. this is why mondelez is trying to distinguish itself with a growth plan. now this all brings us back to bill ackman who reportedly would

like to see this company get bought but with mondelez new plan on the table it will be fascinating to see what they're going to say about it. they're going to set the wheels in motion. top line growth has been so elusive in this industry. >> you should call and see what he has to say about that. >> i heard he'll be on squawk box soon. >> now he's down on this, isn't he? >> keep in mind, monday these has 80% of its business overseas. it's heavily exposed to emerging markets, especially choo in ina >> there would be some sort of teaming up. >> and that's what i was saying. you make enough noise it's going to go up just based on that but it doesn't always workout. >> the other thing interesting to me is they don't take macro views. >> that's how you get burned sometimes too. >> it's a much more --

>> it's a very long time. >> well, maybe bill ackman will be here on friday. >> they're using the savings not to return cash to shareholder which is is in right now and not to talk about acquisitions but they're talking about a big investment. >> but that's a nelson peltz view of the world. >> he is on the board. >> he is and it's interesting that it pitts both of them against each other so some degree. both spoke at delivery alpha. >> and becky asked warren buffet about it. >> they have a big challenge. >> doesn't it cause a little concern when it takes an activist or somebody to bring about a program like this? woen you think they might have done this in advance. >> they would tell you that they're doing it anyway. that it hasn't been under pressure but clearly the presence of two high profile

activists, nothing like that to put the pressure on the company. >> have you had a thin oreo? >> they're new in the u.s. they started in china and they were so successful they brought them here. >> no, i like the double stuffed one. >> how often did a shareholder come visit you with an idea that you actually acted on? >> i don't remember one. >> there was never a time when a shareholder came and had a meeting with you and said we think you should do xyz? >> i don't ever remember anybody ever coming up with an idea. i hope if they had i would have listened. >> are you of the view that the activist craze is a good thing. >> you can't generalize. in some cases it is and in other cases it's inappropriate. >> are we at peak activism though? >> who knows. just look at the number of funds

started over the last three years. you'd say that not only is it the end but it's probably just the beginning. >> where do you stand on the flip side of what mondelez is doing? the buy back dividend craze. >> i'd give it a chance. this is very difficult industry to boost revenues. they'll make an effort and put money in it. if it's successful then the activist will be pleased and go away. if they're not they'll be far more aggressive and give them a year and no more than that in my view. >> they can't predict when emerging markets growth is going to come back and when the environment won't be tough again so all of these companies are going to have to get proactive. >> sarah, thank you, larry thank you. >> they're a double stuffed lovers worst nightmare it says right here. >> it looks to me like if you dipped this in milk it would just fall apart.

>> my son rips off the top and eats the cream and throws out the rest of it. >> throws out the rest. >> so they're not closing the plan in chicago unlike what donald trump is saying. >> july 6th they were going to hit supermarkets soon. are they here? >> yeah they're here and doing well according to the company. >> that's the important stuff. >> when we come back this morning shares of lululemon getting a boost this morning. and later don't miss david tepper. his bold car was so influential that it marked a rally that bears his name. let's see what he has coming up at 8:00 eastern time.

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i just noticed brazil now junk at s&p. just hitting that rating now all the way into the junk domain. welcome back. u.s. equity futures at this hour are showing sharp gains. not as much as before. all over the map already this morning. up over 100 earlier. that didn't last yesterday obviously so it should be interesting and we're leading up -- i think a lot of this is china but we're leading up to next week and people have said, i've said the market is not going to sell off just -- the market wouldn't do this just to force the fed's hand to raise. people are are like are you kidding? people say the markets would do that. >> although there were a lot of pros that got burned badly with

that sell off. >> sometimes it's murphy's law and if you're in a approach month tell where you can't get out you expect the market to be tumbled before you're going to do it. >> and even if they would like to do it they can't do it probably anyway. china that has proven that in the last month. >> and the dollar is a problem as well. although strong dollar makes all of us maintain our wealth in this country better than the rest of the world. >> in business it used to hurt exports. that was troubling for me. >> you're very self-centered. >> >> among stocks to watch today, lululemon with better than posted revenues. >> and we got results of our quarterly survey of the cfo

council and they're in and the group made interesting predictions this morning. the council represents some of the largest companies in the world and manages more than $2 trillion in market capitalizati capitalization. >> 78% expect jeb bush to grab the gop nomination. they failed to reach a single vote. different type of poll we're doing here. the council shifted it's view on the fed and interest rates as well. in may, 47% of members surveyed thought that a september rate hike was likely now 22% think so and then we have sri here who thinks 2017. >> when we come back this morning remember when you found

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anymore. the market for home services. everything for finding a babysitter to a painter or even a plumber, it could be worth a whopping $8 billion. valuable matches are to be made. the goal is to try and connect consumers to the local service providers. joining us right now is thumb tack's ceo. thanks for being here today. >> thanks for having me. >> thumb tack is a really interesting idea. you say this is what people had to go around and pull off of telephone poles, ask a friend. >> this is not a new problem, right? people have had leaky faucets and kids they wanted to tutor for a long time. the challenge has been finding the right professional for the job. historically it's easy to find names and numbers but you had to do the work of finding out who's interesting, how much they're going to charge you. quite simply, it's a pain. >> how is this different than angie's list? >> we bring the professionals to you.

instead of searching it, you tell us what you need once. we then send that out to our network of pros and the one who is are right for you get introduced. so they come to you. so it saves you the time of having to search and call and e-mail and hope. and instead you're able to quickly and confidently make a hiring decision. >> how often do they do repeat sort of searches? >> happens all the time. think about your own to do list. right? my guess like me, like everybody -- >> i have two things. >> you're not alone. once people realize they can get it done easily, they use it for a bunch of things. the home is our kind of category. contractors, painters, those folks. then event services is also huge for us. >> there's a big network effect to this. what cities would you say right now are the places that have the greatest network effects? which are the hardest to break into culturally? are there some more tech savvy?

>> we're not live nationwide. our biggest cities are l.a., new york, chicago, atlanta, and dallas. actually, surprisingly -- >> surrounding areas outside of that too? >> yeah. san francisco is our 12th biggest market. and the challenge in our space -- >> it's interesting because you'd think they're the most tech savvy. >> yeah but this isn't about tech savvy. this isn't just for nerds. this is for busy professionals, busy moms. and these folks are everywhere. and we've sort of gone out and built this in such a way where we haven't had to scale it market by market. unlike uber, we don't have boots on the ground. we can see it programatically. so we have to -- have been working hard for the last five or six years to build nationwide. we've done that at real scale. >> how do you differentiate your

offering in the home improvement market from home advisers.com who does a lot of advertising here in the east. i never see you guys advertising. what do you think about that? >> we're actually still supply constrained. we have more paying professionals that yelp now. that's still not enough to serve the customer demand we have. we're focused on the making the network rock solid before buying a bunch of tv ads like these guys. the difference comes from the fact that on home adviser, the pro isn't picking you. they've preselected, preopted into the category generally then have to pay for what comes their way. we think that breaks the fundamental thing you're after which is a match from a pro who wants to serve you. in some sense, thumbtack is a dating app. we're a match maker. >> i like that. >> how do you get paid? >> so the professionals pay us a fee per introduction. we bring them the customer and if they're interested in getting

in touch, they pay us a fee for doing so. >> marco, thanks for coming in. >> i appreciate it. coming up, that's him right there, david tepper. you probably rep the tepper rally and the taper tantrum. we'll see whether he feels that way today. we'll hear his new market --

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apple upgrading its iphone, ipad, and apple tv lines. introducing a pencil and announcing an expanded role for siri. we've got the details on apple's new offerings. plus we're just one week away from the september fed announcement. we'll get you ready for the fireworks with strategies from allianz and u.s. trust combined.

they manage about $900 billion in assets. and the justice department planning a crackdown on white collar crime. why the new rules could mean more executive offenders could see jailtime. the second hour of "squawk box" begins right now. ♪ live from the beating heart of business, new york city, this is "squawk box." >> that voice comes back tonight too. which will be great. welcome back. welcome back to "squawk box" here on cnbc, first in business worldwide. i guess he was doing some of the preseason games, wasn't he? those aren't quite as compelling. i'm joe kernen along with becky quick and andrew ross sorkin. more from larry in a minute but first becky has the headlines. asian markets falling

overnight. the nikkei and hang seng both falling by over 2%. shanghai composite falling 1.4%. just out, the bank of england left its key interest rates unchanged as expected. markets there have been mixed throughout. but the u.s. equity futures are looking higher today ignoring what's happened in the morning. s&p futures up by 7. the nasdaq up by 15. again, this has been a morning with a lot of bouncing around. just in the last hour we were up by about 160 points for the dow. so we'll continue to see as the market fluctuates before the opening. on today's economic agenda, three reports of note. weekly jobless claims, august import/export prices, and wholesale trade numbers. and the justice department is cracking down on white collar criminals. the doj issuing new policies

that prior tiess prosecution of individual employees, not just their companies. this is according to to a memo issued worldwide. to turn over evidence against their executives. president obama's justice department has taken criticism for punishing few executives involved in corporate scandals despite securing record fines for major companies. criticism with that is it's mow noply money, it's play money so people are willing to throw that around which is why you never see the people who actually did things wrong get punished. also we should tell you apple unveiling new products. new iphone 6s and 6s-plus. he also showed the ipad pro with a 13 inch display. new keyboard and stylus called the apple pencil. also revamped siri enabled apple tv. they will finance iphone sales to consumers without them being tied to a particular carrier.

that marks a sharp turn in the relationship between apple and service providers. we'll have more on this in about ten minutes. i think it's the last piece, how they're going to work with the cell phone providers that may be the most important. also box did post better than expected results. raising its full-year revenue forecast for a second time. more customers subscribed to its platform. the ceo will be on "closing bell" today. a week from today can't come too soon. the september meeting. we're going to learn whether the fed will hike interest rates at its september meeting. here now with nearly $1 trillion worth of market advice, that's what it's going to be worth. i'm not kidding. keith banks, president of u.s. trust where he is responsible for close to $400 billion in assets and andris uterman, he

oversees nearly $500 billion in asse assets. when you guys sat down -- have we met? but i knew you would be andris. you just look sort of euro style i think. you are elizabeth's counterpart. one of our guest hosts that comes on that we think highly of at allianz. and i think -- what's -- you don't need a lot of money to be u.s. trust do you? i think i might call bank america and i think they transfer me to u.s. trust once in awhile. do you have some of my money? >> i hope we do. >> you better be -- i'm going to be hard on you because now i'm a little bit -- you know what you're doing? >> i think we know what we're doing, yeah. >> okay, good. what do you think the fed's going to do? >> well, i think whether it's september, october, november, they're going to raise rates. rates at zero is crisis level. i don't believe we're in a crisis environment any longer. you know, we're all mesmerized

about when is it going to happen. i think the most important question, joe, is what is the pace at which rates will go from there. >> we do keep hammering this in. larry the former ceo that just can't get out of the ceo mind-set says you're -- this is a very bad thing you're saying because of the dollar. because you're going to hurt exports. ceos have to worry about. >> look. i think at some point we've got to begin the process of moving -- >> get on the board. we've got to get on the board, right? >> we've got to put some points -- >> 5.1% unemployment. >> look. here's how we think about it. a 25-basis point increase we don't think is going to tip over either the u.s. economy, corporate america, or derail the recovery we're in the midst of. >> if that's the case, why do it? >> i'll tell you why. it's the beginning of a process and that's the important thing. >> i think we need to move away

from what they will do to ask us what they should do. they should definitely raise. the ft's on your desk. the emerging market central banks are saying the same thing. they should raise rates. what's apparent after seven or eight years of zerp and qe, you're absolutely right. >> some people believe that. >> the imf is not saying that 37 and the world bank is not. >> look at that track record. >> larry summers had an article you saw, five reasons you shouldn't raise rates. he's a good spokesperson. >> oh, my god. larry, i never thought i'd live to see the day. larry summers from you, what happened? >> i think in this case he may be right. >> i mean, fixed capital investment is at an all-time low and has been declining every years the last 20 years. sending all the wrong signal. it's telling the decision makers there's a crisis going on. as long as a crisis is going on, nobody's going to invest. >> you think b 25 basis points is going to change that?

>> larry, krugman is with you as well. >> these arguments i feel we're having again and again and again. the question is what's the fed going to wind up doing? what do they look at? i think larry may be right just from the perspective of if you're looking at this as a risk manager, your least risky thing to do is wait another month or two. >> you heard fisher and others. they wanted to do this. this was right after -- we were closer to the market break when he said that than we are now. >> people keep saying if the s&p is above 1900 it gives them ground. i can't believe they would actually look at something as stupid as whether or not the s&p is above or below 1900. >> absolutely. i mean, that's part of the mandate now. >> that's how absurd it's gotten where we think that's okay to say let's see. wait a minute. apple looks like it's opening lower today, let's not raise rates today. >> we can't look away from the

fact that in the u.s. we're looking at 5.1% unemployment rate. we're looking at the second half of this year we believe anyway 3% growth in the u.s. >> we haven't seen any inflation yet though. >> yeah. but you are beginning to see signs that wage inflation is beginning to tick up. >> very, very slowly. >> but nonetheless -- >> the left brags about the 4.1% until you say so they raise rates. then this say it's not really 5.1%. then it is until they raise rates. then no, no. >> what do you think they will do opposed to what they should do? >> i think they should and will raise rates either september -- either september, october, or november. >> if they don't raise rates in september, how does the market react? people say the market will breathe a sigh of relief. others say no, no, no that's because the next thing we worry about is how slowly they do this. >> that's where i am. i don't think the market's going to -- >> where do you stand?

>> london, england. >> you're left of the euros now. you've moved left of the euros. >> i have one view that maybe right or left i don't know at what i think is the best interest of the country. i think they're going to raise rates. i agree with you. i don't think you ought to be in a hurry to do so. >> right. okay. how about china? andre andre andreas? >> i'm a brave man to predict its bottoming. that's interesting tim cook should come on jim cramer's show and say i'm confident about iphone sales in china and q4. >> he e-mailed cramer. >> okay. he e-mailed him. but we think china is struggling mightily. there's a lot of political infighting going on that's not helping at all. what they've tried to do in terms of stabilizing markets hasn't worked. the switch to the consumer economy is taking a long time and will take a long time.

so i think, you know, this is going to be a future for the next few. >> so china is a $10 trillion economy. the only other economy that size outside the u.s. by definition growth needs to slow and will slow. we don't subscribe to the -- and i'm not saying you're saying this, but we don't subscribe to the hard landing which i think has gotten people all wound up. the growth rate will probably move down gradually to a 5% to 6% level. but i think a healthier level of growth because you will shift. services i believe right now are about 50% of gdp for china. consumption is about 38. think about that relative to the u.s. so we need to get those numbers much higher. when we get there, even if it results in a 5%, 6% growth rate, it's a healthier, more sustainable rate. and i think good for the global economy longer term. >> do you think you can run this economy centrally as they try to do opposed to over time having some of that power to the provinces?

>> i do not. i heard your comments earlier which i agree with. i think ultimately centralized does not work. the good thing, it may help them manager this transition. but at some point in time, you've got to seed power. and i think they will at the appropriate points. >> point on the currency, maybe. a lot of commentary has been happening around the chinese devaluation. but, i mean, look at the facts. very close to its all-time trade weighted high. it's just against the dollar that it's weakened a bit. the euro has -- so that's not really a devaluation. it's a downward blip. >> although we are at a currency war where every nation is looking to get an advantage over having an easier way to export. >> china is tied to us. it's too high. it's probably overvalued. andreas, the queen, huh? the longest reigning. congratulations. >> we're in the second elizabeth

age. >> prince charles is probably saying, man. it's never going to -- >> everybody loves her. >> i know. >> her mother died at 103 or something like that. good genes. >> well, i would hope so. anyway. thank you say hi to elizabeth. >> i will. >> you can keep my money for awhile. >> good. thank you, joe. >> you did pretty well. i feel better. >> we appreciate it. >> not a lot. i thought you don't have a lot of money. minimum of $3 million. >> then it's not you. >> i'll leave a business card. >> mine might be us trust. when we come back this morning, apple's latest announcements. plus a change in the relationship with wireless carriers. we have daniel ernst joining us nexts. and then also gerry storch.

then an hour with david tepper. stick around. a lot more to come today. surprise!!!!! we heard you got a job as a developer! its official, i work for ge!! what? wow... yeah! okay... guys, i'll be writing a new language for machines so planes, trains, even hospitals can work better. oh! sorry, i was trying to put it away...

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>> good morning, andrew. you know, it's a rounding error right now on apple's balance sheet. but some analysts do believe apple tv could become a moneymaker for the tech giant. apple's revamped tv features the aa chip for better performance. and a siri-enabled remote. tv also includes support for apple's 11 million registered developers who can now create apps for the big screen. >> as we've said, the future of tv is apps. now, apps have changed what we expect from and do on our iphones and ipads. we think it's going to do the same thing for television. we're introducing a brand new operating system for your apple tv called tvos. it's based on ios and built for the living room. >> yeah. the new apple tv will be available at the end of october starting at 149 bucks. right now apple tv accounts for less than 5% of revenues, but

fbr's dan ives thinks cook could contribute in the next few years. in part because apple is has a powerful device. so smartphones, tablets, set top boxes jump more than 60% in the last year according to adobe. back to you. >> thanks, josh. here to break down the new apple products and the impact on the stock is dan ernst from welch capital partners. are you yawning? are you excited? what was the takeaway? >> loved everything i saw. you can count the ernst family down for one of each. i think the market has for the last ten years even when steve jobs was still with us put way too much emphasis on these. and you had a lot of volatility

in the event. so stock was down 2% yesterday. when steve was here he was down 10%. so actually, you know moderated the volatility in the stock. so that's a good thing. as i said, the real story for apple is that continuous innovation. while everyone expects them to come out with something ground breaking new, my contention is apple is still one of the most innovative tech companies in the world. they do something called economic innovation. by that they brus technologies that generate real revenues and real profits. and so -- >> meaning that the iphone has like a 92% margin whereas an android phone or samng phone, rather, is like nothing. >> precisely. they have so many new categories that they are so large they have to be broken out. so when they did the iphone,

ipad, itunes. those are all new things. so you layer in the watch, apple tv, and i think once we have real content on there that could become material. they serve 1 billion customers around the world that all have credit card accounts with them. so i really think there is just tremendous platform value there. i know joe doesn't like the valuation argument, but when you have a stock trading at 12 times earnings with a compound groeft of 31% versus the s&p of 7% and it's at 16 times, i think there's a real value opportunity for that. i think even if we don't get a market multiple. >> why don't we get a market multiple? >> you know, that's a great question. and if we had a market multiple in apple, the stock would be 160. but i don't even hope for that. my kind of bear case is the market is skeptical.

joe was skeptical. >> you were buying with both hands. it's 620 right now. maybe every once in awhile you should take a step back and look. >> to be fair, we bought actually when the stock dipped. >> okay. >> you know, we think it's an opportunity. but, listen. if a year from now the stock is still 12 times earnings, it would be 120 hours. >> you just said 31% compound earnings growth. okay. you can guarantee me 31% compound earnings growth? >> as you know, there's no guarantees. >> that's what i'm talking about. so i don't talk about multiples. i talk about whether you know as an analyst whether your 31% compound growth rate has any validity in the real world. i don't know whether you do. >> just to clarify, i'm an analyst. we actually own the stock. we have money in apple and we

think it's a good investment for our fund. so, you know, we have real skin in the game here. we're reasonably confident. i look at a market down 6%. even without that market multiple in just 10% earnings growth, a dividend yield, i'm getting paid 12% in a market that's down 6%. i'll take that all day long, joe. that is actually a really good outcome. and they're generating $70 billion in free cash flow a year. i don't know what i could do to convince you and i probably never will. >> convince the market. 785. your next was a trillion and it hit 500 on the way. it woufbl before to say maybe the stock is a little bit over-hyped at 785. maybe we should sell half and buy back at $520 billion.

that would have been nice. >> we're not traders. >> okay. but don't give it all back. that's all i'm saying. >> we pick our opportunities to invest in companies for the long-term. and we think that's there -- it wasn't -- it's not our only investment. we also own google. we own check point. in the tech space. >> before you go because we've got a wrap it up, among all the companies you mentioned if you had $1 to put in one of them, where are you putting it? >> the reality is i've got money in all those stocks. >> they're all your children, but they're not really children so you can pick one. >> i don't really need to. there's another stock i think you'll talk about later that we also bought during some of the recent dips that we didn't own in the beginning of the year and that's alibaba. and i think that, you know, whether it's the hard landing, soft landing over the next ten years the platform opportunity there, it's not a cheap stock.

it's 20 times earnings. but internet stocks like google and facebook, you know, trade at 40 or 50 times sometimes. i think there's an opportunity there as well. >> dan, thank you. appreciate it. coming up, the nfl season kicks off tonight. details straight ahead. then top of the hour, someone who's going to be watching tonight because part owner of the steelers, david tepper joins us right on the "squawk box" set. he's coming in from my part of the world. out near the short hills mall. i think that's where he has an office. eeeeep breath in. . . and . . . exhale. . . aflac! and a gentle wavelike motion... ahhh- ahhhhhh. liberate your spine... ahhh-ahhhhhh......aflac! and reach, toes blossoming...

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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. welcome back to "squawk box." amazon is giving up on its fire phone. a spokeswoman tells cnbc that the company has sold through its inventory and now has no plans to replenish its fire phone

stock at this time. amazon will continue to support the phone for customers who already have one. that was, of course, a big investment they had made. they tried a couple of different things over time. >> it's a depressing story, isn't it? they're going to support -- >> they're going to support the folks who have that phone. that was a big deal when they came out with that. dell announcing plans to invest $125 billion in china over the next five years. in a statement ceo michael dell says the internet is the new engine for china's economic growth and has unlimited potential. dell says it will contribute to imports and exports and sustain more than a million jobs in china. and a menu warning. new york city's board of health voting yesterday to acquire a salt shaker symbol next to menu items that contain more than the recommended daily limit of sodium. that is 2300 grams. the rule will apply to chain restaurants with at least 15 locations nationwide. >> you're not opposed to that, right? >> i use a lot of salt.

i hope -- you know, we keep changing what the proper amount is. >> yeah. but this is just a warning. like i'd just like to know. doesn't mean i'm going to stop eating stuff. >> i don't know what -- how difficult it is for businesses to comply with a lot of this stuff. >> transparency helps. i think especially with the number of people walking around today trying to maintain cholesterol and sodium levels. if you're trying to maintain a bunch of different things -- >> for me i need someone to take the salt shaker away. it's not what's already there. it's what i'm adding to it by a mile. >> but heart patients need to maintain to make sure they don't have their blood pressure going up too high. >> true. i just saw on some website that sugar is the new heroin. when i see things like that -- >> that's not going to stop me from eating sugar. >> the new heroin, really? really? you can write that headline with a straight face? >> i think they've been writing

that headline for decades. >> i'd like to know how many calories were in the doughnuts yesterday. >> you've seen the people that are now prediabetics or diabetics. >> everything in moderation. >> the problem is nobody knows moderation. >> right. >> i didn't start with the doughnuts yesterday because of what would have happened. >> i'm still regretting it. they were good. >> and the wait is almost over. the nfl season kicks off right here on nbc. the new england patriots with tom brady will take on the pittsburgh steelers in foxboro. the kickoff starts at 7:30 tonight on nbc. and i've known about this game for awhile. yeah, for months. and for awhile it was like, you know, pre-the suspension and post-the suspension it was like it's going to be a great game. then he was out for four, it's not going to be nearly as good of a game.

now he's back in. >> watch it. we will. >> yeah. i don't -- it's tough to stay up that late, but i'll hopefully see the first quarter. when we come back this morning, we'll have much more from our guest host larry bossidy. and gerry storch runs hudson bay. he'll be joining us right here on set. plus look at the u.s. equity futures. look at that. they are well off their highs this morning. we were looking at the dow up by about 170 points just about an hour and a half ago. more of the volatility, more of the same. now up by 17 points. s&p by 3.5 and the nasdaq by 7.

♪ another song from 1995. welcome back to "squawk box," live on cnbc first in business worldwide. lululemon offering upbeat full year guidance.

quarterly sales rising 6%. and xpo logistics buying conway for a roughly 34% premium. you'll see that stock move also. palo alto beating the street on revenue. and benefitting as governments and companies spending more money these days to protect themselves from hacking attacks. the cover story in the new "rolling stone" getting buzz today. it has donald trump mocking carly fiorina's looks. he success, look at that face. would anyone vote for that? can you imagine that, the face of our next president. he continues, apparently, saying i mean she's a woman and i'm not supposed to say bad things, but really, folks, come on. are we serious? fiorina says she may be getting under his skin because she's climbing in the polls. >> and jeb bush joined us on the

"squawk" set yesterday. he made his case for an overhaul of the tax code. >> high growth strategy requires first and foremost dramatic reform of our tax code. what we proposed is simplifying the rates 10, 25, and 28. and 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. >> our guest host this morning is larry bossidy. always great to have a nice discussion on things. first thing i ask, what would you need -- let's say jeb bush gets elected. even if it's a republican congress. even if that were to stay. all these things have sacred cows. you can't even count on

republicans much less if it was a divided congress. how do you get something like this through? what remains? >> that's the key question. i think what he's proposed is pretty well balanced. the individual tax, takes the corporate tax from 39 to 20. puts a territorial system in. he gives a one-time tax to repatriate the $2 trillion offshore payable over ten years. he kills the marriage penalty. he kills this alternative minimum dax. kills the death tax. he expands the earned income credit. but he also on the other side of the ledger, he -- while he accelerates depreciation good for business. he takes away the tax deduction for debt. eliminates the ability for state and local taxes like in some states like i live in is a big deal. so it's pretty well balanced. but to your point, how much of that even if he is elected can survive the congress with everybody from going from a very personal position, very hard to estimate.

it will be a tough battle. >> we glossed over this yesterday. he was here for a short period of time. even the idea of saying that you are no longer going to get a state deduction as you mentioned. get the local deductions. what that would do to new jersey, new york, connecticut. that in itself seems it is a massive hurdle. he makes a fair point that they shouldn't subsidize everyone else, but that's going to be tough to get through. >> i also think the tax on deductions is going to be tough because a lot of these deductions are for purposes that are admirable. things you want to do. but on the other hand you can't have it all one way. i presume it's revenue neutral. did he say that yesterday? >> no. dynamic. >> which -- now people write that off. i think that argument does have merit where people think it doesn't. what about -- chanos was here, jim chanos. he said it would put private

equity out of business. >> no, the carried interest is -- >> no, not that one. the other one. >> the deduct of business. i talked to guys last night about this. the question is whether both the offset of lowering overall corporate rate against that plus a lot of these businesses have to buy stuff and they get to deduct that immediately. >> yeah. with that other part of it. >> yes. i'm actually trying to dig into this to figure out what the numbers mean. it's interesting. >> there's a double whammy. as you say, the deductibility of interest is problematic. then the carried interest on the gain. so they get hit twice and they'll have a lobby in place, you can be sure. >> the problem is you can't remove three or four or seven of these things without taking out all of them. the whole thing comes tumbling down. >> what it is is the beginning of a negotiation. i mean, because everybody in the

congress thinks they're tax experts. everyone has their own ax to grind. it seems to be a good start. >> yeah. all right. we're going to take a break. more from larry bossidy still to come. got another 20 minutes or so. you got up early. >> yes, it was early today. >> thank you. >> as far as i know, i'm still conscious. >> for me it's a favorite when it's pouring down outside and dark and there's lightning and thunder. that's when i, myself, like getting up. you know what i mean? the cold in the room. the air conditioning is on. the dog's upstairs. >> it's getting better. january will be here before you know it. >> yeah. cold is even better. and snowy. when we come back this morning, we'll get a read on the retailers. hudson bay ceo gerry storch will join us next.

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from boston. hey, courtney. >> good morning to you, becky. that's right. u.s. retailers beware. in three hours from now primark opens its first u.s. location right here in boston. in fa it is ireland-based with 292 stores in nine european countries and now in the u.s. it is considered fast fashion with jeans for $12, sweaters for $14, and towels for $2. primark makes its merchandise and volume buying all allowed to sell for the lowest price. cnbc contributor stacy woodlitz says it's a stockup in europe. making kohl's, jcpenney, and walmart its closest equivalent. now, locations are key. the two uk oxford street

locations have the highest traffic and conversion of any retailer that she tracks in europe. there are challenges, of course. brand awareness is very low for primark here in the united states. this is the first of just eight locations that are planned to be opened by the end of 2016. so it could take some time for u.s. shoppers to understand and be aware of primark. plus there's no e-commerce component. you can't buy online. and a number of other retailers that have come to the u.s. have struggled if not failed when they tried to bring their same strategy here. back to you. >> thank you. of course as the competition heats up, retail rers under more and more pressure to get consumers to buy more than just electronics, cars, and home furnishings. our next guest faces it head on. joining us is gerry storch, head of hudson bay company. thank you for being here. >> good morning. >> you happen to have sales out

today. the numbers are strong. canadian company so you transfer everything back, but same store sales of 4.2%. that's a strong number. >> very good. if you're where the consumer is today, you're going to do well. we are a store-based retailer. and we do that. moreover, you have to grow on the internet these days. our internet growth was 30% in the last quarter. so this combination of the bricks and mortar internet can be powerful as we look to the future. >> do you think of stores as this primark. or are you focused on what's happening with competitor online? >> they are a fabulous retailer. i think you can learn from them. you can learn from everyone. fast fashion model and source brilliantly. >> are you guys doing that? >> you know, we're starting to. and traditionally we relied on a very established venn tor base. but we're changing that model.

we're looking for opportunities to tap into other sources of manufacturing and emulate that. >> we had terry lundgren join us recently. macy's disappointed on their results. terry said, look, part of the problem is the strong dollar. you have a lot of tourists who come and his flagship stores here in new york city are pretty important. they got hit pretty hard on that. i would think saks would face the same. >> mostly affects tourism. how do we grow the domestic business? what with do we do that there? we're big in canada. we're the largest department store chain in canada. they're the number one tourist spender in the u.s. normally. they're staying in canada. we're doing fantastic in canada. meanwhile we recently bought a large department store in

germany. then we'll have a european leg. that will be a third of our company going forward. >> it fair to say you're doing well in spite of the flagship stores in new york city? >> it's fair to say we're seeing a drag from the international tourist and even the chinese. they're coming less than they used to. sometimes they're going right to europe where they think they can get a better deal. >> where's the higher margin? >> it's a higher operating country. so it's higher reflecting to get back the operating expense. but we're trying to become a true global country. traditionally people said retail is not a global business. in fact, that's not true. the more important the kind of sourcing we talked about earlier, the more important the kind of learnings we get in canada and bring them to germany, more that becomes. the more global the business does become. >> gerry, how do you compare --

do you have a different customer than you have in the two saks offerings. do you compete with each other? how do you play that? >> we're synergistic. saks fifth avenue is the high end nap is ultraluxury. and lower is between macy's and a saks. now -- >> macy's might argue with that. >> i don't know that they can argue with that. if you look at the research, it's as blindingly clear that lord and taylor would sit above. tj maxx is worth more than the entire department store industry. that's why there's a mad rush into retailing. growth on saks on fifth was more last quarter. that is the same one way. could be different in -- for the

saturday play versus something they wear to the grand ball they might buy at saks. but either way, it's an entry point into the saks brand that can migrate. >> you're a global company but probably have a good idea about the health of the u.s. consumer. what do you see there? >> there's a lot of change taking place. that's why you have to be on the internet. that's where they want you to be. you see these huge numbers on the internet when you play there. similarly if you're in the value space, where they want you to be. you see big numbers. when people complain, i think it's because they're not adapting to the changes truly taking place. millennials want something very, very different from their grandparents. >> thank you for joining us today. >> thank you. coming up at the top of the hour, appaloosa hedge fund founder david tepper to talk about the markets, china, everything else. take a look at u.s. equity futures. different every time we put them up. now up just 2.

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our guest host this morning is larry bossidy. larry, the thing we've been trying to figure out is how do you really estimate where growth is in the united states? as a guy from the corner office. >> we've been kind of 2% since the end of the recession. this year maybe a little bit better. i think we're in a 2.5%, 3% growth. until we correct the issues, we're going to stay there. is jeb bush right when he says you can get to 4%? >> i think he's got to do a lot of different things. we have to fix the tax code which is 14 points higher than the 30 other. we have to have a territorial tax system. >> and you think -- is that worth a point or two? >> yes. also there's other things we have to fix that seems to me that are troublesome. one, our education system isn't gated to the needs and skills of this century. i think the student debt at $1.3 trillion causes some growth problems for young people. >> what's the larry bossidy plan

to fix that? >> i think -- i don't have a plan. i've read proposals i don't think are practical. we've got to correct it in some way or another. and i think the job market -- there are people underemployed. those are high paying jobs. we got 11 million people on social security disability which i think is incentive for some not to work. so i think we've got to change some fundamental things if we're going to get growth in the range of 4%. >> if you were going to start a company, where would you start it? >> i would still start it in the united states. i mean, you can still look at what happens on the silicon valley and other start-ups doing remarkably well. if you've got something different, if you can differentiate your offering, you can be highly successful. >> can't start one anywhere else, can you? >> you can. >> where? not europe. >> germany. not the rest of europe.

probably in china. i don't know whether or not that's a great -- not for me it wouldn't be a great place to do business. we're still the best economy in the world. >> you wouldn't start it in connecticut. >> no, i would not start it in connecticut. i think connecticut has its own set of problems that sooner or later will come home to roost. >> larry, it's been great to have you this morning. woke up really early this morning. has larry -- have you come in at the 6:00 hour before? >> no. and i'm not going to volunteer either. >> you don't need to volunteer. you're a contributor. we ask you to be here, you -- >> yeah, right. >> larry, thank you. coming up, if you listen to david tepper on "squawk box" five years ago and went long equities, you've done pretty well. the s&p 500 is up more than 70% since that call. but what should you do now that the fed is getting ready to raise interest rates? david tepper is back. he's going to join us on the set next in an interview you can't afford to miss.

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20 years of power, money, and mayhem. >> are you ready? >> yep. >> hit it. >> 20 years of unprecedented access. >> we'll be together for awhile. >> another 20 years?

>> well, yeah. >> and 20 years of bringing wall street to main street. >> if they're down 20%, a better deal today but a terrible deal a year ago. >> now it's time for the next 20. >> today's conversation is with the man whose bold call triggered a market rally so big that it took on his name. >> what's going to do well? everything in the near term. everything. >> now the man behind the tepper rally is back in a "squawk box" exclusive. and with the fed on verge of hiking rates, does david tepper have another market move surprise up his sleeve? you need to stick around to find out as this 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." >> welcome to this very special

edition of "squawk box." conversations with david tepper. i'm andrew ross sorkin along with joe kernen and becky quick. we're less than 90 minutes away from the opening bell. dow would open off about 7 points. nasdaq off as well by 2 points. check out the markets in europe at this hour. you're looking at red arrows across the board. everything down about a percent or so. let's go to becky with the headlines. >> i don't know if we could bring that music back again. anybody over there, 20 years i've been thinking the wrong lyrics here. anyone know? i thought it was a monkey song. >> because it's from "ice age." >> oh. i've heard it there too. >> i thought it was from "ice age". >> you learn things every once in awhile. here's what's happening at this hour.

xpo logistics buying conway. roughly a 34% premium. warren buffett's berkshire hathaway bought another million shares of phillips 66. joe? >> that prompter is too small, isn't it? >> it's tiny and i can only see part of it. >> xpo. it's xpo. >> the problem is i only see -- it's cut off -- >> it's too small. >> there's a missing strip in the middle of it. >> those are terrible ones. too small. >> hurry up, go away. >> appaloosa's david tepper is here. to say his first "squawk box" appearance was memorable would be an understatement for so many reasons. it was september 2010. he told us that the fed's asset purchase program virtually guaranteed strength in stocks. sparking what would become known as the tepper rally. since then the s&p has gained

73% even after the recent correction. fast forward to may 2013, tepper was back on "squawk." he urged the fed to taper to keep the stock on an even keel. but then in october of that year he predicted that the fed wouldn't taper for three or four months because of the fiscal cliff budget overhang in washington. then in may of 2015 he issued an ominous warning for investors bluntly cautioning, i'm not saying go short. i'm just saying don't be too long. >> fricking long. >> i like to keep it can clean. then in december of last year he e-mailed us with us during the show writing, this year rhymes with 1998. actually, it was 1999. russia goes bad, easing coming from europe sets up 1999. oops, i mean 2015.

so he's back again. ready for another bold market call. let's welcome david tepper. president and founder of appaloosa management. you came in from our mutual neck of the woods which is a great place. >> good place. >> gets a lot of -- people who don't know new jersey can say a lot of stuff. they can keep thinking that because we don't want them there anyway. you are also a part owner of the steelers. >> true story. >> but you're not going tonight to foxboro. >> not going to foxboro tonight, no. >> right. so who will personally -- if it's not you, who's going to personally inspect brady's balls tonight? >> joe, i understand that you're a great inspector of balls. >> i wonder -- i told the producer i was going to ask you that just to see what -- >> that's what i heard. that's the rumor on the street. >> well done. >> lovely. >> so you're staying home. >> i'm going to watch with buddies. i was going to go up there, but -- >> you don't want to tell me

what you said off air about the defense. >> yeah. the defense is -- hopefully we'll show better than it showed in preseason. you know, i am not fond of the patriots these days. >> i like the patriots. >> sometimes i have a problem to keep my mouth shut so i figured i'd just stay home. >> they're going to say we're burying the lead here, but you've seen the last two months. did the last two months -- the 1998, 1999 prediction. was that -- take that back given what happened over the past two months? or -- >> well, you know, it's a funny thing. when you write in a line or two, then you can just pick it out. at that time i said i thought you could go to 18 times earnings. what i said is i thought you could go to 18 times earnings. and i kind of think if i had my calculating up here, it did go to 18 times earnings. you went to 18 times earnings

which was up. we did get there. the earnings were worse. >> something else that was very compelling that you sort of indicated to me a couple weeks ago was that one way to explain what we've seen recently is to realize that china reserves were flowing to china for how long until more recently where that could be changing to some extent. and therefore people that had set up certain portfolios needed to change their strategy quickly. is that -- can you explain it better than that? >> if i can't explain it better than that b i could go to the street in the rain. >> can you tell me about that? had to unwind based on the change in their -- >> let's just dial back, okay? so let's dial back to 2010. >> okay. >> all right. so in 2013 we're coming out of that crisis and we had our first qe. which was the beginning of a river flowing. okay? but it wasn't really the beginning of a river flowing. you know, there was a river

already flowing that made -- that suppressed bond yields. that started flowing around 1999/2000 with this reserve currency buildup. and with china and other foreign countries. and what they did was they invested their reserves in longer assets. so, you know, some people thought it was kind of conundrum. some people thought that. when the rates were lower than they should have been. it wasn't such a conundrum. i think these guys were just buying, buying, buying, buying. that was good. then you had qe on top of that. that was nice. you know, so first qe and then you had the japanese qe. then the european qe. so you had just a tremendous river flow. so for 15, 17 years, whatever you had, a river flowing. one way rb right? you could say a money flow. reserves got up to $10 trillion, $11 trillion around the world.

you know how big the qes were. then what happened? the u.s. stopped easing. that flow of the river stopped flowing. so the river is a little bit -- still flowing. still had the reserves, kind of. still had europe and japan going. and so we stopped. so, you know, it's kind of funny. then some time this year you had reserves flowing the other way. right? flowing the other way. what happens when you get water flowing two different ways? >> turbulence. >> it's a tidal river. yeah. so here's the question for you and you know this, joe, because you were in the markets. when you have 16 years of a river flowing one way and some of the river reverses course, you think there's this guy that said when the wave gos oes out,

some are naked. i don't want to see that guy without a swim suit, but anyway. when there's waves going out and in, you know, water going in and out you get bigger waves. that's what you've got here. it's what you've got. think about this. if you had -- you have this reserve drawdown depending how much it continues. it's pretty large. that's why we didn't see it and other people didn't see it when you started hearing about it in august. because you saw it. you saw the bonds being sold. i've heard on this program, it gives me a headache sometimes. people say going to invest in something else. here's my problem with that. on the way in, it didn't work that way. so it's going to work that way on the way out. think about it. you remember this operation twist in a way? >> i do, yeah. >> went out short and long. think about that, right? what happened on the way in? it was like these reserves guys

investing in longer equities and treasuries and stuff like that. longer than the dollars were held before. they should have worked the same way. should have been -- rates should have been coming down. you can't have it. people come on the show and say it's not going to make a difference. you can't have it one way and like it and have it going the other way and not being the same way. not just china. you guys say china, china, china. not just china. it's all been emerging markets. you have brazilian coffee in there this morning? yeah. it's not a good cup this morning. lower grade coffee. the reserves are not just china. it's around the world. china was 4 trillion. you have numbers out of saudi arabia, reserves out of rest of asia. so it's just cumulative. china is the big kahuna. is that you, joe?

>> kahuna. >> i'm the spouse. i get invited to all my wife's tournaments. >> well, you look a little pregnant today. anyways. >> so did you finish your thought? >> no, no. so you asked about the river. so just think about that. so this is the turbulence. this is the issue about money coming out. and it has to be this way, okay? i have people who say if it continues on, it has to be that way. it's not going to go into other things. that effect wasn't like that. they didn't accumulate reserves overnight. that change in error. people are fussing about the fed, this with the fed, that with the fed. who cares? it's going to be 25 basis points reflecting on the market.

it won't matter because it might accelerate some of these things we're talking about. now, the one thing about these reserves and the way they work this way. you went for a long time with china and other people having undervalued currencies. what happens if you have something undervalued? what do you want to do? you want to buy it. so you want to put your money in that country. >> if you have something undervalued? in the market today which is like they're in the market, they did is the stock market. now they're doing the currency. it's going to work really well. i like -- like, mcfly. maybe they should see "back to the future" in china. they should look at that movie. anyways. >> meaning that the chinese are not going to be able to hold this offer, continue to maintain -- >> well, they can hold it, but you're going to have a faster reserve. because the currency is over valued. people will find a way out of the currency. now they can shoot people and keep them from taking money out.

but what they can't do is keep them from paying euro debt and hong kong dollar debt. so that money will leak out. but you can -- it will leak out regardless of what they do. but what they can do is they're trying to keep -- they can try to make it tougher for other people. when you have an overvalued currency like you had an undervalued currency, there's a -- then when you put -- markets work. the rivers flow. if you try to keep the river from flowing, you better have a very good dam. >> when the dam breaks, it's a bigger problem. >> exactly. >> you mentions risk parity. >> i'm going to apologize to the risk parity guys about this just to begin with. but as i understand it, you go long bonds or long equities or go long something. now, going long something for the last 15 or 17 years, i got

one other great thing for you. going long something for the last 15 or 17 years when you have all this money flow flowing one way, that's going to work. when you change the flows, you better be thinking about changing your positions. when you have these flows going and people say these positions over the last two years on hedge funds, last two years hedge funds have been between 62 and 70. now at 64% long. some people say, yeah, they're at bottom in the last two years. well, the five years before that, they were 23 to 62. i think because of this scenario that we're talking about and this is kind of right. it makes sense, it's logical, easy, right. you're going to have more volatility. you have to. you don't know how the rivers are going.

until you know how they're going, it's still going to have volatility. now, 22% is probably a low vol. got there yesterday morning. it was just 13, 14. people still want it to be 13, 14. in the hedge funds, if you have now -- you know, i'm not a big believer of value at risk. right? var. but if i was -- i guess i am a little bit -- your portfolio has gotten so much riskier in the 60s than it was two months ago. because you have different things going on. and this is the -- you know, so that's that part. that has to be right. has to be right. mathematically -- >> that's a big macro picture. >> right. look at mutual funds cash. in the last five years, it's on a lower end. so all these guys -- this risk adjusted -- and risk has something to do. you know, i -- i don't know var.

i know i'm supposed to have a lot of cash. because that's the same thing as old time. before there was var i knew i had cash. >> right. >> it's like copurnicus. >> the macro is way more important now. >> no. let's go to the micro a little bit. not micro individual companies but micro companies in general. some things may still be cheap. some are questionably cheap or not cheap. so you went to an environment and people are waiting for it to come back. when you have china legitimately growing. brazil growing 4%, 5%. a lot of other latin-american countries, they've taken down growth everywhere. if i think china and i can b optimistic about this, it can be 2%. >> you know, they could be at that moment. they overbuilt a lot of different things. here's the problem for you.

so you have china with the big growth problem. india's okay. so, a few years back, some say they were great. when the water is rising that's not such a great thing because you can drown with that brick. so what's not happening in this market? go through these companies. you can do it today. go down the list of the first s&p industrial companies. look at the p's. should mondale trade? with this future growth. so you picked the company. ge. you can go down the list. they all have huge emerging market exposure. so i think the u.s. is a great place. here's the other thing. when i came on before, you quoted stuff from me that's one

liners. what i've been on? twice maybe? >> three times. >> okay. so i've really only been here. and every time you come on you come to the question, what about margins. this is andrew's favorite question. he loves to ask about margins. people say margins are going down. i say no, they're not. and no, they weren't. now ask me the question, andrew. >> what's happening to margins? >> let's think about margins now. let's talk about margins. what i got? i got a situation where i got tight, tight labor market in the u.s. so maybe i'm seeing a little wage pressure in the u.s. so if i have wage pressure and higher wages, is that good for margins? if i have higher wages and i have to pay my employees more -- it's good to pay employees more i know you're a socialist so that's good. >> it's not good for margins. i know very little, but that's the one thing i learned in economics. >> and let's see. if i'm overseas and my growth is slowing a lot and i already

built capacity and i have exchange problem, is that good for margins? >> i don't think so. >> maybe not good for margins. so i've got a challenging stock market environment. what does that mean? that means that this 18, you know -- other people say it wasn't 18. maybe it should be 14. maybe it should be 15. maybe it should be 16. i'm still an optimistic guy. i'm a cheery guy. you know, maybe it should be one of those. then you have to figure out the earnings. >> we've got to take a break. but just listening to you, if the -- you know, we do obsess about the fed and we just heard it's irrelevant. >> it's not irrelevant. >> not irrelevant, but they can't save us from this. >> you have to take a break? >> yeah. >> well, take a break. we'll talk about it afterwards. >> that worries me. because if all this stuff is happening -- this is a huge river you're talking about. i don't think they can save us and that scares me. but -- >> we're going to continue down the river with david tepper when we come back. before we do that, a quick look at futures at this hour.

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from david tepper. we are continuing this conversation off air. you've got to hear all of this. don't forget tonight the nfl season kicks off an nbc. the steelers versus the patriots. right now very quickly as we head back to break, some 1995 sports milestones. "squawk box" will be right back. e trader offices. ahh... steve, other than making me move stuff, what are you working on? let me show you. okay. our thinkorswim trading platform aggregates all the options data you need in one place that lets you visualize that information for any options series. okay, cool. hang on a second. you can even see the anticipated range of a stock expecting earnings. impressive... what's up, tim? for all the confidence you need. td ameritrade. you got this.

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welcome back, everybody. we are continuing our conversation for the next 20 years with our guest host david

tepper. david, you laid out your broad theory about a huge change that's happened over years and years in the markets. we saw funds moving one direction, money flowing one direction. now you think that river is drying up a bit and even reversing course in some places. what does that mean for what you think happens to the u.s. stock market over the next decade? >> well, i think a couple things. one, you know -- listen, i'm at heart a fundamentalist. let's go back there when you're talking about stock market valuations. i mean, the growth rates -- when you have world growth that looks like it's going to be lower than it has been over the next five years and has been the previous five years, that's kind of like a change. people did change to the growth forecast. now they're changing for the future. and so are we. so that just means to me when you have low growth, it means lower pes.

i was about as -- probably on the bullish side of pes. i kind of got there and thought the market would go higher. i don't think this estimates would come down, but they did. so when you talk about valuation now, talk about valuation of the market right now, the question is where do you think earnings is going to be and what do you think the multiple is going to be? it's always that simple. this year i think -- well, the estimates right now for this is earnings of 118. are they going to get downgraded before the end of the year? oil is lower than those earnings. lower than what people put in their forecast. so if they're 118, then you're trading 6.5 times right now. so maybe that's okay. maybe that's a little high right now. then you have to think what they're going to do next year. next year people have really high earnings expectations. energy is coming back, other things are coming back, some financials. and everybody loves their own stocks. it's just a funny way it goes. like you love your own kid, you love your own stocks.

one of those funny things in life. but your kid's not your stock, so you can get rid of your stock. you got your kid who you love -- i love all my kids -- for life. which is a blessing. in any case. so then you have to think where are earnings going to go next year? earnings estimates are between 125 and 130. now, if we do reach 118 this year, in this environment, this high 20s earnings estimate, well, there's a bridge in brooklyn. yo i don't think you're going to get there. that's tough. say you get to 120. just because i like that. that's still higher earnings. i could do that math in my head. that's 1800. you know, you want to be optimistic. you want to say 16 times 125. that would be optimistic. it's like do the math in the

head again. it's 2,000. 2,000 today. you know, well, you know, that's 1950 today. and if you're on the other side of that game, you know -- by the way, you can be 14 times too. because you think earnings even worse -- outgrowth seven worse. it would be 1750 today. >> does that mean that you are -- can't sell your kids, but does that mean you're getting rid of some stocks ahead of this? >> it's funny because i have so many different comments in my head at one time. it's scary. i can tell you some of the comments but i'll get in so much trouble later by different people. anyways, listen. you know, flat is not a bad place to be right now. flat stocks. i'm not a great shorter of stock. if the fed doesn't ease and the markets get excited -- i mean, doesn't tighten and the fed market gets excited about that, even though i'm not real comfortable being short stocks,

you know, maybe i can bring myself to do it. so that would be an opportunity to me if the market went higher. >> if the market went higher it would be an opportunity to short stocks, you're saying. >> think about it this way. this is great for you to think about. if you have the rivers flowing one way, all the rivers flowing one way, every dip should be bought. right? every dip should be bought. they're not doing this right now, but if all the rivers flowed the other way, every rally should be -- >> short. >> should be sold. i don't know which way the river is running. there's rivers both ways. if reserve currency is bigger, selling securities, remember it's an operation twist. so i think it's like a reverse operation twist. then you might want to sell. but i don't know where it's at. because i don't know where it's at, nobody knows where it's at, what do you get? and the market kind of does this magic sort of thing.

it creates volatility. >> does that mean you would -- would you say you're a bear for next year? if you were to really think -- to really sort of put it out there. >> i hate that. i have been a bear sometimes. but i'm not probably as bullish as i could be because i have problems with earnings growth, problems with multiples, problems with all kinds of problems. so i can't really call myself a bull. however, i will say this. if you invest today in the stock market and i think people have said it in five years even if you invest in 1800, earnings grow a little bit. they grow 5.5% a year or something like that, you will make money and at the end of the five years -- >> so the guy who's sitting listening to you right now and he's got some cash -- >> i'll tell you who -- so i'm going to give a compliment to cramer, okay? i don't know how many compliments he gets. maybe jon stewart gave him a compliment a few -- no, no. not a few years back.

anyway, cramer said basically for people to take cash off the table they're fully vested. that's probably not a bad idea. okay. if you're the average guy, over time you won't do well in the stock market. we're not talking about, you know, crashes here, massive misvaluations. we're talking about a market that should correct. okay? and the question is what is that level? listen. i've been -- before we had this run, when i grew up in the business in the '80s and '90s and you were there, we had 10%, 15%, 20% corrections all the time. hey, guess what. it's back to the future time. and if we have a 20% correction or a 15% correction, i would buy. i don't know about both hands. i have to see what the world looks like. but i'd be buying. and then it doesn't mean we're going back up to that 20% either. it's just to figure out where the equilibrium is. by the way, when we talk about these types of things. we're sitting down 6%, 7%, 8%.

what the heck -- in the old days, i'm looking at joe because he remembers as a broker. that's nothing. >> one thing that seems different is this is really all based on, like, a global view. and it used to be i thought if we did things in this country taxwise, pro growth. i thought we could control our own destiny. it sounds now like we're held hostage by this global economy. >> we're not held hostage. united states is not held hostage by the global economy. the u.s. stock market, the spx, which is 50/50 u.s. and the rest of the world is not the u.s. it's 30% emerging markets. >> it matters more now. >> okay. so listen. you can try to not see what it is and people can fool themselves that it's a u.s. market, the stock market is the u.s. the u.s. is fine. 5.1% unemployment 37 it doesn't mean the stock market is the same as the u.s.

the stock market reflects what's many the stock market. okay? and if you don't want to face this reality, and we can say -- and you can say, i love the u.s. the u.s. is good. the u.s. could be fine. >> it could be better. but that doesn't mean we could save the world. >> if you're this is really an individual stock picking moment. okay? there are going to be some good stocks out there then there's stocks that have to correct at some point. >> it's also a market timing situation. all of these people at home who have been putting money in their 401(k) every paycheck, that won't necessarily help them over the long haul. >> again, let's go through the math. so i'm going to go the other way on this a little bit. it means if you have all your money in the stock market, you really make sure you have some cash. you know, that's just be a little bit conservative. >> if the right level today is 1800, i'm not saying it is because it's a range and i'm not

sure. could be today, could be fine. could be 1750 today. could be fine. i'm not sure. okay? i'm really not sure. not that this makes me not love it right now. but if you say the level is 18 hurkds. if the earnings growth is 5% or 6%, down from 6% or 7%. still okay. you know, in four years, you'll be okay. you'll be in the green. it just means you shouldn't have had your money there. could have had it other places. the problem is there's other things that could go wrong. there's always things that could go wrong. china could be worse than i think. maybe it's not 3% or 4% growth. maybe it'd be every session there. maybe all the immigrants going into europe cause a huge, huge problem. you know, there's a lot of turmoil. so there's a lot of -- you can make whatever it is there's a lot of different things. you don't have a cushion right now. okay? you don't have that cushion of safety in the stock market.

like you need a cushion of safety. so you have your -- you have those risks. you can't take the world goes apart. you get a 10% or 15% because of a horrible event in the world. you got no cushion to take that right now. that's why you can't sit there, you know, being 100% on margin. not only do you have a market that is just normal correction lower, but you're now in a valuation range, i think, that you're either right or you're a little bit too expensive. >> as someone and i told you i'd reference this. miller said -- and he was a legendary guy. he used to make huge bets to try to make huge returns. and he says he's more risk averse now. he's gotten older. he says the one person who's still doing it with big nerves is tepper. in a not long and not a purely long environment, can you still make big bets to try and score? or are you now a risk averse capital preservation guy? >> first, let me say one thing

about stan. he has very big nerves. >> hits a long ball too. >> don't let stan fool you about that. >> he's still doing it. >> he's still doing it and, you know, the day hasn't -- >> it was a nice compliment to you. >> the day will come for stan, but today's not the day. okay? he's as good as he ever was. or better. listen. i'm not afraid to take risk. there's a time to take big risk. we have a saying. i have a saying in my office. there's time to make money and there's a time not to lose money. okay? what time is this, joe. >> not to lose money. >> it's not to lose money. like i said, i potentially if i get the right reaction, response, maybe then i'll come out or do something that's going to be -- for me it's going to be like -- >> now the fed does matter. >> it matters from the market --

>> it matters to other people. i think there's other things that matter more than the fed. it's a growth rate. listen. let me ask a different way. it matters to the markets. one way or the other. 25 basis points, it's going to be a 25 basis point. more like 15 basis points. and the short end it occurs. when i'm getting much bigger movements because of reserve stuff in the markets. that's going to matter more than the economy i think. do you think 15 basis points is going to make one iota of difference to the strength of these united states? no. but can it make a difference to how currencies flow and other crap -- stuff like that. >> crap's okay. >> crap's okay. >> you did curse last night. >> i'm trying to pg up my act. okay? >> well, i tried to get you to

say -- >> struggling. >> it's a struggle. it's a constant struggle. >> we're going to sneak in one quick break and come back with david. we've got more to talk about before the hour is up. but we should also tell you jobless claims hit the wires and the numbers for americans filing for benefits dropped. futures at this hour looking down. i don't know if that's you, mr. tepper. dow looks like it's off now 80 points. "squawk box" returns in just a moment. this is the place. ♪ ♪ their beard salve is made from ♪ ♪ sustainable tea tree oil and kale... you, my friend, recognize when a trend has reached critical mass. yes, when others focus on one thing, you see what's coming next. you see opportunity. that's what a type e* does. and so it begins. with e*trade's investing insights center, you can spot trends before they become trendy. e*trade. opportunity is everywhere.

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♪ all right. welcome back to "squawk box." futures right now last we looked were down. they were up 150 at one point. now down about 70. among today's biggest losers, krispy kreme. missing wall street's mark. looking for weak full guidance as well. we're going to come back quickly. when rereturn, appaloosa's david tepper on investing for the next 20 years. we decided you were going to tell us what to do with that. i don't know if you did. anyway, can't miss for the next 20 years. and tomorrow, bill ackman will be here. from his latest investments to playing the fed, the activist investor will join us for an hour starting at 7:00 eastern time. ♪

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we're continuing our conversation this morning with our very special guest host david tepper, founder and president of $20 billion hedge fund appaloosa management. and we've been talking about management. we are talking about rivers and which way rivers are flowing. i was going to ask you about a couple of boats on the river this morning. from the 13-f holdings. we talk a lot about different stocks. one we talk about a lot that you have owned and a lot of hedge funds have owned, is apple. what do you think of apple right now? >> i love my apple phone. my son wants to buy me a watch for my birthday, which i think is a good idea, because then i can check the markets without taking my phone out. i think it is -- listen, i own it, so i am going to say it is great and everything else. it is a low mull tip. you guys were talking about it earlier today, i think. listen, i would agree with some of those things. it is always going to have a lower multiple. there is something that is still

in the device. even though people think it can't be replaced, something could come along. we have seen it over time and things happen. it is a cheap stock. it does have a lot of chinese exposure for its growth, which is a bit of a problem. the multiple is low. i can deal with it. we are not talking about a stock that's in the 20s. >> are you buying, selling or just maintaining. >> we're maintaining. we don't have a huge position. it is probably 3/4 of 1% of our book. it is not humongous. we have some longer shorts and we are hedged in. we don't have a huge equity book right now. >> you did buy a piece of alibaba. >> i can tell you, we he do not own allibaba anymore. as i was telling you offline, we were involved in china. i was reading the situation there wrong. i thought they were easing when

they really were not easing. i lost money in the chinese market market. i think the last bit of alley ba pa we had w pa alibaba we had. we probably finished selling the rest of it right around 80 in early july. i was getting concerned about this whole game and those guys running. they just keep making policy mistake after policy mistake after policy mistake over there. i think it's a learning curve to get on to market economy. you could say that. maybe one day they will get it. it is hard when you have somebody on a learning curve. it's good when somebody is a 1 or $2 trillion in a learning curve. it is bad when they are $10

trillion or $11 trillion, it is bad for them to be in a learning curve. >> when you bought up dalio, you said, he thinks there could be an easing, not now but maybe next year. >> do we not go into a full tightening cycle that lasts for years? is the next easing before we get pack to anywhere near what we view as normalized rates? are we that weak where we have to go back into that cycle here? >> i'm not going to put words into dalia's mouth. i haven't talked to him. if they are reversing and you do have the ten-year, not going back from where it was but going up 10, or 20, or 30, or 40 basis points next year, what would you call for? you would kau for it to come ba back down or be where we are now. you might come on this show and say, wow, these rates are going up. now, you know why they might be

going up? i am not sure but they may. we saw evidence of it in the marketplace. we did. even you would say there is some reason to do it at that point in type. you would have to say there is some q.e. to balance this out. a couple of things are going to be problematic. the ecp, sorry to chuckle a little bit. they said they will do another program. geez, i tell you what, i was just doing the math. i halt ma i hate math. it is all about math. without a telescope. eventually, you see the telescope and you know they are going to sell bonds. you know it is going to reverse course and what you sell comes way up. all the stuff makes sense.

right? the ecb is going to continue qe. they raised the standard to 33%. they can't do the same without changing the way they are buying the bonds. a much higher percentage for the german bonds. they will be like 40%. that's just math. i am kind of wondering, when they do this, another reason for the u.s. to do qe. the germans say, you mean you are buying that many protuguese and italian bonds because we don't want to be over 33. you can't get over this hump. that's going to be an interesting little discussion in the marketplace coming up sometime on the way to ecb second q.e. it has to happen. it is just math. it has to happen. that discussion has to happen. they are not going to be able to

do it. so there are reasons why, even you, who hasn't been a q.e. lover might say it. then, if you do have the economy slowing or coming in, maybe they will do it that way. look with different flows going different ways, you can't do it. the next marginal flow of qe may go less and less and less. it may come back and be more effective. at some point, you are left with no, nothing to do. we're at zero rates and i haven't been this. you are left with zero rates, like you are back into the '80s, 1880s. >> not just fed but all the central banks. >> you get neutralized if you have these flows going different ways. the marginal effect of another qe dollar when you are at zero doesn't know. what can they do? they can go more negative interest rates. that might have more effect on more qe. that's something you have to

think about. if you do get that, is it horrific? it is not. it is just what it is. you have to deal with it. we are not talking the systematic risk in the end of days leak in the '07, '08. we are talking the market has to come to certain new realities and adjust valuation to the new realities. there will be volatility. >> you say there is so much blood in the water already it actually looks good. >> you look at brazil. there is something there. here is one i will tell you. the one i like to see is when some of those big stocks with emerging market components, their ps come down. show me that. show me when hedge funds aren't in the last two years with

increased volatility and they are out of this last two-year range. show me that. show me that. show me those things. maybe i'll jump back in the walter. i have a nice bathing suit. maybe i'll get a new bathing suit. you don't want me to lose my bathing suit, almost as bad as joe losing his. >> if we are ever going to ask anyone again, ever again, anyone, about hitting a bottom, this is the guy. i think he has already told us. >> the bottom is not in. >> what do you think? >> we don't think. >> that's the best thing i have heard on cnbc. >> you said you had a great line

for us. do you remember? >> i'll tell you what it was. if you really think the flows have really changed. if you think the reserve flows are much bigger than the qe flows, if you had the qe flows going one way, it is right to have every dip be bought. if you had all this money in the last 15 years between reserves and qes going one way, every dip should have been bought. if you really do think there is this flow going the other way, if you really do, which we are not sure of. we are not sure how big the reserve flows are going out, every rally should be sold. >> that would be a great line. i'm not sure of if but if you knew it, you will get people on here. sometimes i'm very sure of some things. this is a period that i'm kind of thinking, it could be here, it could be here. i'm not really loving it. i want to be a little safer right now. people don't know exactly where things are. it just is what it is.

>> you need a loan. >> what if we want to redo the set, can we come to you? >> i have a lot of cash right now. >> thank you very much. it is great to have you. >> make sure you join us tomorrow. ge's jeff immelt joins the crew on "squawk on the street." good morning. i'm david faber along with sara eisen and kelly evans. jim cramer does have the day off. let's look at futures this morning. you can see we are set up for a lower open. you have been listening to mr. tepper speak for over an hour. not a particularly sanguine view of the bad