thanks for joining me. that's it for the show. but be sure to tune in to fbn a.m., 5:00 a.m. eastern time. thank you for being and good night from new york. >> announcer: from the fox studios in new york city, this is maria bartiromo's "wall street." maria: welcome to "wall street." i'm maria bartiromo. coming up in just a moment. my interview with the home depot founder who has a new book out called "i love capitalism." later on in the program we'll look at interest rates and the fed. jim grant will join us. ken langone is a legend on wall street and the business

community. his new book "i love capitalism, an american story" includes the story of how echo founded home depot and sounds the warning that capitalism is the world's best hope. but its popularity seems to be on the decline in some circles. ken, thank you for joining us. the book is incredible. i'm so happy you wrote this book. i want you to tell the story why you decided to write this book. you had been watching bernie sanders during election season. >> i had been encouraged to write a book, and i said it's not my thing. then in early 2016 i noticed there were a lot of young people attracted by bernie sanders. and i said, oh, my gods, these kids are giving up before they

even start. like it or not, nothing is perfect, but capitalism is the way ford. look at america. look wait has done for us as a nation. do we have problems in america? income inequality. entitlements. public education is a disaster. but capitalism against everything else out there, capitalism is it. when i look at my own life what happened to me. this couldn't happen except in america. i say to my grandparents. i say thank god for coming to america grandma and grandpa. you know it, and we are a nation of immigrants. maria: we are lucky our grandparents did come to america. >> exactly. one time i asked my grandfather, have you ever been back to italy? he said no, why would i go back?

there was nothing there for me, that's why i left. mire grandfather insisted that his children speak to his grandchildren only in english. i regret that now. i wish i could speak italian. working in construction i learned a few bad words. and the biggest date year for him was memorial day when he hard with the sons of italy, and they had their caps with the lodge, and that was the biggest. he was so proud to be an american. and when world war ii came and his son and grandchildren were in the war. he was frightened, but he was so proud. maria: you were the grand marshal of the columbus day parade. >> my dad was a plumber. maria: your mother worked in a

school cafeteria. can you explain to your audience who wants to achieve success and wants to get ahead, the lessons learned. >> let me be crass. i wanted to make money. 11 or 12 years old, i would look to to see if i could deliver newspaper, and i did. i sold christmas leaves. i had two kids younger than me, they each hold the broom handle and we put the wreath on that. i remember one time i persuaded a jewish man to put a wreath in every window. he brought 8 wreaths for me for every window of his house. you know, the guy that ran the liquor store, lovely man. i made a deal.

he hire made for 50 cents a night to take the boxes that the liquor came in to where the garbage man picked them up. i found out you could sell them. i said don't pay me, let me break them down and stack them up on your back porch. when i was getting ready to go to college i was walking paths store one day and he said i want to see you. he said are you going to college? i said yes, i am. he had an envelope -- he put a dollar bill in every week. he says i hope this helps you in college. he put away the buck a week he was paying me that he didn't have to pay me. i am anything but a self-made man. there are a lot of self-made people out there -- maria: you are saying people helped you. >> hundreds. i worked my butt off. maria: take to us your

professional life. you were at nyu business school. >> it began when i was at bucknell, i used to go to the library and read the for "for "fortune" magazine. there was a man named maurice art. maurice hart said to me, i want to tell you the secrets of wall street. we have jewish firms for jewish kids. we have wasp firms for wasp firms. he said go learn about the business, find a job in even institutions.

i got a job for $82 a week at equitable life. i went to nyu at night to get an mba. i got called back into the army. i said i'm going to wall street. my partner was upset. he said these are bad times. i said no, i have got to do it. this is the time to go. crash just happened. i ended up talking myself into a job for $150 a week. that's what they were paying secretaries. i give him $150 a week. i said pay me that. by then i got a job teaching at nyu at night. my wife has been my partner every step of the way. while i was slaying dragons she was cleaning diapers and doing all the stuff mothers do.

what i can tell you is i truly believe i'm the american dream. maria: you and your wife elaine have been giving back even before you had the money you had today. where does that come from? is it because you were at one place and you got to another place and you recognized you have to help those people get a shot? what you have done for nyu, langone medical. what elaine does for animals, the veterinarian hospital. >> my father had nothing. but my father believed that you are on charitable when you sacrifice something yourself to do for others. he really believed that. i have known and elaine has known for all this money that was given away. we have given up nothing,

sacrificed nothing. when she goes to a boy's club meeting, that was type she spent reading a book or playing golf. so people reflect on the time i give because that's a sacrifice more than the money i give. the money is in the abstract. there is nothing elaine or i need or want that we haven't got. maria: i want to take a short break then fast ford to where you see growth in the world. stay with us. >> announcer: as ken langone watched over home depot his good friend jack welch was overseeing general electric. he tells maria where g.e. went wrong when "wall street" returns. so, you guys have recently started dating...

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maria: welcome back to "wall street." home depot co-founder and author of the new book "i love capitalism." what i love about you are the principles and loyalties you have. not to mention you have this marriage of 61 years and you are so loyal to each other. but you have principles to do the right thing. >> i give credit to defending my judgment and why i thought as a member of the committee that happens co-incidentally that this benefited dick. but i knew how we did it.

we had a process we followed and i knew everybody else knew and everybody else agreed. all of a sudden the sergeant schultz from mash, i could have forgotten. maria: i watched the firsthand how dick kree aired the such an event when somebody rang the opening bell. >> when dick took over there were 1,200 listings. he got 1,600 more in 7 years. maria: then there is g.e. long time board nebraska o -- le board member of g.e. >> jack built a company that was made to withstand the test of

time. maria: what happened? >> the culture first of chawl changed dramatically. there was a evident by the leader to unseat jack. jack was meticulous. he would go quarterly to every major business unit and get a complete review. who is your successor. what are you weak on, what are you strong on. it was unbelievable. and he was relentless. jack also had a great relationship with all this people. maria: when i was at cnbc i loved hearing from jack welch. he would send me a note and say good job on this, i'm glad you did this. that pushes a person ford. >> the key is to motivate people. maria: will g.e. ever come back?

>> not like it was and a whole lot smaller than it was. >> it's easy to second guess the other guy, and i don't want to do that. i think some of the strategic decisions made at general electric for horrible. asset capital allocation was a disaster. to me they got out of the financial services business at exactly the wrong time. maria: and energy. >> that was done to accommodate wall street. wall street didn't like them being in that business so they got out of that business. look what jack did with gevment capital and the enormous contribution it made to the whole game. maria: where do you find growth

right now? and where you are allocating your capital. >> i'm look at small to medium-sized companies. i can get to know them better. i can get to know management better. if you are right, one of the companies i like is first data corporation. i think they are in a sweet spot right now. i think more importantly they came through a rough patch. he kept it together. he's cleaning up the balance sheet. maria: and he's a great man. >> frank has all the time in the world to do it right and he is a great man. i think in the next five years the stock will double. if that happens, i'll get 14% on my money.

it will be difficult to get higher compounded interest on your money. i like the public storage business. i like oil and gas for developed and proven reserves only. i'm not a speculator. i love the medical field. we are living longer and the longer we live the more healthcare needs we have. maria: ken, thank you, and thank you for writing this book. my special thanks. >> announcer: the two-year treasury yield spiking this week hitting 3.1% for the first time in almost 7 years. is this cause for alarm. >> the era of lower rates is almost over.

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maria: interest rates have been rising. the 10-year treasury yield hitting 3.1% high since july 2011. jump grant, it's a pleasure to see you. this market gets so afraid of 3%. your thoughts offer where treasury yields are going. >> i'm guessing they are going higher. the interest rates tend to trend in long cycles. they decline for the better part of 35 years until july of 2016. and before that they persistently rose for 35 years.

so just maybe we are embarked on a lengthy cycle of rate rises. so they have to rise quickly. so you are not getting paid that much to lend to companies or governments. we draw in our breath, 3.1%. so old am i. i remember with it was 5%. i remember when it was 15% and up. i don't think the 3% number itself is especially frightening. but wait indicates, i think, is the era of predictably low and lower rates is perhaps over. maria: do you worry that the federal reserve blows it? this is unprecedented given the balance sheet.

>> there is a mike tyson line. everyone has a plan until they get hit. the fed has a plan. that plan is to raise its tiny federal fund rate three or four times this year. what if things don't go according to plan as sometimes happens in life. what if the emerging markets or if italy steps in front of a bus figuratively speaking and there is a euro crisis? i think that the chances are the fed is not going to follow through on its plan. the fed would like us to know it's no longer prepared to flinch in the face of a falling stock market. i think the fed would flinch in the face of a falling stock market. it's unlikely it's going to do wait stated it's going to do.

things are more in flux. maria: do you think we'll see a serious sell-off in the stock market? >> oh, yes. what these low rates have done is to flatter earnings and projections much earnings, very low interest rate, counting future cash flows. rates have allowed companies to refinance apartment advantageous rates. they allowed the leverage and flattering earnings and expanding them. but i think that particular phase of our financial cycle is ending. the bond market is going to become not a source of comfort to the stock market but rather a problem. >> how significant a sell-off would you expect in equities? >> i don't know. but i would say sell-offs are

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♪ most people come to la with big dreams. ♪ we came with big appetites. with expedia, you could book a flight, hotel, car, and activity all in one place. ♪ maria: coming up next week on the program, join me, we have a big lineup. cisco's ceo chuck robbins is joining us. join me sunday on sunday mornings futures when i speak with house intelligence committee chairman devin nunes.

and tune in week days on the fox business networks for "mornings with maria." a jam-packed program bland all week. thank you for watching. >> i'm bob massi. for 35 years, i've been practicing law and living in las vegas, ground zero for the american real-estate crisis. but it wasn't just vegas that was hit hard. lives were destroyed from coast to coast as the economy tanked. now it's a different story. the american dream is back, and nowhere is that more clear than the grand canyon state of arizona. so we headed from the strip to the desert to show you how to explore the new landscape and live the american dream. i'm gonna help real people who are facing some major problems, explain the bold plans that are changing how americans live, and take you behind the gates of properties you have to see to believe. at the end of the show, i'll give you critical tips

you need to know in the massi memo. because information is power. and the property man has got you covered. thanks for joining us. i'm bob massi, the property man. water -- it's not something most of us spend a lot of time thinking about. you may be thinking about it a lot more in the future. and whether you know it or not, well, water will have a big impact on your property and your life. the world economic forum recently declared the biggest threat facing the planet over the next decade to be a global water crisis. the un estimates that by 2030, nearly half the world population will be living in areas of what they call high water stress. >> as we've got more and more population, more and more water use, we're seeing some constraints on some of the water resources. >> here in the united states,

especially in the southwest, battles are already being fought over who gets the water and how. this impacts not just where people live but also how they live. >> going forward, we're gonna see a change in the nature of our communities, how they look, how they're landscaped, how buildings are designed. and we're going to adapt to our water situation. >> california's already more than five years into a drought, and the population of nevada and arizona -- well, they're expected to double between 2000 and 2030. >> water is precious in a desert. it's precious anywhere, but it's particularly precious in a desert. and we were using groundwater, pumping it out of the ground that had accumulated over centuries, at an alarming rate. it was an existential question. are we going to run out of groundwater at some point? and there won't be any growth or economic activity here. we're gonna find an alternative. with groundwater drying up, much of the western united states turned to the nearly 1,500-mile-long colorado river, which flows from the rocky mountains

all the way to mexico. the colorado supplies water for 30 million people. but getting the water to the people in arizona took an astounding level of engineering. >> we have this huge canal system that transports it 336 miles uphill to deliver it to communities, farmers, industries. >> the central arizona project was constructed in the 1970s and '80s. the massive system brings the water to the population centers of phoenix and tucson. >> it cost over $4 billion to build. there was a 300-mile- long excavation, several tunnels bored through mountains, siphons going under rivers. it's an engineering marvel. and you can see it from outer space. >> on average, more than 5 trillion gallons flow through the canal every year. >> what we're looking at behind me here is a map board of the system itself. it's 336 miles long, controlled by two dispatchers that are sitting behind us here. >> we have 15 pumping stations along our 300-plus-mile canal. we have to basically

pump the water uphill and then let it flow by gravity over some period of miles. >> so all these values that you're looking at are in cfs, cubic feet per second. so as you can see here, this pumping plant's doing 2,086. starts at lake havasu, goes all the way down through some mountains, underneath some riverbeds, and then it eventually ends up in tucson. >> from 1985 to 2010, central arizona project generated $1 trillion with a t, a trillion dollars over those 25 years of value for the state of arizona. when our supply becomes more expensive because of scarcity, people need to remember what it's really worth, and not just us personally, when we turn on our tap, but what it's doing for the state that we live in. >> but even the mighty colorado river is struggling. water levels in its two biggest reservoirs, lake mead and lake powell, they've been dropping fast. shortages are coming. so what does that mean for you? >> the cost of water's going up. it's becoming more expensive because there's increasing competition for water, and there's a lot of components that go into the cost of water. for example, it takes a lot of power to move water.

and so if power costs go up, water costs go up. >> water is a valuable commodity. it's undervalued. it's underpriced. the more people come here, as the drought that we've been experiencing continues, it is going to become more expensive. >> arizona's ahead of its neighbors in terms of planning for the future and ensuring that water use is considered when building homes. developers, home builders can't just build wherever. they have to follow certain rules. >> you have to go to the arizona department of water resources and demonstrate that you have sufficient water supplies for 100 years. in order to be able to sell a new house, you have to demonstrate that you've got this water supply. >> they are also stocking up to buffer against future shortages. >> we take some of our colorado river delivered through the central arizona project, and we store it underground through storage ponds. it doesn't evaporate. it's there for the future use. >> homes in america use 27.5 billion gallons of water every day, preparing food, flushing toilets and watering lawns. >> as we see buildings

go up vertically, what we're seeing is less landscaping on a per-resident basis. we're also seeing the opportunity to reuse some of the water internally. we're seeing rooftop gardens. >> there's much more consciousness in terms of individual homes. we have low-flow toilets and shower heads, desert landscaping. >> on a per-person basis, water demand is going down. new construction is more efficient than old construction. people are remodeling their homes. >> regulations were adopted that required golf courses to reduce the amount of grass that they put in when they built a new one. you now see many of these world-class championship facilities out here are a mixture of grass and desert, and they're absolutely stunningly beautiful. >> another thing people are doing is reusing gray water -- the water that comes from the washing machines or showers, not the toilet water and not necessarily kitchen sink water, but kind of that clean wastewater. but what they're doing

is they're directing it to their own property, using it for outdoor watering. >> for any new project today, the assumption is that all of the wastewater that's generated by this new community, all of it will be recycled in one way or another. you're gonna see water becoming more expensive, but you're gonna also see tremendous opportunities to use water more efficiently. >> people here are very confident and optimistic that we will be able to continue our lifestyle, our economic vitality. it may require more talk about low-flow plumbing fixtures and maybe adjusting landscaping. but i think we're in a good place. >> up next, how does the water crisis affect you? there's a lot you can learn from desert landscaping. [ woman vocalizing ] i got scar tissue there. same thing with any dent or dings on this truck. they all got a story about what happened to 'em. i could feel the barb wire was just digging into the paint.

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♪ >> welcome back. i'm bob massi, the property man. so we've heard about water becoming more scarce and more expensive. but if you own property,

at some point, you're probably gonna have to deal with landscaping. and that usually takes a lot of water. so how can you make your home beautiful but still do it in a responsible way? mike robison is the owner of sustain scape. >> we focus on plants that'll work in this environment. being that it's a desert, we want plants that will thrive off low water and be beautiful out here. >> when people buy a home or build a home, the landscaping is, like, one of the things that if they're not prepared enough, they regret after if they don't get some advice. >> get a professional. you know, spend a little bit of money to get someone that knows what they're doing. >> better to spend a little more up front than cost a lot of money back then. >> in the long run. yeah. >> we're out here in the desert of arizona. landscaping here is obviously going to be different from other regions. >> some areas would need plants that could thrive off a lot of water.

plants that thrive off a lot of water out here is not good. >> but wherever you are, you really need a landscaper who understands your particular climate and what works there. i grew up in pittsburgh, where any -- everything grows. right? >> right. yeah. but the sonoran desert's very beautiful. you know, at different times of the year, it can be blooming just as pretty as back east. if you do a correct design, you can design in plants that'll bloom throughout the year. >> now, all plants are not interchangeable. some require much more maintenance than others. you want to look for low-maintenance plants that won't need to be replanted or heavily worked on. pay attention to how the front of your property looks. we've all heard the term "curb appeal." just having a well-thought-out front yard can increase the perception and value of your home. >> you can design it to create different experiences as they come into the house, you know, a basic one or a dramatic one. >> but you can't just only pay attention to the front.

>> people should focus on spending the money where they're gonna be getting the most enjoyment out of it. patios off of courtyards or back patios can extend the house. >> here in arizona, the lifestyle is outdoor living. so figure out where you'll be spending your time. there's three patios on this property. and it was designed to be able to utilize the outdoors during the different parts of the day. there's patios on the north, which you would use in the mornings. you know, you work your way around to the south as the sun migrates throughout the property. we put in pots to bring in the color for the area. they're all plumbed and drained, uh, underground. so the water -- >> so underneath here, then... you can't just move this. >> no, you don't wanna move it. it'll break the seal. the xeriscape focuses on low-water plants, drip-irrigation system that applies water to the plant at the source. >> what xeriscape design means is saving water by using the right plants in the right groupings so that they require little to no external water. >> there's pipes underground

that distribute the water throughout the property. >> there's conduit underneath here? >> correct. everything's set up on valves, which regulate the amount of water to each plant. and you wanna group like-water plants. so trees are a group. shrubs are a group. cactus. so you can distribute the correct amount of water to each plant. >> people often get mixed up about xeriscaping. it doesn't mean just getting rid of plants. it's about using water wisely so that you're not wasting it. the xeriscape brings in the elements of the plants, you know, that'll give you the lush look or give you a nice, pretty landscape. >> gray water is something that you're going to be hearing a lot about in the future. why? because there really no reason not to be doing it. >> gray water is just water that's already been used once. so there's -- there's fixtures in your house like your shower, the laundry. that water can be reused to irrigate plants. >> obviously, this is not from your toilets or even your kitchen sink. >> here, we're standing next to a gray water tank.

the water comes out of the house into this tank and then pumps throughout the pipes underground to the landscaping. >> the most important thing -- have a plan. >> hiring the right people is kind of the right step in the direction to get what you want in the end. >> don't just randomly start doing things. it'll end up costing you more money in the future. >> if you don't have a plan to lay everything out, you could be putting trees in places, and you'd be tearing 'em out in a couple years. so then you're wasting money and going back and redoing stuff twice. >> which costs you more money. >> costs you more money in the end. >> up next, living inside a shipping container, well, it might not sound like your idea of luxury. but wait until i show you what life is like inside these tiny homes. [ woman vocalizing ] pah! that will never work.

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>> welcome back. i'm bob massi, the property man. shipping containers. they're just big boxes used to move stuff across the globe. so living inside one might not exactly be what you think of as luxury. but that could be changing. this is the front living room. >> and the idea is it's a one-bedroom space. but it's really wide open, similar to a hotel room where there's no door separating the back bedroom and the front living room. >> this is containers on grand, 16 steel former shipping containers that now form eight 740-square-foot one-bedroom, one-bathroom apartments. it's the brainchild of brian stark and wes james, architects and builders who saw these formerly discarded containers as an opportunity. >> because of the trade deficit in the united states, there's a lot of product

that comes into the u.s. from overseas. but we export very little. >> typically, shipping containers are produced in china. when they land here, 9 out of 10 times, they don't leave our shore. so we have a shipping container sitting in ports along the shoreline. >> the 16 containers have now become a sustainable-housing project on what was once the kool kar used-car lot in downtown phoenix. each of these 9,500-pound steel crates once traveled the high seas and were wasting away in california before they were salvaged. >> these containers are meant to hold 40,000 to 50,000 pounds each, be stacked 11 high and sent across the ocean. and they're incredibly over-structured for what we're using them for. we did everything we possibly could so that, when people were driving by, that it literally looked like a stack of shipping containers. we were also very keen to have the aesthetic, the blue containers that you see here. >> and what kind of work did you have to do to them? >> we actually did minimal cuts. we left most of the container intact. once we had all the underground and footings in place, we had them shipped here. and then we used a crane

to actually erect it. these aren't temporary structures. >> these are fixed to the ground. >> yeah. we built this using the ibc, which is the international building code. we actually erected this entire complex structurally in just about four hours. >> then came the plumbing, the wiring, insulation and finishing touches. >> we have a container stacked up against a conventionally built masonry core. that houses most of our mechanical plumbing and electrical infrastructure. within the core are all the bathrooms and the kitchens, leaving the containers to really be just the pure space. we really wanted an open, clean, modern interior space that contrasted against the, you know, the rough exterior. >> the bedroom, you can see, is a decent size. it's roughly 16 by 12, which is a good-sized bedroom. we have a queen bed here and then the bathroom in through this door. this is a small work space. when you have only 740 square feet, every space is important to use. and so this gives us kind of a desk and work space there. one of the things inside that we've left is the flooring.

shipping containers come with an inch-and-a-half plywood. and so you see a lot of the remnants from when they were used, when forklifts came in and dragged stuff out. >> it tells the story of the container. we didn't wanna sand it down. so we ended up putting many, many layers of epoxy on the floor to also keep the character of the shipping container. >> how well is it insulated? we actually are thicker, using closed-cell insulated foam, than we need to be to make sure we cut down on the radiant heat coming through the metal skin. >> yeah, because we're down in the scottsdale-phoenix area. obviously gets pretty hot here in the summer. now, is there air conditioning in here? >> oh, absolutely. this is a fully functioning apartment. >> the apartments, they rent for about $1,000 per month and are already quite popular. >> people seek these out because they are so novel. i think people that are interested in recycling or repurposing or even modern architecture are interested in what we've done here. >> i was kind of just looking at a bunch of just boring old cookie-cutter townhomes, apartments, houses for rent. i stumbled upon this on zillow and decided it would just -- it was too cool of an opportunity to pass up

and decided to take a chance. and so far, so good. >> we face the containers facing each other so there's a sense of communal interior space to encourage people to come outside, essentially. so far, it's been a lot of fun. i mean, everybody wants to come over and see my place. i mean, i've probably given 20 home tours. >> containers on grand is located just outside of roosevelt row, part of downtown phoenix billed as a creative, walkable arts district. >> we have a really wide spectrum of people that have contacted us interested in containers, everywhere from people wanting to put bomb shelters in their backyard to people wanting to do really luxurious modern homes. >> could you take a couple containers and sort of cut a hole in 'em and make it, like, a two- or three-bedroom? >> just -- it's just money. >> yeah. >> it's always about money, guys. >> it's just money. >> up next, time to dig into the viewer mailbag and answer some of your questions. [ woman vocalizing ] it's easy to think that all money managers are pretty much the same. test.

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my mother-in-law has had a stroke. she has cancer, a broken back, and has not been able to live in the house for two years. first of all, i'm so sorry for your mother-in-law's problems. besides the illness, she has to deal with this. it's not fair. the law, however, is on her side, tim. and she has grounds to sue the builder for breach of contract, breach of warranty, construction defect. you gotta get a good lawyer that specializes in that area. now, like many states, it does recognize these principles of law. so when you see a competent lawyer, he or she will explain what your rights are. important to understand there is a 10-year statute of limitations, meaning that you have that period of time to actually bring an action. but you have to prove that the workmanship fell below a certain standard. and it surely sounds like that happened in this case. now, here's the problem. nothing -- nothing in litigation happens quickly.

but most of the contracts that we sign when we buy a home has certain clauses in it. for example, it may have a mediation clause. it may have an arbitration clause. and what does that allow you to do? it allows you to get into litigation early on to try to resolve the problem. you also have to get, as i stated early -- earlier, a competent lawyer to handle this. the other problem we're dealing with, as i said, nothing happens quickly in litigation. find a competent lawyer. have them answer the questions. and so far as selling it, i don't think you're gonna be able to do it, my friend, because you'd have to sell it as is. and who's gonna buy that property? that's all the time we have for today. be sure to send me your property stories, questions or pictures of your property bloopers. send them to propertyman@foxnews.com. and don't forget to check us on facebook and twitter. there's also plenty more

information and videos on our website, foxnews.com/propertyman. i'll see you next week. [ woman vocalizing ]