the euro is over 120. >> by the way, on the two-year if it's not warranted because of the u.s. economy, think about how stimulative that is. >> that's right. >> instead of 2.5%, it's 2.1 >> what we heard from richard fisher, 2.5% gdp. >> hopefully hopefully. >> thanks, mike. make sure you join us tomorrow "squawk on the street" is coming up right now. >> good morning and welcome to "squawk on the street. i'm david faber, along with jim cramer we are live. if you're watching ""squawk box"" with joe, we are looking for a down open this morning. >> 4:00 a.m., journey was down 2%. >> the man on my left.

that's still the case. reaction to the north korean overflight also the euro is on fire. >> they don't want that. >> ten-year yield. look at that 2.10. >> jamie dimon must be thinking how am i going to make that -- >> how am i going to get my net interest margin? home prices is just out. report for june shows prices up 5.8% compared to a year earlier. up 5.8 that was a bit more than had been anticipated let's get to our road map this morning. it starts with that north korean provocation. a new missile test that flew right over the main japanese islands. president trump says, quote, all options are on the table plus, best buy is moving lower although, the numbers -- >> cautionary on the call, saying this is not the new normal. >> we're going to get into it,

of course, here, and explain what exactly is going on of course, we'll be following the continued catastrophic flooding paralyzing southeast texas. tropical storm harvey now one of the most destructive storms in the nation's history and the rain, as you'll see when we go to sully, still falling. still falling. futures, as you saw, pointing to what would be a triple-digit dow loss at the open south korea launch aid ballistic missile over japan an emergency meeting being held today. japanese prime minister shinzo abe spoke with president trump after the launch threatening and destabilizing actions only increase the north korean regime's isolation in the region and among all nations of the world. all options are on the table it's not going to be the first time that we talk about the market reaction to a provocation like this, jim they seem to come

with some frequency. the question, i think, the rising question is, what, if anything, will the trump administration choose to do in responding and that group of options, many of the experts say, none of them are particularly appetizing. >> no silver bullet. i haven't heard a single one that i think anybody particul particularly mattis, believes is palatable. europe down more in part because the euro is at 1.20. japan, oddly reserve currency. although their country might be under attack look, i don't know what -- when you send a missile over in their airspace and you don't know what's -- >> right they actually briefly issued a call for people to seek shelter. >> right. >> as they didn't necessarily know it would just pass over of course, it did. i think 1700 miles was --

>> i think, obviously, we make a commitment to defend japan so, whatever happens, an attack on japan is considered to be an attack on us i would point out, david, that there is genuine chaos in many parts of what i regard the market if the euro is really strong, then theoretically, our international companies should be doing better. instead our international company stocks are the most hard hit, which is amazing. so often in keeping with the month of august. >> why is the euro so strong >> i think it's so strong in part, because we can't keep it down anymore. >> it's so strong we have to put that in relative terms what do you mean, it's so strong, people say >> i think the dollar is weak. one of the reasons that i think the dollar is weak is because they're of a belief that -- you know, by the way, let's not forget, we still have a

budget -- >> we have a debt ceiling. >> you've been saying from the beginning this was going to be an issue now, literally, with all this happening -- our president is going to houston, which is right. >> he's going to texas. >> september is next week. >> it's coming up. end of september, we start -- got to start cutting out essential government services in order to continue to pay the interest. >> wait a second we're going to cut out services at the same time when almost no one -- no homeowner's insurance is covering the checks that are going to have to be written here now, i deal with -- i have a fabulous -- no insurer companies that are at all in trouble insurers themselves have single digit billions why is that? they don't cover flood what is the u.s. government going to do? ten years ago, the checks would have come out. now we're dealing with a situation where the republicans are very stingy.

we have a debt ceiling to worry about. the president will go down there and say this has got to be the greatest reconstruction in history because the president is given to hyperbole, greatest recovery, faster than katrina, than ever. that requires money. where is it coming from? it's not allstate. it's not travelers their exposure, from what i can tell, is still single digit billions and my numbers are more accurate than others, if i can say that. >> we'll move on to retail in a moment and i know your numbers are. this debt ceiling issue, you know, talking about north decreea i have a feeling we're going to end up talking -- was it in a tweet? no, it was in a statement, i believe, that the president did say i'm going to not -- unless i get funding for my wall -- >> yeah. sticking point. >> -- i'm not going to assent to

a ceiling hike. >> houston has to be rebuilt and rebuilt with federal money the numbers i'm getting from the reinsurers, indeed diesh presented last night katrina the worst case and katrina is in play. >> katrina was, what 100 -- it's in play? now we're talking roughly 0. >> no, for the feds. new orleanian. the feds will have to step in at the same time as the budget ceiling, where there's no plan for -- >> stronger euro, north korean threats, budget ceiling debate going to start raging very soon. let's say after everybody gets back after labor day although you've got congress in and out. >> at the same time you have an apple launch, constant currency numbers that are now greater

constant currency numbers. >> now they're moving the right way. >> right. >> press releases, though, actually they never seem to mention in the press release when it's going their way. >> big british business. >> we'll look at that around the bell let's get on to earnings this morning that are at least catching our eye of course, starting with best buy. it was a beat on both the top and bottom line. stores up 5.5% you may look at the stock and go why is it down finish line is plummeting. small market cap but is also a tell for a larger story when it comes to athletic footwear, outerwear. the retailer cut its profit forecast for the kurpt currenta and poison pill. who will want to take part in that thing everybody is selling but

somebody may want to buy. >> finish line -- talk about how nike's innovation. nike's two largest categories are continuing a level of deceleration people have been talking about how nike doesn't have a refresh. i would come out and say maybe we're finally at the age where the jordans aren't working. >> running their course, huh >> finally. >> my 15-year-old, i don't even know what he's got bunch of nikes on his feet not all at the same time. >> it seems to have finally run out. >> speaking of sara eisen, who follows this -- >> from cnbc >> yes, cnbc's own sara eisen will join me at 10:00. obviously, we talk a lot about mall traffic. >> right. >> and the decline there footlocker reported not a great number a few weeks back.

>> terrible number. >> and adidas is killing it. >> they are killing it less. i was on one of the customer calls. i'm talking about a category slowdown the main category that had been really great i don't want to write off all apparel. pbh had an amazing quarter that's shirts and ties but that's also calvin klein and it's tommy hilfiger but that's europe they made a big move into europe, china. nike lacks a killer shoe 70% of finishline, 71% of finishline is nike it's impossible to have any other read through that's a big dow stock, david. it's a not countered by united health that did an acquisition that's going to be positive. dav david, it's racheon. >> you're jumping the gun here

that's not until 9:25. let's circle back to best buy. the stock moved up after the numbers. >> the conference call -- >> sales comp number in this world, i would think, would be reenjoy joic rejoiced. >> they said this is not the new normal, much better than 5%. highly competitive fourth quarter and, remember, when you hear competitive you always have to think about what mr. gannett said on macy's, that the fourth quarter could be promotional as this conference call goes on, the stock sinks because i think he's just saying, listen, let's not get ahead of ourselves. >> 4% revenue growth, moving up their target from what had been 2.5%, percentagewise. >> give me a fight the cfo moments ago said we are also expect increase in operating margins to moderate over time.

in general, everyone read that as we reinvest in the business -- david, they're spending more but not getting necessarily the return i come back and say i like what they said, it's strong computing, wearables, smart home, mobile, appliances david, the connected home is a theme here. >> yeah. don't forget the big picture couple of years ago, we kept talking about, what was it, showrooming? what was that term how this was nothing more than a showroom to buy things on amazon now a $19 billion market value managed to turn around a company that, frankly, you and i sat here and questionedity ability to operate in this environment which has only become more competitive. >> did it with service lot of these devices got so big that you needed them. >> need advice. >> you get that 72 screen, which the wife totally vetoed. that just meant i would never leave for saturday and sunday during football season.

>> i hear you. >> you couldn't just put it up. >> what did you go with then >> 52. >> come on you couldn't even get to 60? >> i live in a stalinist regime. >> that's terrible. >> the geek squad is good. remember, this stock took a hit when amazon said they were doing geek squad then amazon said eggs and milk simon says amazon. categories they're playing tough on in whole foods are categories that costco has often competed in taking aim from getgo. >> interesting interesting. >> that's not the reason best buy on the conference call being much more tepid. finishline saying be careful, nike read through costco i don't have much to give that's positive this morning i just don't. >> you've given us a lot not to mention you told us what the key to this market is, 14

minutes early. >> i'm saying a lot of things wrong. if you want premium oil that, posted price is not what you're paying it's like raw stores in burlington when it comes to oil, okay >> speaking of energy, when we come back, hurricane harvey or tropical storm harvey now expected to dump more rain in the houston area could get up to 50 inches. we'll talk about the storm's impact on refiners we'll take you live to texas, of course another look at futures. we're headed for a lower open. more squa"squawk on the street"e weomba ce ck

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we're continuing to follow, of course, latest developments on the gulf coast in the wake of hurricane harvey president trump is on his way to survey the damage. and braving the rain down there quite some time, bringing us up-to-date on everything involving energy brian? >> i think there's been more rain in the last two days, david, than i've seen in my entire life combined as you can see, it's clearly still raining here basically everything from north of galveston to houston is, if

not under water, is at risk of being under water, has been under water or is impassable as we drove around extensively yesterday, we're lucky to find the one road that was open we're going to crest northward of this and how far we can get, see if anybody needs help up there. a lot of stuff happening outside of houston, guys that aside, economic story is one that cnbc will tell. it is big. we hit the refinery story a lot. a few new developments since the last time i was on the air reuters reporting that the 3,000 barrel a day in beaumont, texas, we know it's been running at reduced rates. apparently it's running at more reduced rates. technological stuff there. again, that is reuters reporting, one to watch. we continue to reach out to motiva, saudi eramco, $6,000 a

d day. reduced output and marathon petroleum, 460,000 barrels we're trying to confirm and they're not giving any information. marathon if you're listening, people need to know. you've talked about a lot of these different angles refineries shut down we're going to wait to see if more are going to shut down. there's no word on when anything is going to open because nothing has changed. nothing has gotten better. it's just rained more. port of houston remains closedment i'm going to introduce a word to you guys i don't know if you're familiar with the word shoaling squad truck they're going to go out to help some people. galveston is starting to flood in parts army corps of engineer truck trying to get to the building

but can't get there because the roads are being flooded. shoaling is when storm brings in silt and dirt and raises up the bottom these ships will come within a foot or two of the bottom of the sea. it comes up, you create a new problem so you don't know how the bottom looks so it makes it tough. lot of things are fluid. and when the army corps of engineers can't get to their building, you know that's an issue. >> yep yep. brian, wow do you get to dry off at all you don't just have to stand there the whole time, right? >> no. listen, we're fine galveston, as you can see, is getting worse. we're going to try to drive up a little bit north we were there sunday where the flooding is, there's a lot of people that need help 18,000 people under mandatory eebee vac wags order i don't think you could get dry if you're anywhere -- as you can see, guys, it hasn't stopped raining in four days and it's

not going to change. >> brian, thank you. >> heaviest rain we've felt in two days. >> i remember watching yesterday. it wasn't raining nearly as hard as what you're dealing with right now. we'll be checking in with you, of course, next hour and every hour key point he has made many times, jim, it's about the employees being able to get to the facilities as much as anything else. >> right right. we don't have a current update from valero. they're saying their under gulf refineries continue to operate corpus christi, no but i'm wondering -- they've been the guy who has given me the best information now. >> let's take a quick break. we'll come back to cramer's mad shs count you down to the opening bell than your health. so if you're on medicare or will be soon, you may want more than parts a and b here's why. medicare only covers about 80% of your part b medical expenses.

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all right. we're counting down to the opening bell about six minutes or so. hain celestial. >> they did have accounting issues that are now behind them. when it comes out and the smoke clears, they're doing okay david, i think what's going to happen is people will say this stock was up more initially wait a second. where does hain fit in, in what many people feel will be the suppression of price increases hain has always worked very well with whole foods does that mean he'll work well with amazon? we don't know. what we do know is they're doing okay. >> doing all right. >> yesterday we saw the beginning of what i would regard as your dividend does not protect you anymore. >> why >> because people are so concerned about what amazon is going to do. mongolese has been very heavy

here not that they have much of a dividend just beware that this consumer products group -- >> could these guys get sold it's funny there's so much chatter about these kinds of companies potentially being consolidation fodder. >> it's a good question but -- >> he doesn't have one big product. >> no. he has a lot of products irwin loves rung hain celestial. >> does irwin have a choice? he's not a controlled shareholder. >> no. in the end it's like -- you could get anybody. >> activist as they were an engaged capital. >> until you had the accounting problems, irwin was doing great. they're in the past. i don't want to continue to reference them now that they've solved them. i think we have to go forward. the issue is natural, organic, still strong category. whole foods, we don't know what

they're going to do. >> okay. of course, we'll have the opening bell a few minutes from now. we are looking for a down open stay with us on "squawk on the street."

you're watching cnbc's squawk on the street you already told me what the key to this market is. it's ratheon why? >> it offers your best defense against missiles if you want to see when the overall futures bring down stocks that are attractive, that's the one to watch. it would probably be up four, five points if it weren't for the overall futures selling. futures drive everything down, machines, algorithms i think it's wrong because the euro is very, very strong versus the dollar but that's the stock that would recover first. best buy not recover first

2%, 3% going forward. >> under promise, over deliver. >> you got it. he's also a magician has had an amazing comeback in life i just want to wish him the best. >> there it is, opening bell for this tuesday you can see that the real time in change at hq will have a lot of red on it at the big board. beverage supplier cott and at the nasdaq, nykredit, investor from denmark doing the honors. >> saying tesla surveys mixed model three outlook worrisome. >> wow bernstein has done a survey of

what tesla buyers >> possible buyers there. >> okay. >> i caution here that this is a love stock it's a colt stock. auto nation -- remember, cars that are wet need to be thrown away we learned that from sandy initial decline and then replenishment. one of these, we have to step back and say and remind people, who in another wave of rain could suffer tremendous tragedy but there could be a gigantic rebuild. this very large city so that three, four months from now we will be talking about maybe even gdp expansion from this if the president goes down to houston and says he's going to have the greatest rebuild in history. but will congress let him spend that money >> that remains unclear on a lot of different fronts, whether it's tax reform, raising the debt ceiling and how much is going to be needed to help

rebuild houston. >> doesn't this, once again, delay the idea that they can spend time on tax reform it's a katrina-like event, all-systems -- all hands on deck. >> it may take away some attention. i think that's somewhat unclear. take a look at live pictures. >> amazing first responders. boy, were they ever ready. have you noticed how right the first responders have been here? they are just everywhere. >> in all areas. people on the ground there the coast guard. the work that they've done. >> that city is run right. >> incredible. you talk about things like the coast guard. trump presented a budget that would have cut their budget by, what, 14, 15%. >> we're seeing the advantage of a well-prepared group of people. >> we really are of course, this is the key human toll here is enormous. >> i do want to point out that technolo technology, that would be the other group to watch, we rid ourselves of the european

hangover huge beneficiaries of the weakening dollar. >> right. >> huge. i think it's important to recognize that numbers will come up for a lot of stocks that are on what we call -- and i also feel that gilead is not one and done i'm working hard to figure out who is next. >> what do you mean one and done you're referring to yesterday's large deal of kite >> yes. >> what do you mean when you say not one and done >> gilead stock rallied so much. >> they'll do another deal >> yes we look at acquired stock. if it's done well, bankers start making their calls and the bankers' calls are, look, gilead spent the money on something that is a loser in terms of three years. >> three years until it gets -- >> yet look what they're doing maybe you ought to think about combining with someone. >> right. >> also bristol-myers, which you know has had very unfortunate luck of late. >> horrendous.

>> why is that stock not lower >> i don't know, jim why isn't it lower >> i think there's endless chatter. >> the biggest deal of the year was, what, j & j's acquisition. >> it's maybe the most levered dollar david, gold bugs are saying will you please mention rand gold i've just done that. number one low cost producer of gold aye folli follow. >> 2.10 yield on the ten-year note. >> it's just the exact opposite. >> concern once again about the ability of the banks to generate a net interest margin and propel them to sort of anticipated earnings growth that's been out there. they've all done not too terribly this year citi is the leader in terms of price percentage movement of the

big guys, up 12% they're all down. >> jackson hole was viewed as being a green light for one more rate hike. this may change things. >> this being north korea? >> no, the treasury. >> right, which seemed to be pressured in part by north korea. >> north korea is very hard to read obviously it's an opec situation. we can offer very little, i think, on it. >> yes. >> it was obvious the way stocks got hit yesterday. let's take a stock like alibaba. that stock was down 5 but asia wasn't hit nearly as hard. chi china, by the way, can we just say, does this show you exactly where china is china is -- >> also if i'm looking to shed some risk -- alibaba is up still almost 89% this year it's market value was approaching and not far off from amazon's it's had an incredible year and it's a little over a year ago that you and i sat down with joe

tsai. >> before we sat down with joe tsai there was an undercurrent that perhaps their numbers were not real. >> yes. >> after we sat down with joe tsai, the under current was not only are the numbers real, they're spectacular. >> still throws who say, listen, they don't consolidate the lo logistics. they don't own the majority of it it's a huge spence that doesn't flow through. >> who is representing alibaba in that? it's a quiz. >> i'm sorry, who was representing -- >> alibaba in the various inquiries? the head of the s.e.c. >> right. >> so, i don't think he's going to turn around and say his work wasn't any good. >> no. >> i also think -- >> good point. i see what you're saying. >> right totally rigorous guy i think what joe tsai told us was, look, we are exactly what the s.e.c. wants you and i came away saying yes

versus -- surge of the chinese consumer and willingness the only way the mobile, alibaba, ecosystem they've created. now they come over here to try to get small, medium-sized u.s. manufacturers. don't forget altaba, weirdly named company that sold yahoo! no longer. that's up 62.5%. >> cash management by yahoo! >> it was. $60 billion market there as wel well. >> best buy because of that guy.

>> best buy is down 8%, jim. >> right but immediately you have lockheed martin showing -- wait a second defense spending has to go up because we have a mad man through his icbms. >> people are going to say it's august it's not an opportune time to -- >> verizon is up it doesn't happen every day. in fact, it doesn't happen most day zpls verizon is a bond. >> it is 4.57% yield. >> stocks that yield good are going to do well i am surprise d nike

health, advisory board crown jewel business, very high target for united health that will probably play out. 235. >> i got my younger kid a phone yesterday at the verizon store. >> how was that? >> it was not a bad experience. >> you went with the 8 >> she's not getting the 8. >> why not >> got the 7 but we went three lines unlimited. i'm sure john ledger is like, are you kidding me >> you went t-mobile >> no, verizon. >> but john ledger had -- >> i'm paying more there than anywhere i hope i'm going to get more quality. >> it's the largest -- >> after 22 gigabytes they start to throttle you back a little bit. >> verizon is -- you know, they have to put up more towers great secular story here sba, american tower. >> that's where you want to go >> you need every transponder on

every antenna. we should have been in that business, david. >> we should have. that is a bond right there. >> those are bonds, real estate investment doing incredibly well at one point people were critical they've run over the shorts. that's because we need more towers because there is so much netflix, so much that's why, by the way, parent company's net worth, wifi -- >> endless. >> endless. >> really good football ad it's just scoring. guess i have to draft him. >> gilead is now up 25 cents, t your point that's encouraging when they put those deals together a lot of balance sheet capacity. s selguin? >> first line of defense comes earlier. i think that it's out three, four years this has been in the works for a long time. will be in the works whether

gilead owns it or not. let's not necessarily buy celgene off this or sell it. pattern after katrina, that's playing out. >> let's get to dom chu on the floor and give us a little bit of a look at what's moving this morning. >> david, jim, to highlight what you've hit on here as well, it's what traders are looking at on the floor today. look at markets overall with a north korean missile aggression, taking the next step here, you would think that the markets would be down a lot more than they are dow has held steady now, down 94 points, s&p down half a percent as well. gentlemen, we generallyize and say risk on, risk off. sectors like utilities leading the way higher cyclicals, materials are the ones taking some of the biggest hits here. watch some of those dividend paying plays like what you were

talking about before that's going to be a big deal here the other thing that a lot of traders are watching here is the price of gold. we've seen a bit of a breakout here 1300 an ounce for futures is what we saw, bit of resistance here over the course of the last five or six months we've broken above that. 1328 last prices here. those gold mining stocks have hit a bit of a surge and stride as well. we're watching vaneck vect rochlt s gold miner, up 2% in trading and up considerably over the course of the last week. gold miners something to watch here as well i want to put on another theme here we talked about the hurricane plays yesterday. certain companies look t possibly benefit as the rebuilding efforts start to take hold in that hurricane-ravaged part of texas and parts of louisiana. we looked at names like home depot and lowe's overall market sentiments today because of north korea drags everything else down some traders will be watching

shares of floor & decor that does the flooring-type work and mow hawk industries, engineering construction firms, quaunta services, infrastructure watch those stocks and united rentals as well, guys. back over to you. >> thank you, dom chu. >> i recommended united rentals last night they made a very big push in the southeast. you know, mike has had a great quarter. stock is still down where it could be mike is doing a terrific job no one wants to get lucky off a storm but he's in a position to be able to have the equipment that's needed. by the way, not a caterpillar guy. just so you know caterpillar is separate. don't make, necessarily presume caterpillar is doing better. united rental is not caterpillar. let's get to rick santelli at the cme group in chicago to take a look at the bond market, of course. rick, that yield has people's attention this morning. >> absolutely. and, you know, it really

shouldn't be shocking that we are testing. remember, i look at the closes as the most significant level of the day. and weekly, monthly, quarterly close gets priority as the timeframes get bigger. intra-day here, we're toy iing with new low yield closes for the year look at a one-week chart matter of fact, all long-end sovereigns, developed economies are moving lower in yield on short ends some are moving a little lower some are actually moving higher, like the shots in europe our two-year is down much less than the long end, which means it's a curve flattening event. look at one year of tens, you can clearly see what i'm talking about. 2.13 we're below it now let's see where the roller coaster ride ends at the end of the session. bunds. jjbs, japanese government bonds literally trade by appointment one of the biggest sovereign bond markets in the world in

less than $1 billion trade every day. today's no exception hardly any trade at all. the government is the market but you could clearly see even though it's slow and it's a scaling issue, it is flirting back with negative territory again, hovering right around zero the euro is at the highest levels right around 2013 but it seems to have some room and it certainly seems to be the currency du jour horrible mother nature events in texas have economic consequences we also know north korea has captured the market's attention. very hard to doubt how long that lasts, what that half life is, anybody knows on the ladder finally, if you look at the

dollar/yen, dollar index, hovering at the lowest level since early 2015 david, jim, back to you. >> thank you very much, mr. santelli, as we head to a quick break. programming note tomorrow on squawk alley, becky quick will sit down with berkshire hathaway's warren buffett. >> those trade gd apple in and out, perhaps that's ill advised. >> going to hear a lot of what he has to say, of course we'll have that for you tomorrow be right back.

whole foods making an amazon logo out of ground beef. showing organic peaches next to an advertisement for what they're calling farm fresh amazon echo. >> one of the things i like about twitter, you can get a good read of things and people are saying on my twitter

following that whole foods are out of a lot of stuff already because people have been going to see prices. >> we're talking less than 1% of the skus that amazon lowered they're congratulating them on a great pr campaign. we talked about it the last few days. >> one thing against that i would say, david, is that when you lower the staples and everybody has to buy staples, it is a windfall for people who decide to walk over there. people on a budget, knows that. >> people on a budget you aren't going to. >> the old whole foods, you weren't going to the new whole foods, you are half paycheck. it will be real and spectacular. >> i remember that i don't know. $4.95 per trade? uhhh and i was wondering if your brokerage offers some sort of guarantee?

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i have a couple of options, home depot stock going down. rebuild is going to be big it's interesting but, david, the one i want to focus on is allstate. >> okay. >> if the insurers had such big lo

losses, why is that going up two reasons. one, they don't have that much liability. it's federal mony and could be as much as $100 billion. two is you can raise prices after this you can raise price. >> raise prices and you're not on the hook for as much. therefore -- >> right i have allstate in my beach house. >> counterintuitive that the insurers all go up after a disaster of this magnitude. >> flood damage, no. fish in the basement, better to catch than it was to get the mold out usg, remember, that kind of board is what gets moldy that kind of board can get replaced warren buffett owns -- don't forget, he is going to come on and speak very positively and the president is going to come on and talk about the greatest rebuild in the history of the western world. i wonder if he invokes the pyramids. >> you can't rule it out. >> no. >> let's get a look at what's coming up on "mad" tonight. >> chipotle, people think, has

bottomed let's get next chipotle, a company called deltaco that's a dark picture we have that was a reference to the eclipse. >> it was a bust for me. i made the cereal boxes, tried the whole thing. we didn't get the glasses. >> you had to be in a place called clayton, georgia. i met a fellow named rhett butler jr. his father was named rhett butler before "gone with the wind." >> john cappasola who runs del taco i'm going to guess they sell taco. >> you are a genius. >> insight i have is impressive. >> are you celebrating the holiday this weekend >> no. >> festivus? >> no. it comes around the time of all the holiday. >> all the rest of us are going to celebrate labor day. >> i do like to have the airing of grievances. reference today in that story about cohn, mnuchin and

prospects of tax reform, reference to a show from -- >> that's what made me think about "seinfeld. i can't believe it was still invoked. still i never thought jordans would have lo last this had long but it seems to have peaked. >> story line hurting under armour and a number of others. thanks, jim. >> it's great. i'm liking the action in the drugstores they, too, have stopped going down maybe amazon is going to destroy the world is over. amazon is focused on food. >> we're going to go but we're going to come back and, of course, have more on this sell-off. stocks cutting their loss. >> because we like the weak dollar, rebuild. >> "quasquawk on the street" wil be right back. at fidelity, trades are now just $4.95.

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good tuesday morning i'm sarah eisen with david faber. dow is off the lows of the session still lower about 50 points s&p 500 down a third of 1%

wti crude under pressure after a nearly 3% slide yesterday. gasoline prices continue to rise that has been the dynamic post harvey with about 15% of the nation's refinery and capacities shut down. the nasdaq is getting hit the hardest. rick santelli is breaking knick data this hour rick >> our august read on consumer confidence from the confidence board we're looking for a number slightly north of 120. we ended up much further north 122.9. darn close to 123. a very solid number. matter of fact, that's the second best number of the year it compares with march when we were at 124. the reason that's interesting is because that 124 number was like the best going all the way back to 2,000 a very, very solid number. subtle revision to july now standing at 120 versus 121.1 and yields are definitely down

on the long end, pretty much everywhere you have a good economy. but they are coming back after, of course, the unlikely combination of north korea and the horrible events of mother nature in texas. david, back to you. >> thank you very much, rick santelli road map does again with north korea, launching a missile over japan. how the trump administration plans to respond and what that will mean for geo politics and, of course, the markets. >> the latest for you on harvey. historic rainfall continues to pumble the coast of texas. we'll head out to houston for more on the economic impact behind the storm. >> and, finally, best buy reporting a beat this morning. the stock falling in early trading. we'll dive deep into the quarterly results in a minute. >> but first up, north korea launching another missile yesterday. this time, over japan, sparking global alarm and an already destabilized region. our sherry kang is in south korea and joins us with more on the reaction

sherry, good morning. >> reporter: good morning, sara. so, we certainly saw a sudden reescalation of tensions on the korean peninsula, especially with the longer range ballistic missile that flew over japan, which, by the way, is the first time for a north korean ballistic missile. as for the latest reaction, at least from washington, u.s. president trump came out with a statement, quote, threatening and destabilizing actions only increase the north korean regime's isolation in the region and among all nations of the world. all options are on the table at this time we're not getting an explanation of what options are on the table at this point from the south korean government, reaction as well, the president ordered a strong show of deterrence against north korea.

in fact, the country's military carried out a military exercise, brought in foreign fighter jets to the interkorean border area and dropped eight multipurpose bombs in that area as well more about this latest missile launched it was a rare launch from the capital area of pyongyang which doesn't really happen a lot. it flew over japan, like i said, for the first time for a ballistic missile. and it was fired in a normal angle. i say that because what they normally do is that they launch the missiles in a very steep, upright angle, saying that it's out of consideration of neighboring countries. but it did not do that so, certainly it looks like they wanted it to be a threatening factor and, of course, it was not exactly a missile strike, like i said, towards the area of u.s.

territory of guam. like i said, it was thinking about doing earlier this month but certainly the distance of that was very close, the travel distance of a 2700 kilometers, which happens to be very close to the distance between north korea and guam guys >> all right thank you very much. embass dor jeffries, some would say it's another missile test in what seems to be a frequent action for the north koreans in your opinion, does it meaningfully increase the tension in the region and the need for the u.s. to respond >> absolutely. as you reported correctly pointed out, this is an escalation where it was launched from, it was a mobile, very capable missile.

it traveled over japan this is the first time, other than the excuse that the north koreans were trying to launch satellites, that they have done this over an american ally this is very threatening also it's after president trump's very specific threats. they didn't shoot this thing at guam but they shot it in another direction that is very destabilizing. this means threats are not going to slow this guy down and i don't think normal negotiations, normal diplomacy that we've been try i trying before with administrations, including when i was in the bush white house, are going to work with this guy. >> what is going to work if normal diplomacy is not going to work -- it's funny. steve bannon prior to his exist gave this interview, was on the record, said he wasn't he talked about no possible solutions here whatsoever militarily is that your opinion if not, you know, when you say there's no ability to use normal diplomacy, what do you mean? >> that's why it's such a difficult problem. bannon is right because if

there's a general war, even if nonnuclear, the civilian south korean population, along the border, particularly in the capital of seoul, is at risk here is the problem. all of our assumptions have been north korea is doing this defensively. it doesn't want to be overrun like it almost did in 1950 it doesn't want to go the way of gadhafi and saddam hussein it's also possible that kim jong-un, like his father and grandfather, want to unite north and south korea, like ho chi minh was willing to sacrifice. he's trying to drive a wedge between us, the koreans and americans who would be facing a nuclear attack that's the problem we have with this guy. >> and what about the chinese, the role they play here? the trump administration has been focused on their ability to

certainly influence north korea. is that still the case there's been, you know, various tweets from the president that have indicated his unhappiness with the chai theez. what role do they play here? >> it is a crucial role. nothing will roll without chinese oil and north korea's exports go through chiena. it is absolutely vital over four administrations, we've assumed that china sees this as an irritant, a secondary level problem, doesn't want to have refugees or instability. how about another scenario china sees north korea, however unpredictable and irrational, as part of its set of tools to drive america eventually out of the western pacific. if that is so -- and that seems to be china's overall goal, in china's ability to act against north korea, unless china really thinks we're prepared to go to war, is going to be very limited and that's exactly what we've

see seen. >> so how many more provocations do we have to see? >> i would say the sooner the better but it's going to get worse and worse. on another track they're going to develop the north korean's nuclear arms icbms that can reach the united states and place our population at risk before that point, that's just one or two years out, we need to reintroduce tactical nuclear weapons to the region, make it clear that we will respond militarily to any further nuclear tests, icbm tests or missile shoots over or close to our allies if we don't take action that strong, this is just going to keep getting worse. >> right although, as you indicated, the risks are not insignificant,

ambassador. >> no. >> how many people could conceivably die, americans and certainly south koreans amongst them. >> what i'm trying to say is we've got three fundamental choices, military confrontation that could lead to a conventional war with very heavy casualties, possibly, but not necessarily. secondly, us eventually being pushed out of the western pacific, the biggest strategic change since the collapse of the soviet union or possible nuclear confrontation, set of nuclear strikes between us and the north koreans involving our homeland those are extremely unpleasant choices. it's one of the three. it's not some fantasy land, diplomatic solution. >> okay. we'll leave it on that less than optimistic note. ambassador, thank you. >> thank you. >> for more on market reaction to this, let's bring in jack avlin, chief investment officer

and steven from jp morgan. we've seen that, what, half an hour into trading here any reason to think with this escalation in japan this time might be different >> as it relates to geo politics, trying to figure out what's going to happen and how markets will react is really tough. you look at these geo political shocks going back to pearl harbor there's been a clear pattern. that's the initial knee jerk reaction where you sell off and markets will recover when that pattern breaks tends to be some sort of spike in inflation or recession that's a knock on the effect of the geopolitical event global growth has been the strongest it's been since the crisis on a single global basis. you'll continue to see people coming in and buying the dips. >> buying the safe havens, too, jack gold prices are higher so is the japanese yen

so are u.s. treasuries is that anything to be alarmed about or are you in agreement with stephen, that short-lived risk off period? >> yeah. obviously it's hard to tell. if you take north korea, that cou could, add to it the tragedy in texas, that will be a depressant near term. the two combined could potentially keep fed officials on the sideline, keeping inflation relatively low keep interests rates relatively low. keeps risk taking rewarded for now. ultimately, i think we are going to see some growth down the line as we rebuild and spend tens of billions of dollars getting houston and surrounding areas back on its feet

it's difficult to tell and so you have to look out ten-year horizon with equities and so far nothing has changed. >> stephen, you alluded to the synchronized global growth what do you say to those who say look, we've had this period of unusually harmonious growth, earnings rebound substantially, you had all the things in place and the stock market has been stuck for a few months here in the u.s. does that mean we've used up all the fuel or do we have to wait this out >> i think this is a little bit of a consolidation period. a huge rally at the start of the year u.s. markets are still up close to 10% international markets are well ahead of that and now investors are looking at whether or not those earnings trends can continue in the back half of the year the unusual situation isn't what's been happening recently

it's what's happened the last five or six years where it's been a one engine global growth story, that being the u.s. >> like which? >> we like europe. >> worried about that stronger euro surpassing 120 this morning? >> we saw an overshoot to the down side for the euro last year because of the political concerns, election season. now we're seeing actually better growth out of europe than we are here in the u.s. that's what's being reflected in currency markets if you go back to 1970, there have been five periods where international stock have outperformed the u.s on average, the dollar has declined by about 20% in those periods. a weaker dlafr isn't necessarily something that will derail the story. it may cause it to pause a little bit and some of the exporters in europe have underperformed but i think it's actually a sign of strength. >> jack, i don't know if you heard ambassador jeffries.

>> i did. >> laying out three military scenarios, none of which sounded particularly good when you think about the loss of life and everything that comes along with it how does the market react to that he's just one voice. we have no idea how the administration necessarily is thinking about this. but you're going to hear that more and more, i would expect. do you think that's going to unnerve investors? >> certainly could, potentially. right now, we still have most investors ignoring most stuff when it comes to north korea we've been glossing over terrorist events and a lot of other stuff. when it comes to north korea, it really does capture investors' attention. that's because of this game theory it doesn't seem like there are alternatives if it's simply between north korea and the united states.

i think ultimately if we could get china to pull the extension cord and put pressure on them, perhaps we could bring that territory slightly more in line. it's hard to say i understand the ambassador's comments, that china doesn't want to see us intervene perhaps we could see diplomatic relationship with china and get this thing resolved. at least intermediate term. >> finally i wanted to ask you about impact with harvey unusual for so many different reasons. striking the energy capital of this country, the fourth biggest city in this country and continuing to relentlessly pour down rain. >> first of all we have colleagues in the houston area and their safety is the most important thing. i don't think you'll see a huge impact economic data the next month or

so, there will be noise in there. it's going to take some time to figure out what this means for the energy infrastructure, what this means for oil prices, gasoline prices in this country. but i don't think this is going to have a major market or economic impact. >> we'll see what happens. stephen thank you for joining us jack ablin, nice to see you always as well. >> thank you. when we return, we'll take you back out to texas for the latest on the devastation caused by hurricane harvey. more squawk t seeafr isonhetrt te

contessa brewer is in houston with more on the damage behind the storm and the impact it's having on the local economy. contessa >> i'll tell you what. it's taking logistical mastery hear, turning a convention center into a city housing 10,000 people. we continue to see them streaming in through this door they get padded down and immediately funneled over who are where there's a supply of dry clothing, towels most people are coming in, soaked to the bone then they're sheltered after they get dried clothes over here to the registration and finally into the dormitories here. we're told that they're now bringing in portapotties, portable showers these devices that are now people's only convection to the outside.

at&t and verizon are coming in, setting up charging stations so people can be in communication with loved ones. i asked representative about potential for a government shutdown she told me that's not an option and she expects a bipartisan agreement moving forward and so then i said to her, what about the local businesses what about the communities and the corporations here in houston? here is what she told me. >> do you have any message for the business community that's watching cnbc about what their responsibility is in this time of crisis for houston? >> i'm so glad you asked that question we live harmoniously with corporate houston. this is the time now that we have needed more than their money, but we need it. the mayor's fund needs to be funded fully because the expenses are enormous.

the city hall went under water we need money but we also need corporate houston to lend their technicians, their logistical persons, their energy ears, their persons who know how to plan we need to move these people fema needs to be flexible because we've got too much on the line people want to stay here and i would like them to stay here and if their homes are repairable, it is imperative that we do so. >> okay. and now i need to update you on the situation with the flooding. we now know that the attic's reservoir has overtopped they've had so much rain, water coming in that they can't keep up with it anymore we are expected to see more evacuees coming in as additional neighborhoods flood even more. we'll keep you updated about that situation we are expected to go out and see some of the damage outside here the reservoir simply can't keep up with the amount of rainfall that houston is getting now,

guy guys. >> contessa, brewer, thank you very much. as we head to a break, take a look at shares of best buy, the company sinking following earnings that did see a beat on the top and bottom le.in we'll tell you why the stock is reacting the way it is stay with us

shares of best buy getting crushed this morning despite earnings, raising guidance stock is up by 30% but this morning down more than 11. let's bring in michael asner at ubs. what was said on the call that spooked investors so much after what was very decent results >> i think there's three reasons the stock is down. it's had a nice run as you pointed out. two, expectations have moved off. in the weeks before as we saw signs, particularly where best buy is strong and three and most importantly, what we heard on the call was that they're

transitioning away and from here, margins more so eb and flow with the rate of sales. we'll probably see slower growth and, as a result, stock is the way it is. >> do you agree with the way the stock is responding after the company posted its best com since 2009, moving past cost cutting and seeing widespread growth in many of its units, including appliances and electronics, in what was not a particularly hot season for smart phone releases. >> it's undeniable that this team and this company has done a masterful job of turning around this business and positioning it well for the future. that has not gone unrecognized by the market. and valuation has gone from four times to seven times it has seen some significant multiple expansion our argument is from here, it really needs to drive earnings

growth in order for the stock to appreciate significantly while we think that the company will drive earnings growth, it's just -- they're playing with a lot of external variables that are not within its control. >> what are those variables? >> price deflation and competition, market share gains. good news for the company is all of those things are working in its favor right now. but the history of this industry would suggest that's not always going to be the case. >> i wonder whether you got a sense and maybe the stock performance today tells you this a certain number were hiding in the very small handful of traditional retailers who seemed as if they could survive and thrive in the amazon world is that being unwound right now? >> i don't think that's being unwound. that will continue to be the case in this very dynamic world where amazon is having an influence on a wide variety of

retail sectors, investors will continue to gravitate toward those sectors and those companies that seem to be doing a better job of circumventing that risk. a lot of that had already been recognized in the price of best buy and the stock has taken a bit of a pause right now. >> so you cover a lot of these big box retailers across america, walmart, target, home depot, dick's, home foods. tell us about the exposure to the houston area of texas and whether you're concerned about any of them missing numbers, for instance, what we're seeing in the devastation there or others, like home depot, actually benefiting. >> without a doubt first and foremost, our hearts go out to what those folks are dealing with in houston. second, there will be widespread economic evaluations best buy talked about it this morning. it's probably too early to talk about the effect retailers like home depot, lowe's, tractor supply to some

degree do see a boost as the rebuilding and repair takes place. we expect that to take place this time around as far as what the disruption, it's happening at a time right before and in the midst of the back-to-school season. some of those retailers who are more impacted and affected by back to school are going to see a greater impact on their financial performance. >> did you expect the stock to be down based on what you heard on the call? are they basically under promptsingand will over deliver? >> i think there's no doubt that they do a great job of managing expectations business that's very volatile. they want to under promise and over deliver it is a very lumpy business. there's uncertainties about what's going to happen in the

holidays how much of an allocation will they get like the iphone 8, to what degree will the nintendo switch continue and the television category is peaking that was negative this quarter that's probably another reason on top of all of this for why the stock is pulling back today. >> we should note that at neutral, $62 price target. michael lasser, thank you for joining us. >> thank you. when we come back, former fema manager tim manning will join us on the relief efforts going on in texas. whoooo.

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good morning, everyone i'm sue herera president trump and the first lady exiting marine one helicopter and walking to air force one in terrible weather. hence, the large umbrellas before they boarded the plane. they're on their way to texas, to visit some of the areas devastated by flooding from harvey the president saying all options are on the table, following the missile launch from japan late yesterday. the president said north korea has signaled its contempt for its neighbors and all members of the united nations awe suicide bombing killed at least five people in an area near kabul not far from the u.s. embassy. the taliban has claimed responsibility for that attack and they said the explosion likely targeted a branch of the privately owned kabul bank here at home, disney and its sister station jointly announcing a cash commitment to the red cross in support to the

recovery efforts and communities affected by harvey in addition thursday disney's television group will host a day of giving to benefit the victims. you are up-to-date that's the news update this hour david, i'll send it back downtown to you. >> thank you, sue. of course, we're going to stick with hurricane harvey here catastrophic flooding continuing to paralyze southeast texas this morning. we'll get live pictures from downtown dickenson, about 30 miles from houston of course it's proving to be one of the most destructive storms in the nation's history. joining us now, tim manning is former deputy administrator of fema i think you're able to see those pictures if you were in charge now, what would you be doing and also what would you be thinking about as foremost in your mind? i understand, of course, the human tragedy. i guess beyond that in terms of what actually has to happen on the ground >> what i would be focused on

right now is the same thing that fema and brock long, fema stlart is focused on. that's life safety this event isn't over yet. the storm does seem to be dissipating in texas, going back out of the gulf but will be going into louisiana that rescue mission is not done yet. that would still be all of my focus. i would be looking out to the next thing, which will be the recovery this will be a long-term recovery fema and the local governments, state of texas, state of louisiana, people are going to be working on rebuilding for years. that work needs to rt start now. >> how difficult is it to ascertain exactly how much damage has been done given we're still in the midst of the storm? >> there's really no way to know at this point just how wide the destruction is to give you a sense, tropical storm allison in houston in 2001 cost $9 billion worth of damage.

hurricane katrina was in the neighborhood of $50 billion worth of damage. hurricane sandy in the neighborhood of about $20 billion in damage. this is certainly on the magnitude of those storms. the percentage of uninsured loss and losses that are not covered in the national insurance program are estimated to be well in excess of 80% you're going to see a great impact to texas and western louisiana and that recovery is going to take a lot of effort on the part of a lot of people. >> tim, can you talk to us about some of the health care concerns whether there's adequate medicine and food supplies, access to hospitals? i can't imagine that the floodwater is very sanitary. how does the government deal with this? >> that is a great concern floodwaters carry all kinds of contaminants it's important to people, to the degree possible, to avoid that

reports are that the shelters are reaching capacity. the focus of the government, search and rescue teams, fema's efforts of emergency sheltering with the red cross seem to be focused on delivering that assistance that response seems to be going well at this point it's something, certainly, to keep an eye on. >> tim, such a gargantuan job in the moment of trying to keep up with the basic human needs and displaced populations and all the rest if you were coordinating this response, what is now happening to kind of bring ahead in the next few weeks what are the services and what do you have to have in place in the next stage of this thing

>> there are literally thousands of people across washington and texas working to do those next steps, to make sure i'm sure they're stacking up people in the fema registration centers right now. if there's anybody in the affected area they can register now for fema disaster assistance.gov there are a great deal of efforts going under way now and probably will be ramped up over the coming weeks to bring that in that cleanup will be a bigger mission than the local government is going to be able to handle. while people are very willing to volunteer now, what's definitely going to be necessary is people willing to volunteer then to go in and help people clean up after the storm. >> tim, have you ever seen anything like this, where days

after the hurricane makes landfall we see another 10 to 20 inches of relentless rainfall? >> that's right. the forecast looks like it could be up to 50 inches in some places we've seen catastrophic flooding, hurricane sandy, katrina. we've had other tropical storms and hurricanes that have come ashore and parked. floyd in north carolina was one. the weather service had to change their scale to show how much rain is going to fall on their maps it's so far beyond what they've seen before unprecedented level of flooding disaster in texas and one that will require the entire nation to come together and focus on that recovery over the long ter term. >> mr. manning, thank you.

as we continue to watch these pictures, they are frightening, heartbreaking, watching that town completely under water in dickinson, texas that's our crew down there from cnbc when we return, former wyoming senator alan simpson will join rick santelli. that's a conversation you're not going to want to miss. they'll talk about budget, debt ceiling. later why the housing inventory crisis in houston is making relief efforts for hurricane harvey that much worse. a lot more "squawk on the street" after this hey gary, what are you doing? oh hey john, i'm connecting our brains so we can share our amazing trading knowledge. that's a great idea, but why don't you just go to thinkorswim's chat rooms where you can share strategies, ideas, even actual trades with market professionals and thousands of other traders? i know. your brain told my brain before you told my face. mmm, blueberry? tap into the knowledge of other traders on thinkorswim. only at td ameritrade.

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let's get over to the cme and rick santelli with a special

on the debt ceiling. >> we have senator alan simpson, former republican senator from wyoming and attorney at berne, simpson, hurst. >> it's great to be back fire away. >> depending on what party is in power, we always get the same excuse, just with a different label, whether it's the democrats, republicans in this country, our politicians seem to think that it's normal operating procedure to forever spend more than we take in we wear deficit spending and debt like a red -- literally red badge of courage what should happen with the debt ceiling issue? should we just pass it, then abolish it it seems like it's a horrible dream that keeps recurring every cycle. >> it's a horrible dream for the congressmen and the senators who see it come up all the time. but if you can't understand the

debt limit extension or raising the debt limit or approving it is stuff that's already been spent. so don't stand there with a google-eyed expression and say, boy, i'm going to vote against the debt limit so we won't go into debt any further. hell, that isn't what it's about. you've already blown the money what are you going to do, default? that's what this is about. you can't get it done if you have these people say i'll vote for it if we cut spending. they won't do it because there's no spending to cut it's already been spent. >> and they never cut spending looking forward. come on. since the credit crisis, all the dangling participles of things that haven't been done parts of dodd/frank still aren't written. this group that we send, a different group every couple of years, they always seem to end up with this void in their brains with regard to what you just described if you're against debt, try not to spend in the future

if you hold back on the promises as you underlined you're kind of a chicken, aren't you? >> well, but, look, pal, if you can't -- if you're running for president on the basis that you won't touch social security or medicare and you vote for that guy, you know, who is who? you can't get there without getting in to medicare, the trustees of the system, the trustees of the social security system and your congressman is coming up at the town meeting saying i know the terrible problems we can get it without touching precious medicaid, precious medicare, precious social security and precious defense. you get up and say you're giving a terminological inexactitude you lying sack of -- through go. >> senator, you can never get elected if you tell the truth and you really want to tackle the problems we need to face head on, it seems as though the political class is more worried about their jobs than they are

about anything else. i don't see that changing any time soon. so, if we take it the way it is and assume that all the service that politicians should have for the country, they're not going to change overnight. so, here we are. another debt ceiling issue and, yes, if you cut all the things we need to address to affect future spending, you'll never get elected. it seems like a problem that's insolvable. >> that's right. and it will come to pass everybody on the commission with a brain, five democrats and five republicans, one independent -- fine people of all spectrum of the party says where is the tipping point? and the tipping point is very real when we owe $21 trillion and interest goes from $240 billion a year to $700 billion a year then you're going to scratch and look around and say which one of you s.o.b.s didn't pull the trigger on this when you knew it was going to happen? then you go in and clean them

up, hopefully. if not, grab up your socks and run for blocks. >> so, senator, i'm pretty sure i see exactly where you're aiming no matter what happens, even before the ultimate this is really the deadline deadline hits and we solve this and raise the debt ceiling, it's just -- you have so many colorful expressions, you could use the metaphor, but we walk away from one problem but the real elephant in the room never goes away >> no, it doesn't. and it's very sad because the people who are telling us of the seriousness of this are the trustees of these systems consisting of very bright democrats and republicans who are not elected, who are just patriotic americans saying, look, buster, you either get in and do something with the solvency of social security, which is the biggest elephant in all the rooms, and just make the change to retirement age to 68 by the year 2050

raise the money subject to the tax. change the points and go to a cpi. you can't do any of that or aarp will tear your underwear from your body. they don't care about anybody under 50 that's a monstrous organization. 38 million people bound together by love of airline discounts and scooters and bathtubs, you know, and erectile dysfunction ads. >> my final question, you know, one of the issues talked about on this floor is maybe the rating agencies will take our aaa rating away. s&p already did. in '11 they haven't put it back fitch and moody's haven't. we lost our aaa with s&p, it matters not. the reality under the surface is the same as it is throughout much of the globe. on your final answer if you had to have a position in the mrktplace, how would you think about the debt ceiling issues in front of us the next couple of

weeks? >> i would think about it but wouldn't do much as long as i was making money i guess that's what the average guy sees out here in the weeds who is going to get into the esotery of the market when how many americans are in the market for god know the only market ty know is where they get their lettuce. so can you play that game. can you run those things up and down, up and down the stream and all the wizards talk but it you're going to use gimmicks to forget what's eating you up and go to things like -- there is no need to even bring it up. you still have something that is off budget any time you come to something where you need a ton of money, just put it off budget you know, give me a break. >> i got you >> the gimmick is crazy. >> we're out of time here. it's always a pleasure to hear your logic the problem is i just don't know how we can get at these guys to do the job that they need to do sooner or later. thank you again for -- >> they'll tell you exactly what they want to tell you.

you'll swallow it. >> it always makes me a bit depressed to hear the senator zblechlt tells it like sichlt we miss having guys like him in the corridors of power, rick, thank you. >> but even when he was there, nothing really happened, even when he was there. so it really is double >> hey guys, got update you now on breaking news out of texas. we are getting an alert from the official twitter account of a county 30 miles south of houston where they tweet the will havee at columbia lakes has been breached this is something that we were on guard for and alert after, of course, hurricane katrina in 2005 where some of the levees and flood wall has been breached this is the first we know of that has happened in texas but clearly this is an alarm and for the people within that area, they should get out if they have not already done so. of course, the levee has been

broken and we'll report more as we know it contessa brewer earlier saying that reservoirs were overflowing. >> she said 30 miles southeast of houston and the water, the rain continues to fall. those remarkable pictures from one of our crews down there in diggenson, texas, continue to come n you can see, that's a main thorough fair with strip malls, fast food, one you would see in many typical u.s. towns you can get a real sense there in terms of the damage that's been done which is incalculable really when you look at. that it's a major river in the midst of a major thorough fair >> we'll continue to kip posted on the disastrous flooding and, of course that, levee situation. columbia lakes, brazoria county, just outside of houston. let's send it over to jon fortt and get a look at what is coming up. >> there are all kinds of ways that people are trying to help out in southeast texas and the

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welcome back to squawk on the street markets are low area across the street board the averages have significantly paired their losses from earlier today. now well off the session lows, staples and industrials the

biggest gainers. materials and financials are today's laggers. check out utilities, etf getting a fresh all time high earlier in the session it's on pace for the fourth positive month in the last five. now the financials, a few regional banks losing the main grounds. key cores regions financial, coamerica are lower by 2% w that, i send it back down down for the start of "squawk alley" to sarah, mike, and john back to you. >> thank you, morgan good morning it is 8:00 a.m. at apple headquarters in california 11:00 a.m. here on wall street and "squawk alley" is live