competent that will grow the jobs they can take advantage of. that's bigger than trade. we have a confluence of things that have been going on between technology and trade and the changing structure of our economy that are making it a challenging moment but tpp on its face should be a clear plus. we're going to continue to make that case and i think we're going to have to demonstrate the commitment to working families. >> in that equation you have to address the omni bus criticism of the obama administration, which was attempt down on private enterprise and too much government intrusion into the private sector that kept some of the gains getting to individuals. >> if you look at where the economy was when we took office just under eight years ago, it was in the middle of the greatest recession since the great depression. we were seeing unemployment at 10%. there was no bottom. we put in place an economic program that's lifted the united states out of that recession. we've seen sustained growth. we've seen 15 million new jobs.

we're seeing wage growth. and some of these things that you're just labeling regulation are also why we're able to be in a place to meet our commitments to rereduce emissions and meet standards to make this a safer world by having our climate problems not engulf our future. there's a lot of things going on inside the package that you call just more regulation. this economy is a stronger economy because of the policies we've pursued. it is not as strong an economy as we'd like to see. a lot of what i see as having held back the u.s. economy is the headwinds internationally. we've seen probably half a percentage point of gdp shaved off the u.s. economy because demand globally has been weak. that's one of the reasons we put so much time into trying help move the global debate towards using policy tool tools to grow the demand and economy. we've made progress. you're seeing a number of places

around the world put policy in place using fiscal tools and monetary tools. the united states is looked to in the world as being a resilient economy that's bounced back. what i tell my colleagues around the world, we can't be the only engine in the world economy. there need to be multiple engines. >> i want to get to the overall economy. one of the things you talked about is this need to invest in infrastructure. the republican nominee has come up with something like $500 billion for spending on infrastructure. is that a good number? >> i have not dissected any of the campaign proposals. i'm not doing politics in my life. i'm happy to talk about our policies. >> what's the right number for infrastructure investment? assume we're talking over a ten-year period. >> the right number is a very, very big one. we have trillions of dollars that need to be invested. it's not all public money. what we did a little over a year ago, we extended our surface

transportation funding for five years basically at level funding, a little bit of an increase, enough to maintain what we're doing now. not enough to build the new facilities that we need to compete in the 21st century. i think putting several hundred billion dollars of federal money into a commitment on a multiyear basis to build infrastructure would have an effect on state and local planning that would bring more state and local resources to bear. and just as importantly would be a foundation for public/private partnerships, which is what gives you the ability to leverage the amount of resource you're putting in. this is not all a question of federal funding. federal funning has been the foundation. one of the things we do is we create a certainty out there that there's steady flow to get projects off the drawing boards. without that, the whole system slows down. i think we have taken some time off from driving that process forward, not to the point that it's irreparable but we can't

take another decade off. >> at the same time, when we look at overall economic growth, we're doing just around 1% the last three quarters. how much concern has this caused you that we can't even get to the new lower new normal of 2%? >> i think when you go quarter to quarter, sometimes you can overexplain an individual quarter. we've seen growth in the low 2% for a number of years now. we're continuing to see strong labor markets. we're continuing to see improvements in wage growth. consumers in the u.s. are very strong. housing is doing better. autos have been doing very well. the weak spot on the economic picture is investment. and i think that if we could figure out what it is that's going on in investment and productivity to drive the investment numbers forward, that would be very important. i mean, i think that there is a

lingering lack of confidence in the global economy coming out of the economic crisis. it was a deep, deep economic crisis. it left a concern. how do you know we're not snapping back? i think in the united states we've demonstrated pretty decisively that we're not slipping back. there are other parts of the world where every three to six months you wonder is it going one way or the other? there's a lot of geopolitical risks. we have to stabilize those risks. one of the things we do when when meet in the g20 is focus on that. we met in china at the g-20 leaders meeting. you heard a few things at that meeting that were important and different. one is, what i just talked about in terms of inclusive growth, in terms of everyone sharing in it. we used to be a chorus of maybe one talking about inclusive growth. all the leaders were talking about inclusive growth. i think there's a clear understanding that we have to show that the benefits of growth get to working people.

globally right now. secondly, there was a commitment to using all policy tools. that is much stronger than it's been in the past where heads of state are talking about using the fiscal space they have more vigorously. i think on the exchange rate issues that have been so vexing for a long time, we have a clear agreement to refrain from competitive devaluation and to coordinate together so that in moments of volatility we don't see unilateral actions that destabilize the global economy. >> i want to come back to one of the things you talked about using the fiscal side. is the fiscal side getting a message from the monetary side that there's only so far they're willing to go. mario draghi said there'smade a. the fed is suggesting. >> i don't comment on monetary policy, particularly not fed

policy. >> it's a question about fiscal policy. >> i don't think fiscal authorities needed messages from anyone that fiscal tools are important. we've been delivering that message consistently since 2009. i've been doing it as treasury secretary for the last 3 1/2 years. what we've seen over the last three years is a shift in the debate. when i became treasury secretary, there was a global debate about posterity versus growth. we went to g-7 and g-20 meetings. there'd be debates about austerity versus growth. those debates are over. there is focus on making sure there are sustainable fiscal plans. in terms of short-term programs, the global community embraced idea that we need to use all policy tools. if you look around the world, even in the last six months you've seen from china to canada, south korea to japan, more use of fiscal tools in a responsible way. it doesn't mean build up debt

that's unsustainable. it does mean don't try to hit deficit targets and debt targets in the short term when you need to get your economic engine moving. i think fiscal authorities during this recession put more pressure on monetary authorities than we should have. i've said that all along. here in the united states, we went too fast in terms of some of the fiscal consolidation. there was a big debate in the united states in 2011 and 2012 about this. we've done okay. we've done -- we could have done better. we could have had a little more growth if we put some of the savings a few years out and less of the savings in the front end. other countries didn't have the recovery act. they didn't do the payroll tax cut. they didn't come back repeatedly and put more fiscal power to deal with economies that needed it. it wasn't always pretty in the united states but we used all of our policy tools, our fed was aggressive. our fiscal program was big.

and our reform in the financial system was a structural reform we needed here in the united states. there are still challenges in the future but our call internationally is for all the tools to be used. >> i want to talk about challenges in the future. can you give us an idea, i'm betting you thought about this. what goes in the letter that you leave for your successor? >> this may surprise you, steve. that's something you think about when you get to the last day in my experience. you don't write it four months in advance. i think that we're still focused on the work we have to finish in these next four months. i think that the economy that we are working through now and that we will leave behind is much, much stronger in almost every dimension that the economy we inherited. i'm proud of that. that's something the american people are well served by. that doesn't mean that all the challenges of the future are addressed. these questions of income inequality are deep economic and social issues. and we have put proposals

forward that we believe deal with that in a sensible way. to pay for things like education, starting with preschool education, community college education, to pay for infrastructure and to have an equitable distribution of tax burden to pay for it. those debates aren't over. i think if we take a long break from dealing with all those issues, you pay a price. it starts to stress both the economy and the social fabric. i think we've done enormously important work. i don't think any administration finishes the job. you pass the baton. you give some advice and then you try from the sidelines to help move things in the right direction. >> i wonder if four months in advance you think about what you do personally. have you thought about going back to wall street or back to academ academia? >> i've made one key decision to live in the same city as my wife for the next four years. >> after that. mr. secretary, i personally look forward to lew the musical.

thanks for joining us. >> thanks, steve. >> that is the treasury secretary with our own steve liesman at delivering alpha, talking about everything from wells fargo to the corporate tax rate to tpp to government's ability to sell the benefits of globalization, infrastructure, the nagging problem of investment and productivity in this country. good morning, welcome to "squawk on the street." i'm carl quintanilla. a long day ahead with some big players, big show on "mad money" tonight. jim, your thoughts? >> look i think it's business as usual. i think jack lew talks similar about what he's said a few times at delivery alpha. the overhang in the market, iea says there's a big glut of oil.

yesterday the market went up. as nutty as this is, what jack lew says, what companies say, it doesn't matter. we are tick by tick to oil. we are just on oil. did you get your trading card for the different fed players? i mean, did you get the stick of gum from topps? >> now they're done. they're finally done talking for a few days. >> i was going to trade you a brainard for -- >> for what, a rosen -- >> we're stick. >> you're right about crude which is down on this for example from the iea saying that the glut is expected to last longer than expected. we'll get api tonight. as you said we enter this blackout period before the meeting next week. >> well, carl, how can it be that whoever speaks last controls the market? honestly, we've gotten to a point where the market is so thin, the market has become too stupid to believe. if it really is every tick by

oil and whoever speaks from the fed and none of the fundamentals, i think we're stuck in a volatile world that makes it very difficult for someone at home to do anything other than stay the course. if you try to trade this thing, you're going to get whip sawed. >> i will give you one positive here. it's not going to happen anytime soon, perhaps next year when we have a new president. secretary lew talking about corporate tax reform. both candidates for president are talking about corporate tax reform. that would certainly be positive. i don't know if 25 to 28 is something that will excite corporations. overall, when you think about that, that is seen as a positive, the ability to get $2 trillion, some portion of it back here has to be seen as a positive. not short term, not today but longer term something important and something that is desperately needed as the saekt made clear. >> we've seen a big inkrooess in buy backs.

okay? the dividend growth has slowed down. and if treasuries aren't going to have a big -- if we're not going to see a big rise in interest rates we need more dividends to keep this market where it is. i find the market -- i don't want to say it's precarious but i do have to say the market's volatility, the new-found volatility after a nice, calm period is scaring people in either direction it's scaring people. >> your point being that money that might one day be brought back could help support dividends although a lot of people would rather see it support job growth. >> capital investment. >> yes. >> i think there won't be a deal. >> there won't be a deal. i think that money comes back and they do whatever they want with it. boy is that money sizable. i think it's usually bullish. it's interesting you say that. that's the first thing that's come out of the election that both candidates give you other than big defense spending. >> 600 billion is not enough. >> we need more ships. >> and guns. and ships.

>> carl, look, i find we're at one of these moments where it is really like -- that today the apple data point is more important than anything else other than oil. if oil were up, apple would be up 3. >> yes. we are going to talk a lot about apple later on this morning. the iphone 7 reviews are out en masse as of 6:00 a.m. this morning. largely positive. we're beginning to talk about how buyers may or may not be influenced by various innovations like these new air pods. finally, wells fargo announcing it will eliminate all product sales goals for retail bankers effecti ivive at the beginning the year. the move comes after that $185 million settlement with regulators for allegedly allowing employees opening up to 2 million customer accounts they never wanted. jim will talk to stump tonight on "mad money." you heard secretary lew say that

compensation and culture make a difference. jim, you want to take a listen to that? >> sure. >> here's secretary lew. >> what i've seen from what they've done is bad behavior, they were correct to take action against. how that flows through in terms of next consequences is beginning to depend on the facts of case. what i can tell you is, there's a lot of talk in washington these days about rolling back dodd frank, about rolling back the law, changing the law that created the agency that uncovered and task action against this. this ought to be a moment where people stop and remember when you don't have proper items in place. >> andrew ross sorkin with a good column in the "times" today. basically calling it a sham. a breathtaking sham. >> yes. >> i think john stumpf will

argue that a lot of this is untrue, that the bank founded itself, that the bank has fired a lot of people, including managers who were involved. i bet, john, when we ask him about who's going to have to pay in management, will defend upper level management and, therefore, you get the situation where the secretary said they. and i think that the key issue for me to try to evaluate tonight is who is they. is they the bank managers and it stops there or is they the board? is they john stumpf. there's such a level of outrage for it to stop at who has so far been caught, so to speak, will be unacceptable to washington. >> i don't know what to make of a fact that it was $1.5 million over five years. such a small amount of money. this is something that andrew pointed out in his column and yet the numbers, the other numbers, the 5,300 employees, the hundreds of thousands of fake accounts.

>> okay. >> the number is tiny. >> maybe that number is wrong. >> okay. >> maybe that's wrong. maybe it's unsubstantiated but not fake. i think that is what i have to find out. i agree when i read andrew's column, it seems to be that would amount to say 38 cents. >> right. >> there's something wrong with the calculations. i've got to find out what is wrong with these calculations. they don't make sense. will i find out? >> yes. >> i don't think it's going to be a friendly interview like the last time i sat down with john. >> this is the first opportunity to try to get some questions answered. that's largely what there are here. >> no free passes. >> no. >> it's true i've had john -- look, john stumpf, the bank has been incredibly profitable. how much was cross selling? cross-selling is not a bad word.

or a bad hyphenate word. how much was reckless, how much was incentivized and how many people did they catch? who have they turned in? i want to know. >> we can't wait for "mad money." >> i can't either. let's just do it. >> when we come back this morning, as we said, apple getting good news. the reviews regarding the iphone 7 are pretty good. we'll fill you in. a lot more coming up from delivering alpha, including a panel discussion with former treasury secretary time geithner and ray dalio of bridgewater with 115 billion under management. take another look at the premarket. jim and david will talk to chanos, bill miller. oil is down triple digits. we'll be back in just a minute.

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apple's up in the premarket, t-mobile announcing preors of the i'm phone 7 and 7 plus shattered all previous iphone records of the wireless carrier. both t-mobile and sprint say preorders friday through monday were up almost four times compared to the next most popular iphone. question, jim, is whether or not this is really worth two points

or not. >> it is if you look at sprint which just put out an announcement. i think we'll discover that verizon and at&t have very similar, very similar increases. >> four-fold at sprint as well. they're talking about. the question i have is we know t-mobile has been successful at getting a lot of new subscribers. percentagewise, what are we talking about aprils ples to ap when you look at sprint out, preorders of the iphone 7, iphone 7 plus, increasing nearly four times. you're getting a sense there was a good amount of demand on weekend one. >> indeed. walt mossberg, a long-time apple watcher calls it an outstanding phone. but adds not as compelling an upgrade as many of its predecessors. those expectations arguably built in as the narrative has been writing that the big

changes are coming in the 8 next year. >> i think one of the things that happened is there is a gap between the snap judgment. the snap judgment was that it was a bore, ridiculous, who cares, versus what we're seeing. t-mobile, we don't know how many people t-mobile sign up in the interim. we're trying to direct message, tweet john. this is the first time john ledger has never been on twitter. just respond. this is important. i know you were on a few minutes ago. if you put together sprint, at&t and verizon and they all say this, you have to raise numbers apple. apple did come out last thursday within they said they would not release the weekend. that makes sense. there's hundreds of thousands of entities that you can get it from. they did reiterate guidance. they didn't raise guidance. boy, would that be something if they raised guidance. >> that would be unexpected. >> unexpected. >> that would be unexpected. >> yes. >> nice to see tweets from clara

and ledger. >> there's an air of good feeling. >> we'll count down to the opening bell. one more look at the premarket as we are down significantly. the opening bell in just about five minutes. as a supervisor at pg&e, it's my job to protect public safety, keeping the power lines clear, while also protecting the environment. the natural world is a beautiful thing, the work that we do helps us protect it. public education is definitely a big part of our job, to teach our customers about the best type of trees to plant around the power lines. we want to keep the power on for our customers. we want to keep our community safe. this is our community, this is where we live. we need to make sure that we have a beautiful place

for our children to live. together, we're building a better california.

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there it is, mad dash here. a little bit different than the new york stock exchange. >> right. >> a couple minutes to go before we get the opening bell. where do you wand to head on this mad dash? >> my old friend just gave me some numbers we were trying to figure out. if a four-fold increase in t-mobile meant anything versus the number of subscribers they had in 2014. >> the last time there was an iphone introduction. >> they had 23.6 of the important prepaid, now they have 30.9. the answer is arithmetically, it

is a big add. it is a rather large number. again, i want to state that i believe verizon and at&t will have very similar numbers and that, therefore, the people who have been vetting against apple may be wrong. now, remember, apple has added a lot of features to the ios here. this is not just something -- it has a lot of bat ris. these things will move the needle. they move the needle because there's a billion customers. >> there are a billion customers. they're upgrading to ios 10. >> right. >> they have a lot of things they can do and apple will be a feature today, carl. that's a big move for the biggest market cap company in the world. >> yes. >> the market is looking down very badly. the market was looking down badly yesterday. then we've got a fed -- now, fed's in blackout. fed's in blackout.

we only can trade off of oil. there's nothing else other than that. right? >> right. >> jack lew, some benign comments. apple, oil. >> let's go to carl for the opening bell. >> ball has shifted. there's the opening bell. and a look at the s&p at the bottom of your screen at the big board, it's cbiz. at the nasdaq it's van eck. a slew of management changes at various companies, guys, new cfo at tiffany. new ceo at time. and a couple of others, weight watchers, for instance, we'll watch all that. >> you know what, thank heavens we have a new ceo at tiffany. that conference call had to come -- investor relations guys speaking. it was horrible the last time

they reported but not as horrible as really horrible. it wasn't just -- it wasn't a dismal worst in show. it was just really bad. the stock went up a lot. i think a cfo would make people feel like it's not rudderless. it had been a rudderless company. not bad. not bad. >> breadth decidedly negative, guys. apple will be the biggest gainer today. in terms of yesterday's action, we went 43 sessions without a 1% move. now it looks like we might get our third in a row. has this ushered in a new chapter of volatility? >> yes. i tell i don't you, as this race seemingly tightens for president, i think we're starting to get people to recognize, let's say hillary clinton gets in, you have to sell health care. hillary clinton gets in on a landslide, you have senator warren maybe she says, listen, i don't want me more cross-sell on my watch. ends cross-selling.

listen, those of us who have met senator warren, she's not -- she doesn't like jamie diamond any more than she likes john stumpf. it's no the a personal issue. it's an issue of consumer protection. people she feels cross-selling is per se not something they should do. if donald trump gets in, do we know? >> no. >> why are the banks such big givers to hillary clinton? the banks like what i regard as being certainty. that's what they can plan the best on with certainty. it sounds like they're giving a lot of money to trump. i think trump is, forget where you think he's going to be, i think he thrives on the idea of unpredictability. he said he likes to be unpredictable. when i was in the boardroom with him, when i was on the apprentice, which people forget. >> i remember. >> really? i think melissa rivers was safe.

i thought she was safe. no. not safe. >> so -- right. perhaps the banks won't be safe. but to your point. the wells fargo news, jim, does nothing, it would seem, to improve the overall perspective of the banking industry in a broader sense. even if none of them had anything to do with it other than what went on at wells, it doesn't help jp morgan, doesn't help bank of america. doesn't help any of them. >> i know wolford frost coming back. i think what wells did is bring back something we thought, when all those justice department fines were done, which is that the banks became public enemy number like three. >> yes. >> you had the big three. the big three by the way is no longer ford, gm and chrysler. the big three is teva, valiant

and mylan. when you speak the drug companies -- >> teva? >> yes. >> these are companies that people perceive as doing very little research and development but raise prices a lot. i'm not kidding. i'll say to someone who is in this business, what do you think about what's going to happen? it depends on what teva, valiant and mylan do. the industry wants to put them out, i believe, as poster boys to be able to get away from the rest but you can't. and the same way that wells fargo won't let you get away. i want to know, what percentage of jp morgan people have been fired in the last five years? listen, maybe it's the same percent. i don't know. >> you are taking out the worst 1% or 2% one would expect every year. >> yes. >> you have a work force of 200,000 people, that's a lot of people. >> john stumpf, he's on tonight. i have yet to hear the defender. >> yes. >> when the justice department

was exacting these fines, dick kovacevich was on our air saying he thought it was extortion. i have yet to find someone say, this is the way business is done. no one can defend this action. you can defend the idea that no one necessarily -- i don't defend this action -- that no one necessarily did anything wrong and that's where why there are no prosecutions. i think these are instances where you could argue there's fraud and fraud should be prosecuted. individuals who did fraudulent things should be punished. am i like -- is that gibberish? is that banking gibberish. >> no. but coming back to the dollar amount involved which is so small over a long period of time. i don't know where that rises. a $185 million fine on a $1.5 million -- again, the number is not indicative of the action. >> well, right. what you would think, was there a branch where this was -- where

it was the preponderance? was it all in california? there were like five branches that were most -- that did the worst thing. i love to see those people perhaps paraded in the way they used to parade hedge fund managers. >> the ones who committed incider trading you mean? >> yes. >> yes. i do remember those. >> that was a perp walk. should there be a perp walk? no, no. how about a claw back. >> for the lady that earned $125 million. >> that's a lot of money. >> still. even here delivering alpha that's a lot of money. even for this audience. >> that audience laughs athat. >> they do? >> yes. >> they laugh at the ticket price, too, apparently. >> whoa. >> hey, guys, there is some research we haven't gotten to net. netflix gets a downgrade at mcquarry. their thesis is that the international expansion will hit head winds from locally based streaming services.

jim, i know you've seen that. kate spade gets an upgrade over at wells, thinks that the recent weakness provides a good entry point. >> i think that was interesting. kate spade is in a very beleaguered area. coach had a decent quarter. women's apparel has not been a standout business. look at lulu. kate spade seems to be on top, then coach and make kors. accessories had been maybe the worst. now they're coming back. pvh said what's really come back is tommy hilfiger and really calvin klein. there are -- it's bifurcated, carl. pink from elle brands is incredibly strong. urban outfitters brand, amazingly strong. within the mall, people are going to some places and other stores are being avoided. i have yet to find anyone defending sears.

i'm snot saying they're like wells fargo. let's take that out of the same sentence. the most important comment in the call was that they were shooting against sears. marvin ellison, point blank, we're shooting against sears. i thought that was incredible. >> yes. or kmart. not a lot of people going to kmart either. >> my first suit was from kmart. it was a corduroy suit. my mom thought i looked great. >> nice. >> vest? >> no. >> no vest? >> i took the vest off before i went in because i thought that might look cheap. i thought it was corduroy and looked dynamite. one of these guys gave me money and said please go home, go home. i had a wearing button down. listen, you've got to go home. you have to go home. anyway, that was the old goldman. maybe they wear jeans now. >> they do. they don't wear ties. >> how can they not wear ties? >> we'll need pictures of that

evidence, jim, i think you have to bring that in in the next few days. we are at 2,142 whether or not you believe 2,120, 2,110 has drawn a line in the sand? some discussion about how it's become even more important support? >> i think it has. but i think, if we're in a blackout period and we get an inventory number that is as low for oil tomorrow as we got last week, which remember was the second lowest on record, i think you're going to take off again. i wish it weren't like this. now, we haven't even talked about the libel rates. people aren't talking about that. the highest since the great financial crisis, david, aberration? goes back down, something we should worry about? >> unclear right now. it's something to keep in mind. the credit markets are starting to behave a little strangely.

>> yes. >> keep an eye on john and everything. also the borrowing rates. there was a little hiccup late last week. is it going to continue is the question. >> one of the things that is really important is you're going to see the semiconductors that are linked with apple, which had about in their own personal bear market. intersell, that's more automotive. they couldn't have all the orders, apple couldn't have the orders. it's not humanly possible to have a giant stack of every single apple phone that's needed. i don't get the music in my ear. i can keep talking. >> you usually do. we got it. >> this ear is hurting. >> we are going to try to squeeze in a break. dow is down 106. apple the only component in the green. we're back in a minute.

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stumpf from wells fargo on "mad money." jim, viewers curious to know just how much we can get into this issue. how much can be uncovered in a live tv interview tonight? >> you know, look, there are limits to -- i do not have subpoena power. you know, i look at these people on twitter. i don't have subpoena power. i don't have that. that's the government. i can't ask the toughest questions i know. i can ask the questions on twitter. i can ask the questions everyone has asked me. i can ask the questions i thought about beginning at 3:30 in the morning. in the end does he have to answer? there's no fifth amendment. i'm sorry, jim, under the protection of the fifth amendment i can't answer that question. it's journalism. you can ask tough questions in journalism. that does not compel an answer. you want to find out as much as you can. i am starting to get fed up with people who think i have subpoena power. i don't. i am not a grand jury and i don't have the ability to indict john stumpf.

>> we'll be watching tonight, jim, that's for sure. let's get to geithner and dalio with andrew ross sorkin at delivering alpha. >> but i think that the answer to the question is really why we are -- there's only so much you can squeeze out of a debt cycle. and we're there globally. so when you can't lower interest rates anymore, we know that the power of having the effect on asset prices going up because interest rates go down. it has a present value affect that causes interest rates -- lower interest rates cause asset prices. you are reaching that limit. the inability to produce stimulation by lowering interest rates that makes debt service payments lower and causes spending. is at a limit. the wealth gap is part of that limit. you can't lower interest rates

more materially. maybe they go the other way. and you also are at a limited quantitative easing because the spreads are limited. the way quantitative easing works, somebody comes in and buys an asset, they sell that bond, want to buy something else. causes all the assets to go up. globally, those forces that were behind are no longer behind us. this is -- so the real question, i think, that people should think of is at are we at the end of a long-term debt cycle? i think japan is one step ahead of europe and europe is one or two steps ahead of the united states and the united states is probably two steps ahead of china. in terms of a limited ability to produce stimulation to produce that kind of growth. so everybody will have a lower growth rate than we're used to. >> tim, do you have any more optimistic view on what that

number could ultimately be? >> within i left the new york fed, ages ago, feels like decades ago, economists then thought the u.s. economy was at 2.25% long-term potential growth. i would say most economists today are in raise range. you have to recognize that demographics and slower productivity growths are powerful secular trends apart from the things ray was focusing on, too. that brings a lot of gravity to what's possible in these economies. it's like a world where people, you know, people say it's a world of diminished expectations, slow growth, low return. i think the scarier things are really about politics, about the scary erosion of the pragmatic center in politics.

diminished capacity to make sensible economic choices on things government really have to do and the erosion in the keynesian arsenal or the erosion in the tools available to help offset the effects of the next recession. those two things are very ko consequential, very scary things. if all we faced was growth that's more stable make it fine. those two other things make it more perilous. >> you brought up politics. donald trump has said 4% is attainable. blue sky is with me. given the numbers you just presented, what could you do from a policy perspective to get there? >> you know, i think that -- i think people have this sense

that our system can't deliver anything meaningful. but if you want to take a more hopeful view of the world, we're operating so far short of the frontier, what's possible in terms of sensible policy that it's possible, if you had a little bit better, we rediscovered the capacity for mog pragmatic government, you could see improvement at both the rate in which we grow over time and how those outcomes are distributed. but it's hard to overcome those deeper secular forces in the consequences of coming out of a long-term debt cycle and the secular pressures on demographics. so you can be optimistic that by getting closer to the frontier of what we know would work, you can get better outcomes. they're not going to dramatically increase the rate in which we can grow over long periods of time. >> there are two forces you have to think about as productivity or debt and money sicycles.

you're going going to get it because you make big changes in productivity. we can play around with how that might exist but you're not going to have the debt cycles. you'll have a big money cycle. the money cycle is a question for investors who are holing money. in other words, the central banks necessarily have to make it really bad for savers. >> which they're doing. >> which they're doing. >> very well. >> in order to make it better for debtors. so we are in a situation where everybody -- they want to drive you out of cash, drive you out of bonds. by making them so terrible. we have experienced not the bad returns of that yet. investors look at the price move as well as the carry. we go through the cycles where the carry gets all the attention. >> right. >> you're squeezing a little bit of carry out of it and at the

price is not against you. that's a dangerous situation. because the carry can be disappeared in a price move of a day. when that starts to happen, we have a risk that -- >> what's the tipping point for that? how do you, if you're an investor in this audience or elsewhere, position yourself for that, recognizing that we've been talking about this particular issue for now many years. >> i think if you extrapolate -- do pro forma financial statements for five years forward and start to look at what that would mean in terms of monetary policy and what it means for cash flows. so if you take the ecbs policy and say that has to go on for five years, as you start to get months into it, they can't buy the same stuff. they have to then continue to buy different things. start to think of the implications of that. or take japan. and you think, what can they buy and what can they do?

they're starting to buy things that are going to be riskier assets in this great e eer montization. i think holders of financial assets will start to think about alternatives and those alternatives when that happens will probably have, you know, a profound effect on the nature of the market action. in other words, kind of the end to the cycle that we've been through. >> you said to me when we were talking backstage, i hope -- the historical parallel is 1935 to 1945. that's where we are now? >> yes. well, you want to find an analogous period you look to. the 1929 period was a bubble. just like 2008. we had a classic, talking monetary policy, we had a

classic depression, 1929 to 1932. from that you have the montization, quantitative easing, essentially montization, easing the money to make up that gap. you had reactions after that. you bring interest rates close to zero. we have a situation where there's no interest rates hardly and asset prices have enjoyed the liquidity effect. so there is no period in time -- it would be the most recent period of time globally that is most analogous to the situation we're in. >> right. i want to get to the fed but i have one policy question for you, a bank policy question. we talked about wells fargo and other things this morning here. when you think about all of the regulations that have been placed on top of the financial system, wall street, capital requirements, leverage ratios, what do you think that's done to the growth rate? >> i think the financial system by most measures is dramatically more stable today, because the strength of the capital cushions

in the system are just dramatically thicker. and that's a valuable investment in trying to reduce the risks of further trauma from the system. and i think it's -- i think it's -- although there's a lot of muck and bad design in the regulation that came after the crisis, the pendulum tends to kind of -- i don't know how to describe it. it's a messy muck of stuff. but i think it's hard to make the argument, even it would be nice to clean it up, make it armour intelligent design in some ways, it's hard to make the argument outside some important pockets of the economy that it's had a meaningful negative effect on how fast we're growing. one of of the great strengths of us, if you're a company in the united states today you have an idea. it's just a great place to try to raise capital. and the diversity ways people can financial things is a great

strength. i think it's better today than it was. there are some exceptions, though. if you're self-employed and relatively moderate income, it's much harder to get a mortgage. and that has some effect. if you're a small business in some areas it's tough, post-crisis to -- i don't think that's principally the result of the undesirable features of some of the reforms. some of it is there but not the dramatic. >> ray dalio of bridgewater and former treasury secretary tim geithner with a decidedly gloomy discussion about the limits of the debt cycle as dahla dalia se are there globally. the secretary called an age of diminished expectations, along with jim and david, what he called the scary emotion of the pragmatic center and diminished capacity for governments to make sensible economic choices. >> look, i know that kyle tamea,

the ceo of home depot. it's important to distinguish the united states from the rest of the world. tim geithner, never want to quarrel with his overall view. the united states has a pick up and it's a meaningful pick up and it's why housing has been very good in this country. >> those were somewhat dower words. >> i'm stuck with what happened in the nfl and the eagles won. i'm fine. there is a propensity for people to be negative. >> coming off week one. >> if you're from cleveland, this is like the last straw of delivering alpha. it's like i can't take it anymore. redskins, people, washington, they have the whole -- they have these guys. oh, my god.

kirk cousins is a nightmare. any way, it's very gloomy here. we'll have to make it less. >> we are. >> guys, we have a couple things coming up. >> you have a big morning still ahead. you're going to talk to bishop and miller. >> right. >> i heard from john ledger. it's a bigger number than versus what they expected versus 2014. so it's not an absolute -- it's also relative of an absolute. that's important. tonight, i've got boston scientific which would have been a big show, but i have john stumpf from wells fargo. i'm going to ask him everything that can be tough. does that necessarily mean he's going to say, listen, absolutely everything you said is whatever. no. let's watch the interview. i'll do my best. no free passes, thank you, mark haines. >> we can't wait, guys. we can't wait for your stuff later on this morning from delivery alpha, a lot more to come on cnbc. paul singer of elliott

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what i want to be ♪ ♪ suddenly i see this is what i want to be ♪ ♪ suddenly i see good tuesday morning. welcome back to "squawk on the street." i'm carl quintanilla along with kayla tausche. we'll be joined in just a moment. first, markets looking at what appears to be the third consecutive day in which a 1% move in the s&p is possible. 2135. we're down about 23 points. dow is down 181 on decidedly negative breadth. one component, apple, is in the green on the dow. sara and david are at delivering alpha. we'll bring you the highlights, talk to mark carhart and ubs's jonathan patrick. >> the reviews are in. apple getting ready to release its latest iphone 7 and iphone 7

plus to the public. we'll put the new device to the test, right here. >> wells fargo is in the hot seat this morning after announcing it will eliminate all those product sales goals for retail bankers effective january 1. we've got the latest on that unfolding controversy. but first up, cnbc and institutional investor hosting the sixth annual delivering alpha conference in new york city. sara eisen and david faber are there. good morning, guys. >> hi, carl, good morning. a lot of news being made here. really headlined by jack lew, the treasury secretary. speaking with steve lease man to kick off the conference front and center, apple and the european commissions action over its back taxes in ireland. here at the delivering alpha summit, here's what treasury secretary lew had to say about all that. >> the action that the european commission took is out of the framework of normal tax policy.

it is a retroactive tax that reaches into another country's, another jurisdiction's tax base in order to make sure that a firm pays its taxes. we agree with them that firms should pay their taxes. but when it's u.s. income, we think that that tax should be paid in the united states. >> secretary lew there saying it was an tune for the u.s. to look at its own corporate tax structure and an opportunity to revamp it, something he says that's not possible in the current political climate. but as they pass the baton to the next administration, maybe it will be. his big problem with it, david, was that this is money that is owed to the u.s. taxpayer. >> right. >> not the irish government. >> right. of course in this case, the irish government doesn't even want it. they are disputing the eu's saying that they do want it. the point here, perhaps, for those who are looking for a long-term positive is that tax reform, corporate tax reform doesn't appear to be on the

agenda, certainly as you point out, not for this administration given it's the end of its tenure coming up. either candidate, if you listen to them, have both spoken about the need for it, both mr. trump and secretary clinton. i thought it was interesting secretary lew came in 25% to 28%. what is the rate, that was not in the statement he put out yesterday. >> and trump's 15%. >> no, it is not the 15%. one of the keys, though, $2 trillion that remains overseas in the hopes you could come up with a system in which corporations would be incented or willing to bring it back and what that would actually do in terms of capital investment and/or also a windfall on taxes that could be used for infrastructure. >> mike santoli is with us here hanging out in midtown manhattan. on this idea of politics and what's possible and not, secretary lew said there's still time for tpp. >> yes. >> which i just hosted a panel on global opportunities and it was all about the fact that the

u.s. is moving in the opposite direction on trade. both candidates oppose the tpp. so to hear him say something like that in this environment, you just wonder how realistic it is. >> by definition there's time because the administration goes until january. is there the will or the political reality that will line up for it. he did caution, i thought was interesting, when steve lease mankind of said, well, you haven't been able to get something done. he said let's not make broad statements about what we have been able to get done. he did want to suggest there could be more that in fact you could push on this. it doesn't really seem as if -- maybe lame duck, everyone pointing to that. when you have both candidates kind of opposing it and really even in congress it doesn't seem as if -- i don't know if there's that much momentum behind it. maybe it ill, the last legislative stand of the obama white house to try and make it happen. >> they're certainly positioning it that way. the other notable comments came on the discussion around wells

fargo. this was the treasury secretary's first opportunity to react to the fact that there had been millions of accounts set up for wells fargo and that the consumer financial protection bureau has charged wells fargo $100 million. secretary lew used pretty strong language, 185. >> $18 amillion. >> for 1.5 million worth of infractions over five years, 5,300 employees. some of the numbers are staggering. wells fargo by the way as you know is getting hit down almost 3%. >> continuing to fall. >> yes. even though initially, michael, the reaction was not very strong when we first learned about this. >> pretty small number in terms of the fine with respect to the size of wells fargo. it also didn't seem as if there was that much customer loss as you mentioned, david. it wasn't a matter of extracting that matter from customers. it was the deceit and the systemic nature, the apparent systemic nature of the behavior, if it got that broad, went on for that long, it was built into

the incentive structure, seemingly cross-selling all these products. even if it's done correctly, cross-selling is one of the premises that big banks are based on right now. >> we watch the share price decline 3% for wells fargo since june, probably didn't help to hear this from the treasury secretary of the united states about it. >> what i've seen from what they've done, it was bad behavior they were correct to take action against. how that flows through in terms of next consequences will depend on the facts of the case. what i can tell you, there's a lot of talk in washington these days about rolling back dad-frank, about rolling back the law, changing the law that created the agency that uncovered and took action again this. this ought to be a moment where people stop and remember how dangerous the system is when you don't have the proper protections in place. this is something our watchdogs found.

if they weren't there, they would still be going on. >> so treasury secretary jack lew using it as an opportunity to tout the importance of the bureau, which is young, about five years old, was created around dodd-frank. we talked to the head of this bureau yesterday. he said similar things. >> he did. obviously this is going to be something that will be a reminder of the function was men to the serve. critics will say this was bubbling up in southern california. you have prosecutors in los angeles on it. if you have the federal government being able to come and and say and publicize, we got this nine-figure settlement out of wells fargo, we'll look at these policies throughout the industry, i think it does support the existence of the bureau. >> he was asked repeatedly about the claw back of compensation for executives. he wouldn't go there. he says this is a consumer

protection issue. clearly that is in the averaout right now publicly. >> of course the company has said that the executive who was in charge of that unit who has since left the bank was paid what she deserved over a number of years. and that was all described in proxy filings over time. this is also going to be a topic of concern when john stumpf, the ceo and chairman of the company has to testify on capitol hill next week. what i thought, guys, was interesting about secretary lew, is when steve leaseman said you may have uncovered this, the bank was still allowed to not have to accept any wrong doing. they didn't have to plead guilty. why after all these years and fines are banks able to skirt guilty pleas? that's on the prosecutors. it's up to them to find a case. he seems there wasn't a case for

wells fargo to plead guilty here. you've covered a lot of these cases yourself, david. it's interesting for him to be shift something of the blame there on to what the prosecutors may or may not have been doing. >> yes. well, as you know well, of course, prosecutors have made a lot of decisions over the past eight years not to actually prosecute, to accept deals where there was neither an admission or denial of guilt by the bank itself, kayla. and that certainly is a frustration for some out there who say why aren't more people held culpable at the higher level of these banks. >> we'll talk more about what some of the big ideas and headlines are coming out of here. we just heard from ray dalio of bridgewater, the former secretary treasury tim geithner on u.s. policy and global ideas that i got out of an interesting panel of experts. for now, i'll send it back to you, carl, at the stock exchange. >> dow is down 200. obviously we mentioned the breadth very negative. last time we had a down 2%

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welcome back to delivering alpha. where we're talking with wall street heavyweights on this down market day. the dow down about 200 points. joining me now is mark carhart, founding partner and ceo at kepos capital. he's a former partner at goldman sachs. he just joined me here on panel stage at delivering alpha to talk about global opportunities. that was fun. >> thank you for having me. >> it was gloomy i think is a word we've been talking about lately, this idea of slow growth, zero to negative interest rates and sort of crisis shocks like euro deck crisis to brexit. how do you view the world through your lens right now? >> there's just not as many opportunities. that's the reality. i wish i could create them for

the world but there just aren't. our quantitative lens, it tries to value assets using a long-term view of cash flows and growth. relative to expectations. and what we see today is that there just isn't as much opportunity in the traditional asset classes. >> because of valuation. >> primarily because of valuations. we have the top decile. you have interest rates at almost all-time lows over a longer period. >> one of your points that you made on the stage was that whole 60/40 model, stocks and bonds, throw it out the window. what do you replace it with? >> i wish there was something else that was just as good or i could tell you was awesome. 60/40 will still be part of people's portfolios. the question is how much do you want to have in those

traditional asset classes? they're available in unlimited quantities. you can invest in size and equities. when you pull that back, what can you do? you can invest in alternatives like trend following. trend following is a strategy where you trade futures and currencies, buying things that are going up in price and selling things going down in price, both directions. >> sounds like momentum investing to me. >> momentum investing it is. this is one application of it in macro markets. there are other types of investing we call risk factor invests. it's this idea that you try to buy security, buy and sell securities which are exposed to some sort of a risk. uncertainty, liquidity, something like that. and over time you build -- you get a return, a risk premium. no different than insurance company gets paid for insuring you against loss of your house. >> what's an example of that

right now? >> one factor we particularly like today is emerging currency care. what that means is long positions in the highest yielding currencies within emerging markets like the turkish lira, the indian rapea. >> the fed may be on the brink of raising interest rates again. we saw what happened last time to emerging markets. they got crushed. >> that's correct. that's why you want to build a factor portfolio which tries to hedge out that kind of risk. that's why what i'm proposing is long on some emerging markets, long on other emerging markets. when there's a sell-off jointly, it's not hit by that same sort of risk factor. it's a different dimension. i'm trying to capture the relative value in interest rates across emerging markets. >> i want to understand something. i was not on the panel.

you're a quantitative driven fund. you have a bunch of ph.d.s creating algorithms based on the ideas you have. >> correct. >> 'robots. >> and robots. artificial intelligence at some point, conceivably putting you out of business. >> somebody has to program the robot. >> right. >> i think quantitative investing at its core is simple. it's taking the same sort of information humans use to make decisions but removing sort of behavioral biases and emotion from the decision. and using the power of computers and data to find relationships that aren't maybe parent to the naked eye and finally, to be able to react to that real time across an infinite number of markets. there's no reason why you can't use a quantitative model 24 hours a day across any piece of information that's available. that's what makes it different. it's not that it's fundamentally

better. it's a different approach. >> it's been very popular post-financial crisis. it's attracted a lot of money. has that peaked at all? what are you seeing in the flow? >> flow falls performance. because a lot of quantitative strategies have done well, a lot of inflows, the areas where we've seen the best performance have been quantitative equity risk factors. sometimes people refer to it as smart data. it's tilts within stocks towards value stocks, momentum stocks, quality stocks, profitable stocks. and the result of that has been first a tail wind, which has helped performance through the beginning of this year, the prior two years, the realized returns had been well above long-term averages. and this year, because there's been so much money coming in and has been a little bit of money coming out around january, there's some sell-offs

deleveraging a big hedge fund, they've seen actually pretty substantially poor performance because so much money has come in. we don't see that much crowding in other markets. particularly in quantitative equity markets there's a lot of crowding. >> the dow is down almost 200 points. do you see this move having momentum to the down side? >> our models, we have very short-term models that look at short-term moves. in general when you see a sharp correction, a sharp move like this, they tend to rebound. it often can take two or three days, though. a one-day move may not be enough. i'd have to go back and look at see what the models are saying right now to give you a formal answer to that question. >> thank you for joining us here and on stage at delivering alpha as well. mark carhart from kepos capital. back to you in new york. kayla? >> thanks so much. we'll get more from you guys later. coming up on "squawk on the street," the reviews are in. apple's iphone getting ready to go on sale this friday. we'll put the new phone to the

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the iphone 7 reviews are here finally. we have the good and the bad on the ear pods. strong preorders are in. joanna stern, "the wall street journal's" personal tech columnist and scott stein is c-net's senior editor. you brought a bowl of water which i assume we're going to put to use in a moment, right? >> we are. >> we're drinking it actually. >> overall, what's the first thing to know. >> the water resistance is

great. the battery life is good. and the headphone jack. >> which you have in your ears right now. that's not a blue tooth. >> these are apple's own kind of twist on blue tooth. i think the head phone jack is a big deal. it's a jack that's been taken away. you need that still. maybe we'll go head phone jackless. there are enough every day things that the person will reach for will feel annoyed. it's like the 12 inch mac book. it's the future but does that have to be right now. >> apple thinks it's a dinosaur. your overall review of the phone? >> pretty much the same. i think people need to realize removing the headphone jack does have benefits. number one, camera, there's more space for better camera and battery life. the camera to me is one of the biggest reasons to upgrade here. i have an iphone 6s. i wasn't planning on upgrading. i started taking sample shots and now i bought a new phone.

people need to look at those two things when they're considering upgrades. battery life and camera, yes, headphone port is kind of a pain. >> the battery life is only one to two hours more than you are getting. is that really that much, scott? >> it was enough in using it, we're still doing full battery tests to get me through a day throughout the process of doing this without having to recharge. if you just get over that hump that's useful. there are a lot of phones with great battery life now. i don't think it's competing on that super crazy element. i think it finally gets to towards the end of the day, fine. >> i'm going going have to a battery case on my phone. does apple need to do better on batteries? absolutely, across the board, especially when it comes to the iphone. they sell a case for better battery life. they make it. >> that's a big reason to the lack of head phone jack. especially in the smaller phones, allows you to have a better battery. i want to read you a couple tweet from viewers.

wow, does he know what he looks like with those head phones on? his wireless headphones look like broken q-tips in his ears. >> are they saying i look better? i pull them off. sorry, scott. >> this became a meme over the weekend. the reviews really embarrassing. i knew these look ridiculous. if you have one in it looks like a blue tooth ear phone head set. two in you look like a hipster jewelry alien. look on read it for other suggestions. >> maybe it's a look some people are going for. >> yes. maybe it was necessary for things like microphone or antenna. you'll see a lot of other designs. you don't have to go with that one. it's not google glass. these particular ones are a little bit funky looking. >> all right. >> you want to do the water? >> i do. >> the lack of a head phone jack makes waterproofing a lot easier, yes? >> yes. there are phones with a

headphone jack that are just as waterproof if not all. >> that's the thing. >> we're going to do them all. >> they're all black. >> what are we putting in there? >> we have two iphone 7s and two iphone 7 pluses. i've done a bit of water testing over the last week. apple says this will be okay, right? you drop it in the toilet. this happens a lot. people think it's ridiculous but it happens a lot, a splash in the pool, that's fine. what apple doesn't want you to do is swim with it. however -- >> which you did. >> i did. because we done the have to listen to everything apple tells us to do. so i was really surprised you should not do this at home. but i was fine. and so the big thing everyone needs to know is apple is not going to cover water damage. you come in with a phone that's water damaged you are not getting a new phone. that is on you. do not do that. >> i was actually had a phone

that got water damage. you dunk it in the bag of rice. >> did it work? >> it did. not as well as it did before. i want you to turn these on without the insurance policy of the bag of rice. >> these are actually -- scott, i've got your phone. >> we all have the same phone. >> this is the phone i swam with for quite a few hours this weekend. it's been working phone. that compared to the galaxy note 7, that has a whole other set of issues we done the want to talk about right now. when i swam with that for a long time, it started to get wonky. apple says i don't want to do this. >> you don't want to go in salt water. i threw them in the shower, left them in a sink filled with water for a while. the screens get skittish under water. the idea of using them in the shower is not going to happen. wait to dry them before charging. >> big point. >> a couple of hours. >> that's good. >> last one, tell him to say the

cigarette butts out of his ear. they're all aimed at you. >> i'm the target. >> i love this show. >> beat me up. beat me up. >> great stuff. thanks for coming in, joanna stern, scott stein of the journal and cnet. >> you look good. coming up, we'll head back to delivering alpha where we'll sit down with ubs's global head of equities, dawn fitzpatrick. more ahead on "squawk on the street," just ahead. both on the trac and thousands of miles away. th the help of at&t, red bull racing c share criticalformatior inch of the car from virtually ywhehe. brakes are getting wm. coird, daniel you need to co your brak. understood, brake bias bac2 clicks. givbecause no one knows & likee speat&t. rision. [phone buzzing] some things are simply impossle to ignore. the strikingly designed lexus nx turbo and hybrid.

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good morning, everybody. i'm sue herrera. here's your cnbc news update this hour. syrian opposition activists say the cease-fire in syria appears to be holding with only minor violations. 20 trucks carrying aid crossed into northern syria. the week-long u.s. and russia brokered cease-fire went into effect yesterday. two u.s. supersonic b-1 bombers flew over south korea on monday in a show of force and solidarity. this comes amid heightened

tensions following north korea's fifth nuclear test last friday. china criticized the move. pakistani police say they foiled a suicide coming at a shiite mosque in southern pakistan when an attacker blew himself up as guards stopped him for a search. residents in southern taiwan are preparing for super typhoon maronte. taiwan's national weather forecasters say that typhoon is packing winds of nearly 130 miles per hour. heavy torrential rainfall is expected. that's the news update this hour. i'll send it back downtown to you, kayla. >> thanks so much, sue. we're watching down, currently down 202 points. energy is the worst hef performing sector with oil eyeing 45 bucks a barrel. bob pisani has our movers. >> very strange day. eight to one declining versus

advancing. immediate catalysts, you can say it was energy in a sense. the international energy agency came out with comments on the global situation. the world is adequately supplied with oil. that's a simple way of looking at it. demand may be lower than anticipated next year, particularly in india and china. if you look at the big global oil names, you can see they're all down about 1.5%. somewhere around there. there's royal dutch, total, bp, chevron down 1%. sectors, energy is the worst mover. we have a general risk-off day. materials week, banks down again today. they've been seesawing back and forth for a number of days now here. i think there's a broader issue. there you see what's going on. the central bank volatility issue is a real problem for the markets right now here. remember, the fed could hike in september. there's only a 25% chance. down here they think there's a majority that do want to hike

it. maybe they can find a way to do it. maybe it's paranoia or not. we're waiting for the bank of japan next week. the bottom line is this could get more volatile around central banks changing their policies. look at the vix curve here. the vix was 12 a couple days ago, carl, it's now 14. that's the cash vix. getting close to the vix futures contracts in october and november. so they're expecting more volatility in the next seven or eight days prior to the fed meeting. carl, back to you. >> bob, thank you so much for that, bob pisani. our next guest is a five-time national champion with duke and college basketball. won his third gold medal in a row with team usa at the olympics. today he's announcing a new digival video based leadership platform partnering with big names. joining us at post nine is coach k, mike krzyzewski. great to have you, coach. >> thanks. >> video based leadership. what is the product.

>> the very first thing, do i have to put my iphone in water? i don't have the 7 yet. i'll keep it. >> you've been watching, obviously. that's great. >> this is an exciting time for me. because i'm partnering with caa to basically it's a platform that's interactive. it's on video. and we take influential leaders in all walks of life and they tell a story. it's like a case where for a 15-minute period you listen to it. like hr, you put it for your employees for emerging leaders. what would you do in those situations. it teaches leadership. i'm not sure that that's done right now. and with a lot of companies, they grow so fast, if you can teach leadership to your emerging leaders along the way, your company will have a greater foundation, a stronger foundation. >> are you the star of these

videos? >> i'm not. >> or other leaders. >> many other leaders in all walks of life. it's not just sports. military, business -- >> give us a sample. what would you like to tap into their leadership acumen? >> i like the military. marty dempsey is a good friend. i would want to know how he leads. one of my former players now commands all of our troops out in hawaii. bob brown, like how is he leading and how do they get their leaders, their battalion commanders, their company commanders. more importantly, how do you get their squad leaders? in other words, how in a company can you get people in real time to step forward and make decisions that ult t-- the

ultimate leader might not know about. that's why we got this thing going. >> this is the kind of thing you can do and have done for years and get paid in speeches -- >> right. >> where there's relative scarcity. people are dying to hear from you. why do it at scale. >> i'm ultimately a teacher. when i do get out of coaching, whenever that is, i want to teach team work and leadership and learn -- continue to learn more about them. and this is new. this is something in the hr world that, again, a lot is being done in the hr world. i'm not sure leadership is the key thing. and it's the most undertaught thing, even in our schools. you know, i'm an adjunct professor at our business for the last 20 years. we started a center for leadership.

organizational leadership and methods. we want to teach these things people need to know about their businesses. >> we had jim boeheim, the legendary syracuse show talking about a virtual reality venture he was backing. shortly after that he announced he was retiring. i hope this is a foreshadowing of that. >> you have to get over that. i tried to settle do you downa little bit, former cheerleader at north carolina. she was there for national championships. >> he was. >> it's a healthy rivalry. you were shocked that we are good friends. >> i was shocked that you and roy williams are very good friends. >> would you consider politics in a post-coaching drecareer? >> i would not consider politics. i would get more active in that arena as far as support. as a coach, you know, people say are you democrat, republican? i'm independent. i vote for the person and i

would like to vote for issues if anyone would really start talking about them, that would be nice. >> have you supported either candidate so far? >> no, no. i won't publicly support either. and part of it is, you get into a world, i'd rather figure out how my team will attack the zone and try to win a national championship. >> melo, lebron, kobe, a lot of players that you coached are turning to investment. which one do you think will have the best record? >> i like what kobe is doing. i always loved what lebron has done. because he's associated himself with really good people. and outside of his own area. when you surround yourself with good people, usually good things happen. i'm interested in how carmelo takes this last part of his career and being in new york, because you know, he's a three-time gold medal winner. i love him. he was my leader in this third

gold medal that we've captured. >> finally, ncaa north carolina, are you behind that decision? >> yes, yes, it's embarrassing for our state that this has happened. our state has gone through, the economic stuff in our state as a result, not just of losing business, you know, events, image. how much do all these companies, states, areas spend on image? our image is being tarnished. it's embarrassing. my a.d. came out with a great statement, kevin white last night, that i'm totally supportive of. it's sad, really, it's sad for our state. >> coach, congratulations. >> thank you. >> please come back. >> thank you for having me. >> coach k. at post nine. down 190, not quite the session lows. we're back in just a minute. it easier to get here,w thas

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we go through the cycles where the carry gets all at tension and then you're squeezing a little bit of carry out of it and the price is against you. that's a dangerous situation. it can be the price move of a day. >> that of course was billionaire hedge fund manager ray dalio of bridgewater speaking right here at delivering alpha. that's where david and i are watching the heavy hitters, discussing the theme that dalia was hitting, that central bankers were in control and "b," making it a hard place to get return all over the world. >> he was warning there about the fact that the bond prices have actually been moving in the direction, you've still been able to pick up profits. but that debt cycle is coming to an end. >> something he's talked about before. >> quite a few times. >> he also said he disagrees with jp morgan ceo jamie dimond

that the fed should raise rates. he says they should not. he said that europe is one step behind japan and the u.s. is two steps behind japan, china, maybe three steps behind japan, just in terms of where we are in that central bank easing and low growth. >> which is the world we've been in for a long time. secretary geithner didn't have much to say that was particularly uplifting. >> yes. >> not as specific in terms of that. >> he said it's still a place to invest. >> as you'd expect a former treasury secretary to say. >> my message, my big takeaway is expect lower returns. stocks, bonds, currencies, commodities, you name it. we're looking at some of the

volatility today and wondering if this sort of post-crisis period that everybody is talking about here of ultraeasy monetary policy and more and more and more qe is coming to an end and then what? >> right. >> what are we looking at next? >> right. maybe a fed that actually has a few bullets to use if we ever actually do have a recession. >> absolutely. so let's just check on markets where we stand right now. we mentioned that the dow is down about 200 points. oil prices are also getting hit pretty hard as well. after the iea lowered its demand forecast this year pretty sahar. 1% decline in the s&p 500 feels like a big bounce back, on again, off again, no question, summer's over. couldn't have a better backdrop to from these investors what they're doing. the central bankers have gone into quiet period. >> thankfully. >> we hear from the big investors. >> we get ten days of quiet. not even. >> next tuesday starts the fed meeting and wednesday is their

decision. the whole shebang, news conference, et cetera, et cetera. there's a big debate as evidenced by dalia and dim 0. nd. some of the demographic challenges and other big picture issues. >> true. they may be trying to come up with excuses as to why their performance was not particularly good. >> all right. let's just quickly -- kind of a joke. >> quickly show you where we are on the markets yet again. after the dow rallied and closed up more than 200 points yesterday, we're giving a lot of it back today. energy is particularly hard hit. we're looking at some of these declines. we'll continue to monitor that. we'll talk to dawn fitzpatrick of ubs, manages a lot of assets over there. what is she looking at globally with 1% declines across the major averages? that's coming up. for now, though, back to you, kayla.

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latest casino, the parisian opens in the gambling hub. susan lee joins us with more on that story. susan? >> edelson is bringing the eiffel tower to macau, parisian opened to the biggest gaming hub with its own replica of the landmark, right next to edelston's other projects when gaming revenues are finally turning positive once again after 26 months of declines. adelson seems to think we've come through the worst of it, now that macau gambling has hit the bottom. investors seem to think so, the worst might be behind us. global gaming shares outperforming global benchmarks in 2016 and las vegas up by a third this year, that's right

over 30%. steve wynn opening up his expensive high-end wynn palace. premium gamblers whereas adelson has usually mastered the masses. aiming at the family, average player. that, according to most analysts, is the winning strategy right now. anti-corruption drive, which just nabbed another top-ranking official this week, by the way. high rollers or whales have been scared away from macau. analysts seem to like this new offering, 3,000 rooms for $300. pretty good value for money spent. parisian will earn about $300 million in 2017, pretty good for the first year out in these current conditions. back to you. >> thank you so much, susan li. the selloff remains fairly severe, not quite as severe as friday. this would be the third in a

row. at one point a few moments ago on the s&p 500, there were 16 -- that's one six -- components in the green. oil, by the way, down 3%, too. >> oil and focus yet again. we just dipped below 30 a barrel. iea forecast was not what investors were hoping for. we'll see how the opec leaders and all their job earning over the next few weeks can directionally move the market. 45 bucks, though, is what a lot of producers, between 45 and 50, a sweet spot for whether they're actually able to make money. >> jim's point, of course, in the 9:00 am show, as you enter this blackout window leading up to the fed meeting, oil does really drive the narrative. and that resulted in yesterday's rally. we certainly do not have brainard speaking today. david is back with a lot more on a busy day.

hey, david. >> hey, carl, that's right. break going on here. you can hear the sound behind me. stocks in the red as oil prices continue to slide, causing the dow, s&p as well down well over 1%. fed officials remaining divided ahead of the next policy meeting that starts next tuesday. what area should investors be focusing their attention on? dawn fitzpatrick, global head of at asset management and most 21 powerful women in finance. that's okay, too. lot of guys and ladies showing up saying why they can't deliver alpha. does that continue? >> there's always going to be alpha in the markets. i think what we've seen of late is that alphas are dominated by the macro. certain hedge fund strategies we saw crowding. investor money returns and most hedge fund strategies are relative value. you get an excess return, flood

of money and the return goes away and the money leaves and then the returns come back. >> people have been predicting the demise of the hedge fund industry for some time. that hasn't happened. assets have actually moved in. this year, certainly another one where actively managed hedge funds, certainly the long/short variety are underperforming their benchmarks and well so. is there ever going to be some sort of a tipping point where fees come under significant pressure and assets really do start to move out of this area as some of the institutions and others who invest in hedge funds say what are we doing? >> i do think hedge fund fees will come down. investors are getting a lot smarter about decomposing alpha and beta. in other words, the majority of hedge funds are typical equity long hedge funds where the underperformance has been the most pronounced. what investors are starting to do, they can buy beta for a couple of basis points.

they want to pay for the excess return. so i think that kind of delineation will put fee pressure on the industry. but i'm really in the camp that the hedge fund industry two years from now will be larger, not smaller. >> why? >> because it's really important. if done right, it's a really important diversifier in the context of an overall portfolio. again, the other thing you'll start to see is divergence of returns across traditional asset classes. having someone who can actively allocate and take advantage of opportunityies, i think, is goig to add value and be really important especially when you have return targets of, you know, 7% to 8%. >> does it say something about your view on the overall macro and market environment, that you expect hedge funds to grow the next few years in terms of what your expectations are for returns and various asset classes? >> yeah. i think returns are going to be

challenged across asset classes and overall return expectations, absolutely, are going to come down. you know, again, that said i do think there are going to be pockets of great opportunities in the hedge fund space right now. one of the opportunities i think is really attractive is merger r arbitrage. >> no kidding. why is that? >> classic supply and demand balance. activity down a little bit from last year but the number of deals over $10 million is actually up 50% from the last cycle and largest traditional players and merger spreads were the investment bankprietary trading desks. you have microsoft, linked in, and that's been over 10% annualized. $26 billion deal. if that was a $2 billion deal,

the spread would be significantly lower. so, places like that are really interesting. >> one of my mernler friends are happy to hear that, hoping that will be the case. it's not been without its pitfalls. in terms of the risk, as you well know, dawn, the number of deals that was not expected you have to pick the right manager. don't you? >> it's a short tail strategy. you can step on a land mine. the key is having a smart manager and having a diversified portfolio. >> beyond deals, dawn what is your outlook on the current political risk that many people here agree is elevated, especially here in the united states, heading into the election? this market, which is being sort of jerked around by various fed speakers into a very important meeting next week. >> it's been really interesting to me. it feels like the markets are very central bank fixated and not paying enough attention to the political angle that you're talking about with the u.s.

elections, with referendum in italy. and i think that's going to drive more of the market volatility going forward. and i think what we've seen the last couple of days in markets, there's a lot of debate going on in terms of the diminishing returns from central bank policy and also kind of the fortitude of the banks to stay the course. >> thank you for rushing over here from the panel. appreciate it. >> thank you very much. >> dawn fitzpatrick, head of global equities and management. lot here to come from delivering alpha. i'm off to a panel. we'll be talking to the executive chairman of alibaba. right now over to carl and the gang at nyse. carl? >> thank you. good morning, everybody. welcome to a special edition of "squawk alley." i'm carl quintanilla. obviously