Transcripts For CNBC Squawk Box 20150909 : vimarsana.com

To unveil a new short position he has never spoken about publicly. This puts him up against some other powerful Hedge Fund Players and thats just the way he hikes it. The news makers will keep coming. Tomorrow dont miss the exclusive hour long conversation with david tepper. You may remember the market call that lead to the tepper rally in september 2010. Well find out what september surprise he could have up his sleeve for investors now. Of course good timing on this. The fed ready to act again next week and then on friday we have bill ackman stopping by with his best bets for the next 20 years. First though before we get to todays news lets get to more of the news of the morning. Our top story this morning is the markets. Joe mentioned japan, check this out. The nikkei surging to close higher by 7. 7 . The comments from Prime Minister abe who told a meeting of investors he would seek to lower the Corporate Tax rate by 3. 3 Percentage Points next financial year. The rest of asia closing in the green. Shares are trading higher as well. Also a boost from positive german Economic Data and u. S. Futures came off of all of that news in the green as well. Dow would open 153 points higher. S p 500 up about 17 points. And governor bushs plan would lower Corporate Tax rates here by 15 Percentage Points. Not 3. So we should be up 3500 points today or 4,000. There is a little bit of road to go before you get to that part. The other guy is in the job already. If he were to win getting all of these will be just like breaking yeah. Will that ever happen again in this country . I dont know. We actually write legislation and say i think this might help the country. We can have it as long as all three parties thats not partisanship. Thats cramming stuff through. United continental replacing ceo jeff smisek amid a federal probe of the airline and two other senior administrators are leaving the administration. Theyre not talking about the status of a federal probe into the countrys relationship with former Port Authority chairman David Sampson but the government is investigating whether united added direct flights from newark to Columbia South carolina where sampson had a home and that route was cancelled shortly after sampson resigned from another crazy situation, the whole bridge thing from the Port Authority early last year following news of a federal probe into a conflict of interest because his role of Port Authority interest and private law firm. Its the worst stuff that you think about Port Authority and trading. I immediately thought about around the world. But remember what goes on in china . What goes on in china right now. I dont think this was still happening in the United States. For Port Authority and government croanies. That was 30 years ago. Remember hiring everybodys kids. Its all sort of its pretty the question is whether the emails are going to come out. Theres two other people under him, the Government Communications people who are clearly communicating on this. They actually killed the flight because they were losing money and then they needed the slots. It wasnt just slots. They were asking for a deduction on their rent. A deduction on the rent at the airport and a bunch of other crazy things and then asking for a discount on your rent and continuing flights to Atlantic City where one of the Law Firm Partners was running things and losing money as a result. Sampson was a lawyer, right . But in the Airline World i think this thing has been going on for a long time. Senators wanting to get home from dc. Look at the flights that go from dc elsewhere. There was even the story with joe biden coming up from delaware every day that they would hold the train for him to come up. Thats the urban legend that floats around and is there criminal liability for them or these other people . I cant believe theyre paying him a sevrence pay to go away. Free flights for life. Thats the real value. And you should leave with nothing or you did nothing wrong. Unless what theyre trying to do is insulate the company. This has been out since january. And instigated by the company. That was the other part about it. If you weed out the bad players that are involved in this maybe you save the company from actually getting hit hard. I have asked three sitting governors of new jersey for my own easy pass. You have not gotten it. Thats never Chris Christie was going to get you a patrol car. Police escorts are much better. Mcgreevy. The new guy, the guy theyre putting in charge, his name is menunous. Csx. I liked what he was saying yesterday. He was hitting all the right notes in terms of making sure that the airline focuses on customer service. Well thought of by labor as well. I want to be able to get him on. Good idea. Anyway, another big story today too, apple will be in the headlines today because theyre holding a new product event in san francisco. Tim cook is going to be delivering the keynote address. As always there is a lot of speculation about what might come. Among the popular guesses a new iphone. One called the 6s and 6 plus s. Maybe it will have a better cam ran than whats out there. Also a new Apple Television box to stream movies and games with voice recognition. You can talk to your tv and tell it what you want to watch. Theyre also speculating about a new ipad. Theres a wild car. Its a big screen ipad maybe meant for business users. Thats something theyve been working on and were not sure if theyll have it this week but its a good chance. Shares of apple this year, a lot of ups and towns and ups recently. I saw speculation off of a new potential car. There was that report two weeks ago where the first time there seems to be a real car being made or something thats actually happening in a way that you have no idea about. Its a little early though. Recommend how long it took them to get the watch out. Its been a little surreal. One will be bigger and one of them smaller. I dont know about the law of returns on the ipad. The better camera, okay. Thats why i want an upgrade. Would you have a five or a six . I have a five but the new 6 has a better camera i want that. I wish siri wasnt so obnoxious that would help. Why is she obnoxious. She never gets have you ever tried to dictate. I think siri has gotten better in the past two days possibly ahead of this thing. Im not joking. How would that be possible . Its not no, siri is it comes im looking up into the heavens. It could be the vacation and youre i dont know. I thought it was better. The irs dealing a big set back to yahoo . They may have to pay taxes on the money it plans to get from the stake in alibaba. Denying the request for a private level ruling for whether it would be tax free. They have not concluded it would be taxable. Shares dropping nearly 16 when the news first hit before pairing back the loss but putting a lot more pressure on marissa mayer. Its not near over though. Its not over yet but this is a huge crimp in the plan. They dont know yet. I think theyre saying bring it on and then well tell you. Its just not the way you want to do it. But they were also nervous enough to ask for clarification. Its not only what this does to yahoo and alibaba but other spin offs. Theres a little bit of other alibaba news. Theyre strimitrimming sales estimates. The customers are still willing and able to spend but alibaba is seeing a negative impact of the magnitude of the spinning and we should probably talk to mr. China about all of this. We will. I argued with someone, one of our people, i dont know which one it was. It was after he just told me that you cant buy this kind of growth anywhere else so the valuation was not excessive. Last week . No, this was like six months ago. It was a millennial person. I dont remember which one. That does not narrow it down. Instagram is making a big ad push. Before now ads were only available in 8 countries. The facebook owned company has 300 million monthly active users and the social networking giants consumer data allows instagram to target audiences more accurately. I guess i fall privy to in my own way on twitter i do count how many favorites you get or something but i see people in my immediate family that do instagram and they live on if they get 100 likes their life is complete. Thats big. But why . Because its affirmation. Its affirmation. That we like you. We really like you. You would have never imagined wed get to and then theres the poor people that get no likes. What are they supposed to do . I think the comments are work. Its a huge part of my life. Im at negative tolerance now. Even if i dont like the name itself theres no one left. How about you. You want to see what people say. Bring it on. Dont issue that challenge. I want to know. So you said bring it on. I want to know. Ill ask some of my people to bring it on. They do. I see what they say. Netflix is expanding. Its going to launch its streaming service in south korea, singapore, hong kong next year. It plans to reach 200 countries by the end of 2016 including china. 40 billion is the market cap. 50 for awhile. Im watching this closely because the media pundants that say this is the only stock they recommend but if its going to work then every time, every market cap loss in viacom, time warner its not a perfect hedge. Thats down more than the other ones and now these guys havent been on to say its still happening. So i dont know. I did notice yesterday disney was up about 3 or 4 points. 400 point gain yesterday and some of the guys that got hatched on the way down. Theyre greatly exaggerated again and again and again. No one ever learns. This is true. Thats what the media is all about. Except for print. Love that too. Lets stay on the Technology Theme this morning and talk about imb as well. I got the chance to sit down with warren buffet and ask him about his position in the stock. When he joined us on august 110th he hinltedded he may have been buying more shares in the Second Quarter. Then there werent any additional purchases of ibm and had us confused. He cleared it up yesterday. I owe you one on that. I thought i was buying it in that quarter. We bought it in the First Quarter and normally i wouldnt tell you this but we bought some in the Third Quarter. I thought there were purchases in the Second Quarter. I wouldnt have said that unless i thought the number was going to be higher but i was wrong so i have to tell you we have bought a little in the 3rd quarter and the 1st quarter as well. That was august 10th so i take it you were buying in the Third Quarter before august 10th even before this market volatility came up. I dont remember that exactly and i got in trouble getting an answer where i didnt remember perfectly before so ill leave it at what i said which is true. We bought in the 1st quarter and 3rd and did not buy in the Second Quarter even though i thought we had. Mystery cleared up if you were wondering what he was doing so you heard it here first. We dont know how much really. Not yet. Well find out in those quarterly filings. Yeah. He obviously wants to go back up to what he paid for it so he cant say im not happy about it. I just dont know about ibm. But he doesnt seem like he is buying it with two hands. I just dont know about 10 or 15 years from now well have a totally different who was that . It was a long time ago. But we have done some math and i dont know about 147 billion but when it was back in the mid to low 50s when have you ever added in dividends before. If you added in the dividends he was up. Not when it was at 150. I thought it was mid 150s. I dont know who gets into your ear on this but you thought he had a much lower cost of acquisition than he actually had. It was like 170 or so was his cost of acquisition, right . The yield is 3 down here. 3. 5 . I dont know. Those wild swings that weve seen in the markets seems to be the norm in the Global Markets now. Joining us is a cnbc contributor. Great to see you today. Good to be seen. We thought the wild swings were base of the holidays and people on vacation and you look around and theyre continuing. Whats going on . Its shocking to me. I thought i had seen all sorts of wild and exaggerated movements but to see the dow down 300, up 300 its wearing every professional out. You find yourself selling the lows and buying the highs and at the end of a week and a half market versus gone nowhere. I remember an old friend of mine. We were standing on the top of the bond pit one day and everything was going crazy and i asked what do you think . And he said im flat and im nervous. I feel the same way. Im nervous. I was modestly net short of the market and i mean modestly net short but when i came in yesterday morning and saw what the chinese had done changing their dividend policy and doing away with taxes on dividends if you own the stock for more than a year that was the most powerful capitalist move in a long period of time. You had no choice but to say this thing is going higher. Is there a way to figure out valuations of things or is it being sloshed around with the ti tide . Its being sloshed around with the tide. Its a market without a memory. Maybe this is to change their tax structure might give the market some memory and follows through on the upside. All economics is the study of peoples propensity to do something and the propensity now will be for every other country to follow what the chinese have done. Cutting taxes completely on dividends is an extraordinary move. You dont think thats going to happen here . I think we have to change it. No, were obviously not going to do away with taxes completely but shall we have to follow in some manner or cut taxes in some manner . Yeah were going to have to. What do you think gets us to that point . People have been saying that for years here. I dont know. The chinese have made the move. Thats a very radical change and others will have to follow suit. But i dont know why. Usually capital finds the best place to live but this is not going to make people invest in chinese stocks. No, its not going to make americans run out and buy chinese stocks but it will make chinese buy chinese stocks. But usually when other people have to follow suit its because youre going to lose your capital. I dont see that being the case with china because theres too many obstacles. Am i going to move any money and shall this make me move money to china . No bit will give them a better propensity to come off the sidelines. What else are you looking at at this point and factoring in or are you just waiting for the market craziness to subside before you place any bets . I think one of the major changes taking place is if you reading the newspapers over the course of the last month and a half and listening to the news media all youve seen is the commodity markets. Those are the series of headlines that one gets as markets turn. Theyre extremely inexpensive. I think youre seeing the lows in oil and grains and steal and maybe even coal. Thats a big change. Thats a momentum call and not a change that things we thought were slowing down in china are not as bad as we thought. I think that we exaggerated the low down in the circumstances in china. If ask what china is doing, they think that china is slowing down. No china instead of growing at 18 or 12 or 11 is growing at 4 or 3. Youll see circumstances Getting Better again. Well be talking to him a little bit later this morning about what he sees happening in china but where do you go back in . Where are you most willing to place your bet. One of the places you have to take a look at coal, coal prices have been so decimated. Coal stocks have been decimated. Many of them have gone bankrupt but peabody coal. Thats a longterm leap and call on economic circumstances. Take a look at coal. Take a look at the place or the things that move crude oil around the world. Thats the simple things to take a look at. You dont have to go to the markets and buy futures or gold but something is taking place because it had been so disturbingly bearish that those are the hall marks of when things change. Thank you for joining us today. Very nice to see you, sir. Good to be seen. Coming up, european leaders unveiling plans today when dealing with the migrant crisis but first heres a look back at this date in history. Can a business have a mind . A subconscious. A knack for predicting the future. Reflexes faster than the speed of thought. Can a business have a spirit . Can a business have a soul . Can a business be. Alive . 800,000 migrants fleeing conflict zones and expected to reach the continent in 2015. Angela merkel called for quotas to ensure Fair Distribution of migrant acceptance in europe. Whats the cost of this going to be . How would we think about this from the business context . I hate to say that but thats a real question. First of all, these are not sort of the most educated and white collar capable refugees that are coming in so on the near term of course its a significant expense the germans pledged for their resettlement. Theres going to be a lot of backlash there. Some of these countries over the longer term do need blue collar labor thats low cost and theyll get it with a number of these syrians and some of them dont and youre going to see more of the traditional back and forth. What is it going to be . Its like the greece debate. Its germany leading the way to do entirely too little to respond to a crisis. You just mentioned 800,000 this year. Theyre talking about a deal for 160,000 and to get that 160,000 resettled they have to get every single country to agree and a lot of those countries are going to engage in very significant horse trading over other things that dont matter as much to the germans like for example russian sanctions. Do you think the hungarians are going to push on that in return for their assent of this vote . The greeks . Absolutely theyre going to. Were seeing the weakness of europe. The inability to coordinate. Weve taken 1500 refugees here . No, nothing but this means we dont care. We have a serious immigration issue were debating in the Hedge Fund Players<\/a> and thats just the way he hikes it. The news makers will keep coming. Tomorrow dont miss the exclusive hour long conversation with david tepper. You may remember the market call that lead to the tepper rally in september 2010. Well find out what september surprise he could have up his sleeve for investors now. Of course good timing on this. The fed ready to act again next week and then on friday we have bill ackman stopping by with his best bets for the next 20 years. First though before we get to todays news lets get to more of the news of the morning. Our top story this morning is the markets. Joe mentioned japan, check this out. The nikkei surging to close higher by 7. 7 . The comments from Prime Minister<\/a> abe who told a meeting of investors he would seek to lower the Corporate Tax<\/a> rate by 3. 3 Percentage Points<\/a> next financial year. The rest of asia closing in the green. Shares are trading higher as well. Also a boost from positive german Economic Data<\/a> and u. S. Futures came off of all of that news in the green as well. Dow would open 153 points higher. S p 500 up about 17 points. And governor bushs plan would lower Corporate Tax<\/a> rates here by 15 Percentage Points<\/a>. Not 3. So we should be up 3500 points today or 4,000. There is a little bit of road to go before you get to that part. The other guy is in the job already. If he were to win getting all of these will be just like breaking yeah. Will that ever happen again in this country . I dont know. We actually write legislation and say i think this might help the country. We can have it as long as all three parties thats not partisanship. Thats cramming stuff through. United continental replacing ceo jeff smisek amid a federal probe of the airline and two other senior administrators are leaving the administration. Theyre not talking about the status of a federal probe into the countrys relationship with former Port Authority<\/a> chairman David Sampson<\/a> but the government is investigating whether united added direct flights from newark to Columbia South<\/a> carolina where sampson had a home and that route was cancelled shortly after sampson resigned from another crazy situation, the whole bridge thing from the Port Authority<\/a> early last year following news of a federal probe into a conflict of interest because his role of Port Authority<\/a> interest and private law firm. Its the worst stuff that you think about Port Authority<\/a> and trading. I immediately thought about around the world. But remember what goes on in china . What goes on in china right now. I dont think this was still happening in the United States<\/a>. For Port Authority<\/a> and government croanies. That was 30 years ago. Remember hiring everybodys kids. Its all sort of its pretty the question is whether the emails are going to come out. Theres two other people under him, the Government Communications<\/a> people who are clearly communicating on this. They actually killed the flight because they were losing money and then they needed the slots. It wasnt just slots. They were asking for a deduction on their rent. A deduction on the rent at the airport and a bunch of other crazy things and then asking for a discount on your rent and continuing flights to Atlantic City<\/a> where one of the Law Firm Partners<\/a> was running things and losing money as a result. Sampson was a lawyer, right . But in the Airline World<\/a> i think this thing has been going on for a long time. Senators wanting to get home from dc. Look at the flights that go from dc elsewhere. There was even the story with joe biden coming up from delaware every day that they would hold the train for him to come up. Thats the urban legend that floats around and is there criminal liability for them or these other people . I cant believe theyre paying him a sevrence pay to go away. Free flights for life. Thats the real value. And you should leave with nothing or you did nothing wrong. Unless what theyre trying to do is insulate the company. This has been out since january. And instigated by the company. That was the other part about it. If you weed out the bad players that are involved in this maybe you save the company from actually getting hit hard. I have asked three sitting governors of new jersey for my own easy pass. You have not gotten it. Thats never Chris Christie<\/a> was going to get you a patrol car. Police escorts are much better. Mcgreevy. The new guy, the guy theyre putting in charge, his name is menunous. Csx. I liked what he was saying yesterday. He was hitting all the right notes in terms of making sure that the airline focuses on customer service. Well thought of by labor as well. I want to be able to get him on. Good idea. Anyway, another big story today too, apple will be in the headlines today because theyre holding a new product event in san francisco. Tim cook is going to be delivering the keynote address. As always there is a lot of speculation about what might come. Among the popular guesses a new iphone. One called the 6s and 6 plus s. Maybe it will have a better cam ran than whats out there. Also a new Apple Television<\/a> box to stream movies and games with voice recognition. You can talk to your tv and tell it what you want to watch. Theyre also speculating about a new ipad. Theres a wild car. Its a big screen ipad maybe meant for business users. Thats something theyve been working on and were not sure if theyll have it this week but its a good chance. Shares of apple this year, a lot of ups and towns and ups recently. I saw speculation off of a new potential car. There was that report two weeks ago where the first time there seems to be a real car being made or something thats actually happening in a way that you have no idea about. Its a little early though. Recommend how long it took them to get the watch out. Its been a little surreal. One will be bigger and one of them smaller. I dont know about the law of returns on the ipad. The better camera, okay. Thats why i want an upgrade. Would you have a five or a six . I have a five but the new 6 has a better camera i want that. I wish siri wasnt so obnoxious that would help. Why is she obnoxious. She never gets have you ever tried to dictate. I think siri has gotten better in the past two days possibly ahead of this thing. Im not joking. How would that be possible . Its not no, siri is it comes im looking up into the heavens. It could be the vacation and youre i dont know. I thought it was better. The irs dealing a big set back to yahoo . They may have to pay taxes on the money it plans to get from the stake in alibaba. Denying the request for a private level ruling for whether it would be tax free. They have not concluded it would be taxable. Shares dropping nearly 16 when the news first hit before pairing back the loss but putting a lot more pressure on marissa mayer. Its not near over though. Its not over yet but this is a huge crimp in the plan. They dont know yet. I think theyre saying bring it on and then well tell you. Its just not the way you want to do it. But they were also nervous enough to ask for clarification. Its not only what this does to yahoo and alibaba but other spin offs. Theres a little bit of other alibaba news. Theyre strimitrimming sales estimates. The customers are still willing and able to spend but alibaba is seeing a negative impact of the magnitude of the spinning and we should probably talk to mr. China about all of this. We will. I argued with someone, one of our people, i dont know which one it was. It was after he just told me that you cant buy this kind of growth anywhere else so the valuation was not excessive. Last week . No, this was like six months ago. It was a millennial person. I dont remember which one. That does not narrow it down. Instagram is making a big ad push. Before now ads were only available in 8 countries. The facebook owned company has 300 million monthly active users and the social networking giants consumer data allows instagram to target audiences more accurately. I guess i fall privy to in my own way on twitter i do count how many favorites you get or something but i see people in my immediate family that do instagram and they live on if they get 100 likes their life is complete. Thats big. But why . Because its affirmation. Its affirmation. That we like you. We really like you. You would have never imagined wed get to and then theres the poor people that get no likes. What are they supposed to do . I think the comments are work. Its a huge part of my life. Im at negative tolerance now. Even if i dont like the name itself theres no one left. How about you. You want to see what people say. Bring it on. Dont issue that challenge. I want to know. So you said bring it on. I want to know. Ill ask some of my people to bring it on. They do. I see what they say. Netflix is expanding. Its going to launch its streaming service in south korea, singapore, hong kong next year. It plans to reach 200 countries by the end of 2016 including china. 40 billion is the market cap. 50 for awhile. Im watching this closely because the media pundants that say this is the only stock they recommend but if its going to work then every time, every market cap loss in viacom, time warner its not a perfect hedge. Thats down more than the other ones and now these guys havent been on to say its still happening. So i dont know. I did notice yesterday disney was up about 3 or 4 points. 400 point gain yesterday and some of the guys that got hatched on the way down. Theyre greatly exaggerated again and again and again. No one ever learns. This is true. Thats what the media is all about. Except for print. Love that too. Lets stay on the Technology Theme<\/a> this morning and talk about imb as well. I got the chance to sit down with warren buffet and ask him about his position in the stock. When he joined us on august 110th he hinltedded he may have been buying more shares in the Second Quarter<\/a>. Then there werent any additional purchases of ibm and had us confused. He cleared it up yesterday. I owe you one on that. I thought i was buying it in that quarter. We bought it in the First Quarter<\/a> and normally i wouldnt tell you this but we bought some in the Third Quarter<\/a>. I thought there were purchases in the Second Quarter<\/a>. I wouldnt have said that unless i thought the number was going to be higher but i was wrong so i have to tell you we have bought a little in the 3rd quarter and the 1st quarter as well. That was august 10th so i take it you were buying in the Third Quarter<\/a> before august 10th even before this market volatility came up. I dont remember that exactly and i got in trouble getting an answer where i didnt remember perfectly before so ill leave it at what i said which is true. We bought in the 1st quarter and 3rd and did not buy in the Second Quarter<\/a> even though i thought we had. Mystery cleared up if you were wondering what he was doing so you heard it here first. We dont know how much really. Not yet. Well find out in those quarterly filings. Yeah. He obviously wants to go back up to what he paid for it so he cant say im not happy about it. I just dont know about ibm. But he doesnt seem like he is buying it with two hands. I just dont know about 10 or 15 years from now well have a totally different who was that . It was a long time ago. But we have done some math and i dont know about 147 billion but when it was back in the mid to low 50s when have you ever added in dividends before. If you added in the dividends he was up. Not when it was at 150. I thought it was mid 150s. I dont know who gets into your ear on this but you thought he had a much lower cost of acquisition than he actually had. It was like 170 or so was his cost of acquisition, right . The yield is 3 down here. 3. 5 . I dont know. Those wild swings that weve seen in the markets seems to be the norm in the Global Markets<\/a> now. Joining us is a cnbc contributor. Great to see you today. Good to be seen. We thought the wild swings were base of the holidays and people on vacation and you look around and theyre continuing. Whats going on . Its shocking to me. I thought i had seen all sorts of wild and exaggerated movements but to see the dow down 300, up 300 its wearing every professional out. You find yourself selling the lows and buying the highs and at the end of a week and a half market versus gone nowhere. I remember an old friend of mine. We were standing on the top of the bond pit one day and everything was going crazy and i asked what do you think . And he said im flat and im nervous. I feel the same way. Im nervous. I was modestly net short of the market and i mean modestly net short but when i came in yesterday morning and saw what the chinese had done changing their dividend policy and doing away with taxes on dividends if you own the stock for more than a year that was the most powerful capitalist move in a long period of time. You had no choice but to say this thing is going higher. Is there a way to figure out valuations of things or is it being sloshed around with the ti tide . Its being sloshed around with the tide. Its a market without a memory. Maybe this is to change their tax structure might give the market some memory and follows through on the upside. All economics is the study of peoples propensity to do something and the propensity now will be for every other country to follow what the chinese have done. Cutting taxes completely on dividends is an extraordinary move. You dont think thats going to happen here . I think we have to change it. No, were obviously not going to do away with taxes completely but shall we have to follow in some manner or cut taxes in some manner . Yeah were going to have to. What do you think gets us to that point . People have been saying that for years here. I dont know. The chinese have made the move. Thats a very radical change and others will have to follow suit. But i dont know why. Usually capital finds the best place to live but this is not going to make people invest in chinese stocks. No, its not going to make americans run out and buy chinese stocks but it will make chinese buy chinese stocks. But usually when other people have to follow suit its because youre going to lose your capital. I dont see that being the case with china because theres too many obstacles. Am i going to move any money and shall this make me move money to china . No bit will give them a better propensity to come off the sidelines. What else are you looking at at this point and factoring in or are you just waiting for the market craziness to subside before you place any bets . I think one of the major changes taking place is if you reading the newspapers over the course of the last month and a half and listening to the news media all youve seen is the commodity markets. Those are the series of headlines that one gets as markets turn. Theyre extremely inexpensive. I think youre seeing the lows in oil and grains and steal and maybe even coal. Thats a big change. Thats a momentum call and not a change that things we thought were slowing down in china are not as bad as we thought. I think that we exaggerated the low down in the circumstances in china. If ask what china is doing, they think that china is slowing down. No china instead of growing at 18 or 12 or 11 is growing at 4 or 3. Youll see circumstances Getting Better<\/a> again. Well be talking to him a little bit later this morning about what he sees happening in china but where do you go back in . Where are you most willing to place your bet. One of the places you have to take a look at coal, coal prices have been so decimated. Coal stocks have been decimated. Many of them have gone bankrupt but peabody coal. Thats a longterm leap and call on economic circumstances. Take a look at coal. Take a look at the place or the things that move crude oil around the world. Thats the simple things to take a look at. You dont have to go to the markets and buy futures or gold but something is taking place because it had been so disturbingly bearish that those are the hall marks of when things change. Thank you for joining us today. Very nice to see you, sir. Good to be seen. Coming up, european leaders unveiling plans today when dealing with the migrant crisis but first heres a look back at this date in history. Can a business have a mind . A subconscious. A knack for predicting the future. Reflexes faster than the speed of thought. Can a business have a spirit . Can a business have a soul . Can a business be. Alive . 800,000 migrants fleeing conflict zones and expected to reach the continent in 2015. Angela merkel called for quotas to ensure Fair Distribution<\/a> of migrant acceptance in europe. Whats the cost of this going to be . How would we think about this from the business context . I hate to say that but thats a real question. First of all, these are not sort of the most educated and white collar capable refugees that are coming in so on the near term of course its a significant expense the germans pledged for their resettlement. Theres going to be a lot of backlash there. Some of these countries over the longer term do need blue collar labor thats low cost and theyll get it with a number of these syrians and some of them dont and youre going to see more of the traditional back and forth. What is it going to be . Its like the greece debate. Its germany leading the way to do entirely too little to respond to a crisis. You just mentioned 800,000 this year. Theyre talking about a deal for 160,000 and to get that 160,000 resettled they have to get every single country to agree and a lot of those countries are going to engage in very significant horse trading over other things that dont matter as much to the germans like for example russian sanctions. Do you think the hungarians are going to push on that in return for their assent of this vote . The greeks . Absolutely theyre going to. Were seeing the weakness of europe. The inability to coordinate. Weve taken 1500 refugees here . No, nothing but this means we dont care. We have a serious immigration issue were debating in the United States<\/a>. Its a wall with the mexicans that are sending far fewer refugees or migrants to the United States<\/a> than in previous years. Last two years chinese and indians have had far more. Now we wont help out anybody fleeing the situation. To be fair the americans are spending more money in humanitarian aid to respond to the Syrian Crisis<\/a> than any other countries so far. None of the president ial candidates is saying anything about resettling the syrians. Its very far from us but we dont have to worry about walls. We have two oceans. Its very easy for the syrians to get to turkey, 2 million of them thus far and to move from there on to greece and italy. We read about europe has become all too aware of terrorist acts. Its a different place now. Theres armed soldiers in every train station and does this increase the risk to europe . Can people that have malice in mind, can they use this as an tun . Of course there will be larger numbers of easily radicalized individuals. Of course there will be. Any of them already ready to go and just joining. If ask me if i have been talking to them the answer is no. France had the Charlie Hebdo<\/a> attacks because of the unintegrated muslims living there. If youre bringing in millions of refugees into europe over the coming years from syria, from iraq and this is merkels challenge. She needs the labor. The germans from the economic wherewithal to provide these people. Theyre doing more in any other country than europe except for turkey you start to see individual acts of violence. God forgive you see a terrorist act that will be linked to these flows and its going to happen. Its really going to hurt. You must be seriously negative about europe as a consequence. These people are fleeing war basically. Does there come a point where people in countries that dont have the same tuns just decide im out of here . I can see how the rest of the world lives. The deal were talking about would have exclusions from country where is they wouldnt be directly fleeing war. Its interesting that cameron has actually said i only want to spend our money resettling syrians that are fleeing directly from syria. Not if they already made it from turkey. You are no longer fleeing war when you go to hungary theyre not giving you asylum status and they dont have the benefits that you would receive. Say 400 plus dollars a month for benefits and housing that everyone is getting in germany. If i were the father with the child crying when i finally made it across the mediterranean would i want to do Everything Possible<\/a> to get my little girl to germany as opposed to stuck on the island in greece, of course i would. But if youre the europeans, you would understand why they would have very little inclination to suddenly say okay the doors are open for everybody irrespective of where youre fleeing. You already made it some place. Do you know who used to say there you have it all the time . Who. The emperor of austria. He wasnt a good character. Thank you. No, no. He was the guy from farri Farris Bueller<\/a> that had personal problems. Morning wig for squawk box. You should wear one of those. Coming up todays top corporate story united kopt nenal replacing its ceo amid a corruption probe. The implications for the airline, next. My name is watson. Im helping doctors keep people healthy. Take ted here. Im pulling together data he shared from his wearables, Health Records<\/a> and family history, so we can analyze it. Hes doing everything right. For the most part. No pain, no gain. You are a beast, ted. My name is watson. How can i help you . You forgot the milk thats lactaid. Right. 100 real milk, just without the lactose. So you can drink all you want. With no discomfort . Exactly. Here, try some. Mmm, it is real milk. See . Delicious. Hoof bump oh. Right here girl, boom. Lactaid\u00ae. 100 real milk. No discomfort. And for a creamy and delicious treat, try lactaid\u00ae ice cream. Welcome back to squawk box. The big corporate buzz story of the morning. Y United Continental<\/a> replacing the ceo. He is chairman and ceo and resigned yesterday. Were still trying to figure out what sparked his resignation but heres the shake up in the executive ranks that united announced late yesterday. He is out along with two of his top executives. Theyre tied to a federal probe of the Port Authority<\/a> and specifically whether the former head of the Port Authority<\/a> was using his influence in order to get united to add a flight from newark down to columbia, South Carolina<\/a> where the former head of the Port Authority<\/a> has a home. That flight was cancelled three days after he resigned. He is being replaced at United Airlines<\/a> by a board member and a board member that has experience when it comes to operations in the Rail Industry<\/a>. Oscar munoz is the new United Airlines<\/a> ceo. He was the former coo of csx. The large rail company and he is going to be focused on improving the operation at united. They have had problems over the last three years since united and continental got together. Heres oscar munoz yesterday talking about his focus now that he is running united. We intend to maintain cost discipline and allocating capital to share owners. United has tremendous potential and i look forward to leading this team to becoming the topper forming airline. Take a look at shares of united versus american and delta over the last couple of years one thing to keep in mind is the elevation of oscar munoz to ceo was so sudden that they have yet to announce what his pay package will be at United Airlines<\/a> and with regard to the severence package. Theres something saying he has to pay back the 4. 8 million. No more free flights for life and a couple of other things that are start of the package. So it remains to be seen what he will get once its all said and done because this probe is on going. So one thing we know about united is theres still some some loose ends in terms of labor. This gentleman is known to labor. Didnt they make positive comments that they can work with him . Yes. Is that one of the reasons . I figure the Rail Industry<\/a> is close enough in term of scheduling and operation and Everything Else<\/a> so you dont say he doesnt run an airline but thats close enough. If you cover united as i do theres no shortage of nasty comments over the last three or four years about him from organized labor. The pilots too. The pilots specifically but other unions as well. Operationally as well as Labor Relations<\/a> at united this airline is a mess and has been over the last three or four years which is one interesting nugget in this. You talk with analysts on wall street. Repeatedly they would say we think these guys are a sleeping giant. Theyre ready to really become a topper forming airline and yet its never happened. Thats the challenge now for oscar munoz and his expertise in terms of operations and running a company or working at a high level with a company with a lot of labor unions and government regulati regulation. Those factors work in his favor but he has a way to go with united. You look at the broader implications of things. Number one you probably like to opine about the boards getting more power. I just wonder do we now do you think united is the only airline that has had these weird relationship with port authorities and slot providers . It must be interesting what goes on. There are great cautionary tails that come out of this one. The board moved quickly. They didnt put in an interim. They put the right guy in there and some interesting thoughts as to request they did this as opposed to twisting on the vine like twitter or some others have done, they put somebody in there that knows what hes doing. Hes been Battle Tested<\/a> and very well thought of. Interesting twist you bring up with phil on the labor side. They actually have the chairman of the Airline Pilots<\/a> association on the board. Only you and i would remember the legacy of that and the employees got 55 of this company. This is a very employee invested operation so that matters but theres also big picture ill take the curve you let me take on that and then as you look at the other news on the headlines today this is the board where the chairman and ceo were unified. They can still make the change. They separate the rolls. Stie sometimes it makes sense. Obviously yesterday you had a great interview with warren buffet and he did the same kind of salute about him. What a great job he was doing. They separated it in 2009 and they brought it in. Now you wouldnt have separated under hugh at bank of america but under ken lewis they needed to so it made sense at different times and its just crazy and instead of paying attention to an emperor for life. Heres a company that did one of the tax inversions with a weird c contrivence. Theres no take over premium as they go after the superior company, i think and hes entrenched. So you take a look at separation of roles makes sense sometimes and if you have a crisis, this board was able to act very ni , nibly. And no interim ceo. This was january when this first started percolating. But there was a problem. They suggested it would lead to the residengnation or depart. Thats going on in a lot of areas. This is Public Safety<\/a> and things. Theres a reason why when Delta Airlines<\/a> got rid of leo mullins he wouldnt take it as an interim. We took a look at boeing when they had transition there is that were sudden or united technology. They is put somebody in there that was there not as an interim. It was a spicy one. I remember that one. But the whole stuff is the Port Authority<\/a>. He was the clean up guy and they got caught in a relationship there. Any other company wouldnt have been an issue but the notorious skirt chaser. Yeah. And a lot of problems. They had to be beyond question. Absolutely. Dont forget that. As dean of yale. Look at the Port Authority<\/a>. What do you think of this guy David Sampson<\/a>. Hes working it. He does his own hair. I told you i wanted my own. Ive asked three sitting governors and they have all declined. I should have gone to the Port Authority<\/a>. Thank you for coming in. Thank you. But it is not the device that is mobile, it is you. Real madrid have about 450 million fans. Were trying to give them all the feeling of being at the stadium. The microsoft cloud gives us the scalability to communicate exactly the content that people want to see. It will help people connect to their passion of living real madrid. No students ever been the king of the campus on day one. But youre armed with a roomy new jansport backpack, a powerful new dell 2in1 laptop, and durable new stellar notebooks, so youre walking the halls with varsity level swagger. Thats what we call that new gear feeling. You left this on the bus. Get it at the place with the experts to get you the right gear. Office depot officemax. Gear up for school. Gear up for great. Coming up, apple ready to unveil new products. Speculation next. Do they still do the one more thing . He does that right . Got to be big . And then later, jeb bush joins us in studio. The republican president ial candidate, big piece in the op ed pages of the wall street journal outlining his tax overhaul plan. Hell talk about his ideas for unleashing growth at 7 40 eastern. The Gillette Mach<\/a> 3 turbo still feels better after 10 shaves than a disposable on its first. Mach 3 blades have twice the coatings. For a closer shave with zero redness. Get an incredible experience shave after shave after shave. Gillette. The best a man can get. At ally bank no branches equals great rates. Its a fact. Kind of like shopping hungry equals overshopping. More data means more freedom to do. Whatever. Thats why at t is giving you 50 more data. Thats 15 gigs of data for the price of 10. Because the more data you have, the better. And right now at at t get 300 credit for every line you switch when you trade in a smartphone and buy any smartphone on at t next. Its a big day for apple as the tech giant expects to unveil some new products. Joins us now ed lee and gene munster. And well obviously both get your ideas about the most earthshattering stuff. Its tough to do this every year. Anything apple, you know, people want to see. But is there anything thats going to have that you know, where you drop your jaw and go, oh my god. Theyre not going to have a blockbuster announcement necessarily today. Its more of the same. Its the iphone 6s. 6s plus. Better camera . Better cameras. Better processors. Essentially the same look and feel. Its what we call the bridge model. Its the model that for those people who didnt upgrade the last time, this is your chance to upgrade. Thats part of this announcement today. Is that enough . Heres whats interesting. Give you a stat. When the 6 came out, about 28 of existing iphone customers upgraded to the 6. Less than a third, basically. So theres a whole lot of room. Theres a universe of people who havent upgraded. This is their chance. So gene, when we talked in the past, talked about the stock maybe being priced for perfection, its no longer there. Price for perfection, maybe. But is this going to be enough in iphone sales to satisfy, to feed the beast on what this companys got to do every quarter from now on to do i mean, those are huge numbers theyve got to do every quarter. Today its probably not going to be enough because it never is enough. Theres one other feature isle throw in there. This force touch that doesnt sound like something thats exciting. Its just a new way to interact with your phone. To answer your question is if they can grab fractional margin share, theyve gained 2 Global Market<\/a> share, but that adds 12 to the numbers. So i think this is going to be an incremental step. As the numbers progress over the next few quarters, it should show some upside to the street numbers which should help investors be more optimistic. Your price target is 178 and that has not changed as the stocks come down, correct . Thats correct. That still hasnt changed. Were still optimistic that this market share story is going to play out over the next few quarters. So market share iphone story too. Thats what it is. Its not ipads. Its not apple tv. And its not theyre not going to have a car, are they . Well, eventually they probably will. Today the other news, obviously, in the Toy Department<\/a> is going to be apple tv. Its going to be for tech people. Its not mainstream. But its still all about the iphone for investors. Gene, real quick, yahoo alibaba. What do you make of that spinoff thats potentially in jeopardy because of this nontax decision by the government at least so far. I mean, the big story in yahoo has been alibaba and at the end of the day is that this is going to force investors to look more at yahoo core which is not exciting. I think the reason were holding onto our outperform rating is the numbers get easier next year. They start to grow their ad business. This is going to shift the pressure back to marissa about what yahoo looks like. Its not about alibaba anymore. Whats the one more thing going to be. With apple . Who knows. I dont think theres no car announcement. Even with the apple tv so its going to be the push thing is going to be the one more thing or a new watch band . I mean, thats going to theyve got to stop doing that. I want the one more thing to be more numbers. I want more details about how things have been doing. That will be nice if they can give us that. All right. Thanks, ed. Gene munster. Got a delay with gene. Thank you. Oh, thats good. Coming up, the short and long of it with jim chanos. He will be joining us on the set with his best ideas straight ahead. Can a business have a mind . A subconscious. A knack for predicting the future. Reflexes faster than the speed of thought. Can a business have a spirit . Can a business have a soul . Can a business be. Alive . Only glucerna has carbsteady, diabetes, steady is exciting. Clinically proven to help minimize blood sugar spikes. So you stay steady ahead. No students ever been the king of the campus on day one. But youre armed with a roomy new jansport backpack, a powerful new dell 2in1 laptop, and durable new stellar notebooks, so youre walking the halls with varsity level swagger. Thats what we call that new gear feeling. You left this on the bus. Get it at the place with the experts to get you the right gear. Office depot officemax. Gear up for school. Gear up for great. Market alert. Japans nikkei jumping nearly 8 overnight. European shares rising and u. S. Equity futures in rally mode. Well get you ready for the opening bell on wall street. Our guest host for the morning, jim chanos. His take on china and energy prices. Plus hell unveil a new short position hes never talked about publicly. And gop president ial candidate jeb bush is here. Well ask him about the next debate, his tax plan, and his appearance on last nights premiere episode of the late show with Stephen Colbert<\/a> as the second hour of squawk box begins right now. Live from the beating heart of business, new york city, 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. Markets in rally mode again today. Im willing to try fourday weeks if this is what will happen. If it will go up on tuesday and wednesday. I think we all are, arent we . Well take every monday off. If it helps the market. But weve got chanos here. He likes it when it goes down. Some men like to watch the world burn. Stocks in asia climbing overnight. Japans nikkei jumped nearly 8 . The hang seng rose by 4 and the shanghai composite was up 2 . In europe, nice numbers there. Piggybacking a little off what we did yesterday and also whats happening in asia. All up between 2 average. And the u. S. Equity futures up 150 points after a session yesterday that accelerated into the close. A couple of times, remember it was up. It was up 390 at the end. Almost on the highs when it was all said and done yesterday. All right. Lets tell you about some of our top stories this morning. United continental replacing the ceo jeff smisek amed a probe. Reports say the government is investigating whether they added from columbia, South Carolina<\/a>, from where david samson happened to have a weekend home. Hed been very upset about the route getting canceled. But the route was reinstated. Then it was abruptly gotten rid of again after samson resigned last year. Following news of a federal probe into a potential conflict of interest, all of this came out. United actually investigated its own had its own investigation laumpbled on this. In the meantime, united announcing the board member and csx chief operating officer oscar munoz coming in immediately. How to get things in order in terms of how they help customers. That stock down about 1. 5 . Well have more on this from a legal expert in a few minutes. Were also watching shares of yahoo this morning. The company may now have to pay taxes on the 23 billion it hopes to get from the planned spinoff of its take in alibaba. Denying the request for the letter on the private ruling on whether it would be considered tax free. The irs has not concluded that the transaction would be taxable, but theres no guarantee and that leaves shareholders in a bit of question about whats happening. Stock is down by close to 3 . Also the wait is almost over for apple fanatics. The company is expected to unveil upgrades to iphone, ipad, and apple tv. The stock has fallen ahead of the announcement. Unusual move. Its the first time its fallen leading up to an iphone launch since the original iphone in 2007. Okay. Weve got the perfect guest to talk about that and a lot more. Mark volatility and devaluations in china sparking global turmoil since june. Shares in the shanghai composite plunged this morning. Our guest was the first to sound the alarm in 2009. Hes joining us for the next two hours, its jim chanos. He is the founder of pimco associates. The largest short selling fund with over 3 billion in assets. Good morning. Good morning. Rome is burning and youre happy about it, i assume. Ill take the fourday week in exchange, i think. I dont think rome is exactly burning. Well, chinas burning. Chinas not burning. Well, heres the question though. Where are we on china in terms of your call originally and where you think things stand now and where you think things will stand 12 months from now. People look at shanghai composite as a barometer of china. Thats the wrong thing to do. I think anybody whos trying to figure out the chinese economy is looking at the wrong thing if theyre looking at stock market. Its leveraged and subject to pronouncements as we know. The fact of the matter is the chinese economy since i was on squawk in february of 2010 was growing at 15 nominal. Its now growing at 5 nominal. Its 7 real, 2 deflation. It has been going down in terms of the economy about 2 a year. I think thats going to continue. The model is broken. And that was the issue weve talked about for five years. This whole idea of statedirected capitalism heavily dependent upon investment. Exports, secondary. No reform despite all the talking heads youve had on and others have had on about moving to a consumer and servicedriven economy. Fact of the matter is the investment still 50 of the economy. And theyre running out of room to borrow. Thats the real problem. The Banking System<\/a> is loaned up. They had to resort to shadow banking and now capital is leaving. Thats the real sort of new story. The other big story is the rise of xi jingping. He is a different animal than the previous two regimes. Chinas not so open for business anymore if youre a western company. China is more muscular and its a different place than it was under previous regimes. In china the politics are as important as the economics. So whats the chance that the Chinese Government<\/a> pulls out of this. Means they figure out a solution. I think that basically people have felt for five years that these guys were despite the problems, they were very smart guys. Were still hearing it. Thats what my point was going to be. You still havent gotten any satisfaction in my mind because the same guys that we parade out and i wont mention any names but that have been on the other side of this the entire time, theyre still saying the same thing. All right, 7 . But this is going to be the low. And now theyre going to learn how to do it. Have you made as much money you deserve to make on this . It hasnt happened yet. The final the end is still coming. I mean, if you look at some of the things weve been short, its worked out just fine. My point is that the system is still in the process of unraveling in slow motion. Whats the end game . Thats what i mean. What does a complete unravel look like in china . Its not going to be good for us. Its a credit event. And basically the credit event is still to come. Stock market boom and bust. The Property Market<\/a> is still sputtering along. But the key is that the debt is still growing two to three x times the economy each year. In terms of what it means for us back here in the United States<\/a>, theyve been a big lender to us in terms of buying. Is that over . Thats been over for years. They havent been a net buyer for years. And of course now people are worried theyre a net seller because of reserves, but the treasure market is the biggest, deepest market in the world. There will be buyers. So it doesnt matter . I dont think it matters. Were the country least affected by whats happening in china. Ive said that all along. Whos the most affected . Certainly trading partners in asia, korea, japan, and of course the commodity exporters. Australia, canada, brazil. Whats the systemic event . One of the worries we always had is they would lose control of the current si. Thats why the markets took a sputter in august. When they make a ab announcement nast a change, you have to pay attention. Even if they back track on it. They did not do that lightly when they had the press conference and said now were going to start devaluing. Of course the market immediately began to run away from them and they back tracked on it a couple days later. But thats a change in policy. And now anybody thats Holding Assets<\/a> in china, particularly crossborder, is worried. Because one of the biggest trades globally was to borrow in dollars hong kong dollars or singaporean dollars, buy in china shadow banking paper, Wealth Management<\/a> products. Leverage it and plus you had had the currency. Now its going in reverse. Broader question. Lets just bring in europe and the u. S. To this. U. S. Equity markets, were all trying to understand whats going on. Most your hedge fund friends, colleagues, rivals, what have you, had had a really tough last couple of months. Thus far had a tough year. This has been a good years for you given youre in the short business. Right. How long does this go on . Warren buffett doesnt think the worlds coming to an end. I dont either. But sort of where are we . Well, look. Markets shockingly every once in awhile do go down for a few months. That happens. I know that people think its the end of the world, but it really isnt. You know, markets fluctuate. Weve gotten so used to since 2009 this constant move with volatility. That when you have a correction, you used to have one every year. People think meteors are falling from the sky and looking for an aspect k to it. It happens. Longterm youre probably 20 years bullish on china, arent you . Whats that . As a country i think china is going to be around for a long, long time. Okay. So you got factories where people are still employed and they got to stay employed and no ones using them anymore. And buildings no ones living in. So youve got all the over capacity. But you still have the strength of 1. 4 billion hard working people who want to succeed. Sooner or later it seems the capacity gets soaked up and they start moving forward again. I would think at some point, the credit event is still ahead of them. Do people get laid off . No one have a job at some point . No, but i think you could have a long, long period of very low or little growth. Of the economy where no one recognizes a bad debt. The state stands behind everything. But consequently theres so much overcapacity. So theres no guarantee that youre going to financially prosper from this particularly if youre outside of china. Jim, you said that corrections happen. We should get used to them. But when you see Something Like<\/a> this happen, were already out of correction territory based on yesterdays gain. See how quick it was . It was very quick, but did you take off your shorts based on this or move money around in other locations . Were always short for our clients. Were basically an Insurance Company<\/a> as i told you. So weve covered certain things that have gone down a lot. Weve added new positions. Were constantly trading positions. We have a core portfolio. Jim chanos. Hes going to be with us for the rest of the show. And then were going to unveil a new short position hes never talked about publicly. Stay tuned for that. Also still to come this morning, jeff smisek is stepping down in connection with a federal probe. We will discuss the legal implications. Plus jeb bush will join us right here on the squawk set. He is unb vailing a new tax policy plan one week ahead of the next debate. Stick around. Squawk box will be right back. At ally bank no branches equals great rates. Its a fact. Kind of like mute buttons equal danger. That sound good . Not being on this phone call sounds good. Its not muted. Was that you jason . It was geoffrey it was jason. It couldve been brenda. Hey hi our cloud its a platform based on awesomeization really . Can it keep our data where it needs to be no matter what country were in . Integrate with our systems to help keep transactions secure . Combine Customer Data<\/a> with likes, tweets, the weather, to predict trends . That would be awesome. Tote . Now theres a cloud that understands business. Now theres the ibm cloud. Welcome back to squawk box, everybody. If you are just waking up, the futures looking strong once again this morning. Youre looking at those dow futures up close to 150 points after a gain of almost 400 points yesterday. You can see now the s p futures are up close to 18 points and the nasdaq up by about 45. Instagram opening up its platform to most advertisers worldwide today. Before now ads were only available in eight countries. Facebook has 300 million monthly active users. Plus faster mobile internet is coming sooner than expected. Verizon announcing theyre going to begin field trials of 5g wireless in the next year. Could role out to customers 2017. 5g speeds expected to be five times faster than 4g and more power efficient. Very cool. Coming up, gop president ial candidate jeb bush is here. Were going to ask him about his new tax plan and next weeks debate. As we head to a break, heres a look at jeb bush channelling donald trump for the late show with Stephen Colbert<\/a>. I will build a wall between the United States<\/a> and iran and make mexico pay for it. Trucks are strong. I will turn the National Mall<\/a> into a luxury golf course and china will respect that. I promise to muput meatloaf on e 10 bill. Eeep breath in. And. Exhale. Aflac and a gentle wavelike motion. Ahhh ahhhhhh. Liberate your spine. Ahhhahhhhhh. Aflac and reach, toes blossoming. Not that great at yoga. Yeah, but when i slipped a disk he paid my claim in just one day. Ahh so he had your back . Yep. In just one day, we approve and pay. One day pay, only from aflac. [duck snoring] when youre not confident your companys data is secure, the possibility of a breach can quickly become the only thing you think about. Thats where at t can help. At at t we monitor our Network Traffic<\/a> so we can see things others cant. Mitigating risks across your business. Leaving you free to focus on what matters most. Prge a manufacturer. Well thats why i dug this out for you. Its your grandpappys hammer and he would have wanted you to have it. It meant a lot to him. Yes, ge makes powerful machines. But ill be writing the code that will allow those machines to share information with each other. Ill be changing the way the world works. interrupting you cant pick it up, can you . Go ahead. He cant lift the hammer. Its okay though youre going to change the world. Welcome back. Layoffs at lockheed martin, Company Planning<\/a> to cut 500 jobs in Information Systems<\/a> and Government Services<\/a> division. Thats according to a reuters report. Lockheed is planning to sell or spin off that Division Later<\/a> this year. The layoffs are expected to be completed by midnovember. The u. S. Futures Trading Commission<\/a> deciding whether Jpmorgan Chase<\/a> thats according to a report in the wall street journal. The cftc probe claims they owned capital management. Also netflix is following its debut in china with plans to expand its service in asia. The expansion is expected early next year. Also exploring for expansion into china. United continental ceo jeff smisek stepping down. Joining us now is jacob frankel. Jacob, whats this whole thing smell like to you . Well, clearly the company is doing the right thing. They connected an investigation and in terms of what statutes we might be looking at, it brings back thoughts of jeffrey skilling. Because on statute which is part of the mail and wire fraud statute has been used to investigate and prosecute state or local officials. So it seems like that is really the guts of the investigation. But i really have seen statutes available in play here. We dont know the details. One is on a Services Fraud<\/a>. Another is fraud using federal Program Funds<\/a> which has also been used to charge cases where theres this air of bribery. And the other is the travel act. But a long way to go. But where we are right now is the stage of the corporation doing the investigation which is the proper thing and quality corporations when Senior Executives<\/a>, we talked about this many times over many years. When quality corporations have Senior Executives<\/a> who were caught up in some set of allocations. Now corporate discipline requires that they remove themselves or be removed from those positions of leadership. You mentioned skillings name. That certainly got the attention of jim chanos who uncovered the enron scandal. Remember, skilling was skilling conrad black and the third case was often forgotten as part of that triple header at the Supreme Court<\/a>. Was a lawyer from alaska who was also in the state legislature. I dont want to say similar, but those three were all affected. Thats where the Supreme Court<\/a> said on a service and fraud prosecution there needs to be a bribe or a kickback. I think thats really the guts of this investigation. But honestly, what theyre talking about here, i cant believe that things like this would still be taking place in the United States<\/a> at this point in time. We knew that this used to happen 30 years ago. We suspect it happens all the time in foreign countries. To hear that an official in order to go ahead and give them the things they need to do at Newark Airport<\/a> wants an entire flight line reinstated so he can get to his summer home on time . Thats got to be beyond the pail. The case involving the governor of virginia too but were talking about things of value. The traditional bribe which is money is something we dont see much. The most high profile case of that was congressman jefferson from louisiana with the dollars in the freezer. But the more traditional issue in the United States<\/a> over many years has been something of value and really the government trying to figure out whether and now particularly with the way the Supreme Court<\/a> reinterpreted on a Services Fraud<\/a>. The issue of is there something of value. Was there a quid pro quo or was there a kickback . I want to understand the criminal liability for jeff smisek if there is criminal liability. Correct. If. If. No, no. But just what would they have to prove and what would be the possible defense . Well, the defense would simply be this is part of you know, this was a bona fide corporate need and there really was no quid pro quo. We had been lobbying for this for a long time. That there was a business logic to reinserting this, you know, this route into uniteds route system. And what the government needs to prove in which ever of the cases whether its travel act on a Services Fraud<\/a> or federal Program Funds<\/a> fraud which has the bribery component to it as well. And i digress for a moment. Thats a violation of state law. What were really talking about when were talking about with these three sktatutes what might be a state driven defense. As i mentioned before, Public Officials<\/a> from the state municipalities and liquor boards. I wrote an article about this years ago. But the fundamental issue that has been to be proven, back to your question, andrew, is there was criminal intent here. That there was something of value that was given in exchange for an official act or expectation of an official act. Do you think united is going to be paying everybodys legal bills given how the setup so far in terms of all the benefits that seem to have gone to these executives that are still leaving . In these structures there is indemnification, corporate officials. I will say yes because this is still the investigation stage. Jacob, thank you. Thank you. Coming up, guest host jim chanos is going to unveil a new short position that he hasnt previously discussed. Hes going against some major Hedge Fund Players<\/a>. Well unveil that position right after the break. Welcome back to squawk box here on c first in business worldwide. Tivo shares getting a bump right now. Results helped by higher subscriptions. Also macys planning to close 45 underperforming stores. And the wall street journal reporting that the ftc is now stepping up its antitrust review of the Staples Office<\/a> depot merger. The request for sworn statements could signal a possible lawsuit against that deal. All morning long weve been telling you about a new short position that jim chanos will unveil this morning live on squawk box. Well find out which company hes talking about right now. This is a company in the lng arena. A company that carl icahn announced hes taken an 8 stake in. Becky, were shinear is the company. But its a u. S. Developer of lng plants. But weve been pretty negative in this space. We think its a looming disaster. Why . Well, its tied into asia. It was seen as a lot of natural gas plays a way to basically satiate the demand for energy out of asia. The problem is that everybody figured this out much like iron ore at the same time. Everybody is convinced building these huge lng plants which are immensely expensive, many of them in australia and pacific rim. The problem is that lng demand isnt growing anymore. And we already have excess kpacht. Were about to double the capacity in the next four years. Weve seen this movie before. This time its going to be coupled with incredibly expensive giant plants basically with debt attached to them. Lng has been seen as a unique animal because its going to be u. S. Based. Theyre opening their paths later this year and it was a way in which cheaper gas, u. S. Gas could be used as a feed stock. And lng went out and got longterm contracts, 20year contracts from a number of buyers. It was seen as a safe play, this lng boom. The problem is it only covered about 80 of their outlook. More importantly if you do the numbers the company has given you, 2. 2 billion many years in the future of so called ebida. Depreciates over 30 years. 30 20 billion will be invested in this things. And pay interest on the debt. Youve got about 2 a share on earnings. Stock is near 60. For a company that doesnt have profits yet. And is losing lots of money and is in effect a commodity business. Two interesting things. China has tried to actually now begin renegotiating certain take or pay contracts in asia. More interestingly, the government which was the largest from a supplier point of view is willing to renegotiate longterm take or pay contracts with customers. So the whole idea that its in a declining commodity environment i think is going to be under a lot of pressure. Having said all that, with the stock at 30 times 2020 earnings with the upside coming from a glutted market, we think the risk reward on this given where other lng plays are in australia and elsewhere is completely out of whack with other places. This is a commodity. I assume you were building the short position before icahn revealed. That, i dont know. We might have krosed a few trades. I dont know. He Just Announced<\/a> this a month ago. When did you land on this . How did you land on this . Landed on cheniere, and the amount of capacity coming out over the weekend came out sounding the warning on lng saying this glut is coming. The problem with these plants is they take years to build. Once you start constructing them, they have to come online. Its not like shale gas where you turn it on and off. So this is really something that is going to be hitting over 2016, 17, 18 no matter what happens. And i think thats the real problem. As i learned a long time ago building a house, theres no such thing as a fixed price contract. Theres ways in which buyers can get around. Part of what carl icahn wanted to say was lets return some money to shareholders or get some value back to shareholders. Theyre going to need every penny they can get. Given what e the hydrocarbon collapse in price, i mean, do e renewable represent theres got to be something where the story has gotten ahead of the ability to make any money. Isnt there . Yeah. Theres probably a couple where i think the renewables are a little silly. I know theres one company that is being promoted by a certain guy whos got an electric car. Sfl is it a great mens aftershave you cant have too much of . Yeah . Weve talked about solar city and the solar city ceo got quite upset i called his company in effect a subprime company. He came back on later that day on cnbc and said no our fico scores are this and that. Some of those agents have subprime credits but my point was hes a Financing Company<\/a> and he admitted that. And people think of solar city as a hightech company. No. Its akin to people going door to door selling aluminum siding. I got a call yesterday. I get this call every day. Subsidies. You can get them for free or something. Which is what it is. And the coe knitted it. Its a different dynamic. And hes not competing with you till tis. Hes competing with other solar companies. Thats where solar city is out of whack. Because you think theyre out of whack in terms of their pricing. Yes. Exactly. You think thats going to catch up to them. Commodity business. Why hasnt why havent people figured that out then . Because its aggressively sold door to door. But why is that a bad business if they continue to do it . Ultimately people will decide they have choices. A lot of it is doing they keep the itc because they own the panels. Thats going away. But thats going away. To allow the consumer to keep the itc. Having said all that, it doesnt deserve a crazy multiple. Its a finance company as the ceo admitted. You dont have a roof. I mean, youre dying to put up some panels somewhere. Can you put one on like your n window and recharge your iphone or electronics with it . Theres nowhere to put your solar stuff. On the plaza. You cant act on your greenness to the extent youd like. You have to move to the burbs. The twins dont care about takeout chinese. They dont care about that. Anyway, jim chanos short he just revealed cheniere. Isnt it more cosmo if you say cheni. Coming up, jeb bush is here and hes unveiling the new plan he has for taxes that has a prominent position in the wall street journal opinion page today. Among the highlights, lower taxes, get rid of loopholes, and keep america competitive. And a programming note, dont miss david tepper. He had a tepper rally. How about a tapper tantrum. That could be a that imto him. Exclusive tomorrow at 8 00 eastern only on squawk box. I say we go all in on the internet. Of things. What were recommending as your consultants. The new consultants are here. Its not just big data. Its bigger data. Were beta testing the new wearable interface. Xerox believes finding the right solution shouldnt be so much work. By engineering a better way for people, process and technology to Work Together<\/a>. Work can work better. With xerox. Can a a subconscious. Mind . A knack for predicting the future. Reflexes faster than the speed of thought. Can a business have a spirit . Can a business have a soul . Can a business be. Alive . Jeb bush. This was last night making an appearance on the premiere episode of the late show with Stephen Colbert<\/a>. Were one week away from the next president ial debate. This morning governor bush is rolling out his new tax plan here with us on set to talk about it. Jeb bush, former governor of florida. Great to have you on set. Thank you, joe. Thanks for joining us. Andrew, becky. Great to see you. Nice to have the journal put knit a prominent position. Not everyone has seen it though. Summarize the key points. I think we need a grow at a far faster rate than today. 2 is fine for people who already made it. But its putting a lid on peoples aspirations. More People Living<\/a> in poverty than the day president obama got elected. First ae foremost, dramatic reform of our tax code. What we proposed is simplifying the rates. Expanding, doubling the exclusion so many low income earnings wont pay taxes at all. Simplifying the code to put a cap on deductions because theres thousands and thousands of these credits and deductions that i think create the kind of environment Everything Else<\/a> would be part of the cap. We would eliminate state and local exemptions of taxes. And so that system for personal taxes will create an environment where people will save more. All people will get a tax kuts of some kind. The dramatic economic effects i think are reducing the tax rate from 35 to 20 for Corporate Tax<\/a>es. And allowing for full expensing of all Capital Investment<\/a> and eliminating the deduction for interest expense. Mortgages. No. For capital for corporate borrowing. And Capital Gains<\/a> . Capital gains goes to 20 . We eliminate the obamacare tax. So all investment would be taxed at 20 interest income, dividends. Capital gains. And we would have a 20 Corporate Tax<\/a>es as well. And then overseas profits. We eliminate worldwide taxation. And bring it back at a over ten years at 8. 5 or something . 8. 75 pr . Will that work for you, andrew . Or will that be a solution this seems like a no brainer. This is the existential question. Whether people will bring it back and what rate. Well, were taxing it. Our proposal is it will be taxed whether it comes back or not. Because it is a form of a tax liability. But going forward, thered be no taxes. Which is i think what every other country in the world has. A 20 rate when fully investing in growth is going to create more growth. Well create the opposite of what we have today. Well have whatever im not sure what you call a reinversion, weal call whatever it is if we can fix how we regulate e, embrace the revolution if in the long haul, this will be an opportunity to reindustrialize the country. We need to create higher wanls and this plan would do it. This would stimulate higher growth. Combined with other initiatives. You could get to 4 growth. So you get to 3. 75 , fine. Would you get this through if the next election changes and its not a Republican Congress<\/a> . In the congress we have today nothing gets done. They cant pass a budget. They pass a budget, the republicans did that. But the president has threatened any appropriations bill any deduction you get rid of, someone is going to squeal. On the personal side, do you get rid of the Home Mortgage<\/a> . We put a cap on. So for lower income americans, they get a bigger deduction proportionately. It would be capped. The other approach wuss to get rid of all of these things and to have the big fight youre describing. I think you still have the fight either way. I dont know. Well see. I think when you see the lower rates, thats the tradeoff. Simplicity. Therell be 13 million filers of the long form instead of 47 many l. Theres a lot of benefits of this. To the extent you wanted to benefit the middle class and have even talked about doing that t a the expense of the wealthy with, how do you think this addressing that . Because organizebly by bringing down the tax at the highest and the way you have, they will be great beneficiaries of this if not more so. Everybody will benefit from it and well create higher growth. There is a dynamic effect of taxation. Those who think we statically score this, theyre just wrong. That is ludicrous. People make big Investment Decisions<\/a> based on tax policies around the world. A simplified code would create activity for sure. In our case in this proposal, people from the top 10 , the top 5 , top 1 will end up paying more than they pay today. Thats going to be the pushback. I already saw it. Of course it is. And they are they will not grant you that theres a dynamic aspect of this. Theyre wrong. They wont allow you to add any growth into whether this is revenue neutral or not. Theyll say its not. Of course. Would you cut some stuff . Absolutely. This is part of a strategy to create Economic Growth<\/a> will generate revenue for the government. Growing for an extended period of time. And we need to cut spending. And we need to deal with entitlement issues that are going to be the outyear costs that people are legitimately concerned about. Are you going to write another oped or have another plan for regulation as an issue . Yes. Weve got im blessed with a lot of really smart people who are helping me with this. Im running a policyoriented campaign. Im not going stob the loudest voice out there and not going to try to disparage and insult people. Were going to come up with plans that give people hope. That coming in question of the campaign. Youre having a thoughtful discussion. But how do you get that to break through . By coming on squawk box. Every question is not going to begin with a t. But that is the question in this environment where there is an element of trying to just get the electorate excited and interested about what youre doing opposed to even having a thoughtful dialogue about it. Youve got to put in context that people understand. Theres this new Thing Called Television<\/a> advertising will be part of this. And youve got to stick with it. Youve got to stick with it. If people want someone who disparages everybody and thats their version of a sign of strength, then im not going to be elected president. But if they want somebody who has the leadership skills to change the culture in washington, im interrupter. Thats what i did when i was governor of florida. We cut taxes every year. I balanced state budgets. When i left there were 9 billion of reserves. I whacked the budget all over the place. If it wasnt part of a disciplined approach, i used the power of the executive to change the course of how we want about things in tallahassee. Things are stuff in washington. If you come in and say its going to be my way or the highway and youre going to argue with me about whether this generates growth. You know that 50 of the people there are going to think it doesnt change growth. Is there room for something to say were going to get the rest of this passed. Of course there is. Campaigns are about aspirations. Governing is about finding solutions. And you can be principled and actually have a dialogue with someone who doesnt agree with you. Last night on the interview with colbert i said we havent im going to pause. But i think hes wrong. The fact is you dont have to scribe bad motives to someone. The moment you do that, you create camps in washington. The apart from the culture of this huge government thats inept and incompetent, youll have a conversation with someone about Cyber Security<\/a> next. Can you imagine a country like ours allowing the Chinese Government<\/a> to hack into the office of personnel management. This is an outrage of sheer incompetence. Bringing those to washington is important. But you dont have to push someone down to make youfrs look better. When you think about the motive issue. Trump has raised the first that was the first time it was mentioned. I knew you were hed say hillary is owned by the special interests. Look at the superpac and say theres individuals getting a Million Dollars<\/a> each. Look at my tax plan. We eliminate carried interest. And whats the response been . I thought that would be your first question. You gave him kudos. Im looking for the Investment Bankers<\/a> jumping out of buildings. Youre also going to eliminate the private equity business. If youre not going to allow interest, governor, if you buy a company if you buy a company, would you disallow the deduction of interest on that . Yeah. I think we need to move to i might send you a check myself. Because this sounds great. This is a radical departure. It is. Investing in hard assets. Were rewarding main street. Were not penalizing wall street. But right now wall streets done had a pretty good ride here engineering and using great skills to make american businesses the most come ppetit in the world. People are stuck in the middle and the Poverty Level<\/a> is increased during this time of great transfer of payments to people in poverty. We need to move to a completely different direction. Could you imagine a country that would have the lowest tax rate in the world and where youre rewarding investing in a factory. 100 deduction. And youre from rewarding equity. Thats what we need. And the wall street dguys will e fine. Theyll look for high growth for the middle class and for everybody. So thats my answer. What would be yours, andrew . Maybe youll write a nice column about it. My view is in carried interest. Kudos to you on that in a big way. Hes right. It will change if people invest, put money, put skin in the game and are investing in the proposition theyre doing, then theyll get treated the same way as other investors. You would get democratic votes on this plan, i think. Im expecting to get republican votes first. So reince priebus, i thought this primary season the mistakes of the last one werent you know, that someone wasnt going to give the democrats all the ammunition in the general election. But things dont work out as they are planned. If the last one was a circus, what is this . This is like the ringling brothers circus. Theres a crackup in our political system. Both on the left and right. People are genuinely upset and angry about the dysfunction in washington, d. C. So i disassociate legitimate angst and anger from candidates that are praying on that angst and anger. No one is going stob elected by calling people an idiot. Thats not going to work. But were going to have to fight it out. I intend to fight it out. I believe in limited government and personal responsibility and individual freedom and all these things that have created the greatness of our country. Im not going to let that be tarnished by people that come in and disparage these deeply held beliefs. When Elizabeth Warren<\/a> yesterday i almost spit up my diet coke. She applauded donald trump for his tax policies. I mean, come on. This is alice in wonderland time here. So as the world gets turned upside down temporarily, we need was there actually a tortoise and a hare . Did that actually happen . Some say that did happen. Its a great story. And in a perfect world, thats the way it works. Stick to your principles. But in a social media world where youve got to make a splash, i dont know if it eventually rises to the top. I dont know. Hang in there. Were going to find out. Yeah. You seem joyful to me. I am joyful. When im talking about ideas that matter to people, thats why im aspiring to be president. This is important. Well, and its important that we have great viewers, obviously, that want to hear substantive stuff. So thats why you have a place here wherever you want. Come back on the regulatory plan next month. Thank you. Im writing that down. Thanks to governor jeb bush. With an exclamation point. Thank you for the conversation. Coming up next guest host jim chanos is going to be joined by the head of fire eye. Were going to talk about the future of the threat from china. That and more. Were back in a moment. So youre a Small Business<\/a> expert from at t . Yeah, give me a problem and ive got the solution. Well, we have 30 years of customer records. Our cloud can keep them safe and accessible anywhere. My drivers dont have time to fill out forms. Tablets. Keep it all digital. Were looking to double our deliveries. Our fleet apps will find the fastest route. Oh, and your boysenberry apple scones smell about done. Ahh, youre good. I like to bake. Add new Business Services<\/a> with at t and get up to 500 in total savings. Dentist appointment when my teeth are ready . Can it tell the doctor how long you have to wear this thing . Can it tell the Flight Attendant<\/a> to please not wake me this time . The answer is yes, it can. So, the question your customers are really asking is, can your business deliver . 20 years of power, money, and mayhem. You know, tailgating. 20 years of unprecedented access. Who are you wearing . And 20 years of bringing wall street to main street. Do you want people to be able to try to noncorrelate a portfolio to normal risk. Now its time for the next 20. Todays conversation, cybersecurity china and an indepth look at how corporate american governments are dealing with the threats and the back actors behind them. We are joined by the leading Security Firm<\/a> for fortune 500 companies and a man whos been sounding the alarm about cyber es pea joj. David dewalt ceo of fire eye. A special edition of squawk box conversations for the next 20 years starts right now. Live from the most powerful city in the world, new york, this is squawk box. Were back. Never mind. Wheres andrew . Hes over there. Welcome back to squawk box. Im joe kernen along with becky quick. I thought it was over. Its not. We have important things to do, obviously. Sorry, david. Big interview of the 8 00. Chanos is still here in studio this morning for the 20th anniversary conversation. Kynikos associated founder jim chanos. It was like you saw god or something. You like the idea of getting rid of the interest deduction. You think democrats could go for that . I think some could, yeah. I think actually simplifying the tax code, reducing deductions and focusing on equity, not debt. You talk of this as i think theyre going to try to shoot this one down. It guts a few industries. We didnt have time to talk about everything, but it is a bright spot in the economy from time to time. As is actually some of the other wall streetrelated industries. Thats been one of the arguments. Is thats working. Why mess with that when its something we lead the world in . Does that concern you . Most hedge funds. Fair isnt a word you can use. This isnt an issue for most hedge funds. Carried interest is a way to turn in effect fee income into Capital Gains<\/a>. Wouldnt it affect law firms, architectural firms . No . Mostly private equity and to a lesser extent real estate and oil and gas. It avkts the Hedge Fund Industry<\/a> least. Did you endorse it . The Vice President<\/a> is a friend of mine and im hoping he runs. Youre hoping he runs. But you still might vote for this plan. Well, i think that his plan is interesting. And i think its keep an open mind. As an american citizen i think its interesting. It may have a lot to it. Well see. Even andrew. Andrew, you know, he got you at hello with the carried interest. And then he even extended that with you. You know, ive been an advocate for getting back far long time. He may get a column out of it. Life would be complete if you wrote a column. He may get a column. I told him not to hold his breath. It takes courage to do that. We talked about all the money hes getting. Its going to be an interesting good thing he already raised it. All right. Lets tell you whats going on in terms of the headlines. Check out this futures at this hour. Looking at a higher open. Dow would open 150 points. Nasdaq up about 45 points. Warren buffett sharing his thoughts on the recent market volatility saying hes confident markets will be considerably higher. Heres what he told becky yesterday. Im no good on whats going on in markets. I have no idea what will happen tomorrow or next week. Sometimes they get very volatile like this and other times you get to sleep. Im confident theyll be considerably higher in ten years. I really have no idea where theyll be in ten days or ten months. We have a couple corporate headlines this morning. Yahoo may have to pay taxes on the 23 billion they plan to get from the stake in alibaba. Denying the request for a private letter ruling on whether the spinoff would be considered tax free. Can still go ahead with it but then it has to wait for the government to tell it it did not get an advance on putting that rule in jeopardy. Also apples big event coming up this afternoon. Expect iphone upgrades, new operating system, bigger ipad, and ways to block online ads. Apple shares are down about 14 since its Earnings Report<\/a> back in july. Weve got a lot more on apples event in just a couple of minutes. Then the buzz story of the morning. United continental replacing ceo jeff smisek. Added a direct flight from newark to columbia, South Carolina<\/a>, where former Port Authority<\/a> chairman david samson has a home. Route was canceled after samson resigned from the Port Authority<\/a> early last year due to an unrelated federal probe. United is now announcing oscar munoz is going to become the coo immediately. They called that flight the chairmans flight. Shares of united right now are about 57. Becky, over to you. Thank you. Right now it is time for a special squawk conversation for the next 20 years. Sanctions against Chinese Companies<\/a> accused of prophetipr from the digital theft could come as early as next week. That would be ahead of xi jingpings visit to washington. Thats raising a lot of eyeballs. Right now what corporations could be facing the next 20 years, we are joined by the ceo of fire eye. His Security Firm<\/a>s customers include 600plus fortune 500 companies. Also with us this morning is jim chanos. He has over 3 billion in assets under management and famously sounded the alarm on the scandal that befell enron. Gentlemen, again, thank you to both of you. I think the biggest question is how frequently we have started to see these attacks. How youre talking about millions of americans personal information being compromised in these situations. The idea that nation states are behind this more and more frequently. It is. Weve seen nation state activity for well over a decade now. And of course we havent seen that at all. In fact, if anything, weve seen it increase. We tracked with just within chinese military. Basically stealing from american western world countries. Were watching the russian state activities now all over the world. Its kind of a major chess game and cyber space is in the middle of that with no end in sight. What how are corporations supposed to protect themselves from competing against a country thats actually sending its resources to try and break into your system . Its not easy. I think this is one of the Biggest Challenges<\/a> corporations face today. If you have a lot of intellectual property or financial assets, youre probably a target. This is the reality. We think the Security Breaches<\/a> are inevitable and we need government help. Obviously the sanctions against russia and potential sanctions against china are really just a small step guard to what probably needs to get done. We need a lot more diplomatic relationships to stop this or else military against commercial operations is an unfair fight. Youre talking about the chinese doing things like this. I guess they all have their own footprint in terms of what theyre trying to do. Yeah. Theres a lot of different motives. China, no surprise there. A lot of state owned funding using cyber activity to fuel that economic interest. Russian activity is much more for financial gain. Syria and iranian for terroristic type purposes. And now north korea with sony as well. When you think about this back and forth war that seems to be going on in cyber land, would you ever tell a corporation effectively not only to put up gates but either to try to attack back in some way even as a defense mechanism. Whoost really going on behind the scenes . You hear more and more about not just a Protection Element<\/a> on our side, if you will, if youre protecting a u. S. Corporation. But maybe even having to launch your own attack against the attacker. We dont. I mean, andrew, i dont think thats a strategy or a philosophy that will work well when youre up to the military might of china or russia. Youre only asking for more response when you do that. So its going to take cooperation and teamwork. This is a lot of relationships amongst corporations to work back together. We now have formed a lot of communities that can really put a deterrent back in place. Critical services has them. Government has to Work Together<\/a> with Public Sector<\/a> and private sector and we need to be able to resolve this. Do you work with nonu. S. Companies, by the way . Of course. We do work with companies that need to be protected in china. Mostly western World Companies<\/a> doing business in china. Same with russia. And our goal is to protect anybody globally who needs help. Jim, youre a short seller, but youre long this industry because you think its a growth industry. Its one of the few areas were long the industry in our hedge fund. David, at what point do you think b that these actions by state actors have literally crossed the boundaries into acts of war . We have xi jingping visiting washington in a couple of weeks, what would your answer be to that question . My answer is weve already crossed that line. I think what we watch every day is massive military operations stealing from corporations. Even disrupting them. Iranians activities, north koreas attempts to wipe not only soernny but other companies is across the line so we need more than just diplomatic Relations Just<\/a> to solve this. Sometimes a response is required or whats a kinetic response . Some sort of physical response. Some sort of activity that helps us. You know, say this is a deterrent thats required. Again, my view, we have to take a much more aggressive stance. Should we be rolling out the red carp it and having the premiere at the white house. I think its the right strategy to be honest. We have to peacefully resolve this. President obama last year had his summit in stanford which is a great step trying to educate. And part of this is naivete at times on what the problem is. And ultimately we need peace. How far the government ranks how the Cyber Attacks<\/a> are being orchestrated . In which area chinese. Chinese, for example. I believe cyber is a new domain. Whenever we see land, air, space, and now cyberspace. Almost every country in the world is using those domains to their advantage one way or another depending what their missions might be. Of course were seeing that. If we dont resolve peacefully what its about, its heading for some challenges that i worry about. You think theres a policy from the premier on town from around the Cyber Attacks<\/a>. We published a report, my Service Group<\/a> called mandate reported. We though unit 61398 operating out of shanghai is a big operation. You know, we track them. We know who they are. Its a injure operation funded by military. Do you honestly not think its being approved by the highest level of Chinese Government<\/a> . I suspect it is but im trying to understand how high it goes. We believe so, obviously. But i dont have a direct tie to say thats the case. But you can see these Major Military<\/a> operations seem like they have the support from the top. Of course i think weve got a big challenge in front of us to take steps to resolve it. 20 years from now, what has to happen in order to make sure you guarantee our safety not only of our consumers but also our corporations . What are the three most important things that have to happen . Think about the physical world with viruses and disease. We have World Health Organization<\/a> operations, we need something cyber. We need an independent body to help regulate cyber space in a way thats very controlling. And if we dont do that, one nation is always going to have a mode operandi. And so were in the very early innings and stages of this. We probably have to evolve quickly. Now were seeing rogue nation states begin to get weaponry and begin to get activity that can put Destructive Forces<\/a> into place. So, you know, times now. And i think the meetings that are coming up with the chinese Prime Minister<\/a> as well as the american is important to do. Dave, thank you for joining us today. Thank you. You have a lot of water stored somewhere in a bunker . I mean, seriously. This is scarier to me than i mean, the grid. What are we going to do without the grid . We had a couple weeks where we couldnt get gasoline, electricity was off because of gasoline. And i saw things that were scary. If it was six months without the grid, i dont know i dont want to be ominous either. I think weve got to keep improving. We do get a front line seat to this. We help companies all over the world. The company has been growing. I think we can solve an important area, but its not easy. And, you know, hopefully dont forget the can opener. You can have all this beans and then you forget to rocks. Break them open. Break them open. Youre screwed. What am i going snood. Just write you off. Chanos you probably own an island somewhere. Jim chanos is staying with us for the rest of the hour. When we come back, apple fans are gearing up for a big event this afternoon. And the rush to be first on line its already begun. Pictures on twitter are already popping up of campers in front of apple stores. Well talk product bloomers later on. And tomorrow a special guest Appaloosa Management<\/a> founder and ceo david tepper will be joining us. Well ask him what he thinks its going on a week ahead of the feds decision. Squawk box will be right back. Good. Very good. You see something moving off the shelves and your first thought is to investigate the company. You are type e. Yes, Investment Opportunities<\/a> can be anywhere. Or not. But you know the difference. E trades bar code scanner. Shorten the distance between intuition and action. E trade opportunity is everywhere. On the internet. Of things. What were recommending as your consultants. The new consultants are here. Its not just big data. Its bigger data. Were beta testing the new wearable interface. Xerox believes finding the right solution shouldnt be so much work. By engineering a better way for people, process and technology to Work Together<\/a>. Work can work better. With xerox. Welcome back, everybody. Apple expected to announce upgrades to the iphone. Plus theres talk of a new television offering and ipad enhancement. It happens a few short hours from now. Our jon fortt is there for the party. Good Early Morning<\/a> to you. Things starting early today. Yes, they are. Good morning. And i tell you, this is a little bit unusual for apple in recent years in that usually they reserve this september event just for iphone news but were expected to get news on more than just the iphone. The iphone b is the big moneymaker. Were expecting iphone 6s, 6s plus. May be named that or something else. Force touch. You got that in the watch. Actually feels like theres depth when you touch on the phone. That should open up new interface possibilities as far as how you interact with the phone. Also a new frontfacing camera to help our inner narcissism to take higher resolution selfies. And a stronger aluminum in the body itself. Not that bendgate was a real issue, but these should be harder to bend. Were expecting an upgraded box on apple tv. Perhaps playing games with an app store, a new remote. Perhaps you can speak to using siri. Then on the ipad front, a larger ipad thats able to have a couple of full size apps running side by side for multitasking. These will be more expensive but apples trying to figure out how to revive ipad sales after those have been down for a couple of years now. The unknown here, though, is how customers will react to price. Carriers have changed the way they sell smartphones recently. Theyre off of the subsidizing them up front. This could benefit apple actually. Theyve got a number of legacy ios users they want to upgrade. Thats the biggest thing. The cherry on top, to get other manufacturers to switch over to ios. Theyve been succeeding with that in this cycle. Samsung has the curvy new phones, theyre going to try to keep apple from doing that. What time does tim cook take the stage today . Your time it should be 1 00 p. M. Thats the standard time they usually do these things. Tim cook takes the stage. We expect to see the phones at the end of this month if they do things as they usually do. Jon, thank you. Well be watching. Our guest host today jim chanos has been bullish on apple. Maybe its better to say youre bullish on apple but really using it as a hedge against something you doipt like, which is hewlettpackard. Were short the pc chain. Were looking for ways to be hedged in our fund. App sl an easy way to do that. Its cheaper to do that. If you like hewlettpackard, you have to love apple or vice versa. What do you think about the tumble over the last month or so . Theres been chaos in the stock. In apple . In apple. Yeah. Its a socalled hedge fund hotel. I guess ive checked into the hotel too. But like anything, expectations like with any stock can get ahead of things and people sold off. Theyre probably also using a source of liquidity. Have you been buying more apple . Well, we buy more as a hedge. Just simply as a hedge but nothing more than that. Nothing out of the ordinary, no. We havent changed our view on it because of the product launches. Although im curious about apple tv. Because apple tv will have a real impact on other businesses. Is there anything that will change your view on hb, by the way . Yeah. If i saw business growing again. The problem with a tech company shrinking 6 to 10 a year is you lose all your people. And, you know, the people that remain there are really not the people that are going to take that company to the next level. Hewlettpackard is basically a backwards looking company. Even with the breakoffs. The breakoff is financial engineering. Its more of the same nonsense. You know, tell me new products that hewletts got that people are excited about. Cyber security . No. 3d printing . No. I mean, all these things that keep getting launched up in silicon valley, hewlettpackard misses. Jim chanos will be with us through the rest of the pra m. Sounded like you were talking about ibm. But you havent looked in into them. We were short them a time ago. But same story basically. Coming up, jeb bush hitting the talk show circuit including squawk box. His comments on the economy are next. Plus well talk the run for the white house with jim chanos. Check out the futures at this hour. Still up by about 140 points on the dow. Squawk box will be right back. They come into this iworld ugly and messy. Ideas are frightening because they threaten what is known. They are the natural born enemy of the way things are. Yes, ideas are scary, and messy and fragile. But under the proper care, they become something beautiful. Happy birthday to squawk box. 20th birthday. Very young. Id like to say a big happy birthday to squawk box. 20 years young. Well done. My grandfather had a saying. Youre old enough to know better, but young enough to try it one more time. Keep doing what youre doing. Squawk box, happy 20th birthday and many, many more. Peace. Welcome back to squawk box. Heres whats making headlines at this hour. Mortgage applications falling 6. 2 last week. The drop was led by a nearly 10 decline of refinancing applications. Also a fresh read on the job market. Thats about 90 minutes away. The Labor Department<\/a> is going to be oelt with the jolts report for july at 10 00 eastern time. The measure of Job Opportunities<\/a> in labor turnover. Then japan saying mcdonalds saw sales rise 2. 8 last month. Thats pretty significant because thats the first time its increased in 19 months. Joe . Republican president ial candidate jeb bush calling for an overhaul of the nations tax system. Proposing individual tax brackets from seven to three. He also wants to eliminate the death tax and alternative minimum tax. Governor bush spoke to us a short time ago about the plan. A 20 rate when youre fully expensing investing in growth is going to create more growth. Well create the opposite of what we have today. Well have whatever im not sure what you call a reinversion. Whatever it is, if we can fix how we regulate and embrace the Energy Revolution<\/a> over the long haul, this will be an opportunity for us to reindustrialize the country and to create higher wage jobs. We need to increase productive to create higher wages. This plan would do it. And the full plan is set to be unveiled this afternoon as part of a larger Economic Policy<\/a> speech that the governors left florida to head down to north carolina. And yesterday becky spoke to Warren Buffett<\/a> about Vice President<\/a> joe biden possibly throwing his hat in the ring. If they think they have a reasonable chance. Im sure thats what hes weighing. More about the 2016 race for the white house and why jim chanos is a joe biden fan. You said youve had a long relationship with the Vice President<\/a> . Had. Ive known the Vice President<\/a> when he was a senator. So, yeah. And hes mulling it over as he says he is. I think its a family issue right now. More and more people on my side of the aisle want him to run. Well see. I mean, i think hes not hurt to wait for some certain reasons. I think in other ways hell need to get an organization going. Wait because you want to see what happens with Hillary Clinton<\/a> . Well, i think clearly hes waiting to see what happens with the investigation. I mean, people are worried about him raising money. But of course, if somebody bad happens to the hillary campaign, it kind of doesnt matter. Hell be able to raise money. Its a binary outcome. Youre a betting man. What do you think is going to happen with the investigation . I have no idea whats going to happen in the investigation. Im just reading the same stuff you are. So its in the hands of the fbi. Under no circumstances would you support Bernie Sanders<\/a> . I dont know a whole lot about senator sanders. So im just waiting to see right now what the Vice President<\/a> s doing before i make any decisions as a voter. Would you support Hillary Clinton<\/a> . Historically ive not been a supporter of the clintons as you know, joe. Again, let me see what happens with the Vice President<\/a>. Under any circumstances would you vote for a republican . I voted for republicans before. That wasnt a yes. That was a, ive voted for republicans before. I dont know if i could vote for any of these republicans. But ive voted for republicans before. That big dogcatcher position out in east hampton was significant when you voted for that republican. I voted for Ronald Reagan<\/a> in 1980, joe. Thats going to knock you off your chair. Most people go the other way. As they get older they get a little bit youve heard the expression. Ive heard a lot of expressions, joe. When push when actually pushed for an answer, the Vice President<\/a> said i dont know, harwood doesnt think hes going to run. Our washington guy. And he says, geez, i just dont know if i have the emotional fortitude to go for it. And that doesnt sound like a guy whos going to conjure that up. I think he has the emotional fortitude. You think he might . I think its a broader family issue. Personally i dont know that, but thats a guess. I think the familys been through a lot of tragedy. I think theyre weighing these things and the impact on him, his wife, his you know, extended biden family. People on the other side would like to see that just to be a witness to the whats another word for storm . I cant use the one im looking. But there will be an excrement storm if hes with the clintons. I love the way they operate. That will be monumental if he jumps in. In terms of what theyd be willing to throw out. When we talked to the governor this morning, one of the things that struck me about the plan is this is the tax plan, anyway, is that if its as he described, its a plan that actually i think would interest people from across the aisle. Didnt you get the notion that obama would lean towards biden too just from the way the press secretary sort of fielded those questions . That would obama would be an interesting position too. Hell be in an interesting position. You know, hes supported hillary, the secretary of state, when she left. Remember that famous 60 minutes interview with the both of them . I think hes also very close to the Vice President<\/a>. I dont think its a secret. Andrew, if the democrats could still win, would you support that fight just to watch it with me . Just to watch the clintons versus the bidens . Just as a journalist and a water cooler guy, arent you just i like a good story. If thats what youre after. Arent you ready to pull up a chair to watch that . You just want the same chaos thats happening right now the the republican early going, right . I think that would pale in comparison. Im more into the policy discussion. I know you are. Much more with this. Well talk later in the hour. When we come back this morning, we can have our cake and eat it too. A special present from a super chef. Look at that. A beautiful cake. Plus his endeavor in new york city. The ceo of real estate giant Howard Hughes<\/a> and famous chef will be joining us. Lets check on the European Market<\/a> at this hour. This is the same story we saw yesterday at this point. It looks like the cac is the major gain. 2. 6 . You see green arrows across the board here. Even as you saw 400point gape b for the dow yesterday. I should say almost400point gain. Now take a look at events that happened in 1995. Thats the year squawk box was launched. Our special conversation continues in a moment. Squawk box will be right back. Care of my heart. Thats why i take meta. Meta is clinically proven to help lower cholesterol. Try meta today. And for a tasty heart healthy snack, try a meta health bar. This just in 50 million customers data was not compromised this morning in a Security Breach<\/a> that didnt happen. Wall street. Not rattled. At all. No. Not at all. Not at all. I mean, look at the day. Sir. Sir. What went right . What went right . Everything. Thank you. With threat intelligence, behavioral analytics, and 6000 experts, ibm security will help keep you out of the news. My dads company wasnt hacked today. Cool. Celebrated chef behind 30 restaurants around a world is here. He joins us with dessert this morning and news hes partnering with the Howard Hughes<\/a> corporation to open a 40,000 square foot food hall in 2017. Chef jon george with us. You brought us we should show an image of it because were happy about i. You brought us a birthday cake. Happy anniversary. Youve got doughnut there is . Marshmallow cake. We have some grape glazed doughnuts, some chocolate chip cookie. Is that the marshmallow you were talking about . No. They do these you still do that right . Marshmallows at dessert. Superb. In a trump building, no less . Thats right. Lets talk about what youre doing at the sea port. This is different. Very different. Its a very exciting project. The sea port in the 1800s was the epicenter of new york city where all commerce originated. And where jeangeorges market will be is where the Fulton Fish Market<\/a> was originating in 1822. This is the first place when i arrive in new york in 1986. I run to the market. The fish market was spectacular. So much going on down there. I feel like thats where the city started. Dare i say is there any comparison to what mario vetteli has done . The fish market with retail fish as well as sushi bar. Its going to be a Free Standing<\/a> building and the authenticity of reviving that Building Back<\/a> to its original use is something that was important to us. And this really got wiped out during sandy. The building has been shuttered for awhile but the entire sea port area was damaged during sandy. How much you have to spend to do this . A lot. Were just finalizing our budgeting on it, but we have to rebuild the pier underneath it and we have to take the building apart and put it back together again. Whats the margin on Something Like<\/a> that compared to doing a restaurant for you . In terms of how do you think about whats the next project to do. Try to recreate you know, we have so many different restaurants and concepts. This one, were creating something. Its two years away but retail and everything will be can you ever get to a point where theres too many . Of course not, no. Thats not too many. I think also the sea ports celebrated as one of the great destinations for the city. You can see the brooklyn bridge, the statue of liberty back towards the city. What were really focused on is making the sea port relevant again for new yorkers. And at the center of that is making sure we have the best food offerings. And one of the things that was so appealing about jeangeorges is his celebrated offerings from abc kitchen to his flagship. Would you ever want to go down i dont want to call it down market, but you look at what danny meyers has done with shake shack. Its a different type of business. Is that something youd like to get into . Were looking into it. We have a few concepts already in the works. Like . A concept called simply chicken. We have different places. We have a pizza place. We have a but is there an opportunity to grow those on a National Level<\/a> like that . Yeah, sure. I mean, in asia they dont eat too many burgers. And final selfhelp question for joe. Hes trying to get into the restaurant, hes at the front. How much is he supposed to grease the guy . No, no, not that. Which one is the hardest to get into where i should go now that youve been on where i can throw my weight around and come in there . Can i get a waiter can i get a table near a waiter . Which one . Abc . Should i come . Abc kitchen, amazing. Dont send had him to the mart. I hang out there. Oh, a lot of hookers. I think the best ways sorry. That was bad. Im sorry. Really an open table . I think so. For sure. You dont have to know anybody. Usually its between 7 00 and 9 00 p. M. You block those because you give them to people. We always have a few tables for i never get to go in the city to places because its too hard to get in. It really is. From the burbs. Yeah. Where im trying to get you to come. I know. David, thank you for being here. Thank you for the cake. Well eat that during the break. Happy anniversary. Thank you. Up next, we have a list of stocks you need to keep an eye on. Check out the futures this morning. They are pointing to another solid open on wall street. Up 390 yesterday. Up 148 this morning. Well be right back. Can it make a dentist appointment when my teeth are ready . Can it tell the doctor how long you have to wear this thing . Can it tell the Flight Attendant<\/a> to please not wake me this time . The answer is yes, it can. So, the question your customers are really asking is, can your business deliver . Welcome back to squawk box on cnbc, first in business worldwide. Im dominic chu here with your morning market flash. First dave and busters shares higher in the premarket. Better than expected q2 sales and profit and same store sales as well. The restaurant and arcade chain also boosted its full year forecast. Analys analysts raced the stock to buy rating. Well watch those shares for sure. Also shared of mankind falling. Cut to underweight from a prior neutral rating. They also slashed their price target to 1. 50 from 4 prior. Man mens wearhouse that saw sales jump in the Second Quarter<\/a>. Even as their chain continues to struggle. Shares are down over 5 in the premarket so, joe, some of the morning movers, all on relatively light volume at this time in the morning. The market is not open, am i right on that . Youre right on that. Okay. Good. When we return, well wrap up our special two hours with jim. Tomorrow on squawk box, we break down apples big reveal, and a special interview with david tepper. We will be here at 8 00 a. M. Eastern. Well be here at 6 00. Squawk box will be right pack. You, my friend, recognize when a trend has reached critical mass. Yes, when others focus on one thing, you see whats coming next. You see opportunity. Thats what a type e does. And so it begins. With e trades investing insights center, you can spot trends before they become trendy. E trade. Opportunity is everywhere. They come into this iworld ugly and messy. Ideas are frightening because they threaten what is known. They are the natural born enemy of the way things are. Yes, ideas are scary, and messy and fragile. But under the proper care, they become something beautiful. Were wrapping up todays conversation on the future of the market with our special guest. A couple stocks we havent mentioned that youve been short, successfully so, cat. Were still short cat. When would you close that position out . I think if you saw what happened to joy global, which was a name we were short, not anymore. I think cat has been slow to tell its shareholders whats really going on. I think theyve been polly annaish, and i think the reality is all the end markets are hurting. This is a company, still trading at a big multiple relative to its peers. We talk about hp. Where are you on intel . Were negative on that whole space. Pretty much everybody in the pc chain, were still pretty negative on. And how about, we talked about solar city, but what about tesla itself . Tesla, i talked about what you guys last time i was on here. It is sort of silly. There was a published report a few weeks ago that bmw was talking about having its entire caroli car line by 2025 electric. Think about that. So tesla is being valued according to our friends at various different brokerage houses on 2025 earnings in cash flow that may or may not happen. Bmw has an entire product line that exists today that they may port over to electric in 2025 with all the infrastructure and factories and dealer networks, and it trades, you know, at levels, i think below where tesla trades at. It gets how silly some of the stocks that have become momentum and concept stocks are relative to Real Companies<\/a> with Real Products<\/a> did you call for that company to go out of business . Do you think somebody buys it . I mean, whats your thesis on tesla . Of all these companies, i think the one thats most problematic is solar city. Theyre burning 4 million quarter and putting up solar panels that may not be worth anything in 20 years. Tesla, it will sell cars. I understand the cloud, actually, i dont. I just know its the answer to everything, but when corporations need workstations to do things for whatever kind of data or whatever theyre doing, whos going to be the winner there . Not a single pc maker . Amazon makes their own. So whats the future going to look like in terms of Information Processing<\/a> technology . Theres not going to be anyone who makes hardware . People will make hardware, but it will be in taiwan and china. It will be a commodity. It already is a commodity. And i think increasingly, the value in the hardware chain just gets competed away. Again, you look at amazon, and some of the other cloud companies, they put their own boxes together. What do you think of amazon . Amazon is a great business. People derided amazon in its early years, but amazon never had any capital in this business. It was like dell. It basically, its customers financed it, so it really, you kn know, although it never reported profits, it never had any capital. That has changed. Now theyre becoming quite a bit in terms of bigger footprint physically. I think its a lot less attractive today than it was years ago. Having said all of that, we went back and looked because people said, well, amazon was the big winner from dot come 1. 0, but at one point it was down over 90 . And a couple of times it was down 50. I say thats great but would you have held it through those periods . Its easy in hindsight to go back and look and say, well, amazon came out of this thing a winner, but it was down 90 like all the others from 2000 and 02. Would you have kept it . Most people, no. Much Better Business<\/a> back then than it is now. Their returns now matter because theyre burning cash. Google, whos the bigger part of my life in ten years, google or facebook . Google or facebook for you . All right, google, google has a lot going on. I dont see you on facebook but i dont know. Im not on facebook. They have so many crazy things at google. Google is going to be in my life, a huge part of my life. Selfdriving cars. Are you going to be part of that revolution . I like driving my car. Are you going to be able to deal with the fact that most drivers that you curse at wont be there . Thats going to remove i guess id have lower blood pressure, but it would take away the fun. Will Driverless Cars<\/a> be stuck in the left lane going 55 . Good question. Suburban problems. A question about the hedge fund. Given that so many of your brethren have suffered, how are we supposed to think about they havent suffered. Not personally, but how should we think about that. Three bad months. Relative to the market, though. The real issue is are they adding value. My problem with a lot of people in my industry is they dont hedge. Guys are coming in and running their funds 90 and 100 net long. And markets go down, they dont make as much on the way up, but they capture it on the way down. Thats for the clients to determine whos adding value and isnt. Thank you for being here. Happy birthday. That does it for us. Now its time for squawk on the street. Bad wednesday morning. Welcome to squawk on the street. Getting some follow through to yesterdays rally as the nikei sores. A lot of vague talk of stimulus in china. Yahoo and United Airlines<\/a> in the news. Tenyear at","publisher":{"@type":"Organization","name":"archive.org","logo":{"@type":"ImageObject","width":"800","height":"600","url":"\/\/ia800503.us.archive.org\/32\/items\/CNBC_20150909_100000_Squawk_Box\/CNBC_20150909_100000_Squawk_Box.thumbs\/CNBC_20150909_100000_Squawk_Box_000001.jpg"}},"autauthor":{"@type":"Organization"},"author":{"sameAs":"archive.org","name":"archive.org"}}],"coverageEndTime":"20240622T12:35:10+00:00"}