Transcripts For CNBC Squawk Box 20160915

South korea were closed for whats the mid autumn festival there. And the european equities, things are up. Cac is flat and if ftse is up by 0. 2 . This morning crude is up by 24 cents still trading at 24. 81. Lets get you caught up on the busiest day of the week. The bank of engallant is going to be announcing its latest policy decision. Expects to leave rate. Jobless claims are out at 8 30 time. The Producer Price index and september philly fed index and at 9 15 look for august Industrial Production. We talk about the apple iphone a lot. Apple now saying the initial quantities of its iphone 7 plus are sold out. Thats the one i want. The new gadgets will hit store shelves sometime tomorrow. Consumers wont be able to buy sold out phones but the company will continue to take orders online. I wont be releasing its first Sales Numbers of the iphone 7. Why . I think they made that decision a while ago. It reminds me of the details. In fairness to apple, nobody else does. Samsung doesnt. Theyve always been in fairness probably more transparent. Once you give the information its a lot harder to take it back. You have to think maybe they thought it was going to be and this was a good time to do it. I think youre going to get less information over time. I do too. Theyve never been a fan of Quarterly Earnings but they do it. Early reports are good in terms of sales. What feature on the 7 plus has you pining for that phone . The camera. I carry the sr. Lr. Remember when i took the kids to school i took the slr because you can take the great focus. You look great and the behind looks fuzzy and its beautiful. You cant get that on a phone typically because its one camera, very flat. You can get that on the new one . The phone is basically almost as good as an slr. Thats one thing that would push me over the edge. And they say its good at night too. Good at night. What do you mean at night . The battery. Much clearer. Cover the aperture on all of your devices. So you dont get hacked into. I knew that i could the reverse thing where it takes it looking at you and i thought it was the whole like screen just took a picture ofmy. Theres a thing up there on the top of that. Yeah. Yeah, yeah, yeah. Dada da. I figured that out. When you keep seeing these email dumps come out, do you want everything you say or do forwarded . If you have any notions that theres any privacy left in the world, just forget it. I have one other problem is i dont get the midautumn thing. Its not midautumn here. Its not autumn. Isnt it september 21st . How can you have the midautumn festival on september 15th . I wasnt focused this. You dont. You dont. You need to quit the two is that a pivotal problem, joe, in your mind . Did you hear her . Its a midautumn problem. Its based around the moon. Its a little outside our traditional calendar. Supposedly down south its winter when its summer. Ive never seen that for sure. In brazil, sure. I can attest to that. It is true. Separately on the apple front, its now been just more than day since apple release thad new iphone software, and, joe, i hope you paid attention to this. The ios ten is out. The latest version has seen a number of installments. They estimate the Adoption Rate stands at 15 which is a better Adoption Rate of this later ios. However, in the first 24 hours some claimed they were being bricked. What . All of a sudden your phone doesnt work and it becomes a brick and you have to plug it in and install it through itunes. So i hope you waited your 24 hours. Its all patched up and everything is good to go. Theres not a little sign on the settings yet. They know its you. It can work if you go do it right now if you were to go into general and go to updates, but its not telling you to next. It probably will in the next week. Separately shares of apple hitting a 2016high with its market value topping for the first time. Shares of the company that supply chip and other technology also got a boost out of all this. A serious logic skyworks solution. Samsung has helped out a little bit in the last week, wouldnt you . Well, yeah. U. S. Prosecutors have started to investigate the banks sales practice that led to a 185 million settlement. The u. S. Attorneys office in manhattan. The offices in manhattan report lid conducting probes and theyve sent subpoenas seeking information. Wells fargoes shares are under pressure and this is how Warren Buffett has suffered. Were talking berkshire hathaway. Buffett has fall on the the fourth richest person in the world with jeff bezos. So it wasnt you. Youre not even close. No. Not teen top teven the top t no. First of all, surprising because of its reputation and concerning because they didnt get on top faster. They laid off 5,300 people of their work force. The idea that that problem continued for five years and nobody looked why were fire 1g of our work force a year over this or ask the manager a question . It seems to me a couple of things, one, theres a cultural problem, and, number two, its interesting to see what should be done to the lead management. Some of the people directory involved or at least one is apparently left, but if i was on the board and im not, i would certainly give consideration to giving no 2016 bonuses for the ceo and the people in line in the Consumer Banking segment where this occurred. Potentially looking back at clawing numbers, not only for the manager who was directly responsible but how how much of the bonuses was based on fraudulent numbers as well. By the way, this is larry who thinks this, as a former jpmorgan board member. Yes. I also think, too, they didnt get out ahead of it very well. Northward these kinds of things should have been decided before they came public. They needed to make these decisions in terms of announce the pay issue. Yes, before this became an issue. What happens if theres an effect that hasnt been fully computed . By virtue of not make the decision, theyve extended the story because tla will be another story when they decide whatever theyre going to do about it and that would have been avoided before they did. So the whole thing is given the reputation that theyve had, it certainly has been blemished. Okay. Well talk a little bit more about this later. Larry is with us throughout the show. But lets get you caught up on political news as well. Republican president ial candidate donald trump is going to be addressing the Economic Club of new york tore at 11 00 eastern time. Trump expected to offer more clarity on his Economic Policy. In the meantime trump taped an interview with dr. Oz that will be airing today. He gave dr. Oz his medical revuchlt also Hillary Clintons doctor releasing a twopage note saying she remains healthy and able to serve. Well have more coming up in a few minutes. Our guest host for the next three hours is larry boss idy. Im told it is midautumn in the chinese calendar. I dont know whether they have autumn. You talk about wells fargo. This is all ive got for you. Well, you know, you always have a lot going, joe. Im also interested in the apple situation from this standpoint. In terms of the Tax Liability that the European Union is trying to impose of 14. 8 billion, theres a view that yesterday if they were to pay it by the way, the European Unions chances of winning this are very, very good. Theyre going to have to pay it. Would it be a deductible . That was secretary lews concers concern. They have 3 billion offshore but theyve got lots of subsidiaries off shore. If they pick one of foreign earnings and bring that back, then they can apply the 14 billion payment as a tax credit and instead of paying 35 theyll pay chit is kind of crazy. They will find a way to bring back foreign earnings. They can but its still a credit. If they pay, it will be the u. S. Tax person. Its too bad but thats the way it works. I was kidding a little bit about, you know, the fed, but i guess we need to, we need to mention it. Suddenly maybe the market eventually tells the market its okay to go up. If we stay or go to two on the tenure, then they probably will be able to raise without, you know, preparing us all do you think they do it in Election Year . No. Ill tell you one thing. One thing we can say with certainty is its a political organization. I mean they say its separate and autonomous and thats nonsense. Oh, my god, larry. I mean john harwood is going to spank you. Thats all right. I can accept that. When trump said that the other day. He used that as an example that trump is back with no discipline anymore. Larry, why do you say that . Because i how about the Justice Department . I think that theyre in constant contact. I mean theres records of that that theyre dealing with the Administration People frequently and therefore we even seen feds that have dealt with multiple administrations that have dealt with democratic administrations just as closely. Im not saying it as a republican or democrat. Im saying its political. That they have to be aware. I would be very surprised. Political and youre shocked that theres gambling going on. When you say political youre not saying theyre in bed with the administration. You say theyre very cognizant and maybe theyre trying too hard not to get involved. No. I think thats partially true. I think they recognize that they i think they want to act in a way that doesnt influence the election. Are you trying to walk larry back . No, no. How is it different by the end of the year. How is it different than where i am . Because i think your suggestion is and Donald Trumps suggestion is theyre in bed with the administration. I think hes suggesting that theyre cogny zamt of the politics of the moment, which is different, i think. I dont want to put words in your mouth. No, no. Thats fair explanation. Whatever the administration happens to be in maybe. Thats the one one time they went one time they went and that was 41 never for gave greenspan. It cost him the election. I mean i i would assume that any fed would be cognizant of Something Like that, would be concerned about it. You guys have to talk about it every day, which is unfortunate, but the truth is this. They shoulden stay at zero. They should. They might. They say the end of september. I think. Liar. I dont think september. Hey, we might. Like they send a we dont use i dont know if you saw it minions is a world you use instead of mafia. Like colin powell actually said the clinton mafia. But they dont want especially mainstream. Its minions. Arent minions the cute universal studio not people that break legs and people that cement over you. Thats how you clean up the act. I was suggesting it was set up that way. Anyway, weve got to to go. Well be back in just a moment. A very busy day for donald trump in new york. Hes giving a speech at the Economic Club. Hes going to be on fallon tonight. Plus, this interview is going to be airing today. Trup p gave dr. Oz his medical records to review and john harwood is in town to talk trump, hillarys return to the campaign trail after her battle with pneumonia and a lot more when squawk box returns in just a moment. Welcome back, everybody. We have stocks to watch. The macker of commercial and industrial glass products says that it continues to see strong conditions in the nonresidential Construction Market shares of aeri ooe pharmaceuticals jumping 60 as it met a goal. It submitted a marketing application to the fda last week and boeing is curbing overtime pay by 80,000. This is part of the companys efforts to try and cut costs. Starting on october 14, theyre halting overtime pay. The rupp nominee will be peering on dr. Oz and then late oretown tonight show with jimmy fallon. Hillary clinton is back on the campaign trail speaking in North Carolina after taking a few days off to recuperate from pneumonia and john harwood is here with all of that. John. Its getting real. And the speech that donald trump is going to give. Its not going to be new policy detail. I talked with an aide. Hes going to pull together his tax plan, regulatory plan, child care plan he announced the other day. But were at the point of the election ten day out from the debates where all of the fluff is getting sorted out of the polls postconvention and were fixing out exactly where the candidates are strong and donald trump has got some good polls by his side. Hes been getting drawing closer to Hillary Clinton and were going have to see when Hillary Clinton gets back on the trail. What does history show about the debates and how influential they are . They talk about everything thats happened thus far and this is the pregame. This is like tailgating before the game. Its almost irrelevant. The game doesnt really begin for another ten days. Well, i dont think thats entirely true. The history is if youre leading in labor day, you usually win the election. What weve seen from a couple of debate cycles is that a strong first debate can boost someone and can bring their base home and get them closer. So Walter Mondale drew closer to Ronald Reagan. Didnt get close enough to compete. Owned obama. Remember, it didnt help. It did, but what happened he was the ropeadope for the next yeah, but mitt romney had republicans who did not come home and that debate brought them home and that got him closer. Now, when Ronald Reagan debated jimmy carter, you had a whole country that was dissatisfied and not happy with carter, not sure about reagan. Reagan made them feel sure in the debate and that boosted him. So, you know, what can donald trump get out of this. I think donald trump still has a barrier in terms of convincing a decisive segment of people, especially College Educated whites that he is fit to be president. If he can somehow demonstrate that quality, he could help himself a lot. What do yhow do you think th history of Hillary Clinton plays given the new letter from the doctor . Im dubious that that is a huge factor in the election either way. First of all, i grant the presmgs of health to both candidates. Theyve been out for a year and a half. Thats not an easy thing to do. Just as the president ial campaign shows who you are personality wise, it also tests you physically. Wasnt trump ahead in College Educated white men . Yes, he has been. All right. But put them all together and what hes been doing is underperforming among College Educated men and women compared to say the previous baseline. I dont think health is going to be decisive unless, somehow, we learn something more about the candidates. Donald trump didnt release new medical information. Were hearing from audience members and that sort of thing. We dont know what it was. Hillary clinton released a letter. Shes been sick. And if she gets better and campaigns and performs in the debates, i dont think its going to make a difference. Earlier in talking to the folks on worldwide exchange, i brought up the i dont want to say the name, david brocks hit squad that he funds for Hillary Clintons campaign, the eight things you dont know about dr. Oz. All of them disparaging, calling him a tv dock tomorrow i just mentioned did you know my ninth thing you know roger altman, a friend of the set. Sure. When he needed a heart transplant, he specifically asked dr. Oz will you do the procedure for me and 2kr6789 oz subsequently did do the heart transplant surgery for dr. Altman and that was 1990. I didnt realize. Its easy to just say hes a tv doctor. First of all, i didnt realize that roger had a heart transplant and im delighted to hear that dr. Oz did it. He specifically asked him. You cant ask dr. Drew pinsky because he got fired for saying something and sanjay gupta. I dont know where he stands. Personally i wouldnt go looking for a tv doctor. Would go for one actually on e. R. This wasnt when dr. Oz was on tv. He was a real doctor. He didnt ask him to stop taping a show to come do it. One of the things that you begin to think about when these debates take place, the first being ten days out, is there going to be a question of somebody losing as opposed to somebody winning . Can be. In other words, the negatives on both of these candidates continue to move up, not a lot, but they dont come down. You just wonder whether or not you can lose it. If one of them can lose it as opposed to the other one winning it. I think thats exactly right, larry. Look. If a candidate there havent been in the general Election Debate stage too many catastrophic wonders. There was the gerald ford with jimmy carter about the domination of mr. Perry. Yeah. That was a primary debate. This is a different stage. But, yes, if a candidate sort of drives home an impression that people have been vaguely feeling and then all of a sudden its demonstrated to this massive audience, that could foreclose somebody from rising or drag somebody down. Tim kaine, was that a smart move to say, i dont know if thats the real one when colin powell said those are mine, those are real, which is a smart way of not having to address them. He said, what would you make of them. He says i dont know how to comment, i dont know if theyre real. Colin powell said theyre real. Its a way of dodging it. Colin powell is effectively disparaging everybody. I just said hes got a whole lot more. To be clear, hes disparaging trump a lot more than hes disparaging Hillary Clinton. Well, no, i think thats sflu ambitious. Number one, he voted for president obama twice. Its not to say that greedy everything she touches she ruins because of hubris. It also came out that the biggest democratic fundraiser say the clintons absolutely despise president obama and you have the stuff, more personal stuff. Right. But theres a difference between embarrassing and sweeping condemnation. Im not surprised on the sweeping condemnation. Okay. So what youre saying is, yes, theres a difference but hes the democrat. No. The race card being thrown about trump, i just dont buy. You can do it all you want. Im not doing it at all. Im not saying you. He doesnt need help. Hes fine. Youre okay. You had your show yesterday. Take it easy. John, thank you. What is this . Nothing just take it easy. Its 6 00 a. M. , thursday. All animated. When we come back, bringing down the cost of health care. The ceo works to improve the efficiencies and produces providers and patients. Shell join us on set. In the meantime take a look at yesterdays s p 500, winners and losers. Ught i was crazy to open a hotel here. Everyone said its so hard to be a musician, but i cant imagine doing anything else. Now that the train makes it easier to get here, the neighborhood is really changing. Im always hopping on the train, running all over portland. I have to go wherever the work is. Trains with innovative Siemens Technology help keep cities moving, so neighborhoods and businesses can prosper. I can book 3 or 4 gigs on a good weekend. Im booked solid for weeks. It takes ingenuity to make it in the big city. Welcome back to squawk box right here on cnbc first in business worldwide. Youre looking at green arrows. Dow looks like it would open high e 24 points higher. S p opening higher and nasdaq. Right now its time for the executive edge. Were talking health providers. Susan devore is the ceo and own owner. Susan, thanks for coming in today. Thank you rngs becky. Lets talk about premier. What you do is go directly to hospitals and do what . We work with hospitals and Health Care Systems and help them improve their performance. We wake up every day and say how do we make them safer and more cost efficient. Thats been increasingly performance. How are things going so far along that line . So in health care now, value has become the new economy. Theyre being called on everything. Theyre being intensenty advised on taking care of parents, producing good outcomes and doing it affordably. Is there a dense between the best and the worst or whats happening . I would say theyre stuck right in the middle of a system nas in transition so they get paid fee for service, you know, fee per vacuum and at the same time theyre trying to translate it. Theyre trying to make that transition. Theres always a discussion in the Health Care System of waste, fraud, and abuse. Do you see it and how much of it would you guess there is . So at premier, we have data on 40 of the headlight care systems in the country and we run 48 billion of supply chain spend through our Group Purchasing and i would say theres still 25 to 30 waste, dupe plication. Its a result of the fragrant meant dupe plication in the system. Weve seen a lot of mergers not just because of Insurance Companies but even between doctors offices who say you cant be independent and be out there and keep up with all the red tape. Right. At premier, we see aza need scale. Its been such a cottage industry. Its consolidating in insurance and providers and physicians. My read on this is the doctors and health care have dealt with the pain. They havent seen the flusher times schl that a fair read or not . I guess i would say, were right in the middle of the transition, and premier is working with 130,000 physicians and 3,700 Health Care Systems and hospitals, and i would say the momentum around improving quality, improving safety, we can see those results. Mortalities Getting Better, deaths being prevented, health is improving. Theyre seeing a clinical improvement, i think, not seeing economic gain from some of those changes. We vn v an election and two candidates looking at the Health Care Industry very differently. Hillary clinton would continue obama care, trump would put the brakes on it and the house has told us very clearly it wants to stop things. What do you think of those eventalities . It really depend os whan happens in congress. If theres a victory and a democratic sweep, i think the train moves faster. They try to extend medicare to people 55. We get transparency and other initiatives around drug pricing. If trump wins and theres a republican sweep, ily will be some confusion and uncertainty for a period of time, but theyve got to sofrl the same problems. Youre looking at this from the hospitals perspective and the cost structures that have been set up there. What weve been seeing is the premium levels of people paying the obama care have skyrocketed, gone up 25 , 35 . Weve seen providers drop out and the suggestion is, look, when you only have one option that a single payer system is more likely to come in. How do you balance with what the hospitals are dealing with and consumers . I think market competition, i think multiple payers, buyer, competitive market system is what will work best. I think clearly the skparjs arent working and i think they have worked the system and opted in before they have expensive care thats driven. Its driven costs up. I think healthy of competition and friction, thats what premier is all about. Were trying to create friction between the suppliers to drive let care costs down. Tell me something, the fact that so many states are with drawing from the system, does that drive us faster to a single payer system hour do the hospitals think about that . If there is consolidation in insurance or even if you had single pay yore system, you have a lot of power. It cant be fixed by Insurance Companies. It needs to be fixed. If you go to a fivestar restaurant you do want the chef cooking your meal or the Health Inspector cooking your meal. You want to know the inspector has been there but you want the people responsible for the outcomes. Appreciate your time. Coming up, three dow components to watch for. Squawk box coming up next. Harvard school unveiling its report on competitiveness and the results are scary enough to keep you up at night. He brought a special guest. Squawk box will be right back. This car is traveling over 200 miles per ho. To win, every millisecond matters. Both on the track with the help of at t, Red Bull Racing can share critical information about every inch of the car from virtually anywhere. Confirmed, daniel you need to cool your brakes. Understood, brake bias back 2 clicks. Giving them the agility to have speed precision. Because no one knows like at t. Im one unlucky guy. The chance of being involved in a robbery is 1 in 757. The chances of being struck by lightning. [thunder] [coughs] 1 in 750,000. [ding] woman on p. A. please fasten your seatbelts for unexpected turbulence. Announcer the chances of being a victim in an airline crash, 1 in 29 llion. Hey could i get some peanuts . The chances of being iold in a car crash are far greater than lightning strikes and plane crashes. And if you are texting while driving, your risk of crash increases 23 times. Now, i may be an unluc guy, but i dont havto be part of that statistic, and neither do you. Drive responsibly. Welcome back to squawk bach. Stocks include pfizer. They have recommended the removal of the most serious warnings from chantix. Thats the series of commercials where people say they were able to quit smoking with a long list of warnings. If you dont try to kill yourself. People trying to quit smoking, im not sure if its chantix or trying to quit smoking. Please do it. Black box im talking to you, greco. Black box warning was imposed in 2009 because of potential Mental Health side effects including suicidal thoughts. Whenever they do that with antidepressants, i always think the same question. Because youre depressed. Thats why youre on the antidepressants. Or worse. Maybe it actually in some cases. Get worse. It does get worse. Mcdonalds reportedly receiving final bids for its three groups. Reuters says theyve teemed up for the business which is worth 3 billion. And disney cutting 250 people from its Consumer Products and digital units. The cut include people who work on video games. Disney has moved away from developing its own content for that versus licensing its characters. Weve got to a little tesla news here. Im sure james chase la revealing that news. There are safety concerns over the semiautonomous pilot system telling reuters that tesla was, quote, pushing the envelope in terms of safety, unquote, saying the system s quote, not zained to cover all possible crash situations in a safe manner. The safety of autopilot was called into question after that fatal crash. Tesla has since said it has updated that software so that that type of crash wouldnt happen. What does mobileye do . It makes a lot of the mobile technology that sits aboard tesla and has the radar. They also, you should know, are developing a potentially competitive product that they would sell to other manufacturers. Whos stepping in i guess i should read up on this whos stepping in to fill the bridge . I dont know. They wanted to do it to help their own reputation, so this is kind of defensive move for them. But its problematic. Youre in there and youve got it on automatic pilot and youre like, okay, you can relax, but be ready for the time the accident situation. Thats what i mean. Theyre just human nature. If you think you can relax, theres going be a team where youre not ready for that accident situation. Its a ways away. But the distinction between having it out there for customers to just do it on their own, you know, ubers doing these experiments you probably read about this week in pittsburgh. Two guys in the front seat. They have people in the front seat. And i imagine theyll be in the front seat for a year or two. I hope so. You can apparently as a passenger press a button that says you dont want the car to be autonomous. You want the actual driver to do it. It might be one of those things. Dont download the new ios system because it may brick your phone. That may be one of the things you want to work the bugs out of before youre a human guinea pig. I would guess so. Harvard coming out with its sixth annual finding. Theyre going to unveil the findings and what theyre going to do to fix it. Were taking a break. Well take a check in the next half hour. Were back in just a bit. Whoa. Whats going on here . Oh hey allison. Im val, the orange money retirement squirrel from voya. Val from voya . Yeah, val from voya. Quick question, what are voya retirement squirrels doing in my house . Were putting away acorns. You know, to show the importance of saving for the future. So youre sort of like a Spokes Person . No, im more like a metaphor. Okay, a spokesmetaphor. No, im. Youre a spokesmetaphor. Yeah. Ok. See how voya can help you get organized at voya. Com. Remember here at ally, nothing stops us from doing right by our customers. Whos with me . Im in. Im in. Im in. Im in. One, two, wait, wait. Wait wheres tina . Doing the hand thing . Yep we are all in for our customers. Ally. Do it right. Today i am helping people everywhere do what they do. Better. I work with startups like alpha modus to predict markets five times more accurately. I am helping tv networks use social data to predict what people want to watch. And i worked with marchesa to turn fan feeds into a dress that thinks. Hello, my name is watson. Working together, we can outthink anything. Welcome back to squawk box. Harvard Business School out with its fifth annual Competitive Survey on the performance of the American Economy and the steps needed by business and government to restore growth and prosperity. Were joined by cochairs of the project to break down the findings. Theyre shocking, guys. Joining us is Michael Porter and jan rivkin. Good morning to both of you. This is sad. This report was sad. I dont know if you want to go through some of the key findings, but i want to figure out how were going to fix it. Well, andrew, i think it is very disappointing. We have were stalled in america. Our performance Economic Performance an many metrics is worse than weve seen in many generations. I mean, not five years. I mean 10, 15, 20, 30 years. We havent been making any progress on really dealing with the things that are holding us back. Were having a very bizarre political dialogue about a lot of things but ultimately were not moving ahead on tax policy, on infrastructure, on all the things we need to do. You say Economic Performance peaked in the late 90s. Right. A lot of people think whats going on is we had a bad recession and were recovering. We find in the late 90s around 2000s. And the recovery is indeed slow. This dates back earlier than that. It reflects some emerging weaknesses in the u. S. Things that used to be strengths turned into weaknesses. Let me go to professor rivkin. You have written about some of these issues for five years. Repeatedly. Made a number of the same suggestions. Tax reform or other issues. We have not moved on any of those. Are you any more hopeful that in a new president ial term we will get there . Well, i think youve got to realize that in fact, you know, United States retains amazing strengths. Its got a great context for entrepreneurship, vibrant capital markets, strong management. We also have weaknesses we can actually address. So im hopeful that the American Economy has a great runway in front of it. We just need to in some ways get out of our way on things we know we need to take care of. You know, michael, its good to see you again. One of the things you get when you have dialogue with ceos today, they are frustrated by things in america. They are adaptable, smart people and they cope with it and go out of their way to succeed despite what goes on in america. Particularly what the government does. Thats a trend thats disappointing to me. I dont know whether that can be reversed in terms of them being part of providing the solution we need to get off the place where we are. What do you think about that . Well, i think the Business Community has actually been stepping up to try to get engaged in this issue. To try to work on skill development. Youre seeing Companies Raise incomes and Job Opportunities for lower income workers who have been really suffering over the especially over the last several decades. So i think businesses in the game and actually large u. S. Companies we find are doing quite well. Theyre quite successful. But theyre in a position where they dont have to deal with many of the real weaknesses. If we have a bad tax policy, they have a global tax structure that works around it. If they cant find the right skills for their industry in america, they set up a facility in latvia to do those things they need those skills to do. The real pain is hitting Small Business. Weve had a dramatic reversal in the state of Small Business in america. Small business job formation is slowing down. The number of new companies that are formed is slowing down. Small business is struggling. The worker with only average skill or low average skill is struggling. Theyre now competing with workers around the world that would have blown past us. We used to have the most skilled workers in the world. Now we dont. Their education levels are not special. The percentage that went to college is not special. So jan is right though. We have tremendous strengths in america. The problems we have are fixable. Jan, whos doing it better . Sorry, i couldnt follow that. I said whos doing it better . Whos doing better than the United States you mean . Yeah. What country do you look at that we should be following if this isnt it . I dont think theres a simple way to follow the model of another country. I dont think we need to. I think america has unique strengths we could build upon. You know, weve got some weaknesses we need to address. You guys want to weigh in on the Political Climate . Is there one candidate that you think is more likely to fix the problems that you talk about in this report . Well, i dont know, we almost put in this report an assessment of how the candidates were doing. You know why we didnt . Because we couldnt tell. Their policies are so fragmented and so changing that we really cant understand what the strategy is that each candidate is there a place doing it better . I mean, these are Global Forces that are affecting whats happening. And since we have american exceptionalism, we may not be doing as well but is there a place that could do better given the Global Forces . Maybe they got 6 million people, i mean, i always hear about sweden. But nobodys doing it better with 250 million people, right . Well, i think the metaphor of the United States is we did pretty much everything really well 20 or 30 years ago. Then other countries started Getting Better. They streamlined maybe thats who we should answer. Who . Korea, many of the european core european countries. Chinas gotten a lot better. India is even Getting Better. They have big hurdles in terms of personal they have a lot of hurdles, but at least theyre fixing things. Were going to continue this conversation with mr. Porter. But we want to thank mr. Rivkin. A huge day for data and it could stir up one last fed meeting debate. Weve got retail sales and jobless claims. But that is just the tip of the iceberg. Top strategist from bank of america and jpmorgan will join us after this break. Across new york state, from long island to buffalo, from rochester to the hudson valley, from albany to utica, Creative Business incentives, infrastructure investment, university partnerships, and the lowest taxes in decades are creating a stronger economy and the right environment in new york state for business to thrive. Let us help grow your companys tomorrow today at business. Ny. Gov good morning. Markets looking to open slightly higher today. Investors will be eyeing one big blast of data before next weeks fed meeting. Ready to tell you what to expect through the end of the year. While the gender pay grap slimpgs, we talk about the trillions at stake. And twitter is ready for football. Tonights game will be the first in a series to be streamed over the countrys new app. That story and much more next. Live from new york where business never sleeps, this is squawk box. Welcome back to squawk box here on cnbc, first in business worldwide. Im joe kernen along with becky quick and andrew ross sorkin. And larry is here. At this time futures indicated up a little. We had a high fair value close. If you see the futures up 74, its not quite that good. It is indicated up 44. Another thing i was talking about earlier that i always get a little nervous in september because theres been so many october lows. The reason theres so many over the years is because september is not great. Yeah. And when the first day people get back in and it goes down 400 points they get back from vacation. Welcome back to business. Yeah. Then you got up 250. I was like, see, they were wrong. Then it was down 250. Well see what happens today. Breaking news. Oh becky. The bank of england is leaving rates unchanged. The end. Surprise, surprise. Yeah. We expected. Not counting on that to drum up viewership. In the meantime, lets get you caught up on everything else. Okay, we found out. Lets turn on the today show. What else is going on today, its more than exciting than just that. It is one of the single biggest days for Economic Data in some time. 8 30 eastern time, we get initial jobless clams and the philly fed index. Thats a lot. Everything is unchanged but this we get. Plus later on utilization and business inventory. Also the Swiss Central Bank has kept its negative Interest Rates intact in its latest policy statement. That coming despite increasing criticism that negative rates have hurt both banks in pension funds. And gary johnson is going to be on the ballot in all 50 states. Good for gary. Plus on election day, its the first time a Third Party Candidate has appeared on all state ballots since 1996 from both ross perot and harry brown. I just saw a note from gary johnson this morning. I think hes polling at 13 in the latest. You need 15 to get there. But the latest poll that was out had him at 13 . That aleppo. Okay. I get it. That aleppo. No he said aleppo . But it was the way barnicle asked him. He basically did say whats aleppo. Hey, larry, whats nirp. North american friends of negative Interest Rate policy. I ask the wrong people the next day. They all knew. You were asking economists. I wanted to get someone in and make them feel really stupid like barnicle did. Fallout at wells fargo. U. S. Prosecutors have started investigating the practices that led to the 185 million settlement with regulators last week. How much did the guy in charge make . 125 124. 6 million but it included deferred comp. It was a woman. But thats less than the settlement. The u. S. Attorneys office reportedly conducting probes sent subpoenas seeking information. Wells fargo shars under pressure and over the past month down about 4 . All of this is uncharacteristic for wells fargo. Uncharacteristic for buffett even. This is a serious issue. When i first heard 185 million fines, i didnt think that much about it. But as soon as you start reading the details on this, something that involved 5,300 employees over five years, that is a much more significant issue and as you could see with this, its not going to end with that 185 million settlement. A little corporate news. Apple saying the initial quantities of the iphone 7 plus are officially sold out. New gadgets will hit shelves tomorrow. The company did say it will continue to take orders online. Shares of apple hitting a 2016 high yesterday with its market value topping 600 glrl 600 bill the First Time Since april. Donald trump is going to be address aing the Economic Club of new york today. Trump is expected to offer more clarity on his Economic Policy. That might help Michael Porter when he decides what had to do in terms of competitiveness issue. And Hillary Clintons campaign releasing a twopage note by the candidates doctor saying that she remains, quote, healthy and fit to serve as president. Meantime, trump will be revealing more about his health when he appears on the dr. Oz show today. All right. Markets continue to sort of trade im going to call it sideways. Well see. Under the uncertainty of what the fed will do next week on rates. And that in itself could keep the fed on hold. As, you know, the third mandate. The stock market. Joining us now is avita from Merrill Lynch and David Leibovitz from jpmorgan funds. Our guest host continues to be Larry Bossidy. Why did either of you have a good feel why on the 10year . I know theyve jawboned a lot, individual, you know, fed heads and some of them said septembers live. Right. And then, you know, some of then leak. Then leisman says you see theres a concerted effort sometimes to make us think they might do it. The dow futures now 15 or 20 for september . Yeah. Why are we at 1. 70 and theyre taking notice . Were in a weird period. What i worry about is september and october are generally seasonally weak. Then youve got the election. The one thing we know about the election, even if it were a normal setup. Even if we had a less of a crazy setup than we have this election, you always get volatility in september and october leading into an election. And growth isnt great. I think markets are absorbing things arent that great. And weve had a massive runup since the february lows. And if its up there based on animal spirits and easy money. When the tide goes out its not going to be great. Not wearing bathing suits. Thats right. Thats scary. But i think when you think about what got us to those prior levels initially, it was after brexit. To me this has always been about easy money. It makes sense that the stock market would pull back. I think the fed is priming the pump for december. This is the reaction they want. They want it to happen now opposed to the end of the year. Are you saying the market is going to pull back . I think that this pullback is justified given concerns about september. But i think once we get past that meeting so you think stocks will stabilize when they dont ray rates in september but what happens if they do raise rates in september . Exactly. I dont think the indigestion will be that bad. I think they learned their lesson this year. The market didnt like it. You think that sort of temper tantrum is whats holding the fed up at this point . I think they are very worried about financial tightening conditions over the past couple of days. Thats what theyre trying to avoid. Rates go up, the stock market goes down, maybe the dollar gets a bit stronger. Then the fed finds themselves unable to hike. When theyre not really thinking about september in my opinion and not have to deal with it come december. See, we have a rules based system. Well, a talk about hiking in september, that causes the market to go down 400. Then thats means theyre not going to raise because the market just went down 400. Then in december it went down 400. I mean, this is ridiculous. Its a feedback loop. Should it be that way . Should the fed and theyre subjective about these things. They all have their own opinions. They play us. And theres 10 or 12 of them that play us on a weekly basis on whether or not its going to happen. We point to individual inferences. Yeah. Were counting words in the fed minutes and were obsessed with the fed. It wasnt like this before, was it . Michael porter, thats whats wrong about this than in the past. Is the fed is too transparent. You never knew about it. Now its in the papers every day. All the spokesmen out there trying to give misleading data. And when they never raise, you wonder what do they really know. You wonder is it not good. I thought it was okay. Look. Just putting the fed aside for a moment, look what else is going on in the economy. Weve got Constant Currency sales growth at a threeyear low. After the fed has done whatever they could do to reinvigorate demand and stimulate the economy. But part of it is inflation too. If you look at some of the food prices out there. Part of it is deflation. But youve also got i mean, even if you strip away all of the pricing impacts. Take oil out of the equation, you still have no demand recovery. Thats what i worry about. But look. Thats got to be something of a hangover effect of consumers not feeling settled in their jobs. They may finally be seeing some wage growth, but they remember what happened in 2008 and they are very wary of making some of those purchases they may have made before. I agree. It doesnt look like a great setup for a raging bull market this year. I worry about the market for the next couple months. Our year end target i think is very achievable here. Its 6 lower than where we are today. That means you should get out. Very achieve snbl thats a great achievement. Selling stocks immediately. Absolutely. If youre betting, sell rather than buy. What are you going buy if they sell . So i think what out performs the market over the next few months is health care and technology. Theyve got growth, some yield potential. You know, kind of hedging against the fed not doing anything. And rates staying where they are. Theyve got you know, theyve kind of got whatever you need. Theyve got clean balance sheets. But the market overall doesnt look great to me at these levels. This is the first time ive felt ll worried about s p. The other argument would be the micro is g ining to come back. As we see 3q results and 4q results, maybe things are better than people expected. Thattive gs the market some legs. I think it could go either way right now. Growth looks kind of mushy. Central bankers are talking too much. But maybe the fundamentals, maybe this head wind from the dollar, maybe head wind from oil prices are beginning to abate. And well actually see Earnings Growth which thats what in the long run makes stock prices go up. It would be a 10 correction. Yeah. Youre looking for a decent Third Quarter in terms of corporate earnings . I think its going to be incrementally better than the Second Quarter. I agree. But its not for great reason. Second quarter was 1. 2 . First quarter was negative. Its Getting Better but its not getting great. Its Getting Better for the wrong reasons. Its Getting Better because of oil and the dollar. Those arent really kind of highquality reasons for an earnings recovery. But thats why it got worse in the first place. Sure. But did the market really sell off that much on lower oil and a stronger dollar . I think were sort of Energy Stocks sure did. Sure. But the market sailed through it. You had utilities and high dividend yielding. Oil and gas got hurt badly. And, you know, manufacturing in the Third Quarter doesnt look good. No, absolutely. You look at production. Were not going to have great earnings in the Third Quarter. Will we beat 1. 2 . Maybe. But thats not great. But its the tale of two economies. To your Point Health Care and technology are more Service Oriented and could be poised for decent growth. I think, you know, a plunging stock market to 10 is not an achievement. Okay . Sorry for using the word achievement. Maybe you say theres risk in the system that can get you there. An achievement is 2600. I guess if youre short the market, its an achievement, right . [ overlapping speakers ] for chanos it would be an achievement. Thats just great. Thank you. Thank you david too. And larry will be with us for the rest of the show. When we come back, well have more from Larry Bossidy. And later, mass mutual creating a 275 billion investment company. The ceo Roger Crandall joins us to talk about that and much more. Squawk box will be right back. [phone buzzing] some things are simply impossible to ignore. The strikingly designed lexus nx turbo and hybrid. The suv that dares to go beyond utility. This is the pursuit of perfection. Welcome back to squawk box. Futures have been improving as the morning has progressed. Last i saw i think the futures themselves were up about 70. But after you factor out fair value, theyre up about 40 or so. I guess maybe the boards are frozen. So take my word for it. Youre going to have to. Right now lets turn to our guest host today. Former honeywell chairman and ceo Larry Bossidy. We just went through this entire economic conversation and tried to figure out how to gain things. Your point is manufacturing has not been great. We saw that in the manufacturing numbers that actually showed a decline in manufacturing. Whats happening . You know, i think a lot of the economy goes along pretty well. If you look at housing. If you look at Consumer Spending. If you look at employment. Its up and down but basically pretty good. But the Manufacturing Sector has been soft all year. For a couple of reasons. One, i think theres overcapacity around the world. Thats why Business Investment is faltering. You dont build new things. That was my second point. Thats why you think Business Investment is up . Sure. The average Capacity Utilization is 30 . You dont build new when thats the case. Secondly, still high labor content jobs leaves the country and looking for lower cost locations. Still going on. And thirdly robots which used to be a cocktail conversation are now in everyday use. You dont go in a factory every day without seeing applications of robots which costs jobs. But it doesnt necessarily improve the activity and manufacturing. So you dont get productivity out of them . You dont. And we havent had productivity all year. You dont get productivity until you get volume. That means you have to become a big exporter. You have to do all you can to fill your factory in terms of participating on a global scale. A lot of companies do that. But the demand the overall issue here is theres not enough demand. We talk about how consumer the demand has been decent. Is demand a problem because the dollar is stronger and its tougher for us to compete outside of our own market. Or is the demand problem coming from companies not ordering more . I think certainly the strong dollar has hurt us. But theres no demand across the world. Certainly nothing going in europe thats worthy of talking about. Asia is okay. But south koreas soft as well. So its pretty soft across the globe. Until that changes, i dont see us having a big rebound. Hes going to be back to talk about the competitive problems in the United States and all the things we should be doing. Would all those things change the game or given the demand picture heres the issue that i think that Michael Porter will talk about. The things that have to change he said have had to change for years. Are we going to have tax reform, a territorial tax system, combat regulation, cultivate our energy advantages. Those are things that ultimately the government has to do and they havent done. And the question is are either of these candidates are elected or whatever happens, are we likely to do them. If we were to do them, yes. If we were to get a competitive Corporate Tax rate, for example, yes, it would help our activity in terms of manufacturing and our exports across the world. Im convinced it would. So we talk a lot about how gridlock in congress is actually a good thing because it Means Nothing changes. Are we reaching that point . It is addressed. If we dont address the issues of the day, not only the ones that i mentioned, but we cant get any place on immigration. So yes. We have to have a congress that ultimately passes something so we can get off this the place where we are. I dont think we do much in this manufacturing study upcoming until the government takes action in these things. So far they havent. And i dont know i want to be positive and optimistic. But i cant feel positive on either of those trends when i see whats before me in terms of the election. So you would i mean, in the past people thought im going to split my ticket. I dont want to be sure to give power to one side or the other. You think the days for that are passed. Is there a way the two sides Work Together . It seems its gotten much more acrimonious in washington. Not much more consensus building. I think, becky, this countrys history is we wont do much until the bear is at the door. Until something really breaks. Until something really forces us to take these actions. Then we will. I mean, im reluctant to say that but i think thats where well be. And until that happens, i think were going to continue to slide. You know, were not joe pointed out whos better. There arent many countries better than we. Were not nearly as good as we would like and could be. Because thats in our dna. So were not losing position across the world on that, i dont think. But nonetheless, were not nearly as good as we could be. So something really happens. Not like that financial crisis. Something big. Something actual that it really focuses on. We did do something after the financial crisis. We just didnt fix the structural problems with the economy, unfortunately. We thought dodd frank was the answer to the financial crisis. Thats been part of the problem. Thats right. But what would a crisis be among forget the war situations which always could be a crisis. Unemployment got to 10 for some reason. That would force Interest Rates. Our Interest Rates were to spike as they did. You remember. Then we would do something. Short of that, seems to me we just kick the ball down the road. You look closely enough at certain things in the economy right now and you can almost make the case we really do need to do something. You look at the Participation Rate. Young men out of the workforce, there are a lot of major were six years in the recovery and Participation Rate is 63 . Lowest in 30 years. There are signs. Okay. Larrys going to stick with us for the rest of the program. When we return, is twitter ready for some football . The company set to stream its first of almost a dozen games this season. Weve got that story when we return. D aflac pays cash. Aflac isnt Major Medical enough . No whos gonna help cover the holes in their plans . Aflac like rising copays and deductibles. Aflac or help pay the mortgage . Or child care . Aflaaac and everyday expenses . Aflac learn about one day pay at aflac. Com boat blurlbrlblrlbr tempurpedic mattresses is that they contour to your body. It keeps us comfortable and asleep at night. vo soft, firm, or hybrid. Our three collections pair up to create the perfect bed for two. Theres more than one tempurpedic. Are you or your spouse saved enough for retirement . 62 or older . A governmentbacked reverse mortgage enables you to turn the equity youve built into the retirement you deserve. With over 20 years in the mortgage business, lendingtree allows you to compare free reverse mortgage offers with no obligation. Just go to lendingtree. Com or call now to get started. Live in your home and get the steady income you need. Enjoy your family. Your home. Your life. Lendingtree when banks compete, you win. Coming up when squawk returns, the ceo of mass mutual Roger Crandall will join us to talk about the state of the economy as well as the u. S. Election. As we head to break, look at the futures. Back in a moment. Announcer alvin and the chipmunks want to remind you bacteria can hide in food and make you ill. Wow announcer but you can keep bacteria from ruining your day with 4 simple steps clean, separate, cook, and chill. The roadchip to food safety starts at foodsafety. Gov. Sometimes they just drop in. Always obvious. 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. Welcome back, everybody. Among the stories front and center this morning, the bank of england leaving those key Interest Rates unchanged in its latest policy meeting. That was expected. However, the bank did say that its still likely to cut Interest Rates to just above zero later this year. Two fda panels have recommended that the socalled black box warning be removed from chantix. The warning notes of psychiatric side effects. That comes after a study said there was no elevated risks of effects like that. And republican president ial candidate donald trump will give an Economic Policy speech today. Hell be speaking with that event scheduled to tart at 11 15 a. M. Eastern time. This is a fascinating story. The company is revealing it did so because it said it had safety concerns over the autopilot system. Telling reuters that tesla was, quote, pushing the envelope in terms of safety saying the companys system was, quote, not designed to cover all possible conditions. The safety after autopilot was called into question after a crash with a tesla model in may. Tesla then said it upgraded its software in the car. But still this raising more questions than answers. And there is more at stake in tonights nfl matchup than meets the eye between the jets and bills than just wins and losses. Its also a crucial test for twitter which is streaming the tv broadcast of the game along with live tweets and ads. This is the first of ten nfl Games Twitter will stream as part of a 10 million deal it struck in april. And twitter shares rising after announcing the app will be available on apple tv, xbox one, and other devices. Lets talk about the insurance business. Mass mutual is combining into a 275 billion asset manager. And this and deals with metlife is part of the environment. Here on set is Roger Crandall who is the ceo of mass mutual. In this tough Interest Rate environment, how does an Insurance Company thrive . Well, first its great to be here. So thank you for having me. You know, were a Mutual Company which means were owned by our policy holders is the best way to think about it. Im a policy holder. Thank you for being a member of the company. We think about the business in a longterm way. If youre a member of our company you could be a member for 50plus years. You have a chance to be a member for 75 or 100 years the way longevity is going. And we own businesses as well as just owning a portfolio stocks and bonds. In private equity, you you think of them exiting. Some guys are locking up money for 20 years at this point. Thats nice. We have a policy holder whos been with us for 90. So thats great. Have r you actively involved in this . Absolutely. We own Insurance Companies in japan, Insurance Companies in hong kong we bought after the financial crisis in 97 in japan and asia. And we think about running those businesses for the longterm for the benefit of our policy holders. Given the low Interest Rate environment, also actually you mentioned the word longevity. Im curious how that factors into the actuary tables and how you do the math. This has to be a tough business right now. It is a tough business right now, but theres a real opportunity. 30 of american households dont have any Life Insurance. But i think do you guarantee me a rate . We do have guarantees built in. You do . How does that work . A world where we might go to negative Interest Rates . Could be a lot worse. I could be a japanese or a swiss or a german dealing with true Interest Rates. Do you sell those . Not really. What guaranteed rate you mean on a Life Insurance policy . And then we also sell Lifetime Income annuities. Roger, hate to point this out but you said some of the great places we own are Insurance Companies in japan. Then you said one of the worst is a Insurance Company in japan. You are. Not yen in japan. Why did you buy the premiere group . So weve been growing our agency force. And the premiere group, that decided to break itself up and didnt want to distribute insurance products. Lets face it. People dont wake up and say todays the day im going to buy a Life Insurance policy. Theyre sold out of iphone 7s, were not sold out of Life Insurance policies yet. So we have over 4,000 locations. For us getting more Financial Professionals who think about protection as being a core part of a portfolio makes a lot of sense. Dare i ask, though, you look out ten years in your business in a world where robo advisers are the hot thing in financial services. I dont know if its coming in the insurance world, but what does it mean to the advisers already working for you and you say you want that number to be double or half in the future . The way i think about it is advisers are going to deal with clients the way clients want to be dealt with. If you want to interact online, on the phone. So were investing in technology to help that. You can do esignature today. Were running it through al go rit them underwritings. I dont think its an either or. I think its an experience and were investing in that technology. Are there policies youve had to eliminate as a function of the Interest Rate environment . We have certainly stopped some of the higher guarantees. For example, the socalled living benefits on some annuity policies that we stopped selling back in 2008. And the industry as a whole has back aid way from this. Do you look and say to yourself you know, nothing is gone for good. Its just a question of environment. I think Insurance Companies are much more aware of some of the risks that theyre taking in those policies than they might have been prethis environment. This is a brave new world. You know, can i follow up a little bit on andrews question . I just wonder when you look at 9,300 people in the field whether or not given the advances of technology that number will shrink dramatically over time as you meet customer requirements who are very comfortable working online . Yeah. I think its very difficult to say, but i think if you look at whats happened in the securities industry, for example, facetoface brokerage hasnt gone away. But its now integrated into an online experience. So well see. What is the department of labors fiduciary rule . Frankly were trying to figure that out right now. We have to comply by april 20th. When we bought the met deal, we merged a broker deal. To be compliant with that rule. Our suspicion is its going to have an initial dip in some products. But im a big fan actually of doing the right thing for customers. We were joking the other day at delivering alpha, of course there should always be a fiduciary role. Always have a fiduciary responsibility. It was like, all right, weve got a new idea here. You have to put the client first. Before your own compensation. Eureka let me ask you this quick. Second is still popular. To not get ripped off with whole life or universal life, what ive heard people really disparaged because the fees are so high. They go with term and do investment other way. Do you have a whole life policy that actually is a great deal. We have great whole life policies. In fact, our whole life sales have been growing at 20 for the last five years. Weve grown at 15 for the past decade. Wells fargo had an increase. Sit good for people or mass mutual . Well mass mutual is people. I think absolutely. But this is a longterm product you have to think of in a longterm way. Term makes all the sense in the world except for the year the term expires and youre still alive and still need coverage. Heres the grim fact. Over time the mortality cost goes up. Lock in your mortality cost when youre younger, buy whats called a convertible term policy which means even if your health changes, you can convert it. Thats what i did. See, great salesman. This is what i did. Im not licensed but we have a few people around the country who are. Life insurance is the worst. Why didnt you call your benefit massmutual. Why bearings . So weve always run multibrand strategy. So Oppenheimer Funds we bought back in 1991 and we continue to run that business here in the u. S. We have bearings. Different regulations . Different regulations and frankly its a complex world around distribution. With different brands in some cases, some distributors are happy to work with us. And theyre fundamentally different businesses. We got to go, but a customer and viewer of yours just emails in and says how will they maintain dividends in a falling portfolio yield environment . Every year our board talks about what the right dividend is. We look at whats going on in the portfolio. We look at how our other businesses are doing. Were going to announce our dividend decision in late october, early november. If i told you id have to kill you. Oh, please tell him. Please tell him. Do you have a food taster . Oh, she doesnt cook. He does. Shes a great cook. Does she really . She really is. I call the chinese restaurant. She actually cooks. Thank you. Coming up, former wall street pro and current ceo of ellevest, Sallie Krawcheck joins us. Check out the futures at this hour. Now the dow is up only 15 points. Squawk box will be right back. Now that fedex has helped us simplify our ecommerce, we could focus on bigger issues, like our passive aggressive environment. Were not passive aggressive. Hey, hey, hey, there are no bad suggestions here. No matter how lame they are. Well said, ann. Ive always admired how you just say whats in your head, without thinking. Very brave. Good point ted. Youre living proof that looks arent everything. Thank you. Welcome. So, fedex helped simplify our ecommerce business and this is not a passive aggressive environment. I just wanted to say, you guys are doing a great job. Whats that supposed to mean . Fedex. Helping Small Business simplify ecommerce. Were drowning in information. Where, in all of this, is the stuff that matters . The stakes are so high, your finances, your future. How do you solve this . You dont. You partner with a firm that advises governments and the fortune 500, and, can deliver insight person to person, on what matters to you. Morgan stanley. Narrator kubo est place come on, this way. E. Narrator . Is in the forest. Kubo wow. Narrator so grab your loved ones monkey dont even. Narrator and explore a world of possibilities. Kubo its beautiful. Narrator visit discovertheforest. Org to find the closest forest or park to you. When you travel, you want your needs to be understood no matter where you go. You want an experience that feels highly personalized. With watson on the ibm cloud, travel Companies Like wayblazer can apply cognitive analytics to social data to understand what a destination is really like. And who exactly, it will appeal to. Today watson is helping businesses create experiences that revolve around you. Because thats what the ibm cloud is built for. Welcome back to squawk box. Weve all heard of the gender pay gap but what about a gender investment gap . Sallie krawcheck is here a Banking Industry veteran. Says the gap is worse for women and can cost them tens of thousands if not millions of dollars. Lets bring her into the conversation. Do you mean by all of this . Well, women dont invest to the same extent that men do today. And we never really talk about it, but as you mentioned it can cost women a lot of money over the course of their lives. And i think wall streets assistance to women has been we better market to them better. But we need to make them work harder. Maybe they need remedial financial education. I said you know what . How about we buy a business that is directed exactly to their needs with hundreds of hours of Research Done on what will help them invest. Whats the distinction between the way men and women invest . A couple things. This is not remedial financial education. These are powerful algorithms that wum use. The fact women live longer. Super important for retirement. That we earn less and our salaries peak sooner. So frustrating, but super important. And the fact that we tend not to want to choose a Large Cap Value fund versus a small cap etf. We dont even look to outperform the market. Its about i want to start a business. I want to retire well. I want to have a baby. Becky. And i how much do i need to get there and can you put together for me a highly bespoken investment portfolio to get me there . Its different. And so what type of not women but in terms of income levels are you looking in to approach . We believe every woman who has paid off her high Interest Rate debt should be investing. So we have no minimum. Is part of this women are making less so they feel like they have less to put aside . Part of it is maybe were a little more conservative. You want to be sure to have an Emergency Fund before you start investing along those lines . Well, we certainly do make less. But what bugs the crud out of me is therell be some financial journalist who is are not you who say the real problem is the gender pay gap. I broke my leg or arm, im not going to fix it. Women, they havent felt welcome. The financial advisers, many do a great job for women but theyre 85 male. Men leave at a single digit rate in a year. But in the year after their husbands death, women leave at a greater rate. They dont feel comfortable with the person theyre talking to. And it doesnt talk to them. Its a lot of war analogies, sports analogies. Hey, the symbol of the industry is a bull. How do you implement your strategy . You have four or five products that you offer . Or do you tailor each individual . Hows it work . Great question. Completely tailored. We women, we like things that cura curated. Rather than the typical robo you see out there, we put together a goal for them. We put together a highly customized etf portfolio whose target is to get them to their goal or better in 70 of markets. If they fall off track, Market Correction more than we expected. Didnt make a monthly deposit or something. We reach out the them and say youre off track. Heres how to get back on. You can look at this s p approach much of the industry takes. In terms of your ability to scale this business, you have many investors. You announced a 9 million round. Today. Today. Congratulations. Thank you. What are you going to use that money for . To run the business. To run the business . In terms of marketing the business, though, whats the approach going to be is this is a facebook business . Were linkedin, facebook, reaching her wherever she is. Age group . The women we say its any woman whos paid off credit card debt. So were seeing women in their late 20s to early 40s. But i dont want to lose this funding round because i think whats happening here is really interesting. Whens the last time you heard of a Fin Tech Company run by a woman targeted to women, built by women, and now funded by women and some great men . Right . So weve got great new investors. Weve got melody hopson, venus williams, a great group of female investors who have been very successful in their own ways who are putting their money into a company that is looking to help women make money through investing. What do you do about married couples . Couples who manage their money together. First of all, i want to be clear. This is about including women. Not excluding men. And for women to invest more is good for every viewer of this show. So we find with the women were about we have guys, we have married couples, but we typically find the woman because were talking directly to her unlike the rest of the industry. Shell be the lead and shell say honey, honey, do we have enough money for the kids . Do we have enough money to start the business . Come on in, take a look at this. Its different. Right. Sallie krawcheck, thank for coming in. Ellevest is the company. Whats the website . Ellevest. Ellevest. Com. Thanks. Good to see you. When we come back, wynn resorts looks like a winner this morning. That plus more from Larry Bossidy our guest host. Squawk box will be right back. Coming up, harvard Business School unveiling its annual report on competitiveness. And the results are scary enough to keep you up at night. Professor Michael Porter is here and he brought a few special guests. Youre here to buy a car. Lets take a look at some stocks to watch this morning. Wynn resorts is adding to recent gains in premarket trading. This morning the casino operator shares have jumped 20 so far this month. On indications of a recovery in the macau gambling market. Global payments was upgraded. The Payment Technology Services Company has multiple drivers to continue its Strong Revenue growth. All right. Lets get back to our guest host Larry Bossidy. Got a myriad of things to touch on. We touched on politics but not that much. Have you ever i mean, its never been where, you know, the population is kind of looking at the worst thats how most people view it. Do you think thats accurate that its two very undesirable candidates or could one of them surprise us . You hope in terms of being optimistic that one of them could surprise us. I do think its the most unusual election ive ever seen. And, you know, i think ive never seen an election where theres more personal insults going back and forth as opposed to arguments over the issues of the day. Maybe thats change over the next couple of weeks or at least theyll be more intense debate on the issues that confront the country. But you know, its something thats unparalleled in our country in terms of the negatives that both of them seem to have. Just dont see how we got here necessarily. And thats when you say its unheard of and that, you know, it was a very logical sequence of events that did it. We have a system. The Republican Party had a system. That system, you know, there are no rules that were broken. This is what resulted from whatever the last eight years has been or even go back longer than that. Go back 30 years. We had 17 able candidates and america spoke. I do think theres a lot of frustration in this country in terms of whats not happening. I think people dont believe that their lives are as good as they could be or should be or have been. That explains the republican side. What explains the democratic side . What about the wife of a president that got elected to the senate in new york. You can see that playing out and then the democratic the dnc basically chose her more than even the voters did. I thought, you know, in all deference to her, shes done a lot of things that qualify her to be the president in terms of the role shes played. But frankly, she didnt have much opposition in terms of getting the nomination either. I mean, Bernie Sanders was pretty much a quiet senator. Let me say that in terms of his accomplishments. So she didnt have a lot of competition. She came through it in a way that youd expect. And as a consequence, she got the nomination. Here we are with two candidates, a lot of characteristics which seem to be in opposition to what the American Public wants. But were going the have to choose one or the other come election day. Hopefully the campaign gets more issue oriented. The issues were talking about on both sides are frightening as well though. To some people. They are. I dont know whether it actually comes out when the governs is done. Im surprised that ive heard that the republicans were going to lose the senate. Have you looked at the numbers . I have. Portmans up by 15 points or something. Rubio is up by 15 points. Where are they going to lose the senate . I think there are cases where they could lose the senate. Karl rove has an article this morning about looking at the races. Theres reason to believe they wont lose the senate but theres a possibility, of course, that they will. But, you know, i think that at the end of the day, the clinton campaign, shell basically concentrate on immigration. And i think there will be an Infrastructure Fund and that will be happen i think under either of the two candidates. All right. Larrys going to be with us for the rest of the show. When we come back, well be joined by Michael Porter. We also have a lot of data at 8 30. Stick around. [click] man youre beautiful [click] im coming back to you [click] its been over 100 years since the first stock index was created, as a benchmark for average. Yet a lot of people still build portfolios with strategies that just track the benchmarks. But investing isnt about achieving average. Its about achieving goals. And invesco believes doing that today requires the art and expertise of highconviction investing. Translation . Why invest in average . Breaking news this hour. A flood of Economic Data about to hit the tape including readings on the consumer, inflation, and employment. Well bring you the numbers and the market reaction. Lucky number seven . Shares of apple trading near a high. Plus initial quantities of the iphone 7 plus have already sold out. Donald trump releasing his medical records in dramatic fashion. Why not share your medical records . Why not well, i have no problem in doing it. I have it right here. I mean, should i do it . I dont care. What to expect from his busy day in new york city straight ahead. The final hour of squawk box begins right now. From the most powerful city in the world, new york, this is squawk box. Welcome back to squawk box here on cnbc, first in business worldwide. Im joe kernen along with becky quick and andrew ross sorkin. Our guest host this morning former honeywell chairman and ceo Larry Bossidy. And hbs professor Michael Porter. Harvard Business School. Does everybody know that . I think they do. They do. Everybody knows. Everybody. Futures right now take a quick look. I dont know. Hbs, aleppo. Depends who you ask. And take a quick look at oil prices suddenly below 45. Now 43. 83. Well see if that becomes a problem for equities. Lets get you caught up on this mornings top stories. The bank of england keeping its key Interest Rate unchanged at the record low at a quarter percent. Surprise, surprise. The boe saying the momentum of the economy has been slightly to the upside relative to its most recent projections. U. S. Today, a flood of data coming up ahead of the fed meeting. Well get jobless claims, retail sales, Producer Price index. And the current account deficit. So if youre into numbers, this is the morning for you. Later in the morning, Industrial Production in business inventories as well. Also apple seeing initial quantities of its iphone 7 plus, thats the big one, are sold out. Thats the one i wanted. Unlike in the past apple says it wont be releasing its first weekend sales. Joining us now is the ceo of one of the nations Largest Financial Services firms. Bill mcnabb is part of vanguard managing over 3 trillion in assets. Bill, its great to see you this morning. Thank you for joining us. Thank you for having me. Were going to talk competitiveness with Michael Porter, but before we do lets talk vanguard. Over the course of this year, your firm has taken in more money than any of the other big funds out there. Something like 112 billion. So why dont you tell us about whats happening and why you think investors are piling into vanguard funds. Well, i think there have been a couple of things that have contributed to this. You know, one is theres really been a move among, you know, a broader array of investors to more market matching strategies. So the index story, if you will, has been really getting much wider acceptance than it than wed seen historically. Actually, the numbers so far through the end of august are about 200 billion into our various funds. And most of that is in two categories. You know, broad index funds which give people broad market exposure at very low cost. And then the second big category are our target date funds which are very popular in the 401 k arena. I think thats actually a really encouraging sign that so many investors are using these target retirement solutions, if you will, to set themselves up for retirement. Part of this is coming that for several years now active investors have had a much tougher time. Theyve had a tougher time matching up to the indexes. When you see swings like that, you do see people say forget about it. Im not going to try to beat the market when even the pros cant beat the market. But with this cyclical swing, how much of it do you think sticks this time around . How many of these investors can you keep if there is suddenly a period where the indices do poorly and active managers are out performing . You know, i think thats a question that we get a from a lot of investors. I think there is always a cyclical element to this. So what youre describing could certainly happen. But i think theres a much more secular change going on here. You know, earlier in your show you had Sallie Krawcheck on who was talking about her new venture. If i heard correctly, sallies set up a series of portfolios for her clients that are using low cost etfs, index based funds to create solutions for investors. So were seeing a big trend. Its coming from some of the fin teches, traditional advisers, and then of course individual investors themselves are choosing to do this. Its less sort of point solution just flowing into a product. Its about a holistic approach. And i think thats the secular element. Lets talk about competitiveness. Why Michael Porter is here and why youre talking about it. If you look at your business, youve done very well. What worries you about competitiveness in the United States . Well, you know, michaels study is just out. Michael, i want to thank you for giving me at least 12 hours to digest it all. Its a terrific piece of work. And i think it underscores topics that have been very much front of mind for the last several years for many people. And, you know, what worries us is that the economy broadly has not been growing at the rate that we think it needs to grow. And one of the, you know, huge impacts of that is were not lifting the standard of living for as many people as we could. And i think at the heart of it, thats really what a lot of the work points to. And some of the prescriptions for, you know, moving forward in the harvard work really try to get at that. You know, id add to it one of the things that is a pervasive issue thats not necessarily called out in the paper but its really implied. I think theres a tremendous overemphasis on the shortterm. And this is this occurs in the political arena. It occurs in running businesses. And it occurs in the investment arena. And i think one of the real calls to action has to be to for everyone to take a much longer term perspective. Michael, one of the issues you all point out is that we have not gotten back to the median pay levels we were looking at for middle income houses since 1999. But we did see a big jump over the last year and those statistics that were just released this week. Is that something that you think we can make a move and get back to some of these levels . But is it still not enough progress for you . Again, its very encouraging to see Median Income go up after 17, 18 years of decline continuous decline. It bumped up whether thats an anomaly or a new trend is still unclear. But i mean, the cold hard truth is were still 18 years behind. Were still getting closer to where we were 18 years ago. And we dont see structurally in the terms of underpinnings of skill, education, and the kind of fundamentals of competitiveness. We dont see the underpinnings right yet that are going to turn that into a kind of new era of growth and prosperity. You know, its great. It reminds me weve been in this game now for five or six years. We have a jobs report and it looks a little good and we say good were moving in the right direction. Then two jobs reports later, things go down. And the cold heart truth and bill said this is growth is very slow compared to our tradition. Productivity is not improving very rapidly. Investment is low in our economy. And so unfortunately i think that weve got to deal with some fundamentals. There are some things that weve allowed to slip and they particularly hurt the average citizen, the person without a lot of skill, the smaller company. And were just not making progress. Michael, do you see, though, in the president ial dialogue, the president ial races theres enough discussion about this . Theres enough identification of things that need to be done that leads you to conclude that something will happen . Youve been after this for five years with some always with some insightful thoughts on the subject. Yet we continue to regress. Is there any reason for optimism . Well, larry, you know, theres reason for optimism about america. We have some terrific companies. We have good management. We have a lot of strengths that we talk about in our report. Americas a dynamic place. But frankly over these five years that ive been working on this, ive come to believe that actually theres the overarching problem right now is actually the political system. Its what the system is delivering. Its just not delivering solutions. You mean the way we find our candidates, the way you have to rise up through . The way we find our candidates. The way that the dialogue is not about solving a problem. Its about essentially dividing the electorate for one or the other. We discuss everything in a very simplistic way. Trade is good, trade is bad. Well, trade is complicated. And of course we know that we want to expand trade. We want access to international markets. But were not having a productive dialogue and were not getting anything done. Were almost out of time. But before we let you go, whats your take on the markets right now . I know youve made some comments in the past about how some stock prices have you a little f concerned. What do you think right now when you see where weve come . So, you know, we tend to look at things over long periods of time. So as i sort of look out over the next decade, when we look at valuation and we look at earnings and so forth, our models point toward a much lower absolute return over the next decade than weve been accustomed to over the past, say, 30 years. And were looking at the equity market being in the sort of 6 to 7 range per year over the next decade. And i would tell you thats if things go reasonably well. And some of what michael is describing gets addressed. Thats based on where we are from a valuation standpoint. In the short run, i have no more idea than anybody else but over the next decade thats kind of the way were thinking about it. Bill, real quick on the active passive debate, what percentage of your business now is active . Because i always think of vanguard as an Index Company but i know a lot of your business still is active. So were about 65 index and 35 active. And that active is both on the fixed income side and on the equities side. And do you see that changing . Increasing . I think over time. You know, the index side may continue to creep up a little bit. But weve never said theres no place for active. Where i really think theres no place is for high priced active. I think thats a gain that will disappear over time. Bill, i want to thank you very much for joining us today. Its been a pleasure. Great to see you all, thank you. And of course Larry Bossidy and Michael Porter are staying with us. So wed be 36 to 40,000 in 10 to 12 years. Even at 6 . For the dow . Yeah. Only problem is we dont want to double from 10,000. Thats the problem. Right. As long as we stay at 18,000. 6 , 7 a year nobody thinks 36,000 to 40,000 is thats a big number. So that, you know we got to do a lot right. Thats what rob baron says every time he comes on. If you look at the numbers youre looking at incredible growth even if its not the type of growth percentages were used to. Coming up, were going to talk american competitiveness. Stay tuned. Youre watching cnbc, first in business worldwide. Coming up, the prescription for success and innovating pharma. Well talk to former amgen ceo kevin sherer about price hikes and the power of competition. Squawk box will be right back. Online Radio Service pandora has rolled out a new version of its adfree service. Its called pandora plus and costs 4. 99 a month. It offers subscribers a chance to replay songs and listen offline. It also allows to skip over more songs than theyve been able to in the past. Our guest host this morning, Michael Porter and Larry Bossidy is with us. Michael, you were not with us at the top of the 6 00. Had a very brief conversation with larry about apple and this whole tax situation in europe. I want to go with you to that which is to say do you think longterm what are the implications of that particular situation coupled with brexit and the questions about the future of and whether you think that us multinationals end up trying to come back to the United States perhaps on their own volition because they think its a better place to do business . Well, i think it is a better place to do business. But were all tangled up in our tax structure and our tax policy. Particularly our Corporate Tax policy. We have the highest statutory Corporate Tax rate in the world. Not a friendly thing for American Companies to do things here. But if u. S. Companies start you know, theyve pursued all these inversions. If we find out in e the next two years that all of a sudden theyre getting hit with new taxes they didnt know about or that the countries that they move to are no longer part of the European Union, they might have to think again. Well, thats definitely going to move some investment back in this country. But i guess what weve been saying in this work and it comes up over and over again is theres we right now were having a big political battle on Corporate Taxes. And one side says, well, corporations are not paying enough. And the other side says thats not true. And we can fix this. We know how to fix it. Weve had multiple sensible proposals. There would be no more tax invegss. Companies would bring their capital back to the u. S. What we find is the fundamental challenges right now are some simple policy changes. Mostly in the federal government. State and local levels doing okay. Theyre trying. Business is actually trying to business is moving ahead. But the real barrier right now in this country to our prosperity is in washington. And its a series of very basic policy steps that were just not taking. We all agree we should take them. Theres no debate about whether theyre good or bad idea. Except in the extreme political world. There is more issue than just policy though. For example, theres a widespread view that our Corporate Tax rates too high. That we have the highest rate as you said. And some say it ought to be 20 , 25 . The question is how do you pay for it. As soon as you talk about eliminating the mortgage payments or charitable contributions. Then it becomes the political problem. And of course thats something that washington has not wanted to deal with. Until we get over those hurdles, i think we stay stymied. That may be true, larry. And for sure weve been stymied. Our work on issues like tax policy, infrastructure shows that actually weve got nothing done. Nothing. Heres the question. Everybody would love to find a way to repatriate a lot of this money. Right. Republicans for the most part would do it at a relatively low rate. Democrats seem to be worried that if its brought back, its almost going to exacerbate inequality because its not going to be used for jobs. Thats the flip side of this argument. Perhaps. They look at the last time this happened, the holiday that took place and they say they werent able to recoup both the tax revenues that you want plus werent really able to create jobs that ended up going to the investor class. Question is how do you satisfy both sides of that . Well, i think first of all on the point larry brought up. There are multiple plans for how to reduce the Corporate Tax rate in a revenue neutral way. Everybody argues that they want to do this but they want it to be revenue neutral. Thats also assuming that the people that argue that a change would bring Dynamic Growth where you dont need to do it just adding up things that you actually spur Economic Development people will some people will say no, theres no evidence that revenue goes up when you cut taxes. Others will say yes, there is. So theres youre back to another argument. I can tell you the Business Community is clear. This Corporate Tax rate is driving all kinds of disinvestment. And its also theres a giant industry about tax avoidance and being clever and figuring out how to, you know, play the system. And we could shut all that down and just go back to doing business. Think about what youre what other people are saying. Because youre just channelling other people. It would exacerbate income inequali inequality. If we brought it back here, certain people here would have more and that would be a bad thing. Ive heard that why is that a bad thing . Youre not taking from people and making them lower. Some people even in the worst case scenario, some people stay where they are and other gos up. Wouldnt it be better to have it anyway . You want to make sure trying to capture both. But you want to make sure nobody gets it . Its a stupid argument. Joe, fundamentally we have to get the lower middle income americans with growth in their opportunities. Weve got to do that. I believe getting investment into the u. S. And having American Companies with that capital they can do acquisitions in the u. S. They dont have to do acquisitions abroad. If its a way to get trickle down a lot of people saying it didnt work. But raising up somewhere, maybe theres a way we can force the trickle down once we expand everywhere. I do think theres a way. With whatever we have offshore, some say 3 trillion. 3 trillion. Under either administration, whoever wins, there will be an Infrastructure Fund. 300 billion, 400 billion over ten years. There will be in my view a tax on repatriation. Say 10 payable over ten years. That will pass the democratic view. Republicans will join if they can get a if it went to the investor class. All the people that have money in pension plans, all the people if dividends went up. If there are no jobs but only dividends went up. Would that be bad . Focused on jobs, jobs jobs. We got to press pause. Guys, when we come back, retail sales, ppi, breaking Economic Data coming up. Stay tuned. Mapping the oceans. Where we explore. Protecting biodiversity. Everywhere we work. Defeating malaria. Improving energy efficiency. Developing more clean burning natural gas. My job . My job at exxonmobil . Turning algae into biofuels. Reducing Energy Poverty in the developing world. Making cars go further with less. Fueling the global economy. And you thought we just made the gas. Energy lives here. Welcome back, everybody. In political news, republican president ial candidate donald trump will address the Economic Club of new york today thats at 11 30 eastern time. In the meantime, trump taped an interview with dr. Oz that will be airing today. He gave medical records for his review. And clintons doctor releases a letter saying she remains health aand fit to be president. When we come back, retail sales and jobless claims. Well bring you all the numbers and the reaction. Stick around. Squawk box will be right back. Across new york state, from long island to buffalo, from rochester to the hudson valley, from albany to utica, Creative Business incentives, infrastructure investment, university partnerships, and the lowest taxes in decades are creating a stronger economy and the right environment in new york state for business to thrive. Let us help grow your companys tomorrow today at business. Ny. Gov we are just seconds away from august retail sales, the Producer Price index, and the weekly jobless claims. The futures flight, take a quick look. Up 46 points on the dow. Rick santelli is standing by. The numbers, please. A litany of data. On the manufacturing, most realtime, down 0. 199. Well call it down 0. 2 . Double what we were expecting. Lets go to Second Quarter current account balance, the cousin of the trade deficit. That moderated a little more than expected. Minus 119. 9 billion versus we were expecting minus 121. Sales headline down 0. 3 . Worse than expected. We did have a 0. 1 pop on the revision from unchanged to 0. 1 . If you take out autos and gas, it is down 0. 1 . The control group, down 0. 1 . These are dismal numbers. Control group we were looking up 0. 5 and negative revision our last control number, input into other data points which last look was zero. Now stands at down 0. 1 . Initial jobless claims, they moved up a whopping 1,000 from 259,000 to 260,000. A lateral move on continuing claims. 2. 143 million. August ppi, anybody . Unchanged on headline. Cooler than expected. 0. 1 if we look at core food and important energy. That is close to expectations. Heres where it gets interesting. If you look at the month over month exfood and energy, that sis up 0. 3 . I take that back. Up 0. 1 . On the trade exfood and energy that is up 0. 3 . So these data points are fascinating. If we take a long look on core, we are looking for 1 . Thats indeed what we have. That follows up 0. 7 . So when we look at the trade ppi, that is hotter than we anticipated. Retail sales was much weaker on all metrics. Initial and continuing claims was a push. And empire was weak. How did the markets synthesize all that . Were 167 coming out. But the short end dropped a couple of basis points. So maybe theres a fed implication. If youre able to imply anything with this Federal Reserve or any central bank. But we did move from 74 to 72. And we also dropped a basis point and a half. So its more of a steepener right now whats been doing on lately. Throwing a bit of a fit. Its let the logistics of the newly packed positions all on the long side reverse and the dollar index went from virtually unchanged to down about a sixth of a cent. Of course hinting but we all know that hibts dont really give us anything solid to put in the bank. Fwook becky and the gang. All right, rick. Thank you very much. Again, a lot of data to be digesting. Nothing going on. As rick pointed out, maybe these retail Sales Numbers make it even less likely that the fed raises rates. I dont know it has much to stretch into this. Do you take away the most from numbers that jumped out. Retail weak, but it comes off a decent july. The numbers for the quarter are running okay on manualized basis. We were doing what . 4 plus in the Second Quarter. The idea is were doing between 3 and 4 in the Third Quarter it comes essentially off of lower gasoline station sales im looking at. Im looking at also should be lower autos in there. Yeah. Minus 0. 9 . You went up to 17. 8 i think in august. Came back down. Still a decent rate. So if i were try to account it already, retail bad, claims good. Philly fed good. Empire state bad. Its kind of a wash when you look at it all. The thing that spooked a lot, thought the fed might hike this september. But then those isms came out. The ism manufacturing was weak, services were weak. Looking to the empire state and the manufacturing and the philly fed to see if that was a fluke. You cant really tell here. It was a really sharp slowdown in the economy in august. If you listen to the isms. Actually went negative. Fell below 50. It did. And it had been there. I mean, it was 51 to 49. It wasnt like the end of the world and there was no great expectation that manufacturing was going to power the economy. But we didnt want to see it detracting from the economy. Thats the impression now. So youre not getting much in the way of definitive reversal or another way to think about whats happening. But the claims numbers remained very healthy which suggests the job market remains healthy which suggests the consumer and Consumer Spending should remain healthy. Theres no big science to this in terms of how Consumer Spending we talked about that yesterday. So i dont see anything that kind of dramatically is off this idea that somewhere in the 2. 5 to 3 gdp range is where we are for the Third Quarter. Well see later on today. Larry, what do you think . I dont think theres much happening in those data up and downs. My guess is we stay closer to gdp growth in the Third Quarter compared with 1. 2 in the preceding quarter. But most of those numbers as you said, steve, one offsets the other. So i think were kind of in neutral. Can i ask michael a question . Youre the academic at the table. You can think more broadly about how to process data like this if youre the fed. And youre trying to make policy and this policy echoes out over months and years because we know the lags are available and long. No need to insult him. You know, thats a perjoritive. Not to me. But a better way to make policy. This data come in and it suggests theres kind of muddling along is where it is. Where do you set policy in this context . My interpretation is the u. S. Economy is in a trading range. Bouncing around. Its been like this for years. And theres no really fundamentally good trend going on right now. And i think from a policy point of view. Our Economic Strategy in america for the last five years has been monetary easing. Thats all weve been doing. Weve been depending on the fed. Weve been hanging on Janet Yellens every word. Thats not the problem. The problem in america is weve got some fundamental weaknesses. Weve got some tax issues. Weve got some budget issues. Weve got infrastructure issues, regulatory issues. Until we start dealing with those, were just going to b in the same trading range. Do you believe Michelle Carusocabrera yesterday, we had an impassioned discussion yesterday. Said the federal banks around the world enable the fiscal side to not do anything. Do you agree with that . If the fed were to not were to tighten more, would that get the fiscal side to do something . You know, i cant i have a hard time predicting optimistically that any side will get much done in america right now. You know, kind of given the gridlock we have. The lack of the ability of pass legislation. Do you know the amount of legislation actually being passed now is at an alltime low . Were just not moving the needle. But i think the fed has allowed us to skate by without tackling things. So they should do less. I think they should tighten is a harsh word. Force the issue. Take your question in reverse. Its more in reverse as to who enables. In other words, the feds been allowed to take this position. Steve, thats the thousandth time someone has said that. I cant believe youre still arguing i still dont buy it in the sense not everybody in the world says it. Yes, everybody in the world says it. Theres still the argument, joe, that since the fed can do something, it is mandated to do it. Im saying its giving a pass to congress and then everybody says to do a Stimulus Program or want deregulation taxed. And then be i agree with that. But joe, lets say is a pertard . Thats an exploding box. You meant get off their tuck kus. Yeah. Thats right. I have seen jackass sit on a firework. Sorry. Thats fine. Did you think that was going to go without being challenged . I had that wrong. Patootie is fine. Ass ill even say that. When you try to hurt someone bsh did not by your own rear. Its early. Its early. Anyway. When we return better than making a patootsie of yourself. When we come back, following the fire storm, were going to talk to kevin sharer about keeping pharma competitive. Were going to ask him what were amgens over the last 30 years. Hell join us after the break. Announcer dont let e. Coli mosh with your food. An estimated 3,000 americans die from a foodborne illness each year. So, always separate raw meat from vegetables. Keep your family safe at foodsafety. Gov its a performance machine. Engineering. With this degree of intelligence. Its a supercomputer. With this grade of protection. Its a fortress. And with this standard of luxury. Its an oasis. Introducing the completely redesigned eclass. Its everything you need it to be. And more. Lease the e300 for 549 a month at your local mercedesbenz dealer. Mercedesbenz. The best or nothing. Welcome back to squawk box this morning. The futures right now, its been sort of back and forth bit of a morning here. Right now were looking good. Dow looks to open up much higher. And the s p 500 open about three. Its come down a bit while weve been talking. Weve been speaking this morning about keeping american businesses competitive. Highlighted in a new record from harvard Business School. One area thats recently taken heat for not being competitive enough is the pharmaceutical industry. Joining us now is kevin sharer former ceo of amgen. And its good to see you, but a case study in you know, in how the pharmaceutical marketplace is fundamentally different for a reason than most businesses in terms of a competition in the market place because of the mir i cant do of patent laws. I dont even know how we talk about pharmaceuticals in that way. And kevin, in terms of innovation, i understand why it has to be that way. We outinnovate the rest of the world. But maher gins do stay awfully high while its under patent protection. And it helps companies not necessarily patients sometimes. Its good to be with you. Good to be back with my current boss professor porter and my old boss Larry Bossidy. Thats right. At ge. And mckenzie and then amgen for a long time. And probably yeah, 20 years. But its a complex environment. Let me try to break it down a little bit. The three cases that have been in the news mylan, valeant, and turring are actually individual cases. And none of them are representative of the true nature of things. We can talk about it if we have time, but what id like to emphasize is that were trying to sort of balance a lot of tradeoffs. Safety benefit innovation. And its not easy. However, i would say that the biopharmaceutical market is much more competitive than is generally believed. For example, if you look at the Biotech Companies that existed when i started am amgen 20 years ago, virtually all of them are gone. And most of the reason is that they couldnt compete. Weve also had a big shrinkage in the number of pharmaceutical companies. Most medicines have competition. Theres fierce blowback appropriately from payers and benefit managers, list prices are not usually what are actually paid. And so the real tradeoff is do we impose some kind of price controls to meet the needs of the public, if you will. And whats the price to innovation. And price controls have never worked. Nobody in the world has our Innovation Ecosystem. So id be very, very concerned if there were any heavy handed moves to try to change the key elements of what id call the Innovation Ecosystem which applies to more than biopharmaceuticals. I think the heart of american competitiveness. And ive watched amgen all the way through from the i remember when i was a stockbroker when it published. I remember amgen is the envy of the world in the way its been it came from nothing, the way its operated. Heres the argument that can be made, kevin. And that is i watched amgen go from 1 dl 1 a share to probably 2,000. You as a ceo and as a company, you fought tooth and nail to keep out competitors. And you were justified in doing so, obviously. But the market cap gains were, some would say, on the left at the expense of the Health Care System. And they didnt need to have 50 , 70 margins if there had been competition the entire time. Maybe amgen wouldnt have gone from 1 to 2,000 but maybe the cost inflation of the entire health care would have been kept lower. I have a different point of view, of course. What i would say is that nupogen continues to provide enormous value to patients. Amgen led the talk in the bio youre preaching to the choir. I understand that. You see the point im making. I appreciate that. And the money from nupogen and epogen went to fund over time which have resulted in any number of and we dont have time today. I could go through them. Breakthrough medicines. I think that the American People got a good value for what they paid. The social contract is high margins, high innovation, take high risk. And i think thats what it takes to innovate. But people looking for pure competition dont see it. And this is the road im just saying. Youre preaching to the choir here. I agree with everything you said about amgen. Its the apple of our eye in this country in terms of innovation. But thats going to be the argument. That theres something called a fair price that isnt reflected when you have 17year patent protection and the Company Benefits and also, kevin. You look at the pharmaceutical industry. They get a patent then do extended release. Spend hundreds of millions of dollars to get new patent protection to extend it. Im not going to defend every single thing that every company does to in some cases gain the patent system. We could probably agree on some of the details. But i think in the main, a strong patent Protection System is central to the system. And amgen was centrally involved in trying to strengthen the patent law and im proud of what we did. The Tech Industry wanted to weaken patents and we thought that patents really, really mattered. And in countries that dont have patents, innovation doesnt happen. Zero. Is it perfect . No, its not perfect. But in the main, i think the experience of amgen and other companies is that the money that we make on the winners funds rnd and its a risky business. The whole pharmaceutical industry has been working for 19 years to try to cure alzheimers and thats expensive. Thats where the cures going to come from. I think its a matter of degree, not a matter of fundamentals. Kevin, its good to see you. I noticed the other day good to see you. The ceo of allergan opposed a price ceiling on his products. And that was obviously well accepted politically. What do you think about that in terms of the health of the industry . Of the industry . Well, i think, larry, that theres danger in that. We have some biopharmaceutical drugs that are priced at astronomical levels to treat very, very small populations, as much as 250,000 a year for several thousand people populations. And thats a good bargain, because it doesnt cost the system much and those people otherwise wouldnt be helped. I think there are real issues in some of the Cancer Therapies that are 100,000 a year that provide what i would call invest marginal benefit. When i was in the seat, i used to think the speed of sound was a sixfigure annual price. So i dont like price controls in any form. But i think the dialogue were having nationally, and frankly, shaming companies which should be shamed like mylan for what they did, is a good way to discipline people. And i think the free market and our noisy democracy is the best way to do it. Kevin, im anything but your boss. But i was honored by that statement. I think, you know, if we step back, our Health Care System in terms of the value cost benefit is actually a competitive weakness of the United States. It shows up in all our surveys. Its just very, very expensive. It creates the high cost of doing business in the u. S. So i think you and i, we would all agree if we can bring down that cost and still innovate and deliver great value to the patients, thats a good thing. And i think part of that is competition in the pharma industry. But part of it is for the Delivery System to raise the bar, to better measure outcomes, to understand, you know, which drugs really work and work the best way. I completely agree, mike. I think as you and i have worked on this together that first fact is the biopharmaceutical part of the Health Care Systems 10 , thats the 10 of the total cost. So if were going after the 17 of gdp that the Health Care System represents, its got to be where the dollars are. And weve got to shift from what i call a tonnage system, pay for activity, to a value system which means pay for results and outcomes. And i think that goes across the spectrum. I think whats going to happen over time is even in drugs safety and efficacy are not going to be enough. Theyre going to be table stakes value. Were going to have to get into the idea of value. Its a complex subject, but weve got to get there. I think the other thing is that rich shifting to providers is going to have to happen too. All these things are happening now. Its just slow and complex. But i think thats where it goes. Pay for value. And i think its risk sharing. Kevin, thank you for your time today. We appreciate it. Up next, we have jim cramer on todays top stories. Do i look smarter . Yeah, a little. Youre making money now, are you investing . Well, ive been doing some research. Let me introduce you to our broker. How much does he charge . I dont know. Okay. Uh, do you get your fees back if youre not happy . dad laughs wow, youre laughing. Thats not the way the world works. Well, the worlds changing. Are you asking enough questions about the way your wealth is managed . Wealth management, at charles schwab. When you travel, you want your needs to be understood no matter where you go. You want an experience that feels highly personalized. With watson on the ibm cloud, travel Companies Like wayblazer can apply cognitive analytics to social data to understand what a destination is really like. And who exactly, it will appeal to. Today watson is helping businesses create experiences that revolve around you. Because thats what the ibm cloud is built for. Lets get down to the new york stock exchange. Jim cramer joins us now. Weve had a little more to watch over the past week anyway, jim, right . Yeah, look, weve got some other factors. I think one of the things people are not focused on enough is what does apples selling of its 7 mean for the actual demand. People have to remember people buy a lot of stuff on amazon and this is a hugely expensive phone. And people may think august sales were bad, and i understand that. Steve liesman is right, august was weak. But when i look at these numbers, look what people spend on, i dont think this is a tradition like buying shirts at macys. This is a new way to spend and people have a lot more money than disposable income because these phones are expe e expensi expensive. So are we going to have to do one of those october selloff, lows things or are we going to avoid it . I kind of think we have to. Whether it be the fed or some event, i think theres just a lot of jitters, people saying ive made money this year in some of the high fliers and the stocks that are winning are stocks not necessarily sustainable right now because theyre technology and commodity. They dont last. Jim, we got to go. See you at the top of the hour. Hey, larry. He said hi. Larry says hi, jim. Coming up, dont miss senator Elizabeth Warren on power lunch at 1 00 p. M. Eastern. Opportunities arent always obvious. Sometimes they just drop in. 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. Narrator kubo est place come on, this way. E. Narrator . Is in the forest. Kubo wow. Narrator so grab your loved ones monkey dont even. Narrator and explore a world of possibilities. Kubo its beautiful. Narrator visit discovertheforest. Org to find the closest forest or park to you. Tempurpedic mattresses is that they contour to your body. It keeps us comfortable and asleep at night. vo soft, firm, or hybrid. Our three collections pair up to create the perfect bed for two. Theres more than one tempurpedic. Announcer dont let salmonella get funky with your chicken. On average, one in 6 americans will get a foodborne illness this year. So, learn the right temperature to cook each type of meat. Keep your family safe at foodsafety. Gov. Its scary when the lights go out. People get anxious and my office gets flooded with calls. So many things can go wrong. Its my worst nightmare. Every second that power is out, my citys at risk. Siemens digital grid manages and reroutes power, so service can be restored within seconds. Priority number one is keeping those lights on. It takes ingenuity to defeat the monsters that live in the dark. We want to thank todays guest host former honeywell chairman and ceo, and harvard Business School professor, gentlemen, thank you both. Its wonderful to see you. Thank you. Wonderful to be here. Folks, that does it for us. Make sure you join us tomorrow. Right now its time for squawk on the street. Strike it up, this band is going to play my tune strike it up good thursday morning, welcome to squawk on the street. Im Carl Quintanilla with jim cramer, david faber at the new york stock exchange. Busiest day of the week for macro, retail sales, wholesale inflation, philly fed, were not done yet. Well get to all that. Europe mixed. Bonds are reacting to mostly disappointing data here at home. Apple shares up more than 9 this week. Iphone 7 m