51. 94. Coming up on 52 here are the big stories were watching new this morning, defense secretary james mattis responding to north koreas latest threats saying the u. S. Will seek a diplomatic solution. Mattis making those comments at a News Conference in india south korea is reporting that north korea boosted defenses on its east coast after it said it would shoot down u. S. Bombers flying near the peninsula. Shares of apple dropped for a fourth straight session yesterday. Debt klein f the decline follows reports about concerns for demand for the new device on the wall street agenda. The s p caseshiller home prices are out at 9 00 a. M. Eastern august home sales at 10 00 Consumer Confidence also out at 10 chair janet yellen will give the keynote address at the National Association of business economics at 12 45 perm even we will hear from lael brainard, mester and bostic. On the corporate front Carnival Cruise lines and darden report results before the opening bell after the close, we will hear from nike. The gops latest effort to repeal and replace obamacare seems to have received a fatal blow late last night, Susan Collins who has always been was there ever a doubt she made it official she announced she will not support the bill she is the third party no which means they cant get the votes to pass the measure. Ted cruz is a no mike lee, mur cowk i dont thin ever close and trey gowdy has asked the white hous to explain the use of personal email accounts by senior white house officials this follows revolutions that Jared Kushner and other Trump Officials used such accounts for government business the white house has instructed everyone to follow procedure to comply with the rules. Ive always been in compliance because you have no other email address i dont have a private email account. I never had one. So, ive been in compliance. Youre in compliance. Even the Bed Bath Beyond coupons, they go to your work address . Joekernen. Com. The domain is available. 11. 99 on godaddy maybe that should be your present to joe somewhere my credit card. Dont youll put horrible things no. No ill send you our private correspondence i never had a private email. Now you do. Im entering the card continue to the cart one domain selected. You think im joking do you want Privacy Protection its 7. 99 s extra youre paying yes, i want it. Im buying it continue with these options. We have news to get to during the commercial break, joe domingue joe kernen. Com on monday night football, there was a display of team unity before the game. The players and coaches along with jerry jones took a knee the gesture was metwith boos from the crowd both teams stood with arms linked during the anthem dallas beat arizona 2817. Its so weird now that you know, trying to find a middle ground there was not a Single Person not standing during the nash na National Anthem for this game. Now you do it before, that covers your bases with the protest side, also with the you know any way. Alabama republicans i have a question for harwood alabama republicans go to the polls today in a slowly watched runoff for senate between roy moore and Luther Strange john harwood, my biggest question for you, i hope you can answer t youshgs it, because y, how tall is Luther Strange how tall is that man have you seen him . 69. Okay. Never mind im looking at him with trump. Its hes tall. Hes somewhere between a small forward and a Power Forward in the nba even on duke. Hed play in the post for the u. S. Senate team that guy is is tall. He is if it was based on height, hed be winning by 90 but its not unfortunately for him roy moore has been dribbling circles around him in the polls so far what we see going into todays special election runoff is roy moore leading in the average 5242. Now, special elections are very unpredictable. Theyre low turnout races. They dont happen at normal time its possible that strange could pull it out. This is something of big concern to the Business Community. The u. S. Chamber has gone in hard for Luther Strange, and the reason for that is, one, they think its possible that roy moore could lose the election in december, the general election, even though bam mras alabamas conservative everybody remembers what happened with scott brown in massachusetts, todd aiken, when it looked like one party would win it, but then they lose roy moore has been boot the out of office twice for not following court orders on Church State Separation and samesex marriage thats one possibility the second is simplay that he would be another rebellious member of that Republican Caucus you mentioned that republicans do not have the 50 votes they need to pass this grahamkas cad bill that bill is dechltd now theyre going on to tax reform the last thing Mitch Mcconnell wants is another member who will not be a team player roy moore has not given indication to be a team player the crazy thing about this race, President Trump went along with the desire of Mitch Mcconnell and other Republican Leaders and endorsed strange, but at a rally last week, he knew many of his own core supporters and the people at that rally were actually for moore so he got up and said, well, if moore wins, ill campaign for him, too maybe a made a mistake backing strange. Hes not done his side forgavers in terms of helping strange get elected. His chief strategist, former chief strategist, steve bannon what gone down to alabama and is aggressively campaigning for roy moore. Its kind of a mess right now. Certainly the Business Community is hoping Luther Strange can pull this out today. Yeah. Roy moore is very, very socially conservative the left doesnt know what to do they want trump they want his influence not to work for Luther Strange, but that brings in roy moore. Do you think roy moore would be elected if he is the republican nominee . I do. I think its more likely than not. So hell get in but a republican pollster said as unlikely as it sounds, the democrat would have a chance i would give roy moore 75 of winning. But it could be a seat that democrats dont want to lose they only have 52 seats in their caucus they are coming to 2018 elections where they have some vulnerable members and if they have a couple of quirky races that end up changing the equation, thats how democrats might be able to sneak past roy moore is certainly an unusual figure he may be asking these nfl players to hold a bible while theyre at the National Anthem, you know this is a guy who does not follow the 2 1st se century cul line on politics alabama, very conservative. I wouldnt say a throwback hes a throwback. But very to the right thank you. We are joined by semie semien hymien and chris retzler. It seemed like in yesterdays session, we had a tech rotation out of technology. We had facebook being the biggest drag on the nasdaq 100 apple nearing correction territory. In the past every single dip in tech has been one to buy is anything different this time around certainly growth valuations are stretched. The relative price to book to growth is three times, it only got to 4 before the bubble burst in 2000. It will happen, but value wu underperformance can persist for a long time. Tiger went out of business a few months before the tech bubble burst. It does have to happen, but the growth could hang on a little bit longer clearly the valuations are stretched. You would say stick with technology a bit longer . Weve seen brent up 12 in one month. Weve seen Energy Stocks up about 10 in the same month. I think a better option is it makes sense to be worried about growth because value underperformers can persist, choosing quality stocks that have a bit of a better opportunity to participate and protect can be a better approach than just going to value, where you might have a couple more quarters of underperformance. Chris, youre into small caps russell 2000 hit a new high in yesterdays session. Where are we in evaluations . Valuations look fine. What are small caps trading to large caps . We like small caps trading 15 20 bottom line. If theyre trading at a multiple similar to that, theyre pegged at 1 we think thats cheap in a market, when they can outp outperform markets sluggish, the economy growing, but not at levels that we probably want to get to if we were able to get tax reform and repatriation into the economy. So, you know, were still excited about small caps were seasonally in a period where they tend to do better were out of the summer months volumes are picking up we want to watch volatility. That does keep up price earnings ratios with volatility thats been suppressed by the central banks. So well watch that as they begin to unwind some of the stimulus theyve been putting in we saw a jump in the vix, even though still at record lows. Within small caps, which sectors are you valuing favor over growth. We like technology. We see more than four Technology Companies out there. If the large caps are selling off, we think thats cashing in on winners that money could rotate into other sectors. One area weve been bullish on through the years, software security, a company like fireeye which is out there protecting after equifax. Its going to be interesting to see their Earnings Call coming up its a bigger priority for executive suite that they can no longer ignore. Semien, are you worried about being the last man holding the bag when it comes to technology . Weve seen a real Distinct Movement lower when it comes to some large caps that have led the way between facebook and apple. 68 stocks of the s p 500 Technology Sector have seen recent drops of 0 or more 68 stocks in correction territory. Are you concerned youre the last ones at the party saying buy technology i do think one of the challenges this time around is that the global style cycle has become much more correlated. In emerging markets, their correlations have dropped versus developed markets over the past couple of years, but the outperformance of growth versus value, is as exacerbated as the u. S. With regards to the last man standing you have a global issue with technology. But do you have geographic opportunities to be better diversified. Rather than being the last man holding the tech bag globally, make sure you have exposure to developed and emerging markets but be wary about growth across those places in the market you mentioned tax, tax reform. Is that an outlier scenario for you . Is that a real possibility i think there is a real possibility. Whether its 20 , 24 , im more interested in the repatriation you take Companies Like cisco, massive cash hoards, cash overseas, when that comes back or if it does, what it could lead to for small caps is an increased m a environment. We think that activity picks up next year as the Large Cap Companies need to buy higher Growth Opportunities thank you, preesh wrat appre. Republicans are pushing ahead on tax reform. We have jim nussle who will join us next on the possible changes to the tax code. And joe kernens domain. We will show it to you well be right back. Wow your brain is an amazing thing. But as you get older, it naturally begins to change, causing a lack of sharpness, or even trouble with recall. Thankfully, the breakthrough in prevagen helps your brain and actually improves memory. The secret is an ingredient originally discovered. In jellyfish. In clinical trials, prevagen has been shown to improve shortterm memory. Prevagen. The name to remember. Its a warm blanket. Its a bottle of clean water. Its a roof and a bed. Its knowing someone cares. Its feeling safe. Its a today thats better than yesterday. Every dollar you can spare helps so much more than you can imagine. Please donate now to help people affected by Hurricane Harvey. Your help is urgently needed. Welcome back to squawk box. U. S. Commerce secretary wilbur ross is in china hes meeting with senior official theres ahead of President Trumps visit to asla later this fall. Ross is pressing beijing on the need to rebalance bilateral trade and guarantee fair treatment force u. Trade and guarantee fair treatment force u. For u. S. Fir. A blackrock executive could have cost the firm 32 million for donating 2700 that donation made to kasichs president ial campaign. The move could prevent blackrock from collecting fees from the state of ohio where kasich is governor blackrock asked the s. E. C. To make an exception to the rule. The s. E. C. Has yet to respond. We dont know who the executive was . Donating to kasich, huh . You think he has money on the line at firm in what you are suggesting from ohio new numbers today on the devastation of Hurricane Maria and these are numbers that are not finals, but catastrophic air worldwide estimates the storm cost between 40 billion and 85 billion in insured losses, more than 85 of that damage was done in puerto rico the numbers are higher than estimates for losses caused by Hurricane Harvey and irma because of the direct hit on that island. And i think theyre still assessing. The pictures are unbelievable. Air was also pointing out 50 of the homes on puerto rico are not insured against wind damage. Which is much higher or lower than in the rest of the United States so when they talk about insured losses, you have to wonder whether theres a wholeother number out there that is just not insured that will be damaged, just absorbed by people because insured losses here dont cover water. So for it to be that high, its mostly wind. Verizon announcing its support for victims of Hurricane Maria in puerto rico pledging 1 million for a fund in relief efforts. They will also match funds from select relief organizations. Andrew i need to take a time out i think, joseph, i need to apologize to you now yeah. While i was paying for your domain yeah. You will be master of your domain mmhmm. You dont have to pay me for that. Appears somebody else may have tried to front run me and jump the line. I thought they would. Because i was about to publish your new website, which i just worked on and then when i went to try you knew they would do that i didnt think they would be faster than my speedy gonzalez fing fingers. Out of the tens of dozens of viewer we have one of them got there before i did. Im kind of glad. I think the average viewer would be nicer you should see. I was making you a beautiful website. It is beautiful. I will show it to you. See, if everybody goes to joekern joekernen godaddysites. Com maybe we will buy him another domain which is similar, but we will not tell the public what that domain is you notice it, i dont have joekernen, for twitter, if i d way too many people would easily follow me i made a beautiful you made that thats beautiful. He is master of your domain. Thats really cool. My skill set he is a bit of a showoff that he was able to do that you can do your own web thing. What was that web company that designed things . You could do that. You think can you see that i dont know if it has that weird thing on it. I had a bachelors degree from the university of colorado i said under skillset, i wrote did you put my masters from m. I. T. I have it there i said my skill set, i possess a sharp eye for detail which i use to find the smallest errors in anything said. My passion is outside the office im an avid golfer, i have three dogs and i love shopping at Bed Bath Beyond. What about my kids and wonderful wife did you put im a family man wasnt a lot of time during the last segment to be doing this he did this in 15 minutes on air. I wondered what he was doing. This is the first nice thing hes ever done for me. Now its not even working the republicans are planning to release the blueprint of their tax reform plan tomorrow joining us now is om bsb directr jim nussle good morning to you, sir i follow both of you on twitter, just so were clear you guys are fun to follow i thought i blocked you tell us, jim, where do you think this tax proposal stands we obviously hear well hear about 20 of the corporate rate. Something coming down on the individual but unclear exactly where its going to land. Its unclear because even the socalled big six, the leaders of the congress that are trying to get together on the republican side and craft a tax bill dont appear to even have Common Ground amongst themselves having actually quarterbacked a tax bill from the beginning to end, including negotiations with the senate and the white house, this is a tough thing to do, especially when you start off with as much disagreement as it appears they have. I also hear tomorrow now, i think this is in the news, that the republicans will take a very different kind of approach theyll ask all of the House Republicans to go to a retreat, a conference a oneday conference and talk about this to try to get any kind of Common Ground i think its going to be a very difficult lift if the starting points is where it is. This is even before they dont have a budget yet for 2018, which they need if this is going to have a chance of going through. That, based on what weve seen in the last few months transpire with healthcare reform, this is going to be a huge lift. But jim, explain this if you are to put this on a timeline, you wanted to be optimist bic it shgic about it,s like youre not, but if you were, when could this get done step one, you have to pass a budget you have to pass a budget for 2018 thats certainly at this point in time looking like its first and foremost dead in the w