percentage point dax is slightly weaker, relatively flat as is the cac. crude oil prices, crude oil yesterday was flat ended up by two cents this morning another 44 cents $55.35 so wti above $50 a barrel. >> back to the markets in a moment first the latest developments on hurricane maria. the hurricane making landfall on the island of dominica as a category 5 storm it is now weakened slightly within the past few hours to a category 4 that's the good news forecasters warn that maria could reach strength as it nears the virgin islands, puerto rico also in maria's cross hairs. you know, when these hurricanes come, they come. this come in waves we are also following developing stories out of southern california overnight a magnitude 3.6 earthquake shook parts of los angeles it happened at 11:20 p.m. local time dren residents as far away as costa mesa felt the rumble joseph, why -- >> never heard of costa mesa >> i called it so ed ied it cos, i'm mesa. i'm a mess-a in the morning. >> look at my script it's this big. among the top corporate stories. >> you're a pro. you can do it. >> you can see, i would never be intimidated. >> costa mesa. >> america's largest toy store filing for bankruptcy protection toys "r" us announcing chapter 11 filing late last night. it's one of the largest ever by a specialty retailer the move comes as toys "r" us looks to relive its $4.9 billion debt load to reduce that the company says operations will continue as usual at its 1600 toys "r" us and babies "r" us stores around the world. more bad news for equifax. it's weird finding out about another -- >> this one takes the cake >> before the other one. >> they didn't say anything. >> the credit reporting agency saying they faced a second security incident earlier this year actually it's first before the one we know about. this is separate from the breach announced last week that exposed the personal data of 143 million u.s. consumers the attacks involved the same intruders, but in a statement the company says the two incidents are not related. and that it has, in its words, complied fully with all consumer notification requirements related to the march incident. >> once again, we did everything we had to do we didn't tell you about this but we complied with all the requirements, tone deaf in terms of the response. >> i think the guy may have made cramer's hall of shame >> he should >> yeah. >> shares have fallen 19% in the last week. lucky some of the executives were able to get out of stock prior to this. >> lucky >> federal reserve policy -- >> lucky until the s.e.c. and others start calling >> depends on your perspective might get lucky. policymakers will kick off two-day meeting in washington. look for august housing starts and building permits at 8:30 a.m. eastern, along with import prices and second quarter current account figures. as for earnings, auto zone reports before the opening bell adobe, fedex and bed bath & beyond are out after the close andrew, if i seem a little different today -- >> yeah? >> i don't believe in these. i don't believe in them. it says it's good that i have strong opinions about certain issues, but don't expect others to agree with you. >> okay. >> you won't change your outlook no matter how hard you push it don't waste your time trying agree to disagree. leave it at that just as we go through the show today, you know, you're ready to -- i won't engage, maverick i won't engage it will be pointless for you to try to get me going or for me to try to get you going. i'm not -- it's not going to happen okay >> we will have a much shorter t show today >> viewers might enjoy this. >> i know. i know >> heat. heat and light light and heat >> they just said "squawk box" starts right now the u.s. senate passed its version of a 7$700 billion defense policy bill backing president trump's call for a bigger, stronger military. the house already passed its version of a bill at a similar spending level the two versions have to be reconciled, it could spark a fight over spending. senate democrats vowed to block big increases in funds for the military if spending caps on nondefense programs are not eased. this morning president trump set to address world leaders at his first u.n. general assembly. michelle caruso-cabrera has more on that. >> reporter: we're here at the u.n. general assembly's annual meeting. this is when every member of the u.n. is invited to send their president or foreign minister. brazil always goes first united states second expect president trump's speech 10:00ish it's a highly anticipated speech there's enough leaks to know we expect it to be nationalist in tone topic also include north korea, iran, also venezuela north korea and iran have been obvious on the list, but the u.s. administration has gone to great pains to say that they will be active on the issue of venezuela while here at u.n. in fact, last night the president held a dinner with the president of brazil, the president of colombia, the president of panama, the vice president of argentina and vice president pence was there as well the policy portfolio has been very active on the issue of venezuela. president trump spoke about the country last night and about the pervasive effects of the socialist price controls >> venezuelan people are starving, their country is collapsing it was one of the wealthiest countries in the world for a long period of time. now the people are starving and the country is collapsing. who would think that's possible? >> reporter: notable omissions this year, vladimir putin of russia will not be here. xi jinping of china will not be here nicolas maduro of venezuela will not be here, nor will enrique pineda of mexico. the fed kicking off much an tess pa anticipated policy meeting today. joining us is eric knudson a multi asset chief investment officer from new burger, who has 2$267 billion under management. ian, i want to start with you. this has been swirling around the set, mark grant's comments about the liquidity, global liquidity and how it's still flush. barely starting to stop the -- slow down the additions over in europe, while we're very slowly supposedly unwinding some of this stuff so that's positive and i understand that the japanese stock market hit a two-year high today. >> yeah. >> you know why? because they're re-elect this guy, who is mr. abe-nomics, also mr. easy money is it this simple what's happening now? >> i think so. we're taking away a teeny sliver of the gigantic wave of liquidity. asset prices are hugely overinflated everywhere, including the bond market in the u.s. what's going to happen this week will be an announcement of a teeny move, janet yellen says it will be like watching paint dry. it will be so small and so boring and trif wrvial, and intt rates are rising slowly in the u.s. and not anywhere else we're at the start of a process. what's happened before boosted growth, asset prices, but also distorted asset markets in a way that's not been helpful. it's removed asset prices from where the real economy would have put them otherwise. >> at the same time, i was reading this morning a zero hedge piece on a deutsche bank guy, one of their head guys, global assets have never been more overvalued than now in history. >> i think that's right. i think emergency policy globally has been in place for long after the emergency was passed so i think central banks did the right thing. >> overvalued doesn't mean they'll be fairly valued at any time soon. >> no, markets can be irrational >> they can be irrational for things to catch up we had a guy yesterday, i don't know what hell he was saying, he was saying stay long, everything great, but the market may go down 40% a typical sell side if things go up, we should buy. if things go down, we shouldn't. do you think we're set up for major -- are they that much overvalued >> i wouldn't say the most overvalued ever. there are segments of the global marketplace hugely overvalued, but also areas where we say there's interesting opportunities. our view right now is this is not a great time to take market risk i wouldn't pile everything into equities and let it ride not at these levels of valuations, particularly in large cap stocks, not at this level of volatility. >> would you raise cash? there are people fully invested. >> we're fully invested, but neutral on the stock/bond mix but finding interesting relative value opportunities. the spread between u.s. large cap growth stocks and u.s. small cap value stocks, 20% difference that's an extraordinary difference in performance. that creates opportunities in areas like small cap values, some bank stocks, et cetera. if we see rates rise we don't think inflation is priced in ten-year tips break evens at 1.8%. peek qe, they're starting to pull out the stimulus. by 2019, there needs to be a trillion dollar of treasury bounds bought by somebody other than the fed and chinese they're creating interesting relative value opportunities now. what was i going to say? i don't know i'll move on to something else so, as we slowly try to hire, there are some things that you wrote about that could derail this right? the biggest worry. i remember what i was going to say. kovosicich and one of his buddies, wrote a piece, the fed needs not to fear low inflation. you just said you're worried about the tips not showing inflation. >> we're saying those represent value. >> is there no inflation >> inflation has been squeezed out over the last few months there's a mini raging debate about how long that will last. i think that's beginning to unwind already we have seen numbers bouncing back to something like normal. i'm worried the next six months or so we see a shock in inflation expectations >> a shock >> a shock they've been beaten down so far no one expects inflation all we need to see is an increase for people to say hang on, i wasn't waiting for this. >> with oil, copper, some other things, that seems to be -- caterpillar at a new high. some global growth would pore tend inflation >> there's a ton of global growth >> that's weird then >> the key thing for the u.s. is what happens in the labor market i think before the hurricanes distorted everything, it was looking strong it will get stronger it will come back. we'll see chaos for a while, but then it will come back there that will give a different picture of where inflation is going to that's what the fed responds to. the market says one hike and you're done. i don't buy that >> there may be, andrew, some fiscal stuff coming that people -- they won't be blind-sided, did you see they're supposedly one vote away from the latest repeal. >> right >> we'll know about it tomorrow. mccain is on, which he was the guy last time. he is supposedly the arizona governor saying i'm going with this it's lindsey graham's deal. that's mccain's best buddy supposedly this might happen this week. did you see a trillion and a half in tax cuts >> i saw that. >> so there's things -- >> could still happen. >> things you may need to start talking about washington when is the last time you talked about washington other than the fed? >> it's been a while i always assumed tax cuts, but not 1.5 trillion, especially in a economy that needs zero tax cuts >> now the accent is coming out. you're returning to your socialist roots. we won't have your healthcare system here. >> i think he's talking about the stimulative perspective. >> doesn't need it we always need tax cuts. >> unemployment is 44.25%. >> so you think a tax cut could lead the fed to raise rates quicker. >> will make them more determined >> wouldn't it be nice to get up to 3%, 4% in rates >> it would. >> make up your mind is it a bad thing they go up i wanted them to raise rates i want normalization >> do you need the tax cuts and the healthcare and all that to get there? >> i don't think rates -- raising rates will trash the economy. it will teach people we're normalizing, and they can behave in a normal way rather than being scared and not taking risk >> there's some opportunities where things are not priced in yet. if you get pro growth legislative action, very little is priced in now if anything was, you would have seen better performance from the cyclicals, companies geared towards the u.s. economy, will you see a rotation within the equity markets u.s. overseas that'sfunds we're positioned towards value names there's interesting opportunities, if you get some positive outcomes out of washington >> positive for some obviously. not everyone would call either one of these things positive >> pro growth. >> preaching to the choir. thank you. norwegian? knudson? >> my version is danish. >> danish. i think -- who is the other guy? yan -- the bald guy, with the big glasses. looks like trum etruman capote. >> tknippon. >> that's english. they don't pronounce the k >> i would have it it's a waste of ink and paper. >> why do we use silent eshgs. >> that's different. that's a vowel when we come back, tax reform negotiations. we have a special report on a $2 trillion tax break that companies may be willing to give up that story next. and a programming note, the founder of the world's biggest hedge fund will join us at 8:00 a.m. eastern bridgewater's ray dalio is here first on cnbc. >> what? that's awesome nice work, andrew. is that you? >> we know some people >> "squawk box" will be right back ♪ >> taylor swift. this is for joe this morning >> you made me do that >> the senate is holding a hearing on the corporate tax code today the next big fight in tax reform is taking shape and focusing on a proposal known as full expes i expensing. ylan mui has more. >> reporter: this is a $2 trillion tax break, but some companies say they're willing to leave it on the table. full expensing is a key plank in the house gop blueprint on tax reform the idea is that companies could write off the entire cost of their capital i investments rig right away rather than drawing it out over several years. that sounds great, but there are always tradeoffs, big companies are worried they'll have to give up rock-bottom rates if they move to full expensing at&t, boeing, fedex, pord, wafo they're part of the rate coalition, and their motto is rate matters most. on the other side of this, steel companies, oil and gas industry. they have their own lobbying group, the crane coalition capital-intensive businesses that would benefit the most from moving to the system on capitol hill, republicans are split on this the house freedom caucus is against it, so is the powerful koch brothers group senator ted cruz is calling it a top goal in tax reform you have a divided gop, a company versus a company this fight could be as big as the one with the border adjustment tax >> complicated stuff there's a reason why people want this when you try to build coalitions, you can see how things tend to get bogged down ylan, thank you very much. coming up, when we return, an update on the insurance business the ceo of mass mutual financial group will join us next. plus quick programming note. senator elizabeth warren will join jim cramer on "mad money" tonight. that's a must-see interview. that starts at 6:00 p.m. eastern time as we head to a break, look at yesterday's s&p 500 winners and losers your muscles look good, but we should be seeing more range of motion. i'm fine. okay, well let's see you get up from the couch. i'm sorry, what? grandpa come. at cognizant, we're uniting doctors, insurers and patients on a collaborative care platform, making it easier to do what's best for everyone's health, every step of the way. you may need more physical therapy. ugh... am i covered for that? yep. look. grandpa catch! grandpa duck! woah! ha! there you go grandpa. keep doing that. get ready, because we're helping leading companies see it- and see it through-with digital. you myour joints...thing for your heart... or your digestion... so why wouldn't 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advisor, life can be brilliant. ameriprise welcome back you're watching "squawk box" live from the nasdaq market site in times square. good morning, everybody. welcome back to "squawk box" on cnbc let's look at u.s. equity futures. we did see the markets close higher yesterday this morning we see green arrows for the dow and s&p 500 futures. nasdaq down about three. s&p 500 futures up by 8.5 points above fair value stocks to watch, the activist investing fighting claria clariant's merger with huntsman has a stake in clariant. white tail was created by a hedge fund one of sina's biggest shareholders has launched a proxy fight. areta capital is seeking board seats and proposing a possible sale of the company or its stake in china's version of twitter weibo. intel invested more than $1 billion into startups working on artificial intelligence. it includes autonomous driving, medical technology and brian krzanich discussed the strategy yesterday on "opening bell." >> you can't provide the complete solution and it rides with a generic software like windows or android there's a lot of integration between the car, the driving experience, the safety, the functional safety. you have to have an open platform that's really both with mobileye on the autonomous driving, the waymo partnership is a great example. >> shares of intel up about 30 cents yesterday. other stocks to watch. glaxosmithkline says the fda approved the new 3 in 1 inhaler to treat copd. the inhaler combines three drugs to open patients airways glaxo also submitted approval applications to regulators in europe, australia and canada walmart will allow some shoppers on food stamps to order groceries online the retailer is testing the option at a store in houston and four near boise, idaho shopper can order online and pay in person when they pick up their groceries. fedex will raise some shipping rates starting in january. fedex express ground and home delivery will go up 5% the one-rate shipping will increase 3.5%. fedex reports earnings after the close today. the improving rate environment is breathing life into some insurance companies. joining us is brian crandall are we right >> 2.2% on the ten-year is an increasing rate environment that tells you where we've been for a long period of time. we wouldn't mind seeing slightly long-term higher rates. >> that's a huge issue for the insurance industry >> and savers. >> are there products you have not been able to sell or effectively get out of as a result of where interest writs have been? >> there's a series of life insurance i guarantees embedded in them. we're not doing what's called mean reversion pricing there's some policies where our premiums are higher than others. we're not selling a lot of those policies. >> because you don't think it's likely or you're not willing to bet money on it? we look at where the capital markets are. to bet against the markets is not what we do. >> when you look at competitors who have products like that, do you say to yourself, 2030 years from now they won't be able to make the payments? >> no. no the life insurance industry is a strong industry. if you look, you've seen companies have to take vef editie reserve additions because of pricing in the past. we sell permanent whole life insurance. we don't adjust on a portfolio of bonds, we own businesses. those businesses help us pay a better dividend. >> can you make the case for whole life i had a conversation with warren buffett about this he said term life hopefully at some point in your life you'll be able to be self-insured that's the goal. >> you have enough money that you don't need insurance >> so the richest person in the world is self-insurable. >> but the rest of us -- >> for most people, the ability to have instant liquidity when your family needs t you may have an estate tax, you may own a business, think about the transfer most importantly term is wonderful for getting mortality protection when you're young it's inexpensive the chance of dying young is low. the day the term policy expires and you wanted to take care of your children, grandchildren, wife, permanent insurance has a real place the earlier you buy t the lower the cost because you're spreading that mortality cost. our sales of whole life insurance were up 24% in the fish first six months this year >> there's a way do it where you don't get ripped off the perception was for years whole life wasn't -- even now, if you -- we said this off camera if you lived to 9 4, you still get a 3%, 4% return on what the policy is >> how many people are -- >> you don't want term life to pay off. >> no. >> there's times where i'm like i don't want any term life i'm not admitting the possibility that it will -- it's like the worst thing in the world. that's my benefit? >> but we have kids. >> i know. i get it i got a lot of it, but i hate it >> mass mutual is interesting. we have one alignment. >> but on the whole life policies, how many people are now -- especially given the lack of savings that people have. where they're coming back saying i need that money. >> one great thing about whole life, it builds cash value we have 11%, 12% of cash value borrowed that's what it's supposed to do. it's a whole life policy, you need to send your kids to college, borrow some money we had great american businesses, disney was an example where the cash value in a life insurance policy helped to get that company going. what did the insurance companies do years ago that gave whole lo life a bad name? they tried to commission too high there is a bad rap >> you go way back, when volcker pushed up interest rates, portfolio products were yielding lower, people borrowed against the cash value and put it into money market things. that structurally changed how the industry worked. if rates were go up sharply again, would you change your position. >> we are much better now at matching assets. >> can i ask about underwriting? one other thing that happened is technology in the last 12 months, so much of the underwriting is not just being done by human beings, but helped by algorithms and ai. >> mass mutual invested a lot to disrupt the manufacturing side of life insurance. no normal person thinks about how life insurance works, until you have to go through the process. to take 20 days 30 days to have someone show up at your house, put you on a scale at the start of a process that goes downhill from there, we want to change that this past month three out of the four policies we underwrote went through a machine underwriting >> meaning what? we are using algorithms to issue a policy >> do you don't have to do the health check on me you can figure out statistically what odds are? >> big policies, older people, more human underwriting. but the whole push to using artificial intelligence and machine learning and everything is coming to our industry. >> there's another issue around privacy, which is to say people are using these services like 23 and me, all sorts of other things, people are taking their dna, ancestry, whatever. you are using data yet will you be? >> we are not using genetic data it creates an issue that there may be asymmetry of information, you may know information about your health through a genetic test than we are allowed to find out. >> i'm going to buy a big policy if i find something in my genetic code >> this is an issue. this is not about reporting i didn't go to the doctor. >> so this is an evolving area, frankly like in a lot of places where technology is advancing -- >> in other words, folks f this is something that applies to you, get your policy now it sounds like you guys will be tackling this. >> it's something that everybody has to worry about >> i can't imagine that for a big policy you will never not need a physical. >> the question is how big, and what the health -- >> millions of dollars >> we are up to age 59, up to $3 million. we are going through algorithmic underwriting >> up to 3 million >> for us, it was a million three months ago >> the growth rate you have in terms of signing people up for life insurance, is that due to the online stuff you're offering people like the geico -- >> we're hitting on all cylinders a year ago we purchased a distribution business from metlife. we've grown from 3700 agents to 9300 agents in the last ten years. sales have grown at a 15% compound annual growth rate. we crossed 700 million in sales for the first time we are technologically enabling advisers so they can work more quickly with folks we are selling more direct for the first time you can go to massmutual.com and buy a policy 30% of policies have come through nonadvisers. >> two quick business questions. you sold your asia unit to this jack ma group. >> yes >> why we bought the company in 1999. it was successful. we see technology changing everything in that region. the opportunity to not just sell t but take back an equity stake, the public company buying the majority of it lets us participate in the wealth management business in china we think that's a tremendous platform for growth. >> i feel like i ask this every time i see you one of the great marketing pieces of mass mutual, it's not a publicly traded company, as a result you don't have to necessarily get the margins that somebody else might, and that as a cooperative, i get to participate in that to some degree cooperatives have in the past over the years turned into publicly traded companies. >> yeah. >> will there ever be a day where you will >> we have no intention whatsoever at this point to become a publicly traded company. it would take a massive change in the regulatory environment or the tax environment for that to happen we lik constituents, our policyholders. >> thank you very much for coming in. >> thankment. >> >> i can't believe it. >> you know what day it is today? >> tuesday >> national talk like a pirate day? >> today >> that means 7:00, the onslaught will begin probably with matt greco. >> argh. >> it's international talk like a pirate day, andrew >> yep >> you have been part of this before >> yes we've been together on the show for long enough. >> do you have any ready >> i have my hook. >> i have -- i'm looking at jokes, there's a lot i found one, pirate jokes for kids those are the only ones i'm interested in, you know what i mean what's the movie rated >> argh. >> there was a year where the pirates booty people sent us some of that popcorn, if you remember that. >> yeah. >> i don't know, pirates booty people >> don't mention it again. they didn't send it. i should mention -- i should thank them i mentioned i had a cold two weeks ago. >> my god. >> i took a zicam. the zicam people sent me a thank you note >> you're so neurotic. what about your nose spray don't you use some organic -- >> i still like my -- i do it. >> your neti pot >> no, i spray up my nose what is it called x clear. >> you still use that? >> every day >> yuuseless. >> i'm here. not getting a cold >> argh! farmer's insurance is tallying the damage from the hurricanes, irma and harvey, i can't do that like a pirate. the company's ceo will join us with an update at 7:15 a.m. eastern. then later, investment advice from managers of the world's big effort hedge fund, bridgewater's ray dalio will join us on a first on cnbc interview. you're watching "squawk box" on cnbc 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. that's real etf innovation. flexshares. built by investors, for investors. before investing consider the fund's investment objectives, risks, charges and expenses. go to flexshares.com for a prospectus containing this information. read it carefully. welcome back to "squawk box. time for the executive edge. we're watching shares of chipotle mexican grill today the stock fell more than 3% yesterday following negative buzz on social media about the new queso cheese topping i love that stuff. a company spokesperson warned against drawing conclusions from twitter about the new menu option he said the reaction online is similar to the response in the test markets chipotle rolled out the queso nationwide my life changed about 2 1/2, 3 years ago when taco bell left springfield, new jersey. >> sad day >> well, it was. it was it was a sad day but guess what's moving in >> chipotle? >> not in the same building, but right within a mile of my house. chipotle is moving in i'm willing to give them a second chance >> all is good in the world again? >> i'm willing to give a second chance >> off the -- >> after all that other stuff. do they make a frito or dorito-topped nacho -- >> no. >> but it's better for you >> i don't care. it's rare, andrew. you can do it once in a while. >> it's rare now that they shut it down, they're no longer there. >> i pass them when we're on the road i see one. >> sweet memories. >> i think about stopping. i do avril lavigne has been named the most dangerous celebrity on the internet mcafee saying the online post about lavigne were most likely to land users on websites that carry viruses or malware sort of a tease, bring you in doing that the firm said the interest in lavigne stems from word she's been working on a new album and an internet conspiracy that she has been replaced by an impostor bruno mars was the second most dangerous followed by carly rae jepsen, justin bieber, beyonce and katy perry also made the list clip bait. this is what happened to this person you click on it. >> it's bruno mars and it's carly rae jepsen coming up, business leaders weighing in on the economic development at the u.n.'s private sector forum we'll talk about the group's goals and challenges ahead right now, as we head to a break, a quick check of what's been happening -- >> i think it's only on ar'sgh. >> a check of the markets right now. stay with me, mr. parker. 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advice. dell small business advisor with one phone call, i get products that suit my needs and i get back to business. ♪ >> there's a risk of the globalist influence that rkt market lights waning here. >> the hiring climate in the u.s. is giving some international business school candidates pause >> that -- if that slows down, it could have an affect on the u.s. economy overall welcome back, everybody. at the united nations private sector forum yesterday ceos spoke about the difficulties that they face keeping both their consumers and investors content. here's what nestle ceo mark snyder had to say. >> we relied on a steady high quality supply of resources, and on the other hand, as a -- we need to consume as we're spending it's easy to make the business case, it is known something that's an add-on to undermine business activities, and when you focus on those, it's easiest to make the case inside the company why that needs to happen >> we were talking about -- you are also talking about chasing off problems, right? there are some investors who you may not want to know >> we're not chasing off anyone, but when it comes to telling the story -- >> hedge funds, activists. >> we're not chasing off anyone, but, again, consistency in the story is key >> joining us right now is lisa. that is the world's largest corporate sustainability initiative thank you very much for being here >> thanks for having me. you need corporations to get involved with government to try and make some of these goals achievable >> well, it's basically a huge challenge to meet all the 17 sustainable development goals that has the purpose of creating a better world for all of us and the future generations it's a huge task we need to involve governments, business, the civil society, everybody in creating a global movement to really make these goelsz take off. >> there is something like $5 trillion to $7 trillion in additional funding that's needed to really push towards some of these goals. that is money that you're certainly going to have to tap into finance to help that happen yesterday we spoke with the cio of pimco, who will be joining us later. one of the ideas that they were talking about are buying bonds, that investors can invest in to help companies what other ideas are out there floating around? what kind of things are happening? >> yesterday at the private sector forum that you so elegantly facilitated, becky, i think we all saw how finance is kicking these global goals into higher gears there's now a huge interest in the financial sector for identifying new products, new innovative ways of attracting private funding, other kinds of funding into actually making the goals a reality only in 5,000 days from now. to really put, you know, fire and energy behind the global goals. >> you know, it's the type of thing that if you are not into this language, if you don't understand it, it can kind of make your eyes gloss over, but when you hear the real examples of things that are happening on the ground, it's kind of amazing. micro-financing, banks that are actually reaching out and lending directly to women and other entrepreneurs to make sure that they can have access to funds that they never have before unbanked something like 500 million people who have given access to banking facilities over four or five years time that were never there before what do you think about some of these ideas? what are some of the real concrete things that you've seen happen >> i think there are lots of great solutions from companies out there already. it's in the energy area, as you mentioned. it's in the material areas it's all solutions from companies that can solve major global challenges like climate change, like the oceans. too much plastics in the ocean it's very concrete it's products that are touching each of us every day it's important to think of the global goal as the people's goals, as our goals, because we will have to make a difference, each of us, and at the u.n. global compact we are the larnlest sustainability initiative in the world. we just did a very interesting survey of all our member companies showing that 75% of our companies across the world are already working with the global goals they are making the golds harder, and that thinking around how to innovate and how to build the company in the future. >> lisa, thank you very much for your time today, and good luck with the rest of this week >> thank you >> appreciate it when we return, the fed kicking off a two-day meeting today. we're going to talk market strategy right after the break later, investment advice from the manager of the world's biggest hedge fund bridgewater's ray dalio will join us in a first on cnbc quk x"etnsita "sawbo rur wh big two hours in just a moment i count on my dell small business advisor for tech advice. with one phone call, i get products that suit my needs and i get back to business. ♪ they always refer to me as master sergeant. they really appreciate the military family, and it really shows. we've got auto insurance, homeowners insurance. had an accident with a vehicle, i actually called usaa before we called the police. usaa was there hands-on very quick very prompt. i feel like we're being handled as people that actually have a genuine need. we're the webber family and we are usaa members for life. usaa, get your insurance quote today. investors in a holding pattern as the fed kicks off a two-day meeting, and president trump heads to the u.n we have the details of what to watch and where to put your money to work. that is straight ahead weeks after hurricane's harvey and irma slam texas and florida, insurance companies are starting to see the storm's impact we have the ceo of farmers insurance who will join us with an update. plus, a new tax study on why america needs to do reform the head of the business roundtable, josh bolton, and eli ceo mark wineburger will join us with shocking numbers. the second hour of "squawk box" begins right now live from the beating heart of business, new york city, this is "squawk box." good morning welcome to "squawk box" here we're live at the nasdaq market site in times square, and we should say it is talk like a pirate day leave that to joseph to do i'm andrew ross sorkin with becky quick and joe kernan we'll show you what's going on right now dow looks like it would open up higher about 35 points higher a little over eight points higher nasdaq would open down off about two points here's what's making headlines at this hour on today's wall street agenda we have fed policy makers that will be kicking off a two-day meeting in washington later this morning. meanwhile, on the data front look for august housing starts and building permits at 8:30 a.m. eastern time along with import prize and second quarter current account figures. fedex will be raising shipping rates starting in january. the company says that fedex express ground and home delivery go up about 5% into one rate shipping, which offers a simple flat rate and will increase 3.5% that reports earnings after the close today. the house already passed a version at a similar spending level. the two versions must be reconcile and could spark a fight over spending, said democrats, about to block big increases in funds for the military if spending caps on non-defense programs are not also eased joseph we're going to play along a little bit i see a word coming up, andrew this is serious. president trump expected to issue harsh warnings to north korea and iran today during his address to the united nations. sorry, michelle caruso cabrera it's national talk like a pirate day, and we've -- >> and we're idiots. >> and we're idiots, and we beat it to death already. i deliberately went to jokes for kids for pirates i don't know why great minds, i think anyway, he is going to say some nasty stuff today probably, and the traffic is going to be unbelievable i know that much >> even nastier. yeah foreign policy experts are going to be watching this speech to hear the outlines of what they'll likely call the trump doctrine we know that he will be nationalist in tone, as you mentioned. he will address north korea, iran, also venezuela also, expect him to discuss the wleef that other countries need to shoulder more responsibilities when it comes to financial responsibilities to the u.n., the united states contributes 22% of the more than $5 billion core budget, 22.it%. even though every member country is invied to speak here, not everyone comes vladimir putin of russia, china, nicolas of venezuela, nor enrique of mexico. even though xi jing ping isn't here, we know that president trump spoke with him he had dinner with leaders of latin america about what to do with the destruction of democracy in venezuela he addressed reporters and told them that he spoke with xijing ping last night. >> discussed some of the obvious things, and we discussed trade and we also discussed a place called north korea it was a long call it was a very good call. we have a very, very fine relationship >> correction. he spoke with him yesterday morning, not last night. as for the schedule today, we expect the president 10:00-ish, emphasis on the ish. usually happens during squawk on the street, the u.s. president's address. back to you, guys. >> okay. all right, michelle. thank you. we've got a pretty nice front row seat there a little envious she doesn't need that thing in her ear because they can speak any language michelle probably -- >> would understand that >> she's our international -- that's why anyway, she's -- the fed is set to begin its two-day policy meeting. they join us now david biancao, chief investment strategist for the americans at deutsche asset management. yeah, we're going to talk. chief investment officer at oppenheimer funds which has 242 billion dollars in assets you should management. earlier i reference some comments from a deutsche bank strategist that global assets have never been more overvalued in the history of global financial assets you have in insight here the guy's name -- >> that's jim reed, and he is one of our strategists >> often camera, you made the point that he may or may not speak for you. >> it's a large global organization we have a markets business, in which he is part of. >> do you think he is, like, crazy? >> we're unlikely to have a financial crisis any time soon >> do you think -- so you disagreed as deutsche bank why they let him say that if they don't feel -- >> we have a lot of strong opinions >> you know what you should do you should have some guys really positive and some guys really negative that's just -- i just think that would be a good idea for you guys then you could say -- >> the conversation in the debate, but at deutsche asset management in my view, represents -- >> you differ with his view? >> i am the chief investment strategi strategist >> you are, but you're not going to fire this guy >> no. that's not within my reporting line >> well, you might whereby. >> i do share some tactical caution. i can understand -- >> tactical caution. tactical caution >> look, i think the market -- >> construction with tactical caution. sorry. >> andrew is doing the voice >> aarrgh, andrew. >> officers -- we're strategy ee -- strategically positive i do think the market is on the right track, but i do think it's gotten ahead of itself i do think that it's important that the fed cut corporate tax rates and hike i think these things will happen, but i think the market is going to get more anxious about these things in the coming weeks. >> chris is really bullish, aren't you >> absolutely. i think the global economy is in synchronized growth phase, and policy rates are low in plays like emerging markets, asset prices are reasonable relative to the growth outlook we have for those markets. >> it's not -- it's -- if you just look at face value all these things and try not to get too complicated, it's hard to deny that this is a pretty positive time. we're trying to figure out, what is the biggest negative that you can find right now can you even find one? >> so the biggest negative is if the ecb follows the fed's lead too quickly and starts tightening policy. >> but the fed is not moving quickly. >> absolutely. i think the policy makers have played it perfectly, and they deserve -- >> that worries me when you say that >> we can criticize the fed from 15 angles, but the fact of the matter is since the financial crisis, they have done a reasonably good job, and so has the ecb. i think the level of the markets and the growth synchronization that you see on the global basis, they deserve a lot of credit for that. >> we mentioned mark a lot he added up the balance sheet here for the fed, whatever it is he added up what they're spending over in europe. it's a big, big number if you believe your guy, you know, jim reed could have -- he could end up being someone that was out in front of all this i mean, it's a huge amount of liquidity, and by any metric a lot of valuations have historically not been this high. >> well, to be specific, markets traded 19 times. the s&p is 19 times the $131 that we're forecasting >> that's not bad. that's a different number than most people have, right? >> on this year's earnings estimate, the $131, i would be more comfortable with the market at 18 to 18.5 times. i do think the s&p is trading with a $5. >> it's not just about equities, though what about who else i think, what, it's greenspan talking about the biggest bond bubble in history. >> that's the thing. >> why isn't that a huge bubble? if there's a bubble that ends the world, it doesn't have to be stocks it could be bonds, couldn't it >> that's one of the big risks one of the big risks is the interest rate uncertainty. i don't think the ten-year treasury yield will go up in a big way. i think what's important is that the fed be comfortable continuing to hike to about 2% by the end of 2018 that won't upset the equity market it would be very positive for banks. right now we have an equity market that's still been led, dominated by growth stocks, tax, health care. i like to see a better earnings outlook for the financials that's going to require higher interest rates that's going to take some fed -- >> is this five or six straight dow records? >> yes >> 2018, another double digit return for the equities? >> i think from -- on a 12-month basis high single digits is what we are looking for i think that the key thing to recognize is it's not just -- it's not just off of valuations. earnings are good. growth is good earnings are supposed to grow. in that sort of an environment, we always have risks, but i think the outlook is as positive, as it has been over the last three, four years >> well -- >> well, i would agree i do think we have a long-lasting cycle one that has another few years of growth. probably 5%, 6% earnings growth. the valuations are full unless interest rates don't go up at all, but if interest rates don't go up at all, we have to take down some of our earnings expectations, particularly financials >> they're going to be working on shrinking the balance sheet, the trillion dollar balance sheet for a while. >> we don't think that's actually going to do much to interest rates you know, maybe the ten-year yield climbs from here, but the curve likely flattens as the fed hikes. >> from deutsche bank, do you dictate the asset next what are you at for equities what's -- >> how about 60% equities. >> how about bonds >> we're 35% bonds 5% -- >> yeah, and then 10% cash >> we're 5% alternatives and then within our fixed income allocation, we have some short duration >> which is what your cash -- >> 10% is short duration of cash >> i think just focussing on the u.s. kind of takes away from the real change that is taking place in the world right now, which is growth in emerging markets is deepening and becoming less china-dependent. that's really good that will kind of provide us tail wind on a global basis for the next 12 to 24 months that is really the biggest -- or one of the biggest changes that has happened in the last 12 to 18 months. it's fantastic >> all right thank you. >> thank you >> appreciate it thanks thanks -- >> thank you, guys >> -- for clearing that up and throwing that guy under the bus and everything that was fun that was good. it was all very good aarrgh >> coming up, the ceo of farmers insurance joining us to discuss the impact of two major hurricanes in the east coast the latest numbers on what it's going to cost to clean up and repair that's coming up next. plus, scott mather of pimco set to discuss global markets and part of this panel at the general council. business roundtable president josh bolton will join us along with ian wise -- stay tuned. right here on cnbc she can't become a guitar legend just by playing air guitar. the baby's room won't build itself. and her paw won't heal on its own. we're all working forward to something. synchrony financial can help your customers make it happen sooner. so she can plug into her dreams... and they'll have a new addition for their new addition. whatever you're working forward to, even if it's chasing squirrels, synchrony financial can help you get there. for tech advice. dell small business advisor even if it's chasing squirrels, with one phone call, i get products that suit my needs and i get back to business. ♪ >> hurricane marie was upgraded a category five storm this morning. the hurricane making landfall overnight on the caribbean island of dominica purityee ricco is in its path. it could face a direct hit later today. it's been more than a week since hurricane irma slammed into florida, and more than three weeks since hurricane harvey hit texas residents taking stock of the damage, and so are insurance companies. joining us right now is jeff daley, the ceo much farmers group. good morning to you, jeff. in terms of taking stock of what has taken place and trying to do a little bit of math, unfortunately, on your side to add up the costs and the liabilities in damage, what are you seeing out there >> good morning. thanks for having me on. so, obviously, we're a little further along in the harvey response we've had people there for three weeks. we have a pretty good estimate on the damages for farmers we think harvey will be about a $500 million gross event for farmers after our reinsurance plans, after tax about $140 million debt. it will be a reasonable size hurricane for us, and certainly the more important thing is the devastation that it's caused the citizens and clearly uninsured loss that will be around for harvey as well >> given the flooding event nature, it an awful lot of this has been auto insurance and not homeowners we think by the end of this month we'll have seen every single person who has had a claim with us and has been able to assess that damage. we literally after the assessment we can issue those checks to those customers very quickly, and so that process has already happened, and we have about a quarter of the claims that have been reported to us that are already closed. we do think we'll have extra people on the ground in the houston area for the remainder of the year as homeowners repairs start getting going. there's a lot of time you new ed to bring the adjustor back in to make sure the process is happening on the house >> just when we think we've got past irma and harvey, we're now facing maria what are your forecasters telling you? >> so we watch -- we have a command center that watches all of these things in our national headquarters out in kansas city, and so far the models would tell you for jose, maria, and lee certainly the caribbean is in target again, but it looks like right now the united states hopefully is going to become okay as the models have -- the storm is moving off to the north and a little bit to the east, although i did watch irma models moved every single morning from a direct hit to the east coast of florida moving all the way to just south and west of key west and moving up the keys to the west side of florida as good as the modelling is, it's still subject to change, you know, at the very last minute we're watching it carefully. >> jeff, i think it's somewhat controversial -- i don't know if you had a chance to watch the show, but we were talking to people who will build and rebuild in some of the affected areas. perhaps less texas, but maybe more florida he lives down there. he has a home down there, and we were talking about who should pay for all of this? whether the government should pay, fema, all of this, and he said, look, there are certain areas in the country that have a preponderance or more likely to be affected. maybe if you aregoing to live there, you should know these things it was a very unpopular thing to say, i should say. we've got a lot of -- given that you do watch which areas are more likely to be impacted by weather events, how you think about that >> so it's an interesting public policy issue, and i'll give you my personal view on it, and i actually do have a house in the florida keys, and thankfully i estimate have still have a house in the florida keys my view is that if we break the pricing signal that insurance provides for the amount of risk that we're really having people, you know, building and developing in areas that as uneconomic and we ought to allow the actual signal, which is the price, what that risk that they're actually bearing, and i think the people that live there should bear that risk. now, obviously it's quite easy when you have a lot of rich people living on the coast that's a lot different when you are sort of up and down the keys and there are a lot of people that can't afford that i think the government probably needs to step in and make sure that there's a way that those people can insure sthemsz e themselv -- themselves, but i think one of the reasons we have overbuilding in the coast and they are in a much more risky position today than they were before -- flood insurance is inadequately priced and is not sending the right message to the marketplace >> what do we have to do to change that? >> i think from an insurance perspective and i will tread cautiously here because i deal with 50 regulators in 50 states and by and large they do good work they have to be willing to allow insurance companies to charge what the risk is, and that the free market will ultimately figure that out, and if i don't do as well as one of my competitors in charging thatistic are, that will be on me certainly not on the customer. i think from a fema perspective on the flood perspective, that will be a tough thing to go through congress because you're really going to have to actua actuarially allow those rates to rise significantly to the point where they can actually afford to insure the properties that they insure. >> we have to go, but here's the complicated part you may have a place in the florida keys and a number of wealthy people -- more than a number of wealthy people may be along the coast, but there's a lot of people who are going to need to live in those areas, dare i say, the service, those areas that may not have the same type of wealth >> that's right. that's what i said you need an alternative market for those people that can't afford to buy because that's exactly right. if you drive through the keys, you know, there's lots of wealthy homes on the coast, and there are lots of people that support them, working and the services sector, and they're not going to be able to afford that risk there's going to have to be a mechanism to subsidyize those people >> you mean government >> it's going to have to be government probably in this case state and i should not be subsized for living in the keys >> we wish you well, and i know you guys have been working around the clock the past couple of weeks, and we hope that hurricane maria is a little bit less severe than what we have seen thus far. thank you for coming on this morning. talk to you soon >> we hope that as well. thank you very much. >> great thank you. jeff daley, ceo of -- >> farmers >> pirate. >> you did it for me >> coming up, the fed is going to kick off a two-day meeting today. the latest figures from the cnbc medicine survey and what economists are expecting straight ahead then pimco -- >> that's not -- farmers pimco's chief investment officer scott mather is our guest, and don't forget, today at 8:00 a.m. eastern time, bridgewater associates president and cio ray dalio joins usor f a special interview. "squawk box" will be right back. not rebalancing your portfolio. focused on what you love, not how your money will last through retirement. we make it easier to plan for retirement with day one target date funds from prudential. look forward to your 401k plan. ♪ yo ho, yo ho ♪ it's talk like a pirate day ♪ when laptops are benches god gave us for wenches ♪ >> oh, man not a lot of good pirate jokes around i've got one argh, it's talk like pirate day. it began in 2002, started by two guys who would start conversations by saying argh for no real reason other than it was one of the founder's ex-wife's birthday if you want to talk like a pirate today, here are some suggestions. blow me down oh my god. >> that's what it means. >> it means oh my god. avast ye means look at this. thar she blows, when you see ae whale. if you want to eat like a pirate, a lot of bread, a little bit of beef, and a gallon of beer or rum will do. i saw something about -- i don't know i saw -- the jokes are not good. i'm looking at them, and they're not good except maybe what did the pirate -- >> ahoy. >> what did the pirate become in college? an argh-atect. not any good any of these other ones are really good either pimco chief investment officer scott mather bravely will join us to talk markets and the trump agenda plus, a business roundtable putting out a new tax study. the results are straight ahead josh bolten along with smark wineberger will be here at the top of the hour. we have ray dalio live here's a look at u.s. equity futures as we go to break. i can't wait for her to have that college experience that i had. the classes, the friends, the independence. and since we planned for it, that student debt is the one experience, i'm glad she'll miss when you have the right financial advisor, life can be brilliant. ameriprise welcome back to "squawk box. we have a few stocks to watch this morning glass yoes smith cline says the fda has approved its three in one inhaler to treat copd. it combines three different drugs to help open patient's airways. it has approval applications to regularo regularo regulators wal-mart is testing the option at a store in houston and four other stores near boise, idaho. wal-mart says that shoppers using a government-issued card can order on-line and then pay in person when they pick up their groceries. fedex is going to be raising some shipping rates starting in january. the company says that fedex express, ground, and home delivery will go up by about 5%. it's one rate shipping, which offers a simple flat rate, will increase by 3.5% fedex reports earnings after the close of business today. the latest cnbc fed survey is officially out, and the one and only man in charge of it all, steve liesman, joins us with the details >> you're enjoying the survey? >> i mean, you >> but i prepared for three minutes of jokes from joe about the -- >> now you are derailing your own hits nothing -- >> i've gotten used to it, the abuse. >> now you do it, and i have nothing. >> the results of the cnbc fed survey are in. 42 economists, strategists, and analysts polled as well. 100% say no rate hike coming in september, but aboutly enough, had 76% say they expected that third rate hike this year coming in december. that's slightly more than the market, which puts a 43% probability according to thompson reuters the cme is a little over that. this group is a little bit more positive on the outlook for the rate hike where, that third rate hike, 68 periods say yes the fed will allow the dollar to clee cline coming in october other results of the survey when we look at the outlook for the fed funds rate averaging 1.4 that is where pretty much unchanged from the march survey. 2% down .3 and down for 2019. the long run rate, i find curious. i think the fed is going to be lower than that 2. % i think they're going to be closer to 2.5 when they come out with their forecast. we've been watching that closely coming tomorrow. when it comes to expectations for the balance sheet, you guys have been talking about that here's the average the idea is on average i think they bring that balance sheet down to -- from $4.5 trillion to $2.had trillion. >> that's pretty precise >> that's the average we get >> i put that with changes over time people think the fed will be faster or slower, but i think when you talk about why the market has been so sanguin about this and not really changed much in terms of the outlook for rates, it's because it's going to be gradual and over time. >> is $2.4 trillion the new normal >> that's where they would probably get to. you think about the idea about the balance sheet would normally be rising over time with the economy. right? >> right >> okay >> it was $800 billion something like -- and then there was this increase in the demand for currency people wanted to hold more cash. that untilly swells the size of the balance sheet. about half of that $2.4 trillion, i think, is probably going to be currency >> it's for hoarders like us >> people want dollars for whatever reason. maybe overseas globalizing overseas >> sure. >> let me just do another two quick pieces from the report here we asked people how low could the fed let unemployment go without sparking inflation 3.7% these guys think -- and women as well -- think that the recovery can go lower without sparking inflation. interestingly enough, 45% do not agree with the concept of the phillips curve the idea that there's a connection between unemployment and inflation, which is a basic bed rom principle of fed policy. that unemployment falls. wages rise that sparks inflation. you have a large contingent of people who follow the fed closely that don't think that idea even works. that is even out there so that they're obviously of different ideas about how inflation is created, but they don't really believe in the phillips kicurve. >> we're going to continue this conversation with our next guest. joining us is scott mather, the cio of u.s. core strategies at pimco. he co-led a panel yesterday talking about some of these global goals, things that they would like to see happen by 2030 like ending hunger and poverty big, lofty goals we'll talk about that in a minute and how you think we can reach those. first, let's talk about what steve was just mentioning. where you come down on this panel in ermz it of pimco and how quickly you think the balance sheet is going to shrink, how quickly the fed may raise rates. >> yeah. we think it is going to be like watching paint dry that's what's going to be very slow that's why the market is not very upset about it. we sort of suspect relative to your survey that the ending size of the balance sheet is much larger than 2.4 trillion it could be as much as 3 trillion the timeline is probably pretty close to correct it's going to take -- >> forever >> yes, forever. three to five years. it gets underway tomorrow, and then you get probably a 50-50 chance for a fed hike in december, but after that, you know, they really -- they're really on the same trajectory. maybe two hikes in the following year until they see some inflation. >> it sounds like that's the type of thing that supports equities continuing decline potentially. if there's not big pressure coming in, if there's not other places that look like a great place to start putting your money. >> well, it does, except for there's a pretty big transformation ongoing in terms of global monetary policy, and that we think -- it's the global environment that's been so supportive in our view for low volatility and equity -- higher equity valuations. when you look at the global monetary policy shift, it's quite -- it's quite stunning, right? you have all developed world central banks shichting into the normalization path obviously, the ecb change at the beginning of next year, their balance sheet will probably be more impactful than what the fed has. >> i think the market and even people who characterize the market -- i don't even mean the media. i mean other people in the market are a little bit over the top on it. when you talk about normalization in europe, they're going to decide perhaps in october to begin to taper perhaps in january, which would perhaps bring their monthly purchases down from 60 billion euros a month, maybe down to 30 billion at the end of 2018 calling that -- it is a shift, but it's not a big shift i wanted to make that statement, but i want to make one more quick. when i said the fed's end point is 3%, you noticeably smiled do you have a different take on when -- on how far the fed is going in this cycle? >> we think the neutral policy rate is probably in the low 2's. >> that's a big difference >> the fed rarely stops at neutral. >> right that's fair enough >> there may be an over-shoot, but we think policy rates are still around 0% real they're credible in a 2% inflation targets, and that's probably not much more than 2, 2.5. >> they could be done relatively quickly. a few more quarter points and done with the fed. >> this he could be. >> that's huge >> but i think where we -- we still sort of suspect this change in gold monetary policy is going to be more impactful in the markets than you suggested, and one reason is we think the ecb is going to taper much faster they're not going to move as slowly as, you know, being able to continue with 30 billion a month all the way through the end of next year don't forget too, it's not just -- it hasn't just been the ecb. i mean, almost every single year for the last decade some central bank has been doing a massive amount of balance sheet expansion. if the bank of japan also curtails their purchase activity, if you see bank of england nudging rates up, canada continuing to go and australia continuing to go, it's a pretty big shift. you go from having -- most people haven't been aware at least for the past couple of years that the amount of global balance sheet expansion has been close to $150 billion per month, right? that's much larger than what the fed was doing over on average over that period of time people are hyper-focused on the fed, but they haven't necessarily been paying attention to what's happening on a global basis we think that's probably a mistake. it's probably the reason the volatility is so low and will likely go up next year >> let's talk a little bit about the u.n. and this goals for 2030 things like ending poverty, ending hunger, very lofty goals. even trying to reach towards those, they're saying that they probably need $5 trillion to $7 trillion in additional funding to help attack some of those problems you have some interesting ideas for how to raise money for things like that >> yeah, we think it's going to be critical to access the biggest capital market, the biggest asset class in the world. that's through bonds, through fixed income we talk about sustainable goals of 17 different goals that they announced a couple of years ago. you know, one of the problems we see is there's tremendous investor interest in putting money to work there and solving those problems in a profitable way. what's missing is the language and the architecture for investors to be able to do that and to be able to show progress that measured the performance of those strategies we think the right way to do it is to think about moving towards issuing things like sdg bonds, sustainable development goal bonds. you have seen a growth in green bonds over the past several years. from nothing to $1 00 billion this year. think about sdg bonds. it's a larger opportunity. maybe green bonds are sort of a subset of that you could address many of these problems and opportunities on the social environmental site. >> the buyers would include pension funds. >> absolutely. >> individual investors all the way through? >> we see and hear about tremendous -- >> i've heard these things are oversubscribed like that when you launch some of the sdg things >> they are. green bonds in general >> green bonds i know some sdg funds have been created, and i know one just did one for $1.5 billion, and it was well over subscribed there's a huge amount of investor interest. >> at pimco we -- in fact, at the beginning of this year we relaunched a few existing strategies we had, which were targeted at sri criteria, socially responsible investing criteria, and broadened the opportunity set through the esg space. >> there's too many letters. what's esg >> it's the acronym for environmental social and governance standards >> got it. >> you think of that, and it's sort of broadly accepted that companies with better governance standards are better performers in the marketplace well documented. makes natural sense. we think what also makes sense is the companies that are responding to environmental change and environmental opportunities, and think about solving social problems in softable ways. those are the types of companies that could -- the companies that are also more strategy eenlic in their thinking they're going to be the better performers that's why we think it's logical that large pension funds, retail investors, increasingly want, yes, financial performance they don't have to sacrifice that in our view to also be able to measure and quantify the impact that they're having that's what they want as well. >> scott, thanks for your time today. >> thank you >> and steve, thank you. >> while you guys were talking, we had a little bit of deal news we want to bring you post holdings, acquiring a bob evans farm for $77 a share it's a 15% premium >> down on the farm. >> weighted average price of bob evans shares take a look right now. showing unchanged. we were saying that in real-time, but we're going to show you as they move. the deal is a total equity value of about $1.5 billion. transaction has officially been approved by both boards. >> you have not stopped at one >> and on the farm it's on your -- well -- >> down. >> as you are flying over the fly-over states, you should look down, and you can see -- >> look down -- >> the overall >> it's not the restaurants. it's a package >> is it just the package. it's not the restaurant. >> just the package. >> you should stop at stuckey's. stuckey's? >> i'll tell the pilot >> if you go over one, yeah. >> you got to do that. you got to try that sometime you won't get -- go over the hudson and kooel keep going. >> what's between new york and california >> new york and san francisco. it's a wonderful -- >> there's something there >> a reason god created all that >> wheat fields >> of course i know this wonderful country. >> you've heard. >> when we come back, a new study from the business roundtable on why tax reform is a must for corporate america we'll run you through the numbers right after this "squawk box" will be right back. i count on my dell small business advisor for tech advice. with one phone call, i get products that suit my needs and i get back to business. ♪ so they called the fire, yodepartment for us.clearly, my first truck was on the scene within five minutes. i am grateful we all made it out safely. to protect what you love, call 1-800-adt-cares this morning the business roundtable is releasing a new study on the u.s. corporate tax rate, and one of the key findings with a 20% corporate rate, the u.s. could have kept approximately 4,700 companies from leaving the states over the past 13 years. joining us now e and y ceo mark weinberger he chairs the business roundtable's tax and fiscal policy committee, and business roundtable president and ceo josh bolton. i think that having watched this happen over the years, i guess we had an idea, but how did you quantify this, and the study itself, josh, how did -- what are -- what was the rationale? how did you do it? how did you figure out this number that's a huge number >> well, efrmt .y. did the numb, so i'll let them discuss how they came up with them i'll say one word,joe, which i that there was something clearly observable going on in the u.s. economy over the last many years, and that's that companies are fleeing the united states in extraordinary numbers, and it's costing us jobs and economic growth, and so he dug in and looked for what is the tax code doing to contribute to that problem, and the numbers show that the tax code is a big contributor. >> yeah. the other thing that gets me and either one of you are free to address this, we hear that the blended rate of u.s. companies is actually much lower, but that that fails to mention that one of the reasons the blended rate is lower is they've already moved some of the facilities abroad to get advantage of tacks over there, so, you know, the damage has already been done both of you gentlemen think that they -- the wage gains have been muted by this, that the employment rate has been muted by this? this seems like a tangible thing that you could point to the nay sayers about whether it's supply side or growth initiatives that republicans come up with can you point to this as a factual example that we can do better >> yeah, joe so great questions josh is right. this is trying to look over history and see what would have been different if we had a lower rate you're spot on if you look at since 2000, we have 25% fewer u.s. head quartered -- and two-thirds of the r & d, two-thirds of value added, almost two-thirds of employees sit in the home country jurisdiction when these companies move overseas and leave the u.s., they are taking a lot of that with them. to be clear, it's not bad that there's cross-border transactions there's lots of them this study tried -- and capital should move to where it's the highest return wherever it may be where the tax code dis are the ones it, that's when you look at it this study tries toitis isolate that issue looking at variables and decision making around deals, and to look at some 0,000 deals. a significant portion of them have been driven by taxes, which is clear wrrks as you know, there's been a lot of focus on inversion. there's only been several dozens of those the bigger issue is u.s. companies which causes the overseas headquarters to occur >> i remember them talking about -- he would have a billion dollar lower tax bill if he had done this merger and that he could have put into rnd or could have put into make pfizer more competitive against the whole global back drop of other multi-national pharmaceutical companies, and it just was so clear, but then i don't know why you can't -- you only have one side of the aisle that really is behind this completely josh, i don't see why can't you convince democrats that it could mean keeping, you know, jobs here, keeping, you know, more assets here that might result in higher wages that might -- it's like anything trickle -- anything that starts at companies, they don't think ever makes its way down to workers anymore. they just say, no, trickle down doesn't work >> yeah, look, we're working on trying to persuade both sides of the aisle. >> it's not working. it's just a tax cut for rich people the minute you cut taxes for corporations, it's just a tax cut for rich people. >> yeah. here's an interesting data point that we're pressing. especially on our democratic friends. that is that a lot of studies show that the corporate tax, 75% of that burden, is born by the wage earners that's different from what we're talking about with companies fleeing, but it's a big deal then the question is how do you -- allow do you pay for it, and are you going to advocate for higher income taxes and are you going to change capital gains and carried interest and all those other things it josh, on those issues what do you advocate >> look, what -- where we stand on this is that we need fundamental tax reform the most important part is the corporate tax reform that's where the job creation is we define success -- and the shift is to a territorial taxation that we in the business community will support and that will have a major growth affect on the economy over the long-term. >> josh, i thought you were in studio today last time i was kidding you about we thought we had john bolton you know what i had ready for you today? michael bolton, when a man loves a woman. ♪ when a man loves a woman >> i had that ready for you, and i was going to say josh bolton i thought we had michael bolton. >> imagine my surprise when i found out i it was on this show that wasn't morning joe anymore. >> you know what, bolton -- you know what, they're celebrating ten years today. we celebrated 20 years two years ago. i think we know who the real morning joe is my name is actually joe, not charles. he stole joe because chuck scarborough already had charles. all right? >> i think you touched a nerve >> he did touch a nerve. i'm going to come up with another bolton next time you're here >> mark and josh, thank you, gentlemen. coming up, when we return, ray dalio, bridgewater associates is going toe bour special guest. "squawk" returns in just a moment a very big hour coming up. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group: how the world advances. it's life insurance and wharetirement solutions toic? help you reach your goals. it's having the confidence to create the future that's most meaningful to you. it's protection for generations of families, and 150 years of strength and stability. and when you're able to harness all of that, that's the power of pacific. ask a financial advisor about pacific life. the final hour of "squawk box" begins right now. skblienchts live from the most powerful city in the world, new york this is "squawk box." good morning welcome back to "squawk box" here on cnbc live from the nasdaq market site times square the fed will kick off a two-day meeting today. let's get a check on the markets. the futures right now, this would be, i think, like five straight records for the dow all-time highs that's indicated up 32 points. this morning the s&p is tipping in playing along with the dow. up eight the nasdaq, however, diverging a little bit down. may turn positive any moment it just did. it's up a little bit less than a point. the ten-year 2.218%. the dollar this morning, continues to trade just under 120 or so. the yen has been interesting to watch as the nikkei hit a two-year high. >> nike downgraded to neutral from positive. the analyst dropping the price target from $64 to $54, talking about an oversupply of basketball products in north america and a lack of innovation when this analyst says hurts performance more than ever nike shares down by 1.6% a similar sentiment from wells fargo. that company lowered estimates for all athletic focused retailers, including underarmour. it says that the broad industry is suffering from what they call a lull in product innovation just when you thought there couldn't possibly be any more fall-out from the equifax fraud, what happened with all of those numbers and data being released. the credit agency is now saying that it is acknowledging it faced another security incident earlier this year. this is separate from that breach that was just announced last week that exposed the personal data of 143 million u.s. consumers reports say that the attacks involved the same intruders, but equifax is denying that. in a statement to cnbc, equifax says that the two incidents are not related and that it has done what it is calling complied fully with all consumer notification requirements related to the march incident. none of us had heard of that, so it is certainly raising some brows. this news of a second breach, or a first breach before the one we heard about later, comes as lawmakers demand answers from the company on what happened it also comes as the justice department is reportedly opened a criminal investigation into whether three equifax executives violated insider trading rules by selling company stock before the news of the breaches were made public. shares of equifax fell by 19% just in the last week. they're down another 1.5% this morning. we are watching hurricane maria. now nbc meterologist steve mclaughlin is tracking the storm. where are we at this point just -- i guess we're east of puerto rico, steve >> yeah, just southeast of puerto rico, and the virgin islands. this storm is a massive storm. category five with winds of 160 miles per hour you can see that eye slammed right across dominica and guadalupe yesterday evening, and it is making a beeline for the virgin islands and puerto rico this is a big storm. remember, 157 is the cutoff for category five. it's either going to be a strong category four or a weak category five as it heads right towards puerto rico. the bull's-eye right now is san juan, puerto rico, as a category four then the storm will be awfully close to the turks and the caicos before going just east of the bahamas. after that lots of question marks. some of our computer models take this storm into the united states cape hatteras and up the east coast. a couple of models take it out to sea and begins to interact it with jose. as we talk about jose real quickly, do want to talk about what you are seeing right here tropical storm watches and warnings that red area that's coastal rhode island and all of cape cod. that's where we could have three to six inches of rain, maybe a bull's-eye of eight inches one to three foot storm surge and wind gusts up to 60 miles per hour the storm will not make landfall, but it is big, and no matter where you are watching from from delaware, new jersey nlk shore, long island northward, we have some hire surf and some beach erosion over the next couple of days. jose might just sit there for the next five days, and, again, does it interact with maria? that is going we'll be working on in the coming days. for now, back to you >> okay. thank you for that we are now going to move to our news maker of the hour it has been highly kwaeshl, yet indisputably lucrative a company culture at bridgewater associates has garnered attention from the media for many, many years in his new book "principles" founder chairman and cio of bridgewater breaks down the strategy behind his firm's success. he joins us this morning on set. ray dalio himself. we got a chance to spend some time with him last week at the delivering alpha conference, but we're thrilled to have you on the day that this book comes out. i talked about this last week, but not only did i actually -- i enjoyed the book, but i got a lot of out of it on a personal and selfish level. we'll talk about it. we're going to talk about the markets, but i want to ask you this it's sort of about what you said when you sat down during the commercial break, which is you have in some ways tried to avoid -- not avoid the media because you have come on our show and others before this, but you have not been someone who has loved the media over the years, and so what has it been like, and why did you decide to even do this >> well, i think you remember when i got involved with the media i was below the radar, and then we anticipated the financial crisis of 2008 we got a lot of attention. we have an unusual way of operating, and so i put those principles out on the website, and they were downloaded three million times, and i received a lot of thank you notes and so on along the lines, and then there was no escaping. you were either going to be above the media and deal with it, or you were going to be talked about behind, and i felt that there was a contribution. i felt at this stage of my life the most important thing i can do is pass along the things that helped me and helped bridgewater. i want to make those clear that's why i did the book, and i feel really good about it. >> erds in, you want to make sure you're telling it and using your narrative, rather than having somebody trying to interpret it and maybe getting stuff -- >> first of all, to get it wrong, but even more importantly, i wouldn't have done it just to deal with that these are lessons that i learned and have made i think everybody can use them it's not about a hedge fund, and it's not about me. it's about ways of operating when you encounter certain things it's like every time i encountered a particular situation, rather than just deal with it, i wrote down the criteria for dealing with that type of situation because another one of those is going to come along particularly mistakes. in other words, when i made mistakes, i thought what should i do differently that was my greatest gift are these mistakes by writing them down, when this situation happens and that situation, how would i deal with it, it was helpful not just for me, but it was helpful for all of us working together we could agree then on what should be done and why it made a meritocracy. those rules for operating within the market and operating with each other became a basic algarhythm the computer can deal along with us, and we can have an ideal mericratic way if you make your goals crystal clear and then you can agree with people how you should operate with each other, that's the foundation the most important thing that i learned mostly from, you know, particularly a terrible mistake i made in 1982 in the markets, was how to have an idea meritocracy. >> let's talk about that because that does seem to be a turning point for you, which is to say, well, i'll let you say it. what happened in 1982? >> in 198 it2 i calculated that foreign countries weren't going to be able to pay their debts back to american banks, and that the american banks had 250% of their capital out to these countries. that was a controversial point of view. then in mexico defaulted in august 1982. august 1982 was the exact bottom of the stock market. the biggest bull market in our history practically. i was dead wrong i lost money i had a small company then i had to let everybody go. i had to borrow $4,000 from my dad to pay my family bills it was the most painful thing that had ever happened to me really, but it turned out to be probably the best thing that happened to me because it change the my way of thinking i went from thinking i'm right to then asking myself how do i know i'm right that opened my mind. it led me to find people who would disagree with many he and try to understand the reasoning. in the markets you have to bet against the consensus and be right because the consensus is built into the price i need a bunch of independent thinkers around me, and those independent thinkers are going to argue, and when they argue and we do this in a quality way, so that we can get through those arguments to make better decisions, it's been fantastic there are three things you need to do to have an idea meritocracy. the first thing you have to put your honest thoughts on the table. most people are reluctant to put their honest thoughts on the table. you have to put those on the table. >> because most people have gotten their heads chopped off when they put their honest thoughts on the table before >> isn't that stupid why? it's just that i honestly think something. otherwise, you create this confusion. also, you create this political environment. number one, you have to put your honest thoughts on the table number two, you have to have thoughtful disagreement. in other words, you have to appreciate disagreement. not as conflict, but as a curiosity. to nabbed why the person thinks differently. >> that's why i appreciate joseph so much >> uh-huh. we do that here. >> and that back and forth to get to a better answer than -- >> the first time -- you have to work on that a little bit. don't you think? >> anyway, go for the third. >> okay. and then the third is if you have disagreements that remain, you have to have a system to get past the disagreements that everybody thinks is fair and it should be an idea meritocratic system >> i bet it's complicated in process even though it sounds easy we have different ways of looking at the world, dealing with conflict, we may have hurt feelings that stick around after something like that. >> there have to be protocols. the real question is do you want to have an idea meritocracy, in other words, where the best ideas win out? either you are going to have an autocracry where the boss makes the decision or an -- you have to -- the best system is to have an idea meritocracy. it's explained literally what we do in that book. >> how do you know before if it's not hindsight how do you know who has the best ideas before it happens? and past performance is no guarantee of future performance either >> right there are a lot of things that are explained in the book, and i don't think i'm going to be able to cover them all now, but, first of all, you -- there's a whole bunch of ways that we collect data this is a lot of data collection data collection. we'll have views of who is best. >> really? >> we'll take surveys. >> performance does factor into it >> also, logic comes in. then there are actual tests that people do. now did this happen and that >> you have to -- when you are forming your own belief about somebody's believability, you are. somebody is going to tell you something, you'll form a point of view of why they're believable or not. we'll all do that with each other. this is more of a systematic way of doing that, and we come up with believability the main question that everybody has to ask themselves, however they follow it through, is isn't collective thinking high quality collective thinking an idea meritocracy the best way it has served us tremendouslily well it's because we disagree well. we have -- >> can i ask you one question, which is for this to work, you have to believe that everybody who is around the table truly does have the best intention >> but through the radic transparency, through discussion, these things are likely to come out you know, one of the -- if we all are watching each other's behaviors, and even questioning whether that seems to be in the interest of the common interest, you'll be able to start to get at those types of things better than -- >> you know, if you are going to -- if people around the table are all being honest, then they're not going to have the -- >> you like to think i'm just suggesting in a large organization -- >> i can tell you how it really works, right like this -- this is not an experiment this has been something that's been going on for decades. >> what are the returns them e then as a result of this what have the returns been as a result of this that's the -- that's where the proof lies >> that's the bottom line. you know, i think we have made more money than any other hedge fund for our clients we've made money 23 out of the last 26 years. we've never had a really bad year and the average return has been about a little short of 12% a year that's -- >> that's the proof. >> right >> but it's also there's returns on relationships like this is, by the way, not for everybody, just to be clear. it's one of those things, can you be radically transparent do you want to know your weaknesses it's a big thing do you know -- do you want to know your weaknesses and know how to deal with those weaknesses that's a strength. this is -- this can be a little bit difficult for people about one-third of the people don't make it in the first 18 months then there's a group of people who wouldn't want to work anywhere else because they go into office politics or they don't know what's happening. read about it in there because i think if you read the book, you'll get a sense of that >> my guess is if this works for you, the rest of the world looks like dilbert to you. >> a lot of our people couldn't. >> that's the question, though how scaleable is this? people who read this, look, as i said many times to you, i read this book, and i think personally there's a lot you can take away from it just on your own, but in terms of large scale organizations that want to attempt this, i know you're going to build an app or you're going to make some of your algarhythms available publicly for companies to use in the future in part, because you have so many people who come for the first 18 months and it doesn't work, will it work in other places >> we've discussed it with other places, and this transparency that we're having, this collecting data, knowing what people are like, is now here >> right >> and you can gather data -- >> you think it's here whether we want it to be here or not >> right that knowing what people are like, that transparency, then the question is what is done with it? i think if you are dealing with that collectively on what do you set the criteria as and how do you build that on, you have that power. it's the power to even get past disgreemgts, you know? it's like if we -- so i think it's very scaleable. everybody in their own way if they want to operate idea meritocratically, they can do the three things i say if it's just a relationship. okay are we going to put our honest thoughts on the table? are we going to get spas past - >> not in the media we aren't. not in this day and age. >> would -- doesn't it logically make sense in other words, if i asked do you want to know what i really think? >> i'm not sure. >> not in this day and age, right? >> it depends on what you are talking about when it comes to work, yeah >> that's what i mean. >> definitely when it comes to work >> that's just what i mean work i don't want to know what you think about my outfit. >> no, but that's not relevant, right? >> so we're just talking about work yes, i do want to know your real opinion. >> if i -- what i think you're strong at and weak at, and then can we have a conversation >> sure. >> because if we don't have that kind of conversation, it's still going on in my head. right? >> right >> you don't know about it you can't address it >> i away rather get stabbed in the chest than in the back you're right >> just one question you talk very personally about this one of the challenges you have had is finding a successor and creating a succession program, which i think you now -- you might be there there were some challenges along the way. does that -- what parts of the principles in that worked? what parts didn't? >> first of all, we know that we don't know what something is going to be like until we do it. when we undertook this, we said that it would be up to a ten-year period. we wrote letters to our clients. it's going to be up to ten years that we're going to go through this i don't know what's going to work we went through that process, and we discovered it then we had disagreements about it because we had ways of getting past our disagreements, idea meritocratic ways, we pleaded our cases, literally, to a group of people, and they had a believability weighted vote, and then we decided and moved on because of that, the disagreeing parties who believed it was fair, then liked the idea and continued to move on the same people, you know, greg genson, bob prince, david mccormick, ilene murray, who have been there for many years, those same people were able to get through their disagreements and resolve it i don't think if i'm pretty sure that if we didn't have a process, we wouldn't have got through it think of like an example would be the presidential elections. in you have processes and prels about thousand to get past disagreements, you can make better -- we did that. that proved -- >> we're going to slip in a quick break and come back. did you have the highest believability index of everyone at bridgewater >> it depended on the dimension. there are all different ways of wreevability, right >>e' going to come back many just a moment wrrn ouble with re. thankfully, the breakthrough in prevagen helps your brain and actually improves memory. the secret is an ingredient originally discovered... in jellyfish. in clinical trials, prevagen has been shown to improve short-term memory. prevagen. the name to remember. 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. people don't invest in stocks and bonds. they don't 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 can't approach investing from just one point of view. because it's only when you collaborate and cross-pollinate 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. >> i remember the consensus then in 1982 was that the world was ending when you came to that conclusion, you must have been 32 or 33, a. can years older than i am. that was before you realized the consensus is usually wrong, i think, because all your facts were absolutely right, but at the same time you had business week had the death of equities and the death of bonds, and i was at merrill and bob ferrell was talking about going back down from 800 or we're going to test the 600 level, and it was just the next ten years were the greatest years in the history. to be negative then you had to be going fully with consensus. that must have been one of the most important less obs you learned is that consensus is very rarely right. >> well, i learned the consensus was not right before then. >> what happened then? >> what i learned then was humility to balance with my odd affect i learned the fear of being wrong. that fear opened my mind in a way. second thing is i knew to you ho diversify my bets. in other words, proper diversification was able to allow me to lower my risk without loweringmy returns i was worried that if i can't continue to do this. i can't -- i have to not have that one in ten bet kill me. i have to be able to know how to balance my bets better i learned really how to balance my bets better then i learned how to study history better the things that are the biggest surprises to us are things that never happened in our lifetimes before they happen before it was essential to me to go back and study those periods that's why when 2008 -- 2007 and 2008 came along, it was lnl the same sort of thing, but i was better prepared for it >> the consensus that the fed has orchestrated this, know, for the last eight years successfully with all of this liquidity and all these extraordinary things that the fed has done, i hear it now. from steve i hear it all ever on the place. they did it. they saved us. it's clear sailing sort of from here that makes me nervous that we haven't exited yet i'm wondering what is the consensus right now for the fed? >> there's money, and there's credit i mean, the only thing that matters is spending. you could spend money. you can spend credit when credit goes down, you better put money into the system so that you can have the same level of spending. that's what they did through the financial system, and that can work we're at the end of that era in other words, that began in 2008 and drove interest rates down and off of that the carry all the assets had their carry off of that. we drove that down to low level that is we're not going to go below anymore, and then the risk premiums now are relatively normal on that in other words, if you look at the risk premium of -- or the duration premium of either bonds or any assets, they're built off of that curve at reasonable levels now we're ending that. i think that the balance sheet run off at the rates that they're saying is too high i don't think they'll probably progress at that rate, at the rates that they're telling us. >> meaning, you don't think credit is coming back at a quick enough level >> that's right. on the margin we know where credit is, and then what it means essentially 2.5% of gdp is going to be caught essentially by allowing the balance sheets to run off, and i think that they'll probably be an increase in the budget deficit by something like 2.5% of gdp the supply demand of bonds, if you look at that, would be something like 5% of gdp if you worsening if they -- >> if they should -- >> if they went through the plan i don't think they're going to make that plan i think it will be very similar to their tightening plan if you looked at what was built into their expectation, stated expectations, and the curve. we just talked to steve liesman, and consensus is basically that over the next 4.4 years they will get the balance sheet down from $4.2 trillion to $2.4 trillion you think it's going to take a lot longer >> yes, i don't think that will happen i don't think -- i don't think it's a big deal. okay i think what is a big deal is if you had an economic down turn because we have two economies now. really okay we look at averages. averages are misleading. the top one-tenth of 1% of the population has a net worth that is equal to the bottom 90% of the population combined. we know from elections, from what has happened, that we have these two economies. if you carve out that 60% economy and what's the bottom 60% of the economy looking like, it's a terrible economy. if you were to have a downturn, i really do believe that the wealth conflict, the left, the right, and all of that would be intolerable. we mustn't have a downturn what we have as a situation where there's no compelling reason to tighten monetary policy the fed's assumptions in terms of how unemployment rates would lead to inflation rates are clearly wrong, right they don't understand that what is the problem? what is the basis of -- we don't need to be -- we have to be careful, right this is very much like 1937. 1937 similar situation 1929 we have a debt bubble 29 to 32, it goes down like 2008. then interest rates hit zero, and then the stral banks buy a lot of assets and extend their balance sheet, print a lot of money to make up for credit, and we have a rebound from 1932 to 1937, and the markets go to highs, and everything is good. then at that moment in 1937 we're at the point where that ended and then there was a tightening of monetary policy, and at the same time the wealth gap was analogous to the wealth gap now. statistic i just gave you was the same back then it's a delicate period of time >> that's a real bad scenario. it took a war to get us out of that >> conflict is one of the things we have to worry about >> who would we go to war with now? >> ourselves >> now suddenly we are, you know -- suddenly we are. >> my point isn't that that's going to happen. >> the possible seems possible >> my point is that's not going to happen. my point is that it works like a machine. if you take the rate of tightening that is built into the curve, and you tighten faster than that, then that rise in the rate passes through other asset areas. they have to be cautious they have to wait. >> that assumes that there's not an economic down turn. you keep saying we can't have that what if we do? >> you mean if we have that? i'm talking about right now. if you have that downturn, it's a social yes question. i think the biggest economic question of our time is social question in other words, it's the two economies. and if you have a downturn, i think it becomes a social and complicate question. what would cause a down turn right now? would it be -- >> i don't see anything that would cause a down turn now other than if it was a move to a tighter monetary policy brsh. >> kre quickly, i want to give you breaking economic data we'll get right back to this conversation, but the august housing starts are out they're down 0.8%. the consensus was calling for a 2.6% increase. >> do you think any of those things will, a, have happened or b, will have that impact that people are talking about >> i think they're going to have -- when it's all said and done, a relatively modest impact >> modest impact one other thing. i wanted to ask you about this last week. somewhat of a political question comey was your general counsel at bridgepaurt what did you think of trump's decision to fire him >> i'm not going to get into that that's a very personal, you know, matter i would say that i had a lot of admiration for jim comey's integrity, and i think that -- and i know nothing about the particular situations in terms of that. i don't know you know, i'm sure i couldn't add anything of value to that. >> great back to 1982, what was it that you missed, the lesson you took out of it? >> that all of these defaults would not -- i thought they would have the consequences on the banking system, and i didn't have a really full appreciation of how those exposures could be rolled in other words, the restructuring of the debt so we didn't call them defaults, and how monetary policy could be changed, and the reason monetary policy could be changed is it was now this world shortage of dollars. okay all these deters needed dollars. caused commodity prices to fall, and reduced inflation pressures while there was positive growth and the federal reserve could ease monetary policy particularly when you had a level of interest rates that can allow that those flood back of dollars was an important thing that short squeeze if the currency is the nominated in your own -- debt is the nominated in your own currency >> the capacity -- >> the capacity to restructure is really -- >> it's in your own hands. >> talk about currencies, and we talked to jamie dimon about this >> china, for example. you know, a lot of people are worried about the debt crisis in china. >> no asset bubble no asset bubble. we don't have too much spending. we don't have too hot. we don't have too much inflation. we don't have too much debt growth, right? you took $15,000, and you put it on their balance sheets. you have $15 trillion worth of spending that you wouldn't have had. that's part of the restructuring. then the maturities get extended, and the interest rate gets lowered if you look at debt service payments, where are the bubbles? it'sic not like 2007 you might see a little thing here and there what we have more is kind of the sticker shock because we're not used to when we say rates are low, and the future returns are low that's another way of saying those prices are high. if you have a lot of liquidity that's competing for markets, you know, everything competes for each other, and you have it off of a curve that it's an interest rate there. interest rates can't be too high if they were too low, we would have overheating and a bubble. interest rates must be about right, and so there we are no bubble. $15 trillion balance sheet, and it all makes sense is bitcoin a fraud >> there are two things that are required for a currency. the first is that you can make transactions, and it's a medium of exchange. the second thing is that it's a store hold of wealth those should be the two purposes of a currency. bitcoin today, you really can't make much transactions in it it's not easy. you can't spend it very easily, and in terms of a store hold of wealth, it's not an effective store hold of wealth because it's -- it has volatility to it. unlike gold, let's say, in which reflects the value of money. it's more stable than the 1r5u8 of money bitcoin is a highly speculative market we just dedpien a bubble based on that criteria bitcoin is a bubble. it's a shame it could be a currency it could work conceptually, but the amount of speculation that is going on, and the lack of transaction, the idea that it will be private in terms of transaction -- >> in terms of the government allowing it to be a private currency >> then when you take bitcoin, bitcoin, there are other crypto currencies bitcoin, might have -- lose competition to another crypto currency, and so is it a crypto kurny bet we're making or a bitcoin bet? it's very much speculative people thinking can i sell it at a higher price, and so it's a bubble >> fair enough the book is called "principle. ray dalio, thank you for being here >> thank you for having me >> okay. coming up when we return, best buy holding its first investor day in five years. we're going to hear from its ceo in a rare interview. squawk returns in just a moment. what are the ingredients of a life well lived? is it the places you go? the things you own? or the people that fill it with meaning? for 150 years, generations of families have chosen pacific life for retirement and life insurance solutions. protecting what's most important to you. that's the power of pacific. ask a financial advisor about pacific life. >> best buy is holding an investor day from rich fooed, minnesota, that's where we talked to best buy's ceo. good morning >> good morning, becky you know the last time that best buy spoke to investors, then new ceo laid out his transformation plan hoping to stem the negative comps, the falling margins and finally quiet those that were questioning the company's vie anlt >> we kbrooud the customer experience on-line in the stores. we had the partnerships with the vendors. we threw costs out, and that allowed the resurgence with best buy 2020 believe the new glue, we are focused on growth we've taken the time to look at the strategy eenlic landscape, and we think that we are operating in a very attractive environment that's full of growth opportunities >> many of those growth opportunities have to do with the connected home, like the in home advisors. now available nationwide we'll actually come to your home for free >> ewe still going to have the geek squad, the magnolia support, inhome advisors and total s. support as well zoo this is so exciting. typically the geek squad services who are attached to a single product, so you would buy that, and it was repair oriented for your computer. with everything being connected with customers have told us they want is support across their entire home. the service is attached to a household. it covers every technology product you have in your home. whether or not you buy it at best buy we're going to help you. as an example, you know, if netflix is not working tonight, is it because of netflix is it the wi-fi? is it the tv is it distributing device? honey, please help me. >> now, best buy shares up more than 220% in the five years that uber has been ceo. fixing best buy is one thing kbroet is a whole other. back to you, guys. >> pretty nice looking stock chart there, courtney. anyway, thank you. coming up from space to health the co-founder of moon express is on a new mission. this time to revolutionize wellness he joins us on set next. >> focused on exploring the depths of outer space. we know that from the last times we've talked to them, but for his new project he is looking deep inside the human body let's bring in navine james, the founder of vio, an ai-powered health and wellness service using information from gut bacteria or microbes he is also the co-founder of moon express that is the only company to have permission from the united states government to leave earth orbit and land on the moon it's great to see you again. >> thanks a lot, becky it's good to be here >> we are going from outer space to inner space what is this all about >> interestingly in the last five years every single research is pointing to the fact that all of the chronic diseases, whether you look at the parkinson's or alzheimer's, autism, depression, anxiety, auto immune diseases, they all start in the gut. the pharmaceutical kpsz believe the best drugs that are the drugs you take for the rest of your life. instead of suppressing the symptom, what if you could understand that is causing these diseases >> the sign is very clear. you microbes in your gut are really responsible for these chronic inflammation and the causes of the diseases >> this has been a trend probiotics has been a hot trend. the problem is we're treating our body like a black box. there's never been a technology that actually tells you what's already there and what's missing. the fact is if you take probiotics, the same is dleen, and they give it to everyone what's really happens is i may already have too many of those strains. >> do you test me? do you get a tool sample >> it's interesting that you ask. we designed for the national security, and they needed to know for the biodefense what is going on inside your body. it looks at the swab of the stool and the blood, and it's to be able to see every single gene expression, every single oerg nichl in your gut. not just who they are, how active they are, but most importantly, what are they doing? are they producing fasy acids that our body and brain needs. are they producing vitamin b and k? they look at all the nutrients we as humans are really a microbal society 98% of the genes in our body come from our microbes and not the human dna. >> is this something i can buy on the parmarket today >> you can buy -- >> $399. >> $399. it used to be $3,000 the technology we have at our disposal now brings the cost down, but most importantly, we tell you what to do. >> i was going to say, is this as simple as taking vitamins is this more probiotics. >> it's food we tell you, for example -- my blood glucose is prediabetipred. everybody said don't eat starch. eat lentil and tofu. i did the test it turns out i need to be eating more cash carbs, less protein, and less fat it turns out my body since i've been eating all the lentil lagumes, i was only feeding one set of microbes, and had no diversity. >> don't most people have the same microbes? isn't it consistent through everyone >> no, it's very interesting >> why is it different >> the people with which you live and the food you eat. >> you have way more >> individually you and i, joe, you may not realize 99% of dna is same between us look at our look at the microbes, less than 5% of the microbes are the same. when people live together, their microbes get closer to each other when they live in the same household. but when you look at any two people, we are really different. most of our genes are coming from our microbes. there's no such thing as universally healthy diet the diet good for you, may not be good for me the diet good for me today may not be good for me three months from now you have to make sure you're constantly adapting your diet. >> thank you we'll get you back another time to talk about this and everything you're doing. >> we will go to the moon in six months, when we land on the moon, we will not only become the first private company but the first superpower this is our next moon shot >> you come back and spend a longer time with us. >> okay. ouerchnk y vy mu >> appreciate it >> we'll be right back breaking news s on procter & gamble to get out of life. but helping them get there means you can't approach investing from just one point of view. because it's only when you collaborate and cross-pollinate 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. what they want out of life. 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 hewlett-packard enterprise, we're transforming the way we work. with the right mix of hybrid it, everything computes. ♪ ♪ ♪ ♪ >> well, procter & gamble is taking aim at nelson peltz leslie picker has the story. >> the battle of p&g is premised on one key question, why not just add peltz to the board. to that p&g said we've done our homework on peltz, the results are not good now cnbc has reviewed the contents of that homework among the highlights, p&g dug into how trian's larger investments performed relative to the s&p 500. they say he tends to buy when undervalued, outperform one week through his stake when he exists, and underperform one year after peltz exists. they also were seeking to show the difference between what he says and what happens. they gave examples such as at heinz where he said he could increase gross margins by 200 basis points, and they remained unchanged. and then at wendy's, he focused on divestiture, that happened, but then they merged with arby's they said many of the best investments were where he did not hold a board seat. this is the largest company to ever face an activist. >> it shows what a large company can do in terms of fighting back this is an aggressive fight you don't generally see. >> a lot of people looked at the money that p&g is spending on this they said it would cost them about $35 million to defend themselves against putting nelson peltz on the board. peltz said it's closer to 150 million. clearly they have the resources to create this kind of report and showcase and dig into what trian has done in the past what that could mean for procter & gamble >> will be interesting to see nelson peltz's and trian's response to this >> he will be on in a little bit. opportune timing by the way, 9:00 a.m., nelson peltz stick around, squau"squawk" wile right back of long-term mega trends, like the prime-time of urban expansion, pin-pointing opportunities to capture alpha in real estate, infrastructure, and emerging markets. partner with pgim, the global investment management businesses of prudential. becareally want to be there, but you can't. at cognizant, we're helping today's leading media companies create more immersive ways to experience entertainment with new digital systems and technologies. get ready, because we're helping leading companies see it- and see it through-with digital. tcan help protect you from the unpredictable. and the distracted. its cameras, radar and sensors can help prevent just about any surprise. well, almost. lease the gle350 for $609 a month at your local mercedes-benz dealer. mercedes-benz. the best or nothing. the numbers are in the winner is not the emmys. viewership for the awards ceremony was about even with last year which was an all-time low and 10% less adults in the key 18 to 49 demo tuned in it's less about the emmys and more about the fracture of television >> i tried to figure out a way i could watch it even less than i watched it i don't think i could. i watched it as least as i possibly could >> you don't like it for a different reason i would say there's something different happening in television >> football is down, too streaming. >> because there's so many shows, people are not interested in the same way. it's tough out there >> it's true you know, it's like i -- i couldn't watch it any less than i already did i wish there was a way i could watch it less, but there isn't. if it was on nbc, i wouldn't say that. >> you can rewatch the monologue. >> let's look at where the markets stand. futures have been positive for the dow and the s&p all morning. now the nasdaq is positive dow futures up by 26 points. s&p up by 2.5. ed nthat does it for us today. see you tomorrow right now it's time for "squawk on the street. ♪ good tuesday morning welcome to "squawk on the the street." coming up, nelson peltz from trian. the president speaks to the u.n. general assembly next hour we'll take to you that live. futures are steady as the fed begins a two-day meeting