"squawk box" begins right now. ♪ live from new york where business never sleeps, this is "squawk box. good morning 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 and is off for this week joining us is cnbc's fast money trader, guy adami. thank you for being here >> awesome to be here. joe is yelling at me already >> you are trading already i'm sitting here talking to you. >> you're a fast money trader, did you trade already? >> it's 6:00 in the morning. >> if you wanted to, could you. >> i could thank you for having me in your house this is your home from 6:00 to 9:00 >> i wasn't really yelling at you. >> no, you weren't we were having an interesting

conversation >> stay tuned. >> which will continue for the next 59 minutes. >> i want you to be more vocal on fast money, certain people are saying whatever they want. when good men are silent, that's when bad things can fester >> that's like a history lesson. >> that's when things can fester >> he's saying you're a good guy. >> i'll take that. thank you, joe a look at u.s. equity futures it looks like we would have been on track for a positive month of august we'll see what happens this morning. dow futures up by 57 points. s&p futures up by 7. nasdaq up by 20 this comes after an up day for the markets yesterday as well. overnight in asia, you will see the nikkei closed up by 0.75%. hang seng down by a percentage point. shanghai was almost flat

if you look at what's happening in early trading this morning, you can see across the board there is strength. it looks like the ftse is up by 0.6% similar gains for the dax in germany. the cac is up by 0.7%. check out the dollar, too. dollar we've been watching so closely as it's been weaker against many currencies. dollar index down. this morning the dollar is up across the board right now trading at 118.74 to the euro dollar/yen at 110.60 a delaware court has given former uber ceo travis kalanick a legal wind a judge sending a benchmark capital lawsuit against kalanick to arbitration rather than having it play out in open court. benchmark is a major uber investment and sued kalanick after helping to ouster him as ceo claiming he defrauded them the firm wants kalanick removed from the board kalanick counters he's the victim of slander by disgruntled

investors. >> do you know the difference? >> slander is what you say libel is what you write. >> you remember that. >> she's a journalist. >> that's why she would know that's why i would not know. >> you're like a biotech major >> you're not a journalist either >> i didn't claim to be. >> neither did i don't get defensive already. >> can we restart this already >> you and grasso, steve, i love him. both you guys. >> however -- there's a however -- >> no, no however. that's all i will say. uber's new ceo, dara khosrowshahi making headlines at an all-hands meeting in san francisco. he said he believes uber should be public and that we could see an ipo timeline of 18 to 36 months ub hear a ver has a valuation o8

billion, and daraa sa says the n is to pay the bills. we go way back >> khosrowshahi. i've been practicing >> i know. board member arianna huffington tweeting this photo saying a special selfie at end of a special all-hands meeting. the tweet said dara will take the helm at uber on tuesday. >> just trying to figure out how people are melding behind the scenes which board members are lining up where how travis kalanick will get along with dara khosrowshahi arianna's key in all of this because she has been seen as being on travis kalanick's side. if she's also embracing him, maybe there could be at the beginning some semblance of trying to work together. that's what i would take out of there. >> does travis make a comeback in five years? will he michael dell or steve jobs it. >> i would not talk rule that

out. talking about coming back immediately is premature, but i would never knock him out completely given how he put that company together >> and then it would be easier for joe to pronounce the last name >> i can pronounce it okay it's just dara you just sort of -- >> when you're that close. i haven't met him yet. >> khosrowshahi. yeah khosrowshahi i'm fine with it i learned that technique from somebody else. to use the first name, he, ignore it whtchlit what about this one? did you practice this one. >> expedia >> yeah. >> not that. >> promoting cfo mark okerstrom. >> okerstrom >> he replaces dara khosrowshahi whew, who took over the top job at uber.

okerstrom will join "squawk on the street" at 10:00 a.m. eastern. nafta negotiations resume tomorrow mexico is starting this round with a hard line eamon javers has more. this is something that the president referred to yesterday. >> the president has been on the road for the past couple of days he was in texas, in missouri, today a light schedule back at the white house today. a couple items on his radar screen including this nafta situation. here's what president said earlier this week. he said the united states will probably need to terminate nafta in order to get a fair deal with mexico and canada. the mexicans have responded to that the foreign minister saying mexico will leave the negotiating table entirely if trump pulls the trigger on nafta withdrawal there's a couple of procedures within the nafta treaty terms

which allow any country to withdraw mexico saying if the president does that, they're walking away from the table that presents a complexity for the president and his negotiating team there smaller news percolating around the russia story a couple subpoenas fired off this week to people close to paul manafort. melissa laurenza, and jaso jason maloni both have been issued subpoenas to give information related to what they know about all of this politico reporting last night that the new york stated attorney general, eric schneiderman is working with the investigative team for the special counsel, robert mueller, that seems to ab

message sent by mruler mueller' even if the president offers federal level pardons, there could sdil be still be state level issues a lot for the president to focus on today >> the other huge issue is tax reform, where that will be something like 63 working days left in congress this year that shortens the time frame the president saying he's ready to work with congress but also saying don't disappoint me how contention is the relationship going to be >> was a fascinating moment yesterday. the president saying he doesn't want to be disappointed by congress again this is a president who feels burned by congress from the healthcare problems. he doesn't want a repeated of

that he's out on the campaign trail, so to speak, pushing for this. that's something allies wished he had done more of during the healthcare effort. he was out there yesterday he talked about the corporate tax rate he said ideally i would like the corporate tax rate down to 15% clear that in his mind there's negotiating to be done on that whether or not he can get there is another question. the president making the public case here that corporate tax cuts are good forever the middle class because companies will begin to hire at a quicker rate if those tax cuts go through >> eamon, thank you very much. a programming note for you steve liesman will interview steven mnuchin today at 11:30 a.m. eastern time. they will talk a lot about this new tax plan we continue to follow the deadly storm hitting the gulf coast. harvey weakened to a tropical depression last night.

at least 28 deaths have been attributed to the storm. harvey dumped about 50 inches of rain on houston. texas governor greg abbott says around 32 people remain in shelters officials estimate as many as 40,000 homes may have been damaged in houston and harris county economists calculate total financial losses ranging from 48 billion to $75 billion. it's not over yet. that's a wide range, but i don't know how reliabiliiable that ra. nobody does. >> we heard the ceo of farmer's suggesting that uninsured losse could reach 1$150 billion >> the post has numbers like that sandy and katrina combined in this day and age where everything is on video or whatever and it makes it harder

to watch things like this. saw the little toddler that held on to her dead mother to -- you know, the human life -- can you even talk about animals, but you can't help it, because you care there. you see horses stuck these guys are risking their life to save -- i saw a guy in a helicopter go down to save a dog. it's amazing not only -- that's the good thing, watching what these -- >> the heroism, but the -- >> it's hard to watch. >> i >> it is >> it moved east, now there's all these rescues happening in beaumont and -- because the water on its way out has to go south. main pipeline carrying fuel from texas to the east coast is temporarily shutting down. colonial pipeline is the biggest fuel transporter in the nation

with gasoline, diesel and jet fuel all going through the lines. outages at supply points contributed to the shutdown. energy prices, looking quickly at crude, you don't see a whole lot happening. more of it happening in rbob at the bottom gasoline scott cohn is live on the ground in houston with the latest scott joins us now with more good morning >> good morning, joe this is the george brown koc convention center in houston at the height of the storm there were 10,000 evacuees that's down to 2500 at the last report there may be less than that as day light breaks shortly in houston and people start heading home don't let that fool you. this is still a developing disaster we want to get to that chemical plant in crosby, texas 30 miles to the northeast of here

remember they make and store peroxide come points that need to be refrigerated the refrigeration is out because they got six feet of water in the plant. within the last two, three hours, reports of two explosions and fire at the plant. that was inevitable because the products are not refrigerated. so they evacuated an area about 1.5 miles around the plant there's the scene as you can see in crosby as they basically wait we are told it's inef vitable tt there will be more explosions. already ten deputies have gone to hospitals, complaining of dizziness and potential symptoms from inhaling those chemicals. that's just one of many disasters within a disaster unfolding around the region. in beaumont, texas along the gulf coast near the louisiana

border, the water system is down this is near the area where harvey made the second u.s. landfall yesterday here is port author, where r rescues are going on people heard the need for boats, we got pictures last night of people being evacuated from a hotel. at last report, 25,000 rescues have taken place that's just rescues from the various agencies, doesn't include some of the people coming out, bringing boats to help people out. an epic amount of water here a disaster still unfolding even as harvey makes its way out of here >> all right, scott cohn, thank you. appreciate that. when did you get in to texas >> i got to texas yesterday.

so i'm coming with sort of the second wave here we'll see as this unfolds. we'll probably be here a while as the cleanup begins and as some of these other things to the east of here continue to play out, we're just 24 hours removed from that second landfall with so much water. so this will be going on for quite a while in a very wide region >> right exactly. huge like nothing we've seen. scott, thank you the k. bailey hutchison center in dallas has been transformed into mega shelter and is housing roughly 5,000 people after the storm that center is named after kay bailey hutchison thank you for joining us today i know you're in brussels but keeping a close eye of what's happening in your homestate what do you think about what you've seen so far and where you see the state headed from here

>> becky, thank you very much. you know, i grew up in galveston county, my early career was houston. i have seen these terrible storms and the devastation that they wreak our texans come through time after time after time. we're seeing that now. of course i've been talking to people and e-mailing with people in houston, including some of my family i have to say, from over here in brussels, the eu has a good satellite imagery system fema reached out to them for help, they're on board helping i'm seeing so much support from my colleagues here they're reaching out to say what can we do? they're reaching out, and the eu is helping with this satellite

imagery that can tell us where the waves are coming from, and what to predict that will help them in the efshts so we're doing something over here that i think is very important. mainly my hometown of dallas is opening its arms our university of texas southwestern system is putting doctors into the kbh convention center and we have walmart that is opening a pharmacy to help people with medication they will be taking 5,000 people from the gulf coast, port aut r authur, beaumont, galveston, so it is a team effort. i'm doing everything i can and certainly staying in touch >> we have seen everyone happening. we have seen everything that's happening and fema's response and hoping for a quick recovery

there. ambassador, tell us about the situation in the eu and with nato right now it seems like you are arriving there at a time when relationships have been frayed to some extent because president trump pushed for all of these nations to make sure they're up to their funding obligations what are you walking into at this point what's your sense of the relationship as it stands? >> becky, thank you. i have talked to many of the ambassadors already. we had a form meal meeting tuesy and wednesday. people are very welcoming. i think they know the president, secretary tillerson, secretary mattis and the congress are together i wrote an op-ed about that, about how together our administration is on support of nato we know the strength nate nate

to cflanato can bring and we're speaking with one voice. i'm taking this to our european allies in nato, we know today nato is facing some of our biggest tests. we have really in afghanistan our country is going to go forward with a more robust effort to ash sure that there are not terror cells that are fermenting in afghanistan and the surrounding areas. i think our allies are ready to step in and help we'll ask for that help. i think nato is especially important now. i think everyone realizes it just taking the common threats that we have very seriously. >> in your op-ed piece you

pointed out that you think the alliance needs to be revitalized in some way. can you play out what you think that game plan is? what you think needs to happen >> yes i think that in addition to the original purpose of nato, which was to assure russia did not become aggressive against the new countries that are now republics around russia, we are also taking on anti terrorism. this is something president trump was very firm about when he was here. and the nato allies stepped up to the plate and agreed that we need to be more productive in anti-terrorism both in our southern member countries, who are concerned about the encroachment of any kind of terrorist activities, but also fterrorist cells in

afghanistan. we're also looking now at the nuclear threat that we see with north korea, iran, rogue nations that are beefing up this dangerous capability i think our allies are ready to say and actually have said already that we are going to deter nuclear activities, we will speak with one voice. we've seen it in the u.n. and we'll see it at nate to i think therenato i think there's a lot of threats, a lot of the old ones of russian aggression and also new ones of terrorism, counterterroism, and making sure that we stand allied against any kind of nuclear weapon and in irresponsible hands.

>> thank you very much for your time again today we'll talk to you soon >> thank you, becky, joe >> great to see you. coming up a new challenge to activist investors, it has bipartisan support in the senate and the backing of corporate america. it's coming from a small town in rural wisconsin. leslie picker is here to explain that after this break. [phone ring] hello. hi, it's anne from edward jones. i'm glad i caught you. well i'm just leaving the office so for once i've got plenty of time. what's going on? so those financial regulations being talked about? they could affect your accounts, so let's get together and talk,

and make sure everything's clear. thanks. yeah. that would be great. we've grown to over $900 billion in assets under care... by being proactive, not reactive. it's how edward jones makes sense of investing. i'm vern, the orange money retirement rabbit, from voya. i'm the money you save for retirement. who's he? he's green money, for spending today. makes it easy to tell you apart. that, and i am better looking. i heard that. when it's time to get organized for retirement, it's time to get voya.

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all your tv at home. the most on demand your entire dvr. top networks. and live sports on the go. included with xfinity tv. xfinity, the future of awesome. new challenge ahead. it started with the demise of a small town in wisconsin. leslie picker joins us from brokaw, wisconsin. good morning >> good morning. the town of brokaw is effectively bankrupt after the mill that is standing behind me xwloez closed down a few years back residents here blame the hedge stunned fstarboard. now brokaw has become the namesake for a bill being reintroduced today in the senate

by tammy baldwin, a democrat from wisconsin and cosponsor by republican david perdue from georgia. the bill does a couple things, focused on disclosure it requires them to reveal their stake of greater than 5% in four days instead of ten to say whether they have a short position, to disclose whether working in a group and require derivatives to be included in the disclosures. some say, especially some on the activist side say the mill would have shut down regardless of starboard's involvement. warsaw paper had been closing mills for years before starboard came in resulting in 550 total job losses we spoke with the former ceo, hank newell who said he had a deal for the mill but that fell through after starboard criticized the company starboard did not respond to our request seeking comment, but sources we spoke with say activists are concerned about

this bill, especially with the new bipartisan support as well as support from corporate america, including home depot. >> wow that is something, leslie. dark there, isn't it i know how that works. i understand thank you. appreciate that. wisconsin is happening lately. a lot going on >> yes >> great state >> i got my rear end kicked in wisconsin. >> excuse me. >> you don't know what that is from. >> recently. >> come on, joe. of all people -- >> give me a second. >> i don't expect becky to know this >> give me a hint? russell zisky? >> bueller bueller. >> it's not the line, i cleaned it up. it's from the movie "stripes" if you recall >> okay. all right. >> it's early. >> funny you mentioned that. i have thumb problems. >> the big thumb big toe, i think >> oh.

>> toe, thumb. your thumb looks like a toe. we are off the rails. a programming note, we'll hear from some investing titans next month at the delivering alpha conference the lineup includes jamie dimon, ray dalio, and steve schwarzman. we're trying to get fast money's guy adami. that's a long shot for more information head to deliveringalpha.com. >> sarcasm doesn't become you. >> sarcasm is for losers >> losers. when we come back, the american red cross is working around-the-clock on the gulf coast helping thousands of people effected by hurricane harvey the organization's president will join us after the break to give us the latest on where things stand. later we'll talk to the anheuser-busch brewer who is shifting from beer to water to help out hurricane victims

welcome back you're watching "squawk box," live from the nasdaq market site in times square. good morning, everyone it is the last trading day of august we've been watching the u.s. equity futures, they have been higher this morning a little shy of where they need to be in order to see a positive month in august, which is a rare thing as it stands. we'll see as we get closer to the opening bell right now the dow futures indicated up by 38 points. the nasdaq up by 11. >> walmart and the walmart foundation announcing a commitment of up to $20 million in support of relief efforts for

the gulf region, that includes 10 million for the support of red cross shelters, that's stepping up, and hurricane harvey relief efforts are underway throughout texas. joining us from the new red cross shelter, gail mcgovern, american red cross president and ceo. i don't even know where to start, gail, in terms of the services that we don't always think about or that are needed in a daisaster like this. can you tell us some of the things happening now >> well, first of all, let me say my heart goes out to the people of texas. they have been through so much and will continue to go through so much. this is an enormous operation. as of tuesday night we had 32,000 people living in shelters, 230 different shelters around the state

we already served 180,000 meals and snacks the need is tremendous you mentioned walmart, they have bln been a remarkable partner for us we have volunteers that have gone through so much to break through. we transported some dump trucks could get through the water. it's an enormous operation weather there to provide comfort and hope to people who have just basically lost everything. >> the death toll is too high, but not what we saw in some other events that changes what the role of the red cross is in terms of injuries not as much blood need, things like that. this is more about shelter and

food, i guess. >> you're absolutely right i can tell you this was the most remarkable disaster. it's heartbreaking but also heartwarming to see neighbor's helping neighbor's that's why so many survived the storm. everybody stepped up, the coast guard, texas national guard, department of defense jumped in. it's remarkable how well people have gotten through. you mentioned blood. when we have a disaster this size, the need for blood increases around the whole country because we have to cancel blood drives. for all of your viewers, if they feel the urge, we would love if they could make blood donations. we will see a decrease in the blood supply as a result of

this as always the american public is stepping up. if anyone wants to go to our websi website, red cross.org, they can find out ways to volunteer find out ways to make a financial donation i would tell people, the website is sluggish now, because there's an overwhelming need on the part of american citizens to help when they see an urgent need >> watching and reading, that's something that i'm sure didn't occur to me, gail. i was thinking that the blood wouldn't be an issue in this disaster as much as others, but then you showed us that, connected the dots there looking at what happens in hospitals down there just reading about doctors that administering experimental cancer treatment and they were

mid-regimen with some of their patients, and they couldn't get to the hospital and the trial or whatever it was for limb fo lymphoma or something won't work if he can't get to the patient is the red cross doing anything with hospitals down there? is that under control? dialysis, things like that, are you involved in that as well when a hospital evacuates and they present to the shelter, we will attempt to bus people to a different hospital the shelter i visited last night, we had transitiportationo a medical facility the heroics are incredible i'm seeing it over and over

again. volunteers doing that, staff doing that the need to help just seems to override putting yourself in harm's way it's incredible. >> what can -- what should we do you never can have enough money, people can easily find how to give to the red cross, i would imagine. tell us. >> so, they can go to our website, which is red cross.org. we have an 800 number they can call if they want to give an agent a credit card number it's 1-800-redcross. every gift will be deeply, deeply appreciated regardless of the size we will make sure it goes to help the people impacted by hurricane harvey >> we're hearing, you know, some big numbers from places like

walmart, but 20 million when you're talking about 150 billion, you can see what the issue is it's fractions of what we need the government has to step up, too. you have a lot of experience in this you have seen a better coordination of fema and state and local and federal agencies this is a step up from what we've seen recently. i wonder how they figured it out. i guess you bet bettget better s when you've done it a few times. >> first of all the coordination through this disaster, with fema, state government, local government has been remarkable we have daily video conference calls where every person is reporting out. we identify a need, people jump in we explained we couldn't get our volunteers and cots through,

the next thing i knew we had 20 high water vehicles from the department of defense help us out. my hat is off to all of the state and local government, the national guard, the coast guard. the coast guard, they're my heroes it's unbelievable what they've been doing so the coordination is very, very tight i deeply appreciate the help of our government and the local officials. it's remarkable. >> great thanks for coming on i know you have other things to do, hopefully this will help out some of our viewers. thank you. >> thank you, joe. thank you very much. we want to give you an update on another fund-raising effort that we've been updating you on and giving you hints along the way on what's happening. j.j. watt, his houston relief fund is growing by the minute.

the houston texans star raising more than $9 million for the victims of hurricane harvey, it's a huge jump from the 5 million he raised this time yesterday. watt has increased his goal to 10 million every time he hits his goal, he raises it another million dollars. as joe mentioned, all of this is a drop in the bucket for what's needed, but it all helps. when we come back, president trump's push on texas. we'll talk about the president's speech and the challenges ahead for lawmakers. alex brill will join us. and later, steve liesman has an exclusive interview with the treasury secretary stephen mnuchin, that's on "squawk alley" at 11:30 eastern time w ct and be full service.

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fda approved a new treatment for childhood leukemia the therapy involves extracting special immune cells from the patient and reprogramming those. the cells are infused back into the body to destroy the cancer

it's the first gene therapy approved for eyuse in the unite states the therapy is developed by novartis it is very expensive, $475,000, but novartis says if a patient does not respond to the treatment after one month, there will be no charge. it also says that it will provide financial help to families who are uninsured or underinsured on a humanitarian basis. here's a pretty serious story that you should pay attention to this is recall issue and a fix that you need to listen up nearly 500,000 pace makers are being recalled by the fda after the agency found that the devices could be hacked. the manufacturer is releasing a firm wear update that fixes the vulnerabilities. the models were made by st. jude medical. patients need a three-minute software upgrade that must be administered by a healthcare

provider this is not something that requires surgery, but absolutely an urgent fix. this is not one of those recall notices that you don't pay attention to. >> maybe joe can get his done in the commercial break you're getting up there in years. >> really? do i have a head full of white hair yeah exactly. right. >> no you have to dance with the girl you brought to the prom >> it's because you have money on the line, right >> is that what it is. >> i think >> no. >> i can see there's a biting sarcasm to that. >> don't you trade. >> i do. >> we don't trade. >> that's creating the great hair >> and the wrinkles. >> and the wrinkles. anything else. >> fatigue >> fatigue >> the sort of slow-witted -- dull-witted -- >> not being able to capture the words i want to use. >> being half asleep >> all those things. >> you have an excuse. >> an out. >> president trump urging congress to overhaul the nation's tax code.

we have reaction to the speech from alex brill. i can set you up with someone for the hair i have a good -- kidding everyone thinks that quick check of what's happening in european markets. weave ee hgrn across the board when this bell rings... ...it starts a chain reaction... ...that's heard throughout the connected business world. at&t network security helps protect business, from the largest financial markets to the smallest transactions, by sensing cyber-attacks in near real time and automatically deploying countermeasures. keeping the world of business connected and protected. that's the power of and.

welcome back, everyone president trump is calling on congress to commit to tax reform >> when it comes to the business tax, we are dead last. can you believe that so this cannot be allowed to continue any longer. america must lead the way, not follow from behind we have gone from a tax rate that is lower than our economic competitors to one that is more than 60% higher. we have totally surrendered our competitive edge to other countries. we have totally surrendered. we're not surrendering anymore >> joining us now for more on the tax reform agenda is alex brill, research fellow at the american enterprise institute and previously served at chief economist and policy director to the house ways and means

committee. alex, it's great to see you this morning. what do you think after this speech what are the odds that tax reform is picked up and passed if not this year early next year >> good morning, thanks for having me back on. i see the speech yesterday as the president's strongest commitment to engaging in this policy process where eight months into the administration, things could have started sooner. we were side tracked with other policy agendas, but i'm hopeful that this is the beginning, as the president said, the kickoff, i think, of a concerted effort to move from the tax code that we have, which i think doesn't work very well, to the kind of tax code republicans have been talking about for well more than a year now, one with a broader base and lower rates. >> he stuck with that 15% rate i guess he said ideally he'd like to see that 15% rate but it was a little light on some of the other details. maybe that's where the other issues are going to be how do you see this playing out?

>> there were very, very few details yesterday and even the 15% rate was softened a bit when he said ideally it will go to 15%. that was his campaign policy platform on the corporate rate you know, i think that the corporate rate, first of all, absolutely needs to come way down i think that lawmakers in congress agree with that and will pursue that i don't think we'll get down to 15 it just has to do with budget math 15 would be great, but i think we're more likely to be in the 20s at the end of the process. >> you've got a lot of work to do pr-wise, alex number one, democrats, progressives, liberals will always say that the actual tax rate is way below 35 and that no companies pay that they'll say it's like 10 or 12, which is lower than other countries, number one. do other countries where you see

they might have a 15 rate or a 20, do they also have de facto rates that are actually lower with other deductions, so apples to apples, we're still higher, or is there merit to that argument that no corporations pay 35 anyway? >> yeah, this is the classic argument about whether we're talking about what the average rate is or whether we're talking about what the marginal rate is. what we need to do is we need to bring that headline rate down. that's not the average rate. that's absolutely true when liberals say corporations tend not to pay 35% oftentimes. but what matters is when they think about growing their business, when they think about making a new factory in the united states or in china or in ireland, how much more tax are they going to pay on their additional profits and there the rates can be 35% for a u.s. investment. >> and part of the reason the blended rate goes down is because they go abroad and that's why they're down at 20%. >> absolutely. they're mixing in the 0s or the

1s or the 2s. >> how about this, all the pass-through people, if you cut -- they're corporations but the liberals are going to say you're giving a tax cut to the rich and they're notgoing to cut about what the real story is it's going to be dissembling and deflating and that's going what you're going to hear about, you have a tax cut for the rich. and if you poll the public, they say corporations don't pay enough so you've got more work to do there. >> that's the pr issue that you raised we need to see the president talking about tax reform and in more detail than he did yesterday and the rest of his team i know you'll have the secretary on later this morning. we're going to need to see at some point more specifics. and when i say specifics, that's part of the leadership process from the administration on tax reform not just on which taxes are going down, but what the offsets are going to be. how we're going to close the

loopholes, which loopholes we're going to close and where the revenue is going to come to offset this package at the end of the day you raised one issue which was the pass-through issue what i thought was interesting from yesterday is the president didn't talk about small businesses in particular he focused on the corporate tax rate where previously there has been a lot of discussion about also adding a lower tax rate for pass-throughs. i'm not sure why that was. >> alex, thank you very much for joining us guy adame is here and we'll talk to him about the market's reaction to some of this stuff. >> thanks for having me. >> thank you. coming up, the catastrophic floods in texas forcing some companies to get creative with their supply chain, especially those trying to get food on the grocery store shelves. we'll talk logistics after the break. later, the anheuser-busch brewery that's shifting from beer to water to help out the hurricane victims. we'll be right back.

breaking news this morning an explosion and fire breaking out at a chemical plant in crosby, texas, following severe flooding from the hurricane. the latest from areas that are hard hit by this historic rainfall straight ahead. and could the president's push for tax reform mean higher returns for investors? we'll talk to a tax policy expert and find out where you should be putting money to work in this market and uber's new ceo making headlines at an all hands on deck meeting in san francisco. details coming up as the second hour of "squawk box" starring guy adame starts right now >> announcer: live from the beating heart of business, new york city, this his "squawk

box. good morning, everyone welcome back to "squawk box" here on cnbc we are live from the nasdaq market site in times square. i'm becky quick along with joe kernen and guy adame we've been watching the futures at this hour and things have been in the green through the morning. not quite enough of a boost to give us a positive month for august but pretty close. dow futures are indicated up about 43 points, s&p futures up by 5, the nasdaq up 12.5 and this comes after a positive day yesterday for the markets. in the meantime here's what's in our headlines this morning flooding from hurricane harvey has sparked several explosions at a chemical factory in crosby, texas. that is about 25 miles northeast of houston arkema, the company that runs the plant, had said there was no way to prevent an occurrence like this after the storm shut down refrigeration of those chemicals. refrigeration is what keeps them stable

yesterday the company began warning that this was going to happen they cleared the area as a result we will have more of our continuing coverage of harvey in just a moment. it's also been a busy morning for economic numbers in 90 minutes time we'll get july personal income and spending figures both are expected to increase from june levels at the same time, the labor department will have its weekly look at jobless claims all of these lead up to tomorrow's big august jobs report following the adp numbers and a revised gdp number showing 3% annual growth for the second quarter. i asked warren buffett if he thought that that represented a longer term economic trend. >> no. it's been about 2% a year now for -- since the fall of 2009, eight years, and it's been remarkably close to that most of the time the way they report those quarterly numbers, they take the quarter and multiply by four so

it gets a little tricky that way. if you're off by a tenth it makes it 0.4 in the annual figure they report you never want to take any quarter too seriously. i would guess we're in about a 2% growth economy now. >> guy, that whole idea of sometimes we get a little above, sometimes a little below, most people say it will probably take policy change to really significantly push us above 3%, something like tax reform. >> i agree, i agree, i agree but what does it mean for the market, right? during president obama's administration, the market did extraordinarily well people that didn't like him were incredulous that the market did that well, they couldn't wrap their hands around it. now you're seeing the same thing except the other side. people that don't like president trump can't believe the market is going higher. the market is apolitical yes, we're going to see some tax reform, but the reality is the market is grinding higher for the right reasons. the right reasons being earnings are on a decent trajectory and regulation has been cut back

so take politics out of it try to get your dogma out of it and looks what's in front of you. the reality is the market is in pretty good shape here if we get any reform, tax regulation, tax reform, it's just going to add fuel to the fire that is the market already. i'm not trying to come off as some crazy bull, i'm not but the market is in a trajectory higher and every piece of bad news we've seen for the last six months if not the last six years has been discounted and you have a vix below 12. >> guy adami is with us this morning. let's get an update on what's been happening down in houston historic rainfall in the houston area causing many businesses to shut their doors so as the floodwaters recede, the question is what does this mean for travel in and out of the area contessa brewer has been in the area monitoring everything that's been happening. contessa, good morning it's great to see you. >> reporter: becky, thank you. i'm at bush airport in houston which has reopened this morning.

it actually opened late yesterday afternoon, but for very limited service here's the problem they're telling people if you've not been contacted by your airline, do not come to the airport. when i'm talking limited service, i'm looking up here at the united board this is a big hub for united cancelled, cancelled, cancelled. i see a few flights that are on schedule to places like los angeles, denver, chicago even the flight to newark, which is another one of united's big hubs, cancelled at this point. but a lot of people didn't get that message they have been stuck here for days and they're showing up at the airport anyway like mom with two sons who i met early this morning >> no one was here it was empty it was like a ghost town so i'm just curious to see what's going on because when you look up on the boards everything says cancelled, cancelled, cancelled. >> reporter: she thinks she's going to norfolk, virginia she's been at an airport in downtown houston this was supposed to be a

connecting flight for her and she got stranded here. a very, very frustrating travel journey for her. i also wanted to give you a quick update here. there are new mandatory evacuations around the barker dam in houston this is an area west of houston that had already flooded well, the reservoir is still over capacity at this point and they're telling residents now, this is not voluntary anymore, it's a mandatory evacuation. you must get out we are watching that situation and going to try to travel out there today, becky, and see what's happened with people who have already had enough water. >> contessa, you've been telling us that the hope was people could maybe start getting back to work in downtown houston yesterday as some of the floodwaters receded some certain areas. is it a problem at the airport of getting employees there or is this a problem of even being able to get the airplanes into the area too >> i think there's not immediate flooding in this area. there are still some roads where there are some issues, but the

good news is at both airports, and hobby is open too with limited service, that's where southwest flies in and out, there are some problem roads but there are ways to get in and there are major thoroughfares coming into the airports for the employees, the problem is that mass transit has not been up and running and it depends on the neighborhood they're coming from whether they're able to get to work. we've seen people coming in and out. one note, though, i was chatting with tsa agents this morning only two checkpoints available this morning two tsa security checkpoints one in terminal a, one in terminal e where i am right for you for united and tsa agents came in from chicago to man those. >> wow, wow. so still massive efforts trying to get people up and running your sense was yesterday at this time when we talked to you that some people might make it back into houston is that what actually happened yesterday? are there ways that people -- employees can trickle back in? >> reporter: yes it was an amazing explosion even from early morning when we had

talked, becky, until the afternoon and evening to see how many businesses came online, to see how many employees came back to work. at the hotel where we're staying, it went from having a skeleton staff, who had been sleeping at the hotel in the rooms there, all of a sudden we saw a bunch of new people coming in and saying, yeah, i was able to get back to work today, no problem getting around maybe if there were minor inconveniences i was able to overcome those so i wanted to show you yesterday how quickly, how resilient houston is in terms of business, but i don't want to give the impression that the all clear is here. it's just that i can only show you one tiny slice of houston neighborhoods at the same time. >> and this is affecting such a massive area contessa, thank you very much. we will check back in with you a little later this morning. >> reporter: thanks, becky >> thank you. walmart and the walmart foundation have committed up to $20 million in support of relief efforts for the gulf region and the aftermath of the hurricane this includes $10 million

focused on support of american red cross shelters, which we were just talking to the ceo of red cross about. also $2 million in support of the hurricane harvey relief fund at the greater houston community foundation something that has gotten a lot of attention and there's different supply chains, let's talk about grocery supply chains, because central texas grocers are focused on restocking their shelves in the wake of damage caused by hurricane harvey roger davidson joins us to discuss the supply chain logistics that retailers are facing to get products to the houston community. he's the president of oakton advisory, previously was senior vice president of procurement at walmart and at heb grocery we had heb on the other day, roger. what a great job they're doing down there with meals and everything else for people good citizens, good corporate citizens but i think the point you make, which is interesting, is that if you know a hurricane is coming, that's when you need to jump into action, right

that's the most important part of the supply chain, of keeping it running after the hurricane is what you did before it happened. >> yeah, good morning. i think actually of equal importance is preparing for these hurricanes i've worked hurricane work with major retailers in the u.s., with heb when i was here for 31 years, and a lot of retailers who are in these flood-prone areas, hurricane areas, whether it be heb in texas, walmart in louisiana or publix out in florida, they deal with these all the time and so well ahead of time you'll bring in supplies that are important for hurricanes things like bottled water, charcoal, baby formula, diapers. those are all critical and you don't want to start chasing those items when the hurricane hits because everybody is going to be after them. so you want to bring them in ahead of time and be prepared

for that hurricane when it gets here there's really three phases to dealing with these the first is being prepared, whether it's in your supply chain or in your stores. the second is dealing with the hurricane from a supply chain standpoint once it gets here how do you get trucks to the stores, water, ice, that type of thing. and then there's the aftermath you know, what happens afterwards, how do you restock the stores, get supplies back in i know heb is chasing product all over the country bottled water coming from all over the country right now ice coming from several states in the area. and it's a massive logistical operation. they have a command center set up here in san antonio, and it looks like you're fighting a war when these things happen and the enemy is the weather >> yeah. so this time around, did you see people doing the right things in terms of preparing for this or are we already seeing the effects of not having prepared how is it going down there in

terms of satisfying supply chain for grocers in stores, et cetera >> well, i think, you know, all these chains are prepared and i think heb is probably as well prepared as any chain in the country. they have been dealing with hurricanes ever since their existence, the company was formed early on in corpus christi, the valley of texas. they're well prepared. they're well prepared from a product supply standpoint, from a logistics and transportation standpoint with different distribution centers around the state. with over 100,000 people working for the chain throughout the state in all these communities they're in these communities, they're the first responders, and they're shipping product, they're getting -- they have shipped out i'm sure all the reserve for hurricane product and now they're working with their suppliers, people like nestle waters and meade johnson with baby formula to get that

formula as fast as they can, as direct as they can as soon as the stores are open for business and then their store people are working a lot of them around the clock just to keep those stores open, running, get that product in there and get it back to their customers so they can get up and running. >> this is grocery -- it's a whole different supply chain issue with refining and oil and crude and chemicals and everything else that is difficult as well, but we appreciate your insight on this side of things, roger, thanks. >> you bet appreciate you having me on this morning. >> you're welcome. let's get some final thoughts from this morning's guest host guy adami is here. >> well, it's always great to be with you folks. >> where have you got to go? >> he's got to go. >> radio. >> radio >> i'm much better on radio than i am on television. >> i pointed to that. >> and you gave me some hints on the hair before i leave during the commercial break. >> it's distinguished, but you're young. >> 53. >> you're very young you have a huge career ahead of

you. so if you're looking for trades in this environment we find ourselves in, big cap, energy, exxonmobil 52-week low yesterday for all the wrong reasons. in my opinion the trajectory is still lower. but if you want to play energy, and it pains me to say it, but these refiners set up very well. which ones valero, endeavor and holly frontier, one of these mid-continent plays. that coupled with the move in biotech, which we talked about before, you mentioned that leukemia drug, the technology, the science behind these companies works. now, gilead paid up for kype 100% but this breaks the seal. i think you'll see more deals in the space. juno comes in play blubert comes in play. >> because of the advances that we are seeing in the science -- >> the valuations are crazy, the science is real. now i think it opens the flood

gates. >> blue bird, is that what you said >> like the blue bird of paradise >> i don't know the company, there's gilead huge market cap, right >> look at what they have done the last 18 months it's finally breaking out. why? because they put their balance sheet to work. yes, they paid up but they had to do it. >> there's an article in "the wall street journal" about novartis coming out with this amazing cancer treatment it's individualized cancer treatment. the journal points to the high price tag, but it's a lower price tag than a lot of analysts expected given -- >> they'll get better at it. >> it's going to get better. but i think, again, to nail down that point, the science behind this, and you should read -- >> it's amazing. >> it's amazing and it's ground breaking >> we need it for solid tumors it's mostly just -- >> it's blood cancer. >> but it's the first time they are improving -- >> no, there's going to be a way to do it with, hopefully, some

kind of gene therapy a similar way but it's hard to get into the solid tumors >> but it hits to the point you've been talking about for so long that cancer is not a unified thing. there are so many different cancers. >> you can do it one at a time and it's not going to be just where all of a sudden you just cure cancer. but there are some quantum leaps coming. >> and this is one of them and this was a quantum leap for me, spending this quality time with becky and joe joe, i hope your thumb feels better i'm going to get you some epsom salts now. >> i don't think it's an age thing. >> no, it's an infection. >> i don't know if it's infected it's a cuticle -- something. >> it's painful. >> you touch it and i -- i'm not give you an idea, i jump through the roof i couldn't tie my tie today. >> i'll stay here. >> guy, thank you very much for joining us. >> my thumb is acting up. >> i have my own

everybody else who doesn't have their own -- >> did you see the guy spent in a picture of an ear mite >> disgusting. we've been talking about harvey wreaking havoc on refiners we'll hear from the head of the american petroleum institute about the impact on the industry after the break. how long it may take to get things back up and running and what the damage is at this point. the s&p posting its longest winning week since may we'll talk the markets in just a little bit. also anheuser-busch, the cartersville brewery switching from canning beer to water sarah schilling will talk about their efforts to bring water to the houston area you are watching "squawk box" right here on cnbc

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welcome back, everybody. the main pipeline carrying fuel from texas to the east coast is shut down because of harvey. they are the biggest transporter in the nation. joining us for me on all of this is jack girard, the president and ceo of the american petroleum institute. jack, thank you for joining us this morning it's great to see you. >> thank you, becky. always good to visit with you. >> we have been trying to just get our arms around the impact on the oil industry and the refining industry from what's been happening in texas and now louisiana.

what can you tell us at this point? what has happened? what's shut in >> at this point in time, becky, i think it's the same attitude we all have. our first focus is the protection of our people, our employees and to make sure they're safe you've seen a number of our facilities that we have temporarily shut down in order to make sure we protect those people and the environment and the process. i will note that this morning we now have three of those 15 facilities that were temporarily shut down have announced they're restarting and they're beginning to come back up to fully supply the marketplace. so while we focused in an abundance of caution, if you will, early on, protect people, protect those communities, we're now in the process of gearing back up to bring full production to the market. >> that's great to hear, jack. we had heard that even under the best of conditions once a refinery is shut down, it's not an easy process. it's not like flipping a switch

and turning things back on those three facilities that you're talking about, how long do you think it will be before they are back up and running >> well, it's typically a matter of days. to your point, startup is -- these are large, sfifophisticat high-tech complexes and so they do it in phases, if you will as they graduate from one phase to the next, it typically takes them a few days to do so they do so out of an abundance of caution of some of these have had severe flooding, but they need to make sure the supply chain is there i know to joe's conversation earlier about supply chain and the grocery marketplace, likewise we have the same dynamic in the oil and gas space. we need to make sure we're able to move the product, to receive the product necessary to process and refine and so those are all coming into place now, particularly as they open up roads, as the ports now believe they can reopen soon so it's a matter of variables that come together, but i think it's very positive news that already some have been

temporarily shut down are now planning that startup, that restart. >> i know it's impossible to know for sure at this point, still waters rising in louisiana, still a lot of things that are happening, but we had been hearing reports yesterday afternoon, yesterday evening that about 23% of the nation's refining capabilities had been shut down by this. if you had to guess, if you're looking at a week or so, where do you think we'll be at that point? >> well, it's difficult to speculate. but if you look across the country holistically, we have about 141 refineries about 30 of them in that corridor, if you will, across the gulf of mexico and texas, louisiana. of those you have about six in the corpus christi area, seven in the houston/galveston area and a couple more over in port arthur so our hope and expectation is, as the water recedes and we're able to get those assessment teams in there, and that's part of the challenge initially, as

you know, we need that water to go down and then go in and assess is there any damage and if so what do we need to do to correct it or fix it so our hope and expectation moving forward is that we'll be able to bring these facilities back online, be able to restock the pipelines, the barge traffic moving, trucks moving again, t t cetera so we're committed to doing it as soon as we possibly can. >> jack, that's great to hear. we realize what a difficult time it is for people in your industry and we appreciate your time giving us this update. >> thank you, becky. i'm just say our thoughts and prayers are with the people of houston, the surrounding area. we're with you all the way. >> thank you, jack. >> thank you, becky. coming up, president trump pitching some sweeping tax reform, saying would unleash the american economy and create millions of jobs steve liesman will have more behind the numbers after the break. the futures at this hour, take a quick look, all green. 37 points on the dow

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i'm gonna just go back to doing what i was doing. find your awesome with the xfinity x1 voice remote. good morning, everybody. welcome back to "squawk box" here on cnbc we are live from the nasdaq market site in times square. among the stories that are front and center this morning, the new york stock exchange is proposing an enof session news embargo the big board proposal would prevent companies from issuing news releases from up to five minutes after that 4:00 p.m. close. walt disney is preparing to

make a significant budget cut at its television unit. that's according to "the wall street journal." disney is targeting budget cuts of 10% and they will be specifically identified by the end of september those moves will include staff cuts. and campbell's soup just out with quarterly earnings with a miss on the top and bottom lines. the company also giving a full year outlook that falls below the street's forecast. campbell says that the operating environment for the packaged foods industry remains challenging. this echos some comments made by other food companies that missed estimates in recent reports. things like j.m. smucker and hormel with grocery stores having to compete against amazon and whole foods, they'll all look for ways to improve their margin and usually it comes on the back of suppliers. president trump kicking off a push for tax reform. steve liesman joins us now where are you? >> washington. >> oh, you're in d.c., okay.

we like it when you're here, steve. >> oh, that's nice of you to say, joe >> i'm mostly sincere there, buddy. >> yeah. >> mostly. at least greater than half, and you are too. >> better than half is all you can hope for, 51% is what the -- look, let's talk about president trump yesterday, joe, who held a rally in missouri yesterday to promote tax reform but there's only one problem so far, the bill doesn't exist yet. >> this is our once in a generation opportunity to deliver real tax reform for everyday, hard-working americans, and i am fully committed to working with congress to get this job done. and i don't want to be disappointed by congress do you understand me do you understand? >> the administration has been working internally on a tax reform package but he's letting congress take the lead on it so treasury secretary steve mnuchin

and gary cohn have been working with congressional leaders to craft this bill that they think can pass the president did lay out four core principles. one, that it's simple, fair and easy to understand two, that it be competitive. three, that it provides tax relief for middle class families and four, some form of repatriation now, there are doubts there's enough time to get it done this year and some suggest it could be well into next year before the bill passes. charles schumer expressed his skepticism in a conference call about the intention of the bill saying, quote, the president has repeatedly talked a good game when it comes to the working class but just about everything he's done has been to benefit the wealthy special interests. that does a pretty good job of highlighting the president's challenge here many on both sides of the aisle think the corporate tax rate is too high relative to other countries, needs to come down to be competitive but how can the administration convince the public that reducing taxes on companies is good policy and not a give-away to the wealthy

that's just one of the questions i'll be ask in our exclusive interview with treasury secretary steve mnuchin coming up at 11:30. guys, one of the other things everybody should know is what we keep hearing is this idea that maybe the president said ideally the rate would be 15%. but we hear that in the talks it's more like in the 20% to 25% range. >> this is -- you know, steve, this is where your role is going to have to be so essential to back me up on these things because it's easy to dissemble and to conflate and demagogue all these things you're going to hear that pass-through, if you lower rates there, you look at who benefits and all these people will be 1 percenters there's going to be all this rhetoric from people who supposedly want to do something. but then when push comes to shove, you're always -- it's the old problem. if you're going -- >> it's unbelievable

>> if you cut taxes, you have to cut them on the people that are paying the taxes and it's like will sutton, that's where the money is. >> joe, let's see if we can be an example for the country. >> you can't cut taxes on people that don't pay taxes. >> i agree with that should the corporate tax cut in your opinion be revenue neutral inside the corporate world >> i'm not -- that wouldn't be something that i would say is an absolute must. i believe in -- i think that the benefits are going to outweigh -- >> let's go through the matrix then if not then -- >> it's a small part of the big -- it's a small part, what is it, 9%? >> almost 10%, yeah. >> 10% of what we collect. >> nine and change. >> there's no doubt we have the absolute worst corporate tax system we have the worst of both worlds we make people jump through tons and tons of hoops to do so

i will point out from the left what they argue is that the statutory rate -- the effective rate is much lower >> we already talked about that with the aei guy that's the first thing i said. you'regoing to hear progressives and liberals say they don't pay that anyway and he made some -- that also is kind of a -- not an accurate way. i mean it sounds good. but the other thing, steve, most people if you poll the public think corporations don't way enough, that they should pay more so there's a lot that has to be done. >> the bigger problem is going to be if you want to get to a lower rate and have to cut out some of the loopholes to get there, there are sacred cows and there are arguments on both sides that will do this. >> but steve, with 10%, considering it's only 10%. >> right. >> i made the case that, and kudlow makes the same case, our corporations are trying to compete globally and keep jobs here we could go to zero and the guys

that are making the money from the corporations doing well, whether it's shareholders or whether it's ceos or whoever you want to talk about where it's finally filtering, tax it there. but let the -- unincomeben unene corporations. >> it's a beautiful thing, joe you should cut it and it makes sense. if you do that, by definition, you are putting the burden of the tax that you've relieved from the corporations onto the individual side. >> that's okay you heard who i said to go after. go to -- try not to tax capital necessarily. >> right, okay. >> but you can definitely get -- you can get it somewhere else. >> where are you going to get it >> individuals >> okay. which individuals? >> the rich ones >> that's fine, okay you can do that. that's the way we do it. you can reduce corporations and then you can raise it on the

wealthy, which means you basically talk about -- by the way, steve bannon was in favor of some kind of 40, 44, 45% tax on the wealthy >> you know, there's a lot of -- what did we find out romney was bragging because he paid 18% or something. >> right, right. >> you know what i mean? >> i'm at least 55, aren't you >> if you're a w-2 employee, yes, that is the exactly the levels you're talking about. >> joe, a lot of people would love to have your problem of being in your tax bracket. >> i'm not complaining >> i know, i know. >> i'm just saying that it's the real -- it's the people that bringing in -- buffett has pointed this out >> you're in favor of the buffett tax? >> i'm in favor of a big ole wealth tax of about 50% on his butt. >> how did butts come into this? >> because i didn't say ass.

>> do you think it's smart politics for the administration to promote a bill that doesn't exist yet? i kind of get it the president yesterday, we'll talk to the treasury secretary today. but there's no numbers to debate what they're trying to do is to get the support. >> you have to understand that there are a lot of players that have to be brought on board. i think he made a great point when he said, look, i'm going to be working with congress, we're going to be working to do this but the next point out of his mouth was and congress better not disappoint me again. i think if you're going to come across with conciliatory, we're going to be working together, it's hard to come back with the don't let me down. >> that's how they did health care and it didn't work very well. >> right which is why maybe a kinder, gentler -- >> well, but most -- right and i don't mean the tenor of it, i meant more the process of it in the sense that if they did -- a lot of other

administrations have put together a package. >> and leading saying here's my plan, do it. >> it didn't work so well with health care. maybe they should come with a package from the administration, but perhaps this process of working with the congressional leaders can yield a meaningful tax reform package >> i'm going to need you, steve. >> i'm with you, joe i mean, look, the economics of it makes sense the politics of it are crazy. >> i'll take care of this side of the aisle i need you from the oar side to make it bipartisan coming up a check on the markets. and then a georgia brewery hey, i cop to it, at least i'm conservative people have different opinions switching operations from making beer to canning water in an effort to help hurricane harvey victims. we'll hear from an anheuser-busch brew master after this qoññ:é@d@úú@=

welcome back, everybody. it is the last trading day of the month, august 31st we are focusing on than countdown to the jobs numbers that come out tomorrow let's talk more about the broader markets right now. joining us is matt toms, chief investment officer at voya investment management which manages $134 billion in fixed

income assets. and on set with us is steve wood, the chief market strategist at russell investments and has more than $277 billion in assets under management gentlemen, welcome to both of you. steve, there have been a lot of different things that have been competing for attention when it comes to the markets many of them bad headlines when you look at the geopolitical situation, when you look at even the natural disasters that are happening here and yet the trend for stocks has been up and up and up what's driving it and what do you pay attention to >> we tend to focus on the fundamentals a lot of things can hit markets in terms of headlines, geopolitical, weather, as you mentioned. i think a lot of the policy debates are important at the edges. but we look at what's driving sentiment and valuations we see the u.s. economy at 2.5% gdp. i don't think it's 3% world i think it's 2% world. >> but that's not bad, right >> that's not bad but it's not going to hit 3%. you've got an economic cycle in the u.s. which is mediocre in

its later stage. we think that the sentiment is really strong right now that's keeping markets ahead certainly on the equity side but we think valuations continue to be medium to longer term and increasingly important constraint on a globally diversified -- >> so are you telling people to invest or not? >> we are getting long in the tooth in the economic cycle and in the sentiment and in the valuations in the u.s. equity space. but if you're global in nature and multi asset in your strategy, you don't have to make these country-biased decisions europe as pulled back a little bit. if we get some accommodation from the ecb, which i think we will, there could be some valuation tailwind there. >> even though the dollar has been so weak against the uro if you're a u.s. investor, you have to think about the currency impact, not to mention what that means for your stock prices. >> but that's one of those shorter term boy and the elements. >> so you don't think the weak dollar is going to last. >> i think the weaker dollar i think will stabilize i don't think you're going to

get as much of a dollar kicker into earnings coming in the third and into the fourth quarter which normalizes next year again so it's not a negative u.s. picture. eight and a half year, pushing nine year run u.s. equities. just be planful, be deliberate and disciplined and be multi asset. it's global fixed. so i would take a total asset picture. >> matt, let's talk about the fixed at ses strsset strategies. we see the ten-year hitting 2.1%. >> the opportunities of fixed income have been more global but speaking more directly to the u.s. bond market, we look at the ten-year as a predictor of the terminal fed funds rate. the market is saying 2 to 2.5 is going to be enough right now you want to bias towards higher quality income and don't look for outside

gains. >> so you're talking corporate bonds, high quality corporate bonds with a global focus? >> that's correct. higher in quality at this point in cycle look for volatility infused from central bank balance sheet unwinds to use as an opportunity to use some dry powder now is not the time to be aggressive, it's the time to wait for volatility into the fall ultimately the up wind of the ecb balance sheet in 2018 will provide a bigger opportunity. >> you think we will get volatility this fall people that have been waiting and waiting and waiting to see what happens, you think this fall is when the markets get spooked by actions they're seeing from central banks? >> we do we think the flow effect of central banks supresses volatility we'll see the unwind of that >> matt, steve, i want to thank you both for being here today. great to see you. >> thank you. >> thank you. when we come back, stop brewing and start canning water. we will hear from an anheuser-busch brew master about

efforts to help the victims of harvey that's coming right after the break. "squawk box" will be right back. , 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.

welcome back, everybody. general electric is planning significant job cuts according to a reuters report. it is said to be part of an effort pby the new ceo to reduce costs and improve profits.

costco is up by 1.3% this morning. dollar general reporting quarterly profit of $1.10 a share, a penny above estimates revenue beating forecast it beat the consensus forecast but still down 2.5%. when it comes to disaster relief after events like hurricane harvey, companies with well established distribution networks are among those best positioned to help those who need it. sarah schilling is the brew master at the anheuser-busch brewery in cartersville, georgia, which has switched over from beer to emergency drinking water production you're the only anheuser-busch brewery that still does it and you do it regularly during the year a couple of -- two, three times for just this purpose. but now when this happens, you're going to do it in an

unscheduled time for just what happened in texas? >> yes, correct. periodically throughout the year we pause our operations for the one particular can line, which is the only line in our system that has the capabilities on our brewing side to produce clean, pure drinking water. typically it takes a week worth of preparation in order to have high quality and clean, pure drinking water available as we switch that operation and work through the conversions. we've already shipped eight truckloads now of emergency relief dripinking water that we keep locally on site and using our distribution network and the partnership of our beer distributors and wholesalers to get the product out as a donation to the red cross and distributed by them when there is a time of crisis. so we have it here, we can ship it at moment's notice and it can be available for distribution. as we ship these eight truckloads of over 400,000 cans of emergency relief drinking water to red cross facilities around texas and louisiana,

we've depleted our stock so we are going to be running again this monday. >> it takes a week, which people -- when i read that, i was like, wow, because it's from the very beginning of production all the way to the canning an everything else. it's totally different it's almost like -- it's not really retrofitting, but it's a big job. takes a long time. you're totally changing what the brewery does. >> yeah. so on this one can line there will be specific conversions to bow sure we're routing that specific package we have to go through a complete cleaning procedure for the preparation and then also quality testing to ensure that we have things set up for clean drinking water. >> you test -- every day you're testing the beer or the water, right? but you test the water too >> yes, as part of my daily responsibilities, yes, i have sensory analysis and we have an on-site lab. then for this water production we actually send samples of our

water to an off-site lab internal to our company to ensure that we have declared levels of analysis and that it is clean, pure drinking water. our normal business is making beer so the water that we use here in the cartersville, georgia, area is really awesome drinking water, which is why we are where we are, but there's a few more tests that go into making sure that what we put in the can is of the highest quality and purity and that it's shelf life stable for up to a year. >> 76 million cans have been distributed, donated since 1988. that's pretty amazing. you think about -- you helped flint, right you helped flint, michigan, in 2016 you may have -- i read here also during the wildfires out in california so this is -- this is not harvey inspired i mean that just made you take an extra couple of water runs really you do this all the time anyway.

>> yes this is something that we do every year you know, as you noted, some recent donations also include hurricane matthew, flooding victims in the midwest and often we've responded to wildfire crises in the western states but we're very proud of this long-term partnership with the american red cross and we're also proud to say that this is really important and near and dear to all of us in a big way we have over 1100 employees that are in the houston area that are also affected by this. so we care about the communities where our consumers are and do business and we're also especially attached to the houston area right now because of the operations that we have there. >> well, never make light of this as all, but, you know, for the first responders and a lot of the volunteers, maybe, you know, just a couple of cases of beer could go along with the water once in a while. you might just think about that. >> yeah, you know, the houston

brewery is still safe. however, the distribution network in and out has been halted, so i'm sure that they'll have a backlog of trucks ready to go when they're back up and running. >> there's a time and place for some beer too in addition for water but thanks for what you do, sarah. >> thank you. >> there's been an amazingly small amount of looting in houston given the conditions that are there the one place that did get broken into was a liquor store. coming up we'll be back with the president of the university of houston ade. fidelity's active trader pro can help you find smarter entry and exit points and can help protect your potential profits. fidelity -- where smarter investors will always be.

new this morning, damage from hurricane harvey sparking multiple explosions at a chemical plant a live report from texas is straight ahead. the push for a tax overhaul. president trump turns up the heat on congress. >> and i don't want to be disappointed by congress, do you understand me? >> new york representative joe crowley will join us. >> uber's new ceo lays out a road map for the company including a potential ipo. the final hour of "squawk box" begins right now >> announcer: 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, live from the nasdaq market site in times square. i'm joe kern enaloen along with quick. andrew is off today. futures have been up for most of the morning. not gangbusters but 30 on the dow, just 3 on the s&p, nasdaq up 7 the dollar, if you're looking at the euro, has not continued to plummet, i guess you'd say we were at 120 for the year and we are at 1.18 today the point has also been strong the main pipeline carrying fuel from texas to the east coast is temporarily shut down due to harvey colonial pipelines, the biggest fuel transporter in the nation, it has gasoline and diesel, also jet fuel, so all those affected here are -- here is the energy

complex. you can see at the very bottom, another 5% move, 5.5% in rbob gas for september delivery. among today's top corporate stories, general electric is planning significant job cuts. that's according to a reuters report it said to be part of an effort by the new ceo to reduce costs and boost profits. campbell's soup company missed estimates on both the bottom and top lines and calling conditions in the food industry challenging. jm smucker and hormel did also in their most recent reports. workday, the maker of human resources software, earning 24 cents a share for the first quarter. that beat street expectations by 9 cents. also raising it's full year forecast as more companies are signing up for subscriptions that stock is up by 24 cents. uber's new ceo is making headlines at an all hands on deck meeting in san francisco. he said he believes uber should be public, and that we could see

within 18 to 36 months as far as an ipo timeline. the ride-sharing company reportedly has a valuation of $68 valuation. he said his plan for uber makes it a priority to, in his words, pay the bills. an uber board member, arianna huffington, tweeting this photo saying a special selfie at the end of a special all hands the tweet said that chosrowshahi will officially take the helm on tuesday. >> the picture we were showing was just -- >> no, we photo shopped him in there. >> travis? no that's huge if you see the entire picture and see them all there. we'll see if that's how it actually plays out, if they can all work together on this, but that'sage for the start of this. >> are you sure? >> i'm pretty sure we didn't photo shop this, yes. >> itlooks real.

he's in front, though. in the meantime we're following the deadly storm that's been hitting the gulf coast. here's what we know at this hour harvey weakening to a tropical depression last night. harvey dumped a total of 50 inches of rain on houston. in a news conference this morning, fema officials say they will begin the process of moving storm victims from shelters to hotel rooms. they have already received 325,000 registrations for fema assistance and they have paid out $57 million, which is obviously just the beginning of what this is going to cost also a developing story out of texas, all the flooding from hurricane harvey sparking a fire at a chemical factory in crosby, texas. that's just about 25 miles northeast of houston that's where we find scott cohen who has been standing by monitoring the situation and he joins us now scott. >> reporter: hi, becky we just finished listening to a news conference from the harris county sheriff and fire marshal that may set some minds at ease about this

we have been reporting and the company, arkema characterized these as explosions at this chemical plant the officials here are taking pains to say they were not explosions but something more along the lines of containers under pressure that popped, that created a small fire and that is what is supposed to happen so what we are told also is that as part of the whole protocol for all of this, when arkema lost power at its plant, and these peroxide compounds need to be kept cool in order to prevent any sorts of explosions, popping or fire or whatever, they moved all of the containers into essentially refrigerated trucks. there are nine trucks. three of them lost refrigerat n refrigeration. in one of those trucks, a couple of the containers popped that created this fire and some smoke or substance that was released into the air. some of the deputies reported some irritation, but they say that this chemical is not toxic.

nonetheless, they have evacuated about a one and a half mile radius around the plant as this continues to play itself out because as they lose refrigeration, these chemicals heat up and the inevitable result is that the pressure builds and they pop or explode or whatever and that is expected in all cases to create some fire the deputy fire marshal telling us that all of this they were prepared for >> right now everything is going according to what we thought was going to happen so far and we're in a defensive posture. >> reporter: so there you go they are continuing to monitor this really the only thing that they can do is let this play out as far as all of these containers are concerned. and when they catch fire, they burn out and the danger subsides so what may be happening here as opposed to the great crisis that it sounded like is one of the many sort of mini disasters that

play out within this disaster, multiply that by thousands and thousands across the gulf coast and you get a sense of what they're dealing with in the wake of harvey. >> scott, that is a much better scenario than i had been imagining just from the news reports i had been hearing last night and this morning i was thinking it was more akin to a mini fukushima type situation. >> it sounded a lot more dire than it apparently is. >> do they have any idea about how long this will continue? if you have three trucks that have lost refrigeration, does that play out over a matter of hours, over a matter of days and what about the three trucks that are still running, are those okay >> reporter: there's a total of nine trucks so six trucks are still running. they don't know how much fuel they still have in order to keep the refrigeration going. obviously the hope is that they can get power back and have some refrigeration the normal way, maybe get these containers back into the plant but barring that, there's about 36,000 pounds of these peroxide

compounds that are out in these trucks and if they heat up, if they lose refrigeration, the pressure builds because that's -- you know, their chemical composition and this is the inevitable result so all they can do at this point is sit back and watch, hope they get some actual powered refrigeration back and the water goes back around the plant they got some six feet of water in the plant obviously that's the root cause. >> yeah, it sounds like a situation they'll probably have to let it all play out just for the safety of the workers. nobody will go near this until they have better hands around it but great news to hear that this is not anything as dire as we had initially expected on this scott, thank you so much. >> reporter: sure. harvey disrupting, of course, more than 70,000 students at the university of houston. it has four different campuses there. the state university has roughly $6 billion in terms of an impact on the greater houston economy joining us right now is the

university of houston assistant chancellor she's also a former member of the dallas reserve board can you tell us about what's happened to the university system right now >> thank you very much yes, we have eight locations, four universities, and we have suffered minor damage. some of the universities have had flooding and some leakage, so it's really devastating on our people, though they have lost their homes, many have lost their cars, many have been traumatized and we are trying to help as much as possible, but we are ready to go and resume classes on tuesday, at least on most of the campuses. >> what about the students who have been there, have they been displaced as well, any of them >> from one of our campus, which is victoria, they were directly in the eye of the storm and we had those students come to the main campus in houston, 2,500 students stayed in the residence

halls, they are okay but many of our students are spread around all over the city in greater houston and we have been in constant communication with them. many have lost their homes, their cars, many are in shelters and we are doing everything to reach out to them, to provide them relief, give them flexibility and make sure they understand we are a family and we are in it together. >> you know, yesterday we spoke about the former president of tulane, who was the president of tulane when hurricane katrina hit in new orleans, and that was -- sounded like a much more dire situation they were forced to close school for an entire semester it sounds although people are struggling and it will bow a great hardship for many people, it sounds like you are in a much better position than that, correct? >> yes, that is very true. the infrastructure is intact most buildings on the main campus that i toured yesterday myself, some have minor flooding, some leakage, but i think most are in good shape

our online system is in good shape. and you prepare your emergency plan for these kinds of things you wish and hope that you never have to use them, but i'm glad we have it and we are going to execute it and i think we should be okay. we'll provide as much flexibility as possible. we'll keep on communicating. compassion is the most important thing right now. we have guidance counselors, mental health counselors standing by. we have staff that are already helping people we have a special e-mail as well as a portal so that students can reach out with their very individual questions and ask for help so we are doing everything possible we have to get up on our feet, you know, and start building this community and this city it's a very resilient town what i have seen is absolutely heart warming here. >> there have been some heroic

efforts. >> people have stood in line to volunteer. >> it's been amazing to watch and see some of those efforts at relief and recovery. it's been wonderful to see but obviously this is going to have an impact for quite some time to come you are a former member of the dallas federal reserve board what do you see in terms of the economic impact? what would you be telling the board right now if you were advising them on any of this >> well, you know, everybody knows that economy has taken a hit with so many people displaced and so many businesses shut down, it's going to have a long-term recovery on the economy of houston and we know that however, i think the most important thing is now at this point to pick up the pieces and start rebuilding, start helping each other this city is so resilient, what an incredible can-do spirit here

it's overwhelming, the stories of how people are helping one another. we'll be fine. it will take time. it will definitely take a lot of hard work. but we'll be fine. >> thank you very much for your time today, we appreciate it we will be watching. >> thank you coming up, president trump giving a major speech on tax reform in the heartland, and he's putting congress in the hot seat up next, we'll talk to new york congressman joe crowley about the road to reform and then later as far as democrats it is totally blocked but we'll talk to him. why jim paulson says there's no break for the stock market, at least right now he will join us at 8:30 a.m. eastern time stay tuned, you're watching "squawk box" on cnbc

welcome back president trump making a major tax reform speech in missouri, backed his call for slashing the u.s. corporate tax rate to 15 from 35% turned up the heat on congress >> this is our once in a generation opportunity to deliver real tax reform for

everyday hard-working americans, and i am fully committed to working with congress to get this job done. and i don't want to be disappointed by congress do you understand me do you understand? >> for more on tax reform and the debt ceiling deadline, let's bring in congressman joe crowley. i didn't know he was going to be in studio. what are you, 6'4". >> just shy of 6'5", but who's counting. >> anyway, i figured you were on a remote i was really going to grill you. >> but you're big and you're in studio, so never mind. >> i'm okay. >> so we agree on a lot of things you know the one thing to talk about, because all we're focused on is what's happening in texas, louisiana, and the gulf. one of the things, there shouldn't have been any politics probably being talked about in light of what's happening, but it was and what it was about was that a

lot of the texas politicians didn't vote for sandy relief they say it was because it was filled with pork and then you had governor christie on some radio shows or fox or something talking about it and it got very political. chairman brady of the ways and means said, you know, what is christie doing politicizing this are you still mad at texas for not -- >> well, i think it's important to point out a majority of the republicans in congress voted against the sandy aid. >> so it wasn't just texas. >> and i think that's important to point out as i said back then, we have to put aside politics and really focus on the needs of the people i look at the television screen and i see the suffering that's going on. >> exactly. >> and i think we have to respond to that. >> but was the initial sandy aid bill was there politics there? >> unbelievable politics. >> was there stuff in there that wasn't going to directly -- >> no, no. there were other smaller disasters that had taken place in the country that were one-offs and couldn't do one at a time so we put them altogether

i just think there was a lot of politics pack then being played, presidential politics unfortunately that really seeped into that whole debate i think america shines best when it responds to these disasters whether we're from new york, texas, california, kansas, wherever we are, we're americans first. i know i speak for all the folks in queens and the bronx i represent, we want to help these people who were suffering. >> so you think we need a supplemental. >> oh, sure. >> do you think that there are republicans that would stand in the way of that? >> oh, i'm sure there still are, purists who believe that unless something is fully paid for when it comes to an emergency or they may object to the fact that big government is actually helping people that seems to be an issue generally speaking for the republican party today they're so anti-government that even when government is needed to help restore order, to rebuild, they may even vote against that. >> and government -- you know, this time around so far so good. pretty good job.

>> it has responded but they're going to need more resources we know fema can get through the initial stages, but the level of damage, we don't even know what we're talking about yet. people say it's more than katrina and sandy combined i don't know what that means at that point. >> the insured losses are going to be dwarfed by the uninsured losses for both people who are there and businesses, small businesses on the ground. >> there's no question and the level of water damage and foundation damage, things we don't even know yet because the water level hasn't gone down enough to be inspected i think we'll be dealing with this for months and years ahead. i don't think we can do this all at once in all likelihood. we'll be taking steps along the way. so i do think my colleagues in washington, both democrat and republican, are going to be working together hand in hand, hand in glove, to produce for their constituency we want to be there to help them as americans they deserve that response. >> well, instead of this

complicating the debt ceiling, maybe it does go clean because people just come together a little bit maybe as it turns out, maybe -- it could never be viewed as a positive but maybe there's a silver lining. >> i do think in the end we have a responsibility as members of the government to actually pass that. >> so schumer yesterday said -- i mean he -- you know, he's -- do you like what he's doing? is he representing the democratic party the way you'd like >> chuck schumer is a quintessential new yorker. and i think we need a lot of that presence in washington today. >> tax reform is doa after what he said and you immediately said, look, and i read it and i don't know republicans say they want tax reform but all they really wanting are tax cuts for the rich you honestly believe half of the political class in this country isn't trying to help the economy or the middle class, they really just want to line the pockets of their buddies? is that really what this is

about? >> i can only go off the statement that the president issued which is a one-pager? >> what. >> not cutting corporate taxes. >> it's entirely about corporate tax cuts. >> right. >> the only way in which i can see getting a corporate tax rate of 15%, the only thing the president has talked about, is by cutting tax credits across the board, including for the middle class and the working poor in this country. >> he didn't say he was going to do that. >> there's no other way to get to 15% but do that. >> philosophically, at this point what i hear from democrats, it's going to be reconciliation >> they have already indicated -- joe, joe, three months ago i had a meeting with kevin brady. and he talked to democrats he talked to house democrats on the ways and means committee and told us we're going to be using reconciliation in the senate that means no democratic involvement at all. >> philosophically, if you were to do something that actually worked, pro growth, and this is

one of the pro growth policies, cutting corporate taxes, and let's say gdp did get out of the doldrums and start going up to 2.5% or 3%, at that point you guys are so anti-trickle down, but if you do see overall growth, isn't it possible that you could see better wage gains, better employment, better gdp and all -- isn't it possible that might work? we saw eight years when we didn't do that and we got income inequality went higher, we're stuck at 2%. >> i'm getting in here, joe. i'm going to get in here. >> they told me two minutes. >> democrats and republicans i think can both agree that the code that exists right now is unfair, it's ineequitable. >> wow, i softened you up a little. >> no, no. there's a recognition we do need to address our competitiveness. >> can we cut corporate taxes? >> i think we can but it's really to what degree can we do that look at the fact that we spent -- we get less than any other industrialized nation in terms of corporate taxes into

our coffers as a percentage of gdp. >> right. >> so this whole thing it's at 36 or 39% -- >> but if it would get us to 3% -- i've talked about going to zero you could even get -- tax the people that get the -- the shareholders, taxing -- >> the president hasn't been able to tie his own shoes at this point, let alone work with congress. >> he's wearing loafers. those new nikes that tie themselves anyway, congressman, thank you. >> thanks, joe thanks, becky. when we come back, just how short is your attention span the nfl thinkshekn ty ow we've got the details right after the break.

still to come this morning, two economic reports about to hit the tape we'll bring you those numbers and the instant reaction right after this 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 to "squawk box. i'm from the cme group and it's jobs week. yesterday we had a read on the adp number and it came out significantly better than expected as a matter of fact the last two numbers have come out pretty good we get jobless claims, we were expecting 238, we got 236, slightly better than expected. for continuing claims, we got a better than expected personal spending, plus 0.3 a little worse than expected real personal spending, plus 0.2, a little worse than expected the core pce, we were expecting a plus 0.1, we got a plus 0.1. the stocks up were 5.25.

ten-year yields were 2.14. they stayed the same the numbers will be fine for the stock market it seems the last couple of days, it seems like good numbers are okay and you're not going to expect more tightening it's probably been put on a temporary hold until they can figure out the economic impacts of the hurricane obviously back to you, becky. >> hey, jim, thanks very much. while we have you here, let's talk a little bit about tomorrow's big jobs report both the adp number and the gdp report yesterday were better than expected. how is that setting things up in terms of what traders expect for that number tomorrow >> i think they're expecting good if we look at the last five numbers, yes, two of them have been significantly disappointing, but the last two in a row have been both pretty good so of the whole data spectrum, a lot of them have been coming out wa weak but jobs numbers are pretty solid. the most important thing is we think for the time being that good numbers don't necessarily mean an aggressive fed, like i

said we were reminded last week there are significant things to worry about. in the long run, a hurricane probably increases economic activity, but in the short term it certainly doesn't but the most important part is they have to take a back seat and see what the real economic impact is before they move i think traders will like good numbers and are expecting a good number tomorrow. >> all right, jim, thank you very much. we appreciate it we'll see you soon. >> thank you, becky. in the meantime, let's get to steve liesman in washington he has more reaction to these numbers too. steve, what do you think >> yeah, a little light on the spending number, but you get a revision upward to june of 0.1%. 0.3 is a good number it was expected to be 0.4% consumers should be spending because the job numbers are doing pretty well, as jim was talking about. and the income numbers have been pretty decent. not as good as many hoped. here's the thing with the jobless claims numbers 236 is a good number we'll look for some volatility

two things happen when you have a storm like hurricane harvey. on the one hand, jobless claims can shoot up on the other hand, because of two issues, not just the flooding, but the electricity, people can't file for jobless claims a lot of the jobless claims filings essentially happen over the internet or -- you need electricity to make that happen, so that could actually depress it at the same time, you will eventually get a spike associated with it my guess is the market will look through that, understand that it's not something that's part of a longer or weakening trend that happens, affecting weakness in the economy so we'll set up for the jobs number tomorrow, guys. looking for that 180 number. i think the risk is to the upside because of that strong adp number coming in at 237. >> steve, thank you. again, we'll be watching that interview with the treasury secretary coming up in just a few hours time in the meantime, let's get back to the broader markets. joining us right now is jim paulson, chief investment strategist at the luthel group

jim, all of this stuff, what are you thinking right now we had a fairly decent month of august, historically speaking. we could even potentially end in positive territory, which is a little unusual how are you feeling about things right now? >> well, i just think we've got so much really good economic -- not only here in the united states but around the globe. china posted another good ism number, for example. this recovery is probably broader than it's ever been as far as participation it's reached mainstream in america so consumers are happy, businesses are happy, but it's also reached every corner of the globe. and until that economic momentum sets off some overheat pressures, becky, in the form of some higher inflation and the need to raise interest rates, i just don't see how the stock market won't continue to trend higher we certainly could have a pullback on geopolitical events

or seasonal calendar events, but i think the trend is still up because of the underlying economic momentum that's so good so far it's not setting off any over heat pressures. >> jim, that's a little more nuanced and a little more bullish than i think you were maybe four, five, six months ago. is that correct in assuming that >> well, i kind of -- you know, i went more defensive after woe broke through 2,000 in 2014 and then i got finally after we sold off in 2016 i got back more aggressive again i've kind of increasing low glyt more aggressive. i know this is a calendar old recovery and it certainly is i know valuations are above average and elevated but i think i'm going to stick with equities because we're in a really good sweet spot of being able to generate broad-based economic growth without creating any inflation or interest rate pressures. i think that will change and

eventually we are going to create some overheat pressures that will eventually end this recovery and end the bull market, but i think you have a risk of prematurely exiting this if we can stay -- continue to grow modestly without creating any overheat i'm not -- i wouldn't be surprised if we see 2600 this year yet on the s&p 500. and maybe we get into more inflation concerns sometime this year. >> what did he just -- >> premature exiting. >> okay, jesus, paulsen. >> what would be the canary in the coal mine? what would be the thing because people know this is long in the tooth, people know we have seen these games continue what would be the warning flag that says to you, okay, maybe it is time to get out >> it's awful hard to concentrate, becky well, the things i'm watching, becky, i'm watching for

overheat almost every recovery in post war history has ended with some semblance of overheat and i think this one will too. >> that seems so far off, jim. >> what? >> that seems so far off this time unless -- unless you can -- unless you think that 5% or 6% interest rates could actually choke things off, because it almost -- what you're talking about in the past, we didn't -- when we got overheated, interest rates had to be almost double digits. >> that's kind of his point, though. >> we're never getting back there. this could be -- how long is that going to be >> well, i've got things, joe, that tell me if we get up 3.5% to 4%, i think it will hurt the economy and it will hurt the stock market on the ten-year bond so i do think that the upside yield that hurts has come down here i'm keeping an eye on a few things i'm watching the differential between the earnings yield and the bond yield, which is still about 2.5% what i've found in the past,

since 1950, as long as the earning yield has a big buffer over the bond yield, you can raise yields and stocks go up with them. if that starts to contract more, then i'm going to get more concerned about equities i'm also watching inflation surprises, the inflation surprise index, since the late '90s, as long as that's been below zero, stocks have been okay and we're still below i'm because offing the correlation between stocks and bonds. that's been mostly positive in the last 15, 20 years. when it's turned negative what it says is that rates start to bite the stock market. every time it's turned negative we've either had a bear market or correction. people are looking at good news as good news and even though it goes up, the stock market goes up and lastly, i'd like to see a break on this momentum

right now we have rising or accelerating economic momentum, but we're also juicing it. we're juicing it with a 10% decline in the dollar since year end. we're juicing it with a 40 to 50 basis decline in long yields so until something comes up that pressures the stock market, rising yields, less liquidity, rising dollar, i just don't know what's going to stop this momentum overall so those are some of the things i'm keeping an eye on, becky. >> jim, thank you. it is great to see you it's been way too long since i've gotten to talk to you on tv, so thank you. >> you too, thanks for having me. >> he retired. >> no, no, he just switched places i've been talking to him off-air but every time he's been on, i haven't been here. >> paulsen, you said you were retiring. >> that was premature. coming up, estimating the damage a rundown of hurricane harvey's insurance impact next on "squawk box. we'll be right back.

welcome back to "squawk box," everybody. let's get over to cnbc's headquarters morgan brennan is digging through the numbers of hurricane harvey's insurance impact. while it's still early, she does have some things to tell us about. good morning. >> good morning, becky that's right, it is still very early. we're just starting to see assessors get out on the ground. the bigger number will come out in the coming days and weeks but the latest estimates of the impact of hurricane harvey, now, the risk modeling firm says economic losses, that's not the same thing as insured losses,

could total $70 to $90 billion most of that flood related with less than 10% from storm surge and wind now, about half a million flood insurance policies, which are underwritten by fema, could be affected from the storm and they are warning that this could be the largest loss event ever for the national flood insurance program. now, as of wednesday, fema had already received about 35,000 claims these are just the initial claims to put this in perspective, hurricane katrina is the biggest event on record from a flood standpoint $16 billion paid by the government on almost 168,000 claims other major events, superstorm sandy, hurricane ike and from a loss standpoint, the storms in louisiana last year. but that's just homes with this type of coverage as we've unfortunately seen before with these types of disasters, many more are not covered. as of june in harris county, which includes houston, less than 250,000 active policies or

15% were in place and 9%, that represents 9% fewer than we saw in that county just five years ago. so what does all this mean well, as great as the impact will be to the federal flood program, not to mention the billions that are expected to hit private insurers, the majority of this loss is going to be very likely uninsured, which, becky, i know you just discussed yesterday with warren buffett. this is the big focus and why it might not hit some of the insurers, but there's going to be huge economic tolls >> okay, morgan, thank you very much joining us now on the squawk news line, loretta worters, a national spokesperson for the property and casualty insurance industry what do you know so far, loretta? it's preliminary, i know, but what type of damages are you estimating >> well, yeah, it's still too early to tell. i mean certainly as has been

pointed out, katrina has been the largest loss not only from an economic standpoint, which was totaled to be about $200 billion, but from a flood perspective as well. harvey in terms of the financial aspects on the insurance industry, it will not adversely impact the industry as it's primarily a flood event. the industry has the financial capacity to pay claims from harvey, and we have over $700 billion in surplus but in terms of loss estimates, we are still waiting to hear back you know, obviously adjusters are still waiting to get into the hardest-hit areas. so we can only really put this into historical context. two of the costliest hurricanes to hit the u.s. caused damage in texas. that's hurricane ike in 2008 with a total of nearly $10 billion and hurricane rita in 2005 which cost nearly $2 billion in texas >> it's hard pr-wise, loretta,

for people to understand that great capital base that you have of almost a trillion dollars, and yet you feel like you can't insure flooding. and we know about the problems with the national program that we have. why don't -- an insurance company that insures against losses, why don't you cover flooding why can't you just make it market based, charge whatever you need to actuarially. >> because the only ones that buy flood insurance are the ones in a position to be flooded. that's what buffett said yesterday. >> oh, yeah, we cover hurricanes as long as it's not water damage. >> right well, and actually the insurance industry hasn't covered flood damage -- the program started in 1968 through the federal government because the industry felt it was too much of a risk i mean flooding happens

everywhere >> what are people supposed to do life is a risk -- >> probably -- the problem is too that you've got people who can't either afford to pay or don't want to pay the amount of money that it takes actuarially for those risks. we've seen this and that's why the government is in debt for $24 billion because they're not -- you know, it's been subsidized by the government all these years. >> and none of these people had it in houston. these weren't flood areas in houston so they weren't required to have it there. >> and there aren't any incentives to build elsewhere. >> and we keep trying and it's very frustrating for us. we keep trying to educate consumers about the importance of flood insurance it doesn't just happen in these flood-prone areas, it can happen anywhere it can happen on a mountain, because in the wintertime when you have -- when the spring comes with all the snow, you can have all kinds of damage from

that and people just seem to think i don't live near an ocean or a river, so i'm okay but sometimes you're not that far and you don't realize it. >> we're going to have to come to grips with this at some point, i guess, because i think the program is broke and it's going to get broker. is that a word i don't know loretta, thank you we've got a congressman in the district where the chemical plant is so we're going to move quick lly to there, but thanks o your time, we appreciate it. we told you earlier about the explosions at a chemical factory in crosby, texas apparently they are not quite as bad as anticipated but still it's a story of devastation that's been affecting texas, these areas in houston that plant is on the border of congressman ted poe's district he joins us on the squawk news roi line he is about ten miles away thank you for joining us, i realize how many issues you have

going on there it sounds like the worst case scenario was not what happened with the plant but obviously still a huge problem what have you heard so far >> well, of course they had the explosion early this morning of the chemical plant and it is -- some of the chemicals on the plant itself that are exploding. there may be more explosions and fires in the next few hours or days the company says they could be as long as six days away six foot of water got into the plant. it took out the power system both backup power systems went out. those are used to keep the chemical cool, the refrigeration unit wasn't working and so the chemicals get hot. they burn and they explode and that's what's occurred the plant has been evacuated as well as about two miles in diameter from the plant as well.

there's a couple of injuries, a sheriff's deputy got some fumes and he has been taken to the hospital so that's the current situation. it's going to burn itself out, according to the -- all of the experts in the area. >> sir, it's obviously just one of many issues that you and your what else have you seen and what are you dealing with right now and what do you need >> we are dealing with flooding from now from the rising creeks that flood into, or drain into the system the river someone of the rivers that go through houston. houston is flat. all the water has to go southeast of the gulf of mexico and all of that area is

flooding so riegz watsing water and we'rh rescue, almost the recovery mode right now. people are helping each other. getting their stuff out of their home ifs they can and rescuing individuals. we still have a lot of work to do it's stopped raining and we're just watching the riegz waters come up and some of them are going down. >> that's very good news and heart warming to see neighbors helping neighbors. people reaching out and making sure that they're taking care of each other it's early but what do you think you need in terms of help from the federal government. >> the federal government as i see in a role and basic infrastructure of the roads, the

bridges, we have lost sour highways and interstate system and the role is to help with infrastructure and get transportation work on our roads and highways they have other roles. immediately they're helping people, the state and local government has the first responsibility for all the costs. the federal government, fema is helping people get out of she shelters into other temporary housing such as hotels with a voucher so that's the next role of fema here in the houston area. >> congressman, thank you for your time this morning and wish you well, sir. >> thank you very much. >> when we come back, jim cramer will join us live omfr the new york stock exchange. squawk box will be right back.

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about to have the greatest rebuild in the nation's history and our president is going to lead it and that's really important. >> we do need that. >> i think our president can figure this out. look at katrina. how bad off all the governments were the first responders didn't know who to report to we had a mayor that didn't know what he was doing. fema that didn't know. contrast this with what's happened i feel good about the government including the federal government. >> said that earlier how they're doing well

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up 7.25% that you will see. >> s&p needs 12.71 months to pull even for the month of august we'll see what happens. >> make sure that you, thank you becky. >> make sure that you join us tomorrow squawk on the street is next we're live from the new york stock exchange carl has the day off let's give you a look at futures as we get ready to start trading here at the nyc.