♪ live from new york where business never sleeps, this is "squawk box. good morning, everyone welcome to "squawk box" on cnbc. we are live from the nasdaq market site in times square. i'm becky quick along with joe kernen and melissa lee we've been looking at the u.s. equity futures, things have been higher after the market turned around yesterday this morning futures are indicated up again the dow futures up by almost 40 points s&p up by close to 3 nasdaq up by 12. overnight in asia, you'll see that in japan, the markets were higher there as well even with all of these concerns about that missile fired over japan. you can see the nikkei up by 0.3% the hang seng up by 1.2%

the hang hishanghai slightly lo. in europe, green arrows across the board. the dak x is up by 0.4%. the cac up by 0.3% the ftse up by 0.2%. the dollar, which has been under so much pressure, you look and you see today the dollar sup against the euro, back below 1.20 this morning it looks like the dollar/yen is at 109.89. check out crude oil and gasoline prices, crude oil yesterday at a one-month low. it's down once again this morning at 46.18 rbob gasoline up nearly 6% yoed yesterday to a two-year high of 1.82 sits at 1.83 this morning as we quont to watch the reficontinuec those refineries shut in with the additional rainfall.

>> gas prices at the pump could go up to 2.60, 2.70 we were thinking 4 dollars was the norm even after this, it's amazing that we're in a different kind of -- and can you believe that people that supposedly know what they're talking about said crude would go down and gasoline would go up because you're not refining as much you get a glut of crude? a scarcity -- they were right. crude has not spiked on any of this >> no. and that spread that blown out that's helped refiners, particularly the ones not along the coast, the mid continent refiners can benefit because they're not affected by the flooding situations, yet they can take advantage of that spread >> wasn't it good that it stopped raining in houston >> but i think some rivers have not even crested yet

>> but the overflow on some of the reservoirreservoirs, it wasa controlled release and then uncontrolled release, which sounds scary, but a little bit going over the back. >> some of it is going through it was only a foot over. >> fwbut there were concerns abu those dams even before the situation. >> on the anniversary of katrina, the same day t bring backs the same thing i think it's a really devious storm that circles around and -- because that is what i said. it already made landfall horrific that it makes landfall twice. it comes here over the weekend we'll get the remnants of it >> here are the stories we're watching uber welcomed its new ceo. the former expedia ceo had not

spoken publicly about take the job until last night in a note to expedia employees he wrote i have to tell you i'm scared i have been here at expedia that i have forgotten what it's like outside of this place. today he will take questions from employees one topic that may come up, the justice department is looking at claims that uber violated u.s. bribery laws it focuses on whether uber managers violated the corruption act. it did not specify the nature of the case this is the third time ub ser fielding questions from a federal agency this year later this morning, shervin pishevar will join "squawk on the street" that should be an interesting conversation he's our guest >> we're a network

we're a team >> i get that. >> how many ceos are unassuming enough to say i'm scared i heard nothing but good things about this guy did you practice in case you had to say that? >> yes, khosrowshahi >> we'll be saying that name a whole lot. >> low key >> and deal maker. which is good for uber >> a change. i would be afraid to-dwhosh wouldn't be -- it's a daunting challenge to take over you're comfortable at expedia. >> to do it at a time when you're hearing reports of a potential bribery -- >> that, too >> the highest paid ceo last year, mostly because of stock option grants. >> he likes the challenge. >> exactly united technologies nearing

a deal to buy rockwellcollins. an agreement could come as soon as this weekend. if the transaction happens, it would be the largest air erospae deal on record >> amazing 20 billion will put you there for aerospace. when you look at pharma mergers, media mergers much more than that president trump is set to give a sfeepeech on tax reform later today. eamon javers has more on what the president is expected to say and i get comments on yesterday's visit down to the area >> the president spent yesterday afternoon traveling in texas, today he will give a speech in missouri, on the idea of tax reform here's what we know will be in the speech white house officials telling us yesterday that this is going to be billed as a main street

speech near america's main street, route 66 that's the imagery we'll see today. he will talk about shared prosperity slipping away in this country. he will say we need to end the rigged system. this is an interesting rhetorical choice by the president of the united states he will say the u.s. economy is rigged we need to jump start it with tax reform, tax cuts across the board. that will help get the economy going again and bring back that shared prosperity. politico reporting that steven miller, the nationalist white house aide is taking a big hand in crafting this speech. so we can expect some of that populist rhetoric in the speech. it will be an interesting way to kick off the tax reform debate going into the fall. this will be the buyiiggest priority of the white house other than that hurricane harvey relief bill the president talked about yesterday. >> interesting piece in the "journal" today, op-ed piece,

maybe you already have seen it we still don't know everything yet. but there were things that happened 12 years ago that people were ready for this time. and that saved lives, and maybe when it's all written, if anything positive comes out of this, it's that some of these agen agencies -- after 9/11, it's the same thing where were all these guys if anything positive can come out of it, maybe all the agencies learn to work together state, local, federal to help. >> you heard the head of fema making that point alongside the president, saying that the convention center is not at all like the superdome making it known this is not a repeat of the katrina. the trick is that a lot of this is two, three days on. you have these after-effects that you can't predict

that's where they have to be nimble even when the first responders are so exhausted from spending the last five days from the onslaught. now you deal with the water receding, the damage being visible, the cleanup beginning all of that is coming to bear on these people who have been under siege for so many days >> when the scary comment yesterday from the mayor worried about bodies, when the waters recede >> right >> any reason for optimism there? there's hope that's not going to be the case this time, isn't there? >> there's always hope i'm not an expert in this. having covered these stories in the ast, one thing that you worry about is when the disaster hits, everyone scatters, people go to different shelters, they go inland, get a hotel room, they hit the road, people don't know where each other are. though don't know where family

members are. as the disaster recedes, they try to reconnect that's when they say wait a second, we're missing somebody that's when you get the missing persons reports coming in we may not even have those yet. they may not have a good sense of how many people are missing and that might be dead in the storm. i think that coming days may be more grim on that front, but there's always reason to hope. there's certainly a lot of notice that this storm was coming in so people had a chance to prepare >> eamon, thank you. >> you bet let's get down to texas for the latest on the recovery and relief efforts from hurricane harvey brian sullivan is standing by in galveston. we'll get to him in a moment first to contessa brew ner houstughe brewer in houston where a curfew was in effect last night >> that curfew has just been lifted it was in effect last night to prevent looting and other kinds of theft from properties around

the city there has been a dozen or so arrests for looting and burglary and robbery. considering the magnitude of the damage here, that's a minor part of this story. what we're seeing today, dry skies. this is the first time we've been out here that it hasn't been raining that's a great sign for houston businesses we were out late last night on military vehicles accompanying volunteers out scouring some of those neighborhoods, looking for victims that had been holed up and missed over. there were long lines of trucks and boats and high-profile vehicles ready to go in. literally parades of these vehicles going in to check for victims. we saw businesses yesterday even when it was still raining that were open for business there was a loves travel plaza that was packed. the mini-mart had lines out the

door the arby's had lines wrapped around the turnstiles. twle serving food. they were up and running just next door, the pilot travel plaza had pumps wrapped in plastic. we saw a place where businesses were showing up to feed hungry victims and first responders then i got a chance to talk to them about what the shutdown for their business has meant to them buffalo wild wings outside of houston, three locations, shut down since saturday. >> as far as sales, us being down, especially with the texans, mayweather fight, you're talking $110,000 in sale potential limit. >> among three restaurants >> for one restaurant. >> so, his restaurants have power and there was still food, but he couldn't open because his employees are scattered all around the broader metropolitan area there are some 3 million workers in the greater metro area.

surely some of them get back to work today interstates are beginning to open there's debris on them, but a good sign is traffic is going the way it's supposed to people are still going to have to navigate around flooding, low levels we spent two hours trying to get back into downtown houston last night and we were in a high profile vehicle going through some of these flooded areas. >> it's great to hear that the rain has stopped but there has been questions about whether all the rivers have crested yesterday or whether some of the worst of the flooding may yet to come >> so that's part of it. we saw waterways yesterday that were being filled with water we're watching the waters recede back into the waterways. but that means that downstream from these waterways, you'll a neighborhoods may get flooded.

that's something that people who live here have to take into consideration when they make plans for when they can return home to see the damage >> con tess sashgs thank you very mu contessa, thank you ver much let's get to brian sullivan who has been watching the oil refineries >> hurricane harvey is not over by any means the most extreme rain event in the history of the united states keeps on giving. it's not where contessa nor i am it's about 100 miles east of here flooding is starting to rise, to the point where the evacuation center is having to be evacuated because water is coming in the place where everybody went to get shelter, they're having to leave because the water is coming up. this is the storm that will not

northeast united states over the weekend. port arthur, texas a lot of sad stories about families, but also the home to the biggest refineries in the united states. saudi aram aramco's refinery yesterdayport arthur, there were reports that it would shut down because of flooding, and maybe because they can't get the workers in to run it that is something to watch as gasoline futures hit a two-year high the recovery efforts begin here as well. let me paint the picture for you. effectively everywhere between here and contessa is if not flooded some what underwater and they sent in the marines yesterday. that's a video of the marine

assault amphibian battalion from galveston going north towards houston doing what they could. we spoke to major john kennedy of that battalion about their efforts. >> we're ready i think the most important part we're in the game now. i have a wife and kids at home we've been watching the water rise like everybody else just every time we think the storm is passed, it comes back and hits us again. we're here, ready to help. we can offer that flexible diverse responsive capability that i think this area needs now. >> that was yesterday. i don't think he knew how precious those comments were given what's happened in beaumont, port arthur, memphis and even new york and new jersey over the weekend this storm will go down as the greatest water and rain event in the history of

the united states. >> i know earlier louisiana said it was willing to take refugees from the storm that it was willing to put them up look like that is the worst place for some of these refugees to be headed towards following the path of that storm wlafrn >> what we've seen around here, there's nowhere to go you turn down a road, that road is blocked. you think i'll go down this road people use their smartphones, google maps, waze, but the problem with those map apps, waze takes people to tell you about problems if there's nobody on the roads, you think the road is open when you look at your phone, then you turn, that's galveston yesterday. that's us driving around we got at one point -- i'll l leave with you this. at one point in houston yesterday, the pace of rain was 10 inches per hour

10 inches of rain. that was a short time. we got about 12 inches of rain in galveston in about 12 hours it just comes out of nowhere the ground is so flat, it comes across and goes up can you imagine that 10 inches of rain per hour >> 50 inches that some areas have hit is more than those areas typically get in a year. >> brian, thank you very much. we'll check back in with you in a bit. >> emergency response teams from heb are on the ground delivering thousands of meals to houston residents. joining us from rockport, julie betti b beddingfield they are called dru, disaster relief units, and mobile kitchens how long you have had these? it's amazing you had these ready

to goch you served 8,000 meals sunday and monday, relocated to rockport on tuesday. serving 2,000 meals, that was all ready to go somebody at hgb thought of this years ago to be ready for this >> absolutely. it's ironic, i guess, how disaster relief and just our normal supply chain for business go hand in hand. we had these mechanisms in place for years. one of myercounterparts this is his 17th disaster relief effort. we had those vehicles for years. we deployed 15 disaster response units on sunday and started going where we could safely go with those vehicles, start providing services to customers, communities affected by harvey >> it's been point the out even

corporate america seems to be more receptive or more reactive to what happened this time around that's the way it should be, because the government will not there to be able to do everyone. there were worries yesterday and the day before about food supply in general a mcdonald's somehow managed to stay open with huge lines if this continued, the food supply was in question, which would have made your efforts more important. >> yeah. as a grocery retailer operating in texas, we understand the landscape here, have a good handle on things it's our business philosophy to try to be the last ones to close in times of natural disaster then the firstones to hope our stores themselves can provide much need resources to customers and communities facing cleanup efforts.

we're also focusing some efforts here in houston as well. half of our team arrived at convention center last night we will serve breakfast to first responder there's, the other half of the team, we're still serving breakfast to the residents s is in rockport. we have our employees all over the state trying to get stores back up and running and assist communities throughout texas >> so it's possible to donate to heb who else is involved >> yes >> central market? is that part of heb? >> absolutely. you know your stuff. those are part of our heb family customers are the first to ask what can we do we donate 1d $0d $1,000 to reli efforts, we are partnering the

red cross. customers can do into the store and donate in 1, 3, and $5 increments if they choose donate more, we can accept that as well, via cash donations then we're -- he would direct people to those partners as well to see what their needs are. our food banks have specific needs on whether it's baby formula, you know, food, snacks for folks who are being displaced for shelters so we're communicating out with those resource in addition our store reopenings and closings are at heb/disaster >> are you concerned the disruptions on the roads will cause you to have food stho shortages. >> once again, being that regional grocery retailer, we have warehousing and supply chain operations throughout texas. our team has been working 24/7

to make sure our stores are getting restocked on a continual basis. we have grocery shipments going out. we're trying to figure out how to shift once again that supply chain to make sure that stores or foodbanks or shelters that need the resources are getting them if it means a store gets less product than they're used to, that's okay. i think texans understand. we're keeping our stores as operational as possible. so far we've been on top of things our amazing team is doing an amazing job. >> i never heard of heb. so you've give n out all these meals, if i go to texas, the only place i would shop is he about. >> it's smart, helpful and a good model thank you. >> thank you, guys when we return, the countdown into friday's job

report is on we'll tell you what to expect from the adp numbers after the break. and we'll speak with warren buffett live at 11:00 a.m. stn men "squawk alley. stick around, "squawk box" will be right back.

welcome back to "squawk box" as we count down to friday's payroll numbers, we are joined by ellen zenter and alex dryden.

alex, starting off with you. in terms of yesterday's session, make reversals across the board when it came to the reaction to the north korea firing we had the biggest intraday reversal on the dow in nine months how do you read that reaction? >> in august, you've seen markets in a how oldi inholding. we don't have many answers to the debt, we have central bank meetings in september, we have the fed, ecb and the bank of japan having big central bank meetings we're expecting announcements, so investors are in wait and see mode >> why should we be in a holding pattern with these evaluations why are we willing to have that risk you listed off the potential risks in september, also the fed potential wind down of the balance sheet, why should we be

here >> there's certainly risks, but let's look at the fundamental back drop. the economy is improving in the u.s. and globally. pmi numbers for july show that 95% of countries are in expansionary mode. when you look at those fundamentals, that's why investors arie inwilling to tak some risks despite the volatility in the later part of the year >> i imagine some of the economic data we'll be getting in the coming weeks, given what's going on with harvey, do you look through that? >> i think friday's payroll nub was sort of rendered obsolete on hurricane harvey we know that we'll start to get effects on the data later from the hurricane it won't be shown in this report sure, we'll get a good jobs report this friday low unemployment rate, tick up in wage growth the real question is when harvey affects the data what does it look like? depending on how long the

disaster drags on for, and believe me our hearts go out to everyone down there, but you hope for quick cleanup then in the same quarter, you can start to make up that lost activity then you actually get aboost t the few quarters following that from all the homes, cars being bought >> will that boomering effect happen quickly in the past, we've seen the gdp report and then it took another report, another quarter or two to start seeing that reversal. >> yes i think you'll see that fed policymakers will look through that and so they tend not to get so minute with the details of the tiny fluctuations from things like natural disasters they'll look through the basics. this is why less than half of them have built in any kind of

fiscal policy assumptions because they learned and got burned, if you fwhilt fiscal policy assumptions that fiscal stimulus is not guaranteed so they tend to forecast the big picture and not try to get into the minute details. >> here we are in the markets, in yesterday's session what was interesting was that in terms of the reversal, large cap technology ended up the day strongly is that where you want to be be with what's working throughout the year? >> for us, going into the fourth quarter of this year, we like large cap tech the der nationa international es something that is attractive one other factor or area tha we're looking at is financials we can see a world where the yields begin to rise we get a steeper yield curve that throws a bone to net interest rate margins.

>> ellen and alex, thank you very much. >> you know wilfred? >> no, i have never met wilfred. why? >> you have ever gone on the site -- what do you call this site here? >> i think you call that twitter. >> twitter >> twitter >> you could say it like -- wilfred -- >> as a british -- >> can you say it twitter? >> no. >> wilf can. he doesn't on purpose. he doesn't on purpose. when he does it, it looks like it almost hurts him to say it. >> how would you say the name of this show. >> "squawk box." >> that's how he says it, too. i don't hear it. "squawk box." >> i need to start learning this american >> i have to say, wilf americanisms are much stronger than your british. coming up, going back to more serious things, north korea

says that yesterday's missile test was the first step of its military operation in the pacific. great. wel lk aut'ltabo america's options next when a fire is going on, you're not thinking clearly,

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welcome back you're watching "squawk box" live from the nasdaq market site in times square. the u.s. ambassador to the united nations calling for enforcement of all security council sanctions. nikki haley saying the world is united against north korea joining us is adam mount

adam, you say there are two things so concerning about this first of all this is the first time they've done this with a mril te military missile, and it shows a lack of restraint f anybo, if ay thought they were going back into a box >> i think there are three things going on with this test they get more data flying over japan. the missile heats up better so they can test reentry better second, it fits with their pattern of coercion it came during u.s./south korea joint military exercises, hours after u.s./japan exercises ended they want those exercises to stop, so they're throwing their weight around. third, it fits with what many of us thought was an overture to release tensions in the area

washington rejected north korea reaching out trying to reduce tensions many in washington didn't read it that way. they didn't understand that signal what north korea is trying to do is they think they were denied, so now they're ramping up pressure again and trying to get a response >> their read of this is they were offering an olive branch by slowing things down, we didn't take that olive branch because we continued with these exercises. >> right the threat ove conditional. they said we will launch four missiles into the waters around guam if you don't slow b 1 b bomber overflights and slow these exercises. the united states did not respond to that threat directly. so far it's not responded

specifically to the fact that north korea flew a missile over japan. they haven't done that since 2009 and so the lack of these specific tailored responses is causing north korea go its own way. it's sending its own signals and trying to set the agenda >> we know north korea has been threatening, has been posturing, has been creating these provocations the entire way. how do we respond is the question what options do we have? militarily it seems that there are a lot of issues with the ideating into some military battle with them when you consider the potential loss of life from south korea and beyond wh beyond where does that leave us >> the possibility of the u.s. striking north korea is poor that woucould escalate to the

nuclear level. so right now we should not look at the long-term position of denuclearizing the regime, but the near-term response how do we respeond to these new threats north korea is putting on the table how do we prevent them from overflying japan with these tests. >> your suggestion would be what >> we need to look at specific taylor the deterrent threats to say if you continued to do this, the following things will happen >> which would be what what threats do we have? we can have economic measures specifically tailored to those keys >> we've already done that >> we've applied general economic pressure to try to harm the regime to get tell bahem ba the negotiating table, but it's clear that generalized pressure has not worked so a specific response can also involve new force structure in the region we have not talked about that in a great deal but as this deterrent challenge

evolves, the united states will need new capabilities against north korean submarines, missiles and possibly against ground forces to convince the regime they cannot start a limited war and come out ahead >> it would be terrible by accident that's what got me, so the first three out of four times they tried this missile it broke up so they launch one in may it was successful then to immediately think it's not going break up over japan and fall on someone and kill a couple hundred people, that would start something. that's where i thought that this was kind of reckless do you think they had a high degree of confidence that that wouldn't happen? or if it did happen they would say it's an accident if that had happened that could have started anything. that's what scares me, it could be accidental and start a nuclear event. >> right there is a significant risk that there's an accident like that. north korea has been 2 for 2

with this specific missile, the hs12 so the measure of confidence was not high it was a deliberate risk they were taking. they know the potential that the missile could break up they know that it could fail they wanted to send this signal that exercises should stop to refocus america's attention and try to throw their weight around >> very quickly, are we dealing with a sane and rational actor some people say it's logical and sane others say no way. >> i think this propensity for risk taking alarms many m americans, but that doesn't mean it's irrational. he's absolutely practicing deterrence ably and skillfully >> adam, thank you for your time today. >> thank you coming up, the former president of tulane university will join us

he wrote a book about the resurgence of louisiana after katrina. and then wesley clark will join us and later, jobs week in america. we'll get an early read of friday's adp data. stay tuned, you're watching and ai to help thousands get to work safely and efficiently. this is not the cloud you know. this is the ibm cloud. the ibm cloud is the cloud for enterprise. yours.

welcome back to "squawk box. we start with some stocks to watch. berkshire hathaway is now bank of america's largest shareholder. warren buffett's firm exercising war warrants to buy 700 million shares of stock. those shares a s ars are worth$ billion and gives berkshire a 6.5% stake in bank of america. we knew they would be doing this warren buffett will be joining us live today on "squawk alley," that's coming up at 11:00 a.m. eastern. also autonation is launching a 2$250 million stock buyback program. yesterday on "squawk box" mike jackson told us that the company

plans to scrap vehicles damaged by hurricane harvey which will hurt august sales number j.j. watt has raised a whopping $5 million for hurricane harvey relief. he pledged $500,000 of his own money. the owner of the tennessee titans made a million dollar donation watt has a goal of $6 million. that's cool. when we come back, gasoline prices ticking higher once again today. this is happening as tropical storm harvey adds to one of the worst flood disasters in american history we'll get an update on the refineries in the gulf after this break rbob up another 4.8% this morning after being up 6% yesterday. also as we head to break a quick check of what's happening in the european markets things are up across the board

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the art and expertise of high-conviction investing. translation? why invest in average? texas oil refinery operations are taking a hard hit this week as hurricane harvey pounded that state and it's reflected in gasoline

futures, which are up again this morning. joining us now, the president of lippow oil, andy lippow. more than a quarter of refining capacity has been affected in some way do you know anything other than that we know in terms of the refineries, what condition they're in, when they're likely to be reopened >> sure. so if we start in corpus christi, where all the refineries have been downgraded. we're finding to have sustained major damage but the utilities around them are having some problems and that's going to delay their start-up we're looking down there of maybe seven to ten days, the port is out there clearing the debris if we look to houston we haven't seen any major sustained flooding damage. but they're out of crude oil so they're not making petroleum products and it's the same type of -- >> they can't get deliveries >> exactly some of the pipelines from the permanentian basin are down because the terminals are shut in the houston area. so it's looking better

but it's still going to take them about 14 to 17 days to get back on stream i'm actually particularly concerned about beaumont/port arthur because they just got a huge amount of rain in 24 hours and we've already seen flooding, within the refineries themselves but we don't exactly know how bad it's going to be if it is bad, you're looking at 6 to 8 weeks of outages over in beaumont port arthur >> the refinery in port arthur was shut down this morning because of power outages and you mention utility. we have motivea there, reports they're looking in to shutting down they're only operating at 40% capacity right now so things could actually get much worse before they turn around and get better in the next 17 days or so >> exactly my expectation is beaumont -- port arthur they're going to be down two to three weeks because if you look at where total is relative to motivea they're all in the same geographic area. the flooding is going to affect them all >> the power comes back on

eventually how much in terms of regulations and complying with environmental standards, how long does that take is it less now under a trump administration than it used to be tough to reopen after something like this >> well, they're still going to comply with the environmental regulations. i mean, if there's air pollution or whatever i'm sure that they won't be fined like in a previous administration. because it's such an issue on fuel supplies that they're going to try to get back onscream as quickly as possible. >> some people would like that so they can cut some corners because we need the gasoline >> well, i'm not going to say they're going to cut corners but there is a procedure to start up the refineries. you really need this equipment to get onstream to make the fuel >> we've seen prices up another 5.5% just this morning after being up 6% yesterday. you think thaiths justified based on the damage you're seeing and based on how long you think it's going to take to get

these refineries back online >> let me put it in perspective. prior to this event gulf coast refiners were running about 6 million barrels a day of crude oil. today they're down to 2 million barrels a day. we're seeing significant shortages of petroleum products. if you look at the pipelines, coming out of houston, they're shut down because there's no product to put in them so you're having affects throughout the midwest, and st. louis, chicago, sort of mid-atlantic from colonial pipeline all the way up to baltimore. you have pipelines that are in indianapolis, that don't have product. >> could this spike some gasoline prices, people are forecasting for different areas of the country, actually be more pronounced particularly in the northeast, since colonial pipeline has said that it is experiencing issues, because of harvey. >> well, we're actually seeing it across the board, because in the northeast, we're actually not loading tankers of gasoline to go down to the florida market, which had been supplied from the gulf coast. so, the increases in gasoline prices are going to be

widespread and on a national average basis, expect to see it go up 2.5 to 3 cents a gallon per day over the next five days as it rolls through the system >> how quickly do those prices come back down as operations start again? >> well, it usually comes down much slower. i mean, it probably would take about a month or six weeks to come back down >> andy, thanks. we've seen this movie before, i guess. certainly, it's always different, but -- >> exactly i mean we've seen this with hurricane ike, with hurricane katrina, whenever you take out a significant amount of refining capacity, the replacement is simply not there immediately to give to the consumer >> all right we appreciate it thanks >> thank you >> okay. coming up, scott cowan will join us, the author 6 the inevitable city the resurgence of new orleans and the future of urban america. we'll ask him about the long road to recovery from hurricane katrina and the threat to new orleans from trocastm rveypil or stay tuned for your heart...

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texas and louisiana brace for more rain as harvey regroups a look at where the storm is headed, and what it will take to get the much-needed supplies to those in the area. president trump calling the response a real team effort. the latest from the ground straight ahead energy has been in focus this entire time gasoline futures surging to a two-year high as harvey takes more refiners offline. we'll talk about the storms impact on oil, plus a look at gold and the dollar, after yesterday's big moves in both of those markets. and north korea calls its latest missile launch over japan a prelude to more military operations general wesley clark it here to

discuss the options on the table for president trump as the second hour of "squawk box" begins right now live from the beating heart of business, new york city, this is "squawk box." good morning, everyone welcome back to "squawk box" here on cnbc, we are live from the nasdaq marketsite in times square i'm becky quick along with joe kernen and melissa lee again the futures at this hour have been in the green things have picked up just as we saw the markets turn around yesterday. stocks actually rose after suffering some losses early in the session. this morning it looks like the dow futures are indicated up another 46 points, shaking off all of these concerns surrounding not only the hurricane, and the storm that continues, but also those concerns about north korea obviously markets have a mind of their own. you can see the s&p futures are up by 3.3 this morning nasdaq futures up by just over 13 let's get you caught up on some

of the other headlines this morning. we do have two key economic reports that are coming within 15 minutes of each other this morning. first up it's the august adp report that comes out at 8:15 eastern time it's expected to show that the u.s. economy actually added 185,000 new private sector jobs last month 15 minutes later we get the second reading of the second quarter gdp. that's expected to show that the u.s. economy grew at 2.8% on an annual rate compared to the first estimate of 2.6% also on today's calendar, a speech by fed governor jerome powell also target is fighting back against amazon by cutting back on the amount of money that it pace its rivals. sources tell cnbc that target is scaling back its use of amazon web services, and that microsoft is among the cloud vendors hoping to get target's business. meantime, amazon and microsoft are teaming up in another area the two have announced a collaboration which will allow their digital assistants to talk to each other. amazon's alexa and microsoft's

cortina will begin talking to each other later this year so that each can access features exclusive to the other berkshire hathaway is now bank of america's largest shareholder. warren buffett's firm exercised warrants to buy 700 million shares of b of a which it received when it invested $5 billion in the company in 2011 those shares now worth $16.5 billion. give berkshire a more than 6% stake in bank of america warren buffett will join becky today on "squawk alley" and then at 11:00 a.m. eastern. goldman sachs, the ge, it's good to be warren buffett >> to get preferred shares in times of a crisis with a very high return. >> sometimes if you have money, and you have a reputation, it just helps, you know what was the -- coupon on this preferred stock, do you remember >> i know that they were getting something like $300 million in

the dividend payments but with the dividend increase the bank of america came through with they'll be getting $320 million to $350 million in dividend payments >> but at the time -- >> i want to say 7% but i could be wrong >> and it wasn't height of the crisis >> no it wasn't. but it was when bank of america was about halfway through. >> there were concerns >> brian had been doing a lot of work, he was about halfway through cleaning up the balance sheet. so it was really the good feel, or the feel of -- >> no, i no he >> approval. but yeah it's faith in the ceo, his ability to turn this stuff around >> try that, you know. "squawk" anchor buys shares in company -- >> just want to give you preferred shares >> no, but -- >> if i gave my seal of approval that maybe i'd get a better deal >> the "squawk" stamp of approval >> the joe "squawk" -- we're not allowed to do it anyways, are we have to be like an etf stupid mutual fund >> all right hurricane harvey may be moving

on from the sea scenario but the water is still rising in some places the president making a trip to the region yesterday team coverage begins this morning, contessa brewer is in houston. but first we go to eamon javers which joins us with more on the president's trip >> good morning, melissa the president made two stops in texas yesterday in corpus christi and in austin, texas he had the opportunity to meet with leaders of the coast guard, and with fema and get briefed on the situation there, and he also had the opportunity to try on a new role as president of the united states, and that was sort of cheerleader in chief. the president greeting a large crowd just outside the venue in corpus christi, who were cheering him, and the president in turn, cheered them on and waved the texas flag here's that moment >> just want to thank your governor, senator cruz, senator cornyn, everybody, we want to thank the whole group. this has been a total cooperative effort again, we will see you soon. i will tell you, this is historic, it's epic what

happened, but you know what? it happened in texas, and texas can handle anything. >> white house says the president will likely head back to the region for two stops as soon as this weekend they also say that he'll be traveling to missouri today where he's going to be talking about tax reform but now let's head over to houston where contessa brewer is on the ground and she's got the latest contessa >> eamon, we're at the convention center where we see the population inside decline just slightly. now it stands at just under 9,000. some of those people may be being moved or transitioned to the nearby toyota center where the houston rockets play, as they try to manage the population in these shelters the rockets' owner, by the way, donating $10 million toward the relief effort. and it's not the only sports team to get into the action. at the nrg stadium where the football team plays we know that another private charity has set up a shelter there, capacity 10,000 and at the bbda stadium, where the soccer team plays, they are

sorting through mountains of donated supplies we're talking about diapers, and toiletries, nonperishables, and all of the clothes that are needed from -- for the very elderly down to little babies for the days and weeks ahead and inside here at the convention center, we got a firsthand look at how some of the organization is going. really it takes the skills of a city planner, at a moment's notice, to make this place run like a well-oiled machine. so yesterday when we saw inside, some of the things they were talking about is how do you turn this into a neighborhood with addresses where families can find each other if they go to the bathroom or go to the food line that was part of it. part of it is something that we didn't have to deal with as much during hurricane katrina cell phones now are the lifeline for so many people, and for so many people important for staying in touch with family at&t and verizon came in to set up charging stations, so this place is operating, and they say

they're up for the long haul as long as they need to house people, they will. >> that's, again, i keep referencing this "wall street journal" op-ed piece pointed out that big corporations have stepped up this time that's not all that at&t and verizon did. i think they were bringing fuel, helping with generators. everybody, it's just been a, i don't know, a more concerted effort it seems like and a smoother response. although it wasn't identical to katrina, obviously but right in the middle of it is a reason for hope, contessa, at this point >> yeah, that's for sure, joe. by the way, you know, down here the streets are dry. it's not raining today i'm expecting to see more houstonians. if they can get to downtown i think they'll be returning to their offices today. >> wow that's all good. good no rain because you know, we heard it was going to rain until friday, and that you know, just -- i'll be honest with you, when we wake up in the morning, sometimes i don't want to get out of bed and i actually thought this morning,

what if i -- what about people in houston that are, you know, they're not at home, or they're at a -- >> they're not in a bed. >> or they're in a place that's flooding to think about what a lot of people are going through down there is mind boggling it's mind boggling, contessa >> yeah, can i just tell you about the most amazing moment yesterday? when this high profile military vehicle out of the back, we've seen flooding everywhere, it's a tiny little slice of the massive geographic region that's experiencing harvey damage and it had been raining nonstop, and all of a sudden, the rain let up, the clouds parted, saw a little peek of blue sky and we actually saw a sunset last night. and i have to tell you, it was an amazing moment. we were in the back with four guys who needed a lift to try to find something open to replenish food supplies. and everybody had big grins on their face to see that even though they were facing miles long walks to get back to their homes. >> you know, contessa, at this point, was it good that it wasn't evacuated i think maybe -- you know, you

don't know in hindsight whether it's good and there -- i saw shots of people staying in their second floors that didn't -- didn't even want to go with rescuers, and their entire first floor was flooded. but it looks like maybe the waters recede, and even they're going to be fine with the decision to stay so, 100 people died in an evacuation with that other hurricane. >> rita. yeah >> rita. i mean, is that in hindsight now, is that the right advice to not evacuate >> i've heard lots of different opinions we went through a neighborhood yesterday where clearly, everyone had stayed and the whole neighborhood was surrounded by water. there was water on the street but families were in their garage patios cooking on a barbecue so clearly they felt like staying was the right thing to do i talked to a former police officer from outside of houston who was driving this big military vehicle yesterday and he said, absolutely the wrong move no they shouldn't have waited

till the last minute the problems with rita were caused with last-minute evacuations and everyone clogging the highway at once if you had planned at the moment they knew that this storm was going to be a problem for this region, he said it would have saved a lot of devastation, a lot of these last-minute rescues. but if you look at the death toll compared to some other storms that we've seen, so far, so far, it is not close to what we saw in katrina. and even hurricane sandy, which, of course, we lived through ourselves, you know, it's just not the same it's not the same. so it's a tough call to look back and said should we have evacuated entire cities? >> okay. >> all right thanks contessa. >> yeah. our next guest was on the front lines during hurricane katrina. he led tulane university in new orleans bringing the university back online after it suffered about $650 million in losses because of that storm. and the forced closed for an entire semester. joining us right now is scott

collins the former president of tulane university. he was on the city's bring new orleans back commission leading committees to rebuild the city's public school system and he's also the author of the inevitable city, the resurgence of new orleans and the future of urban america, and scott thank you very much for being with us today. >> it's a pleasure to be with you. >> you showed with new orleans what can be done, the silver lining that came with that was that you had the opportunity to start over and build a new system, one that better serves the city do you think that that same opportunity exists with houston, or is this a different situation? >> well, of course, it's a different situation in terms of the magnitude. but the size of houston, versus new orleans. but what you always hope for, at least, is every time there's a great tragedy that you can find some silver linings out of it. it seems like we have an obligation to the next generation to try to fix what we learned from the tragedy, so the likelihood of it occurring again is very, very small.

so i think there will be silver linings from it. it's unfortunate it had to come through so much anguish and hardship through so many people right now in houston and texas >> we're not even talking about the waters receding at this point, obviously there are going to be some very long days, weeks and months to come but, in the very early stages of this, what advice would you be giving planners in houston at this point what would you be saying just in terms of what is probably going to be a very long fix? what would you be telling them to pay attention lessons that you learned from new orleans? >> well, the most important, quite honestly, focus right now is the safety and welfare of all the people in the city and in the state. it's hard to underestimate the anguish they're going through right now. many of them have lost their homes. their possessions of a lifetime. not sure where they're going to be able to get back into their home, if they will at all at any time likewise, businesses have been

disrupted, and they're concerned about what will happen to their place of employment. and the future so, what they're going through mentally, it's hard to describe unless you've been through it. but without a doubt you focus on what can you do for the safety and welfare. tlafr it starts planning and there's several levels of planning that have to go on. one of course is at the state level. one is at the city level another is at a neighborhood level. and the last is for every individual and very detail planning will have to go on over several years. it won't happen right away it takes a long time to recover from an incident and great tragedy like this. so i anticipate this will be a focus, this recovery, for several years. it's not a quick fix in any way. but the other thing i think that's very important at a time like this is, is to ensure that we learn, was there failures of the flood protection system? that's what we learned in new

orleans. that our flood protection system, which we had an inkling of before the storm, was faulty. and we had to fix that because if we didn't, people would ask, well couldn't this happen again? why should i come back to new orleans? why should i rebuild if we're not physically safe in the city? so i think a lot of focus has to be on that flood protection system >> scott, it is new orleans, and it is louisiana safe at this point? were there lessons that were learned and taken away i ask as harvey is bearing down on louisiana, bringing very heavy rains, and potential flooding once again. >> i think yes, we did learn an awful lot. the corps of engineers has invested billions of dollars in rebuilding the levee system. and i think that almost eninsures that our safety is at a much higher level today than it was in the past of course we never want it to be tested again we've had some hurricanes since

then and we've weathered them very well. but i think everyone feels physically much more safe today. the second thing is the level of planning for emergencies has improved significantly when i look at what's happening in houston today, versus 12 years ago, with katrina, first of all, fema's much more effective today than they were 12 years ago a lot of cities and states learned from katrina about emergency planning and how to handle these hurricanes, or these tragedies that can beset a city so i think the level of preparedness is much better than it's ever been before. but having said this, this is an unprecedented event for houston. there will be lessons learned from this. but i'm sure the lessons were learned from sandy, and from katrina. and by the way, my heart goes out to the houstonians, because when katrina happened i eventually moved to houston, and then had to, of course, evacuate houston because of rita.

and people in new orleans have a great fondness for houston and texas, because everything they did for us during katrina. >> yeah, and we have seen many of those efforts reciprocated with this storm with harvey. scott, want to thank you very much for your time today >> yeah. pleasure to be with you. >> when we return, tension between the united states and north korea. state media there saying that the recent missile launch over japan was a prelude to more military operations. we will speak to general wesley clark after the break about what options might be used against the rogue state. and the dollar recovering after tumbling yesterday gold backing off of a nine-month high we'll betalking markets, the riskings and rewards in just a bit. also later this morning as houston dries out we will speak to a group that is ready to move in and help those in need. the national spokesperson for convoy of hope will be joining us u ay tuned yoare watching "squawk box" right here on cnbc

the u.n. security council labeling north korea's latest missile firing over japan, in their words, outrageous. the launch comes less than a month after the council approved its toughest sanctions ever against north korea. joining us now retired four star army general and former nato supreme allied commander for europe, wesley clark and, general, it's good to see

you. you've got some interesting ideas about what our responses are. which include, which you don't always see, which include, perhaps, some military action. whether it would go after a launch pad it could actually go after wherever the next test is going to be conducted, it could go after that i don't think that's your first choice but that is actually one of the range of u.s. responses that you feel is appropriate. >> that's right. we're walking up to them, actually kim is forcing us to walk up to considerations of these options. look, a lot of stuff is happening that we're not seeing in the united states so, the south koreans are launching test missiles, doing bombing runs, televising this the tenter of gravity of this is the population of south korea. south korea's response and their strong face to the north is very important.

that's what really is the center of gravity, and that's really the target for kim's efforts we've got to keep the pressure on china we need to bring russia into this we know russia has been communicating and working with north korea. and they have probably assisted their missile development program. so, why should russian firms and russian individuals escape attention on this? japan's reaction is very important. and japan should be strengthening its anti-missile defenses at this point and we have to consider what we can do in a nonlethal category, as well. so, we could -- there's been a lot of talk about cyber. maybe that's already been done we don't know how much has been done and frankly, we don't want publicly to know but we know we can shut down a lot of the north korean communication. we can shut down electric power. we can shut down their early warning air defense networks we can do a lot of these things. but we don't necessarily want to do them on a routine basis

we don't want to disclose all of our capabilities to the north. so behind the scenes we're sort of looking at how we ratchet up a response and privately, we should be considering what is it that really is intolerable for us is it the firing of missiles at guam or in the direction of guam and if so, are we going to permit that to happen? so, we're in a real cat and mouse game in terms of how we look at north korea. how much warning do we have of their test launches? how much do we know about the direction and the type of missile that's going to be test fired? and what are our soft skill capabilities to be able to disrupt such a launch on command, if we have to do so >> you agree more with the president, then, than with his recently departed chief strategist who said because there could be tens of hundreds

of thousands, perhaps, casualties, that if there were any type of military option that that's not actually on the table. you believe that it might actually be something that needs to be done eventually? i mean, we just had a gentleman on saying that it wasn't our fault that he launched this missile. but that we didn't respond to some of his entreaties for negotiations recently. we continued with the, you know, the exercises over there when he gave us an opportunity and we could have gotten him not to do this but then it just seems like the longer we do that, he's building up the nuclear capability, and it's like we're not -- sooner or later it's still going to happen unless we deal with it and that's been our m.o. for the past, you know, for decades now. and you seem to think maybe we need to deal with it before we deal with something absolutely horrific in guam, or even on the mainland >> well i think you have to have

a short-term response and also look at the long-term. so, i think that you've got to be able to work behind the scenes we should be trying to talk to north korea. we should be talking to them very explicitly. if we have to talk to them through china, or through russia, we should do that. so, that should be going on behind the scenes. we've got to work with the allies but you also have to be prepared at some point, if the north persists in ratcheting this up, you can't sit back and do nothing. so, at some point there is, and we don't want it publicized, but at some point the united states is going to take some kind of action when it becomes threatening to people and populations, and to our national -- >> it's not like syria, where trump actually did something and there were -- >> right >> it actually may have worked a little bit in terms of chelsea cal weapons, and you know, now they know that something might

happen but there's a lot of people that think that that option is not possible with north korea because they'd immediately go with conventional weapons on south korea, where we have troops, or japan, or whatever. but i think we got to face that some day >> well, i think there is always the risk that if you did something that they would -- they would blow the whole thing wide open. but i think we also have to look inside -- >> could happen eventually anyway >> we have to look inside that risk you can't simply say, there is no way you could do something. for example, if they fire missiles in guam, okay, so you take out a few ships in the north korean harbor. is that going to trigger it? we don't know. but we need to be looking at these options behind the scenes. and we need to be evaluating them and the chinese need to be considering what their options are so we don't have to take action >> all right, general, thank you. appreciate your opinion and analysis on this interesting that there's a lot happening we don't know about. >> right >> i think and i don't know whether

that's -- >> a little comforting >> -- better or worse. anyway, thanks, general. just one day after the 12th anniversary of hurricane katrina new orleans area is keeping a weary eye on tropical storm harvey nbc's blake mccoy joins us now from new orleans with more blake? >> melissa, good morning this is one of the giant pumping stations that surround the city of new orleans and they've been running through the night to keep water off of the streets, to keep the city from flooding, so far these pumping stations are holding up pretty well. residents here have been sandbagging in preparation for this storm they closed schools and government offices yesterday to give residents more time to prepare. as you mention, harvey is coming almost 12 years to the day that hurricane katrina devastated this city. those images seared in the minds of the people here forever, so they weren't taking any chances with this storm. the good news, though, is that the forecast for new orleans has improved a bit the storm has tracked further south making a third landfall overnight close to the texas/louisiana border, so that

is the hard-hit area right now folks here in new orleans are breathing a sigh of relief they dodged the worst of this storm. in fact, schools and government offices are expected to reopen here today officials feel pretty confident that they'll be able to keep up with these pumping stations, so instead the focus now returns to that texas/louisiana border where there's flooding again this morning >> blake, thank you. blake mccoy. coming up a check on gold, the dollar and the effect of harvey on refineries and check out the futures at this hour remember yesterday we had the biggest turnaround on the dow in nine months. dow looking to open higher by 30 points time now for today's aflac trivia question -- are you ok? what happened? dad kinda walked into my swing. huh? don't you mean dad kind of ruined our hawaii fund? i thud go to the thothpital. there goes the airfair. i don't think health insurance will cover all... of that.

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good morning, everybody. welcome back to "squawk box" here on cnbc we are live from the nasdaq

marketsite in times square among the stories that are front and center, mortgage applications falling 2.3% last week that's according to new figures from the mortgage bankers association. both new purchase applications and refinancing activity fell during the week. the average 30-year mortgage rate edged one basis point lower to 4.11% that's the lowest level since november goldman sachs is reportedly planning to detail the turnaround strategy for its bond trading unit last month. reuters says goldman is breaking from its stance of saying very little about its strategy. goldman reported a 40% drop in bond trading revenue for the most recent quarter. and we're just about 45 minutes away from the august adp report on private sector employment it's expected to show 185,000 new jobs for the month, following july's addition of 178,000. all of this comes ahead of friday's jobs report from august from the labor department. when we come back, gold, the dollar and yesterday's big move in equities. also a programming note,

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refineries and ports in a holding pattern after hurricane harvey brian sullivan joins us now with the latest hi, bri. >> hey, joe, thanks very much. yeah, we just got official word that the largest refinery in the united states, motivo which is saudi aramco's 603,000 barrel a day refinery is indeed shutting down there had been reports yesterday that it was shutting down. this is official motiva shutting down about 100 miles to the east of here exxon's beaumont, texas, facility also shutting down. it's hard to know exactly the amount of numbers. we were just talking here, how many barrels a day are offline because some companies like marathon haven't said yeah, we're shut down, no we're not. we don't give status updates for a lot of different reasons, including security i think it's safe to say that close to or around 3 million barrels a day of gasoline

refining are offline you put that in context america produces about 18 million to 18.5 million barrels a day of refined products you can do the math on how much is offline how long that's going to be offline, i think, will now become the next question is there flooding damage is there infrastructure damage can workers get to work? these are going to be questions that are answered likely in weeks and months, and certainly not days the sun is coming up here in texas. i don't know if you can see light in the distance. those are all the ships that are lined up waiting to come in. the coast guard still has galveston ship channel at what they call condition zulu, meaning no leave, no enter once they open that up, they can start to bring some of these ships back in. but i can't reiterate how long this is going to take. you've got hundreds of -- look at that live satellite picture you've got hundreds of ships out there. some of them 50, 60 miles off. the port, i think you guys

interviewed the commissioner, can accommodate 50 ports or 50 ships a day. there's new ships coming in all the time it is estimated that the port of houston is losing $350 million per day in total economic output and as phil lebeau has reported it is estimated that there are maybe tense or hundred thousands of cars, you know, new cars, that are being imported in you've got a lot of freight tonnage as well. some of that may be underwater so hurricane harvey, we know, is the biggest water event in the history of the united states in terms of rain may turn out, guys, to be the biggest economic event once all is said and done. it may not have to be in direct property damage. but in lost revenue, given houston's size, it is entirely possible this could be the most expensive storm all-in, ever >> so, you know, this is not about us it's not about you but you are amazing at this.

i've just got to tell you that every single report, completely ad-libbed. i see other guys out in the field, at networks, they got one line memorized before they talk to a package and they usually screw that up. i mean, in every report's been different. but i mean you're like as good as any field reporter out there. maybe you should never anchor again. i mean you are -- you are -- >> um -- >> you are amazing >> well, i appreciate that i tell you what, got mike newburgh, we got oscar molina, we have jody, we got jerry martin, we've got amanda laske back at hq it's literally all the people around you working >> -- never the came report on no sleep >> throughout the whole day. >> on no sleep incredible >> thank you >> -- as a co-anchor, just saying >> i'm not wearing makeup but i think you made me blush. i do appreciate it >> see you later, brian sullivan

in galveston portfolio manager and senior research analyst, mark chandler global head of currency strategy at ground brothers harriman and jim iuorio at the chicago mercantile exchange, he's also a cnbc contributor we've got a lot of ground to cover but most notably the reversal that we saw in yesterday's session so i will kick it off with you there are some people who have the school of thought that gold should have reacted much more sharply higher, and should not maybe have given up almost all of its gains in yesterday's session on the back of this north korean missile threat. >> sure, sure. well for those that long may never get enough we always want to see more but certainly it's been a constructive market for gold you know, only early july we were back down to 1210 or so which looks like a really nice support system developing for gold and here we are at 1300. we're breaking through some technical levels, which i think is very constructive here in the market and it's not just event driven market but also some other

aspects in the market, fiscal policy, monetary policy. >> weaker dollar >> correct, correct. >> yeah, and are you concerned at all i mean, as a fund manager who specializes in gold, and those sorts of assets, are you concerned that perhaps the demand for bitcoin as a safe haven has diverted some investor attention away from the metal itself >> you know, that's a bit of a concern for us but if you look at gold, the attraction of gold is that it is a noncorrelated asset with noncounterparty risk and crypto currencies do have counterparty risk. and the beauty of gold is that it doesn't have that type of risk >> mark chandler i go to you in terms of the dollar, reaction. the dollar was not a safe haven in yesterday's session at all. even though it did recover from losses so what do you make of that in terms of where the dollar stands in the world for people to prefer to gravitate to the yen even over the dollar we saw no bid practically for the dollar >> i think it's really misunderstand. the yen strength

and the swiss franc strength yesterday, not so much a safe haven. people are not only buying japanese assets but north korea is flying a missile over their space. people are buying back previously sold yen, previously sold swiss francs but the broader picture, i'm a little bit still concerned about the dollar to september, we had the debt ceiling, and we had the spending authorization still have to come through so i'm looking for a better fourth quarter for the dollar, thinking that you know, we've been bandying with the north koreans for awhile we saw the geopolitical risk seems to be very sharp, very intense, very short lived. we already saw yesterday the korean stock market begin to recover. further recovery today i would look for the dollar to recover a little bit here but in the big picture i think that september will be a heavy month for the dollar, better the recovery in fourth quarter >> heavy month in terms of downside risk to the dollar. so where would you see the vix what's a key level of concern for you? >> i think what's important right now is where we are in the big picture. this is one of the reasons why i'm reluctant to give up a

strategic bullish view on the dollar i think what's happening this year for various reasons, the dollar's correcting, to the downside, a rally that began in the middle of 2014 we held yesterday that 50% retracement in both the euro, which is on 121.60, and the 50% of the dollar index, if those levels hold i think that could be the beginning of a base for dollar recovery. but so far, i want to say 50%, to 61.8 retracement, that's a big retracement we look for is closer to on the dollar index down about 88. >> all right jim iuorio, this seems like the market you just can't sell the market that you always want to buy on the dips, right? i mean how are traders positioning themselves, especially ahead of very heavy september in terms of economic events >> well, i think you're right about that every time we've seen it, it's been a buy the dips situation. if the market was going to correct significantly, it certainly had every opportunity to do that in the last few days and weeks. and it's chose not to.

as a matter of fact, yesterday you said it was one of the biggest reversals we've had. it was astanding the nasdaq finished strong to me that's a show of strength. what's amazing to me is that we have the heir cane and we have the missile test and both of those things could, at the moment they happen, be a risk but longer-term, both of them could end up being tail winds for economic activity. the old adage for war is that you buy on the sound of the cannons, sell on the sound of trumpets meaning a war is not bad for the stock market it's a terrible thing of course. it's not bad for the stock market it took the market all of about 12 hours to come to that conclusion or maybe it's just that there's too many people who want to buy the dip. either way, it seems like the momentum is higher and i'm going to stick with that for now >> all right, guys, good to hear from you doug, marc and jim, appreciate it when we come back, the rain starting to move on from houston. now the path begins of getting people back home and cleaning up we will hear from a group that has boots on the ground and is

ready to help with food and supplies that is right after the break. and then at the toch of the hour, jeff moseley the ceo of the texas association of business will join us to talk about the task of getting companies back up and running in quk ton. "sawbox" will be right back. it's been over 100 years since the first stock index was created, as a benchmark for average. yet a lot of people still build portfolios with strategies that just track the benchmarks. but investing isn't about achieving average. it's about achieving goals. and invesco believes doing that today requires the art and expertise of high-conviction investing. translation? why invest in average?

welcome back, everybody. one of the many nonprofits on the ground in texas is distributing food and emergency supplies joining us right now on the "squawk" newsline with more on this relief effort is jeff nene the national spokesperson for convoy of hope thank you very much for joining us i realize that convoy of hope has already responded to over 300 international or domestic disasters in the past. what are you finding with harvey >> we're finding a lot of damage i mean, the expanse, the area that's been hit is i think one of the things that's causing people the most difficulty in the response and the damage level is just -- you have a hurricane damage, the wind damage, normally you see, but then you have extensive flooding damage on top of that

>> so, what is convoy of hope doing? what are you bringing? how does it work >> what we do, we're based out of springfield, missouri but like you said we've been to over 300 disasters all around the world. we know that after a hurricane, the immediate need is going to be food, water, hygiene kits, paper products, things like that and so that's what we've done. we've already got well over 20 tractor trailer loads of those type of products here at our site in texas. we've got well over 50 tractor trailer loads in the queue that are at some form or another of distribution they're either on their way in the manufacturer, or on their way down here. >> logistically, how does it work because we know so many of the roads and the freeways have been flooded. how do you know where to set up? how do you get there >> we coordinate not only with local partners on the ground, but the local emergency management, state emergency management, and fema, and it

gives us a good idea where's the most beneficial area for us to set up so we're not duplicating efforts. so we'll work with people on that right now we're set up in a large church parking lot here in victoria, texas. and this is our central distribution site. and then we're sending trucks out from here to communities all across this area of texas. >> you mention that part of what you're doing is taking products from distributors. who are the groups that you're working with are there companies that are involved in this, too? >> there's a lot of companies involved home depot's been very good to us through these disaster responses. bass pro shops, nestle, there are so many. little debbie's. there are so many of people, i know i'm going to forget somebody but what we do is we work with those manufacturers, and they donate the supplies, and then what we're responsible for is getting those supplies trucked from there, either to our central warehouse in springfield, missouri, our main distribution center, or

sometimes there will be direct ships here to texas to our site here >> and in terms of what you need, is there more that you would be asking, more that you could use for hurricane harvey in particular? >> yes absolutely we, as we look at this, i mentioned we've got, you know, 50 tractor trailer loads on the way. number one, we have to figure out now how to pay for that. but number two, our guys are saying you know what this is probably one of the top two or three disasters that we've responded to in terms of immediate need and that's just because of the geographic area. so we're looking at, you know, it's going to be 100 tractor trailer loads or probably even likely more than that. so there's still a lot more to go >> we've talked about how this is going to be a long recovery how long can you hang in there what can you do now versus what you can do down the road >> what we do now is the immediate needs. that food, water, hygiene supplies, things like that

and then we'll move to a phase two of the response, where we will start with volunteer teams and we'll go in and start debris removal. we'll send teams in that literally will shovel mud out of people's homes, start to rip the carpet out, the drywall, insulation, things like that and just start helping people get back on track, get their lives put back together. >> jeff, want to thank you so much for your time this morning, and for all the efforts that you and your group are putting together >> thanks so much for having 3450e. >> coming up, stocks to watch ahead of the open on wall street at the top of the hour, getting companies back in running in the houston area the ceo of the texas association of business joins us with an update on what he's hearing from owners and a programming note at 11:00 a.m. eastern time berkshire's warren buffett joins becky for a first onnb cc interview today on "squawk alley. what did we do before phones?

they save us from getting lost, getting hungry, and getting tired of places like this. phones changed everything

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all-hands -- at an all-hands staff meeting to take questions from employees >> i'm sorry dara >> what's his last name again? who is this guy? >> khosrowshahi. hooked on phonics. not all of us are. all of us here are >> quick programming note. later this morning uber investor shervin pishevar will join "squawk on the street" at 10:30 eastern time on cnbc j.j. watt has raised a whopping $5 million. one guy. for hurricane harvey relief fund the houston texans player began a fund-raising campaign sunday afternoon pledging $100,000 of his own money. his efforts got a big boost yesterday afternoon when the owner of the tennessee titans, amy strunk, made a million dollar donation. watt's fund now has a goal of $6 million. i never -- anyone who says anything bad you know who knows this guy well is kenny from wisconsin loves the guy.

and great guy. another example gshs >> he keeps -- >> every time he hits his goal he raises it another million >> and wouldn't it be great if he -- you'd need a blotter to pick me up if he ever, you know, just looked at me the wrong way. >> when we come back, jeff moseley, the ceo of the texas association of business will join us to talk about the task of getting companies back up and running in houston we are also watching the markets this morning after yesterday's market swings as investors push north korea fears aside after that turnaround yesterday for the stocks you can see markets up once again this morning dow futures up by 40 s&p up by 22 and the nasdaq up by 13. "squawk box" will be right back. , helping keep shoppers safe. this is a financial transaction secure from hacks and threats others can't see. this is a skyscraper whose elevators use iot data

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it's been over 100 years since the first stock index was created, as a benchmark for average. yet a lot of people still build portfolios with strategies that just track the benchmarks. but investing isn't about achieving average.

it's about achieving goals. and invesco believes doing that today requires the art and expertise of high-conviction investing. translation? why invest in average? breaking news this hour, two key reports about to hit the tape adp and a new read on u.s. economic growth. we'll bring you the numbers and the market reaction. harvey doubles back. the tropical storm makes landfall in louisiana, as waters rise in texas. a live report from houston straight ahead >> plus getting supplies to the storm zone lowe's among the companies lending a hand with harvey

relief an exclusive look inside the emergency command center as the final hour of "squawk box" begins right now live from the most powerful city in the world, new york, this is "squawk box. good morning and welcome back to "squawk box" here on cnbc we are live from the nasdaq marketsite in times square i'm joe kernen along with becky quick, and melissa lee andrew is off today. let's get a quick check on the markets. the futures have been solid. not extravagantly so but up 38 now on the dow up 2 on the s&p. up 11 or 12 on the nasdaq. yesterday's session was pretty we talked about it later in the afternoon, since they're working us both to death, melissa. but we both -- you did six hours, didn't you? >> it's not work when i'm with you, joe >> thanks, melissa what is that drip of -- no, no, no but yesterday was that not unbelievable missiles -- >> biggest reversal in nine

months on the dow. 200 points on the day. >> oh, it was? it was a little -- when trump was down there and things seemed not quite as dire and i mean i think, it's what presidents are supposed to do at times -- >> don't you think that the market reaction -- >> no, not only. but i think that the entire day, the low point of the day was early in the morning, thinking about north korea, looking at the 10-year, looking at gold again over 1300. the dollar was going down. you know, it went over japan harvey was going to, you know, continue raining until thursday or friday. and as the day -- it was amazing. market was down 1 50 to start. and it ended up, what did it close up 40 or 50? and it was up 60 or 70 for awhile >> having said all this week -- >> and no one -- >> with the rain still falling >> no one saying -- >> or the north korean situation. >> or north korea. and we thought that we had that brief respite with north korea a

couple weeks ago where the guam threat was -- how long did that last ten days or so and then, you know, the missile this time over -- >> the markets are inure to all of this at this point. harvey is now a tropical storm made landfall again early this morning in louisiana the national hurricane center says the center is now over southwestern louisiana harvey is about 25 miles west/northwest of lake charles packing maximum sustained winds of 45 miles an hour. flooding raines are continuing over southeastern texas and southwestern louisiana motiva's port arthur refinery has shut down due to flooding. nine deaths have been reported in the wake of the storm seven from drowning. >> contessa brewer is live on the ground in houston and contessa what can you tell us at this point >> number one, here at the convention center between 8,000 an 9,000 people still housed inside this particular shelter it's remarkable, i just talked

to the police here and they say the arrests here have been very minor. no looting nothing serious of note. more like stolen property. they are checking everyone who comes in these doors, frisking them to make sure that there's no weapons inside of the building but in the broader area, too, i think it's remarkable to say that there's been fewer than a score of arrests for looting and other kinds of theft we did see video coming in to us from a looted liquor store, where people have pulled up and they were found with a big bag of liquor bottles. they ended up arresting four people in that particular incident and when we were out yesterday, on a ride-along with volunteers who were looking for people to rescue, and these high profile military vehicles, we did see a big police presence out protecting first responders. we had gotten reports, the houston police union is one of them, saying that people were taking shots at first responders and firefighters out doing their rescues. we heard anecdotally other

reports of that yesterday. no confirmation that that had been happening but because of the threat we did see u.s. marshals out there armed with rifles protecting the first responders who were out to do swift water rescues but again so far some 14 arrests for this remarkable when you consider the magnitude of areas that the harvey damage course now today, there will be businesses who are eager to get back, unlock their doors, if they can get power to turn on the lights, to prevent the threat of looting, and especially as people start running out of food, the place has been shut down for some four or five days there were many, many families who were unprepared for that so we'll be watching to see whether houston businesses are eager to get back in their homes to prevent the threat of looting. >> earlier, contessa, earlier we spoke with the former president of tulane university and he's somebody who has his university shut down foran entire semester he helped rebuild the city of new orleans. he's had a lot of experience with this, and he says he thinks

one of the biggest beneficiaries is that fema is in much better shape, it's a much better responder than it was 12 years ago. you're on the ground there what's your sense of that? >> the organization in response has been remarkable. i covered katrina. i was there in the aftermath of the storm. and i remember how disorganized, how desperate, the situation seemed and i'm not taking anything away from what it is here it's desperate but for the department of transportation to come forward and already have $25 million in emergency funds to repair the roads, that means clearing debris, getting bridges back up and running, that's going to be remarkable so have a shelter like this operating like a small city, within the space of a couple days, is remarkable. and to have school space they said we're not having school, we were supposed to have the first day of school, no school, and just cut it off for the week, i think that's incredible so the question is now, how fast -- because it was a great, organized response, because we did learn a lot of lessons from

sandy, how quickly does this city get back up to the business of being houston, as opposed to just being victimized by the storm and all the flooding >> it's your sense, though, that there will be some businesses that are reopening today potentially if their employees can make it through the roads? >> absolutely. there are already businesses in areas that were previously flooded, there are already businesses that are reopening their doors. downtown houston has power now there's still spot lights out, stop lights out but for the most part lights are all on here. i expect, we talked to people in the storm, they were trying to get into their office buildings in the height of the storm oh, yeah, those people will be back at work today and restaurants, coffee shops, the starbucks right across the street from the convention center is serving coffee they have been through the storm. they're giving coffee away for free to all of the first responders who are heading in and out of those doors it's a remarkable response >> wow contessa, thank you so much. we will check in with you later today.

also been great. >> fantastic we were just talking about that. outstanding. >> the texas association of business setting up resource centers for local business recovery joining us now is jeff moseley, the ceo of the texas association of business. i almost asked contessa, jeff, whether -- i mean i don't want to get ahead of anything, but it just seems like it's a little better today is that the feeling you get, too, that there's some, at least, reason for hope now that we're on the other side of this? or stashting to be on the other side or is it still too early >> it's certainly better today, because, first of all, we were pleased that president trump brought his cabinet and came down and met with governor abbott and had a chance to be on the ground to understand how the federal agencies can step up and help we also have strong leadership from governor abbott, as well as on the ground in houston, by mayor turner, working alongside county judge ed emmitt so, yes, today we know that

there's a lot of work ahead of us, but a lot of work has been done >> what do you still need, do you think, down there? and what has been better than you thought over the past three or four days some things have been good what is -- what do you still need >> one of the striking differences between hurricane harvey and hurricane ike is that it did become an epic flood. that being said, the winds were not knocking down so much of the power as ike so the workforce hasn't been cut off. just like your reporter said, downtown, the galleria, johnson space center, texas medical center, and a significant areas have kept their power. and that's been a huge assist. now comes the work of putting these businesses back together some businesses did remain open during the storm some businesses now have to go and reopen and clean up, get their doors open, and then some

are just totally taken off the ground so we have to help those rebuild from the ground up but you know, from corpus all the way across now to jefferson county, to the louisiana line, we've got a lot of work to do. >> jeff, what's your sense of how many businesses have flood insurance? whether it be commercial flood insurance, or smaller businesses that may be insured actually through the federal government >> oh, not nearly enough you know, living on the coast -- >> a very small percentage i mean we're just trying to get a sense of whether or not these folks may want to reopen will actually have the wherewithal to reopen >> a small percent that's why our resource center, we're going to be working to bring businesses in to communication with the small business administration, with fema, and also provide some form of grant to give them the ability to get back, and get their doors open because most likely, a good portion of them did not have the appropriate insurance. >> what's your anticipation to how many -- i mean i know it's really early and it's really

tough to say but do you expect to have a lot of business owners just won't reopen? they either choose not to reopen or they just don't have the funds to do so >> well texas is a hardy and big state. so i think you're going to see the business community step forward, helping one another, neighbor helping neighbor. these businesses are committed to opening their doors again that's why we have a resource center at the texas association of business, because we have 4,000 members, many of them have resources to help other members that are in need and so we're having this business-to-business clearinghouse so that there's a one-stop place for us to do that networking and bring the two together >> a lot of lessons, people said, there were a lot of lessons learned from katrina i think you recall, jeff, the relief act, the sandy relief act. i'm not going to blame either side one side would say three quarters of it was not sandy related. so they have this, you know, their stance this moral stance

that they have against doing it because there was so much pork the other side said when we needed help for sandy, texas voted against us do you think that -- that that lesson was concerned and that the relief bill will be focused -- more focused? and do you think it will get bipartisan -- not bipartisan, but support across the board >> oh, a lot of lessons have been learned since sandy, and since katrina. and as your reporter said, you know, fema's operating much more efficiently and effectively. and as president trump called for immediate and quick response, we would say now is the time for congress to, you know, lock arms with the administration, and put this aid package together very quickly. >> and you're confident that, you think it's 95% certain that there's going to be no -- there won't be any stumbling blocks along the way? >> well, we know that the need is great this is an epic storm. typically houston has more rainfall than seattle.

about 50 inches a year in this case, we had 50 inches of rain in a period of days. >> okay. >> so there's an epic flood here it's a national opportunity to serve. >> okay. thanks for coming on today appreciate it, jeff. good luck. >> thank you >> up next, minutes away from the adp august employment report we will bring you the numbers and the market's reaction in -- this is an important number for what happens on friday stay tuned you're watching "squawk box" on cnbc it naturally begins to change, causing a lack of sharpness, or even trouble with recall. thankfully, the breakthrough in prevagen helps your brain and actually improves memory. the secret is an ingredient originally discovered... in jellyfish. in clinical trials, prevagen has been shown to improve short-term memory. prevagen. the name to remember.

in the futures here, adp reports coming out steve liesman has the numbers. >> 23, melissa, 237,000 a big, big beat to the upside payrolls revised up for july by 23,000 another one over 201,000 i was just looking at the number of times we've been over 200 on the adp report we know we've been quite consistently above 200 on the bls report here is the data 237 is the number. looking for just 185 so it's the kind of miss for i would expect to see perhaps some of the private sector economists upgrade their forecasts for friday july revised up by 23,000. the goods sector doing very well

up 33,000. we'll see some detail on that in just a second. services 204,000 there's the payroll estimate which is now going to be, you know, call it 80k underneath what they're expecting on friday pretty good distribution small business up by 48,000. medium 74,000. but large business doing the bulk of the work, up by more than 115,000 by sector, trade transport 56,000 that's strong. leisure, hospital 51 so that's the service sector along with education, 45,000 kind of a weird month august with the back-to-school stuff. sometimes that gets a little weird. maybe that revised down. look at construction and manufacturing, 18,000 and 16,000 we're going to bring it in a second let me point out there's going to be a lot of rebuilding to do in houston we already know there's a shortage of construction workers throughout the country so that's going to be another piece of the issue let's bring in mark zandi now chief economist with moody's analysts who puts this together. mark, let's talk about the good stuff and then go to the bad

stuff. mark, are you there? >> i am. can you hear me? >> yeah, i hear you, thanks. so let's talk about this 237,000, another 200,000 in a row. where are these workers coming from how much longer can it go on >> all over the place. you don't create 200,000 jobs and not create jobs just across the board. low paying, high paying, middle paying, all of the above in fact, the thing that's driving the economy now is the fact that there is no headwinds to growth. i mean, if you think back since the recession, at any point in time there was a major headwind to growth. deleveraging, european debt crisis fiscal brinkmanship, so forth and so on. nothing right now. so the economy is powering ahead. and we're getting 200k now can we continue on at 200k no because the economy's at full employment, close to full employment the labor force is growing only 100k so we will see this slow it's just a question of when

>> mark, i was surprised to see the manufacturing. i thought autos would be slowing down and i thought maybe it was minerals and mining. where is the manufacturing strength coming from >> again, it's pretty much across the board one area of strength is global, right? the dollar is down in value about 10% from where it was end of last year, beginning of this. >> uh-huh. >> and the global economy is performing much better so, that's lifting trade and exports and that's obviously very important for the manufacturing business >> steve, one thing i want to get in real quick about the bls number, you know the august number is very tricky, right >> yeah, right >> since the recession it's always come in very light the initial estimate, and always gets revised higher. so, it's very -- and we did not account for that in this number. in this adp number so it's very possible that the number comes in on the light side just because of that tricky, swirly technical issue that bls has >> i've always been confused at what exactly we're forecasting here

the money is to be made in forecasting the wrong number that's where the trade advantage is so you should actually lowball if it's going to be low and forget about the reality because the market never trades on reality. you can quote me on that i want to move on to two things. we're going to get a gdp revision number. it's going to be in the 2.6, 2.7 range and then the third quarter in our cnbc wrap it update which you can file for us is also going pretty well. are we shifting up here? >> temporarily i mean i think you know we got that very weak q1. now we got a strong q2 q3 is going to be close to 3%. i think the underlying rate of growth is still about 2% so you know, some quarters, year you might get above 2. some years in a quarter you might get below 2. but, the underlying trend growth is 2%. that won't change until we get some good economic policy. we need some fundamental reforms. >> let's not do the politics, mark, let's talk about harvey now and talk about what kind of

impact you might expect on gdp from what you're seeing there in the pictures you're seeing and what you know about how storms play out through the economic data >> this is obviously very disruptive, damaging to the houston and surrounding area, that economy but generally storms even of this magnitude don't show up in the national macro economic -- now it can affect the monthly statistics but this may not, because of the timing this is at the end of august so take the 34r0i789 numbers that is determined by a survey done in the week that includes the 12th of the month. by then the rebuilding will have kicked in, and so we may not see much of any impact of this storm on the national economic statistics so obviously this is a body blow to the economy of houston. houston will come back it's a very dynamic economy. it's not new orleans in that sense. it's got a lot going for it and it's going to do very well coming back but i don't think it's going to show up in the national data in any significant way. >> didn't we see it in katrina

though, mark in the quarter after katrina didn't gdp halve or more than halve in that quarter and thin bounce back or am i recalling this incorrectly this is entirely possible. it did show up a little bit in the housing statistics if you remember back back melissa, housing construction the number of housing starts actually key in the very end of '05, early '06, all-time high and that was in part because of the katrina rebuilding but other than that, no, it didn't have any impact on gdp. you know, a lot of things going on but katrina didn't impact it >> mark, thanks for joining us we'll be back at 8:30 with the second quarter gdp revisions >> coming up harvey may be the most expensive hurricane ever to hit the mortgage industry. our diana ick olis digging through the numbers. we'll check in with her next

we've seen the pictures and you can imagine how housing is going to be affected by harvey diana olick is getting some new numbers on mortgages, and the potential for trouble. she joins us now diana? >> well, joe, some really remarkable numbers in the houston area today, there are more than twice as many mortgaged properties with nearly four times the unpaid principal balance than there were in the louisiana, and mississippi counties that were hit by katrina in 2005. if we were to see a similar

impact, more than 75,000 houston borrowers could be unable to make a mortgage payment within the next two months. and 45,000 could become seriously delinquent on their mortgages, or face foreclosure within the next four months. now that's all according to black knight financial services. fannie mae, freddie mac and fha which backs the majority of loans in the area have already said they will offer loan forbearance for at least 90 days for borrowers hardest hit. that means you don't pay the mortgage but the interest does accrue and that won't solve the problem long-term if the house is totally destroyed or a borrower loses income because of the storm. now, mississippi and louisiana borrowers had more low down payment mortgages. so back in 2005, about 20% of borrowers had less than 10% equity in their homes. compare that to houston today, where only about 4% of borrowers have that little equity. so houston homeowners should have more incentive to stay and pay, but more than half of those

at risk of flooding are not in the federal flood zone so, if the amount of losses a borrower suffers are considerably higher than the equity in the home, they could just walk away back to you guys >> diana, thank you very much. folks, when we come back we are just minutes away from the second read of the second quarter gdp. we'll bring you those numbers and the market reaction instantaneously. "squawk box" will be right back. because, when you really, really want to be there, but you can't. at cognizant, we're helping today's leading media companies create more immersive ways to experience entertainment with new digital systems and technologies. get ready, because we're helping leading companies see it- and see it through-with digital.

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welcome back to "squawk box," everybody. this is cnbc and we are live from the nasdaq marketsite in times square we've got a quick stock to watch. check out shares of otonomy. the drugmaker's treatment for an ear disease missed the goal in a late stage study that company had a $630 million market cap as of yesterday's close. 80% of it is now gone down $16 to 4.05. >> we're seconds away from the second read on second quarter gdp futures are higher across the board extending that big reversal that we saw in yesterday's session off the concerns about the north korea missile firing

we've also got the ten-year yield right now 2.1449 ahead of the results. of course, second quarter gdp rick santelli is standing by over at the cme as we await the numbers. we're just about five seconds away, rick >> yes and we saw a little pop in yields, of course, on the strong adp with strong revision three, two, one, buzzer, please. and the number expecting 2.7 jump a handle, we're up at 3%. whoa feels kind of farm and fuzzy to see that 3%. it is our second look. it still can be revised. but that's a nice pop from 2.6 let's look through the internals, shall we? if we look at the consumption, we're expecting 3. we ended up with 3.3 on the gdp price index up 1% exactly as expected and sequentially unchanged personal consumption expenditure quarter over quarter up 0.9. also exactly as expected and sequentially equal to our last look. maybe most important, corporate

profits, they were minus 2.6 we're now in positive territory up 0.8 not quite 1% but definitely an improvement. yields popped about another half a basis point, one basis point but it's very fascinating. we haven't taken out the june low yield close of the year rate under 2.13 very close yesterday we're dancing at the bottom but we are having a little bit of selling coming in. post auction and the dollar index actually up over a half a cent today joe and the gang, back to you. >> all right, rick santelli, thank you. steve liesman is back with reaction to the numbers. so, not going to last, or set up for by the last administration which is it? >> i think you have a third joe. why don't you just say it. >> i'm trying to speak for you >> why do you speak for me >> were you -- >> speaking for myself >> you and zandi >> i have not shown any -- >> make it ease whier for you. >> degreesing the runway

here we go these is all president obama -- no, i have no idea consumer spending ticked up by half a point durable goods -- they bought more durables than originally estimated. more nondurables business investment also ticking up look, i said all along, if there's a trump effect it's going to come i think principally through the business confidence channel, which could boost business spending. structures were up revised up again equipment revised up a little bit, intellectual property revised up housing, a little bit less negative exports a little bit less than originally estimated and government purchase just want to see what happened to inventories. haven't got a chance to look at that i don't have it here in front -- there it is. inventory change a little bit better don't get too excited when it's a business inventory thing there are elements of confidence that can work in through the business cycle i think it's too early that's really my opinion i hold out hope that there are changes that can be made to the tax system, and your comment,

the mcneely quote, which is your favorite -- the water boarding has started i think a positive attitude towards business is something that could help -- >> a couple of outlier quarters in the past eight years -- >> this is the first 3% -- since 2015 >> but when you see at 3% it's wow i really like, like wow it starts with the three. >> do it for a year. and it will come back. >> i know. even for a quarter so far so good where is the all-america survey for this next -- for the third quarter? >> the cnbc rapid update we're at 2.8 it's a different -- this is the cnbc wrap it update -- >> why do you humor him? >> because it's sort of fun. but wait we have a really smart guy here at the -- >> ignore him. >> it's fun. when it gets boring we'll move on to some other stupid joke >> no we don't >> we're going to keep on the same stupid joke >> i'm telling you i've been here awhile -- >> get some new writers. get some new writers >> steve, stay here. joining us right now

peter henry, the dean of the nyu stern school of business he's also the author of "turnaround: third world lessons for first world growth." thanks so much for being here. >> great to be here. >> why don't we talk about gdp numbers first. 3% better than people had been anticipating do you think it's a one-off? >> well it's a nice increase it's good to see that. but i think it's really important to see what's going to happen in the future you know, one quarter's numbers do not make a trend and it's really trend growth that matters and my suspicion is that we're still looking at some 2% trend growth in the united states. which doesn't take us away from where we've been so the real question is, are we going to see the kinds of policies we need to really draw the long-term investment growth. >> and what are those policies >> well in particular, everyone's waiting to see what's going to happen with tax reform. but, i want to emphasize it's not the only thing that matters. we've been ignoring the fact we've got a growing skills gap in the united states for a long time so education is really fundamental to drive the long-term growth as well >> it's also a long-term

solution though, not something you can fix overnight. >> absolutely. absolutely but if you want to get to back to 2.7%, 3% growth, which is what we saw precrisis in the u.s., we're going to need to address issues immigration is a fundamental issue. you think about a skills gap two ways to address that, one is to grow your own workers at home another is to invite skilled workers in and drive this economy for the last couple of decades. there are a lot of pieces that go in to driving 3% growth in the long-term. >> peter can we talk about the democrats, though, and water boarding economic waterboarding let's call it. don't want to make light of that if you're the president of the united states, you certainly want a country where business confidence is higher where the private sector is supportsed and economic growth is a goal. charles schumer in a "new york times" op-ed wrote about the democrats' plan for growth i believe the words economic growth were not in that op-ed. and the word private sector was not in that op-ed.

i'm wondering, and you're right, we need to see if this continues, i'm personally wondering if a guy who comes in and says you know what, we're going to try to make the system better for business, is one that has a potential real economic effect maybe it's not here and there are other issues associated with this president that could be negative, but the whied that you have all of a sudden, with just the election, turned around business confidence, is something you have to thinks aa measurable impact and something you would want as a leader of the country. >> well, one thing that everyone should be able to agree about is you want more prosperity right? and we've got a long history not only in the united states, but in other countries around the world, that basically tell us that if you want to drive prosperity the best way to do that is to invest in capital, get business to invest, drive up business confidence, and invest in people. you need both. so, an agenda that says, let's beat up a business friendly environment but a business friendly environment also pays attention to the worker in terms

of operating worker skills, that's a good recipe for moving forward. so that's something that both democrats and republicans should be able to agree on. >> how do you do that, though? what type of skills plans are you talking about? because we've heard from a lot of companies that figure they can't find engineers so they're going to have to help train them themselves >> well exactly. if you go back, just to make a bipartisan point, there was a report, bipartisan report in 2012, and economic recovery on jobs in the united states, which told us that by 2020 we were going to be 1.5 million skilled workers short in the united states college educated workers short so that suggests that you've got to, again, do two things one you've got to grow those workers. you've got to find a way to create more educational ability within the country but even while you're trying to catch up on that front, you've also got to encourage integration of skilled workers if you want an agenda that's going to drive shared prosperity it's going to be pro-immigration agenda is a pro-growth agenda. >> back to colleges, bernie sanders says free college education for all, that's the

way to get there is that the right plan >> you have to figure out how you're going to pay for this, right? so we certainly want to have more folks going to college. but we need education at a whole range as well. for those students who are equipped to go to college, and that's something you want to make happen, but we also have to have skills at other levels, as well so there's a lot of evidence to suggest that right now there are many thousands of u.s. workers who have the skills but not the credentials to do certain jobs and there are platforms out there like i think it's called opportunity at work, which basically are trying to match particularly small and medium sized employers with workers who don't have a college credential but have the skills to do jobs >> apprenticeship programs almost >> apprenticeships and the opportunity for workers to demonstrate, you know, online, through a test for example, that they have the

skills to do data entry jobs and certain things like that without having to get a college agree. >> it sounds strange coming from the dean of a college. >> well, our graduates continue to do really well. and the fact is, if you look at the economy over the last 40 years college graduates, students who get mbas, they do extremely well and we know that because in 1970, the average wage of a high school educated worker was around 80% of what it was of a college educated worker. today it's half of what a college educated worker makes. so we need the -- we need to have ways of subsidizing more college education. particularly for those who are born in the bottom of the united states you've got an 8% chance of going to college versus if you're in the top you've got an 85% chance of going to college >> peter you were out with my at jackson hole and we had a lunch together but we haven't had a chance to talk about what yellen and draghi said. there was a theme consistent in both of their remarks?

>> yeah. there was an explicit theme and then there was a subtext the explicit theme that was consistent across both the yellen and the draghi speeches was that we need to continue with financial regulation has done a good job. there's some tweaks we need to make but by and large the financial changes at central banks have brought over the last decade or so have made the financial system sounder the implicit message in their speeches was that monetary policy, central bankers, have done all they can do to really drive growth and now it's up to leaders to implement the kinds of reforms, tax reform, infrastructure, hard infrastructure, like roads, and telecom, and technology but also soft infrastructure, investing in human capital, to really drive prosperity and in the absence of those kinds of changes, we're not going to see more than 2% growth in advanced economies. >> period want to thank you very

much for your time today >> thank you >> appreciate it >> just a quick note, there was no inflation in the gdp report it was still flat, so you have this good 3% number that came along with almost no inflation, so the -- >> goldilocks for the markets once again >> well i mean i saw the market traded off a little bit so i was wondering if there was an inflation number >> you saw a pop in the 10-year yield -- >> that's why i looked again -- >> and the futures got a little bit weaker >> melissa, i don't know what you did. because i was away for a week and i left it was 220 on the 10-year and you guys messed it up >> it was 2:08 yesterday >> that's crazy. right? >> and here we are >> we are living in the no inflation environment and i know the fed is not all that concerned about it just so you know >> which means they're not going to raise rates >> they're not in any particular hurry. >> up next home improvement retailer low's shipping recovery supplies to regions devastated by harvey. courtney regan is live inside the company's command center what do you have coming up

>> so i'm here in wilkesboro, north carolina this is lowe's emergency command center where the home improvement retailer is working 24/7 to make sure critical supplies get to the areas that ffte it most that were aecd by hurricane harvey. we've got more coming up on "squawk box. chwab billboard. oh, not so fast, carl. ♪ oh no. schwab, again? index investing for that low? that's three times less than fidelity... ...and four times less than vanguard. what's next, no minimums? ...no minimums. schwab has lowered the cost of investing again. introducing the lowest cost index funds in the industry with no minimums. i bet they're calling about the schwab news. schwab. a modern approach to wealth management.

welcome back best buy says cases of water selling for more than $40 in one of its houston stores was, in its words, a big mistake

this photo went viral on twitter. the company told cnbc that it does not sell water by the case, and the signage promoting the offer was a mistake made by several employees. who priced the case of water by totalling the single bottle price for a pack of 24 a spokesman said we are sorry, and it will not happen again busted >> home improvement giant lowe's employs more than 23,000 people in texas closed stores, deliveries and the weather forecast are monitored at its command center in north carolina. courtney regan has an exclusive look inside how lowe's is getting supplies to the stores in the storm zone. >> good morning. i'm here in north carolina this is lowe's emergency command center this is operating 24 hours a day, 7 days a week, to manage through the storm. it opened on thursday. it's been running ever since and it will continue to run while it's needed. the goal is to get supplies to the stores in the wake of the

storm. there are 90 in the affected area 17 of them are still closed. truckloads have been going in in advance of the storm, and during the storm. and i'm joined now by rick, the manager of the emergency command center rick, thanks for joining us here so can you give us an update how much have you actually been able to get in to the affected area so far? >> between the time of preparation before the event, through this morning we've had about 900 truckloads that are in or out or being delivered to the stores in the affected areas >> what is in the trucks what do you need most at this time >> the preliminary items are like generators, bottled water, tarps, five gallon buckets grills charcoal things like that, so people if they're staying in their house or where they live, they're allowed to survive until services return. >> and in advance of the storm, similar items? >> we shipped many, many truckloads of generators, water, tarps. it's the same items.

we're in the beginning phase o the event. next phase will be cleanup, where you start to do cleanup of mold, remover, mildew remover, shoveling the dirt, things like that >> how do you actually get in to the affected areas the flooding is phenomenal from the pictures that we've seen how are you getting to the stores >> for the stores that are open, we have a fantastic transportation group that works with the texas department of transportation, and they have constant websites that they're able to use to bob and weave through open roads, they may be back roads, they may be highways, to get to the stores that are open. >> and so the folks working here, what are they doing right now? >> the group in this room is coordinating with our distribution centers, our transportation group, the majority are fulfillment group working with vendors to obtain the product, arrange trucks, arrange shipment, and get it entered into our system so that the stores can receive it as quickly as possible. >> and this becomes a personal story for lowe's as well because

you have employees that live in these areas that also are personally affected. are they able to get to work >> we have about 100 employees that are impacted. some of our stores that are open have a skeletal crew because a lot of their employees are impacted but lowe's has a fund that employees contribute to and the company matches to help those employees that need help with housing or clothing, so that they can get back to their lives, as well >> and then very quickly, lowe's also works on the ground with some groups to sort of help get supplies where they need to go can you tell me about that >> lowe's has a group that helps with the first responders, what we call relief buckets which are five gallon buckets full of necessary supplies to help do initial cleaning, where they live, or where they're going to, and we have a lot of people that are helping clear debris and things like that we're a very community based company, our hearts are in our communities, and they're helping their community so that they can all get back to normal >> thank you so much, rick,

really appreciate you inviting us here today. we're going to spend the day here at lowe's emergency command center in north carolina becky, back to you >> courtney, thank you very much when we come back, jim cramer will join us live from the new york stock exchange. check out the futures this morning. they're still trading higher but they have come down a bit. actually the s&p has just turned negative and this has all happened since that gdp number came in. gdp number that was revised higher than expected second quarter now at 3% and somehow that has managed to turn into a down day for stocks at least putting pressure on this we're going to talk to jim about that in just a moment. dow futures still up by about 3.5. nasdaq up by 1 s&p futures down by 1.5. quick programming note by the way, we are be live with warren stffett at 11:00 a.m. eaern time on "squawk alley. stick around we'll be right back. there's a denture adhesive that holds strong until evening.

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the u.s. has been talking to north korea and paying them extortion money for 25 years talking is not the answer. jim cramer joins us now. jim, the 3% traders say 3% means rates might go up. is that, is it that simple

>> traders are idiots. >> isn't 3% great? >> sent alibaba down 5 they're aligned with the people's republic of china how wrong could they be? they sold apple and every stock down huge and then of course we turn around. look, there is more bad trading in the first hour. some of it is embarrassing europe is up very big today and we could have a turn at the beginning but 3% is good and those that think it's bad are playing with an old algorithm and should be careful because we need the bank stocks to go up and we need them as leadership and we'll get that as interest rates go higher. these traders have been wrong so long and do they not know that becky is interviewing warren buffet he's going to just hit the

short. you vehave every right to be stupid but this is why warren buff sfet going to say be an index fund these are literally plays where they hate it and it's fun. >> i don't know who does it. >> my wife at one point said that she was upset and i was saying you can't be upset and she said i have the right to be upset so my kids now made that the next amendment you have the right to be upset in our house you took it one step further, since there was no inflation even though it was 3%, that the fed could be, you know, less aggressive in raising rates but you said if it does cause it to

raise rates it's good for the banks and that's good. >> listen, those top ten amendments we know that the 2nd has a little bit more staying power. >> all right you can use that if you want. >> i like that. >> you have the right to be upset. you can pull that out of your pocket >> i just think look, you know, we can comment on how stupid people are or we can talk about what's good. you know what's good 3rks% growth. >> excellent. >> it is good. >> yeah. >> i like how you said yesterday about that jim and i like what you said about why you have a smaller television set than you want. >> that's that regime i live under. >> we have one of those at our house too. >> 75 or something. >> how do you watch football.

>> got two of them. >> you got to put your foot down man. you got to do it now. >> actually i'm one to talk. anyway, see you at the top of the hour. >> she doesn't watch the show. >> up next, alexa has a new friend details about a surprising tech partnership coming

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that's coming up at 11:00 eastern time. >> two tech giants teaming up for a digital assistance match making initiative. you will soon be able to summon amazon's alexa using microsoft's cotana it began with an e-mail. >> final check on the markets. looks like the futures are at least at this point mixed. we have been higher most of the morning. got the gdp number stronger than anticipated and saw stocks come down the fed raising rates faster

than expected. dow futures down by just over one. nasdaq up two. if you check out the ten year you'll see that the ten year note this morning is yielding 2.148% and that's been something to watch melissa, i want to thank you for being here today. >> my pleasure. >> see you back here tomorrow and you guys are on power lunched today. >> not today. >> all right well thank you make sure you join us tomorrow it's time for squawk on the street good morning and welcome to squawk on the street i'm david faber along with james cramer and there you see i'm not saying much of