The s p up by 3 and nasdaq up by 15 this comes after all the markets looks looked very strong yesterday. The dow was up by 260 points s p was up by 26 it was a record close for the s p 500 and thats its first since august 7th the dow closed at a onemonth high take a look at whats been happening in europe this morning. The gains we saw yesterday as concerns about irma faded a bit and, again, some concerns about north korea not quite as potent as they had been as we headed into the weekend this morning, it looks like a bit of a mixed picture in europe most of the major bourses are higher with the dax up by. 5 and a similar gain in france the ftse is down by about. 2 . Lets flip the charts and see what happens overnight in asia youll see when it comes to asia, there were some closes actually, lets go excavate to the currency check it looks like the dollar is down a little bit against the euro today. Below 120 for the first time if in several days. 1. 196. Dollar is up against the yen, 109. 68 oil coming back a little bit weapon saw gains in crude oil prices yesterday after refineries in the gulf restarted things and you heard the saudis talking about potentially extend something cuts this morning, wti is down by about 21 cents to 47. 86. You were worried about it, back to 2. 15 i started hearing from mortgage guys again yesterday, do you want to refinance do you want to come back in . Really . Yeah. We were at 2. 02 so it looked like it could have hit a one handle but yesterday was first time ive heard from mortgage people in a while saying come back in, test the waters. We hit 20 trillion yesterday. Yes, on the debt clock. Fwo gosh, i wish we had a Government Official to talk about that that would be great oh, wait a minute, we do. Unbelievable numbers, there he is, secretary mnuchin will be on at 8 30 and that may be something we touch on. Now were going to give you the latest on irma, the storm down graded to a post Tropical Cyclone. Its bringing moderate rate to tennessee and the ohio valleys irma about 100 miles eastsoutheast of alabama. Its expected to weaken throughout the day look at the destruction in its wake this is video of jacksonville, florida, late yesterday. And weve got complete Team Coverage this morning. Carl quintanilla is live in tampa where ports are reopening. But we want to begin in West Palm Beach where Jackie Deangelis is covering the millions of consumers still without power. Good morning, jackie good morning, guys. This is a major story here in florida. The ceo of Florida Power light, floridas largest utility has said power could be down in some parts of the state as long as weeks, especially if theres structural damage. Take a look at this downed power line behind me this is certainly one of the issues that people have to work on the crews have to get out and fix these lines. But when were talking about structural damage, were talking about potentially the grid now, weve mentioned yesterday that there were almost 7 Million People without power now that number is down to about the 5 Million People within the state. Take a look at this map. There doesnt seem to be a part of this state that hasnt been touched by the Power Outages in palm beach county, we were looking at half a million without power yesterday. That number has dropped by about 125,000. So its certainly a step in the right direction. As we drive around, we see different areas that have lights, stores, businesses but still, there are so many traffic lights, for example, that are out intersections that ever totally unmanned and people sort of fending for themselves help is on the way about 50,000 to 60,000 crew members could be taking to the streets to work on this problem, but its also coming from other utilities in other states. So that is a good sign, as well. But like the ceo of fp l said, if its structural, it could be harder to fix. And down here in florida, its hot. You have elderly populations, people with special needs, its not just electricity, its an airconditioning issue and these seem to be moderate concerns when you look at what the rest of the state is facing, as well. Jackie, thank you very much well check back in with you later. Right now, though, lets get to tampa where cooler is looking at the ports as theyre reopening carl hey, becky. Listening to jackie, you never thought you would wake up and hear that twohad thirds of the countrys third mostpopulous state have no electricity. And all those utility workers who are working there way around those power lines are going to need gasoline. And thats the one positive story out of port tampa bay where we are this port managed to open early on monday morning, earlier than expected given the lack of damage and all those big tanks, those big, round tanks you see by the highway, they had to fill those with gasoline ahead of the storm. Otherwise, if they were empty, they could get punctured or crushed by the wind. So they had this ready gasoline on shore they called the Oil Companies that service out of here and said, look, if you want to get some trucks in here and start filling up gas to gas stations, be our guest so all these trucks, they russelled to their rigs, go over here, so youre beginning to see the flow of gasoline work its way around the state port tampa bay supplies or received about 43 of all fuel consumed in this state nothing good can happen until things happen here first you see things like disney world and Universal Studios open today. Keep gasoline in mind. Until the day where everything is electric and were all on the grid, gasoline will be a necessary commodity and this is where it begins. Andrew, i guess some of the good news is we see the lights right behind you was that something they had to get up and running or it dodged some of the worst of the storm obviously, i mean, look at genera xw stock. Theres a reason we talk about generax. A lot of backup generators were in play here if you look around the tampa bay skyline, youll see some lights, but when they say twothirds of the state, i believe it. Our hotel has no electricity and no hot water if youre in a nursing home, right, and your mom is there and youre worried about the heat today, that is a much different story. Carl, thank you for that. Some news out from dow dupont, it is altering its previously announced breakup plan. Its still splitting up into three separate companies, but its going to move business from the materials to the Specialty Chemicals spinoff to satisfy activist investors the chairman and ceo will be on squawk on the street at 9 00 a. M. Eastern time to break the new split down for us. In the meeven time, we are kicking off the delivering alpha Conference Today leslie joins us right now to take a quick look at Hedge Fund Performance which is going to be a hot topic. Everyone likes a comeback story and that could be a theme at todays delivering alpha conference new data out by einvestments shows data out in august posted their three month of consecutive gains in the black for the year. And guess this, guys in august, they returned about threequarters of a percent which is twice that of the s p 500. Finally were seeing some outperformance there today, well hear from some Hedge Fund Legends this industry is rapidly changing so its important to hear their thoughts now, one strategy that did not perform so well in august was activism this was the first month since october where returns have been even close to negative territory. And well get a sense of what lies ahead for activists were several featured speakers, including jeff smith, mick mcguire and ed garden b who as you mentioned will be had here along with ceo ed breen of dow dupont where garden has a sizable staij stak sizable stake. And to kick things off, im looking forward to your conversation with secretary mnuchin. How much of this do you think is going to resolve around what the big Pension Funds are doing . The guys who got out are they going to come back in or not thats the big question it appears were seeing a lot of strategies and those strategies did perform fairley well in august because they saw a spike in volatility which helps those Computer Generated strategies outperformance the overall markets. And so individual bits and pieces, but in materials of an allout industry, you know, getting those assets back to where they were a few years ago remain toes be seen, at least on the inflow side of things. The algorithms made us less needed people in general people in general, yes. Humans. Teachers will be replaced in ten years. Did you see that its not going to, though not from the standpoint of a kindergartner. And then theres all these other things that theyre going to replace men and women with each other well, that i understand yeah. Im already feeling replaced youre right i already feel unnecessary leslie, thank you very much when we come back, a Global Market ral ly a day after the s p rallies to a record close, check out the futures right now. You can see how strong they are at this point. Dow futures up another 55 points after those guidelines s p up by 4 and the nasdaq up by 17 coming up at 8 20 eastern time, our newsmaker of the morning is treasury secretary Steven Mnuchin. Hell be joining us on stage for a special conversation stay tuned you are watching squawk box here on cnbc livestream your favorite sport at the airport. Binge dvrd shows while painting your toes. On demand laughs during long bubble baths. Tv on every screen is awesome. The Xfinity Stream app. All your tv at home. The most on demand your entire dvr. Top networks. And live sports on the go. Included with xfinity tv. Xfinity, the future of awesome. Welcome back to squawk box. Up another 55 this morning in the dow jones. Caught up another 4 in the had nasdaq called up another 17 making headlines the ewe nated Nations Security Council unanimously approved new sanctions against north korea last night the latest Security Council resolution calling it illegal. The envoy says in his words, forthcoming measures by north korea will make the u. S. Suffer the greatest pain it has ever experienced. I read at least one analysis when it was all said ask done that it was watered down there were threats that if you do any more sanctions, the same kind of hyperbolic rhetoric but then also, the treasury secretary mnuchin has talked about how if the u. N. Doesnt come through with some of these tougher sanctions, they could go ahead and have sanctions against any country that does business with north korea the big push and pull now is are we on a path to where we say, all right, theyve got they already do, but do we say, all right, theyve got Nuclear Weapons that can actually hit us or do we actually nikki haley yesterday, she talks tough shes saying the world will not accept this country having Nuclear Weapons. I dont know what that means i think it comes down to china in corporate news, two key u. S. Senators have asked equifax about the data breach last week, including details who sold stock after the breach was discovered. The wall street journal reports equifax has been lobbying congress about easing regulations before the i started i had a tendency to feel for these people because absolute power corrupts absolutely and when you try to deal with these people, they might not even return your call. You might say, this has been on for six years. It was wrong when it started they wont return your call. And the customer is not always right. Before they did it. So im starting to feel like, wow, i hope how does this feel but its me. Its my how does that theyre not the ones who suffer from this. We are the ones who about bear the brunt. Am i supposed to take the other side of this and say we should very sympathy for their victims . Could you do that i was thinking, actually, though, about whether theyre victims wait, whether equifax are vijts . They are victims of a hack. They are victims who did not protect themselves and by the way, its not themselves theyre protecting, its us. And by the way, the only reason we havent talked more about this is because of Hurricane Irma setting shore its something that otherwise we would be going wall to wall with about the massive breach of trust. The ohm reason i say it is be default, they are victims of a theft. Actually, we are arthritic victims of a theft that they did not protect us from. And then the question becomes, did they leave the door open did they have five locks on . And then this is what the debate really is going to be. And by the way, if it happened to a big bank or somewhere else there are a couple of situations in this instance that make it very different one has been the reaction and how theyve dealt with it has been terrible. Secondly, you yourself pointed out that they have been warned that they are not protecting us enough, that they have 143 million americans this had close to the internet was completely ridiculous third of all, what the executives have done i have there are times when i do feel bad for corporations who are attacked by nation states. Times. This is a situation where they have handled it so poorly that i do think i would like to see congress get involved at some level and say, wait a second what faces are you making behind me no, its okay no, im ready so mad about it a 460 on my credit thing . Really thats what i go on my s. A. T. Math you only got a 460 on math . Back then, the ratings were out of 800 no, i did better. Weve got some stocks to watch this morning travelers will temporarily stop stock buybacks while they assess the damage from hurricane and irma 490 million for catastrophe related losses including recoveries from reinsurance todays top corporate story, apple is holding an event this afternoon. The company is expected to unveil a number of new products, including its next generation iphone some are saying it could cost as much as 1,000 for this new phone. There are a lot of people who would be willing to pay up for that well keep an eye on the apple suppliers today. Fox con, Western Digital and Analog Devices are all trading higher foxconn is up by over 5 the. Some other news from the mobile industry, samsung reporting record preorders for its new galaxy note 8 smartphone the company says theyve received about 650,000 orders globally over the past five days the note 8 officially hits the market on friday you dont want to miss complete coverage of the apple event the this afternoon its going to happen on power lunch. Lets get to the markets right now. Joining us is doug cote, chief investment strategist at Voya Investment management that has a 215 billion Investment Platform also, simian hyan. Its great to see both of you. Thank you appreciate it yesterday we saw this huge rally that Hurricane Irma, while devastating, did not pack the worst punch we thought in the florida area and some concerns were abated and others were talking about this idea that maybe the fed will not raise Interest Rates now, hold off because of all the devastation of those hurricanes. Doug, what do you think was the real well, right now markets are doing what they should be doing. The top 45 countries of the develop economies are all positive that is synchronized growth. Europe is doing better than expected corporate Earnings Growth in the u. S. , did you think double digits, emerging markets, japan. Japan was up 4 . So its responding to the strong corporate Earnings Growth, the strong Economic Growth, and sure, theres a problem. Theres always a problem geopolitically irma, thank god it waes wasnt as bad as everybody thought it was going to be. Well get past that. But i think as far as the fed, the fed might raise rates, might not i would like the fed to start quantitative tapering, get out of the way, raise rates and it would be a signal that the economy is good. That would mistake you have more strength in stocks than seeing the fed sit on the sidelines . Yes i want the fete to get out of the way and move to pro growth policies the fundamentals are there. We are seeing a growing divergence between growth and value. It only got to four times in the tech bubble. So if anything stretched, its on that had higher valuation side some people say when you look at the value stocks, its hard to find value stocks there is an element to that you have the financials that sit by definition and value but theres an opportunity in quality stocks, consistent dividend growers who havent lagged as much, gotten about 80 to 90 of the upside you saw the report about seth clarman of outpost apparently planning to give some money back to investors because zavend these value plays youre talking about. Well, the issue with devalue is the gamble is the limit theyve lagged by so much that investors are sort of fed up with them. That you have to get the timing quite right. There was another report just out that etfs in japan, some massive portion of them are owned by the bank of japan does that start to concern you when you see a central bank moving so far afield certainly they have gone too far if there is any time to start raining that back in, its when they have 4 growth. That time is now i think japan is going to benefit from this Global Economic synchronized recovery try to broadly global phi your portfolio. Most investors right now are concentrated in the s p 500. Thats worked for the past five years. I dont think its going to work for the next five years. I think were seeing emerging markets up 5 . Europe is up 18 you ever to start to spread out your betts value is probably underperforming or probably continued to underperform. You need to take more risks in your equity portfolio. Youre getting paid to take risks and certainly have bonds for a rainy day on risk control. But broadly, globally diversified. And practically buying stocks at that point. Some of the e the tfs are stocks in japan, they really are in the market they really are that his is not a good sign. And etfs we already worry about. Dont we from a liquidity perspective. One of the things they play is the etf market sdmrz etfs are very sophisticated. Allow rates to go up the effs and were an etf firm, there is an extra layer of liquidity added to the markets the Treasury Curve is so flat, but the Corporate Credit has an opportunity to diversify gentlemen, thank you both for your time today. Thank you coming up, Hurricane Irma leaving a wake of destruction. Were going to talk to some Industry Analysts and try to shed some light on that. Plus, were getting ready for todays seventh annual alpha conference its a whos who of the Investor Community with huj fund titans, private equity giants and top Institutional Investors offering rk ainheportunities t maetnd some of their best ideas. 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This is the ibm cloud. The ibm cloud is the cloud for enterprise. Yours. Welcome back to squawk box live from the pierre hotel in new york this is the site of todays delivering alpha korns aconfered we have a huge lineup for you including treasury secretary steve mnuchin. Looking through all the people here today on this lineup, 3 trillion in assets under management represented by the folks we have on the stage, not including Steven Mnuchin 3 trillion is more than the gdp of india i thought you were talking about his personal assets under management add the three to the 18, you get 21 and we almost pay off the the debt. We could pay t off the debt with our own money, though. Yesterday yes. Lets take a look at yesterdays equity futures right now, dow up by 53 points, s p up by 4, the nasdaq up by 18 among todays top stories, the dow dupont is altering its breakup plan. Its moving businesses with 8 billion or more in annual revenue from the materials to the Specialty Chemicals spinoff what makes this somewhat interesting, i guess, is that its an apparent move to satisfy activist investors chairman Andrew Liviris and ceo andrew green will be on squawk on the street. This is considered a win for people like dan loeb and Janet Partners why they didnt like the mix of how these assets were set up you heard the story the 8 billion goes from the materials to the specialty chemical yes one pocket to the other pocket yeah. And you have to be really in the weeds to see how that is, you know, something you really want to okay im fine with it you want it in specialty versus materials with your with the new stuff, do it hey, move 9 billion, you know . No, no, but part of the issue is i know. The strength of what these three companies are ultimately going to although like and if theyre going to continue to perform. And if youre going to hold them, which ones you hold. Okay. Now to the latest on irma, the storm now a post Tropical Cyclone and its expected to weaken throughout the day. But the storm has left a trail of destruction in its wake look at this video out of jacksonville, florida. Just yesterday, the storm flooding streets and damaging car webs but today florida is looking to get back to business. Walt disney world and epcot are looking to reopen today. Everybody is champing at the bit to have those visitors coming back in it was worth more than 100 billion to florida last year, those tourism dollars. So lets get you caught up to date carnival cruises says it will have cruises leaving from port miami and ft. Lauderdale today for cozumel. We heard from carnival and nor ve norwegian that they were bringing cruise ships back today. Disney is opening and says its going ahead with a full schedule universal, theyre excited to reopen their big parks, volcano bay, but lego land, all of its parks are closed and, in fact, its encouraging its hotel guests to seek shelter elsewhere. Sea world is closed today. Busch gardens tampa is closed today. Both of those are hoping to reopen tomorrow. Oh, and i should mention disney water parks will remain closed theyre hoping to reopen those later this week. So for those visitors who have had enough of all of this hurricane and debris cleanup and all of that, getting out might be a priority. Lets get you caught up today on the flights. There are more than a thousand flights in florida that have been canceled today. Thats just the big airports, tampa, orlando, miami and ft. Lauderdale ft. Lauderdale airport opened about two 12 1 2 hours ago. Miami had a lot of damage from water. Five terminals with significant water damage so they are having extremely limited service today. They are hoping to be back up and running tomorrow or later this week. Orlando and tampa are both gradually introducing service again today, ramping back up to full service so the good news is, if youre trying to get in or out of florida, its coming it will be there you have to check with your airlines today guys all right contessa, were going to try to shed some light on all of these issues i dont know how much we know yet, but lets take a closer look at the effect irma could have joining us now, paul newsome paul, i couldnt help thinking about you guys and yesterday, obviously, at sandler. Im sure it was a somber day at the firl, but you guys have done well just to come back into such a Great Institution after what you went through 16 years ago. Thank you very much thank you. The lights are still on coming into the city today i could see the twin tower lights anyway, get to irma here do you, in the last 24 hours, do you have a better idea how to gauge things, how to look at what total losses for the industry are going to be probably much less than what you thought going into the weekend that is entirely correct. Every day, you get a little bit better sense of what the storm damages will be both from an economic and insured perspective and the range of what we thought, which was sort of zero to something in the hundreds of billions is narrowed a lot reasonable in the low tens of billions in terms of insured damages from Hurricane Irma. And the notes that you had written before, landfall, it wasnt just florida you were worried about. It was going to move up into other states at this point, do you still need to add billions to this number is it still causing insurance related damage im sure it is, but not to the same extent. It is the storm isnt over its adding damage, but not anywhere near the extend it was before but the great caveat is that storms change and theyre unpredictable, so anything can happen over the income day or two. Still. We had a conversation yesterday that highlighted the ierpny in trying to gauge Insurance Companies and the pricing cycle. And the poip was made that you probably need a third storm to get the pricing cycle to turn positive for property and casualty insurers because of the big capital cushion they built up over the last ten years which are relatively quiet so this is not going to be enough to turn it into a positive pricing cycle probably not from a real broad sort of Global Pricing the most likely be some stress perhaps higher prices in the affected areas in florida in the costal areas but unless the Reinsurance Market is really stressed by this, and i dont think it was, then you wouldnt see sort of the broad price increases that youve seen after past cycles. But if something arises thats unusual that changes how people underwrite insurance, that may change but at the moment, it looks like its going to be more of a return to normal after the storms okay. I guess if we were to split off and start an Insurance Company that did flood. Charge what it takes, do it act uarily, is tha going to finally happen from this, do you think i dont think so. There has as been a private flood market, but its hard to compete with the u. S. Government it doesnt seem well, theres an argument to be made that Flood Insurance has propagated properties along the coast that were susceptible and made the losses higher because were essentially subsidizing building in the wrong places exactly we cant solve that now, paul, but we appreciate your tile. Thanks my pleasure when we return, the day ahead in washington, including reaction to the u. N. Vote on north korean sanctions and then later this morning, dont miss a specialcation with treasury secretary Steven Mnuchin he will join us on stage right here right now as we head to break, take a lk d ooadyesterdays winners and losers most etfs only track a benchmark. Flexshares etfs are built around the Way Investors think. With objectives like building capital for the future, managing Portfolio Risk and liquidity and generating income. Thats real etf innovation. Flexshares. Built by investors, for investors. Before investing consider the Funds Investment objectives, risks, charges and expenses. Go to flexshares. Com for a prospectus containing this information. Read it carefully. Welcome back to squawk box, everybody. A new deal announced this morning by Kingdom Holding it has purchased a 16. 2 stake from frances agricole for 1. 5 billion. That makes Kingdom Holding the largest Share Holding in the Bank Although chris agricole will remain as a strategic investor the United Nations unanimously approving sanctions against north korea. Ayman joining us this morning. These are tough new sanctions, but not exactly what the United States wanted to have in place take a look at some ovp new measures here from the united Nations Security Council theyre going to reduce by about 30 oil provided to north korea. Theyre going to place an annual cap of 2 Million Barrels on refined petroleum, so gas and diesel opinion theyre going to ban all textile imports. Theyre also going to have an impact on north korean laborers who are working overseas and over time gradually withdraw their right to Work Overseas and to send money back to the regime theyre going to end joint ventures between nations from north korea in order to cut off Foreign Investment but here is what washington didnt get a couple of things that the United States noted that they wanted in these sanctions. They wanted ultimately to have a block entirely on oil exports to north korea. They didnt get that they got the cap they also wanted authorization for use of force against ships that didnt comply with inspections on the high seas they didnt get that, either theres no travel ban or asset freeze on kim jong un himself in any of this. Still, nikki haley, the u. N. Ambassador from the United States said in a tweet, the u. N. Security Council Unanimously adopted the strongest sanctions ever against north korea the North Koreans predictably did not like what they saw yesterday. They issued a statement, as well the North Koreans saying the delegation condemns in the strongest terms and categorically reject the latest illegal and unlawful u. N. Security Council Regulations guys, the trick here when you are here is the other part of the north korean statement they said that the washington regime is frustrating them and theyre lobbying some rhetoric at washington here, as well. And the trick here, when youre dealing with sanctions is you want to have something thats politically tough that nightens up the pressure on the regime, but the balance is you dont have to have anything to cause the regime to totally collapse did they trike the right balance . That will be the debate in the coming days. That you can for that well be seeing you throughout the day. When we return, will apple deliver for consumers and investors today . 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Breathe better starting within 5 minutes. Get symbicort free for up to one year. Visit saveonsymbicort. Com today to learn more. One estimate was irma causing 2 billion and i saw a number of 49 these will be big numbers hopefully the bipartisan ship we saw last week wont be a collaboration. What kind of impact is irma going to have on the multibillion dollar Citrus Industry thats another sign of the overall resilience of this market. Today thats another sign of the overall resilience of this market welcome back to squawk box. This mornings top corporate story, Apple Holding its big event this afternoon the Company Expects to unveil a number of new products, including its highly anticipated next generation iphone some are saying it could cost as much as 1,000 shares of apple rising yesterday in advance of that announcement. If youre wondering what might happen today, heres what history tells us according to a cnbc study, apple stock was lower 75 of the time on the day it made its iphone announcements. But on the day after in the news, the stock did much better, gaining 60 of the time with an average increase of 0. 6 so, youve been warned as to what to watch for today. Joining us right now to tell us exactly what do to watch for is dan zeno good morning good morning. So everythings been leaked out. We know whats about to happen as far as the actual details and whats going to be included in these devices, yes. I would say what remains a question mark is the actual price point and the actual launch date of this higherpriced device theyre going to launch. We think theres three devices. Right we think theres this x at the top end, this 1,000 device and two phones below that. Correct, priced at 695 and 769 so whats the price point that excites you and whats the price point that scares you . Anything under 1,000 we would get excited about and what we think the street would positively react to. We think something along the lines of 1,200 to 1,400, i think you get a pullback in the shares i would think the opposite . I would think the potential for a true profit margin, a really great profit margin on the topend phone would excite you. You dont think you can move that many phones at the end of the day, i think apple will get the margins, being somewhere 40 or so if they can keep the price where they can launch it at 999, i think thats great for consumers and apples what about the watch . Weve heard the watch is finally going to have Cellular Service do you think thats meaningful we think the series 3 watch will come with a face time camera we think its going to come with that 4g connectivity we think that that will kind of spur the next kind of move up to you know, for the apple watch. So, you know, potentially, in the 15 to 20 million shipment range for the apple watch, with this 4 ge connectivity, we think is more than possible. What is the surprise youre looking for . Everyones always looking for that Steve Jobs Used to say, one more thing i dont know if youre going to get that at this event, to be honest with you. I think theres so much coming with this you know, with this phone here, i really think that it i think theres going to be so much time spent on kind of on announced announcing this phone, i dont see this at this event. How worried are you about the stock . I think when you look at the runup here, its typically what you see ahead of these massive Product Launches you saw it with the iphone 6 this phone is going to be compared to that recordsetting launch but we think at the end of the day, this will we think expectations remain too low here still too low yeah, we do so that being said, i think, you know, we think there could be a pullback on the news that being said, we think we continue to see upside in the shares and when you think about the replacement cycle, everyone thinks this might be the moment, everyones holding on to the 6 or the 6s, thinking this is the next big opportunity do they upgrade to the s at this price point or whatever its going to be. When you look at the user base today, that compares to three years ago with the iphone 6 launch where were lacking at half the size. If we get anywhere near that type of launch, were going to be having a party. On any device on any device that being said, we expect potentially about 45 of shipments to come from that higher priced device to get anywhere near that side, this side of things, i think that will be great news for the bulls. Is there anything that we may here, not maybe tomorrow, but before the Holiday Season on other products that you think may or may not be in the works i think you could possibly see a refresh to the appletv i dont think thats going to be huge news. Do you think thats today potentially and that is probably just adding 4k to the system yes home pod was announced earlier this year. Youre not going to get a new hardware device launch, we think. I think the biggest potential surprise here over the next couple of years here, weeks, is if we see any kind of positive indication coming out of china if all of a sudden consumers are buying out in china for this higher priced device, where weve seen shipments kind of decline, you know, more than 50 from the peak do you believe there are supply chain problems . Yes a lot of rumors about that. I think there are supply constraints. I think they these as they go into october and november. Do you think theyll have enough product preHoliday Season our view is well see all three products launched by the end of september that being said wing apple is going to carefully manage that iphonex launch, where they may limit it to a couple of regions. But all said and done, i think, you know, were talking about some severe supply constraints largely because of the high demand were going to see for the product. Angelo, thank you pup. Thanks for having me. And we should mention, you dont want to miss complete coverage of the apple event this afternoon starting on power lunch at 1 00 p. M. When we return, the fun is just Getting Started up next, well welcome a special guest cohost, marc lasry, and Steven Mnuchin will join us on stage for a ecl spia conversation stay tuned you are watching squawk box on cnbc helping keep shoppers safe. This is a financial Transaction Secure from hacks and threats others cant see. This is a skyscraper whose elevators use iot data and ai to help thousands get to work safely and efficiently. This is not the cloud you know. This is the ibm cloud. The ibm cloud is the cloud for enterprise. Yours. The ibm cloud is the cloud for enterprise. Im vern, the orange money retirement rabbit, from voya. Im the money you save for retirement. Whos he . Hes green money, for spending today. Makes it easy to tell you apart. That, and i am better looking. I heard that. When its time to get organized for retirement, its time to get voya. Dad molly, can you please take out the trash . sigh dad molly trash whoo mom hey, molly . Its time to go bell ringing class, lets turn to page 136, recessive traits skip generations. Who would like to read . molly i reprogrammed the robots to do the inspection. Its running much faster now. See . Its amazing, molly. Thank you. squawk box is delivering alpha. Were giving you a front row seat to todays big conference at the pierre hotel in new york. Todays guest host, marc lasry of Avenue Capital. Well talk about his best investing ideas as we count down to our big interview with treasury secretary, Steven Mnuchin. As were doing this,ish ma isrs winding down the storm weakens to a tropical depression as it pushes deeper into georgia millions remain without power throughout the southeast and lines are already forming as the buzz builds for the new iphone that story and much more as the second hour of squawk box live from the delivering alpha conference, were doing it live. And it begins right now. Announcer live from the beating heart of business, new york city. This is squawk box good morning, everybody welcome back to squawk box here on cnbc im becky quick along with joe kernan and Andrew Ross Sorkin, we are live at the pierre hotel in new york for todays delivering alpha conference. Well be kicking off the main event with Steven Mnuchin. Hell join us live for a q a session, all the way around. And we have a lot of ground to cover with him well be talking taxes and the impacts of the hurricane in the meantime, joining us is guest host this morning is marc lasry, Avenue Capitals chairman and ceo and a featured speaker at this mornings conference marc, goork. Great to see you. Check out the futures at this hour they have been higher. S p futures up by 3. 5 with the s p at a new record high and the nasdaq up by close to 15 in the meantime, heres whats making headlines this morning. The newly formed dow dupont has announced a split into three different units. Businesses totaling 8 billion will be removed. That appears to be at least partially in response to pressure from activist investors. Chairman Andrew Liveris and ed breen will talk about this more live on squawk on the street at 9 30 a. M. Eastern time. Small Business Confidence registering a slight increase in august the monthly index from the National Federation of independent business rose to 105. 3 from 105. 2 in july its largely because of an anticipated scaleback of federal regulations. The lawsuits, in the meantime, are piling up against credit reporting agency, equifax. More than 30 have been filed already since a massive data breach was revealed last week. The stock down, losing more than a huge chunk of its value here, if you take a look its gone from about 138 to 111. Its down again this morning by another 1. 3 news of that breach just came out last thursday. Apple is holding an event, weve been talking about it all morning. This afternoon, the company is expected to unveil a number of new products, including its highly anticipated next generation iphone. Some are saying it could cost as much as 1,000 keep an eye on apple suppliers foxconn, Western Digital, and Analog Devices are all trading higher ahead of apples big event. Thats like dick tracy, you can do a face time on your watch if it has a camera. I may break down and finally do it what if your camera is accidentally on . Thats the thing. One of the big issues has always been, about the camera and recording. Like butt dialing terrible things could happen a whole new world to butt timing a whole new meaning to that word and also, people doing things surreptitio surreptitiously. One of the big issues was you couldnt record. Anybody you sitting down with who happens to be wearing and will the face go red so people know a recording is going. Maybe musk is right about this ai stuff. Bitcoin, you can have somebody rubbed out and not know who did it i mean, youre telling me things that are im afraid to we dont know if anybodys done that, we just know possibility of it you can put a hit on somebody and you wouldnt know who put the hit out. Dark net. Dark net. Lasry, seriously thats the opening of this book, dark net, the idea that you wouldnt know who who put the hit out. You knew this . Well, things i wouldnt really want to talk about, yeah. He can tell you, but hed have but hed have to put a hit out. Hed have to kill me. In the meantime, we want to talk real briefly about Hurricane Irma, now a tropical depression as it pushes north into georgia look at the destruction in its wake, roughly twothirds of residents remain without power in northern florida, including the city of jacksonville major flooding many areas of the state had fuel shortages, standing water and downed power lines cnbcs team coveraging continuing this morning. Jackie deangelis covering when the lights will be turned back on but first we twin with carl qui quintanilla whos visited the port of tampa yesterday. Reporter you listed the three big concerns obviously, its the historic flooding in jacksonville, the utter devastation of the florida keys, and then twothirds of the cups third most populous state have no electricity this morning. And yet, cover the tampa times on monday was this, were lucky. That sort of encapsulates the study around here. As we now know, if that eye wall had shifted 40, 50 miles to the west, i would literally not have been able to stand where i am right now. The water would have been well over my head when that eye wall hit. So the economic engine here in florida is revving up, here at the port of tampa pay. Tanker trucks have been filling up with gasoline, starting yesterday, making their way to gas stations all around the state. Thats very key, if were going to get this economic engine up and running once again cruise lines, we think, may be out of this port tomorrow, possibly thursday. And a slew of things are going to start to open over the next 48 hours schools in tampa, open on thursday were going to get some limited Flight Service out of tampa starting today american airlines, bringing in some 777s so miami international. Disney and Universal Studios open today after two days down garbage collection starts today. And the florida aquarium, very close to where im standing, will be having what im calling tampa strong day oday, free parking, lower admission than usual, as they try to get some people out of their homes and back into some of these Service Industries again, the story will be power restoration, andrew,and i know you guys have that covered, top to bottom. Carl, thats right. Thank you very much. There are about 5. 1 Million People without power this morning, across florida, as carl was just mentioning. The full extent of the damage is still not known. But Jackie Deangelis is in West Palm Beach and she has more on this story good morning, becky heres what we know so far about a little more than 6 Million People were without power as of yesterday. That number has come down tow a little bit more than 5 Million People so, slow and steady, the situation is improving but already, the ceo of Florida Power and light has said that if there are deeper infrastructure problems, its going to be hard to restore power to everybody. It could potentially take weeks. Here in palm beach county, we know that people without power, a little bit over half a million yesterday, that number also down, a little bit more than 100,000. So theyre more enthusiastic about it and more encouraged, but take a look at this map of the entire state of florida. Tough to see an area that hasnt been touched by the Power Outages. And in fact, the red areas that youre seeing there, theres a big, red portion, at least 75 of those areas dont have it at this time. Again, lets go back to the ceo of Florida Power and light, because he made another comment about how the process is going to work to restore power to the people of florida. Theres a lot of tree damage out there. Theres a lot of debris that we have to remove before we can actually even start to get the lines back up and the substations back in power and make sure we can turn the lights on reporter and debris is a huge issue this street where were standing, you can obviously see a downed power line behind me. Those crews are going to have to come out and get those power lines up, but the debris the tree debris on the streets, as well, just moving that out of the way. Making sure that the crews can get out here and do what they need to do and palm beach county, there was a curfew up until last night, because they dont want people out, so the crews can do what they need to do, to get that power back and as carl mentioned, yes, there are many pieces to this economic engine, but getting people comfortable and back in their routine is going to be a piece of that as well, guys. Okay, jackie. Jackie deangelis, thank you for that lets get to our guest host this morning. Marc lasry, Avenue Capital group, chairman, ceo, and cofounder and speaking at todays dluelivering alpha conference do you have an overall theme youre talking about, or im fascinated by these things youre doing in brazil sure, we can talk about what would you rather talk about . Overarching stuff . We hit 20 trillion in debt. Can you go in and restructure the United States . Not yet i think were good worrisome are we going to add to that with the tax reform i think if the tax thing gets done, i think you will, to the national debt. Is there a certain amount you can add to that would be okay because growth it all depends on what growth is if growth is 2 or 3 , i think its going to be less of an issue. Its like you said, what were trying to do now in brazil, its interesting, were finding at of these opportunities, were able to restructure some debt and get control of a company in brazil it was the largest waste company. Right, estry, right and youre doing it with i figured it avenue, your publicly traded vehicle is boulevard, like another kind of a road, right . So this is boulevard 2, is it not . Yes you raised, what, 300 plus million. 400 and public . Its public so you go in. Did you read this . Why theyre buying a Waste Management company, because it cant be dissbintermediated by amazon one thing bezos doesnt care about, garbage we bay Public Company biffa, take it public, its up like 33 si since we take it public. If you look at Waste Management here in the u. S. , when it went public i think in 89, its up about 15, 16 over the last 30 years. Right . Annualiz annualized annually. Annualized, its got about 25 of the market. Got brazil right now, the company weve got has 8 were buying it at 25 discount to where Waste Management trades and its growing at like 100 more, twice as much. Youre able to do things outside of the u. S. At huge discounts, and take advantage of that is this also a call on the brazilian economy . Do you think its about to turn a corner uptothat this point . I think the stock markets, i think, yesterday, had a record close. I think its up about 25 this year so a lot of it really is just, for what we do s, is whats the discount youre able to restructure and taking the company public, i think for us, we think its something that should double over the course of the next year not next year, next couple years. Are still in the camp that everything outside of the u. S. Is still more attractive than anything in . I think so. Theres very little to do in the u. S. On the distress side. So you have to go outside the u. S. Brazil, if you can call the swings over the last 25 years, its pretty unbelievable and lately, they politically, theyve had i mean, its been a its had some issues a storm its had issues, but now its gotten a lot better. And gdp is probably going to gdp is up everything is up in brazil so macro you like thinking other stuff in brazil we think on a macro level, its good. But if i had to go down and go through the books of a baa zillion Waste Management companies to see their capital structure and their balance sheet, i might have a problem with that. Who does that for you . You have someone go down and it youre going to restructure the debt thats existing with estry right now. We already did that so debts the same wherever you are. And we were able to restructure that debt. But the law is not the same wherever you go. Thats why youre buying it at a discount. People love the rule of law in the United States. So the rule of law in brazil is good is it as good as the u. S. . No but theres no country thats as good as the u. S. So therefore, i think youre actually getting overpaid for the discount youre buying it at, for something thats going to grow twice as much as sort of a counterpart in the u. S i think youre getting overly paid for that. Are there places in the world you wouldnt go because the rule of law is so uncertain and youre not sure you would ever get paid back. Yes have those places increased in the last ten years . They have whats happened is, what you found is that the rule of law, what would normally take three or four years, takes you six to eight years. So therefore, just time kills you from an investment point of view youll ultimately get there, but just the time of how long it takes, kills the investment. What are some of the markets youve crossed off the list in the last decade . I think for us, china, where what were finding inside china, its taking a lot longer i would tell you indonesia has also been an issue the philippines. But what weve found in indonesia is that we can actually, in certain situations, do pretty well, as long as we team up with the right families. So people who, in essence, are pretty connected in those countries. Youve had visitors from the Democratic Party for 2020 visiting you you make the point, it used to be, maybe theyd start in 2018 or something theyre starting six months after the last election, you already had some prospective president ial candidates coming they want money from you. Shockingly, yes can you tell us how many have you met with . Quite a few quite a few can you kiss and tell . I guess you cant. Like who no, they come i would rather not say whos coming its all the people you would know cory booker its everyone you would think. Cauliffe if i get warm all in the political camp, meaning theyre politicians today, or any in the yes, theyre politicians. Any in the business ceo camp . All politicians today and they all think they can beat trump because hes trump and youre telling them, you better have Something Better than that. I think you need a message other than, look, its anybody but trump, right and if you remember, that sort of was the message with president bush and i think john kerry lost i think you actually really need a message. And if youve got that message youre going to make so much money over the next four years, youll be able to back whomever you want, i think. Yes, that would be good youve already made so much since november weve done well thank god. The better thing is the rock got sold youre going to throw that at us that was good, also thats exciting i look at all sports teams remember how worried you were about the dodgers . I was very, very worried. It made no sense on its face, it didnt make sense. But prices have gone up. Are you convinced they continue to go up given the challenges we talk about espn and disney all the time, all the challenges that espn is having . Yeah, but theyre having challenges, but what youre finding is facebook and amazon and sort of other Media Outlets now want to come in and buy that content. I think the question is, do you look at what espn did and say they overpaid for content, and thats why theyre having the challenges they are having and that is true, does that does a facebook or an apple or whomever you think is going to come in, is there a lesson to be learned in that or do you think they overpaid, too first, i dont think they overpaid i dont think espn overpaid. I think Everyone Needs that original content if they didnt overpay, why are they having the challenges the theyre having everyone has issues the issues theyre having are a little bit separate. When you look at sports and especially basketball, basketball is one of the few areas its growing the price they paid for the nba is right most analysts and investors who have been frustrated with the stock would suggest that one of their biggest problems is that they think they overpaid for the nba. And since im one of the people who owns an nba team and im biased i know you are. But im trying to understand you think all of analysts and investors are wrong . I think you need to look at it over time and when you see that ratings for the nba are continuing to grow, i think over the next, because its a tenyear deal, youll find it ends up being a pretty good deal theyll make money when its all said and done . They should would you invest in disney . I would well have mark throughout the hour it just occurred, wouldnt it make more sense to let a republican go and then put a democrat in to redistribute everything again wouldnt that make more why dont you let it grow a little more before you back a democrat to split everything up more evenly one, i think its great that i have that amount of power, that its up to me, that would be good. Youd be okay with that 3 , 3, 4 until 2024 then start splitting it up growing the economy by 3 in the United States . I dont think we are. Just sit back and watch maybe these hurricanes, we were a couple of quarters at 3 , well see. But then we may have a 5 after because of the hurricanes right marc, believe it or not, we want you to say for the rest of the show uill talk to you offcamera. Coming up, i dont even know where this is going to go. Well talk about the impacts of Hurricane Harveys and irma on the nations power grid, utilities after the break, and feeling the brunt of whats left of irma. Senator david perdue will join us to discuss the effects of irma on his state and much more. In the meantime, check out the futures this morning youre looking at green across the board. The dow up by about 67 points. Nasdaq up about 18 s p 500 close to 5 points. We are back in just a montme live from the pierre hotel at the delivering alpha conference. Some of the biggest names in business these are going to be big numbers. Hopefully the bipartisanship we saw last week wont be an aberration what kind of impact is irma going to have on the multibilliondollar Citrus Industry the exact of irma hasnt been as big as expected the markets rallied huge today another sign of the overall resilience of this market. Welcome backing to squawk box. A quick note on the story we mentioned earlier, the change in the dow dupont, one of the activists issuing a statement immediately saying, it fully supports todays announcement, commending the companys board, management, and advisers mckenzie was on that deal, of optimizing dow duponts portfolio. Well hear a lot more from triant today david faush and the gang on squawk on the street will be hanging out with Andrew Liveris. With such a big chunk of florida losing power during Hurricane Irma, getting power back is on a big concern. Joining us is an Energy Analyst and managing director at Clear View Energy partners great to see you today weve already heard good morning, weve already heard from our reporter on the scene there that about 5 million customers are still without power. Obviously, thats even as they are making progress, getting people back online how does this match up with what weve seen in the past and how well prepared were these utilities to get things back up and running this time . I think what weve seen is, theres been a lot of investment over the last 10, 12 years since the big round of storms with wilma and charley in 2004 and 2005 and the hardening of the system is where were really going to see the difference and that is the difference between restoration and having to completely rebuild. Theres a lot of restringing that has to take place theres a lot of reconnecting that needs to go on. And even that is going to take several weeks. But that is not going to be the months and months that people are going to be out of power, for example, down in the caribbean. So i think, although we dont have a counterfactual to demonstrate how much better this is compared to what it could have been, i think that what we are going to see, regulators are going to realize that the investments made over the last 10 to 12 years have really paid off. Having said that, when winds this high hit out of the ground, what he was talking about is downed telephone poles and others along the way that would take time to build back up which begs the question, could you ever make yourself completely resistant to a category 5 hurricane i certainly dont think so. I think what we see, the effort is to see how fast we can get back online. That is the definition in the industry now of resilience it is to figure out how to get things back together as soon as possible when youre not replacing wood poles that have come completely out of the ground was simply restringing them simply but when youre restringing them on concrete pillars, that is something that takes place over long time and something that brings you back into a functioning economy much sooner. That is the best we can do, because mother nature, shes much more creative than we are sure. We havent spent much time talking about what happened in houston. How was that area prepared for the floodwaters that came in well, houston understands that they are approximate to flood. I think what we saw in terms of the weather event was very much unanticipated, a lot like what we experienced with Superstorm Sandy up on the east coast in 2012 but i think houston was more prepared, because they, too, have been hardening their system in the wake of hurricane reit a and ike. And the fact they were able to keep the outages around the 300,000 customer level on a rolling basis, they brought other people up, and yes, other people were flooded, but their ability to manage that situation, i thought, was very impressive, in spite of the absolutely epic amount of water that is in that system right now. So i think we are seeing improvement. Its no consolation when youre the customer whos still out of power, of course, but their ability to manage that situation, i think, had a lot to do with the fact that they dealt with flood instead of wind, and in that way, that damage is a little bit easier to manage, as opposed to avoid altogether. Christine, thank you for your time tonight we appreciate it no problem. And coming up, could the fed be forced to hold off hiking Interest Rates this year, following Hurricane Irmas and harvey a report from Steve Liesman is straight ahead squawk box will be right back. Announcer later on squawk box, were kicking off the cnbc delivering Alpha Institutional conference Steven Mnuchin will sit down for a q a session with joe, becky, and andrew and you can watch it right here live. His comments on the state of nation, tax policy and more is straight ahead keep it locked to cnbc, where the biggest names in business will be speaking at the delivering alpha conference all day long squawk box returns after a quick break. Can we at least analyze can we push the offer online . Legacy technology can handcuff any company. But yes is here. The new app will go live monday . Yeah. With hewlettpackard enterprise, were transforming the way we work. With the right mix of hybrid it, everything computes. From godaddy in fact, 68 of people who have built their. Website using gocentral, did it in under an hour, and you can too. Build a better website in under an hour. With gocentral from godaddy. Not rebalancing your portfolio. Pursuing your passion, not reacting to market downturns. Focused on what you love, not how your money will last through retirement. Let us help you with those decisions, and get on with your life. We make it easier to plan for retirement with day one target date funds from prudential. Look forward to your 401k plan. Good morning, everybody. Welcome back to squawk box here on cnbc among the stories that are front and center this morning, the Labor Department is going to be out with its monthly jolts report, a little bit later this morning. Thats its measure of Job Opportunities and Labor Turnover in recent months, its shown Record Number of job openings. Among the many disruptions caused by Hurricane Irma, ratings for this past sunday nights nfl atchup between the Dallas Cowboys and the new york giants thats because the ratings company, nielsen, actually had to evacuate its ratings staff from their tampa headquarters ahead of that hurricane. Nielsen says it isnt yet sure when it can resume normal operations and while apple prepares for its Product Launch event later today, rival samsung says preorders for its galaxy 8 is the highest ever in the series the note 7, of course, had to be pulled from the market because of battery fires Hurricane Irma caused severe flooding around jacksonville, florida. It could be several days before the water begins to recede Morgan Radford joins us now in jacksonville reporter good morning. We are in downtown jacksonville. You can see where these waters have already lapped over this bridge that once was the barrier is completely gone at this point. And these waters have really flooded in area, making this road and this grid almost impassable this is as about 200,000 people across the state of florida are waking up in 585 shelters. Its not only the loss of power, theres 6 Million People in the state of florida that are without power. About 160,000 of them right here in jacksonville, florida but the water, the biggest issue. Thats whats caused a lot of damage, causing property damage, houses have been ruined, as well as entire apartment complexes. And its not just here in jacksonville further north, i also saw a woman who was stranded inside her home and take a listen what she told me she did when the hurricane was coming my daughters and i, we camped out in the living room and we had a safe zone in the hallway we pulled a mattress out there in case we needed it its all good. Ive been through things like this before, and you know, its you know, its okay, youre going to survive and joel swim out or whatever, you know, or something comes down, thats your but when youre responsible for your children, its kind of different and this is after a lot of these lowlying areas had mandatory evacuations. And right now, businesses are closed, school has been closed and so people are trying to figure out how theyre going to get through the rest of the week, and hoping that things will return to normal by the end of the week. Back to you, joe okay, very good, morgan for a look at how hrm rurrican a irmas and harvey may fact the economy, the Economic Data and the fed, Steve Liesman joins me now. It wasnt as bad i hate to say it, i dont know if youve adjusted gdp based on it not being quite as severe as it could have been, are you looking at a 1 i obviously dont think we know, joe. Are you looking at a 1 quarter . I dont think its 1 its down toward the 2s. Weve been talking in the 2. 8 to 3 range. I think were now down to 2s the storms will wreak havoc with lives, the economy, and the data over the next several months even with fed policy, hopefully everything makes a full recovery here let me show you one estimate thats out there this is mark standzandi. Irma, very initial estimate, 64 to 92 billion, for a total cost for the two storms of 150 to 200, which is combined around the level of katrina together. Thats where they are. And lets take a look at some of the estimates im seeing about how it could affect the data nonforeign payroll september, im seeing estimates of down 50 or 100,000 from what it would have been. Thats not the total there and then, august, those are sort of unrelated jobless seems to be up to 100,0 100,000, a separate process for why nonforeign payrolls would be lower. August retail sales is a really interesting story. You had people buying stuff ahead of the storms. You had additional gas price hikes in there, but you had the wake of the storm where you had lower retail sales and q3 gdp, thats what im seeing, off half a point to a full point whats it going to mean for the fed . They werent going to hike in september anyway a final hike this year was always in question before the storms, only given about a 30 probability. What i think is, the fed is going to look through the economic news, believe the economists, almost a full recovery over time, and do what it was going to do anyway. Do what it was going to do anyway nothing . Which is, we dont know, figure it out based on the september inflation data and a lot of this depends on the inflation data you have a hike in the gas prices, that will probably roll off. I didnt look at it this morning, but it was a little bit better yesterday we saw it over time. One of these days, a storm is going to come through and its going to be one that doesnt say were going to have a full recovery and its going to be okay spomp, what im seeing is these are not those storms im still seeing everybody say, we have this weakness in the third quarter. The rebound from the rebuilding plays itself out in the economy for the Fourth Quarter and the first quarter. Hopefully its not a nuclear storm. Whats the Steve Liesman gdp expectation . So were i think its fair to say to say 2, 2. 25 and thats still pretty good in the wake of look, there are times to be hit by a hurricane, if i might, when it comes to the economy. This was one of them we had low inflation, we had pretty strong gdp. Weve got strong job growth. We can take this hit nobody wants it. Nobody thinks its a good thing. But in terms of where the data were and it boosts the gdp down the road its like the company that reports earnings and says, extraordinary items affected the fed shouldnt change what they were going to do based on it but if they were going to raise in september, previously, i would say they wouldnt now. But because they werentgoing to anyway, theyre not you know what september, they raised in, joe go back in the wayback machine. 2008 . 2007 2005 . 2005. September 2005, in the wake of katrina, they looked through the data and they hiked less than a month after. Reporter the financial crisis that was before we got scared to death of our own shadow and we didnt do Monetary Policy in a normal way now weve rewritten right its always emergency accommodation, according to these guys right but now i think theyll go slow and take a look, but i dont think it changes all that much, going forward. So two things real quick, getting the refineries up and running is key and getting disney world up and running and the airconditioning and Universal Studios and universal, they say, it was mickey mouse and airconditioning and i guess Mosquito Control those are the three things i dont know whats happened to Mosquito Control mark, as an investor, i dont suppose you pay a whole lot of attention to Something Like this not really. For us, you need to have sort of restructurings and things in trouble. This is all shortterm got some very nice property on sea island that he might be paying attention to. But thats about it. Well we have, just as a side, weve had a number of people saying, do we want to get involved in rebuilding, like tampa . Like, that you can buy you can buy a number of units and just end up rebuilding is that attractive to you it depends on what the rate of return will be. But does a storm like this change your overall outlook . No. Does it change, in terms of a state like florida, well, now its been revealed how vulnerable the state is. No, not really. I think for us, its were we want to invest in companies that are doing structuring i think investing in real estate in florida, you want it to be five years ago after the but i think the larger question in terms of the weather issue is, are you worried or even interested in properties along coastal areas . Does that matter to you, one way or the other yeah, because it will be shortterm well end up rebuilding, sell, and well be out before the next storm. Steve, thank you we have some Serious Problems in 2100. Probably wont matter to you no. Steve, thank you very much. When we come back, in fact, senator david perdue of georgia will join us to talk about the Economic Impact of Hurricane Irma and whats happening in his state. Right now, though, as we head to a break, take a look at the u. S. Equity futures picking up even more strength with the dow futes uurp by 65 points stick around, squawk will be right back people dont invest in stocks and bonds. They dont invest in alternatives or municipal strategies. What people really invest in is what they hope to get out of life. But helping them get there means you cant approach investing from just one point of view. Because its only when you collaborate and crosspollinate many points of view that Something Wonderful can happen. Those people might just get what they want out of life. Or they could get even more. Announcer later on squawk box, were kicking off the cnbc Institutional Investor delivering alpha conference. Treasury secretary Steven Mnuchin will sit down for a q a session with joe, becky, and andrew and you can watch it right here live his comments on the state of nation, economy, tax policy, and more is straight ahead keep it locked to cnbc, for the biggest names in business will be speaking at the delivering alpha conferen acell day long. Squawk box returns after a quick break. I think that shes a very nice girl. You never got the brakes looked at . Oh yeah. No. At cognizant, were helping todays 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 its back . Get ready, because were helping leading companies see it and see it throughwith digital. Georgia taking hits from Hurricane Irma and while the storm has been downgraded, its knocked out power for more than a Million People joining us now, a georgia resident, senator david perdue i daresay, sometimes sea island resident you know, lasrys here, too, senator. You remember this guy . We used to have to like kiss up to him, when he owned sea island what can you tell us, senator, about the state in general haan have you heard ive heard that sea island is not awful at this point, anyway we had a big storm, not like florida did, but it was big. We had an 11foot surge in savannah, because it hit at the high tide yesterday. But georgias digging out today. The airport shut down in atlanta yesterday, late. I was on one of the last planes out. As i was evacuating the coast over the weekend, i noticed dozens of trucks, out of state power trucks headed down to restore electricity. So water and wind was a big story in georgia we did have three fatalities a Million People without power people are not working in many parts of the state today so weve got to get power going again and make sure people get back into their homes, safely. Senator, you know, things are still happening. And i hesitate to ask you this, but they say that all politics are local. Does that deal that the president cut with democrats get immediate relief for these hurricanes, does that look more palatable to a guy like you, when you see that we need to do this quickly you didnt maybe get everything you wanted with the debt ceiling and its going to come back in december, but was that right move now in your view . This is whats at stake here. Were losing the right to do the right thing. Every dollar that the president and everybody allocated up here toward relief for harvey and now for irma, is borrowed money. Weve had this conversation. Were losing the right to do the right thing. Thats what we should be talking about up here, is how not to do that in the future all right, but in the face of true need for residents of texas and georgia and florida and the carolinas, isnt the right thing to maybe rise above . We used to use that term at this network, but isnt is right thing just to get it done, even if you have to go across the aisle . Thats what washington did last week. People criticized the president , but thats exactly what the president did. Congress stepped up and voted for that in a moment of crisis, thats exactly what we do the problem is, in the future, were going to have less and less ability to deal with these emergencies. In a moment of crisis, we do what we have to do, joe. So, senator, were going to talk to treasury secretary mnuchin in about a half hour or so do you think that this latest move by President Trump changes the dynamic of tax reform . Well, i dont really think so weve got this in our own hands. Were going to do this in reconciliation but what we have to do is focus on the priorities. I know thats what the secretary is going to talk to you about. Our corporate rates are not competitive with the rest of the world. That makes our companies in the u. S. Very vulnerable we are the last company to have a repatriation tax those two things alone will free up a lot of capital and get our economy going again. And wave got to simplify this individual tax code. That would what i would love to talk to the secretary about. And then we need to pull back on these onerus regulations so this is not going to be a deal with chuck and nancy and idee and everybody else. Its not going to be permanent its not going to be 60 . Were going to welcome anybody who will vote for this thing. But i didnt just get off the plane, joe what weve got to do is make sure we get this priority done at all cost. Thats what the american pamer e want if we get this tax package done in some form, this economy is wanting to turn right now. Consumer confidence is at a 16year high ceo confidence is up at a 20year high and i believe weve seen the first stages of real capex investment right now in u. S. Business im optimistic if we get this tax thing done, well see this economy start to turn. So, senator, you said, do the right hing, in terms of not adding to the deficit. You saw, we went over 20 trillion i know you saw that. So, does that include doing the right thing includes paying for all the tax cuts, or do we do dynamic scoring, which assumes future growth that a whole group of people either dont want or dont think it can happen joe, you have to include dynamic scoring. Thats a washington term i never knew what that meant in real business. What we did is we actually did financial models that made sense. These scoring models up here are not they have no relation to the real world if i dont do anything else up here, weve got to change the way washington decides on these financial matters. The budget process, how we do all of these afinaginling were the last country in the world that has this, and we know weve got to get rid of it, but our score keeping us in many cases from doing the right thing. And when im talking about doing the right thing, the right thing is to help the people in georgia and texas and florida and South Carolina but the problem is were losing the act to do the right thing. Thats what were talking about. People forget that. Sooner or later, we run out of other peoples money, i guess. Senator perdue, thank you and good luck and were obviously, some property there, as well were pulling for georgia. Hopefully everything is going to come back better than ever thank you. Thanks, guys. When we return, more from the delivering alpha conference at the pierre hotel in new york marc lasry will talk markets in just a moment. Stick around squawk box will be right back. It can detect a threat using ai, and respond 60 times faster. It lets you know where your data lives, down to the very server. It keeps your insights from prying eyes, so theyre used by no one else but you. It is. The cloud. The ibm cloud. The cloud thats built for your business. Designed for your data. Secure to the core. The ibm cloud is the cloud for enterprise. Yours. We cut the price of trades to give investors even more value. And at 4. 95, you can trade with a clear advantage. Fidelity, where smarter investors will always be. And at 4. 95, you can trade with a clear advantage. [he has a new business teaching lessons. Rodney wanted to know how his business was doing. So he got quickbooks. It organizes all his accounts, so he can see his bottom line. Ahhh. Thats a profit. Know where you stand instantly. Visit quickbooksdotcom. You myour joints. Thing for your heart. Or your digestion. So why wouldnt you take something for the most important part of you. Your brain. With an ingredient originally found in jellyfish, prevagen is now the number one selling brain Health Supplement in drug stores nationwide. Prevagen. The name to remember. Welcome back to squawk box. I want to get back to marc lasry, delivering alpha featured speaker. One of the conversations weve been having a lot recently is about Pension Funds and whether Pension Funds want to be in your business or not. And weve had a number of big Pension Funds get out of the hedge fund industry. The timing of all of that was sort of at the lowest of all low points do you think thats going to change no, i think what youve got is everybody today wants to be much more in locked up capital right so weve actually changed our business, where today we dont have anymore hedge fund money. None . You mean pension money . No, hedge fund money, where we have any money that is quarterly liquidity. All of our moneytoday is locke up for three years or more and thats where the Pension Plans are going. But when you think about calpers, for example, do you think thats changing the game i think what calpers is done is theyve gotten out of the liquid money, the quarterly money, and the reason for that is because people were paying 2 a year for that right now in the private equity side, they dont pay fees until the money starts getting drawn down, so it has a huge impact on returns why lock up for three years is that because you cant do anything if you feel like you need to be able to cash out. You need to be able to invest and worry that someone is going to take their money out. I would love to lock it up for ten years. But three seems to be the minimum. Weve talked about it a couple times over the past 48 hours, this report that seth colorman, a valueoriented investor, is probably going to be returning money this year does that make sense to you . It is the biggest problem youve got on the u. S. Side right now is there arent as many as distress opportunities. If you said to me, look, i would like to give you 10 billion to do u. S. Stress, i would say, ill take one or two the opportunities are really outside of the United States so i think for seth, his focus has been much more on the u. S. One of the things you want to do is return capital. And when the opportunities come back, youll end up getting the capital back if youre an investor whos watching this program right now who cant run around the world the way you are, is there any way to play what youre doing . Or Something Like what youre doing in a Public Market setting . I think one of the things they can do, they can play in what were doing in boulevard, too. As were buying sort of a company, Waste Management company in brazil, i think part of it is to try to see what people like me are doing and try to play in whatever public vehicles theyre trying to do. Okay. Ma marc is going to be sticking around before we get to the treasury secretary thats right. When we come back, well be kicking off todays big events at the delivering alpha secretary. Treasury secretary Steven Mnuchin will be joining us very live in about 20 minutes cnbc will be bringing you live presentations all day long check out some of the names you can expect to hear from today, ray cooperman, jamie dimon, and many more. Squawk box live from the delivering alpha conference at the pierre hotel in new york well be right back. People dont invest in stocks and bonds. They dont invest in alternatives or municipal strategies. What people really invest in is what they hope to get out of life. But helping them get there means you cant approach investing from just one point of view. Because its only when you collaborate and crosspollinate many points of view that Something Wonderful can happen. Those people might just get what they want out of life. Or they could get even more. Delivering alpha, a frontrow seat to Market Movers and shakers. A 3 trillion lineup set to take the stage with the top stock picks and best market ideas. Its interesting, were finding a lot of these opportunities. It all kicks off with the view from treasury a big interview with secretary Steven Mnuchin, just minutes away as this special hour of squawk box begins right now. Good morning and welcome back to squawk box here on cnbc im joe kernen along with becky quick and Andrew Ross Sorkin it is delivering alpha day and its usually very quiet in this studio. This is exciting for me. This has got to be going out, to some extent, on our mikes. We hear it. Theres a pbuzz its happening here this is like one of your parties at the sorkin house. This is loud we are live this morning at the pierre hotel in new york city. Our guest hosts, marc lasry from Avenue Capital more from him in just a bit. And in minutes we will be speaking with treasury secretary Steven Mnuchin well be bringing you that interview live and the big lineup continues including jpmorgan ceo, jamie dimon, bridgewaters ray dalio, and as you can see there, many, many, many, many, many more. We are kicking off delivering alpha with a little bit of breaking news this morning in the ongoing saga between bill ackman and adp leslie picker is here with the detai details. Adp is firing back out with a 69page presentation, in response to Pershing Squares 167page presentation last month. Some key things to point out, Pershing Squares owns both options and shares to comprise its share stake, but ackman only has 2 thats confirming reporting by our david faber yesterday. The rest are in options with a much higher cost basis with about 116 per share, 8 higher than that of common stock. Now, action dp says its cost an about 2 billion to convert those options to shares. This whole situation is highly unusual and significant because the record date has passed, meaning that ackman can only vote 2 worth of his share ifs this gets to a proxy contest so this signals that he was aiming for a settlement here, but it appears he may not get that and adp exposed some details on Pershing Squares new Compensation Structure now his investors will pay 30 performance fees on returns greater than 5 . Before, they charged 20 on positive returns adp says this incentivizes a, quote, swing for the fences mentality, encouraging Pershing Square to make decisions with more weight on the upside than typical hedge funds. This is some serious blowback this is they are pushing back theres no way any settlement is cominge ining out of this. This is them really taking off the gloves saying, you want to fight this way, well fight this way. And hes encouraging shareholders to vote with him. 2 still makes him a top 10 shareholder of adp, but its less o of a convincing argument to other shareholders nan he owned 8. 3 question for you. Do you think that if youre going to mount a proxy contest like this, that there should be thresholds for how much you actually own no. No . No. I think at the end of the day, every shareholder has a right. Theres a cost to doing it even if you own one share, no ones going to listen to you if you own a million share, more people the more you own, the more people will listen to what youve got to say. But theres been an argument made that perhaps we should rethink, from a governance perspective, whether there should be tlesh hehresholds to t contests like this but why if you want to have a contest, at the end of the day, shareholders are going to vote, so what ive never understood is, you know, in my world, you need to have 33 of the debt to be able to control something on the equity side, ive never understood why you can have 1, 2, 3 , anybody cares what do you think about the pay structure changing 30 , once you get 5 returns or greater. Im guessing its a much smaller percentage or zero percentage for gains below 5 whats that well, zero. I think what hes got is, hes saying the first five, and the reason for that, i think investors today are demanding and saying, look, if all youre going to makeis 10 , i want to get the vast majority of that. But i do think at the end of the day, the higher your return or the higher the incentive fee, the more you need to generate a 10 or 15 return so therefore youll go for things that have a little bit more volatility. Thank you very much, leslie, we appreciate it thanks. Lets get a check on the markets in the meantime. As weve been showing you, the futures have been higher all morning long, and this comes after big gains yesterday, with the s p sitting at another new high the s p this morning is up by another 5 points above fair value. Dow futures are up by 67 s before fair value. And remember, the dow was up by about 260 points yesterday if you want to take a look at the treasury yields, the yields coming down a little bit or coming up a little bit after being under so much pressure yesterday. The tenyear at this point is yielding 10. 15 . Right now lets get an update on irma that storm downgraded to a tropical depression as it pushes north into georgia millions of customers remain without power this morning, from florida all theway up through South Carolina also, travelers says its temporarily going to be suspending stock buybacks, while the Insurance Company assesses the impact from hurricanes harvey and irma. Travelers has put an early estimate of up to 490 million out there for catastrophicrelated losses from harvey, including projected recoveries from reinsurance and guys, im leaving, now. Youre leaving us i am, because im going to take you behind the scenes in just a moment, were going to go backstage with the treasury secretary before we all sit down with him in just a couple of minutes. We will see you backstage we wont be apart for long. I know. Bye, guys heres what else is making headlines at this hour dont walk in my shot. I wont ill walk right behind you dowdupont announcing a change in its planned split into three separate units businesses totaling more than 8 billion in annual revenue will be moved from the Material Science Division to the Specialty Chemicals unit this appears to be at least partially in response to pressure from activist investors, including trion, which issued a Statement Today saying it fully supports todays announcement and commends the companys board, management, and advisers for optimizing dowduponts portfolio. The stocks up as a result chairman Andrew Liveris and ceo edward breen will discuss the move live on squawk on the street at 9 30 a. M. Eastern well also hear more from trian at delivering alpha today with cio, ed garden meanwhile, its a big day for apple, as you probably are aware. The company is expected to unveil a number of new products, including its highly anticipated next generation iphone some are predicting the new gadget could cost as much as 1,000 thats so much more than a gadget its not like some yeah, its a lifeline its not like so gopro thing you stick on your bike helmet. As you pointed out, this is something youll go back to work to go find if you forget it. Its 1,000 and andrew will be waiting if line for hours dont miss complete coverage of this apple event this afternoon on power lunch. Thats a nice shot there united Nations Security Council unanimously approved new sanctions against north korea last night the north Korean Ambassador to the u. N. Conference on disarmament said that his delegation condemns in the strongest terms the latest Security Council resolution, calling it illegal the envoy says forthcoming measures by north korea will make the u. S. Suffer the greatest pain it ever experienced. In the understated terms we hear from that country. Marc lasry is here. Youre chuckling a little bit about this, but look, this is something that really has started to affect investors mentality as they look at this north korea being more and more belligerent, having more and more missiles launched up, and even cited as a reason that the dow picked up yesterday, because they didnt launch any additional missiles over the weekend. I know, but if you look at it in a passive resolution, you have that statement. The reason i was laughing is you have that statement and the dow is going to be up, what, 300 points so i find it utterly amazing that you could be in the midst of this, you know, with south korea and north korea, would you want to live in south korea today . No. Right do you know where the sovereign debt so investors are telling you theres no risk. The sovereign debt of south korea trades at around the same level as the u. S. Treasury wow so where would you rather be . So you thought there were no opportunities in the United States what does that mean well, theres a lot of opportunity outside in asia, pau because if youre in asia, youre much, much more worried about this whereas investors here believe its all talk. For someone like me, i look at that and go, well, theres got to be a little bit of risk to that but how do you manage that risk most people assume its either risk either completely on or completely off and theres no way to tell in between. So for things where it ends up being like sort of aaa, people and institutions will keep buying that but where people need capital for a Small Business or anything like that, you can come in and still make sort of a 15 to 25 return, depending on direct lending or anything that you want to do out in asia today are you doing that in South Carolina or other asian nations right now . In south korea, its not somewhere i want to be investing in today when you look beyond that, weve also seen missiles that have flown over japan. Do you think thats outside the range of that trouble zone uptothe it is i think in japan, im still comfortable investing. For us, were investing right now, ends up being in australia, it ends up being in hong kong. It ends up being, were doing a deal in indonesia, a deal in india. So those areas today is where were focused . You mentioned earlier, china was a bit concerning to you because of the rule of law and how long it takes to get anything done. In hong kong, a separate story . Its a separate story its takes too long so our return end up getting killed on that marc, the last time we talked to you, i dont want the steal too much of your thunder today for delivering alpha, but last time we talked to you, you talked about some of the things you were long and some of the things you were short. At the time, you said you were short retail stocks. Are you still . Whats your prognosis for the retail area . I in think weve covered quita bit. I think whatever we made money on, we made money on the issue today is, where is retail going and well all find out the i think the easy money has been made and now youre sort of going to wait. Is this a melting ice cube and the question is, how fast is it melting is it something thats going to be really slow, which is fine . Or something thats pretty quickly, which will have a lot of issues for these companies. When you say the easy money has been made, youre talking about on the short side . Yes are there any potential for potential longs . Do you like amazon or some of these other new players . Or are you looking stocks that have been beaten down. Were looking amazon, im not going to look at that. But im going to look at companies today where their debt has gotten hit and their equities have gotten hit and well probably start investing in that sector again in the next three six months as we get a better feel for whats happening. Anything specifically in retail that you can talk about more high End Companies you would know that have gotten hit, like a j. Crew or a couple others a real sports guy yes would you go to the olympics . Would i go . In south korea . Soon no, i know. I saw the latest finally an article came out, some of the ticket sales have been a little bit soft, but i mean, duh not surprising. I think by then, it should be fine really . Its not that far off. Were going to have some kind of resolution in months then, of some kind . I think youll know whats happening. Im trying to go as an athlete and so far thats been unsuccessful im trying to come up with a quick comeback on what you would really be able to compete with i dont know whether the summer or winter would be i dont see it either way. I dont see it either one maybe tennis. All right, marc, thank you. Thank you its awesome and we look forward to your more its going to be riveting you should just be its going to be the most riveting thing im not detecting a hint of sarcasm there. It will be dont sell yourself short. All right just sell the retailers short. Coming up, well take you behind the scenes of delivering alpha as the news making conference gets underway and our conversation with treasury nucretary Steven Mnuchin is mites away squawk box is coming to you live from delivering alpha at the pierre well be right back. Can we at least analyze can we push the offer online . Legacy technology can handcuff any company. But yes is here. The new app will go live monday . Yeah. With hewlettpackard enterprise, were transforming the way we work. With the right mix of hybrid it, everything computes. Welcome back to squawk box. I am whispering, because we are at the pierre hotel at the delivering alpha conference, just getting ready for this big event. 3 trillion of money under management here. We have a huge lineup, ray dalio is going to be here, steve schwartzman, jamie dimon let me take you a little bit behind the scenes because the big event is about to start and steve mnuchin, the treasury secretary, is just back here theres his brother, by the way. And the whole crowd, everybody getting ready for the event. We have it coming up in just a couple of minutes. I want you to stick around, security is here secret service squawk bo rur wxetnsith all of this in just a couple of minutes. My dell Small Business advisor has gotten to know our business so well that is feels like hes a part of our team. With one phone call, he sets me up with tailored products and services. And when my advisor is focused on my tech, i can focus on my Small Business. A dell advisor can help you choose the right products with powerful intel® core™ processors. Welcome back to squawk box. Were live at the delivering alpha conference treasury secretary Steven Mnuchin is about to take the stage. Hell be with joe, becky, and andrew and while they get set up, thats the reason youre looking at me and the guy i usually do my show with in the morning, along with carl quintanilla, parts unknown at this point with carl doing fabulous work down there. Down in florida you and i will have some interesting stuff to discuss on squawk on the street including Andrew Liveris and ed breen, respect live i chairman and ceo of dowdupont and a big reshuffling that took place among the key companies, materials and specialty in terms of whats going into them. Right, they create basically a 3m company, which is the one that has got food and its got safety some really exciting things but more importantly, david, as a former fund manager, i saw these estimate cuts and i blanched but as someone who knows the ins and outs of where people want certain things, i think you could say that theyre very happy and the longer term is better i think they were under pressure from at least three, if not more investors of course, dan loeb at third point. Trian, glenview. They all seem to be somewhat happy with this change theyve added about 2. 4 billion in ebitda to the Specialty Products part of the company, the one led by breen they were looking for as much as 3 billion, but getting most of what youre looking for. They seem to be genuinely pleased with that. Now, there may be a move on to Capital Allocation what about buybacks . What about the dividend . And of course, as you point out, i dont know if there will be a nearterm reaction to some of the guidance i think that, actually, the hedge funds that you mentioned are the ones that they are in favor of that means they could buy more, they would be more excited why are we talking about this . This is the Worlds LargestChemical Company a lot of people thought it was shotgunned, initially. This is far more than that if it were just some little Chemical Company, it wouldnt merit five seconds of our time, but this is the biggest Corporate Restructuring going on in the world right now the two things that are happening in the world right now are this and the, should i upgrade . Should i upgrade its incredible, in the last 24 hours, i cannot tell you how many people who have said, i have the six, with i think i should upgrade i ha i have the 7, should i upgrade and this country has not seen a debate among consumers that i can recall apple will be very happy as long as people are talking about it and debating it weve talked as well about that 1,000 price point we were talking about it yesterday. Given the equipment installment plans so many people have in the u. S. , you never actually cost what the actual cost is. You want to know your monthly cost do you think it will be an impediment to sales . No. And theres a weird tiffanylike component to this. In china, they like the really expensive. They like the watches. They like they cant own big homes, so theyre not buying those 8 million mansions that what do you mean, 8 . 18 that will be washed away. Thats right, they tear them down, anyway in china, the way they show their worth, this is how you show your worth. This is 1 thor,000, i want 500, that shows you dont have any money. So china becomes even more important for apple in some ways more important. They face a lot of competition there, as you know but one name we never talk about here, huawei, for example. Kmart, do you mean . Is that what you kmart versus tiffany a lot of people used to shop at kmart before it became kmart they that was so long ago, its hard to remember. I remember but these are the things people are discussing and look, we have a market thats filled with news, but people want to know really whats in its incredible how Little People know about this phone, given how far talk there is about whos in it, whos not in it. Weve seen a lot of stocks fly with the idea that they will have tremendous economic content, whether it be skyworks or broadcom. Whether it be nxpi david, talk about something, eliot partners is still agitating that qualcomm has to pay more where is that . You know, its funny, i havent checked in on that in a little bit, because they still need their approvals to come in, but that is still a key question mark for qualcomm, whether the 110 cash bid will hold the stock price traded well above that i havent even looked at it, jim. Its at 112 and change. And as we pointed out, they need 80 to tender its going to be very difficult. Ive discussed it, of course, with the ceo at this point, all qualcomm can really say is were committed to where we are in that deal, until theyre not. But you have said from the very beginning, you have to be very careful about the all or nothing apple lawsuit. David, only nxpi makes itso its all or maybe nothing. Because if and the last ruling was not so great. Qualcomm, theyve got much more at stake than any tech company i know i know, its funny. We need to check back in after the summer has now ended with all of the stories weve been following, including that really historic battle between qualcomm and apple, that has been going on and as you said, is so key to qualcomms future, in terms of certainly its royalties and its ip portfolio, which apple is arguing, they charge way too much for when it comes to the phone, given the percentages it takes. And at a 1,000 price point, that number is only going higher right and i think that even though they say, well, you had nothing to do with the o with the additional features weve added. Qualm com would with say, of course we have you jumped in ten years ago and took advantage of everything weve done until then. Apple reminds me of the battle going on with amazon and with walmart, versus the suppliers. I had david taylor on last night. I know he spent most of the time talking about trian. Well, well speak to ed garden today. We will were back to activism now of course, it played such an Important Role in this reshaping of dow dupont. You spoke to david taylor, the ceo of png, in this fight with trian which is getting more and more passionate. Passionate is good. Because there were other lets put it this way, initially, i think that this was more gentlemenly, but there has become blue card versus white card and blue card when you start getting into the colorof vote blue, it almost feels like the president ial election. What was the Key Takeaways from taylor last night when he joined you on mad money . He said it was dangerous to have mr. Peltz on with dangerous strategies i retorted that one man can do that and david taylor said, yes, that man can. Thats been the interesting part of this, i think. This idea that even adding, and all peltz wants to be is added which, his key question to shareholders is, why not why not me and thats how david taylor sta started the idea that one guy could change the entire composition of a board, jim but this why not youre going, it he didnt personalize it what kind . Why is this man qualified . This is a man who is from consumer products. But mr. Taylor said, food. And were not food hes a man with aged materials, looking at a Company Eight years ago, not at his company. Why is this so important think about who were talking to today . Ed garden. How did old dowdupont start . It started with activism. Jim, were beginning to get to the treasury secretary and of course the squawk box gang is going to take it from here becky, take it away. Thank you so much for joining us thank you its a pleasure to be with you in new york. Its a pleasure to have you here this whole conference is about delivering alpha and we know that you know this and understand it very well from your previous life at Goldman Sachs and beyond and we have an entire list of questions that we want to ask you about in that vein but given the Historic Events that weve seen over the last several days, first with Hurricane Harvey and now with Hurricane Irma, we would like to maybe start off in this vein i know youve been meeting with the president recently and im wondering if you can give us an update from the administrations point of view about where we stand with these storms . Starting with the first storm, the president has been incredibly engaged weve been having cabinet meetings constantly, working with fema. On sunday, i was with the president at camp david, we were monitoring the situation via video. And sunday afternoon, i went with the Vice President to fema headquarters and let me just especially thank all of the people in both the states and the federal government who have been working around the clock to save lives its been an incredibly, you know, a very important response to two historically terrible storms we know that it is still very early to try to get a feel for the Financial Impact of these storms we are still in a recovery and making sure that people are getting through the storm. But we also know that those numbers will be very large billions and billions of dollars. Weve seen an initial payment for that coming from the government with the bill thats been passed for 15 billion for harvey but what do we do with a second round of funding we know the numbers will go up again, i think the first thing is the president wanted to be very clear. We needed to make sure we got the money to the states, so that they could protect citizens and property, which was the most important issue. And we accomplished that and the first payment is a down payment. Well see what we need to spend more, but the president will make sure that whatever the federal government needs to contribute to this, we will do so 100 to 150 is moodys latest estimate for both storms, which would be equal to katrina. Any affect on ongoing gdp numbers . Do you have an estimate . Half a percent, perhaps . And secondly, does the fed change anything that it was planning to do based on this and even had mark grant say, not just because they were going to hold off in september, anyway, they might even cut at this point. Could you imagine that i cant comment on what the fed will do. Because, as you know, as treasury secretary, i respect their independence i would say there clearly is going to be an impact on gdp in the short run. We will make it up in the long run, as we rebuild, that will help gdp so i think its too early to tell what the exact estimates will be, but i think it wont have a bad impact on the economy. We may not ive got to ask, yellen, she get reappointed . Im working closely with the president on the issue he hasnt made any decisions and thats one of the things hes still considering. Hes got a bunch of people now that there are some openings on the fed yeah, theres a lot of good people the chair is, obviously, quite talented and shes being considered, but theres a lot of great people weve been meeting with and considering, as well . Is gary cohn is still on that list this early in the conversation where do you think gary cohn stands in all of this, given that the president has talked about him as a candidate, and yet what we do hear constantly, over the last several weeks, some of the comments he made publicly, that perhaps maybe the relationship is has been compromised. I appreciate you asking me and i would be disappointed if you didnt, but i obviously will respect the confidentiality of the response and not make any comments on any specific people that the president is considering. Putting that piece asaid, what about the relationship can gary cohn . Your own relationship with him, the president s relationship with him theres a view within the marketplace and were going to talk to ray dalio and others all about this that gary cohn and you represent a very important piece of this administration and that if perhaps gary cohn were to leave, that the markets would take that as a bad sign. Well, let me say, gary and i have worked very close together for a long period of time. We worked together at Goldman Sachs, we were in the same Partner Class at Goldman Sachs were working very closely together on taxes. I was with him yesterday on the hill well be back on the hill this afternoon. Well both be at the white house for a dinner with the president tonight on tax reform. And let me just say, i appreciate working with him. You mentioned the taxes, youre helping us to get into all of the different areas we want to go the kumbaya moment, i dont know, thats one of your words that you use a lot yes senator schumer, Speaker Pelosi, does that that the president had recently, did that change the dynamics in your view of how to approach tax reform . Not at all. So i would say, first of all, i give the president a lot of credit we were in the middle of two major hurricanes we needed to get money to the states we were in the middle of having the dliebt limit. And the president was very clear. He wanted to cut a deal, he wanted to cut a deal quickly we moved the debt limit substantially further back we had to fund the government. We were running out of money i was operating it like a piggy bank and we got out of there and showed the American Public that were putting politics aside as it relates to tax reform, its been my number one priority it will be and were going to get this done does it change it from reconciliation to a bipartisan bill the president flew a senator heitkamp back to north dakota. Do you foresee this being permanent and 60 votes or we just had senator perdue on and said, just outright said, this is going to be reconciliation hep didnt even couch it ive always said, our hope is that it is bipartisan. This is about creating jobs. This is about creating a middle income tax cut and making our businesses competitive we have one of the highest tax cuts in the world, we have this crazy concept of deferrals, we leave trillions of dollars offshore these are issues that both democrats and republicans should understand having said that, if we cant get 60 votes, were prepared to use reconciliation to get it done this is the most important issue for the American Economy lets talk about those meetings you have later today. You just mentioned that you will be going to capitol hill to talk to senators there about it i know youre meeting with republicans. Will you also be meeting with democrats from the Senate Budget committee . Ive been meeting with republicans and democrats since january. Ive been working on taxes with the president since the campaign this this program ive been working on for a long time and ive been meeting with lots of different groups, both republicans and democrats on this as youre getting closer to finding more details, i know you have said that those will be released later this month, but we still hear a pretty wide variety of opinions about where we could see a Corporate Tax rate everyone from paul ryan, who says, in the low 20s, recently, to the president saying 15 . Where do you think it falls within those ranges . Let me just comment, i think on the business side, and i mentioned, this is business. So this isnt just the Corporate Tax rate, this is also, we want to create relief for passthroughs, which are a major part of the economy. We need to make this system competitive. And thats what were trying to do and i mentioned turning it from a worldwide system to a territorial system the president has made it clear since the campaign, ideally, he would like to get it down to 15 . I dont know if well be able to achieve that, given the budget issues but were going to get thisdow a very competitive level and what the exact number is, is less important, and whats more important is making sure we have a competitive system if its in the mid20s, is that a win again, im not going to comment on whats a win and whats not a win again, this is a pass fail exercise so passing tax reform, which hasnt been done in 31 years, thats a win and what the exact number is, well see. The passthrough issue is what drives a lot of people on the left crazy, because all the rich people are going to rush to become llcs, to get to 15 or 20 , and thats part of the 5 trillion that the left is worried about that this plan could add to the deficit 2 trillion of it almost is through the passthrough issue youre not going to get any i cant imagine any democrats coming onboard for that. First of all, we are very concerned about the debt its gone from 10 trillion to 20 trillion, which we just passed and we are concerned about that. But having said that, were focused on Economic Growth the difference between 2 and 3 is over 2 trillion to the government and were going to make sure when we set passthrough rules, and this is what weve been working on since january, that theyre not used as loopholes. Theres a way to do that . Absolutely. How do you do that . Give us a framework for what that looks like . For one, Services Companies that are passthroughs will not get the benefit of the right so, you know, kind of what were not looking to do is, if you earn money thats clearly income, okay, if youre an Accountant Firm and thats clearly income, youll be taxed at income rate you wont be taxed at passthrough rates if youre a business thats creating manufacturing jobs, youre going to get the benefit of that, right because thats going to be passed through to help create jobs and better wages. One of the other issues which matters in large part to this audience has been the issue of carried interest and what rate that gets taxed at the president talked for a long time about closing that loophole does that get closed or changed under your tax plan . The president has been very clear that for hedge funds, they will not have the benefit of carried interest one of the things that we are working on, as it relates to other entities that do create jobs, whether its in different sectors, we want to make sure that we encourage jobs thats something were still working on this is where it gets complicated. Partnership accounting is difficult, you get into oil and gas, real estate, private equity how do you separate them out the good news is, we have over 100 people at the treasury working on this. Weve got a lot of people at the house and the senate just give us a sneak peek so that we understand your thinking whats the bad news i know this issue is incredibly important to everybody in this room its less important to the American Public and creating jobs youve alluded to the difference between 3 and 2 . So were talking about dynamic scoring, were talking about not paying for this, i imagine thats going to be in the final plan thats not going to be what the democrats want in terms of every dollar being accounted for thats still the case . Well, again, i cant comment on what the democrats want, but what i can comment on is what makes sense. Fuf first of all, dynamic scoring does work. To the extent that you change rules. So if we go from an International System to a territorial system, we will bring back jobs. We will bring back trillions of dollars and thats going to have an impact on the economy so, yes, i expect therell be a couple of hundred billion dollars accounted for on dynamic scoring. I think what Larry Summers called it ludicrous i think that was the word supplyside fantasies or something . Well, with i woui would neve anything bad about another treasury secretary, although theres lots and lots of economists that will line up on the other side of this argument. Let me take this one more step further lets say, and i dont know whether you know for sure it wont happen, lets say the president says, chuck, nancy, im going to give you infrastructure along with this, if you go along with this. Youre talking about dynamic scoring, potentially, adding to the deficit, and an infrastructure bill. Is that possible that we would we would be at 30 trillion in no time. Well, again, we have no doubt we are not going from 20 trillion to 30 trillion but what the president is focused on is creating jobs, creating economic opportunities, creating manufacturing in the United States, having us competitive. And thats what were going to do but could you see him proposing that or do you know whether he will a way to bring them in absolutely. The president is very focused on infrastructure weve been working on a plan we will reach out to democrats on that plan and thats absolutely on the part of tax reform . People have asked us whether or not we should put them together or not. My inclination is it makes it more complicated youre talking about two complicated issues i think when you put them together, its harder to do. But to the extent that the democrats and republicans want to put it together, congress has that option. Youve had a remarkable sense of confidence that something is going to happen this fall. But you also were quite confident and explicit earlier in the year, suggesting that we would have signed tax reform by august what was the miss in terms of the confidence then and has something changed . Well, one of the things this audience understands, as do i, is that markets move so, the answer was, in january, we had a plan that was lined out, working with congress, that we thought we could get tax reform done by august. And that was based upon doing Health Care First and doing health care fast i think, as you know, health care took longer than we expected we then got into the august recess thats what pushed back tax reform so, the market moved im now incredibly hopeful were going to get this done by the end of the year. The president still occasionally tweets about health care is it off the agenda as far as youre concerned right now are we moving on to tax reform and beyond before that circles back around . The president still very much wants to get health care done. So its not the major focus at the moment, but its on the president s agenda and he wants to get health care done steve bannon over the weekend on 60 minutes effectively said that you were misled, that the administration was misled by the senate, i by congress about what was possible in terms of this timeline do you think you were misled again, i had the opportunity to work with steve closely on the campaign and over the course of the last year and i respect him. I think the word misled was a little extreme i do think there was an agenda as he said on tv, when the president got elected, we sat down with the leadership and we looked at a calendar having said that, let me be clear, obama was it took a long time to get his two major accomplishments done so for us to get one accomplishment done this year, in the president s first term will be historic and thats what were working on is there any way that tax reform could be backdates to january 1st of 2017 . Absolutely. Still something were considering and would be a big boon to the economy. Does it matter if its only ten years . Ive been consistent on this. Permanent is better than temporary and temporary is better than nothing. So you wanted 18 months this has been reported you wanted 18 months on this debt ceiling and then at the last minute, supposedly, you tried to talk him into 6 it came out 3. So maybe not what you wanted does it set us up for just brinkmanship does it set the republicans up for brinkmanship in december with the democrats when they say, were not going to do tax reform unless you do this our way well, look, i did want 18 months and as treasury secretary, i obviously want the longest period of time for the debt ceiling. As ive said, congress has every right to control spendup. And if ultimately the government shuts down, which would not be a good thing, thats their right if they cant debris on spending the debt ceiling is about paying for things weve already committed to so i did want to extend it longer the president , rightfully so, wanted to get this done and particularly in the wake of two hurricanes, well come back on the debt ceiling again. We have a commitment from the democrats and the republicans that were never going to let the government default and im comfortable where we are. The rationale was, we can get this debt ceiling stuff out of the way and work on tax reform, but a lot of other people say, it just makes it even more difficult, it mucks up the works in december for getting tax reform yopi dont think so at all. We are super focused on tax reform now it clears the calendar for tax reform, for december 8th, we have the continuing funding, the government through december 8th. We dont have a shutdown at the end of this month, in the middle of two hurricanes. And i think thats something that the president was very focused on and for december, we will be negotiating funding. Now, we could have done and this wasnt widely reported, we could have done a oneyear deal on the debt ceiling. Had we done that, it would have been linked to one year of additional funding for the government, but the president wants to raise military spending thats one of his main priorities, particularly in the midst of whats going on in north korea and other areas. And the president wants to increase military spending and thats something hes going to demand for december i want to go pack to taxes for one sec and on the individual side. I remember when you sat with us on the set of squawk box and one of the things you said is that the wealthiest among us, their tax rate will not go down. Do you think thats still true i feel very honored from that interview, because in my conforms, confirmation, i now have a rule named after me theres the buffett rule and volcker rule and the mnuchin rule named after what i said and the objective, i think, sas you know, were looking at a system that gets rid of state and local Tax Deductions so in the hightax states, two of which ive had the opportunity to live in, new york and california, yes, i can assure that there will not be a tax decrease what will that mean more states like new york, connecticut, new jersey, california if those they can no longer be backed up by the federal government that they will have to have these high rates and realize their taxpayers are going to get crushed . Im hopeful in these states that taxes dont go up so well have a slight rate decrease on the high end, to offset the deductions. And im hopeful we can size that so that it doesnt hurt new york and california they may not get a tax decrease, but these are the details that will be a federal tax decrease, but well end up paying it in state taxes . Thats how its going to go down again, im hopeful that theyll get a slight decrease in federal government, which will offset what they will lose on the state deductions but again, these are the details that although the group of six has a plan, are going to go through final decision and the two taxwriting committees talking about state taxes, im curious of what you make of the competition going on among states these days, and the incentives that theyve been offering for Different Companies to come to them. Foxconn obviously making the big deal with the state of wisconsin. Amazon Just Announced last week, a big competition for them to come some of these incentives seem great, because theyll create jobs, but theres a larger question in the case of foxconn about whether they actually pay off and whether it takeses 25 to 30 years to pay off. How do you think states should think about that i think the great thing about the foxconn announcement is that we have manufacturing being brought back into the United States and being brought back into the heartland of the United States, where we need jobs so i think the president was instrumental in that and to me, thats a huge win i cant comment on the state negotiations, because i wasnt part of that we were part of the deal of bringing them into the u. S. And make suging sure that we could t a competitive system and i think one of the reasons they did that is because they were comfortable with where we were going on tax reform but im saying, from a state perspective, if you said to yourself as a citizen of a state, its going to take 25 to 30 years for us to get ourmone back, if we get it back at all, does that make sense i havent looked at the specifics of im familiar with what the state offered, but i havent gone through the numbers on whether it makes sense or not i assume they think it does make sense, and i think competition between the states is healthy. You downplayed the overtures to the democrats a little bit, that the president agreed upon, based on that it was necessary for hurricane relief, et cetera. But its been, obviously, played up a lot in terms of how Mitch Mcconnell feels about this about how, you know, whether paul ryan, you know, looked askance at the way it went do you have are you worried that certain relationships are beyond repair between the president and certain republicans at this point . And that he needs to actually Court Democrats at this point, or duke all the republicans will be there for you they werent there for you on health care. Well, i dont want to downplay it, because i think imt that the president reached out to democrats and showed that he could get things done on a bipartisan basis and i think thats incredibly important. The president would like to have bipartisan support having said that, i can tell you, i was with paul yesterday he was with the president at dinner earlier in the week im going to be with mitch again today. These relationships are very important in the relationships with the president are there. I saw a headline it was the end of the two party system. I dont think we have to worry about it being the end of a two party system. The president is still a republican the president is absolutely a republican i wanted to turn the conversation as am i, by the way i know on this show and others thats been questioned i wanted to ask you about north korea and where we are north korea said the u. S. Will, quote, pay a due price for leading this drive with additional u. N. Sanctions. You have said their behavior is unabsentable what do you have in your tool kit at this point . Its a great opportunity being treasury secretary i had a lot of experience in domestic and international finance. Theres a major part of treasury, i probably spend 50 of my time on national security. The treasury staff has given me a ph. D. These sanctions work they works with iran the president i fundamentally believe that we had iran on the five yard line and we could have cut a better deal, that a tenyear deal was not good enough on iran in north korea, Economic Warfare works. I made it clear that the president was strongly considering and we sent a message that anybody that wanted to trade with north korea we would consider them not trading with us. We can put on economic sanctions to stop people trading we worked very closely with the u. N. Im very please the with the resolution that was just passed. This is some of the strongest items. We have more tools in our toolbox and we will continue to use them and put additional sanctions on north korea until they stop this behavior. We havent been able to move the needle on china. Which seems to be the real mover on this in terms of able being e to apply the pressure. We have moved the needle on china. What they agreed to yesterday was historic i put sanctions on a Major Chinese bank thats the first time thats ever been done if china doesnt follow these sanctions, we will put additional sanctions on them and prevent them from accessing the u. S. And International Dollar system thats quite meaningful. Does that put any u. S. Multinationals at risk theres a balancing act in all of this. Let me be clear the president s number one concern is north korea and his security when it comes to nuclear testing, when it comes to missiles, our number one priority is the security of americans. Cyber security and we have learned about 143 million americans identities being compromised. At Morgan Stanley its not the first of the data breaches that we have seen. It looks more and more likely like americans can expect these things to happen what can treasury do about this . Americans shouldnt expect these things to happen the Current Situation is obviously quite unfortunate. I cant comment on the specifics of that. But i can tell you, this is something that i am actively involved in. Tom bosser and i were on several calls yesterday. Cyber is a big focus of mine for two reasons. One, i oversee the irs so we have an incredible amount of personal data we want to make sure that that is safe. Number two, im concerned about the Global Financial system and keeping it protected i can assure you that were working with all of the intelligence agencies on cyber issues to keep americans information safe. Where do you think the liabilities for american corporations should be theres a piece where you say they are a victim. We all become victims. On the other side, you have to decide whether they have done all the right things in advance. I think its a complicated issue. You have both international and government actors as well as you have private people. I cant comment again on the specifics of this. Our number one concern is making sure that the data is safe and working with industry on that. But i do agree with you, the issue of liability and responsibility for corporations, those are very important issues. And i think Public Private partnerships on cyber is critical this is not something that the private sector can do alone and its not something the government can do alone. If congress doesnt action in six months on daca, what would the president do i cant comment on what the president will do. He wants them to act he will take it into account. After Speaker Pelosi asked him to tweet, he tweeted we will deal with it you saw ceos, the new arbiters, ceos wrote a lot ofler letters about daca and they wrote you about whether you are going to stay on him they are pr canaries in the coal to start with. Have they become too sensitive to some of these things . Or do you welcome the speaking out on every issue first of all, im staying on. Its a great opportunity to serve the president and the country. As it relates to daca, these are complicated issues we have to have laws in our country. There have to be immigration laws we cant just pick and choose what laws we want to enforce and what laws we dont want to enforce. This is an issue that the president had said, its not legal the way its done, that congress should work on that the one comment i would make on ceos, i think ceos have a responsibility to their company and thats their responsibility. But they also have responsibilities to advise the government every time theres an issue that the government does that ceos say we dont like this and were not going to give you advice anymore, that to me doesnt take sense. What was your reaction to the councils being dismantled . My view is that ceos being on the councils didnt necessarily mean that they endorsed every single policy of the administration or the president. The purpose of the councils was to give the president advice on issues that they had do you feel like theres been a cutoff between the not at all. Was it symbolic i think theres plenty of ceos who meet with us andwe will continue to reach out i personally think it was a mistake that the councils were disbanded. The stock market yesterday the s p 500 closed at another record level when i spoke with you earlier in the year we talked about how the administration sees that as their report card for whats going on do you still see it that way i think theres no question that the stock market has an expectation that were going to get tax reform done and thats partially built in i think also the stock market has expectations that were going to create significant growth, which is what this president and this administration is focused on yes, i take that as a big vote of confidence in the economic plan a couple more quickies before we wrap up i do want to touch on russia and what you thought of facebooks announcement last week that there were 100,000 worth of ads bought by government sponsored entities to influence the election again, ive obviously seen intelligence on this i cant comment on any classified information or what their role was or what it wasnt i personally think the sooner we get these investigations over and behind us, the better we are. Again, im not going to comment the latest leak still about don juniors meeting, still no new stuff. Nothing else no smoking gun, no leaks were still on the don junior investigation. Talk to hope hicks thats where it is now is that enough smoke it seems a little overblown to me. I cant comment on the specifics. Personal question steve bannon said over the weekend to charlie rose something fascinating about the way he thought about his relationship with the president. He says, when you side with a man, you side with him and you side with him that way publically but you dont necessarily side with him that way privately. Whats the difference between the conversations you are having with us now and the conversations you have with him inside the room . Look, first of all, ive known the president for over 15 years. I worked with him on the campaign so ive had the benefit of working with him for a long time and i obviously feel comfortable with telling him my ideas on things sometimes well agree. Sometimes we dont agree hes the president and i respect that no different than a lieutenant who reports to the general i work for him fair enough the treasury secretary, mr. Mnuchin, thank you. Thank you thank you thank you very, very much [ applause ] good morning welcome to squawk on the street. Were live from the delivering alpha conference in new york city we will hear from carl momentarily on the aftermath and impact of Hurricane Irma lets give you a look at futures as we are 30 minutes from that opening bell you can see a higher open after a nice move yesterday. Quite a nice move, in fact, overall in our broader markets european markets, we answer. Lets see. Im not at the nyc they give me spain and italy. Look at that