tv Squawk Box CNBC August 28, 2017 6:00am-9:00am EDT
good morning welcome to "squawk box" here on cnbc we are live from the nasdaq market site in times square. kelly evans with joe kerr anyone, becky and andrew are off. joining us, charles campbell, we appreciate you joining us to talk through a lot of impact from hurricane harvey this morning. let's check in on u.s. equity futures. off a mixed session in overseas markets. open lower by 2.5 points it was choppy, s&p 500 trying to edge higher. let's look at the overnight session in asia. there's japan's nikkei, barely lower. hang seng is a little higher, shanghai composite making a move
another 1% in europe, the impact of the euro, now it is 1.20 >> yeah. most of it happened friday >> i can't say it was that much of a move, felt like the cap stone of a huge move it was almost a parody earlier this year. now at a buck 20 >> there's the euro, 1.193 >> it was 1.17 and change, just under 1.18, then went up to 1.20, led by a pound at some point, and all based on comments from jackson hole. >> doesn't say things are awful, i guess the implication, take it another 10% higher. >> she didn't say things were
great. >> people know all right. we'll get to texas in a minute first, an important corporate story to tell you about after a bizarre ceo search, wasn't it? finally chosen, uber has, expedia ceo dara khosrowshahi to be the next chief executive, he has been with expedia since 2005, credited with expanding the global presence. he immigrated to the united states from iran in the late '70s. he says he was the truth pick for uber he has been very inquisitive, visionary, i guess barry diller met him when there was something going on with paramount, and he was impressed with the way this gentleman was able to crunch numbers, brought him over to his shop, now here we are. and he did okay at expedia,
although it wasn't that outsized, 95 million -- his comp. would be 95 million. >> couple years ago, that was the incentive price if he stayed through 2020, which now he wouldn't >> unclear, i can't imagine that uber would be lucrative to attract him there and of course it's already richly valued, not even profitable. >> so if you come in valued at 70 in private markets, that's a lot of pressure to take it public with a valuation like that. former ceo withdrew when it became clear he didn't have enough support on the board. and what does that mean, i have decided not to pursue a leadership position or they have decided i am not pursuing a leadership position at uber. reads weird. which was it >> it is a bit like the trump stuff. >> that's what i thought
that's what i thought. >> are you leaving or pushed out. >> "new york times" says another finalist meg whitman couldn't agree on terlms wait a minute, she was talking to them? >> she gave a presentation saturday this happened in a previous job, too, had to be begged and cajoled to come along. >> corporate america, we watch corporate america, you're part of it. anything you say today, do we have to say well, he said that, but it was like spin or sort of sugar coating? can we believe you today that's all i want to know. she swore six times over -- >> but at some point, they say -- >> she said i'm not going there. >> of course but at some point. >> she made a presentation >> want to be in that position of saying we desperately want you. >> i wouldn't know >> he said he thought they were
not i think company focused enough, after everything that played out, you could believe him. again, he said he said, but dara is a rock star this is a guy that's been at expedia 12 years lately arguably they're under pressure they have home away, saw the air bnb thing coming. >> smart guy, financial type is he up to the challenges the company has in terms of dealing with key shareholder base, key constituency, existing shareholders and potential shareholders going forward, not his customers. customers don't care who the ceo is they want to get from a to b potential investors, future shareholders want to know what are you going to do for surge pricing. are you going to alienate customers, how are you going to manage >> what do you think he will do? what does that background bring to a company like uber. >> public appreciation for various stakeholder interests. >> he knows how to get a share
price. >> having managed for future expectations so he doesn't offend future -- hurricane harvey is a tropical storm, the flooding is incredible angie lassman joins us with the latest forecast. >> good morning. we're keeping an eye on harvey, continuing to be a problem for folks in southeast texas you can see what we are watching as far as radar goes still, heavy rain on it. good news, houston is not seeing heavy rain overnight we, however, are seeing plenty of torrential rain into portions of beaumont, lake charles area dealing with that as well. we continue to watch for tornado watches as well as flash flooding the flooding the big story the past couple days still tornado watch in effect later this afternoon you can see flash flood warnings from bay city, houston, galveston to portions of louisiana, lake charles area included, and we have flash
flood watches extended further out of there we watch for continued heavy rainfall in the forecast in the next couple days this is a marathon, not a sprint we continue to see over 30 plus inches in areas of houston that's two feet of rain in many spots, watching for another 15 to 20 inches of rain we will watch for officials, they have to make a hard decision to open dams, areas that haven't seen as much flooding will be watching for flooding as they continue to let water levels decrease. still much more to come on this. you'll notice rainfall amounts, record breaking in many areas, houston area all the way extending to portions of louisiana, we are watching for conditions to last the next couple days. continuing to see the flash flood warnings and watches in effect and tornado watches as well much more to come on this. back to you guys >> unbelievable. thank you. let's get to galveston crucial point for the shipping channel for port of houston.
brian sullivan joins us from there live brian? >> reporter: good morning. thank you very much. the galveston ship channel, busiest in the country remains closed port of houston which is four separate ports basically remains closed refineries that are all along there effectively remain closed. that's taken 15% of the refining capacity there's enough gasoline to last about 23 days. a lot of gasoline we get in the northeast comes from this region via colonial pipeline. right now, that pipeline is fine, they've reported no issues at all, but it is early. obviously you have the humanitarian issue nothing is more important than that from an economic perspective, this is not only a heavy oil region, gasoline region, but heavy gasoline region for us lot of people don't realize that in the northeast because a lot of this goes there to get oil refined, you need a couple of things
you need oil and people. yesterday we tried to get to some refinery areas. we got so far until the roads were blocked you may have seen images last night. we were some of the first on the scene in the morning where we are driving up 45 north toward houston, the road just stopped people were coming the wrong way on the interstate, generally a good sign something is not well up ahead and roads are flooded. most side roads are flooded, some significantly so. people were putting in boats, tried to make it up there in the afternoon, obviously that didn't work as well i bring it up not only because it is fairly dramatic, there were a lot of individual heroes, people with boats and driving buses, going to rescue people, but let's not forget to run refineries and ports, you need people if you can't get to work, if the home is underwater, you're worried about your family, there's a labor issue along with the humanitarian issue that we need not forget about. >> brian, how much refining
capacity are we talking about all together >> reporter: it is hard to know. the whole southern texas region is about 2.2 million barrels per day. that includes where jackie deangelis is in corpus christi half of that in houston area most refineries are off line i say i don't know exactly some of the companies won't give you the total. exxon shut down bay town, 560,000 barrels a day. shell, 340,000 gallons marathon with a massive refinery just over the bay from where we stand says they're not giving operational updates, basically the safety of workers is what matters. they're not being clear as to what the status is we'll try to get up there later today. starting to rain here again. this is not what this area needs, guys, more rain going to try to make it back that way through the day today, see if things are opening up or getting worse. there's nowhere for the water to
go there's a bay on one side and bayou on the other we're on galveston, on an island, and you can't get off it you get off it, the roads stop see if things change today it's tough we have it better than most people to be honest. >> brian, we'll check back shortly. brian sullivan. more on the economic and financial impact of hurricane harvey, joining us, chuck watson, hazard analysis expert and founder of anke holdings this is shaping up to be like allison in terms of water, probably worse at this point in today's dollars and severity of the event, too >> good morning. it's amazing you hear words like epic, monumental around these storms sometimes it is exaggeration i was crunching numbers and it
is hard to exaggerate. allison is a pretty good comparison, but numbers are overwhelming it was in today's dollars, probably about 12 billion. some of the model runs show harvey in the $30 billion range. it is going to blow out allison in terms of total impact >> apples to apples, allison was 12 billion back then in 1992, or are you already putting that in today's dollar >> those are adjusted 2016 dollars. >> this would be two and a half times that >> that's what it is starting to look like. there's a couple of reasons for that it is important to realize how big the area this is covering. people focus on the reports from houston area, some are pushing 30 inches, may get another 15 inches this is something like 30,000
square miles of texas getting ten inches of rain or more, all the way into austin, gauge reports over ten inches. that's a phenomenal amount of water. it has to go somewhere and where it is going are into rivers and channels and roads and houses, and so in terms of the area that's being inundated, significantly larger, plus with growth in the houston area, that's adding to it as well. it is shaping up to be just an amazing dollar value human suffering aside. >> right and we are right in the middle this is not the recovery effort, still in the rescue stage. >> oh, absolutely. in terms of estimates, all these estimates are based on the model. there's no way you can get in there to do a proper damage assessment we are running computer models which tend to be fuzzier for this kind of flood modeling,
with a normal hurricane, even 24 hours out, you can get an estimate within 10 or 15% on the damage and losses would be with this kind of event with so much flooding, suffers from what i call the trash can, fish problem. you have a minor blockage of train aj outflow can cause water to back up and flood places that wouldn't order necessarily, this case you have cars blocking drainage it is tough to get an estimate on at this stage. >> chuck, question for you now that we see so much water being the issue, does that mean national flood insurance program is on the hook to the extent, $25 billion in the red already, but isn't it the case that if this were wind mostly that caused damage, it would be a lot of private insurance, but if it is all this water, that's on the government, right? >> exactly that's going to be a huge political issue coming up. just to give you an idea, you look at historical storms,
generally in modern era since the mid 2000s, for a wind event, 50 to 60% coverage between total losses versus private insurance sector you look at allison, for instance, about 30% was covered by private insurance things like business interruption and some wind damage you look at a storm like harvey, looking at probably 25% in the private sector private sector insurance, not so good for public institutions, we are looking there at 25 billion of losses that won't be covered by private sector insurance. some will be covered by flood, but national flood insurance system is in a mess. >> yeah. where is that money going to come from, chuck is this something that washington has to put special funds aside for, they have to
find somewhere >> yeah. and there's the rub. in the current political climate, with the debt ceiling coming up and budget arguments going on, i have mixed feelings about that in one sense it could be a deadlock or excuse folks need to get past the debt ceiling, saying oh my god, natural disaster, we will be budget hawks next year. it is hard to see how that will -- there's no way doing prediction of storms is easy compared to predicting what goes on in washington, d.c. >> that was tricky enough without hurricane harvey these people need funds right away thank you for joining us >> you're welcome. >> chuck watson, founder of enki holdings for more on the hurricane impact, bring in founding partner, a lot of focus, understanding this properly, oil is input into refining
gasoline is the output what's happening with that what's the biggest impact for harvey >> i have the total of refinery outages about 2 million barrels. based on information that i have that means 2 million barrels a day less crude oil demand, why you see prices on that side of the ledger lower i think this will be a steady climb higher and higher and higher for gasoline as the realization dawns that these units aren't coming online any time soon as brian sullivan's video showed awhile ago. you can't get the people there to turn the units on typically with the hurricanes it is a glancing blow they're built to withstand category three, category four hurricanes they can handle the wind, they can handle temporary flooding, they can handle temporary power outages that come with this kind of situation they can't handle not having folks on the ground to get things restarted that's going to be the big
problem. >> it will put upward pressure on gas prices. >> it could be a slow but steady climb that becomes all of a sudden eye popping. >> how long are we talking for outages. >> there's another 20 inches of rain coming, nobody is going anywhere, any time soon. won't be able to restart in my estimation for at least another week, at least to the weekend until they can safely secure the roads and the people and get them back to some normalcy in their own lives before they can get back to the plant. from there, takes another several days for plants to come online good news there, that will be quicker than folks assume at the moment, doesn't look to me especially from video and other things i have seen that there was real damage to the refineries from the storm itself it is flooding that's the issue. >> john, how does this change the curve for gasoline and crude, short and versus further out? >> will tighten things in the
front. this will be a slow but steady, march to u.s. gasoline shortage for the eastern two-thirds of the country. it will put us back and if there's other refinery issue, fire or outage, had several of them in the past couple weeks that got gas prices higher as it is, so we're starting to get a little tight, that's going to make us more vulnerable. only good news is that come october 1st on futures board, we start trading winter blend of gasoline, more plentiful, easier to make, and not as stressed on the system, so we're at an interesting time period in that consumers may catch something of a break for awhile, but this is going to be slow and steady climb higher. >> global market, too, even though we're producers and consumers, apparently we export a lot of product, mexico, latin america could be dealing with shortages as well? >> absolutely. we're all now competing for international barrels. typically historically you could
see the northeast would probably be the best off, can get a lot of european supplies, but southeast is where the pain will be felt, as brian also mentioned, colonial pipeline and other pipelines feed out major amounts of that houston area refining product to the southeast, that's going to be impacted not real easy to get asian barrels to there or other latin america type product from there, and also, too, some of the caribbean refineries are having issues, in particular venezuela major refinery because of problems going on in the country there. >> thank you coming up, check out the markets and everything else that's happening on this monday. we'll get you up to speed on that, some of the biggest movers programming note, wednesday, warren buffett joins becky quick live in new york at 11:00 a.m. eastern on squawk alley.
anyway, "squawk box" will be right back ronoh really?g's going on at schwab. thank you clients? well jd power did just rank them highest in investor satisfaction with full service brokerage firms... again. and online equity trades are only $4.95... i mean you can't have low cost and be full service. it's impossible. it's like having your cake and eating it too. ask your broker if they offer award-winning full service and low costs. how am i going to explain this? if you don't like their answer, ask again at schwab. schwab, a modern approach to wealth management.
with chief investment strategist for fifth third bank and trading specialist for mk partners put in context storm of harvey what about the markets more broadly? >> typically these events are fleeting in terms of macro economics and market impact. this time could be different, couple things we'll be watching for. we focus on energy complex, petro chemicals, these are important part of the u.s. economic supply chain. could there be disruptions, too early to tell. the other thing to keep in mind is these kind of disruptions are inflationary, fleeting but when you have inflation expectations so well anchored, staying suppressed, despite tight labor markets and other tight conditions, could this be a break in that kind of disinflationary psychology. >> we have early earnings, today
is the day whole foods is cutting prices under new owner amazon that's pushing things the other way, that's disinflation what's key here? >> i think we are approaching the upcoming earnings season, preannouncement period had the two best earnings periods since 2011 with double digit growth, first time since 2011 that we had that. markets are looking forward. they're expecting something at the september meeting. they're not expecting another rate cut until 2018. there's 32% probability. rate increase. until 2018 only a 2% hike in december they're prepared for that. markets will look to corporate results to guide them. >> talking about earnings coming we were finishing up this last one. are you kidding me
you know, i figured it out, september is the last month of the quarter, isn't it. it neverends it is like the house of representatives. they get elected and they start campaigning. >> perpetual earnings. discounting 14% increase in earnings. >> part of that was coming off a low base of energy and that sort of thing how much is apples to apples, we jumped 15% on the year. >> large part is companies reengineering, cost cutting, and a number of the countries that they export to are accelerating, economic growth. you look at pmi from developed economies are looking better, especially in europe. >> great point, something we heard about from the imf u.s. dollar has been weak in the midst of this. supports corporate earnings. euro up huge how important is that? >> it is a tail wind for u.s. earnings we've seen that earnings tend to
fallout, dollar denominated global gdp if you have the dollar weaker, then dollar denominated global gdp goes up faster and should be sustained earnings. >> is that more important than direction of raising rates, what the fed is doing can they slow it down enough that you get concerned >> i think they would have wanted to already. so we're not overly concerned. we tend to think the dollar is range bound, at the bottom end of its range a lot of this fall has been due to declining expectations of another rate hike. there may be some tie, if you look at daily tracking of presidential approval poll that rasmussen puts out, put it next to a dollar, euro chart, you may see impact of loss of faith in the u.s. government. >> serious things to talk about. you fly in from cincinnati >> i'm chicago based. >> you're chicago based even though it is fifth third. >> i live in o'hare airport as
far as i can tell. >> how often are you in -- >> i was there last week, every couple weeks. >> gold star or skyline prices >> i go skyline. >> montgomery and ribs. >> best in the city. >> best in the city, best in the country. you're not a true cincinnati -- >> i think the twin anchors in chicago -- >> you're greasing their -- they got a mention. >> lot of guys in kansas city would take issue. >> and memphis okay thank you. >> did we cover all of the important stuff? >> no, bengals lost, nothing new, reds are 30 games below 500. but you got the cubs >> and to make matters more confusing, i am a red sox fan. >> okay. never mind coming up. rescue and relief efforts under
way. you see the nursing home shots people in waist high water this is tough to cover these things hardest areas in texas to talk about. a live update from corpus christi. plus we check in with the executive director of port of houston as residents brace for more rain. always happens when you least need it. catastrophic flooding, "squawk box" will be right back. ♪ it's been over 100 years since the first stock index was created, as a benchmark for average. yet a lot of people still build portfolios with strategies that just track the benchmarks. but investing isn't about achieving average. it's about achieving goals. and invesco believes doing that today requires the art and expertise of high-conviction investing.
translation? why invest in average? you myour joints...thing for your heart... or your digestion... so why wouldn't you take something for the most important part of you... your brain. with an ingredient originally found in jellyfish, prevagen is now the number one selling brain health supplement in drug stores nationwide. prevagen. the name to remember. and the wolf huffed like you do sometimes, grandpa? well, when you have copd, it can be hard to breathe. it can be hard to get air out, which can make it hard to get air in. so i talked to my doctor. she said... symbicort could help you breathe better, starting within 5 minutes. symbicort doesn't replace a rescue inhaler
for sudden symptoms. symbicort helps provide significant improvement of your lung function. symbicort is for copd, including chronic bronchitis and emphysema. it should not be taken more than twice a day. symbicort contains formoterol. medicines like formoterol increase the risk of death from asthma problems. symbicort may increase your risk of lung infections, osteoporosis, and some eye problems. you should tell your doctor if you have a heart condition or high blood pressure before taking it. symbicort could mean a day with better breathing. watch out, piggies! (child giggles) symbicort. breathe better starting within 5 minutes. get symbicort free for up to one year. visit saveonsymbicort.com today to learn more.
good morning u.s. equity futures are mixed, down less than a half point. on the dow-jones, indicated down about 7 nasdaq had three straight days. another one on the open. hurricane harvey downgraded to a tropical storm, but it will continue to dump rain in areas already hit by catastrophic flooding jackie deangelis joins us from corpus christi with the latest on rescue and relief efforts jackie >> reporter: good morning to you, kelly as you can see, this wind certainly hasn't quit here corpus christi held up relatively well compared to other areas in texas after being hit by the eye of the storm friday night i can tell you after visiting
other coastal towns nearby, specifically one called rockport, about 30 minutes north of here, some of the towns have been absolutely decimated. they're not necessarily underwater like houston is, but we're talking massive damage to homes, businesses, and i'm not just talking one or two buildings here or there, talking blocks that we drove by, entire blocks devastated. we spoke to one homeowner who lost his home. >> i am looking forward to some help i lost everything, i have nothing. and trying to be positive and make this a fresh start. >> reporter: so you have people in towns like these that have nowhere to go. obviously they didn't evacuate some shelters are taking them in some neighbors take them in. you also have the mayor of rockport saying if you left, don't come back, if you're here,
try to stay hunkered down. we don't want you to become part of the problem as we work on relief efforts it could take two or three weeks to restore power to a little town like rockport we have some residents wondering with houston in such grave situation, when will they get help at the same time, i will add morale is pretty high, people praying for those in houston, understanding that resources are going where they need to go now, and they're just trying to stay patient, guys. back to you. >> jackie, houston mayor came under pressure for not telling people to evacuate he said i have memories of ten years ago, ordered evacuations, people were jammed on highways, heat exhaustion, they needed rescued from there thinking about that in line of what the rockport mayor is saying, difficult to figure out if people are worse off trying to leave and stay gone or trying to stay put. >> reporter: it is such a tough call to make certainly that's been an issue in corpus christi as well. there were voluntary
evacuations, not mandatory by the mayor. corpus held up well. rockport did not at the end of the day, most people i spoke to, city officials and residents here said put your safety first the governor of texas said put your safety first, put your life first, not your property so it is always a smart decision to get out of town and see when you can come back, but certainly as this develops, as this continues to wear on for days, that's a big part of the conversation >> yeah, especially with more rain headed that way jackie, thank you for now. jackie deangelis >> reporter: sure. talk more about the economic and financial impact of hurricane harvey joining us on squawk news line, roger gunther, executive director of the port of houston. what's the current state of the port, roger? >> well, good morning. lot of us are on stand by,
waiting for this event to be over the port as far as physical facilities are public facilities, haven't received any notable damage it's just as you've seen, tremendous rain in the region. got to continue this rescue effort before we move on into recovery >> the port, you had time to lock it down it is locked down. in general, if it is not wind, if it is rain and flooding, that's something that the port is not going to be one of the primary areas where we are worried about how it is fairing. is that fair to say? >> yeah. every storm is different with ike, you recall the eye came up this channel and it is west of it, this is a different event, rain event. effect on houston ship channel
remains to be seen as far as how quickly we can recover a lot of rain coming from the water sheds, dumping tremendous amount of current into the houston ship channel, and so it's a different event. >> is anyone out gauging that now? or you're in wait and see mode until the event is over? >> yeah. it will be well planned. survey of our start with coordination by the coast guard, we have a call later this morning with the port coordination team, the community, involves the coast guard, corps of engineers, houston pilots, us as the board and industry to see where we're at you know, again, once it is time for recovery, that group will have a well organized process on how we get the channel back
open >> earlier showed us how many ships are stranded in the gulf, including some cruise ships. what happens to those people how long do you think they have supplies in order to stay out there as they try to wait for a good time to come to port? >> well, i can't speak on behalf of cruise ships. i know as far as the time, again, this is the busiest waterway in the nation we see 40 to 50 vessels each and every day and the channel has been shut a few days there will be ships ready to get in here. a lot of ships, a lot of refineries as you probably noted that are in need of feed stock, crews to produce the gasoline. we have six largest container port in the nation, seeing 20 or 30 ships a week. they're going to be trying to get in here as well. the coast guard does a great
job, coordination team establishing priorities for vessels that need in here when we're able to get back open. >> appreciate the time again this morning good luck. thank you. >> thank you coming up, uber picking ceo of expedia to be the next executive. and early uber investor in a few minutes. relief efforts in texas. former fema director michael brown joins us at 8:00 a.m. eastern. stay tuned, you're watching "squawk box" on cnbc
i think -- personal income and spending, home sales coming on thursday and then friday, that's wednesday, thursday would be claims number. okay and then we have jobs report and ism. that's the first, isn't it how is that possible. >> sometimes they bump it back >> that's going to be ready on the 1st. >> polling the week of the 12th. right? >> all right handful of companies report earnings, best buy, h and r block, campbells soup, dollar general and lululemon. president trump tweeting about trade, yesterday morning said we are in the nafta worst trade deal ever made, re-negotiation process with mexico and canada, both being very difficult, may have to terminate. the president made similar
comments at a rally in phoenix next round begins friday in mexico. president trump told new chief of staff john kelly i want tariffs and i want someone to bring me tariffs kelly's first week on the job. the president explained he had been asking for stronger trade action including tariffs for six months, but globalists in the room were resisting. the president was told they would work it out and reconvene. the big business story is uber, choosing ceo of expedia to be the next chief. we will to investor next as we come to break. quick check of what's happening in the european markets now, much stronger euro
stay with me, mr. parker. when a critical patient is far from the hospital, the hospital must come to the patient. stay with me, mr. parker. the at&t network is helping first responders connect with medical teams in near real time... stay with me, mr. parker. ...saving time when it matters most. stay with me, mrs. parker. that's the power of and. with the new sleep number 360 smart bed. it senses and automatically adjusts on both sides. the new 360 smart bed is part of our biggest sale of the year where all beds are on sale. and right now save 50% on the labor day limited edition bed.
capital that invested at $40 billion evaluation right now, if it is 70, soinds like an amazing investment that's one of the major questions hanging over the country. what is that public market valuation going to be? >> that time will tell. but the company continues to perform. that's all that we could ask them to do you look at the numbers for last quarter. they've had a lot of tumult externally in the press and they've continued to grow 100% year over year >> ed, what do you think about dara khosrowshahi about ceo? >> by all accounts he's really liked at expedia, personable and smart manager. these are big pluses for uber. they've had issues trying to figure that part out the whole process of finding a ceo was so fraught that even -- dara didn't even know he actually got the job until we started to report it out >> did he know he was in the running >> knew he was in the running. said he didn't get the official go-ahead until, you know, you saw news reports, including from
us so, that part, there are a lot of things he needs to fix in terms of operationally in terms of personnel and management and then that's not even getting into the actual businessof uber, which is they're still having a hard time signing up enough drivers to get enough concentration in certain markets that it becomes a feasible economic thing >> so, brian, are you gis comfortable with this choice as ceo? and what do you think he needs to do? >> look i think that we're super comfortable with this choice i think you look at his background, he's got deal making experience he's got financial experience through his experience as a cfo. and he's got company building experience in a nascent market, back in 2005 and built it over a 12 year period and compounded the stock price 20% year over year i love it. i think he's great we've been following his career for awhile and we're super bullish. >> one of the reports, he had a relationship with softbank which is considering a big investment
in uber but there's been all this board drama on that front how do you guys feel about a company like softbank, billions and billions to spend coming in with some sort of -- what would that mean for uber if that deal got done >> yeah i mean i think it would be great if that deal got done they're a huge pocket of capital. i think that partially it's great for the company to bring in that capital to help them expand and also, to have softbank getting their stamp of approval to your company is a good thing. they're a key player here. biggest fund in the world. >> also global fund. so i think the idea that, you know, strategically you really want to figure out their place around the world beyond the u.s because that's really where, you know, they have room to go to the u.s. but it's really international markets. >> they've already made deals for china -- >> that's the thing. they have a hard time operationally figuring out how to win in these big markets. china, russia just hasn't worked for them so they either need to figure
out in other markets where they can get a foothold or increase their share. or you know, partner with other players. and i think that's a big part of the puzzle >> what about the board drama? so now this has revealed just how much tension there is between the company's founder, between the board members, and the people who sort of backed travis kalanick and say you've taken this too far and then obviously bench mark had its own point of view on things. can dara come in and try to work something out? how should we try to affect that power structure? >> the board has to vote unanimously to bring in a new ceo. so clearly everybody is on board. everybody is excited about him and i think the company's probably just excited to move forward and have a pick that everybody's pumped about to help grow the business. and so, i think that that drama that's been unfolding in the media will go behind them. and ultimately, it's how do we look forward to continue to build the business >> represents, you know, dara is an experience manager and travis still has this idea that he's going to come back and steve jobs it, right, come back and run the company again. i think we're moving out of that
era of sort of founder managers. >> but what if they clash? >> that's -- that's a big question, right? who knows how that's going to play out i think the first -- probably the first challenge for dara is figuring out travis. how he's going to work with him. because travis is not out of the picture entirely i think he's going to be a voice. he's going to be a factor in how you manage that. it's going to be a big mark of whether there's success or not >> do you anticipate that dara will change the policy about surge pricing and not just during prime-time but during periods of terror strikes like in the united kingdom? there were reports that pricing went up 400% or 500% is that reasonable or is that something that the market can bear and therefore it's justifiable? >> look, in series -- in circumstances where there's big emergencies, things like that, certainly i wouldn't agree necessarily it was surge pricing. i think that he's done a great job at working with the supply side figuring out where the demand side is at in the ota and really sort of brought that
industry to the limelight. so to me, i think he'll do a really good job politically of managing everything properly and, maybe a little bit less brash than the company was four or five years ago. and i think that that's a good thing. that's the type of professional leader that they need. and you know, where offices go >> i wonder how much he's leaning on the table in walking away from expedia. widely reported when he signed that $95 million deal just a couple of years ago. but that's contingent on certain performance, you know, metrics being met, and him sticking around to 2020 which iwouldn't be doing >> if you do the math, well uber going to ipo, if they're worth $1 00 billion like benchmark thinks they are. >> like right now? >> they think they'll get there. they could get to $100 billion valuation. if the equity works out right for him it's probably worth more but again a lot of big ifs a lot of big hurdles to meet >> all right >> as an investor i take that a lot. >> you think they're worth $200 billion? >> sure. >> guys, thank you both.
>> thank you >> and, charles, thanks. thanks for being here. >> you're welcome. >> you're going to be replaced by someone that's like eight feet tall. wilfred frost is here. and not just tall. he's got a lot of positives. hey, wilf. coming up -- thank you want to talk to you in a second. coverage of the -- we -- >> well -- >> what is she -- >> a special place >> no -- >> i don't -- >> what is that? >> do you know what that is? >> looking down her nose >> joe, you're there i think that's the factor. >> okay, all right catastrophic flooding in texas continues. we're going to talk about the impact on insurers with jeff daley, ceo of farmers group. then later more on the disaster. former feela director michael brown will join us "squawk box" will be coming ghback olay eyes
prestige eye cream for better hydration. and your best look yet. olay eyes collection. ageless. we cut the price of trades to give investors even more value. and at $4.95, you can trade with a clear advantage. fidelity, where smarter investors will always be. it's been over 100 years since with a clear advantage. 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?
a developing story houston is under water much more rain, as you are all away unfortunately on the way complete coverage of hurricane harvey is straight ahead the energy impact. gasoline futures are spiking after the storm. and its aftermath. think about 15% of america's refinery capacity offline. plus some big corporate news this morning including uber choosing its next ceo. and a big pharma deal. the second hour of "squawk box" begins right now live from the beating heart of business, new york city, this is "squawk box." good morning welcome back to "squawk box" here on cnbc live from the
nasdaq marketsite in times square i'm wilfred frost along with joe kernen and kelly evans andrew and becky are off today we've got full team coverage of this rapidly unfolding situation in texas jackie deangelis is live in corpus christi brian sullivan is along the gulf coast in galveston, texas. let's begin with contessa brewer live in houston with the latest this morning contessa >> wilfred, good morning like so much of houston the theater district in downtown is flooded. you can see the intersection is filled with water. that's the hard rock cafe down here in the theater district and controlled releases from two houston dams are adding to the flooding concerns, as the army core of engineers decides to release them rather than risk it breaching or overtopping those dams the shelters are filling up. nearby at the convention center we already are seeing 2500 evacuees inside. and this morning, more families arriving as they escape their flooded homes. the roads here are closed. more than 250 roads in the
region shut down because of flooding and we're talking now 9 trillion gallons of water that would fill salt lake ci city -- or the great salt lake twice over at this point and more rain is coming for houston. it's a lot of nail biting right now. a lot of holding on and hoping that things will be okay, wilfred. >> all right, contessa, thank you. we'll obviously check back in with you contessa brewer is in houston. gasoline futures are spiking as harvey takes 15% of america's refinery capacity offline. jackie deangelis is live in corpus christi this morning. jackie >> good morning to you, kelly. that's right here in corpus christi people are trying to deal with the damage suffered from the eye of the storm that came over the weekend. obviously, corpus christi is one of the refinery hubs on the coastal region but we know that three refineries here have been shut down and some of the refineries in houston, and other areas, as well in terms of capacity, you're talking about a little bit less than 50% of the american
refining capacity here right now the estimates that about 2 million barrels are potentially offline. the issue right now is the flooding in houston but also the damage that we sustained here in corpus christi the power outages, as well, to run those refineries the second piece of the story is the port shut down corpus christi's port has been shut down since friday. the next piece of it, of course, is if the pipelines are going to be operational to be able to move around some of the supplies that are potentially in storage. there are a lot of moving parts to the oil and energy story here and we're watching them all very closely for you. back to you. >> thank you appreciate that. be safe. the texas ports play a major part in the u.s. economy brian sullivan is along the gulf coast, he is in galveston. good morning again, brian. >> hey, joe, good morning. i know you guys spoke with the port of houston commissioner earlier today. i think the timetable of when
they're going to open up is really now the big question. you can see it just started to rain again that is not what they need there's an aspect to the ports which is very important. which is not only the rain, so you think well the rain elevates water, and that should be good no because what the hurricane did is also bring in a lot of dirt and silt, which means the bottom comes un, which means in some cases, will they be able to get the same type of ship in we showed earlier, there are tens, maybe hundreds of tankers, freighters, container ships, that are off the coast they're all waiting to get through the very narrow channel which is actually less than a mile from where we're standing right now. the galveston ship channel and it's the busiest in the united states you go through there and opens up, guys, and there's four separate ports inside what we refer to as the part of houston. a lot of those are refineries. to jackie's point, a lot of those refineries are shut down i'll offer a slightly different view on gasoline i know gasoline futures, guys, are rising this morning.
but the one thing i've been already going back to talk with a few traders this morning what they remind me is basically everything around here is shut down schools, no one's going to go to work, probably for days, maybe for longer that is going to crush demand in this region. so there's actually a situation where we could see a buildup in gasoline, because demand is just going to stop for the most part, but of course, then as those refineries shutdowns continue we could see a swing. so in the short-term, it's anybody's guess. the real question now, aside from the obvious humanitarian side, which is the biggest side, is how long will these refineries be shut down? and hurricane ike in 2008, some of them were shut down for weeks. or more than a month and bay town is the one we're going to watch, that's exxon's 560,000 barrel a day facility. we're going to try to creep our way closer to that as we go throughout the day here. you can see it's raining again not what this area needs not what anybody needs
>> i think at the moment, 15% of refining capacity is shut down is it possible that number could rise depending on the path of the storm from here? >> yes, indeed, wilfred, two things to keep in mind about that number one, we say about 15. we don't know. some of the refining companies like marathon petroleum which has a huge facility. i can see it over there, won't say what they're status is they say for security reasons we don't say what the operational condition is we assume it's impacted. but again we don't know. so we can't put a finger on it and then to your point about the weather, going east of here to port arthur and beaumont, texas, which is where sort of the tail of the storm is now tracking, i'm playing meteorologist right now i guess, there's four huge refineries there, including the biggest in the united states, which is saudi aramco's 600,000 barrel a day facility. a lot of rain over there it's a flat area it's not used to getting a lot of rain. so that's another part of the story that we got to watch
but guys, to your point, just all sort of unfolding. i wish i had more specifics. but we don't know, because people can't even get to the facility to inspect them because all the roads around them are closed >> brian, earlier, john killup mentioned that the southeast could have some interesting problems if all of a sudden -- you mention the gasoline demand in houston might be down but it might not in places like atlanta which are not having impact. they still need the product that would have come from the houston area, they might potentially face higher costs and more of a blowback >> they certainly might. and listen, i hope all the gasoline station owners out there, don't gouge okay because you can look at the wholesale prices and you know what they're paying. the colonial pipeline, that is a major pipeline that takes gas and refined products like airplane fuel from here, all the way through georgia and back up to the east coast. that's huge. watch for updates on the colonial i'm sure we'll have them for you on cnbc all day today and the next couple of days. according to the government
there's about 23 days of gasoline and supply right now. so there's a good amount of gasoline which is three days more than there was ahead of katrina. so there's gasoline -- plenty of gasoline now again, goes back to my earlier point. how long will all the refineries, 2 million barrels a day of capacity in and around where we're standing right now, how long will that be offline? how much will demand drop? and then of course, when the recovery efforts begin, you're going to see gasoline demand likely spike, schools open, work opens and then you've got to bring in all the ships all of a sudden we'll see demand go like this and then go like this depends how long the refineries are offline. >> all right, brian. we're going to move ahead to the eventual recovery and talk about that although we're not obviously there yet. once harvey does pass organizations large and small are going to need to begin the restoration process. joining us now is sheldon yellen the ceo of disaster recovery
firm and just to put a finer point on it, sheldon, you will, for your clients, you move people, supplies, and technology to sites immediately after the danger passes. and i guess this starts before the storm even hit in texas, you've got 169 people there now with another 200 ready to go the minute it passes is that -- have i got that right? >> well, we have seven permanent offices in texas every day of the year. bellefour presently as we operate in 34 countries and have 7700 people around the world, 169 of our people are located in texas each and every day two days ago we sent in 209 more people >> okay. >> and yesterday we dispatched another 200 people headed to our waco, texas, office. and as of last night, we have finally arrived on site in the corpus christi area to some of
our prequalified clients and we're already beginning restoration processes. again, tracting water, preve preventing mold and mill drew from growing and we have an additional 206 people standing by that should be dispatched throughout another 42 belfor offices throughout the country in the next 48 hours >> and, you've got mostly commercial clients you've got 900 affected in the area, do you think how many other belfors are there? you're just a part of this whole process, i guess, and normally what you're there, two, almost two years, or a year and a half after the event, you're still there, belfor is still active 20 months after >> right and as i've said before i've been doing this 33 years, and been to a lot of the storms that you guys have referred to on your show previously once the storm passes and the restoration process gets everybody back to ground zero,
then we have the reconstruction process. and our people will be on site anywhere from one year to a year and a half, two years, to complete all projects that we're responsible for. some of the other things that, you know, we talked about, we have to move logistically all of the support items, and we have 42 tractor trailers of equipment there. we have a tractor trailer of washers and dryers so when our men and women are sleeping at night their clothes are being washed and we have generators on these trailers so that they can work again in clean clothing the next day. we have tractor trailers of water and food and of course all the life safety issues, and we send in a whole logistical team to support our people and one of the first things we need to do is also make sure that we can secure, restore the hotels that we'll be staying in so that our people have somewhere to sleep while they're working every day.
and as we are working on the ports, and working in hotels, we start to logistically spread out further over the lay of the land as this storm languishes and then moves on to the northeast a little bit >> so what are the potential negative wild cards that you watch out for from here that could make the fallout of this a lot worse than you currently expect >> i think as you guys have reported, so well, the flooding is really coming as a surprise to a lot of people in that nobody was prepared for this type of rainfall so when the power is out and you've got downed power lines, and water everywhere, there are huge life safety issues, and the reports we're getting from our people on the ground that are out and about, with authorities, the need to alert people as to where they can go and where they can't go some of these power lines are live some are not so i think the immediate concern
is making sure that people do listen to the authorities, stay in place, and do not travel out on your own without somebody directing you as to where it's safe to drive, or not. >> and sheldon, as you already discussed with joe you've got a lot of corporate clients in the area how long is your best guess at the moment how long until the texas economy, the houston economy, and these areas is back up to full speed again >> i think you're going to see that as soon as the rain moves on, and the waters can begin to recede, the efforts are going to accelerate exponentially i would guess that in two to three weeks you'll see a lot of power being restored probably four to five weeks, the majority of it and i think you'll see a lot of work and effort going on over the next 30 to 60 days, and people will start to return to their communities, we will aggressively approach the schools, and the retail trades so that stores can open up and begin supplying people with
their needs again. as you just recently reported. gas is an issue once people return in fact, we have seven of our own tanker trucks down there with security because it's a highly sought after commodity in the area where there's no gas services, no electricity to pump but i think you'll see significant progress in 60 days. but the lingering effects will take up to a year, year and a half to complete a lot of this work that's going to have to be done but these communities will come back peems lives will be restored and each and every day people -- >> we've got the fema administrator speaking here. i hate to cut you off. thank you very much, and thank you for what you're doing as well fema administrator, brock long beginning a new conference fema headquarters in washington. let's listen -- >> administrator brock long, the national weather service
director, and also joining to take questions will be the commandant of the u.s. coast guard. and the secretary of -- sorry health and human services. again, the first three speakers will provide opening remarks, and then we'll open up to your questions. just to let you know in advance, administrator long will be immediately heading from here to make his way down to texas, so we should end promptly at 7:45 to allow him to get to his airplane to make it down to texas. and with that, i will bring out our speakers thank you. >> good morning, everyone. thank you for joining us at fema headquarters today, home of the national response coordination center i know everyone in this room, and on the president's team, has been moved by the images and
stories of people who are suffering in texas we want to make sure you all know that we are working right now to provide assistance as quickly as we can. right now, we are focused on rescue operations, and will move into recovery operations later in the week. but today we are deeply concerned with those in houston, and surrounding areas, who are stranded and in need of immediate assistance people need help and we are working to provide it. while the hurricane force winds have diminished, i want to stress that we are not out of the woods yet. not by a long shot harvey is still a dangerous and historic storm according to the national weather service, who you will hear from shortly, rainfall amounts, as much as two feet, have occurred in the houston metro area, and life-threatening flooding will occur over a large portion of south and south
central and southeast texas in the coming days. rivers won't crest until later this week. it is vitally important for those in texas and louisiana to monitor your local radio and tv stations for updated emergency information, and as always, listen to the direction of your local officials. if you are in the affected areas, we're asking that you please only call 911 if you have immediate need for medical attention for evacuation assistance if local officials deem it safe, please take time to check on your neighbors and friends, particularly the elderly, who may need assistance. the department, through fema, has been working in close coordination with the state and local officials throughout the region for many days in preparing for hurricane harvey and under the president's direction, we have made every resource available to respond to
this historic storm. the partnership at every level of government has been exceptional. and i want to thank governor abbott, and governor edwards, for all they have done we understand that there are challenges before us, particularly in houston, but we are committed to getting the resources, local officials need as soon as possible. finally, i'd like to thank the thousands of civil servants, first responders, and volunteers in texas and around the country including those here in d.c. at fema who have worked tirelessly throughout the weekend and will continue to carry out our response and recovery efforts over the weeks and months to come you have provided a tremendous service to your fellow americans, and we thank you. with that i'd like to turn over to fema administrator brock long to walk us through our response efforts. >> they, madam secretary emergency management is about
partnership. my goal as the emergency manager of fema, or the federal emergency management administrator is to unify the efforts of all these agencies. not only these guys here, the agency that they represent, but basically the power of the federal government what we want to do is have a unified effort down to support and give the state of texas everything they need to fill gaps, to bolster their operations, and capability they set the mission priorities. we fall in line to support those. right now, this is still an ongoing situation. we're not at recovery yet. we're thinking and planning for recovery we have recovery teams down in texas but right now this is a life safety, life sustaining mission. we're trying to bolster the efforts to do swift water rescue, search and rescue, over a huge county jurisdiction over 30 to 50 counties possibly impacted in texas. just because we see what's going
on in houston, this impact -- these impacts are not only across houston, but 50 different counties within texas, we're also going to see a tremendous amount of rainfall into southwest louisiana. we're asking citizens to still listen to their local emergency managers, county judges, or parish presidents, for life saving communication so, right now in addition to search and rescue, the next objective is to stabilize disaster survivors once we move them, we're able to extract them from different areas and rescue them. we've got to get them into shelters this shelter mission is going to be a very heavy lift we're anticipating over 30,000 people being placed in shelters temporarily to basically stabilize the situation and provide for their care next, we are already deploying essential life sustaining commodities. we have a tremendous amount of supplies in the state.
and the state is pulling our resources already to be able to put those out. it's occurring all over the state of texas through our partners at the army corps of engineers we're working to restore power so we're providing emergency generators for critical infrastructure to support things such as 911 centers, or other critical infrastructure within the state of texas finally, we're also providing emergency communications we're trying to help the state reroute 911 centers, but also making sure that we're interoperable between the federal, state and local resp d responders that are out there on the ground security is also a main concern. the state, as you know, has mobilized a huge amount of national guard but we have also, the secretary has been leaning forward, we've activated the dhs what we call homeland security activist force
as well as other dod assets that are going down right now here's what i need you to know. this helping texas overcome this disaster is going to be far greater than fema coordinating the mission of the entire federal government we need citizens to be involved. texas, this is a landmark event. we have not seen an event like this you could not draw this forecast up you could not dream this forecast up. it's been a very challenging effort for the national weather service, who's been putting out great information. we've been telling people that this is coming it's still ongoing but you couldn't draw this situation up the bottom line is, is that it's going to continue on we need the whole community, not only the federal government forces, but this is a whole community effort from all levels of government, and it's going to require the citizens getting involved so here's what i want you to know as a citizen if you're willing to help. right off the bat, we have a website www.nvoad.org.
that's nvoad own organize. nvoad.org. if you're looking to help, start there. it will have a whole host of nongovernmental and religious organizations that are seeking help, and being able to support texas. we have to make sure that donations and volunteers are managed correctly to be effective down to the state and local levels that's one way to start. underneath the president's disaster declaration, we have turned on what we call individual assistance programs we're expecting, you know, based on this event over 450,000 potential registers of disaster victims. that is a huge number, but we are ready to go with the process. we've already processed over nearly 15,000 calls over the last 24 hours of getting citizens registered. you know, what we want to do is be able to get you in, hopefully be qualified for disaster assistance, and we'll start processing and setting up your case management to go forward there.
to do that, we would, if you have access to a website, go to disasterassistance.gov even, disasterassistance.gov if you do not have access to a website and you have a phone call 800-621-fema. 800 -- 621-fema. again, i'm asking for all citizens to get involved here. donate your money. figure out how you can get involved as we help texas find a new normal going forward after this devastating disaster right now what i would like to do is also i would like to push it over to the national weather service director >> and that is brock long, who is the administrator of fema he was confirmed in june and previously he was the director of alabama's emergency management agency. previous to that he was regional hurricane manager for fema in other words a guy with quite a bit of experience, knows what he's talking about when it comes to readiness for hurricanes. trying to direct the public to
websites to give them more information. we also heard from officials saying please only call 911 if you have a life threatening emergency as we know 911 was inundated with calls in the houston area, from folks trying to be rescued as they were stranded by a lot of the flood waters and fema runs the national flood insurance program which is in its eyeballs in debt already because of previous storms like katrina. this is going to be a huge issue for them one the federal government will probably have to act on in order to cover the cost of all this damage coming up woo he have continuing coverage of hurricane harvey including the impact on insurers farmers group ceo jeff dailey will join us live at 7:40 eastern time "squawk x"ilbeig bk.bo wl rhtac we have a question about your brokerage fees. fees? what did you have in mind? i don't know. $4.95 per trade? uhhh and i was wondering if your brokerage offers some sort of guarantee? guarantee? where we can get our fees and commissions back if we're not happy. so can you offer me what schwab is offering?
new, more reliable equipment for your home. and a new culture built around customer service. it all adds up to our most reliable network ever. one that keeps you connected to what matters most. coming up, gasoline futures spiking as harvey and its aftermath take 15% so far of america's refinery capacity offline. we'll talk about the potential impact on the economy, and the financial markets next stay tuned you're watching "squawk x.bo wait so you got rid of verizon, just like that? uh-huh. i switched to t-mobile, kept my phone-everything on it- -oh, they even paid it off! wow! yeah. it's nice that every bad decision doesn't have to be permenant!
ditch verizon. keep your phone. we'll even pay it off when you switch to america's best unlimited network. it's time for the biggest sale of the year with the new sleep number 360 smart bed. it senses your every move and automatically adjusts on both sides to keep you effortlessly comfortable. and snoring.... does your bed do that? the new 360 smart bed is part of our biggest sale of the year where all beds are on sale. and right now save 50% on the labor day limited edition bed.
welcome back to "squawk box. we just heard from the fema administrator and the acting secretary of homeland security here's what we know. the worst of the storm isn't over yet rivers, and texas aren't expected to crest until later this week. government officials are working to restore power and move victims into shelters and deliver more resources to texas. the fema director is urging citizens to get involved, and help with the relief effort. >> now to nbc meteorologist
angie with the latest weather forecast >> good news out of some of our radar pictures they continue to be showing heavy rain in some parts but houston, overnight, not seeing all of the heavy rain like they did yesterday. we continue to see the circulation of harvey moving off the gulf coast we continue to watch for the eastern side of that system to continue to sit over beaumont. we will still continue to watch for some of those heavy rains. i want you to notice why this is important. if we take a look at buffalo bayou. of course this is the bayou through the center of the city, we see over the next couple of days we're going to watch it move up to about 70. that's going to be continuing to see heavy amounts of rain falling in that area, so the flooding that we're already noticing from there, you'll notice our old record, 61 feet now we're talking about 70 feet. that's not even the peak point of the bayou as we head later into those overnight hours between tuesday and wednesday, that's when we'll watch for 71 feet notice, if we took a look at our
additional rainfall over the next couple of days, we have made it to the halfway point still more to come as we go closer to about wednesday. you can see some areas, galveston, areas of houston, still those are the hardest-hit areas and we still have more to come you know, notice upwards of 20 inches for some. right now we're talking about rainfall rates after the 8:00 a.m. hour, one to three inches per hour again, unprecedented amounts so something that we'll have to continue to watch for, but better news in the forecast as we head through the next couple of days. >> okay. thanks let's talk to gordon gordon, old friend of the show, thousands of flights were canceled over the weekend. hurricane harvey brought catastrophic flooding conditions to the southeast joining us on "squawk" news line gordon bethune, former continental airlines ceo and cnbc contributor where are you calling from >> i'm at home, joe. everything is fine here. >> do you live in houston now, gordon >> yes, yes i do i have since '94
this is obviously unprecedented, but both airports are closed today. i suspect we'll get more information later today about george bush intercontinental houston is closed until wednesday, and they evacuated people on federal airlift yesterday about 500 people but the airports are closed. >> and that's canceled flights, people at airports, not the main concern that we're thinking about gordon is it -- you've been there for the entire -- you've been there for the last three or four days, gordon >> yes, yes, i have, joe >> you were there for the main part of the rain is it raining right now at your house? and it's not to the same extent that it was? we just heard some semi good news from our weather person >> no, no it's not i just looked out the door it's been intermittent rain heavily and then stop
i am fortunate enough to live in an area that's not flood prone, so houston is such a diverse area, geographically you'll have some really severe weather, and then places like where i live now, we've got good drainage, and it's able to dissipate the accumulation >> this is going to be the worst event in texas you don't -- i guess we won't know immediately, right, gordon, and from where you are, you say you're on lie ground, you can't really tell at this point? >> well, you know, i drove around yesterday to where you can drive, so a lot of city intersections that are just inundated with water so while the street is clear, you can't cross over to the next street without stranding your car. so there are a lot of stranded cars everywhere. i'm wise enough to stay home, because it's fine here but, you know, it just depends on where you live. there are freeways completely submerged.
and then there's other areas where it's normal. and there's no hard rain coming down right at this moment but that doesn't mean it won't recur again as it has off and on over the last few days. >> gordon, you mentioned the airport closures are the airlines fully insured against this sort of event happening in terms of flight cancellations? or will they have to take some form of costs? >> well, they'll have to pay some most of the insurance, the -- this is service disruption, which means that the airport, when it's closed it's like a grocery store, you can't go there. so no one can fly in or out of george bush, or hobby airport until the airport opens again. and i understand they've got accumulated water on the runways. plus the meteorological conditions to the approach in the unstable air wouldn't be a safe maneuver in any case. >> and what about the gas price increase is that something that's going to take an effect on the airlines
>> i don't think so over the long-term. this would be a spike but it's not a double digit hit to the bottom line. but, it is obviously got to factor in the total cost but the refineries are shut down, many of them are, but there are many refineries in the world so global supplies, i think, can be brought in pretty quickly. >> gordon if you were still running continental, what would you be -- would you be on the phone constantly what would you be doing other than waiting for things to settle down and for the airports to reopen? >> well, we would be taking care of our employees and make sure that they're safe. >> in the houston area >> and that's the problem. obviously, even if the airport's open and you can't get to the airport, the pilots and the flight attendants, they're unable to access the airport, you don't resume service until all that infrastructure is available to you and that's going to take a
couple of days that's not going to happen overnight. >> well, all right, gordon, thanks we're thinking about everybody in houston and texas, obviously. we appreciate you calling in this morning thanks >> thanks, guys. nice talking to you. coming up, the economic cost of the hurricane still unknown we have some estimates when we come right back. stay tuned you're watching "squawk box" on cnbc this is a car protected from storms by an insurance company that knows the weather down to the square block. this is a diamond tracked on a blockchain - protected against fraud, theft and trafficking. this is a financial transaction secure from hacks and threats others can't see. this is a patient's medical history made secure - while still available to their doctor at their fingertips. this is an asteroid live-streamed to millions of viewers from 220 miles above earth. this is ai trained by experts in 20 industries. your industry. hello. this is not the cloud you know. this is the ibm cloud.
that's why at comcast we're continuing to make4/7. our services more reliable than ever. like technology that can update itself. an advanced fiber-network infrustructure. new, more reliable equipment for your home. and a new culture built around customer service. it all adds up to our most reliable network ever. one that keeps you connected to what matters most.
welcome back to "squawk box. gasoline futures at this hour up about 4.98 1.7496 joining us now randy grossman portfolio manager at barron funds and andres garcia myer founder and ceo of zoe financial. good morning to you both as you start with you, gasoline prices moving in a similar trend as we saw to last week judging by past examples, how long do you think that will last and do you think it's going to have an economic impact? >> very tough question even by the hour we don't know how much of an impact this will have this week clearly has a bigger impact on
gasoline prices than all prices. roughly 50% of refinery supplies affected by this, versus 5% of oil supply so, it's going to affect the everyday person more than if it was another part of the country, for sure so, hard to put this in numbers, especially i was mentioning, i have an aunt that lives in katy, texas, it's hard to compartmentalize that from an economic standpoint. i think if you look, a year, two years out, oil prices will be probably the -- if we do have an economic impact. because eventually it will translate into higher gasoline prices >> randy, in terms of the wti price, as andres said, it's lower because it's the input to the refineries, there's less demand for it at the moment. what is your view in terms of how that impacts oil praises and your view on oil prices going forward from here? >> i'm not really an oil analyst. but what we do really is look longer-term. what's interesting is when you looked at new orleans, very
similar type of storm where it moved in short and really destroyed everything and stayed there. new orleans over time, even with difficulty of what happened during the storm, really got to reconstruct and build terrific businesses so, we think that over time we're kind of hoping that the same thing will happen our hearts go out to the people now, because immediately we're in emergency situation and want everybody to be safe but we're kind of hoping, it's a beautiful city, i've been there a few times, that things will turn out okay. >> andres is this a moment, as we all know, it's an emergency situation, is it a moment where you look at buying gold? what is your position on gold, your outlook on gold >> funny you brought up gold i've done a fair amount of work on gold and the problem with gold is that it changes stripes. in some cases just a couple weeks ago there was a hedge against north korea then all of a sudden it was beating the s&p up a couple weeks, even though north korea is no longer an issue. so i don't tend to use gold as a potential hedge because frankly
i don't understand it. i don't know what it's supposed to do this week versus last week i think a well diversified portfolio is the best bet to hedge against circumstances like this >> you manage barron's discovery funds. >> yes >> what sort of special situation type investment. what are the top things you're looking at at the moment >> health care and technology are about half the portfolio we have a number of potential electronics companies. we have pharmaceutical companies. in particular we're focused on the internet optical networks is a very big theme. we own a company that builds optical connectors we also own everspin which has an interesting new memory technology which we think will enable the rapid build-out of solid state disk drives, and controllers which are critical for back end storage in the data center
>> andres in terms of the main market stories away from the storm on friday, clearly saw a big move lower in the dollar again, and move higher particularly in the euro but what's your view in terms of whether that can continue that trend, and how important is that for broader markets if we continue that soft dollar? >> i'm in the camp that the dollar is in the beginning stages of a bear cycle it had a 6.5 year bull cycle and now we're starting on the bear cycle. that has massive implications. you as an investor, that means that anything you buy abroad from a stock perspective might do better than prior years, for that reason we favor international stocks >> andres, thank you very much randy, also thank you very much. and coming up, continuing coverage of hurricane hur very including impact on insurers farmers ceo jeff dailey will join us live s to change, causing a lack of sharpness, or even trouble with recall. thankfully, the breakthrough in prevagen helps your brain and actually improves memory.
welcome back as floodwaters continue to rise in texas, insurance estimates are just beginning joining us now is jeff dailey. he's the ceo of farmers group. farmers insurance is sending out mobile claim centers on wheels across texas to handle an influx of storm related claims. thanks for joining us this morning. >> thanks for having me. >> my understanding is from your point of view, the exposure could be a lot worse the fact that so much of this is
flooding, and that this storm was quickly downgraded to a tropical storm with much lower wind levels, doesn't that mean most of the burden is going to fall on the federal government and the flood insurance program? >> kelly, that's right the typical homeowners policy does not cover floods. and the national flood association, through fema, actually provides those policies we will have a significant event for flooded vehicles as automobiles that are flooded will be covered under the automobile policies. >> that's a good point is that what those claim centers are largely for that you're rolling out across the state >> no, actually they're for really all types of claims we've already had 2200 claims reported which may not sound like a large number but given the state of power, and the people evacuated from their homes, our expectation is that that number is going to rise dramatically over the next couple of days but we're there to help our customers regardless of what claims they may have and, in fact, we're a servicing carrier for the national flood program to our adjusters will be involved in those claims as well >> you'll be plenty busy
quickly on the point about flooded vehicles, can those be salvaged and repaired or are those destroyed? >> if the water crosses a certain line in the engine, the vehicle is considered destroyed. now, because the sheet metal of the vehicle is fine, there could be good salvage on those vehicles but if the water does cross a certain line, especially with salt water, the engine's going to be destroyed. >> jeff, speaking about the national flood insurance program for a minute, since you guys do help there, how quickly can people expect some help? and how many people will be covered by this program across the region >> so, i can't answer across the region, because i'm not aware. unfortunately, the penetration of the national flood program is not huge i think we're going to find a lot of uninsured losses in this event. for our own book and business, maybe one in four of our homeowners actually sought the flood insurance program. i think you will see an awful lot of uninsured losses. i think this will rival what we saw in new orleans after katrina. >> how big were the uninsured losses in katrina?
>> i can't tell you that specifically, kelly. >> yeah, just guessing that it's going to be a number in houston big enough that, i mean, i know we're speculating here, but at some point don't you expect the federal government is going to step in with some funds to try to help these people >> oh, there's no doubt. in fact, if you go to new orleans today, you know, more than ten years past katrina, you're still seeing parts of that city rebuilt. i think houston has the possibility of being even larger than that. i think the if egg is going to be involved for a very long time >> talk to us about the role of technology, and the disaster in terms of how better prepared we can be with the advantage -- advances made in technology, the use of drugs, things like that >> we have a three mobile catastrophe buses that will deploy after this event, and they're right now in austin and dallas and we'll bring them in as soon as we get the okay from the authorities that it's safe to do so but we have mapping technology on those buses so we can tell
exactly where our insureds are, what type of coverage they have and we can deploy either our agents or an adjuster out to the seen and especially in a hurricane that can be very helpful because a lot of times the property is no longer there anymore. drones are really interesting. this will be the first catastrophe that we'll actually deploy drones. and just to give you a sense for how powerful that is, our drones can map the damages for about three houses an hour prior to this it would take an adjuster -- we could do three houses in a day. so technology is going to dramatically improve our ability to respond quickly to our customers. >> give us a broader gauge of that time frame. when do you hope that those buses will be in there the drones will be doing their work, and as you say the time frame hopefully, much reduced from past tragedies? >> so, my expectation would be we would be in there sometime tomorrow we have 80 people in texas already. we have another 320 ready to be
deployed, to define the severity of the loss. and i think once in, if this is similar to hurricane ike, which hit texas in 2008, my guess is our folks will be there for about three weeks. we actually have a city, small city that we actually deploy, almost like an army barracks that we'll set up so that we don't take hotel rooms from people that are going to need to be evacuated from their homes. the bigger issue, though, i think it's relatively easy for us as an insurer to go in, assess the damage and write the checks there is going to be a massive need for contractors in the state of texas and i think the rebuild is going to stretch, unfortunately, to years. >> all right, jeff, thanks for your time this morning >> my pleasure thank you. >> jeff dailey, the ceo of farmers. >> coming up, uber choosing a new ceo and it's not jeff immelt or meg whitman details on the dark horse pick straight ahead i can't -- i'm not -- and then later -- would you read this, please
>> i want everybody to listen up this is -- >> self-promotion? i'm not going to read this >> don't miss, not me, him, on power lunch. >> who >> joe >> joe who >> kernen. is going to join the team. starting at 1:00 p.m ai he cannot wt. >> you get a promo you get a promo for this "squawk box" will be right back. created, s 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?
i enjoy the fresher things in life.o. fresh towels. fresh soaps. and of course, tripadvisor's freshest, lowest... ...prices. so if you're anything like me... ...you'll want to check tripadvisor. we now instantly compare prices... ...from over 200 booking sites... ...to find you the lowest price... ...on the hotel you want. go on, try something fresh. tripadvisor. the latest reviews. the lowest prices.
hurricane katrina and he fears the country hasn't learned anything from that deadly storm. he'll join us live next. a quick check on energy prices crude is lower, brent a little bit higher and rbob gasinup.5ole 4%. you always pay your insurance on time. tap one little bumper, and up go your rates. what good is having insurance if you get punished for using it? news flash: nobody's perfect. for drivers with accident forgiveness, liberty mutual won't raise your rates due to your first accident. switch and you could save $782 on home and auto insurance.
i thyou never got the brakes looked at?l... oh yeah. no. at cognizant, we're helping today's leading manufacturers make things that think and do automatically. imagine that, a world of new digital products and services all working together for you. can i borrow the car when it's back? get ready, because we're helping leading companies see it- and see it through-with digital.
developing story houston, braces for more rain. millions are stranded. as the catastrophic situation unfolds in texas full coverage of hurricane harvey is straight ahead harvey's energy effect the gasoline futures spiking as the storm takes 15% of america's refinery capacity offline. plus, new this morning, gilead buys kite pharma for $11.9 billion. the details coming up as the final hour of "squawk box" begins right now live from the most powerful city in the world, new york, this is "squawk box. good morning, and welcome back to "squawk box" here on cnbc live from the nasdaq marketsite in times square, i'm joe kernen along with kelly evans and wilfred frost. andrew and becky are both off today. the futures right now, haven't seen in about a half hour or so, turned positive up 16 now on the dow. up 2 and change on the s&p
and the nasdaq is actually indicated higher after a couple of down sessions that we had late last week >> we are following fallout from hurricane harvey it's now a tropical storm. here's what we know. the worst of the storm isn't over yet rivers in texas aren't expected to crest until later this week government officials are working to restore power, move victims into shelters, and deliver more resources to texas the fema director is urging citizens to get involved and to help with the relief effort. we have full team coverage of this rapidly unfolding situation in texas contessa brewer is live in houston. brian sullivan is along the gulf coast in galveston, texas. we'll get to them shortly. >> brian sullivan there, as he's taking a look at the economic impact of hurricane harvey hello again, brian >> good morning, joe yeah, listen, the total economic impact right now, i think, is anybody's guess. honestly, to your point earlier,
joe, we don't know what's going to happen. we don't know when the recovery efforts are going to begin i know some of the weather models have harvey circling back and coming back through on tuesday or wednesday i just think i speak for everybody when i pray to god that's not the case. we have moved up the road from the last time you saw us in fact, this is part of the marathon galveston bay facility. don't know the status of this refinery marathon is cagey about the exact operational side you can see there's almost nobody on the roads. it's a normal work day you'd think but most of these refineries are closed. we were able to get up this road yesterday there was a lot more water on it. i guess that's a positive sign keep this in mind, guys. the houston total economy would make it one of the 25 biggest in the world. it's got a gdp of about $500 billion per year it is the fastest growing large metropolitan area in america it's added more jobs than any metropolitan area in america in the last 15 years. and now you've got a city that is literally and figuratively
right now in parts under water the port of houston remains closed which is four ports in one there's a bunch of different aspects. the refineries, some of which employ 5,000, 6,000 men and women full time. but also a lot of contractors, and temporary workers, as well one would assume those men and women may not get paid if their hourly workers and not salaried employees. no ports no shipping. very few refineries. 15% of total gasoline refineries are offline. and to your point earlier, guys, with the interview with gordon bethune, keep this in mind it's not just the airports being closed or the people not being able to get to work. houston refines about half of the nation's jet fuel. so, if refining of aviation fuel also comes offline, don't know what the stockpiles are there, but last time i checked, you need gasoline to fly planes, as well also, military grade fuel. heavily refined in this region there are so many economic angles that we i think are just beginning to sort of touch on,
as right now the storm clears. and i hope it's for good i think we all do. >> i do, too brian, i was -- while you were talking, i actually -- i've heard anecdotal evidence about, you know, i don't know if you -- i'm not joking, fema -- >> i grew up with a waffle house. >> fema has an actual index referred to as the waffle house index. it had green, yellow or red depending on they actually monitor how bad a storm is depending if the waffle house totally closed it's really bad >> did they say what it is now for houston? >> i didn't look i'm just -- before i even mentioned it, i had heard of it. and i was wondering whether this is real. but it really is and it was coined by former fema administrator craig fugate back in may of 2011 and you probably haven't passed one down there, brian, but it actually is a real thing that that's the one -- if that's open, that's one of the first
signs that you're actually recovering believe it or not. because they're so ubiquitous. >> joe, i believe it waffle house is a staple in this country. here, of course, they've got bucky's which is a regional change and whataburger. i think these restaurants are becoming gathering spots for people around here we're sort of near texas city. and just a quick anecdote i want to give yesterday, guys, because we were driving up the interstate one of the first to arrive in some of the flooded areas. a sheriff, this is a feel-good anecdote a sheriff was telling us he had a deputy who had a 3-month-old baby and she was stranded in her house outside of santa fe texas on a kitchen counter as the water rose and then he ran off to help. i found him later, good news, they were able to commandeer a neighbor's farm combine with eight foot high tires drive through the water and rescue his sheriff's deputy and her 3-month-old baby so i think there's going to be thousands of stories like that
and they'll probably be told at a lot of waffle houses around here, joe. because that's where people need communication and cell phones are okay right now but we'll see what happens there's a lot more to come >> and mcdonald's as contessa was saying earlier >> all right, brian, thank you great shot down there. going to move on here. let's get to our next guest. fema expects more than 450,000 harvey disaster victims to file for assistance fema director brock long held a news conference in the last hour that we brought you. here he is >> what we want to do is be able to have a unified effort, coordinated effort, down to support and give the state of texas everything they need to fill gaps, to bolster their operations and capability. they set -- they set the mission priorities right now we fall in line to support those. >> joining us now, michael d. brown former fema director you have -- you know, brock long, you've known him for
awhile and you think that he's a good person to have in this position right now? mike >> he's a great person to have in this position he was my representative for the national hurricane center when i was the director, then he went on to be the emergency manager in alabama so brock knows exactly he's just kind of that low key, down-to-earth kind of guy that you need in these kinds of high pressure situations. but i listened on the way in to the studio i listened to that interview, and two things struck me one is, they expect at least 5,000 people in the kay bailey hutchison convention center. they have statement of 30,000 people without power which i think is probably extremely low estimate, that will probably grow over days and then listening to your previous reporter talk about the economic impact, the thing i guess that frustrates me is just an average american citizen, but one that's kind of been there, done that, houston is the fourth largest city in the united states of america. as you pointed out, its economy
will be the 25th largest in the entire world when are we going to learn that when the national hurricane center, or noaa, or the national weather center, uses the word catastrophic, which i think sometimes gets overused, but not by them, when are we going to learn that estimates of rainfall of 25 inches or 30 inches, and i'm not saying that the mayor should or should not have ordered a mandatory evacuation, but when do we start telling citizens the truth about, look, we're going to have 25, maybe 30 inches of rain hour advice is, not shelter in place, but if you can, if you have the ability, two or three days in advance, to make a trip to dallas, san antonio, waco, wherever it needs to be, to get out of town, then do that. i don't think we've learned the lesson in this country that in the kind of urbanized society that we live in, with all of the electronics, and all of the great things that we have, in
this studio for example that you have in your studio, those things go down and you can't get those things back up and running for two, three, in this case maybe sometimes five or six days, people are going to be suffering. and they are suffering needlessly because they didn't need to be there >> right seems like every time there's something like this, maybe the urging gets louder, and it's like please, move but human nature is tough. it's tough to change and -- >> i think it's tough to change. i think there's also a -- there's a political reticence to not order a mandatory evacuation, because you do that, and if the storm is not quite that bad there's political fallout. >> right >> but i think there's a middle ground and i think that middle ground is look, here's what the forecasters say. here's what the national hurricane center says. you're going to be without power for five, six, seven days. and people in a place like houston where it's going to be hot and muggy, it's still summertime, you'll be hot, muggy
and miserable, you don't have your cell phone, you don't have your television, your radio, all those things, it's going to get frustrating. >> a couple days ago you had an opinion piece, mr. president, don't let hurricane harvey be your katrina and you're asking president trump to use the bully pulpit. number one, it's been a couple of days. has he -- did he heed -- did he heed your advice and what exactly do you think he should be doing right now with the bully pulpit >> well, i'm not sure he heeded my advice. but i can tell you from folks that i've talked to inside the administration that he has done exactly what i was opining about in that piece. he has told the entire cabinet that, look, this is all hands on deck, and if brock long needs something, you give something to him. so whether that was because somebody ran my article to him or not i don't care. all i care about is he's told the federal government yes, you do what needs to be done and based on what i'm hearing brock long say in the interviews and the press conferences, he's getting what he needs.
and i think that's an excellent sign for both the economy, and for fema itself. >> as you look at things now, michael, do you think the fallout of this is going to be greater, or less than it was for katrina? >> oh, in terms of economic fallout, all of that, i think it's going to be much greater. fourth largest city, and part of the problem is, the media has a difficult time it's easy when you have a hurricane to have somebody stand out, and show the wind in a flood it's easy to get somebody on an interstate overpass, and they're in their waders and show how deep the water is but what the media can't show, which is very difficult to understand, is the massive amount, the massive numbers of homes where the water -- that story you had about the baby being on the countertop. well imagine, it's hard for people sitting in denver or sitting in new york to imagine water inside your home that is as high as your countertops. >> and michael -- >> the kind of damage that
causes when that water sits around for two, three, five days, it's going to be very, very difficult to recover are from that -- >> i just want to make sure everybody heard what you just said hurricane katrina was a $50 billion storm and you're saying you think this one could be much, much worse >> yes >> we already know that a lot of this damage is from flood which goes to national flood insurance program which is $25 billion in debt already and is basically maxed out its borrowing limit. so, i mean, how big a number are we talking and where is that money going to come from? >> well, here's the thing. number one we have no idea what the number is going to be. but i think it's going to be much heighter than katrina, because tropical storm allison that hit houston 2001, when i was the deputy director of fema was the fifth largest most expensive disaster in american history. but those waters were pretty quick, that storm moved in and moved out. you and i are talking about a storm that is still sitting over south texas, that is still dumping water. so i think those numbers are going to be even greater but to your point, about where does the money come from
this is where we need to have an honest and frank discussion. that money comes from you and me >> right >> that money comes from the taxpayer and i don't think most people realize that >> well, and -- they've been trying actually to say, you know, to the cities you have to contribute more before this is -- they've been trying to fix up the finances but this is not the time if anything it shows the need is greater than ever. should we just do away with this whole middle man and just embrace the whied that we're on the hook for this one. it happened to a place like houston? >> no, no. and here's why because the more that we become reliant upon the federal government to respond, the slower the response will be, the more difficult the response will be back to brock long's point at his press conference this morning, all disasters begin and end with local government. when you dial 911, you're calling your local fire department and if we weaken those, or we somehow put this gigantic federal bureaucracy on top of them and say the federal
government is going to manage all these state and local and first responders that is a huge mistake. that destroys federalism that empowers the federal government much more than it should it's much more infeeffective in terms of dollars it's more effective in terms of management we should not do that. but what we should do is, and i think brock -- i've heard him in his confirmation hearing, brock wants to look at true reform to the national flood insurance program. and we have to do that we can't, for example, continue to subsidize homes that build in flood zones. you know what? i think that if there's an insurance company for example that wants to take on that risk, and is willing to build a pool to do that risk, we ought to look at privatizing part of this it was the insurance companies originally that said we don't want to cover floods, so they will bebied and got congress to create the nfip and i think we've seen the disaster that that can be. let's look more at the free
market and see if we can do some free market reforms for the flood insurance program so that people that take those risks actually have to pay for those risks. >> michael, just quickly, what's the big swing factor now that could make the total cost of this disaster much higher or much lower just simply how long the water sticks around for? or other factors that you can look at? >> as long as the water sticks around you used the waffle house example. so stop and think about waffle house and whataburger, mcdonald's think about the refineries all of the businesses in downtown houston and high rises that won't be able to get into those high rises for maybe several weeks because you have elevators that are out of commission so you have to fix those. when you start thinking of all the details of what floodwater does, and when it sits around for maybe two, three, five days, maybe even a week, you're talking about an enormous economic cost that will take years to recover from. >> all right michael brown thank you for joining us this morning with your thoughts
>> my pleasure, thanks >> up next we're continuing to monitor that devastating storm in texas houston is under water more rain is expected. we'll go there live. plus the president tweeting about nafta as round two of negotiations are about to kick off. former commerce secretary carlos tirewi jn right after the break.
welcome back to "squawk box. president trump tweeting about trade. writing, we are in nafta, the worst trade deal ever made, renegotiation process in mexico and canada both being very difficult. may have to terminate with a question mark. the next round of those nafta negotiations begins this friday. and joining us now is carlos gutierrez, who is the former u.s. commerce secretary and now chair of the albright stonebridge group. good morning thanks for joining us. >> good morning. thank you. >> what do you read from his tweet and the comments he made in phoenix last week about the prospects for negotiations now, versus scrapping the whole thing at some point later? >> well, look, i think this whole -- the talks are off to a very bad start, last week when the talks got started, the opening comments from ambassador lighthouser were very aggressive and they detailed a set of
objectives that is going to be very hard for canada and mexico to meet. so yesterday for the president and in arizona for the president to say we may back out before the actual negotiations have started, because they start this friday, they just had opening comments before >> right >> they've exchanged papers, and this friday they'll start negotiating in earnest but yesterday, the mexican government issued a statement, basically saying, number one, we're not going to payfor the wall, because the wall continues to be inserted into the free trade debate and number two, we will not negotiate in public. which is essentially what's happening. so, my concern here is that when you add the wall, the fact that the president sees success as eliminating the deficit, it's hard to imagine that these talks won't break down at some point he may succeed in the end but it's hard to imagine that. >> what do you think is the
objective here there's a lot of this that kind of resonates from the president's campaign but what are the objectives that the u.s. will not, i was going to say will not walk away from but i guess that's the alternative. what are the goals here that you think are most important for these negotiators to press when talks begin friday >> well, the u.s. is focused on the trade deficit. which i in i is a mistake to hold out the trade deficit as a measure of success it's interesting that the deficit declined substantially during the great recession why? because we're doing less trade because we're in a recession >> right >> so it's the trade deficit we would also, the u.s. would like to get rid of the dispute settlement mechanism which worries canada and mexico tremendously and things -- >> i think some of the u.s. -- >> yes, of course. because you have no place to take your dispute. but the main thing here which is the problem is number one, the deficit has to decline in order for the u.s. to be satisfied
that's a big problem because, if your purpose is to lower the deficit, you're going to end up impacting the vitality of nafta, you're going to end up impacting the supply chains, and you may lower your deficit but it will be a negative impact on our economy let's remember that germany has a huge trade surplus but their economy doesn't grow as fast as ours so the trade deficitsurplus is not a -- >> if they put the deficit issue aside, i know that's a big if, but what do you think the other important goals here are >> well, i think the -- look, the goal from the u.s. standpoint it's very specific. it's the trade deficit and somehow getting the wall in there. that makes it very difficult to negotiate. i think most -- canada and mexico are looking at number one, how do you expand nafta one is through e-commerce. we have not, you know, nafta was
started before e-commerce took over retailing so, that's going to be a big thing. that's going to expand nafta that's going to help the u.s we already have a surplus in services the other thing that we should be thinking about is that the amount of petroleum that we export, petroleum and petroleum products that we import from the canada and the u.s. is higher than our deficit so we should be strategically thinking surgically about what we can do instead of just this mercantilist idea of getting rid of the deficit >> all right, mr. secretary. thank you. >> thank you >> we'll see what happens come friday still ahead uber has a new ceo. a full rundown of the board room drama next and later harvey's impact on the energy mke 're back here in a couple of minutes.
welcome back today's top corporate story. uber selecting a new ceo >> good morning, wilf. it's not jeff immelt or meg whitman. uber's next ceo will be dara khosrowshahi, the dark horse candidate who was not leaked in this process, but has taken month. khosrowshahi is the current chief of expedia and he emerged
i'm told late into the weekend up until sunday afternoon, very close to when the selection was made meg whiteman was the likely choice according to sources, despite numerous denials that she wanted it or was even in the running. jeff immelt pulled out of the race sunday morning via a tweet. khosrowshahi it is and though he's been called the truth or compromise candidate, he's seen as a very qualified and respected choice he has presided over expedia's expansion to more than 60 countries and he has made deals to bring in other brands into expedia's fold but guys his hard work begins now. if and how much he'll work with former ceo and founder travis kalanick, that's a big question. there's the lawsuit from alphabet's waymo plenty of executive positions to still be filled. and not least boosting morale and fixing culture, a company that has just gone through the wringer. >> do we know how travis kalanick would likely have felt about this particular selection versus the other two front-runners? >> according to our reporting it is unknown how he feels about
this particular. especially because his name came out so late in the race until he was selected but it's been reported, we know from sources, too, that he had chosen, or he had favored jeff immelt, and benchmark had favored meg whitman and that was where all the drama was going on over the weekend, each vying for their choice but for the expedia ceo to come up and win it. >> d., thanks very much for that >> all right, coming up, residents in houston bracing for more rain, and catastrophic flooding we'll take you there, again, live first though quick check on u.s. equity futures. "squawk box" will be right back. and the wolf huffed and puffed... like you do sometimes, grandpa? well, when you have copd, it can be hard to breathe.
it can be hard to get air out, which can make it hard to get air in. so i talked to my doctor. she said... symbicort could help you breathe better, starting within 5 minutes. symbicort doesn't replace a rescue inhaler for sudden symptoms. symbicort helps provide significant improvement of your lung function. symbicort is for copd, including chronic bronchitis and emphysema. it should not be taken more than twice a day. symbicort contains formoterol. medicines like formoterol increase the risk of death from asthma problems. symbicort may increase your risk of lung infections, osteoporosis, and some eye problems. you should tell your doctor if you have a heart condition or high blood pressure before taking it. symbicort could mean a day with better breathing. watch out, piggies! (child giggles) symbicort. breathe better starting within 5 minutes. get symbicort free for up to one year. visit saveonsymbicort.com today to learn more.
good morning and welcome back to "squawk box" here on cnbc, live from the nasdaq marketsite in times square we're continuing to monitor the devastating effects of hurricane harvey in texas. we have full team coverage of the storm. jackie deangelis is live from corpus christi morgan brennan is at a travelers
national catastrophe center in connecticut. and contessa brewer is live in houston. let's go back down to contessa, again, this morning. how are you? good morning >> joe, we are seeing relentless rain, persistent flooding, and at least here, an incessant alarm. we're in the theater district in houston. as you can see here the flooding has taken over this particular intersection we are seeing some of these floodwaters recede but you never know where that's going to happen. you encounter an intersection, and below houston are all these underground tunnels, and areas where they have retail and shops and restaurants. look at this you can see the water now at one of these staircases, leading down to a parking garage, houston is a city underwater and we heard fema say they expected 30,000 people to need temporary shelter. among those were jacob and megan joseph we met them at the convention center among the 25 people who spent the night there at the
convention center. he's a doctor. she's a speech pathologist they live in a beautiful home but they said when they had to retreat to their second story and their cars were under water they decided they needed help getting out and listen to how they were rescued. >> and then we had bring us on the high volume -- or high water vehicle to bring us here >> they're hoping that they can go stay with friends at this point but they don't know how they're going to get there they have no vehicles. there's no bus service running it's a real problem. not just for them but thousands of families like them. we saw new families streaming in there. it's a situation we'll continue to monitor we also heard the attorney general in texas say his office is investigating reports of gouging, which is illegal in this state, bottled water at $8.50 per bottle he said gas prices reportedly
being jacked up 30% higher than normal so we'll be covering all of those angles here in houston today. joe, i'll send it back to you. >> contessa, thank you appreciate that report >> let's also get to the insurer impact of hurricane harvey morgan brennan is live at the travelers insurance catastrophe center in connecticut. >> wilf, that's right. take a look behind me. we're at travelers national catastrophe center and as you can see, you've got monitors and screens up on the walls behind me that have everything from weather analytics, to satellite imagery. policyholder data. even social media feeds that the company is using to monitor harvey in realtime as it sits on the coast of texas and even as you can see right here, louisiana now, too so this technology, much of which didn't actually exist for hurricane katrina, or even for 2008's ike, is now a crucial part of the claims process for travelers.
>> many of the new tools have really expedited the claim process. for instance we can actually build out the footprint of a property before we're on site to inspect it >> so travelers is one of the biggest insurers in texas. about 3% market share on the homeowners side of coverage. and almost 8% market share for commercial that's according to wells fargo. this center has been monitoring harvey all weekend and as the claims begin to increase over the coming days and coming weeks, it's going to get much busier here in the meantime, the company has three mobile claims units that are alreadyon position or in standby position to go in to the region, and many of the adjusters and employees that are being sent down to texas are actually certified as drone pilots as well travelers is certainly not alone in this. other big insurers in the texas region including aig, chub, allstate and farmers have resources that are moving in to position as well
guys, it's really important to remember that even though harvey did make landfall as a category 4 hurricane, this is very much a flooding event and what that means, akwording to analysts, is that insured losses for the private sector are likely to be limited that's very different than say the most costly hurricanes like katrina, or even superstorm sandy back in 2012 the expectation is that a lot of the costs associated with this storm are going to fall on the federal government because the federal government is the one that underwrites the vast majority of flood policies in this country, particularly on the homeowners side. guys >> great okay, morgan, morgan brennan, thank you. joining us now, managing director covering the life, property, casualty and mortgage insurance sectors at fbr capital markets. how's it all work? how much -- who gets exposed how much are they exposed when we consider all the bermuda companies that do reinsurance. how does the risk really get
spread around, randy, in a nutshell >> sure, good morning. so, you know, we are running this morning with a $2 billion to $4 billion loss for the storm overall. i cover primary companies like allstate and travelers our view is that this event is mostly going to be covered by the primary insurers i think reinsurers are more likely to see risk from offshore energy and maybe some onshore energy. as you mentioned in your broadcast all morning, it's more of a water event than a wind event and that means the federal flood program and ultimately the government's going to bear the brunt of this. >> randy, just to make it clear the $2 billion to $4 billion number you're talking about is just the insured losses. let's say given our conversation with michael brown earlier the total damage of this could be upwards of he said more than katrina, katrina was $50 billion. you're saying of a storm potentially of that magnitude, only $2 billion to $4 billion of that is going to fall on the insurance companies? >> good question $2 billion to $4 billion is our
estimate of private insured losses so that would be the companies i mentioned like allstate, travelers, farmers, state farm, and that tends to cover more wind, rather than flood. because flood is covered by the flood program. this event's going to be interesting. i think, you know, usually you take insured loss and double it for total economic damages on an event. this one seems like it's going to be higher because the flooding is so significant the other swing factor in this, i think, is really auto losses you know, houston did not evacuate for the storm as you mentioned your broadcast, a lot of cars are trapped underground. so the swing factor higher, if we're wrong with the two to four on the insured loss, the private insured loss, it's going to be because the auto losses are going to be a lot more but each car in america is only worth $20,000, $25,000 so it takes a lot of those to add up into the billions >> randy, when does that two to four hit the bottom lines of these companies? is it within weeks or over the following twelve months or so? and how have share prices reacted as these sorts of insurance companies following similar types of disasters
are there buying opportunities in the immediate aftermath >> so, the -- they'll know right away i think they do a good job assessing the claims and the claims are pretty clear. and so, the two to four -- the two to four billion will come out pretty quick now one thing to keep in mind for the stocks is that we estimate, what we call catastrophe or cat budgets in the numbers so this storm just the way that the third quarter's worked out probably is mostly within those cat budgets, so it's not going to make a big incremental difference for earnings usually they trade down ahead of a landfall and recover afterwards i think just given the media coverage today, shares like allstate, travelers, may be flat today. but ultimately i think they recover. we're neutral rated on those we think it's a soft pricing environment. a lot of other factors going on besides the storm. but this is really a moderate earnings hit for the space this is not going to be a big event in my view -- >> no, randy -- >> or -- or even a sandy >> it's actually work because we're taurking about losses that could be among the worst that
the u.s. has ever experienced from a hurricane or a storm like this and yet it could actually make almost no impact on private insurance. that means the taxpayers almost completely on the hook for this through the flood program or directly, and i wonder what kind of result may come of that it may not be this year. it may be longer-term, but michael brown earlier suggested that more of the burden should be shifted somehow back on to the private insurance companies. maybe do away with nfip altogether what kind of options do you think are viable >> jeff hensarling and others in the new administration want to privatize the federal flood program. that's been on the books for a long time, and there's a decision coming up on that actually in september. listen, i mean, this event is going to be, you know, very important for that because there is private capital globally that would want to write this risk. you would spread this loss globally, among, you know, financial institutions, pensions, you know, other investors, the problem is, is
that for private capital to write this business the premiums are going to be a lot more expensive than they are under a subsidized program but ultimately you're right. there's no reason in the context of an overcapitalized global insurance industry that this can't be privatized. it's just where the rubber meetsed road is that people don't want to pay more for the flood insurance and that's been the hesitation on the part of folks in washington to privatize. >> randy, thank you. we appreciate your time this morning. thanks >> all right thank you. >> coming up, harvey's eye hit corpus christi before flooding houston. a live report in those locations. plus harvey's threat to texas' energy industry. we'll talk to oil expert tom close today as we head to break. quick look at the energy prices. gasoline prices up 4% to 5%. wti slipping just a little bit you always pay
your insurance on time. tap one little bumper, and up go your rates. what good is having insurance if you get punished for using it? news flash: nobody's perfect. for drivers with accident forgiveness, liberty mutual won't raise your rates due to your first accident. switch and you could save $782 on home and auto insurance. call for a free quote today. liberty stands with you™ liberty mutual insurance.
welcome back to "squawk box. texas senator john cornyn will join governor abbott today in corpus christi to be briefed on harvey and survey the latest storm damage jackie deangelis is live for us in corpus christi right now. what's the latest? >> good morning to you, kelly. well, we're standing here just at the bay, and it's eerily quiet. we're getting another band of bad weather here things had calmed down a little bit over the weekend but now the wind and the rain is picking up again remember, about a third of corpus christi is without power
right now. you've got major intersections that don't have traffic lights a lot of people have left. but certainly, a number of people chose to stay here. we also drove to some of the other coastal towns, one north of here, specifically called rockport we spoke to a couple that we found there, that decided to hunker down. they had a generator and they were going to wait the storm out. they had to take in some of their neighbors because the damage was so bad. their home wasn't hit but one gentleman, bill, described to me what the scene was like. >> devastating is the first word, obviously. the howling wind was pretty crazy. but we were getting through it and the next morning we're just heartbreaking. when you see destruction like this, in your community, your lives. it's hard. but we're alive. >> and destruction really is the right word to describe it. in rockport, many businesses, many homes, blocked.
you saw damaged structures, roofs coming off of those structures and people generally not knowing what to do now the mayor of rockport said that we could potentially see the power outages there last for two to potentially three weeks he told residents if you've left, don't come back. and if you stayed there, be responsible, don't continue to be part of the problem kelly, you mentioned the fact that the governor would be here in corpus christi later this afternoon. to survey the damage and certainly we'll be waiting for his arrival. back over to you >> jackie, thank you very much for that joining us now on the "squawk" newsline for more on harvey's impact on the energy market, tom kloza, oil price information service cofounder and global head of energy analysis. tom, good morning to you thanks very much for joining us. we're going off this figure of about 15% of refining capacity shut down. if that's accurate, how big a factor is it for oil and gasoline markets >> well, it's an immediate factor right now i mean, we're seeing the actual physical gasoline market, the
stock market at the gulf coast open up and it's about 30 cents higher than it was a week ago. about 20 cents higher than it was on friday. so, you know, trading is nowhere near as active as it should be because a lot of people can't get to their offices in houston. but we're looking at a little mini gasoline spike. we're looking at the prospect of, you know, millions of barrels a day of u.s. refining capacity, lost for at least a period of days and there's the overlap of corpus christi, which only received a glancing blow, or you know, didn't get any serious damage to refineries but some real questions about what happens when you have unprecedented forecasts of 30 to 60 inches of rain, in an area like houston, where many of the refineries sit along the ship channel at very, very modest numbers above sea level. >> and, tom, what are the swing fatters from here that could lead to energy markets reacting
in a more pronounced fashion if the water hangs around for longer than expected or the storm now pushes east toward some of the refineries close to the louisiana border are those things that could see energy market prices react more pronounced >> well, first of all, separate into crude and products. crude oil, this is probably a bearish outcome, or a bearish scenario for crude we're not going to be able to run at the 7. -- 17.8 million barrels a day run rate that we've been sort of zooming through in july and august so there's less demand for crude. also much more difficult to export crude and import crude. but we've got plenty of crude oil in storage the problem with gasoline, and diesel and jet fuel is that if these precautionary shutdowns result in actual damage, flooded control rooms, any sort of breach of retaining walls and so forth, then you could lose a significant amount of gasoline production and we're not just to suppliers, these refiners are not just the
suppliers for the united states. they're also the suppliers to the world. and so south america and central america. so it will be a true test of what happens if u.s. refineries get knocked out, and have to sort of satisfy two masters, south american and central american master and the north american master. the short answer is, gas prices are going higher they're going higher at an annoying rate. not an apocalyptic rate. but it will be noticeable, particularly east of the rockies, in the next few days. >> in terms of the trading around us, you mentioned earlier that volumes are a bit thinner because not everyone is at their desks in houston where a lot of the volume usually takes place do you think that means that as the water goes away and people get back to those desks we could see a bigger reaction? >> i think you'll certainly see more trading when they return to their desks. the question is will they return to their desks, and hear confirmation that some refineries have sustained damage that will take weeks or months to repair?
so far we don't have that. you know, we had corpus closures and shutdowns without any damage so that -- those units should be restarted. i'm very, very worried about houston, beaumont, bay city, you it's hard to forecast because it's unprecedented and the outcomes are completely unknown. >> and factoring this weekend's events in and also all other considerations what is your forecast for wti for the rest of the year >> i think wti is behaving this summer like it will for the rest of the year. this will hurt wti a little bit. we stunted some exports and if you're running the million barrels a day less crude oil that's a million barrels a day less of the crude oil that will disappear. so i think our destiny is prices in the 40s for most of 2017 and to be honest with you, i think
there's a similar december nis in 2018 of some big projects come back online. >> we'll leave it there. thank you for joining us. >> thank you. >> when we return jim cramer joins us live from the stock exchange we'll get his take on today's top stories. here's the futures now turn positive now more so than any time in the morning session. 45 on the dow. up nearly 5 on the s&p, 13 on the nasdaq
jim cramer joins us now. jim we know that right now there's people that probably still need to be rescued and are in waist high water so there is no other story obviously but for us there are a couple of others so if you want to talk about harvey, that's fine too because we're praying for people and thinking about them but you got uber and also the dollar are two other things we have touched on today. >> yeah. i look at the same overhead, i'm just getting some overhead pictures of houston. it's rather amazing. i don't know when people can come back. the insurers are short-term,
they go down and then they go back up. i've seen people play home depot and lowe's but i'm looking at a couple of things away from this. this deal that's really great for gilead they have been sitting on the money doing nothing and i look at expedia and i think wow what a loss even though obviously uber's game. >> >> a lot of people are in that. >> yeah, i'll tell you the problem with all of these is that they're far away. but when you look at the level in terms of phase would be and phase two they're early. still very early. >> i'm hoping for something similar with solid tumors.
>> they have plenty of money joe. they could maybe move things faster. >> jim we'll see you after the top of the hour. as we head to break don't miss becky's interview with wrearn buffet wednesday at 11:00 a.m. eastern time on squawk alley we'll be right back. ruined our hawaii fund? you meaf i thud go to the thothpital. there goes the airfair. i don't think health insurance will cover all... of that. buth my fathe! without that cash from - aflac! - we might have to choose between hawaii or your face. hawaii! what? haha...hawaii! you might have less coverage than you think. visit aflac.com and keep your lifestyle healthy. aflac!
theextreme risk of burstd a pipes and water damage...y... soon, insurance companies won't pay for damages. that is, not if they can help prevent damages from happening in the first place. at cognizant, we're turning the industry known for processing claims into one focused on prevention with predictive analytics, helping them proactively protect the things that matter most. get ready, because we're helping leading companies see it- and see it through-with digital.
we'll get a final check -- that is five hours of live tv though. >> how many is wilf doing? >> 5. >> you're doing 5? >> i'm doing 5, you have to do 5. >> so competitive. >> i don't want to do power lunch. no, i do i'm sure i want to but obviously they're short handed if they have asked me there's the energy complex
you can see 47 the futures are part of and check out the currencies because the euro for awhile was 120. i think it's 119 or so and as we said there's no, we look at all of these things we're a business network we have to but we're not thinking about these. we're thinking about people that are miserable and everything else. >> far from it. >> anyway, thank you both and make sure that you join us tomorrow join me on power lunch squawk on the street is next good morning and welcome to squawk on the street i'm david faber with jim cramer and we're live at the new york stock exchange let's take a look on this monday morning. you can see at least the implied open looks