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tv   Squawk on the Street  CNBC  August 30, 2017 9:00am-11:00am EDT

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than expected. dow futures down by just over one. nasdaq up two. if you check out the ten year you'll see that the ten year note this morning is yielding 2.148% and that's been something to watch melissa, i want to thank you for being here today. >> my pleasure. >> see you back here tomorrow and you guys are on power lunched today. >> not today. >> all right well thank you make sure you join us tomorrow it's time for squawk on the street good morning and welcome to squawk on the street i'm david faber along with james cramer and there you see i'm not saying much of anything. >> inconclusive.
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european markets are well underway and as he has pointed out a number of times they have been of late for our own markets and there they are up across the board. not bad actually. >> no, our futures being down is a function of idiocy. >> idiocy how about the ten year note yield we're right around 210. yesterday. and also we know if you buy the banks you get some leadership rally and oil goes to 42 they still have no place to put it which is incredible given the fact that at one point we would be in a state of emergency but instead we're in a state of glut you're going to pushing and there's not enough people in the
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refineries they get far earlier than people think. at the same time oil has to come down because it's in storage and those that want to ship that oil will get it to the market somehow. the president said to speak on taxes later today. expected to call the u.s. economy quote rigged or at least the tax system plus it's official warren buffet now the largest shareholder in bank of america. plus berkshire hathaway is the company he runs. he's going to join becky quick this morning. >> do you think he's going to trash bank of america? wells fargo. >> i don't believe he will there's my point that's why again you can end the show. >> thank you we'll start a new show right now. the latest on hurricane harvey, of course that deadly storm makes land fall again this time
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in louisiana the flood waters continue to rise >> unbelievable job. >> futures were flat you saw that after looking as though we would get a bit of a higher open this morning investors are shifting their focus toward economic data we had adp out this morning. private sector jobs were up 237,000 in august. that was ahead of expectations which were about 185,000 in job gains. also revised second quarter gdp showed the economy growing faster than initially thought notching it's quickest pace in more than two years. we have 3% that's a kwar. doesn't mean it's a year. >> no, it doesn't. >> it's full of things that could move the market today. it's an internet of things stock
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and will control a lot of the action in the tech portion of the nasdaq but you have to tell the traders and the algorithms that analog devices is a big tech company and i don't think that they necessarily get that it bought linear technology and there's an internet of things play mostly autonomous. >> i haven't heard you discuss that. >> because this combination is dramatic that's also going to reveal fantastic numbers. don't forget, weak dollar means higher than expected quarters for most of these companies. >> it does it does not appear to be playing a role in any moves going on in stock market thus far. >> not yet. >> a number of the multinationals are down more than the peer group and domestic companies. >> do you know what saved them this year? this particular week because there's a lot of things happening that are rather araising it doesn't start at the top but david it's your world.
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every day we talk about the united technologies rockwell collins deal this is the long awaited consolidation of the aerospace industry we have long awaited the consolidation of the drug industry the features again are not keen on anything. other than their own really algorithms that have been wrong. >> it can be very confusing. yesterday we talked the day down on north carolikorea and fears a and we came back during the course of the day. i think we have a new tweet from the president indicating the time for talking with north korea is over. i'm not sure with a that means. >> one thing you have to remember, i am real news president was i think by all means better than other presidents who have visited these sites. this again is back to being the 140 character foreign policy
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that the real news people are baffled by. >> you could argue that. >> do you think it will have an impact on today's trade. >> it's the impact on foreign speech if he is off the prompter we'll probably go lower. >> you can just say today is the day where the president read the prompter by stocks and president off prompter sell stocks that's again real news not fake news. >> let's talk about tax reform of course as jim just referenced president trump is getting read do talk tax reform it will be this afternoon in a speech in springfield, missouri. he is expected to tout tax cuts
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as a way to help workers in the middle class in an economy that is, quote, rigged against them officials say the speech will be about why reforming the tax code is needed and not necessarily not how to reform it but this is something that i have taken an interest in since day one of the trump administration it's the single most important we would argue business story of the year. >> it didn't move the market up dramatically. >> it did and as this year has gone on of course the expectations and hopes for true tax reform have waned and i'm not hearing anybody despite what will be in this speech, believing that we're going to see anything any time soon that's going to pass. >> two things are keeping the tax reform from happening and they have repeal and replace and rest and relaxation. >> that's a very short time to be able to do anything other than solve the debt. >> you have a debt ceiling and you also have to pass a budget
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to even get to tax reform because they would only pass tax reform under reconciliation and be able to require that so you have to do that first. by the way, i would be more focused, forget tax reform we going to get a clean debt ceiling raise and a budget that comes well before anything else and what has been thus far the incompetence of this administration executing any of its things. >> the agenda. >> given the confusion that's real news. confusion over what's coming next i want to try to get rid of it because i can tell you that congress equally, i mean -- >> you're right, if the speaker isn't featured tremendously the speaker comes back and says before we address any of this we have to talk about repeal and replace then, you know -- >> when koimts it comes to tax m they have been focused on a tax
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rate it's unclear unless they want to balloon the deficit. how many senate republicans will abandon you and interest deduction and any number of other things and another portion of republicans if you were to pass the budget be able to do it all under reconciliation the expectations are that if you get anything it's probably not going to be this year. it will be next year and still it's probably going to end up being some sort of a tax cut fairly modest and a deal to allow cash to come how about the $100 billion that we now between last week and today we think how little -- it's going to be 100 billion
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federal government on the hook do you think these people want to talk about budget reconciliation >> something that did move the market a little bit was the idea that they would attach it to the debt ceiling and at least you take care of that. >> you're going where i wanted to go. that's what i believe is going to happen. you can't let the 4th largest city in this country stay off line for all that long. >> one final thought on this, corporate america in terms of tax reform seemed to have moved on that's what i hear from a number of people. they were not make decisions to a certain extent when it comes to the large transactions that i like to focus on. >> that's no longer the case you're moving ahead. you're going to make it. many are expected at this point
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nothing coming out of d.c. that hasn't changed. we'll see what the president says today not expecting anything new or any specific of a plan. >> i am getting from ceos business as usual. the government is dysfunctional. and doing a lot of things right. you have to go to the cloud in order to be able to save a little money. >> it's a company that is about no repeal, replace and they are doing fabulously. that is the best example of a company that has profited from the complete dysfunction of
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washington. >> finally let's end this programming talking about berkshire hathaway because it is now bank of america's largest shareholder. and 70,000 million shares of b of a it invested $5 million in 2011 and convert at a very low price so now it's worth rough $16.5 billion. he did that when he raised the dividend and therefore that would outweigh what they're giving the 6% on the preferred only warren buffet gets those deals and he's 87 years old today. >> founding fathers should be who identified there's only three banks that represent a major part of the country. they would be horrified but then again they are looking good.
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the founding fathers. >> are you still talking about hamilton. >> i love that play. >> you finally went. >> it was my birthday present about two years ago. i finally got the tickets. any time i use the pull i'm in the journalism jail. i use no pull whatsoever i waited two years. >> i only waited a year. >> used pull. >> you're not allowed to pull. you can't get this one of the reasons why they've been so strong i waited too long. >> largest shareholder in each. >> he's a big shareholder in apple pulling back from ibm and we'll talk about how the rails are are great. after big storms the most important thing is dry because mole takes over in four days
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and warren buffet that was a joke that will say many positive things he needs a consumer product from am 17 times earnings is well under what clorox sales and estee lauder is not for sale got it >> we got a lot more for you it's also made land fall of course in louisiana again taking another look at futures this morning. we send you a break. >> listen, please. alibaba they sold it down to 164 on a north korean missile. we got to goav, nely didhost
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the focus of us given our focus on business and brian sullivan in galveston. once again, nice without the rain background he had for so long. >> it does appear to have stopped raining. >> it's a spectacularly gorgeous day. it's hard to believe that yesterday it was raining at an inch an hour rate and looks like this let's be clear hurricane harvey is nowhere near being done it just moved east it's pounding port arthur, texas. a lot of them are under water and in trouble and all the way up to houston where it's amazing. 100 miles east is a disaster zone and harvey by the way hit new jersey on friday and saturday in some form. let's go back to the couple of issues you were talking about earlier. port arthur t civic center being
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used as the evacuation location, it had to be evacuated because of flooding so people that got flooded out of their homes went to the civic center and had to leave because it started to flood. i don't know where they went after that but it's a dier situation. you got four major refineries including the biggest in the united states. that's 600,000 barrels a day and that is officially shutting down to be 4,000 barrels a day shutdown all the refining in this area for the most part shutdown there are a couple of guys, variables, because marathon petroleum hasn't given tus exact number if they're trust or running at reduced capacity so you have to guess. jimmy made the point earlier today it doesn't matter if they have no water in them. it doesn't matter if the ships behind us can get into port. if they don't have people to come into work they can't open
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the refinery we drove around those refineries the last couple of days. if they weren't under water they were close to being under water and if your home was under water you're probably not going to go to work. there's another situation too which say company that's actually approximate publicly traded but based in par race and they have a plant up near bay town texas which is at risk of exploding. it's not hyperboyle. if it's not kept under 30 degrees it has a high risk of explosion. the plant lost power like so many other did and it's back up generators also went off line because that's the area that got about 50 inches of rain so they went down. the back up plan failed and they evacuated a 1.5 mile radius
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around that plant. and the evacuation is still in in order nothing changed that we're trying to get a rehe preventatives on cnbc to give an update guys because this say big plant that's dangerous enough that they evacuated a mile and a half radius because it could explode. not trying to be like fake news they're the ones saying that the risk of explosion is there so there's a lot of stories still to tell. a lot of bad stuff we're going to try to see the conditions of the road if your home is under water you're not going to work you're taking care of your family. >> we mentioned no wind. so private insurers insure wind. that kind of damage that brian is talking about is all federal because there is no wind
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so people have to recognize that there has to be a major federal rebuild and brian you know if there's no wind then it's not going to be travellers that pays or allstate. it's going to be the feds or nothing. which do you think happens nothing or the feds? >> we'll see it's amazing because this is going to turn into a political fight quickly if it hasn't already about people in texas that try to deny sandy aid that now of course are asking for federal aid. here 40,000 people they were 9 feet under water that water was not gone guess what it gets warm and you have water and mold and there's another problem. >> as always great work thank you brian sullivan we'll be right back with more squawk on the street
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coming up, shoe companies have a real, real big influence over these kids so nobody wants to play in under armours, i'm sorry. have you talked to steph about this >> no, they just tonight want to say nothing. >> that was kevin durant on the
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podcast that was the subject of your mad dash and referring to his teammate steph curry. >> he went there this is david. whether it be the problems or foot locker or finish line, the move into sneakers is an unmi unmitigated disaster and what consumers want but maybe it's because jordan allowed consumers that are alive and have seen michael jordan or i think that the end of the expensive speak. >> what?
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>> yeah. >> no one ever. >> we need it to come back and we need to reinvent it. >> you ring the bell there is. of course you can take a look at the s&p 500 real time exchange kind of a futures point to a mixed open that's where it appears to be at this point by the way, up here at the pbig board, pencils of problems is looking to increase literacy rates around the world, that's all about the broadcast group. they're getting bigger and bigger former players martina and james
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blake. >> she was good until serena came along. >> i want to say once again first responders doing a remarkable job in houston. this is typical what's going on. there's a group of exnavy s.e.a.l.s organizing a trip down there bringing jet skis and atvs this is so different from what happened in katrina. it's almost as if everyone is just saying what can i do to help nobody had the sense to really be able to truly survey the damage they're still under 6 feet of water. >> absolutely but i do think the
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federal government is going to have toed address it and that's going to be a battle david like none other which again just puts things ahead of the presidents agenda i am real news on this i favor the president's agenda for the stock market i'm not fake news. i'm not mainstream i'm real news. >> favor the president's agenda for the stock market. >> tax reform. >> we need tax reform. >> you're not part of the fake media. >> no. >> i think having covered corporate america for as long as i have certainly there's a unanimity of thought that it would be helpful including the border adjustment tax and the interest there's so many parts of that to raise revenue to enable us to lower the overall rate for corporations to entice them no longer to want to invert and leave the country. to bring the money back but
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we're not going to get that. >> i covered it. >> we're not going to get that plan. >> it took tech for a long time to get through the great reagan revolution and it worked but that was a period of incredible compromise among democrats and republicans. that's when you have with and by the way, in the senate, forget the house, senate is where tax reform will be decide or tax acuts. that's where it comes down to. and look what happens. >> it took three republicans to say no to repeal and replace. >> and what happens david when there's a stat -- you have a static market but nothing goes on what happens you know what happens? fang comes back and here we are with another day of great fang. >> a good day of faang. >> netflix up about 1%. >> yeah. >> how about the moron futures
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traders. that's mo-ron. >> you mention alibaba that's the communist party the chinese are in with the north koreans. the chinese has historically ever since that october 1950 where they came over with the stock i think that people have to understand that the communist party very much in favor of what the north koreans are doing so you're not going to have missiles pointed at any of the big cities in china. >> no and to the larger point of all the people that come on and say we need the cooperation of the chinese, you have to remember and they do point this out, they don't want to unify korea. >> no, this was a long time ago. you can't pressure the chinese and got scrapped by the
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president. >> i'd like to know more about that maybe that will come up. and that was me being fake news. i'm sorry. that probably won't come up but we do have to stay in touch with faang because when faang happens it takes money away from everything else. analog devices is the internet of things i thought it would spread once again the price of crude. can i just emphasize 42 it's at 46 and i believe it's headed to 42. >> that's wti. >> yes, united technology goes up every day i will expect that he will and i hope he'll come on with us and discuss the merits of the transaction and explain perhaps why he did change. >> is he going to say it ain't going to happen? >> one thing that annoys me is
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there's people that clearly know this i always like to think when you have a deal it's best to talk about it. >> yeah. >> but david it's been on going. united technology stock is real information isn't it >> no. >> you're getting on that now? >> i'm just saying united technologies moved so much on this rockwell collins -- >> it's not material information. it's been reported by reputable sources. not myself but it's out there. >> what's interesting is the utx has gone up. >> that's my point and gilead went up. that's why when we get back from labor day you'll be the busiest man in the universe. >> i may be. activity overall has picked up among the lawyers that focus on getting deals done and the corporations that are saying we're not waiting anymore. >> but you're in one of those
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maem mae moments make a lot of phone calls. >> it's bullish. >> it could be bullish. >> could be very bullish and the people that are betting against the market here, they could find themselves bush whacked by many deals but without deals i think the market meanders. >> on utx stock going up despite what were comments not that long agatha they were focused on smaller deals and not large deals. >> but technology is also part of the cohort. some people think it's defense but greg hayes is a bean counter and not going to overpay for rockwell collins. >> that's what seemed to encourage people as the price talk is 140 or below that. rockwell already moved frup the first reports. >> did have a couple of quarters it's a bad quarter
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remember they bought the pill. and these companies are growing at rates that are low. and they sell 24 times earnings so i think the president is going to -- warren buffet, i always confuse those two will talk positively and they have been extraordinary which means that union pacific can go up and csx although we know they're having problems getting the railroad not running on time then. >> what do you mean? >> nobody runs the railroad like
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him. they're having -- >> short line ready all ran better than that. >> no. yeah my daughter bought all of those and she won. she won. that's the way to win a monopoly. >> yeah. i used to play with my sister i always tossed the board before i lost. >> that's horrible. >> i always do what's necessary. that stock continues to go higher we want to see if he continued to lose faith in that management team. >> do you think he has >> 100%. >> that's an tiemt right there.
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have you been following target are they going to go to google web services have you noticed that microsoft has been going up rather steadily quitely working behind the scenes to take amazon business as retailers realize they can't do web services with amazon without aiding the enemy since whole foods. >> yes. >> there's a lot of things happening in the data center that's still red hot. >> you have been focused on it and should continue to be as we both should on ai and other things and cloud
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they're only about 50% occupied. take a look at the way markets are shaping upright now. they're starting off to the down side here and not dramatic and we mention bfrd this is not heavy volume ahead of the labor day long weekend the dow off maybe one or two points and the s&p about flattened. that's up about a third of a percent. if you take a look at the sector winners and losers as you might suspect as things start to stabilize it's returned to some of the more economically sensitive sectors out there.
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toi i want to highlight the momentum if you look at the leaders jim mentioned united rentals the last couple of days. one of the best performing stocks so far this week in the s&p 500 along with the semi-conductor stocks and then they make construction aggregates, concrete, asphalt, that sort of thing, that's where your strength and short-term in the s&p and opposed to the flip side where the weekness has been we talked about foot locker, underarmor, nike, one of the best here also the defense
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contractors. you can see there on the right hand side of your screen since tuesday that stock is moving higher already up about .1% in early trading here remember there's a certain price and point where some things get cheap enough where investors say it's a value. take a look at michael kors, ralph lauren and dollar tree over the month those are three of the better performers that whole retail sell off we'll see if the trend continues post back to school season and of course into that all important 4th quarter. back over to you guys. >> that was a great report by dom and i love the united rentals. i think it's terrific. we do have a stock down very
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badly today and that's because they were working on a cure for something. those of us that have at one time or another been feared to be die knowsed that that's vertigo. that's a huge miss this is much bigger. so that stock down it's a terrible, terrible diagnosis. dom mentioned, i don't want to jump around too much he mentioned the best texas road build. >> so let's never forget those are the two that if you want to play that game are worth
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playing. >> that's what you want to own. >> people agree with you this morning. >> they agree because have been pushing these things endlessly that's okay. >> let's check in with rick and see what he has for us he's at the cme group in chicago. >> good morning, the curve is still in a flattening mode as it was with the effects of north korea. we did see that the short end always seems to do more when it's the upside these days and you see it today two basis points higher. basically unchanged on the 30
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year bond we have been challenging that yesterday and we didn't settle to be low it closes are important even though there's still a good chance we can slip through that level many traders are look at the 2% area and if you look at bunds with the same time frame something jumps out at you the patterns are obviously similar. there's a lot of correlations going on in the world but with the bund especially they had the draghi bump where it moved from 25 to 60 basis points. it's still retaining about 10 basis points of that
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>> now if you look at the dollar index earlier in the week took out that april 16 low. if you look at the charts you can see that on the left side but open it up the real chart to pay attention to is how we're now trading since december of 14, january of 15 but we still want to be into that area from april of 16 and the dollar index is fighting here a bit now to flip it around let's look at the other currencies against the dollar it's in this pattern and seems to be holding but here's one that doesn't look like it's going to settle down if you look at the four year chart of the euro versus the r dollar 125 is jumping out at you because of the movement on the
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left side of the chart it's the reasoning that doesn't match up. >> david and jim back to you. >> thank you as we head you to break i want to remind you yet again not to miss becky quick's interview with berkshire hathaway's warren buffet birthday boy is 87 today and that will take place 11:00 a.m. eastern time squawk on the street will be right back
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suing that firm in support of travis, the company's founder. of course uber has a new ceo if you're just tuning in as well. but we'll speak in the next hour on cnbc.
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up next stock trading with jim squawk on the street will be right back
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i'm going to be as surprised
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as our viewers are because i'm going to ask you. >> i was going to do nintendo which is the switch which therefore is my dog because the switch was pointed out as being the hottest product at best buy but i'm switching to a piece in one of the short stocks in the world. >> it's just starting and apple is involved. samsung and chinese omes this universal display up 8 today. and take away union pacific. it means apple it means apple and it could be the apple. >> it could be. >> so anything that's in apple. >> who are the largest customers. >> who are they? oled. >> everybody samsung, chinese oems and
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perhaps apple. remember apple is like fight club the first rule about apple is you can't talk about apple it's the number one play on nonreplace >> i got up to study these guys. i'm still not done i have a day devoted for this. >> what does it matter. >> i live in a world of tyranny.
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>> negotiate a big screen for you will you give me a little something on the side? >> yes if i get a big screen anywhere >> yes but i think it's important to remember that it didn't have it and where is the furtherest that the germans got in world war ii in tess 7th? the homestead.
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carl has the morning off again. taking a look at the market, sort of a mixed start for stocks got strong economic data by way of economic growth and jobs. put that along side a new
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twitter tweet from the president to north korea nasdaq and technology stocks are outperforming wti crude continues to fall as investors in the energy market weigh tim pact of harvey gasoline prices at 2 plus year highs. our road map begin with the latest on hurricane harvey we'll take you back with more on the storms impact on houston and local economy and the entire country. then uber investors join us. and he is is going to discuss that and the new ceo at the company and all of the changes and drama that have been happening. >> and finally famed investor warren buffet set. >> water levels are expected to continue to rise and contessa
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brewer is in houston and joins us with more good morning. >> it's not that i want to be all polly anna silver lining but outside there's blue sky businesses are back open for business inside i'm in a mcdonald's here we're looking at the drive-thru and they just don't have the staff for it. there's 15,000 mcdonald's employees. 300 restaurants and and with me now is matthew and owner operator tell me what the biggest challenge is coming through the storm and making sure that you're open for your neighbors. >> first of all thank you for having me and we are very fortunate that many of our restaurants are open now we're able to get our crew and our staff back in. the challenge is honestly trying to get up to 100% capacity.
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>> supply chain. >> supply chain, staffing, but every day we're getting better and stronger. >> a third of the restaurants open already you expect half by days end. the logistics clear up now but you still have a real problem with 15,000 employees. many would have been displaced by flooding. how do you get the people back to work and still manage what's happening in their personal lives. >> our employees are family as well and we're going to do everything that we can as owner-operators and as a company to make sure that we can get them back on their feet and then them move on. >> >> restaurants are dealing with a lot of this and spoiled food and things like that if the power has been out but transportation maybe the biggest issue because people have not been able to get around because city buses haven't been running and still some are flood out even as the water recedes in
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downtown houston >> it's a good sign. been doing good work for us all week long in that difficult situation. joining us now former u.s. transportation secretary and former under secretary of homeland security that oversaw national reforms after katrina gentlemen thanks to you both let me start with you, we had you on a couple of days ago you were making the point we still don't know what we don't know in terms of the damage. anymore sense as for what they're in for there and what has to be done. >> i think we do know a lot more the one thing that's clear
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though and she played it out, the challenge is getting the work force back to a level of stability. and i think one of the biggest challenges that still lies in front of the local state and federal officials is getting people out of mass shelter facilities back into their homes and back to a sense of normalcy. >> what if your home is not able to be occupied >> well, in a lot of these homes in getting the level of flooding you may have individuals that will be out of their homes for weeks or months. and one of the things the federal government is going to have to help in the houston area in the state of texas with is how do you create sheltering how do you create that narrat e
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narrative. >> what is your sense in terms of the federal governments role here in trying to help what's been a catastrophic situation. >> we have the citizens on our mind the role of the federal government is very important here it's to work in partnership with the state and local government that's why frankly the trip by the president was very important yesterday. it's going to be important that his chief of staff mr. kelly who as you know is the head of homeland security frankly is uniquely situated as the chief of staff to ensure that the entire administration is following through on the commitment of the administration
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to be supportive that too is very very important. >> i just wonder where that falls because there's a series of budget battles looming on the federal budget, on the debt ceiling. now on the enormous bill that is going to come due for hurricane harvey and the president wants to pivot to tax reform today where does infrastructure fall in that and do you think it gets a push from something like this. >> i think so. congress is going to step forward. you'll have members of the texas louisiana mississippi delegations and all of the other impacted states. they'll be reechg out and challenging their colleagues in the congress to step forward so i think you'll see significant response and the appropriations process is what has to work here and you do have these other dynamics at play be but this is a time and we see
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not only them waiting to come to rescue and support so the country at whole is ready to bond in a way that's consistent in years past. >> you obviously have a lot of app rations happening in parallel, still trying to assess damage and then trying to get to the next stages of recovery, what are the bottlenecks what do you think could be the potential hold ups as those processes get moving in the absence of new federal appropriations are we going to have enough money and aid flowing in through the agencies to support what needs to be done at this point? >> in this immediate phase you'll have all the resources you need to deal with problems ahead. but as you get further from the crisis, the rescue operations that are on going and the storm is make land fall in louisiana
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so that spreads the scope and scale of the disaster you'll begin to see a transition to probably more bureaucracy. it's not a negative but it is the reality of does assisters and i have to tell you we have gotten through this immediate phase and everybody has done well people are exhausted tensions are going to begin to rise and the potential for conflict is very real. >> secretary slater since your expertise is transportation just on the imminent challenge that businesses are going to have opening up schools, getting back airports, how do they drain the water? >> clearly they're very important in this regard but the roadways and bridges and the
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like and we have to make sure that as people go to super markets you're going to have the items there that they need and want so the trucking community is important and the entire transportation system is about getting people to the places they need to go and getting the goods to the place where is peel go it's also about getting kids to school and giving us access to opportunity and those things that improve our quality of life and i know that secretary chow will bring the entire apparatus of the u.s. department of transportation to bear working in the states effected and with those at the local level as well there is a very important role for transportation to play here. houston is also very critical to our overall economy. we're going to see a significant
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impact on our energy production and processing and transportation will play an important role in ensuring that we meet that challenge as well but what happens in houston as it relates to this catastrophe could have a significant impact on the overall economy of the u.s. and that's why it's important for all of us to be concerned about it and all of us to lift a hand and offer an opportunity to be supportive in every way possible. >> okay. well, secretary slater we appreciate you joining us. thanks to you as well. >> thank you. >> good being with you thank you. >> monitoring the markets this morning, a mixed start for wall street despite some strong economic data this morning the president is set to speak on tax reform later this afternoon. joining us is wells fargo global quantitative strategist and the washington crossing senior portfolio manager. gentlemen good morning to both of you 3% economic growth for the quarter. not too shabby
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>> we felt the consumer was in a good position and wages are goe growing and that's what drove the beast. >> does the rate of growth stay consistent it will be sustained for the rest of the year getting the president to his long-term 3% growth target. >> you don't see it sustained at 3% this is more of a bounce back so from that standpoint you'll see a little bit of leveling off into q-3 and q-4 but the nice part swer continuing to b on solid footing and corporate profits are still growing and the inflation data was still tame and in line. >> and as a result kevin in the markets you're seeing financials on top yields are higher.
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every day it's a different story. yesterday jitters about north korea lead to buying of treasuries today the president fires off another tweet threatening north korea. do you buy this group? the banks and other groups that are sensitive to higher wreelyis or not >> i don't think you do. i don't think you're going to see a big break out of growth as your other guests mentioned. >> what we have lived through is an acceleration from zero growth or close to it to a healthy looking growth rate. but ultimately the market has moved strongly ahead of that i think if you look at valuation, traditional valuation measures put the market overvalued relative to anything that you look at and the question comes from here, what follows up on this
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and we'll probably see more modest returns from here. >> yesterday gave us another chance to ask why doesn't this market seem to care about these potentially looming threats and geo politics or the lack of policy projects. have we seen one of these period where is the recent softness in the stock market took care of what we needed to in the pull back or are we still wary going into september so you have seen the minimum amount needed to get that paz those things can always go further. the valuation point say good one and things are not cheap on an absolute basis you have to say what's my
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alternativ alternatives. >> so stocks aren't cheap. >> i want to ask you about the impact of hurricane harvey maybe a short-term hit on lack of activity but longer term boost on reconstruction. does it change your view at all on the markets and the economy the average price of gas in this country is 230 that's way up from a week ago and expected to rise further that has an economic effect doesn't it >> it does and the economic effects are going to be most severe we saw what happened with hurricane sandy and hurricane katrina and focus on the
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underlying new economy we're happy to see growth but we're cautious about the forward looking returns because the market seems to be pricing in very good things going forward so we cut our equity allocations from overweight back to neutral and wouldn't make any change in the portfolio specifically tied to this unfortunate event in houston. >> all right thank you for weighing in with your thoughts on the market. growth and the impact of harvey. >> thank you. >> when we come back, uber investor and adviser will join us in an exclusive interview with his thoughts on the new uber ceo he's arguing that the firm held the company hostage in the removal of travis as ceo we'll get into all of that on squawk on the street just ahead.
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his last visit with cnbc in may. >> basically, the economy is doing okay whaend i say okay 2% not that precise for the figures but one
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thing that helped with rail. there's a lot of coal that doesn't move at $2 natural gas and moves at $3. a lot. >> we also asked him what he thinks about jeff besos and why he chose not to invest in the e-commerce giant. >> how come you don't buy shares of amazon? >> stupidity i was impressed with jeff early. and what's really, i mean, i thought he could pull off something but on the scale that has happened it's changed your behavior and it's changed everybody in the offices behavior and the remarkable thing about jeff and everything else is two industries almost simultaneously that really don't have that much connection. >> buffet on missed
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opportunities there. >> we're all eager to hear what she says about some of his current investments when it comes to consumer technology expecting bullish commentary there right? >> he made a lot more better decisions. sometimes to get a deal that nobody else can and that comes to mind with bank of america where berkshire is the largest shareholder as a result of a 2011 deal where they invested money, gave them that buffet confidence that they needed at the time and took a 6% dividend and now of course converts at a very low number. >> it's going to be a similar yield. he is accepting the down side risk but i do think for the average investor his comments on amazon is almost reassuring because you miss some and you miss some big ones and there's no shame in it if you don't take a swing he likes to say he plays baseball
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with no called strikes and that's the case. by the way, amazon over the course of its history the stock was down at one point. this was not obvious to the world let alone warren buffet 20 years ago. >> that's a good point be sure to catch the oracle himself warren buffet just under an hour right here on cnbc but next on squawk on the street, the latest on the devastation and economic impact behind hurricane harvey. we'lbeig bk.l rhtac ♪ there's nothing more important than your health.
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for more on the relief effort surrounding hurricane harvey let's send it out to courtney reagan inside the command center. >> good morning to you, mike i'm here in north carolina this is lowe's emergency command center it's been up and running since thursday 24/7 they make sure that all the crocidolite c critic inventory and supplies get to where hurricane harvey struck this is going to be up and running r for several weeks. it's not something that will be fixed overnight. so far about 900 truckloads have
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been delivered or at least are in route to that region. the employees here are in constant touch with all the nodes of the supply chain. it does make it difficult to get them through because of the flooding and the road closures so lowes is working with fema, homeland security and the department of transportation to make sure that the critical supplies get through >> the most critical in the area now is generators, water, tarps to cover roofs, bungie cords to hold down the tarps, fans, air movers, air conditioners for people that don't have power they'll use a generator to run the air conditioner. it's a very humid area of the country. >> 17 stores are still closed and a lot of the inventory was sent in advance. the corpus christie store was able to reopen on saturday despite a number of them being displaced including the manager.
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lowe's has donated $500,000 to the red cross and it's called lowe's heros working with first response team of america five gallon buckets full of supplies being delivered directly to homeowners and those effected mike, david, back to you. >> okay. thank you courtney courtney reagan. >> coming up legendary investor warren buffet will join our own becky quick. his thoughts on everything from the hurricane to the trump administration to the economy. his increased stake in apple and a whole lot more first as flood waters rise just how will the nations largest flood insurer fema pay for the recovery we're going to ask former fema deputy administrator who hepd run the national flood insurance program. more squawk on the street after this so that i can take my trading platform wherever i go. you know that thinkorswim seamlessly syncs across all your devices, right? oh, so my custom studies will go with me?
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kborgood morning, here's yo cnbc news update at this hour.
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a double whammy in port arthur texas. after evacuating their flooded homes they're faced with more understooding inside the civic center being used as an evacuation center. officials plan to close it and move the m to another location. comcast, the parent company of cnbc the latest corporation to donate to the relief effort. it will contribute $1 million. 500,000 of it in cash and it will also donate advertising time on the cable systems to the relief organizations that need to run public service announcements. >> president trump tweeting this morning that he has dismissed any diplomatic negotiations with north korea after the country's latest missile launch over japan. he said talking is not the answer north korea releasing photos and videos of that launch. >> spain's parliament holding a moment of silence for the victims of islamic attacks that killed 16 and injured more than 100. the session is the first since
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the attack some two weeks ago. that's the news update this hour i will send it back downtown to you, sarah. >> sue, thank you. with crude oil under pressure again this morning let's go to kate rogers with the eia inventory report. >> a much bigger decline in crude this morning 5.4 million barrel decline calling for a drop now looking at crude we're down by around .5% right now. continuing pressure due to hurricane harvey goldman sachs has about 23% of the nation's refining capacity is currently off line due to that storm the other big story is gasoline. we're higher by 6.5% aaa says the national average price for gasoline right now is
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about 240 a gallon that's up from 237 yesterday and $2.34 last wreeek. back to you guys. >> consumers will already start to feel it thank you. >> flood waters continuing to rise and the nation's largest flood insurers already $25 billion in debt for earlier storms joining us now is former deputy administrator for the national flood insurance program. now university of maryland center for disaster resilience thank you for joining us. >> well, good morning. >> so first of all and the federal government is going to bare the brunt of a cost here and flooding isn't covered by homeowners insurance and as we understand a lot of people aren't insured on it anyway. what kind of undertaking are we
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talking about financially for the federal government. >> you have to understand that we heard only about 20% of the homeowners in the effected area have flood insurance flood insurance should cover that and most people were uninsured and fema's programs were not designed to make people whole after a flood. they're designed to get people back on their feet so individual assistance comes in and funds that go toward that are to provide temporary housing. so by no means will it kroefr your home. >> what is the status of funding for the national flood insurance program set to expire september 30th. >> that's a serious problem. every time the program expires
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it put ace lot s a lot of the et at risk. first of all, people can't buy policies so people that are considering getting flood insurance can't get insurance. claims can't be paid and other things happen because of that. we have to make sure that it gets reauthorized. we have a $25 billion debt as you just discussed by all my estimates and what i have read and scene we're going to be facing at least $10 billion worth of insurance claims we don't know the numbers yet. and if you just look at the people effected and the insurance policy is on the order of 80 to $90,000 then you can expect a good chunk of money needing to go to that and fema funds for flood insurance have
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less than 2 billion so if we don have enough capacity with the ceiling of 30 billion then we're going to be deficit and having the money to pay for those claims >> sandra, had storm surfaced a debate and whether it serves to incentivize building in vulnerable areas subsidize the building of homes in areas that would be prone to flood and could not get private flood insurance. is that something that has to be rethought as part of the reauthorization progress or afterward? >> i certainly think we need to reform the program, maybe this isn't the right time, maybe we need to just get it reauthorized but yes there's an unintended consequence of offering flood insurance in these areas and the standards are set so low set to the 1% annual flood that you're required to have flood insurance and that is by no
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means a safety net so this well exceeds what we're calling that type of flood and people live in these areas and in fact urbanization has caused a great deal of development and floodplains even building to these standards there at risk. so yes there's an unintended consequence and a hazard to the flood insurance program. >> so president trump predicted congress would authorize many billions of dollars in funding do you see this being able to be tied at all to raising the debt ceiling and some of the other budget battles that are looming in the next few legislative sessions in congress and would that make it easier to get money to texas >> well, so having the money in the bank makes it quicker, right? and you have accessibility and funds to pay out the claims as they come in by no means is this going to be a fast process
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but congress could make a decision to have a disaster relief and flood insurance program and reauthorize the program. there's a lot of things that need to be done by september 30th. >> it would certainly test key republicans tolerance for spending money they have been budget hawks for so many years. thank you. we'll leave it there former deputy administrator for fema in charge of the national flood insurance program. when we come back, expedia ceo accepting the chief executive role at uber while uber investor will join us on set next to tell us what's in store for the ride hailing company and some of the board room drama but first a check on where we stand here in the markets. nasdaq out performing it's banks and technology stocks on top
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today. nasdaq up about .4%. the dow still down about 10 points we'll be right back.
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what does he think about the new ceo of the company he is an uber investor and capital co-founder, hyperloop one co-founder it's nice to have you there. >> thank you for having me. >> when you look at uber right now it's growth potential on one side but you have this fight that is quite significant with benchmark going after the ceo.
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travis still has incredible influence at the company and new ceo coming in and the lawsuit potential foreign bribery charges. why stay an investor at all. >> one of the most i think important technology companies in the world right now we're right in the middle of a huge shift in transportation technology you look at self-driving and automation and where all of that is going and making our world a cleaner place and more efficient place. and you'll get the scale that it's gotten to it's the fastest growing company in history and it's play a role that's very important and the new ceo, in case anyone wanted to under pronounce it is a fellow american and he's really a crown
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jewel of our community and many, many of his family, his cousins have been contributing to our country, to america in such amazing ways and we are all very proud that he is accepted and joined to lead uber into it's next phase of growth. >> all right i can understand that. of course as a fellow iranian american why you would be proud on that but why is he the right choice considering he seems to have been the truce choice. >> no, i think he was the perfect choice if you look at the experience with expedia over the last 12 years he is the value of the company and beloved by everyone and doesn't shy away from solving problems and he's a
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leader so we're all happy and excited about him joining. he's the perfect choice. >> you're heading to court today in delaware over this board fight. tell me what you expect to accomplish there what is your role wurks ber, with travis and the letter you said had a lot of information about what's going on at uber and what travis is thinking. >> well, everything i'm doingass a personal investor in uber as you know, well i was an early investor in the company on the board as an observer for about four years was lucky to see the company go for over 9,000 customers that revenue in tens of billions in such a record amount of time. and my role is really just to
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try to make sure and the voice of all and no one is bullying their agenda and their choice of a ceo or their selection of who should be the board members. no one should in the stance that i have taken benchmark i believe has been pushing their agenda at the expense of stake holders. it's important to be in the court and very lucky to have quite a man yule, one of the best law firms in the country take on the case with us we intervene last week. >> you have deep insight into travis's thinking and feelings you two are friends right. some of the information in the
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letter on your feelings about what travis was told and when and benchmark management. >> no, i'm very close to the company and i know a lot of these things and that conversation that i cited in my first letter to the board made me believe that benchmark had leaked information about the holder report and many other things that is in the letter and i know that you're going to post some things later online but it was important that the board of directors and all shareholders and all employees and everyone knew that what was going on here and what the facts were. >> you believe that benchmark was trying to take hold of the country. >> it says that i believe those actions are in that direction. if you're trying to control board seats and keep who is going to point which board seat
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where that is obviously something that we made them believe. >> take back the board seats he said he would relinquish. >> you know, as i have said, these guys they showed up the week that travis's mother was -- passed away in a tragic accident his father was in the hospital dying and they saved his life. that very week when travis agreed to take a leave of absence to mourn his mother and that week they showed up in his hotel room with a letter from five shareholders without the support of the board of directors and hold them up in a room and that's not an honorable thing in my opinion to do.
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and you know the facts are the facts as i have written in the letters and they push them to re-sign. and that's an honorable way of doing business >> do you think he deserves any of the blame for overseeing a company that was myered in so many con tro ver sis and allegations of sexual harassment and on going investigations by the federal government the list goes on and on. >> he took a leave of absence for a reason and he has also said that he was absolutely supportive of t you know, of this process and now unanimously the board has selected dara as the new ceo and the company is going through a process. at the same time this say founder that helped build the
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fastest growing company in history and created millions of jobs so you know i think with his leadership this company is going to go where it is to even bigger and more important accomplishments. >> a lot of people expect that somebody in his position is going to want a truce on the board. between you and benchmark. is there a chance of that happening? because in your letter you said that benchmark said we don't want to talk peace until the ceo thing is done. now it's done. so is there a possibility that's going to happen? >> well, as i said in the letters they need to drop their lawsuit. file a lawsuit against the founder and the company in the middle of a ceo search in the middle of a major strategic investment round is not prudent and that's not the way they should have acted and they -- and so that's what we're talking
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about and we want to make sure that the choice of all shareholders is mentioned. >> you started by outlining the growth prospects for uber. what about autonomy? full autonomy would present a problem on the drivers to own the automobile how do they get past that? >> yeah, you're talking about probably one of the most important, you know, shifts in technology and also society that's going to happen over the next decade to 20 years, it's not just uber, i mean, this is going to involve many, many companies and it's going to involve governments and regulatory agencies all around the world. but autonomy in terms of self-driving, it's inevitable. it's already happening and we all have to kind of find the way to make that work and make it -- bring all the benefits it can bring to the world. there are millions of people that die every year from car accidents that just should not
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happen and autonomy can save those lives. >> yeah, the economic model will be interesting to explore. we certainly thank you for coming on. >> of course thank you. we go now from one important interview to another let's go straight to our becky quick live in midtown manhattan with a special guest becky, take it away. >> reporter: hey, sara, thank you very much. i'm in midtown manhattan and we are here with the tourist today, warren buffett, the chairman and ceo of berkshire hathaway is here to playoff a lunch auctioned away for glide warren, thank you very much for being here today >> thank you for having me. >> i know this lunch is very important to you this time around the auction went for $2.679 million today. over 18 years you have been doing this with glide, you have raised over $25 million. it's a little unusual for you to focus on a charity like this because you have given so much to other foundations that give away money
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why is this charity so important to you >> well, it's run by a very special man, cecil williams, who in the early 1960s was assigned as a minister to a church that was on the way down. it was in the tenderloin district of san francisco. it had about 110 or 20 white parishioners and cecil was black. so the 120 went down very fast when he arrived there. and so he started from scratch and he built a remarkable church but really aer remarkable social organization he helps the people that the world has given up on. and he never gives up on anyone. there was that movie, "the pursuit of happiness"with will smi smith, my wife told me a lot about cecil, and i thought it was too good to be true. i'm a suspicious guy by nature so she didn't sell me, but then she took me there one time, to
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glide, and i got to meet cecil and see what happened with the kind of people he was helping and out he was helping him they served 700,000 some meals last year. and they really take people who are at the bottom and help bring them back. and he's been doing it for decades. he's a remarkable man. and if we can help out raising some money for him, i enjoy doing it. >> that's great. i was wondering if we could talk a little about the area of the country in pretty dire straits right now. that's texas, houston, specifically, and now louisiana. as the rain continues to fall from hurricane harvey. i've seen some pretty enormous estimates of damage and obviously the human loss has been heartbreaking what is your sense of this storm of the damage that's been done here >> well, it's sort of unbelievable i saw a figure the other day of 14 million, 14 trillion gallons
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of water being dropped from the skies. that's equal to 2,000 gallons of water for every man, woman and child on the planet. so it's staggering and the insurance loss will be large. there will be a lot of uninsured loss, too. because flood, a lot of people have coverage with the national flood operation, but in the case of our particular company, we write about 10% of the auto insurance in texas so if you have comprehensive insurance, which covers flood, about 70% of the people who buy our insurance get that you may very well have a total loss we probably have $500,000 or so cars insured in that area. >> through geico >> through geico there's probably 5 million cars in that area and we don't know at this point, but i wouldn't be surprised if
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we had 50,000 losses and most of them will be total losses that number is about the same as we had in sandy, but our market penetration up here in new york is higher than in texas. we have to get tens of thousands of cars in there, because a person has enough trouble with their house and everything else, but they need a car. and we want them to have a full tank of gasoline, so we have been taking on big tankers of gasoline it's how you perform at a time like this that really defines whether your insurance company is doing the right job >> yeah, i have seen some estimates of losses. jpmorgan was suggesting maybe $10 to $20 billion in insured losses the ceo of farmers was on yesterday and suggested it could be $150 billion in uninsured losses do those sorts of numbers make sense to you how much of a feel do you have of this? >> nobody has too good of a
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feel, but don't strike me as high there will be a high proportion compared to most events. because with just a straight hurricane, everybody clicks on homeowners insurance but fortunately they did have some warning, a fair amount of warning on this, so there was a lot of evacuation that took place. but it's just got to be devastating. we have six furniture stores, star furniture in the houston area, i was with those people yesterday, the day before yesterday, it was yesterday. and they hope to open up on saturday, but it's -- the effects of this are going to go on for a very, very long time. >> what other exposure does berkshire have aside from geico, aside from some of the furniture store that is are there? >> not like we used to we used to write a lot of super cap, in fact, we were some of the biggest writers in super cran, and then they didn't have
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hurricanes for a long time it's been 10 or 11 years since a hurricane hit land in the united states and then you can go back to 1840 or so, which is the longest record we have, and there's really never been that long of a period without a hurricane coming to shore. so the rates kept coming down and down and down. and the wind doesn't know what the rates were, so if you get the wrong rate on insurance, you're going to lose money over time so as the rates went down, we got out of the super cap business pretty much entirely. so it does not hit us big in re reinsurance like it would have ten years ago. >> is that part of the national insurance plan that is looking at massive amounts of debt that it owes to the u.s. treasury, $25 or $26 billion >> the problem with flood insurance is that the only people that buy it are the people that are going to need it where it's going to happen you know, if i have a house
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that's higher up in omaha, i'm never going to buy flood insurance. so you don't get the spread of risk that you get with auto or homeowners nobody knows on a fire or something to hit a house that's random, but it is not random on floods so people that live in floodplains, they are the only one who is want to buy flood insurance. and the normal insurance industry can't take care of it when you have an adverse reaction like that so the government step in. they are already in the hole for what happened and thereby a lot further in the hole when this gets through >> usually what happens after a hurricane hits land like this, though, the rates can come back up for insurance if that's the case, would you start insuring again >> i don't think they'll go up that much, but it's super capped, rates get to where we think that the odds are in our favor, we'll write write it, but it's been five or six years since we have written a supper cap in the united states
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the rates just keep going down and down and there are more houses on the coast that are worth more money and there's been a lot of money coming in from outside the insurance industry with cap bonds. so it's not struck me as a good business in recent years. >> let's talk about the potential impact on gdp. we have mark sandy on today who suggested it would probably not be a massive impact on gdp would you agree with that assessment >> yeah, i would say, i mean, i don't think it will be a full percentage point for ayear or anything like that, but it has a real effect. it destroys wealth and if there's $150 billion or something of uninsured houses, that's a lot of wealth we are a wealthy country, too. >> let's talk about gdp because we did get a second quarter read on second quarter gdp. it was 3%, quite a bit better than people anticipated. does this feel like a 3% gdp
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economy to you >> well, it's been about 2% a year now for -- since the fall of 2009. eight years. and it's been remarkably close to that most of the time the way they report the quarterly number, they took the change and multiply by four. it's not year over year. so it gets a little tricky that way if you're off by, it makes it .40 in the annual report then with seasonal adjustments and everything, you don't want to take a quarter too seriously i would guess we are in about a 2% growth on the economy now and as i've said, every now and then we think it's accelerating and every now and then we think there's a double dip or something, and it just needs to be a couple percent. and certain industries pick up quite fast the autos go faster on homes, but now they are tailering down. 2% is not bad incidentally. >> no. >> 2% will make -- if we


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