live from new york where business never sleeps, this is "squawk box." >> hi, everybody. i'm beck request quick along with joe kernen and. larry bossidy is here with us. again, we saw the dow and the s&p down yesterday. they were down marginally. this morning you can see things around the flat line. s&p is up by 1.5. nasdaq by 3 points, the dow, 24 points above fair value. overnight in asia, we're going the check out the nikkei today. the nikkei closed down by 1.25%. markets in china, taiwan, and

south korea were closed for what's the mid autumn festival there. and the european equities, things are up. cac is flat and if ftse is up by 0.2%. this morning crude is up by 24 cents still trading at 24.81. >> let's get you caught up on the busiest day of the week. the bank of engallant is going to be announcing its latest policy decision. expects to leave rate. jobless claims are out at 8:30 time. the producer price index and september philly fed index and at 9:15 look for august industrial production. we talk about the apple iphone a lot. apple now saying the initial

quantities of its iphone 7 plus are sold out. that's the one i want. the new gadgets will hit store shelves sometime tomorrow. consumers won't be able to buy sold out phones but the company will continue to take orders online. i won't be releasing its first sales numbers of the iphone 7. >> why? >> i think they made that decision a while ago. >> it reminds me of the details. >> in fairness to apple, nobody else does. samsung doesn't. they've always been in fairness probably more transparent. >> once you give the information it's a lot harder to take it back. >> you have to think maybe they thought it was going to be -- and this was a good time to do it. >> i think you're going to get

less information over time. >> i do too. >> they've never been a fan of quarterly earnings but they do it. >> early reports are good in terms of sales. >> what feature on the 7 plus has you pining for that phone? >> the camera. i carry the sr. lr. remember when i took the kids to school i took the slr because you can take the great focus. you look great and the behind looks fuzzy and it's beautiful. you can't get that on a phone typically because it's one camera, very flat. >> you can get that on the new one? >> the phone is basically almost as good as an slr. >> that's one thing that would push me over the edge. >> and they say it's good at night too. >> good at night. >> what do you mean at night? >> the battery. >> much clearer. >> cover the aperture on all of your devices. >> so you don't get hacked into. >> i knew that i could the

reverse thing where it takes it looking at you and i thought it was the whole like screen just took a picture ofmy. there's a thing up there on the top of that. >> yeah. >> yeah, yeah, yeah. >> da-da da. >> i figured that out. >> when you keep seeing these e-mail dumps come out, do you want everything you say or do forwarded? >> if you have any notions that there's any privacy left in the world, just forget it. i have one other problem is i don't get the mid-autumn thing.

>> it's not mid-autumn here. >> it's not autumn. isn't it september 21st? how can you have the mid-autumn festival on september 15th? >> i wasn't focused this. >> you don't. you don't. you need to quit -- the two -- >> is that a pivotal problem, joe, in your mind? >> did you hear her? it's a mid-autumn problem. >> it's based around the moon. it's a little outside our traditional calendar. >> supposedly down south it's

winter when it's summer. i've never seen that for sure. in brazil, sure. >> i can attest to that. it is true. separately on the apple front, it's now been just more than day since apple release thad new iphone software, and, joe, i hope you paid attention to this. the ios ten is out. the latest version has seen a number of installments. they estimate the adoption rate stands at 15% which is a better adoption rate of this later ios. however, in the first 24 hours some claimed they were being bricked. >> what? >> all of a sudden your phone doesn't work and it becomes a brick and you have to plug it in and install it through itunes. so i hope you waited your 24 hours. it's all patched up and everything is good to go. >> there's not a little sign on the settings yet. >> they know it's you. >> it can work if you go do it

right now if you were to go into general and go to updates, but it's not telling you to next. it probably will in the next week. separately shares of apple hitting a 2016-high with its market value topping for the first time. shares of the company that supply chip and other technology also got a boost out of all this. a serious logic skyworks solution. >> samsung has helped out a little bit in the last week, wouldn't you? >> well, yeah. >> u.s. prosecutors have started to investigate the bank's sales practice that led to a $185 million settlement. the u.s. attorney's office in manhattan. the offices in manhattan report lid conducting probes and they've sent subpoenas seeking information. wells fargoes shares are under

pressure and this is how warren buffett has suffered. we're talking berkshire hathaway. buffett has fall on the the fourth richest person in the world with jeff bezos. so it wasn't you. you're not even close. >> no. >> not teen top teven the top t >> no. first of all, surprising because of its reputation and concerning because they didn't get on top faster. they laid off 5,300 people of their work force. >> the idea that that problem continued for five years and nobody looked why we're fire 1g% of our work force a year over this or ask the manager a question? >> it seems to me a couple of things, one, there's a cultural problem, and, number two, it's interesting to see what should be done to the lead management.

some of the people directory involved or at least one is apparently left, but if i was on the board and i'm not, i would certainly give consideration to giving no 2016 bonuses for the ceo and the people in line in the consumer banking segment where this occurred. >> potentially looking back at clawing numbers, not only for the manager who was directly responsible but how how much of the bonuses was based on fraudulent numbers as well. by the way, this is larry who thinks this, as a former jpmorgan board member. >> yes. i also think, too, they didn't get out ahead of it very well. northward these kinds of things should have been decided before they came public. >> they needed to make these decisions in terms of announce the pay issue. >> yes, before this became an issue. >> what happens if there's an effect that hasn't been fully computed? >> by virtue of not make the decision, they've extended the story because tla will be another story when they decide whatever they're going to do

about it and that would have been avoided before they did. so the whole thing is -- given the reputation that they've had, it certainly has been blemished. >> okay. we'll talk a little bit more about this later. larry is with us throughout the show. but let's get you caught up on political news as well. republican presidential candidate donald trump is going to be addressing the economic club of new york tore at 11:00 eastern time. trump expected to offer more clarity on his economic policy. in the meantime trump taped an interview with dr. oz that will be airing today. he gave dr. oz his medical revuchlt also hillary clinton's doctor releasing a two-page note saying she remains healthy and able to serve. we'll have more coming up in a few minutes. >> our guest host for the next three hours is larry boss idy.

i'm told it is mid-autumn in the chinese calendar. >> i don't know whether they have autumn. you talk about wells fargo. this is all i've got for you. >> well, you know, you always have a lot going, joe. i'm also interested in the apple situation from this standpoint. in terms of the tax liability that the european union is trying to impose of $14.8 billion, there's a view that yesterday if they were to pay it -- by the way, the european union's chances of winning this are very, very good. they're going to have to pay it. would it be a deductible? >> that was secretary lews

concer's concern. >> they have $3 billion offshore but they've got lots of subsidiaries off shore. if they pick one of foreign earnings and bring that back, then they can apply the $14 billion payment as a tax credit and instead of paying 35% they'll pay chit is kind of crazy. they will find a way to bring back foreign earnings. >> they can but it's still a credit.

if they pay, it will be the u.s. tax person. it's too bad but that's the way it works. >> i was kidding a little bit about, you know, the fed, but i guess we need to, we need to mention it. suddenly -- maybe the market eventually tells the market it's okay to go up. if we stay or go to two on the tenure, then they probably will be able to raise without, you know, preparing us all -- do you think they do it in election year? >> no. i'll tell you one thing. one thing we can say with certainty is it's a political organization. i mean they say it's separate and autonomous and that's nonsense. >> oh, my god, larry. i mean john harwood is going to spank you. >> that's all right. i can accept that. >> when trump said that the other day. he used that as an example that trump is back with no discipline anymore. >> larry, why do you say that? >> because i -- >> how about the justice department? >> i think that they're in

constant contact. i mean there's records of that that they're dealing with the administration people frequently and therefore -- >> we even seen feds that have dealt with multiple administrations that have dealt with democratic administrations just as closely. >> i'm not saying it as a republican or democrat. i'm saying it's political. >> that they have to be aware. >> i would be very surprised. >> political and you're shocked that there's gambling going on. >> when you say political -- >> you're not saying they're in bed with the administration. you say they're very cognizant and maybe they're trying too hard not to get involved. >> no. i think that's partially true. i think they recognize that they -- i think they want to act in a way that doesn't influence the election. are you trying to walk larry

back? >> no, no. >> how is it different by the end of the year. >> how is it different than where i am? >> because i think your suggestion is -- and donald trump's suggestion is they're in bed with the administration. i think he's suggesting that they're cogny zamt of the politics of the moment, which is different, i think. i don't want to put words in your mouth. >> no, no. that's fair explanation. >> whatever the administration happens to be in maybe. that's the one -- one time they went -- one time they went and that was -- 41 never for gave greenspan. >> it cost him the election. >> i mean i -- >> i would assume that any fed would be cognizant of something like that, would be concerned about it. >> you guys have to talk about it every day, which is unfortunate, but the truth is this.

they shoulden stay at zero. >> they should. >> they might. they say the end of september. >> i think. >> liar. >> i don't think september. >> hey, we might. like they send a -- we don't use -- i don't know if you saw it -- minions is a world you use instead of mafia. like colin powell actually said the clinton mafia. but they don't want -- especially mainstream. it's minions. aren't minions the cute universal studio -- not people that break legs and people that cement over you. >> that's how you clean up the act. >> i was suggesting it was set up that way. anyway, we've got to to go. we'll be back in just a moment. a very busy day for donald trump in new york. he's giving a speech at the economic club.

he's going to be on fallon tonight. plus, this interview is going to be airing today. trup p gave dr. oz his medical records to review and john harwood is in town to talk trump, hillary's return to the campaign trail after her battle with pneumonia and a lot more when "squawk box" returns in just a moment.

welcome back, everybody. we have stocks to watch. the macker of commercial and industrial glass products says that it continues to see strong conditions in the nonresidential construction market shares of aeri ooe pharmaceuticals jumping 60% as it met a goal. it submitted a marketing application to the fda last week and boeing is curbing overtime pay by 80,000. this is part of the company's efforts to try and cut costs. starting on october 14, they're halting overtime pay. the rupp nominee will be 'peering on dr. oz and then late

oretown tonight show with jimmy fallon. hillary clinton is back on the campaign trail speaking in north carolina after taking a few days off to recuperate from pneumonia and john harwood is here with all of that. john. >> it's getting real. and the speech that donald trump is going to give. it's not going to be new policy detail. i talked with an aide. he's going to pull together his tax plan, regulatory plan, child care plan he announced the other day. but we're at the point of the election ten day out from the debates where all of the fluff is getting sorted out of the polls post-convention and we're fixing out exactly where the candidates are strong and donald trump has got some good polls by his side. he's been getting -- drawing closer to hillary clinton and we're going have to see when hillary clinton gets back on the trail. >> what does history show about the debates and how influential they are? they talk about everything that's happened thus far and

this is the pregame. this is like tailgating before the game. it's almost irrelevant. the game doesn't really begin for another ten days. >> well, i don't think that's entirely true. the history is if you're leading in labor day, you usually win the election. what we've seen from a couple of debate cycles is that a strong first debate can boost someone and can bring their base home and get them closer. so walter mondale drew closer to ronald reagan. didn't get close enough to compete. >> owned obama. remember, it didn't help. >> it did, but what happened -- >> he was the rope-a-dope for the next -- >> yeah, but mitt romney had republicans who did not come home and that debate brought them home and that got him closer. >> now, when ronald reagan debated jimmy carter, you had a whole country that was dissatisfied and not happy with carter, not sure about reagan.

reagan made them feel sure in the debate and that boosted him. so, you know, what can donald trump get out of this. i think donald trump still has a barrier in terms of convincing a decisive segment of people, especially college educated whites that he is fit to be president. if he can somehow demonstrate that quality, he could help himself a lot. >> what do yhow do you think th history of hillary clinton plays given the new letter from the doctor? >> i'm dubious that that is a huge factor in the election either way. first of all, i grant the presmgs of health to both candidates. they've been out for a year and a half. that's not an easy thing to do. just as the presidential campaign shows who you are personality wise, it also tests you physically. >> wasn't trump ahead in college educated white men? >> yes, he has been. >> all right. >> but -- >> put them all together and -- >> what he's been doing is

underperforming among college educated men and women compared to say the previous baseline. i don't think health is going to be decisive unless, somehow, we learn something more about the candidates. donald trump didn't release new medical information. we're hearing from audience members and that sort of thing. we don't know what it was. hillary clinton released a letter. she's been sick. and if she gets better and campaigns and performs in the debates, i don't think it's going to make a difference. >> earlier in talking to the folks on "worldwide exchange," i brought up the -- i don't want to say the name, david brock's hit squad that he funds for hillary clinton's campaign, the eight things you don't know about dr. oz. all of them disparaging, calling him a tv dock tomorrow i just mentioned did you know my ninth thing -- you know roger altman, a friend of the set. >> sure. >> when he needed a heart transplant, he specifically

asked dr. oz will you do the procedure for me and 2kr6789 oz subsequently did do the heart transplant surgery for dr. altman and that was 1990. >> i didn't realize. >> it's easy to just say he's a tv doctor. >> first of all, i didn't realize that roger had a heart transplant and i'm delighted to hear that dr. oz did it. >> he specifically asked him. >> you can't ask dr. drew pinsky because he got fired for saying something and sanjay gupta. i don't know where he stands. >> personally i wouldn't go looking for a tv doctor. >> would go for one actually on e.r. >> this wasn't when dr. oz was on tv. >> he was a real doctor. >> he didn't ask him to stop taping a show to come do it. >> one of the things that you begin to think about when these debates take place, the first being ten days out, is there going to be a question of somebody losing as opposed to somebody winning?

>> can be. >> in other words, the negatives on both of these candidates continue to move up, not a lot, but they don't come down. you just wonder whether or not you can lose it. if one of them can lose it as opposed to the other one winning it. >> i think that's exactly right, larry. look. if a candidate -- there haven't been in the general election debate stage too many catastrophic wonders. there was the gerald ford with jimmy carter about the domination of -- >> mr. perry. >> yeah. that was a primary debate. this is a different stage. but, yes, if a candidate sort of drives home an impression that people have been vaguely feeling and then all of a sudden it's demonstrated to this massive audience, that could foreclose somebody from rising or drag somebody down. >> tim kaine, was that a smart move to say, i don't know if that's the real one when colin

powell said those are mine, those are real, which is a smart way of not having to address them. >> he said, what would you make of them. he says i don't know how to comment, i don't know if they're real. >> colin powell said they're real. >> it's a way of dodging it. >> colin powell is effectively disparaging everybody. >> i just said he's got a whole lot more. >> to be clear, he's disparaging trump a lot more than he's disparaging hillary clinton. >> well, no, i think that's sflu ambitious. >> number one, he voted for president obama twice. it's not -- to say that greedy -- everything she touches she ruins because of hubris. it also came out that the biggest democratic fund-raiser say the clintons absolutely despise president obama and you

have the stuff, more personal stuff. >> right. but there's a difference between embarrassing and sweeping condemnation. >> i'm not surprised on the sweeping condemnation. >> okay. so what you're saying is, yes, there's a difference but he's the democrat. >> no. the race card being thrown about trump, i just don't buy. you can do it all you want. >> i'm not doing it at all. >> i'm not saying you. he doesn't need help. he's fine. you're okay. you had your show yesterday. take it easy. >> john, thank you. >> what is this? >> nothing -- just take it easy. >> it's 6:00 a.m., thursday. >> all animated. >> when we come back, bringing down the cost of health care. the ceo works to improve the efficiencies and produces providers and patients. she'll join us on set. in the meantime take a look at yesterday's s&p 500, winners and

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welcome back to "squawk box"

right here on cnbc first in business worldwide. you're looking at green arrows. dow looks like it would open high e 24 points higher. s&p opening higher and nasdaq. right now it's time for the executive edge. we're talking health providers. susan devore is the ceo and own owner. susan, thanks for coming in today. >> thank you rngs becky. >> let's talk about premier. what you do is go directly to hospitals and do what? >> we work with hospitals and health care systems and help them improve their performance. we wake up every day and say how do we make them safer and more cost efficient. >> that's been increasingly performance.

-- how are things going so far along that line? >> so in health care now, value has become the new economy. they're being called on everything. they're being intensenty advised on taking care of parents, producing good outcomes and doing it affordably. >> is there a dense between the best and the worst or what's happening? >> i would say they're stuck right in the middle of a system na's in transition so they get paid fee for service, you know, fee per vacuum and at the same time they're trying to translate it. they're trying to make that transition. >> there's always a discussion in the health care system of waste, fraud, and abuse. do you see it and how much of it would you guess there is? >> so at premier, we have data

on 40% of the headlight care systems in the country and we run $48 billion of supply chain spend through our group purchasing and i would say there's still 25% to 30% waste, dupe plication. it's a result of the fragrant meant dupe plication in the system. >> we've seen a lot of mergers not just because of insurance companies but even between doctors' offices who say you can't be independent and be out there and keep up with all the red tape. >> right. at premier, we see aza need scale. it's been such a cottage industry. it's consolidating in insurance and providers and physicians. >> my read on this is the doctors and health care have dealt with the pain. they haven't seen the flusher times schl that a fair read or not? >> i guess i would say, we're right in the middle of the transition, and premier is

working with 130,000 physicians and 3,700 health care systems and hospitals, and i would say the momentum around improving quality, improving safety, we can see those results. mortalities getting better, deaths being prevented, health is improving. they're seeing a clinical improvement, i think, not seeing economic gain from some of those changes. >> we vn v an election and two candidates looking at the health care industry very differently. hillary clinton would continue obama care, trump would put the brakes on it and the house has told us very clearly it wants to stop things. what do you think of those eventalities? >> it really depend os whan happens in congress. if there's a victory and a democratic sweep, i think the train moves faster. they try to extend medicare to people 55. we get transparency and other

initiatives around drug pricing. if trump wins and there's a republican sweep, ily will be some confusion and uncertainty for a period of time, but they've got to sofrl the same problems. >> you're looking at this from the hospitals' perspective and the cost structures that have been set up there. what we've been seeing is the premium levels of people paying the obama care have skyrocketed, gone up 25%, 35%. we've seen providers drop out and the suggestion is, look, when you only have one option that a single payer system is more likely to come in. how do you balance with what the hospitals are dealing with and consumers? >> i think market competition, i think multiple payers, buyer, competitive market system is what will work best. i think clearly the skparjs aren't working and i think they have worked the system and opted in before they have expensive

care that's driven. it's driven costs up. i think healthy of competition and friction, that's what premier is all about. we're trying to create friction between the suppliers to drive let care costs down. >> tell me something, the fact that so many states are with drawing from the system, does that drive us faster to a single payer system hour do the hospitals think about that? >> if there is consolidation in insurance or even if you had single pay yore system, you have a lot of power. it can't be fixed by insurance companies. it needs to be fixed. if you go to a five-star restaurant you do want the chef cooking your meal or the health inspector cooking your meal. you want to know the inspector has been there but you want the people responsible for the outcomes. >> appreciate your time.

coming up, three dow components to watch for. "squawk box" coming up next. harvard school unveiling its report on competitiveness and the results are scary enough to keep you up at night. he brought a special guest. "squawk box" will be right back. this car is traveling over 200 miles per ho. to win, every millisecond matters. both on the track with the help of at&t, red bull racing can share critical information about every inch of the car from virtually anywhere. confirmed, daniel you need to cool your brakes. understood, brake bias back 2 clicks. giving them the agility to have speed & precision. because no one knows & like at&t.

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welcome back to squawk bach. stocks include pfizer. they have recommended the removal of the most serious warnings from chantix. that's the series of commercials where people say they were able to quit smoking with a long list of warnings. >> if you don't try to kill yourself. >> people trying to quit smoking, i'm not sure if it's chantix or trying to quit smoking. please do it. black box -- i'm talking to you, greco. black box warning was imposed in

2009 because of potential mental health side effects including suicidal thoughts. whenever they do that with anti-depressants, i always think -- >> the same question. >> because you're depressed. that's why you're on the anti-depressants. >> or worse. >> maybe it actually -- >> in some cases. >> get worse. >> it does get worse. mcdonald's reportedly receiving final bids for its three groups. reuters says they've teemed up for the business which is worth $3 billion. >> and disney cutting 250 people from its consumer products and digital units. the cut include people who work on video games. disney has moved away from developing its own content for that versus licensing its characters. we've got to a little tesla news here.

i'm sure james chase la revealing that news. there are safety concerns over the semiautonomous pilot system telling reuters that tesla was, quote, pushing the envelope in terms of safety, unquote, saying the system s quote, not zained to cover all possible crash situations in a safe manner. the safety of autopilot was called into question after that fatal crash. tesla has since said it has updated that software so that that type of crash wouldn't happen. >> what does mobileye do? >> it makes a lot of the mobile technology that sits aboard tesla and has the radar. they also, you should know, are developing a potentially competitive product that they would sell to other manufacturers. >> who's stepping in -- i guess i should read up on this --

who's stepping in to fill the bridge? >> i don't know. >> they wanted to do it to help their own reputation, so this is kind of defensive move for them. >> but it's problematic. you're in there and you've got it on automatic pilot and you're like, okay, you can relax, but be ready for the time -- the accident situation. that's what i mean. they're just human nature. if you think you can relax, there's going be a team where you're not ready for that accident situation. >> it's a ways away. >> but the distinction between having it out there for customers to just do it on their own, you know, uber's doing these experiments you probably read about this week in pittsburgh. >> two guys in the front seat. >> they have people in the front seat. and i imagine they'll be in the front seat for a year or two. >> i hope so. >> you can apparently as a passenger press a button that says you don't want the car to be autonomous. you want the actual driver to do

it. >> it might be one of those things. don't download the new ios system because it may brick your phone. that may be one of the things you want to work the bugs out of before you're a human guinea pig. >> i would guess so. >> harvard coming out with its sixth annual finding. they're going to unveil the findings and what they're going to do to fix it. we're taking a break. we'll take a check in the next half hour. we're back in just a bit.

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welcome back to "squawk box." harvard business school out with its fifth annual competitive survey on the performance of the american economy and the steps needed by business and government to restore growth and prosperity. we're joined by cochairs of the project to break down the findings. they're shocking, guys. joining us is michael porter and jan rivkin. good morning to both of you. this is sad. this report was sad. i don't know if you want to go through some of the key findings, but i want to figure out how we're going to fix it. >> well, andrew, i think it is very disappointing. we have -- we're stalled in america. our performance -- economic

performance an many metrics is worse than we've seen in many generations. i mean, not five years. i mean 10, 15, 20, 30 years. we haven't been making any progress on really dealing with the things that are holding us back. we're having a very bizarre political dialogue about a lot of things but ultimately we're not moving ahead on tax policy, on infrastructure, on all the things we need to do. >> you say economic performance peaked in the late '90s. >> right. a lot of people think what's going on is we had a bad recession and we're recovering. we find in the late '90s around 2000s. and the recovery is indeed slow. this dates back earlier than that. it reflects some emerging weaknesses in the u.s. things that used to be strengths turned into weaknesses. >> let me go to professor rivkin. you have written about some of these issues for five years. repeatedly. made a number of the same suggestions.

tax reform or other issues. we have not moved on any of those. are you any more hopeful that in a new presidential term we will get there? >> well, i think you've got to realize that in fact, you know, united states retains amazing strengths. it's got a great context for entrepreneurship, vibrant capital markets, strong management. we also have weaknesses we can actually address. so i'm hopeful that the american economy has a great runway in front of it. we just need to in some ways get out of our way on things we know we need to take care of. >> you know, michael, it's good to see you again. one of the things you get when you have dialogue with ceos today, they are frustrated by things in america. they are adaptable, smart people and they cope with it and go out of their way to succeed despite what goes on in america. particularly what the government

does. that's a trend that's disappointing to me. i don't know whether that can be reversed in terms of them being part of providing the solution we need to get off the place where we are. what do you think about that? >> well, i think the business community has actually been stepping up to try to get engaged in this issue. to try to work on skill development. you're seeing companies raise incomes and job opportunities for lower income workers who have been really suffering over the -- especially over the last several decades. so i think businesses in the game and actually large u.s. companies we find are doing quite well. they're quite successful. but they're in a position where they don't have to deal with many of the real weaknesses. if we have a bad tax policy, they have a global tax structure that works around it. if they can't find the right skills for their industry in america, they set up a facility in latvia to do those things they need those skills to do.

the real pain is hitting small business. we've had a dramatic reversal in the state of small business in america. small business job formation is slowing down. the number of new companies that are formed is slowing down. small business is struggling. the worker with only average skill or low average skill is struggling. they're now competing with workers around the world that would have blown past us. we used to have the most skilled workers in the world. now we don't. their education levels are not special. the percentage that went to college is not special. so jan is right though. we have tremendous strengths in america. the problems we have are fixable. >> jan, who's doing it better? >> sorry, i couldn't follow that. >> i said who's doing it better? >> who's doing better than the united states you mean? >> yeah. what country do you look at that we should be following if this

isn't it? >> i don't think there's a simple way to follow the model of another country. i don't think we need to. i think america has unique strengths we could build upon. you know, we've got some weaknesses we need to address. >> you guys want to weigh in on the political climate? is there one candidate that you think is more likely to fix the problems that you talk about in this report? >> well, i don't know, we almost put in this report an assessment of how the candidates were doing. you know why we didn't? because we couldn't tell. their policies are so fragmented and so changing that we really can't understand what the strategy is that each candidate -- >> is there a place doing it better? i mean, these are global forces that are affecting what's happening. and since we have american exceptionalism, we may not be doing as well but is there a place that could do better given the global forces? maybe they got 6 million people, i mean, i always hear about sweden. but nobody's doing it better

with 250 million people, right? >> well, i think the metaphor of the united states is we did pretty much everything really well 20 or 30 years ago. then other countries started getting better. they streamlined -- >> maybe that's who we should answer. who? >> korea, many of the european -- core european countries. china's gotten a lot better. india is even getting better. >> they have big hurdles in terms of personal -- >> they have a lot of hurdles, but at least they're fixing things. >> we're going to continue this conversation with mr. porter. but we want to thank mr. rivkin. a huge day for data and it could stir up one last fed meeting debate. we've got retail sales and jobless claims. but that is just the tip of the iceberg. top strategist from bank of america and jpmorgan will join us after this break.

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business never sleeps, this is "squawk box." >> welcome back to "squawk box" here on cnbc, first in business worldwide. i'm joe kernen along with becky quick and andrew ross sorkin. and larry is here. at this time futures indicated up a little. we had a high fair value close. if you see the futures up 74, it's not quite that good. it is indicated up 44. another thing i was talking about earlier that i always get a little nervous in september because there's been so many october lows. the reason there's so many over the years is because september is not great. >> yeah. and when the first day people get back in and it goes down 400 points they get back from vacation. >> welcome back to business. >> yeah. then you got up 250. i was like, see, they were wrong. then it was down 250. we'll see what happens today. breaking news. oh!

becky. >> the bank of england is leaving rates unchanged. the end. >> surprise, surprise. >> yeah. >> we expected. >> not counting on that to drum up viewership. in the meantime, let's get you caught up on everything else. >> okay, we found out. let's turn on the "today" show. >> what else is going on today, it's more than exciting than just that. it is one of the single biggest days for economic data in some time. 8:30 eastern time, we get initial jobless clams and the philly fed index. that's a lot. everything is unchanged but this we get. plus later on utilization and business inventory. also the swiss central bank has kept its negative interest rates intact in its latest policy statement. that coming despite increasing criticism that negative rates have hurt both banks in pension funds. and gary johnson is going to be on the ballot in all 50

states. good for gary. plus on election day, it's the first time a third party candidate has appeared on all state ballots since 1996 from both ross perot and harry brown. >> i just saw a note from gary johnson this morning. i think he's polling at 13% in the latest. you need 15% to get there. but the latest poll that was out had him at 13%. >> that aleppo. okay. i get it. that aleppo. >> no he said aleppo? >> but it was the way barnicle asked him. he basically did say what's aleppo. hey, larry, what's nirp. >> north american friends of -- >> negative interest rate policy. i ask the wrong people the next day. they all knew. >> you were asking economists. >> i wanted to get someone in and make them feel really stupid

like barnicle did. fallout at wells fargo. u.s. prosecutors have started investigating the practices that led to the $185 million settlement with regulators last week. how much did the guy in charge make? >> 125 -- $124.6 million but it included deferred comp. >> it was a woman. >> but that's less than the settlement. the u.s. attorney's office reportedly conducting probes sent subpoenas seeking information. wells fargo shars under pressure and over the past month down about 4%. all of this is uncharacteristic for wells fargo. uncharacteristic for buffett even. >> this is a serious issue. when i first heard $185 million fines, i didn't think that much about it. but as soon as you start reading the details on this, something that involved 5,300 employees over five years, that is a much more significant issue and as you could see with this, it's not going to end with that $185

million settlement. a little corporate news. apple saying the initial quantities of the iphone 7 plus are officially sold out. new gadgets will hit shelves tomorrow. the company did say it will continue to take orders online. shares of apple hitting a 2016 high yesterday with its market value topping 600 glrl$600 bill the first time since april. donald trump is going to be address aing the economic club of new york today. trump is expected to offer more clarity on his economic policy. that might help michael porter when he decides what had to do in terms of competitiveness issue. and hillary clinton's campaign releasing a two-page note by the candidate's doctor saying that she remains, quote, healthy and fit to serve as president. meantime, trump will be revealing more about his health when he appears on the dr. oz show today. all right.

markets continue to sort of trade -- i'm going to call it sideways. we'll see. under the uncertainty of what the fed will do next week on rates. and that in itself could keep the fed on hold. as, you know, the third mandate. the stock market. joining us now is avita from merrill lynch and david leibovitz from jpmorgan funds. our guest host continues to be larry bossidy. why did either of you have a good feel -- why on the 10-year? i know they've jawboned a lot, individual, you know, fed heads and some of them said september's live. >> right. >> and then, you know, some of then leak. then leisman says -- you see there's a concerted effort sometimes to make us think they might do it. the dow futures now 15% or 20% for september? >> yeah. >> why are we at 1.70 and

they're taking notice? >> we're in a weird period. what i worry about is september and october are generally seasonally weak. then you've got the election. the one thing we know about the election, even if it were a normal setup. even if we had a less of a crazy setup than we have this election, you always get volatility in september and october leading into an election. and growth isn't great. i think markets are absorbing things aren't that great. and we've had a massive run-up since the february lows. >> and if it's up there based on animal spirits and easy money. when the tide goes out -- >> it's not going to be great. >> not wearing bathing suits. >> that's right. >> that's scary. >> but i think when you think about what got us to those prior levels initially, it was after

brexit. to me this has always been about easy money. it makes sense that the stock market would pull back. i think the fed is priming the pump for december. this is the reaction they want. they want it to happen now opposed to the end of the year. >> are you saying the market is going to pull back? >> i think that this pullback is justified given concerns about september. but i think once we get past that meeting -- >> so you think stocks will stabilize when they don't ray rates in september but what happens if they do raise rates in september? >> exactly. i don't think the indigestion will be that bad. i think they learned their lesson this year. the market didn't like it. >> you think that sort of temper tantrum is what's holding the fed up at this point? >> i think they are very worried about financial tightening conditions over the past couple of days. that's what they're trying to avoid. rates go up, the stock market goes down, maybe the dollar gets a bit stronger. then the fed finds themselves

unable to hike. when they're not really thinking about september in my opinion and not have to deal with it come december. >> see, we have a rules based system. well, a talk about hiking in september, that causes the market to go down 400. then that's means they're not going to raise because the market just went down 400. then in december it went down 400. i mean, this is ridiculous. >> it's a feedback loop. >> should it be that way? should the fed -- and they're subjective about these things. they all have their own opinions. they play us. and there's 10 or 12 of them that play us on a weekly basis on whether or not it's going to happen. we point to individual inferences. >> yeah. we're counting words in the fed minutes and we're obsessed with the fed. >> it wasn't like this before, was it? michael porter, that's what's wrong about this than in the

past. >> is the fed is too transparent. >> you never knew about it. now it's in the papers every day. all the spokesmen out there trying to give misleading data. >> and when they never raise, you wonder what do they really know. you wonder is it not good. i thought it was okay. >> look. just putting the fed aside for a moment, look what else is going on in the economy. we've got constant currency sales growth at a three-year low. after the fed has done whatever they could do to reinvigorate demand and stimulate the economy. >> but part of it is inflation too. if you look at some of the food prices out there. >> part of it is deflation. but you've also got -- i mean, even if you strip away all of the pricing impacts. take oil out of the equation, you still have no demand recovery. that's what i worry about. >> but look. that's got to be something of a hangover effect of consumers not feeling settled in their jobs. they may finally be seeing some wage growth, but they remember

what happened in 2008 and they are very wary of making some of those purchases they may have made before. >> i agree. it doesn't look like a great setup for a raging bull market this year. i worry about the market for the next couple months. our year end target i think is very achievable here. it's 6% lower than where we are today. >> that means you should get out. >> very achieve snbl that's a great achievement. >> selling stocks immediately. >> absolutely. if you're betting, sell rather than buy. >> what are you going buy if they sell? >> so i think what out performs the market over the next few months is health care and technology. they've got growth, some yield potential. you know, kind of hedging against the fed not doing

anything. and rates staying where they are. they've got -- you know, they've kind of got whatever you need. they've got clean balance sheets. but the market overall doesn't look great to me at these levels. this is the first time i've felt ll worried about s&p. >> the other argument would be the micro is g ining to come back. as we see 3q results and 4q results, maybe things are better than people expected. thattive gs the market some legs. i think it could go either way right now. growth looks kind of mushy. central bankers are talking too much. but maybe the fundamentals, maybe this head wind from the dollar, maybe head wind from oil prices are beginning to abate. and we'll actually see earnings growth which that's what in the long run makes stock prices go up. >> it would be a 10% correction. >> yeah. >> you're looking for a decent third quarter in terms of corporate earnings? >> i think it's going to be

incrementally better than the second quarter. >> i agree. but it's not for great reason. >> second quarter was 1.2%. >> first quarter was negative. >> it's getting better but it's not getting great. it's getting better for the wrong reasons. it's getting better because of oil and the dollar. those aren't really kind of high-quality reasons for an earnings recovery. >> but that's why it got worse in the first place. >> sure. but did the market really sell off that much on lower oil and a stronger dollar? i think we're sort of -- >> energy stocks sure did. >> sure. but the market sailed through it. you had utilities and high dividend yielding. >> oil and gas got hurt badly. and, you know, manufacturing in the third quarter doesn't look good. >> no, absolutely. >> you look at production. we're not going to have great earnings in the third quarter. will we beat 1.2%? maybe. but that's not great. >> but it's the tale of two economies. to your point health care and technology are more service oriented and could be poised for decent growth. >> i think, you know, a plunging

stock market to 10% is not an achievement. okay? >> sorry for using the word achievement. >> maybe you say there's risk in the system that can get you there. an achievement is 2600. >> i guess if you're short the market, it's an achievement, right? [ overlapping speakers ] for chanos it would be an achievement. >> that's just great. thank you. thank you david too. and larry will be with us for the rest of the show. when we come back, we'll have more from larry bossidy. and later, mass mutual creating a $275 billion investment company. the ceo roger crandall joins us to talk about that and much more. "squawk box" will be right back.

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welcome back to "squawk box." futures have been improving as the morning has progressed. last i saw i think the futures themselves were up about 70. but after you factor out fair value, they're up about 40 or so. i guess maybe the boards are frozen. so take my word for it. you're going to have to. >> right now let's turn to our guest host today. former honeywell chairman and ceo larry bossidy. we just went through this entire economic conversation and tried to figure out how to gain things. your point is manufacturing has not been great.

we saw that in the manufacturing numbers that actually showed a decline in manufacturing. what's happening? >> you know, i think a lot of the economy goes along pretty well. if you look at housing. if you look at consumer spending. if you look at employment. it's up and down but basically pretty good. but the manufacturing sector has been soft all year. for a couple of reasons. one, i think there's over-capacity around the world. that's why business investment is faltering. you don't build new things. >> that was my second point. that's why you think business investment is up? >> sure. the average capacity utilization is 30%. you don't build new when that's the case. secondly, still high labor content jobs leaves the country and looking for lower cost locations. still going on. and thirdly robots which used to be a cocktail conversation are now in everyday use. you don't go in a factory every day without seeing applications

of robots which costs jobs. but it doesn't necessarily improve the activity and manufacturing. >> so you don't get productivity out of them? >> you don't. and we haven't had productivity all year. you don't get productivity until you get volume. >> that means you have to become a big exporter. >> you have to do all you can to fill your factory in terms of participating on a global scale. a lot of companies do that. but the demand -- the overall issue here is there's not enough demand. >> we talk about how consumer the demand has been decent. is demand a problem because the dollar is stronger and it's tougher for us to compete outside of our own market. or is the demand problem coming from companies not ordering more? >> i think certainly the strong dollar has hurt us. but there's no demand across the world. certainly nothing going in

europe that's worthy of talking about. asia is okay. but south korea's soft as well. so it's pretty soft across the globe. until that changes, i don't see us having a big rebound. >> he's going to be back to talk about the competitive problems in the united states and all the things we should be doing. would all those things change the game or given the demand picture -- >> here's the issue that i think that michael porter will talk about. the things that have to change he said have had to change for years. are we going to have tax reform, a territorial tax system, combat regulation, cultivate our energy advantages. those are things that ultimately the government has to do and they haven't done. and the question is are either of these candidates are elected or whatever happens, are we likely to do them. if we were to do them, yes. if we were to get a competitive corporate tax rate, for example,

yes, it would help our activity in terms of manufacturing and our exports across the world. i'm convinced it would. >> so we talk a lot about how gridlock in congress is actually a good thing because it means nothing changes. are we reaching that point? >> it is addressed. if we don't address the issues of the day, not only the ones that i mentioned, but we can't get any place on immigration. so yes. we have to have a congress that ultimately passes something so we can get off this -- the place where we are. i don't think we do much in this manufacturing study upcoming until the government takes action in these things. so far they haven't. and i don't know -- i want to be positive and optimistic. but i can't feel positive on either of those trends when i see what's before me in terms of the election. >> so you would -- i mean, in the past people thought i'm

going to split my ticket. i don't want to be sure to give power to one side or the other. you think the days for that are passed. is there a way the two sides work together? it seems it's gotten much more acrimonious in washington. not much more consensus building. >> i think, becky, this country's history is we won't do much until the bear is at the door. >> until something really breaks. >> until something really forces us to take these actions. then we will. i mean, i'm reluctant to say that but i think that's where we'll be. and until that happens, i think we're going to continue to slide. you know, we're not -- joe pointed out who's better. there aren't many countries better than we. we're not nearly as good as we would like and could be. because that's in our dna. so we're not losing position across the world on that, i don't think. but nonetheless, we're not nearly as good as we could be. >> so something really happens. not like that financial crisis. something big. something actual that it really focuses on. we did do something after the financial crisis.

we just didn't fix the structural problems with the economy, unfortunately. >> we thought dodd/frank was the answer to the financial crisis. >> that's been part of the problem. >> that's right. but what would a crisis be among -- forget the war situations which always could be a crisis. unemployment got to 10% for some reason. that would force -- >> interest rates. >> our interest rates were to spike as they did. you remember. then we would do something. short of that, seems to me we just kick the ball down the road. >> you look closely enough at certain things in the economy right now and you can almost make the case we really do need to do something. you look at the participation rate. young men out of the workforce, there are a lot of major -- >> we're six years in the recovery and participation rate is 63%. lowest in 30 years. there are signs. >> okay. larry's going to stick with us for the rest of the program. when we return, is twitter ready for some football?

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coming up when "squawk" returns, the ceo of mass mutual roger crandall will join us to talk about the state of the economy as well as the u.s. election. as we head to break, look at the futures. back in a moment. announcer: alvin and the chipmunks want to remind you-- bacteria can hide in food and make you ill. wow! announcer: but you can keep bacteria from ruining your day with 4 simple steps: clean, separate, cook, and chill.

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welcome back, everybody. among the stories front and center this morning, the bank of england leaving those key interest rates unchanged in its latest policy meeting. that was expected. however, the bank did say that it's still likely to cut interest rates to just above zero later this year. two fda panels have recommended that the so-called black box warning be removed from chantix. the warning notes of psychiatric side effects. that comes after a study said there was no elevated risks of effects like that. and republican presidential

candidate donald trump will give an economic policy speech today. he'll be speaking with that event scheduled to tart at 11:15 a.m. eastern time. this is a fascinating story. the company is revealing it did so because it said it had safety concerns over the autopilot system. telling reuters that tesla was, quote, pushing the envelope in terms of safety saying the company's system was, quote, not designed to cover all possible conditions. the safety after autopilot was called into question after a crash with a tesla model in may. tesla then said it upgraded its software in the car. but still this raising more questions than answers. and there is more at stake in tonight's nfl matchup than meets the eye between the jets and bills than just wins and losses. it's also a crucial test for twitter which is streaming the

tv broadcast of the game along with live tweets and ads. this is the first of ten nfl games twitter will stream as part of a $10 million deal it struck in april. and twitter shares rising after announcing the app will be available on apple tv, xbox one, and other devices. let's talk about the insurance business. mass mutual is combining into a $275 billion asset manager. and this and deals with metlife is part of the environment. here on set is roger crandall who is the ceo of mass mutual. in this tough interest rate environment, how does an insurance company thrive? >> well, first it's great to be here. so thank you for having me. you know, we're a mutual company which means we're owned by our policy holders is the best way to think about it. >> i'm a policy holder. >> thank you for being a member of the company. we think about the business in a long-term way. if you're a member of our company you could be a member

for 50-plus years. you have a chance to be a member for 75 or 100 years the way longevity is going. and we own businesses as well as just owning a portfolio stocks and bonds. in private equity, you you think of them exiting. >> some guys are locking up money for 20 years at this point. >> that's nice. we have a policy holder who's been with us for 90. so that's great. >> have r you actively involved in this? >> absolutely. we own insurance companies in japan, insurance companies in hong kong we bought after the financial crisis in '97 in japan and asia. and we think about running those businesses for the long-term for the benefit of our policy holders. >> given the low interest rate environment, also actually you mentioned the word longevity. i'm curious how that factors into the actuary tables and how you do the math. this has to be a tough business right now. >> it is a tough business right now, but there's a real

opportunity. 30% of american households don't have any life insurance. >> but i think -- do you guarantee me a rate? >> we do have guarantees built in. >> you do? how does that work? a world where we might go to negative interest rates? >> could be a lot worse. i could be a japanese or a swiss or a german dealing with true interest rates. >> do you sell those? >> not really. >> what guaranteed rate you mean on a life insurance policy? >> and then we also sell lifetime income annuities. >> roger, hate to point this out but you said some of the great places we own are insurance companies in japan. then you said one of the worst is a insurance company in japan. you are. >> not yen in japan. >> why did you buy the premiere group? >> so we've been growing our agency force.

and the premiere group, that decided to break itself up and didn't want to distribute insurance products. let's face it. people don't wake up and say today's the day i'm going to buy a life insurance policy. they're sold out of iphone 7s, we're not sold out of life insurance policies yet. so we have over 4,000 locations. for us getting more financial professionals who think about protection as being a core part of a portfolio makes a lot of sense. >> dare i ask, though, you look out ten years in your business in a world where robo advisers are the hot thing in financial services. i don't know if it's coming in the insurance world, but what does it mean to the advisers already working for you and you say you want that number to be double or half in the future? >> the way i think about it is advisers are going to deal with clients the way clients want to be dealt with.

if you want to interact online, on the phone. so we're investing in technology to help that. you can do e-signature today. we're running it through al go rit them underwritings. i don't think it's an either or. i think it's an experience and we're investing in that technology. >> are there policies you've had to eliminate as a function of the interest rate environment? >> we have certainly stopped some of the higher guarantees. for example, the so-called living benefits on some annuity policies that we stopped selling back in 2008. and the industry as a whole has back aid way from this. >> do you look and say to yourself -- >> you know, nothing is gone for good. it's just a question of environment. i think insurance companies are much more aware of some of the risks that they're taking in those policies than they might

have been pre-this environment. this is a brave new world. >> you know, can i follow up a little bit on andrew's question? i just wonder when you look at 9,300 people in the field whether or not given the advances of technology that number will shrink dramatically over time as you meet customer requirements who are very comfortable working online? >> yeah. i think it's very difficult to say, but i think if you look at what's happened in the securities industry, for example, face-to-face brokerage hasn't gone away. but it's now integrated into an online experience. so we'll see. >> what is the department of labor's fiduciary rule? >> frankly we're trying to figure that out right now. we have to comply by april 20th. when we bought the met deal, we merged a broker deal. to be compliant with that rule. our suspicion is it's going to

have an initial dip in some products. but i'm a big fan actually of doing the right thing for customers. >> we were joking the other day at delivering alpha, of course there should always be a fiduciary role. always have a fiduciary responsibility. >> it was like, all right, we've got a new idea here. you have to put the client first. before your own compensation. eureka! let me ask you this quick. second is still popular. to not get ripped off with whole life or universal life, what -- i've heard people really disparaged because the fees are so high. they go with term and do investment other way. do you have a whole life policy that actually is a great deal. >> we have great whole life policies. in fact, our whole life sales have been growing at 20% for the last five years. we've grown at 15% for the past decade. >> wells fargo had an increase. sit good for people or mass

mutual? >> well mass mutual is people. i think absolutely. but this is a long-term product you have to think of in a long-term way. term makes all the sense in the world except for the year the term expires and you're still alive and still need coverage. here's the grim fact. over time the mortality cost goes up. lock in your mortality cost when you're younger, buy what's called a convertible term policy which means even if your health changes, you can convert it. >> that's what i did. see, great salesman. this is what i did. >> i'm not licensed but we have a few people around the country who are. >> life insurance is the worst. >> why didn't you call your benefit massmutual. why bearings? >> so we've always run multi-brand strategy. so oppenheimer funds we bought back in 1991 and we continue to run that business here in the u.s. we have bearings. >> different regulations? >> different regulations and frankly it's a complex world

around distribution. with different brands in some cases, some distributors are happy to work with us. and they're fundamentally different businesses. >> we got to go, but a customer and viewer of yours just e-mails in and says how will they maintain dividends in a falling portfolio yield environment? >> every year our board talks about what the right dividend is. we look at what's going on in the portfolio. we look at how our other businesses are doing. we're going to announce our dividend decision in late october, early november. if i told you i'd have to kill you. >> oh, please tell him. please tell him. do you have a food taster? oh, she doesn't cook. >> he does. she's a great cook. >> does she really? >> she really is. i call the chinese restaurant. she actually cooks. >> thank you. coming up, former wall street pro and current ceo of

ellevest, sallie krawcheck joins us. check out the futures at this hour. now the dow is up only 15 points. "squawk box" will be right back. now that fedex has helped us simplify our e-commerce, we could focus on bigger issues,

like our passive aggressive environment. we're not passive aggressive. hey, hey, hey, there are no bad suggestions here... no matter how lame they are. well said, ann. i've always admired how you just say what's in your head, without thinking. very brave. good point ted. you're living proof that looks aren't everything. thank you. welcome. so, fedex helped simplify our e-commerce business and this is not a passive aggressive environment. i just wanted to say, you guys are doing a great job. what's that supposed to mean? fedex. helping small business simplify e-commerce. we're drowning in information. where, in all of this, is the stuff that matters? the stakes are so high, your finances, your future. how do you solve this? you don't. you partner with a firm that advises governments and the fortune 500, and, can deliver insight person to person, on what matters to you. morgan stanley.

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welcome back to "squawk box." we've all heard of the gender pay gap but what about a gender investment gap? sallie krawcheck is here a banking industry veteran. says the gap is worse for women and can cost them tens of thousands if not millions of dollars. let's bring her into the conversation. do you mean by all of this? >> well, women don't invest to the same extent that men do today. and we never really talk about it, but as you mentioned it can cost women a lot of money over the course of their lives. and i think wall street's assistance to women has been we better market to them better. but we need to make them work harder. maybe they need remedial financial education. i said you know what? how about we buy a business that is directed exactly to their

needs with hundreds of hours of research done on what will help them invest. >> what's the distinction between the way men and women invest? >> a couple things. this is not remedial financial education. these are powerful algorithms that wum use. the fact women live longer. super important for retirement. that we earn less and our salaries peak sooner. so frustrating, but super important. and the fact that we tend not to want to choose a large cap value fund versus a small cap etf. we don't even look to out-perform the market. it's about i want to start a business. i want to retire well. i want to have a baby. becky. and i -- how much do i need to get there and can you put together for me a highly bespoken investment portfolio to get me there? it's different. >> and so what type of -- not women but in terms of income levels are you looking in to approach? >> we believe every woman who has paid off her high interest

rate debt should be investing. so we have no minimum. >> is part of this women are making less so they feel like they have less to put aside? part of it is maybe we're a little more conservative. you want to be sure to have an emergency fund before you start investing along those lines? >> well, we certainly do make less. but what bugs the crud out of me is there'll be some financial journalist who is are not you who say the real problem is the gender pay gap. i broke my leg or arm, i'm not going to fix it. women, they haven't felt welcome. the financial advisers, many do a great job for women but they're 85% male. men leave at a single digit rate in a year. but in the year after their husband's death, women leave at a greater rate. >> they don't feel comfortable with the person they're talking to. >> and it doesn't talk to them. it's a lot of war analogies, sports analogies. hey, the symbol of the industry is a bull. >> how do you implement your strategy? you have four or five products

that you offer? or do you tailor each individual? how's it work? >> great question. completely tailored. we women, we like things that cura curated. rather than the typical robo you see out there, we put together a goal for them. we put together a highly customized etf portfolio whose target is to get them to their goal or better in 70% of markets. if they fall off track, market correction more than we expected. didn't make a monthly deposit or something. we reach out the them and say you're off track. here's how to get back on. you can look at this s&p approach much of the industry takes. >> in terms of your ability to scale this business, you have many investors. you announced a $9 million round. >> today. today. >> congratulations. >> thank you. >> what are you going to use that money for? >> to run the business. >> to run the business? in terms of marketing the business, though, what's the

approach going to be is this is a facebook business? >> we're linkedin, facebook, reaching her wherever she is. >> age group? >> the women -- we say it's any woman who's paid off credit card debt. so we're seeing women in their late 20s to early 40s. but i don't want to lose this funding round because i think what's happening here is really interesting. when's the last time you heard of a fin tech company run by a woman targeted to women, built by women, and now funded by women and some great men? right? so we've got great new investors. we've got melody hopson, venus williams, a great group of female investors who have been very successful in their own ways who are putting their money into a company that is looking to help women make money through investing. >> what do you do about married

couples? couples who manage their money together. >> first of all, i want to be clear. this is about including women. not excluding men. and for women to invest more is good for every viewer of this show. so we find with the women we're about -- we have guys, we have married couples, but we typically find the woman because we're talking directly to her unlike the rest of the industry. she'll be the lead and she'll say honey, honey, do we have enough money for the kids? do we have enough money to start the business? come on in, take a look at this. it's different. >> right. sallie krawcheck, thank for coming in. ellevest is the company. what's the website? >> ellevest. e-l-l-e-v-e-s-t.com. >> thanks. good to see you. when we come back, wynn resorts looks like a winner this morning. that plus more from larry bossidy our guest host.

"squawk box" will be right back. coming up, harvard business school unveiling its annual report on competitiveness. and the results are scary enough to keep you up at night. professor michael porter is here and he brought a few special guests. you're here to buy a car.

let's take a look at some stocks to watch this morning. wynn resorts is adding to recent gains in premarket trading. this morning the casino operator shares have jumped 20% so far this month. on indications of a recovery in the macau gambling market. global payments was upgraded. the payment technology services company has multiple drivers to continue its strong revenue growth. all right. let's get back to our guest host larry bossidy. got a myriad of things to touch on. we touched on politics but not that much. have you ever -- i mean, it's never been where, you know, the population is kind of looking at the worst -- that's how most people view it. do you think that's accurate that it's two very undesirable candidates or could one of them surprise us? >> you hope in terms of being

optimistic that one of them could surprise us. i do think it's the most unusual election i've ever seen. and, you know, i think i've never seen an election where there's more personal insults going back and forth as opposed to arguments over the issues of the day. maybe that's change over the next couple of weeks or at least they'll be more intense debate on the issues that confront the country. but you know, it's something that's unparalleled in our country in terms of the negatives that both of them seem to have. >> just don't see how we got here necessarily. and that's when you say it's unheard of and that, you know, it was a very logical sequence of events that did it. we have a system. the republican party had a system. that system, you know, there are no rules that were broken. this is what resulted from whatever the last eight years has been or even go back longer than that. go back 30 years.

>> we had 17 able candidates and america spoke. i do think there's a lot of frustration in this country in terms of what's not happening. i think people don't believe that their lives are as good as they could be or should be or have been. >> that explains the republican side. what explains the democratic side? what about the wife of a president that got elected to the senate in new york. you can see that playing out and then the democratic -- the dnc basically chose her more than even the voters did. >> i thought, you know, in all deference to her, she's done a lot of things that qualify her to be the president in terms of the role she's played. but frankly, she didn't have much opposition in terms of getting the nomination either. i mean, bernie sanders was pretty much a quiet senator. let me say that in terms of his accomplishments.

so she didn't have a lot of competition. she came through it in a way that you'd expect. and as a consequence, she got the nomination. here we are with two candidates, a lot of characteristics which seem to be in opposition to what the american public wants. but we're going the have to choose one or the other come election day. hopefully the campaign gets more issue oriented. >> the issues we're talking about on both sides are frightening as well though. to some people. >> they are. >> i don't know whether it actually comes out when the governs is done. i'm surprised that -- i've heard that the republicans were going to lose the senate. have you looked at the numbers? >> i have. >> portman's up by 15 points or something. rubio is up by 15 points. where are they going to lose the senate? >> i think there are cases where they could lose the senate. karl rove has an article this morning about looking at the races. there's reason to believe they won't lose the senate but

there's a possibility, of course, that they will. but, you know, i think that at the end of the day, the clinton campaign, she'll basically concentrate on immigration. and i think there will be an infrastructure fund and that will be happen i think under either of the two candidates. >> all right. >> larry's going to be with us for the rest of the show. when we come back, we'll be joined by michael porter. we also have a lot of data at 8:30. stick around. [click]

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breaking news this hour. a flood of economic data about to hit the tape including readings on the consumer, inflation, and employment. we'll bring you the numbers and the market reaction. lucky number seven? shares of apple trading near a high. plus initial quantities of the iphone 7 plus have already sold out. donald trump releasing his medical records in dramatic fashion. >> why not share your medical records? why not -- >> well, i have no problem in doing it. i have it right here. i mean, should i do it? i don't care. >> what to expect from his busy day in new york city straight ahead. the final hour of "squawk box" begins right now. ♪

from the most powerful city in the world, new york, this is "squawk box." >> welcome back to "squawk box" here on cnbc, first in business worldwide. i'm joe kernen along with becky quick and andrew ross sorkin. our guest host this morning former honeywell chairman and ceo larry bossidy. and hbs professor michael porter. harvard business school. does everybody know that? i think they do. >> they do. everybody knows. >> everybody. futures right now take a quick look. i don't know. hbs, aleppo. >> depends who you ask. >> and take a quick look at oil prices suddenly below $45. now $43.83. we'll see if that becomes a problem for equities. let's get you caught up on this morning's top stories. the bank of england keeping its key interest rate unchanged at

the record low at a quarter percent. surprise, surprise. the boe saying the momentum of the economy has been slightly to the upside relative to its most recent projections. u.s. today, a flood of data coming up ahead of the fed meeting. we'll get jobless claims, retail sales, producer price index. and the current account deficit. so if you're into numbers, this is the morning for you. later in the morning, industrial production in business inventories as well. also apple seeing initial quantities of its iphone 7 plus, that's the big one, are sold out. that's the one i wanted. unlike in the past apple says it won't be releasing its first weekend sales. joining us now is the ceo of one of the nation's largest financial services firms. bill mcnabb is part of vanguard managing over $3 trillion in assets. bill, it's great to see you this

morning. thank you for joining us. >> thank you for having me. >> we're going to talk competitiveness with michael porter, but before we do let's talk vanguard. over the course of this year, your firm has taken in more money than any of the other big funds out there. something like $112 billion. so why don't you tell us about what's happening and why you think investors are piling into vanguard funds. >> well, i think there have been a couple of things that have contributed to this. you know, one is there's really been a move among, you know, a broader array of investors to more market matching strategies. so the index story, if you will, has been really getting much wider acceptance than it -- than we'd seen historically. actually, the numbers so far through the end of august are about $200 billion into our various funds. and most of that is in two categories. you know, broad index funds

which give people broad market exposure at very low cost. and then the second big category are our target date funds which are very popular in the 401(k) arena. i think that's actually a really encouraging sign that so many investors are using these target retirement solutions, if you will, to set themselves up for retirement. >> part of this is coming that for several years now active investors have had a much tougher time. they've had a tougher time matching up to the indexes. when you see swings like that, you do see people say forget about it. i'm not going to try to beat the market when even the pros can't beat the market. but with this cyclical swing, how much of it do you think sticks this time around? how many of these investors can you keep if there is suddenly a period where the indices do poorly and active managers are out performing? >> you know, i think that's a question that we get a from a lot of investors. i think there is always a cyclical element to this.

so what you're describing could certainly happen. but i think there's a much more secular change going on here. you know, earlier in your show you had sallie krawcheck on who was talking about her new venture. if i heard correctly, sallie's set up a series of portfolios for her clients that are using low cost etfs, index based funds to create solutions for investors. so we're seeing a big trend. it's coming from some of the fin teches, traditional advisers, and then of course individual investors themselves are choosing to do this. it's less sort of point solution just flowing into a product. it's about a holistic approach. and i think that's the secular element. >> let's talk about competitiveness. why michael porter is here and why you're talking about it. if you look at your business, you've done very well. what worries you about

competitiveness in the united states? >> well, you know, michael's study is just out. michael, i want to thank you for giving me at least 12 hours to digest it all. it's a terrific piece of work. and i think it underscores topics that have been very much front of mind for the last several years for many people. and, you know, what worries us is that the economy broadly has not been growing at the rate that we think it needs to grow. and one of the, you know, huge impacts of that is we're not lifting the standard of living for as many people as we could. and i think at the heart of it, that's really what a lot of the work points to. and some of the prescriptions for, you know, moving forward in the harvard work really try to get at that. you know, i'd add to it one of the things that is a pervasive issue that's not necessarily

called out in the paper but it's really implied. i think there's a tremendous over-emphasis on the short-term. and this is -- this occurs in the political arena. it occurs in running businesses. and it occurs in the investment arena. and i think one of the real calls to action has to be to -- for everyone to take a much longer term perspective. >> michael, one of the issues you all point out is that we have not gotten back to the median pay levels we were looking at for middle income houses since 1999. but we did see a big jump over the last year and those statistics that were just released this week. is that something that you think we can make a move and get back to some of these levels? but is it still not enough progress for you? >> again, it's very encouraging to see median income go up after 17, 18 years of decline -- continuous decline. it bumped up whether that's an

anomaly or a new trend is still unclear. but i mean, the cold hard truth is we're still 18 years behind. we're still getting closer to where we were 18 years ago. and we don't see structurally in the terms of underpinnings of skill, education, and the kind of fundamentals of competitiveness. we don't see the underpinnings right yet that are going to turn that into a kind of new era of growth and prosperity. you know, it's great. it reminds me we've been in this game now for five or six years. we have a jobs report and it looks a little good and we say good we're moving in the right direction. then two jobs reports later, things go down. and the cold heart truth and bill said this is growth is very slow compared to our tradition. productivity is not improving very rapidly. investment is low in our economy. and so unfortunately i think that we've got to deal with some

fundamentals. there are some things that we've allowed to slip and they particularly hurt the average citizen, the person without a lot of skill, the smaller company. and we're just not making progress. >> michael, do you see, though, in the presidential dialogue, the presidential races there's enough discussion about this? there's enough identification of things that need to be done that leads you to conclude that something will happen? you've been after this for five years with some -- always with some insightful thoughts on the subject. yet we continue to regress. is there any reason for optimism? >> well, larry, you know, there's reason for optimism about america. we have some terrific companies. we have good management. we have a lot of strengths that we talk about in our report. america's a dynamic place. but frankly over these five years that i've been working on this, i've come to believe that actually there's the over-arching problem right now

is actually the political system. it's what the system is delivering. it's just not delivering solutions. >> you mean the way we find our candidates, the way you have to rise up through? >> the way we find our candidates. the way that the dialogue is not about solving a problem. it's about essentially dividing the electorate for one or the other. we discuss everything in a very simplistic way. trade is good, trade is bad. well, trade is complicated. and of course we know that we want to expand trade. we want access to international markets. but we're not having a productive dialogue and we're not getting anything done. >> we're almost out of time. but before we let you go, what's your take on the markets right now? i know you've made some comments in the past about how some stock prices have you a little f concerned. what do you think right now when you see where we've come? >> so, you know, we tend to look at things over long periods of time. so as i sort of look out over

the next decade, when we look at valuation and we look at earnings and so forth, our models point toward a much lower absolute return over the next decade than we've been accustomed to over the past, say, 30 years. and we're looking at the equity market being in the sort of 6% to 7% range per year over the next decade. and i would tell you that's if things go reasonably well. and some of what michael is describing gets addressed. that's based on where we are from a valuation standpoint. in the short run, i have no more idea than anybody else but over the next decade that's kind of the way we're thinking about it. >> bill, real quick on the active passive debate, what percentage of your business now is active? because i always think of vanguard as an index company but i know a lot of your business still is active. >> so we're about 65% index and

35% active. and that active is both on the fixed income side and on the equities side. >> and do you see that changing? increasing? >> i think over time. you know, the index side may continue to creep up a little bit. but we've never said there's no place for active. where i really think there's no place is for high priced active. i think that's a gain that will disappear over time. >> bill, i want to thank you very much for joining us today. it's been a pleasure. >> great to see you all, thank you. >> and of course larry bossidy and michael porter are staying with us. >> so we'd be 36 to 40,000 in 10 to 12 years. even at 6%. >> for the dow? >> yeah. only problem is we don't want to double from 10,000. that's the problem. >> right. >> as long as we stay at 18,000. 6%, 7% a year -- nobody thinks 36,000 to 40,000 is -- that's a

big number. so that, you know -- we got to do a lot right. >> that's what rob baron says every time he comes on. if you look at the numbers you're looking at incredible growth even if it's not the type of growth percentages we're used to. coming up, we're going to talk american competitiveness. stay tuned. you're watching cnbc, first in business worldwide. coming up, the prescription for success and innovating pharma. we'll talk to former amgen ceo kevin sherer about price hikes and the power of competition. "squawk box" will be right back.

online radio service pandora has rolled out a new version of its ad-free service. it's called pandora plus and costs $4.99 a month. it offers subscribers a chance to replay songs and listen offline. it also allows to skip over more songs than they've been able to in the past. our guest host this morning,

michael porter and larry bossidy is with us. michael, you were not with us at the top of the 6:00. had a very brief conversation with larry about apple and this whole tax situation in europe. i want to go with you to that which is to say do you think long-term -- what are the implications of that particular situation coupled with brexit and the questions about the future of and whether you think that us multinationals end up trying to come back to the united states perhaps on their own volition because they think it's a better place to do business? >> well, i think it is a better place to do business. but we're all tangled up in our tax structure and our tax policy. particularly our corporate tax policy. we have the highest statutory corporate tax rate in the world. not a friendly thing for american companies to do things here. >> but if u.s. companies start -- you know, they've

pursued all these inversions. if we find out in e the next two years that all of a sudden they're getting hit with new taxes they didn't know about or that the countries that they move to are no longer part of the european union, they might have to think again. >> well, that's definitely going to move some investment back in this country. but i guess what we've been saying in this work and it comes up over and over again is there's -- we -- right now we're having a big political battle on corporate taxes. and one side says, well, corporations are not paying enough. and the other side says that's not true. and we can fix this. we know how to fix it. we've had multiple sensible proposals. there would be no more tax invegss. companies would bring their capital back to the u.s. what we find is the fundamental challenges right now are some simple policy changes. mostly in the federal

government. state and local levels doing okay. they're trying. business is actually trying to -- business is moving ahead. but the real barrier right now in this country to our prosperity is in washington. and it's a series of very basic policy steps that we're just not taking. we all agree we should take them. there's no debate about whether they're good or bad idea. except in the extreme political world. >> there is more issue than just policy though. for example, there's a widespread view that our corporate tax rate's too high. that we have the highest rate as you said. and some say it ought to be 20%, 25%. the question is how do you pay for it. as soon as you talk about eliminating the mortgage payments or charitable contributions. then it becomes the political problem. and of course that's something that washington has not wanted

to deal with. until we get over those hurdles, i think we stay stymied. >> that may be true, larry. and for sure we've been stymied. our work on issues like tax policy, infrastructure shows that actually we've got nothing done. nothing. >> here's the question. everybody would love to find a way to repatriate a lot of this money. >> right. >> republicans for the most part would do it at a relatively low rate. democrats seem to be worried that if it's brought back, it's almost going to exacerbate inequality because it's not going to be used for jobs. that's the flip side of this argument. >> perhaps. >> they look at the last time this happened, the holiday that took place and they say they weren't able to recoup both the tax revenues that you want plus weren't really able to create jobs that ended up going to the investor class. question is how do you satisfy both sides of that? >> well, i think first of all on

the point larry brought up. there are multiple plans for how to reduce the corporate tax rate in a revenue neutral way. >> everybody argues that they want to do this but they want it to be revenue neutral. >> that's also assuming that the people that argue that a change would bring dynamic growth where you don't need to do it just adding up things that you actually spur economic development -- people will -- some people will say no, there's no evidence that revenue goes up when you cut taxes. others will say yes, there is. so there's -- you're back to another argument. >> i can tell you the business community is clear. this corporate tax rate is driving all kinds of disinvestment. and it's also -- there's a giant industry about tax avoidance and being clever and figuring out how to, you know, play the system. and we could shut all that down and just go back to doing business. >> think about what you're -- what other people are saying. because you're just channelling other people. it would exacerbate income

inequali inequality. if we brought it back here, certain people here would have more and that would be a bad thing. >> i've heard that -- >> why is that a bad thing? you're not taking from people and making them lower. some people -- even in the worst case scenario, some people stay where they are and other gos up. wouldn't it be better to have it anyway? you want to make sure -- >> trying to capture both. >> but you want to make sure nobody gets it? it's a stupid argument. >> joe, fundamentally we have to get the lower middle income americans with growth in their opportunities. we've got to do that. i believe getting investment into the u.s. and having american companies with that capital they can do acquisitions in the u.s. they don't have to do acquisitions abroad. >> if it's a way to get trickle down -- a lot of people saying it didn't work. but raising up somewhere, maybe there's a way we can force the trickle down once we expand everywhere. >> i do think there's a way.

with whatever we have offshore, some say $3 trillion. >> $3 trillion. >> under either administration, whoever wins, there will be an infrastructure fund. $300 billion, $400 billion over ten years. there will be in my view a tax on repatriation. say 10% payable over ten years. that will pass the democratic view. republicans will join if they can get a -- >> if it went to the investor class. all the people that have money in pension plans, all the people -- if dividends went up. if there are no jobs but only dividends went up. would that be bad? >> focused on jobs, jobs jobs. we got to press pause. >> guys, when we come back, retail sales, ppi, breaking economic data coming up. stay tuned.

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welcome back, everybody. in political news, republican presidential candidate donald trump will address the economic club of new york today that's at 11:30 eastern time. in the meantime, trump taped an interview with dr. oz that will be airing today. he gave medical records for his review. and clinton's doctor releases a letter saying she remains health

aand fit to be president. when we come back, retail sales and jobless claims. we'll bring you all the numbers and the reaction. stick around. "squawk box" will be right back. across new york state, from long island to buffalo, from rochester to the hudson valley, from albany to utica, creative business incentives, infrastructure investment, university partnerships, and the lowest taxes in decades are creating a stronger economy and the right environment in new york state for business to thrive. let us help grow your company's tomorrow- today at business.ny.gov

we are just seconds away from august retail sales, the producer price index, and the weekly jobless claims. the futures flight, take a quick look. up 46 points on the dow. rick santelli is standing by. the numbers, please. >> a litany of data. on the manufacturing, most realtime, down 0.199. we'll call it down 0.2%. double what we were expecting. let's go to second quarter current account balance, the cousin of the trade deficit. that moderated a little more than expected. minus 119.9 billion versus we were expecting minus 121. sales headline down 0.3%. worse than expected. we did have a 0.1% pop on the revision from unchanged to 0.1%.

if you take out autos and gas, it is down 0.1%. the control group, down 0.1%. these are dismal numbers. control group we were looking up 0.5% and negative revision our last control number, input into other data points which last look was zero. now stands at down 0.1%. initial jobless claims, they moved up a whopping 1,000 from 259,000 to 260,000. a lateral move on continuing claims. 2.143 million. august ppi, anybody? unchanged on headline. cooler than expected. 0.1% if we look at core food and important energy. that is close to expectations. here's where it gets interesting. if you look at the month over month exfood and energy, that sis up 0.3%. i take that back. up 0.1%.

on the trade ex-food and energy that is up 0.3%. so these data points are fascinating. if we take a long look on core, we are looking for 1%. that's indeed what we have. that follows up 0.7%. so when we look at the trade ppi, that is hotter than we anticipated. retail sales was much weaker on all metrics. initial and continuing claims was a push. and empire was weak. how did the markets synthesize all that? we're 167 coming out. but the short end dropped a couple of basis points. so maybe there's a fed implication. if you're able to imply anything with this federal reserve or any central bank. but we did move from 74 to 72. and we also dropped a basis point and a half. so it's more of a steepener

right now what's been doing on lately. throwing a bit of a fit. it's let the logistics of the newly packed positions all on the long side reverse and the dollar index went from virtually unchanged to down about a sixth of a cent. of course hinting but we all know that hibts don't really give us anything solid to put in the bank. fwook becky and the gang. >> all right, rick. thank you very much. again, a lot of data to be digesting. >> nothing going on. >> as rick pointed out, maybe these retail sales numbers make it even less likely that the fed raises rates. i don't know it has much to stretch into this. do you take away the most from numbers that jumped out. >> retail weak, but it comes off a decent july. the numbers for the quarter are running okay on manualized basis. we were doing what? 4%-plus in the second quarter. the idea is we're doing between 3% and 4% in the third quarter

it comes essentially off of lower gasoline station sales i'm looking at. i'm looking at also -- should be lower autos in there. yeah. minus 0.9%. you went up to 17.8 i think in august. >> came back down. still a decent rate. so if i were try to account it already, retail bad, claims good. philly fed good. empire state bad. it's kind of a wash when you look at it all. the thing that spooked a lot, thought the fed might hike this september. but then those isms came out. the ism manufacturing was weak, services were weak. looking to the empire state and the manufacturing and the philly fed to see if that was a fluke. you can't really tell here. it was a really sharp slowdown in the economy in august. if you listen to the isms.

>> actually went negative. fell below 50. >> it did. and it had been there. i mean, it was 51 to 49. it wasn't like the end of the world and there was no great expectation that manufacturing was going to power the economy. but we didn't want to see it detracting from the economy. that's the impression now. so you're not getting much in the way of definitive reversal or another way to think about what's happening. but the claims numbers remained very healthy which suggests the job market remains healthy which suggests the consumer and consumer spending should remain healthy. there's no big science to this in terms of how consumer spending -- we talked about that yesterday. so i don't see anything that kind of dramatically is off this idea that somewhere in the 2.5% to 3% gdp range is where we are for the third quarter. we'll see later on today. >> larry, what do you think? >> i don't think there's much happening in those data up and downs. my guess is we stay closer to gdp growth in the third quarter compared with 1.2% in the

preceding quarter. but most of those numbers as you said, steve, one offsets the other. so i think we're kind of in neutral. >> can i ask michael a question? you're the academic at the table. you can think more broadly about how to process data like this if you're the fed. and you're trying to make policy and this policy echoes out over months and years because we know the lags are available and long. >> no need to insult him. >> you know, that's a perjoritive. >> not to me. but a better way to make policy. this data come in and it suggests there's kind of muddling along is where it is. where do you set policy in this context? >> my interpretation is the u.s. economy is in a trading range.

bouncing around. it's been like this for years. and there's no really fundamentally good trend going on right now. and i think from a policy point of view. our economic strategy in america for the last five years has been monetary easing. that's all we've been doing. we've been depending on the fed. we've been hanging on janet yellen's every word. that's not the problem. the problem in america is we've got some fundamental weaknesses. we've got some tax issues. we've got some budget issues. we've got infrastructure issues, regulatory issues. until we start dealing with those, we're just going to b in the same trading range. >> do you believe -- michelle caruso-cabrera yesterday, we had an impassioned discussion yesterday. said the federal banks around the world enable the fiscal side to not do anything. do you agree with that? if the fed were to not -- were to tighten more, would that get

the fiscal side to do something? >> you know, i can't -- i have a hard time predicting optimistically that any side will get much done in america right now. you know, kind of given the gridlock we have. the lack of the ability of pass legislation. do you know the amount of legislation actually being passed now is at an all-time low? we're just not moving the needle. but i think the fed has allowed us to skate by without tackling things. >> so they should do less. >> i think they should tighten is a harsh word. force the issue. >> take your question in reverse. it's more in reverse as to who enables. in other words, the fed's been allowed to take this position. >> steve, that's the thousandth time someone has said that. i can't believe you're still arguing -- >> i still don't buy it in the sense -- not everybody in the

world says it. >> yes, everybody in the world says it. >> there's still the argument, joe, that since the fed can do something, it is mandated to do it. >> i'm saying it's giving a pass to congress and then everybody says to do a stimulus program or want deregulation taxed. and then be -- >> i agree with that. but joe, let's say -- >> is a pertard? that's an exploding box. you meant get off their tuck kus. yeah. that's right. i have seen jackass sit on a firework. sorry. >> that's fine. >> did you think that was going to go without being challenged? >> i had that wrong. >> patootie is fine.

>> ass i'll even say that. >> when you try to hurt someone bsh did not by your own rear. >> it's early. it's early. >> anyway. when we return -- >> better than making a patootsie of yourself. >> when we come back, following the fire storm, we're going to talk to kevin sharer about keeping pharma competitive. we're going to ask him what were amgen's over the last 30 years. he'll join us after the break. announcer: don't let e. coli

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welcome back to "squawk box" this morning. the futures right now, it's been sort of back and forth bit of a morning here. right now we're looking good. dow looks to open up much higher. and the s&p 500 open about three. it's come down a bit while we've been talking. we've been speaking this morning about keeping american businesses competitive. highlighted in a new record from harvard business school. one area that's recently taken heat for not being competitive enough is the pharmaceutical industry. joining us now is kevin sharer former ceo of amgen. and it's good to see you, but a case study in -- you know, in how the pharmaceutical marketplace is fundamentally

different for a reason than most businesses in terms of a competition in the market place because of the mir i can't do of patent laws. i don't even know how we talk about pharmaceuticals in that way. and kevin, in terms of innovation, i understand why it has to be that way. we out-innovate the rest of the world. but maher gins do stay awfully high while it's under patent protection. and it helps companies not necessarily patients sometimes. >> it's good to be with you. good to be back with my current boss professor porter and my old boss larry bossidy. >> that's right. at ge. and mckenzie and then amgen for a long time. and probably -- >> yeah, 20 years. but it's a complex environment. let me try to break it down a little bit. the three cases that have been

in the news mylan, valeant, and turring are actually individual cases. and none of them are representative of the true nature of things. we can talk about it if we have time, but what i'd like to emphasize is that we're trying to sort of balance a lot of tradeoffs. safety benefit innovation. and it's not easy. however, i would say that the biopharmaceutical market is much more competitive than is generally believed. for example, if you look at the biotech companies that existed when i started am amgen 20 years ago, virtually all of them are gone. and most of the reason is that they couldn't compete. we've also had a big shrinkage in the number of pharmaceutical companies. most medicines have competition. there's fierce blowback appropriately from payers and benefit managers, list prices are not usually what are actually paid. and so the real tradeoff is do

we impose some kind of price controls to meet the needs of the public, if you will. and what's the price to innovation. and price controls have never worked. nobody in the world has our innovation ecosystem. so i'd be very, very concerned if there were any heavy handed moves to try to change the key elements of what i'd call the innovation ecosystem which applies to more than biopharmaceuticals. i think the heart of american competitiveness. >> and i've watched amgen all the way through from the -- i remember when i was a stockbroker when it published. i remember amgen is the envy of the world in the way it's been -- it came from nothing, the way it's operated. here's the argument that can be made, kevin. and that is i watched amgen go from 1 dl$1 a share to probably $2,000. you as a ceo and as a company,

you fought tooth and nail to keep out competitors. and you were justified in doing so, obviously. but the market cap gains were, some would say, on the left at the expense of the health care system. and they didn't need to have 50%, 70% margins if there had been competition the entire time. maybe amgen wouldn't have gone from $1 to $2,000 but maybe the cost inflation of the entire health care would have been kept lower. >> i have a different point of view, of course. what i would say is that nupogen continues to provide enormous value to patients. amgen led the talk in the bio -- >> you're preaching to the choir. i understand that. you see the point i'm making. i appreciate that. >> and the money from nupogen and epogen went to fund over time which have resulted in any number of and we don't have time today. i could go through them.

breakthrough medicines. i think that the american people got a good value for what they paid. the social contract is high margins, high innovation, take high risk. and i think that's what it takes to innovate. >> but people looking for pure competition don't see it. and this is the road i'm just saying. you're preaching to the choir here. i agree with everything you said about amgen. it's the apple of our eye in this country in terms of innovation. but that's going to be the argument. that there's something called a fair price that isn't reflected when you have 17-year patent protection and the company benefits -- and also, kevin. you look at the pharmaceutical industry. they get a patent then do extended release. spend hundreds of millions of dollars to get new patent protection to extend it. >> i'm not going to defend every single thing that every company does to in some cases gain the patent system. we could probably agree on some of the details.

but i think in the main, a strong patent protection system is central to the system. and amgen was centrally involved in trying to strengthen the patent law and i'm proud of what we did. the tech industry wanted to weaken patents and we thought that patents really, really mattered. and in countries that don't have patents, innovation doesn't happen. >> zero. >> is it perfect? no, it's not perfect. but in the main, i think the experience of amgen and other companies is that the money that we make on the winners funds rnd and it's a risky business. the whole pharmaceutical industry has been working for 19 years to try to cure alzheimer's and that's expensive. that's where the cure's going to come from. i think it's a matter of degree, not a matter of fundamentals. >> kevin, it's good to see you. i noticed the other day --

>> good to see you. >> -- the ceo of allergan opposed a price ceiling on his products. and that was obviously well accepted politically. what do you think about that in terms of the health of the industry? of the industry? >> well, i think, larry, that there's danger in that. we have some biopharmaceutical drugs that are priced at astronomical levels to treat very, very small populations, as much as $250,000 a year for several thousand people populations. and that's a good bargain, because it doesn't cost the system much and those people otherwise wouldn't be helped. i think there are real issues in some of the cancer therapies that are $100,000 a year that provide what i would call invest marginal benefit. when i was in the seat, i used to think the speed of sound was a six-figure annual price. so i don't like price controls in any form. but i think the dialogue we're having nationally, and frankly, shaming companies which should

be shamed like mylan for what they did, is a good way to discipline people. and i think the free market and our noisy democracy is the best way to do it. >> kevin, i'm anything but your boss. but i was honored by that statement. i think, you know, if we step back, our health care system in terms of the value cost benefit is actually a competitive weakness of the united states. it shows up in all our surveys. it's just very, very expensive. it creates the high cost of doing business in the u.s. so i think you and i, we would all agree if we can bring down that cost and still innovate and deliver great value to the patients, that's a good thing. and i think part of that is competition in the pharma industry. but part of it is for the delivery system to raise the bar, to better measure outcomes, to understand, you know, which drugs really work and work the best way. >> i completely agree, mike. i think as you and i have worked

on this together that first fact is the biopharmaceutical part of the health care systems 10%, that's the 10% of the total cost. so if we're going after the 17% of gdp that the health care system represents, it's got to be where the dollars are. and we've got to shift from what i call a tonnage system, pay for activity, to a value system which means pay for results and outcomes. and i think that goes across the spectrum. i think what's going to happen over time is even in drugs safety and efficacy are not going to be enough. they're going to be table stakes value. we're going to have to get into the idea of value. it's a complex subject, but we've got to get there. i think the other thing is that rich shifting to providers is going to have to happen too. all these things are happening now. it's just slow and complex. but i think that's where it goes. pay for value. and i think it's risk sharing. >> kevin, thank you for your time today. we appreciate it. up next, we have jim cramer on today's top stories.

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let's get down to the new york stock exchange. jim cramer joins us now. we've had a little more to watch over the past week anyway, jim, right? >> yeah, look, we've got some

other factors. i think one of the things people are not focused on enough is what does apple's selling of its 7 mean for the actual demand. people have to remember people buy a lot of stuff on amazon and this is a hugely expensive phone. and people may think august sales were bad, and i understand that. steve liesman is right, august was weak. but when i look at these numbers, look what people spend on, i don't think this is a tradition like buying shirts at macy's. this is a new way to spend and people have a lot more money than -- disposable income because these phones are expe e expensi expensive. >> so are we going to have to do one of those october selloff, lows things or are we going to avoid it? >> i kind of think we have to. whether it be the fed or some event, i think there's just a lot of jitters, people saying i've made money this year in some of the high fliers and the stocks that are winning are stocks not necessarily sustainable right now because they're technology and commodity. they don't last.

>> jim, we got to go. see you at the top of the hour. >> hey, larry. >> he said hi. larry says hi, jim. coming up, don't miss senator elizabeth warren on "power lunch" at 1:00 p.m. eastern. opportunities aren't always obvious. sometimes they just drop in. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group: how the world advances. narrator:kubo: est place come on, this way.e... narrator: ...is in the forest. kubo: wow. narrator: so grab your loved ones monkey: don't even. narrator: and explore a world of possibilities. kubo: it's beautiful. narrator: visit discovertheforest.org to find the closest forest or park to you.

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we want to thank today's guest host former honeywell chairman and ceo, and harvard business school professor, gentlemen, thank you both. it's wonderful to see you. >> thank you. wonderful to be here. >> folks, that does it for us. make sure you join us tomorrow. right now it's time for "squawk on the street." ♪ strike it up, this band is going to play my tune ♪ ♪ strike it up good thursday morning, welcome to "squawk on the street." i'm carl quintanilla with jim cramer, david faber at the new york stock exchange. busiest day of the week for macro, retail sales, wholesale inflation, philly fed, we're not done yet. we'll get to all that. europe mixed. bonds are reacting to mostly disappointing data here at home. apple shares up more than 9% this week. iphone 7 m