are doing. so there we have it. >> scott, thank you for being we're us. >> great fun with sir richard branson and you guys. >> we'll see you this week. >> see me at noon today. >> we'll see you because you have president clinton interview. look forward to that. >> we'll see you. time for "squawk on the street". ♪ good monday morning. welcome to "squawk on the street". i'm carl quintanilla with jim cramer and david faber. multiple headlines on m and a, more fears of a hard landing in china, glencore, putin at the u.n., icahn with a market warning. futures are lower. bonds, dudley is out saying he still sees a rate hike this year. oil is lower amid a lot of news from companies with energy and

materials. we begin with a record breaking weekend for apple. fed calling for at that rate hike. >> a set to become two separate publicly traded companies. but first up apple is announcing it has sold more than 13 million new iphone 66s and 6 plus. it will be available in 40 more countries beginning october 9th. >> look, i think that no one will care. this is a market no one may even care about alcoa which is a major split and that's because the gloom is so palpable. i spent a lot of time trying to be constructive about a market where there are black holes. you mentioned we're going to get to a company called glencore

which a vast majority of our viewers don't know that's gigantic. some say $30 billion in debt. apple keeps delivering. apple china says mirror nike china sales. very strong. right now we're at a moment where the market is gripped by forces unseen that are concerning people and oblivious to them is to say i've been oblivious to great earnings news and it didn't matter. >> you're coming off a friday. i was not hear. i've been hearing plenty of it. health care got taken. take a look at shares of valiant. it got hit. so many health care names got beaten badly. the debt markets ability of some companies to get financing terms. junk market that's highlighted today in the "wall street journal," but i'm also hearing

it separately and it has got to be something that creeps in in terms of the way people think about their -- just miss ad call i wanted. their approach right now and then you mentioned glencore which we'll speak about in a moment. >> i think there was a deal on friday that i think was of great concern to people which was olen buying the commodity business of gal and have you raise money at an extraordinary 9.7%. some of this could be related to a deal that was unraveled that dupont spun off. i had xpo which is buying conway. but the olen deal and the cable deal. >> was able to raise money. but at a much higher coupon than had been previously thought. i talked about altice many times

an aggressive acquiring company based in france with a v-very aggressive chairman ceo. but they have benefitted enormously from incredibly generous debt markets. so when you start to see a company like that have to borrow at 10 plus percent versus 9 plus percent. investment grade, abi will be in the market and tell bus enormous financing they got to finance their bid. i'm hearing no problems on that front. junk is where it starts. i'm curious what karl icahn is talking about. >> i don't want to ever ignore a market that has some tremendous things going for it. u.s. pretty good. >> that sort of the apple news. apple news is we're selling a lot of phones. >> the consumer is very good.

but it doesn't matter right now because we have systemic risk in places outside the u.s. and there's no way we can keep it from coming here. this commodity decline, carl, is really unheard of proportions. i think that we all kind of thing, that's great. cost of things are going down. it just doesn't impact as positively as the financial market are hurt by it. >> unbelievably busy week. dudley the fed president from new york says the fed will raise rates this year. consumer spending came in, .4. david mentioned karl icahn warning of danger ahead for a new video to be released tonight. in the video he says low interest rates have caused bubbles in art, bubbles in real estate, high yield bonds and of course the fall out for markets could be dramatic. take a listen. >> it's like giving somebody medicine and this medicine is

being given and given and we don't know what's going to happen. you don't know how bad tend of this is going to be. you do know, though, when you did it a few years ago it cause ad catastrophe. it caused '08. where do you draw the line here? >> that's a preview of what karl will unveil later on tonight. he did tell scott wapner he's more hedged than he has been in years. this is a personal mission. he's truly out to save mom and pop from a lot of pain. >> there's no doubt about it that he's done many great things. and i'm not going to criticize him from the point of view of being concerned about high yield debt. i am going to criticize him about the fact that he's been buying energy -- >> he owns a lot of chess speck.

>> chesapeake and freeport are the two i'm concerned about as well as glencore. i hope he's hedged big time. identify been trying to get people out of chesapeake and freeport. to not mention that is to not show people that he's been very aggressive in the two areas that are the most dangerous american stocks, the most dangerous american stocks because they are copper and oil. so, yeah, he ain't in there buying general mills. i don't hear bristol myers. doing those? >> he lost a lot of money in energy. we know that. i heard 5, 7 billion. i'm not sure the numbers. it's a very large number. he was up enormously as high as 30 billion in assets -- all his asset, by the way. he's short cvs. big hedge on the bond market. he's paying a big number each month just to keep that going.

>> why do you have to buy those? the greatest shorts, such fabulous shorts. hedge them against, i don't know, exxon and chevron. >> fair point. speaking of energy, we did get that big energy deal this morning on the m and a front. energy transfer agreeing to acquire williams company. enterprise value includes debt 37.7 billion. both companies say the combination will create the third largest energy franchise in north america. this is going largest energy infrastructure company in the world. of course, all they've done is go down. why? the underlying commodity they transfer around whether it's gas or oil has been going down and they have been getting clobbered. the stock was around $45 or the partnership was around 45 bucks. they are talking, jim, about $2 billion about commercial snirj, 4 million in cost savings.

et team is adept. williams company has been around for 120 years but didn't execute as well as they might have. they have a lower multiple. e temp is the smaller company. they have been in pursuit for months and months. williams has been pursuing another transaction and it's abandoning. >> how about that? they were doing w pc. >> yeah. >> what happens -- >> that deal is not going to happen. >> kelsey warren the big deal maker in this business -- >> fully controls this company which will now become the largest energy company in the world. >> this is a giant etf. energy transfer equity, etf is a big mistake. they are doing 10% yield. company had a great quarter. remember, there are companies that do natural gas distribution. natural gas is cheapest in 12 years. natural gas is needed.

far more than oil. i think when we talk about oil we have to talk about exports because we have too much, bach trying to store, north dakota make it so they don't shut wells up. if you're levered in natural gas it's good. all that said everyone will hate this deal. why? because it's energy. if you mention the word energy then you're courting one of the big bear markets. >> they hated both these stocks all the way down. williams for the board of williams which there was a great deal -- remember you got corvette, the activists and some board members who are not happy about it. >> they stole it. >> they were afraid of a 20% decline the stock price should they walk away from this deal. it might be defensive on their part although, again, the idea is you'll have a team that's very adept at running these businesses. kelsey warren will control this company. they will have a higher growth

rate and a higher dividend. >> great deal but who cares. >> it's going to keep going down? >> part of an etf. there are people who every time unless they sell. one day that will change. we're not at that day. maybe karl icahn should be hedging. he's paying big dividends. >> yes. as i said he benefits from the bond market going south. spread is widening. >> always difficult to talk about the bond market because it worries people. bond market has between secret behind a lot of different declines that are major. >> in terms of size much larger than the stock market. >> just boring. i love to make it come alive like rockettes come in here. i don't know what to do. gentlemen prefer bonds. gentlemen should prefer bonds. >> shouldn't prefer bonds.

i'm doing a twist on larry kudlow. >> "new york post" says he's going to run for that seat. >> do we host a debate? >> we are hosting a debate. >> between larry -- >> blumenthal. final point on etf they didn't raise the consideration. they replaced stock with cash so it's eight bucks in cash. >> raise some capital there. >> after all that they didn't raise it all. >> unbelievable. this is a huge deal. huge. no one cares. they rather talk about media general. >> we'll talk about that later. bring on the ceo the company that's trying to do the overbid from media general. >> alcoa news. we're filled with good news that doesn't matter. >> that's a good point. a lot of the bad news does matter. glencore and volkswagen. haven't got into a lot of that. dudley is crossing the tape and

sarah eisen is on the floor. >> a voting member one that's very close to janet yellen, new york fed president bill dudley talking. headline is the fed will likely raise interest rates this year. very much echoing what we heard from janet yell len. it is based on the data versus the calendar. on this wholedea of the fed watching international development something the fed told us in that last decision was one of the reasons it was taking it slow and being cautious here is what president dude lie said about those international considerations and why they care so much. >> we let the u.s. economy overheat because of international development that would be saying we're putting too much weight on international development. we care about international development not just for them schls but how it affects our economic outlook. at the end of the day what we do is based on what's the right

thing to do achieve our mandate of full employment and price stability. not about the international outlook per se. >> in other words for all of us staying fed wants to make policy for the world and adding a third mandate, no that's not it. we're curious to see how it will impact the outlook on the united states. other quick headlines he says we're not targeting the equity market. the fed has received some criticism of that. they are watching very carefully what happens to financial conditions not just the stock market but conditions in markets overall. he did, though, say october is a quote live meeting something janet yellen has said. there's a strong case for liftoff if the economy stays on track. >> dudley one of four speakers today alone and the rest of the week is just ass about with fisher and yellen making remarks later in the week. >> they will send the market

down. i'm no cheerleader for this market. i suppose it's good to be sanguine. it sends the market down. it's something we have to deal with. that's why i'm suggesting these defensive stocks. >> you've done everything but call for a 30% bear market. >> short term targets, dow 1533, 370. we corks if everything goes wrong it's very easy to take the multiple to 15 times earnings which you get 12% decline. look, i'm very realistic. a rate hike, if i were at my old hedge fund, bring it on. be thrilled. i don't know. that's constructive. so i am constructive. i think we can hold that 1867. >> talk about that and a lot more as we said busy week and day ahead.

alcoa splitting into two publicly traded companies. becky quick talks to information president bill clinton from the annual meeting of the clinton global initiative. take another look at future. adp, you a, to job numbers on friday. a lot of "squawk on the street" from post-nine in a minute. i'm here at the td ameritrade 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

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all co-a announcing it will split into two public trading companies. alcoa says it expects to complete the split in the second half of next yearer and we'll have a live interview with alcoa's chairman klaus kleinfeld in half an hour or so. not first company facing big structural challenges. >> this company has been linked with the price of aluminum which has been in free fall. the upstream business, so-called business that makes aluminum has been challenged. to some degree challenged because of a surplus that's perceived in actual aluminum from china. but they aren't nearly as related as they should be.

more importantly this final business, the business that's the finished business looks like precision cast parts. and it's a big company. precision cast parts bought by warren buffett and that business is worth a great deal. in another market the stock would be a 12. we're in a different kind of market. >> we're seeing shrink to grow in action. something we've talked about in a robust m and a market. many companies are choosing to split. i can name many others that have chosen to go down that road. >> klaus kleinfeld has been struggling with the idea although he buys a big company, buys another company so makes it the company is the largest factor in engines and aircraft and aircraft as we know from boeing growing at 9:00% has struggled to show people why you would own a stock that makes aluminum for the new f-150, a

micromill strategy, licensable klaus is doing -- he's doing what he should do because one day the market won't be as bad as it is now. one day that will happen. it will really matter. again we're not at that day. >> today is not that day. >> we'll get cramer's mad dash and count down the opening bell. we'll see you on the other side of this break. we've got trouble in tummy town.

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commodities complex. incredible trading company. mark rich, right, some of these businesses, the old train of mark rich, when you go back they are every where, glencore and people are trying to understand what's going on here. the stock is down 80%. you had a negative research report that said their graph illustrates negative equity pie left for shareholders should commodity prices not recover. under a scenario value for glencore eliminated. >> ten year bonds is trading down significantly. trying to keep this in front of people, david, because glencore is a company we know very little about. >> we do. this morning everybody is trying to understand their counter party risk. i know people have looked at the

bank agreements to see if there's any triggers. don't appear to be. this is an important name that people have to keep front and center right now. they already tried to hit the market, remember, jim and everybody who did that with them has gotten crushed. the idea they can go back to the markets seems unlikely. so we'll just watch this down about 25%. largely it seems in part because this is exacerbated fears that investors already had about what's left here and if commodity prices do not recover. >> copper is down tremendously today. now look, this is china. this is a reflection of the fact that commodity prices have come down a great deal. now, we're in better shape around the world to handle whatever goes wrong in glencore. i don't want to put this as systemic risk in 2011 in europe or anything like 2007-2009 in our country and that's important. this is not the type of thing that will take down a stock like

verizon. but might cause a better fries buy stocks given verizon. you don't really like it. >> key is counter party risk. junk bond, high yield markets showing weakness. question about volkswagen. enormous company. these things are conspiring to bring us lower. >> it feels like october. >> not yet. we got the opening bell coming up next.

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you're watching cnbc "squawk on the street" live from the financial capital of the world, opening bell bin 45 seconds. the market obviously stepping into the week with trepidation amid some headlines. alcoa splitting into. obviously big concerns about glencore in london and we'll see how they trade through the course of the rest of their market day. then the week ahead, a slew of data, whether it's adp confidence, lot of fed speak, fisher later on friday, auto

sales, jobs number. then things whole foods laying off 1500 doesn't help. >> whole foods, i'm doing a lot of work. whole foods makes more money than anybody. the fact is i did some pricing on whole foods. last saturday and was surprised how low the pricing of their brand is. this is a very smart move. i'm not saying buy whole foods. there will come a time when they should buy whole foods. it's selling. it's more profitable and lowered the price so much. can't seem to win. still a great place to shop. >> there's the bell and negative breath at the open. pacific alliance at the nasdaq communications technology company ericsson. >> own nokia.

>> alcatel lucent, late '90s. giants. >> the end was bad how horrible carly fiorina is. notice horrible. i put that out there. honestly i remember when she was at hewlett-packard and a lot of people thought she was doing a good job at the time. that's okay. it seems to be a pinata approach. >> she was at lucent as well which went from great to not so great. >> a titan. >> poor execution. >> poor decision-making long term. even largest of companies can fall. >> there's some research moving around today. credit suisse up citi. stearns up j.c. penney. >> j.c. penney is a good example of what i like. people don't want to hear, when you have a j.c. penney that's look. but cummings is bad.

listen we're in a bifurcated world. j.c. penney that new ceo is doing a lot of good. but, macy's seems to be hurt by the return of j.c. penney. don't forget macy -- i'm an amazon prime personer and i was trying to buy shoes macy's versus amazon. you always end up thinking amazon it will thereabout next day. macy's has a great omni channel. macy's has been hurt since our out look conference has been in decline. >> yes. a significant decline in macy's. >> macy's is unusual. we have costco reporting this week. i suspect costco will be good. i almost feel like to tell the guys at costco, again don't be depressed if you report great. i'm a market psychiatrist. don't be depressed. i want doesn't matter. glencore is out there. what does costco have to do with the price of glencore.

glencore could be like long term capital. they will pull themselves out. >> we don't know. that's scarier when you have a good grip on what it is. because trading businesses are interesting. and they can go lots of places. >> there's rabbits out of hats. >> there are. >> tell you who else, volkswagen down again today. reports out of german media, german prosecutor is taking aim directly, pursuing potential criminal charges. audi now has more than 2 million cars affected by this scam. >> there was some great articles in the paper saying over and over again how clean diesel was. the tests showed diesel was much cleaner. no. tests rigged. >> scandal is --

>> see there's a good example. if you did your documentary that we loved you went to a norwegian town. >> talking about "house of cards". showing various instruments here in the u.s. delivered around the world -- delivered losses around the world as a result of being tied to home mortgages. >> saxon owns a huge percent. >> they to e7bd%. question with volkswagen a so little we know in terms of how it began and how far it will go and then don't forget the debt side of the equation, jim. the ecb is not including their mortgage backs -- their loans, their securities made up by auto loans from vw auto finance any more in terms of an assets of the buy, the bonds of volkswagen traded off considerably in

price. and so you just wonder about the wherewithal of the company and that's a concern. you couple that and volkswagen with glencore and you get a lot of tumult. >> why does no one want to buy another auto company. it's incredible volkswagen with 11 million vehicles. the other stocks go down, volkswagen is a loser and zero sum game in this business. >> there was a table of the top automakers market cap last week post-volkswagen news breaking only one higher was tesla. every other automaker had their market capcom in. >> people are saying listen diesel is not a good fuel. using 20 numbers for tesla. tesla is so hated by so many people as being one of the ones they expect to roll over this short position is gigantic. shorts against tesla. >> software.

german made coffee maker put the software in there to blow up every two years. >> good house keeping seal. >> bosch was the -- >> i have an emill. >> very quiet. >> remember we talked about our household appliances. >> i'm watching valiant. stock was down sharply on friday. the concern is about drug prices. valiant has aggressively increased the prices of any number of drugs that it takes in when it does an acquisition. this morning the ceo of the company says this concern that our business model and strategies dependent about large price increases and our u.s. pharmaceutical business is unfounded.

he also says our exposure to u.s. drug price reimbursement both of those thesis are incorrect. they are well positioned for strong organic growth even assuming little or no price increase. as we stated many times, we focus on volume growth and concentration on private and cash pay markets that avoid governments markets. >> i do want to point out biotech in a bear market, officially in a bear market. >> below that flash crash of august 24th. >> that crazy morning level. >> look, when i look at this xpo, conway, that stock was cut in half. borrowed money at much a better rate. the idea that the growth can continue for roll ups is more in

question. those companies grow by acquiring. and that's allergen is going to sell that business. clean up the balance sheet. valeant is viewed like sun edison. a deal too far. >> sune. i watch that one. i watch green lights performance. >> red light. >> red light, an offer i want to mention. nexstar where media general is merging with meredith. not well greeted by investors on the media general side although there was speculation that media general would be in the sights of another acquirer. nexstar is another one. offering 1015 cash important media general is having a positive impact on those shares.

needs to break up the current meredith deal which would require a shareholder vote and hoping to have the ceo of nexstar join me next hour. >> it sound like a modern digital tv company and i thought it made more sense than meredith. i thought time would merge with meredith but that did not happen. >> alcoa biggest s&p gainer. we'll talk to klaus klein field in a few moments. >> weaker open here in the u.s. as investors look ahead to a third quarter earnings season that's expected to show a decline in earnings. also on the heels of weakness in europe and mixed mixture. dow is off about 15 points from the lows of the session so far. this is what we're looking at. we're seeing a bid in dollar and bonds. commodities are weak in large part because of the stronger dollar. there's fed talk. bill dudley echoing comments from janet yellen saying he's expecting a fed increase by the

end of the year. m and a we've been been talking b-david mentioning another bid for media general from nexstar. materials in focus in part because of the weakness we're seeing in commodity prices today, specifically gold is down and amid concerns about glencore that over shadow the minors. that's weak right now. also we're watching the biotech index, last week entering bear market territory on concerns about price gouging. weakness tinseloff continues today. karl icahn was out today with his video saying there's a bubble in the art market, real estate market and the junk bond market. you can see that's taking a hit. high yield bonds taking a hit. want to look at the other stocks involved in that deal. nexstar, media general and meredith. nexstar trying to break up that deal. meredith stock under pressure on news of that.

in the chip space, a bid working on atmel to be acquired by dialogue semiconductor. so right now the dow is off 116 points. once again concerns about the earning season weakness overseas and then of course continued weakness we're seeing in commodities with oil down as well just about 84 cents right now. all of this keeping pressure on the markets today. carl, back to you. >> let's get the bonds as well. rick santelli in chicago. good morning, rick. >> reporter: good morning. there's a lot of talk today, karl icahn in particular. basically talking about risk when he's talking about junk, high yield, corporate. if i look at tens for two days i don't see a lot of that showing up because this is on the receiving end. there's more buying here. this is the best of the credits, of course. we're hovering very close to unchanged on the year which is 216, 217 open the chart up to august. can you clearly see we're not

near 2% and the last time we've fwlen was a spike but we're holding at what really is the mid-to-upper two-thirds of a recent range. if we look at high yield in the etf market you can see we haven't been anywhere near this level in the hyg since thanksgiving of 2011. very close to the two year note. think about that. look at the investment grade etf, lqd, a different picture comping back to 2014. if we got to go on the security side we go the barclays index. barclays investment grade definitely see the spread are widening by a difference of 170 over treasure injuries on the junk about 631 basis points. clearly see on these one month charts how it's moving higher. last chart dollar index. a lot of ping ponging back and forth. on this chart we're still

somewhat in the middle of a recent range not an extreme but if you pull back a goodyear for the dollar. carl, back to you. >> rick santelli in chicago. when we come back, alcoa's chairman and ceo klaus kleinfeld on the aluminum giant's decision to split into two publicly trade companies. the dow down about 116 points. we're back in just a moment.

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>> there was a lot of concern about chipotle. pigs being mistreated. this is a very big deal because there are people who went elsewhere, or were dissatisfied. and i think that the fact that this is coming back is going make people understand chipotle is a domestic stock.

i have to make this difference. i'm not bearish on domestic stocks. i'm bearish on companies that have internal exposure. chipotle is a growth name stock you can watch go up and not freak out about. i'm trying to be emperrical and what's not. >> 90% and all of them potentially by november. >> look they were doing this rolling black out of carnitas. a lot of younger people rely on more than older people. >> that's good. alcoa ceo klaus kleinfeld is after the break.

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>> alcoa announcing this morning splitting in to two publicly trading companies. klaus clean field joining us. this was done by you. why now? >> yes. well, look, we have actually been talking about alcoa, the two value engines and over the last years we have created a lot of additional opportunities

here. i mean on the value add side we've grown organically and we've added to the acquisitions and built this out to attractive materials. on the upstream side we have built into five different businesses that this can stand on a very, very strong box side business, biggest box side minor, low cost first quarter, same thing on aluminum side, strong energy assets, commercially oriented and a smelting business we have reshaped. this is what we've done in the last years and allowed us to build those two businesses into -- intoing the right size, the right strength and the right scale. this allows us to put both businesses on that their own path independently to pursue their own strategies which are very distinct. >> klaus let's look at the value added. when i look how much of it is aerospace which is 9% grower,

this has the appearance of a bit of a precision cast parts, warren buffett just bought. it's not necessarily a company that's levered to the gdp any more. >> well, i mean it's 40% of it, roughly 40% is aerospace but there are other things. there's automotive, commercial transportation, a whole range of it in it. the good news is, i mean not only are we strong in these businesses that grow you, you pointed 0-9% on aerospace, first time on north american automotive very strong growth business. that's all very, very good. at the same time, you know, we're increasing the aluminumization, you know or the amount of materials capabilities in that we're strong in the jet engine side, strong in the aerostructure side. we have just brought out the revolutionary microtechnology signed about two weeks ago another joint department of agreement with ford. we have new capability there's.

all of this is extremely exciting, growth opportunities, profitability growth opportunities we see in the value add and value add company. >> let's talk about the nonvalue add. for the upstream. how do we know that won't be hurt by china and capitalized enough to not look like timken steel and people got killed. >> look, i mean this has all been the great work of many and reshaping our upstream business. the upstream business -- very often people just look at the upstream business and equate it to aluminum. that's not what is it. you have to see there's a strong side box business. one thing china doesn't have is box side. we have low cost large box cost mining position. we've decapped the aluminum pricing aluminum pricing index.

75% of our sales are on spot. very enviable cost position. in this business it's where you are on the cost curve. then we flexed our energy assets. most are hydropower. we can sell them into the market or use them for internal use. the castoff business we put that business together, focus this on commercial transactions and in the last years we generated additional 1.3 billion profitability if these things and reshaped also the smelting business into what it is today. we're very comfortable that this business can go through any cycle no matter where it stands. don't forget aluminum is a material that grows and you can see every one of us see it in their own environment. you're surrounded by a lot of aluminum. aluminum we believe demand growth will be 6.5%. this decade we'll see doubling of demand growth. this is a very different story.

>> so as people try to put a value on the engineered products and solutions business, klaus, some are using the pc p valuation as a model. is that reasonable to you >> i would say this. we have been building this out and also increasing our value on the aerospace side in the last years organically and inorganically. pc p is roughly around 5.6, 5.7 billion. so that's the part that's comparable. there are elements that are not comparable but equally attractive. we talked about automotive. automotive ramping up. focused very much on north america. the next wave is coming through the micromill. then we have commercial transportation in there also, good business for us. in the key businesses we have in the value add we look how many

of those products are number one or number two positions and it's 80% of those products are number one or number two positions. this is fantastic. gives you a good idea how massively competitive these businesses are. all by itself. >> all right, klaus thank you so much. ceo of alcoa. will be my guest again on "mad money". i don't mind having some positive. speaking of positive we have game stop. paul raines defining the shorts. but this is trying to find out how you do by the phone. >> health and tech, man, amazing. look forward to hearing more from klaus tonight. >> i want to be more constructive. very happy. >> jim we'll see you tonight. congratulations on this weekend, by the way, a win that you guys

needed. >> yeah took a lot. a visit in philadelphia. >> when we come back morgan stanley strategist adam parker on what he sees ahead for the markets and we're waiting for the president's address to tuhe u.n.. live coverage of that when we return.

good monday morning. welcome back to "squawk on the street". i'm carl quintanilla. markets getting off to a tough start. dow is down 158 amid a slew of corporate news. now we're about to get some more at least on the macro fund pending homes. >> carl, pending home sales down, 1.4% month to month in august. that's a miss. street was looking for a slight gain. this is a measure of signed contracts in august not closings. we did see closed sales in august fall off very sharply. pending sales is up 1.6% year-over-year. realtors saying that's still healthy. gains were much higher over 7% in july. still up 6.1% in august.

realtors pointing to still very tight supply and higher prices. new report today from black knight financial services shows home prices nationally are 5.5% lower than their bubble peak of july 2006 and many markets are already surpassing that price peak and that's keeping many buyers at bay. regionally pending home sales down 5.5 in the northeast. down 2.2% in the south but up 1.8% in the west month to month. realtors say there's road blocks ahead. they are concerned about a government shutdown and new mortgage regulations going into effect next week. a miss pending home sales down 1.4% for the month. >> thank you very much, diana oleck in washington. general electric, let's go to mary thompson. >> ge is moving more jobs abroad because congress refused to renew the export-import bank.

it has to go to foreign agencies in order to receive financing. sometimes they ask if we give the financing you have to bring some jobs over here. sometimes the jobs are moving to canada where the company will have a gas engine plant that it will be building there. 350 jobs leaving wisconsin, moving to canada. now this comes on the heels of ge moving 1,000 jobs to the uk and 500 jobs to france and hungary. ge is prepared for an export-import bank world if congress doesn't renew the fanning for the export-import bank. export credit agencies around the world are greeting u.s. exporters with open arms and ge is very confident with the level of financing it's received from these agencies. he also when asked whether or not the resignation of house speaker john boehner would change the equation at all as to

whether or not the export-import bank would gets renewal, john boehner was a supporter so it stirs the pot. ge moving 350 jobs from wisconsin to canada. >> markets in the red. down 150 points on the dow as investors digest. bill dudley's rate increase comments along concerns from the giant mining trading corporation in europe appears to be breaking down. parker is the chief u.s. equity strategist at morgan stanley. adam, good morning. >> good morning. there are parts of the market that are fascinating if not worrisome to watch. what's happening with glencore. junk bonds coming in to the weekend. arguably biotech is rolling over on friday. what do you think overall about the strength of the market now? >> well, look. we're pretty optimistic as we see old economy, new economy

bifurcation. we're under weight in materials. i think there's pockets in consumer, pockets in technology, pockets in health care. our view you want to own large cap growth stocks where growth is scarce. >> doubling down on consumer discretionary importantly despite the fact that perhaps we haven't seen the savings from gasoline appear as people have hoped yet. >> i think that's a big thing. first of all discretionary is the best performing. big controversy is how much of that gas savings comes through. we think it will. we think we're starting to see signs of consumer. saw better personal spending data this morning. think back to july. a watershed moment. amazon prime day is bigger than black friday. walmart's comps were better. you want to focus a little bit better on low end consumer that

will benefit. ross stores we like. ways to play the consumer that's going to benefit from the lower gas at the pump. >> adam i'm reading your note here. let's talk about energy. here's a quote. we made a really bad call by going overweight energy at the beginning of the year. sound like your capitulating big time. it's a pain sector. down 23%. why now your throwing in the towel. >> first of all one of those weird things you have a top down bet that's bad. we did so well with the stock picks it offit is. we had position in valero. so our energy stocks outperformed and offset by bet. the logic to be worried we don't see a catalyst for next 12 months. if you get focused on rip count you feel optimistic supply could look better. i think what happened sometimes you buy a stock or overweight a sect jork it goes down and you get new information. why hold something new.

>> the technology change within the sector is the be all and end all. >> in a way it's important. to extend the gas markets analogy think about an area where, you know, rates were down 80% and production was unchanged and we're seeing a little bit of that in the oil side and i just worry a little bit it will take longer for the oil sector to recover. i don't want to sit on dead money whether there's other places i can do better. >> what about the overall market. you're also going overweight on financials as well despite the fact that the fed is reluctant to move on in rates. what do you think the overall market will do. do you buy on this fourth quarter rally argument >> part of the financial increase we added stuff like capital one and american express and even added some blackrock. trying to find quality stocks down a lot. if i look at the portfolio, i got amex and capital one some is

a consumer bet also. i think that's what i'm thinking. in terms of the big banks, jpmorgan they are rate sensitive. to me you have good earnings growth at a reasonable price. with buy backs, not a lot of currency exposure, strong dollar. i'm feeling more second cohn strubtive. the broader market expectations just being too low and sentiment being too low. there's a reasonable chance you're only three, four weeks away from using that phrase melt up on your program. >> simon has benghazied biotech. down 20% from the highs. would you be buying biotech? aren't he still in an environment of low growth where investors should be willing to pay up for companies that can post earnings growth? look apartment nike. >> health care has had one of

our best bets. we went to neutral at the beginning of the year. three concerns. one very crowd. you look at morgan stanley's data shows high net exposure. two, very rate sensitive. particularly biotech and especially pharma area where you see value impacted by the specter of rising rates. three, you have seen the highest fraction of deals ever in the health care sector. we look back 10% of the public health care companies received an offer. some was positioning that had to unwind a and got exacerbated by a tweet last week. my sense you'll get a better entry point. so i wouldn't say it's over for "the cycle" but i wouldn't be surprised it takes longer for that positioning excess to unwind in biotech. >> now that we suffered the losses we have for the year, do you still think we're in a bull market? do you think there are strong

gains to be had next zblaer >> i still think we are. if i look at the major things, high-risk of recession, i don't think so. corporate excesses across capital spending, i don't think so. imminent credit problem outside of smith cap energy. i don't think so. so me what's happened a lot of liquidity searching and tighter financial conditions perhaps but i don't see an end of the cycle call. i cee lo expectations. the numbers are for zero earnings growth this year and that's not right. two whole quarters of earnings in front of us you'll see some benefits to companies that clearly will do well with lower oil and lower rates. you'll see 3% to 4% organic earnings growth. i have a 1.9% dividend yield and pretty negative sentiment out there and that's the reason to remain sanguine. it's not the end of an era.

tend of the beginning but not the beginning of the end. >> good to see you, sir. adam parker joining us from march began stanley. months and months of pursuit by energy transfer of williams has resulted in a deal this morning and that's what the market has to say about it. basically looks as though investors wish it never happened. of course we've been following this for some came. carl wams was involved in the deal that would require a shareholder vote. energy transfer came in and wooing the board ever since with the help of two prominent members on the board who run hedge funds. finally results in a deal this morning with about $38 billion when you bring in debt but a lot less than it was worth not that long ago as etf shares were as high as 45 when this pursuit began and have come down dramatically since then on of course the declines and commodity complex including oil and gas for which both these companies make the pipelines or

run the pipelines that have those commodities running through them. deal about 8 bucks a sharon cash plus a ten cents special dividend and regular dividends you get between now and close. investors just don't like it. what's going on? some market mechanics involved. if you want to it is up you might have hedged the alp. no one wants to do that. take a look. here's a look at the williams companies. so there's no effective way perhaps for some people to want to hedge. they don't want to own et out right even though over the long term a lot of positive things about this tie up, 2 billion of commercial synergies. williams larger company, 120 year plus history is forced to sell out to them at this point. it will become the largest

energy infrastructure company in the world and it will be controlled by one man whose name you're not hearing a lot about now but you may over time kelsey warren who will be the general partner controls a company with $180 billion worth of pipeline assets. again, investors just saying, as they watch and send etf shares down dramatically. big loss. many hedge funds own this name on both sides and they watched them come down together over time and today no exception. even worse when they finally announced the big deal. >> thumbs down on the market. coming up, president obama is set to speak at the u.n. general assembly. right now the president of brazil has the podium as she wraps up her speech the president is set to go next. president obama we'll take to it live. later this morning former president bill clinton sits down with our very own becky quick as the clinton global initiative kicks off here in new york as well. we'll be right back.

president obama is set to speak at the united nations in a few moments. you're looking at the president of brazil finishing her speech. a busy day here in new york city. we'll get speeches at the u.n. from russian president vladimir putin as well as cuba's raul castro. our michelle caruso-cabrera is in new york with the latest. putin-obama dynamic should be interesting, michele. >> reporter: that's the big highlight of the day.

we'll hear from both of them fushlly at the speeches at u.n. and president obama's motorcade went by. he's in the building. he's up next. key diplomatic event of the day is when he's set to meet with vladimir putin at 5:05 according to the president's official schedule. on the agenda ukraine and syria, mostly syria as russia is far more interventionist to support the dictator in charge, bashar al assad. there's more equipment on the ground because of russia, fighter tanks, health, surface to air missiles and a limited number of troops though not a huge number. the question is what happens next. also a lot of intelligence sharing now just recently announced between russia, iraq, iran, and syria. obama has been less than -- far more reticent about getting involved in syria so the two have to come together here at some point to see if there's some way to solve the issue on the ground when it comes to isis

and at the same time the migrant crisis that has become the key ripple effect as a result of this. we'll be watching to see what president obama says then putin but the key event of the day is the meeting late this afternoon. back to you. i think president obama is taking the podium now. let's take you there. >> president of the united states, we invite him to address the assembly. [ applause ] >> mr. president, mr. secretary-general, fellow delegates, ladies and gentlemen. 70 years after the founding of the united nations it is worth

reflecting on what together the members of this body have helped to achieve. out of the ashes of the second world war, having witnessed the unthinkable power of the atomic age, the united states has worked with many nations in this assembly to prevent a third world war by forging alliances with old adversaries. by supporting the steady emergence of strong democracies, accountable to their people instead of any foreign power. and by building an international system that imposes a cost on those who choose conflict over cooperation. an order that recognizes the dignity and equal worth of all people.

that is the work of seven decades. that is the ideal that this body at its best has pursued. of course, there have been too many times when collectively we've fallen short of these ideals. over seven decades terrible conflicts have claimed untold victims. but we have pressed forward. slowly. steadily. to make a system of international rules and norms that are better and stronger and more consistent. it is this international order that's unwritten, underwritten, unparalleled advance in human liberty and prosperity. it is this collective endeavor that's brought about diplomatic

cooperation between the world's major powers and buttressed a global economy that lifted more than a billion people from poverty. it's these international principles that have helped constrained bigger countries from imposing their wills on smaller ones and advance the emergence of democracy and development and individual liberty on every continent. this progress is real. it can be documented in lives saved and agreements forged and diseases conquered and in mouths fed. and yet we come together today knowing that the march of human progress never travels in a straight line. that our work is far from complete. that dangerous currents risk pulling us back into a darker

more disordered world. today we see the collapse of strong men and fragile states breeding conflict and driving innocent men, women and children across borders on an epic scale. brutal networks of terror have stepped into the vacuum. technologies that empower individuals are now also exploited by those who spread disinformation or spread discontent or radicalize our youth. global capital flows of power growth and investment but also increased risk of contagion. weaken the borrowing power of workers and accelerated in equality. how should we respond to these trends?

there are those who argue that the ideals enshrined in the u.n. charter are unachievable or out of date. a legacy of a post-war era not suited to our own. effectively they argue for a return to rules that apply to most of human history and pre-date this institution. the belief that power is a zero sum game. that might makes right. that strong states must impose their will on weaker ones. that the rights of individuals don't matter. and that in a time raf paid change order must be imposed by force. on this basis we see some major powers assert themselves in ways that contravene international law. we see an erosion of the

democratic principles and human rights that are fundamental to this institution's mission. information is strictly controlled, the space for civil society restricted. we're told that such retrenchment is required to beat back disorder, it's the only way to stamp out terrorism or prevent foreign meddling. in accordance with this logic we should support tyrants like bashar al assad who drops barrel bombs to massacre innocent children because the alternative is surely worse. the increasing skepticism of our international order can be found in the most advanced democracies. we see greater polarization, more frequent gridlock, moments on the far right and sometimes

the left that insist on stopping the trade that bind our fates to other nations. building of walls to keep out immigrants. most ominously we see the fears of ordinary people being exploited through appeals through sectarianism or tribalism or racism or anti-semitism. appeals to a glorious past before the body politic was infected by those who looked different or worship god differently. politics of us versus them. united states is not immune from this. even as our economy is growing and our troops have largely returned from iraq and afghanistan, we see in our debates about america's role in the world.

a notion of strength that is defined by opposition to old enemies, perceived adversaries, a rising china, resurgent russia, revolutionary iran or islam that's incompatible with peace. we see an argument made that the only strength that matters for the united states is belacose words and depliplomacy will not work. i'm mindful of the dangers we face. they cross my desk every morning. i lead the strongest military

that the world has ever known. and i will never hesitate to protect my country or our allies unilaterally and by force where necessary. but i stand before you today believing in my core that we, the nations of the world can not return to the old ways of conflict and coercion. we cannot look backwards. we live in an integrated world. one in which we all have a stake in each other's success. we cannot turn back those forces of integration. notation in this assembly can insulate itself from the threat of terrorism or the risk of financial contagion. the flow of migrants or the danger of a warming planet.

the disorder we see is not driven solely by competition between nations or any single ideology. if we cannot work together more effectively, we will all suffer the consequences. that is true for the united states as well. no matter how powerful our military, how strong our econ y economy, we understand, the united states cannot solve the world's problems alone. iraq and united states learned the hard lesson that even hundreds of thousands of brave effective troops, trillions of dollars from our treasury cannot by itself impose stability on a foreign land.

unless we work with other nations under the mantle of international norms and principles and law that offer legitimacy to our efforts we'll not succeed. and unless we work together to defeat the ideas that drive different communities in a country like iraq into conflict, any order that our militaries can impose will be temporary. and just as force alone cannot impose order internationally, i believe in my core that refregs cannot forge the social cohesion for nations to succeed. the history of the last two decades prove that in today's world dictatorships are unstable. strong men of today become the spark of revolution tomorrow. you can jail your opponents but you can't imprison ideas.

you can try to control access to information but you cannot turn a lie into truth. it is not a conspiracy of u.s. backed ngos that expose corruption and raise the expectations of people around the globe. it's technology. social media. and the irreducible power of people every where to make choices about how they are governed. indeed i believe that in today's world the measure of strength is no longer defined by the control of territory. last thing prosperity does not come solely from the ability to access and extract raw materials. the strength of nations depends on the success of their people. their knowledge. their innovation. their imagination. their creativity. their drive.

their opportunity. and that, in turn, depends on individual rights and good governance and personal security. internal repression and foreign aggression are both symptoms of the failure to provide this foundation. the politics of solidarity that depend on demonizing others that draws on religious sectarianism or narrow tribalism or jinglism may at times look like strength in the moment but over time its weakness will be exposed and history tells us that the dark forces unleashed by this type of politics surely makes all of us less secure. our world has been there before. we gain nothing from going back. instead i believe that we must

go forward in pursuit of our ideals. not abandon them at this critical time. we must give expression to our best hopes not our deepest fears. this institution was founded because men and women who came before us had the foresight to know that our nations are more secure when we uphold basic laws and basic norms and pursue a path of cooperation over conflict. strong thags have a responsibility to uphold this international order. let me give you a concrete example. after i took office i made clear that one of the principle achievements of this body, the nuclear nonproliferation regime was endangered by iran's mpt.

on that basis the security council tightened sanctions on the iranian government and many nations joined us to enforce them. together we showed that laws and agreements mean something. but we also understood the goal of sanctions was not simply to punish iran our objective was to test whether iran could change course, accept constraints, and allow the world to verify that its nuclear program will be peaceful. for two years the united states and our partners including russia, including china, stuck together in complex negotiations. the result is a lasting comprehensive deal that prevents iran from obtaining a nuclear weapon while allowing it to access peaceful energy. and if this deal is fully implemented the prohibition on

nuclear weapons is strengthened, a potential war is averted, our world is safer. that is the strength of the international system when it works the way it should. that same fidelity to international order guides our responses to other challenges around the world. consider russia's annexation of crimea and further aggression in eastern ukraine. america has few economic interests in ukraine. we recognize the deep and complex history between russia and ukraine. but we cannot stand by when the sovereignty and territorial integrity of a nation is flagrantly violated. if that happens without consequence in ukraine it can

happen to any nation gathered here today. that's the basis of the sanctions that the united states and our partners impose on russia, it's not a desire to return to a cold war. now within russia state-controlled media may describe these events as an example of a resurgent russia. a view shared, by the way, by a number of u.s. politicians and commentators who have always been deeply skeptical of russia. and seem to be convinced the new cold war is, in fact, upon us. and yet look at the results. the ukrainian people are more interested in aligning with europe instead of russia. sanctions have led to capital flight. contracting economy. a fallen ruble. and the immigration of more

educated russians. imagine if instead russia had engaged in trudie plow macy and worked with ukraine and the international community to ensure its interests were protected. that would be better for ukraine but also better for russia. and better for the world. which is why we continue to press for this crisis to be resolved. in a way that allows a sovereign and democratic ukraine to determine its future and control its territory. not because we want to isolate russia. we don't. but because we want a strong russia that's invested in working with us to strengthen the international system as a whole. similarly, in the south china sea, the united states makes no claim on territory there. we don't adjudicate claims.

but like every nation gathered here we have an interest in upholding the basic principles of freedom of navigation and the free flow of commerce. and in resolving disputes through international law not the law of force. so we will defend these principles while encouraging china and other claimants to resolve their differences peacefully. i say this recognizing diplomacy is hard. that the outcomes are sometimes unsatisfying. that it's rarely popular. but i believe that leaders of large nations, in particular, have an obligation to take these risks. precisely because we're strong enough to protect our interests

if and when diplomacy fails. i also believe that to move forward in this new era, we have to be strong enough to acknowledge when what you're doing is not working. for 50 years the united states pursue ad cuba policy that failed to improve the lives of the cuban people. we changed that. we continue to have differences with the cuban government. we will continue to stand up for human rights. but we address these issues through diplomatic relations and increased commerce and people to people ties. as these contacts yield progress i'm confident that our congress will inevitable lie lift an embargo that should not be in place any more. [ applause ]

change won't come overnight to cuba. but i'm confident that openness, not coercion will support the reforms and better the life that the cuban people deserve just as i believe cuba will find success if it pursues cooperation with other nations. now, if it's in the interest of major powers to uphold international standards, it is even more true for the rest of the community of nations. look around the world. from singapore to colombia to senegal, the fact shows nations succeed when they have inclusive peace and ross peter within their borders and work cooperatively with countries beyond their borders.

that path is now available to a nation like iran. which as of this moment continues to deploy violent proxies to advance its interests. these efforts may appear to give iran leverage in disputes with neighbors but they fuel sectarian conflict that endangers the entire region and isolates iran from the promise of trade and commerce. iranian people have proud history and are filled with extraordinary potential. but chanting death to america does not create jobs. or make iran more secure. if iran chooses a different path, that would be good for the security of the region, good for the iranian people, and good for the world. of course around the globe we'll continue to be confronted with nations who reject these lessons

of history. places where civil strife and border disputes and sectarian wars bring about terrorist enclaves and humanitarian disasters. where order has completely broken down. we must act. but we will be stronger when we act together. such efforts the united states will always do our part. we'll do so mindful of the lessons of the past. not just the lessons of iraq but also the example of libya where we joined an international coalition under a u.n. mandate to prevent a slaughter. even as we helped the libyan people bring an end to a tyrant our coalition could have and should have done more to fill a vacuum left behind. we're grateful to the united

nations for its efforts to forge a unity government. we will help any legitimate libyan government as it works to bring the country together. but we also have to recognize that we must work more effectively in the future as an international community to build capacity for states that are in distress before they collapse. that's why we should celebrate the fact that later today the united states will join with more than 50 countries to enlist new capabilities, infantry, intelligence, helicopters, hospitals and tens much thousands of troops to strengthen united nations peace keeping. [ applause ] these new capabilities can prevent mass killing and ensure that peace agreements are more

than words on paper. but we have to do it together. together we must strengthen our collective capacity. to establish security where order has broken down and to support those who seek a just and lasting peace. nowhere is our commitment to international order more tested than in syria. when a dictator slaughters tens of thousands of his own people that is not just a matter of one nation's internal affairs. it breeds human suffering on an order of magnitude that affects us all. likewise, when a terrorist group beheads captives, slaughters the innocent and enslaves women it's not a single nation's national security problem, that's an

assault on all our humanity. i said before and i'll repeat, there's no room for accommodating an apocalyptic cult like isis and using our military as part of a broad coalition to go after them. we do so 0 to ensure there will never be a safe-haven for terrorists that carry out these crimes. and we have demonstrated over more than a decade of relentless pursuit of al qaeda, we will not be outlasted by extremists. but while military power is necessary it is not sufficient to resolve the situation in syria. lasting stability can only take hold when the people of syria forge an agreement to live together peacefully. the united states is prepared to work with any nation, including

russia and iran to resolve the conflict. but we must recognize that there cannot be after so much bloodshed, so much carnage, a return to the pre-war status quo. let's remember how this started. assad reacted to peaceful protests by escalating repression and killing that in turn created the environment for the current strife. and so assad and his allies can't pacify the broad majority of a population that's been brutalized by chemical weapons and indiscriminate bombing. realism dictates compromise will be required to end the fighting and ultimately stamp out isis.

but realism also requires a managed transition away from assad and into a new leader. and inclusive government that recognizes there must be an to end this chaos so syrian people can begin to rebuild. we know that isil which emerged out of the chaos of iraq and syria depends on perpetual war to survive. but we also know they gain adherence because of a poisonous ideology. so part of our job, together, is to work to reject such extremism that infects too many of our young people. part of that effort must be a continued rejection by muslims of those who distort islam to reach intolerance and promote violence and must also involve a rejection by nonmuslims of the ignorance that equates islam

with terror. [ applause ] this work will take time. there are no easy answers to syria and there's no simple answers to the changes that are taking place in much of the middle east and north africa. but, so many families need help right now. they don't have time. that's why the united states is increasing the number of refugees who we welcome within our borders. that's why we will continue to be largest donor of assistance to support those refugees and today we are launching new efforts to ensure our people and our businesses our universities and our ngos can help as well. because the suffering of families our nation of

immigrants sees ourselves. of course in the old ways of thinking the plight of the powerless, the plight of refugees, the plight of the marginalized did not matter. they are on the periphery of the world's concerns. today our concern for them is driven not just by conscience but should also be driven by self-interest. for helping people who have been pushed to the margins of our world is not mere charity, it's a matter of collective security. and the purpose of this institution is not merely to avoid conflict it's to galvanize the collective action that makes life better on this planet. the commitments we made to the sustainable development goal speaks to this truth. i believe that capitalism has been the greater creator of wealth and opportunity that the world has ever known. but from big cities to rural

villages around the world we also know prosperity is still cruelly out of reach for too many. his holiness pope francis reminds us, we're stronger when we value the least among these. and see them as equal in dignity to ourselves and our sons and our daughters. we can roll back preventable disease and end the scourge of hiv/aids. we can stamp out pandemics that recognize no border. that work may not be on television right now but as we demonstrated in reversing the spread of ebola it can save more lives than anything else we can do. together we can eradicate extreme poverty and' race bar towers opportunity but this requires a sustained commitment to our people so farmers can feed more people, so

entrepreneurs can start a new business without paying a bribe so young people can have skills to succeed in this knowledge-based economy. we can promote growth through trade that meets a higher standard and that's what we're doing through the transpacific partnership, a trade agreement that encompasses nearly 40% of the global economy. an agreement that will open markets while protecting the rights of workers and protecting the environment that enables development to be sustained. we can roll back the pollution that we put in our skies. and help economies lift people out of poverty without condemning our children to the ravages of an ever warming climate. the same ingenuity that produced the industrial age and computer age allows us to harness the potential of clean energy. no country can escape the ravages of climate change. there's no stronger sign of

leadership than putting future generations first. the united states will work with every nation that's willing to do its part so that we can come together in paris to decisively confront this challenge. in dect this challenge. and finally, our vision for the future, of this assembly, my belief in moving forward rather than backwards, requires us to defend the democratic principles that allow societies to succeed. let me start from a simple premise. catastrophes like what we are seeing in syria do not take place in countries where there is genuine democracy and respect for the universal values this institution is supposed to defend. [ applause ]

i recognize that democracy's going to take different forms in different parts of the world. the very idea of a people governing themselves depends upon government giving expression to their unique culture. their unique history. their unique experiences. but some universal truths are self-evident. no person wants to be imprisoned for peaceful worship. no woman should ever be abused with impunity. or be barred from going to school. the freedom to peacefully petition those in power without fear of arbitrary laws. these are not ideas of one country or one culture. they are fundamental to human progress. they're a cornerstone of this institution.

i realize that in many parts of the world, there's a different view. a belief that strong leadership must tolerate no dissent. i hear it not only from america's adversaries but privately at least i also hear it from some of our friends. i disagree. i believe a government that suppresses peaceful dissent is not showing strength, it is showing weakness and it is showing fear. history shows -- [ applause ] history shows regimes that fear their own people will eventually crumble. but strong institutions built on the consent of the governed endure long after any one individual is gone.

that's why our strongest leaders from george washington to nelson mandela have elevated the importance of building strong democratic institutions over a thirst for perpetual power. leaders who amend constitutions to stay in office only acknowledge they failed to build a successful country for their people. because none of us last forever. it tells us that power is something they cling to for its own sake. rather than for the betterment of those they purport to serve. i understand democracy is frustrating. democracy in the united states is certainly imperfect. at times, it can be dysfunctional. but democracy, the constant struggle to extent rights to

more of our people, to give our people a voice, is what allowed us to become the most powerful nation in the world. [ applause ] it's not simply a matter of principle. it's not an abstraction. democracy, inclusive democracy, makes countries stronger. when opposition parties can seek power peacefully through the ballot, a country draws upon new ideas. when a free media can inform the public, corruption and abuse are exposed. and can be rooted out. when civil society thrives, communities can solve problems that governments cannot necessarily solve alone. when immigrants are welcomed, countries are more productive and more vibrant. when girls can go to school and get a job and pursue unlimited opportunity, that's when a country realizes its full potential.

[ applause ] that is what i believe is america's greatest strength. not everybody in america agrees with me. that's part of democracy. i believe that the fact that you can walk the streets of of this city right now and pass churches and synagogues and temples and mosques where people worship freely. the fact that our nation of immigrants mirrors the diversity of the world. you can find everybody from everywhere here in new york city. the fact that in this country, everybody can contribute. everybody can participate, no matter who they are or what they look like or who they love. that's what makes us strong. and i believe that what is true for america is true for virtually all mature democracies. and that is no accident.

we can be proud of our nations without defining ourselves in opposition to some other group. we can be patriotic without demonizing someone else. we can cherish our own identities, our ethnicity, our traditions, without putting others down. our systems are premised on the notion that absolute power will corrupt. but that people, ordinary people, are fundamentally good. that they value family and friendship. faith and the dignity of hard work. and that with appropriate checks and balances, governments can reflect this goodness. i believe that's the future we must seek together. to believe in the dignity of

every individual. to believe we can bridge our differences. and choose cooperation over conflict. that is not weakness that is strength. [ applause ] it is a practical necessity in this interconnected world. and our people understand this. think of the liberian doctor who went door to door to search for ebola cases and to tell families what to do if they show symptoms. think of the iranian shopkeeper who said, after the nuclear deal, god willing, now we'll be able to offer many more goods at better prices. think of the americans who lowered the flag over our embassy in havana in 1961, the year i was born, and returned this summer to raise that flag back up. [ applause ]

one of these men said of the cuban people, we can do things for them and they can do things for us. we love them. for 50 years, we ignored that fact. think of the families leaving everything they've known behind. risking barren deserts and stormy waters. just to find shelter. just to save their children. one syrian refugee who was greeted in hamburg with warm greetings and shelter said, we feel there are still some people who love other people. the people of our united nations are not as different as they are told. they can be made to fear.

they can be taught to hate. but they can also respond to hope. history is littered with the failure of false profits and fallen empires. who believe that might always makes right. and that will continue to be the case. you can count on that. but we are called upon to offer a different type of leadership. leadership strong enough to recognize that nations share common interests and people share a common humanity. and yes, there are certain ideas and principles that are universal. that's what those who shaped the united nations 70 years ago understood. let us carry forward that faith into the future. for it is the only way we can assure that future will be

brighter. for my children and for yours. thank you very much. [ applause ] >> that is the president in front of the u.n. with a full-throated defense of not just democracy as an institution but also diplomacy over force, multilateralism. eventually a bit of scolding of russia on ukraine, russia on syria. called for what he called managed transition in syria. saying that a return to assad is not a reasonable outcome after all the bloodshed there. our michelle cuse sa cabrera. not a lot of applause until the very end. >> no, i would highlight the point you bring up about the managed transition, post-assad. i mean, that was definitely a foreshadowing of what he's going to talk to vladimir putin about this afternoon when they have that bilateral meeting. at s