♪ live from new york where business never sleeps, this is "squawk box. good morning, everybody. 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. let's look at the u.s. equity futures. you will see that right now it looks like there are red arrows across the board dow futures down by 56 s&p futures down by 3. nasdaq down by 6 markets were mixed yesterday the dow was down, the s&p 500 and the nasdaq were up here is a weird statistic for you. the three major averages have not risen together on the same date since august 29th we'll see what happens today we should point out the dow transports rallied by 1.8% yesterday closing at an all-time high up by 206 points 1.8% also we should talk about what happened overnight in asia

hong kong's hang seng index remained in bear territory for the second day after dropping more than 20% from its january high you can see the nikkei was up by 1.3% stocks in china at the shanghai were down 0.2% you'll see red arrows across the board in europe where there is active trading the ftse is the biggest decliner, down 0.6%. look at treasury yields here in the united states. again, those yields have been moving up significantly. you are now talking about the ten-year note at 2.957%. a state of emergency in effect for maryland through the carolinas as florence, a category 4 hurricane pushes towards the coast. evacuation orders have been issued for the outer banks, virginia and south carolina. tropical force winds expected to pick up late tomorrow. we'll give you a live report from carolina beach in a couple of minutes we'll continue to monitor the

path of the storm throughout the day on cnbc. shares of sonos went on a roller coaster ride yesterday. ran up 13%, ahead of the company's first earnings report, then fell as much as 15% in extended hours after the maker of wireless home speakers reported a third quarter loss of $27 million. sales of wireless speakers rose 1%, but revenue from home theater speakers and components fell in a letter to shareholders, the ceo cited the timing of a new product launches for the dip in revenue. he is focused now on potential growth from the upcoming holiday season and the company's expansion into japan even with that move sonos still up 27% >> it's not just speakers, they make systems what i use it for is my apple

music, which was a big step for me >> yeah. >> i can play that through sonos. >> you can >> you knew that i don't know if i have wireless speakers but also it's just the components that allow you to do that, is that sonos, too >> they make wireless speakers, they make systems that allow you to get into wired speakers if you want >> that's what mine is >> in the house? >> in the house. >> what's the weakness in the wireless speaker space >> the wireless speaker space is a competitive space. >> okay. >> they had a number of new product launches >> you know all about this and about the financial crisis amazing. you're doing the whole ball of wax. >> i'm a poly math >> tomorrow is a big day tomorrow is a big day. we'll do a live interview in the middle of the day with hank paulson. >> when are you doing this >> takes place at about 10:00 a.m. in the morning. part of the "squawk" family, the cnbc family.

that will happen at the brookings institute. we have ray dalio on this morning. >> again, not benefiting "squawk box. >> he's not intentionally -- >> you do breakfast with buffett at 11:00 >> it was lunch. yeah >> none of this gets cleared with me before where were they at 8:00? >> unavailable washing their hair >> hank, ben -- that's a lie that's a lie tim maybe. okay let's talk about the broader markets. joining us for that is ed keon portfolio manager at qma, and david bondeson from hightowers bondeson group you are good as good as we got in terms of people just not overtly bullish. neither one of you i would say

are buy with both hands bullish. you have some weird phrase called bearly bullish, b-e-a-r so tell us about this. >> there's a time coming for a shift in leadership, and what has been the leader, this high-te high-tech, new tech, cool tech stuff is due to cool down. my thesis is not so much about the next month or two but going forward. i think the cultural and political forces at play with the f.a.n.g. stocks are very likely to suppress valuation >> if you look at the leadership of what we've seen in the last year or two, it's those fa.a.n.g stocks if there's a question there, there may mean a pause for

everything >> with the percentage they represent within the cap-weighted s&p >> and they were overvalued in your estimation. >> very much so. but it's not a timing call condition the broad market, where are equity opportunities the emerging market story has gotten extremely cheap the problem is timing it i'm not trying to say we're at the bottom i think those currency stories have to play out if i had to pick value in the market, i would go to emerging markets, energy sector and certainareas, consumer staples that i think are beaten down i wouldn't be buying f.a.n.g >> that a falling knife? the steep fall of the emerging markets has hurt the developing world of the companies and governments to issue bonds now is the time to go into that? >> yeah. i think that whole story centers around the idea of the dollar denominated debts. the dollar has risen so much if people believe that the dollar has another 20% to

advance, then there's more pain in store for the emerging markets. >> would rather be in the emerging markets than f.a.n.g. >> yeah. >> really? >> as a value investor i would be rather be in emerging markets equity than f.a.n.g. equity. what about that, ed? >> i'm not ready to go overweight emerging markets yet. we have the probability of higher rates in the united states which will strengthen the dollar further, hurting emerging markets. then you have idiosyncratic events in many meaning markets which are likely to keep them down i agree emerging markets valuations are looking tempting but i don't think it's ready yet. in 2008 we had things that went down much longer than we expected 1998 things got worse before they got better. so i'm reluctant to use the time to get in right now, even though i admit they look more tempting down 25% than a short time ago

>> you think transports hitting new high signals anything? >> i think it signals the economy is still doing well in the united states. we dig up 4% growth in the last quarter, at a run rate of 3 and change i think transports are the most economically sensitive >> but i think it also speaks to joe's point about the f.a.n.g. being the leadership stocks s there another leader out there look at small cap this year, look at what the transports did making new highs yesterday it's not true that f.a.n.g. is the only thing performing. i think there's other strength in the market. but again my point on emerging regardless of timing, u.s. sectors, the fact of the matter is that there has to be something that is undervalued in the market i'm saying if there is, that's what i believe it will prove to be but i agree that the specific point that one enters will be very difficult to get right. but i think that the broader market, the transports are a much better reflection of macro economic strength.

and f.a.n.g. has not been that throughout the period. f.a.n.g. has done well when the economy is weaker, stronger. the transports give you a better indication of overall how the economy is doing >> we will have a trucking guy on later, can't find people. the deal is they want to go 18 to 21. you have to be 21 to drive a truck across state lines did you know that? >> yes, i did actually >> you can go to afghanistan, but you can't drive a truck across state lines they want to be able to access the same pool of workers as everybody else because they say they have to pay more. should we let them >> i have personal feelings on this, i don't think i want to get into it. i'll tell you later. >> okay. so no is what you're -- >> no. >> i don't know. ed, one thing that we're seeing day in and day out, yesterday that was wrong about the -- once you get down -- once you get

unemployment down to 3%, 4%, you will have gdp quarters that are above. that was an error, but there are things that seem like they can't get better or tighter, can't get hotter now when things can't improve anymore than they already have in terms of unemployment, you know, i don't know, whatever metric that you want to measure that is so bullish right now, is that a time to start heading for the exits? can that last for years? >> well, we think that unemployment will continue to go down, and it will hit 3% -- >> can't go below zero, right? >> it will get down to 3% by this time next year. >> that seems scary. >> that's true you will start to get pressure on profit margins, you will get pressure on inflation. the fed has already said they will hike a couple times this year, maybe three times next year so i don't think that the markets run is quite over. we will work our way a bit higher between now and the end of the year.

we have close to 25% earnings growth this year way above the market returns we thought at the beginning of the year we with get 10%, we already have 9% total returns. a little bit of upside, maybe we get to 12. i think the returns of this great bull run are pretty much over >> i'll tell you why i feel that way about trucks >> tell us >> look, actuarial tables, you can't rent a car until you're 25, but you have a higher propensity to have an accident before then. i don't mind an 18-year-old, 20-year-old riding along, learning, but i don't think you should be allowed to do long hauls across state lines by yourself without guidance. >> this gentleman said there should be an extended training program. if there's a training program, that's fine. you shouldn't be buy yourself doing long hauls >> it's a great job. much higher wages -- >> they have a hard time finding people to pass the drug tests. harder time since drugs have been legal in some states. i get it, but i also know a

family who lost several children in high school -- >> you don't want elon musk driving an 18-wheeler. >> he wouldn't pass the drug test laws. and some people say -- >> you've been thinking about that, sorkin >> no but i'm in agreement >> really? >> i'm in agreement with becky >> about elon musk not driving -- not about him -- he will drive one of those electric trucks >> big electric truck. >> hopefully it will be autonomous by then we'll see. i do think that's a real issue if you think about the number of accidents and the ages >> you know what i got to look and see when this trucking guy is on we talked about it so much everybody at home will be sitting there, setting their clocks for when he comes on. not that you guys were not great, david, ed thanks to david and ed and we are remembering those who lost their lives as a result

of the terrorist attacks of 9 99/ 9/11 17 years ago. later on we will be talking to harold lutnick of canter fitzgerald later on president trump will visit the field where flight 93 crashed. crew members and passengers learned what was happened and attempted to regain control of the airplane, all 40 were killed let's get to washington for a look at the top political stories. for that we go to eamon javers >> a couple of things to bring you up to speed on this morning. first is nafta as the united states and canada struggle here to come to some agreement. you remember the u.s. and mexico struck a side deal, a bilateral trade agreement, they said the canadians were welcome to join in on that as a nafta 2.0. now the white house is sending positive signals about those negotiations here's kevin hassett yesterday,

the chair of the council of economic advisers at the white house. >> as for nafta, ambassador lighthizer and the whole team have been in negotiations with canada we are hopeful they will sign oun on to the 21st century deal with mexico >> so hopeful rhetoric there from the white house that the canadians will sign on to the deal no indications of progress yet one sticking point has been canadian dairy policy. we'll see if either side is willing to make concessions this week we believe tlat dehat the deadle they're shooting for now is november 1st meanwhile, at the white house dealing with north korea as well, sarah huckabee sanders, the white house press secretary yesterday announcing that the president received a new letter from the leader of north korea >> the president has received the letter from kim jong-un, it was a very warm, very positive letter the primary purpose of the

letter was to request and look to schedule another meeting with the president. which we are open to and are already in the process of coordinating that. >> so we saw that big set piece meeting between the president and kim jong-un earlier in the year this would indicate that the white house seems to have some openness to doing another one of those. no indication that the white house got what it wanted in terms of total denuclearization of the korean peninsula from the last meeting, presumably they see an opening for more diplomacy with an eye towards denuclearization in the future >> eamon, thank you very much. coming up, more on "squawk." preparing for hurricane florence we will go live to the carolina coast where more than 1 million people have been told to evacuate and then our newsmaker of the morning, ray dalio will join us, the founder of bridgewater associates, the world's largest hedge fund he will join us for an extended interview at 7:00

a.m. eastern time. he has a new book on the financial crisis ten years later. here's a look at pre-market winners and losers in the dow. i think that she's a very nice girl... ...you never got the brakes looked at? oh yeah. no. at cognizant, we're helping today's leading manufacturers make things that think and do automatically. imagine that, a world of new digital products and services

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this is staying connected with xfinity to make moving... simple. easy. awesome. stay connected while you move with the best wifi experience and two-hour appointment windows. click, call or visit a store today. welcome back to "squawk box. elon musk tweeting overnight the following. he said moving 2 of 7 tesla colors off menu on wednesday to simplify manufacturing obsidian black and metallic silver will still be available at a special request, but at a higher price >> seems like primary colors >> there's different colors of

black. >> because they're multi layered -- he talked about this on twitter before. there's multiple layers required for certain colors you need to do many layers >> this is for all of them for all the different models >> i don't know. he did not specify >> the model s is a cool looking car. the other ones, both of them i'm not crazy about. the suv, whatever that is. >> with the wings? >> yeah. or the new one -- >> not for you >> i mean, it's cheaper, it's -- you plug it in fine i like the s it's a great looking car i wish there were more different options. colors, styles, you know, different something -- because i get -- if i were to get one, i don't know what i'd get, red, silver, white. >> did you read that review in the "wall street journal" about the expensive model 3? that was -- for you, for a

porsche owner, they were saying it's the greatest thing in the world. >> it's fast >> i don't like it though. >> he's doing corners, all this stuff. i just drive in the city >> i know. you have some horrible, like, pseudo minivan, don't you? >> yeah. >> he has three kids >> i know. i know i know >> in the meantime, talking about not so much fun, hurricane florence gaining strength in the atlantic as it approaches the carolina coast projected to make landfall on thursday mass evacuations are under way ahead of that storm. jackie deangelis is live with more >> good morning. you can see behind me the sun is starting to come up here this sort of hot, muggy, humid phase of the storm has moved in to the beach here in north carolina people are making preparations, evacuations go into effect here

this morning at 7:00 everybody told they must leave the concern, of course, with this storm is that it will be a category 4 hurricane when it makes landfall the winds will be strong between 130 and 150 miles per hour that there will be the potential for flooding and for storm sufrn surge, and once the storm does make contact on land, it will hover here adding to the pressure and adding a lot of rain residents are preparing to leave. some are hunkering down, stocking up on gas and supplies. but the president issuing a tweet this morning saying my people informed me this is one of the worst storms to hit the's coast in many years, also looks like a direct hit on north carolina, south carolina and virginia be prepared, be careful and be safe the president also authorizing homeland security and fema to aid these parts of the country, these states in trouble.

north carolina, the governor here saying this state is the bullseye of the storm. when we were out last night we saw people cleaning off the shelves in the supermarket there were no bottles of water to be had. we've seen this in advance of storms but this is pretty early preparation. the hope, of course, is that folks will have learned from the experiences in harvey and irma last year as well. north carolina is no stranger to hard storms. but it has not seen one in a while. some of the storms that you may recolle recollect, matthew, floyd, fran, also hurricane hazel that hit here in 1954 the folks on the ground are concerned that this one will be that severe and the general manager of the hotel telling us he's worried his lobby will be under water. a lot to think about in the next couple of days ahead as the state authorities and the locals are preparing for this storm the national weather service issuing a tweet saying there's always a calm before the storm

you can really feel that on the ground here now. that doesn't mean that this is not going to be extremely dangerous. guys >> i remember floyd. i was just thinking, they're named like that. this is the height of the season this is peak this right through here. i guess that's when the "f"s are named. they have ranked, you know, storms in the past depending on what letter you start with "f" is a bad one i guess that makes sense >> yeah. >> i remember floyd, that was about 13, 14 years ago or so i remember even new jersey got hit really hard with floyd not like -- not a direct hit, but a lot of rain. >> 1999. >> 19 years? >> absolutely. guys, the problem last year wasn't even necessarily the storm itself but the damage and havoc wreaked afterwards

the power outages, the flooding. a lot to deal with on the ground a lot of leanup effort it hit the residents hard. you are right, we are at the peak of the hurricane season it runs to the end of november even if this is a bad one, it doesn't mean the worst is behind us yet >> another big problem is this is a slow-moving hurricane hurricane harvey dumped so much rain on houston and that caused its own problems you think slow moving is a better situation, but it doesn't, because it can sit over and hang out >> storms with "a" have a bad reputation >> thank you >> because of andrew in florida. it's too late to veer off. for a while they thought this would veer north it doesn't necessarily -- i don't know whether it increases

or decreases you can always hope it peters out a bit, goes down to a 2 or 3 before making landfall it's not supposed to be until thursday night >> right >> all right thank you, jackie. we will continue to visit with you throughout the morning coming up, it's been ten years now since the financial crisis we'll look back at some key players and highlight a problem that could have a potential to trigger the next crisis. as we head to break, a look at yesterday's s&p 500 winners and losers only half the story? at t. rowe price our experts go beyond the numbers to examine investment opportunities firsthand.

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welcome back you're watching "squawk box" live from the nasdaq market site in times square. welcome back this week marks the tenth anniversary of the financial crisis cnbc has a special documentary premiering tomorrow, comes on at 10:00 p.m. eastern time "crisis on wall street: the week that shook the world. former treasury secretary tim geithner will be on. here is geithner trying to avert disaster without the necessary tools. >> you can siay why was this

crisis so terrible it was because we had a huge boom in credit financed in several ways it was terrible mostly because we did not have enough to contain the damage from the economy and protect people from effects, that's because we didn't run the country with enough authority people were not willing to provide that authority until they were convinced it would be terrible they couldn't be convinced it would be terrible until it was past the point of no return. so it was a microcosm of what you would see across the political system at that point >> when do you think the moment of past the point of no return came >> it's hard to know of course it was never past the point of no return because in the end congress did the right thing and we were able to use that authority to do dramatic things they were unpleasant things, but dramatic, necessary things so we never got past the point of no return i would say by middle of '08 it

was too late for this to be -- for something terrible to be avoided. certainly too late for us to avoid a bad outcome without increased authority from the congress ♪ >> ten years after the financial crisis hit, have americans and global companies gotten smarter about debt levels? brian sullivan is here to look at why they may have not >> yeah. thank you very much. great stuff to look forward to tomorrow night at 10:00. many people out there probably think debt levels will be down from a decade ago. it was a debt laden crisis but guess what if you thought that you would be wrong. according to moody's total debt outstanding in the united states is up a few trillion over the last ten years particularly company-issued debt beginning in 2008, just under 13 trillion in corporate debt 12.7 trillion. the first quarter of this year, that number jumped to 15$15.1

trillion get this, according to informa global markets, corporate debt as a percentage of gdp is back to about 45% it fell slightly after the recession, you can see it's crept its way back up. not just by the way an american phenomenon corporate debt in many other countries also rising since the crisis in fact, here are the countries with some of the biggest changes in the corporate debt to the gdp ratio. we love the irish, but their corporate debt to gdp up 42% since 2008 singapore up, canada up. france up. united states only up 1% because we're back to where we were. the uk one of the few that's brought it down. nobody is saying there's any debt-laden panic, but we talk about debt levels here, and the level of corporate debt, the bbb, the lowest investment grade are up markedly since the crisis ten years ago. >> in this case, it's a smart move for companies to have taken

out all of this debt when they can get it to next to zero percent interest rates there's been companies that have done these long bonds, 50-year bonds. that was a smart move. some companies did not really need to borrow the money, they had cash sitting around, they've taken it out at incredibly low rates. because of the crazy interest rate environment that was spawned by the crisis ten years ago it's a smart move. we've even said countries should do the same. >> it's only up 1% as a perce percentage of the gdp. the whole economy is better. i don't know whether the 12 or the 15 makes sense -- >> that's all debt i guess it's basically all the debt versus the corporate debt side and i hear what you're saying, people say, yeah, interest rates are low. they're kind of giving away money. that's why i said nobody is calling for an imminent corporate debt issue, but let's not forget a couple things debt, you haveto repay it. ultimately you have to pay it back number two, bbb has gone from --

that's the lowest investment grade. that's like dad i brought home a c minus. that's just getting over grounded level, or maybe that was just me. 700 billion to 3 trillion in a decade >> it's worth digging into which companies can withstand it and go through it. i was surprised just to hear there's more debt now than there was before you would have expected we would have unwound that. >> the other question is who is ultimately holding the bag, which is to say when you look at the capital requirements of so many of these banks, it's hard to believe they're the oncing financing this debt. in the crisis they were the ones who did it last time do we have a sense of who is holding the bag today? >> the bag is not being held by the banks. it is not as much the banks as it used to be here's the bad news, levered loans, clos,

collateralized loan obligations, all these terms we talked about that kind of just get our stomachs turning, those are coming back, but it's not held on the bank's balance sheets as much still about $1 trillion in capital that will come back, be repatriatiz repatriatized, coming back from overseas, much of that will go back to buy back stock or a company's own debt so nothing scary now, but just pointing out that the debt levels are higher. like if you watch "game of thrones," they pay their debt. you have to pay your debts back. >> the united states government will not pay its debt back >> what's that >> we owe 21 trillion. we're never going to pay that back we'll pay it back with more debt, but that's -- >> that's okay i'll just take out another credit card to pay the other credit card. at least this time we're not using it to buy solid gold boats and $800,000 condos with an $18,000 a year income.

>> it's an interesting story appreciate it. we should tell you we'll have a huge lineup this week to talk about the lessons from the crisis, including former s.e.c. commissioner dan gallagher and make sure to tune in to the documentary tomorrow night at 10:00 p.m. time. it's called "crisis on wall street: the week that shook the world. and there's an updated version of my book "too big to fail" with a new afterword that draws a parallel between the political divide and the cultural divide >> that sounds like a lot of work >> what's a 30-second spot cost for a commercial on "squawk box" do you know what we charge >> i cannot disclose >> the answer is not enough. >> you owe whatever it is for that -- you know what else

ray dalio was on >> he has an interesting book. >> his whole book is about it. >> you're in debt now -- listen, this one time we'll give that to you as a -- >> as a free bbie. >> an introductory offer >> we don't want anybody to talk about how much time we spend on our own things >> it's not lining my pockets usually, it's getting good grades for my kids when we come back, the founder of the world's largest hedge fund, bridgewater's ray dalio will join us on the "squawk" set for an extended interview. that's at 7:00 a.m. and later an update on the projected path of hurricane florence, a live reportfrom th carolina coast where more than 1 million people have been ordered to evacuate. stay tedun, you're watching "squawk box" on cnbc

welcome back the national federation of independent business is out with the latest confidence report kate rogers has the details. >> good morning. this is a big one. the nfib is out with its monthly

read on optimism showing a new all-time high for the month of august of 108.8, nearly a 1 point increase from last month this breaks the previous report of 1.08 set back in 1983 looking at this chart, this is optimism for the full-year, holding well above the index's historical average of 98 the biggest gains this month were plans to increase inventories, plans to make capital outlays and plans to increase employment. to the down side the biggest drops were in those who expected credit conditions and those who expect the economy to improve. labor quality again remains a stubborn issue for small business in the number one spot this month as a single biggest issue followed by taxes and government red tape and regulations i talked to the group's chief economist and asked if and when the labor quality might impact optimism he says owners are on the myspt

about the future and are trying to hire. if you try and don't succeed, you don't get depressed. we have people reporting profit gains at a record high rate. this continues to be a top issue. it's been in that spot for over six months now you have to wonder if and when it will take optimism a leg down but itdoesn't seem to be slowing down soon. >> one thing that surprised me, they expect real sales to decline overall? >> was a one-point drop this month. sales continued to increase, they've been fairly strong, the economy is strong. consumer confidence is there that's one measure that fell slightly one other thing of interest is that trade has not impacted this either they say they have a less trade intensive group responding to this but they don't seem to be concerned. i think they're waiting to see how things shake out >> this is a good feel of what they're seeing on the front lines. >> certainly. coming up, a new in-depth profile of mark zuckerberg

you have to read this thing from his awkward tour of america to his administration -- admiration of a roman emperor. and how facebook discovered its influence over american politics the "new yorker" staff writer will join us next to break it down and tell us about it. first a quick check of what's happening in european markets right now. at&t provides edge-to-edge intelligence, covering virtually every part of your healthcare business. so that if she has a heart problem & the staff needs to know, they will & they'll drop everything can you take a look at her vitals? & share the data with other specialists yeah, i'm looking at them now. & they'll drop everything hey. & take care of this baby yeah, that procedure seems right. & that one too. at&t provides edge to edge intelligence. it can do so much for your business, the list goes on and on.

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♪ welcome back u.s. equity futures at this hour are in the red september has started off a little different than august it's been a little ragged, a little more volatile that's all red that's all you see there down like elon musk's eyes, w h without visene -- i will never get over that. >> no. >> down 60 down 3 1/3 on the s&p, down 5 on the nasdaq i'm the only one here who sort

of defended him. andrew was mortified by that whole -- >> right >> slightly. >> probably a bad idea for shareholders >> particularly at a time when your country is in crisis. >> it's legal, though. are we going to legalize it or not? is it really legal or not? >> the same reason truckers can't get a job. >> he wasn't going out to take a big rig anywhere he was on his free time. >> when people question your judgment it's a bad idea to publicly do that >> then we shouldn't legalize it. >> i'm not a fan of legalizing it. >> there shouldn't be stigma -- >> it's not legal everywhere >> now there's questions about what's going on with spacex contracts. >> this is different than taking one hit off of a joe roggin -- >> it's more about -- >> just to try to look cool on a podcast. trying to look cool on a podcast. his deal is with people like you, millennials and such. that's where -- those are the people that love him the most. >> yeah.

the question is do more people -- i'm not a millennial so -- >> millennial-minded >> maybe >> nafta -- >> aren't we all >> no. nafta negotiations between the u.s. and canada picked back up today in negotiations between e u.s. and canada continue robert lithizer is going to be sitting down with krista freeland who looks just like this journalist who used to come on "squawk box." >> she is. >> oh, it is her there you go meantime, the white house is coordinating another round of talks between president trump and kim jong-un. this comes after the north korean sent a warm and positive letter to the president asking for a follow-up to that june singapore summit the timing and the location of the second trump/kim summit is still unclear. at the most recent military

parade for the first time, north korea didn't highlight a lot of intercontinental missiles. so what's really going on though are they working harder than ever behind the scenes and just playing us for fools and going full on with the nuclear program? or is there really something positive happening here? does he want to come to the united states to check out, you know, the gulf stream plant for a new jet and, like, mcdonald's? i mean, what's going on there? i'd want to be invited here if i were him for credibility >> our next guest, by the way, last time he was on spent some time with us because he had been in north korea and wrote a fantastic piece in the new yorker all about it. maybe we can talk about that in the meantime, we have -- >> he didn't bring back any posters. >> this morning he has a new story out with an in-depth history of mark zuckerberg and facebook including how the

company discovered its way to manipulate the users' emotions joining us now to talk about it -- you have to go out and read it. it is quite something. staff writer at the new yorker spent all sorts of time with mark evan, good morning to you. congratulations on the piece >> thank you >> you write the following i found zuckerberg straining, not always coherently to grasp problems for which he was plainly unprepared including the meaning of truth, the limits of free speech, and the origins of violence. it's one of the most searing sentences in this very lengthy article. explain what you mean. >> well, look. these are the hardest problems these are not -- let's not pretend that these are simple issues that you work out a little bit on the technical specifications of the site and all of a sudden you're in the clear. look facebook has traveled this distance from being a start-up

in which everybody said it's not going to work, there's already friendster and myspace then you get to today where they are dealing with quite literally the hardest problems we deal with in the non-digital realm. they have landed squarely at the center of his desk and he's trying to figure out what to do with them >> how should the public feel? how should investors feel about the fact that you think he may not be prepared to deal with these questions thus far what's it like just spending time with him? you sat in his kitchen for this article. >> one of the things that comes through is this is a guy who defines himself in many ways by the doubters, by the skeptics, by the critics he's on top of the world, built this company, yeah, they've had a rough couple of years. a very rough couple of years

surely he would see himself as a master of the universe actually, when you ask him about what it is that -- how he sees the world. and that was the point of this project. let's get behind the cur din a little bit and see how he actually experiences it, he will say it'll never work you should have sold to yahoo. he's talking about stuff that happened 11 bb 12 years ago. that underdog complex is in some wa ways but the positive side of that is, he is too ambitious to let this thing go pear shaped. i mean that seriously. you come away with the clear sense it took him too long to recognize the scale of the problems now he recognizes there is a fundamental risk >> i found that you painted a tremendously human picture of a man that people often describe

as and you talk about in the piece lacking emotion, almost robot robotic. you asked was it insulting when people said he lacks emotion what did he say? >> he fell silent for a few seconds. that's one thing you discover when you talk to him in private. if he doesn't know the answer to a question, he will just stop talking. it's unnerving to some people. i've gotten used to it then he said i'm not insulted. i don't think it's accurate. he said, i have emotion, i just do not make emotionally driven decisions. at one point, you know, i was talking to him in the course of the last few weeks and months when musk was going through a process of reckoning with his own emotions i asked mark, look you're not talking about things is in a public way what he said was i process things in my own way i kind of process things internally and i'm not a big believer in making emotionally driven decisions

in that way he is not apologetic about not projecting more emotion. >> have you broached the subject of him taking a test do you think he's pass >> you know, he is -- he's gamed out all of the prospects >> like his circuits are like, am i human so he had to stop and wait for awhile to try to figure that out. stumped him. >> he is more human than the jokes allow. and i think that koms through. it's one of the things i wanted to see up close. he knows he's going through a crisis right now but he's grappling with it >> people worth $50 billion don't go through crises, i don't know maybe they do. >> they do >> money doesn't die bbuy happi. coming up, the squawk news maker of the morning the leader of bridgewater ray

dalio. joining us after the break it's not about quantity. it's about quality. no trendy stuff. i want etfs backed by research. is it built for the long-term? my reputation depends on it. flexshares etfs are designed and managed around investor objectives. so you can advise with confidence. before investing, consider the fund's investment objectives, risks, charges and expenses. go to flexshares.com for a prospectus containing this information. read it carefully. a moment of joy. a source of inspiration. an act of kindness. what will it bring? an old friend. a new beginning.

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another news making interview you can only get right here on cnbc bridgewater associates founder ray dalio is here. we'll look back at the financial crisis and find out where this market stands ten years later. where he's putting money to work and find out if this bull market has room to run. that interview is minutes away apple's biggest announcement of new phones are one day away look at what you can expect from apple's big unveil and bracing for impact hurricane florence heading towards the east coast the storm currently has sustained winds of 130 miles per hour and could strengthen. the latest on the path and its

business impact coming up as the second hour of "squawk box" begins right now ♪ >> live from the beating heart of business, new york, this is "squawk box. good morning, everybody. we are live from the nasdaq market site in times square. i'm becky quick along, joe kernen and andrew ross sorkin. this morning numbers have been in the red this morning the dow futures are indicated down by about 55 points s&p futures indicated down by three. the nasdaq by four let's get you updated on headlines at this hour u.s. trade representative robert lighthizer will be sitting down with canadian krista freeland.

discussions weren't expected to resume again until the end of the week corporate news this morning, shares of sonos went up yesterday. but then fell by as much as 15% in extended hours after a third quarter loss of $27 million. revenue was in line with what the street was expecting, but was down 6% from a year ago. sale of wireless speakers rose 1% but revenue from home theater speakers and components fell even with the move of extended hours, sonos still up 20% from its ipo back on august 2nd stock is trading at $18.60 and we are tracking hurricane florence the storm is quickly gaining strength in the atlantic where water has been very warm evacuations have been ordered for people up and down the carolina coast

we'll get a live update in the next half hour 17 years is a shocker, again, to think about this we were all doing what we're doing now on that horrific day we're remembering those who lost their lives as a result of the terrorist attacks of 9/11. that was 17 years ago. later this morning, we're going to talk to howard lutnick from kanter fitzgerald. they lost nearly 2/3 of their employ employees in the attack. and president trump will visit the sight in pennsylvania where flight 93 crashed. the passengers and crew members learned what was happening we'll never forget the -- hair on my neck stands up let's roll the heroism and bravery of the people on that fight they attempted to regain control of the aircraft and all 40 were killed god know where is that was headed >> it was headed to washington the capitol, they believe.

meantime, ten years after the 2008 financial crisis, an investing legend has written a book on what went wrong and best ways to avoid another catastrophe on wall street joining us now is ray dalio of bridgewater. he has a new book out. it's getting endorsements by all sorts of luminaries. it's called "a template for understanding a big debt crises." it's out now this is one of the best kind of books. it's available for free. you can download it as free for a pdf. download it on your kindle but it's a look at crises over centuries, really. and what policies created the cris crises helped rescue the world from them 37 -- >> we're spending the whole week looking back at the crisis

big pieces of this book, he was writing these memos every day that people like tim geithner and ben bernanke were reading that got crafted inside this book when you look back and think about the crisis, what is the biggest lesson i know there are so many, but the biggest lesson for you zb >> of all of them, the debt finances, the bubbles that happen before it that create the busts. there's basically six stages to it there's the normal debt growth that finances growth that pays for itself then you get to the bubble stage when everybody's extrapolating what happened in the pass. asset prices are going up. everybody is borrowing a lot of money to extrapolate what's happened and that -- i think at that stage is when the central banks should be looking at are those debts going to be able to be paid back from the financial

that would be the biggest. >> right and what stage, therefore, are we in today? we had a segment on it with brian sullivan who talked about how debt in this country has actually increased since 2008. >> yeah. debt has increased, but debt relative to the debt service payments, relative to incomes, have not risen like they have in 2007 and 2008. >> he was looking at corporate debt in particular. >> but if you look at the corporate cash and the maturity of the debt. when we run the pro forma business calculations, it's nothing like 2007 to 2008. there's a squeeze that will be emerging but generally speaking, we're in, i would say, the seventh inning of the cycle. i think that we're at the stage in the cycle where interest rates are being raised we're in the later stage we have two more years into the

cycle, something like that then the issues of this debt crisis are very dumpbt thiffere the last debt crisis this one looks like the 1935 to '40 period >> you called it a crisis. we're not at a crisis, are we? or you mean the debt situation >> can i describe the parallels. >> kbryeah please >> i think the parallels are important to understand. okay 1929 to '32 and 2008 to 2009, we have a debt crisis and interest rates hit zero both of those cases, interest rates hit zero only two times this century. there's only one thing to do next and that is to print money and buy financial assets so in both of those cases, that's what the central bank did. they pushed asset prices up. as a result we had an expansion, we had the markets rising.

and we particularly had an increase in the wealth gap if you owned financial assets, you got richer and if you didn't, you didn't. so today what we have is a wealth gap that's the largest since that period. the top 0.1 of the 1% of the population is equal to the bottom 90% combined. as a result we have pop luculipm pop capitalism not working for the majority of people so we have a political gap, a social gap in terms of the economics. and we're coming into the phase where we're beginning the tightening cycle 1937 we begin a tightening cycle. we begin a tightening cycle at this point no tightening cycle ever works out perfectly. that's why we have recessions. we can't get it perfectly. so as we're going into this particular cycle, we have to

start to think, well, what will the next downturn be like? we're nine years into this as you have a downturn, i believe there's a political and social implication to that related to populism. there's less effective monetary policy because so far there are two types ofmonetary policy used we can't lower interest rates. and the second is quantitative easing so i think the next downturn is going to be a different type of downturn i think pension problems, health care problems in terms of obligations that are not funded. >> more severe next time >> i think it'll be more severe in terms of the social/political problems it won't be like the -- it won't be the same in terms of the big bang debt crisis it'll be a slower growing, more

constricting sort of debt crisis but i think it'll have bigger social implications and a bigger international implication. >> there's a sense in this book that there's inevitability to these crises one of the questions is from a policy perspective, if we're in the seventh inning, is there anything policy makers can do today, not afterwards, but today to avoid this crisis you're talking about? >> i think first of all, to be able to think about how to handle it. they're inevitable because there's never the perfect balance between lending and borrowing. so they're inevitable. i would say the things they should do that maybe are missing or first of all to have the freedom of action, we have a lot of regulations and they're usually written for what the last debt crisis was like but there are less freedoms of action today we have a safer banking system

and we've done a lot of things to make it safer but each one is a little bit different. classically, there's the development of the shadow banking system and we will have a new type of shadow banking system. so less freedom. i think we have to think about what is the monetary policy three as i call it when we have quantitative easing. >> is the prescription -- would the prescription for that, though, be to raise rates now and try to unwind the balance sheet as fast as possible? >> no, no, no. if you raise rates now, all the rate structure's affected and carries through all markets. it's a discount rate for the present asset classes. no i think you have to think what monetary policy three is which is particularly in japan you're going to need it. the type of thing where there's a -- it's not just the purchase of financial assets. it gets individuals to make their purchases. >> what if what we're seeing now

is not really transient in terms of the business conditions and we continue to see this new corporate structure actually help in terms of capital formation for corporations the 2.9% wage gains we saw continues. and does the populist worries and concerns you have for income inequality, could that ease if we went into a protracted period of good economic growth? >> i looked at the bottom 60% of the population so to take out of the averages to do with technology and other things like the asset purchases. >> are you going to tell me we're screwed either way >> i think there should be a national initiative to look at the parts of the population that are not benefitting from the cycle. and i think that, you know, education in many ways is just terrible >> you're not talking about pure

redistribution you're not talking about universal basic income you're not talking about anything like -- you want to keep things going in terms of the private sector >> i think the most important thing is the ways to create opportunity and productivity in that group >> we all want to do that. >> because productivity -- everybody needs to be productive >> is it better to do that in a growth period? you have more money to do that with if the overall economy is growing. >> i think this is the time. imagine it if you have a downturn, what will it be like? i mean, it's a basic principle if you have a big difference in wealth and you share a pie, you divide the budget in one way or another. and you have an economic downturn that people are at each other's throats. >> but if you're growing at 3% for three or four years, if that were possible which is 50% even more faster than we were growing previously, that throws off more money for education and for social programs to get what you're talking about, doesn't it >> certainly

but it doesn't solve the problem. >> doesn't solve the problem, but you're in -- if you choose one or the other, you'd want growth >> i want growth that's why i would say the risks are -- >> much harder to solve the income inequality problem when you're not growing >> i'm sorry >> much harder to solve the income inequality problem when you're not growing >> yes that's why i'm sayi ining when e downturn comes -- and do you doubt the downturn will come >> i don't want to -- when you say it's inevitable we'll have another debt crisis, it makes me sad. >> i didn't ask whether you were sad. >> it's disturbing it's like you're saying human nature mandates it happens >> we get late in a cycle, we never get the balance exactly right. >> we do the same things over and over again >> that's what the book is about. the reason i wrote the book is not so much to talk about this one and so on.

it's to show that they all happen in the same way there's all a mechanics of the same way there are six stages to it we won't have time to go through the six stages, but that same thing happens. in the first 60 pages of it, and it's free. just read the first 60 pages and you'll see -- >> now, can i download that for free >> you can download it on kindle you can buy it >> is it like ray's book >> i'll sign your book for free. yours. >> is it free like ray's book? >> i'm a capitalist. he's a philanthropist. >> i'm sorry >> ray, here's a policy question for you. one of the things we've all heard from hank paulson, ben bernanke, tim geithner, is they wish they could have articulated their policy responses better. and there's a view that maybe if they did, somehow the populism

that we have today might be different. do you think that's true >> i think the majority of population is not watching your television show and understands the communication. i think that they understand their experiences. and what those experiences that produces anger >> when you look at the policy responses, people have talked about would we be better off if there was principal reduction for homeowners directly. a lot of the resentment came is the feeling the money was going to the banks rather than directly to the homeowners in trouble. or some of these other steps you've looked at these different crises and how people sort of feel about them afterwards >> i think over and over again, it's emotions and it's not logic. and when there's the polarity, sometimes it even gets, you know, it even gets violent you know, so i think it's emotions >> when you say violent, we had a conversation you talked about pearl harbor. >> well, what i was referring to

is that the conflicts that we have internally between the left and the right and those who have and those who have not, we also get electeded populist and when we had the smooth holley tariff and germany rising in a power, we had a situation where there were economic rivalries out in asia. and so 1931 was when the japanese invaded manchuria and that they started to compete with resources that took nine years but 1941 was the bombing of pearl harbor i'm saying that you're in a situation where also we have rising powers. china is a rising power competing with the united states and those tensions get carried forward there. and those are economic tensions

of paramount importance. those economic tensions produce conflicts in various ways. and that everybody should be cautious about that. >> how did the stock market do in '36 to '39 >> not too good. >> what's your current commentary >> i don't think it's anything like that. i think -- >> but in general, how are you feeling? are we -- is it fairly valued? >> right now we have just gotten to the point in my judgment that it's more than the risk return is more negative we used to have a lot of -- we talked at davos. >> i remember you said that. stay in. but you weren't comfortable. >> there was a lot of cash on the sidelines. a lot more of that cash has been deployed we had had the benefit of the corporate tax cuts behind us

and if we look at what's being discounted, what's being discounted is about right. in other words, if you look at the projected returns of equities relative to cash and bonds, the projected returns look sort of right but the upside, the upside is limited relative to the others >> meaning you would pull money out of the market? >> right now whatever is more defensive, i would then be in a more defensive posture whatever your strategic asset allocation issue is. you know what your strategic mix it i would be less aggressive rather than more aggressive. >> he remembers what he told us in davos i remember and you remember too that's good. you don't give that many interviews so you remember exactly what you said. i was going to mention that. you weren't -- i wouldn't call you rampantly bush but you had concerns even then >> well, i have concerns over a two-year time horizon. if i was to take now and think

over the next two years, that's where my concerns are. i'm not excited about -- >> could we consolidate for two years and stay here at these levels >> i think more than likely we'll be in these general vicinities for awhile. >> okay. >> but as time progresses, the risks incomrease. >> okay. >> what do you think the fed should do right now? >> the fed should make sure it doesn't raise rates faster than is discounted in the curve right? because there's an interest rate curve that calculates how fast rates are going to rise. that rate curve is priced into all asset prices and so they should make sure they're not quite as fast as the curve or equal to the curve. because asset prices are very sensitive. >> i think that was something you said as well >> i was going the ask you about china. someone who spends a lot of time there and knows the people

there. what's going on in their economy? there seems to be a lot of debate and discussion. >> you mean about what about the debt restructuring, the tariffs? >> tariffs and trade >> i think the actual size of the tariffs and trade on the chinese economy is not that big a deal there's the $500 billion they export there's the size of that they've got a giant economy and they can handle those types of things so i don't think it's that big of a deal for them the big deal is the nature of the relationship is this going to be a relationship in which they have to give and take or is this an antagonistic relationship? i think that's more of a warlike relationship i don't think they like the term trade war. >> but you think it's warlike? >> i think that it is an exchange of painful acts and intimidation kind of thing

rather than a negotiation of what do you need, how can i help you, how can you help me so i think it's gotten on a footing that i think is discomforting to chinese officials. >> there are people here who say it's gotten uncomfortable because in this relationship negotiation to this point americans have faired less well. do you think that's accurate and is there a way to be a tougher negotiator without maybe ruffling the feathers? >> yeah. i think tough negotiations, nobody is against tough negotiations every country understands that it needs to -- >> it's the rhetoric >> it needs to do what's best in the country. but the question is, i think the real issue of china, a leader in china described it as follows. he said in the united states that unit that matters the most is the individual. you're a country of individualists

you protect individual property rights in a certain way. and if you understand our mentality, we are a family in other words, the word country in china in characters is state family and he says when we run the country, we think about how to run the family it's much more from the top down so the notion of china inc., in other words, of course there's almost a pyramid and they think ahet the head of the family, the government, what is better for china and my chinese companies. so that approach very much different from our approach which is this bottom up. it redefines so many things. how we handle data, how we handle each other, and so on that's a very structural important difference it works for them. and so their notion, will you have the state-owned enterprises

being helped by the government and how will you compete in that >> what state are they in in terms of the six stages? >> the most important thing about debt is whether the debt's denominated in your currency or a foreign currency if it's in your currency, you can manage it just like you managed it you spread it out and monetize it in their case, it's denominated in their currency, most of their currencies so they're going to be able to manage that, i think, well their corporate debt levels are high they're going through the restructuring. but generally speaking their debt levels are not as high as others one of the great things is they're doing it before a crisis we do it in a very reactive way. and in their particular case, they know that they've got a debt situation and they're in the process of managing it i think that they'll manage it just fine. i think they'll manage their economy just fine. i don't think we're going to

have any big -- there'll be bumps along the way. slower growth, a bit of that but i think the big issue are our relationship with china over a period of time i hope it doesn't follow a path that is very similar to the u.s./japanese path where the economic tensions, the competing for trade routes, the competing for influence in different countries and all that leads to an antagonism, leads to embargoes. >> two final quick questions one on policy which is $21 trillion in debt in our country. do you think that we can ultimately manage that that's one -- people talk about too big to fail. that was in the concept of banks. now people talk about it in the context of the country >> i think that's exactly right. if you -- while we don't have an immediate debt rollover in the next year or two, we have a giant squeeze happening. it's not only because of the

debts. but even more important, the unfunded pension liabilities, they -- and the health care costs and so we have a squeeze that's emerging. we will in two years have the fiscal stimulation that we have passed and we are going to be sell a lot more bonds to the rest of the world. we are a reserve currency. because we're reserve currency, we're in the very privileged position of having other countries want to save our currency and buy our bonds but that is going to be risked by the quantity of debt. >> final question. given that you've seen how policy makers have responded to crises, how would you grade hank paulson, tim geithner, and ben bernanke given the populism and all the issues you've raised today >> "a" or a-plus i really do think one could

theoretically say you could have anticipated. we were able to anticipate it by doing these pro forma financial numbers and so on. but actually, who did? raise your hand if you did hardly anybody did so once that point happened and they were operating in that political environment, the actions that they took, the speed at which they dealt with all of that led to the results that we now have i think they did a great job >> is there any income inequality problem in china that you see? >> yeah. >> is our bottom 60% better than their bottom 60% >> their income problem, income gap problem is very similar to ours almost the same as ours. and it's an issue. it's part of the development of the western provinces and those types of things. but on the other hand, they don't have the same sort of political and social problems of dealing with it. >> they deal with it different there. >> yeah. >> ray dalio the legendary leader of

bridgewater, author of the new book download it this minute. "a template for understanding big debt crisis. thank you for joining us this morning. >> thank you when we come back, residents up and down the southeastern coast are preparing for hurricane florence it's expected to slam into the u.s. thursday as a category 4 storm. we'll have more on that in just a moment later, though, buzz is brewing over apple's new phones that will be introduced tomorrow in cupertino, california. we can tell you what you can expect from the party. that's straight eaahd. stay tuned you are watching "squawk box" right here on cnbc ♪

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connections. high-speed connections. is the world ready for me? through internet essentials, comcast has connected more than six-million low-income people to low-cost, high-speed internet at home. i'm trying to do some homework here. so they're ready for anything. good morning and welcome back to "squawk box" here on cnbc live from the nasdaq market site in times square among the stories front and center, mark carney has agreed to stay on until the end of january 2020 his term was due to end in june of next year but he agreed to remain to provide a measure of

stability during brexit. that never happened. and tesla ceo elon musk tweeting overnight moving two of seven tesla colors off menu on wednesday to simplify manufacturing obsidian black and metallic silver will be available as special quest but at higher price. shares of cbs trading lower right now. ubs downgrading the stock to neutral. the analyst cites management uncertainty following the departure of ceo les moonves wow. that's quite a perceptive call there. apparently see some management -- >> you think you heard? >> at cbs. >> i heard other people putting out reports yesterday saying it was a buying opportunity on any dip because the company is valuable as a takeover >> the management uncertainty

has been there for three months. now it's getting handled >> look. ez lees is here so we could talk to him >> you mean between viacom and cbs? >> a viacom/cbs deal -- >> because ofthe wording she said if the board can come to their own conclusions >> by the way, there was a price in place there was a ratio in place they were very, very close you take some of the different people out of the mix in terms of who's negotiating and who's making the decision, i think you could very well be talking about something much sooner. >> does that make an assumption, though, there's not a bidding war for this >> there's still the tax implication for the redstone family it's almost impossible to make the tax situation work unless you merge the two companies or if somebody wants to buy

national amusements, that solves the tax problem. otherwise it's hard to think -- you'd have to come in with a crazy price for cbs to make up for the tax piece. >> the fact that viacom is a softer target, frankly, is the thing that allows e-- that woul make it -- >> meaning nobody would want to buy viacom >> right >> if you're shari redstone, you say viacom we don't know about that combine the two. we'll sell it for more to someone else >> national amusements controls how much >> 80% >> 80% of the voting >> sumner controls 80% of the controlling shares of aai. they owe cbs and viacom. there's an extra step involved sumner, by the way, still technically in charge of that. >> we'll put a pause on this conversation talk about the hurricane for a second as hurricane florence continues to barrel toward the u.s., governors in carolina and

virginia issuing hundreds of evacuation orders. jackie deangelis is live we the latest >> you can see the sun is starting to rise here. there are still people on the beach. they're walking with their pets. there are a couple of surfers behind me. this is what you would call the quintessential calm before the storm. but this is projected to be a very dangerous category 4 storm as far as the models and the forecasts can tell and of course local authorities and state officials are urging residents especially along the coastal areas as you mentioned to evacuate. we know the storm is coming. that's the message take the proper precautions. listen to what the governor of north carolina had to say. >> north carolina faces three threats here first the ocean surge along our coast, then the strong winds which may be higher than the

other hurricanes that we have recently experienced, and of course inland flooding from heavy rains. >> and it's those three threats that cause the governors of north and south carolina to declare state of emergencies and urge these resident of the coastal areas to get out while they still have time obviously the storm has a day or two before it gets here. thursday night is when it's expected to hit. friday is supposed to be expected to be the worst of it and of course it's not just the matter of the storm coming through. it's also the hover factor this storm is expected to bring towards these areas anywhere from 10 to 20 inches of rain so flooding is a severe issue. power outages are on the horizon as well, guys. >> jackie, thank you very much we will continue to check in with you looks beautiful behind, but as you mentioned it's the calm before the storm >> exactly >> jackie deangelis.

all right, folks tomorrow brings us apple's big event. the company is going to be unveiling products and software. they have kept the details under wraps. joining us now is ed lee from "the new york times" and also a cnbc contributor ed, what can you tell us from all of these tightly kept secrets? >> tightly kept secrets. do we know we know a lot right now. there's going to be three new phones there's going to be a slightly updated version of the old x, and also a bigger one. the xs max is probably what they're thinking about it. >> how big >> so it's going to be closer to 6 1/2 inch or maybe even bigger. this follows sort of the s-class year right? apple does this thing where there's a step up in the model then the following year, they'll do an incremental improvement where you'll see kbrooumts in the internals and software there's a third model as well which will be a cheaper one. an lcd based one opposed to

these screens which are oled a lot more phones, a lot more price points i think apple is -- we're seeing a bit of a saturation, right in terms of everyone who wants an iphone already has one. are they going to continue to upgrade? and part of what's bothering them is the prices going up. a lot of people bought the thousand-dollar phone. i think things like the apple payment plan has been a big help for why people want to buy these things or how they're able to afford these things. on a monthly basis you can buy the top of the line, pay 56 bucks a month for a lot of families, that's probably not out of range. >> any surprise software feature we're going to see that somehow works with the hardware in a new way? >> no. not from what we've been able to gather i think there is questions around augmented reality still that was something they hyped a year or two ago.

we haven't really seen that take off as a new ecosystem the way the app store was an ecosystem. we haven't seen them come through with the augmented reality and makes use of it. new watch. other, you know, sort of devices like chargers. >> what about ipads? >> new ipad. >> i'm in the market. >> the ipad is always more of a niche part of the market you're an edge case. it'll have a facetime id unlock for the ipad but face i.d. for me has been great. those you can unlock with your face is easier it's huge. it's a game changer. >> let me ask you, there have been so many issues surrounding apple politically. >> yes tariffs with china >> the manufacturing here. do you think any of that comes up tomorrow? or is this just about the showmanship? >> this is -- it's for the developers, but more the

consumers. and i think if tim cook wants to hint at this tariff issue here and play a little politics, that's a possibility but he doesn't play that way he tends to really focus on this is for the consumers i want to make sure they know what we're up to >> it's september, folks, guest your christmas list ready? >> yes there's all these iphones coming in i think that's part of it. beyond the new phones, the thing we want to hear more about is their services business. how they want to bump that up. a lot has to do with a lot of weird things they're doing >> will we hear about the media business >> so there is a really small chance we hear more about their original tv shows they've been working on they've blown past the $1 billion budget they're closer to $2 billion budget spending. then there's a news product where they would bundle in news subscriptions like potentially "new york times," "wall street journal," things you pay for now. these publications haven't

signed on yet, so we don't know where that lands part of it has to do with how apple thinks about selling the consumers a bundled subscription of media stuff could be tv. could be magazines and newspapers and that's the more steady revenue. it's the more predictable, it's more steady. it's not up and down like this with how they release new hardware that is a way for them to stabilize. >> it's an exciting time >> you're going to get the new one, joe i know you are >> no. i have a 75 inch screen and these people are tripping over themselves for content it's an exciting time. you currently have any favorites? >> you mean shows? "billions" is one of my favorites. >> i'm back onto "deuce" because it's around here. >> it's really smartly done. i love the texture of it >> i tried "the mayans." i couldn't. >> i've got one for you.

the new "jack ryan." >> which is a viacom owned property, believe it or not. they have a deal with amazon where they're selling to them for a five-year period. >> i want to see that. >> it's great. >> moonves because of that fight, it was like for the first six months it was like, oh you know, that's redstone. there's a -- oh, please. this is a -- and so the board is like, oh, that's redstone. we don't believe it. meanwhile, there's like 12 women scarred for life >> and probably more >> but it was a weird confluence that he could say, come on >> shari redstone, all she had to do was sit back >> didn't have to do anything, theoretically. >> ed lee of "the new york times. when we return, more on cnbc coverage of the crisis ten years later continues. we'll speak to dan gallagher he joins us after the break. check out the futures right now. we look like we're in the red. "squawk" returns in a moment

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♪ welcome back to "squawk box. this week marks the tenth an versery of the financial crisis. "crisis on wall street: the week that shook the world" will debut this week. barney frank was the chair of the financial committee. with it came blame and ridicule. >> i believe it should be regarded as the sungingle most highly successful unpopular thing the government did to my dismay having presided over with chris dodd the financial reform bill for which i thought i deserved some credit, instead i found myself in the toughest re-election fight i've ever had. it was the toughest fight since

i first ran. and i was getting blamed for the crisis i had made one statement about fannie mae and freddie mac rolling the dice i was talking about their multifamily portfolio. there was no way i could explain that so i found myself in trouble getting blamed for all this. it was frustrating because i think what we did was the best that could have been done. and on the other hand i knew that people were unhappy so what do you do when people are unhappy? how do you deal with that? and the pumper sticker, i actually did have made up was things would have sucked worse without me which i believe is the case. but it's not a great electoral slogan >> that was good >> things would have sucked without me with us now is dan gallagher who represented the commission in the lehman liquid dacquidation o

worked under president obama >> thanks for having me. great to be here >> i have a couple questions one of which is dodd/frank does it put us in a much better position today when you think about all of the abilities to unwind an institution? a lot of people have said yes. but there's a lot of people who believe if and when we run into trouble, we may not want to roll the dice as he phrased it. >> i've said it once, i've said it a thousand times. dodd/frank is a disaster dodd/frank purported to be the response to the financial crisis it unfortunately was and is still. it's still the law of the land the notion it's going to protect us from the next one is ridiculous >> why is a a disaster >> it is a complete mist that you could orderly -- in an orderly way unwind a major financial institution.

you couldn't unwind lehman under title 2. shouldn't that be the test case? right? and there's one key critical piece that's missing it depends on international nations. what happened in lehman? the british said no. now, what would happen today they could say no. there's no treaty in place, there's no enforceable provision. >>but i doubt there's anything the united states could do unilaterally to make any of that happen maybe it's not a bad exercise. >> if you're going to order that, get the treaties underneath it. >> is the answer to just raise hands and say there's nothing we can do these are global institutions. >> i think quite frankly the effort should have been placed on amendments to the bankruptcy code. >> bankruptcy works. it's ugly, but it works. and it's not a process you'd like to go through >> when you heard barney frank there talking about it, it was just the multifamily, i didn't really mean it about fannie and freddie? is that changing in terms of the

way things work? there was a big push from the democratic party and increasing it >> it came from republicans do >> it was under -- >> it was a little too bipartisan to becky's point. >> so i always thought you got chris dodd, friend of angelo and you got barney frank, the big backer of fannie and freddie and guaranteeing the mortgages and the bailout, the reform bill was named after these two guys this is like an allegory for how difficult -- am i wrong on that? >> it does illustrate the underlying cause of the crisis, the mortgage mess. and it's not fixed >> when you look at the economy today, he said we're in the seventh inning what inning do you think we're in and is there -- >> he was talking about a debt crisis. >> is there an inevitability to another crisis >> i think it just -- if you look at history, there is. there's going to be another one. where is it?

you have to go looking for the bubble first is the bubble, then the burst. >> where is the be you belieubb? >> it's a pretty scary place to be right now you've got trillions of dollars of liability across the country. we experienced some of that bursting in the financial crisis you had detroit and certain counties in california but if i had to pick, i woul say in a time of stress, that's going to be a real -- >> that's scary because that's not something we can easily fix. >> it's not something you can easily fix or get your head around the magnitude because the disclosure is not there. you need disclosure of these things to fully understand the scope and scale. and there's no interest in pr e providing that the s.e.c. overseas fasbi. that's the law of the land gasbi is a voluntary system. allen greenspan was right.

who's going to take away the punch bowl >> are you not worried about the bank sort of classic run situation we had or are you more worried about shadow banks and other places that have begun to finance some of this debt? >> i'm critical of dodd/frank. on the flip side, i look for positiv positives. there's few, but one is the capital levels are up. right? now, the question is are they optimal? as joe knows, there's a certain amount of capital that makes sense. too much is bad for the economy. and in a time of stress, i'll tell you regulatory capital stops the run. >> you always overshoot. you knew it was going to happen. and then when it does happen, we shouldn't be surprised that it happened >> then this becomes the ultimate policy question which is can you mitigate the bubble that's -- or at least make the bubble smaller on the -- and then when it pops, be able to do that >> things were counterproductive where the people that can afford

are the big banks that got in trouble in the first place then all the small guys are, like, inundated with this paperwork that barney and chris dodd figured out you know you're going to overshoot. you do it's the government. >> end of the day, you need transparency you need to know what the underlying assets are worth. we didn't have that with derivatives. >> thank you when we come back, the impact of the trade war on truckers soatn lloiuso american trucking asciiowi jn t discuss the military on our planet than people. we're putting ai into everything, and everything into the cloud. it's all so... smart. but how do you work with it? ask this farmer. he's using satellite data to help increase crop yields. that's smart for the food we eat. at this port, supply chains are becoming more transparent with blockchain. that's smart for millions of shipments. in this lab, researchers are working with watson

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when we come back, a lot more ten-year anniversary of the financial crisis and remembering those who were lost in the attack on 9/11 howard lutnick will be our guest. and we have some special guests this morning at the nasdaq today. the u.s. marines are here. they are part of a symposium taking place at the nasdaq it's a special day and we're honored to have them in the studio we want to thank you all finish your service to our country. appreciate it. "squawk" ruretns a big hour straight ahead.

a dangerous developing story. hurricane florence is headed for the carolinas and more than a million people are being told to evacuate right now back from the brink. ten years after the financial crisis, we are taking a look at banks then and now our special guest, veteran industry executive sallie krawcheck. plus keep on trucking. it might be easier said than done for the transportation sector we will tell you why as the final hour of "squawk box" begins right now

live from the most powerful city in the world, new york, this is "squawk box. >> welcome to "squawk box" on cnbc i'm joe kernen with becky quick. andrew's enlisting he got so inspired maybe not. we had had all the marines in. andrew is going down, i think he has to do the d.c. deal tomorrow on the ten year anniversary of the financial crisis got that it's september 11th. we'll check out the futures right now which are indicated down 75 this morning down ten on the nasdaq the s&p indicated down about four points. treasury yields, i saw 2.95% earlier this morning 2.995% this morning. among today's top stories,

hurricane florence is headed for the southeast. it is a category 4 storm right now. it's expected to make landfall in the carolinas on thursday more than 1.5 million people have been told to evacuate their homes. we've got a live report coming up from the ground in a bit. nafta negotiations between the united states and canada will resume today. u.s. trade representative robert lighthizer is going to be sitting down with chryista friedland. and here's a bit of what ray dalio told us in the last hour >> we're in i'd say the seventh inning of the cycle. i think that we're at the stage in the cycle where interest rates are being raised we're in the later stage probably maybe we have two more into the cycle

it won't be the same in terms of the big bang debt crisis it'll be a slower, growing, more constricting debt crisis i think it'll have bigger social implications and a bigger international implication. >> when he was talking about where we are, the seventh inning, that's in relation to what he sees as a debt crisis that is inevitable and that continues to build no matter what you do. he said that he still sees about two years that would be left in that cycle and atthis point, he was a little more cautious about what to do with stocks. said they could maintain levels where they are now for some time to come but he would be much more defensive >> when we were initially talking about the seventh inning, he was in my view specifically talking about the six stages of debt not necessarily the economic cycle either so i'm not really -- i don't think that exactly sums up what he was talking about of the debt cycle which has six stages at the beginning, not at the

euphoria stage where you're -- at this point, he didn't sound like, you know, we heard earlier about being past the point of no return >> no. but he said it's a constant inevitabili inevitability. >> even though the debt is above where it was pre-crisis, that the debt service is commensurate with where it should be right now. >> he says it does not look like 2007 >> right the financial crisis, meanwhile, had the fed coming up with plans to keep the u.s. from a free fall. but would the central bank use the same tool ifs fas if faced another crisis today ray dalio said the only thing is you can print money. >> that's a big reason they would.

ten years later they tell me they would mostly do it all over again. fed officials there at the time and those now in office largely say they would respond to the lehman and financial crises in pretty much the same way with a few caveats. let's look at what they did. a trip down memory lane here three qes. $1.7 trillion off the bat. that was some mortgages and treasuries $600 billion in qe 2 then there's the open ended qe 3. some people say it wasn't necessary. >> that's qe infinity. >> and that added another $1.7 trillion that was not all there was much, much more. do you are remember these acrony acronyms talf amlf the maximum drawn down in these programs

the discount window. the commercial paper funding facility the taf. >> i haven't thought about these in so many years >> every day i'd come on with one of these programs. that does not mention the currency swaps and twists where they traded short-term for long-term. it's worth mentioning that fed officials believe a much bigger part of their job now is to monitor and regulate the banking system but if it does happen again, here are the lessons -- the controversial lessons they say they've drawn. one, act early and act forcefully and then there's that qe 3 lesson they take which somes from the famous quote from draghi whatever it takes. which is basically open ended versus limited programs. becky, you're shaking your head and i don't disagree with you. greater fiscal policy needed they wanted help from congress

and washington not everything is agreed here are just some of the debates that are still ongoing ten years later. one, negative rates versus qe. i don't think the u.s. central bank is going to do negative rates. europe did them. whether or not they feel good about it, whether or not they ever get out of them, we will see. treasury only purchases. the fed got a lot of flack for buying non-treasuries and being sort of involved in deciding making credit decisions. exit strategy. why is it still ten years later we're just getting out now and finally this big and ongoing nation versus helping in the overall framework for this debate how much and for how long should a central bank distort a market and an economy in order to save it >> can i add to the debates? >> yeah. >> the wealth gap and the rich getting richer and all of that happening. but only because -- only because ray dalio brought this up. >> i know he did i think he's wrong >> but he also said he thinks that he would give berbernanke,

paulson, geithner an a-plus because there was nothing else they could do. >> they shouldn't have been buying the s&ps, i don't think they should have drawn the line. >> they didn't buy the -- >> they didn't >> the plunge protection team, remember that? >> out there as part of the conspiracy theorists >> you know that for a fact? >> it's my belief. bec becky, i would push back on this notion of people whose mortgages were able to help. other low and middle income borrowers. >> but you had to have money and credit to take advantage of those. the bottom percentile groups were the ones hurt the most. we'll never know exactly what it kept them from did it keep them from, you know, hoovrm ci hoover cities or things along those lines? we'll never know >> the wealthy did well but i

don't know at the expense of -- >> not necessarily at the expense, but if you look at it, the wealthiest got a lot wealthier? >> as you pushed up asset values, you definitely did >> he didn't think there was anything else to do at that point. >> the question becomes the fiscal response. i talked to geithner he said to me he thinks washington is on board with a fiscal program next time i don't agree with tim on that either i think that the -- >> i don't think so either. >> -- the congress would think twice about it the thinking is that the fiscal problem from obama didn't work well but economists have looked at this and they believe what happened is that the fiscal programs from the federal government offset massive cuts from the state and local governments. and that's why eric rosengren in our interview on friday said definitively he thinks the state and local governments should get ready for the next crisis so we don't have to have these massive government cut backs.

>> we spoke to a guest who said the next bubble, that could be it that and with pension problems there. and we had a piece on from geithner earlier with andrew where he talked about the extraordinary measures that congress granted the fed to go ahead with some of them taken away and you're dealing with a fed that is much more skeptical -- or a congress that is much for skeptical of the fed today, i think. that you might not get the same sort of issues granted >> i think the question is, look, we li in a hopefully once in a life time crisis. it doesn't mean you can't have a massive selloff in assets without a financial crisis that can happen. and that's what i think one of the things that's being debated right now is this idea of a countercyclical buffer a lot of officials want banks to have higher capital now because times are good and -- >> saving for a rainy day. >> that should be true in the local governments and banking

sector >> good luck with that it's counterintuitive. steve, thank you very much let's broaden the conversation now joining us for that is erin gibbs and david leibovitz. what do you think? are we in a situation where something like this could happen again? i don't think anybody thinks we're never going to have a recession again or a downturn again, but where do we stand >> i would share steve's view that in theory, these things happen once in a lifetime. i think it is definitely possible that in the next couple of years we see some sort of pullback in the u.s. and potentially the global economy but i don't think it needs to become systemic. i don't think it needs to evolve into a financial crisis. i think you can see a 20% selloff without the fed having to step in and do what they did last time. i mean, this is poised to be the longest expansion on record. economies are cyclical this will come to an end

i think the severity of the end is what people are thinking about in the current juncture. >> i don't expect the exact same thing to happen just because of how we've put in the stops and regulations. but certainly some sort of slowdown could be possible within the next 18 months. but we are on -- at least in the u.s. we are on really solid fundamentals here. >> because of the economy and because of earnings. >> because of the economy, because of earnings. looking at the type of valuations we're seeing. we're really not at these high peak valuations. our concern would be more some of the concerns you're seeing in the emerging markets particularly emerging market debt, turkey, argentina. those areas would be a concern but they don't have the capability to spread to the u.s. >> is there a contagion there. >> one is it's so small, it is so pocketed. and two, the u.s. is so strong we're able to handle any type of issues in emerging markets >> part of the lessons learned

how the u.s. responded versus how europe responded they were like three years late and they're still digging their way out. they're still in a qe easing mode where the u.s. is two, maybe three years ahead. who knows when europe might actually reverse course. they're supposed to stop qe. in terms of selling off the balance and raising rates, we're ahead of them. we think it's because we acted earlier and more forcefully than they did >> i guess it's better to be first to get through those issues to lead on both fronts >> it's brd to haetter to have capitalist economic system too >> but joe, what does that mean? >> it means they're entitlement states over there. they're never going to grow. >> in that respect but do you think that the fed should not have been involved? >> no. i'm saying that the idea that europe didn't recover as quickly because they didn't act as quickly, they were never going po they didn't have the same -- we

are exceptional. i know some presidents have said we're not. but we are exceptional >> i agree in more detail what you mean is the u.s. economy because there's less of a safety net has a more rapid flexibility to shift around >> also a more immediate response helps support confidence, right? and if you think about the relationship between confidence and asset prices and the economy, 70% of the u.s. economy is the consumer. if you're hesitates, hesitating, you support confidence >> picking up on that, do you remember a moment when you thought, okay. we're not going to fall apart. was there something that happened that gave you confidence about what was being done there >> no. i think we were always confident we were going to get through this i don't think there's any one particular moment. i think within for me the past

years when we see stronger economic growth and those incredible corporate earnings are what have shown we're going to get through this. maybe the robustness of the u.s. economy. >> you don't remember when the house voted it down or we went down 1100 points or whatever i remember president obabush sa this sucker's going down >> this sucker's going down. i remember watching that tally come up and while they were voting, calculating the ining w going to get -- wasn't it 700 points >> his hands were like this. and the stock was at five. and we had the ticker which i was like, leave that ticker up >> covering his hands shaking. >> but it did close above six. >> i remember when one of our guests on "squawk" told us -- >> i know ann wants to go, but

we should mention this moral hazard issue which is we've not really done away with it the question to which we've done away with too big to fail and whether or not we operate more inefficiently because there's a sense right now that if things get really bad, the government will come in and bail them out that is a major -- >> we created that >> that is a overhang or hangover of the crisis >> thank you very much we'll talk again soon. erin gibbs, thank you for being here and david leibovitz. >> all right coming up, kanter fitzgerald nearly lost 2/3 of its employees in the september 11 attacks. they will hold their annual charity day. we'll talk about that live when we come back really want to be there,

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today kanter fitzgerald is holding its annual charity event to remember the colleagues that lost their lives on september 11, 2001 leslie picker joins us from there this morning which has become something we look in on every september 11th because of the great things that are happening. leslie >> absolutely, joe 658 lives as you mentioned in a

way to honor them they host this charity day where all the global revenues go toward charities to honor the memories of those victims. i'm standing here with kanter fitzgerald's chairman and ceo howard lutnick thank you so much for joining me today. >> thanks. >> how does charity day honor those employees that you tragically lost september 11th what are you hoping to accomplish this particular year? >> on such a tough, tough, difficult day for us we've hired so many new people we're about four times the size we used to be. we have about 4,000 people in new york this is the way each of them gives of themselves. they're part of cantor fitz v l fitzgera fitzgerald these people behind us are waiving their pay today. they're asking their clients to do as much business today. every penny of revenue today we give to charities to turn the toughest day into something beautiful. >> what are some of the key charities and some of the key ambassadors that we can expect

to be donating today >> if you like sports in new york, we have saquon barkley and ennis and cantor from the knicks and lundqvist from the rangers e eli manning has come many years. we'll have president clinton, tony blair so we've had eddie falco, bob de niro, matthew mcconaughey. we've got great, great people coming to help these guys feel good about themselves. wounded warriors lots of children's charities lots of cancer charities and then we have the one big event where we always take care of victims of hurricanes so last year we went down -- actually in february of this year we went down to houston, took care of 5,000 families. took 5,000 families with kids in elementary school, gave them $1,000 each. that's $5 million. and this year we're going to puerto rico, we're going to do the same thing there >> all right

howard lutnick of cantor fitzgerald, thank you for joining me we'll be here all day, guys tune in. >> we will do that thank you for that and thank mr. lutnick. now to one of the economy's most important industries we've been talking about this interview all morning. we're talking about trucking joining us is chris spear of the american trucking association. it's good to see you when i'm looking at a lot of your comments, things are great. great time for truckers. and yet we still have tariffs and trade to worry about and i hear sort of something i've heard from farmers and others that come on that you're willing to wait and watch to see if something positive comes out of the tariffs and the trade negotiations but you're not ready to wait forever, necessarily >> well, no, we're not willing to wait forever. but i'd start by saying this is national truck driver appreciation week. it's an opportunity to honor the 3.5 million truck drivers that move america's freight

you know, we're very much involved in movie ining 76% of e nafta service freight. and we're encouraged by the deal with mexico. we're optimistic that we'll get canada to the table and make this is true trilateral agreement. the tariffs are concerning, but as long as they're part of a negotiation and not an end game, we believe the economy is strong enough, our industry is certainly experiencing the best numbers in performance in 20 years. we believe we can weather that and allow this deal to get done. >> yeah. the -- i guess net you look at the strength of the economy, the employment picture, the gdp. we know how much -- just about everything at some point moves by truck that americans use. you have this strong economy and a lot of the policies of the current administration are paying off for truckers. then again, you've got the trade and the tariff issue which might eventually be a head wind.

but not at this point, in your view >> not at this point we do have oems. they're members of ata they're obviously concerned about the steel and aluminum tariffs. some of them putting surcharges put into the price of those. but times are good we believe this is a negotiation. we'll hopefully have an end product that alleviates the tariffs. no more need for that. and that we can move on with a good agreement in place. so we're pretty optimistic right now that the administration can get this done. >> truckers already make more money than i think than average. and that's even improving at this point, but is it hard to find truckers at this point? do you have to pay more. will it eventually impact profit margins for the industry >> absolutely. i mean, with a good economy brings to the service a lot of the problems we've known about for a number of years. the truck driver shortage, technician shortage. we've got to hire over a million people over the next ten years most of them drivers and technicians. we need to start that process

now, not ten years from now. and the good economy obviously puts greater demand on our industry so we're going to greater lengths to attract new talent, younger talent 48 states right now allow an 18-year-old to drive class a intrastate they just can't cross state lines. i'm pretty sure we can train people to fight wars, we can teach them to cross state lines in a commercial vehicle. >> we talked about that earlier. as long as there's training, i think you're probably right. some day i worry about autonomous trucks. but i don't know when we're talking about that, chris. is that on your radar at all at this point >> yeah, it is but i think we try to put it in context. a lot of folks out there are talking about it as if it's tomorrow it's not going to happen tomorrow it could happen in decades we're not really concerned about it as an immediate concern we'd look at this as driver assist, not driverless we have pilots in planes for a

good reason. you're going to have drivers behind the wheels of trucks. certainly 80,000 pound vehicles. two-thirds of the accidents on our roadways are passenger vehicles speeding, texting. so connectivity could be an enabler to eliminating thel fatalities that involve commercial vehicles. but displace iing drivers, we're not concerned about that if. >> chris spear, thank you from the american trucking association. we appreciate your time this morning. thanks >> thanks for having me on all right. still to come, we have this morning's stocks to watch. including a downgrade for tesla. "squawk box" will be right back. this isn't just any moving day.

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erratic behavior yeah smoking pot may count as that when you're doing it on a podcast. >> he's been erratic the whole time though. >> there are levels of erraticness. >> the price target there being cut to $300 from $400. $300 still above where it's trading today at $249. also nike upgraded to buy. the price target there being increased to $95 from $78. and an s.e.c. filing shows berkshire hathaway has cut its stake in phillips 66 to under 5% berkshire could sell the rest of its shares without further public notice. this week marks the tenth anniversary of the financial crisis as you probably know by now. we have a special documentary that premieres tomorrow night at 10:00 eastern time "crisis on wall street: the week that shook the world." jpmorgan ceo jamie dimon spoke

to andrew about the weekend that led to thedemise of lehman brothers and how he was preparing for a financial catastrophe. >> i think i was driving home. i called up my home operating committee. i told them we're about to have a catastrophe take place, all hands on deck the next day i think it was saturday, everyone was at work we had workforces and teams going through every part of our exposure, which we'd been through before i think i called my board that saturday and said we have a national emergency and i told them what it was. i explained how bad it was going to get >> when you told them how bad it could get, what did you tell them my opinion lehman was going to go bankrupt, that it might be a domino effect after that and we don't know how bad it's going to get i said -- someone asked me what does it mean for jpmorgan?

each one of them is an exposure. we were actually fine. >> dick fuld was not at that meeting. do you remember hank polson explae -- paulson explaining why he wasn't at that meeting? >> he said could we do something to bail them out and had we had another week, it's possible we could have done it >> the financial crisis left a path of destruction through the banking sector wilf frost is here he's got a look at the banks both then and now. good morning >> good morning to you guys as well so the total number of banks in the u.s. has shrunk from 8,500 to 5,500 in the last decade. but the biggest banks have been resilient. those with the market cap over $100 billion have only gone from five to four in number and their total market cap has risen

jpmorgan's more than doubling. the same is not true outside of the u.s. there were 13 banks outside of the u.s. over $100 billion in market cap in 2007 there are now eight. and the total market cap has fallen from $1.8 trillion. to $1.3 trillion but china's resilience and canada's growth hide europe's plight there were eight banks over $100 billion in 2007. today only one remains hsbc remains in that size. what about the workings of the banks themselves balance sheets are much stronger thanks to stronger oversight and regulation more on that topic tomorrow. returns plummeted post-crisis from a pre-crisis peak of around 15% r.o.e. weighing down r.o.e.s since the crisis but they're now back to double digits the average last quarter was 12%. the saving grace for that recovery in returns is that costs are down dramatically.

particularly in the last five years thanks to closing of branches and using technology to drive efficiencies for all the scares ten years ago, the big u.s. banks are doing remarkably well. certainly relative to europe >> thanks, wilf. joining us now with a look at how wall street missed the signs of a coming crisis, sallie krawcheck ceo of elevest she served as ceo of citi wealth management from 2005 to 2008 and then was ceo of merrill lynch wealth management from 2009 to 2011 you've got some interesting thoughts you were in the trenches, obviously. >> that's these wrinkles here, and these wrinkles here. >> and there are some things that haven't changed, i think, in your view that is the type of people running things back then i don't know whether -- for lack

of a better term, an old boys network. >> you said it, not me >> actually, i was reading something. >> there we go well, look i think we have to back up i hear you the r.o.e.s are increasing, but i don't think it matters at all what peak r.o.e.s are. what really matters is what they are through a cycle. we always tend to talk about these peak r.o.e.s yourn, merrill lynch which i had the responsibility to run as it was coming out of the crisis, the wealth management business, you know, it was earning double digit r.o.e.s. then they wiped out 50 quarters of earnings in one quarter back when i was a research analyst back in the day. you remember the day, right? >> the last honest research analyst on wall street >> you remember that i published a report that was sort of smart.

which was don't confuse upside volatility with growth >> i mean, i initially thought -- and we'll get into your other comments about diversity. at citigroup you had chuck prince dancing until -- that was the worst thing. and stan o'neil envious of everyone else leveraging up on the products so you watch powerful men essentially do you think put their firms at risk when a woman wouldn't >> back up we tend to personalize it to the ceo. when you actually look at these leadership teams, you know, we could have used more cognitive diversity. we could have used more folks at these big banks saying wait a second it's citi the superseniors with the liquidity puts what are they really doing for us >> how do you find cognitive diversity? >> well, you have to hire

diversity. you have to hire diversity of background, education, skin color, gender. and so the research shows us that gender-diverse companies tend to out-perform companies who hire r.o.e.s, lower risk, greater innovation >> what you're talking about is somebody who can say the emperor is wearing no clothes. right? you're not necessarily groomed in this environment. you can walk in and say that doesn't make sense >> i think it's not only you can say it but you've got a different background i remember march at citi saying why is this good for clients when you have entire leadershi teams that went to the same schools and were brought up in the same neighborhood and had the same training, frankly if we're going to call a spade a spade, people get embarrassed to say i don't understand right? >> right >> i just don't get it i don't understand why we're on this train and you need people of difference to step in and say wait a minute. but the industry just as we've had an increase in wealth

disparity in this country, so the industry for some period of time went backwards on all kinds of diversity >> was your point at the top that r.o.e.s are at peak moments and we're headed for a similar outcome? >> can they go up a bit more sure, they can go up a bit more. but we all know we're going to hit another recession. we hope we don't hit a crisis. but we need to see a full cycle before we know what the true return capacity is >> but at the level of capital we see today, is that enough to protect the banks from a repeat of the last crisis >> anybody who says they know doesn't know right? so these banks have certainly gone from 40 to 1 types of leverage to 10 to 1 types of leverage and their funding is more stable but what does 10 to 1 leverage mean it means if assets go down by 10%, you're wiped out. so if assets go down by 5%, 6%, 7% you're in a panic and deposits are stable. but we've all seen a bank run,

right? so they're certainly more safe the question is are they safe enough >> so sally, you know this bill in sacramento, california, garnered the lead editorial in "the wall street journal." it would dictate the gender of some company directors >> and i'm sure "the wall street journal" loved it, right they were all over it. >> they said the bill is now on brown's desk he could be a voice of reason. >> stunned i'm stunned. >> do you -- but are you -- do you favor legislation that's mandating gender diversity >> i may before i die, right because let's be honest -- >> you don't now what question is -- >> what we're doing isn't working. there's not a ceo on the planet -- >> the ends justify the means. >> at some point they will there's not a ceo that doesn't stand up and say we believe in diversity and then kick it to middle management where diversity goes to die. a lot of people know this

research, diversity draws better performance. but when we sit down as a manager to hire somebody, we're just so -- >> should it be 50%? how many women >> women are half of the population >> so you think that a law maybe -- you're smiling, but do you think that a law should be passed that mandates 50% of directors are women? >> i say before i day i may get there. >> all right >> but at this rate, who knows >> that's an answer. i'm not sure what i think about it either. >> you hate it because you hate the word quotas. >> i don't like legislation being pushed on something. >> you don't want all women. you want diversity >> but if you do have them, there's a law that says i'm on there. >> they may not want you on there. >> i think that's a strong point, becky >> sally, thank you. >> that was the worst possible scenario i was trying to describe thanks >> wilf, thank you see you soon

coming up tomorrow on "squawk box," our coverage of the financial crisis ten years later continues. among our special guests, former senator chris dodd stay tuned you are watching "squawk box" here on cnbc the whole world is talking about ai. big, bold promises like... it'll transform the human race! it's gonna solve unsolvable problems! it'll find life on mars! but here's the thing. you don't live on mars. you build wind turbines. supply car parts to thousands of cities. answer millions of customer calls a year. like this one: no, i didn't order this. it's terrifying. you run a real business with real roll-up-your-sleeves business needs. and that's why you work with watson. hello. so it can analyze weather data to help retailers increase foot traffic. assist thousands of online banking customers each week. and reduce delays for 25 million passengers. mahalo. watson isn't just the promise of ai. it's the real deal deep learning business ai. that knows your industry, protects your insights,

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possibilities. what we deliver by delivering. today marks 17 years since the september 11th terrorist attacks here in new york a ceremony is being held at ground zero at 8:46. a moment of silence will be observed this marks the time the american flight, american flight 11

struck the north tower victims' families will then begin reading the names of their lost loved ones. president trump will mark the day by visiting the pennsylvania field that has become a 9/11 memorial it's where flight 93 crashed passengers and crew members on board, obviously, learned what was happening. let's observe the moment of silence. ♪ and the home of the brave [ applause ] [ silence ]

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and i am a certified arborist for pg&e.ughes i oversee the patrolling of trees near power lines and roots near pipes and underground infrastructure. at pg&e wherever we work, we work hard to protect the environment. getting the job done safely so we can keep the lights on for everybody. because i live here i have a deeper connection to the community. and i want to see the community grow and thrive. every year we work with cities and schools to plant trees in our communities. the environment is there for my kids and future generations. together, we're building a better california. all right, let's get down to the new york stock exchange where jim cramer is joining us now.

17 years now, jim, obviously, this year ten years since the financial crisis, we have been talking about both they're trying to somehow, you know, discuss both items obviously september 11th, we were just talking about that it is hard to even, i know armitice >> we feel it. >> you never forget. i do advise that people go to the museum the museum really captures if far more than it would it is one of the best museums. now i still think we are dealing with september 12th and people trying to pick their lives up

and i am sure those people, we are a business show and we got to cover both. that day is really important for younger people who were three or four or five or people who are not born i think the whole world and this country should make a pilgrimage of that museum >> it is a tough place to go but we should. >> disturbed to see the number that died of the after effects of september 11th and now of the actual event itself, first responders that went in and everything else. >> well, i think people did extraordinary things before and after. i think people did not -- it was

not an issue where people were concerned about health as much as people concerned of trying to find somebody. we know the outcome and i think that it is going to be a solemn day the rest of our lives which is important i don't think it can be anything else but -- is it december 7th a terrible day, those were people in uniforms and these people were not in uniforms. >> when you the hear the beginning of the names being read there are 12 or 15 or 20 people ab when you get to a common name there may be 30 or 40 people drives home the point. 3,000 is the number that how long it takes just to mention the names. >> if you watch the names and you feel the names these are things that must be

done they have to be done your kids have to do it. your grand kids. it can never be forgotten. it is going to get forgotten >> well, it has been 17 years and it is front and center >> may god let it stay that way. jim, we'll see you in a couple of minutes. "squawk box" will be right back. portfolios d customized to help meet your financial goals. you'll know what you're invested in and how it's performing. so you can spend more time floating about on your inflatable swan. [ding]

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the emerging market index snaps a losing streak on friday. hurricane florence is picking up strengths and is on a collision course with the carolinas. jackie deangelis is joining us now from carolina beach with the storm preparations jackie >> reporter: good morning to you. the governor of the carolinas calling this the bulls eye of the storm. president trump signed an emergency declaration as we are two days away from a category four hurricane making land fall here the weather right now seems to be okay, balmy and humid and the sense that the storm is coming some showers and a beautiful rainbow. this is how it goes before hurricanes it tends to be calm and all of a sudden everything can pick up. what worries some here especially of the coastal area

look at the ocean behind me. the waves are starting to get stronger and tides come higher on the beach al storm surge anywhere from 10 or 20 feet, that's what residents and hotels and businesses here on the boardwalk are really concerned about and winds of anywhere from 130 or 150 miles per hour. those gusts can be very strong and can cause a lot of damage and so can the flooding. the other concern is this storm is predicted to hover. if it hovers, it will deposit a lot of rain accumulations. it could lead to some lasting damage the preparations are being made, we are watching people to evacuate the area. emergency evacuations do have to take place the government even ordering some navy ships to leave virginia and settle in the atlantic and making preparations for the storm so they are ready to be dismatch whpatched when n.

everyone is saying this could be a monster, guys. >> the calm before the storm, jackie and a beautiful where you are right now. thank you. we'll take one more quick look at the markets which are all in red all morning. you can see down 91 now on the dow. make sure you join us tomorrow "squawk on the street" is coming up next. good tuesday morning, welcome to "squawk on the street," i am carl quintanilla with jim cramer, david faber is off today. as we watch the 17th anniversary today and hurricane florence some elevations in yields of the highest yields in july our road map is going to begin with trade fears as the u.s. and