the multiple is still not that high for apple it's september 13th, thursday the 13th "squawk box" begins right now. live from new york where business never sleeps, this is "squawk box. good morning welcome to "squawk box" here on cnbc we are live from the nasdaq market site in times square. i'm becky quick along with joe kernen and andrew ross sorkin. the u.s. equity futures at this hour look like they're indicated slightly higher. dow futures up by 22 points after the dow closed higher yesterday. it was helped out mostly by gains in boeing and caterpillar after there was news of potential trade talks between the united states and china again. the dow's gains were capped by losses in 3m shares. this morning the nasdaq is

indicated higher after closing down yesterday the s&p up by a point after they closed up by just under a point yesterday as well. overnight in asia, japan ended up by 1% that was a big gain for the nikkei it's on track for gains of about 2.4% the best gains for a week to date in months hang seng up by 2.5% the shanghai up by 1.1%. we have not one, not two, but three interest rate decisions today. the bank of england and turkey both due out at 7:00 a.m. eastern time then we get the ecb 45 minutes later. right now aled of that you can see european equities, a mixed bag. ftse down by a half percentage point. stocks are weaker in italy and in spain slightly higher in france and the dax is the biggest gainer so far. >> i'm not putting my calendar -- i'm not putting

turkey on my calendar. >> it matters this time. >> i don't care. we're not waiting for interest rates from turkey. bank of england and -- >> interest rates from turkey tell you more about what's happening -- >> how long have we been doing this show. >> i thought you meant we were taking the show to turkey. >> turkey is facing a crisis >> i know. but after all this time we're adding turkey to our -- no >> it matters. >> what you don't know is if it becomes systemic in other ways >> suddenly, an interest rate decision coming from turkey? you read that with a straight face we look at issues that rise up >> how about you do it you do it next month and the month after. >> no andrew is. >> one thing we watch closely every day is the treasury yields in the united states the ten-year, gralan greenspan said that was the one number he watched constantly >> now it's the two-year, two.

how late did you work yesterday? >> late. >> you did >> yeah. >> all day, we were in d.c., came back. >> did you come back on the train? >> train acela. >> you went down the night before >> went down the night before. >> where did you stay? >> you know, it's -- >> tmi >> tmi >> can you tell me >> i'll tell you -- it's more about the paparazzi and security issues >> that's what i thought with you, it is. you need more -- >> with me, i go in there, i get out. with you -- >> you wear your sunglasses, has the low. i get it now to the top stories hurricane florence, and jackie deangelis is live in kure beach, north carolina but first we go to cnbc headquarters for the storm's latest track >> hurricane florence has weakened to a category 2 storm, but this is still a high impact storm as it approaches the

carolinas. right now radar showing us the far outer convective bands are working their way into the outer banks. the rain will continue to pick up heading through the day today. once it starts raining it will not stop for days. we're still talking about a slow moving storm heading into the weekend and the start of next week let's talk about the current track, category 2 with sustained winds at 110 miles per hour. it will approach the carolina coast today. by friday morning at 2:00 a.m., it's sitting off the coast of wilmington we expect landfall on friday now. after it makes landfall it sits there as a tropical storm. that's good news in terms of wind speed but it will continue to dump rain as we head through the weekend and the start of next week. we're talking about feet of rain 30 inches plus some areas could see up to 40 inches of rain as we head throughout the weekend

wilmington is in the bullseye, but even all the way to charleston the further inland you are, the less rain you will see but you add in the storm surge and we're talking about a dangerous situation. let's break down those impacts and what you can expect. rainfall from 3 to 4 feet in the highest areas. the further inland the better off you are. still inchesof rain that will fall the surge, 9 to 13 feet. that's the surge on top of the tide this is an additional wall of water that will push onshore heading through the day on friday those winds, 80 to 100 miles per hour that will be at landfall the winds will weaken significantly upon landfall as the storm weakens. the big thing is the record flooding for portions of the carolinas. today the last day to prepare. the last day to get out of harm's way we'll continue to brink yg you updates. now back to you. >> jackie deangelis is in kure,

north carolina how far did you have to go from yesterday, jackie? you were making the rounds down there. >> good morning. kure beach is south of carolina beach. there's one road here, basically one lane that would take you north up into the beach area everything is basically a ghost town here. put it that way. you look down this street, these are higher-end homes, right on the water. there's not a car in a driveway. there's not a light on in a home everybody here has pretty much evacuated. they have taken those warnings seriously. i walked down to the beach earlier. you can see as the waves break, the water is coming upper the fr and further. wind speeds, even though this is a category 2, are still going to be severe. over 100 miles per hour. that's one issue the second issue is the rain accumulation and the storm

surge. that is the thing that people are the most worried about when it comes to catastrophic storms like this water tends to be the thing that costs lives the most so let's talk about the impact of what people on the ground are worried about. they're worried about power, about survival through the storm. duke energy said about 1 million to 3 million customers could be impacted with power utages they say they have 20,000 personnel ready to get into action but they can't work on some of the damage from this storm until theconditions are safe enough. we have stressed this over the course of the last few days. human lives are the most valuable here. state officials saying that, local officials saying that, the president saying that. property damage will be an issue when it comes to this storm. the insurers taking a hit on the uncertainty as we head into hurricane florence one of the worst case scenario estimates, very doomsday

scenario was 170 billion in damages across the area. more conservative estimates say 20 billion to $30 billion. hurricane hugo was about 20 billion. a lot of things to watch as we head into the day here the sun has not even come up but the wind has kicked up once the rain starts later today, it's not going to stop. >> those were adjusted numbers, i guess? >> yeah. >> 20 in today's dollars >> yes >> 20 billion to 170 billion that's crazy >> a wide range. >> we do know that it's a very nice coastline and they keep building them. that's one of the things that people complain about in terms of flood insurance and everything else. this happens you know, some of them are damaged. they build them again. they're luxury beautiful. all the places that you hear about. hilton head all the way down,

all those great places cape hatteras. >> any shore >> it's gorgeous >> it's beautiful down here. you look at some of these homes, as i said, lives come first certainly, but the property that's down here on the water it's sad this coined kind of destruction is on the way. >> last year there were so many concerns with florida because you didn't know where to evacuate to. the rain and so many issues going inland i heard the same about this storm. even 10, 15 miles inland you don't know where it will be safe where are they telling people to go >> the first thing they're saying, as you said, is get away from the coastline and move inland but the flooding there could be severe as well so they're telling people basically to go as for as they possibly can

remember, when people are traveling or evacuating, oftentimes cost can be an issue, to stay in hotels, to be displaced in such a way. so at this point a lot of the residents we spoke to said we'll go 10, 20 mylilyleilemiles inla. we will get hotel rooms. i can tell you at kure beach, carolina beach, you won't be able to return for quite some time the bridge lead nothing this ar leading into this area was closed last night at 8:00 p.m. they will not open it until it was safe >> all right, jackie i'm worried about you. there's only one road out there, you say? >> there's one road out. we'll make sure we're on it.

>> thank you >> let's get to our top corporate story. tesla losing another executive its vp of worldwide finance and operations leaving last month. last month it was the exit of the chief accounting officer elon musk warning customers they may be facing longer response time he cites significant increases in vehicle delivery volume in north america. that's the good news on one side because they're so busy. the bad news, the customers waiting. a lot of people focusing on those departures, what they mean shares of caesar are higher this morning hg vora built a nearly 5% stake in the operator pushing caesar to explore options including the sale of the company. that stock up a little over 4% now. apple releasing a bevy of new products

the iphone xs, the iphone xs max and the watch. here to talk about this is jason ware from albion financial group, and also steve kovack i read the cnbc.com writeup about these products the man on the ground who was able to see and test them all out. it got me a little excited i don't have a x now, i guess i'm a likely candidate if you have a x maybe you upgrade. >> they're going after people like you who may have saw that expensive iphone x last year and brought that technology down to the new xr mottle, 750 bucks gets you the same thing they got last year. >> i just wanted to make sure i didn't get the alpha version or

the beta version of this stuff >> last year's x was good. the s model lines kicks it up. the xr, maybe $1,000, $1,100 seems too much, here's a $775$70 version. >> historically when apple has created a separate tier, it has not worked to the same degree. why? >> i wouldn't call this a middle tier phone it's still $750. two years ago, a new entry level iphone was $650. they'll increase the average selling prices of phones that will boost profits, they're making it seem more appealing. what will happen to the highest end phones >> that's appealing to some

people it's a bigger screen >> it's like a mini iphone >> it's approaching the size of a tablet >> you don't have the side stuff around it. >> it's no bigger than the old 8. >> the plus model. >> i used to always have a plus. i loved it >> this is the first time i wanted the bigger one. >> yeah. the max model. that will appeal to a lot of people >> what about the watch? fitbit shares are down 7%. it looks like serious competition. >> apple's ambition from the beginning was to make this a health device, we're seeing that realized the technology has caught up to that point they have the ambition down the road for blood testing, blesood pressure, and now they have the

ekg. >> jason, all that and the stock still sold off a bit yesterday that's probably not surprising given what the stock has done over the last month. >> yeah. i think anybody out there that is trying to take stock of any one day's worth of moves in apple or any other security is doing a disservice you have to look at the business over the long term so many things steve mentioned about the event and the lineup from apple that they put forward from the xs and the x max is looking strong there's somebody for everybody in this whole playbook from apple of bigger, faster, more expensive continues. that's good for their business we think that's a nice kind of entry into the apple ecosystem for many people that have older generation phones and for those looking to upgrade to apple for the first time we like the event. the business is doing just fine. >> what do you think about the

stock valuation-wise >> valuation is cheap. despite the fact we had this rally. the fundamentals per share have continued to increase. that's something you want to see as an investor whether it's sales growth. a lot of that sales growth has been on the become of higher asps and more importantly for us better sales growth in the services business which comes with higher margin growth is there. if you look at the pe on the stock, especially x cash, you are trading below the market the s&p 500 using that as an example. we think that has good, relative value for apple. >> are you concerned at all about problems, with the trade war, with apple being in the cross hairs for any problems with china coming down the road? >> no that's a great question. it's certainly something that we're watching closely as far as over the next six months, 12 months, that's incremental risk to the apple

story. if we were to see some type of trade policy enacted that increases the price of the iphone beyond $1100, which we are now seeing for the xs max, which is a 10% increase over the $1,000 mark last year, we get into 1500, 2,000, you have to ask yourself where that price point is where demand will slow for the device that's not the best case tariffs and trade disputes we don't think will cause a problem for the iphone business, that's more bluster, but if that were to happen that would be a problem. and in the supply chain, if component costs go up, that could be a problem for margins something we're watching closely, but it's not the base asyst assumption right now >> jason, good to see you. >> thank you >> steve, great to see you today. >> thank you i got more stuff to buy now.

>> it's on your to-do list >> yes >> when we come back, peloton is suing rival fly wheel. we'll tell you why first the biggest winners and losers in the dow. coca-cola up boeing and apple also looking like they would open up. this isn't just any moving day.

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complex, so interconnected that we had to go to the source and wall street was -- was like the heart. and we had to stop -- we had to go to the source to stop the bleeding, otherwise it was going to kill the economy. what we were doing is putting a tu tourniquet on it it's hard to explain finance is the life blood of the economy. >> the hardest thing was sitting with my wife at the table in the morning with her reading about what we were doing, seeing on her face the mix of despair and doubt.

she knew we were ethical people trying to do the right thing, but she looked at what we did and said -- she's like really? i think that was the hard eest thing. that was mirrored by what we faced across the country >> making a loan against the collateral available would at best sustain the company for a few days, it was not a viable business all we would do is bring up a lot of bad assets on to the fed balance sheet and protect a few creditors. we would not -- it would not be sufficient to keep the company alive. that was the critical element. so, again, not a narrow legal judgement, it was a judgment about feasible that's something which we have never wavered on >> that comment -- it was a fascinating conversation, but that comment by ben bernanke was picked up by so many people,

because legally they said they had no authority it was a nuance. >> maybe that still exists, but why would we want to >> we felt we couldn't do it either others will say it was a choice. >> even if it was a choice, it was a choice to decide whether or not to save them. i was listening this morning to bbc and they were talk about he understood there was not political will, he understood why it didn't happen, but theoretically they could have made them a bank holding company back in june when he first asked for it to happen but there were bad decisions made at lehman even if you were viable in june, you were not when the market turned there's no reason to expect that everybody would come to your rescue >> is this the scott freedman interview? >> i can't remember. >> a powerful interview -- >> it was great interview. i listened to it coming in this

morning. >> a lot of coverage this week >> the other interesting thing they did was talk to someone who was a mid level manager, a woman who found out the night before she came in at 6:00 in the morning, saw two women she never saw before and said have you heard? and they said yes, and they started crying and hugging >> despite the debate around lehman brothers, i do think at least the group i was with yesterday -- but there were people from all political spectrums, i think history will look fondly at the decisions made after this. i do they have an interesting project going on at brookings, the hutchins center. they're actually putting together a book for policymakers in the future to sort of -- almost as a guide to what they actually did in the moment

>> and why >> they have all -- it was like a reunion of everybodywho was participating a decade ago >> here's what i don't understand, how come ten years later people involved in this situation still call him tim geithner what is >> what is he doing now? >> works at warburg. >> i used to work at lehman brothers when i worked there and made cold calls, the first thing we would say, this is joe kernen, you're familiar with lehman brothers, we're the oldest investment banking firm in the country. then we sent everybody this book, the merchant bankers or whatever it was, you got to read about the history of the oldest bank it's staggering that's the one that went down >> there's a play in london all about the financial crisis but about lehman brothers. it starts in the 1800s when lehman brothers began. supposed to be spectacular

>> that's why the story is still compelling where is hank? is he just down fishing? >> no, he's running the paulson institute in chicago >> he's at little saint simon's. >> he's doing that as well >> he owns the island basically. >> he spends a lot of time in china. working on the china relationship >> that might suck up a lot of energy right now >> i saw him over there, he said he doesn't have a tv set i think he's lying >> i believe him >> i believe him, too. not on that little island, no way. when we return, we'll talk to phillip swagel, he was assista also involved in all of this. as we go to break, a look at s&p

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welcome back you're watching "squawk box" live from the nasdaq market site in times square. good morning we are tracking hurricane florence, the storm has been

downgraded to a category 2 the winds are weakening a bit, but florence still poses a threat to the carolina coast this will just sit there with all that water the storm surge is a very big concern. u.s. equity futures separately, but everything is related nowadays, isn't it up 29 points category 2, i saw that, i thought, well, they thought it might hit as a category 5. >> but the wind was never the biggest concern they had >> no, it's the size >> and the storm has spread out as a result. it's more than 200 miles from the eye to the edge of it. makes it about the size of katrina in terms of the spread >> size of michigan. 10 million people. federal regulators say that youth e-cigarette use has reached epidemic levels. the government is cracking down on illegal sales to miners the fda sent 1300 warning letters to retailers for selling

the product to teens while vaping may help adults trying to quit smoking, kids are attracted to the sweet flavors and sleek designs. manufacturers will have two months to give the fda their plan to address this problem we'll talk to scott gottlieb at 7:15 a.m. eastern. peloton is suing fly wheel the bike maker argues that its rival stole the technology bringing spinning classes into users homes. no response from fly wheel. this week marks ten years since the collapse of lehman hearse what the former fed chairman had to say. >> none of us anticipated the full ramifications and extent of the crisis in that respect we were late. we responded aggressively. overall we were successful in stabilizing the financial system

there was a paper talking about how quickly it happened, the costs, and generally speaking we looked good compared to other advanced economies, countries that had crises in the past. where we didn't succeed is we didn't persuade the country that what we were doing was necessary. though we believe it was that communication is out there. >> as a member of hank paulson's treasury deposition and behind the t.a.r.p. program is phillip. he talked about how t.a.r.p. pulled worse than torture. when you think about ta.a.r.p. ten years ago and even today

where the economy is, and how unpopular an even to some degree you could argue there are people who don't believe it worked, what do you think of that and what do you think could have been done differently? >> it's the paradox as you said and as the three principals said yesterday, i think it worked i was involved in the paper that ben bernanke mentioned yesterday that evaluated the outcomes. i'm sure we could have communicated better, though we had a phenomenal communications staff. i'm not sure what we cohave dule done better, faster. the dodd-frank law could have been used to handle lehman differently, but it wasn't available then given the tools we had then, it would have been tough to do much better, which sounds like oh, pat yourself on the back

i think that was the reality given what we could work with. >> even today people say, look -- people on both sides, people on one side say you should let the banks good down on the other side people say you shouldn't give money to the banks, you should have given money directly to homeowners >> yeah. >> do you have a take on either of those >> on both the other paper i was involved in is the housing one. it's a tough issue the money to the banks was an investment, it was critical to stabilize the financial system, because that's the foundation of our economy, but no way would that be popular. in your conversation yesterday you drew that out well it had to be done and it was going to be criticized i think it was effective what is still fascinating to me is so many academics don't think so so many academics -- i'm a

professor now, that's my audience -- they say you guys are such idiots. you are in washington, it's so simple, you're such idiots i have not heard of a better solution >> speaking to the housing issue, if you had given money with regards to principle reduction or lurior lowering ra, would that have been as effective? >> it would have been different. stabilizing the banks was essential. one could have imagine done a massive housing bailout, say in the spring of 2008, a woke after bear stearns was rescued, if the government had come out and said we'll just prevent every foreclosure. so every person who got into a home that they shouldn't be in, you know, through misconduct on the originator, the securityizer, people who signed on the dotted line for homes they couldn't afford, no one will be foreclosed on or lose their homes, that would have

prevented from banks from failing because that would have wiped away all the since of origination, but it's not feasible there was no appetite for a massive bailout. the policy response gets criticized from both directions. >> talking about politically unpopular, what do you think would have happened had the government saved lehman brothers what would have happened afterwards in. >> it's always hard to know. certainly the expectation of other bailouts would have been there. i suspect every counterparty of lehman would have said to the fed thank you very much, we will take our 100 cents on the dollar right now and we're gone they had long-term debt, but not a whole lot. that would have rolled off within a year, probably not much more than a year the fed would have been left operating lehman and funding lehman indefinitely. in some ways more akin to what we see in europe where they

failed to resolve their issues >> is there any issue in today's economy and today's world that you worry about as a crisis, that looks like 2008 or worse or even less? >> there's so much progress since then we have a strong economy the financial system is much better shape two things i can note as worrisome is the fiscal situation, that was a big discussion at the conference yesterday. the other is sometimes our financial regulatory system depends on convertible capital we have banks that fund themselves with tlac, total loss absorbing capacity bonds that are meant to turn into capital or take losses in a crisis, we know those are fragile. i'm not sure they will work. >> phillip, great to see you >> take care thank you. still to come, the ceo of the financial services forum on the state of banking right now

and then in the next hour, former morgan stanley wealth management president and now rockefeller capital management ceo greg fleming coming up at 8:00 a.m. eastern ckew, former treasury secretary ja l you're watching "squawk box" on cnbc our bond is fraying. how do we get back to "us"? the y fills the gaps. and bridges our divides. donate to your local y today. because where there's a y, there's an us. at ally, we offer low-cost trades and high-yield savings. but if that's not enough, we offer innovative investing tools to prepare you for the future. looks like you hooked it. and if that's not enough, we'll help your kid prepare for the future.

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welcome back to "squawk box. it's time for the executive edge ports in the southeast have been preparing for hurricane florence and brian sullivan joins us right now with a look at what's open, what's not and the potential impact on the u.s. economy. this is a big one. >> it is it's an executive edge because a lot of executives out there concerned about the 300 billion in economic revenue from the storms that are in the ports path norfolk virginia, the port of virginia, if you will it's under condition zulu, which is a coast guard -- remember, the coast guard controls these ports as far as the ship traffic. norfolk is in the yellow zone. if you're there, the port is open they're taking stuff on and off

ships but ships cannot get in and out of the channel if you're there, you're working, but you can't get in or out. wilmington, north carolina, charleston charleston, south carolina bth those ports are closed savannah right now is open jacksonville is open earlier today on "worldwide exchange," we had the opportunity to welcome in by phone the president of the south carolina ports association, he runs the port of charleston, one of the biggest on the east coast. his name is jim newsome, we asked about the concern not just about the rain but about the storm surge. >> i'm not seeing any projections right now of anything that would cause concern there. but as we know with storms, they're unpredictable. one can never be totally sure. we -- there's not a whole lot we can do about that now. >> one thing we don't think

about is the water rises, all those containers, those big rectangular metal boxes f they're full of stuff, they're heavy, they get weighted down, but newsome saying they'll have to take precautions to secure the empty ones which are lighter. >> believe it or not, we're most concerned about the empties. the loads are heavy. they weigh 25 tons, they're not really going anywhere. but we have to strap the empties together, because they can go flying around in a big wind event. >> so it's not just the ports, the 300 billion in economic output, it's the risk to life and property with cars, boats, these big containers floating around unstrapped if we get the kind of storm surge they're talking about. >> brian, it's not just that you look at the ports that are closed the three of them closed to ships. how many ships are still out in the water in that area seems like we had enough advanced notice and this storm

has been moving slowly enough that you would anticipate ships have been taken out of the way >> i wish i new the number, it's hard to aggregate the total figure because number one, you have ships that were coming in that were rerouted they were supposed to go to norfolk, wilmington and charleston, they go back out to sea. you have the shipping ships, you have the naval ships, you have cruise ships in many of these ports which have also gone out as jim newsome told us, the coast guard is the one that controls what happens with the ports. they control what happens on land, but as far as saying, okay, these shipping channels are now open, bring ships in, bring ships out, that's the coast guard. under condition zulu right now, which is effectively no ship traffic because they expect gale force winds within a 12-hour period >> just the disruption of those

ships, the moving of assets, that will have a bit of an economic hiccup. >> things you don't read about there's three major aquariums located on the coast down there. what do they do? >> the handlers all mandatory evacuation they had to leave the sea turtles, the sharks, all the life that's in these three major aquariums that are right on the coast, they had to leave them. they have no idea what will happen they said it's heart wrenching we have no idea how the animals will get through this. you don't think about things like that. if they're saltwater animals -- >> i know. >> it's like steve n wright sai, i have the world's largest sea shell collection, it's on beaches around the planet. >> if something happens to the aquariums -- >> they'll be all right. >> no, they won't be all right if there's flooding in the building and it spills out

>> i'm trying to be optimistic here, joe. >> i get it. they're in water, water is coming, i don't think that's going to work here thanks, brian. >> okay. when we return, ten years after the financial crisis, how safe are the banks today are there hid ehidden risks we'll veha kevin frommer after the break. at&t provides edge-to-edge intelligence, covering virtually every part of your manufacturing business. & so this won't happen. because you've made sure this sensor and this machine are integrated. & she can talk to him, & yes... atta, boy. some people assign genders to machines. and you can be sure you won't have any problems. except for the daily theft of your danish. not cool! at&t provides edge to edge intelligence. it can do so much for your business, the list goes on and on. that's the power of &. & this shipment will be delivered...

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♪ our next guest says that ten years on, the larger financial institutions are safe and sound. kevin firmer was at the treasury department with hank paulson during the crisis. he's not president and financial supervises firm. would you say they're too hot? too cold just right where are we >> i'd say in the past ten years. the better part of the last ten years, there's been a significant amount of increase in the amount of capital and liquidity that these hold. with respect to capital, 70% increase in capital. so, when you combine that with rigorous stress testing. certainly robust and

institutions now recovering with resolution planning that they're doing. the whole host of things which they've done and of course, there's the back stop authority which phil swagel was commenting on a few minutes ago. that's a hand flg of things. i would say the most crucial thing is the tier one capital that the institutions hold the largest institutions at 40% increase. that's the observing capital that institutions need to hold to weather a future storm. >> did the smaller institutions, was it at their expense that big banks are fine and doing well now? but a lot of those regulations shouldn't have maybe been applied to the smaller institutions have they pulled back now to where they can safely say they're competing and it's a level playing field now? >> well, there's been revisions to dodd-frank. >> like pulling teeth. >> and it's been a process that the congress took on and they did roll back a series of regulations with respect to

the smaller and medium-sized institutions and i think that was appropriate. and it was a bipartisan act on their part >> you can see there's all this residual bitterness that we talk about. and there should be. because the big banks are ramping up -- you know, they were growing too slowly. they ramped it up and the products, no clawbacks, guys still out upon golf courses that made $200 million that basically would have sunk their firms and they didn't sink >> well, i think if you look at the reforms that have been made. and the risk management processes they've put in place which are quite significant. and you look at the contributions to the economy, which are extremely significant, the amount of $4 trillion in lending in consumers and businesses they play such an important part >> what do you make of arguments who are in the middle of this as well and worked with you, who

today believes the banks, at least the biggest ones are out way too big and they ultimately should be broken up. >> you're right, i know neal i don't agree with him on this point. i think there are a lot of others that don't agree with him on this point. i would say the norm, in terms of the view, as to how the institutions are capitalized right now does not align with some of the things he's been advocating >> one of the things we talked about at brookings with paulson and bernanke -- >> you mean at the hutchins center >> at the hutchins center is whether those worlds actually work in practice theoretically, it makes sense but if we actually get to a point where people say we're not going to try this. >> you know, the living will process, obviously, is untested. but the process that these institutions have gone through, these detailed road maps of their institutions the largest institutions that are part of the foreign

membership have reduced the subsidiaries of those institutions by about 50%. so, just going through the process of preparing for this has led to the simplification of the organizations. and that's information that they have developed for the rerlgts so, if you don't get to the living will process, obviously, that's the goal. and the whole point of having this robust capital and liquidity in the system right now is intended to prevent us even having to use those tools in the first place >> kevin thank you. we appreciate it i don't know, i guess it will never happen again i don't want to bail anyone out again. >> let's hope. >> thank you when we come back, the carolinas bracing for hurricane florence and we'll talk about the potential danger and how the government is intending to respond with former fema director michael brown roup.

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florence heads for the carolinas. the dangerous storm expected to hit later tonight. the latest on the paths and the impact on business is straight ahead. the fda takes on e-cigarette makers commissioner dr. scott duttley will join us to talk about the stern warnings to those companies. plus, the financial crisis that rocked wall street. greg fleming is here as "squawk box" continues right now. >> announcer: live from the beating heart of business, new york this is "squawk box. good morning, everybody. welcome back to "squawk box" here on cnbc we are live from the nasdaq

market site in times square. i'm becky quick along with joe kernin and drew ross sorkin u.s. equities have been higher. dow futures up by 65 points. that's an advance from an hour ago. s&p is up by 5.5, nasdaq up by 22 here's what's in the headlines at this hour we're getting an interest rate decision as we speak from the bank of england. the bank leaving key rates unchanged. the european central bank will issue its own policy and rate decision coming up in 45 minutes. that will be followed by a news conference by ecb president mario draghi here in the united states, the latest inflation figures and the consumer index at 8:30 eastern time is expected to show a jump of 10%. but remember data yesterday was weaker than expected hershey is expanding its snack food portfolio it's obtaining pirate brands

from b and g foods for $30 million and cash hershey intends to close it in the fourth quarter a fun fact, cheese puff snacks are worth $2.5 billion >> eating air. it is what it is >> how manycalories, fewer breaking news on hurricane florence good news for the region, the storm has been downgraded to a category 2 hurricane florence is still causing a major problem for the carolina coast. i want to get to meteorologist katie mcgrath who joins us right now. >> that's right, florence is a category 2 storm but the impact is basically unchanged. we're still talking about a catastrophic event for portions of the carolinas

right now, nasa is flying over the storm to give us a perspective of what it looks like this morning. you see the eye wall, much more clouded. the storm is dissipating just a bit. we are expecting it 0 gain strength expected to make landfall as a category 5 storm by tomorrow morning. let's break it down. we're going to start feeling the impacts. the outer bangs seeing a bit of rain fall. the tropical-force winds beginning to pick up once is starts raining it will not stop we're talking about a prolonged rain event by this evening. and as high tide arrives overnight and early tomorrow morning, we're going to factor in the storm surge and the flood threat that will continue throughout the day on friday now there is still a chance that florence will stall offshore and not make landfall until later in

the day on saturday. if that does occur, we're talking more rain and large storm surge. storm surge between 9 and 13 feet a really dangerous situation for portions of the carolinas. once it moves onshore it will weaken but be raining for days guys back to you >> caitlin, thank you. the hurricane having an impact on travel as you can imagine and tour imin the area you think the carolinas, a lot of people, contessa brewer, joining us now, i think myrtle beach. that's where you are right now >> yeah, in fact, joe, 18.6 million visitors come to visit every year right now, the place is a virtual ghost town look around. even the waffle house boarded up you know i've covered my fair share of storms. in any storms i cover, waffle house is the last one to close it's the first one to reopen often they stay up and rubbing

through these hurricanes not this one in fact, this is a telling sign for this particular area because it's all boarded up and locked up, we just saw a disappointed customer come up, try the door handle, turn around and leave with an empty belly. here's what they tweeted out the command center they come up with what they call the waffle house index hey, green, waffle house is up and running. yellow, waffle house is serving a limited menu, they say it may be operating on food supplies or electrical, generator. red, as you can see, the waffle house is closed. this, guys, this index is something that even fema monitors when doing disaster recovery they think it's a great indicator of how the business community is doing after a storm goes through there are six other waffle houses within a ten-mile radius. i passed several of them last night. they were open

packed parking lots because the options at this point are extremely limited, as you might imagine. joe. >> you're right, fema actually uses the waffle house index as an informal metric to gauge exactly what's happening which is -- i mean, it almost sounds like you're, you know, pulling someone's leg. but it is that accurate. they will be open tomorrow yeah >> i was just wondering, this storm has been so well telegraphed. we've been watching it closely there's been concern about the wind, the storm surge and rain and what it's going to mean. are businesses acting differently? i heard another report yesterday about a home depot closed at 10:00 a.m. and people boarding up but home depot wanted to let their employees go home and take care of their own issues are businesses reacting. >> reporter: yes, they are ace hardware in the area as we

were driving in, boarded up tight. here's the problem they're telling people to evacuate, right, and get ready for a monster storm of the lifetime if people aren't already ready, there's no way to get ready. >> it's too late >> reporter: many, many gas stations are closed. we found one grocery store that was open, the publix it closes down today at 2:00 flights are cancelled. there are a few flights that have left from the airport there are a few visitors at the hotel whose flights are cancelled. what are you going to do try to get a rental car at this late date? everything is locked up tight. >> what does that mean for people who haven't left yet, or you in the area trying to cover things if you don't have an open gas station, that's a fairly concerning situation >> reporter: well, look, we're very experienced my crew and i have been through this before. you go in knowing you're not going to have access to supplies

and knowing how long that's going to be. for a lot of family, the first time riding this out they don't know things like fill up your bathtub with water so you can flush your toilets if the water and power go out it's things like that. i was speaking to a state trooper last night, the problem is, we have to stay safe, too. we have to consider our own personal safety. so when people don't leave and businesses decide to stay up and running and find themselves in trouble, we can't get out to do anything about it, because it's not safe for us, either. they're concerned about the downgrade or severity of the storm, saying it's a cat 2, people saying oh, well, i shouldn't have left and come back they'll be able to do that, because the highway reversal, to evacuate so easily, they're worried that people are going to come back in because of the downgraded cat 2 >> contessa brewer, thank you. when we come back, folks, a

crackdown on e-cigarettes. the fda issuing a stern warning to companies which have products falling into the wrong wrongs. fda commissioner scott gottlieb joins us futures in the green dow futures up by 54ois. pnt s&p by 4 nasdaq up by 20. "squawk box" will be right back. so they say that some day ai will transform the human race. well, today you're a little busy transforming your call center. dealing with millions of customers a year, like this one. no, i'm pretty sure i didn't order a squirrel playing a guitar. that's why you work with watson. it works with your systems to resolve calls faster and improve customer satisfaction. i detected fraud and helped reassign a new credit card. honey, they're overnighting us a new card. woooo!!! woooo!!! for ai that works with tools you already use, choose watson. hello! the best ai for the job.

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welcome back the food and drug administration threatening to pull egr-cigarete off the shelf. joining us is fda commissioner dr. scott gottlieb with more on why the agency decided to do this dr. gottlieb, thank you for being here today >> thank you >> you've talked in the past about some of the teen epidemic problems that come to this what is the situation and what do you describe as an epidemic >> well, we have access to early data that we're going to make public very soon that shows us the proportion of high school students using e-cigarettes is nothing short of an epidemic in my view. and it requires steps to take

dramatic action to curtail this. and we've seen e-cigarette adult smokers trying to migrate off the products who presumably don't have all the rinks associated with combustion, but don't come with the expense of putting a whole generation of kids hooked on nicotine and tobacco products unfortunately to narrow that for kids we're going to have to remove that for adults the key is removing the flavors from the product >> that makes sense. it never made sense the argument that adults who are trying to quit smoking would suddenly turn to vaping with flavors like mango or pineapple that seems like it's entirely designed to lure in new smokers and new customers. >> it may be the case that it does help get some adults with flavors. but what we're going to say to the companies, those flavors are on the market but for an active

enforcement discretion by the fda. we're allowing that without seeking approval to have those flavors on the market what we're contemplating doing and giving the manufacturers sometime to come back to us, but what we're working on now is a plan that would require the companies to file applications with the fda demonstrating that the flavored products have a net public benefit. that they're going to entice more adult smokers to quit the combustibles, versus enticing more young kids on to the nicotine products. >> that's a pretty heavy cudgel. what would you expect to see over the response? by the way, it's not just the manufacturers you've reached out to you've also put retailers on notice selling these >> that's right. we were sending warning letters to 1100 retailers and civil penalties to retailers selling illegally to minors. look, i'm keeping an open mind seeing what the manufacturers are going to do. a lot of this is driven by one

manufacturer in particular, juul i think we need to notice that there are purchases online where 18-year-olds are buying products and reselling them to 16 year olds there are steps to do to shut down their online site i'm not sure they're willing to do that. but we are willing to step in and remove the flavors from the market we think it's one element making it appealing to the truth. certainly not the only element but they are an element and a step >> wait a second, if you said they could no longer sell them, does that mean you could shut down their online websites, too? are do you no longer have authority to do that if the website is based in london >> i don't want to comment on what the full scope would be but in terms of marketing them online, that would be a challenge to say they can't sell them online without additional authority from congress. but in a retail setting, selling them in in a retail setting

there's more ability to control sales to minors if you're looking into the retail chain versus what's happening online they do have age restrictions purchasing online. they do verify online. we think there's a lot of straw purchases. we are actually looking at that. we sent letters yesterday, investigating the online route to see how people might be penetrating that and reselling products to kids and how many products are getting into the hands of kids eye rate of growth based on the data i have right now showing a significant proportion of teenagers and kids now eulogy these products >> i'm reading an about instruct, scott, of adverse long-term effects of nicotine. it points out, yes, it's a better replacement for tar and nicotine in cigarettes but this is no bargain it may not be a carcinogen

there are so many other effects. cardiovascular decreased immune response. and it looks like it could cause tumor proliferation and metastases nicotine, just to have a delivery system for people who around addicted to it, with long-term -- you might as well -- i think people deserve their rights i can't believe i'm saying it, but to get a whole generation hooked on this makes no sense at all after we're trying to get everyone off of cigarettes >> that's right. nicotine is isn't an entirely benign substance and vaping isn't completely denied either. we leaf it's less ricky than smoking tobacco but it's not risk-free. there are probably long-term consequences of using vaping products that we don't understand and such a high percentage of kids are now using these

and some proportion are going to become adithted to nicotine. we're training a whole new generation of addicted young people some proportion of which are going tond up being long-term smokers of combustible products that's simply not tolerable. look there's going to be youth experiment aches with these products, we understand that i know there are a lot of adults who vape, who are critical of the steps the agency is forced to take here but i don't think anyone wants to see fully a quarter or a third of american children addicted to the vaping products >> commissioner, i apologize if this is an ignorant question, but this is happening at the same time that we're legalizing marijuana in so many different states across the country. how do you think about those -- how do you think about this happening, effectively, at the same time? >> well, look, we haven't been proponents of the marijuana. the fda people come in and demonstrate as something to be used through scientific data

and nobody has demonstrated with botanicals of marijuana, but repeated use inhalation of any combustible products is going to have long-term health consequences, set ago side the consequences of the active ingredients itself and just the direct inhalation of the product itself is going to have consequences and as you said, this is now becoming legalized and more recreational, people are doing it on a routine basis. in the same way that vaping products aren't completely benign if you're a long-term vapor, there are going to be long-term risks associated with inhallics of those chemicals >> what does the response, if any that you've heard from either the retailers or manufacturers? >> well, we haven't heard direct response yet there's been some commentary and some reporting from lawyers around town that i'm sure is coming off of some of the companies. the message that we wanted to deliver yesterday and i would

deliver right now, we're dead serious. this has reached a proportion where we have to take action i have strong support of the secretary of health and human services who has been a strong advocate of the steps we've taken. i have strong support from the administration for what we need to do to try to cut down on the youth use of these products. nobody wants to see children using nicotine products. nobody wants to see the percentage of increase rising at astronomical levels. the proportion of teenagers using these products isn't tolerable. i would say to the companies, i invited them in, i signed the letter, i'm going to meet with all of them. we're ready to take action here. >> 60 days and this stuff could get yanked from the shelves is your point >> 60 days, or we would announce the process to remove the flavored product from the market, pending their ability to file applications with the agency which is their legal obligation they're on the market right now,

but for an active enforcement direction by the fda, we could change that policy >> scott, back to andrew's question with the marijuana question, people are using vaping to smoke pot, too, right? is that better than smoking pot? does the tar and some of the carcinogens in smoking marijuana, if you vape it, is that preferable to, you know, smoking it physically with like rolled up in a paper, you know >> well, look, i've always said the lung isn't a very efficient drug delivery vehicle. so what's preferable is not inhaling any pharmaceutical ingredient and getting into your bloodstream through the lung >> but vape and marijuana don't actually converge because people are using vaping to smoke pot. >> yes, it brings up an interesting answcillary point, e

open tank systems, the vaping products sold in stores where people pour the liquid in, those products tend to be used by adults we see more adult smokers transitioning to those products. it's especially juul, juul is a high proportion of the market for these products generally and by the product being used by kids so this is largely a juul phenomenon but the other products are being used as well that's what we're focusing on. we might be able to focus on open closed closed cartilage system we don't want to disadvantage adult smokers who are transitioning to these products. but that said, we're not going to allow the continued abuse, by the kids, at the proportion that we're seeing, it's just not tolerable. >> scott, i'm with you as a mother with kids, i don't want them to be marketed to with these products i don't want them using these products but in the intro, we saw the

stock chart of tobacco stock rising on this news. the idea that, hey, maybe we can continue to keep people smoking. >> well, you know, i used to dabble in the markets before i came into this current position, as you know. i saw the reaction yesterday, obviously. i'm not sure i would draw that conclusion i think the markets were probably reacting to the fact that juul has been dominating this category. so, it might create an opportunity, more of a level playing field if we take the flavors out. i don't think it's a reaction to now, well, more people are going to go back to smoking combustible products at least i hope not. clearly that's not what will we intend the react is if you look at the date of people using e-cigarettes, they're not people migrating off of combustible tobacco on to e-cigarettes they're people initiatesing on e-cigarettes that's true for adults and kids. you can argue that the kids on e-cigarettes never used a

combustible tobacco product but they tried an e-cigarette, that's a fair argument but the vast majority on e-cigarettes or cartridge based systems, this is around the juul because there are surveys around who the juul users are >> obviously, you've done your homework on this we look forward to hearing what happens out of this. scott, we appreciate your time >> thanks a lot. >> fda commissioner dr. scott gottlieb >> before we go to break, i don't know if you saw president trump tweeting just now about jamie dimon's comments yesterday. jamie dimon say he could take on trump in five minutes. >> donald trump literally tweeting the problem with banker jamie dimon running for president is he doesn't have the aptitude or smarts as a public

speaker or nervousness, otherwise he's a and by the way the way, this wealthy new yorker actually earned his money it wasn't a gift from daddy. >> about an hour later he said -- >> -- i wish i wouldn't have said that. so the war of words begins >> admittedly, i know how much trump's father gave him. and he obviously has a multiple of that, but dimon is just a ceo. i mean he didn't found jpmorgan. so, usually, when you think of somebody who founded -- >> with president, he didn't build that >> yes, i am he becomes a billionaire from running a company. that i really didn't think was a great -- jamie is very outspoken, as you know, as well as anyone and all of us know >> he is >> off the record and on the

record anyway, coming up, the latest on hurricane florence >> the operation of business, hundreds of thousands of people, off the bank through the financial crisis and did better than any other financial institution in the world >> you argue as much as anyone that ceos aren't the same as business founders. >> yes, that's true. he's a manager he's a manager >> he has thousands of employees. well trump now has like 300 million people that he's in charge of. anyway -- >> okay, they're both managers florence is at the carolina coast, brace for impact. we'll speak to generation x ceo about the generated demand and the impact of storms such as this "squawk box." time now for today's aflac trivia question? what was the first pickup truck? the answer when cnbc's "squawk box" continues

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aflac trivia question. what was the first pickup truck? the answer -- the ford model t rodster with pickup body good morning again, everybody. welcome back to "squawk box" here on cnbc we are live from the nasdaq market site in times square. among the stories front and center this morning we are just an hour away from two key economic reports august report is expected a rise of .1% we'll also be getting the labor department's weekly read on initial jobless claims walmart will begin selling nike products beginning next month. jet which wall mark acquired two years ago is trying to attract more affluent consumers, mark lurie who founded jet will be a guest on "power lunch" today at 1:00 p.m. eastern time

and the bank of england has left key interest rates unchanged in its policy rating this morning in a statement the bank did discuss the brexit crisis. >> here we go. >> turkey's central bank hiked its benchmark interest by 625 basis points bringing it to 24%. the bank is has now increased the rate by 11.75 percentage points since last april. >> whoa, that's a hike >> when is the last time you heard of 6.25 immediately? >> that's a hike powell better not try that >> no, i don't think it will happen here. we want to bring in michael brown now, unless we're going to get to contessa first? we want to bring in michael brown. we were hoping to talk to him earlier. we're glad to get him now, former fema director and former director of homeland security. to talk about the preparations

made ahead of florence and really how people there should be thinking about it. but i'm curious about the idea that we now have had a number of situations where, you know, policymakers and the government comes out, says, a terrible storm is coming. everybody, or some people leave. some people don't, because they don't believe it's going to be as bad and later, it turns out not to be as bad. and what that does to the psychology the next time. >> it drives me nuts i said yesterday on an interview that i'm so tired of the hyperbole from the media, that this is the storm of the century. this is the most massive thing we've ever seen. in fact, i think even a fema individual called it -- it's going to be a mike tyson punch it's like, let's get real, folks this is a hurricane. hurricanes are serious but why don't you just talk about the facts. let's talk about the pressure. let's talk about the winds

let's talk about the direction and let's forget all of the analogies. just tell the american people the real story about what the hurricane's doing. because we make up this morning, and we find that the eye wall is beginning to collapse a little bit. so, now, i'm going to hear all over the country, oh, look, the predictions weren't nearly as bad as everybody said. but that ignores the fact that the storm's now going to move onshore to the carolinas, you know, as a category 2 which is still serious. but the more serious problem is going to be it will turn into a tropical depression, or tropical storm. it will dump copious amounts of water on is already saturated land so instead of hurricane winds to worry about, you're going to have to worry about flash flooding which in my opinion can be more destructive than a hurricane. >> so, when you talk about how to communicate the risks associated with a hurricane, to some degree, and i don't mean to

support the idea of the hyperbole where the different anecdotes or metaphors are used. but you do have the need to communicate to the public which don't understand the particulars surrounding how a hurricane manifests itself so isn't that a more powerful way to communicate >> no i would disagree and say, here's what i would do instead i'd say the hurricane now packing winds -- we're talking in the past tense now -- that the hurricane is packing winds of 155 miles an hour here's what winds of 155 miles an hour can do you may think that putting plywood on the windows of your store front is going to protect your store or your home but a 155-mile-per-hour straight wind is actually just going to flatten that home or flatten that store front and then you talk about the power of water i don't think people comprehend how powerful water is.

and if you have a storm surge that sm 9 to 13 feet high, i would describe it this way stand in your living room and then imagine a wall of water that's 9 or 13 feet high is going to destroy your living room but it in terms that people can understand what's a mike tyson punch? i just don't think people relate to that, as they would, standing in your living room and imagining 9 to 13 feet of water. >> in terms of your business always trying to think about the cost of these storms not just in human terms which, of course, is most important, but also in financial terms, what kind of number can you put on this >> well, you can't yet but i can tell you this, you're going to lose infrastructure the power grid is going to go down in that area. you'll have highways, roads, all of those things out. then you think about the number of businesses that will probably probably weeks, sometimes

months, to recover so the financial loss, the economic loss that you're going to see is going to be tremendous and it will ripple through now, of course, we can talk about the broken windows theory. you'll have all of that repair work that comes in that will be an economic turnover those dollars will turn over but those dollars could have been better spent expanding a business, as opposed to rebidding a business >> michael, i appreciate it. of course, the former director of fema. we appreciate it thank you so much. >> you bet when we come back, a lot more on "sidewalk" where banks and financials stand incoming capital and ceo and former morgan stanley wealth managing president greg fleming is going to join us right after the breaker. in the 8:00, former treasury secretary jack lew is going to be our guest "squawk box" returns in a moment (guard) i've seen things i shouldn't have.

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welcome back to "squawk box. with some insight now on the current state of financial institutions, let's talkto a man who used to be a wall street insider. who wrote this i think he still claims some inside status. greg fleming, president and ceo of rockefeller capital management and also the former

president of morgan stanley wealth management and also at merrill lynch. you were -- used to be who's writing this who knows, i just read it. anyway, you were really in the trenches you basically said that you have to talk stan into -- i mean, we need to worry about what's happening here you were, as much as anybody, ten years ago of what was happening. >> we had it early so, we were dealing with writing down assets and raising capital in the fall of '07 so, we had almost the full year of trying to get the balance sheet under control. and actually in july of '08, before the whole september time, we had sold the 20% of michael bloomberg's business that we still own, back to the mayor we had raised more capital we had written off more assets and we actually in the august holiday started to feel like maybe we were in a better spot and going to get through this. and then we come back after

labor day, you have the fannie and fredzdy mac situation. you have paulson saying we're not going to bail out any more financial institutions and you have leman's earnings, i remember the date. five days before we sold merrill lynch. i'm a treadmill about to give a speech at miller lyncerrill lynh and i'm watching this show, and you are talking about leman's reaction and it's my reaction, it's not enough. i'm thinking the pressure is going to stay on these guys. the way it was set up, firms were hunted one at a time, bea l merrill lynch was first. >> and then what is fleming doing?

and the reality is -- >> in hindsight, i know. believe me, i know >> when you woke up on monday morning and saw what happened after filed, credit markets just froze. we would have had quite a painful monday when i flew back from dallas, we actually had blackrock's site, it was clear from all of the brightest in finance that this weekend was going to be the weekend, where it all started to come to pass so i was desperately trying to get ken lewis and greg curl who was the pr guy and glenn hurley, the senior parter, get them to engage with us because there was one firm that was capable of buying a big investment bank over a weekend and it was bank america. i had been a financial services banker for a long time there was nobody behind bank of america for anybody. bank of america buy s lehman, we

wake up and there's one seat at the table. >> a lot of people -- they woke up that morning -- rememberer the market didn't tumble immediately. it's actually very interesting people thought that the sale of merrill lynch to bank of america, that the dominos were going to hold everybody up and it didn't. >> and it didn't credit markets looks at the model and said the wholesale funding of banks is over you were getting your credit lines pulled recalled, long-term debt all of the investment in retail banks overnight was gone and then a firm could go bankrupt, we could not get our money back when you you look at tuesday, one of the thing paulson said,

tuesday is the day they were worried about the stress >> if you weren't there, if it was up to stan, what would have happened >> well, it was -- >> stan had already -- >> it's hard to see if you take pieces out what happens. but i was convinced that -- and this comes with doing deals done through the years. a weekend is important if you don't use the weekend and you wake up monday morning, you now have five days to get through the market you can't negotiate a deal on a monday night so, i was convince wed h had too it that weekend. >> do you think the system is safer today? >> yes >> you do. would you change the system in any way? >> i think the pulling back on some of the regulation in recent years is necessary because it's swung as it always does, probably farther than it needed to although we needed deregulation

after the crisis one, you had to tell the public you're stepping sand you're going to regulate more tightly because of what occurred and secondly, because there was too much looseness in the system and then it went pretty far out of the curve so pulling back on the regulation makes some sense. but from an overall standpoint, capital levels, liquidity levels, the memory of people still in the business. you all are talking about some of the leaders before. a lot of people were still around you know when people ask me about the next crisis, it's really around people forgetting what happens when cycles keep going. >> and it's also in unregulated areas. or areas that have escaped some of the hardest regulations where are those areas? >> you know, one of the areas now, and i never want to say what happened in the credit crisis was the first time you had something like that really since the great depression so when i talk about risks in the system, that doesn't mean we're going to another credit crisis, because of the size of

the debt that had been built up in this country from the reagan years all the way through 2007 is part of the reason why the credit crisis was so impactful to the whole country but we do have risks in the system even though we're not at risk for something is that big we have corporate debt at two times more the levels than it was. much less triple d rated or less and capital banks are holding less inventory against corporate debt you have the increase in coveted life loans and a lot of deals happening in private equity space, they're pushing the envelope again, which is always happens later on in the cycle. so, you know, you build up things over time when a cycle goes in one direction, and we're doing that again >> how is rockrockefeller doing? >> one of the lessons is in advice i just hired my first team

>> how much is rockefeller >> rockefeller is a significant piece of the firm we bought. the firm we bought had $20 billion in assets. now, they're a material client to that firm and to us they're also on our board. they're shareholders in the new firm so the rockefellers are pretty much front and center with what we're trying to get going. >> so, i know, gets you away from being a scholar at yale would take a lot it took a rockefeller to get -- like pacino, they pulled you back in. >> pulled me back in >> you're in the ivy league with your daughter? >> that's right, that's right. >> yale was a great place, too you didn't really step up for me there. kidding. our thanks to greg fleming of rockefeller capital. coming up, when we ruretn, stocks on the move this morning, ahead of the opening bell.

"squawk" returns

welcome back, everybody. demand for generators is one thing that can ramp up as a big storm like hurricane florence approaches the united states manufacturers work to get products into the area before weather actually hits.

but they also have to navigate what could be tough conditions after the fact hurricane florence is expected to make landfall tonight and with it 3 to 4 feet of rainfall storm surge of 15 feet and joining me the chairman and ceo the company that makes portable generators aaron, thank you for joining us. what have you seen so far this time around? >> well, obviously, we've been very busy, becky it became clear where the track of the storm was going to go we began working with our channel partners, home depot and lowe's getting enough product ahead of the storm that starts to be logistically challenging. the closer you get, they start reversing the highways in the last 48 hours it's been a mad scramble to get as much

product as we possibly can >> this hurricane is different than in the past in terms of how many people are told to evacuate when somebody is told to evacuate, they're not looking for generators with quite the same intensity maybe it's something they're looking for after the fact is that something that you've seen >> certainly, in evacuation zones, i think it's 150 people 150 million people are told to leave. a lot of people are sheltering in place if they're not in an evacuation zone they're definitely in the market for that type of product. this can be an event that's very skenlded a number of days we've seen a lot of rainfall really ahead of this storm you know, it's been a very wet summer, so when you get those conditions, especially in the carolinas, virginia, and you get a little wind speed. we don't have to have 150-mile-per-hour winds you could literally have 60 or 70-mile-per-hour wins and trees topple into power lines.

we think this is going to be that kind of event >> you did get a taste of this with most of florida being evacuated. what did you learn from that situation that might be applied this time around? yeah, florida, that was irma last year, and it had been ten years since there was a storm down there there had been a lot of people down there that hadn't been through that type of event it was a learning experience for people who live there. as well as the retailers and manufacturers like ourselves who hadn't gone through that in a while. i think the big takeaway, obviously, was to get more product ahead of the seasons the season typically starts in the june time frame. june/july, you get a lot of storms starting to build in that part of the country. you really want to have product ahead of the storm we're trying to push trucks into the region during events like this is a lot more difficult having that product until warehouses, distribution centers and retailer's hands ahead of the product is really important. >> aaron, we know it's an incredibly busy time

we wish you the best of luck aaron jagfeld from generec coming up, former treasury secretary jack lew on wall street and where the country stands ten years later back in a moment (vo) ovewhelming air fresheners can send you running. so try febreze one.

with no aerosols and no heavy perfumes. so you can spray and stay. febreze one. ...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 all working together for you. can i borrow the car when it's back? get ready, because we're helping leading companies lead with digital.

this is moving day with the best hin-home wifi experiences and millions of wifi hotspots to help you stay connected. and this is moving day with reliable service appointments in a two-hour window so you're up and running in no time. show me decorating shows. 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. still to come this morning, former treasury secretary jack lew talks about the economic impact of the 2009 financial crisis that interview coming up right after the break. and later, take two, interactsive chairman and ceo

straus zelnick will join us to talk about the future of video games. the future of video and his new role on the cbs board of directors. "squawk bosw"squawk box" will b.

breaking news, tracking

hurricane florence, forecasters warning of life-threatening conditions and historic storm surges back from the brink. ten years after the financial crisis, we're going to talk risks and regulations then and now. newsmakers this hour include former treasury secretary jack lew and former congressman barney frank game on, take 2 enter active ceo joins us and stocks nearly a 52-week high the final hour of "squawk box" begins right now >> announcer: live from the most powerful city in the world, new york this is "squawk box. good morning, welcome back to "squawk box" here on cnbc live from the nasdaq market site in times square. i'm joe kernin along with becky quick and andrew ross sorkin futures now are better all of a sudden

75 up 17 i saw earlier. upticking. unique components. kroger is down we're going to talk to the cfo about that >> i saw apple was higher earlier today. >> with the components of the new phone. >> yesterday it was down >> you might buy it? >> i'm going to get the phone. >> which one >> bigger one. >> i had the big one before the x came out and then x came out and they didn't make one that was bigger. >> what about the watch? >> i'm probably going to hold on to this current watch and wait for what the next iteration of the watch is >> i'm bittersweet about you wearing the watch. i loved the other watch you that saved up for where is that? >> sitting in a closet >> is it, honestly >> it is it's a mariner >> can i tell you, it's very -- it's ugly. what does it do. >> first of all, it's not ugly it's an apple watch. you can go to the gym, it tells

you -- it's very utilitarian, that's what it is. it gives me my heart rate. my sleep >> you can't relax i'm not positive on this, andrew anyway, is your other one for sale >> to you, at a premium, yeah. >> yeah. let's take a look at the ten-year, which we're watching could be worse we could be living in turkey where they raised interest rates 6 points at a time to like 24% or something >> yes, right. >> anyway, that's not likely to happen here. unless the dow flattens, change. >> i don't think it will change. 2.979%, inching closer to to that 3% range. the bank of england keeping its benchmark unchanged at 0.75%. policymakers say the uk economy is broadly on track but they

caution brexit could still impact the futures the european central bank also announcing a decision, also leaving rates unchanged. in its statement the ecb says it expects rates to remain at its present levels at least until 2019 and then there's turkey which did not leave its rates unchanged. turkey's central bank hiked its interest by 625 basis points that brings interest rates to 24%. the bank has now increased that rate by 11.25 since late april the turkish lira jumping after that rate decision yeah, you talk about decisions that's going to create problems. kroger earnings beating the street the adjusts net was three centers above. revenue or comparable store sales were slightly short of investments. 1.6 versus 1.8 the supermarket chain is

maintaining its full year adjusted profit forecast and they're back to 2 to 2.5 for the forecast for same-store sales. so 1/6, i guess that's what it is it's almost down -- well, down over 8%. the company's cfo will join us in about 15 minutes to talk about that and, you know, we talk about long termism, short termism, going six months we're talking .2% that causes an 8% drop. he may have good reason for that happening. 2 to 2.5 is what the company is looking for previously for all of 2018. hit it this quarter. tailor brands matching wall street ims with recent earnings. revenue, although, a little shy. this is the parent of menswe menswearhouse and it's rising

more than twice the consensus. it's the opposite of kroger. up 8% on a better same-store number the next guest was an adviser of president obama during the financial crisis and then, of course, treasury secretary. jack lew is here also served as white house chief of staff and omb director. thank you for being here, as we try to assess where we are ten years later. i want to read you something from today's "the new york times" which i think is pretty interesting about the questions about whether the policy response to the crisis worked or not. data from the federal reserve shows over the past decade and a half the proportion of family income from wages has dropped from nearly 70% to just under 61%. it's an extraordinary shift, driven largely by the investments profits of the very wealthy. in short, the people who have possessed tradeable assets especially stocks that americans are depending on savings from

their wealthy paychecks have yet to see when you think about the recovery, it looks from a headline, tom line perspective quite tremendous, right? 3.9% unemployment. but people talk about how uneven it has been. what do you make of those numbers? >> look, there is clearly a problem in the country in terms of income equality it predated the financial crisis it was made more extreme during the financial crisis i think if you look at the impact on families, the recovery, you can't just look at wages. wages are important. you have to look at jobs having a job versus having no job is an enormous difference in your standard of living. and we created over 10 million jobs in the recovery and i think the tightenneness o wages, wages have kind of stuck and not going up has overshadowed the enormous impact of having a job which was not a foregone conclusion.

we created more jobs than the rest of the developed world. we recovered faster than europe. faster than asia >> why are incomes stagnant? there are things going on, it's not all the financial crisis we have an increasing amount of the economy being automated. >> right >> so, you don't have as many people in the production process as you used to you've had a lot of slack in labor markets. so, employers have not been passing on the gains that they've been getting frankly, i think we'd be in better shape if there was a bit more of impulse to increase wages. >> does that mean that people haven't felt it or they just don't understand it. the policymakers save the financial system and america never forgave them >> yeah, look, i think that's unfortunately true the alternative would not have been a good story if we had allowed the financial system to completely collapse so it could

be resolved. we wouldn't see the tens of millions people who are working today and we'd be in a much different place. that is not satisfying to a family that says how come we still have a tax code that supports a winner takes all economy. we had an outcome in election that only deepened that trend. it didn't fix that trend we saw tax cuts at the top we've seen a reduction on taxes on inherited wealth. so, we haven't fixed the problem. i think dysfunction in government, as much as the financial crisis, is the reason to blame you look at what the answers are. we all know the answers. we could raise the minimum wage and that would help a lot because you push up wages at the bottom and it provides relief. the, you know, investment in infrastructure translates into good high-paying jobs and fixes roads and bridges that are broken but we can't get any consensus to do those things

the financial crisis didn't create that problem directly it has reversed because we've ended up in a very polarized political space and it took a system that wasn't working and made it even worse >> you don't describe the income inequality, with zero, people that owned assets, obviously, did well as the stock market went up and home prices were down so, the high-end, naturally, as you stated, zero, so -- the fed is trying to engender the wealth effect for the economy to recover. but as one of the side effects of that, the rich got richer and maybe some pro-growth policies that you seem to think are not pro growth even though we're seeing growth. maybe that would have helped and they could have come off of zero and not been there for eight years. >> but, joe, i actually agree if we had used more fiscal policy for longer, it would have taken some of the pressure off the feds >> off the feds. >> to stay at zero for so long

but that gets back to the political disfunction. >> but is the fed supposed to be looking at kind of holding up the world? i thought there were two mandates and some people argue that's too many. you look at employment and you look at inflation, neither one of those is a reason >> you have to distinguish the years of the crisis and immediately after versus now for a very long time, i had these conversations with two chairs of the fed, they didn't see fiscal policy playing its part and they had to do a little more on the monetary policy side so the overall response would keep the economy growing. >> but that is definitely not in either one of the mandates for the fed? >> well, it is, because if your goal is to keep unemployment down because the zero interest rate, a jump start in the economy, it hasn't delayed >> but the contains seeian fiscal policy that you're advocating and then there's the paulson fiscal policy which is

why they didn't want to do what obama wanted to do he wanted to raise taxes even more than that it wasn't cutting corporate taxes or a supply side remedy, so, of course, republicans weren't going to go along with that that's just the nature just like the democrats are going along with anything now. >> truth is within the recovery there were tax cuts of $800 billion. >> but corporate proposal was down to 28%. >> but when we did a second round of stimulus it was reducing the payroll tax which was reducing taxes directly. >> right >> i think we could have done more of that if there would have been more political space. >> you didn't push that hard for corporate tax cuts? >> that's actually not true. we pushed very hard. >> but you could be deficit neutral. >> fact of the matter is we wouldn't be looking -- >> by the way, talking about deficit neutral, on the other

end, the conservatives wanted everything to be definicit neutral. >> we could have created 28% -- 28 or 25 would have been fine. >> well, we'll see, because you we got a 4. 2 under our belt we had -- what was it 2, plus 4.2, anything close to 3 is going to be, the first year of 1% in -- 3% growth in the last ten years. >> well, we'll see where the future numbers go. >> time's running out to say he hasn't done it yet >> no, we had some good quarters we'll see where it goes over time i think a lot of the policies in place are short-sighted. it's throwing stimulus into an economy that is doesn't need it. >> and sooner or later, a year will pass and see if we do sooner or later, 2019 and 2020

will come around and we'll see >> i'm not predicting that it will predict long-term growth. >> well, we don't notknow yet >> spending is still to come with a trillion dollars. >> we've taken in 1% less as for the 11 months of the fiscal year, in august. 1% less. >> we're spending more but bringing in less >> corporate numbers are down 30%. >> well, corporate is how much -- >> only 10% of the total when you mix the corporate in eye were the personal. >> we're down 1% >> we're down 1% >> the numbers are not ambigu s ambiguous, you cut taxes, you raise revenue. that is true all along we've never seen that bump that we hope for that people say it's going to pay for itself. it didn't this time and it doesn't last time. >> we're going to probably go at 3% and we're starting to see wage

gain it's hard to look at the economy we're in right now and not say good things are happening. >> we are seeing wages gaining, and that's a good thing. but we're seeing also policies that contribute to pressures -- well, no, i don't think it's good the trade policy is inflationary prices are going up. we're seeing that. factors of production. >> we're 2.9% on the ten-year. inflation is a problem down the road but right at this point it would be nice to engender some growth. if we have to deal with inflation down the road, we will >> i have empathy for the fed it's a very difficult path to manage the policy it's from the last ten years but it's an environment that makes it even more difficult because you're going to be seeing deficits and trade policies that make inflationary signals seem more pronounced and they may not be core and lasting. and they're trying to thread that needle. how do they get interest rates to the right point without

stopping interest rates prematurely. usually, it's the cause of the downturn >> i think we have some time before that. but you never know, because it doesn't have to be the absolute level. it can be the change in the level of interest rates. >> well, the economy is -- i'm proud of the economy we left i'm proud of where it's going. we're in the tenth year of growth not the second year of growth. i think you come out of the financial crisis you look at the u.s. economy's response, it's better than any developed economy in the world because we responded effectively. so, i think there is a lot to be proud of i have my questions about the current policies that's not news to anyone here and we'll see where it goes. >> jack lew, former treasury secretary. always great to see you. >> pleasure. when we come back, kroger shares getting hit hard this morning after the supermarket is saying same-store sales falling short of expectation

that stock is off by 10% we're going to talk to the company's cfo next stay tuned you are watching "squawk box" right here on cnbc this is a tomato you can track from farm, to pot, to jar, to table. and serve with confidence that it's safe. this is a diamond you can follow from mine to finger, and trust it never fell into the wrong hands. ♪ ♪ this is a shipment transferred two hundred times, transparently tracked from port to port. this is the ibm blockchain, built for smarter business. built to run on the ibm cloud.

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turn your wish list into a checklist. learn more. do more. share more. at home, with internet essentials. this is moving day with the best in-home wifi experience and millions of wifi hotspots to help you stay connected. and this is moving day with reliable service appointments in a two-hour window so you're up and running in no time. show me decorating shows. 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. our top story today, hurricane

florence now a category 2 storm but still very dangerous they already say that florence is packing tropical storm winds over 100, hundreds of miles of intense storm surge and flooding expected 10 million in the potential disaster zone. joe. kroger out with second quarter earning this morning the grocery chain beating estimates of three cents with a profit of 41%. a consensus assessment of 1.9. joining us now, kroger cfo mike schlottman mike, you're saying for 2018, 2 to 2.5% for same-store sales is that what your forecast was at the beginning of the year and at 1.6, is that a disappointment that explains why the stock is down 8% >> well, i guess, obviously, the street is looking at the 1.6 as a disappointment, relative to the 2%, 2.5% guidance.

that is exactly the same guidance we gave back in march we were at 1.8% in the first quarter which is the six-week quarter. 1.6% this quarter which is the 12-week quarter. we told wall street back in june when we announced first quarter earnings that this was a quarter where we had a lot of headwind, because we just made significant investment in the fourth quarter of the year that was going to be ahead of that quarter, with that cycle true and units and categories increased as well as a process, we're going through a remodel process with 600 stores this year. we expect the peak of that headwind that the stores are disrupted. naturally it lowers sales when there's construction in stores and both of this is going to dissipate to some extent from a space optimizization

standpoint, we announced restock of kroger last year. we're off to a great start two quarters into a three-year plan that's going to deliver $400 billion of operating increase $6.5 billion of free cash flow we're happy where the business sits today and we're poised to have a great second half >> so, is it -- did you raise prices to the point where the same-store sales -- what was it units that were down the reason i don't understand it, the consumer seemed so strong the times seem to be flush, a lot of retailers are doing well, because the consumers seem to be in such good shape what caused -- you're saying that the remodeling of 600 stores, that that disrupted people coming into the stores to the tune of missing it at 1.6

versus 1.9 >> well, the remodel certainly happens. we did not raise prices we actually lowered prices. >> you lowered prices. >> and that becomes a headwind >> so, if you raise it, they go somewhere else maybe, too? >> well, actually in the short run, when you raise prices, the customer doesn't notice necessarily in the short run and it would have the effect of increasing sales over the short run. but over the long run, that's not a good strategy to have. as i said, we're thrilled where we're poised to deliver an ib says in the back half of the year there's a lot work to be done. as i said a minute ago, we're laser focused on being able to deliver that >> mike, a friend of ours, jim macke tweeted out breaking news on kroger, it's still a grocery store. he said it tongue in cheek but are not sure to think of

traditional grocery stores when you have walmart and amazon and fresh direct that delivers directly to home what do you do about those issues particularly when you're in a low end business? >> well, we are still a grocery store. we feed between 9 1/2 to 10 million customers every day that come into our stores while we may about a grocery store, we're a grocery store with immense following of customers when you think of 10 million customers coming into your store each and every day, we have a loyal base of customers that visit us on a relative basis relative to joe's early comment on the economy and things like that we do sell food. food is typically not as prone to increase in sales when the economy's strong, people are spending it on nonfood items, primarily which some of you competitors you mentioned sell significantly more of that product than we do and we don't enjoy that tailwind

in this kind of environment. but our sales, we're happy with the unit growth. we're happy where the share is and the model house. it's all continuing to go. 20 of our operating divisions had identical food sales in the second quarter and only a handful had negative. and some of those were most disrupted by some of the activity i talked about so we feel great about where we're heading into the back half of the year >> okay, mike, mike schlottman cfo for kroger, thanks when we come back, barney frank, ten years after the crisis find out what he makes othf e banking system now stay tuned you are watching "squawk box" on cnbc

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good morning, everybody. welcome back to "squawk box" here on cnbc we are live from the nasdaq market site in times square. among the stories that are front and center this morning, target says it had liar 120,000 holiday workers this year. that's 20% more than a year ago. retailers in general have been upbeat about the holiday season

prospects. and earlier this week, fed dex said it expected record holiday season volume. macy's is hiring 80,000 temporary workers for the holidays, too. check out shares of caesars entertainment. actor investment h.g. warrick capital has built a 4.9% stake in the operator and is pressuring to either sell itself or put it up for sale. weight loss company jenny craig is a potential sale. since partners bought jenny craig from nestle back in 2013 >> the next guest is a namesake of the banking reform, p dodd-frank i want to welcome in barney frank that served during the

financial crisis thank you for being here >> good morning, everybody >> you're in the documentary from last night. and becky was saying as you were walking on the set, you have this great line that would have sucked -- it would have sucked more without me. >> quote right >> it was the basis for my campaign in 2010, but it's a hard sale. >> talk about the hard sale. what we were talking about earlier, even today, it say hard sale to tell the public that the policy response to the crisis was the right one. >> it's true part of it is, as a kid, it never occurred to us to look up the movie times. we would just go to the theater, there would be the movie and we would see the last half and sit through the first half that was the weekend and then we'd go out. when you walk in on the middle of a movie, it's hard to fully understand what's happening.

as far as the public is concerned, the attention came in the middle of the movie. there was very good reason for anger. but the anger was at the failures of policy that preceded the crisis once the crisis had started, we did the best we could. and that's been part of the debate, some of us would like to focus the argument on let's look at what we did and what happened that caused us to be in this situation. we had to make the difficult choice don't just focus on the difficult choice and the answer is, again, you don't get much credit for disaster averted in almost any business and we averted our worst disaster but people don't find that something positive >> barney, i always think of you as somebody sitting in congress, there's 535 members of congress. you're someone who always understood what was happening deeply with financial issues and were able to follow through with that i wonder what you think of

today, because of that populist anger, it's got people on the far left and far right very angry about situation, right now. when you hear some of the proposals put forth by people who i think have a less sound understanding of the financial system, what do you think? what worries you >> well, actually, i'm less troubled than our trio, ben bernanke, hank paulson and tim geithner it's geithner and paulson. jimmy durante was part of a trio i always think of paulson, bernanke and geithner with that. they just had a piece in "the washington post" where we curtails the bailout of the federal agencies and they thought there was a problem. at the end, i jokingly asked them how they were doing in lining up sponsors for their bill tole restore full bailout power to the agencies.

and hank said, yeah, when you're writing an op-ed, you don't have to worry about that. >> i remember -- got a million of them. but that's it. i don't remember the trio of -- >> i had to explain henny youngman to -- >> for my mantra, compared to what -- >> henny youngman -- >> take my wife, please. >> yeah, the other good thing about henny youngman which i drove into this conversation, how's your wife? compared to what >> can i get a table or can i get a waiter >> yeah. so there was this fear, i think it's overboned, but i'll give you one argument for my friends on the left. because i find that they don't fully follow through and that is, while we're still not too big to fail. and therefore, the answer is we have to reduce the size the banks. and i guess they'll have to get subpoena power to get any of the

people who advocate that to tell me what size is not too big. but that's the kind of instinctive, oh, it's just not working. the banks are still too big. well how big is too big? lehman brothers, $750 billion. >> if there was a crisis tomorrow given how contentious t.a.r.p. and the work you were doing then was, then what happens? >> i think the orderly liquidation authority which came out of the request from paulson and bernanke says that if an institution can't pay its debts, and it's big enough that would cause the knockdown effect, aig, lehman again, anybody else what else is the federal agencies step in and take it over begin the process of dissolving it and pay only as much of the debts as they have to with taxpayer money, but they get that back from the other

entities so, that's what's supposed to happen now, what people arguing that won't work say, i think they're totally wrong. that won't work, they say. if a major financial institution were in trouble there would be such political trouble not to put it out of business that this system wouldn't work my answer is, in reference to what you're saying i think they totally disagree with that the notion that the secretary of treasury would be under pressure to keep bank "x" in business actually won't work. >> i'm going to actually be interviewing elizabeth warren tonight. when you look at where you are and where the party may be how do you see it manifesting? >> the differences are much less -- look, differences get magnif magnified. you guys are in the business of magnifying we're in the business of magnifying you take for granted the areas

of agreement let's just look at the legislation that went through. it looked contentious, as a result of the bill that passed one that exempted the smaller banks and raises the f-stock level at 250 there is now a total consensus in the democratic party that there will be no further changes. by the way, i think that's what the democratic senate did, was in effect, pacify the small banks who are the only ones with real political clout in this situation. so, we now have the status quo i think you're going to have a unified democratic position going forward. thanks to donald trump, he's a great eununifier. and there will be stress or need to take this seriously the consumer bureau will be exhibit "a." >> we're going to take that segment out when you say that trump is a great unifier, we're going to using that totally out of context do you know any other henny --

that was a good one you did. >> yeah, there was one, i lost my wife in a wishing well. who knew that worked >> how about i went to see shootarou slin shrink, he said, doc, i think i'm a dog. he said, get down off the couch. >> that's where you are in the political situation. >> think about it, there's a lot you couldn't use of henny youngman there are. >> will history ever appreciate what you're talking about? do you think 50 years from now historians or the public will feel differently >> i think they will because i think it will work out look, i think it will already -- even i had people on the left who thought it went way -- it didn't go nearly far enough. but once donald trump became the bred and threatened what we had done, all of a sudden, their appreciation of what we had done spiraled upwards in other words, i said to someone, wait a minute, you said

what we did wasn't worth anything why are you so upset that he wants to undo it once there's a threat you get much more support. on the right, they have a problem. president trump wants to argue this is the best economy ever. god should have such an economy if he was lucky. well, how can you have a wonderful economy if we sneeverl damaged the fundamental mechanism of that economy? that doesn't work. if in fact we damaged the system to raise the money so productive sectors could go forward, then how could you have the best economy ever >> i'm looking at that guy for a response but he's not going to take the bait barney, thank you. great to see you whether we come back, take 2 interactive ceo strauss zelnick 'll lkoin us

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welcome back to "squawk box. several key economic reports out this hour. initial jobless claims fell by 1,000 last week. 204,000. the lowest total since 1969. temporary, though, don't worry consumer price, 0.2% lower

and without the food and energy component cpi was up 0.2%. futures right now have actually picked up a little bit of steam and now triple digits on the dow. i think it's that move in turkey, raising interest rates by 6 percentage points >> relative to what we have here, we realize it could be much morse video game maker take tw-two interactive releasing its earnings joining us strauss zelnick, he's ceo of take-two interactive. and he's also got a new title, you may have heard in the news, cbs board member thank you for being here let's start with the elephant in the room and that is cbs board. that is stepping into the lion's den right now.

how did they convince to you come there what do you think about what has to be done next? >> look, it's an extraordinary company. it's a legacy media asset, poised on the eve of re-creating itself as a company, that also leads into digital media space and those kind of transformations are not new to me so when i was asked to join the board, i have a lot of respect for shari redstone and dick parsons and other members of the board. it seemed like an interesting opportunity. i don't really serve -- i'm on two outside boards starwood property trust and now cbs >> confluence of video games and media seems be to be melding more and more. is that part of the reason you're being there >> maybe it's the reason that i'm interesting to shari and other board members that i built it based on the notion that

video is transforming the media business we've been soin it 17 years >> there's a front page story in "the new york times" by james stewart, really discussing how the board turned on moonves, after it appeared that he wasine women by giving her a job at the company. do you know anything about it? >> no, i'm new at the company. i'm a huge believer in compliance i've been running public companies since i was 29 and they've always been highly public companies the opportunity to take over take-two was in many ways driven by compliance. i think any great company has to do what it do and has to be highly comblient >> let's talk about take-two, if you look at the video game industry, the battle royale are the ones running thing

how do you think about it? is it a trend here to stay >> it's hard to determine. fortnight is a great title it's a massive business, 130 billion dollars plus worldwide business hits bring in consumers. we'd love to corner the market in hits. we've done a pretty good job no, we don't think the right way it to be deriveed from success the titles may be again in the future bought we are not trying to re-create someone's hit we have to make our own. thankfully, it's gone very well. we have another hit with nba 20. >> game streaming a new trend as well isn't st. right to call it a trend or just the way the world is heading? >> it's early. with technology, there's big

companies very well positioned to offer streaming in an effective way. google among them. google has massive hyper data cells around the world so they're well positioned to address technological issues microsoft, amazon as well. really a number of limited companies have the infrastructure to play in that world. for us, it will be great any opportunity to reach consumers is great for a company that makes great content >> tough question, zlz a lot of focus especially after this year, with the gun violence in parkland and the role of video games and what it does for culture. obviously, there are films and all sorts of things that kids see. how do you think about that? >> we're not just in the business of entertainment business we're in the business of creating art some art explores challenging themes and some of our art explores challenging themes our basketball title is meant for everyone a title like grand theft auto is

meant for 17 and above and we make that very plain. exploring gritty themes in art and entertainment is extraordinarily pourchl. we do make sure to market those to mature consumers, label them properly and stand behind that and not incidentally, there is zero connection between entertainment and behavior and that's been studied over and over again and even ruled upon by the supreme court. those things are unrelated >> let's talk about your book "becoming ageless" the subtitle is the four secrets to looking and feeling younger than ever. you are the case study in this situation. this is your own journey in how you came into this what made you start this journey and write this book? >> well, first, the title does not imply that we're going to live forever and that we're not going to age the idea of the book is that you

can be your best self at any age. my career started out quickly and i was told no, you're too young to do those things, as it turns out, i wasn't. very quickly i went from the young guy to being the old guy. between. now at the age of 61 i am often asked when are you going to slow down and the answer is you don't need to be limited by one of the very few things in your life you have no control over. how do you get there you have to be healthy. you have to see a doctor and do what a doctor says. >> did you see shatner on last week >> unbelievable. >> you don't dye your hair and i don't. how do we get credit for that? i get that color doesn't occur in nature. how do you do -- >> i have plenty of gray hair. you just have to get up close to see it. i disagree with you respectfully

on our genetic makeup. anybody can be your best health. even sophisticated people don't go to the doctor. you have to move. eating a reasonable diet and having some spiritual life. >> i want to know about the trick. i have known you for quite some time. he is one of the most disciplined eaters you will ever meet. >> you haven't stuck around for dessert. >> i know i struggle just with the idea of if i'm not thinking, every wone has seen me eat donu after donut. >> there are studies that say if you are watching television you are much more likely to eat. >> at 61 years old, how many workouts this week >> i workout about six days a

week. it is discipline for a while and then it turns into a joy. for me it is my -- >> it has not turned into my joy. >> my advice is start slowly, don't expect too much of yourself and find something you can enjoy. if it is taking a walk with your wife for a half an hour or yoga or high intense interval training. you have to start gently. >> you are the poster child for this. >> it is not retouched. >> it is not. 6t it is lit nicely. >>1 years old. >> the book is called "becoming ageless. 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.

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let's get to the new york stock exchange where jim cramer joins us now. i thought kroger was interesting. the consumer is pretty flush but then again for food it is kind of elastic. it may or may not -- grocers may or may not benefit from a strong economy. >> kroger's move from 22, 23 all the way to 33, it's natural it

gives them something. this is a stock where we wrote them off because of amazon. it turned out that they had a pulse. kroger is a good company. the stores are much more exciting. i would buy it and not sell it. i think they are very smart guys. >> we haven't talked at all really about the china news. i was wondering how to interpret that. i think we kind of went to them. it is better when we hear they are coming to us. does it matter >> you are totally right. by the way, secretary mnuchin, i love him. how many times has he been saying the war is over if novaro has nothing to say they don't. that's the way it works in this administration. >> we have to go.

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a final check on the markets right now. take a look and you will see

that the dow futures are indicated up by over 100 points. s&p futures up by 8.5. the markets have been streng strengthening through the morning. >> make sure you join us tomorrow. squawk on the street is next. ♪ good thursday morning. welcome to "squawk on the street." david faber is at day two of the conference in new york city. futures indicate a triple pop of the open. it does ease some fed jitters. plenty else to watch including china trade. we will