Transcripts For CNBC Squawk Box 20121029

But at this point it has decided to shut trading all together. That happened after it had conversations with other u. S. Stock markets and with u. S. Regulators, including the sec. And this is the first weather related shut down since hurricane fwlor i cant back in 1985. The cme group is running its urk of usual futures session from 6 00 p. M. To 9 15 a. M. Eastern. You will be able to see the stock Index Futures throughout the morning. They are under pressure right now. Cme will be shutting down trading after that time. So depending on the impact of the storm, its possible the same scenario will be repeated this morning. Three companies have canceled earnings reports. Pfizer, nrg and entergy. The government still planning to release personal income and spending data at 8 30. The question is did they decide to shut down the electronic portion because the s sec and others said we dont know whether the system unto itself will work, or they did taest it back in march. And they were undetermine pressure in banks and companies saying we dont want to send people to work. Its one thing to say we wont go it to the floor, but if you keep the can exchange oem, peop still have to interact with it. So the real question there. Lower manhattan is probably not a place you want to hang out. Goldman sachs which is right down there put out a memo saying you tonig dont have to come to work, but trading is open, so please come if you can. Which goes to the issue they are right in the heart of whats called zone a which theyre telling other people to evacuate. So i think this is part of whats going on. Sbl we. Weve talked about the greedy wall street types. Used to get a nickel to trade and now a basis point or something. Unless they go back to fractions. But thats why they did it now. They dont make anything per share. If there were fractions, they would still be open. Lets get down to new york city which is bracing for that storm surge and flooding. Thousands have already been evacuated. Mass transit is shut down. Scott cohn is in zone a in battery park. You wouldnt know to look at things now that there a big storm coming in, but weve already seen the water here in new york harbor starting to rise even though the tide is relatively low. And certainly by later on today where i am is going to be under water and ill be somewhere else. But i think what you were talking about in terms of the decision that the exchanges decided to make was the issue of people later today not only getting into their offices, but also getting out of them as things get worse. And the question now is whether they will reopen tomorrow and the current plan is that they will not. So that would be the first two day weather related closure since 1988. New york city is very, very quiet even for 6 00 in the morning. They shut down the Transit System last night. People have been heeding that. And a lot of evacuations again in the low lying areas, this socalled zone a where we are. But the worry is that the storm surge if it is as forecast, which will be worse than hurricane irene last year, could create some Serious Problems in terms of getting in to the subway system, in terms of getting into the con ed steam lines and potentially the electrical system. And so even if the wind doesnt blow out power, there could be pry empty differen preemptive Power Outages. So thats one of the many reasons that they decided to hunger down with all the Financial Markets. Stay home, theres money to be made later and well just deal with it. For now just a little bit of a breeze blowing here. That is clearly supposed to chan change. Where do you go later . You have to find a pole, right . You know that thats every guy out in a strong breeze, youve seen youve got to find a pole around there, right . Ill look for it. Theres light poles and stuff, but i think i need to get a little further away from the water. Yeah, that would be a good idea, too. Well have to get him a bungee cord. Okay. Lets get a little bit more on the forecast on the storm in maria larosa. As you mentioned, the storm has strengthened since the last advisory. Up to 85 miles an hour mfrp winds. The pressure has also dropped, but still moving to the north at 14 miles an hour. Still hasnt made the left turn. But you can see the rack takes it land falling likely someplace in new jersey to delaware late tonight to early tomorrow morning and then continues slowly into the interior northeast and new england for several days. So youre still looking at that wind field, whether its still a tropical system or subtropical low pressure impacting a huge area. Right now Hurricane Force winds extend out 175 miles from the center. Back to you. Paul walsh is with us and weve heard a lot of things thrown around about this storm, how weve never seen anything like this. Why is this so different . People look at it and think its only level one hurricane. Whats the big deal . I think the biggest deal is just how big it is. This confluence of events with the storm from the south and the cold air from the west, and weve generated this massive storm thats covering a huge area for a long period of time which will have huge impacts as relates to Power Outages which of course will have all the impacts on the consumers in those areas and it will trickle down into the economy almost without a doubt. I guess if you have a storm sitting right over you, what is it supposed to sit here for 36 hours or something . What does that mean in terms of rainfall . Probably five to ten inches of rain. Lots and lots of wind across the trees which still have leaves on them. They come down, power is out and then we have gridlock and everything is shut down for maybe more than several days. You remember last year the snow that we had. Snowtober. The leaves were on the trees. Ive never seen more branchs down. I would think snow on leaves would cause more Power Outages than wind. Is that are there going to be just as many incidents . Because the guys that had to repair stuff last year, they were repairing stuff for two weeks solid. And the tree guys, you still couldnt get an appointment. And every branch fell and wind, a lot of the leaves are falling, im telling you, theyre falling. So a strong wind will bring most of them down anyway, wont it . The difference here, its on broad, it will be affecting all of pennsylvania, new york. Gsome of the estimates are that this will be a power outage like weve not seen before in terms of the shear number of people. They were saying some of the big power lines, too, even the large transmission lines would be affected potentially by some of the winds. I can remember for no reason like even if the final game of the final four when youve got like a georgetown versus a villanova, everybody picks gr g georgetown. P if we underestimate it, we get whacked. If were totally overprepared, and youve had people with all these doesnt sometimes is it possible it goes the other way . Who way th no way this is not going to be as serious. Because the media does tend to jump on things like this. Its really a probability issue. Youre saying theres a 90 chance that we could see in massive infrastructure ahead versus a 10 chance that it wont. What do you make your bet on. There still could be less impacts, but you have to plan for plan for the worst and hope for the best. I know two does not make a trend, but should we worry that every fall were going to start walk manage to Something Like this . Why would we . Ive read a couple of pieces where people have suggested Huffington Post and New York Times probably, right some. That this may be the beginning of a trend and what that means to this region. I think the issue is if it is a trend, we wont really know it for ten years or 15 years because the time scales are so long. So its impossible to point at one do you know how much money geico has made since the katrina year, how much buffett has made . A fortune. What was that, 2005 . Yeah. But i do wonder if you did have trading this morning, what somebody look travelers or berkshire would be trading at. But weaved had less hurricanes since 2005 than you would think. Refinery, do you know anything about the plants around here . I dont know the specific plans, but i know thats certainly a risk. About 7 of the nations refining is done here in new jersey and dwell wear. And theyre right in the path. Absolutely right in the path. So i would expect to see those guys shut in if they havent already. Which will impact obviously gas prices. There was speculation how you could see Oil Prices Drop because no one will be taking supply. Thats true. Absolutely. Paul, thank you very much. Youll be inhouse with us. Im weathering the storm here. Andrew, im not kidding, last week, a sociologist writing for the Huffington Post said if this doesnt get us to completely try to get off all fossil fuels as quickly as we possibly can, this Upcoming Event now, this is affecting how many people are in the world is this probably lifehow many people are being affected by this . Its right here its about onesixth of the country. But you take the world, north america had a warm summer, but you look at the rest of the world and it was varying every single place. And thats what scares me about people that really do try to make a call as if i wasnt trying to i know, but im talking about the social yol guests that write articles about science. Lets check on the markets. Futures are trading, but down about 61 points. Half a percentage point for the dow industrials. Could i make the point since well be looking for things to talk about today, i could make the point that statistics from labor day to the election 90 of the time if the markets up, the incumbent wins. The number of 13,090. So 17 points above where we close the day before labor day. Ohio getting much closer apparently. Anyway, lets look at the oil board. If you look at the s p and how its come down recently, a lot of the risk assets have come down at the same time the s p has. Went up on qe and once revenue started coming in it light or denniss also pointed out we could see big margin calls. Take a quick look at currencies. Or the ten year. Probably down around 1. 7 or so on the ten year. Guess well go to kelly in london. Youre back over there. You made it. Thats good. I was on a flight out saturday night. I i know they started shutting town things on sunday, so i barely squeaked out of there. Did have to help grandpa clear the Deck Furniture before i left. But wanted to give you a sense of whats happening here back in london. A storm on both sides of the atlantic because even the outperformer in the euro stoxx 600, its ubs up 4. 5 because its rumored to be cutting 10,000 jobs. You can see, though, that most of the other stocks are in the red this morning. Down 0. 6 . And this basically has to do with the flaring up of concerns around greece and spain. Talks being held on wednesday about getting aid, but not necessarily an agreement as to getting the Public Holdings of that greek debt to be written down. Lets take a quick look at the major indexes. Seeing losses of about half a to more than that. C 40 down 1 . Guests this morning saying be careful about trading in the u. S. Because it will be so illiquid. We had asian markets more of a mixed bag. The bond wall as mentioned, were seeing this sort of rotation into quality. So bunds doing better. U. S. Treasury doing better. Spain and italy selling off a little. Quick look at currencies. The eurodollar is weaker because of these periphery concerns coming back to the fore. The dollaryen a little weaker. The aussie dollar has flipped up and trying to hold this 1. 0350 level or thereabouts. The yen by the way speaking of japan, we just have a little bit of focus ahead of the boj meeting tomorrow. The boj meeting will be a key one help how much more can they do to try it support the country and depress the value of the yen. And honda slashed its profit target by the year and cited its dispute with china as a key reason. Toyota and nissan report next week. So not a lot of great news to report from over here. Certainly well keep an eye on to 150e what the impact of sandy is, but again, a lot of people deciding theyll clear of this one for a couple days. And i have to wonder will they get the jobs report out on friday as expected. Good question. Also a little bit of news out from your neck of the woods. Pearsons penguin being mentioned with random house. Going to affect book lovers everywhere. Exactly. My book was a penguin book. Penguin will own 47 of the company. Some antitrust questions by the way. They control acts ov little ove respect abopercent of the marke and rue further murdoch will potentially try to jump in. Did you see titanic, did you see how a lot of people that didnt have rafts, they held on to each other and were like, okay, were safe now because they were holding on to each other. This is not good it for the Book Publishing business. They sank much slower they had someone to go down where. Well talk more about the merger and other issues related to the titanic of a ter tfter t break. Coming up, well find out how long travellers may be stranded. And will Hurricane Sandy rock the vote. John harwood will check in from washington. Welcome back. A quiet times square before the storm. Well have a Weather Channel update in just a few minutes. Well see whether they know anything that we dont know here at a business channel. I dont know why they would. Time for squawk sports as the east coast is preparing for Hurricane Sandy, i dont know what happened to the giants. Giants were in detroit sweeping the tigers. Winning four straight games to capture the title. Once you beat the reds and come back from two down, then the rest was easy for the giants. In case you missed sunday night football or saturday football, are they is kent state a full accredited now youre going to thrust an ohio school on top of it . They dont have video of that. I think what you should say to me is how did colorado do against oregon. I wouldnt go that low. Y picked against your alma mater. I know. Notre dame by the way, it you watch the first couple i watched in and out. I thought oklahoma was going to beat them badly with the way but they kept saying it was before the coverage, they let them have those passes. That was like the momentum if that hasnt happened, the whole outcome could have been different. I felt bad up they tied it. It felt good. And you know what else felt good . That guy, they almost scored at the end, and then he didnt get in and he was trash talking. And then they threw to him again and he pushed the guy away and then they never did get the touchdown. How does that feel . Never mind. Were pinning it all on notre dame. Lets go to the other story of the morning, Hurricane Sandy pounding the east koercoast, wi you about the storm rock the vote . Lets get to john harwood. Smuf co you have some cool graphics there. How is this impacting the ground game for the election . The two scores ahead with two minutes left. How is that looking, too . Update us on that. Now hes one score ahead and theres less time on the clock. Still a touchdown ahead. Interesting. You didnt hear me. I said eithers score. What does that mean . Do you think a field goal is a score . A safety is a score. Safety, extra point. And how much time is left and who has the ball . I think hes down a field goal, probably down two, field goal could win it for him. With how much time . About a minute. A minute to go. Where do you see that reflected . Other than entrade, what have you got . I dont care about entrade. Swing states. I guess you have obama up in ohio still. Yeah, i think obama does have a slight lead in ohio. Even though the cincinnati inquirer poll just had it tied. I understand that. Its not rasmussen. Which polls do we believe now . I understand that. Do you want me to should we keep going on this or shy deal with andrews question about the ground game . No, we better talk sandy i think. Okay. Sandy effect on the vote is entirely speculative. There are a lot of people yakking about it, but mostly making stuff up. Ill go to a couple things. First of all, obama is believed to have a somewhat more extensive ground game, he has more people on the ground. So in theory, he has more to disrupt. The president s schedule has him doing more events that will have to be canceled than romney. On the other hand, because romney is down a field goal and needs something to happen, the idea that sandy could flereeze things in place for a few days is not necessarily good for him because he had momentum after the first debate. The momentum seems to have died out. Its left him in a very competitive position. He could win the election. But he may need a little bit of push by the end. And then the other thing that people talk about is the idea that president obama can showrd shal leadership and hes helping people, using fema and other tools of the administration. Im kind of skeptical of that because i think people understand that thats a president s job. I dont see the president getting much mileage out of that. But who knows. This is a random question. If the election were held tomorrow, would they ever cancel or delay the actual election itself due to weather,s that that ever happened . Not to my knowledge. I think it would be very, very difficult to do. But, you know, Stranger Things have happened. Im not aware that thats ever happened. I mean, it certainly happened in particular jurisdictions. You remember in 9 11, they moved the Mayoral Election in new york city. So certainly theres press department for in the catastrophic circumstance moving the date, but ive never seen that in a president ial election and id be very surprised if that happens. John harwood, stay safe today. Appreciate your perspective on all of this. Well still be dealing with this football metaphor when the game ends. When we come back, well talk more about the decision to close nyse and nasdaq both bracing for the impact. Bob pisani will tell us about the plan for today. You do see futures trading today. 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You can see just how much rain we have going on this morning in norfolk and Virginia Beach up through d. C. And baltimore. Flooding rain a huge concern for us throughout the day, but theres the track. Were actually forecasting it very quickly to make that turn here into the u. S. What that means is increased wind speed, as well, by this evening, making landfall overnight tonight, likely somewhere in the south jersey shore and then coming inland, causing extensive Power Outages we believe with a huge wind field with this storm system and for many people, rain will be a big factor, as well. Five to ten incheses for d. C. , five to ten in philadelphia, three five in new york city, and peak wind gusts are already quite high including 52 miles an hour in ocean city. Expect them to double by this evening. Thats the latest. Joe, back to you. Wow. Yeah, those are big numbers. Appreciate it, mike. Heres what were looking for as far as trading. New York Stock Exchange and nasdaq completely shut down today. No stock trading at all. Originally the big board had planned to use its electronic platform to continue nonfloor trading today, but now decided to shut trading all together. The first weather related shut down since hurricane gloria. Glorloria gloria. Cme group is running its usual futures session, so we will be able to show you stock Index Futures throughout the morning. But cme will shut down after that time and its possible the same scenario will be repeated tomorrow. Pisani will tell us whether that will happen or not in a second. Three companies have canceled earnings reports. Pfizer, nrg and entergy. Say it faster. The government however still plans to release personal income and spending data and that will come at 8 30 a. M. Eastern time. And with the new York Stock Exchange closing up shop today, we have a guy who we never get to see here onset. Bob pisani is here to talk about the decision to close. We were speculating about whether this was about personal safety, whether it was about regulators deciding that the electronic portion couldnt handle whatever was about to happen. Whats the no, the regulators were in on the Conference Calls that occurred yesterday. But they dont really get that much involved. They give their blessings. So heres what happened. This was a problem with getting people in and then how do you get them out. Its not just about the floor of the new York Stock Exchange. Remember, theres a gigantic broker Dealer Community that exists. Youre bringing people in from stat ten islanen island, long i connecticut, the subways are shut down in zone a where theyre not allowed, where hotels are being evacuated. So what do you do with your personnel . How do you get them out . So the sequence was 3 00 p. M. Yesterday, nymex decided they would shut down because theyre in zone a. Right on the water. They were the nisfirst one. And then nyse said well shut down the floor. And then there was a Conference Call with all the major participants, all the exchanges, and thats when everyone weighed in and said this is a bigger problem than just whether we keep the floor of the nyse open. This is alled trading desks. What do you do with all of these people. We have to make a decision. And it wasnt until about 9 00 when there was a final decision made to shut virtually all equity trading town. And that makes some kind of sense. Why have a partial shut down of the operations. Were getting some notes, jpmorgan has closed the 4 ny plaza building. The rest of their facilities will be open with backup generators using some of they will. Bank of america, a similar note they put out pl so its a safety issue. I would have liked to see the original plan which is close the nyse floor and keep electronic trading and Everything Else open because this was the contingency plan theyve always had because never actually used. There used to an fess backup to the new York Stock Exchange in brooklyn. N. Case they couldnt use the floor at the but that was in brooklyn and that could be under assault. Mirror image of everything. Well, i call it the parallel universe, but as a practical matter, they closed the place down, the Electronic Exchange became the back up and this is the con continue against city plan theyve never actually used. I would liked to have seen how well this plan worked. Were there concerns about whether the contingency plan would actually work . Theoretically arca is perfectly scaleable. You can stuff the pipes tremendously with a lot more data and information and it will work fine. This has never been tried on this level before. Id like to see how they get stressed a little and see how they work. Do you still have a place across the street . No. I had the first floor and you dont have it. I live in jersey city. Im on the water. My apartment may or may not be evacuated. 36th floor, but the building itself is right on the water. If you have problems there we have to go, but do you think tomorrow no go . They will make a decision at 4 00 p. M. Today. If i had to guess, i would say they will not be open. Will there be the after hours trade . My guess is there will be nothing today. It will only get worse by 4 00 today. Good to see you in person. As Hurricane Sandy storms toward the east coast, more than 7200 flights have been canceled. Delta air lines is just one of the Many Airlines preparing for this storm and already feeling the impact. And phil lebeau joins us live from the Delta Operations Center in atlanta. That was a smart move, phil, go to Operations Center, but youre kind of out of its already passed you down there. Always at that time inside reporting job when it comes to a hurricane. Smart. Very smart. Is there a lot of activity or just a lot of canceling . You know, there was more activity yesterday because they had brought down about a fourth of their flights for the united states, all of those primarily based on the east coast. And this is what theyre watching here at the Operations Center as we zoom in there. Remember, deltas operations, they include hubs at jfk and laguardia. And then youve got shuttle, as well. And also you have the flight mrs. To d. C. And into philadelphia. The idea being lets bring all the aircraft out of there, not fly anymore. And we were here yesterday when they made the decision into why they had to bring down these flights. Winds will be ill get with adam after the call and well be right sizing the operation there based on the configuration and surface winds there. And that is the morning operations call. In fact they will be having another one here in about 45 minutes. Delta again canceling 2100 flights when you go from yesterday all the way through at least tomorrow morning. And again most of those being into the new york and d. C. Markets. 60,000 people exactly impacted, but when you look he at the ripple impact, youre looking at about 200,000 travelers impacted by the cancellations. And the idea, monitor sandy and see how quickly it passes through and they can start to bring back flights. Quicker in a couple of the new york citys because of some of the worry of storm surge and thats something were monitoring on an hour by hour basis. Even though the airports are shut down through monday and parts of tuesday as to how we ramp back up. And here is the airlines that are most impacted when you look at the new york stilly and d. C. Markets all the way up including boston. 17 into the northeast are delta flights and they have brought down their schedule by a fourth here in the united states. Theyve parked their planes as far away as their hub in minute. Planes in europe, theyre staying at their hub and other places. So most of the work has already been done. Now its a matter of monitoring sandy and seeing how quickly they can start to bring back flights. Phil, thank you very much. Whats our best guess as to how many people have been stranded . Oh, its hard to guess. I dont think as many as you would imagine because most people if they had a chance to get out, they got out. Plus the airports shut down. So its not like when you see a blizzard and people are camped out at an airport. Youre not seeing that. People have been notified your flights canceled. No reason to stay at that airport for the most people people have been moved out if they havent gone home, theyre staying at a hotel. That is true. Phil, thank you very much. By the way, if you have any comments or questions about anything you see here on squawk, if you have questions about what exchanges are open and when, the answer is basically none of them are open, although futures, they are trading. But go ahead, you can email us squawk cnbc. C squawk cnbc. Com. Still to come, well bring you a live report from the shore. And pse g is getting ready for widespread Power Outages. Would he a well ask the companys president how long the residents in the northeast could be in the dark. Well can back. U. S. Equity futures which still are open, dow looks like its off, nasdaq and s p all in the red at the moment. Sandy is about to make her way across the state of new jersey today and into tomorrow. You know this already. The reports say it looks like it will be one of the most severe storm surges on record. Kayla tausche joins us live in cape may. Whats it look like there right now . Reporter behind me the storm surge all rigready at four feet waves already at 19 feet here in cape pay. A popular resort and fishing town, but its most important characteristic, its just due south of Atlantic City. A popular area of commerce. Ghuf Chris Christie ordering the vak ace of some 40,000 residents and all local businesses including the 12 flagship casinos. Some stubborn locals want to stick it out, but for those, an emergency spokesperson said talk to someone who tried to ride out the storm of 1962 and see if they would do it again. And that storm wasnt even a hurricane. It was noreaster. And hurricanes actually making direct landfall on the coast of new jersey a very rare occurrence. Its actually only happened three times ever. Two unnamed hurricanes in 1978 and 1903 and hurricane irene making landfall as a Tropical Storm in aufg gust of 2011. When we talk to local business owners, they said the hit from irene was closing down business right ahead of labor day. This time the damages will be much worse. Business interruption is a huge thing. Irene was well over a Million Dollars because it was Labor Day Weekend evacuation. This is mid week in a softer part of our season, but it will still probably be over a quarter of a Million Dollars to our properties. Were focusing on just protecting the property and riding it out and then picking up the pieces come wednesday. Reporter well have more for you on how local businesses are preparing and battening down the hatches a little later in the show. Probably coming to you from a different location because where were standing right now in these dunes expected to be completely flooded by later today when Hurricane Sandy is expected to make landfall. Kayla, thank you very much. Be careful. Shes right there on the dunes and well check in with her later. How prepared is new jersey . Joining us is the president of new jerseys pse g. Ralph la rossa. This im glad youre on. I made the point earlier in a snow event we had in october of last year, leaves were on the tree, ive never seen more places that had to be fixed to get power back up because of the snow. Thats not going to be the case this tile. Are you expecting it will be just as many incidents that need to be repaired or can wind do the same damage as snow on leaves . We certainly do expect the same amount. Heres the problem. Were expecting these winds to be so strong at this point that well have many more damage locations than we would from a normal Tropical Storm that may come through here. These winds are higher. But what is the concern is the flooding that will take place and some of the storm surge into the lower elevations here in new jersey. Im wondering about i shouldnt be thinking only of myself, but in the leafy suburbs, i would think the though would take down more branches. But i dont know. I guess 80 miles an hour, we havent had anything close to that. So maybe im wrong. But maybe we quowont get 80. Maybe it will be 60 with some of this. Were all hoping. Ralph, when you weve been hearing from governor christy look, if the lights go out in your neighborhood, dont look for a truck any time soon because with high winds it creates a real safety issue for the crews. What would conditions be like before you actually send any of those crews out . We usually wait for the winds to drop below 45 miles an hour before our crews will go out and actually go up into the air. Each one of those situations is different. Well have to look at whether or not theres winds falling and what kind of conditions theyre facing. We do have crews out assessing throughout the storm and well have people in many of our substations assessing the flood conditions because well be watching those tides come in. What do you do to prepare aside from getting additional crews in and wait and watch. What weve done this year, we have over 1,300 line personnel here on site already. About 600 folks in addition to that who can trim our trees and cut branches away from our lines as they come down. Then what weve done is weve actually sandbagged many of our substations that are in the flood prone areas. Some of those walls are three to four feet high. Pump there is to pump the water back behind the sandbag walls that we put up and implemented a lot of different Lessons Learned including communications with our municipalities that were lacking during the last storm. Appreciate the update. Thank you. Good luck. Be safe. Thanks. Coming up, cnbc reporters on hurricane duty this morning. Up next, were going to get a live report from Brian Shactman and then at 7 00 well talk markets with mike santoli. Senior columnist at Yahoo Finance will join us on set. One is for a clean, wedomestic Energy Future that puts us in control. Our abundant natural gas is already saving us money, producing cleaner electricity, putting us to work here in america and supporting wind and solar. 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I had the great blizzard of 78. I will tell you that were an hour from high tide and were already about 30 yards past it. The dune behind me has been breached by water. The concern here is the storm surge like everyone else. I want to get percent perspective. Local officials said if you want to search for an apple store, you can get one in connecticut. Thats how far out we are. Were 20 miles from connecticut. The biggest concern really of residents here, 22,000 yearround balloons to 100,000 during the summer. Most of those people are gone. We have jerry seinfeld, paul simon, and of course were not far from Bernie Madoff mansion. Most of those guys are up high. Wind damage is a concern there and not necessarily the storm surge. Back to you. All right, brian. Thank you very much. Well check back in with you in just a bit. When we return, well look at preparations for Hurricane Sandy. Well bring live reports from the east coast and well talk to govern area jack markell and storm preparations in his state. Im getting married. Planning a life. There are risks, sure. But, theres no reward without it. I want to be prepared for the long haul. I see a world bursting with opportunities. India, china, brazil, ishares, smallcaps, largecaps, ishares. Industrials. Low cost. Every dollar counts. Ishares. Income. Dividends. Bonds. I like bonds. Ishares. Commodities. Diversification. Choices. My own ideas. Ishares. I want to use the same stuff the big guys use. Ishares. 9 out of 10 large, professional investors choose ishares for their etfs. Introducing the ishares core, etfs for the heart of your portfolio. Tax efficient and low cost Building Blocks to help you keep more of what you earn. Call your advisor. Visit ishares. Com. Ishares. Yeah, ishares. Ishares by blackrock. Call 1800ishares for a prospectus which includes investment objectives, risks, charges and expenses. Read and consider it carefully before investing. Welcome back to squawk box on this monday morning. Were covering Hurricane Sandy and its effect on the Financial Markets this morning. Lets get you up to speed on what you need to know about the markets and the storms. The big board had been planning to keep electronic trading open but then reversed that decision in the evening last night. Futures trading is taking place this morning. Cme group is running overnight future session until 9 15 a. M. Ea but then theyre going to shut down for the day after that. Dow component pfizer is among companies that canceled earnings reports this morning. However, the government is planning to release personal income and spending data for september as scheduled. That comes at 8 30 a. M. Eastern. Well of course bring that to you. Checking on futures which are still open this morning. Red arrows. Dow looks like it would open 63 points out. Nasdaq and s p 500 also off as well. Joining us now on the set, mike santoli, Yahoo Finance columnist. Were proud to have you join us on this very its been way too long. Not much has gone on in the last five years in the markets. Pretty calm. Good to be here. You were alternating with the cover story. Based on production needs by the way. To be honest with you, yeah. Who needed a color ad next to their column. Yahoo finance needed someone who could be right about things instead of clever in their language . Yahoo probably has had some people who have been right about some things. Now that youre gone, you can disagree with the cover. The cover is the poll. This is just a poll of money managers. They have turned a little bit sad lately. Okay. Its great to have you here. Appreciate it. Good to be here. Well continue talking weather. Right now we have meteorologist todd gross joining us. Todd is going to give us the latest on whats going on. Todd . Thank you. Were basically watching the storm very closely but its an unusual storm. You may not realize how unusual and why its getting all of the coverage that its getting. Basically were dealing with a storm center which is right now a hurricane but wont be a hurricane when it makes landfall. Normally you would say thats good news. Actually its not. It becomes a very strong whats called extra Tropical Storm. Like a winter storm but supervise esupe supersized and thats the problem. The closest analogy that we have is of course the perfect storm. Other than that, we have never really seen that happen before. It just comes slamming in from east to west on the new jersey shoreline and anywhere to the north of that center is where all of the water is going to come with it and that happens to be the new york city metro area, long island, southern connecticut, and of course the new jersey shore, which means a tremendous impact economically once the storm is all said and done. Theres other facets to the storm as well such as the rainfall but lets take a look at the rainfall in the outer bands right now of the storm. You can see already the heaviest is to the south of the center rather than to the north. The south of where its going to make landfall. Thats a whole different ball game. From philadelphia down through washington, d. C. Through pennsylvania, were dealing with heavy rains that will cause very significant flooding. Thats what were watching today. Firms the storm surge will be the story this evening and then the rainfall as the storm just sits put for a while. Keep you covered every aspect of the storm throughout the day today. Todd, i was going to ask him about the perfect storm. Quick question before we get to that. We know its a concern to be north of it because thats where the water goes. Its a concern to be south of it because of the rain that comes with it. What if you are right where that comes ashore. Is that as bad as they thought it would be . Thats unchartered charity. Close to the center you have the worst impacts. But when it becomes extra tropical, what really is going to happen near the center to tell you the truth no one is really sure. Never have he had had a storm do that cross the coast from east to west that was extra tropical like this. The perfect storm never made landfall. It skirted the coast. Were not sure. It could be significant damage. Toward new york city is probably where the worst wind damage will be as an example. Thank you. Well ask you about the perfect storm more a little later. I know youll be with us. Celebrity meteorologist on the set. Well explain what that means in a minute. Lower manhattan is bracing for a possible major flooding. Evacuations were ordered yesterday afternoon. Scott cohen has the latest. Reporter the lower tip of manhattan here and i think you can probably see new york harbor behind me and the water is definitely coming up. Were still a good hour, almost hour and a half away from high tide and the water is kind of lapping up every so often here. A lot of that is because its high tide and full moon. Fast forward 12 hours from now when we have this storm coming ashore, turning extra tropical as todd was talking about and more surge, more wind being pushed up here. Clearly the area where i am is going to be under water 12 hours from now. It gives you a sense of why they ultimately decided to do away with even electronic trading on the Stock Exchanges today because it would have involved a lot of people getting into areas coming into their offices where they shouldnt be and traveling in this area where they should not be traveling so 375,000 people in the socalled zone a, the low lying areas of manhattan, brooklyn, city island, so on, theyre hoping that many of those will heed the mandatory evacuation order. Subways are shut down. New york city is very, very quiet as we wait for sandy to wreak havoc on us. Okay, scott. Well check back with you soon in the next hour are so. Joining us to talk about among other things the storms impact on the state of delaware, governor jack markell. I am going to say markell because there are two ls. Governor, what do you want to do . I appreciate you are getting it right. Its taken a while. As long as you work with us. As far as preparing for it, it must be like deja vu all over again after irene. Because of irene, are you even more prepared at this point, governor . Well, we certainly have learned a lot with every storm. We have a great First Responder Emergency Response community in our state. Theyve been preparing for many days. That being said, this is a significant one. Were seeing a lot of flooding already. We expect people will be without power for a long time. Its a slow moving storm. Going to be several tidal cycles. Significant impact throughout the state. Compared to last year with both of those events that we had, you think theres going to be longer and more people without power . I do. I think the storm will be here longer for sure. Its slow moving. We expect more people without power. The utilities have been bringing people in from throughout the country so thats a positive. The challenge is that its so long lasting, the winds are going to be so strong that it could be some period of time before the utilities can actually put people up in their bucket trucks to put poles back up. Are the centers full near the coast . We had about 500 people in shelters last night. Small state. Seven shelters. We expect more. The amazing thing is if you look at the maps, the storm is still pretty far away. Just imagine how much worse its going to be as the storm gets closer to making landfall. Yep. Can hardly imagine it. As far as preparations, its difficult to do much other than just hunker down, i guess, isnt it, governor . What are the three most important things youve done . Weve done a lot. We put in a driving restriction as of 5 00 a. M. This morning. We did mandatory evacuation from saturday night to sunday night. And weve been very aggressive in terms of getting the message out to the people of the state. The most important thing is for them to use common sense. Theres so much that First Responders can do but people really have to use a lot of common sense as well. Governor, tell me if im correct. I believe that the president has declared emergencies in six states. Massachusetts, connecticut, rhode island, new york, new jersey, and pennsylvania. Not in delaware . Why not in delaware and what would it mean if it had been declared a state of emergency there . We expect that to come. We filed our paperwork as other states did. Fema is in process. We expect it to come. It really means all of the resources will be in place. Fema is already at our Emergency Management agency office. Its a Good Partnership with them and appreciate the outreach yesterday the president made to all of the governors and mayors in the area. Why would delaware not be included . Do you believe this will happen today . We expect to get hit. Theyre working their way through a lot of applications but again we fully anticipate it fairly soon. All right, governor. Good luck. Stay safe. We appreciate taking the time to come on with us today. See you later. Coming up next, find out how Hurricane Sandy will affect retailers, Energy Market and other sectors as it moves into the northeast. This special coverage of Hurricane Sandy and your money continues after this very quick break. Were back in two minutes. But , get married, have a couple of kids, [ children laughing ] move to the country, and live a long, happy life together where they almost never fight about money. [ dog barks ] because right after they get married, theyll find some retirement people who are paid on salary, not commission. Theyll get straightforward guidance and be able to focus on other things, like each other, which isnt rocket science. Its just common sense. From td ameritrade. Its just common sense. Hahahaha hooohooo, hahaha this is awesome folks who save hundreds of dollars switching to geico sure are happy. Id say happier than a slinky on an escalator. Get happy. Get geico. Melons oh yeah well that was uncalled for. Folks who save hundreds of dollars switching to geico sure are happy. How happy, ronny . Happier than gallagher at a farmers market. Get happy. Get geico. Welcome back to squawk box this morning as we head into the frankenstorm. We have read arrows. Dow off 68 . Nasdaq off as is s p 500. The new York Stock Exchange building is closed. Weve been talking about it all morning. The physical Trading Floor operations are suspended. Futures will continue trading as usual, however, until 9 15 a. M. Eastern time. Lets look at oil given whats going on with the storm this morning. There you have it. Brent crude standing at 109. 20. Wti at 85. 70. We can talk markets for a moment with todays guest host. Its not really frankenstorm. Frankenstorm is the doctor. Its frankenstorms monster storm. Its not the monster itself. It should be frankenstorms monster storm. We have to say storm twice. To be perfectly clear, thats right. Frankenstein was not the monster. It was the guy that created the monster. Get it straight. Mike santoli is here. Cnbc has a content sharing agreement with yahoo . We love you nonetheless which is why youre really here. You have views on how this will affect the markets or how we should think about this. Never good when you have three or four days in a row when you dont trade. Its not as dramatics because you have the ability of companies two days to defer quarterly reports. Not a lot of news that otherwise would be dramatically market moving. And also we ended with a whimper on friday. It wasnt really something that seemed like there was a lot of pentup energy in there that had to go somewhere. I dont know if people are talking about the 87 massive storm that hit london, which was the weekend going into the 87 crash. One of the many things people say contributed to the 87 crash here was that you couldnt actually sell in london. You kind of had people piling in. How long were they closed . They closed for the day on that monday. The market had been kind of a disaster going into that weekend. I dont think we have anything like that right now. It does seem as if all things equal you rather trade than not. Can you give us a big broad look at the market since we havent seen you. I think, first of all, doesnt it feel worse than a 4 pullback at this point . A lot of people feel it does because they see all of these identifiable, possible bad things out there. I think thats actually going to insulate us a little bit from this being a meltdown. We already presold here. We have qe perpetual. That to me is part of the wallpaper now. Thats hard to fight. Then you have revenue slowing and actually down. Earnings for the first two or three weeks of earnings showed us that companies are not doing as well whether its because of europe or china or whatever it is. You have two opposing forces. Hard to fight the fed but then it looks like fundamentals dont justify some of where the market is. Is that where you are right now . Roughly speaking. The thing that concerns me about what you lay out there is not the value of stocks right now relative to earnings or to me more importantly relative to anything else along the asset class spectrum. Talking about treasury yields at 1. 7. Its everything. Its reits overvalued because people need to get somewhere with income. You have all of these things. Common stocks are not the thing that stand out as being perverse in how they are valued. When you are this far in a profit cycle and bull market, you almost used up a lot of what you had. A tthe dow comes in and says we cant make next quarter or light on revenues or whatever. To me it doesnt start with the dow stocks. Those are guys that usually can fend it off for a while. The market has been telling you that. Cyclical stuff is in bad shape. China has given back most of what it built up in terms of gains from 2008. So i do think were on this tough position here where you have this maturable market. The flu is only dangerous to the elderly when it comes down to it and younger ones. So thats where we are right now. We just have to see if the corporate numbers are telling us what we already knew which was in july it was tough. We had a slowdown. Lets bring paul walsh into this conversation from the Weather Channel. You look at whats been happening with the storm and what that means for retail sales, whats it going to mean this time around . Its very interesting. The leadup to the storm which is generally positive for retail in general from a traffic perspective, this year it actually topped snowtober from last year. The weekend traffic was phenomenal. Because people knew the storm was coming. Because were so late into the Hurricane Season and into fall, that traffic i think benefited more than just the home centers and the usual suspects. I think theres probably a lot of people even in the malls so the net on a comp basis, the storm was positive for october retail sales. People were in the malls . Canned goods i get but in the malls buying clothing . Probably a halo effect. We are in fall. Predictions are that it will turn cold afterwards. There was more benefit than would normally be in the middle of Hurricane Season simply because there is more people out shopping buying things they need. It was bizarre. This time was it friday or saturday . Couldnt get a parking space at the supermarket anywhere around. All of the batteries are gone. All of the water is gone. Nothing happened for three days. All of the supply trucks are still driving around so batteries were resupplied. There was no reason to hoard. All of the people there early on getting stuff. You have three days. Finally it was empty on sunday. Had hard time getting water on saturday. People are panicked. Waiting in lines. That was me. You had three more days. I had to be here. There were people doing it yesterday. Saturday was the last day of fiscal month and fiscal quarter for a lot of retailers. Yesterday it was a zero day. They will get that benefit back. Well see big retail sales number for october but are those sales that are just pulled out of november . Yeah. So whats good for october is not good for november and we look as we talked earlier massive Power Outages that go through the weekend. Well lose that in november. Theres sort of a bright side to it but downside. Are you long dominos in a situation like this or short because they cant get to everyones home . Pizza. They lose their electricity. I got a pizza last night. They do great. I got chinese food last night. There you go. Japanese restaurant, Chinese Restaurant and dominos. It wasnt for me. Everyone has different things. My youngest son who graduated from College Works for pizza hut. I know that business was good yesterday. Good news for october. Maybe not so great for november. Probably bad as we go into november. Paul will keep joining us throughout the morning. And of course mike santoli is our guest host for the rest of the program. Coming up, chief operating officer of Long Island Power Authority gives us an update of how customers are dealing with Hurricane Sandy and dick grasso will talk about how this massive storm will affect the markets. Squawk box coming back in just two minutes. Try running four. Ning a restaurant is hard, fortunately weve got ink. 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Mary thompson is there. Reporter the port of baltimore lies just east of here. Im standing by the Chesapeake Bay in baltimore. Its responsible for the export of a lot of coal in the u. S. And also autos. The port is actually shutting down cargo operations. Some of the terminals will be open today. This is something thats happening along the east coast. Two other key ports also closing. The port of new york and new jersey and the port of delaware bay which is key for the refining operations here along the east coast in large part because the majority of crude used by those refineries is imported into delaware bay serving refineries in delaware and philadelphia. This has implications. East coast refiners account for about 6. 6 of total production here in the u. S. So ahead of the storm some of them are actually shutting down operations are reducing their run rates right now reportedly. Phillips 6 linden, new jersey plant closed down at 6 00 a. M. Today and hess refinery says its reducing operations. Others reducing run rates. We dont have confirmation on that yet. Now, of course this raises concerns the price of gasoline spiked slightly last night on expectations that reduce run rates will mean lower supplies. Theres an offsetting factor. No one will drive for the next two days. The region impacted by Hurricane Sandy will reduce demand on a daily basis by 2 Million Barrels per day. Whats of concern to the refiners is flooding or sudden Power Outages because that could mean it takes longer for refineries to get back up and running. Well be watching that. As far as pipelines that bring in gasoline from the gulf coast and other parts of the country, they are up and running. We spoke to the Colonial Pipeline last night. They said they are monitoring the situation. From a rainy baltimore where we expect anywhere from 6 to 10 inches of rain, back to you, andrew. Thank you, mary. Stay safe today. Comments, questions, about anything you see here on squawk, shoot us an email or follow us on twitter. Tell us business storm stories if youve got them. Dick grasso on the closing of the trading at the new York Stock Exchange when we return. [ male announcer ] the 2013 smart comes with 8 airbags, a crash Management System and the worlds only tridion safety cell which can withstand over three and a half tons. Small in size. Big on safety. [ male announcer ] the exceedingly nimble, ridiculously agile, tight turning, fun to drive 2013 smart. Check that out. The waves are definitely picking up. Welcome back to squawk box on cnbc and continuing coverage of Hurricane Sandy and its effects on the market. Mike bettes joins us with the storms latest track. Good morning. Good morning, joe. We have a heck of a storm on our hands. No question about that. 85mileperhour winds. You can see the spin here at the center of circulation just off the coast but impacts being felt inland. The northerly movement at 15 is now starting to take a bit of a westerly jog and make an approach toward the coastline. We anticipate landfall later tonight into new jersey but notice this. The very heavy rain along the coastline and then significant snow falling from ohio valley back down through mountains of west virginia. Potentially a deadly flood event taking place this morning in baltimore and washington d. C. It will be relentless rain. That impact already being felt and it hasnt even made landfall yet. Winds should increase 90 miles an hour by this afternoon. Make its way toward probably the delmarva here making landfall overnight. Quickly becoming a weaker storm once it comes inland. Far reaching wind impacts here across the northeast. We anticipate tens of millions of people to be impacted by Power Outages here. Likely here highlighted in red all of the way down through North Carolina and possibly even back into the upper midwest including wisconsin. Water rise will be a huge factor here. Were talking potentially four to eight. That includes long island here. The Long Island Sound, connecticut coastline, water rise could be as high as 11 feet putting people under water. Going to give quick timing here for boston to show you what you can anticipate today. Increasing winds. Winds gusting to 60. Periods of rain. Things only get worse as we go through the overnight unfortunately. Heavy rains. Winds even higher. Moderate coastal flooding. And landfall overnight tonight and tomorrow. Winds die down a bit. Winds slowly decreasing here but i got to tell you from boston down through d. C. , high impact event today through the day tomorrow. Okay. Thanks, mike. Appreciate that. Of course there is no stock trading today because of the hurricane. More on that in a moment. Lets get you up to speed on other headlines this morning. Big one, britains pearson merging penguin book unit with random house. Speculation that Rupert Murdoch could hop in there, antitrust questions, and big speculation this was sold in part because marjorie is stepping down. Now the question is do they try to sell the financial times. Penguin random house. They decided penguin goes first and random house is paying more. Honda reporting 36 jump in quarterly profit. The automaker is lowering annual auto sales forecast. The San Francisco giants are world champions for the second time in three years. The giants completed a sweep of the Detroit Tigers by winning 43 in ten innings in detroit. There it is. Is that amazing . Are you a fan of the giants . Im asking you a question. Youre looking at me like im crazy. I said many, many things over the last two weeks. I like the national league. I was hoping for giants. I dont like designated hitter. Giants beat reds. Down 31 against the cardinals. They scored more touchdowns, andrew. Any way, were going to why did you say that . I didnt think you would notice. Ive been weighing in on it. Did you watch the game . I watched a little bit of it last night. I did at the hotel. There was nothing else to do. I should say that to becky. You know because of kent state game. I do know because of the kent state game. Was that homecoming too . It was. It was supposed to be our easy game. It was a little rough. Were still 71. Ill take that. As we continue our coverage of Hurricane Sandy, our Brian Shactman is in montauk this morning. Reporter that is the atlantic ocean. On the other side is Long Island Sound. I know that joe is a fan of seinfeld. The sea is pretty angry, my friends, today. The water about half hour from high up through this fencing and in terms of historical perspective, this area has not been hard hit by hurricanes in the past. They talk about 1938. 50 people died on long island. Gloria in 1985. The real concern and of course you dont want loss of life is not necessarily loss of life but loss of property and that kind of damage and on this side houses are up on the hill. We talked to the supervisor of the area of east hampton and he put it in perspective his concern. On a scale of one to ten, how concerned are you . Im about a seven. Seems like its getting more with the wind. Absolutely. Could be working its way to an eight. I am a guy who is normally saying that the glass is half full. Seven to me is risky. I just worry about it. You can never be overprepared for these things. Reporter the zip code here is probably one of the wealthiest in the entire country. As i said, most of the multimillion dollar homes are set up on cliffs. If the storm does come around like a lot of people say it might, a lot of the expensive homes on Long Island Sound could go most at risk. They are worried about all of the homes, guys. There is Major Properties out here. Thats the worry of course. Its different for everyone depending on where you are and its north if the surge goes and more rain for the rest of us that have basements that flood. All right. Stay safe. Joining us to talk about the impact of the storm on long island on the news line, chief operating officer at the Long Island Power Authority, michael hervey. Weve had a long time to prepare for this. We hear its a marathon and not a sprint this time. Weve been preparing since the middle of last week. Youre right. This is a marathon. Its not like a normal hurricane that goes and comes inside a half day or so. We started to get winds last night. Had a few outages last night. Fast to get those customers back on. Sometime today when the winds come up, we may have to stand down for safety purposes. Theyll try to continue to restore power through the storm as much as we can. And then we have all day tomorrow to get beat up by the storm with the winds subsiding later or on into wednesday. We will take a lot of damage over the next few days. We have over 1,000 linemen here ready to go. I would like to have more but every utility on the east coast would like to have more. Were as ready as we can be right now. Youll see that surge. I guess everybody just stays locked down while its happening and then fan out as soon as they can, right . Well get to some point where the winds will be so high we cant safely work in the field and well have to bring them back in. But we will try to continue to restore power as long as we can. All right. Michael hervey, thank you for the update. Appreciate that today. Thanks. Good luck. Coming up, dick grasso on the decision to close trading. Equity futures will trade until 9 15 eastern. Squawk is back in two minutes. When we return, the latest on Hurricane Sandy and what it means for your money. Squawk box on cnbc is back in just two minutes. Welcome back. If you are just waking up, the markets are closed for trading this morning. Joining us to talk about storm preparedness and how wall street is going to handle this is dick grasso. Good morning. Good morning, becky. I hope all remain safe. We agree. We hope for the same thing, dick. Its been 27 years since the Stock Exchange was closed for weather. Back then it was for hurricane gloria. What do you think about the closing this time around and what do you think about whether or not there could have been trading done electronically . First and foremost, becky, its important to remember the human life will always trump the need to trade. You know, you make a decision based on what the experts are saying about this storm and the danger that its going to present to the Lower Manhattan community and to the northeast in general and i think its absolutely, absolutely the right thing that they remain closed today and possibly tomorrow because it would put peoples lives in jeopardy and even if you traded as new york is capable of doing on a fully electronic basis, there are two things to remember. Number one, people would have to be at the Technology Centers and at the exchange to monitor and to basically oversee the technology. You are putting peoples lives at risk, a. And, b, a lot of broker dealers who are providing the order flow to the markets, not just in new york but to the nasdaq and to the alternative systems that compete for trading share are going to be closing their facilities to keep their people out of harms way. So, look, a shutdown of a couple of days to save one human life is absolutely the right thing to do. We have heard about the federal authorities and regulators. Obviously they would have concerned about these things. How often do calls like this take place, dick . You know, becky, the agencies that share responsibility for our Capital Markets, the cftc, fed, treasury, they are all staffed by incredibly competent people who understand what i said a moment ago and that is while its important for our Capital Markets to function and given the fact that america is the Global Center of trading, its important to never put that responsibility and that demand ahead of the need to put people out of harms way. I think the fed and all of the overseers understand that weve had larger than a couple of days of market interruptions over the course of the last 100 years. Thenge closed for nine months at the peak of world war i. We closed for four days after the attacks of 9 11. Youre right. Hurricane gloria closed us for a day. The snowstorm in 96 closed us for a day and abbreviated our hours for a day following that. Then again, look, the markets will function. They will come back whether its tomorrow or wednesday. There will be pentup activity but i think its all very manageable and all from the perspective of professionals who understand you never, ever want to put people in jeopardy and this is something that had to be done. Back in 85 when we decided to close the exchange for hurricane glor gloria, we didnt do it until shortly before the 9 30 opening and some of the perimeter markets did open for trading obviously if youre in chicago or if you were in los angeles and there was some active markets in those cities and those days they opened but then they shut immediately when we announced our decision and they wiped out all of the trading. They basically canceled all of those trades. The perimeter markets although they could open because there were no storms when you go west of ohio, the perimeter markets cant really function without the primary market. Is there an argument to be made that there should be a better backup system in terms of electronic trading . The idea that actually ultimately even though the electronic trading is distributed, you still need people to oversee it and probably need to do it from one location . Andrew, you raise a good point. I think following the experiences of 85, 96, 01, the exchanges not just new York Stock Exchange decentralized their data centers and their Technology Hubs so that they would be able to accommodate any calamity be it a man inflicted like a 9 11 or weather inflicted. However, you have to remember, markets function based on the provision of supply and demand from broker dealers. If the broker dealers are closing to keep their people out of harms way, then the supply of order flow would be less than optimal and the pricing that you would get i think would reflect a volatility that no one would be happy with. Dick, if you dont mind pi t pivoting a little bit here, with this going on weve been hearing a little bit about rethinking of the way we trade in terms of decimals and maybe even bringing fractions back and widening out minimum spreads. Is that worth exploring a the this point based on liquidity concerns and other things . Its more than worth exploring. I think its something that the overseers, the cftc and s. E. C. With the markets have got to address and address quickly. Trading equities on a subfraction of a penny basis makes absolutely no sense. It really encourages all kinds of trading behaviors that shouldnt be in the marketplace. I long felt since the implementation of decimals and by the way, decimals were the absolute right thing to do. Pennies and subpennies were critical mistake. If we had kept the minimum variation at a nickel, right, there would have been a spread that incurred risk to buying and selling and would have maintained the incentive for capital to be allocated into the markets. With subpenny trading, no firm is going to put capital in the market to facilitate customer interests and it also with subpennies crushes the ability to charge commission. So what weve done is basically taken the lubricant out of the structure of the u. S. Markets. I think they should revisit it. My own personal point of view, we should go to a minimum price variation of a nickel and i think that would change the character of trading as we see it today to the betterment of liquidity and most importantly it would put the retail customer back on an equal Playing Field with all of the pros. Whats left. After 12 years the market hasnt done anything in 12 years. S p. We could have been closed for 12 years and we wouldnt have missed a lot. Joe, i think it would have impacted on your rating. It has impacted on our rating. We need them back. We need investors to come back. Maybe we need a nickel a share back. I think youre right. Im for that. I think it would be a very smart move on the part of the regulators and im sure that the markets will be able to adjust to Something Like that. Dick, thank you very much. Appreciate your perspective on this crazy day. Well call it a crazy day. Checking futures right now, red arrows across the board ahead of a day when the market wont be open. Electronic trading until 9 30 eastern. [ male announcer ] you are a business pro. Governor of getting it done. You know how to dance. With a deadline. And you. Rent from national. Because only national lets you choose any car in the aisle. And go. You can even take a fullsize or above, and still pay the midsize price. This is awesome. [ male announcer ] yes, it is, business pro. Yes, it is. Go national. Go like a pro. Looking at the pictures of waves building over montauk, new york. Six states declared a state of emergency at this point. You also have the stock markets closing both nyse and nasdaq and transportation is grinding to a halt. Airlines canceling flights, bridges and tunnels closing and amtrak canceling travel along the east coast. Phil, we know this has been a huge issue. What does it look like today in terms of what the airlines are doing. Theyve canceled pretty much anything on the east coast at least in the northeast. Anything north of washington, becky. The Network Morning Operations Meeting is taking place right now. Theyre assessing where they are and what theyre going to do over the next couple of days. When weve been here over the last day and a half, what weve noticed is they have drawn down their system. In fact, they have canceled a total of 2,100 flights when you count yesterday through tomorrow morning and theyll make a decision about when they start to bring back flights. Delta says 60,000 people have had flights canceled. Delta is parking its planes at hubs around the world and assessing when these airports on the east coast will be safe enough for them to start operating again. Make sure that we dont put any aircraft or people in there overnight to put them in harms way so that were clean at the stations with no airplanes to speak of and really most of the customers out of the airport. Were back live at the Operations Center. This is a map on the screen here. The white dots are flights you have to go west to tennessee, kentucky, indiana. Thats the only place where were seeing flights in the eastern half of the u. S. A few way up by maine and New Hampshire but you have to go down south by the carolinas before you start to see flights again. Well be here all day long. Again, theyre holding the morning Operations Meeting discussing where sandy is and when they can start scheduling flights again but for now theyre canceled at least through tomorrow morning for new york, new jersey, and all of the important hubs there in the northeast. Guys, back to you. Phil, thank you very much. Phil will continue updates throughout the day. When we return, well talk about the cost of sandy. Estimates of damage and cleanup as high as a billion dollars. Well talk about the Economic Impact of this storm when we return. Gas stations stressed as well. Some could shut down for days in the northeast. The director of National Convenience stores will join us with an update. Tdd 18003452550 lets talk about lowcost investing. 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Im joe kernen along with becky quick. Andrew has an update on todays market closures. A number of them. New York Stock Exchange and nasdaq will be shut down today with no stock trading as well. Originally they planned to use electronic platform to continue nonfloor trading today but it decided to shut down trading all together. Its the First Time Since hurricane gloria in 1985. Cme group is running the usual equities future session from 6 00 p. M. To 9 15 a. M. Eastern time this morning. Cme plans to shut down trading of equity futures and options after that time. It will, however, maintain all other electronic trading depending on impact of the storm. Its very possible the same scenario will be repeated tomorrow. Dow component pfizer and Energy Producers nrg energy and e everyonentergy. Lets go overseas in asia and see how things closed up there or closed down there in this case. Quickly to europe as we go across the pond. Ftse off marginally. 65. Cac off as well. Hurricane sandy is making its way toward the new jersey coast. Reports say it may be one of the most severe storm surges on record. Kayla tausche joins us now from cape may, new jersey. Reporter that storm surge is well over four feet right now. We moved a little bit farther inland because as you can see behind me, the waves are starting to crash. They erased all sand that you can see and now crashing over the dunes. Businesses all along the new jersey shoreline, which is 83 miles long, batoni iclosing dow. The biggest industry where we are is commercial fishing. The largest port is in cape may. The fourth largest in the nation. Heres a look at how big it actually is. Commercial fishing business in cape may is the biggest business in cape may and biggest business in the county. Its huge. Reporter this storm is coming toward the end of the season which lasts march through october. Thats not the case for the gambling industry. Hurricane irene cost Atlantic City casinos nearly 50 million in revenues when it hit last year. The month of october is very large. Averaging over 200 million in revenues in casino winnings across the 12 flagship casinos. 2 million in revenue a piece at those casinos and with big halloween parties expected to occur and now canceled, the cost of sandy is becoming clear. Were feeling the winds pick up very strongly here on the coast of new jersey. Cape may is all but shut down. A lot of its residents evacuated. Every business boarded up. Its just the newscasters here waiting out the storm and actually braving out the storm we should say. Well have the latest for you every hour as it happens. Back to you. Thank you. Stay safe. Okay. Lets get an update on the storms track from the Weather Channel maria la rosa. Latest advisory in as of 8 00 a. M. Key numbers unchanged. Max winds at 85 miles an hour. Pressure still incredibly low but unchanged from last advisory at 946 millibars. It has picked up Forward Motion now taking that jog to the northwest that we expected. Northwest at 20 miles per hour. It will gain a lot of ground between now and landfall. We still expect the landfall to be somewhere in south jersey into delaware late tonight and early tomorrow. Keep in mind, this is a massive storm. Outside of that center line, the impacts are going to be huge not just in severity but in scope. Take a look for example at our wind forecast. Taking you through the next few hours. The orange being Hurricane Force gusts. The yellow being Tropical Storm force gusts. It moves to the north and west but youre already beginning to feel those gusts by dinnertime tonight. It begins to make that landfall. You still have the back edge. By tomorrow morning still a large area central pennsylvania, west virginia, virginia, maryland, all experiencing the potential for those Hurricane Force gusts. Look at the area with Tropical Storm force gusts from new england down to the midatlantic, North Carolina, virginia included. Back over to you. Thank you. Analysts like our next guest are busy crunching numbers on potential damage. Joining us is chuck watson, director of research and development at kinetic analysis coranalysis. We can get damage estimates down to 10 or so. Even though this is an unusual storm, we probably have a good handle on potential damages and impact. Thats amazing. Where are we . Well, its not good. You may recall during irene i was talking down the potential armageddon scenarios. In this case, this storm may actually live up to the hype. Were currently looking at our models showing 12 to 15 billion in damages. I could see 20 billion because part of the issue here is this storm is a hybrid. It has some winter storm characteristics and some hurricane characteristics. The size of the wind field is phenomenal. Power outages from virginia up to vermont basically. When you throw that in with one of the areas youve talked about that im quite concerned about is refineries. We were looking at linden, new jersey, along the delaware bay, infrastructure there is vulnerable. Water levels are already two to three feet above normal. Were seeing potential and i want to emphasize potential but were seeing potential 15 to 20foot storm surges along parts of the coastline. If that ends up in delaware bay, if it jogs south or nightmare scenario jogs north, you put that into new york harsh harbor talk about water in the subway system. Those are really unpleasant scenarios. Its a wide area, i think, chuck. How much was andrew down in florida and miami . Do you remember . Wasnt that like 15 billion or something . Andrew was approximately 26 billion at the time. If it hit today, you would talk about 40 to 50 billion. That was right at the point of impact i think of all of the destruction. This is different because its spread out and its flood damage and i guess wind damage, right, but not like concentrated . Thats a great point. Thats what is so economically disruptive about this storm. When you talk about this wide an area having outages, just to give you an example, the extent of Hurricane Force winds for andrew was only about 30 miles across. For this storm, were talking Hurricane Force winds in 150 to 200 mile across range. Its phenomenal. Winds arent terribly high. If this was typical 85mileperhour normal sized hurricane, wouldnt be so excited about it. You would talk maybe 5 billion even with a direct hit on the jersey coastline, new york city area. Were talking three to four times that level of damage because its so large and because the storm is taking on these extra tropical characteristics. In terms of storm surge, it could be high along the coastline. Inland Power Outages, some areas wont get power restored for weeks. Not because utilities fault but for one thing theyll play whack a mole for a while. You have winds staying above 35 miles an hour possibly through the end of the week in some areas. Chuck, youre estimating that the damages would be closer to 15 to 20 billion. Thats the range were looking at. I wouldnt be surprised upwards of that 20 billion. It gets a little bit hard with this kind of storm because a lot of these impacts will be secondary. You think about loss of business. You think about lots of little damage is roof damage. If you have with a typical concentrated hurricane, it may be a small area with really severe damage. In this case youll have lots of roof damage over several states. I hate to bring it out into numbers, but when you start looking at a situation like that, it may be not as devastating for some of the Insurance Companies because this is minor damage on a roof or something, you talk about a deductible people have to pick up themselves. Great point. The deductibles are higher than in the past. Of course the consumer its bad news because its more out of pocket. For the Insurance Companies, the other thing is they havent had a lot of business dig aig disas year. There is not the impact like last year with floods and irene and several things hitting and Global Markets are in better shape because last year of course we had the earthquake in japan. Its worse news for the consumer, which could mean worse news for the economy overall because people will have to use that money to repair things rather than go out and buy things they might have otherwise been on track to buy for the Holiday Season. Exactly. Thats where im concerned about a lot of mid and small sized businesses that dont Carry Business interruption insurance for instance. Someone out for a couple of weeks. Markets are very competitive. What tends to happen is if youre down, your longterm clients may find other suppliers and may lose out longterm. These ripple effects through the economy from disasters can be quite complex and because this covers such a large area and because the economy is fairly fragile right now, im afraid this is going to have effects that are really disproportionate to what you would think of from a storm like this anyhow. All right. Sorry to be depressing. Plan for the worst and hope for the best. Chuck watson, appreciate it. See you later. Take care. Lets get back to our guest host, mike santoli who is a senior columnist at Yahoo Finance. Cnbc has a content sharing agreement with yahoo . Mike, you hear of things like that and it puts a finer point on issues we may not have gotten to. This could have a disproportionate effect that consumers could have to pick up a lot of this themselves. I think that its going to raise anxiety levels but one thing im sure about is that it will inject static into Economic Data that comes from here on out. That could be played two ways. You can be a blanket excuse or a matter of this is the thing that tipped us into an even weaker start to the Fourth Quarter than we anticipated. I dont know how to kind of war game it right now and try to figure out if theres a play on it really. I do think that it sounds like a humongous number. I dont think in the grand scheme of the economy thats really a crippling blow. Its much more of kind of an expensive distraction and something that really fouls the data for a while. And then it adds to the data. It just becomes noise for a few months. First you subtract and add rebuilding. Also spoke very briefly about the refinery situation. We have been watching Oil Prices Trading today. Oil is trading. Gasoline prices are trading. Oil prices coming down. Gasoline prices pushing higher. As dennis pointed out earlier today, youll see that because with refineries either shut down or on verge of being shut down, they wont take delivery of crude oil and you wont have as much gasoline. Heating oil too. Regionally. Were talking about this is always a regional thing. I think that if anything that just kind of takes back the gasoline tax break people have been waiting for. Youve had domestic numbers on the consumer side look okay and what do you know . Getting into Holiday Season we have a little bit of a break on gas prices coming off the boil. Maybe that changes the picture there a little bit. Right now it seems like you dont see Energy Markets panicking at the moment. Not yet. It is interesting what this is going to mean for the consumer. A lot of not great things for the consumer as you mentioned. Maybe a slower start to get out of the gate. Thats the way it looks. Its funny. Dick grasso says we made the call to close after hurricane gloria before the open. Right now you have data that people are relatively confident in and models telling you for how long in advance. To me it almost creates a tremendous buildup in economic anxiety and you get that front loading of spending right there and then you sit around all day and watch tv hopefully. We hope. Mike, thank you. Well have more from mike throughout the program. We hope. Coming up, retailers making preparations for the storm. Well check in with home depots Hurricane Command Center right after this. [ male announcer ] this is joe woods first day of work. And his new boss told him two things cook what you love, and save your money. Joe doesnt know it yet, but hell work his way up from busser to waiter to chef before opening a restaurant specializing in fish and game from the great northwest. Hell start investing early, hell find some good people to help guide him, and hell set money aside from his first day of work to his last, which isnt rocket science. Its just common sense. From td ameritrade. But proven technologies allow natural Gas Producers to supply affordable, cleaner energy, while protecting our environment. Across america, these technologies protect air by monitoring air quality and reducing emissions. Protect water through conservation and selfcontained recycling systems. And protect land by reducing our footprint and respecting wildlife. Americas natural gas. Domestic, abundant, clean energy to power our lives. Thats smarter power today. Welcome back to squawk this monday morning. Look at futures ahead of what is going to be a closed market. S p 500, dow and nasdaq all off. Well find out of course whether the markets will open tomorrow. The expectation at the moment is they will not. As unleashes her wrath on the northeast today were turning to home depot. On the squawk newsline is the Hurricane Command Center captain. Doug, with he appreciate you coming on the line with us this morning. Tell us about the weekend going into this in terms of your plans and what your expectation is on the other side of the storm. Absolutely. Weve been in planning mode since early last week. Command center opened on friday and then the team was here throughout the weekend. What does that mean exactly . A multifaceted storm. Huge in size as you have been reporting. So were covering everything angle of the storm. What does that mean exactly . Terms of product that youre getting out to stores, people that youre going to have on hand. Two distinct phases. Prestorm. Its the plywood they need to board up with. Flashlights, batteries, water, all of the things you typically want in advance of the storm. Weve been planning all of the post needs. Cleanup, roofing supplies, tarps, generators, more batteries, more flashlights. Those things are all in preparation as well. I dont know if this will sound like an indelicate can question but are storms profitable for you . Storms are closed down during the storm but on both sides you have to do well. Our core value is to give back to the communities that we serve so this is about taking care of our associates and taking care of our customers. Obviously theres a lot of cash registers ringing and our stores are very, very busy. Its good for the economy absolutely. Your store in new jersey was shut down for a week last year. It is what it is. Have you already seen where you ran out of stuff on friday or saturday and then already able to restock stuff . Weve had plenty of time. No one should be without batteries or flashlights at this point. Werent you able to restock on friday or saturday . The pace in the stores is so robust. Customers have come in. Good news is weve been able to resupply through this morning. Customers have been able to get the goods that they need in most of our stores. If i need a generator, i can go out and get one . Depends on the store youre in. Weve gotten as many trucks into those stores as we possibly can. Depends on which store youre in. There are stores that have generators but its a store to store basis. In new jersey there are stores with generators . Its possible. It would be store by store and specific to that local store. Customers would have to check with the store manager. We should show at some point today a chart of thgenerac. When they are hooked up to natural gas, they are there and ready to go. And you dont need to go to a gas station and load up a bunch of tanks and pour it into the generator and start it up like a lawn mower or something. The market is not trading. What is more profitable, margin on batteries or plywood . Depends on which vendor you are talking about. We really dont talk about specific profit on items. Depends on which one is easier to gauge at any given time. Good thing here is state of emergencies are declared we lock down pricing. We lock down pricing well in advance of states of decree and the majority of states we serve locked down in the northeast at this point. Price gauging may be somebody elses problem but not home depots. Is there a state where you have seen people get more quickly into the stores or is this pretty much across the board everywhere. Robust from florida into maine. Every single customers were preparing. Weve had activity in all of those states as the storms track from south to north. One other question for you. Weve been talking with retail experts and weather experts who suggested that potentially this is a situation where you do see really high same store sales for the month of october but it pulls sales forward from november. Whats your experience with this . Is this something that pulls sales forward or are these sales that would not have occurred without this storm . There are unique items that are storm related. Those sales are all net new sales. As you look forward to the Holiday Season again, unique gift giving type scenarios th s. Two unique sets of sales opportunities. Thank you for joining us this morning. We wish you luck as the storm progresses and as you try to help customers. Thanks for having me. Take care. A lockdown on prices. That was interesting that they do that. Thats good news. Unfortunate for shareholders of home depot but good for shoppers. Coming up, personal income and spending data and then a closer look at the Energy Markets and the impact that sandy will have and what traders are expecting over the next several days. First thing a guy talked about was refineries. This many states you know there will be refineries in the way. As we head into break, check out the price of crude. Welcome back to squawk box. Were keeping an eye on Hurricane Sandy and an eye on the futures this morning. Futures are indicated lower. Stock markets are closed but futures open until 9 15 eastern this morning. Lets tell you about headlines in the news this morning. Clean harbors is buying safety c c kleen. Companies like pfizer which is a dow component putting off Earnings Release because of the storm. When we come back, were just a few minutes away from personal income and spending numbers for september. Those numbers are going to be released by the government. Well bring you data after this. [ male announcer ] you are a business pro. Monarch of marketing analysis. With the ability to improve roi through seo all by cob. And you. Rent from national. Because only national lets you choose any car in the aisle. And go. You can even take a fullsize or above, and still pay the midsize price. Im going big. [ male announcer ] good choice business pro. Good choice. Go national. Go like a pro. Welcome back to squawk box. Were just second away from income and spending data for september. We think they will still release it even though we saw pfizer said were not going to release. Burger king released earnings. They beat expectations. Kevin is standing by at the cme in chicago laughing that were here with this this innth bearing down. Steve liesman is in the studio. You came in for personal income and spending. Yes. You should look at joes face as he says that. As long as youre here, i hope you will have good insight. I think i will. Interesting story going on that ill explain in a minute. Whats the numbers . Here we go. Hopefully. I dont see it. Weve got a delay here. Ive got chicago midwest manufacturing at 93. 4. Down from 93. 8. Call the mayor. Whats the sound of data not being reported . Sound of one hand clapping. Silence. Not as expected. I dont see it on our wires either. For more on the data and impact of Hurricane Sandy, lets get to steve liesman. Earn your pay. Lets say it did come out. There it is. Spending. 8. A little better than. 6. Cant see any revisions yet. 4 as expected on income side. Better on spending. Certainly retailers were showing that. We should be able to get some information on the deflator. Real Consumer Spending 0. 4. Your data is faster than mine. Deflator is at 0. 4. I like this. Its random. Theres pc at 0. 4. Still no revisions that we can see. Its one of the things we want to talk about is the issue split between business and consumer. There is the pce for september. Unchanged over the year. Core is 0. 1. What does this mean . This is coming out so piecemeal i dont get it. Better spending. Income 0. 4. Its explaining some of the better survey numbers we had about consumer sentiment. Housing up a little bit. Its also a piece this is what i want to throw out to the table. The worst earnings numbers. What weve had during this recovery has been a situation where there have been extraordinary profits for a postrecession period but lackluster wage gains. It feels a little bit like were having a reversion to the mean here. Companies are retaining less profit but actually paying their workers a bit more. And this is something thats helping out overall keep Retail Sector intact and keeping consumer intact. Thats one of the reasons we see it negative along with other measures of business confidence. Its the split in the economy. Now were getting just a little bit more data here. This is interesting. The reason for the delay on this is the data was released only on Commerce Department website and not with usual lockup since theres no personnel there. Commerce website to get the information. The core inflation figures were spot on expectations. No change up 1. 7 for the year. I got it now. September 0. 4. Disposables 0. 4. If you take out inflation, you come up with zero on disposable income. Im interested on savings rate. Do you remember what the numbers are . Usually i get a table. I dont have that. Overall personal income 0. 1 in august. 0. 2 in july. I have to look back at the old numbers. Talk amongst yourselves. Spending was 0. 5. Im trying to get prior numbers here. For august . I have them right here. What numbers do you need. Disposable personal income 0. 1 . Personal consumption was in current dollars 0. 5 . Real spending is up 0. 4 . Real income 00. I dont have wage and salary number which is something that would tell me whats going on in the private sector. Do you agree with the assessment of this . Theres definitely something going on in terms of companies having done all they can if you look at the past cycles in less dramatic form we saw something similar. You saw them in the third year of the recovery, fourth year of the recovery, thats when you finally saw the labor market respond. We had the first jobless recession in 90s and then another one. Theres something to that. Its a matter of what was the last thing that made ceos feel incredibly stupid . What that was was actually having too much cost going into thiscrisis. Therefore, they wouldnt make that mistake again. Thats why you have the lag effect on labor. We hear people yelling behind you. Open outcries open there . Were ready to go. Electronic and open outcries. There was a flurry of activity here and the bond contract moved up about 30 seconds after the numbers. The spending side was okay. I think you have to watch. At one point i would say to viewers well close the s p contract at 8 15 and as of right now i just spoke to the control center, reopening it is still under discussion. We know were closing. Address still no definitive answer on when well reopen. Theyre considering reopening it when . The normal would be 5 00 central time this evening. And so thats still influx. So well go through the day in a normal fashion open outcry and electronic. Thank you. We want to talk about the storm and pattern of these things and how they affect Economic Activity. If we go back and look at the prior history of these things, what you put it with a well advertised storm, the activity shows up in the data. A small surge in Economic Activity before the storm and then you get depressed Economic Activity during the event and then you have a bounceback afterwards. Next month when we see numbers what i can show you is do you have those employment numbers from 2005 that i put together . What you see is this depression around katrina. Employment levels were depressed. They bounced back. This is from katrina. This is from katrina which was a major event. You see those bumps there which were september and october and then they come back the next month. Then look, because its all damage dependent, the Employment Level in Orleans Parish never came back. People dont move back and thats lasting effect from that. We dont expect that in this case. We want to get down to Lower Manhattan which is bracing for that possible major flooding and evacuations were already ordered yesterday afternoon. Scott cohn has the latest. Reporter andrew, i can tell you things are definitely getting worse. It is high tide at the battery so thats some of whats going on here. Take a look. Earlier this morning if you remember, i was on a dry area here overlooking new york harbor. The water is now up to my ankles and if i go back it will be up even higher. Now, if you take this and you consider high tide this evening about 12 hours from now, which is about when the storm is going to be coming through and transitioning to that extra Tropical Storm theyre talking about, youre talking about several inches if not a foot of storm surge on top of this. This is what theyre looking at. You get from here into potential of flooding steam tunnels, flooding subway and then you get to some real damage. Now you understand why we have the closings that we do. You have been talking about this all morning. Well run through them again. All equity trading, all stock trading in new york is closed. All equity futures including Index Futures closing at 9 15 electronically and not trading throughout the trading day. New York Public Schools are closed. Broadway theaters are closed and the thing is that this could happen again tomorrow because what were feeling now is just the first teasings of Tropical Storm sandy as it comes ashore tonight, tomorrow, is going to be even worse. Right now were standing in the water. Back to you. When are you moving locations . Reporter well see what happens. We have a little bit of dry land that way that we can stand on but when the winds get bad, thats what were worried about here because we are exposed. I see some cables behind you. Be careful. Youre holding a mike standing in water. Theres a cable. I see a wire. Reporter everything is good. Everything is good. Thats just a phone line. Everything is fine. Were careful. If you see me start to glow, thats a problem. Be careful. All right. Scott will continue to bring us updates hopefully hes going to be moving to Higher Ground very quickly. When we come back, well talk more about the storms impact on fuel prices. This is huge because refineries all up and down this area just in new jersey and delaware alone. That accounts for 7 of the nations refineries and they are right in the path of this storm. When we come back, well talk crude oil and gasoline plus john is the director of motor fuels at the National Association of Convenience Stores will join us as well. Squawk will be right back. Nowp with the etrade 360 investing dashboard. Etrade 360 is the worlds first investing homepage that shows you where all your investments are and what theyre doing with free streaming quotes, news, analysis and even your trade ticket. Everything exactly the way you want it, all on one page. Transform your investing with the etrade 360 investing dashboard. 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Up isnt easy, and we ought to know. Were in the business of up. Everyday delta flies a quarter of Million People while investing billions improving everything from booking to baggage claim. Were raising the bar on flying and tomorrow we will up it yet again. Those are pictures from Battery Park City in Lower Manhattan. This is zone a which has already had mandatory evacuations except for the news crews who you saw standing in front of that camera. Welcome back to squawk. Hurricane sandy could Impact Energy prices in the northeast. Its already doing that with trading were watching this morning. Joining us this morning is matt smith. Matt, weve watched this morning because oil is trading, gasoline is trading and what weve seen is Oil Prices Drop. Gasoline prices go up. How big of a concern is it for refineries that are in the way of the storm . Its a huge concern. As you mentioned, refining utilization in the northeast makes up 7 of the total of the u. S. The three refineries in new jersey, 240,000 barrels a day is already shutting down and the other two are cutting back on rates and so thats really why were seeing gasoline prices spike up. If we see a shut down for just a couple of days while we expect the worst of the storm to be here, whats the impact of that and then what happens if you get either longer Power Outages or if by some way water works their way into the refineries. Sure. Thats the biggest concern in terms of a power outage is not actually wind damage or anything like that. So i think if we do see Power Outages that would knock refining for perhaps a week or Something Like that. Also theres one in philadelphia as well which is closing down. Thats the largest in the northeast. We could really see an elongated price spike for gasoline and even if we dont necessarily see that on the nimax, well see that in retail prices. 7 of the u. S. Production is in the path of the storm. Where exactly are the end markets there. Parallel with where refineries are . Where may you see the prices . People have already gone to the gas stations and filled up and then stations are running dry. With the retail prices, its a whole different animal really to the minimax contract. That will be felt across the board. Are there pipelines that take the refined product to other parts of the country . Does it go down toward new orleans or just in this region . Its the opposite. What you see is a couple pipelines that come into the new york and Northeast Area there and so thats also a concern because if we see Power Outages on those that are sending products into the northeast, that would exacerbate the situation even more. Thank you very much for joining us this morning. Thanks. Hurricane sandy is also impacting gas stations up and down the east coast. Joining us now on the squawk newsline, the director of motor fuels at the National Association of Convenience Stores. John, its moving in anticipation of the event. We did have a gentleman talk about how many refineries are actually in harms way with this going on. I guess its almost like futures. It moves in anticipation already, right . A lot of times the wholesale price of gasoline will move in anticipation. One of the challenges that matt mentioned is retailers only have a couple days of inventory on stock typically and in anticipation of the storm, customers go out and buy fuel when they dont need to buy fuel so our inventories get drained. If you have disruptions, it takes a while to get that replaced in retail location. That would cause prices to go up with supply and demand so prices go up beforehand. Prices go up beforehand. What often happens is a retailer cease their inventory start to drain and they may decide to cap mandatories. Competitors will start raising prices because supplies are down. Theyll get notifications for the next delivery which may be tomorrow or not until the end of the week going up. Theyll try to increase the prices to cover the price of the next gallon they have to buy. When do you get a situation where you are accused of gauging for doing Something Like that. Governor christie is warning businesses not to take advantage of consumers. When your prices go up during an emergency, you are potentially going to be accused of gauging. Our suggestion is when you are making pricing decisions especially during emergencies, dont change the criteria which which you make your decisions. If you are accused later and you have a consistent pattern by which you have made pricing decisions, you will be protected by a legal attack. From a customer perspective, everyone is looking out for who is raising prices. The reality is in situations like this, the retailers want to stay in operation. They want to provide fuel to customers. They want to provide open stores where they can get water and ice and batteries so theyre trying to stay in operation as much as they can. Pricing decisions are so complicated because not only do you have refinery outages, if you have Power Outages, you may have terminals out. If theres flooding or trees down, the tanker trucks may not get to retail locations. Retailers are trying hard to keep the inventory they can. Is that a reason for why they are raising prices . Theyll typically raise prices because theyll look at what their costs are going to be. They may get notifications or as early as over the weekend that wholesale prices are going up. They need to figure out how to cash flow so they can buy the next gallon. People are topping tanks off and filling their other ce containers. Nontypical demand screws up the resupply schedule. Thank you, john. Thanks. Coming up, well be getting our last word from our guest host, mike santoli of Yahoo Finance after this break. When we return, the latest on Hurricane Sandy and what it means for your money. Squawk box on cnbc is back in just two minutes. 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No prediction of anything like that here obviously. As long as you dont have anything that otherwise would have been tremendously market moving, it ends up being a nonevent. To me its like vegas sports book when handicapper set the line but theres no betting. Nothing that would otherwise disrupt things. Well probably be okay if were closed tomorrow. Better news that market is closed. You have to be worry about people you would have brought down. Without a doubt. From a market perspective you dont want to trade in and out of an unreliable market. A shallow market. One youre not sure if its reflective. That has to be the beat about whether the cme should keep it open. I dont think the cme would trade the Derivatives Market if you didnt have the underlying market open. Its not a matter of a correct price. You just let people in. One very minor thing. A lot of mutual funds have october 31st fiscal year end. If there had to be done presumably open on wednesday. It does happen. Of course. You hope it doesnt. This would be the most obvious example of the futures moving around without any underlying not even just underlying move. You have to be able to hedge in a real market and all the rest. Not a good idea. We have been watching the Energy Markets too. Thats going to be a real point of interest. What happens with the refineries. Thats a real wild card. It is. The good news is again that it is hand to mouth local rly why terms of refieneries that are affected. Not across the board affect on Energy Prices for people. Thats a good thing. Right now were okay. A matter of local price pressures opposed to something that has the trading markets, Global Benchmark markets get concerned. We want to thank you for joining us today. A pleasure seeing you again. When we come back this morning, we have some more live pictures from the northeast coast as Hurricane Sandy makes its way onshore. You can see the pictures right now out the montauk as waves have been building this morning. Squawk will be back in just two minutes. Why theyre always there to talk. I love you, james. Dont you love me . Im a robot. I know. I know youre a robot but theres more in you than just circuits and wires uhhh. cries a machine cant give you what a person can. Thats why ally has knowledgeable people there for you, night and day. Ally bank. Your money needs an ally. You have to dig a little. Fidelitys etf market tracker shows you the big picture on how different Asset Classes are performing, and it lets you go in for a closer look at areas within a class or sector that may be bucking a larger trend. Im stephen hett of fidelity investments. The etf market tracker is one more innovative reason serious investors are choosing fidelity. Get 200 free trades today and explore your next investing idea. Welcome back to squawk box. Weve been tracking Hurricane Sandy this morning. Heres the scene outside cnbc headquarters in inglewood cliffs. I have to know which way to turn. Dont worry. Its a full shot of this. Weve been watching this. The storm is really picking up quite a bit. Weve been watching andrew with some of the waves that have been looking as we have come off. It will make it very difficult to be traveling today. The worst is supposed to hit 2 00 p. M. Today. Its not here. Looks much worse in zone a in new york city. The trees werent moving. Its coming. As we pointed out all morning long, the exchanges are closed. Thats why squawk on the street is going to broadcast from here in just a few moments. From our set which is why were standing over here. Specifically in my contract i am not supposed to do this. Futures are