Transcripts For CNBC Squawk On The Street 20170829

Thats still the case. Reaction to the north korean overflight also the euro is on fire. They dont want that. Tenyear yield. Look at that 2. 10. Jamie dimon must be thinking how am i going to make that how am i going to get my Net Interest Margin . Home prices is just out. Report for june shows prices up 5. 8 compared to a year earlier. Up 5. 8 that was a bit more than had been anticipated lets get to our road map this morning. It starts with that north korean provocation. A new missile test that flew right over the main japanese islands. President trump says, quote, all options are on the table plus, best buy is moving lower although, the numbers cautionary on the call, saying this is not the new normal. Were going to get into it, of course, here, and explain what exactly is going on of course, well be following the continued catastrophic flooding paralyzing Southeast Texas. Tropical storm harvey now one of the most destructive storms in the nations history and the rain, as youll see when we go to sully, still falling. Still falling. Futures, as you saw, pointing to what would be a tripledigit dow loss at the open south korea launch aid Ballistic Missile over japan an emergency meeting being held today. Japanese Prime Minister shinzo abe spoke with President Trump after the launch threatening and destabilizing actions only increase the north korean regimes isolation in the region and among all nations of the world. All options are on the table its not going to be the first time that we talk about the Market Reaction to a provocation like this, jim they seem to come with some frequency. The question, i think, the rising question is, what, if anything, will the Trump Administration choose to do in responding and that group of options, many of the experts say, none of them are particularly appetizing. No silver bullet. I havent heard a single one that i think anybody particul particularly mattis, believes is palatable. Europe down more in part because the euro is at 1. 20. Japan, oddly reserve currency. Although their country might be under attack look, i dont know what when you send a missile over in their airspace and you dont know whats right they actually briefly issued a call for people to seek shelter. Right. As they didnt necessarily know it would just pass over of course, it did. I think 1700 miles was i think, obviously, we make a commitment to defend japan so, whatever happens, an attack on japan is considered to be an attack on us i would point out, david, that there is genuine chaos in many parts of what i regard the market if the euro is really strong, then theoretically, our International Companies should be doing better. Instead our International Company stocks are the most hard hit, which is amazing. So often in keeping with the month of august. Why is the euro so strong i think its so strong in part, because we cant keep it down anymore. Its so strong we have to put that in relative terms what do you mean, its so strong, people say i think the dollar is weak. One of the reasons that i think the dollar is weak is because theyre of a belief that you know, by the way, lets not forget, we still have a budget we have a debt ceiling. Youve been saying from the beginning this was going to be an issue now, literally, with all this happening our president is going to houston, which is right. Hes going to texas. September is next week. Its coming up. End of september, we start got to start cutting out essential Government Services in order to continue to pay the interest. Wait a second were going to cut out services at the same time when almost no one no Homeowners Insurance is covering the checks that are going to have to be written here now, i deal with i have a fabulous no insurer companies that are at all in trouble insurers themselves have single digit billions why is that . They dont cover flood what is the u. S. Government going to do . Ten years ago, the checks would have come out. Now were dealing with a situation where the republicans are very stingy. We have a debt ceiling to worry about. The president will go down there and say this has got to be the greatest reconstruction in history because the president is given to hyperbole, greatest recovery, faster than katrina, than ever. That requires money. Where is it coming from . Its not allstate. Its not travelers their exposure, from what i can tell, is still single digit billions and my numbers are more accurate than others, if i can say that. Well move on to retail in a moment and i know your numbers are. This debt ceiling issue, you know, talking about north decreea i have a feeling were going to end up talking was it in a tweet . No, it was in a statement, i believe, that the president did say im going to not unless i get funding for my wall yeah. Sticking point. Im not going to assent to a ceiling hike. Houston has to be rebuilt and rebuilt with federal money the numbers im getting from the reinsurers, indeed diesh presented last night katrina the worst case and katrina is in play. Katrina was, what 100 its in play . Now were talking roughly 0. No, for the feds. New orleanian. The feds will have to step in at the same time as the budget ceiling, where theres no plan for stronger euro, north korean threats, budget ceiling debate going to start raging very soon. Lets say after everybody gets back after labor day although youve got congress in and out. At the same time you have an apple launch, Constant Currency numbers that are now greater Constant Currency numbers. Now theyre moving the right way. Right. Press releases, though, actually they never seem to mention in the press release when its going their way. Big british business. Well look at that around the bell lets get on to earnings this morning that are at least catching our eye of course, starting with best buy. It was a beat on both the top and bottom line. Stores up 5. 5 you may look at the stock and go why is it down finish line is plummeting. Small market cap but is also a tell for a larger story when it comes to athletic footwear, outerwear. The retailer cut its profit forecast for the kurpt currenta and poison pill. Who will want to take part in that thing everybody is selling but somebody may want to buy. Finish line talk about how nikes innovation. Nikes two largest categories are continuing a level of deceleration people have been talking about how nike doesnt have a refresh. I would come out and say maybe were finally at the age where the jordans arent working. Running their course, huh finally. My 15yearold, i dont even know what hes got bunch of nikes on his feet not all at the same time. It seems to have finally run out. Speaking of sara eisen, who follows this from cnbc yes, cnbcs own sara eisen will join me at 10 00. Obviously, we talk a lot about mall traffic. Right. And the decline there footlocker reported not a great number a few weeks back. Terrible number. And adidas is killing it. They are killing it less. I was on one of the customer calls. Im talking about a category slowdown the main category that had been really great i dont want to write off all apparel. Pbh had an amazing quarter thats shirts and ties but thats also calvin klein and its Tommy Hilfiger but thats europe they made a big move into europe, china. Nike lacks a killer shoe 70 of finishline, 71 of finishline is nike its impossible to have any other read through thats a big dow stock, david. Its a not countered by United Health that did an acquisition thats going to be positive. Dav david, its racheon. Youre jumping the gun here thats not until 9 25. Lets circle back to best buy. The stock moved up after the numbers. The Conference Call sales comp number in this world, i would think, would be reenjoy joic rejoiced. They said this is not the new normal, much better than 5 . Highly competitive Fourth Quarter and, remember, when you hear competitive you always have to think about what mr. Gannett said on macys, that the Fourth Quarter could be promotional as this Conference Call goes on, the stock sinks because i think hes just saying, listen, lets not get ahead of ourselves. 4 revenue growth, moving up their target from what had been 2. 5 , percentagewise. Give me a fight the cfo moments ago said we are also expect increase in operating margins to moderate over time. In general, everyone read that as we reinvest in the business david, theyre spending more but not getting necessarily the return i come back and say i like what they said, its strong computing, wearables, smart home, mobile, appliances david, the connected home is a theme here. Yeah. Dont forget the big picture couple of years ago, we kept talking about, what was it, showrooming . What was that term how this was nothing more than a showroom to buy things on amazon now a 19 billion market value managed to turn around a company that, frankly, you and i sat here and questionedity ability to operate in this environment which has only become more competitive. Did it with service lot of these devices got so big that you needed them. Need advice. You get that 72 screen, which the wife totally vetoed. That just meant i would never leave for saturday and sunday during football season. I hear you. You couldnt just put it up. What did you go with then 52. Come on you couldnt even get to 60 . I live in a stalinist regime. Thats terrible. The geek squad is good. Remember, this stock took a hit when amazon said they were doing geek squad then amazon said eggs and milk simon says amazon. Categories theyre playing tough on in whole foods are categories that costco has often competed in taking aim from getgo. Interesting interesting. Thats not the reason best buy on the Conference Call being much more tepid. Finishline saying be careful, nike read through costco i dont have much to give thats positive this morning i just dont. Youve given us a lot not to mention you told us what the key to this market is, 14 minutes early. Im saying a lot of things wrong. If you want premium oil that, posted price is not what youre paying its like raw stores in burlington when it comes to oil, okay speaking of energy, when we come back, Hurricane Harvey or Tropical Storm harvey now expected to dump more rain in the houston area could get up to 50 inches. Well talk about the storms impact on refiners well take you live to texas, of course another look at futures. Were headed for a lower open. More squasquawk on the streete weomba ce ck where to get in. Where to get out. If only the signs were as obvious when you trade. Fidelitys active trader pro can help you find smarter entry and exit points and can help protect your potential profits. Fidelity where smarter investors will always be. Were continuing to follow, of course, latest developments on the gulf coast in the wake of Hurricane Harvey President Trump is on his way to survey the damage. And braving the rain down there quite some time, bringing us uptodate on everything involving energy brian . I think theres been more rain in the last two days, david, than ive seen in my entire life combined as you can see, its clearly still raining here basically everything from north of galveston to houston is, if not under water, is at risk of being under water, has been under water or is impassable as we drove around extensively yesterday, were lucky to find the one road that was open were going to crest northward of this and how far we can get, see if anybody needs help up there. A lot of stuff happening outside of houston, guys that aside, economic story is one that cnbc will tell. It is big. We hit the refinery story a lot. A few new developments since the last time i was on the air reuters reporting that the 3,000 barrel a day in beaumont, texas, we know its been running at reduced rates. Apparently its running at more reduced rates. Technological stuff there. Again, that is reuters reporting, one to watch. We continue to reach out to motiva, saudi eramco, 6,000 a d day. Reduced output and marathon petroleum, 460,000 barrels were trying to confirm and theyre not giving any information. Marathon if youre listening, people need to know. Youve talked about a lot of these different angles refineries shut down were going to wait to see if more are going to shut down. Theres no word on when anything is going to open because nothing has changed. Nothing has gotten better. Its just rained more. Port of houston remains closedment im going to introduce a word to you guys i dont know if youre familiar with the word shoaling squad truck theyre going to go out to help some people. Galveston is starting to flood in parts army corps of engineer truck trying to get to the building but cant get there because the roads are being flooded. Shoaling is when storm brings in silt and dirt and raises up the bottom these ships will come within a foot or two of the bottom of the sea. It comes up, you create a new problem so you dont know how the bottom looks so it makes it tough. Lot of things are fluid. And when the army corps of engineers cant get to their building, you know thats an issue. Yep yep. Brian, wow do you get to dry off at all you dont just have to stand there the whole time, right . No. Listen, were fine galveston, as you can see, is getting worse. Were going to try to drive up a little bit north we were there sunday where the flooding is, theres a lot of people that need help 18,000 people under mandatory eebee vac wags order i dont think you could get dry if youre anywhere as you can see, guys, it hasnt stopped raining in four days and its not going to change. Brian, thank you. Heaviest rain weve felt in two days. I remember watching yesterday. It wasnt raining nearly as hard as what youre dealing with right now. Well be checking in with you, of course, next hour and every hour key point he has made many times, jim, its about the employees being able to get to the facilities as much as anything else. Right right. We dont have a current update from valero. Theyre saying their under gulf refineries continue to operate corpus christi, no but im wondering theyve been the guy who has given me the best information now. Lets take a quick break. Well come back to cramers mad shs count you down to the opening bell than your health. So if youre on medicare or will be soon, you may want more than parts a and b heres why. Medicare only covers about 80 of your part b medical expenses. The rest is up to you. You might want to consider an aarp Medicare Supplement insurance plan, insured by unitedhealthcare Insurance Company. Like any Medicare Supplement insurance plan, these help pick up some of what medicare doesnt pay. And, these plans let you choose any doctor or hospital that accepts medicare patients. 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They did have accounting issues that are now behind them. When it comes out and the smoke clears, theyre doing okay david, i think whats going to happen is people will say this stock was up more initially wait a second. Where does hain fit in, in what many people feel will be the suppression of price increases hain has always worked very well with whole foods does that mean hell work well with amazon . We dont know. What we do know is theyre doing okay. Doing all right. Yesterday we saw the beginning of what i would regard as your dividend does not protect you anymore. Why because people are so concerned about what amazon is going to do. Mongolese has been very heavy here not that they have much of a dividend just beware that this Consumer Products group could these guys get sold its funny theres so much chatter about these kinds of Companies Potentially being consolidation fodder. Its a good question but he doesnt have one big product. No. He has a lot of products irwin loves rung hain celestial. Does irwin have a choice . Hes not a controlled shareholder. No. In the end its like you could get anybody. Activist as they were an engaged capital. Until you had the accounting problems, irwin was doing great. Theyre in the past. I dont want to continue to reference them now that theyve solved them. I think we have to go forward. The issue is natural, organic, still strong category. Whole foods, we dont know what theyre going to do. Okay. Of course, well have the opening bell a few minutes from now. We are looking for a down open stay with us on squawk on the street. Youre watching cnbcs squawk on the street you already told me what the key to this market is. Its ratheon why . It offers your best defense against missiles if you want to see when the overall futures bring down stocks that are attractive, thats the one to watch. It would probably be up four, five points if it werent for the overall futures selling. Futures drive everything down, machines, algorithms i think its wrong because the euro is very, very strong versus the dollar but thats the stock that would recover first. Best buy not recover first 2 , 3 going forward. Under promise, over deliver. You got it. Hes also a magician has had an amazing comeback in life i just want to wish him the best. There it is, opening bell for this tuesday you can see that the real time in change at hq will have a lot of red on it at the big board. Beverage supplier cott and at the nasdaq, nykredit, investor from denmark doing the honors. Saying tesla surveys mixed model three outlook worrisome. Wow bernstein has done a survey of what tesla buyers possible buyers there. Okay. I caution here that this is a love stock its a colt stock. Auto nation remember, cars that are wet need to be thrown away we learned that from sandy initial decline and then replenishment. One of these, we have to step back and say and remind people, who in another wave of rain could suffer tremendous tragedy but there could be a gigantic rebuild. This very large city so that three, four months from now we will be talking about maybe even gdp expansion from this if the president goes down to houston and says hes going to have the greatest rebuild in history. But will congress let him spend that money that remains unclear on a lot of different fronts, whether its tax reform, raising the debt ceiling and how much is going to be needed to help rebuild houston. Doesnt this, once again, delay the idea that they can spend time on tax reform its a katrinalike event, allsystems all hands on deck. It may take away some attention. I think thats somewhat unclear. Take a look at live pictures. Amazing First Responders. Boy, were they ever ready. Have you noticed how right the First Responders have been here . They are just everywhere. In all areas. People on the ground there the coast guard. The work that theyve done. That city is run right. Incredible. You talk about things like the coast guard. Trump presented a budget that would have cut their budget by, what, 14, 15 . Were seeing the advantage of a wellprepared group of people. We really are of course, this is the key human toll here is enormous. I do want to point out that technolo technology, that would be the other group to watch, we rid ourselves of the european hangover huge beneficiaries of the weakening dollar. Right. Huge. I think its important to recognize that numbers will come up for a lot of stocks that are on what we call and i also feel that gilead is not one and done im working hard to figure out who is next. What do you mean one and done youre referring to yesterdays large deal of kite yes. What do you mean when you say not one and done gilead stock rallied so much. Theyll do another deal yes we look at acquired stock. If its done well, bankers start making their calls and the bankers calls are, look, gilead spent the money on something that is a loser in terms of three years. Three years until it gets yet look what theyre doing maybe you ought to think about combining with someone. Right. Also bristolmyers, which you know has had very unfortunate luck of late. Horrendous. Why is that stock not lower i dont know, jim why isnt it lower i think theres endless chatter. The biggest deal of the year was, what, j js acquisition. Its maybe the most levered dollar david, gold bugs are saying will you please mention rand gold ive just done that. Number one low cost producer of gold aye folli follow. 2. 10 yield on the tenyear note. Its just the exact opposite. Concern once again about the ability of the banks to generate a Net Interest Margin and propel them to sort of anticipated Earnings Growth thats been out there. Theyve all done not too terribly this year citi is the leader in terms of price percentage movement of the big guys, up 12 theyre all down. Jackson hole was viewed as being a green light for one more rate hike. This may change things. This being north korea . No, the treasury. Right, which seemed to be pressured in part by north korea. North korea is very hard to read obviously its an opec situation. We can offer very little, i think, on it. Yes. It was obvious the way stocks got hit yesterday. Lets take a stock like alibaba. That stock was down 5 but asia wasnt hit nearly as hard. Chi china, by the way, can we just say, does this show you exactly where china is china is also if im looking to shed some risk alibaba is up still almost 89 this year its market value was approaching and not far off from amazons its had an incredible year and its a little over a year ago that you and i sat down with joe tsai. Before we sat down with joe tsai there was an undercurrent that perhaps their numbers were not real. Yes. After we sat down with joe tsai, the under current was not only are the numbers real, theyre spectacular. Still throws who say, listen, they dont consolidate the lo logistics. They dont own the majority of it its a huge spence that doesnt flow through. Who is representing alibaba in that . Its a quiz. Im sorry, who was representing alibaba in the various inquiries . The head of the s. E. C. Right. So, i dont think hes going to turn around and say his work wasnt any good. No. I also think good point. I see what youre saying. Right totally rigorous guy i think what joe tsai told us was, look, we are exactly what the s. E. C. Wants you and i came away saying yes versus surge of the Chinese Consumer and willingness the only way the mobile, alibaba, ecosystem theyve created. Now they come over here to try to get small, mediumsized u. S. Manufacturers. Dont forget altaba, weirdly named company that sold yahoo no longer. Thats up 62. 5 . Cash management by yahoo it was. 60 billion market there as wel well. Best buy because of that guy. Best buy is down 8 , jim. Right but immediately you have Lockheed Martin showing wait a second defense spending has to go up because we have a mad man through his icbms. People are going to say its august its not an opportune time to verizon is up it doesnt happen every day. In fact, it doesnt happen most day zpls verizon is a bond. It is 4. 57 yield. Stocks that yield good are going to do well i am surprise d nike health, Advisory Board crown jewel business, very high target for United Health that will probably play out. 235. I got my younger kid a phone yesterday at the verizon store. How was that . It was not a bad experience. You went with the 8 shes not getting the 8. Why not got the 7 but we went three lines unlimited. Im sure john ledger is like, are you kidding me you went tmobile no, verizon. But john ledger had im paying more there than anywhere i hope im going to get more quality. Its the largest after 22 gigabytes they start to throttle you back a little bit. Verizon is you know, they have to put up more towers great secular story here sba, american tower. Thats where you want to go you need every transponder on every antenna. We should have been in that business, david. We should have. That is a bond right there. Those are bonds, Real Estate Investment doing incredibly well at one point people were critical theyve run over the shorts. Thats because we need more towers because there is so much netflix, so much thats why, by the way, parent companys net worth, wifi endless. Endless. Really good football ad its just scoring. Guess i have to draft him. Gilead is now up 25 cents, t your point thats encouraging when they put those deals together a lot of Balance Sheet capacity. S selguin . First line of defense comes earlier. I think that its out three, four years this has been in the works for a long time. Will be in the works whether gilead owns it or not. Lets not necessarily buy celgene off this or sell it. Pattern after katrina, thats playing out. Lets get to dom chu on the floor and give us a little bit of a look at whats moving this morning. David, jim, to highlight what youve hit on here as well, its what traders are looking at on the floor today. Look at markets overall with a north Korean Missile aggression, taking the next step here, you would think that the markets would be down a lot more than they are dow has held steady now, down 94 points, s p down half a percent as well. Gentlemen, we generallyize and say risk on, risk off. Sectors like utilities leading the way higher cyclicals, materials are the ones taking some of the biggest hits here. Watch some of those dividend paying plays like what you were talking about before thats going to be a big deal here the other thing that a lot of traders are watching here is the price of gold. Weve seen a bit of a breakout here 1300 an ounce for futures is what we saw, bit of resistance here over the course of the last five or six months weve broken above that. 1328 last prices here. Those gold mining stocks have hit a bit of a surge and stride as well. Were watching vaneck vect rochlt s gold miner, up 2 in trading and up considerably over the course of the last week. Gold miners something to watch here as well i want to put on another theme here we talked about the hurricane plays yesterday. Certain Companies Look t possibly benefit as the rebuilding efforts start to take hold in that hurricaneravaged part of texas and parts of louisiana. We looked at names like home depot and lowes overall Market Sentiments today because of north korea drags Everything Else down some traders will be watching shares of floor decor that does the flooringtype work and mow hawk industries, Engineering Construction firms, quaunta services, infrastructure watch those stocks and United Rentals as well, guys. Back over to you. Thank you, dom chu. I recommended United Rentals last night they made a very big push in the southeast. You know, mike has had a great quarter. Stock is still down where it could be mike is doing a terrific job no one wants to get lucky off a storm but hes in a position to be able to have the equipment thats needed. By the way, not a caterpillar guy. Just so you know caterpillar is separate. Dont make, necessarily presume caterpillar is doing better. United rental is not caterpillar. Lets get to Rick Santelli at the cme group in chicago to take a look at the bond market, of course. Rick, that yield has peoples attention this morning. Absolutely. And, you know, it really shouldnt be shocking that we are testing. Remember, i look at the closes as the most significant level of the day. And weekly, monthly, quarterly close gets priority as the timeframes get bigger. Intraday here, were toy iing with new low yield closes for the year look at a oneweek chart matter of fact, all longend sovereigns, developed economies are moving lower in yield on short ends some are moving a little lower some are actually moving higher, like the shots in europe our twoyear is down much less than the long end, which means its a curve flattening event. Look at one year of tens, you can clearly see what im talking about. 2. 13 were below it now lets see where the roller coaster ride ends at the end of the session. Bunds. Jjbs, japanese government bonds literally trade by appointment one of the biggest sovereign bond markets in the world in less than 1 billion trade every day. Todays no exception hardly any trade at all. The government is the market but you could clearly see even though its slow and its a scaling issue, it is flirting back with negative territory again, hovering right around zero the euro is at the highest levels right around 2013 but it seems to have some room and it certainly seems to be the currency du jour horrible Mother Nature events in texas have economic consequences we also know north korea has captured the markets attention. Very hard to doubt how long that lasts, what that half life is, anybody knows on the ladder finally, if you look at the dollar yen, dollar index, hovering at the lowest level since early 2015 david, jim, back to you. Thank you very much, mr. Santelli, as we head to a quick break. Programming note tomorrow on squawk alley, becky quick will sit down with Berkshire Hathaways Warren Buffett. Those trade gd apple in and out, perhaps thats ill advised. Going to hear a lot of what he has to say, of course well have that for you tomorrow be right back. Whole foods making an amazon logo out of ground beef. Showing organic peaches next to an advertisement for what theyre calling farm fresh amazon echo. One of the things i like about twitter, you can get a good read of things and people are saying on my twitter following that whole foods are out of a lot of stuff already because people have been going to see prices. Were talking less than 1 of the skus that amazon lowered theyre congratulating them on a great pr campaign. We talked about it the last few days. One thing against that i would say, david, is that when you lower the staples and everybody has to buy staples, it is a windfall for people who decide to walk over there. People on a budget, knows that. People on a budget you arent going to. The old whole foods, you werent going to the new whole foods, you are half paycheck. It will be real and spectacular. I remember that i dont know. 4. 95 per trade . Uhhh and i was wondering if your brokerage offers some sort of guarantee . Guarantee . Where we can get our fees and commissions back if were not happy. So can you offer me what schwab is offering . Whats with all the questions . Ask your broker if theyre offering 4. 95 online equity trades and a satisfaction guarantee. If you dont like their answer, ask again at schwab. Your insurance on time. Tap one little bumper, and up go your rates. What good is having insurance if you get punished for using it . News flash nobodys perfect. For drivers with accident forgiveness, Liberty Mutual wont raise your rates due to your first accident. Switch and you could save 782 on home and auto insurance. Call for a free quote today. Liberty stands with you™ Liberty Mutual insurance. I have a couple of options, home depot stock going down. Rebuild is going to be big its interesting but, david, the one i want to focus on is allstate. Okay. If the insurers had such big lo losses, why is that going up two reasons. One, they dont have that much liability. Its federal mony and could be as much as 100 billion. Two is you can raise prices after this you can raise price. Raise prices and youre not on the hook for as much. Therefore right i have allstate in my beach house. Counterintuitive that the insurers all go up after a disaster of this magnitude. Flood damage, no. Fish in the basement, better to catch than it was to get the mold out usg, remember, that kind of board is what gets moldy that kind of board can get replaced Warren Buffett owns dont forget, he is going to come on and speak very positively and the president is going to come on and talk about the greatest rebuild in the history of the western world. I wonder if he invokes the pyramids. You cant rule it out. No. Lets get a look at whats coming up on mad tonight. Chipotle, people think, has bottomed lets get next chipotle, a Company Called deltaco thats a dark picture we have that was a reference to the eclipse. It was a bust for me. I made the cereal boxes, tried the whole thing. We didnt get the glasses. You had to be in a place called clayton, georgia. I met a fellow named rhett butler jr. His father was named rhett butler before gone with the wind. John cappasola who runs del taco im going to guess they sell taco. You are a genius. Insight i have is impressive. Are you celebrating the holiday this weekend no. Festivus . No. It comes around the time of all the holiday. All the rest of us are going to celebrate labor day. I do like to have the airing of grievances. Reference today in that story about cohn, mnuchin and prospects of tax reform, reference to a show from thats what made me think about seinfeld. I cant believe it was still invoked. Still i never thought jordans would have lo last this had long but it seems to have peaked. Story line hurting under armour and a number of others. Thanks, jim. Its great. Im liking the action in the drugstores they, too, have stopped going down maybe amazon is going to destroy the world is over. Amazon is focused on food. Were going to go but were going to come back and, of course, have more on this selloff. Stocks cutting their loss. Because we like the weak dollar, rebuild. Quasquawk on the street wil be right back. At fidelity, trades are now just 4. 95. We cut the price of trades to give investors even more value. And at 4. 95, you can trade with a clear advantage. Fidelity, where smarter investors will always be. Good Tuesday Morning im sarah eisen with david faber. Dow is off the lows of the session still lower about 50 points s p 500 down a third of 1 wti crude under pressure after a nearly 3 slide yesterday. Gasoline prices continue to rise that has been the dynamic post harvey with about 15 of the nations refinery and capacities shut down. The nasdaq is getting hit the hardest. Rick santelli is breaking knick data this hour rick our august read on Consumer Confidence from the confidence board were looking for a number slightly north of 120. We ended up much further north 122. 9. Darn close to 123. A very solid number. Matter of fact, thats the second best number of the year it compares with march when we were at 124. The reason thats interesting is because that 124 number was like the best going all the way back to 2,000 a very, very solid number. Subtle revision to july now standing at 120 versus 121. 1 and yields are definitely down on the long end, pretty much everywhere you have a good economy. But they are coming back after, of course, the unlikely combination of north korea and the horrible events of Mother Nature in texas. David, back to you. Thank you very much, Rick Santelli road map does again with north korea, launching a missile over japan. How the Trump Administration plans to respond and what that will mean for geo politics and, of course, the markets. The latest for you on harvey. Historic rainfall continues to pumble the coast of texas. Well head out to houston for more on the Economic Impact behind the storm. And, finally, best buy reporting a beat this morning. The stock falling in early trading. Well dive deep into the Quarterly Results in a minute. But first up, north korea launching another missile yesterday. This time, over japan, sparking global alarm and an already destabilized region. Our sherry kang is in south korea and joins us with more on the reaction sherry, good morning. Reporter good morning, sara. So, we certainly saw a sudden reescalation of tensions on the korean peninsula, especially with the longer range Ballistic Missile that flew over japan, which, by the way, is the first time for a north korean Ballistic Missile. As for the latest reaction, at least from washington, u. S. President trump came out with a statement, quote, threatening and destabilizing actions only increase the north korean regimes isolation in the region and among all nations of the world. All options are on the table at this time were not getting an explanation of what options are on the table at this point from the south korean government, reaction as well, the president ordered a strong show of deterrence against north korea. In fact, the countrys military carried out a military exercise, brought in foreign fighter jets to the interkorean border area and dropped eight multipurpose bombs in that area as well more about this latest Missile Launched it was a rare launch from the capital area of pyongyang which doesnt really happen a lot. It flew over japan, like i said, for the first time for a Ballistic Missile. And it was fired in a normal angle. I say that because what they normally do is that they launch the missiles in a very steep, upright angle, saying that its out of consideration of neighboring countries. But it did not do that so, certainly it looks like they wanted it to be a threatening factor and, of course, it was not exactly a missile strike, like i said, towards the area of u. S. Territory of guam. Like i said, it was thinking about doing earlier this month but certainly the distance of that was very close, the travel distance of a 2700 kilometers, which happens to be very close to the distance between north korea and guam guys all right thank you very much. Embass dor jeffries, some would say its another missile test in what seems to be a frequent action for the north koreans in your opinion, does it meaningfully increase the tension in the region and the need for the u. S. To respond absolutely. As you reported correctly pointed out, this is an escalation where it was launched from, it was a mobile, very capable missile. It traveled over japan this is the first time, other than the excuse that the north koreans were trying to launch satellites, that they have done this over an american ally this is very threatening also its after President Trumps very specific threats. They didnt shoot this thing at guam but they shot it in another direction that is very destabilizing. This means threats are not going to slow this guy down and i dont think normal negotiations, normal diplomacy that weve been try i trying before with administrations, including when i was in the bush white house, are going to work with this guy. What is going to work if normal diplomacy is not going to work its funny. Steve bannon prior to his exist gave this interview, was on the record, said he wasnt he talked about no possible solutions here whatsoever militarily is that your opinion if not, you know, when you say theres no ability to use normal diplomacy, what do you mean . Thats why its such a difficult problem. Bannon is right because if theres a general war, even if nonnuclear, the civilian south korean population, along the border, particularly in the capital of seoul, is at risk here is the problem. All of our assumptions have been north korea is doing this defensively. It doesnt want to be overrun like it almost did in 1950 it doesnt want to go the way of gadhafi and Saddam Hussein its also possible that kim jongun, like his father and grandfather, want to unite north and south korea, like ho chi minh was willing to sacrifice. Hes trying to drive a wedge between us, the koreans and americans who would be facing a Nuclear Attack thats the problem we have with this guy. And what about the chinese, the role they play here . The Trump Administration has been focused on their ability to certainly influence north korea. Is that still the case theres been, you know, various tweets from the president that have indicated his unhappiness with the chai theez. What role do they play here . It is a crucial role. Nothing will roll without chinese oil and north koreas exports go through chiena. It is absolutely vital over four administrations, weve assumed that china sees this as an irritant, a secondary level problem, doesnt want to have refugees or instability. How about another scenario china sees north korea, however unpredictable and irrational, as part of its set of tools to drive america eventually out of the western pacific. If that is so and that seems to be chinas overall goal, in chinas ability to act against north korea, unless china really thinks were prepared to go to war, is going to be very limited and thats exactly what weve see seen. So how many more provocations do we have to see . I would say the sooner the better but its going to get worse and worse. On another track theyre going to develop the north koreans nuclear arms icbms that can reach the United States and place our population at risk before that point, thats just one or two years out, we need to reintroduce Tactical Nuclear weapons to the region, make it clear that we will respond militarily to any further nuclear tests, icbm tests or missile shoots over or close to our allies if we dont take action that strong, this is just going to keep getting worse. Right although, as you indicated, the risks are not insignificant, ambassador. No. How many people could conceivably die, americans and certainly South Koreans amongst them. What im trying to say is weve got three fundamental choices, military confrontation that could lead to a conventional war with very heavy casualties, possibly, but not necessarily. Secondly, us eventually being pushed out of the western pacific, the biggest strategic change since the collapse of the soviet union or possible nuclear confrontation, set of nuclear strikes between us and the north koreans involving our homeland those are extremely unpleasant choices. Its one of the three. Its not some fantasy land, diplomatic solution. Okay. Well leave it on that less than optimistic note. Ambassador, thank you. Thank you. For more on Market Reaction to this, lets bring in jack avlin, chief Investment Officer and steven from jp morgan. Weve seen that, what, half an hour into trading here any reason to think with this escalation in japan this time might be different as it relates to geo politics, trying to figure out whats going to happen and how markets will react is really tough. You look at these geo political shocks going back to pearl harbor theres been a clear pattern. Thats the initial knee jerk reaction where you sell off and markets will recover when that pattern breaks tends to be some sort of spike in inflation or recession thats a knock on the effect of the geopolitical event Global Growth has been the strongest its been since the crisis on a single global basis. Youll continue to see people coming in and buying the dips. Buying the safe havens, too, jack gold prices are higher so is the japanese yen so are u. S. Treasuries is that anything to be alarmed about or are you in agreement with stephen, that shortlived risk off period . Yeah. Obviously its hard to tell. If you take north korea, that cou could, add to it the tragedy in texas, that will be a depressant near term. The two combined could potentially keep fed officials on the sideline, keeping inflation relatively low keep interests rates relatively low. Keeps risk taking rewarded for now. Ultimately, i think we are going to see some growth down the line as we rebuild and spend tens of billions of dollars getting houston and surrounding areas back on its feet its difficult to tell and so you have to look out tenyear horizon with equities and so far nothing has changed. Stephen, you alluded to the synchronized Global Growth what do you say to those who say look, weve had this period of unusually harmonious growth, earnings rebound substantially, you had all the things in place and the stock market has been stuck for a few months here in the u. S. Does that mean weve used up all the fuel or do we have to wait this out i think this is a little bit of a consolidation period. A huge rally at the start of the year u. S. Markets are still up close to 10 International Markets are well ahead of that and now investors are looking at whether or not those earnings trends can continue in the back half of the year the unusual situation isnt whats been happening recently its whats happened the last five or six years where its been a one engine Global Growth story, that being the u. S. Like which . We like europe. Worried about that stronger euro surpassing 120 this morning . We saw an overshoot to the down side for the euro last year because of the political concerns, election season. Now were seeing actually better growth out of europe than we are here in the u. S. Thats whats being reflected in currency markets if you go back to 1970, there have been five periods where International Stock have outperformed the u. S on average, the dollar has declined by about 20 in those periods. A weaker dlafr isnt necessarily something that will derail the story. It may cause it to pause a little bit and some of the exporters in europe have underperformed but i think its actually a sign of strength. Jack, i dont know if you heard ambassador jeffries. I did. Laying out three military scenarios, none of which sounded particularly good when you think about the loss of life and everything that comes along with it how does the market react to that hes just one voice. We have no idea how the administration necessarily is thinking about this. But youre going to hear that more and more, i would expect. Do you think thats going to unnerve investors . Certainly could, potentially. Right now, we still have most investors ignoring most stuff when it comes to north korea weve been glossing over terrorist events and a lot of other stuff. When it comes to north korea, it really does capture investors attention. Thats because of this game theory it doesnt seem like there are alternatives if its simply between north korea and the United States. I think ultimately if we could get china to pull the extension cord and put pressure on them, perhaps we could bring that territory slightly more in line. Its hard to say i understand the ambassadors comments, that china doesnt want to see us intervene perhaps we could see diplomatic relationship with china and get this thing resolved. At least intermediate term. Finally i wanted to ask you about impact with harvey unusual for so many different reasons. Striking the Energy Capital of this country, the fourth biggest city in this country and continuing to relentlessly pour down rain. First of all we have colleagues in the houston area and their safety is the most important thing. I dont think youll see a huge impact Economic Data the next month or so, there will be noise in there. Its going to take some time to figure out what this means for the energy infrastructure, what this means for oil prices, gasoline prices in this country. But i dont think this is going to have a major market or Economic Impact. Well see what happens. Stephen thank you for joining us jack ablin, nice to see you always as well. Thank you. When we return, well take you back out to texas for the latest on the devastation caused by Hurricane Harvey. More squawk t seeafr isonhetrt te Contessa Brewer is in houston with more on the damage behind the storm and the impact its having on the local economy. Contessa ill tell you what. Its taking logistical mastery hear, turning a Convention Center into a city housing 10,000 people. We continue to see them streaming in through this door they get padded down and immediately funneled over who are where theres a supply of dry clothing, towels most people are coming in, soaked to the bone then theyre sheltered after they get dried clothes over here to the registration and finally into the dormitories here. Were told that theyre now bringing in portapotties, portable showers these devices that are now peoples only convection to the outside. At t and verizon are coming in, setting up charging stations so people can be in communication with loved ones. I asked representative about potential for a Government Shutdown she told me thats not an option and she expects a bipartisan agreement moving forward and so then i said to her, what about the local businesses what about the communities and the corporations here in houston . Here is what she told me. Do you have any message for the Business Community thats watching cnbc about what their responsibility is in this time of crisis for houston . Im so glad you asked that question we live harmoniously with corporate houston. This is the time now that we have needed more than their money, but we need it. The mayors fund needs to be funded fully because the expenses are enormous. The city hall went under water we need money but we also need corporate houston to lend their technicians, their logistical persons, their energy ears, their persons who know how to plan we need to move these people fema needs to be flexible because weve got too much on the line people want to stay here and i would like them to stay here and if their homes are repairable, it is imperative that we do so. Okay. And now i need to update you on the situation with the flooding. We now know that the attics reservoir has overtopped theyve had so much rain, water coming in that they cant keep up with it anymore we are expected to see more evacuees coming in as additional neighborhoods flood even more. Well keep you updated about that situation we are expected to go out and see some of the damage outside here the reservoir simply cant keep up with the amount of rainfall that houston is getting now, guy guys. Contessa, brewer, thank you very much. As we head to a break, take a look at shares of best buy, the company sinking following earnings that did see a beat on the top and bottom le. In well tell you why the stock is reacting the way it is stay with us shares of best buy getting crushed this morning despite earnings, raising guidance stock is up by 30 but this morning down more than 11. Lets bring in Michael Asner at ubs. What was said on the call that spooked investors so much after what was very decent results i think theres three reasons the stock is down. Its had a nice run as you pointed out. Two, expectations have moved off. In the weeks before as we saw signs, particularly where best buy is strong and three and most importantly, what we heard on the call was that theyre transitioning away and from here, margins more so eb and flow with the rate of sales. Well probably see Slower Growth and, as a result, stock is the way it is. Do you agree with the way the stock is responding after the Company Posted its best com since 2009, moving past cost cutting and seeing widespread growth in many of its units, including appliances and electronics, in what was not a particularly hot season for smart phone releases. Its undeniable that this team and this company has done a masterful job of turning around this business and positioning it well for the future. That has not gone unrecognized by the market. And valuation has gone from four times to seven times it has seen some significant multiple expansion our argument is from here, it really needs to drive Earnings Growth in order for the stock to appreciate significantly while we think that the company will drive Earnings Growth, its just theyre playing with a lot of external variables that are not within its control. What are those variables . Price deflation and competition, market share gains. Good news for the company is all of those things are working in its favor right now. But the history of this industry would suggest thats not always going to be the case. I wonder whether you got a sense and maybe the Stock Performance today tells you this a certain number were hiding in the very small handful of traditional retailers who seemed as if they could survive and thrive in the amazon world is that being unwound right now . I dont think thats being unwound. That will continue to be the case in this very Dynamic World where amazon is having an influence on a wide variety of retail sectors, investors will continue to gravitate toward those sectors and those companies that seem to be doing a better job of circumventing that risk. A lot of that had already been recognized in the price of best buy and the stock has taken a bit of a pause right now. So you cover a lot of these big box retailers across america, walmart, target, home depot, dicks, home foods. Tell us about the exposure to the houston area of texas and whether youre concerned about any of them missing numbers, for instance, what were seeing in the devastation there or others, like home depot, actually benefiting. Without a doubt first and foremost, our hearts go out to what those folks are dealing with in houston. Second, there will be widespread economic evaluations best buy talked about it this morning. Its probably too early to talk about the effect retailers like home depot, lowes, Tractor Supply to some degree do see a boost as the rebuilding and repair takes place. We expect that to take place this time around as far as what the disruption, its happening at a time right before and in the midst of the backtoschool season. Some of those retailers who are more impacted and affected by back to school are going to see a greater impact on their financial performance. Did you expect the stock to be down based on what you heard on the call . Are they basically under promptsingand will over deliver . I think theres no doubt that they do a great job of managing Expectations Business thats very volatile. They want to under promise and over deliver it is a very lumpy business. Theres uncertainties about whats going to happen in the holidays how much of an allocation will they get like the iphone 8, to what degree will the Nintendo Switch continue and the Television Category is peaking that was negative this quarter thats probably another reason on top of all of this for why the stock is pulling back today. We should note that at neutral, 62 price target. Michael lasser, thank you for joining us. Thank you. When we come back, former fema manager tim manning will join us on the relief efforts going on in texas. Whoooo. I enjoy the fresher things in life. Fresh towels. Fresh soaps. And of course, tripadvisors freshest, lowest. Prices. So if youre anything like me. Youll want to check tripadvisor. We now instantly compare prices. From over 200 booking sites. To find you the lowest price. On the hotel you want. Go on, try something fresh. Tripadvisor. The latest reviews. The lowest prices. Good morning, everyone im sue herera President Trump and the first lady exiting marine one helicopter and walking to air force one in terrible weather. Hence, the large umbrellas before they boarded the plane. Theyre on their way to texas, to visit some of the areas devastated by flooding from harvey the president saying all options are on the table, following the Missile Launch from japan late yesterday. The president said north korea has signaled its contempt for its neighbors and all members of the United Nations awe suicide bombing killed at least five people in an area near kabul not far from the u. S. Embassy. The taliban has claimed responsibility for that attack and they said the explosion likely targeted a branch of the privately owned kabul bank here at home, disney and its sister station jointly announcing a cash commitment to the red cross in support to the Recovery Efforts and communities affected by harvey in addition thursday disneys Television Group will host a day of giving to benefit the victims. You are uptodate thats the news update this hour david, ill send it back downtown to you. Thank you, sue. Of course, were going to stick with Hurricane Harvey here catastrophic flooding continuing to paralyze Southeast Texas this morning. Well get live pictures from downtown dickenson, about 30 miles from houston of course its proving to be one of the most destructive storms in the nations history. Joining us now, tim manning is former deputy administrator of fema i think youre able to see those pictures if you were in charge now, what would you be doing and also what would you be thinking about as foremost in your mind . I understand, of course, the human tragedy. I guess beyond that in terms of what actually has to happen on the ground what i would be focused on right now is the same thing that fema and brock long, fema stlart is focused on. Thats life safety this event isnt over yet. The storm does seem to be dissipating in texas, going back out of the gulf but will be going into louisiana that rescue mission is not done yet. That would still be all of my focus. I would be looking out to the next thing, which will be the recovery this will be a longterm recovery fema and the local governments, state of texas, state of louisiana, people are going to be working on rebuilding for years. That work needs to rt start now. How difficult is it to ascertain exactly how much damage has been done given were still in the midst of the storm . Theres really no way to know at this point just how wide the destruction is to give you a sense, Tropical Storm allison in houston in 2001 cost 9 billion worth of damage. Hurricane katrina was in the neighborhood of 50 billion worth of damage. Hurricane sandy in the neighborhood of about 20 billion in damage. This is certainly on the magnitude of those storms. The percentage of uninsured loss and losses that are not covered in the National Insurance program are estimated to be well in excess of 80 youre going to see a great impact to texas and western louisiana and that recovery is going to take a lot of effort on the part of a lot of people. Tim, can you talk to us about some of the Health Care Concerns whether theres adequate medicine and food supplies, access to hospitals . I cant imagine that the floodwater is very sanitary. How does the government deal with this . That is a great concern floodwaters carry all kinds of contaminants its important to people, to the degree possible, to avoid that reports are that the shelters are reaching capacity. The focus of the government, search and rescue teams, femas efforts of emergency sheltering with the red cross seem to be focused on delivering that assistance that response seems to be going well at this point its something, certainly, to keep an eye on. Tim, such a gargantuan job in the moment of trying to keep up with the basic human needs and displaced populations and all the rest if you were coordinating this response, what is now happening to kind of bring ahead in the next few weeks what are the services and what do you have to have in place in the next stage of this thing there are literally thousands of people across washington and texas working to do those next steps, to make sure im sure theyre stacking up people in the fema Registration Centers right now. If theres anybody in the affected area they can register now for fema disaster assistance. Gov there are a great deal of efforts going under way now and probably will be ramped up over the coming weeks to bring that in that cleanup will be a Bigger Mission than the local government is going to be able to handle. While people are very willing to volunteer now, whats definitely going to be necessary is people willing to volunteer then to go in and help people clean up after the storm. Tim, have you ever seen anything like this, where days after the hurricane makes landfall we see another 10 to 20 inches of relentless rainfall . Thats right. The forecast looks like it could be up to 50 inches in some places weve seen catastrophic flooding, hurricane sandy, katrina. Weve had other Tropical Storms and hurricanes that have come ashore and parked. Floyd in North Carolina was one. The Weather Service had to change their scale to show how much rain is going to fall on their maps its so far beyond what theyve seen before unprecedented level of flooding disaster in texas and one that will require the entire nation to come together and focus on that recovery over the long ter term. Mr. Manning, thank you. As we continue to watch these pictures, they are frightening, heartbreaking, watching that town completely under water in dickinson, texas thats our crew down there from cnbc when we return, former wyoming senator alan simpson will join Rick Santelli. Thats a conversation youre not going to want to miss. Theyll talk about budget, debt ceiling. Later why the Housing Inventory crisis in houston is making relief efforts for Hurricane Harvey that much worse. A lot more squawk on the street after this hey gary, what are you doing . Oh hey john, im connecting our brains so we can share our amazing trading knowledge. Thats a great idea, but why dont you just go to thinkorswims chat rooms where you can share strategies, ideas, even actual trades with market professionals and thousands of other traders . I know. Your brain told my brain before you told my face. Mmm, blueberry . Tap into the knowledge of other traders on thinkorswim. Only at td ameritrade. Its been over 100 years since the first stock index was created, as a benchmark for average. Yet a lot of people still build portfolios with strategies that just track the benchmarks. But investing isnt about achieving average. Its about achieving goals. And invesco believes doing that today requires the art and expertise of highconviction investing. Translation . Why invest in average . R liwhy is mark unesco calng foa trading recession . More squawk on the street coming up next lets get over to the cme and Rick Santelli with a special on the debt ceiling. We have senator alan simpson, former republican senator from wyoming and attorney at berne, simpson, hurst. Its great to be back fire away. Depending on what party is in power, we always get the same excuse, just with a different label, whether its the democrats, republicans in this country, our politicians seem to think that its normal operating procedure to forever spend more than we take in we wear deficit spending and debt like a red literally red badge of courage what should happen with the debt ceiling issue . Should we just pass it, then abolish it it seems like its a horrible dream that keeps recurring every cycle. Its a horrible dream for the congressmen and the senators who see it come up all the time. But if you cant understand the debt limit extension or raising the debt limit or approving it is stuff thats already been spent. So dont stand there with a googleeyed expression and say, boy, im going to vote against the debt limit so we wont go into debt any further. Hell, that isnt what its about. Youve already blown the money what are you going to do, default . Thats what this is about. You cant get it done if you have these people say ill vote for it if we cut spending. They wont do it because theres no spending to cut its already been spent. And they never cut spending looking forward. Come on. Since the credit crisis, all the dangling participles of things that havent been done parts of dodd frank still arent written. This group that we send, a Different Group every couple of years, they always seem to end up with this void in their brains with regard to what you just described if youre against debt, try not to spend in the future if you hold back on the promises as you underlined youre kind of a chicken, arent you . Well, but, look, pal, if you cant if youre running for president on the basis that you wont touch Social Security or medicare and you vote for that guy, you know, who is who . You cant get there without getting in to medicare, the trustees of the system, the trustees of the Social Security system and your congressman is coming up at the town meeting saying i know the terrible problems we can get it without touching precious medicaid, precious medicare, precious Social Security and precious defense. You get up and say youre giving a terminological inexactitude you lying sack of through go. Senator, you can never get elected if you tell the truth and you really want to tackle the problems we need to face head on, it seems as though the Political Class is more worried about their jobs than they are about anything else. I dont see that changing any time soon. So, if we take it the way it is and assume that all the service that politicians should have for the country, theyre not going to change overnight. So, here we are. Another debt ceiling issue and, yes, if you cut all the things we need to address to affect future spending, youll never get elected. It seems like a problem thats insolvable. Thats right. And it will come to pass everybody on the commission with a brain, five democrats and five republicans, one independent fine people of all spectrum of the party says where is the Tipping Point . And the Tipping Point is very real when we owe 21 trillion and interest goes from 240 billion a year to 700 billion a year then youre going to scratch and look around and say which one of you s. O. B. S didnt pull the trigger on this when you knew it was going to happen . Then you go in and clean them up, hopefully. If not, grab up your socks and run for blocks. So, senator, im pretty sure i see exactly where youre aiming no matter what happens, even before the ultimate this is really the deadline deadline hits and we solve this and raise the debt ceiling, its just you have so many colorful expressions, you could use the metaphor, but we walk away from one problem but the real elephant in the room never goes away no, it doesnt. And its very sad because the people who are telling us of the seriousness of this are the trustees of these systems consisting of very bright democrats and republicans who are not elected, who are just patriotic americans saying, look, buster, you either get in and do something with the solvency of Social Security, which is the biggest elephant in all the rooms, and just make the change to retirement age to 68 by the year 2050 raise the money subject to the tax. Change the points and go to a cpi. You cant do any of that or aarp will tear your underwear from your body. They dont care about anybody under 50 thats a monstrous organization. 38 Million People bound together by love of airline discounts and scooters and bathtubs, you know, and erectile dysfunction ads. My final question, you know, one of the issues talked about on this floor is maybe the rating agencies will take our aaa rating away. S p already did. In 11 they havent put it back fitch and moodys havent. We lost our aaa with s p, it matters not. The reality under the surface is the same as it is throughout much of the globe. On your final answer if you had to have a position in the mrktplace, how would you think about the debt ceiling issues in front of us the next couple of weeks . I would think about it but wouldnt do much as long as i was making money i guess thats what the average guy sees out here in the weeds who is going to get into the esotery of the market when how Many Americans are in the market for god know the only market ty know is where they get their lettuce. So can you play that game. Can you run those things up and down, up and down the stream and all the wizards talk but it youre going to use gimmicks to forget whats eating you up and go to things like there is no need to even bring it up. You still have something that is off budget any time you come to something where you need a ton of money, just put it off budget you know, give me a break. I got you the gimmick is crazy. Were out of time here. Its always a pleasure to hear your logic the problem is i just dont know how we can get at these guys to do the job that they need to do sooner or later. Thank you again for theyll tell you exactly what they want to tell you. Youll swallow it. It always makes me a bit depressed to hear the senator zblechlt tells it like sichlt we miss having guys like him in the corridors of power, rick, thank you. But even when he was there, nothing really happened, even when he was there. So it really is double hey guys, got update you now on breaking news out of texas. We are getting an alert from the official twitter account of a county 30 miles south of houston where they tweet the will havee at Columbia Lakes has been breached this is something that we were on guard for and alert after, of course, Hurricane Katrina in 2005 where some of the levees and flood wall has been breached this is the first we know of that has happened in texas but clearly this is an alarm and for the people within that area, they should get out if they have not already done so. Of course, the levee has been broken and well report more as we know it Contessa Brewer earlier saying that reservoirs were overflowing. She said 30 miles southeast of houston and the water, the rain continues to fall. Those remarkable pictures from one of our crews down there in diggenson, texas, continue to come n you can see, thats a main thorough fair with strip malls, fast food, one you would see in many typical u. S. Towns you can get a real sense there in terms of the damage thats been done which is incalculable really when you look at. That its a major river in the midst of a major thorough fair well continue to kip posted on the disastrous flooding and, of course that, levee situation. Columbia lakes, brazoria county, just outside of houston. Lets send it over to jon fortt and get a look at what is coming up. There are all kinds of ways that people are trying to help out in Southeast Texas and the midst of this flood. Social media and technology is one of them. Were not just talking facebook and twitter. Were going to check in with one of the hea othsoal twksomg updsf e ci policy. How much do you think it cost him . 100 a month . 75 . 50 . Actually, duncan got his 500,000 for under 28 a month. Less than 1 a day his secret . Selectquote. In just minutes a selectquote agent will comparison shop nearly a dozen highly rated Life Insurance companies, and give you a choice of your five best rates. 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Now well off the session lows, staples and industrials the biggest gainers. Materials and financials are todays laggers. Check out utilities, etf getting a fresh all time high earlier in the session its on pace for the fourth positive month in the last five. Now the financials, a few regional banks losing the main grounds. Key cores regions financial, coamerica are lower by 2 w that, i send it back down down for the start of squawk alley to sarah, mike, and john back to you. Thank you, morgan good morning it is 8 00 a. M. At apple headquarters in california 11 00 a. M. Here on wall street and squawk alley is live