♪ live from new york where business never sleeps, this is "squawk box. good morning welcome to "squawk box" here on cnbc we are live from the nasdaq market site in times square. i'm becky quick along with joe kernen and andrew ross sorkin. our guest host this hour is mohammed el-erian from allianz great to see you >> thanks for having me. >> great to have you here. >> wonderful to be here. >> ready to go >> i'm ready to go >> what is there to talk about sofrnlts mu >> so much between the delivering alpha conference, the central banks. >> see, he knows look at the u.s. equity futures. markets were up once again yesterday. you had the dow, s&p 500 and the nasdaq all closing at record levels this is the first time they've seen those concurrent record

closes since july 26th this morning futures are ever so slightly lower dow is down by less than one point below the fair value the s&p 500 futures down by 3 5 3 1/2 and nasdaq down by 8 the ten-year up to 12.160% in terms of the dollar, dollar is down against the euro and yen. looks like it's at 1.1972, dollar/yen is at 110.04. and if you wanted to check out crude oil prices, slightly higher yesterday wti closing at 48.73 this morning up 50 cents a couple stories we're watching, nordstrom's founding family selecting leonard green and partners to help take it private. a formal bid could be submitted

within the next few week shares are up about 10% in the premarket. apple getting buzz today after unveiling the highly anticipated iphone x among the highlights, the phone doesn't have a home button it unlocks with facial recognition technology it has 2.7 million pixel display. that's the highest resolution ever for an iphone and it has an extra two hours of battery life and charges wirelessly quick note on that, two lours of battery life over and above the 7, not the 7 plus. for those gadget heads out there, there is a distinction. the 8 plus may have more battery life it matters the price tag for this phone is $999 apple shares at this moment down just a little bit. >> what happened yesterday -- >> it follows -- it was down

marginally we have shown it now over many years, traditionally it's down we talked about it yesterday down into the announcement, day after up >> they won't sell it until the end of october i don't know if anybody thought it would be on the market right away >> apple trading lower in europe today because of a later shipping date weighing on stocks the 8 and 8 plus you should be able to get soon this famed ten phone not available until november 3rd the wireless charging station not available until august 2018. for those of who wanted the watch, which i do, you can do it on september 22nd. >> don't gloss over that you going to bury the lead with the apple story? what can you do with the emojis and the -- aren't there some things you can do with the emojis >> you can make faces. >> give me the low down.

>> emoji companies are worth $10 billion if you put dog ears on people isn't this big >> the element of it is cool this is the beginning -- >> how long -- >> they go blah! >> it can be an emoji of you >> no, no, you're an emoji of something else, but your face -- it's not really your face. you can make it talk you can animate it >> you can -- >> you thought you should leave this part out when this is the -- isn't this the main feature of the new -- this is not it >> i don't think this is the main feature >> what makes it -- >> i should tell you about the augmented reality thing, that kills the battery life if you use the augmented in any meaningful way -- >> the emoji stuff >> why >> that, or the true augmented where you're looking out on the street, an hour, hour and a half >> what? the key reason is cost $999 other than because it can --

>> the screen. >> because they can? >> the screen. oled screen. significantly better screen. much more expensive screen >> is it clearer >> two things. oled screens traditionally have been very saturated in terms of coloring and the blacks -- there's been a struggle on how black it can truly be. samsung phones, you've been on oled for a long time, the skin tones are a little off i do know this >> that's why i'm leading ed lee on the new products, which is the brilliance -- >> they have -- people don't give apple enough credit because they say they're not innovators. other people have used the screen before. these guys, from what it looks like, it looks like they got it right. >> i kind of understand what you're saying about the blacks on the screen -- >> you want the deepest black possible >> tv -- some of the advances in

screens, it has to do with the colors -- >> i'll get you a watch, joseph. >> talking on the phone, getting texts, that would be cool. >> i waited. now i'm doing it >> i don't need to know my -- >> i won't carry the phone with me >> do you know about the heart rate you know what's going on with apple. >> no, i don't >> now i can go to the gym and see the e-mails without having to have the phone near me. that's a benefit i can go -- i might do stuff without the phone. my whole life could open up. >> all right >> really. trust me it's a crazy thing if you have to have the phone with you with are we going next where? where is that? >> a serious story >> i know. now to the latest on the recovery efforts in the wake of hurricane irma millions of homes and businesses in florida with still without power. i saw a lot of what happened on the keys

a lot in islemorada yesterday. it was in drone shots, which was unbelievable to watch. a lot of things that were very, very sad and heart wrenching residents who either evacuated the state or stayed in shelters are coming back home to survey the damage some curfews have been lifted. jackie deangelis joins us from the orlando area good morning >> reporter: good morning to you. the good news is that about 45% of customers that lost power have seen their power restored we've seen the numbers go from a little over 6 million down to 3.8 million. take a look at this map we've been tracking over the last couple of days the whole state of florida was practically in red, meaning roughly 75% of people in those zones didn't have power. now we're down to 50%, 25% so the situation is looking better i can tell you, as we were

driving north yesterday, we did see floods of people heading south, as you said to survey the damage and get back to their homes and see exactly what irma did in their specific location just because those people might see power in their homes doesn't mean everybody will. we were in ft. pierce, we found a community pretty much under water. they still didn't have power they didn't have water working properly in their homes. there was a large senior population there you can see people wading through and trying to get out so they could get to a safer place. so there's still pockets definitely that have severe damage and it's going to take a while to get out of it it could take weeks. we're here in orlando at disney world. they never lost power. their theme parks were closed, but all but the water park reopened yesterday the story now is getting back to business back to you. >> thank you very much we will continue to have updates

throughout the morning among the reasons for yesterday's rally, treasury secretary mnuchin talking up tax reformed he joined us on stage at delivering alpha >> 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 healthcare first and doing healthcare fast. i think as you know, healthcare 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're going to get this done by the end of the year >> we need to make this system competitive. 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 be able to achieve that given the budget issues, but we'll 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 >> there are a lot of questions about the details he was talking about the level we might expect to get rates to. that's still unclear he did say a few things that caught the attention of people he thinks this could be retroactive to january 1st of this year. he thinks that taxes for the wealthy people may actually come down a bit he said as a way to make up for the idea that they'll be losing state deductions that they receive right now. he said capital gains for the hedge funds will be gone it was interesting to talk to him a bit about where else that might happen not sure on real estate. not sure on private equity he said basically they want the cuts to go to job creator s, but don't want an accountant to say they're a pass through, an llc >> pretty interesting things, i thought. i don't know what timely happens with the pass-through situation. >> that's the whole game not the

whole game, but a big piece of the game, trying to make that actually work. >> at one point i was thinking -- as we were preparing for that over the weekend, i was thinking can we just ask people not to do that >> not to lie and say you're an llc when you're really -- >> even if under the law you're allowed to can i just ask you to stay in the tax bracket where you are right now, even if it goes to 5 and you could go to an llc, just don't because you're not a small business, you kind of are. would you just not do it if i asked you not to and pay your fair share couldn't we do it that way i don't think that's going to work >> law of the land, right? you have to come with the right -- has to be the right -- >> tax avoidance is patriotic, tax evasion is illegal >> what do you think >> he would go to an llc >> well, my preference is otherwise, but importantly is that the market reacted

positively to indications that we can have tax reform done by the end of the year. it's going to be hard. it's going to be ambitious we have lots of things coming at the end of the year, we have hae daca and the debt ceiling, but we need the fundamentals to validate a liquidity driven market rally the market is right to focus on this and insist on it, but we need it delivered by congress. >> okay. separate topic, bitcoin, there was a huge debate going on at delivering alpha about bitcoin jpmorgan chairman and cor o jamie dimon not mincing words, he called it a fraud and went on to say eventually it will become the emperor without clothes. >> governments, first thing they do is form a currency. they like to control the currency they control it through a central bank they also like to know who has

it where if is, where it's going. okay china is closing down the bitcoin exchanges. all i ever said is bitcoin, the bigger these things get -- they look at it as a novelty. washington, talking about technology, we love technology wait until someone gets hurt wait until it's used for illicit purposes which is somewhat -- they can use it for illicit purposes they would close it down and others saying it's not a fraud. >> is it a fraud >> no.

absolutely not >> will it blow up >> no t cannot blow up what countries can constrain today is how it's traded but it's a system that is peer to peer. to the extent you can eliminate the will and actions of every single person in the world you can eliminate it in the absence of that, the genie is out of the bottle, whether we like it or not. >> where do you come out >> they're both right. it's a disruptive technology, but the current pricing assumes massive adoption i don't think government also allow the amount of adoption that is currently priced in. >> one said it will blow up anding the biggest thing since the -- the other says it will be great. both can't be right. >> i think the price will blow up >> okay. >> but it will be -- >> it will exist because it's a peer to peer currency. but not going to have the adoption priced in. >> at what level is the price more reasonable? at a tenth of where it is? half of where it is. >> you and i know it's hard to do this, i would say at least half of what it is >> when you say continues to exist, does it continue to exist

in sort of a black market type of way it wouldn't massively be adopted because governments wouldn't allow it to be massively adopted so does it exist in this weird netherworld? >> exists like other peer to peer currencies exist. we have lots of peer to tear currencies, but the current pricing assumes massive adoption which will not happen. >> okay. leslie picker joins us now with some other highlights of delivering alpha it started at about 8:30 and went straight through. >> a lot of highlights, cautious sentiment surrounding equity evaluations. leon cooperman of omega advisers was more optimistic saying the stock market is fair, it's in line with earnings growth, and he said that we're returning to normalcy and that bonds are in a bubble but stocks are not.

>> it was a little bit like somebody had a foot on the throat of the economy, that foot has been taken off the throat of the economy. people are more optimistic about business outlook i think i constructive you have to be careful we don't become too xexuberant in our valuation of the future. >> he gave some picks, first data, hess, wpx energy >> he did say he's thinking there could be a 5% to 8% pullback at any point. >> he did say earlier in the year he expected equity evaluations to be flat for about six months he talked about different risks to the geopolitical risk was a big topic of conversation we saw however as we heard about geopolitical risks and tax reform, marry callahan said ceo confidence is actually far more

correlated to market swings. she said alpha is back it's possible to generate outperformance but investors need to pay managers to get it >> there's great value in these markets. and you just got to go and look. you can't buy them sort of wholesale and think they're the same you have to get n get on the ground and find opportunities. you have to go with it you -- if you spend the time and you have patient capital, which is a lot of what, you know, these people up here represent, long-term patient capital, you will outperform the markets in a drastic ray, vers way >> that was a panel of investors from all walks some were talking about real estate she highlighted emerging markets, other people on the panel talks about brazil, distressed over there.

very few people were willing to say there were opportunities in equities julian robertson was more in the saw kau sh cautious camp and was where royed about a bubble developing. >> the market as a whole is hollow, and that's due to interest rates being low there's no real competition for the money other than art and real estate and so i think that's why the valuations are so high i think when rates do start to go up, and bonds become more attractive to investors, it will affect the markets

>> robertson was talking about the market as a whole being expensive but stunned the audience when he said he did not put stocks like facebook and netflix in that category he said those stocks remain cheap. and others were urged to look into the tech sectors. >> all these businesses are fundamentally duressed the idea that alpha is back is true the lens we go about finding it is the lens of technology. that's the trail of bread crumbs that allow us to understand where value is getting reallocated and destroyed. being long the former and short the latter >> palipapitiya spoke about exuberance in silicon valley and how if the music stops there it could be problematic for the

community. >> if the fouchntain of money shuts, these things can be a problem very fast. so it ends fast. the eminvestigat elevator to th technology is very fast when the people who fund these things go away >> i've been hearing about the elevator for years, it's when and if it goes to the floor. >> people were cautious overall, but when it came to the so what, no one was willing to abandon the market if anything they were looking to go into more risky segments. how do you reckoncile that peope are nervous about valuations, but the response is to take on more risk. >> the challenge with a lot of smart investors is that if people had said a year ago that

equities looked expensive, which a lot of people did say, they would have missed a huge run up in the markets people are nervous about missing fig future run up. in terms of headwinds, people can't point to anything other than more black swan events, how much of that is priced into the market you're right people are interested in riskier places, emerging markets, less risky assets like real estate. we heard about real estate investment as an opportunity people are avoiding the typical vanilla bonds and stocks, yet people were concerned about the markets overall. >> on one of the financial websites this morning, there was a compelling piece a little different than what we've seen for the past year. this one was the market may set some new highs before the pullback most of them up to this point have been the market is right about ready -- >> but you use this as a contrary indicator

is this making you start to think -- >> someone actually said the market may continue to set new highs before the pull back that we've been predicting for the last year and a half >> and what's interesting -- >> that's a switch >> now investors have been conditioned to buy any dip regardless of what cause of the dip is why? it has worked great. we have an overall conditioning. i think you need a major shock to confidence to get that correction >> correction of 5% to 8%? >> a major shock not the old days, like a small shock. you need a major shock >> but what is the shock we used to think north korea, north korea headlines, the kind of headlines we've seen would be a shock. now we see past this or think they're seeing past it. >> because even though north korea has gotten more brazen in terms of provocation, it has not gone over the line in a big way yet. then if it does, the paradigm changes. we'll see what happens when more

than one central bank tries to normalize policy we haven't been there before >> we had mark lasry on yesterday morning, we were talking to him about where he sees opportunities in the debt markets. he said in the united states it's hard to find distress the debt situations. how do you look at that on trying to look at valuations on stoc stocks >> that was a great interview, he said smart investors are finding the opportunity set is smaller and smaller, and it's more overseas than here. what mark is telling people what you heard at delivering alpha, if you want to be looking for opportunity, you need to look overseas the problem is that's not available to everybody >> to most investors, average investors sitting around, they won't be able to see deals like

that what are they to do >> i think at this point, you have got to -- you have to take some of your profits, put a little bit less money at risk and go to eamerimerging market equities, look at emerging currencies, but it's becoming frothy out there >> you would say if there is a big pullback, what do you consider a big pu pullback >> these days 5% there's such deep faith in central banks, it's excessive. look what we priced for the fed. it's absurd we pushed back interest rates as market base so far out. we started to believe that the fed will be loser for longer if not forever. i think that is a fundamental mistake. >> mohamed el-erian is our guest host for the next hour we'll talk to him more about that leslie, thanks coming up l app, ed lee hass

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♪ apple taking the wraps off a new lineup, unveiling the widely anticipated iphone x >> it 10 or x? >> 10. >> they don't like the number. >> the i phone x what happened to the 9. >> tenth anniversary, right? >> but -- it just -- the new i phone 8, no nine, refreshed apple watch. joining us is ed lee, managing editor at recode, also a cnbc contributor. as the stock hit new highs, seems to be working its way towards a trillion dollars, the rap has been where's the car,

where's the tv >> where is the big innovation >> you can't keep extending the phone and keep going higher, but it has is this another sort of incremental move or is this a gram changer what would make this -- >> i'm more with the former. >> more incremental. $1,000 it's incremental? >> this is the best possible smartphone you could create today. they created it. at the same time it's not necessarily the best smartphone of tomorrow. so that's the key distinction. it's a nice upgrade it has all the great features these are features that a lot of samsung phones have had for years, wireless charges, edge to edge display, faster processors. when apple does these things, they just do it better there's a chance it works better. >> are you old enough to remember when they gave cereal to mikey -- >> mikey likes it. >> andrew likes it >> a lot of people like it. >> andrew is my mikey, and he

liky the watchy. >> i want the watch. >> will you buy a $1,000 apple 10 iphone? >> i will. >> he will do that he will also buy a $400 watch. >> why would you get the -- you're a wealthy billions, all that stuff you're wealthy, you're cheap >> i am the cheapest >> i wouwhy would you pay $1,00r this new phone is it the screen >> the screen. it's physically smaller but the screen is bigger think about that >> sell me >> your hand, this is a big -- this is a big phone. >> it is it's uncomfortable i hurt myself. >> this thing will be smaller but physically the screen part will be bigger >> i'm with andrew >> you'll buy it >> i am. here's the thing $1,000 price point, basically you're buying a laptop >> plus i need to upgrade this thing. >> but i spend so much time with my phone i don't mean for entertainment or whatever, messaging around.

i work, i'm editing on my phone. looking at s.e.c. filings on my phone. i'm so attached to it. >> do you talk to seiri? this is your most important relationship are you married. >> i am married. >> you said you spend a lot of time with siri >> i bet more people spend time with their phone than their spouse >> a guy wanted to marry his computer, he wasn't allowed. >> i think the $1,000 price point is interesting it's really high and it represents a new aspirational element. apple has always been a brand they want to get they didn't need to price it there? >> i think most people will go for the 8, still really expensive, 600, 7 #00 bucks, moe high-end people will get the 10. but it stretches the aspiration. it makes people even -- >> the status symbol

>> there is a great marketing element there. >> they tried that with the $10,000 gold plated thing. >> that was insane >> the watch, that is more than incremental -- >> a lot of people think the watch was -- this is the bigger game changer than the phone. >> because you need to have your phone next to it before. >> now you don't need to have it you could have the watch, the air pods, everything is wireless you'll have a phone with you any way. >> one of the things, i carry my phone wherever i am, unfortunately. would i ever imagine a world where if i just -- i would leave the house for a couple hours with the watch on knowing if something -- if i'm trying to make sure -- just the critical stuff will show up >> once the battery runs out, you'll be like i can't reach anybody. i can't do anything. the testing has not come back yet. we don't know how long in real use the battery will last.

it's great that it exists. >> i'm hoping the watch will limit -- even though people say the watch adds a lot, because you're thinking about it all the time, it will limit my use of the phone. self-limiting. >> isn't the question different, how often do you leave the house, realize you don't have the phone, you have to go back >> in that case i feel naked >> now you have the phone. it's a dick tracy watch. the big picture on whether this is an innovation or invecrement change for apple the app store was the biggest change for apple apple would not exist without the ap technologies that are