201. "squawk box" begins right now. good morning, everybody. welcome to "squawk box" here on cnbc i'm becky quick along with joe kernen and andrew ross sorkin. we are live from the pierre hotel in new york city this is the sight of today's delivering alpha conference. it all kicks off with our special occasion with treasury secretary steven mnuchin make sure you set your watches and just in case you don't have a watch to set, don't worry, we'll count you down right here. we're tracking the destruction from hurricane irma. we have more on that story in a few minutes. but first, let's take a look at the markets this morning u.s. equity futures are extending the rally from yesterday. right now, dow futures indicated up by almost 50 points

the s&p up by 3 and nasdaq up by 15 this comes after all the markets looks looked very strong yesterday. the dow was up by 260 points s&p was up by 26 it was a record close for the s&p 500 and that's its first since august 7th the dow closed at a one-month high take a look at what's been happening in europe this morning. the gains we saw yesterday as concerns about irma faded a bit and, again, some concerns about north korea not quite as potent as they had been as we headed into the weekend this morning, it looks like a bit of a mixed picture in europe most of the major bourses are higher with the dax up by .5% and a similar gain in france the ftse is down by about .2%. let's flip the charts and see what happens overnight in asia you'll see when it comes to asia, there were some closes actually, let's go excavate to the currency check it looks like the dollar is down a little bit against the euro today. below 120 for the first time if in several days.

1.196. dollar is up against the yen, 109.68 oil coming back a little bit weapon saw gains in crude oil prices yesterday after refineries in the gulf restarted things and you heard the saudis talking about potentially extend something cuts this morning, wti is down by about 21 cents to 47.86. >> you were worried about it, back to 2.15 >> i started hearing from mortgage guys again yesterday, do you want to refinance do you want to come back in? >> really? >> yeah. >> we were at 2.02 so it looked like it could have hit a one handle >> but yesterday was first time i've heard from mortgage people in a while saying come back in, test the waters. >> we hit 20 trillion yesterday. >> yes, on the debt clock. >> fwo >> gosh, i wish we had a government official to talk

about that >> that would be great >> oh, wait a minute, we do. >> unbelievable numbers, there he is, secretary mnuchin will be on at 8:30 and that may be something we touch on. >> now we're going to give you the latest on irma, the storm down graded to a post tropical cyclone. it's bringing moderate rate to tennessee and the ohio valleys irma about 100 miles east-southeast of alabama. it's expected to weaken throughout the day look at the destruction in its wake this is video of jacksonville, florida, late yesterday. and we've got complete team coverage this morning. carl quintanilla is live in tampa where ports are reopening. but we want to begin in west palm beach where jackie deangelis is covering the millions of consumers still without power. good morning, jackie >> good morning, guys. this is a major story here in

florida. the ceo of florida power & light, florida's largest utility has said power could be down in some parts of the state as long as weeks, especially if there's structural damage. take a look at this downed power line behind me this is certainly one of the issues that people have to work on the crews have to get out and fix these lines. but when we're talking about structural damage, we're talking about potentially the grid now, we've mentioned yesterday that there were almost 7 million people without power now that number is down to about the 5 million people within the state. take a look at this map. there doesn't seem to be a part of this state that hasn't been touched by the power outages in palm beach county, we were looking at half a million without power yesterday. that number has dropped by about 125,000. so it's certainly a step in the right direction. as we drive around, we see different areas that have lights, stores, businesses

but still, there are so many traffic lights, for example, that are out intersections that ever totally unmanned and people sort of fending for themselves help is on the way about 50,000 to 60,000 crew members could be taking to the streets to work on this problem, but it's also coming from other utilities in other states. so that is a good sign, as well. but like the ceo of fp&l said, if it's structural, it could be harder to fix. and down here in florida, it's hot. you have elderly populations, people with special needs, it's not just electricity, it's an air-conditioning issue and these seem to be moderate concerns when you look at what the rest of the state is facing, as well. >> jackie, thank you very much we'll check back in with you later. right now, though, let's get to tampa where cooler is looking at the ports as they're reopening carl >> hey, becky. listening to jackie, you never thought you would wake up and hear that two-had thirds of the country's third mostpopulous

state have no electricity. and all those utility workers who are working there way around those power lines are going to need gasoline. and that's the one positive story out of port tampa bay where we are this port managed to open early on monday morning, earlier than expected given the lack of damage and all those big tanks, those big, round tanks you see by the highway, they had to fill those with gasoline ahead of the storm. otherwise, if they were empty, they could get punctured or crushed by the wind. so they had this ready gasoline on shore they called the oil companies that service out of here and said, look, if you want to get some trucks in here and start filling up gas to gas stations, be our guest so all these trucks, they russelled to their rigs, go over here, so you're beginning to see the flow of gasoline work its way around the state port tampa bay supplies or received about 43% of all fuel

consumed in this state nothing good can happen until things happen here first you see things like disney world and universal studios open today. keep gasoline in mind. until the day where everything is electric and we're all on the grid, gasoline will be a necessary commodity and this is where it begins. >> andrew, i guess some of the good news is we see the lights right behind you was that something they had to get up and running or it dodged some of the worst of the storm >> obviously, i mean, look at genera xw stock. there's a reason we talk about generax. a lot of backup generators were in play here if you look around the tampa bay

skyline, you'll see some lights, but when they say two-thirds of the state, i believe it. our hotel has no electricity and no hot water if you're in a nursing home, right, and your mom is there and you're worried about the heat today, that is a much different story. >> carl, thank you for that. some news out from dow dupont, it is altering its previously announced break-up plan. it's still splitting up into three separate companies, but it's going to move business from the materials to the specialty chemicals spin-off to satisfy activist investors the chairman and ceo will be on "squawk on the street" at 9:00 a.m. eastern time to break the new split down for us. in the meeven time, we are kicking off the delivering alpha

conference today leslie joins us right now to take a quick look at hedge fund performance which is going to be a hot topic. >> everyone likes a comeback story and that could be a theme at today's delivering alpha conference new data out by e-investments shows data out in august posted their three month of consecutive gains in the black for the year. and guess this, guys in august, they returned about three-quarters of a percent which is twice that of the s&p 500. finally we're seeing some outperformance there today, we'll hear from some hedge fund legends this industry is rapidly changing so it's important to hear their thoughts now, one strategy that did not perform so well in august was activism this was the first month since october where returns have been even close to negative territory. and we'll get a sense of what lies ahead for activists

we're several featured speakers, including jeff smith, mick mcguire and ed garden b who as you mentioned will be had here along with ceo ed breen of dow dupont where garden has a sizable staij stak sizable stake. and to kick things off, i'm looking forward to your conversation with secretary mnuchin. >> how much of this do you think is going to resolve around what the big pension funds are doing? the guys who got out are they going to come back in or not >> that's the big question it appears we're seeing a lot of strategies and those strategies did perform fairley well in august because they saw a spike in volatility which helps those computer generated strategies outperformance the overall markets. and so individual bits and pieces, but in materials of an all-out industry, you know, getting those assets back to where they were a few years ago remain toes be seen, at least on

the inflow side of things. >> the algorithms made us less needed >> people in general >> people in general, yes. >> humans. >> teachers will be replaced in ten years. did you see that >> it's not going to, though not from the standpoint of a kindergartner. >> and then there's all these other things that they're going to replace men and women with each other >> well, that i understand >> yeah. i'm already feeling replaced you're right i already feel unnecessary >> leslie, thank you very much when we come back, a global market ral ly a day after the s&p rallies to a record close, check out the futures right now. you can see how strong they are at this point. dow futures up another 55 points after those guidelines s&p up by 4 and the nasdaq up by 17 coming up at 8:20 eastern time, our newsmaker of the morning is

treasury secretary steven mnuchin. he'll be joining us on stage for a special conversation stay tuned you are watching "squawk box" here on cnbc live-stream your favorite sport

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welcome back to "squawk box. up another 55 this morning in the dow jones. caught up another 4 in the had nasdaq called up another 17 making headlines the ewe nated nations security council unanimously approved new sanctions against north korea last night the latest security council resolution calling it illegal. the envoy says in his words, forthcoming measures by north korea will make the u.s. suffer the greatest pain it has ever experienced. i read at least one analysis when it was all said ask done that it was watered down

there were threats that if you do any more sanctions, the same kind of hyperbolic rhetoric -- >> but then also, the treasury secretary mnuchin has talked about how if the u.n. doesn't come through with some of these tougher sanctions, they could go ahead and have sanctions against any country that does business with north korea >> the big push and pull now is are we on a path to where we say, all right, they've got -- they already do, but do we say, all right, they've got nuclear weapons that can actually hit us or do we actually -- nikki haley yesterday, she talks tough she's saying the world will not accept this country having nuclear weapons. i don't know what that means i think it comes down to china in corporate news, two key u.s. senators have asked equifax about the data breach last week, including details who sold stock after the breach was discovered. "the wall street journal" reports equifax has been

lobbying congress about easing regulations before the -- i started -- i had a tendency to feel for these people because absolute power corrupts absolutely and when you try to deal with these people, they might not even return your call. you might say, this has been on for six years. it was wrong when it started they won't return your call. and the customer is not always right. >> before they did it. so i'm starting to feel like, wow, i hope -- how does this feel but it's me. it's my -- >> how does that -- they're not the ones who suffer from this. we are the ones who about bear the brunt. >> am i supposed to take the other side of this and say we should very sympathy for their victims? >> could you do that >> i was thinking, actually, though, about whether they're victims -- >> wait, whether equifax are vijts? >> they are victims of a hack. >> they are victims who did not protect themselves and by the way, it's not

themselves they're protecting, it's us. and by the way, the only reason we haven't talked more about this is because of hurricane irma setting shore it's something that otherwise we would be going wall to wall with about the massive breach of trust. >> the ohm reason i say it is be default, they are victims of a theft. >> actually, we are arthritic victims of a theft that they did not protect us from. >> and then the question becomes, did they leave the door open did they have five locks on? and then this is what the debate really is going to be. and by the way, if it happened to a big bank or somewhere else -- >> there are a couple of situations in this instance that make it very different one has been the reaction and how they've dealt with it has been terrible. secondly, you yourself pointed out that they have been warned that they are not protecting us enough, that they have 143 million americans this had close to the internet was completely ridiculous third of all, what the executives have done -- i have -- there are times when i do feel bad for corporations who are attacked by nation states.

times. this is a situation where they have handled it so poorly that i do think i would like to see congress get involved at some level and say, wait a second -- what faces are you making behind me >> no, it's okay >> no, i'm ready so mad about it >> a 460 on my credit thing? really that's what i go on my s.a.t. math >> you only got a 460 on math? back then, the ratings were out of 800 >> no, i did better. >> we've got some stocks to watch this morning travelers will temporarily stop stock buybacks while they assess the damage from hurricane and irma 490 million for catastrophe related losses including recoveries from re-insurance today's top corporate story, apple is holding an event this afternoon.

the company is expected to unveil a number of new products, including its next generation iphone some are saying it could cost as much as $1,000 for this new phone. there are a lot of people who would be willing to pay up for that we'll keep an eye on the apple suppliers today. fox con, western digital and analog devices are all trading higher foxconn is up by over 5% the. some other news from the mobile industry, samsung reporting record preorders for its new galaxy note 8 smartphone the company says they've received about 650,000 orders globally over the past five days the note 8 officially hits the market on friday you don't want to miss complete coverage of the apple event the this afternoon it's going to happen on power lunch. let's get to the markets right now. joining us is doug cote, chief investment strategist at voya investment management that has a $215 billion investment platform also, simian hyan.

it's great to see both of you. >> thank you >> appreciate it >> yesterday we saw this huge rally that hurricane irma, while devastating, did not pack the worst punch we thought in the florida area and some concerns were abated and others were talking about this idea that maybe the fed will not raise interest rates now, hold off because of all the devastation of those hurricanes. doug, what do you think was the real -- well, right now markets are doing what they should be doing. the top 45 countries of the develop economies are all positive that is synchronized growth. europe is doing better than expected corporate earnings growth in the u.s., did you think double digits, emerging markets, japan. japan was up 4%. so it's responding to the strong corporate earnings growth, the

strong economic growth, and sure, there's a problem. there's always a problem geopolitically irma, thank god it waes wasn't as bad as everybody thought it was going to be. we'll get past that. but i think as far as the fed, the fed might raise rates, might not -- i would like the fed to start quantitative tapering, get out of the way, raise rates and it would be a signal that the economy is good. >> that would mistake you have more strength in stocks than seeing the fed sit on the sidelines? >> yes i want the fete to get out of the way and move to pro growth policies >> the fundamentals are there. we are seeing a growing divergence between growth and value. it only got to four times in the tech bubble. so if anything stretched, it's on that had higher valuation

side >> some people say when you look at the value stocks, it's hard to find value stocks >> there is an element to that you have the financials that sit by definition and value but there's an opportunity in quality stocks, consistent dividend growers who haven't lagged as much, gotten about 80% to 90% of the upside >> you saw the report about seth clarman of outpost apparently planning to give some money back to investors because zavend these value plays you're talking about. >> well, the issue with devalue is the gamble is the limit they've lagged by so much that investors are sort of fed up with them. that you have to get the timing quite right.

there was another report just out that etfs in japan, some massive portion of them are owned by the bank of japan does that start to concern you when you see a central bank moving so far afield >> certainly they have gone too far if there is any time to start raining that back in, it's when they have 4% growth. that time is now i think japan is going to benefit from this global economic synchronized recovery try to broadly global phi your portfolio. most investors right now are concentrated in the s&p 500. that's worked for the past five years. i don't think it's going to work for the next five years. i think we're seeing emerging markets up 5%. europe is up 18% you ever to start to spread out your betts value is probably

underperforming or probably continued to underperform. you need to take more risks in your equity portfolio. you're getting paid to take risks and certainly have bonds for a rainy day on risk control. but broadly, globally diversified. >> and practically buying stocks at that point. >> some of the e the tfs are stocks in japan, they really are in the market >> they really are that his is not a good sign. >> and etfs we already worry about. don't we >> from a liquidity perspective.

one of the things they play is the etf market sdmrz etfs are very sophisticated. allow rates to go up the effs and we're an etf firm, there is an extra layer of liquidity added to the markets the treasury curve is so flat, but the corporate credit has an opportunity to diversify >> gentlemen, thank you both for your time today. >> thank you coming up, hurricane irma leaving a wake of destruction. we're going to talk to some industry analysts and try to shed some light on that. plus, we're getting ready for today's seventh annual alpha

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welcome back to "squawk box" live from the pierre hotel in new york this is the site of today's

delivering alpha korns aconfered we have a huge lineup for you including treasury secretary steve mnuchin. looking through all the people here today on this lineup, $3 trillion in assets under management represented by the folks we have on the stage, not including steven mnuchin 3 trillion is more than the gdp of india >> i thought you were talking about his personal assets under management >> add the three to the 18, you get 21 and we almost -- >> pay off the the debt. >> we could pay t off the debt >> with our own money, though. >> yesterday yes. let's take a look at yesterday's equity futures right now, dow up by 53 points, s&p up by 4, the nasdaq up by 18 >> among today's top stories, the dow dupont is altering its break-up plan.

it's moving businesses with $8 billion or more in annual revenue from the materials to the specialty chemicals spin-off >> what makes this somewhat interesting, i guess, is that it's an apparent move to satisfy activist investors chairman andrew liviris and ceo andrew green will be on "squawk on the street. >> this is considered a win for people like dan loeb and janet partners >> why >> they didn't like the mix of how these assets were set up >> you heard the story the 8 billion goes from the materials to the specialty chemical >> yes one pocket to the other pocket >> yeah. and you have to be really in the weeds to see how that is, you know, something you really want to -- okay i'm fine with it you want it in specialty versus materials with your -- with the new stuff, do it hey, move 9 billion, you know? >> no, no, but part of the issue is -- >> i know.

>> the strength of what these three companies are ultimately going to although like >> and if they're going to continue to perform. >> and if you're going to hold them, which ones you hold. >> okay. now to the latest on irma, the storm now a post tropical cyclone and it's expected to weaken throughout the day. but the storm has left a trail of destruction in its wake look at this video out of jacksonville, florida. just yesterday, the storm flooding streets and damaging car webs but today florida is looking to get back to business. walt disney world and epcot are looking to reopen today. >> everybody is champing at the bit to have those visitors coming back in it was worth more than $100 billion to florida last year, those tourism dollars. so let's get you caught up to

date carnival cruises says it will have cruises leaving from port miami and ft. lauderdale today for cozumel. we heard from carnival and nor ve norwegian that they were bringing cruise ships back today. disney is opening and says it's going ahead with a full schedule universal, they're excited to reopen their big parks, volcano bay, but lego land, all of its parks are closed and, in fact, it's encouraging its hotel guests to seek shelter elsewhere. sea world is closed today. busch gardens tampa is closed today. both of those are hoping to reopen tomorrow. oh, and i should mention disney water parks will remain closed they're hoping to reopen those later this week. so for those visitors who have had enough of all of this hurricane and debris cleanup and all of that, getting out might be a priority. let's get you caught up today on the flights. there are more than a thousand

flights in florida that have been canceled today. that's just the big airports, tampa, orlando, miami and ft. lauderdale ft. lauderdale airport opened about two 12 1/2 hours ago. miami had a lot of damage from water. five terminals with significant water damage so they are having extremely limited service today. they are hoping to be back up and running tomorrow or later this week. orlando and tampa are both gradually introducing service again today, ramping back up to full service so the good news is, if you're trying to get in or out of florida, it's coming it will be there you have to check with your airlines today guys >> all right contessa, we're going to try to shed some light on all of these issues i don't know how much we know yet, but let's take a closer look at the effect irma could have joining us now, paul newsome paul, i couldn't help thinking about you guys and yesterday,

obviously, at sandler. i'm sure it was a somber day at the firl, but you guys have done well just to come back into such a great institution after what you went through 16 years ago. >> thank you very much thank you. >> the lights are still on coming into the city today i could see the twin tower lights anyway, get to irma here do you, in the last 24 hours, do you have a better idea how to gauge things, how to look at what total losses for the industry are going to be probably much less than what you thought going into the weekend >> that is entirely correct. every day, you get a little bit better sense of what the storm damages will be both from an economic and insured perspective and the range of what we thought, which was sort of zero to something in the hundreds of billions is narrowed a lot

reasonable in the low tens of billions in terms of insured damages from hurricane irma. >> and the notes that you had written before, landfall, it wasn't just florida you were worried about. it was going to move up into other states at this point, do you still need to add billions to this number is it still causing insurance related damage i'm sure it is, but not to the same extent. >> it is the storm isn't over it's adding damage, but not anywhere near the extend it was before but the great caveat is that storms change and they're unpredictable, so anything can happen over the income day or two. still. >> we had a conversation yesterday that highlighted the ierpny in trying to gauge

insurance companies and the pricing cycle. and the poip was made that you probably need a third storm to get the pricing cycle to turn positive for property and casualty insurers because of the big capital cushion they built up over the last ten years which are relatively quiet so this is not going to be enough to turn it into a positive pricing cycle >> probably not from a real broad sort of global pricing the most likely be some stress perhaps higher prices in the affected areas in florida in the costal areas but unless the re-insurance market is really stressed by this, and i don't think it was, then you wouldn't see sort of the broad price increases that you've seen after past cycles. but if something arises that's unusual that changes how people underwrite insurance, that may

change but at the moment, it looks like it's going to be more of a return to normal after the storms >> okay. i guess if we were to split off and start an insurance company that did flood .charge what it takes, do it act uarily, is tha going to finally happen from this, do you think >> i don't think so. there has as been a private flood market, but it's hard to compete with the u.s. government >> it doesn't seem -- >> well, there's an argument to be made that flood insurance has propagated properties along the coast that were susceptible and made the losses higher because we're essentially subsidizing building in the wrong places

>> exactly we can't solve that now, paul, but we appreciate your tile. thanks >> my pleasure when we return, the day ahead in washington, including reaction to the u.n. vote on north korean sanctions and then later this morning, don't miss a specialcation with treasury secretary steven mnuchin he will join us on stage right here right now as we head to break, take a lk d ooadyesterday's winners and losers 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.

welcome back to "squawk box," everybody. a new deal announced this morning by kingdom holding it has purchased a 16.2% stake from france's agricole for $1.5 billion. that makes kingdom holding the largest share holding in the bank although chris agricole will remain as a strategic investor the united nations unanimously approving sanctions against north korea. ayman joining us this morning. >> these are tough new sanctions, but not exactly what the united states wanted to have

in place take a look at some ovp new measures here from the united nations security council they're going to reduce by about 30% oil provided to north korea. they're going to place an annual cap of 2 million barrels on refined petroleum, so gas and diesel opinion they're going to ban all textile imports. they're also going to have an impact on north korean laborers who are working overseas and over time gradually withdraw their right to work overseas and to send money back to the regime they're going to end joint ventures between nations from north korea in order to cut off foreign investment but here is what washington didn't get a couple of things that the united states noted that they wanted in these sanctions. they wanted ultimately to have a block entirely on oil exports to north korea. they didn't get that they got the cap they also wanted authorization for use of force against ships that didn't comply with inspections on the high seas

they didn't get that, either there's no travel ban or asset freeze on kim jong un himself in any of this. still, nikki haley, the u.n. ambassador from the united states said in a tweet, the u.n. security council unanimously adopted the strongest sanctions ever against north korea the north koreans predictably did not like what they saw yesterday. they issued a statement, as well the north koreans saying the delegation condemns in the strongest terms and categorically reject the latest illegal and unlawful u.n. security council regulations guys, the trick here when you are -- here is the other part of the north korean statement they said that the washington regime is frustrating them and they're lobbying some rhetoric at washington here, as well. and the trick here, when you're dealing with sanctions is you want to have something that's politically tough that nightens up the pressure on the regime, but the balance is you don't have to have anything to cause

the regime to totally collapse did they trike the right balance? that will be the debate in the coming days. >> that you can for that we'll be seeing you throughout the day. when we return, will apple deliver for consumers and investors today? we're going to talk about the expectations when we come back plus, stay tuned to cnbc all day for a huge $3 trillion lineup at our delivering alpha conference. we will bring you a front row seat all day long. back in a moment when this bell rings... ...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

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$2 billion and i saw a number of 49 >> these will be big numbers hopefully the bipartisan ship we saw last week won't be a collaboration. >> what kind of impact is irma going to have on the multibillion dollar citrus industry >> that's another sign of the overall resilience of this market.today that's another sign of the overall resilience of this market welcome back to "squawk box. this morning's top corporate story, apple holding its big event this afternoon the company expects to unveil a number of new products, including its highly anticipated next generation iphone some are saying it could cost as much as $1,000 shares of apple rising yesterday in advance of that announcement. if you're wondering what might happen today, here's what history tells us according to a cnbc study, apple stock was lower 75% of the time on the day it made its iphone announcements. but on the day after in the news, the stock did much better, gaining 60% of the time with an

average increase of 0.6% so, you've been warned as to what to watch for today. joining us right now to tell us exactly what do to watch for is dan zeno good morning >> good morning. >> so everything's been leaked out. we know what's about to happen >> as far as the actual details and what's going to be included in these devices, yes. i would say what remains a question mark is the actual price point and the actual launch date of this higher-priced device they're going to launch. >> we think there's three devices. >> right >> we think there's this "x" at the top end, this $1,000 device and two phones below that. >> correct, priced at $695 and

$769 >> so what's the price point that excites you and what's the price point that scares you? >> anything under $1,000 we would get excited about and what we think the street would positively react to. we think something along the lines of $1,200 to $1,400, i think you get a pullback in the shares >> i would think -- >> the opposite? >> i would think the potential for a true profit margin, a really great profit margin on the top-end phone would excite you. you don't think you can move that many phones >> at the end of the day, i think apple will get the margins, being somewhere 40% or so if they can keep the price where they can launch it at $999, i think that's great for consumers and apples >> what about the watch? we've heard the watch is finally going to have cellular service do you think that's meaningful >> we think the series 3 watch will come with a face time camera we think it's going to come with

that 4g connectivity we think that that will kind of spur the next kind of move up to -- you know, for the apple watch. so, you know, potentially, in the 15 to 20 million shipment range for the apple watch, with this 4 ge connectivity, we think is more than possible. >> what is the surprise you're looking for? everyone's always looking for that -- steve jobs used to say, one more thing >> i don't know if you're going to get that at this event, to be honest with you. i think there's so much coming with this -- you know, with this phone here, i really think that it -- i think there's going to be so much time spent on kind of on announced announcing this phone, i don't see this at this event. >> how worried are you about the stock? >> i think when you look at the run-up here, it's typically what you see ahead of these massive product launches you saw it with the iphone 6 this phone is going to be compared to that record-setting

launch but we think at the end of the day, this will -- we think expectations remain too low here >> still too low >> yeah, we do so that being said, i think, you know, we think there could be a pullback on the news that being said, we think we continue to see upside in the shares >> and when you think about the replacement cycle, everyone thinks this might be the moment, everyone's holding on to the 6 or the 6s, thinking this is the next big opportunity do they upgrade to the s at this price point or whatever it's going to be. >> when you look at the user base today, that compares to three years ago with the iphone 6 launch where we're lacking at half the size. if we get anywhere near that type of launch, we're going to be having a party. >> on any device >> on any device that being said, we expect potentially about 45% of shipments to come from that higher priced device to get anywhere near that side, this side of things, i think that will be great news for the bulls. >> is there anything that we may

here, not maybe tomorrow, but before the holiday season on other products that you think may or may not be in the works >> i think you could possibly see a refresh to the appletv i don't think that's going to be huge news. >> do you think that's today >> potentially and that is probably just adding 4k to the system >> yes >> home pod was announced earlier this year. you're not going to get a new hardware device launch, we think. i think the biggest potential surprise here over the next couple of years here, weeks, is if we see any kind of positive indication coming out of china if all of a sudden consumers are buying out in china for this higher priced device, where we've seen shipments kind of decline, you know, more than 50% from the peak -- >> do you believe there are supply chain problems? >> yes >> a lot of rumors about that. >> i think there are supply constraints. i think they these as they go into october and november. >> do you think they'll have enough product pre-holiday season >> our view is we'll see all

three products launched by the end of september that being said wing apple is going to carefully manage that iphonex launch, where they may limit it to a couple of regions. but all said and done, i think, you know, we're talking about some severe supply constraints largely because of the high demand we're going to see for the product. >> angelo, thank you pup. >> thanks for having me. >> and we should mention, you don't want to miss complete coverage of the apple event this afternoon starting on "power lunch" at 1:00 p.m.. >> when we return, the fun is just getting started up next, we'll welcome a special guest co-host, marc lasry, and steven mnuchin will join us on stage for a ecl spia conversation stay tuned you are watching "squawk box" on cnbc helping keep shoppers safe. this is a financial transaction secure from hacks and threats others can't see. this is a skyscraper whose elevators use iot data

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"squawk box" is delivering alpha. we're giving you a front row seat to today's big conference at the pierre hotel in new york. today's guest host, marc lasry of avenue capital. we'll talk about his best investing ideas as we count down to our big interview with treasury secretary, steven mnuchin. as we're doing this,ish ma isrs winding down the storm weakens to a tropical depression as it pushes deeper into georgia millions remain without power throughout the southeast and lines are already forming as the buzz builds for the new iphone that story and much more as the second hour of "squawk box" live from the delivering alpha conference, we're doing it live. and it begins right now. ♪

>> announcer: live from the beating heart of business, new york city. this is "squawk box" >> good morning, everybody welcome back to "squawk box" here on cnbc i'm becky quick along with joe kernan and andrew ross sorkin, we are live at the pierre hotel in new york for today's delivering alpha conference. we'll be kicking off the main event with steven mnuchin. he'll join us live for a q&a session, all the way around. and we have a lot of ground to cover with him we'll be talking taxes and the impacts of the hurricane in the meantime, joining us is guest host this morning is marc lasry, avenue capital's chairman and ceo and a featured speaker at this morning's conference marc, goork. great to see you. check out the futures at this hour they have been higher. s&p futures up by 3.5 with the

s&p at a new record high and the nasdaq up by close to 15 in the meantime, here's what's making headlines this morning. the newly formed dow dupont has announced a split into three different units. businesses totaling $8 billion will be removed. that appears to be at least partially in response to pressure from activist investors. chairman andrew liveris and ed breen will talk about this more live on "squawk on the street" at 9:30 a.m. eastern time. small business confidence registering a slight increase in august the monthly index from the national federation of independent business rose to 105.3 from 105.2 in july it's largely because of an anticipated scaleback of federal regulations. the lawsuits, in the meantime, are piling up against credit reporting agency, equifax. more than 30 have been filed already since a massive data breach was revealed last week. the stock down, losing more

than -- a huge chunk of its value here, if you take a look it's gone from about 138 to 111. it's down again this morning by another 1.3% news of that breach just came out last thursday. apple is holding an event, we've been talking about it all morning. this afternoon, the company is expected to unveil a number of new products, including its highly anticipated next generation iphone. some are saying it could cost as much as $1,000 keep an eye on apple suppliers foxconn, western digital, and analog devices are all trading higher ahead of apple's big event. that's like dick tracy, you can do a face time on your watch -- >> if it has a camera. i may break down and finally do it >> what if your camera is accidentally on? >> that's the thing. one of the big issues has always been, about the camera and recording. >> like butt dialing terrible things could happen >> a whole new world to butt timing a whole new meaning to that

word >> and also, people doing things surreptitio surreptitiously. one of the big issues was you couldn't record. >> anybody you sitting down with who happens to be wearing -- >> and will the face go red so people know a recording is going. >> maybe musk is right about this ai stuff. bitcoin, you can have somebody rubbed out and not know who did it i mean, you're telling me things that are -- i'm afraid to -- >> we don't know if anybody's done that, we just know -- >> possibility of it you can put a hit on somebody and you wouldn't know who put the hit out. >> dark net. >> dark net. lasry, seriously >> that's the opening of this book, "dark net," the idea that you wouldn't know who -- >> -- who put the hit out. you knew this? >> well, things i wouldn't really want to talk about, yeah. >> he can tell you, but he'd have -- >> but he'd have to put a hit out. >> he'd have to kill me. >> in the meantime, we want to talk real briefly about hurricane irma, now a tropical

depression as it pushes north into georgia look at the destruction in its wake, roughly two-thirds of residents remain without power in northern florida, including the city of jacksonville major flooding many areas of the state had fuel shortages, standing water and downed power lines cnbc's team coveraging continuing this morning. jackie deangelis covering when the lights will be turned back on but first we twin with carl qui quintanilla who's visited the port of tampa yesterday. >> reporter: you listed the three big concerns obviously, it's the historic flooding in jacksonville, the utter devastation of the florida keys, and then two-thirds of the cup's third most populous state have no electricity this morning. and yet, cover the tampa times on monday was this, "we're lucky. that sort of encapsulates the study around here. as we now know, if that eye wall had shifted 40, 50 miles to the west, i would literally not have been able to stand where i am right now. the water would have been well

over my head when that eye wall hit. so the economic engine here in florida is revving up, here at the port of tampa pay. tanker trucks have been filling up with gasoline, starting yesterday, making their way to gas stations all around the state. that's very key, if we're going to get this economic engine up and running once again cruise lines, we think, may be out of this port tomorrow, possibly thursday. and a slew of things are going to start to open over the next 48 hours schools in tampa, open on thursday we're going to get some limited flight service out of tampa starting today american airlines, bringing in some 777s so miami international. disney and universal studios open today after two days down garbage collection starts today. and the florida aquarium, very close to where i'm standing, will be having what i'm calling tampa strong day oday, free parking, lower admission than usual, as they try to get some people out of their homes and back into some of these service industries again, the story will be power restoration, andrew,and i know

you guys have that covered, top to bottom. >> carl, that's right. thank you very much. there are about 5.1 million people without power this morning, across florida, as carl was just mentioning. the full extent of the damage is still not known. but jackie deangelis is in west palm beach and she has more on this story >> good morning, becky here's what we know so far about a little more than 6 million people were without power as of yesterday. that number has come down tow a little bit more than 5 million people so, slow and steady, the situation is improving but already, the ceo of florida power and light has said that if there are deeper infrastructure problems, it's going to be hard to restore power to everybody. it could potentially take weeks. here in palm beach county, we know that people without power, a little bit over half a million yesterday, that number also down, a little bit more than 100,000. so they're more enthusiastic about it and more encouraged, but take a look at this map of the entire state of florida.

tough to see an area that hasn't been touched by the power outages. and in fact, the red areas that you're seeing there, there's a big, red portion, at least 75% of those areas don't have it at this time. again, let's go back to the ceo of florida power and light, because he made another comment about how the process is going to work to restore power to the people of florida. >> there's a lot of tree damage out there. there's a lot of debris that we have to remove before we can actually even start to get the lines back up and the substations back in power and make sure we can turn the lights on >> reporter: and debris is a huge issue this street where we're standing, you can obviously see a downed power line behind me. those crews are going to have to come out and get those power lines up, but the debris -- the tree debris on the streets, as well, just moving that out of the way. making sure that the crews can get out here and do what they need to do and palm beach county, there was

a curfew up until last night, because they don't want people out, so the crews can do what they need to do, to get that power back and as carl mentioned, yes, there are many pieces to this economic engine, but getting people comfortable and back in their routine is going to be a piece of that as well, guys. >> okay, jackie. jackie deangelis, thank you for that let's get to our guest host this morning. marc lasry, avenue capital group, chairman, ceo, and cofounder and speaking at today's dluelivering alpha conference do you have an overall theme you're talking about, or i'm fascinated by these things you're doing in brazil >> sure, we can talk about -- >> what would you rather talk about? overarching stuff? we hit $20 trillion in debt. can you go in and restructure the united states? >> not yet i think we're good >> worrisome are we going to add to that with the tax reform >> i think if the tax thing gets done, i think you will, to the national debt. >> is there a certain amount you can add to that would be okay

because growth -- >> it all depends on what growth is if growth is 2 or 3%, i think it's going to be less of an issue. it's like you said, what we're trying to do now in brazil, it's interesting, we're finding at of these opportunities, we're able to restructure some debt and get control of a company in brazil it was the largest waste company. >> right, estry, right and you're doing it with -- i figured it -- avenue, your publicly traded vehicle is boulevard, like another kind of a road, right? so this is boulevard 2, is it not? >> yes >> you raised, what, $300 plus million. >> 400 >> and public? >> it's public >> so you go in. did you read this? why they're buying a waste management company, because it can't be dissbintermediated by amazon one thing bezos doesn't care about, garbage >> we bay public company biffa,

take it public, it's up like 33% si since we take it public. if you look at waste management here in the u.s., when it went public i think in 89, it's up about 15, 16% over the last 30 years. right? annualiz annualized >> annually. >> annualized, it's got about 25% of the market. got brazil right now, the company we've got has 8% we're buying it at 25% discount to where waste management trades and it's growing at like 100% more, twice as much. you're able to do things outside of the u.s. at huge discounts, and take advantage of that >> is this also a call on the brazilian economy? do you think it's about to turn a corner up-to-that this point? >> i think the stock markets, i think, yesterday, had a record close. i think it's up about 25% this year so a lot of it really is just, for what we do s, is what's the discount you're able to restructure and taking the company public, i think for us, we think it's

something that should double over the course of the next year not next year, next couple years. >> are still in the camp that everything outside of the u.s. is still more attractive than anything in? >> i think so. there's very little to do in the u.s. on the distress side. so you have to go outside the u.s. >> brazil, if you can call the swings over the last 25 years, it's pretty unbelievable and lately, they -- politically, they've had -- i mean, it's been a -- >> it's had some issues -- >> a storm >> it's had issues, but now it's gotten a lot better. >> and gdp is probably going to -- >> gdp is up everything is up in brazil >> so macro you like thinking other stuff in brazil >> we think on a macro level, it's good. >> but if i had to go down and go through the books of a baa zillion waste management companies to see their capital structure and their balance sheet, i might have a problem with that. who does that for you? you have someone go down and it you're going to restructure the debt that's existing with estry right now. >> we already did that

>> so debt's the same wherever you are. >> and we were able to restructure that debt. >> but the law is not the same wherever you go. >> that's why you're buying it at a discount. people love the rule of law in the united states. so the rule of law in brazil is good is it as good as the u.s.? no but there's no country that's as good as the u.s. so therefore, i think you're actually getting overpaid for the discount you're buying it at, for something that's going to grow twice as much as sort of a counterpart in the u.s i think you're getting overly paid for that. >> are there places in the world you wouldn't go because the rule of law is so uncertain and you're not sure you would ever get paid back. >> yes >> have those places increased in the last ten years? >> they have what's happened is, what you found is that the rule of law, what would normally take three or four years, takes you six to eight years. so therefore, just time kills you from an investment point of view you'll ultimately get there, but just the time of how long it

takes, kills the investment. >> what are some of the markets you've crossed off the list in the last decade? >> i think for us, china, where what we're finding inside china, it's taking a lot longer i would tell you indonesia has also been an issue the philippines. but what we've found in indonesia is that we can actually, in certain situations, do pretty well, as long as we team up with the right families. so people who, in essence, are pretty connected in those countries. >> you've had visitors from the democratic party for 2020 visiting you you make the point, it used to be, maybe they'd start in 2018 or something they're starting six months after the last election, you already had some prospective presidential candidates coming -- they want money from you. >> shockingly, yes >> can you tell us -- how many have you met with?

>> quite a few >> quite a few can you kiss and tell? i guess you can't. like who >> no, they come -- i would rather not say who's coming -- it's all the people you would know >> cory booker >> it's everyone you would think. >>cauliffe if i get warm -- >> all in the political camp, meaning they're politicians today, or any in the -- >> yes, they're politicians. >> any in the business/ceo camp? >> all politicians today >> and they all think they can beat trump because he's trump and you're telling them, you better have something better than that. >> i think you need a message other than, look, it's anybody but trump, right and if you remember, that sort of was the message with president bush and i think john kerry lost i think you actually really need a message. and if you've got that message -- >> you're going to make so much money over the next four years, you'll be able to back whomever you want, i think. >> yes, that would be good >> you've already made so much since november >> we've done well thank god.

the better thing is the rock got sold >> you're going to throw that at us >> that was good, also >> that's exciting i look at all sports teams remember how worried you were about the dodgers? >> i was very, very worried. it made no sense on its face, it didn't make sense. but prices have gone up. are you convinced they continue to go up given the challenges -- we talk about espn and disney all the time, all the challenges that espn is having? >> yeah, but they're having challenges, but what you're finding is facebook and amazon and sort of other media outlets now want to come in and buy that content. >> i think the question is, do you look at what espn did and say they overpaid for content, and that's why they're having the challenges they are having and that is true, does that -- does a facebook or an apple or whomever you think is going to come in, is there a lesson to be

learned in that or do you think they overpaid, too >> first, i don't think they overpaid i don't think espn overpaid. i think everyone needs that original content >> if they didn't overpay, why are they having the challenges the they're having >> everyone has issues the issues they're having are a little bit separate. when you look at sports and especially basketball, basketball is one of the few areas it's growing -- >> the price they paid for the nba is right most analysts and investors who have been frustrated with the stock would suggest that one of their biggest problems is that they think they overpaid for the nba. >> and since i'm one of the people who owns an nba team and i'm biased -- >> i know you are. but i'm trying to understand you think all of analysts and investors are wrong? >> i think you need to look at it over time and when you see that ratings for the nba are continuing to grow, i think over the next, because it's a ten-year deal, you'll find it ends up being a

pretty good deal >> they'll make money when it's all said and done? >> they should >> would you invest in disney? >> i would >> we'll have mark throughout the hour -- it just occurred, wouldn't it make more sense to let a republican go and then put a democrat in to redistribute everything again wouldn't that make more -- why don't you let it grow a little more before you back a democrat to split everything up more evenly >> one, i think it's great that i have that amount of power, that it's up to me, that would be good. >> you'd be okay with that 3%, 3, 4% until 2024 then start splitting it up >> growing the economy by 3% in the united states? >> i don't think we are. >> just sit back and watch maybe these hurricanes, we were a couple of quarters at 3%, we'll see. but then we may have a 5% after -- >> because of the hurricanes >> right >> marc, believe it or not, we want you to say for the rest of the show >> ui'll talk to you off-camera.

coming up, i don't even know where this is going to go. we'll talk about the impacts of hurricane harveys and irma on the nation's power grid, utilities after the break, and feeling the brunt of what's left of irma. senator david perdue will join us to discuss the effects of irma on his state and much more. in the meantime, check out the futures this morning you're looking at green across the board. the dow up by about 67 points. nasdaq up about 18 s&p 500 close to 5 points. we are back in just a montme live from the pierre hotel at the delivering alpha conference.

some of the biggest names in business -- >> these are going to be big numbers. hopefully the bipartisanship we saw last week won't be an aberration >> what kind of impact is irma

going to have on the multi-billion-dollar citrus industry >> the exact of irma hasn't been as big as expected the markets rallied huge today another sign of the overall resilience of this market.

welcome backing to "squawk box. a quick note on the story we mentioned earlier, the change in the dow dupont, one of the activists issuing a statement immediately saying, it fully supports today's announcement, commending the company's board, management, and advisers mckenzie was on that deal, of optimizing dow dupont's portfolio. we'll hear a lot more from triant today david faush and the gang on "squawk on the street" will be hanging out with andrew liveris. with such a big chunk of florida

losing power during hurricane irma, getting power back is on a big concern. joining us is an energy analyst and managing director at clear view energy partners great to see you today we've already heard -- good morning, we've already heard from our reporter on the scene there that about 5 million customers are still without power. obviously, that's even as they are making progress, getting people back online how does this match up with what we've seen in the past and how well prepared were these utilities to get things back up and running this time? >> i think what we've seen is, there's been a lot of investment over the last 10, 12 years since the big round of storms with wilma and charley in 2004 and 2005 and the hardening of the system is where we're really going to see the difference and that is the difference between restoration and having to completely rebuild. there's a lot of restringing that has to take place there's a lot of reconnecting that needs to go on. and even that is going to take several weeks. but that is not going to be the months and months that people

are going to be out of power, for example, down in the caribbean. so i think, although we don't have a counterfactual to demonstrate how much better this is compared to what it could have been, i think that what we are going to see, regulators are going to realize that the investments made over the last 10 to 12 years have really paid off. having said that, when winds this high hit out of the ground, what he was talking about is downed telephone poles and others along the way that would take time to build back up which begs the question, could you ever make yourself completely resistant to a category 5 hurricane >> i certainly don't think so. i think what we see, the effort is to see how fast we can get back online. that is the definition in the industry now of resilience it is to figure out how to get things back together as soon as possible when you're not replacing wood poles that have come completely out of the ground was simply

restringing them -- simply but when you're restringing them on concrete pillars, that is something that takes place over long time and something that brings you back into a functioning economy much sooner. that is the best we can do, because mother nature, she's much more creative than we are >> sure. >> we haven't spent much time talking about what happened in houston. how was that area prepared for the floodwaters that came in >> well, houston understands that they are approximate to flood. i think what we saw in terms of the weather event was very much unanticipated, a lot like what we experienced with superstorm sandy up on the east coast in 2012 but i think houston was more prepared, because they, too, have been hardening their system in the wake of hurricane reit a and ike. and the fact they were able to keep the outages around the 300,000 customer level on a rolling basis, they brought other people up, and yes, other people were flooded, but their ability to manage that

situation, i thought, was very impressive, in spite of the absolutely epic amount of water that is in that system right now. so i think we are seeing improvement. it's no consolation when you're the customer who's still out of power, of course, but their ability to manage that situation, i think, had a lot to do with the fact that they dealt with flood instead of wind, and in that way, that damage is a little bit easier to manage, as opposed to avoid altogether. >> christine, thank you for your time tonight we appreciate it >> no problem. and coming up, could the fed be forced to hold off hiking interest rates this year, following hurricane irmas and harvey a report from steve liesman is straight ahead "squawk box" will be right back. >> announcer: later on "squawk box," we're kicking off the cnbc delivering alpha institutional conference steven mnuchin will sit down for a q&a session with joe, becky, and andrew and you can watch it right here live. his comments on the state of

nation, tax policy and more is straight ahead keep it locked to cnbc, where the biggest names in business will be speaking at the delivering alpha conference all day long "squawk box" returns after a quick break.

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good morning, everybody. welcome back to "squawk box" here on cnbc among the stories that are front and center this morning, the labor department is going to be out with its monthly jolts report, a little bit later this morning. that's its measure of job opportunities and labor turnover in recent months, it's shown record number of job openings. among the many disruptions caused by hurricane irma, ratings for this past sunday night's nfl atchup between the dallas cowboys and the new york giants that's because the ratings company, nielsen, actually had to evacuate its ratings staff from their tampa headquarters ahead of that hurricane. nielsen says it isn't yet sure when it can resume normal operations and while apple prepares for its product launch event later today, rival samsung says pre-orders for its galaxy 8 is the highest ever in the series the note 7, of course, had to be

pulled from the market because of battery fires hurricane irma caused severe flooding around jacksonville, florida. it could be several days before the water begins to recede morgan radford joins us now in jacksonville >> reporter: good morning. we are in downtown jacksonville. you can see where these waters have already lapped over this bridge that once was the barrier is completely gone at this point. and these waters have really flooded in area, making this road and this grid almost impassable this is as about 200,000 people across the state of florida are waking up in 585 shelters. it's not only the loss of power, there's 6 million people in the state of florida that are without power. about 160,000 of them right here in jacksonville, florida but the water, the biggest issue. that's what's caused a lot of damage, causing property damage, houses have been ruined, as well as entire apartment complexes. and it's not just here in jacksonville further north, i also saw a

woman who was stranded inside her home and take a listen what she told me she did when the hurricane was coming >> my daughters and i, we camped out in the living room and we had a safe zone in the hallway we pulled a mattress out there in case we needed it it's all good. i've been through things like this before, and you know, it's -- you know, it's okay, you're going to survive and joel swim out or whatever, you know, or something comes down, that's your -- but when you're responsible for your children, it's kind of different >> and this is after a lot of these low-lying areas had mandatory evacuations. and right now, businesses are closed, school has been closed and so people are trying to figure out how they're going to get through the rest of the week, and hoping that things will return to normal by the end of the week. back to you, joe >> okay, very good, morgan for a look at how hrm rurrican a irmas and harvey may fact the

economy, the economic data and the fed, steve liesman joins me now. it wasn't as bad -- i hate to say it, i don't know if you've adjusted gdp based on it not being quite as severe as it could have been, are you looking at a 1% -- >> i obviously don't think we know, joe. >> are you looking at a 1% quarter? >> i don't think it's 1% it's down toward the 2s. we've been talking in the 2.8 to 3 range. i think we're now down to 2s the storms will wreak havoc with lives, the economy, and the data over the next several months even with fed policy, hopefully everything makes a full recovery here let me show you one estimate that's out there this is mark standzandi. irma, very initial estimate, 64 to $92 billion, for a total cost

for the two storms of $150 to $200, which is combined around the level of katrina together. that's where they are. and let's take a look at some of the estimates i'm seeing about how it could affect the data non-foreign payroll september, i'm seeing estimates of down 50 or 100,000 from what it would have been. that's not the total there and then, august, those are sort of unrelated jobless seems to be up to 100,0 100,000, a separate process for why nonforeign payrolls would be lower. august retail sales is a really interesting story. you had people buying stuff ahead of the storms. you had additional gas price hikes in there, but you had the wake of the storm where you had lower retail sales and q3 gdp, that's what i'm seeing, off half a point to a full point what's it going to mean for the fed? they weren't going to hike in september anyway a final hike this year was always in question before the storms, only given about a 30% probability. what i think is, the fed is

going to look through the economic news, believe the economists, almost a full recovery over time, and do what it was going to do anyway. >> do what it was going to do anyway nothing? >> which is, we don't know, figure it out based on the september inflation data and a lot of this depends on the inflation data you have a hike in the gas prices, that will probably roll off. i didn't look at it this morning, but it was a little bit better yesterday we saw it over time. one of these days, a storm is going to come through and it's going to be one that doesn't say we're going to have a full recovery and it's going to be okay spomp, what i'm seeing is these are not those storms i'm still seeing everybody say, we have this weakness in the third quarter. the rebound from the rebuilding plays itself out in the economy for the fourth quarter and the first quarter. >> hopefully it's not a nuclear storm. >> what's the steve liesman gdp expectation? >> so we're -- i think it's fair to say to say 2, 2.25% and that's still pretty good in

the wake of -- look, there are times to be hit by a hurricane, if i might, when it comes to the economy. this was one of them we had low inflation, we had pretty strong gdp. we've got strong job growth. we can take this hit nobody wants it. nobody thinks it's a good thing. but in terms of where the data were -- >> and it boosts the gdp down the road >> it's like the company that reports earnings and says, extraordinary items affected -- the fed shouldn't change what they were going to do based on it but if they were going to raise in september, previously, i would say they wouldn't now. but because they weren'tgoing to anyway, they're not -- >> you know what september, they raised in, joe go back in the way-back machine. >> 2008? 2007 >> 2005? >> 2005. september 2005, in the wake of katrina, they looked through the data and they hiked less than a month after. >> reporter: the financial crisis >> that was before we got scared to death of our own shadow

>> and we didn't do monetary policy in a normal way >> now we've rewritten -- >> right it's always emergency accommodation, according to these guys >> right but now i think they'll go slow and take a look, but i don't think it changes all that much, going forward. so two things real quick, getting the refineries up and running is key and getting disney world up and running and the air-conditioning >> and universal studios >> and universal, they say, it was mickey mouse and air-conditioning and i guess mosquito control those are the three things i don't know what's happened to mosquito control >> mark, as an investor, i don't suppose you pay a whole lot of attention to something like this >> not really. for us, you need to have sort of restructurings and things in trouble. this is all short-term >> got some very nice property on sea island that he might be paying attention to. but that's about it. >> well we have, just as a side, we've had a number of people saying, do we want to get involved in rebuilding, like

tampa? like, that you can buy -- you can buy a number of units and just end up rebuilding >> is that attractive to you >> it depends on what the rate of return will be. >> but does a storm like this change your overall outlook? >> no. >> does it change, in terms of a state like florida, well, now it's been revealed how vulnerable the state is. >> no, not really. i think for us, it's -- we're -- we want to invest in companies that are doing structuring i think investing in real estate in florida, you want it to be five years ago after the -- >> but i think the larger question in terms of the weather issue is, are you worried or even interested in properties along coastal areas? does that matter to you, one way or the other >> yeah, because it will be short-term we'll end up rebuilding, sell, and we'll be out before the next storm. >> steve, thank you -- >> we have some serious problems in 2100. probably won't matter to you >> no.

>> steve, thank you very much. when we come back, in fact, senator david perdue of georgia will join us to talk about the economic impact of hurricane irma and what's happening in his state. right now, though, as we head to a break, take a look at the u.s. equity futures picking up even more strength with the dow futes uurp by 65 points stick around, squawk will be right back people don't invest in stocks and bonds. they don't invest in alternatives 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.

>> announcer: later on "squawk box," we're kicking off the cnbc institutional investor delivering alpha conference. treasury secretary steven mnuchin will sit down for a q&a session with joe, becky, and andrew and you can watch it right here live his comments on the state of nation, economy, tax policy, and more is straight ahead keep it locked to cnbc, for the biggest names in business will be speaking at the delivering alpha conferen acell day long. "squawk box" returns after a quick break.

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georgia taking hits from hurricane irma and while the storm has been downgraded, it's knocked out power for more than a million people joining us now, a georgia resident, senator david perdue i daresay, sometimes sea island resident you know, lasry's here, too, senator. you remember this guy? we used to have to like kiss up to him, when he owned sea island what can you tell us, senator, about the state in general haan

have you heard -- i've heard that sea island is not awful at this point, anyway >> we had a big storm, not like florida did, but it was big. we had an 11-foot surge in savannah, because it hit at the high tide yesterday. but georgia's digging out today. the airport shut down in atlanta yesterday, late. i was on one of the last planes out. as i was evacuating the coast over the weekend, i noticed dozens of trucks, out of state power trucks headed down to restore electricity. so water and wind was a big story in georgia we did have three fatalities a million people without power people are not working in many parts of the state today so we've got to get power going again and make sure people get back into their homes, safely. >> senator, you know, things are still happening. and i hesitate to ask you this, but they say that all politics are local. does that deal that the president cut with democrats get immediate relief for these hurricanes, does that look more palatable to a guy like you, when you see that we need to do this quickly you didn't maybe get everything

you wanted with the debt ceiling and it's going to come back in december, but was that right move now in your view? >> this is what's at stake here. we're losing the right to do the right thing. every dollar that the president and everybody allocated up here toward relief for harvey and now for irma, is borrowed money. we've had this conversation. we're losing the right to do the right thing. that's what we should be talking about up here, is how not to do that in the future >> all right, but in the face of true need for residents of texas and georgia and florida and the carolinas, isn't the right thing to maybe rise above? we used to use that term at this network, but isn't is right thing just to get it done, even if you have to go across the aisle? >> that's what washington did last week. people criticized the president, but that's exactly what the president did. congress stepped up and voted for that in a moment of crisis, that's exactly what we do the problem is, in the future,

we're going to have less and less ability to deal with these emergencies. in a moment of crisis, we do what we have to do, joe. >> so, senator, we're going to talk to treasury secretary mnuchin in about a half hour or so do you think that this latest move by president trump changes the dynamic of tax reform? >> well, i don't really think so we've got this in our own hands. we're going to do this in reconciliation but what we have to do is focus on the priorities. i know that's what the secretary is going to talk to you about. our corporate rates are not competitive with the rest of the world. that makes our companies in the u.s. very vulnerable we are the last company to have a repatriation tax those two things alone will free up a lot of capital and get our economy going again. and wave got to simplify this individual tax code. that would what i would love to talk to the secretary about. and then we need to pull back on

these onerus regulations >> so this is not going to be a deal with chuck and nancy and idee and everybody else. it's not going to be permanent it's not going to be 60? >> we're going to welcome anybody who will vote for this thing. but i didn't just get off the plane, joe what we've got to do is make sure we get this priority done at all cost. that's what the american pamer e want if we get this tax package done in some form, this economy is wanting to turn right now. consumer confidence is at a 16-year high ceo confidence is up at a 20-year high and i believe we've seen the first stages of real capex investment right now in u.s. business i'm optimistic if we get this tax thing done, we'll see this economy start to turn. >> so, senator, you said, do the right hing, in terms of not adding to the deficit. you saw, we went over $20 trillion i know you saw that.

so, does that include -- doing the right thing includes paying for all the tax cuts, or do we do dynamic scoring, which assumes future growth that a whole group of people either don't want or don't think it can happen >> joe, you have to include dynamic scoring. that's a washington term i never knew what that meant in real business. what we did is we actually did financial models that made sense. these scoring models up here are not -- they have no relation to the real world if i don't do anything else up here, we've got to change the way washington decides on these financial matters. the budget process, how we do all of these afinaginling we're the last country in the world that has this, and we know we've got to get rid of it, but our score keeping us in many cases from doing the right thing. and when i'm talking about doing the right thing, the right thing

is to help the people in georgia and texas and florida and south carolina but the problem is we're losing the act to do the right thing. that's what we're talking about. >> people forget that. sooner or later, we run out of other people's money, i guess. senator perdue, thank you and good luck and we're obviously, some property there, as well we're pulling for georgia. hopefully everything is going to come back better than ever thank you. >> thanks, guys. >> when we return, more from the delivering alpha conference at the pierre hotel in new york marc lasry will talk markets in just a moment. stick around "squawk box" will be right back. it can detect a threat using ai, and respond 60 times faster. it lets you know where your data lives, down to the very server. it keeps your insights from prying eyes, so they're used by no one else but you. it is... the cloud. the ibm cloud.

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welcome back to "squawk box. i want to get back to marc lasry, delivering alpha featured speaker. one of the conversations we've been having a lot recently is about pension funds and whether pension funds want to be in your business or not. and we've had a number of big pension funds get out of the hedge fund industry. the timing of all of that was sort of at the lowest of all low points do you think that's going to change >> no, i think what you've got is everybody today wants to be much more in locked up capital >> right >> so we've actually changed our business, where today we don't

have anymore hedge fund money. >> none? >> you mean pension money? >> no, hedge fund money, where we have any money that is quarterly liquidity. all of our moneytoday is locke up for three years or more and that's where the pension plans are going. >> but when you think about calpers, for example, do you think that's changing the game >> i think what calpers is done is they've gotten out of the liquid money, the quarterly money, and the reason for that is because people were paying 2% a year for that right now in the private equity side, they don't pay fees until the money starts getting drawn down, so it has a huge impact on returns >> why lock up for three years is that because you can't do anything if you feel like you need to be able to cash out. >> you need to be able to invest and worry that someone is going to take their money out. i would love to lock it up for ten years. but three seems to be the minimum. >> we've talked about it a couple times over the past 48 hours, this report that seth

colorman, a value-oriented investor, is probably going to be returning money this year does that make sense to you? >> it is the biggest problem you've got on the u.s. side right now is there aren't as many as distress opportunities. if you said to me, look, i would like to give you $10 billion to do u.s. stress, i would say, i'll take one or two the opportunities are really outside of the united states so i think for seth, his focus has been much more on the u.s. one of the things you want to do is return capital. and when the opportunities come back, you'll end up getting the capital back >> if you're an investor who's watching this program right now who can't run around the world the way you are, is there any way to play what you're doing? or something like what you're doing in a public market setting? >> i think one of the things they can do, they can play in what we're doing in boulevard, too. as we're buying sort of a company, waste management company in brazil, i think part of it is to try to see what people like me are doing and try to play in whatever public

vehicles they're trying to do. >> okay. ma marc is going to be sticking around before we get to the treasury secretary >> that's right. when we come back, we'll be kicking off today's big events at the delivering alpha secretary. treasury secretary steven mnuchin will be joining us very live in about 20 minutes cnbc will be bringing you live presentations all day long check out some of the names you can expect to hear from today, ray cooperman, jamie dimon, and many more. "squawk box" live from the delivering alpha conference at the pierre hotel in new york we'll be right back.

people don't invest in stocks and bonds. they don't invest in alternatives 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.

delivering alpha, a front-row seat to market movers and shakers. >> a $3 trillion lineup set to take the stage with the top stock picks and best market ideas. >> it's interesting, we're finding a lot of these opportunities. >> it all kicks off with the view from treasury a big interview with secretary steven mnuchin, just minutes away as this special hour of "squawk box" begins right now. ♪ ♪

good morning and welcome back to "squawk box" here on cnbc i'm joe kernen along with becky quick and andrew ross sorkin it is delivering alpha day and it's usually very quiet in this studio. this is exciting for me. this has got to be going out, to some extent, on our mikes. >> we hear it. there's a pbuzz >> it's happening here this is like one of your parties at the sorkin house. this is loud we are live this morning at the pierre hotel in new york city. our guest hosts, marc lasry from avenue capital more from him in just a bit. and in minutes we will be speaking with treasury secretary steven mnuchin we'll be bringing you that interview live and the big lineup continues including jpmorgan ceo, jamie dimon, bridgewater's ray dalio, and as you can see there, many, many, many, many, many more. >> we are kicking off delivering alpha with a little bit of

breaking news this morning in the ongoing saga between bill ackman and adp leslie picker is here with the detai details. >> adp is firing back out with a 69-page presentation, in response to pershing square's 167-page presentation last month. some key things to point out, pershing squares owns both options and shares to comprise its share stake, but ackman only has 2% that's confirming reporting by our david faber yesterday. the rest are in options with a much higher cost basis with about $116 per share, $8 higher than that of common stock. now, action dp says it's cost an about $2 billion to convert those options to shares. this whole situation is highly unusual and significant because the record date has passed, meaning that ackman can only vote 2% worth of his share ifs this gets to a proxy contest so this signals that he was

aiming for a settlement here, but it appears he may not get that and adp exposed some details on pershing square's new compensation structure now his investors will pay 30% performance fees on returns greater than 5%. before, they charged 20% on positive returns adp says this incentivizes a, quote, swing for the fences mentality, encouraging pershing square to make decisions with more weight on the upside than typical hedge funds. >> this is some serious blowback this is -- they are pushing back there's no way any settlement is cominge ining out of this. this is them really taking off the gloves saying, you want to fight this way, we'll fight this way. >> and he's encouraging shareholders to vote with him. 2% still makes him a top 10% shareholder of adp, but it's less o of a convincing argument to other shareholders nan he owned 8.3% >> question for you. do you think that if you're

going to mount a proxy contest like this, that there should be thresholds for how much you actually own >> no. >> no? >> no. i think at the end of the day, every shareholder has a right. there's a cost to doing it even if you own one share, no one's going to listen to you if you own a million share, more people the more you own, the more people will listen to what you've got to say. >> but there's been an argument made that perhaps we should rethink, from a governance perspective, whether there should be tlesh hehresholds to t contests like this >> but why >> if you want to have a contest, at the end of the day, shareholders are going to vote, so what i've never understood is, you know, in my world, you need to have 33% of the debt to be able to control something on the equity side, i've never understood why you can have 1, 2, 3%, anybody cares >> what do you think about the pay structure changing 30%, once you get 5% returns or

greater. i'm guessing it's a much smaller percentage or zero percentage for gains below 5% what's that -- >> well, zero. i think what he's got is, he's saying the first five, and the reason for that, i think investors today are demanding and saying, look, if all you're going to makeis 10%, i want to get the vast majority of that. but i do think at the end of the day, the higher your return or the higher the incentive fee, the more you need to generate a 10 or 15% return so therefore you'll go for things that have a little bit more volatility. >> thank you very much, leslie, we appreciate it >> thanks. let's get a check on the markets in the meantime. as we've been showing you, the futures have been higher all morning long, and this comes after big gains yesterday, with the s&p sitting at another new high the s&p this morning is up by another 5 points above fair value. dow futures are up by 67%s before fair value. and remember, the dow was up by about 260 points yesterday if you want to take a look at the treasury yields, the yield's

coming down a little bit -- or coming up a little bit after being under so much pressure yesterday. the ten-year at this point is yielding 10.15%. right now let's get an update on irma that storm downgraded to a tropical depression as it pushes north into georgia millions of customers remain without power this morning, from florida all theway up through south carolina also, travelers says it's temporarily going to be suspending stock buybacks, while the insurance company assesses the impact from hurricanes harvey and irma. travelers has put an early estimate of up to $490 million out there for catastrophic-related losses from harvey, including projected recoveries from re-insurance >> and guys, i'm leaving, now. >> you're leaving us >> i am, because i'm going to take you behind the scenes in just a moment, we're going to go backstage with the treasury secretary before we all sit down with him in just a couple of minutes. >> we will see you backstage >> we won't be apart for long. >> i know. >> bye, guys

>> here's what else is making headlines at this hour don't walk in my shot. >> i won't i'll walk right behind you >> dowdupont announcing a change in its planned split into three separate units businesses totaling more than $8 billion in annual revenue will be moved from the material science division to the specialty chemicals unit this appears to be at least partially in response to pressure from activist investors, including trion, which issued a statement today saying it fully supports today's announcement and commends the company's board, management, and advisers for optimizing dowdupont's portfolio. the stock's up as a result >> chairman andrew liveris and ceo edward breen will discuss the move live on "squawk on the street" at 9:30 a.m. eastern we'll also hear more from trian at delivering alpha today with cio, ed garden meanwhile, it's a big day for apple, as you probably are

aware. the company is expected to unveil a number of new products, including its highly anticipated next generation iphone some are predicting the new gadget could cost as much as $1,000 that's so much more than a gadget it's not like some -- >> yeah, it's a lifeline >> it's not like so gopro thing you stick on your bike helmet. >> as you pointed out, this is something you'll go back to work to go find if you forget it. >> it's $1,000 and andrew will be waiting if line for hours don't miss complete coverage of this apple event this afternoon on "power lunch. that's a nice shot there united nations security council unanimously approved new sanctions against north korea last night the north korean ambassador to the u.n. conference on disarmament said that his delegation condemns in the strongest terms the latest security council resolution, calling it illegal the envoy says forthcoming measures by north korea will

make the u.s. suffer the greatest pain it ever experienced. in the understated terms we hear from that country. >> marc lasry is here. you're chuckling a little bit about this, but look, this is something that really has started to affect investors' mentality as they look at this north korea being more and more belligerent, having more and more missiles launched up, and even cited as a reason that the dow picked up yesterday, because they didn't launch any additional missiles over the weekend. >> i know, but if you look at it in a passive resolution, you have that statement. the reason i was laughing is you have that statement and the dow is going to be up, what, 300 points so i find it utterly amazing that you could be in the midst of this, you know, with south korea and north korea, would you want to live in south korea today? >> no. >> right do you know where the sovereign debt -- so investors are telling you there's no risk. the sovereign debt of south

korea trades at around the same level as the u.s. treasury >> wow >> so where would you rather be? >> so you thought there were no opportunities in the united states what does that mean -- >> well, there's a lot of opportunity outside in asia, pau because if you're in asia, you're much, much more worried about this whereas investors here believe it's all talk. for someone like me, i look at that and go, well, there's got to be a little bit of risk to that >> but how do you manage that risk most people assume it's either risk -- either completely on or completely off and there's no way to tell in between. >> so for things where it ends up being like sort of aaa, people and institutions will keep buying that but where people need capital for a small business or anything like that, you can come in and still make sort of a 15 to 25% return, depending on direct lending or anything that you want to do out in asia today >> are you doing that in south

carolina or other asian nations right now? >> in south korea, it's not somewhere i want to be investing in today >> when you look beyond that, we've also seen missiles that have flown over japan. do you think that's outside the range of that trouble zone up-to-the- >> it is i think in japan, i'm still comfortable investing. for us, we're investing right now, ends up being in australia, it ends up being in hong kong. it ends up being, we're doing a deal in indonesia, a deal in india. so those areas today is where we're focused? >> you mentioned earlier, china was a bit concerning to you because of the rule of law and how long it takes to get anything done. in hong kong, a separate story? >> it's a separate story it's takes too long so our return end up getting killed on that >> marc, the last time we talked to you, i don't want the steal too much of your thunder today for delivering alpha, but last time we talked to you, you talked about some of the things you were long and some of the things you were short.

at the time, you said you were short retail stocks. are you still? what's your prognosis for the retail area? >>i in think we've covered quita bit. i think whatever we made money on, we made money on the issue today is, where is retail going and we'll all find out the i think the easy money has been made and now you're sort of going to wait. is this a melting ice cube and the question is, how fast is it melting is it something that's going to be really slow, which is fine? or something that's pretty quickly, which will have a lot of issues for these companies. >> when you say the easy money has been made, you're talking about on the short side? >> yes >> are there any potential for potential longs? do you like amazon or some of these other new players? or are you looking stocks that have been beaten down. >> we're looking -- amazon, i'm not going to look at that. but i'm going to look at companies today where their debt has gotten hit and their equities have gotten hit and we'll probably start

investing in that sector again in the next three six months as we get a better feel for what's happening. >> anything specifically in retail that you can talk about >> more high end companies you would know that have gotten hit, like a j. crew or a couple others >> a real sports guy >> yes >> would you go to the olympics? >> would i go? >> in south korea? soon >> no, i know. >> i saw the latest -- finally an article came out, some of the ticket sales have been a little bit soft, but i mean, duh! >> not surprising. >> i think by then, it should be fine >> really? it's not that far off. we're going to have some kind of resolution in months then, of some kind? >> i think you'll know what's happening. i'm trying to go as an athlete and so far that's been unsuccessful >> i'm trying to come up with a quick comeback on what you would really be able to compete with i don't know whether the summer or winter would be -- i don't see it either way. >> i don't see it either one

>> maybe tennis. >> all right, marc, thank you. >> thank you >> it's awesome and we look forward to your more -- >> it's going to be riveting you should just be -- it's going to be the most riveting thing -- >> i'm not detecting a hint of sarcasm there. it will be don't sell yourself short. >> all right >> just sell the retailers short. coming up, we'll take you behind the scenes of delivering alpha as the news making conference gets underway and our conversation with treasury nucretary steven mnuchin is mites away "squawk box" is coming to you live from delivering alpha at the pierre we'll be right back.

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welcome back to "squawk box. i am whispering, because we are at the pierre hotel at the delivering alpha conference, just getting ready for this big event. $3 trillion of money under management here. we have a huge lineup, ray dalio is going to be here, steve schwartzman, jamie dimon let me take you a little bit behind the scenes because the big event is about to start and steve mnuchin, the treasury secretary, is just back here there's his brother, by the way. and the whole crowd, everybody getting ready for the event. we have it coming up in just a couple of minutes.

i want you to stick around, security is here secret service "squawk bo rur wx"etnsith all of this in just a couple of minutes. my dell small business advisor

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welcome back to "squawk box. we're live at the delivering alpha conference treasury secretary steven mnuchin is about to take the stage. he'll be with joe, becky, and andrew and while they get set up,

that's the reason you're looking at me and the guy i usually do my show with in the morning, along with carl quintanilla, parts unknown at this point with carl >> doing fabulous work down there. >> down in florida you and i will have some interesting stuff to discuss on "squawk on the street" including andrew liveris and ed breen, respect live i chairman and ceo of dowdupont and a big reshuffling that took place among the key companies, materials and specialty in terms of what's going into them. >> right, they create basically a 3m company, which is the one that has got food and it's got safety -- some really exciting things but more importantly, david, as a former fund manager, i saw these estimate cuts and i blanched but as someone who knows the ins and outs of where people want certain things, i think you could say that they're very happy and the longer term is better >> i think they were under pressure from at least three, if not more investors of course, dan loeb at third point.

trian, glenview. they all seem to be somewhat happy with this change they've added about $2.4 billion in ebitda to the specialty products part of the company, the one led by breen they were looking for as much as $3 billion, but getting most of what you're looking for. they seem to be genuinely pleased with that. now, there may be a move on to capital allocation what about buybacks? what about the dividend? and of course, as you point out, i don't know if there will be a near-term reaction to some of the guidance >> i think that, actually, the hedge funds that you mentioned are the ones that they are in favor of that means they could buy more, they would be more excited why are we talking about this? this is the world's largest chemical company a lot of people thought it was shotgunned, initially. this is far more than that if it were just some little chemical company, it wouldn't merit five seconds of our time, but this is the biggest corporate restructuring going on in the world right now the two things that are happening in the world right now are this and the, should i upgrade?

should i upgrade it's incredible, in the last 24 hours, i cannot tell you how many people who have said, i have the six, with i think i should upgrade i ha i have the 7, should i upgrade and this country has not seen a debate among consumers that i can recall >> apple will be very happy as long as people are talking about it and debating it we've talked as well about that $1,000 price point we were talking about it yesterday. given the equipment installment plans so many people have in the u.s., you never actually cost what the actual cost is. you want to know your monthly cost do you think it will be an impediment to sales? >> no. and there's a weird tiffany-like component to this. in china, they like the really expensive. they like the watches. they like -- they can't own big homes, so they're not buying those $8 million mansions

that -- >> what do you mean, $8? >> $18 >> that will be washed away. >> that's right, they tear them down, anyway in china, the way they show their worth, this is how you show your worth. this is $1 thor,000, i want $500, that shows you don't have any money. >> so china becomes even more important for apple in some ways >> more important. >> they face a lot of competition there, as you know >> but one name we never talk about here, huawei, for example. >> kmart, do you mean? >> is that what you -- >> kmart versus tiffany! a lot of people used to shop at kmart before it became kmart >> they -- that was so long ago, it's hard to remember. >> i remember -- but these are the things people are discussing and look, we have a market that's filled with news, but people want to know really what's in -- it's incredible how little people know about this

phone, given how far talk there is about who's in it, who's not in it. we've seen a lot of stocks fly with the idea that they will have tremendous economic content, whether it be skyworks or broadcom. whether it be nxpi david, talk about something, eliot partners is still agitating that qualcomm has to pay more where is that? >> you know, it's funny, i haven't checked in on that in a little bit, because they still need their approvals to come in, but that is still a key question mark for qualcomm, whether the 110 cash bid will hold the stock price traded well above that i haven't even looked at it, jim. >> it's at 112 and change. >> and as we pointed out, they need 80% to tender it's going to be very difficult. i've discussed it, of course, with the ceo at this point, all qualcomm can really say is we're committed to where we are in that deal, until they're not. >> but you have said from the very beginning, you have to be very careful about the all or nothing apple lawsuit. david, only nxpi makes itso it's all or maybe nothing. because if -- and the last ruling was not so great.

qualcomm, they've got much more at stake than any tech company i know >> i know, it's funny. we need to check back in after the summer has now ended with all of the stories we've been following, including that really historic battle between qualcomm and apple, that has been going on and as you said, is so key to qualcomm's future, in terms of certainly its royalties and its ip portfolio, which apple is arguing, they charge way too much for when it comes to the phone, given the percentages it takes. and at a $1,000 price point, that number is only going higher >> right and i think that -- >> even though they say, well, you had nothing to do with the o with the additional features we've added. qualm com would with say, of course we have you jumped in ten years ago and took advantage of everything we've done until then. >> apple reminds me of the battle going on with amazon and with walmart, versus the

suppliers. i had david taylor on last night. i know he spent most of the time talking about trian. well, we'll speak to ed garden today. >> we will we're back to activism now of course, it played such an important role in this reshaping of dow dupont. you spoke to david taylor, the ceo of png, in this fight with trian which is getting more and more passionate. >> passionate is good. because there were other -- let's put it this way, initially, i think that this was more gentlemenly, but there has become blue card versus white card and blue card -- when you start getting into the colorof vote blue, it almost feels like the presidential election. >> what was the key takeaways from taylor last night when he joined you on "mad money"? >> he said it was dangerous to have mr. peltz on with dangerous strategies i retorted that one man can do that and david taylor said, yes, that man can. >> that's been the interesting part of this, i think. this idea that even adding, and

all peltz wants to be is added which, his key question to shareholders is, why not why not me >> and that's how david taylor sta started! >> the idea that one guy could change the entire composition of a board, jim >> but this why not you're going, it -- he didn't personalize it what kind? why is this man qualified? this is a man who is from consumer products. but mr. taylor said, food. and we're not food he's a man with aged materials, looking at a company eight years ago, not at his company. why is this so important think about who we're talking to today? ed garden. how did old dowdupont start? >> it started with activism. jim, we're beginning to get to the treasury secretary and of course the "squawk box" gang is going to take it from here becky, take it away. ♪ ♪

>> thank you so much for joining us >> thank you it's a pleasure to be with you in new york. >> it's a pleasure to have you here this whole conference is about delivering alpha and we know that you know this and understand it very well from your previous life at goldman sachs and beyond and we have an entire list of questions that we want to ask you about in that vein but given the historic events that we've seen over the last several days, first with hurricane harvey and now with hurricane irma, we would like to maybe start off in this vein i know you've been meeting with the president recently and i'm wondering if you can give us an update from the administration's point of view about where we stand with these storms? >> starting with the first storm, the president has been incredibly engaged we've been having cabinet meetings constantly, working with fema. on sunday, i was with the president at camp david, we were monitoring the situation via video. and sunday afternoon, i went with the vice president to fema headquarters and let me just especially thank

all of the people in both the states and the federal government who have been working around the clock to save lives it's been an incredibly, you know, a very important response to two historically terrible storms >> we know that it is still very early to try to get a feel for the financial impact of these storms we are still in a recovery and making sure that people are getting through the storm. but we also know that those numbers will be very large billions and billions of dollars. we've seen an initial payment for that coming from the government with the bill that's been passed for $15 billion for harvey but what do we do with a second round of funding we know the numbers will go up >> again, i think the first thing is the president wanted to be very clear. we needed to make sure we got the money to the states, so that they could protect citizens and property, which was the most important issue. and we accomplished that and the first payment is a down payment. we'll see what we need to spend more, but the president will make sure that whatever the

federal government needs to contribute to this, we will do so >> 100 to 150 is moody's latest estimate for both storms, which would be equal to katrina. any affect on ongoing gdp numbers? do you have an estimate? half a percent, perhaps? and secondly, does the fed change anything that it was planning to do based on this and even had mark grant say, not just because they were going to hold off in september, anyway, they might even cut at this point. could you imagine that >> i can't comment on what the fed will do. because, as you know, as treasury secretary, i respect their independence i would say there clearly is going to be an impact on gdp in the short run. we will make it up in the long run, as we rebuild, that will help gdp so i think it's too early to tell what the exact estimates will be, but i think it won't have a bad impact on the economy. >> we may not -- i've got to

ask, yellen, she get reappointed? >> i'm working closely with the president on the issue he hasn't made any decisions and that's one of the things he's still considering. >> he's got a bunch of people now that there are some openings on the fed >> yeah, there's a lot of good people the chair is, obviously, quite talented and she's being considered, but there's a lot of great people we've been meeting with and considering, as well? >> is gary cohn is still on that list >> -- this early in the conversation where do you think gary cohn stands in all of this, given that the president has talked about him as a candidate, and yet what we do hear constantly, over the last several weeks, some of the comments he made publicly, that perhaps maybe the relationship is has been compromised. >> i appreciate you asking me and i would be disappointed if you didn't, but i obviously will respect the confidentiality of the response and not make any comments on any specific people that the president is considering. >> putting that piece asaid, what about the relationship can gary cohn? your own relationship with him, the president's relationship with him there's a view within the

marketplace and we're going to talk to ray dalio and others all about this that gary cohn and you represent a very important piece of this administration and that if perhaps gary cohn were to leave, that the markets would take that as a bad sign. >> well, let me say, gary and i have worked very close together for a long period of time. we worked together at goldman sachs, we were in the same partner class at goldman sachs we're working very closely together on taxes. i was with him yesterday on the hill we'll be back on the hill this afternoon. we'll both be at the white house for a dinner with the president tonight on tax reform. and let me just say, i appreciate working with him. >> you mentioned the taxes, you're helping us to get into all of the different areas we want to go the kumbaya moment, i don't know, that's one of your words that you use a lot >> yes >> senator schumer, speaker pelosi, does that -- that the president had recently, did that

change the dynamics in your view of how to approach tax reform? >> not at all. so i would say, first of all, i give the president a lot of credit we were in the middle of two major hurricanes we needed to get money to the states we were in the middle of having the dliebt limit. and the president was very clear. he wanted to cut a deal, he wanted to cut a deal quickly we moved the debt limit substantially further back we had to fund the government. we were running out of money i was operating it like a piggy bank and we got out of there and showed the american public that we're putting politics aside as it relates to tax reform, it's been my number one priority it will be and we're going to get this done >> does it change it from reconciliation to a bipartisan bill the president flew a senator heitkamp back to north dakota. do you foresee this being permanent and 60 votes or we just had senator perdue on and said, just outright said, this is going to be reconciliation hep didn't even couch it >> i've always said, our hope is

that it is bipartisan. this is about creating jobs. this is about creating a middle income tax cut and making our businesses competitive we have one of the highest tax cuts in the world, we have this crazy concept of deferrals, we leave trillions of dollars offshore these are issues that both democrats and republicans should understand having said that, if we can't get 60 votes, we're prepared to use reconciliation to get it done this is the most important issue for the american economy >> let's talk about those meetings you have later today. you just mentioned that you will be going to capitol hill to talk to senators there about it i know you're meeting with republicans. will you also be meeting with democrats from the senate budget committee? >> i've been meeting with republicans and democrats since january. i've been working on taxes with the president since the campaign this -- this program i've been working on for a long time and i've been meeting with lots of different groups, both

republicans and democrats on this >> as you're getting closer to finding more details, i know you have said that those will be released later this month, but we still hear a pretty wide variety of opinions about where we could see a corporate tax rate everyone from paul ryan, who says, in the low 20s, recently, to the president saying 15%. where do you think it falls within those ranges? >> let me just comment, i think on the business side, and i mentioned, this is business. so this isn't just the corporate tax rate, this is also, we want to create relief for pass-throughs, which are a major part of the economy. we need to make this system competitive. and that's what we're trying to do and i mentioned turning it from a worldwide system to a territorial system the president has made it clear since the campaign, ideally, he would like to get it down to 15%. i don't know if we'll be able to achieve that, given the budget issues but we're going to get thisdow a very competitive level and what the exact number is, is less important, and what's more

important is making sure we have a competitive system >> if it's in the mid-20s, is that a win >> again, i'm not going to comment on what's a win and what's not a win again, this is a pass/fail exercise so passing tax reform, which hasn't been done in 31 years, that's a win and what the exact number is, we'll see. >> the pass-through issue is what drives a lot of people on the left crazy, because all the rich people are going to rush to become llcs, to get to 15 or 20%, and that's part of the $5 trillion that the left is worried about that this plan could add to the deficit $2 trillion of it almost is through the pass-through issue you're not going to get any -- i can't imagine any democrats coming onboard for that. >> first of all, we are very concerned about the debt it's gone from $10 trillion to $20 trillion, which we just passed and we are concerned about that. but having said that, we're focused on economic growth the difference between 2 and 3% is over $2 trillion to the government

and we're going to make sure when we set pass-through rules, and this is what we've been working on since january, that they're not used as loopholes. >> there's a way to do that? >> absolutely. >> how do you do that? give us a framework for what that looks like? >> for one, services companies that are pass-throughs will not get the benefit of the right so, you know, kind of what we're not looking to do is, if you earn money that's clearly income, okay, if you're an accountant firm and that's clearly income, you'll be taxed at income rate you won't be taxed at pass-through rates if you're a business that's creating manufacturing jobs, you're going to get the benefit of that, right because that's going to be passed through to help create jobs and better wages. >> one of the other issues which matters in large part to this audience has been the issue of carried interest and what rate that gets taxed at the president talked for a long time about closing that loophole does that get closed or changed under your tax plan? >> the president has been very clear that for hedge funds, they

will not have the benefit of carried interest one of the things that we are working on, as it relates to other entities that do create jobs, whether it's in different sectors, we want to make sure that we encourage jobs that's something we're still working on >> this is where it gets complicated. partnership accounting is difficult, you get into oil and gas, real estate, private equity how do you separate them out >> the good news is, we have over 100 people at the treasury working on this. we've got a lot of people at the house and the senate -- >> just give us a sneak peek so that we understand your thinking -- >> what's the bad news >> i know this issue is incredibly important to everybody in this room it's less important to the american public and creating jobs you've alluded to the difference between 3% and 2%. so we're talking about dynamic scoring, we're talking about not paying for this, i imagine that's going to be in the final plan that's not going to be what the democrats want in terms of every dollar being accounted for that's still the case? >> well, again, i can't comment

on what the democrats want, but what i can comment on is what makes sense. fuf first of all, dynamic scoring does work. to the extent that you change rules. so if we go from an international system to a territorial system, we will bring back jobs. we will bring back trillions of dollars and that's going to have an impact on the economy so, yes, i expect there'll be a couple of hundred billion dollars accounted for on dynamic scoring. >> i think what larry summers called it ludicrous -- >> i think that was the word >> supply-side fantasies or something? >> well, with i woui would neve anything bad about another treasury secretary, although there's lots and lots of economists that will line up on the other side of this argument. >> let me take this one more step further let's say, and i don't know whether you know for sure it won't happen, let's say the president says, chuck, nancy, i'm going to give you infrastructure along with this, if you go along with this. you're talking about dynamic scoring, potentially, adding to the deficit, and an infrastructure bill.

is that possible that we would -- we would be at $30 trillion in no time. >> well, again, we have no doubt we are not going from $20 trillion to $30 trillion but what the president is focused on is creating jobs, creating economic opportunities, creating manufacturing in the united states, having us competitive. and that's what we're going to do >> but could you see him proposing that or do you know whether he will a way to bring them in >> absolutely. the president is very focused on infrastructure we've been working on a plan we will reach out to democrats on that plan and that's absolutely on the -- >> part of tax reform? >> people have asked us whether or not we should put them together or not. my inclination is it makes it more complicated you're talking about two complicated issues i think when you put them together, it's harder to do. but to the extent that the democrats and republicans want to put it together, congress has that option. >> you've had a remarkable sense of confidence that something is going to happen this fall.

but you also were quite confident and explicit earlier in the year, suggesting that we would have signed tax reform by august what was the miss in terms of the confidence then and has something changed? >> well, one of the things this audience understands, as do i, is that markets move so, the answer was, in january, we had a plan that was lined out, working with congress, that we thought we could get tax reform done by august. and that was based upon doing health care first and doing health care fast i think, as you know, health care took longer than we expected we then got into the august recess that's what pushed back tax reform so, the market moved i'm now incredibly hopeful we're going to get this done by the end of the year. >> the president still occasionally tweets about health care is it off the agenda as far as you're concerned right now are we moving on to tax reform and beyond before that circles back around? >> the president still very much wants to get health care done. so it's not the major focus at

the moment, but it's on the president's agenda and he wants to get health care done >> steve bannon over the weekend on "60 minutes" effectively said that you were misled, that the administration was misled by the senate, i by congress about what was possible in terms of this timeline do you think you were misled >> again, i had the opportunity to work with steve closely on the campaign and over the course of the last year and i respect him. i think the word "misled" was a little extreme i do think there was an agenda as he said on tv, when the president got elected, we sat down with the leadership and we looked at a calendar having said that, let me be clear, obama was -- it took a long time to get his two major accomplishments done so for us to get one accomplishment done this year, in the president's first term will be historic and that's what we're working on >> is there any way that tax reform could be backdates to january 1st of 2017? >> absolutely. still something we're considering and would be a big

boon to the economy. >> does it matter if it's only ten years? >> i've been consistent on this. permanent is better than temporary and temporary is better than nothing. >> so you wanted 18 months this has been reported you wanted 18 months on this debt ceiling and then at the last minute, supposedly, you tried to talk him into 6 it came out 3. so maybe not what you wanted does it set us up for just brinkmanship -- does it set the republicans up for brinkmanship in december with the democrats when they say, we're not going to do tax reform unless you do this our way >> well, look, i did want 18 months and as treasury secretary, i obviously want the longest period of time for the debt ceiling. as i've said, congress has every right to control spend-up. and if ultimately the government shuts down, which would not be a good thing, that's their right if they can't debris on spending the debt ceiling is about paying

for things we've already committed to so i did want to extend it longer the president, rightfully so, wanted to get this done and particularly in the wake of two hurricanes, we'll come back on the debt ceiling again. we have a commitment from the democrats and the republicans that we're never going to let the government default and i'm comfortable where we are. >> the rationale was, we can get this debt ceiling stuff out of the way and work on tax reform, but a lot of other people say, it just makes it even more difficult, it mucks up the works in december for getting tax reform >> yopi don't think so at all. we are super focused on tax reform now it clears the calendar for tax reform, for december 8th, we have the continuing funding, the government through december 8th. we don't have a shutdown at the end of this month, in the middle of two hurricanes. and i think that's something that the president was very focused on and for december, we will be negotiating funding. now, we could have done -- and this wasn't widely reported, we could have done a one-year deal on the debt ceiling. had we done that, it would have

been linked to one year of additional funding for the government, but the president wants to raise military spending that's one of his main priorities, particularly in the midst of what's going on in north korea and other areas. and the president wants to increase military spending and that's something he's going to demand for december >> i want to go pack to taxes for one sec and on the individual side. i remember when you sat with us on the set of "squawk box" and one of the things you said is that the wealthiest among us, their tax rate will not go down. do you think that's still true >> i feel very honored from that interview, because in my conforms, confirmation, i now have a rule named after me there's the buffett rule and volcker rule and the mnuchin rule named after what i said and the objective, i think, sas you know, we're looking at a system that gets rid of state and local tax deductions so in the high-tax states, two

of which i've had the opportunity to live in, new york and california, yes, i can assure that there will not be a tax decrease >> what will that mean more states like new york, connecticut, new jersey, california if those -- they can no longer be backed up by the federal government that they will have to have these high rates and realize their taxpayers are going to get crushed? >> i'm hopeful in these states that taxes don't go up so we'll have a slight rate decrease on the high end, to offset the deductions. and i'm hopeful we can size that so that it doesn't hurt new york and california they may not get a tax decrease, but these are the details that will be -- >> a federal tax decrease, but we'll end up paying it in state taxes? that's how it's going to go down >> again, i'm hopeful that they'll get a slight decrease in federal government, which will offset what they will lose on the state deductions

but again, these are the details that although the group of six has a plan, are going to go through final decision and the two tax-writing committees >> talking about state taxes, i'm curious of what you make of the competition going on among states these days, and the incentives that they've been offering for different companies to come to them. foxconn obviously making the big deal with the state of wisconsin. amazon just announced last week, a big competition for them to come some of these incentives seem great, because they'll create jobs, but there's a larger question in the case of foxconn about whether they actually pay off and whether it takeses 25 to 30 years to pay off. how do you think states should think about that >> i think the great thing about the foxconn announcement is that we have manufacturing being brought back into the united states and being brought back into the heartland of the united states, where we need jobs so i think the president was instrumental in that and to me, that's a huge win i can't comment on the state negotiations, because i wasn't part of that we were part of the deal of

bringing them into the u.s. and make suging sure that we could t a competitive system and i think one of the reasons they did that is because they were comfortable with where we were going on tax reform >> but i'm saying, from a state perspective, if you said to yourself as a citizen of a state, it's going to take 25 to 30 years for us to get ourmone back, if we get it back at all, does that make sense >> i haven't looked at the specifics of -- i'm familiar with what the state offered, but i haven't gone through the numbers on whether it makes sense or not i assume they think it does make sense, and i think competition between the states is healthy. >> you downplayed the overtures to the democrats a little bit, that the president agreed upon, based on that it was necessary for hurricane relief, et cetera. but it's been, obviously, played up a lot in terms of how mitch mcconnell feels about this about how, you know, whether paul ryan, you know, looked askance at the way it went

do you have -- are you worried that certain relationships are beyond repair between the president and certain republicans at this point? and that he needs to actually court democrats at this point, or duke all the republicans will be there for you they weren't there for you on health care. >> well, i don't want to downplay it, because i think imt that the president reached out to democrats and showed that he could get things done on a bipartisan basis and i think that's incredibly important. the president would like to have bipartisan support having said that, i can tell you, i was with paul yesterday he was with the president at dinner earlier in the week i'm going to be with mitch again today. these relationships are very important in the relationships with the president are there. >> i saw a headline it was the end of the two party system. >> i don't think we have to worry about it being the end of a two party system. >> the president is still a republican >> the president is absolutely a republican >> i wanted to turn the

conversation -- >> as am i, by the way i know on this show and others that's been questioned >> i wanted to ask you about north korea and where we are north korea said the u.s. will, quote, pay a due price for leading this drive with additional u.n. sanctions. you have said their behavior is unabsentable what do you have in your tool kit at this point? >> it's a great opportunity being treasury secretary i had a lot of experience in domestic and international finance. there's a major part of treasury, i probably spend 50% of my time on national security. the treasury staff has given me a ph.d. these sanctions work they works with iran the president i fundamentally believe that we had iran on the five yard line and we could have cut a better deal, that a ten-year deal was not good enough on iran in north korea, economic warfare works.

i made it clear that the president was strongly considering and we sent a message that anybody that wanted to trade with north korea we would consider them not trading with us. we can put on economic sanctions to stop people trading we worked very closely with the u.n. i'm very please the with the resolution that was just passed. this is some of the strongest items. we have more tools in our toolbox and we will continue to use them and put additional sanctions on north korea until they stop this behavior. >> we haven't been able to move the needle on china. which seems to be the real mover on this in terms of able being e to apply the pressure. >> we have moved the needle on china. what they agreed to yesterday was historic i put sanctions on a major chinese bank that's the first time that's ever been done if china doesn't follow these

sanctions, we will put additional sanctions on them and prevent them from accessing the u.s. and international dollar system that's quite meaningful. >> does that put any u.s. multinationals at risk there's a balancing act in all of this. >> let me be clear the president's number one concern is north korea and his security when it comes to nuclear testing, when it comes to missiles, our number one priority is the security of americans. >> cyber security and we have learned about 143 million americans identities being compromised. >> at morgan stanley -- >> it's not the first of the data breaches that we have seen. it looks more and more likely like americans can expect these things to happen what can treasury do about this? >> americans shouldn't expect these things to happen the current situation is obviously quite unfortunate.

i can't comment on the specifics of that. but i can tell you, this is something that i am actively involved in. tom bosser and i were on several calls yesterday. cyber is a big focus of mine for two reasons. one, i oversee the irs so we have an incredible amount of personal data we want to make sure that that is safe. number two, i'm concerned about the global financial system and keeping it protected i can assure you that we're working with all of the intelligence agencies on cyber issues to keep americans' information safe. >> where do you think the liabilities for american corporations should be there's a piece where you say they are a victim. we all become victims. on the other side, you have to decide whether they have done all the right things in advance. >> i think it's a complicated issue. you have both international and

government actors as well as you have private people. i can't comment again on the specifics of this. our number one concern is making sure that the data is safe and working with industry on that. but i do agree with you, the issue of liability and responsibility for corporations, those are very important issues. and i think public/private partnerships on cyber is critical this is not something that the private sector can do alone and it's not something the government can do alone. >> if congress doesn't action in six months on daca, what would the president do >> i can't comment on what the president will do. he wants them to act he will take it into account. >> after speaker pelosi asked him to tweet, he tweeted we will deal with it you saw ceos, the new arbiters, ceos wrote a lot ofler letters about daca and they wrote you about whether you are going to stay on him

they are pr canaries in the coal to start with. have they become too sensitive to some of these things? or do you welcome the speaking out on every issue >> first of all, i'm staying on. it's a great opportunity to serve the president and the country. as it relates to daca, these are complicated issues we have to have laws in our country. there have to be immigration laws we can't just pick and choose what laws we want to enforce and what laws we don't want to enforce. this is an issue that the president had said, it's not legal the way it's done, that congress should work on that the one comment i would make on ceos, i think ceos have a responsibility to their company and that's their responsibility. but they also have responsibilities to advise the government every time there's an issue that the government does that ceos say we don't like this and we're not going to give you advice anymore, that to me doesn't take

sense. >> what was your reaction to the councils being dismantled? >> my view is that ceos being on the councils didn't necessarily mean that they endorsed every single policy of the administration or the president. the purpose of the councils was to give the president advice on issues that they had -- >> do you feel like there's been a cutoff between the -- >> not at all. >> was it symbolic >> i think there's plenty of ceos who meet with us andwe will continue to reach out i personally think it was a mistake that the councils were disbanded. >> the stock market yesterday -- the s&p 500 closed at another record level when i spoke with you earlier in the year we talked about how the administration sees that as their report card for what's going on do you still see it that way >> i think there's no question that the stock market has an expectation that we're going to get tax reform done and that's partially built in i think also the stock market

has expectations that we're going to create significant growth, which is what this president and this administration is focused on yes, i take that as a big vote of confidence in the economic plan >> a couple more quickies before we wrap up i do want to touch on russia and what you thought of facebook's announcement last week that there were $100,000 worth of ads bought by government sponsored entities to influence the election >> again, i've obviously seen intelligence on this i can't comment on any classified information or what their role was or what it wasn't i personally think the sooner we get these investigations over and behind us, the better we are. again, i'm not going to comment -- >> the latest leak still about don junior's meeting, still no new stuff. nothing else no smoking gun, no leaks we're still on the don junior

investigation. talk to hope hicks that's where it is now is that enough smoke >> it seems a little overblown to me. i can't comment on the specifics. >> personal question steve bannon said over the weekend to charlie rose something fascinating about the way he thought about his relationship with the president. he says, when you side with a man, you side with him and you side with him that way publically but you don't necessarily side with him that way privately. what's the difference between the conversations you are having with us now and the conversations you have with him inside the room? >> look, first of all, i've known the president for over 15 years. i worked with him on the campaign so i've had the benefit of working with him for a long time and i obviously feel comfortable with telling him my ideas on things sometimes we'll agree. sometimes we don't agree he's the president and i respect that no different than a lieutenant who reports to the general i work for him >> fair enough

the treasury secretary, mr. mnuchin, thank you. >> thank you >> thank you >> thank you very, very much [ applause ] good morning welcome to "squawk on the street." we're live from the delivering alpha conference in new york city we will hear from carl momentarily on the aftermath and impact of hurricane irma let's give you a look at futures as we are 30 minutes from that opening bell you can see a higher open after a nice move yesterday. quite a nice move, in fact, overall in our broader markets european markets, we answer. let's see. i'm not at the nyc they give me spain and italy. >> look at that