2017 "squawk box" begins right now. ♪ >> live from new york where business never sleeps, this is "squawk box. good morning welcome to "squawk box" here on cnbc we're live at the nasdaq market site in times square, i'm andrew ross sorkin along with joe kernen and michelle caruso-cabrera is hanging out with us today. look at u.s. equity futures at this hour. they are in the green after what was a down day yesterday we'll talk about that more in just a moment. dow looking like it would open up about 30 points higher. 31 points higher s&p up a little more than 3 points nasdaq looking to open 16 1/2 points higher. let's show you what's going on overnight in asia. red arrows on the nikkei and hang seng. shanghai composite up marginally in europe, a different picture let's show you what's going on there. we have pretty much red arrows

across the board with the exception of the italian ftse. a quick look at wti crude right now, wti if you're buying it buy the barrel, you can do it for 48.91. >> hurricane irma one of the most powerful atlantic storms in a century. it's churning its way across the caribbean towards florida. kalee dionne joins us live from cnbc headquarters. what's the path? >> reporter: the path is west-northwest at this point the question still lies when will it turn to the north? that's something we'll be watching throughout the day. the latest update from the national hurricane center, it maintained its 185-mile-per-hour winds. it's just to the east-southeast of st. marteen, and conditions are deteriorating there. this will continue to move at 16 miles per hour that pressure continues to drop.

as that pressure drops, the winds will maintain that speed or continue to increase. everyone is wanting to know where is the track i don't want a lot of people to focus on where it will go as it moves closer to the u.s. at this point, there's still a lot of questions, but at this point it continues west-northwest towards puerto rico later on, u.s. virgin islands and then make its way to the north as we go into the weekend. everyone along the east coast of florida, west coast of florida, up into the carolinas need to start preparing. more updates throughout the morning. >> thank you very much hurricane irma is disrupting flights as it threatens the caribbean and south florida american airlines canceled 35 flights through tomorrow to several caribbean destinations jetblue and southwest are waiving change fees for passengers the nfl postponed sunday's game between the buccaneers and the dolphins the league is still considering whether to move the game to a

neutral site or just play it later in the season. let's get you caught up on some other big stories we're watching shares of hp enterprise are trading higher the data technology company posting better than expect the quarterly results. performance was helped by higher sales for networking equipment don't miss meg whitman, she will join the "squawk on the street" gang at 9:00 a.m don't look at me like that >> what? >> i like meg whitman. it's -- >> an ongoing -- >> no, no, no. >> we're kid ag rouding around faber 10, 12 years ago did a big ebay piece -- >> i want to hear from her >> that's why you're laughing. >> what do you think i want to hear from her today? >> about uber. because you love -- what >> i want to hear about the earnings, but what really happened >> you won't be doing the interview, but she won't say anything about that. >> i imagine david will ask.

>> i thought you were going to say daca >> i'm sure that the daca conversation will happen facebook another company in the daca debate being accused of inflating its ad reach in a new analyst note, pivotal research group says the ad reach is greater than the number of people that exist in recorded u.s. censusdata. facebook says its numbers are estimated at how many people are eligible to see an ad run. not to match the census or population estimates the pivotal analyst maintains a sell rating on the stock with a price target for $140 for year-end >> this is something that continuously plagues facebook. >> it plagues facebook, google, snap -- >> do they reach people or don't they. >> we will people come on and say the number -- you would think digitally we could understand the numbers better

than anything -- >> yet -- >> yet nobody believes the numbers. you might be right >> about what? >> it's a 404 billi$404 billion facebook you better be right, the numbers that they supposedly -- if there's ever extreme doubt about it, think about so many underpinnings of the market based on this secular shift towards things like facebook and google it would be a dramatic impact. >> finally, let's tell you what's on the agenda today on wall street. couple of nick reports to watch. july trade deficit numbers out at 8:30. followed by the august ism services index at 10:00. and the fed beige book at 2:00 >> if i look at you, you might start laughing you can't control yourself >> it's very difficult -- >> you're in the middle of a read i didn't even look at you weirdly. >> i know you.

i know you i know exactly what you're thinking >> that's what makes for a great -- >> it's like you're married. >> i don't have to explain to you. >> you don't have to explain to me i know >> let's talk markets now. joining us is karen cavanaugh senior market strategist from voya investment management 2$215 billion platform. karen, i'm not sure i like the weird little rabbits made out of dollar bills >> you don't like it >> i'm talking about it, aren't i? >> yes, you are. >> so it's working it's weird like the aflac duck any way, paul also joins us. normally fundamentals or technic technicals do you follow. >> we're more of a fusion approach >> fusion. that's cool. >> no rabbits. >> whatever -- so whatever

indicates something to you, you'll -- you don't -- >> we incorporate different valuations >> mid-august you went to 30% cash, you had been at 10% cash this is about as non-positive as you have been for the year when did you go fully invested >> we've been bullish -- since -- >> since november? >> the middle of last year >> we have >> through the election you stayed 10% cash. >> at times we got up to 10 15% ca cash in all honesty we thought the market reaction would be negative, but we listened to the market we don't try to -- >> so you really have been fully invested now you're less so >> every time i've been on this year, we've had apocalyptic headlines about russia, collusion. >> korea >> turmoil in the white house. but every time we have listened

to the market. what we've been listening to is the internal breadtbreadth, higl spreads, and every time we see a rally those confirm the rally. in the most recent rally, high yield spreads were wishy-washy, the percentages of stocks hitting new highs did not confirm. from three green lights to a red light, yellow light, green light. it's mixed it's not bearish, just more caution. >> that's -- i respect you for that karen, you're mostly fundamentals >> i'm fundamentals. straight fundamentals. >> did he at this point make you think, wow, maybe the market is on a little bit shaky ground at this point >> no he didn't. >> do you talk to those rabbits? >> i don't usually fundamentals look stronger than ever we came off a blockbuster earnings season with double digit earnings growth. looking at earnings froth for

the third quarter, which is a higher bar the global economics are moving forward. manufacturing numbers are good the consumer is still spending so i don't see anything other than the geopolitical tensions while they're concerns, they're always with us that's always something we have to deal with, natural disasters, washington drama but fundamentals are getting stronger so a get in the market no cash investment. >> yesterday mark grant talked about the trillions that invest verse put into the market, with people still moving so slowly in terms of tightening, it's still that simple. it's as simple as the liquidity globally >> investors don't want to believe it's as good as it is. it's not that often that we have global synchronization, where all the economies are moving in the right direction. it may not be rabbit-like growth >> i like that

smooth >> until we get those pro growth policies, we won't see that. that's not going to happen until we see washington do something, we continue see a lot of growth. that's okay. companies continue to move forward absent a lot of growth just a little bit of growth is all they need. >> is the market at risk if we think tax reform or tax cuts don't happen in 2018 >> i think right now, all the trump trade has been, you know, we saw some optimism last year t faded. i don't think a lot of tax reform is priced in expectations are low. the only thing is on regulatory reform that's what he can control that's been a positive overall there's very low bar to set. to karen's point before about fundamentals, valuations are a bit more than average now. we talked about this bubble in tech it's one of the few sectors that's the closest to the median over the last 20 years, about 2%

above its to-year median, the s&p is above since 1999 the utility sector has outperformed the tech sector so tech is in line with the market right now >> in your notes you do note that the market is somewhat expensive. but if we're going to stay down here at 2% -- if you use the ten-year where it is now, that would be the terminal point for fed funds, if that's where they stopped raising, that's really positive, isn't it >> yes >> valuations are allowed to be higher >> valuations, "a," you have to consider the alternatives, "b," has there ever been a bear market that started strictly because of valuations? no, you have to have another catalyst to get the move going in that respect, again, we have raised a bit of cash here because we're seeing internals of the market and listening to what the market is telling us,

overall the picture is not necessarily as dire as you see some -- on some of these headlines with north korea >> a recession can bring on a decline in the markets historically when you look at that ten-year we just put up, it really started to decline over the last -- >> the yield curve -- does that get you nervous? >> it is sending a signal that there won't be a lot of growth unless we have change, and there's been no policy change. but the economy and the market are not the same thing just because the economy is not rocketing up, it doesn't mean the market will go down. companies -- it's the companies that are making the money. when the companies are making money, then we're going to see the market move ahead. >> but that decline in yield does not signal to you, you don't worry about the "r" word yesterday. >> i don't worry about the "r" word it says there's a lot of geopolitical risk, washington drama. >> why doesn't it say it's global now and that everybody in

the world has lower rates than us so the money is coming here >> absolutely. >> who in europe -- who in europe has higher yields than us it's like countries that are barely -- they may not even be -- portugal and a couple other countries that we know, they're the only countries with higher rates than us why? >> because it's just a low growth global environment. >> mario draghi is drag his feefee dragging his feet. >> but what has really changed >> in europe we haven't seen structural change so therefore this is a low-growth environment until we see true change. >> i think people buy that ten-year when the sabres start rattling. >> absolutely. >> the dollar has not been getting strong on that, yields have been -- >> the trade you should have done the last six months is when

the yield hits 2.2, you buy. when it hits 2.1, sell just do that over and over again all -- >> because it's been in that range. >> your point -- >> we didn't know it was going to stay in that range. >> we haven't seen the dollar rally, you would normally see the dollar rally copper is outperforming gold we've seen gold rally a bit, but the dollar is down so far, you should see gold rally. if geopolitical concerns were a major worry, we would be seeing copper underperforming gold. >> you would think oil would be much more expensive with the dow so weak. that was before horizontal drilling >> if oil prices can't rally in this environment, where can they rally. >> all right karen, thank you paul >> thank you >> does the rabbit have a name >> val >> val >> really? >> i think it's val. >> vernon. >> there's a green one and an orange one >> the squirrel is green >> is that a squirrel?

>> there's a squirrel. he's for your now money. and the rabbit is for your retirement >> i thought it was a ferret >> a nice marmot who is your ad agency? >> we do -- we have our own. we do our own -- >> they do it in-house >> nice. >> maybe you should hire -- no, no i'm kidding. that's fine. we want to get to washington and try to understand the policy implications of what's going on over the past 24 hours the trump administration ending the dreamers program known as daca, but the president urged congress to enact the legalize the act. >> the president did decide to end that program but doing it with a six-month window so nothing will take effect until march of 2018. the president said that will give an orderly wind-down period and give congress the opportunity to pass new legislation to decide what to do

with the dreamers, those are those immigrants who came in as children who are now young adults and have been living in the country their entire lives the president speaking to the press yesterday said that he was compassionate towards those who had come in as children. >> i have a great heart for the folks we're talking about, a great love for them. people think in terms of children, but they're really young adults i have a great love for these people, hopefully congress can now help them and do it properly in speaking to members of congress, they want to do something and do it right. and really we have no choice we have to be able to do something. i think it's going to work out very well and long-term it's going to be the right solution >> a large group of ceos spoke out against the president's decision saying it creates an unnecessary wrinkle for their employees. jamie dimon put out this statement saying america is and

has always been a country of immigrants we should do everything in our power to attract the best and brightest because they make us stronger as a people and as an economy. we saw statements from mark zuckerberg and other business leaders echoing jamie dimon's sentiments there late last night the president put out this tweet which sort of clouded the picture a bit. the president saying congress now has six months to legalize daca, something the obama administration was unable to do. if they can't, i will revisit this issue not clear there what the president means by revisiting the issue, whether he would contemplate extending daca or something else at the six-month mark if congress has not done anything the president putting a lot legislatively on congress' plate that already has a lot to do with tax reform and a bunch of other issues that are must-dos for this fall. very busy agenda ahead >> while you were talking, i was looking at that tweet.

that's the latest information we have i think it's clear what te he means. if you want to put it in a positive light, it's like he's trying to move -- to get these guys to do their job, if they don't, i'll revisit the issue and i'll find some other way to help if he feels compassion for these people, has a love for these people while they're here, he's giving himself an out to not -- >> he is >> that's the way i saw it, too. >> as a matter of negotiating with congress, congress does not have a brilliant track record of accomplishing things, particularly this which is a contentious, cultural issue. it's a tricky issue. to give them six months to accomplish that is not a whole lot. >> president obama in doing it said i know i don't have the authority to do this, he had the

senate, the house and the executive branch for two years and did obamacare instead of immigration. >> couldn't get it done. >> then they did executive orders for this. >> they also -- obama had a number of democrats who wouldn't vote with him on this. he couldn't persuade his entire party let alone the republicans. >> which is very telling, right? >> sure. >> even the party that professes to be uber supportive of immigrants can't -- won't even extend political capital to them it tells you how contentious an issue it is. >> absolutely contentious. in some states more than others. you look at the landscape now and you try to figure out what is the road map for a legislative success story here you don't hear a lot of kumbaya and bipartisanship on capitol hill is there a bill that can be done maybe. maybe i'm just a pessimist

>> it's got to come through the whole reform where they move through the merit system this becomes something that's rolled into that you rethink the whole way we do immigration. >> that's a big lift >> republicans wanted a wall, too. they want to rebuild the wall. >> it's saying that will take years, not six months. you've already seen some prominent republican senators say if dwoe this, we'we do this doing this as a stand-alone. they're saying we'll add some other things to it could you see a deal where they add border security, wall funding, the dreamers, attach that and make everyone swallow hard and vote for it maybe that's the deal that gets done >> how much does this muck up the rest of everything else? >> that's what he's saying it's not getting done in six months >> they're struggling with tax reform the president has been at war with mitch mcconnell, in a war

of words with him. that was difficult now you added another very emotional national complicated issue on top of that it's very difficult to do. look at congress' track record, it's not terrific. >> eamon javers, thank you very much. when we return, the prospects for tax reform we'll tell you what the issues on the table are at this very moment and what it could mean for the investing community. we'll talk about that next we should mention tomorrow becky quick will be back she's going to have an exclusive interview with darren woods of exxonmobil that's tomorrow morning at 6:00 a.m.

president trump met yesterday with his six main advisers on tax reform one issue that remains in the balance is car rried interest, which some argue should be taxed at a higher rate than ordinary income but it may not matter as much as you think for the henl fu hedge fund industry. >> secretary mnuchin made it clear when it comes to carried interest that hedge fund manager also see their tax loophole disappear. it's less uncertain what will happen to real estate investors, but hedge funds no more carried interest for them. but hedge fund managers are not

worried. in fact they receive very little benefit from the way the tax is carried. their capital gains are already taxed at higher ordinary income rate in order to be taxed at the rate of capital gains they would have to hold the position for 12 months or longer which is a rarity in the hedge fund world the one loophole it is closing will do so regardless of the tax reform the irs allowed hedge funds to grow offshore for decades, so now that will end that loophole has them more concerned than anything related to carried interest >> i always heard about the carried interest being related to private equity and whether or not they would get to keep it. that's why it's so easy to get rid of nobody pays it for a hedge fund so they can be bold and say we're getting rid of it. >> from a political standpoint

it sounds great. in reality it doesn't raise that much revenue for the government. >> private equity on the other hand -- >> would >> right that's where they're not willing to take a stand. >> because the administration says private equity, venture capital, real estate, those investment fifrm menment firms s >> it's not even an industry, it's a partnership model >> right >> law firms, right? >> you could do it -- law firms more complicated in terms of how they pay it out. there's not a capital gain traditionally. >> the thing about these people, they're very wealthy, so they write big donations so that's why the stuff sticks around. >> exactly >> thanks. >> thank you. delivering alpha less than a week away. our keynote speak ser steer is nu mnuchin.

coming up, we will talk to kevin rudd, former prime minister of australia sgla later we will talk to george mitchell. as we go to break, a look at the s&p 500 winners and losers where the heart beats warm and true, that's texas. where we always welcome you, that's texas. where we always find a way, that's texas. ♪ ♪ i'm living that yacht life, life, life ♪

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becareally want to be there, but you can't. at cognizant, we're helping today's leading media companies create more immersive ways to experience entertainment with new digital systems and technologies. get ready, because we're helping leading companies see it- and see it through-with digital. welcome back you're watching "squawk box" live from the nasdaq market site in times square.

good morning welcome back to "squawk box" on cnbc look at u.s. equity futures. we have some green arrows after a down day yesterday the dow looks to open up about 18 points higher the nasdaq a little over 9 points the n hurricane irma is one of the most powerful atlantic storms ever measured. the category 5 hurricane made first landfall this morning blasting the island of barbuda with measured wind gusts of 155 miles per hour its precise trajectory is uncertain but it could pose a serious threat to florida this weekend. authorities in the florida keys have called for a mandatory evacuation of visitors to start this morning as florida braces for irma, frozen concentrated orange juice

futures are jumping. the sunshine state is the world's second largest orange producer florida was expected to produce more than half of the u.s. oranges and nearly half of the country's grapefruits. this was the commodity that duke and duke tried to corner the market in in trading places. you might remember the very end it was orange juice. >> can i tell you, so we turned on "trading places" over the weekend. >> never gets old. >> i thought the kids could watch that >> they're too young >> yes but once eddie murphy gets on there -- >> right >> we had to stop. >> he lifts them up and goes -- the legs come back i do have legs do you remember that part? he's on a thing. >> yes yes. i do remember. >> i can see and my legs are there.

>> yes yes. he runs into the private club, dan aykroyd -- >> that's when we turned it off. >> mortimer. morty. all right. >> more serious subjects north korea, what to do. we hear all the time the answer is through china we have to pressure china. china often seen as having the most influence on its neighbor north korea. our next guest says china's view is that the u.s. should ang septemb accept a nuclear north korea joining us is kevin rudd good to have you here. >> good to be back >> i'm glad to get beyond the "there's no easy solution, we must leverage and pressure china. blah, blah, blah >> you have that down well >> yeah. >> i don't think the chinese give a damn that the

koreans have nuclear weapons and they want us to live with it agree or disagree? >> bottom line, about 75% degree they have a baseline calculus, unless you can change that calculus in the chinese mind, we're steering in the direction of the north koreans having a permanent intercontinental ballistic missle with an ability to put a warhead on top. >> is there a way to change the chinese calculus >> you have to get beyond the narrow question of nuclearization or de-nuclearization to the broader question what is the future of the korean peninsula the chinese don't want a unified korean peninsula with a pro-american state and the possibility of military forces close to or within reach of the

chinese border this has been an abiding factor in chinese thinking since 1949 and centuries before unless you develop the grand bargain which deals with that from the chinese perspective, base klein strategic concern, we don't want hostile forces on our land borders, then frankly the nuclearization question comes a distant last >> did you have a question >> i don't understand how you will persuade them of that it requires a president to president conversation, which is let's park the nuclear question here, what do you need, china? the chinese would say, here's a list of five one, you're in a permanent state of war with the north koreans. let's convert the armistice into a peace treaty two, uncle sam, you recognize the creation of the north korean regime three, you, the chinese, russians, provide an external

security guarantee for the future of this regime and the north korean state into the future that is, we will sign an international treaty to that effect with this current regime >> yeah. that's if you don't want the nuclear option i'm just being baseline here finally -- what's finally on the list, they hate the fact that there are american forces south of the 38th parallel if you're deeply concerned, fundamentally concerned as an american national interest with about not wanting a na ing ing n nuke, agree to the withdrawal over time of american forces so the north korean nukes are at only stopped and gone. >> so that's never going to happen not only on the chinese side but our side >> these things have been rolled up once or twice before over the

last 20 years. it's not beyond the realms of policy of previous administration they may be less candid about it publicly all i'm saying is rather than elegantly summarized before the blah, blah, blah, blah, which will set us nowhere soon, or the real risk of a unilateral strike -- >> i don't think there's another option >> the other option is the one i just described, the grand bargain. the chinese will not deal within the parameters of the nuke question, they will deal with the nuke as part of the broader equation >> then you have to assume the north koreans would go along and give up nuclear weapons, i'm not convinced twhee hey would do th. they talk about libya and see what happened to moammar gadhafi. that's a big lesson to them. you get why they want nuclear weapons to survive >> i know what this place is

like it's a totaltarian state it's so totally controlled i remember staying there once in the guesthouse, this we people looking after me said how is he these days >> they didn't know. >> they didn't know he was put up against a wall. what's the baseline north korean interest regime survival. their calculus is i do that with a nuke or an enforcement agreement with two people who sort of like me, the chinese and russians and a bunch of people who don't, but could be cajoled into an agreement. >> if we do this agreement, does that mean kim jong-un can show up at the u.n. and make some speeches >> he can today if he wants to >> interesting >> will he come along? depends. the bottom line is -- the bottom

line is i'm going to fundamentals here. you either accept them becoming nukes or what i think is increasingly a possibility, a u.s. calculus in the direction of a unilateral strike, not a probability, or the grand brar gain everything else is singing in the breeze >> the "wall street journal" went through a number of things that could be done, including making it clear to would-be coup plotters in the country, if they achieve it they will be recognized is that something worth mentioning >> i can neither confirm or deny it what goes on in terms of s subterranean activity, that's a matter for different administrations. i have no idea is the honest answer to that question. look at the way the north koreans have handled would-be

c coup noters before >> there was some cyberstuff yesterday. i don't want to bring it up. i don't want them to know that we know. >> the question is -- >> one of those loops. >> given the missiles that went up and came down earlier this year, not most eventually -- >> will you say what it is they'll know that we know. >> do we believe that we have more enhanced technology that we have not been using on these most haventhings and we could otherwise, and we are holding back now because we want to use them when something worse tra transpi transpires. >> that's beyond my pay grade

and what i know. >> why couldn't we be right? >> the americans are a repository of military technology i don't know how much has been tested in the field, how much has not. i do think we are faced with a hard wall of a geopolitical rally head ning in one direction >> the dnc had a bunch of private servers. >> mr. prime minister. >> thank you >> may your thumb improve. >> thank you i know, paranecia. i tried to order some -- with a wine sauce >> can you going to show that thumb off to the audience? >> no, no. no i love telling but it. >> if you want information from someone, start with the fingernails. >> are they going to pull the numb nail back >> with a scalpel. it's unbelievable.

it's like -- thank you, sir, may i have another coming up, our guest at the top of the hour, larry bossidy we'll get his take on the trump administration plus we'll talk tax reform and the north korean threat with george mitchell. tomorrow, becky quick will be back she's bringing us an exclusive interview with exxonmobil ceo darren woods that starts at: 6:00 m.a. tomorrow stay tuned, you're watching "squawk box" on cnbc i count on my dell small business advisor

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the trump administration will unveil revised guidelines for self-driving cars next week in michigan. transportation secretary elaine chao will reveal the new rules at a self-driving testing facility in ann arbor on tuesday. automakers criticized guidelines issued by the obama administration. couple of piece of auto news nissan unveiling a redesigned version of its best selling vehicle, the leaf. the new model is a longer range version that can travel 50% further on a single charge it features advances in autonomous driving technology.

the leaf is the world's best selling electric car, people don't often talk about it, because people talk about tesla often, but its range falls short of those offered by tesla and gm. the new model is $5,000 cheaper than the tesla model 3 >> model 3 that's the new one >> that's the new eest one. you know what i'm doing today? >> what? >> taking a test drive >> you ordered one >> no, i know somebody who has got one, i want to check it out. >> you are thinking about buying one. >> no we talk about tesla all the time i want to be more informed >> might have helped if you bought stock or made investments in your past life, that might have been an idea to get experience there >> it would have >> what crappy thing did you buy? some minivan deal? what did you finally settle on

i told you what to buy, you didn't what did you settle on. >> we just have a highlander three rows >> that's not bad. that's good. >> kids love it. i thought you went for the hi pilot. >> the honda pilot yeah >> we were thing minivan initially. the pilot hat coolest fes the c feature on it, a camera, where if you switch lanes, you can see -- >> you can see your blind spot >> shows the camera. the camera turns, so it's looking up it's interesting >> okay. all right. >> sorry side note. >> red sox story >> he has driving experience now. the highlander >> why >> it's cheating -- >> it's apple. it's the red sox >> boston red sox have been caught red handed. "new york times" reporting that major league baseball found that the sox cheated by stealing

signs during several games against the yankees by using an apple watch. investigators learned that red sox trainers got signals from the video replay staff and used a smart watch to relay the signals to the players it is legal to steal signs, but teams cannot use electronic devices to do so the red sox have admitted using the apple watch to do it >> two things you can't do, you're not allowed to use cameras, the replay, and then transmit the information using other devices. what is it about boston? >> i know. >> a lot of winning going on up there, too coming up, when we return, softbank investing billions of dollars in online sports the fa nnatics executive chairm will join us next.

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welcome back to "squawk box. japan's softbank investing best 1 billion in fanatics, which is an online retailer of licensed sports merchandise joining us right now to discuss that deal for the very first time and so much more, michael rubin renowned entrepreneur and chairman of fanatics we talk about softbank and massson constantly how did this deal happen

>> masa was my original investor they put $100 million in the business in 1999 we sold the business to ebay for $2.4 billion in 2011 so we've had a great longstanding relationship with masa for nearly 20 years now when they started division fund they were looking for really disruptive companies they made a lot of money in alibaba and looking for kind of what's next in e-commerce. >> do you think of yourself strictly as an e-commerce company? >> we think of ourselves primarily as an e-commerce company. we're the largest sports licensing company in the world our primary sales comes through e-commerce and we're really, i'd say the largest scaled e-commerce company we sell most of -- what we sell is mostly what we make >> there's a lot of conversation about what softbank is doing and what this fund is doing whether it's going to ultimately the prices, what he's really after what do you think this is about? >> what i've always learned with masa and ron, they really figure out what's going to win and then

they go after it i think that's been a very great outcome for them historically. for us they were not easy from a valuation perspective. i think we had even bigger expectations we knew they'd be a great partner for us i definitely think they think of strategic and it's going to be huge they're going to figure a way to get it done >> i was going to say, so i typed in baseball jersey you sell these by imaginistic, the company you own. >> absolutely. >> i typed in baseball jersey. fanatics didn't come up, dick's sporting goods did come up and they are selling majestic jerseys. >> absolutely. >> is that the way you compete against amazon which is you have to be completely vertical so that way everybody is selling your product, not just on your website? >> it really is. for us, we believe amazon and alibaba is two incredibly successful e-commerce platforms but they're selling other people's products. for us, companies primarily vertical most of what we sell, our own products, and then we lfrage that same inventory to all the retailers as well. >> could you ever see a day where you'd sell on amazon

>> we could absolutely look, amazon is an incredible platform for us, the teams are looking to build their direct-to-consumer businesses whether it's media, whether it's e-commerce -- >> how often do you find your product on amazon? >> we find them on amazon. >> and you don't want it there and then how quickly do you get it off >> it's a daily game of whack-a-mole you know last year certainly counterfeit was a huge problem with amazon. i think that was widely reported >> right >> we sent hundreds of thousands of takedown notices to amazon. amazon wants to do the right thing. they're a good company they're also a massive platform that sells other people's merchandise. for us the leagues and teams want to sell it through their own platform >> weigh in on this one. your board members, does the uco -- >> he's incredible i actually thought dara is the perfect person to run uber he's got a great mix he's a great brand leader, he understands technology he is exactly what uber needed my prediction is he'll be incredibly successful.

>> do you think softbank is ultimately going to buy uber >> i have no opinion on that i think that what i do think is that softbank released something strategic and there's a good deal to get done they'll generally find a way to do it. >> thank you for coming in this morning. >> thanks for having me. >> coming up guest host larry bossidy weighs in on the worst day for stocks in nearly three weeks and where markets could go from here. plus a live update from florida where residents are bracing for hurricane irma this is the strongest storm in a decade "squawk box" will be right back.

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good morning u.s. stocks are in the green following a major average's biggest one-day decline since mid august tracking hurricane irma.

the atlantic's most powerful storm ever makes landfall as cleanup efforts from hurricane harvey continue. plus, netflix and laugh? the streaming giant is making fun of itself with mysterious bill boards popping up all across the country we'll tell you what netflix was up-to- it's wednesday, september 6th, 2017 and the second hour of "squawk box" begins right now. live from the beating heart of business, new york city, this is "squawk box." good morning we're at the nasdaq marketsite in times square. i'm andrew ross sorkin along with bill kernen and michelle caruso-cabrera becky is off today guest host larry bossidy, former honeywell chairman and ceo, also a cnbc contributor we're going to have a lot more with larry in just a couple of minutes. first a quick check on the

markets. things are looking good this morning after what was a rough ride yesterday the dow looks like it would open up higher about 22 points higher s&p 500 up a little closer, 2.5 points right now nasdaq looking to open about 12 points higher. show you what's going on in europe, as well. a little bit of a different picture over there red arrows pretty much across the board with the exception of italy. but, there you have a little bit of snapshot of where we are. a couple headlines dallas fed president kaplan urging patience on future rate increases. his biggest concern the lack of inflation. he thinks the higher labor force will move inflation back towards the fed's 2% target. kaplan is a voting member of the fomc for 2017. so what he says matters. also interest rates also a topic of discussion in europe. deutsche bank's chief executive is calling for the european central bank to end the era of cheap money. he says the ecb's accommodation

now leading to bubbles in more parts of the market. and it's beginning to look a lot like christmas already, september, walmart kicking off the holiday layaway plan that allows customers to put down as little as $10 down, hold items that cost $50 or more. >> no rush >> we know it's coming there's no stopping it we don't need to start in september. let's finish with summer i'm not ready to turn the summer stuff in yet broader markets following yesterday's market sell-off, dom chu is here and you commented to me the world did not end >> the world didn't end. >> did not end yesterday but, it fell apart in the morning and got a little dicey there for a minute and i looked at the trading, in the vix, and it was like up 35%. >> yes, to like 12 or 13 >> then all of a sudden -- it closed like, up like 10% or something. so, things stopped >> i mean -- >> i'm not laughing because i

think it's humorous about what happened with the markets yesterday. i'm laughing because the way that things have played out so far this year and arguably in the last is that every time we've seen a dip the dips have gotten littler and littler and littler along the way. and the last time, you know, we had the missile launch over japan. the intermediate range rocket, dropped in the ocean, we thought the world was going to end then and it didn't. the market pulled back all of 1% by the time it was done. if you look at the play by play for what happened yesterday, it really was generally risk on, risk off if you take a look at the sectors overall. it was energy leading the way higher not something you'd expect to see except we'd have some event driven issues with oil prices. and oil prices are now higher again --ish because refineries are starting to come back on energy prices, oil prices liar, energy was up. generally it was the, consumer staples, utilities and dive end dend plays that started to do really well yesterday. materials, financials. financials you can understand why. interest rates go lower. people are worried about bank profits. all of a sudden that's the story

that develops in the marketplace. if you look at the dow, because the dow was the real standout. we don't see 200 plus point moves in the dow that much anymore. even though i know mathematically at a 22,000 level, 200 points isn't huge less than a percent. goldman sachs, united technologies and travelers, you can see those, we're putting them in realtime right now because those three stocks were the ones that contributed the most in the declines in the dow yesterday from a point perspective. >> okay. >> three of the more heavily weighted ones. the one thing i would say that many strategists and traders i speak to talk about the credit markets being one of those indicators for whether the world is going to end. and right now, if you look at certain parts of the credit market, yes, we have seen a flight to safety in treasury yields but we haven't seen real signs of stress yet in places like the corporate bond market. so take a look at a couple of etfs one of them tracks junk bonds and one tracks corporate invest mate debt, those particular etfs, i'm using them as proxies for sentiments, right? you haven't seen a huge sell-off

in these parts of the market in corporate credit isn't doing that poorly and there's not a lot of stress there. so, as traders come in today to assess whether or not they think think is the beginning of that long-awaited 10% correction in the markets, what they're not seeing right now is a huge pullback in the corporate bond market that would be indicative of some bigger pullback in the works. so that's the state of play as we see it right now. >> okay, dom, thanks >> you're very welcome >> stay here for a second. >> joining us jim iuorio of tjn institutional service and cnbc contributor. and u.s. small and midcap strategist and managing director of jefferies and welcome our guest host larry bossidy is here with us as well. just talking about the vix early on that's still a pretty good indicator of fear, and what was the low, we were down 260 at one point, 270 that's when the vix kind of peaked over 14 by the end of the day it was so

orderly that the vix gave back most of the gains. what do you expect from here >> well, when it's at such low levels the upper moves are explosive because everybody seems to be showing the vix. it's become a common joke on social media and how everyone is short the vix. so when the move starts to go higher, you know, it's activated by market position a couple things trgs to me early in the day you saw that big move in the one month t-bill we know now in retrospect that's mostly because of when the funding date lines up, and could be in the government shutdown. that's fine. but it kind of caused a little bit of extra panic at the time then it's the fed to the rescue again. when neel kashkari comes out and says that rate hikes have already caused real harm in the u.s. economy, that just is staggering to me what he's saying is not only should we not hike rates more, they're probably too high to begin. it always seems like nobody at the fed wants to be sitting in the driver's seat when there's any sort of meaningful correction in the stock market and to me that's weird but it's like, they're just saying that the fed put is still

in >> so you saw -- i didn't see that yesterday there is some angst around the short-term market? >> yes -- it was short -- >> you guys were reporting on this >> yeah. and -- after nine, right >> might have missed that. >> was it during power lunch when did the tennis start yesterday? >> 11:00 >> oh, that's right. >> funny >> oh. >> didn't matter anyway. you just mention we're always -- that drives me nuts. we are we're always waiting for the 10% correction like my wife has been waiting for a 10% correction why can't we just enjoy? >> because people like stocks on sale they like the sign at walmart that says 10% rollback and buy your stock >> the last five years it's been like once or something >> you did also have in 15 and 16 you had a pretty bad bear market, you know, that started

in late '15 and then went early '16 around china and global growth now the thing is that you're looking for a 10% correction, but yet you've got economic indicators, globally, that are doing much, much better. so what you're seeing is that companies that have overseas exposure, that's where you're seeing much better earnings growth when you look at the earnings, the overall earnings numbers, for at least the large cap space, they've been actually very, very good. you know the thing that we're cautioning, and we're looking for a pullback, as well, but what we're looking for is the fact that earnings for smaller companies were flat for the second quarter in a 3% gdp environment, we should be seeing earnings growth closer to double digits. so is it more the dollar, the weakness in the dollar, or is it better global growth that's giving us the big differential >> you'd love to be at t.j. right now wouldn't you >> corporate profits were up 11% in the second quarter. that's not too bad for 15% in the first quarter.

anyway here's the question, with the billions of dollars going into etfs, are they stabilizing the market are they going to accentuate, accelerate any correction that might occur? >> i think right now what you see is stabilization, even though on bad weeks you had inflows into passive investments, and dom you were talking about the high yield market one of the things that i look at on a regular basis is the indicator around high yield and how much money is coming in to high yield and that has kept, you know, that has kept the yields so low because each and every week that 10-year starts to fall you see money coming in to high yield vehicles, because they want yield investors want yield >> hmm >> when it comes up, i remember back when i -- i don't remember, i remember reading the book business adventures about the creation of mutual funds, and everybody asked the same question about mutual funds, that they're asking now about etfs do they stabilize? or do they make any kind of big move or better in one direction or another

>> right >> i don't know the answer >> jim, go ahead >> there's nothing that i'm worried about yet. if you look at -- if you want to see that there's a market position imbalance that's going to cause this big sell-off, which is what we're kind of implying with this, we got a couple different opportunities over the last week alone these global headlines come up and we gethit hard and then al of a sudden people realize, well, if we're in an environment where the euro is a safe haven instrument, well then the u.s. stock market doesn't look so bad. and i believe when we talk about these 10% corrections, we can look for all the fundamental reasons we want but one thing that's key to it is people all rushing to one side of the boat. people just piling in. and market position is when risk comes and slaps you in the face and you say wow, i have too many stocks i don't see that happening yet i think there's opportunities for that and it didn't happen. >> jim, thank you. steve, thank you >> larry's sticking around >> dom you're working all day >> that's why you guys pay me. >> that's right.

pay you well, too. you can buy really nice -- >> i aspire to be like you guys some day >> maybe just keep plugging. that could happen. >> hurricane irma now one of the most powerful atlantic storms in a century. and it's making its way across the caribbean toward florida president trump just tweeting, watching hurricane closely my team, which has done and is doing such a good job in texas, is already in florida. no rest for the weary. let's get to jackie deangelis. she is live in fort lauderdale where preparations are under way. jackie >> good morning to you well, certainly you've got residents and business owners here bracing for irma. even though a lot of people we spoke to have said they definitely know it's safer to leave, many of them are making those preparations to hunker down and try to weather the storm. here at this home depot, which opened about an hour ago, lines were forming just before the 6:00 a.m. mark that's because a shipment of generators were coming in.

people are trying to even buy those high end, higher ticket items, those generators cost about $800 a pop and they sold out in the first few minutes but you can see behind me, people are stocking up on wood boards for windows, sandbags, buckets, water, all kinds of supplies gas cans as well you can see this line here is forming as people are stocking up on these boards these boards cost a little bit more than $20 apiece and people are walking out with stacks of them a little bit of mayhem in this parking lot as people are getting ready. there's definitely nervousness, and tension in the air here. the residents are saying even those who are local and have lived here awhile, that they're taking this more seriously than storms in the past just driving around the town, as well anecdotally i can tell you the gas stations were packed people are making preparations to get out of here not everybody. but we're monitoring the situation closely as things are flying off the shelves here, guys >> busy stuff, jackie. busy

>> okay. thank you for that we will see you in a little bit. still ahead on "squawk," a sober mind on what's going on in the world these days former senate majority leader george mitchell is goingto be here a lot of geopolitical headlines to talk to him about, including the rising tensions with north korea. plus is a bipartisan tax plan in the cards? or not democratic senator heidi heitkamp is going to be traveling with the president for a tax focus speech today we're going to talk to steve forbes about the trump agenda. that's going to happen at 7:40 eastern time and in the next hour, rock & roll hall of famer sam moore sang at president trump's inauguration and now he's out with a new album we're going to talk to him about the business of music at 8:50 a.m. eastern time. stay tuned a lot more coming up on "squawk" in just a moment

welcome back to "squawk box. a couple of stocks to watch. shares of hp enterprise trading higher the company posting better than expected results the performance held by higher sales for its networking equipment. and a programming note, hpe ceo

m-e-g whitman. >> meg whitman >> will join the "squawk on the street" gang at 9:00 a.m. eastern. that is a cnbc exclusive >> why didn't you just introduce her as almost-uber ceo -- >> that's all you want to talk about. you and -- don't you want to know about -- >> it's not gas up >> the soap opera that is -- >> why don't you want to know about the nuts and bolts of hewlett packrd enterprise. >> i do. but i also want to know about the drama. >> okay. check out the shares of dave and buster's the sports bar second quarter revenue missed forecasts the company is also trimming its full year earnings and its same store outlook for big loss, 6% pullback today >> we're going to talk to a guy who is not into the soap opera >> no gossip, really >> i introduced him multiple times this morning as the sober mind >> i know. we're all sitting around here drinking or something. so you're sober?

>> larry's sober >> let me just properly introduce the segment and then you can talk about who's sober investors are closely watching the situation with north korea joining us right now is former senate majority leader, very sober man, george mitchell also served as u.s. special envoy for the middle east peace under president obama. had an op-ed just out head lined trump is hurting his presidency by continuing to go it alone we got a lot to talk to you about. want to start with north korea because i do want to get to the op-ed. but i think we're all trying to make sense of it trying to understand it. and trying to understand where it goes. >> right >> what do you think >> north korea >> yes, sir. >> no good answer. >> no good answer? >> no good answer. no good answer i think it's likely to end in talks. because the downside of military action is so high for both sides. and it's hard to predict because president trump says he

wants to be seen as unpredictable. he regards it as an asset in negotiation. he's publicly said that many times. >> tom friedman said it was an asset yesterday. you agree with that? >> hmm >> tom friedman was on our air yesterday, he said he thought it was an asset -- >> a little bit of crazy is good here >> well in some cases it might be but there's a strong argument made for consistency, also, depending on the situation in north korea, of course, there is a leader who is unpredictable, i think, by his actions. whether he's actually said it's his policy or not. so it's hard to be certain in predictions. but i think that the likelihood is, some form of discussion will follow >> we had prime minister rudd, former prime minister rudd on the program in the 6:00 hour and he said we may just have to live with a nuclear north korea, and that that may be the ultimate answer and that we may have to work that out with china. could you imagine that moment? >> several american presidents have said china's the answer the problem with that is that

china's long-term interest is the exact opposite of ours in the short-term we both want stability, we wish this guy would calm down. but in the long-term, we want a unified korea, and a democratic regime and that's the last thing that china wants. so, we can't look at china to solve this problem for us, because their interests diverge so strongly from ours in that regard >> that was part of prime minister rudd's point, look, you've got to figure out -- you would have to give up -- the americans have to give up the dream of this unified peninsula in exchange for a denuclearized north korea to answer to the chinese. and i don't know that we have -- not for the last 40 years has an administration been willing to go that route. >> that's right. and i think it's unlikely that will happen in the short-term. the question is, if the decision is between military conflict and discussions i think it's going to end up in discussions, because as steve bannon himself has pointed out, there is no good military option for the

united states. >> then why for 40 years have we listened to presidents say we will not tolerate a nuclear north korea. and yet now what we've discovered is all of these former diplomats, just like you, behind closed doors, or as well, military action isn't an option, so it's never really been on the table, and yet everybody, you know, for yees bangs the table, we're not going to tolerate it we're clearly, everybody is willing to tolerate it, it appears. >> are you surprised that a democratic politics sometimes political leaders say things that they don't really intend to carry out? are you really surprised >> no, but people get, i think, tired of it when finally everything is said out loud honestly, why did we go through this charade for so long >> well, the fact is, of course, that this is carried over through several administrations. actually it's been a policy since the korean war in the 1950s. and we may have to rethink the whole issue of u.s. relationships in the region. but for now we have a strong presence

we have a strong alliance with south korea and many other countries there are dependent upon us. and i think that we should maintain a very active and strong presence in the region. >> senator, there's been some discussion that one of the things the united states could do was to take -- impose sanctions on other countries who are trading with north korea is that a viable alternative in your mind? >> it is, but like most policies, if carried too far it produces a highly negative result the principle trading partner of north korea is china do we embark on a trade war with china? what's the impact of that in our society? so you have to think a little bit long-term before you adopt a policy like that the reality is, as i said at the outset, there is no good answer. there will be answers, but none of them are good and i think it will end up in discussions between the united states and north korea >> i've got to touch on dreamers, daca and taxes real

quick with you on the dreamers issue, do you see a solution to this >> well, i hope that congress will do the right thing. and to adopt legislation to protect them it would be very difficult, as you know several attempts to have prensive immigration reform has failed, including in president obama's tenure, including president bush's effort. i hope they could carve out something on the dreamers. put that in to law i think it's a very cruel and unfortunate decision to end the program. >> real quick on taxes we're going to be talking to steve mnuchin next week and on "squawk box" next week mr. trump and mr. mnuchin have been holding the line on the 15% corporate tax rate >> yeah. >> it feels like everybody else has already moved to a 20% to 25% tax rate what do you think is realistic >> i think they're holding the line for negotiating purposes because if they give up on 15% too soon it will end up even higher i think there's very little

likelihood it will end up at 15% and more likely in the 20 to 25% range. i do think that corporate tax reform should occur. both parties agree that the current corporate tax system is outmoded, contains -- >> the democrats are actually willing to go there, and give the president a win? >> yes, if it's right for the country, of course they've been ready on many other things why haven't we had an infrastructure program -- >> you really think politicians always say things they really mean >> let me just -- >> i just ask the question >> you think they really mean -- >> i just ask the questions. >> let me just say this. joe, why haven't we had an infrastructure program for five years democrats have favored it president trump says he's for it and yet he has yet to propose a bill >> nobody knows how to pay for it either. >> that's right. it's a problem but he doesn't care about paying for a lot of other things. >> the wall. >> so i think there will be corporate tax reform and i hope it does occur, because it will

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good morning welcome back to "squawk box" right here on cnbc we're live at the nasdaq marketsite in times square a couple things to tell you about. mortgage applications, they rose 3.3% last week according to mortgage bankers association both new purchase applications and refinancing activity increased. the average 30-year mortgage rate fell five basis points to 4.06%. that's the lowest since last november we're also going to get a read today on the nation's service economy this morning coming out with the august nonmanufacturing index that's at 10:00 eastern time looking for a reading of 55.3 -- 55.3, which would be an improvement from july's 53.9 also the fed is coming out with the latest beige book at 2:00 p.m. eastern time today. central banks region by region assessment of the u.s. economy steve liesman is in washington and he's going to have the information as soon as it is out.

we're covering houston there's a rush to get inside and strip properties of sheetrock, insulation and carpeting before mold sets in, and materials run out. morgan brennan is live in houston. morgan >> hey, michelle, that's right so the race is on to get homes cleaned up before the mold, and any other types of damage can set in now just to put this in perspective. we're talking about the difference between several thousand dollars worth of cleanup, and hundreds of thousands. so take this home. this is a four bedroom suburban home it had about six inches of flooding in here but guess what days out from all that flooding it's already starting to see some secondary damage on the second level of the home so this is one of thousands of properties that crews from all over the country for servpro are coming down to houston, being hired to work on >> obviously we're trying to stop the clock with any additional damage. the more the moisture sits in the home, or the business, or

any kind of structure it's going to saturate and move into already unaffected areas so, we really do want to get to it as quickly as possible. >> so about 8,000 people from companies franchises are here in houston. we even shadowed a crew from long island as it cleaned out a $30 million sugarland mansion that sustained damage from a harvey related tornado this work can cost well into the thousands of dollars it is paid for by insurers, businesses, and in many cases down here the homeowners themselves there's even some fnzing options available. in this home the owners did have flood insurance policy so some of this bill will be covered by that policy. but guys, servepro says that their waiting list is growing every single day and so many contractors here from out of state and hurricane irma barreling toward the east coast now, i suspect there's going to be a lot of tough questions that some of these contractors are going to have to ask themselves about where they want to be located in coming days

back over to you >> good point. they're there now, more work looks like, unfortunately. >> what time do they start, morgan it's 6:30 in the morning there they're working long hours, i bet. >> they are working very long hours. they're doing dozens, if not hundreds of homes a day. these different crews. and just to tell you -- i mean, i don't know if you guys have been to houston before but it's very humid, it is very hot here. and the guys here are telling me you've got about a 72-hour window from the flood -- in a case like this with flood damage to when it starts to really seep in to other areas of the house, and really do some more prolonged, sustained damage. so as i mentioned, six inches of water here, but they're already starting to see the impact in other parts of the house some of the doors upstairs are not shutting there's going to be a lot of work that has to get done on a lot of these homes as they sit in this heat >> all right, morgan, morgan brennan. in houston united technologies shaking

things up in the aviation sector announcing a mega deal to buy rockwell collins our guest host larry bossidy competed with united technologies while at honeywell. probably not totally surprised by this deal in the works for awhile make sense >> you know i guess it does make sense for utc. i think rockwell collins was a more significant competitor on a stand alone basis than they'll be with utc. i think customers don't like these big suppliers, because they lose their power in terms of exercising of price so i think it's a good thing for honeywell indirectly in other words i think they'll be the recipient of more business, because customers, big customers, boeing and airbus are going to be concerned about the size and the potential power of new utc. >> what was it was it a defensive deal? an offensive deal? was it a deal you do when you're growing gangbusters, or a deal you're doing because you're not growing gangbusters? >> number one, honeywell took a

shot at utc last summer and didn't go any place. they've got a great business in elevator, turns a lot of cash, no growth. they think the aerospace business is going to be a place to grow for the next decade. this is an addition that makes a more aerospace company than industrial company, and they paid a huge price for it but they seem to think it's the right thing to do. >> greg haig came in it was a rude awakeningiblely >> the company wasn't performing well >> he had to clean that up >> he did. he was -- he was the cfo at the time he took the job but his predecessor never showed a penchant to go to work so that turned out to be troublesome. >> wow >> i remember that >> he said he could -- he could manage the company from monte carlo or something >> well, at least from a distant location but hayes came in and obviously looked at the strategic options and this was one of them

but, as i say, i don't think it hurts honeywell. >> are you just a homer? >> maybe but also boeing wants to get into avionics business, as well. so if they were to get in the business, it would be difficult for both honeywell and utc >> the stock took a hit yesterday. is that more than the classic arbitrage we see when you have a deal where the acquirer goes down and the prior company goes up or is there more to that? >> i think a lot of people were surprised by the price it's a big price 17 times ebitda. and it includes debt so they paid dearly for it and i think that probably had some influence >> $20 billion and it's the biggest merger ever in aerospace. >> yeah. >> that's weird. is it because it's hard to pass muster with regulators >> think media think media. >> think pharmaceuticals it's multiples of that just -- >> joe, there were 20 basically aerospace companies. there's now six. so with all the dispersion they were smaller

>> goldman sachs supposedly pushing boeing to bid for rockwell collins, a report in "the new york post." >> i think that's a possibility. i don't know that they're going to be willing to match that price. but they'd like to get into the avionics business. and this property is now in play but nonetheless, i think the prohibitive price will be something that's -- >> so you wouldn't have done it if you were running utc? >> depends, maybe i would have done it. because i don't know what the other options are. i would have had trouble with the price. but, strategically it may be sensible >> all right, larry will be with us until 9:00. >> am coulding up, president trump taking his tax message to north dakota alongside the state's democratic senator. we're going to talk about what it means for the road to reform with forbes media editor in chief steve forbes there he is in the green room. as we head to break check out the futures at this hour turning around compared to yesterday.

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and i get back to business. ♪ we cut the price of trades to give investors even more value. and at $4.95, you can trade with a clear advantage. fidelity, where smarter investors will always be. president trump heading to north dakota today to tout tax reform with a special guest, democratic senator heidi heitkamp president trump tweeting this this morning, quote, we'll be going to north dakota today to

discuss tax reform and tax cuts. we are the highest taxed nation in the world that will change we go to ylan mui who is joining us this morning from washington. >> good morning, andrew. the president has got carrots and sticks and today he's using a carrot on senator heidi heitkamp she won't actually be heading to her home state of north dakota with the president, flying with him on air force one and she is the first democrat to join the president on his tax reform pitch but she isn't the only defection so far ohio congressman tim ryan, who is a potential presidential candidate in 2020, broke ranks with his party last week, coming out in favor of cutting corporate taxes, and is getting slammed by progressive groups for that with this tv ad that they're running in his home district and today, trump will be calling out democrats in his speech, accusing them of obstruction on tax reform the white house points to a recent poll by the republican group defibers of public

affairs. it shows tax reform is framed as money for the middle-class shopper, it will get a lot of support not just in north dakota but also the nine other red states with democratic senators who are up for re-election now minority leader chuck schumer has thrown cold water on the prospect of bipartisan legislation, saying we're off to a very bad start demgs believe that one reason the gop health care bill went down is because they all stood together to oppose it, but guys this time, they may not have that same leverage back over to you >> we'll be watching for sure. let's discuss more with steve forbes, chairman and editor in chief of forbes media. what's your prognosis here for tax cuts or reform >> they're going to get a tax bill this year it's called the instinct of self-preservation. they know if they don't get this economy really moving, really where people feel it, they're going to be in trouble next year and members of congress do not want to become uber drivers. so i think they will push something and i think there's even a good chance they may make

it retro active. and get a real kick and get big refunds going out in april of next year. >> chuck schumer pooh-poohs any kind of democratic involvement but clearly with the example of heidi heitkamp and what ylan was reporting do you think we'll get some democratic votes here >> yes and again instinct of self-preservation. people like tax cuts even democrats know on the corporate side, there's badly needed reform. huge cuts in our corporate tax rate the worst in the world on the personal side i don't think they're going to get real reform what i think you're going to get is an across-the-board tax cut and a doubling of exemptions so a family making say $50,000 a year, immediately a $15 00, $2,000 tax cut >> so will all republicans be on board? so in other words, if you get some democrats are you still trying to get to 51 for a reconciliation or are you trying to get to 60 because you have -- you get all the republicans plus nine democrats? >> you're not going to get that. but if you get democrats breaking off, what it means is -- >> then you still got --

>> sharply increases the chances you're going to get a bill and also means that -- >> a temporary bill? regulation >> temporary ten years. in washington that's a lifetime. several lifetimes. >> people want permanent, though >> permanent there's no such thing as permanent. >> never happen? >> so if the republicans do well in the elections next year you can take the expiration date -- >> do you think any -- >> the key thing is get the tax cut effective now. >> do any of the far right guys not do it because it's -- >> because of the -- >> increases the deficit >> so you need the democrats to make up for the far right defection. >> how are you going to pay for it, steve? >> you pay for it through economic growth. that's the only way you pay for it as you know larry from your own experiences, when you announce an investment it takes two, three, four years to bring it online where you really have real cash flow the idea that overnight you're supposed to have neutrality in revenue is preposterous. over a ten year period go back ten years. if we had normal growth rates of 3%, 3.5% in the last ten years there would be no deficit today.

over time 3.5% growth really compounds into real revenue gusher >> 3.5 isn't possible. it's speculation >> well before you were born i remember back in the 1970s, they were saying we were in an era of malaise, stagnation, nothing could be done. marty feldstein, head of the economic council of the ronald reagan of the early '80s one year later 6% to 8% growth rate >> politico this morning, trump is increasingly fixated on slashing the top corporate rate to 15%, a level that pretty much no one else working on the issue in the white house or congress thinks is workable goes on to quote a senior official working on tax reform saying you can't get to 15% and anyone who has a back of the envelope can make that calculation. he may not like the truth, but it's the truth, it's just math >> at 15% corporate tax rate, we have a flood of capital coming in to this country, flood of

capital creation, just look at little ireland what it's done with 12.5 throughout the european union hates ireland because of its low rate britain is knocking its tax rate down to 15 % canada is knocking their tax rates down precisely because it creates growth, and investment and so, good, stick with the 15. or you may compromise on 18. but i think a lot of republicans in congress would love to have that 15% -- >> i'm sure they would apparently the big six have already moved on to figuring out how to get down to between 20 and 25 they're not even talking about 15 >> they're going to have to have their back ventures on board and the back benchers want something big, they want it now. they're tired of this process that put health care up first instead of tax cuts. they just want to get a big thing done so the big six can spin all the wheels they want i know the back benchers are eager for a huge tax cut, and the base wants it, too and since time is running out, they know those elections are coming up. and they don't want to have to

find new job opportunities after november of next year. >> you know, i heard from a person that's in the know down there that they're thinking of making this 10-year window a 20-year window in terms of having it deficit neutral over time you think there's any chance of that happening >> that just goes to show how silly the whole process is let's make it 200 years. the fact of the matter is, as you know, cbo's projections are worthless. your daily horoscope will give you more accurate projection of what's going to happen in the future than the cbo. they're always wrong especially after two years, it's worth0s. it's printed paper at least the romans when they did this crazy stuff had vestal virgins or smoke and mirrors when they went to the delpmic oracle >> andrew is worried daca is going to knock this off track. they got to do that first? >> i think they'll do the tax thing first. they know that by early next year they got to get this thing off the table. i think on this, there will be a clean bill, some will try to

disrupt it, but public opinion's going to prevent the democrats and republicans from the cynicism they've displayed on this issue in the past get it done. >> do you stand with or against what seems like a majority of ceos on daca right now >> well, they have to do it. but the way obama did it, president obama did it in a way that was guaranteed a court challenge. he lost his big amnesty of 4 million and there was a big chance he was going to lose this one in terms of how he did it. it's how he did it that's the problem. so by giving congress a six month window i think it may even be extended, they will pass that because public opinion will say these people are not guilty, they've done their -- >> right or wrong in how he's approached this? >> trump has done it right in the sense that what obama did was unconstitutional, it was the wrong way -- >> -- tim cook and -- >> they want the result. they're not wrong. they want the result but in washington, with the constitution, you have to do things a certain way the legislature passes the

legislation. that's what trump has said serve it up in six months. he will sign it. he knows that he's got to do it. and he will. and so, it's up to congress. stop being cynical -- >> the narrative that he wants to pull the rug out without fixing it. >> also -- >> he's saying fix it or else i'll revisit the issue you saw the tweet. why say it's wrong one wants to pull the rug out the other one wants to put the rug under. he's saying i don't want to pull the rug out -- >> you want the legislative answer not an unconstitutional like workaround like a stopgap -- i don't know what that was he did. some jury rigged patchi ining it where -- >> also remember when he announced it in 2012 he said it was temporary. he himself said it was temporary. >> -- the authority to do it >> that's not what he says now >> but that's what he said >> this is not who we are letter i mean, you can just xerox that, and just -- >> pass it out every time this is not who we are.

this is not who we are who are we we're not -- i don't know. >> we're -- >> all i know is he never told us who we are. he always tells us who we not are. >> thank you, steve. good to have you >> coming up this morning's biggest movers, plus calling all entrepreneurs, here's your chance to get advice from bobbi brown. cnbc will host an ask me significant session with the beauty industry icon at 4:30 p.m. eastern time. the makeup -- getting the law of dimensional returns no matter how much makeup i use. to join the conference go to facebook.com/group/iconi entrepreneurs. another programming note, testimony "squawk box" don't miss, i almost said -- miss becky quick. but exclusive is, don't miss becky quick's exclusive interview with darren woods, exxonmobil ceo at 6:00 a.m. eastern on "squawk box." you always pay

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check this out mysterious billboards appearing across the country have netflix fans saying hmm. plain black and white ads popping up in new york and l.a they say netflix is a joke according to variety, signage is part of a new marketing campaign in an effort to promote the streaming service's push into comedy program this, of course, category previously dominated by hbo. netflix recently signed stand-up comedy deals with jerry

seinfeld, chris rock, dave chappelle and amy schumer and david letterman most recently, as well. but i don't think he's doing a comedy show but really trying to take the mantle of the comedy world. >> and amy schumer i guess is not going to get nearly what those other guys are getting and they immediately said okay, you can have it. remember that was kind of a controversy. so they put up the billboard and you think it's anti-netflix. so it causes a -- >> and we talked about it. and they're doing very well. it's doing exactly what it's supposed to do >> it's now netflix and laugh. not netflix and chill. >> you should let -- >> you could work for them >> you even know about that? >> but if i ever tried to do a netflix and chill that would be met with laughter. that's the only problem. it would be netflix and laugh anyway you know what netflix and chill is >> you stay home and you watch tv -- >> no, no, no, no. >> what is it? >> the kids they put it on while they're -- >> oh. >> so if i had a netflix --

>> it's already netflix and laugh for me but anyway >> okay. >> before we go to break -- >> you didn't know that? >> i did not know that i don't have kids. >> you tell people i'm going home with my husband and netflix and chill, people are like ooh you had no idea? >> i had no idea >> this conversation did >> there's michelle -- >> she's got a hall pass >> before we head to break, cue the countdown clock. we are less than one week away from delivering alpha. huge lineup newsmakers on deck between treasury secretary steven mnuchin, jpmorgan ceo jamie dimon, hedge fund titan ray dealo and many more. go to delivering alpha dotcom. >> insurers on the ground in houston assessing the damage as floodwaters recede that's the good news meantime another hurricane irma is making its way across the caribbean right now, towards florida. we're going to talk to the ceo of insurance giant chub about the state of the industry and what is all happening here

stay tuned evan greenberg in just a moment. : a breakthrough. ♪ it's in our nature to need each other. ♪ not rebalancing your portfolio. pursuing your passion, not reacting to market downturns. focused on what you love, not how your money will last through retirement. let us help you with those decisions, and get on with your life. we make it easier to plan for retirement with day one target date funds from prudential. look forward to your 401k plan. for tech advice. dell small business advisor with one phone call, i get products that suit my needs and i get back to business. ♪

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♪ i'm living that yacht life, life, life ♪ ♪ top speed fifty knots life on the caribbean seas ♪ ♪ it's a champagne and models potpourri ♪ ♪ on my yacht made of cuban mahogany, ♪ ♪ gany, gany, gany, gany ♪ watch this don't get mad (bell mnemonic) get e*trade and get invested market watch the dow coming off a 230 point decline and gold hitting its highest level in nearly a year

a full market rundown straight ahead. >> bracing for irma. the caribbean preparing for one of the strongest atlantic hurricanes in recorded history florida could be right in the storm's path >> flus a rock & roll hall of famer joins us on the "squawk" set. soul man singer sam moore weighs in on the big changes in the music business as the third hour of "squawk box" begins right now. ♪ >> live from the most powerful city in the world, new york, this is "squawk box. good morning and welcome back to "squawk box" here on cnbc live from the nasdaq marketsite in times square, i'm joe kernen along with andrew ross sorkin and michelle caruso-cabrera. becky quick is off today our guest host this morning, larry bossidy, former chairman and ceo of honeywell the futures have been bouncing back a little bit. fair value is down so not big moves. all positive now

almost 6 on the s&p. nasdaq indicated up over 19. treasury yields, which fell yesterday, long rally, treasury yield today, you can see the 10-year, 2.07. 2.07, which is the lowest in yield we've been in a couple of weeks at least >> okay. let's get you through some of the big headlines. shares of hp enterprise trading higher publishing better than expected performance results, helped by higher sales for networking equipment. and hpe ceo meg whitman will join "squawk on the street" at 9:00 a.m. in an exclusive interview talking all things hp and maybe a little bit uber. get inside that drama. also facebook being accused of inflating its ad reach in a new analyst note pivotal research group saying that facebook claims its potential ad reach, this is important, is greater, if you can believe this, than the number of people that even exist

in the recorded u.s. census data now facebook says its numbers are designed to estimate how many people are eligible to see an ad a business might run not to match census or population estimates. the analyst maintains a sell rating on the stock. price target for them, $140. right now, of course, stock trading at about $171. >> the vote count in chicago is always higher than the number of people living there. which is weird >> and a couple of other things to show you -- >> living is a relative term dead people -- >> this has always been the big question you think that you should be able to analyze and know the exact numbers. >> right >> a digital business. and nobody now believes the numbers. >> they know everything and yet we don't know how many -- they know everything about us >> and yet -- >> well this goes to an outside auditor or some kind of other service that -- the same reason that in television we have nielsen. you know, you don't take it straight from the cable operators. >> right

>> there's indications they're not always right, either >> correct everybody always says nielsen is wrong. everyone thinks we should get it from the cable operators because those numbers should be accurate also kohl's trading higher this morning. the company inviting amazon into its stores it's going to begin selling amazon devices at select kohl's locations. customers will be able to try out the devices, including the echo, and the fire tv. amazon already sells some of its products in best buy stores, and as of last week, of course, whole foods, and the cheaper avocados >> hurricane irma is one of the most powerful atlantic storms in a century and its churning its way across the caribbean toward florida. meteorologist caylee dion from wmaq joins us now live at cnbc headquarters with the latest >> the latest imagery, cat light imagery from hurricane irma which is a category 5 storm is barreling to the west/northwest and it just currently went over st. martin some really horrific

images coming out of st. martin right now from this storm. it's going to continue to make its way to the west/northwest. the outer bands, you can see already impacting puerto rico, and the rest of the storm making landfall in puerto rico later on tonight. so we're going to be watching that the question then lies, where is it going to go from there? we're going to talk about some of the elements that are going to come into play here when we're looking at that track. take a look at this here, you can see the three arrows there could go up the east coast, could go up the west coast, and into the gulf of mexico. or go straight through florida there is a high pressure off to the west, there's high pressure off to the east. there's a trough, you can see that jet stream there, that's going to dip down. how far that erodes into that high pressure over the atlantic, that is going to be the main player and we're not going to know at least for another couple of days what it's going to do. either way, folks in florida, this storm is huge, 400 miles wide it's going to impact coast-to-coast either way. so you want to start preparing

now. >> kaylee, thank you so much it is a big storm. hur vain harvey may be gone throughout there's a new kind of storm brewing in texas frauds, scams and rip-offs scott cohn is in houston with that story scott? >> hi, michelle. welcome to sage hill drive in the south belt area of houston you can see there's lots of debris here. people actually have to post no trespassing signs. it's about a week after the rain stopped here, and officials and authorities say that's kind of about the incubation period for post-storm fraud the water has gone down, people are coming thome clean up, and the sharks basically come out. fraud ranging from basic theft, items stolen from flooded homes, to crimes that are far worse >> the reality is there's a lot of money to be made by these fraudsters after a disaster. in the storm of fema fraud, of insurance fraud for property and vehicles, fraud involving charities. contractor fraud

>> authorities basically divide the fraud in to three categories the first is charity fraud, basically sets up fake charities to collect donations, or setting up look-alike websites consumer fraud, that's anything from crooked contractors demanding money up front, doing shoddy work, all kinds of people who are out to make a buck here off of consumers and program fraud, like crooks posing as fema inspectors and demanding fees there's a lot of that kind of stuff that goes on and because post-storm fraud often involves insurance the industry national insurance crime bureau is here, too, spotting bogus claims and bogus contractors. >> check their i.d.s you know, check their insurances you know if we're talking about contractors. check their licenses you know, don't feel bad about asking for a driver's license. >> and the crimes just go on and on the texas attorney general says it's looking into price gauging

upwards of 3,000 complaints, since the storm. it is just as one resident said here adding insult to injury as they try and dig out and have people trying to dig into their pockets. guys >> okay. thank you for that, scott. barron's says that chubb is one of the better insurance players in the wake of harvey. the stock rose nearly 27% in the three months following hurricane katrina. joining us right now to break it all down for us is evan greenberg, chairman and ceo of chubb the world's largest publicly traded property and casualty insurer good morning to you. >> good morning. >> so, we have irma coming we're going to talk about that in a second. but just sort of help us understand the implications of harvey from your perspective >> well, you know, harvey is more of a flood event than a wind event it's a more complex storm. it hit a major industrial, urban center it's an event that it takes time

to understand the actual size of the event, and the losses that will be produced from it >> and i assume you have a team with calculators that are trying to assess the damage >> yeah. with calculators, and maybe more sophisticated digital tools, as well >> how many people >> are modeling this i'm sorry? >> how many people you have down there right now? >> hundreds. we have hundreds on the ground right now. we've had thousands of claims reported we've spoken to all of our claimants. >> right >> we've inspected probably a third of their properties already, commercial and personal so you know, chubb is known for its service. >> right >> and we're actively engaged. >> you said a third. there's two-thirds left to go. >> i know. and how many days are we into this >> i understand that how do you select or is there a selection process in terms of where you go first and then being able to assess, does the first third represent the second two-thirds i mean is there going to be more liability coming later >> no.

it doesn't work exactly that way. first of all, it's where can you get in >> right >> so you know, access is still an issue and then by the nature of what they reported, you try to get at the most difficult ones, the most severe losses first >> can you put some numbers around it for us >> no. it's too early it's too early to assess the impact to chubb. it will have an impact on us which we expect. >> right >> for the industry, too early to assess, but my gut, you know, somewhere in that 20 to 25 billion range. >> and then irma you guys already tried to start assessing this before it even hits or how do you do it >> no, you can't what you can -- you can't assess the size, but what we begin to do is notify our customers move our teams into place. so we've already got claims teams that are on the ground, we're already building up our

response capabilities. so you just get ready. and what you try to do is moat fie all your customers to get ready and pay attention to those evacuation notices >> evan it says that flood losses are basically excluded from homeowners policy why is it that the government is the only player that provides flood insurance? wouldn't it be better off if it was in the private market? >> well, i do think they would be better if it was in the private market and there is a private market for flood insurance. it's more for the more affluent buy from the private market. commercial insurance, most all commercial risk have flood insurance coverage the happens that on the consumer side, the government has provided it for many years it goes back to when the tools weren't there to assess flood risk, which is very complicated. flood mapping. and being able to assess the

exposures. but that has moved on now. and there is much greater opportunity for the private sector to participate. however, the government undercharges for the risk, and the government will continue to provide flood insurance to those who've had numerous flood losses so they're actually incenting people to live in places where actually they shouldn't be >> and they put their lives at risk which is ridiculous. >> exactly >> but, there are the common wisdom is that the reason the federal government does that, and underprices it is because you, the private sector, would raise the price so much, that it wouldn't be affordable, and houses couldn't be built do you buy that? >> well, we would charge an actuarially round rate and we would charge more than the government charges for those who can't afford, who are more underprivileged, there is a role for the government to help support in that regard. but other than that, you ought

to charge the price that the -- >> how do you -- do you have a calculator that can tell you about pricing cycles and how long they last and the size of a catastrophe that's actually beneficial to the pricing cycle? i mean, there are -- in a perverse way sometimes, when there is an event like this, it actually ushers in firmer prices for the whole group, right >> it does >> and then you can make -- i just remember buffett in 2005, do you remember that year, and how many -- pricing got so strong and he was more than willing to take the other side of that, because for the next ten years there wasn't a category 3 that even hit and he just raked it in for ten years after the prices went up so much after 2005 how do you know how to do -- does it happen automatically or you know how to do that >> it's a -- you know, really it's a supply/demand question

like any industry. >> so the -- >> capital is supply and demand is fairly constant. when there are major catastrophe events, then supply tends to withdraw many insurers tend to pull back. they become more risk averse and if you understand what the right price for the risk is, and you have the strength of balance sheet, which we have both of those, then you will trade through that environment and that creates opportunity >> insurance is a pretty good business buffett's like the richest guy on the planet. pretty good business, isn't it >> you know, i've been in it for 42 years i think it's a great business. >> you've got a lot of money >> but, you know, i think it also provides a great social good it provides real benefit to society. >> evan, thank you, sir >> thank you thank you for having me. >> so there will be -- this is

going to be a -- there will be a positive pricing cycle for the next couple years, no? >> no. i'm not -- i don't believe that hurricane harvey is going to be a pricing event. >> i'm surprised you lowballed, 25, i thought it would be 150 -- >> uninsured losses. >> that's the -- >> do you think -- there's a whole debate going on about what happened in houston, and whether there was enoughregulations an codes around the structures? you think that that's a real -- and that somehow because there's a little more lazy fair that maybe there's been more damage do you think that's true >> i do think that's true. and i think it comes back to the flood insurance question, as well it's -- it disincents the investment in infrastructure for flood mitigation >> houston isn't like the outer banks though, either it's not like -- >> it isn't. but look at the population explosion in houston >> right, right. >> and the construction. and look at it -- that it is a

flood plain. and you've ignored that combination. >> and properly priced insurance would have been a natural constraint on certain areas for growth >> it would have kept you focused on the risk. >> so what do we want? the market to solve it or regulators to solve it >> i want the market to solve it, and the market's solving it in tandem with regulation. >> coming up, arshes jumping after a controversial drug to treat muscular dystrophy or municipal strategies. what people really invest in is what they hope to get out of life. but helping them get there means you can't approach investing from just one point of view. because it's only when you collaborate and cross-pollinate many points of view that something wonderful can happen. those people might just get what they want out of life. or they could get even more. hey, i'm the internet! what they w♪ out of life.

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serepta therapeutics announcing positive study results in their treatment for muscular dystrophy meg tirrell joins us now stocks up five or six points >> it had been up as much as 15% this morning these were highly anticipated data in serepta's second program for muscular disstrof if i you can see about 16% this morning. these drugs treat a rare genetic condition that causes muscle wasting, can put patients in wheelchairs their by teens, and can often be fatal by age 30 last year sarepta got approval to treat the disease

it's genetically targeted so it can treat about 1 3% of patients with the disease and the goal has been to treat different mutations that cause this disease. so these results this morning are in their next program which treats or affects about 8% of kids and those results met their goals in this clinical trial, increasing the protein that's so important in this disease from about 0.095% of normal levels up to 1.019%. analysts are saying that is more than was expected in the trial results. however this has been a controversial program because people wonder if that benefit is just enough, really, to slide through to increase people's muscle strength and to actually have clinical benefits it's been a controversial program. these data this morning pretty positive for sarepta >> gets it up to over 1% >> yes that's the question, what's enough for normal people would have 100% of normal function of

this production. this is 1% of normal >> of function -- oh, i thought it was -- okay >> it's 300,000 dollars a year and then some. how do you deal with that? >> well that's a great question for the ceo. that's an important question >> doug ingram joins us now on "squawk box" exclusive interview. doug is the new ceo of sarepta therapeutics and i guess the combination of the question is, the benefit that we spoke about, the 1%, versus, is that worth $300,000, doug right? >> well, thank you very much for having me. let me start by explaining why today is a very important day for the duchene muscular distrough if i community it's a cruel disease as you also noted last year we were the first -- sarepta was the first company to have a therapy to treat dmd that only treats 13% our goal is to treat 100%.

and the data that we have this morning shows that we're on the right path, we took a significant step forward in that >> doug, it's mig terrell. already talking about you to he tensionly applying for approval based on these data of this experimental drug. is that the plan >> it's remature to say that we have other programs ongoing with this therapy. we need to sit down with the fda, talk with the fda about next steps and have a productive discussion about what it will take to bring this therapy to patients that need them. but the good thing about it, we had extraordinarily positive results, we were statistically significant on every one of these measures really validating the approach that we're talking to treating dmd and hopefully a step forward in our mission to eventually treat all of dmd >> you know, that's where i wanted to go but this was -- doug this is rationally designed, right you know exactly what you're doing in terms of the way that

the exon works with the protein expression it's only 13%. but can't you, if you prove that this works, can't you go and try and get the other 87% by designing a little bit different drug that would allow you to get the levels right up to almost a normal person's? that's the goal, isn't it? >> well, that is certainly our goal we have very precision scientific technology. we have the ability to make sequences that can address, if not every mutation that causes dmd, hopefully the vast majority of these mutations that cause dmd and cause these children to live challenged lives and to frankly take their lives in very, very young age >> why can't you just give -- why can't you just administer dystrophin >> the protein is too large to be administered. >> really?

no way >> doug, how do you deal with the fact that it's $300,000 a year, and does that influence the fda in any way in terms of its approval >> the issue here, sarepta is a small company and we've already invested a billion dollars fighting duchene muscular distrough if i and we're not done yet this is a societal question more than a sarepta question. the fundamental question is does it make sense, is it worth the investment to find solutions for these devastating rare diseases that often are questioned to children more often than not the answer obviously for sarepta is yes the answer for me is absolutely it's worth that investment from societal perspective i, for instance, have two children i have a 23-year-old and a 22-year-old. and they don't have dmd. so at 22 and 23 they stand at the very beginning of their lives. and if you have dmd, you're at the end of your life if you're

even still alive i think that's unfair and cruel and i think it's the right decision for society to invest in finding solutions for these rare disorders like duchene muscular dystrophy >> initially insurers weren't covering this drug because the label didn't say it even worked that well necessarily. know you did surface analyst expectations in the first quarter with your sales. how is that reimbursement from insurance going? >> you know, i'd say it's going -- it's always challenging accessing reimbursement. it's going well. we've spent a lot of time with payers, educating on the science, they have taken an interest in understanding better we've had good, deep, medical discussions with them. i don't want to suggest that it isn't always a challenge, but i would say the discussions have been more often than not productive >> and of course the approval that you got from the fda was a conditional approval you have to run other study to show this does bring clinical

benefit, help these kids walk better how is that going? when will we get those results and how are you preparing patients for the possibility if that doesn't succeed will these drugs be pulled from the market? >> well, we're in the middle of studies that are looking longitudinally at confirming the results that we've seen in our approval trials. the approval trials, including the trial that we announced this morning, are all about the production of dystrophin it's a fascinating thing dystrophin is a protein in your muscle that is like a shock absorber that allows your muscle to move without damaging itself. here's the interesting thing about dystrophin you and i, we don't have duchene muscular dystrophy so we have dystrophin. you know how much we have? 20.00 of dystrophin. we have almost no dystrophin

and that little amount of dystrophin that we have is the difference between living a long and healthy life, maybe even being in a professional athlete or being one of these children who suffer as a result of dmd and dies at a very young age so both of our trials have shown that we can precision engineer therapies that at the cellular and at a genetic level are able to restore the production of dystrophin we prove that we can then create dystrophin, and then we prove that that dystrophin gets to the right place, so that it is hopefully functional and very helpful. >> it has to be part of the structure of the muscle? so you only need it when the muscle is forming? or do you need it all the time >> it attaches to the muscle it sort of attaches to the muscle, facts like a small shock absorber >> but you can't isolate dystrophin and inject it into people because it's too big? >> the protein is large. but some people are working on -- >> okay and i'm just wondering how -- >> whether you can use this technique to do other genetics

where you have a genetic mutation, and you can cure other diseases with this technique, too? >> i'll say, we have a backbone technology and scientific approach that can be used in lots of different areas. but we're focusing first and foremost on the treatment of duchene muscular dystrophy >> thanks, meg >> coming up this morning's biggest movers your list of stocks to watch r us another director shake-up foa star wars franchise. we've got all the details. we'll tell you about it right after the break. we, the people,

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welcome back to "squawk box. some breaking news yes we have our august read -- i'm sorry we have our july read on trade deficits. and of course, we're expecting the numbers somewhat below 50 and above 40, and more towards the 40 side. minus 43.7 billion following a minus 43.5 billion and you know, these are among some of the smallest trade balances of the year the smallest thus far actually was last month at 43.5 the highest came in january at minus 48 and change, close to minus 49 billion we still have highest nonmanufacturing that's going to be a big number today. obviously there has been some downward pressure on interest rates. equities, as well, although that

seems to have reversed on the equity side. 207 currently. 2% is a bit of a draw. that's roughly 50% of the most recent large moves and if you consider how long it's taken us to get there, maybe the best thing to do is monitor logistics in terms of how long and short the market is at this point we don't expect any major moves. but do keep in mind, 21 3 to 215 above the market, it's an area to pay attention to should we get up there to reverse some of the buying pushes lower. >> all right, thank you very much rick santelli. >> okay we mentioned it before the break, you got to hear this. listen up if you are a star wars fan. "star wars: episode ix" just lost its director. they have parted ways. this isn't the first time the star wars franchise has switched leaders. how do you pronounce his name? he is the fourth ousted director in just the last two years hard to find the right people

for these things because you got to nail it each time >> and you live in the shadow of the originals, right >> always. >> so fantastic. >> dis any of this real at this point or is it all -- >> come on >> cgi -- >> people have to act. >> i know. but it's just all -- they've got a sound stage and a computer they probably don't even go anywhere >> that's not true they need the depth. >> i don't know. you're the hollywood type. i don't know i'll -- you know, you're in that -- >> no, no. a lot of it is green screen, obviously. >> right >> so you got to pretend you're seeing something that's not even there. >> it's hard >> so that's the acting. >> coming up, threat levels rising for cybersecurity and the energy sector. ceo of symantec is going to join us next on the return of dragonfly. as we head to break take a look at u.s. equity futures sivege wwi g aet poti open. where the heart beats warm and true, that's texas.

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semantic is releasing new research showing there's been new espionage with dragonfly

likely to blame. joining us with more is greg clark. >> thank you for having me on the show >> people if they're familiar with any degree with dragonfly it started back in 2011, started going after the energy sector, the farmer sector in europe, peaked around 2014, 2015, and now you have a new report out that says it's back. >> yes so in '14 we talked about it being alive on some of the administrative networks, the sort of noncontrolled elements of the energy sector and recently we picked up evidence that it is actually alive on the control side of the energy companies inside the u.s. and europe and you know, some very concerned -- >> and the implication of that are what could they shut down the power in some places at will >> we have some screen shots that came off some of the malware that are showing the command and control screens inside the energy companies which would indicate that they may have their hands on the ability to do things like that

we have seen in the ukraine, grids being shut off by cyber malware and also some pretty heavy stuff in saudi arabia, also >> greg, do they just attack western europe and the united states no activity in china or russia >> so we have evidence of the united states, and europe. we don't have evidence on the other nations. however, you know, we may not have the telemetry points inside some of those companies overseas i think the interesting part about this is it is a transition from what was administrative networks to what we believe are control parts of the infrastructure, which is alarming >> as an average joe i don't quite understand what that means. >> so typically, inside places like this networks are separated so that places that do the payroll, perhaps the scheduling, maintenance scheduling, orders of parts, that kind of stuff is off on a separate network and the stuff that actually runs generators, reactors, stuff like that is separated. we definitely have evidence of

this actor being up on the more dangerous side, the control side that is a heightened concern we haven't seen any -- you know, bad actor stuff as shutting it down we're more in the, i think the reconnaissance telemetry phase we released this report this morning, really to bring up awareness that this is a different level of risk. and you know, we've also shared everything we know about this with homeland security and also our partners at the site of tread alliance >> who are they? actors actor? is it state sponsored? what do they want? they want money? they want to take us hostage what >> this is a really good question we don't get into the business of trying to pin this down to a particular state actor we have a lot of work on trying to say it's the same people, and

this dragonfly gang, we have methods, and a bunch of tech nothing that helps us pinpoint who this malware is related to, and so we definitely have enough hard facts in the technology that indicate it's the same folks as we were tracking in '14. and this is an active threat that we call dragonfly >> and what do we know about them >> we know that they're definitely too sophisticated to be a bunch of normal criminals >> right >> so we think that this is related to a more heavily funded, more state actor level of adversary >> so, totally shifting gears. we've been talking about whether the united states, with its wherewithal to hack, if we wanted to cause a north korean missile to go up and come straight down, could you envision that we would have the capability to do that? >> you know, i think that the

united states and our government are very good at what they do, and we have good investments inside of defense. i would say that the way to think about this now is that we used to have branches of the military that were air, land and sea and space, perhaps, and now we have definitely a new front which is cyber if you look at what happened on the stuxnet malware that broke that centrifuge in iran. >> yeah. >> that was written to go after that specific thing and had to be put out in the wild, spread everywhere, and eventually it got in there and damaged that. typically things like, you know, a missile control system would be separated from air gaps from any kind of connection to the internet so what happened in previous cases is you know on usb sticks this stuff propagated, got into a very secure place, then got in there and destroyed that centrifuge so there are means to do things like that. but they take a long time. and i think it's something that

we should, you know, i'm sure that our partners that are in that part of the defense are doing it the best they can you know, against that kind of thing. but you know, it is not a, you know, press a button and all of a sudden all that stuff breaks overseas >> okay. >> okay. tom friedman -- >> yeah. >> tom clancy. it's fascinating i'm hoping that we have -- >> hoping we have no idea how good we are. >> you know i think that the attack surface these days is so massive. you look at what's happened -- >> before you go, one, two factor authentication. >> yeah. >> people are saying the texting version of it with the sms not enough >> not enough, that's right. >> not enough? >> can be intercepted. >> oh, god >> so the two factor -- >> so now what do we do? >> so what we do is we use two factors that don't use sms >> you can now get an app. >> we make one at symantec others make one at well. these things are nonsms based two factor authentication is essential in your defense.

>> big deal, people. it's an important thing. people don't even know just in the past couple weeks it's become a big, big issue, because people are actually stealing -- calling up, pretending they're -- >> i know. >> pretending and then switching the phones, and then they're getting the sms. and then they take over your whole life >> yeah. it's a problem >> stealing phone numbers is a big problem. >> thank you for coming in coming up when we return our guest host is going to tell us about an industrial giant that could be ready for a turnaround. got two very well known initials, maybe you can guess what we're about to talk about as we head to a break. quick programming note less than one week away delivering alpha coming up. huge all-star roster including treasury secretary steven mnuchin "squawk" team's going to beible ter viewing him. blackstone ceo steven schwartzman. jpmorgan ceo jamie dimon way dalio. a huge number of big guests coming up. that's going to be next tuesday if you want to check it out, you can do it live you can go to

deliveringalpha.com, get yourself in the room we'll also be bringing parts of this live on cnbc. back in a moment most etfs only track a benchmark. flexshares etfs are built around the way investors think. with objectives like building capital for the future, managing portfolio risk and liquidity and generating income. that's real etf innovation. flexshares. built by investors, for investors. before investing consider the fund's investment objectives, risks, charges and expenses. go to flexshares.com for a prospectus containing this information. read it carefully.

irma is now one of the most powerful atlantic storms in recorded history, making its way across the caribbean towards florida. jackie deangelis is live in fort lauderdale where preparations are under way. >> good morning, joe as you can expect people are certainly bracing for this storm. at this home depot they are

loading up on supplies when this store opened at 6:00 a.m. they had just gotten a shipment of generators that literally flew out of the door in about 15 minutes. and these are big ticket items they're a little bit less than $1 $1,000 each. we're waiting for another shipment to come in. about another dozen. we're also running out of things like plywood and gas cans and big rubber storage containers for water or presumably sand as people start to barricade their homes. either they're going to hunker down inside of them or barricade them before they leave town. now obviously situations like this present challenges for stores like home depot, walmart, and the likes of those others. but remember, this isn't exactly their first rodeo, either. home depot is ready fors is like this they said since harvey hit they dispatched more than 1300 trucks with supplies to all different areas. the problem becomes the fact that you have two big storms on top of one another so while stores like this are

trying to fuel supplies to areas like texas that have been already devastated, rebuilding, then you have the people here in florida, who are trying to stock up ahead of the storm and make those preparations so that's where sort of the catch-22 lies. we spoke to a bunch of people who said they are staying, they're not necessarily taking the advice to leave town but we spoke to many who said they are leaving the thing is, they're not leaving that early they're saying they're waiting until thursday or potentially even friday to make that move. and many of them have said to me, if we can get out. and that's part of the problem here in terms of the planning process and how people are thinking about this this also is one of those storms that seems a little unpredictable right now. whether it goes east coast or west coast of florida is also an issue. back to you guys >> yep makes sense. wait a couple days, i guess, and then see the track i'm still hoping that this veers off course and goes somewhere else anyway, jackie, thank you. for that report. up next, legendary soul man sam moore is in the house.

rock & roll hall of famer out with a new album he will join us on set right after the break. "squawk box" will be right back. the governor has declared a winter weather emergency... extreme risk of burst pipes and water damage... soon, insurance companies won't pay for damages. that is, not if they can help prevent damages from happening in the first place. at cognizant, we're turning the industry known for processing claims into one focused on prevention with predictive analytics, helping them proactively protect the things that matter most. get ready, because we're helping leading companies see it- and see it through-with digital.

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the song soul man was released in september of 1967. that's 50 years and became a number 2 hit single and part of 10 straight top 20 r&b hits. and it's great to see you. >> good morning my friend. >> any idea when you recorded this this is truly an iconic song blues brother song. >> i think it was 1965 '66. i don't know, joe. i guess. >> but the endurance of the song, you had no idea when you were recording it. >> when i first recorded the song i thought oh my god, what is this? what the devil is this you know and i went on and i did it not

understanding that it was going to be a hit. >> not just a hit. >> 50 years. i just come from london for the 50th anniversary of soul man in london and everywhere i performed with sir tom jones. >> fantastic. >> and it was wonderful. and he talked about when he first met me those ruffles shirts he was wearing. and he said well sam, you know, i'm going to say this, those suits that you were wearing look like petal pushers >> i never understood people would throw underwear. do you remember that

you don remember that? >> nobody ever threw the keys. >> i love your pendant do you know what that is >> and it was early for me and had a big hole in the center that didn't fit on the record players. put that in the center so that we would fit. >> no, i looked there for a long time and i got it here in new york and we went down and get all the goodies from the sponsors. they had t-shirts and all of that stuff

i'll take that. >> i got a question. >> can i go for it >> what do you make of all the artists that didn't want to go play the kennedy center because they thought the president was coming and now the president's not coming what do you make of all of that? >> stupid. they didn't want to do it, they didn't do it whatever their reasons were, that's them. i on the other hand had no say about it one way or the other but i think it's real stupid that you don't want to do batz y -- bait because you don't like person i think it's stupid. >> do you hear from the other artists? people like lionel richie and others. >> it's something else when you know what you're talking about they all dropped out and i found

out because i was coming into washington anyway to perform for the veterans. >> right. >> and then they asked right behind that because everybody was dropping out and they didn't want to do it. and my wife said do you want to do it? i said yeah? is it for my country yeah. >> you're still recording american patriot i see that i do like it it's a full album. how many songs all new? >> yeah. and then we have bow onuses on there like what's going on. >> really. >> hallelujah. you don't know about that do you? >> i was going to ask you about streaming. we know the same about streaming. andrew would have to explain it to both of us. we're not sure of this whole new economic model.

>> i don't know nothing about that. >> do you have to change. >> do you juan one of these? >> i do. >> you bet i do. >> you got it. >> that's cool too sam, thank you. >> great having you. >> coming up t call on the future of general electric why he thinks the industrial giant ge is ready for a turn around and then tomorrow on squawk box don't miss becky quick's exclusive interview with darren woods tomorrow starting at 6:00 a.m. eastern time we'll be right back. ...it starts a chain reaction... ...that's heard throughout the connected business world. at&t network security helps protect business, from the largest financial markets to the smallest transactions, by sensing cyber-attacks in near real time and automatically deploying countermeasures. keeping the world of business connected and protected.

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hey. hi. hi. you guys going to the company picnic this weekend? picnics are delightful. oh, wish we could. but we're stuck here catching up on claims. but we just compared historical claims to coverages. but we have those new audits. my natural language api can help us score those by noon. great. see you guys there. we would not miss it. watson, you gotta learn how to take a hint. i love to learn. watson, you gotta learn how to take a hint. wherwhere we always welcome you, that's texas.exas. where we always find a way, that's texas. ♪

talk about an industrial giant this morning that our guest host feels could be for a turn around. spent more than three decades at ge during his career and you have turned bullish, sir. >> not bullish but optimistic. more so than the rest of the crowd. i do think that the new ceo is a realist. i think there's a lot to be tun. he has the courage to do it. he's been in the company for 30 years and knows it like the back of his hand. there will be a reset soon and i

think the company will be more -- >> after 5 or 16 years of nonperformance there's always a lot to be done joe and there is in this case too and i think it will be a more transparent company and it will have more energy and more importantly more rigorous in it's operation and more strategic in it's choices so it's not going to show overnight but overtime i think there's a chance. >> i said bullish and you said optimistic that means you're not dying. >> michelle thank you. make sure you join us. becky is back. squawk on the street is coming up next. >> good morning welcome to squawk on the