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 movement

we're lockstep with europe this is a very big change. >> you pointed that out a number of times the ten-year note yield creeping up a little bit from the lows we saw last week. maybe helping firm up the financials just a bit. you see crude there. we just heard, of course, from the treasury secretary of the united states, steven mnuchin. as they wrap up "squawk box. tax reform, it's got to be the most significant item on the agenda you know, he seemed to echo comments he made in the past about 15% being a target but not hard and fast. he did say some things in terms of pass throughs when pressed by andrew how are you really going to be able to prevent people from becoming llc and therefore benefitting from the potentially lower tax rate than they would as individuals he said, service companies would be one example that we're not

going to allow i'm not sure we heard that before in terms of specifics when it comes to how they're going to sort of thread that, very importantly if everybody becomes a pass through, you will not have any gains. >> as someone who is very much in favor of tax reform, i find that this element is the same as the border tax in other words, something that gets in the way and makes it, to me, less likely that it will happen i know the papers are filled with the full court press. the treasury secretary is part of that full court press when i hear the pass through, pass through is a term which says no good because there's too many people who will be opposed to that. i really think if they spent more time talking about repatriation and a little less time talking about the idea of an ultimate tax code change, we will get something done in 2017. this is not 2017 that we have any possibility for this. >> you don't think so? >> no.

>> the administration is still talking about 2017 being a real possibility. >> i don't blame them. obviously, you don't want to say things aren't coming together. i do think that if there was another moment where the treasury secretary in that important interview was talking about how long it took to get health care and how the administration got sidetracked i think that's really important, because we have actually become in the last few weeks -- i actually would say ever since general kelly got in, we have become very wall street oriented and earnings oriented. much less twitter oriented and much less worried about tax reform david, it's congress in control. he made that point congress, they work a couple of days >> they are -- they are working for a little bit this month. >> i went to our bosses and said i would like congress' schedule. they said, good, you can work for another network. >> you were out for a while. much longer -- >> i took a week off, for heaven sake. >> it felt like a month.

let's take a listen to what the treasury secretary had to say when it came to the issue of taxes and tax reform >> we need to make this system competitive. and that's what we're trying to do as i mentioned, turning it from a worldwide system to a territorial system the president made it clear since the campaign, ideally he would like to get it down to 15%. i don't know if we'll achieve that but we will get this down to a very competitive level what the exact number is is less important. what's more important is making sure we have a competitive system >> i think you and i have having, of course, covered corporate america as long as we have, know that there is a strong case to be made for that basic assumption whether they get to it or not, certainly the people i speak to in corporate america do not anticipate anything in the near term and are dubious as to whether they will get there in the longer term. he was asked about cooperation

from the democrats you make the point about pass throughs if you go down that road, it's hard to imagine you will get to -- if they don't it under reconciliation even if they do get to 51 votes. >> it's funny, one of the standard questions i ask all the ceos on "mad money" for four months is what would be your rate of return if you had tax reform i don't ask it anymore i don't ask it anymore because they don't think it's relevant if one of these executives were to come on and say, we can have more money in tax reform, it -- there was gravity to that. the statement is, don't raise your numbers because of tax reform if you do that, we're not going to make those numbers. i just think the dialogue has changed. i always enjoy dialogue on tax reform >> it's vitally important and it's the single most important, you could argue, issue for the business community whether or not it's going to happen -- >> 2018 -- once we get to the --

turn the calendar to september, i look at 2018 numbers i have yet to see a 2018 number that incorporated tax reform doesn't that tell you the truth about where the corporate leaders think it is? >> as i pointed out to you and our viewers, in the m & a world there was hesitation earlier this year, perhaps on sellers and buyers to wait and see what developed on tax reform. that's no longer the case. if you have a strategic decision to make with regard to an accusation or sale, you are making it. >> isn't that incredible it never came up there was no reason for it to come up. defense spending is something i think has been very important. >> and the treasury secretary did mention the desire for higher defense spending. that's the one part of the budget that was submitted that is dramatically higher with a lot of cuts in other places. >> if you want stock impact where i'm from, the takeaway is you continue to buy general

dynamics similar to reagan in 1980. you had to stay with and stay with you have the rest of the world is a buyer of our arms >> whether it coyesterday's sigl in the broader markets, not a result of any expectations of tax reform >> none. >> is it just about earnings power? >> yes weak dollar is something that raised a tremendous -- people are frantically trying to incorporate a weak dollar. frantically. also, the end of what i regard as being -- you have been following this -- health care reform has left it so that -- united health care, raise numbers, raise numbers the insurance, the idea that the insurance companies are going to write the checks you thought from the federal government, that is very important they weren't wiped out other than a small one that was

talked about that could be in the papers i think there was this combination, worldwide growth, weaker dollar, back to treasuries being seller. end of the flight to quality hot money going back into stocks very big rally over in europe. a sense of when we see these numbers, we're going to be surprised, except for some domestic i also heard -- the auto cycle that the bear has been hanging on to may not be correct because of harvey. peak housing because of florida. we don't know in florida i can't wait to talk to carl we don't know about the keys i remember when marathon -- when they -- in the hurricane you couldn't find them no one seems to find them now. >> speaking of hurricane irma, let's get to carl actually it's a tropical depression as it pushes north into gorm georgia carl is in tampa he has more for us >> good morning.

you are spot on as usual there's a lot we don't know as the recovery continues today the flooding in jacksonville a huge concern complete and utter devastation in the keys. it's weeks before those people who did stay behind -- we're told the numbers are in the -- around 10,000 who stayed behind in the keys. who knows when first responders can get to them. we will talk about recovery in a second you are talking about the treasury secretary who did make comments about not only the impact of the hurricanes on gdp but the degree to which the government will respond with assistance take a listen. >> there clearly is going to be an impact on gdp in the short run. we will make it up as we rebuild, that will help gdp. it's too early to tell what the estimates will be. i think it won't have a bad impact on the economy. >> one of the big parts of recovery this morning is restoring electricity.

hard to believe, the statistic -- it almost doesn't sound real two-thirds of residents in the country's third most populous state do not have electricity today. look at this map it shows you where the worst outages are. not surprisingly, southwest florida where landfall was, you see the highest percentage of households without power look at the northeastern part of the state. that's all that flooding in jacksonville that you saw which is resulted in a surprising degree -- that's probably the biggest surprise for state officials is the concentration of power loss in the northern and eastern part of florida. the good news, guys, lots of things beginning to get back into action. in tampa, schools begin thursday, garbage collection today. in orlando, disney, universal studios open today miami had its first arrival, miami international airport, american flight 1070 from seattle arrived at 7:06 a.m. this morning they're going to get up and running. we think flights are going out

of tampa later today, limited service. your rebuild is going to be happening in varying degrees depending on what region you are talking about. the keys, from our standpoint, are going to remain a mystery for quite a while. >> what i find incredible is that the secretary mnuchin was talking about how the federal government -- the first payment. when you are down there, are people looking at -- all state people, are people talking about travellers people? those are two companies that have tried to write in florida what i'm trying to get a sense is how important is insurance for rebuild, how important is state government the state governments are richer than they have been. how important is federal there was a time, carl, when we would only talk about federal. it doesn't seem like they're playing the big role they used to >> right as you know, florida residents have the highest number of federal policies 1 point some odd, $42 billion in

assets we did take note of the travellers suspension yesterday. whether or not that's going to be part of a trend remains to be seen at this point, that's an early discussion people are trying to get the lights on and get hot water. we will talk about that in the days ahead >> okay, carl. thank you so much. it's just great coverage that you are doing. i find that what people don't seem to understand is, just because irma did not have the extreme, i think we're nuts to not think of this as being a one in -- once in a accecentury. we had some hurricanes in florida where we knew what was happening. we don't know what's happening in a major portion of the southern most portion of the state. >> you are absolutely right. we will talk with some fema officials later today about whether or not -- david, we had this discussion last week. whether there needs to be a whole conversation change about what parts of the country, what low lying areas of at least

florida, people are allowed, expected to live in on a permanent basis. that's later today >> yeah. good because that's a fascinating topic. unfortunately, just one i think, carl, that we know we will deal with in the years ahead. we will be joining carl in tampa. we will have more right here from delivering alpha as well. including live interviews on stage with ray dalio and other big names. first here, hear what procter & gamble's ceo told jim about the proxy fight it's involved in with nelson peltz. usaa to me means

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amazing speed, coverage and control. change the way you wifi. xfinity. the future of awesome. procter & gamble's ceo speaking out about nelson peltz's push to make changes here is what taylor said to jim about peltz last night on "mad money. >> he proposed some things that could be dangerous to the short-term, which is reorganize the company. he proposed something very dangerous. that is eliminating our corporate r & d. many of the inventions in the

process improvements that serve many of the brands and underpin the tremendous performance and value they offer came out of corporate r & d and into the businesses >> clear and present danger. kind of funny. eliminating r & d? >> what's interesting is you know that mr. peltz favors three business units with a very small group at the top he does not favor a cut in r & d. he just doesn't favor that corporate layer. this has been one of the hallmarks of some of the activists engaged shareholders there's this corporate we can't get our arms around it and mr. taylor is saying, that's where a lot of innovations come. the flip side is where the innovation there's been swiffer and tide pods i was willing to go withmr. taylor about what's in my house, what's in our houses he came out slugging it was kind of like really a

brawl versus what you had mr. peltz saying open your intere i. i was willing to address the notion of the great dividend boost, the long-term but he wanted to talk about how what he has been able to accomplish in his short time would be derailed by one person. >> the key it seems to them in terms of the argument they are making is to focus on the shorter term, focus on mr. taylor's tenure as opposed to the longer period of time. they have been pretty pointed about it, putting up slides or having slides included in presentations that show the total shareholder return of peltz's boards versus -- longer term versus short term >> he is out of touch. they claim daily the person who has been -- former cfo is out of touch. it's interesting, because there was a period where this company

had salt mr. taylor admitted it when they had mr. mcdonald, the ceo who left there was big ceo turnover the main theme is that mr. peltz, who is a consumer food guy, doesn't understand the new world like amy chang, the usual credentials, stanford business school it's a group of people who rule the world. they went to stanford, stanford business school and they were computer science not even computer engineer when you get one of those people and she worked at google, what you say is -- >> whatever they say goes. >> do you have einstein? einstein is on our place there was a moment where you wanted -- i just wanted to say, i love those pods, those tide pods he is going, millennials love tide pods. what happened is there's a script when says, if you understand the current business, which mr. taylor does, then you really don't need the help of someone who doesn't.

he did everything but call mr. peltz old. >> i think that's -- that's where they are going it's been fascinating to watch we have another month yet. of course the meeting is about a month from now >> we went into the blue. >> it's like -- >> it's a thriller in cincinnati >> we have a lot more on activism coming up as well we are going -- think about what's happened at dow dupont this morning we are going to have a live interview with the leaders of the newly formed dow dupont, edward breen, andrew liveris, they will join us on set shortly. another look at futures this morning after a very nice move yesterday. you saw the s&p up over 1% we seem to have follow through as well this morning more "squawk on the stetre" from

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jack ma surprised 40,000 employees at the company's 18th anniversary celebration by coming to the event dressed as michael jackson and performing with company executives. ma's outfit was similar to one of the king of pop's during his dangerous tour in the '90s that's the founder of one of the largest companies in the world his willingness to do things like this -- we have musk and

bezos, i don't know if any of them will do that. >> john lezur looks like a senior statesman >> i would like to see a little bit of one upsmanship. ma is the main cheerleader, the visionary, the strategist for the company. he is not running it on day to day, but he has the longer term vision he is traveling all over the world. a year ago, we sat down with joe at this conference shares are up 93%. >> i was talking to my friend herb greenburg you have friends i called a bunch of people about the numbers. we hit them with everything we had. my conclusion was, buy alibaba >> people did it we're talking about a company with a $440 billion market value. no wonder he feels like he can

dance around like michael jackson. more delivering alpha coming at you. we have got a special delivering alpha mad dash getting ready for that i hope so. prepare. take a look at futures more "squawk on the street" after this

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the opening bell is brought to you by brighthouse financial, established by met life. there it is. we have two minutes before we get to the opening bell. let's get to the special delivering i'alpha mad dash edition. >> i feelthis way, david, i felt don't mess with mark barker, the ceo of nike. he is the most competitive person in business they come out today and say buy nike and sell under armour we felt kevin plank was one of the most competitive people. he is competitive. but this is a piece which says even down here, when you see under armour, 43 type 3 times es the industry is under pressure that i can't recall.

nike's brand, they are saying, will survive what is really kind of a wholesale -- >> i was talking to my 15-year-old the other day abou this three years ago, all he wore was under armour now it's other things. i was trying to explain nike versus under armour. what do you say to explain it to somebody who is trying to understand what's going on and why is it down 45% >> i think nike turned on the scientific jets. it's a technology company in the shoe business. under armour had a focus on women. but i was with the philadelphia eagles this weekend with the equipment manager who is fabulous you know what? they love their nike nike has done a lot of innovation people don't understand that this is an innovation business not unlike dell dupont there are industries we talk about that are about innovation. mark parker and nike have turned on the innovation jets, personalization jets

under armour is regarded as being old. can you believe that >> i can't >> when i read shoe dog one of the most important -- >> recommend it highly to anybody. >> you must read -- nike was a sleeping giant it has been -- it's up it's awake look out >> you hear the cheers we're not at the nyc but we can talk about the open of trading which just bebeggan. over at the nasdaq, syntel you realize how loud it is when you are not there. it's really annoying. >> i like enthusiasm. >> i want to take this out of my ear. >> i feel like that i'm -- it's a 12th man it's like playing in seattle >> uas you get older, it gets more annoying.

>> tell me about it. one of the things we have to talk about -- >> tell me. >> s&p is up we have to talk about comcast. >> let's do that it's been a painful number of days for comcast starting with a presentation at an investment conference last week in which the company said, we are seeing the most competitive environment in pricing that we have seen in a very long time in fact, i think the guy said ever and so they forecast potential video subscriber loss between 100 and 150,000, particular ply during a quarter in which most people app think college. kids come back at least used to be the case i don't know if it is anymore. who is getting video now you are probably getting broadband. people come back from vacation or from their second home. that's worrisome it's worrisome to people that that is taking place in this quarter. >> you used a word that is

imbedded in this piece surprise they said they were surprised that people were surprised and the stock dropped 10%. you know what? they say this company at 37 represents a bargain its headwinds but not a c cataclysm. she sliced prices -- we talk about cigarettes anymore, we don't. this was a day that will live in entertainment infamy >> there you go. it's up this morning for the first time, of course, that stock has been very weak over the last few weeks it's close to our hearts as we point out. it's our parent company. it has $180 billion market value. the leader in terms of cable we will see the rest of the -- >> apple, apple, apple everything in the iphone these are the people once again they take a chainsaw to a 1,000

phone. what falls out >> i would prefer the latter rather than the former >> thank you it's like sysco versus sysco. >> don't tell anybody -- >> i'm not allowed to tell margins. it costs a nickel to charge six bucks for a beer. >> on apple, is there anything you can tell people ahead of the product launch and the big show later today that they should keep in mind in terms of the stock? >> you have the usual joker traders who came in yesterday. they have to be wrong, per se. these are the people who every year come in and say, you know what, i am going to buy the stock ahead of the launch. it's going to be so dramatic morgan stanley going with a $253 target up from $200. i may use $254

you have a lot of enthusiasm there's usually a letdown. when you open your presents, there's a bit of a letdown then the stock resumes let the traders come let them knock themselves out. then come back and invest in the stock. a couple guys -- >> we will get to them i want to hit a couple of other stocks one is adp i reported on the strange situation to a certain extent -- >> i like that word. >> we don't typically see where bill ackman who talked about an 8.3 stake in adp, converted to establish a 2% position in the common prior to the record date. prior to being able to vote the shares in the upcoming proxy vote that will take place a couple of months from now at the annual meeting that was surprising. i did speak to bill yesterday. he said, listen, 2.4 billion overall in terms of the 2%, the 9 million shares cost, not to mention my derivative position, one of the largest economic owners, 2% is a significant

position he did indicate an unwillingness to extent beyond that in terms of the cost that it would borne to convert to get to the 8.3% of common it will be interesting to see what adp's response is we kind of know because they have a presentation today, an investor presentation today. that heats up to a certain extent he is seeking three board seats and talks about improvement of 1200 basis points and margin >> that would be incredible. there are people like work day that have come in by storm it's only niche. there's something larger at work we're talking about activists but how about talking about ceos they are no longer lying back and saying, listen, i'm not going to get in the fray they're fray >> they're fray. that's a perfect intro for the guests who are sitting to our right at least stage right, dow

dupont announces a change to split into three businesses. it will move select businesses from its materials division to specialty products that could create $8 billion overall in value andrew liveris and ed breen right here thank you for coming over. >> thanks for having us. >> ed, we will speak to you later on stage here. andrew, thank you. why not have started right out of the gate with this? why have waited until you got pressure from potentially the same activists kind of investors we're talking about in terms of realigning the portfolios? >> when we set this up over 20 months ago, when we announced the deal, we set it up for having three divisions, ag, specialty, material science division we knew we had the construct right of architecting at the top level how we wanted to do it the beauty of the last 20 months is we have had a lot of investor feedback

we have had our own study of the portfolio. as time went on, we kept realizing, there's so many identical end markets between material and specialty if we could align them better and put the right end markets together, the power with our customer base would be enormous. that's really where we transition to. we always intended we were going to do a portfolio review we did have pressure from activists. but we had a lot of investors raise this issue with us that were our normal long-term shareholders that's what we ended up doing the study over the last four months to get to this point. >> it's important for people to understand that there's a delaware company, a delaware company and a combpany in midland. do you think that this new division makes one of the divisions look a lot like dow? >> not really. just to pile on to david's question, pure play market verticals where you can offer

best in breed, growth capability to your customers is what this realignment enables us to do we were about 80%, 90% right the first time around. the way ed described it, we listened to investors, we did our work these actually create game changing market driven companies in the future. the material science company will still be market driven. packaging, infrastructure, consumer care and be low cost and integrated same in specialty, but different markets. we cleaned up the face to the customer so we can be even leaner, more focused and driven. it's not dad and mom's dow ten years ago it was commodity this is a more stable owner. 19 quarters of growth. at the end of the day, we will continue that under materials. when we create the separate companies, materials will be a more stable earnings profile company. >> ed, the special division.

it looks a lot like one of my favorite companies 3m. it has all the segments they have done so well with do you think it will be embraced in a similar vein? >> i do. at the end of the day, we have four distinct divisions, transportation, electronics, building and construction, nutrition and health mid 25% type at the margins, 5% r & d level, the same as the company you mentioned. relatively low capital expenditure, 4% of sales these are real roic machines, which is what 3m is. i would consider us top companies of specialties, 3m and honeywell. with $21 billion in sales, we fit in the sweet spot. every metric you look at, we will benchmark very well >> i want to fast forward.

you announced this this morning. it's been well received by investors, including some of the activists. andrew, now it's on to, okay, how long to spin these things? have you changed your time line at all originally it was 18 to 20 months also, what should go first there does seem to be some at least i hear -- some discrepancy between what you might favor versus what some shareholders might favor. >> stabilizing the portfolio, job one, two and three, recognizing this is a once in a lifetime opportunity, never been done 320 years of corporate history i'm very proud of what ed and i and our teams have done. we have gotten to the starting gate today the question you asked, we a month to to monwo months of wor. we committed to the board to answer the questions so we don't affect the timing, we don't affect the synergy in fact, as ed said and the question that was asked by jim, specialty should have up side on growth synergy, we will define

those. materials should have up side on both mitigating cost to synergy as well as getting at the growth synergy. our goal is to not let it affect timing, not let it affect synergy but we've got a lot of work to do there's 110,000 people in operations we wake up worrying to make sure they're aligned, to not let one customer stop buying from us and still drive this for the growth curve. >> what about ag we haven't talked about that >> we have not talked about ag ed and i talk about that go ahead and talk about ag. >> is that -- should that be first? >> it might be the changes are happening to material and spec. no changes on the ag side. whichever we can get out first we will get out because it's to the benefit of the schauharehol >> what's that decision based on >> so, for instance, what we have to do -- there's a bunch of i.t. work to reintegrate in different divisions.

legal entity separation work that takes time. we will be starting that on this part of the portfolio. ag has been well down the road on putting the two companies together >> to dimensionalize it, it's 50 sites affected now that weren't before with over 5,000 people. our job is to stabilize that ag shouldn't be affected its i.t. systems and legal entity and the work to mitigate synergy. >> i did a piece talking about the value creation you brought talked about tyco. one thing i didn't count on was margin compression, headwinds from corn acres in brazil. they went for soy. softer conditions in global packaged food. i felt like i let our viewers down there are substantive cuts in earnings >> they are very minor most of this is public knowledge already. it's been out there about the corn and soybean acreage issue

in brazil. we're clarifying because we never gave third quarter guidance our forecasts are in line with where we thought in fact, by the way, as you watch, we have posted 5% to 6% volume growth the last two quarters we're feeling we're running at a healthy clip right now >> on the packaging business, recognize we have low cost positions in saudi arabia, u.s. gulf coast you haven't visited our texas side ed has seen it >> let's talk about that what went on with hurricane harvey >> on that modelling guidance, there's hurricane impact we will get over hurricane impacts. we kept freeport running through hurricane. >> don't you benefit from a rise in prices as a result of -- sglu re . >> you read between the lines. yeah, there's issues out there let us get at it i don't think margin compression is a big issue >> ed, capital return. this will start, i'm sure.

i have spoken to some of your investors about it $10 billion in free cash flow annually what is the company's plan in terms of allegation whether it comes to dividend, return to capital through buy back >> look, the board has been obviously busy with this portfolio move we have done so many meetings with them premerger and the first week of the merged companies. we move on to purchase buy back and dividend i can say this on dividend, both are dividend friendly. the boards will act the same way when it comes to a dividend. we both have been doing purchase you will see something from us there. to be announced hopefully in the next couple of months. >> next couple of months we have a lot coming in the next couple of months you will tell us >> we are very excited about dowcorning it has been a fantastic asset. can you explain how it will be divided? there's a downstream with high

margins. upstream that has been up and down where is that going? >> we're moving about 40% into the specialty business it's exactly what you just said. we're moving some high margin businesses into spec co. the ones we're moving in, they line up with our end market. they line up in some of our auto markets, in some of the our building and construction market areas. even in our nutrition side a couple they fit logically with the end market with our customer that's the piece -- >> the big breakthrough here, when you think of value chain, asset centric versus market centric, we look at the value chain. we didn't look at dowcorning we looked at silicone chemistry and used market driven to specialty. >> now, there are familiar brands that our viewers want to know about they want to know about tyvec, kevlar, dupont creations that are household.

where are they going >> they're going to be in the protection solutions business. let me give you a great example of two names coming together you have tyvec from dupont, you have corion and we're bringing them together for the whole building and construction envelope that's a very powerful play. also what comes with dow is sealants, caulking products, tape products from the building wrap around a home the power of these businesses coming together will be phenomenal for our end customer. at the end of the day, spec is 25% even to margins going higher with synergy, you have to get growth this is a growth play for us >> that's the idea is to have a higher multiple on the specialty company, i would seems to be what investors are hoping there's been focus on your etch i exit you indicated i believe it was june of '17. that was extended.

when are you going to leave this company? >> look, our obligation to shareholders and our work that we had to do was not done. we got delayed by the regulatory side our board, the dow board before and the combined board, stability is one of my keym mantras, strong confidence in the team we established. how they work together we joke, there's chemistry between the two management teams and board. so i will find a time when it's the right time really what drives me to that is succession you have to get succession right. one of the most important things one does, ed did it at tyco, we have to do it here, is succession not just for the current enterprise but the three we're going to create. >> you have to recruit management and boards as well for those companies. >> yeah. we have a lot of work done on some of that. >> what is your sense in terms of timing? is it april of next year which i

believe was a date you put out there. >> we announced july i will check with my wife to answer your question specifically look, i will know when the right time is. more importantly, the board and i will know together >> i have to make a suggestion these are adjoining school districts, i can give you advice like when you were thumping us that you constantly did. you have a business that is incredible, which is this microfood business do you know -- listen to me. >> i'm listening >> ben from clorox tells me one day we will all be taking exactly what you make, which are these incredible probiotic -- i'm talking about -- just like we care about cholesterol, we would care about this. can you play this up a little more >> the probiotics business is our fastest growing segment. by the way, we are just penetrating markets like literally 1% penetration in

china. a couple in europe bigger in the u.s. right now that business during last year has grown close to 30% every quarter, quarter over quarter. it's an incredible business. we invested $100 million all to increase capacity in probiotics. you can't make enough. >> you take it every day >> i do. >> and styrofoam who would have thought it? gentlemen, thank you both so much ed, ceo, andrew, executive chairman on a big announcement i do like the dual -- did you notice dow and dupont. >> i have to get some of those >> that's cool stuff coming up, we will have more, including bridgewater's ray dalio. you will want to hear his take "squawk on the street" is coming right back

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omega advisors leon

cooperman is discussing his favorite stocks. >> what we have right now are five picks that leon put out there for the investing public at delivering alpha. first is first data corporation. these picks were previously disclosed by cooperman's omega advisors in filings from the past season. he liked first data. likes it as a global company able leadership. no maturing debt also shire plc also they have a strong balance sheet position united airlines, another top pick under managed until 18 months ago. activists are involved currently managed among the best in the sector. we think this is a 100 stock of united he liked two oil plays one of the smaller, hess wpx energy the assumption, energy is overly

discounted we think oil prices will be higher in a year price of oil closer to 60 bucks per barrel also a couple of pieces of commentary in the overall market he thinks we're in the process of returning to stock market normalization and it's not stocks that are in a bubble but bonds. he sees 7% to 8% return in the stock market overall if you factor in dividends, given his assumptions about the market back over to you >> thank you 7% to 8% bond bubble not a stock bubble >> i think that that is not a negative forecast. i think it's in line i want to point out to our viewers, first data, 85 million shares were filed last night. >> which is why it's down. >> those who are saying, i don't -- some sort of curse, that will be priced thursday i don't want to tell people wait for the deal who knows where they price it.

understand that it's an overhang it's kkr if you bite from ought from kkr okay dollar general, they scale out they don't crush you that's one of the hallmarks. wpx is one people haven't heard of they should. rick mumfrief who was the architect behind a lot of what happened at continental resources that was positive, i rode in a helicopter with him going over their holdings. he runs his own company. i'm not a big fan of energy right now. wpx is a very interesting spec based on how smart rick is >> cooperman renounced for not being able to limit himself to one idea goes through his 13f filing. that's okay. >> by the way, david, hess is one that always captivates people >> i can remember the battle with elliott >> that's where i was going. >> then the price of the commodity tend to have a larger impact >> think about what we talk

about now. elliott and hess, we have a couple of hedge funds that endures this dowdupont, the numbers were not what i thought. the change in ag, which had been considered to make the numbers, down look at the stock. why? because of larry robbins they were all pleased, which means they're not selling. i understand from some of my sources they could be buying sglch. >> they could be we have more to doeal with we will hear from ray dalio talking to andrew right now. always fascinating to listen to him. keep it here

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let's do a quick stock trading. what's going on with mcdonald's? >> there's m science which does work trying to figure out how a company is doing they are saying perhaps mcdonald's same store sales may not be what they think they are. children's place and domino's pizza were afflicted by an m

science hit -- some people say hit jobs, other people say completed work i would tell you that if you -- they are hit or miss, m science. this is not from steve easterbrook. it's from an outfit trying to figure out if numbers are weak listen, it may be right, it may be wrong >> okay. you and i are going to be together in a little bit interviewing ed breen and he had garden it's really warm here. there's an important interview in progress at the conference. let's send it over to the stage. you see ray dalio sitting down >> so we're now in an environment of a lot of conflict in other words, conflict within the administration, conflict between parties, conflict between other countries and so on i think it will be very important how that conflict is handled. this is very important this is even more important than

how the tax chain changes are go take place the most important thing is there must not be a downturn in the economy. because if there's a downturn in the economy with this kind of a wealth grab -- imagine what that would be i think the federal reserve has done a much better job of realizing such things. so i think we're in this kind of environment in which there are these cross currents, the economy is not too hot, not too cold assets are kind of there we just hope that we are -- >> to put a fine point on it, when you talk about the 1930s, this ends in war >> the circumstances can be handled differently. defenda there are lessons to be learned from history i think the real question from this -- relating to conflict is how we deal with each other. in other words, do the principals that bind us together, are they stronger than the ones that divide us?

are we going to get -- how with we going to deal with this i think -- i think in terms of monetary policy. there are lessons to be learned by the federal reserve or the central banks. i don't think that it means -- i do think we are in a situation where those -- that situation is set up similarly >> but you have written about this extensively recently on some of your notes to investors. you freaked out a lot of people with this. what i'm trying to understand is given this view of the world, what do you do about it as an investor >> well, you know, there's alpha and beta we're in an alpha conference there's alpha and beta the most important thing is to know how to separate those two things in other words, know what your strategic asset allocation mix is that's your beta portfolio know how to achieve balance. that's where you are starting. >> you have talked about buying

gold. >> that's essential part of the balance. we're in a monetary -- gold is an effective diversifier of assets it's in terms of currency regime we have a situation where gold's position in the world is a reserve currency started with the monetary system, 1944. we now have a dollar denominated system that dollar is very much subject to the demand around the world and the positioning of the united states. it's a paper currency. it's also something in which there's -- when there's conflict it's an alternative version of cash it should be part of everybody's portfolio, between 5% and 10%. not because it's necessarily the best thing it's most importantly because of how it serves as an effective diversifier, particularly at a time when we are looking at the united states and their role in

the world. the united states' position in the world is one of a few countries that are powerful countries. it's unique in many ways what is actually happening and the dollar's role in the world, you know, can't be taken for granted. >> let me ask you about one of the other powerful countries, china. bridgewater planning to launch a china investment fund. what can you tell us about this? >> i started to go to china in 1984 not for money, because the curiosity. they invited me over to teach them about the financial markets. i developed wonderful relationships with the people there. when they formed the financial markets in 1989 and 1990, there were seven people in a rundown hotel room put together by these various companies to make financial markets. over that period of time, i've

been lucky enough to have those people as friends and build relationships. and help them to develop some of their financial markets. an extension of that is that when they're opening up to the world for investment, that it's something we want to do. we have been managing money since 1993 for chinese institutions outside now their capital markets are developing we want to invest inside for investors who want to be inside and chinese investors who want to invest. >> what do the chinese think of us, the u.s. right now, of president trump, of the politics of the moment and our economy? >> i don't know that it would be appropriate for me to speak for the chinese other than to say quizzical. i found the chinese leadership to be intelligent, and like good

chess players. i think they're in the process of figuring out what the new administration is like and what we're going to be like i think the administration itself is in the process of figuring out what it's like. >> how concerned are you about the situation in north korea, both itself but also in terms of our relationship, the united states' relationship with china and how that is going to affect businesses like yours? >> it's all going to be a function of how they're going to be together. that's a big question. let's take north korea i think on the north korean question, the world is looking at the united states and what its power will be. you know, there's -- speak softly and carry a big stick >> right are we doing that? >> are we doing that are we doing opposite of that? what is the power? >> you ask some question good questions. what's the answer? >> i'm not finished with my answer

i think that this can have geopolitical implications. in other words, what korea can reshape what the whole asia region is like countries in that region think, who am i going to be affiliated with, how does that work this will have implications all through the region >> and your sense though of how -- for example, everybody here is trying to figure out in terms of putting percentages on it, can you trade around this? is there a trade is there a way to hedge risk if you think there's a -- how do you at bridgewater think about that >> we think about hedging risk there's a beta component to this when we think about is how to take it off the table and you think of options, you think of hedges in terms of structures, in terms of gold and -- we don't -- in our alpha portfolio, we want as least correlation

with anything. we want to minimize -- >> north korea is clearly taken into account i ask because there are other people who say, it's a binary event. there's no way to think it through. there's no way to actually hedge it in any meaningful way ride the tide. >> i don't think that's true if you look at the market behavior, you could basically calculate essentially the betas to the north korea event by watching how the market reacts we see it every day. you can say that but of course, there are many betas to many different things you have brexit. you have this and that these things ebb and flow. they happen immediately. you can achieve greater degrees of hedges. it's mechanically possible >> one of the big questions around the market is the future of the fed bridgewater may have better information than the fed i'm curious about what

information you think that you have that they don't also, what you think about the future of the fed and who is going to run it. >> well, it will be a very important -- i don't have any particular insights. it will be a very important decision, because a lot of fed seats -- not only the head of the fed -- are up. i think that it's very important that a fed chairman have a combination of the technical skills and -- wisdom and a global perspective there aren't many people who have those things. you have to put a committee of such people who will have those qualities. >> you know gary cohn. does he have those things? >> gary cohn is a very capable man who also has his greatest strength in being able to know who also to speak to and he is open minded.

so that ability to draw upon the best thinking, particularly people who have thoughtful disagreement this is my big thing how you can have thoughtful disagreement, sort through that disagreement to get to the right answer i think gary cohn has that >> how important is he in the administration if he were to leave, would that be a signal to you >> first of all, i'm not inside. if i was inside -- >> you wouldn't tell us. >> in terms of my reaction though, i would say if he was to leave, it would be terrible. because it would be terrible in two dimensions it would undermine the future progress of economic reforms and so on. and it would also represent a challenge in putting to the the administration as you probably know in terms of the number of jobs filled,

treasury department is short the capabilities, the time and attention. then i think it becomes also representative of what it might be like to be in the administration it might be difficult to get the quality people into the administration i would be concerned about the leadership i think it would be terrible if gary left. >> terrible for market >> oh, yeah. >> oh, yeah, it would manifest -- >> it would be bad for the market >> when president trump was first elected, you called it a broadly positive i think the was quote in terms of what it could mean for the market and the economy. do you still feel that way >> yeah. we're in the process of figuring this out i think we're faced between a pro-business -- there are a lot of policies i disagree with and choices i would make that would be different there's the notion of a pro-business environment and, of course, then there's the mechanics. you lower a tax rate, you cause

stocks to be worth more. it's positive because -- lump sum payment and any investment is a lump sum payment for future cash flow. those future cash flows would be initially enhanced by those kinds of stimulus. they're a two-edged sword. if you lower regulations, you have maybe a boost to the economy, a boost to profits. then maybe you have something else to pay. if you eliminate let's say climate, that might have a cost in terms of the environment. it could be profitable for businesses i'm not saying that it's -- how the net of that is other than to say that that pro-business environment -- i think if we can have a pro-business environment, it's okay to make money, it's a good thing to make money and make jobs and all that, and you have that at the same time as you have togetherness, thoughtful pulling the american

dream, you know, for all americans, how do you do that for all americans, a big element is how we're going to deal with the bottom 60%. >> i want to turn to the principals in a moment i have two other questions as a risk manager, when you wake up in the morning, what do you most worry about what is the single thing you -- >> you know, there's -- there are the event risks like korea i don't think that's probable. over the longer term, i'm worried more about the wealth and social gap and the conflicts we're going to have with each other. i worry about the large burdens we have in the form of debts and pensions and other things that are not going to be adequately surfaced unlike 2007 when we -- the financial crisis, we went through calculations and we said, we could see who couldn't pay their debt. >> nothing structural out there. >> nothing right now that i can

see -- we're in the part of the cycle and we have the cash flow to support -- >> welcome back to "squawk on the street." we're at the alpha conference where we have been listen on a conversation between andrew and ray dalio. a lot of different topic anything strike you in particular >> well, what he just said about gary cohn. if he were to leave the white house, dalio said it would be, quote, terrible in two respects. it would be unpredictable in terms of the reforms that cohn is involved in, like tax reform, which is a hot topic over there and represent a challenge of putting together an administration that struck me as notable. he said it would be terrible and bad for the markets, something that we have seen because when there have been rumors of this, we have seen market sell off i know secretary mnuchin was asked about it earlier wouldn't really go there in terms of the relationship with

cohn they seem to be focused on getting this tax reform through congress we're learning little tidbits about it but not any of the major underlying issues. >> no. earlier in the interview that secretary mnuchin gave to the gang, he mentioned the 15% rate being a target but not a hard target in any way. seemed to be willing, as he has in previous interviews, to go higher than that but would not delineate in any way how high. then did mention on past throughs this idea of will everybody become an llc saying we are going to administer it very tightly and make sure service companies are not part of it. believe that may have been something we haven't heard before from the treasury secretary. >> absolutely. then just on dalio, a few other notable headlines that stood out. we know he has been a fan of gold he called it an effective diversifier in a portfolio

it should represent 5% to 10% of your portfolio this theme we will hear about what kind of economy where he in dalio called it not too hot, not too cold, about 2.5% to 3% economy. that seems to be a again cgener consensus. are you sensing negative as you have in the past >> no. there have been a few delivering alphas i can remember where there was a lot more uniformity and worry, risk off as we used to say that's not necessarily indicative of anything to expect in the marketplace as you know it's early it's very early. we have more people to hear from >> a lot more to talk about. north korea, they were talking about that in the conversation the debt burden with the pensions, of course, the mystery of who will be the next fed chair and those other spots on the fed. do want to bring in carl who is in tampa, florida, this morning following the latest

developments on hurricane irma good morning >> we're paying close attention to delivering alpha as well, especially the comments from the treasury secretary early this morning about the impact on gdp and the words down payment, which he used to describe the government's initial forms of assistance to texas and florida. keep those in mind the story today overall is we're seeing two different worlds of recovery on the one hand, take the florida keys we are still just now coming to grips with the level of devastation down there dod estimates 10,000 residents might have stayed behind before the storm. that's one out of every eight. it could be weeks before they really get help from first responders nbc news is saying the president is looking at a possible trip to the u.s. virgin islands. we know what happened to the british require begin islavirgis you can see the green in the before photo all those trees. then now, just a strip of brown.

everything has been shorn and all that's left is essentially tree bark. the other different story is on gulf coast the cover of the tampa bay times says we're lucky as we're beginning to see schools open on thursday, garbage collection here today, airports are starting to open with limited service. here is video of the first flight arriving to tampa international from atlanta a few -- an hour or two ago. all those airplanes are going to need gasoline. that is another good story here. the port of tampa bay stockpiled 15 million gallons of gas in the big round tanks that are on shore. we talked to the president of the port yesterday he explained why they did that >> think of a coke can that was empty in the wind versus one that's full. it's very similar. they are rated to handle high wind and hurricane but they have to have fuel in them

>> that's good news not just for people who need gas but increasingly the utility trucks that are spanning the state trying to fix all the power lines. jackie is in palm beach gardens with more on that. >> hi. you know, i'm going to go off of what you said about the tampa folks saying we're lucky that's what a lot of the communities on the east coast of florida are saying as well including palm beach and where we are right now, palm beach gardens. a lot of folks here did lose power. at one point more than half a million people it's dropped down to 385,000 in this community, for example, power was just recently restored many people said that it came back last night. they are getting it quicker than a lot of the other places that were harder hit. that doesn't mean that this isn't an important story for florida. across the region, 5 million customers are still without power at this point. that number is now down a little bit over a million, which is a

step in the right direction. but, of course, we're not all the way there just yet look at this map of florida. that will give you a sense you can see the red, orange, yellow portions. these are all portions of florida that have been impacted by the outages it's widespread across the straight those red parts are places where 75% of people don't have anything right now obviously, that's the majority it's shrinking from what we saw yesterday. yesterday the whole map was pretty much red. also we know that the crews here on the ground are getting help from other states. some crews coming in from long island to add on to some of the help we have gotten over the last 24 to 48 hours as well. hopefully, slowly but surely, this infrastructure gets back in place. >> a challenge to get the lights back on. jackie from palm beach gardens, thank you. keeping our eye on stocks. they're higher again across the board this morning the s&p 500 hitting a record

high this c it is materials and dowdupont driving the charge financials strong today. joining us here, goldman sachs strategist we get a rare one on one date. the storm impact on the economy, goldman sachs says 2%, which is a downgrade. how do you think about what that means? >> from human point of view, it's tragedy some of the pictures we saw from carl and others. from an economic perspective, as you indicated, it reduces the economic activity for this quarter. it would boost gdp growth for the fourth quarter this year, first quarter and second quarter of next year the estimates to around 2.5% 2.5% is a modest level of growth in that environment, the growth becomes skwars

faster growing stocks are likely to outperform as compared to value stocks value stocks do better when growth is more robust. >> you are talking technology? >> technology would be a leading area of -- you would get the best growth. top line growth and where is that top line revenue. google and amazon and large stocks where they grow their revenue at 15, 20, 25% in some cases. revenues grow in the 4% everywhere else. you get growth in sales that are much, much more rapid than market the margins are twice as high, 18% compared with 9% or so approximately for the rest of the market that will depend on individual companies. growth becomes a scarce asset. >> don't you worry valuations, in the sectors, are stretched? >> in a world where we characterize it as perhaps secular stagnation, really in the united states growth has

been 2%, sometimes -- >> not too hot, not too cold. >> that's what ray indicated in that environment, which has persisted, growth stock dozen well for 50 years, value as a factor has been a successful investment strategy last several years, it's not the reason it lagged in my view is that you had growth -- economic activity that has been mode modest therefore, investors looking for better top line revenue. that's technology. you see that in other areas. one way to think about it is which companies are actually making the pro active investments in their business? most companies, if you look at their cash flow, most companies invest 18% of their cash flow reinvested in the business in growth capital investment and research and development there's a group of companies that rare investing 80%, 90% bac into the business. that's an important distinction.

deer, electronic arts, google, amazon, they're making that proactive decision. >> apple >> they have made these capital investments to grow their business if you think about an economic environment that's more modest, then argument would be those companies ought to be and i believe will be able to outperform on the top line revenue. >> you take up the topic of a correction in the market in this week's note. you are getting a lot of questions from investors it's been a while since we have had any type of real 5% correction, 14 months you point out. 19 months since a 10% correction and yet you tell them not to worry. why? >> it's the number one question we receive when is a downturn likely to come at some point there will be a correction or a downturn when you look at what's imminent, i would emphasize the status of the consumer the position of the consumer, which is just about 70% of the u.s. economy is represented by the consumer they have the strongest balance

sheets in many respects since the 1980s where you have in terms of their debt service, in terms of the benefit from lower interest expense there's huge deleveraging and solid growth that's driving the economic and that's part of the story why the economy is unlikely in the view of our economists to have a recession. that environment then you are basically looking at revenue growth as a key driver margins are not expanding. margins have been flat for five years. it has to do with top line growth it's not about the multiple expapge expansi expansion. the intuition is the market would rise 7% for the year it would happen in the first quarter. going to around -- >> you haven't changed your target. >> around 2,400. it's a little higher now the risk is more to the down side there's a concern about what -- >> you didn't talk north korea you didn't talk fed. didn't talk fiscal policy

showdown that could head for december which one ruins your thesis? >> any one of those are risks. the interest rates are probably the one that we're most focused on in terms of the debt policy and long-term interest rates two months ago, the ten-year u.s. treasury yield was 2.4% it's 2.2% approximately. rates came down. equity prices went higher. concern is that as rates go higher that will reverse 2,400 remains a target at the end of the year. >> we're below -- >> 7% return for the market this year. >> last week we were around 203. good to check in with you. the chief u.s. equity strategist at goldman sachs. >> thanks. becky quick joins me she hosted a panel with steven mnuchin. the topic of focus was tax reform a lot of other things. >> right tax reform had to be front and center

it's something we have been thinking about, this audience is thinking about mnuchin says it's his number one priority december is the expected delivery date. of course, remember earlier this year he had a time frame that turned out to be overly aggressive >> in january, we had a plan that was lined out working with congress that we thought we could get tax reform done by august 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 the market moved i'm now incredibly hopeful we will get this done by the end of the year >> in fact, he thinks there's a possibility tax reform will not only be passed by the end of the year, but it will be retroactive to january 1 of this year. the details of tax reform are unclear. mnuchin said that he thinks it will include a couple hundred billion dollars of dynamic scoring.

it's likely to cut wealthy people's tax rates to offset the deductions they will lose at the state level. he said hedge funds will no longer have the benefit of carried interest we talked about the federal reserve. he says yellen is in the running for chair. >> there's a lot of good people. the chair is obviously quite talented she's being considered but there's a lot of great people that we have been meeting with considering as well >> we also asked him about gary cohn he said he has worked with gary going back to goldman sachs. he said he will go to capitol hill with him today to meet with the senate to talk about tax reform he is going to dinner with him tonight with president trump he wouldn't say anything about his chances for fed chair. he wouldn't divulge any of the confidences the president made in him. >> ray dalio on stage with andrew said it would be terrible if mr. cohn left the administration, which continues to be a key question as tax reform goes, he seems to

be not alone but in the minority in the belief that they are going to get it done by the end of the year. >> i thought that was off the table. he thinks it's out there we will see. they will have to get things done on an expedited time frame. they are looking at december 8 they have the debt issue, the debt ceiling coming up by december 15. >> seems hard to imagine they could figure it out. on this pass through issue, we have been making the point, you pressed him on that. hedge funds, carried interest goes away. if they are llc -- >> 22%, 15%. >> in terms of figuring out who is not eligible for a pass through, we did learn a little -- >> i said, if you are somebody who is a paper pusher, if you are an accountant, if you are looking -- this is income that's coming into you, you will not be on that list for what's considered a pass through to get those rates. if you are somebody who is a job creator, a manufacturer that's creating jobs, they want you to be on that list because they

want to be able to be creating more jobs here in america. that leaves a lot of unclear issues whether that would apply to private equity, apply to real estate those are all questions that have to be resolved quickly. >> are we consider eed pencil pushers? key questions. as new jersey and new york taxpayers, no longer deductibility of state and local income tax, that will hurt. >> they don't want the federal government to be in the business of subsidizing the states. if you are giving those people a tax break so it no longer impacts that, you are still subsub subsy subsidizing them thank you. the interview with secretary mnuchin. >> lots of other news to talk about today. when we come back, it's apple's big day. tell you what you can expect from its long awaited product

launch we will take you back to the seventh annual delivering alpha conference steven schwarzman getting ready to take the stage.

good morning i'm sue herrera. here is your cnbc news update. things are beginning to return to normal at fort lauderdale hollywood international airport. reopening this morning after closing due to hurricane irma.

the airport has closed since saturday french president macron arriving with food, water and medical supplies in guadeloupe he is meeting with local officials to discuss support and aid to that region the british government will refer 21st century's bid to the regulator. this is a blow to the takeover plans. the culture secretary says there's a risk it would not be in the public interest one person was injured after a plane crashed in a connecticut parking lot monday morning the cessna crashed behind a business that's adjacent to the local airport. the 79-year-old pilot was taken to a hospital with minor injuries that's the news update this hour back to david at the delivering alpha conference maybe i'm going to sarah >> i will take it. >> it's all yours.

>> thank you i will take it and send it back to carl in tampa, florida. you have been sharing some of the newspaper headlines. looking at the sun sentinel, similar sentiment. hurricane irma slams florida, some count costs, others count blessings. that's the story today. >> absolutely. as you know, as the recovery continuing today, the story is a human story but also a very economic story earlier this morning, at the delivering alpha conference, the treasury secretary talked about how these hurricanes in texas and florida will impact gdp in the short and long term and how the government is thinking about assistance take a listen. >> 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 i think it's too early to tell what the exact estimates will be i think it won't have a bad impact on the economy.

>> let's bring in paul paulison, talk about what's needed from the federal government when you hear comments like that from the treasury secretary, what are fema officials probably thinking right now in terms of their wish list? what's going to be needed over the next few weeks and months? >> i think they understand very clearly what's going to be needed one is housing we still are dealing with hurricane harvey in texas with all the people that are not back in their homes that's a long-term housing issue there. here in florida, it's more of an infrastructure issue look at the roads and bridges and the sewer systems and with a tr syst water systems. those are eligible expenses out of the disaster relief fund. there's a lot of dollars that are backing up there that are going to be needed in the next -- in the next few years. we need to look at that carefully. how are we going to spend our money? are they needed? is there good economic benefit for doing some of it

>> i have to ask you about the keys we're still trying to come to grips with what exactly it looks like right now obviously, u.s. 1, they will spend a lot of time trying to verify the structural integrity of what is a giant bridge. can you talk about the challenges of getting assistance to an area that is accessible by basically one road >> very difficult. the keys are very vulnerable to being cut off. we have seen it time after time with different hurricanes. we did put a new bridge in the old bridge was not stable anymore. that should hold up very well. a lot of that roadway could be damaged, especially with the tidal surge. when it came across the roads. when those waters die down and move away and you start doing an assessment, it's difficult to get back in there in a timely manner >> dod estimates show that maybe

10,000 residents stayed behind that number sounds incredibly high given how ferocious the warnings were to get out do you think that number makes sense? when the white house says it could be weeks before they are getting real help, does that seem like a reasonable time line >> you know, the time line is what it is because of the access to it. during hurricane andrew, we had to bring supplies into homestead by helicopter because the roads were impossible. power lines down, debris on the road it's the same type of thing. i'm sure they will move stuff in by air the amount of people does not surprise me. people live in the keys are independent and sometimes very hard headed. i say that in a kind way it would not surprise me at all that 10,000 people did not evacuate >> the last question is maybe a little out of fema's universe. but given that level of hard headedness and the degree to

which americans are willing to pay up to live by the water, we all get that is this going to color that somehow? do you see maybe the government even weighing in and changing some zoning restrictions as to where you can basically put down a mansion or a mobile home >> i think it's definitely something we have to address we're spending so much money in these disasters, it's not sustainable anymore. we have to look at our building codes. we keep building in the same place over and over again. we keep rebuilding homes in the same way they blow down again we have to look at our building codes and see how we can change it the president and congress need to take a very strong view of our mitigation plans, which states are doing the right thing, like florida. we changed our building codes after andrew we only have 16 states in builda are enforceable. congress needs to look at that and reward the states doing the

right thing. have a disincentive for states that refuse to put strong building codes in place. >> david, we always appreciate getting your insight even on a story like this one discouraging as it is thank you very much. david paulison, former fema director over to you, sarah >> okay. carl, thank you. see you in a bit when we come back, steven s schwarzman getting ready to take the stage. looking at stocks, another rally. dow is up 43 points at this hour s&p 500 building on that record close yesterday. not the gains we saw during yesterday's session but groups like materials, financials, energy all higher. we aarl. above $48 bre 'll be right back. eet your fath. kevin kevin kevin kevin kevin kevin

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apple is getting ready to unveil a number of new products this afternoon josh lipton with more we can expect always a lot of hype going into these. more so today i think for good reason given what we are expecting. >> yes i'm actually at apple's new corporate campus what you see behind me there is the new steve jobs theater that's going to be where this event takes place in a couple hours. apple stock has surged nearly 60% in large part due to excitement about the products we expect to be unveiled here the star of the show is anticipated to be the new flagship iphone which we think will include a lot of new features, including a new 5.8 inch display that would show colors more vibrantly.

3d front facing camera with facial recognition and wireless charging they found that was the most attractive feature the price tag, some think $1,000 surveys indicate that consumers aren't willing to pay more than that in other words, there's a ceiling here that apple needs to be aware of. the device might cost $400 to manufacture. the most ever for an iphone. tim cook either had to charge more or take a margin hit. excitement about the new iphone has helped drive a powerful surge in apple stock it's jumped 40% so far this year in addition to the new flagship device, we expect to see upgrades to the iphone 7 there are rumors apple might unveil a new watch with its own cellular connection. gene munster estimates the watch

is a $6 million business he thinks that could double if that watch is unveiled it starts here at 10:00 a.m. local. back to you. >> a question on the expectation game since apple has been a strong performer going into this unveil, how do you measure success? is it harder to predict this time because of the $1,000 price tag on the iphone? >> i think the price tag is a big variable listen, after the surge we have seen, skeptics, including the teams at pacific crest, they sa the up side, however exciting, is priced in piper jaffrey estimates there are 330 million active iphones that are two years old if you are a bull, you bet there is some significant portion of the people that are going to upgrade to the devices we're about to see introduced here

>> hard to believe it's been ten years of iphone. thank you very much. for that preview outside the spaceship. john >> we are going to talk about that we're going to check in at delivering alpha founder of c3iot will join us. he has a broad perspective on artificial intelligence. that's coming up stay with me, mr. parker. when a critical patient is far from the hospital,

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everyday when we go to work we want everyone to work safely and come home safely. i live right here in auburn, i absolutely love this community. once i moved here i didn't want to live anywhere else. i love that people in this community are willing to come together to make a difference for other people's lives. together, we're building a better california. welcome back to "squawk on the street." taking a look at stocks this hour, mostly in rally mode not quite the power from yesterday, but still the s&p 500 building on what was its 31st record close of 2017 also near record day territory the dow is being driven by names like dupont. also financials are doing better today. again, goldman sachs, we have pfizer, nike on an upswing mcdonald's down 3.2% on the

bearish note from m analysis worried about the comps. let's send it over to bob on more on what's moving this morning and what's driving it. bob? >> more tension over north korea, less concerns about the hurricane's financial impact growth back, bond yields moving up, so the banks on a mini rally right now. materials and energy strong. notice utilities, defensive is down tech's also down here. apple is down as you heard from josh we'll see if that turns around have you noticed this market trend? last week when the concerns with north korea were high and the hurricanes were high, markets were down, but not very much, then they snapped back strongly on positive news this trend wanting to go up has been there for a long time state of the market right now, new highs on the s&p, advance/decline line, new highs. that's very important. they often diverge at the top. the new high list, 200 down here, that's modest, but getting better europe's reversing a three-month

down trend italy is at a new high today this is sort of the s&p 500, it's up for a fifth day in a row. we haven't seen that for a long time, i don't think since april. we've been moving the down trend for a while. there's been a big issue with that of course, that's primarily due to the euro's strength we've seen three months, euro has been going up recently the last few days the euro has been a little bit weaker i think that's been a major reason why we've seen a reversal elsewhere in the u.s., breakouts. banks, energy, transports here ten-year yields finally moving up a bit, so we're getting the banks at a mini rally, so the regionals are up, some of the big banks like citi also moving to the upside and the european banks, which have also been hurt in the last months also had a very good day today, still not closed over in europe. another positive, oil above $45. for a while now, and that's now created a mini rally in some of the energy stocks. up again today at the open here, chevron,

halliburton, exxon, schlumberger also the transports, norfolk southern was at a new high that was an interesting one to watch. jb hunt also in the transport stocks that stock was at a 52-week high yes, airlines have had a lot of problems, american with its warnings about the cancellations have been a big issue, but overall we seem to see transports move up one sector we're waiting for is the big winner and that's the technology sector up about 27%, hit a new high just a short while ago, early part of september. multi-year high, that's not there today because apple is a little bit on the weak side. so that's weak side, the one stock we're waiting for. of course, you heard from josh, waiting to hear what the details are for the new apple releases overall. finally, i want to note, mcdonald's you heard earlier from sarah, a research firm had a negative comment out this

morning noting q3 systemic sales and comps will be below consensus. there was a report, an opinion from m science, a research firm. again, see mcdonald's down 3%. that's really bucking the overall trend. sarah, i think the important thing right now is advance decline lines at a new high and often you see that going south when you hit market tops there's no sign of that. as of now, on a technical basis, the market is in very, very good shape. back to you. >> yeah, they were telling us, doesn't see any kind of material correction looming here. bob, thank you very much david, i want to go back to you. a lot of good things coming out of delivering alpha, as always this morning themes, ideas, and much more to come what stands out to you >> yeah, you know, always interesting to hear from the secretary of the treasury, of course, mr. mnuchin, we heard from dalio, as well, and a precursor to an interview we're doing with the ceo of dow/dupont

and one of the large activist investors involved in not just dupont, but dow/dupont and involved in the big news this morning in terms of the reshuffling of the businesses that will go into the specialty products, part of dow/dupont in particular we did sit down, actually, as you know with andrew liveris earlier. one key question investors continue to have is about mr. liveris' continued timeline at the company as its executive chairman i did ask him, given he's already pushed back his expected departure from june of last year when he does see himself no longer being a part of dow/dupont here's what he said. >> obligation to shareholders and our work that we had to do was not done we got delayed by the regulatory side so our board, the dow board

before and now the combined board, stability is one of the keys here. i very much have strong confidence in the team we've assembled on the dow side, the dupont side, how they are working together we joke there's chemistry between these two management teams and board, the new board so i will find a time, when it's the right time >> apparently we're not getting when that time is, sarah a lot more coming from here, of course, i'll be sitting down with jim coulter, jamie dimon, and that's just a handful of the exciting things coming from delivering alpha back to you. >> and another strong day for the new stock, dwdp, second best performer right now in the dow after goldman sachs. david, we'll see you then. when we come back we're going to go live to delivering alpha, and we're going to continue to follow this rally thheowp points. we'll be right back.

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you want to tell us what happened that day? >> oh, well, this is a complex time around charlottesville, and it was sort of unprecedented and reminded me of the 1960s without going into every strand of why, this was sort of red hot, and what happened is, people who were running public companies at that time were concerned about employee reaction to what the president said or didn't say there were customer issues for those in countries where some of the ceos felt they were under pressure there were shareholders who were unhappy with