Transcripts For CNBC Squawk Box 20130918

0. 1 . As for the markets this morning, take a look. The dow and the s p both closed at sixweek highs yesterday. The nasdaq ended the session at a 13year high. 15,529. That was the close for the dow. If you take a look at the futures this morning, just to get a sense of this, cramer told us yesterday the market wants to get up no matter what. The futures are indicated up higher by 2. 8 for the s p. But the big question, joe, is what happens at 2 00 today. What do you think . I think theyre going to taper by 10 to 15 billion. Which . Ten or 15 . Here is the thing. The market is almost 100 set on this. Liesman wait a second was talking about it yesterday and only 48 of the experts that he polled said the taper is going to come today. I think by saying 10 or 15 today, i think im still sticking my neck out. What do you think . I love steve, but these are just putting together a bunch of the clowns that we have on all the time. I know its a composite look at that. But theres no way it was 48 . Why should we give them any well see what happens. But the question is, the time sg weird. Theyre doing this just as we are getting back to this issue with the debt ceiling again. There is a question of what washington does with all of that. I was thinking of it purely in terms of you want to go to 70, which is a round number, that would be down 15. Or a lot of people think 75, three quartseers its probably going to be 10 max. I want to do 70. This is why i want to hire a monkey. Who can throw the dart. Thats what im saying, it might get to 70 instead of 75. Do markets care one way or the other . Its more likely that it starts in and out, right . I want to go to 70, but its probably 75. I think 75. What about 65 . No way. In corporate news, apple is going to launch its new operating system today called ios 7. Its being called the most drastic change in apples mobile operating system since apples 2007 launch. Six years already for the iphone. Among the improvements, better handling of photo galleries and air drop. Whew for sharing files with other devices. For air drop. Is that when you just test it . Is that like drop box, andrew . Maybe its where you touch it and those other phones you can you dont know . Not really, no. Air drop is when you can share the stuff with other phones. I thought it was other devices. Yeah. No, you can listen to my music from my phone. For u. S. Users, the update includes itunes radio. Andrew, looking good. A Free Internet radio service. Thats why were seeing some movement in those other competing but thats why pandora that is going to hurt pandora. Nobody else gets hurt in that. Right. Meantime, blackberry unveiled its new z30 Flagship Smartphone and theyre not really sure how good it is, so they decided theyre introducing it in malaysia today to see how it goes. The company battling the win back the market share. The new touch screen device thats a five inch display and a 11. 7 gigahertz processor, which could get the delorian up to 85 Miles Per Hour so you could time travel. It will initially launch in the uk and in the middle east. No, that was giga what . Back to the future . I dont know. Yeah, giga well immediately get bombarded with emails because people love that. Michael j. Fox. Run dmc. Jp morgues long whale problems may not end with a civil settlement. U. S. Prosecutors reportedly still investigating the banks trading scandal for potential criminal wrongdoing. This is a sign that an expected 800 million what was it . Giga watts. The settlement may not be the put to rest for the firm. Andrew, can you believe that . Back in chicago. I know. Andrew has been traveling this week. Hes in chicago. He has more of this mornings top stories. Andrew. Thank you, becky. By the way, i still want one of those skateboards, the air skateboard. Remember the one that michael j. Fox had . That, to me, if i could have that that was in later that was back to the future 2. Because he had a really . Yeah. He had a regular he had a regular skateboard in the first one. Remember . He breaks it off and hes holding on to the back of the bullys car. Yes, yes, yes. And then all of the cow doody gets spilled inside. Bif or buff. Has he ever done anyone else . I feel bad for that guy. He was in all three movies. Later on, he was washing his car later. He was in all three back to the future movies. Oh, you mean the actor . Right. Ive always felt bad for him. Were going the talk Goldman Sachs in just a minute, but we have some stocks to watch this morning. Take a look at adobe, earnings and revenue falling short of estimates. But you can see that the growth of the company says that it expected strong growth to top the 31,000 it add in the third quarter, adobe citing Strong Demand for corporate customers. Discount chain 5, below, announcing a 7 million share secondary offering for old er admin international. And i should also say i was with Lloyd Blankfein last night. Goldman sachs had their conference in chicago. Thats why were here. Were going to talk with him at 8 30 eastern. Were going to talk about fed tapering and hell give you a guess perhaps on the 10 to 15 to 20 billion issue. He is a new component of the dow and what that means and he has some interesting interviews on jamie dimon, oog even interesting news on steve cohen, who is still a client of the firm. So weve got a lot to talk to him about. And i know you guys are going to jump in. He still has the beard. Still has the beard. This is the fiveyear anniversary of all the problems. We are using a picture that takes us back to what he looked like during the crisis. We did this on purpose. Thats a time sensitive picture of where he was during the financial crisis. Because we could have gotten one that looked like him now and that was actually current, but we wanted to get one you remember, he debuted the beard, though, on squawk box. The beard is good. Hes very proud of that. We talked about that last night, he was proud of debuting the beard with us. The beard and jeans is what i see. Very casual. Yeah, the beard and jeans. Do you think its a suggestion when you really feel like you have confidence when you have a beard . What does the beard signal to you, joe . A lot of bald guys have beards. I dont know. Its almost like just to show i can still do it somewhere. Have you noticed that, though . Its the overcompensation for about then again, a lot of poem like me that have a lot of hair, i dont know what my beard would look like. Or you. Its very patchy. I could try and maybe were the ones that are inadequate. I might be wrong about the whole too much . Yeah. We also have a number of newsmakers who are joining us in studio this morning, including former minneapolis fed president gary stern. Plus, we have Toll Brothers ceo doug yearly and two members of the cnbc global cfo council. We have the top executives at home depot and wells fargo. Big show lined up. Yeah. Marissa. Not published, anyway. Yeah. They also were going to get to this right now, but they also switched michael j. Foxs girlfriend. It was yeah, it was you know way too much about this. No, no, but all of a sudden they stick her in there and youre supposed to, like, think its still her and its a totally different actress. And its like, were not that stupid. I wasnt, anyway. In the first one, remember the brother married the woman from nbc . What was his name . Shoe, elizabeth shoe. And then they switched it around. Lets get to the markets this morning. But i noticed. No putting it over on me. Theres the futures this morning. Amy robach is not with cnbc any more. No, shes not. So with can he talk about her in a negative way . No. No, i like her. I like her. Yeah, im sure. Im sure. Anyway, theres the futures this morning. It was okay yesterday, kind of never got going, got up to 50 or 60, but i think we closed up around 35 points or so. Were indicated higher. That would be more than a few days in a row. Theres oil. Now people are saying gas will never go below 3 a gallon again. Its been over a thousand days. But they say never again. But it had to go above 2 never again. Yeah. Well see. The tenyear note, taper day. 2. 85 . That might mean the fed lost control if it was over 3 . Take a look at the dollar versus the euro and the yen and said if anything is happening there. 98. 96, 1. 33. It hasnt been that much fun to watch the currencies lately. Lets take a look at gold. There are people that think its over now because once tapering starts, fred about it. Gold is headed that little thing you see there, that trend will resume and will head lower. Time for the Global Markets report. And ross westgate, hes been consistently here for us lately. Hes in london. Its good to see ross. Someone talk to you or something . No, joe, i just decided id be here, help you out as we go through this. We benefit. Viewers benefit. Yeah. We are higher. Were up to the best levels of the day. We start the session towards the fed decision. 64, 32 advancers outpace decliners at the moment on the Dow Jones Stoxx 600. Not huge gains yesterday. You can see here the stoxx europe 600 up around 0. 5 at the moment. But were not far away from recent sort of fiveyear highs generally across the board. The ftse today jup just up 6,586. The ftse above 8,000 has been called by tend of the next year, 8,000. The xetra dax did hit a fresh record high, up 0. 4 lower. The ftse mib up 0. 5 . Theres now a thought that keeps going on, here were going to do with berlusconi, theres a thought that even if they do decide to reject him, he will broadly support the sector, as well. Travel and leisure is lower. The gains coming from banks, technology and camera claws, as well. Well keep our eyes, of course, on whats going on with yields ahead of the fed decision. Treasury yields, 2. 84 . The interesting thing this morning, the mover, while treasury yields have come down, 2. 86, something on monday we say, the yield, gilt yields have gone higher, back over 3 and widening gilt to treasuries. The reason for that is we saw minutes today from the bank of england. No member voted for any more qe, despite the fact that market rates have gone up despite issuing Forward Guidance. We might get at least one member saying qe. They also are talking about upgrading their growth forecast, as well. Sterling has stronger, as well, against the dollar and the euro. Thats where we stand. Back to you. All right, ross. All of our duck necessary a ree here. Learning more. Claudia wells was the first girlfriend of michael j. Fox. I was thinking of his mother. I was confusing it. No, leah thompson. But then she was replaced by andrew shoes sister in two and three. All right. In washington news, this is much more important, obviously, than this other stuff. You know who else was in the first one, though . Huey lewis. Oh, his song. But then he was the judge of the talent at the you spend way too much time watching these. Im not watching them. I just remember. House gop leaders are said ready to be prepared to take a stand on health care. Theyre expected to use a vote this week on a must pass temporary government funding bill to block implementation of obama care. It will be offering to rank and file republicans at a closed door meeting on capitol hill later today. Meantime, the senate would likely strip out the Health Care Provision and accepted it to the house and this raises the possibility of a confrontation that could lead to a partial Government Shutdown over the september 30th end to the budget year. Interesting editorial i thought in the wall street journal today. If you get a chance to, check it out. The president was back to business with that speech. No longer syria is no longer enemy number one. Back to the republicans, enemy number one. The market is waiting to hear what the fed has to say. Joining us now is bill smead at Smead Capital Management and Jeff Mortimer at bny melon wealth management. So were at 85 billion. Where are we going today . Well, the tide is going out. 75 . I want a number. We are microanalyzing this. 75 or 70 . Well go with the consensus of 15. Thats what i think, 70. And we think that as the tide goes out, the first part of the tide only short people will be short to be naked, meaning and then you get way, wait into the wait a minute, tall people will be naked first. Really . Unless youre at the other end of the high. So what were getting at, the switch has been flipped. Capital intensive businesses, people that borrow a lot of money, this is rough on them. Utilities and telecons are not doing that great the last year. We think the taper is a continuation of the currency switch that occurred when the japanese decided to weaken the yen, in effect since the yuan is pegged at the dollar, you weaken the yen against the dollar, you cut the chinese off at the knees. So what youve done now is youve added the United States participating with the japanese and really given a struggle to emerging markets. Commodities, gold, whatever. And do you care what it is, whether its 10, 15, 20 . And markets. And what with the next meeting, do they cut another 10 or 20 or see what happens with this first 10 or 20 . Baked in the cake is a 15 billion taper, probably more weighted to treasuries than mortgages. Every time or just this time . I think the fed, you know, this is probably going to away long goodbye. They are going to be very data dependant as they look forward and i think well adjust as need be. We believe were going to get stronger data Going Forward. How long will it take them to get down to zero . Its probably a decent guess. Middle of next year might be a fair assumption. Data dependent. Theyve locked into that. Dont forget the midterm. Theyve locked into the 7 employment, 6. 5 up employment. Youve still got the front end of the curve at zero. Thats probably in our views not going to move into 2015. And the instead moving from a five, very, very accommodative to now absolutely less accommodative. But still accommodative. It used to be that they could make us feel really good by staying at zero and by just saying were going to stay at zero for a long time. Theyre trying to scare us with housing. We love right now that theres people that doubt the housing recovery and they say that this uptick in Mortgage Rates is going to ruin it. We happen to agree with tim sloan, who is going to be a guest i hear later, the demographic res powerful. Theres 18 million americans between 18 and 37. Theyve been slow to get married and slow to have children. As soon as you have a chile, you dont want your screaming baby next door driving people crazy. So we think that youve got to go back to the late 70s and be reminded when the baby boomers were buying their first house that we were paying 10 , 12 , 14 Mortgage Rates and theyre was a housing boom in the United States in the late 70s. Its need that driefls housing, its not the price of money. So theyre making a huge mistake to think that a blip up in Mortgage Rates is going to kill this recovery because theres a wave of a huge wave of people that are getting going. And we actually considered we kind of think that Kate Williams having a baby is a watershed event, the College Educated people looking and saying, hey, its a pretty good idea. Its tipped now because of exactly. Theyre wealthy, College Educated and theyre making babies. Thats what the United States needs. Thats what we need. So both of you gentlemen have to decide on how to invest money. Did you go 90 10 on equity right now . Versus bonds . Weve been overweight. Our recommendation is to be overweight and just stay there. 80 20 . What is it . With a 60 on 40 client, were upwards of 70 equities. We stay fully invested. Thats all you do . I thought you were value funds. Okay. You so youre 70 for were overweight weve been overweight equities really for a while now and just sort of continue to press those. How did you come up with that name, smead capital . A very expensive pr firm. How much did you pay for that . Loads. Anyone else work there . Theres seven of us. There you go. It could have been any of those other they settled on smead. Yeah. So both of you stay long. Markets not expensive . Market is fairly its a fair valuation. It could go higher if earnings continue . We think we could continue to pull higher. The thing that encourages it the most, and we could have a 10 krekcorrection at any time. But we are encouraged by the fact if you look at the large Institutional Investors do Something Like the nacabu study or if you look at High Net Worth individuals the way theyve got their Asset Allocation right now, theyre all very much underowning u. S. Long only. Therefore, declines are going to be limited. Were going to have decline webs but theyre not going to be the black swan folks are going to be thirsty in seven years, probably. Because thats probably how long it will be before the next black swan since everybody is all hedged for it. All right, guys, thank you. Thanks for coming in this morning. Appreciate it. Thank you. When we come back, we have a number of Large Companies that are saying theyre changing the way that they will deliver health care to their employees. Well have the details, right after this. First, lets check on the National Forecast with the weather channels alex wallace. Alex, good morning. Good morning to you. Its going to be a warm one for us in the midwest. Weve got this storm system coming in from the west. Out ahead of it, warmer and more serious air is going to come in. It will feel more like summer for you. Des moines, up to 91 degrees. Thats on the heels of the 70s yesterday. So a big warmup, but it doesnt last too long. Latter part of the week, a cold front sweeps through, the 90s, we see goodbye to that. Now were talking 60s and 70s. But that same front will be marching to the east. Out ahead of it, that will increase our risk for rain for the east coast cities. Most of the week, dry. But the weekend looks like wet weather and the same for us in the south. For our saturday, well be looking at showers and storms to kick off. Lower Mississippi Valley and spreading its way on into the carolinas for the second half of the weekend. Thats your National Forecast. Squawk box coming back in just a bit. Announcer where can an investor be a name and not a number . Scottrade. Ron im never alone with scottrade. I can always call or stop by my local office. Theyre nearby and ready to help. So when i have questions, i can talk to someone who knows exactly how i trade. Because i dont trade like everybody. I trade like me. Thats why im with scottrade. Announcer scottrade proud to be ranked best overall client experience. Toib squawk box. Its time for the executive edge. Walggreens is moving employees from coverage provided right now from carriers. 17 other large employers will join the Corporate Health exchange. The companies includes sears and darden restaurants. This is part of that movement to offering employees catch to purchase their own plans. Private insurance mimics the coverage mandated by the Affordable Care act. Were talking about other companies doing this, including dupont and caterpillar . Yeah. We talked in terms of people that are already retired. This is current. I read everyone in the journal regarding this. Its funny to see people, if its a good thing, they attribute it to obama care. But since its viewed negatively, you see this has nothing to do with obama care, the companies were going to do this, anyway. But to me, its as simple as what happened in retirement plans 20 years ago where they went from a defined benefit where you had no idea how much it was going to cost you based on return to a defined contribution. This is the same thing. You have this much money. You have this much money to spend on health care. Manage it. It could mean that, you know, you may need to spend more. And also you would be much more selective about going to a doctor and which doctor you go see. So its personal responsibility, which is, i think, helping. Andrew . So the good news, i agree, is personal responsibility. The bad news is, theyve giving a lot of cash now, but the question is does the cash that they give catch up to what is the true cost . Its going to cost you more. But youll have so much to spend. With the wall greens employees, there are 120,000 of them that have health insurance. There are two plans now. They can go to five plans in this new setup. 43 of them or something chose a plan where they were paying less than they were right now. That means bigger deductibles. In that situation, youre crossing your fingers and hoping that nothing bad happens. Its going to be leaving people with preferred money, if you have a catastrophic event, youre going to have to pay a lot more. Obama plan mandated that those cadillac plans you migrate away from those because theyre taxed in 2018. That was part of it, too. One thing we know is if you like your plan, you cannot keep it. Thats what we know now. If you thought that he was, you know, maybe that is true. There was no way if you liked your plan you were going to get to keep it because youre not going to get to keep it. My only question is whether you think this is ultimately going to keep prices lower. I think it will keep prices down, but here is the problem. Its going to hurt people who are in the lower middle class, people who are scraping to get by who say im fought going to spend the money now on insurance, im going to put it off and hope nothing bad happens. If something bad happens, you have less of a safety net to catch you and pick up those costs. This chips away from people trying to get into the middle class, trying to reach up for some of those things. But obama care is not in yet. Most of this is happening because it was going to happen, anyway. But if you didnt have any if you used to have more money before this recession, youre going to think spending it even on health care. But the reason its come down so much is because no one at this point at 8 unemployment or wherever we are, no one has a lot of extra money to spend on anything. Looming medicare constraints that are going to be enforced by obama care, too. But really, it hasnt taken effect, andrew. And well see, theres appear argument about whether it makes it costly early once october comes or whether it continues. I dont think its happening. It was happening. If you say ultimately again hold on. Do you think that the move towards 401 k was better for employees than defined pension benefits . I dont know if its better. It had to happen, though. It had to happen, but i dont know that its better. They had really great pensions. It would only be considered better because at least you have a chance of getting the 401 k . Because the company is still in business. Yeah. Look at what we had to do with a lot of those old style plans. Its better than not having the company around, but its not the same lifestyle that was guaranteed. But was it really guaranteed . Thats like saying that our entitlements that we have now from the federal government are guaranteed. Do you really think those are going to be available at the rate we have them now . Theyre not. Lets talk about this next story. Get ready for an advertising blitz. Only we are not talking about beer commercials on television or popup ads. The sec is lifting a ban on hedge funds to investors. This change starts on monday. Private equity firms will now on be allowed to reach new investors for television, radio and the internet. There had been a lot of restrictions before and they didnt want people being preyed upon by unsavory characters. Its going to be fun. Think about the guys that, you know, theyre starting out. They have a couple hundred thousand in a hedge fund and they buy advertising time 37. But rules are in effect. You cant go after everybody out there. You cant go after anybody out there. Will they stoop . Thats what im hoping for. Then you have the guys that are high brow. No, i think the high brow guys are my worry about the high brow guys is they dont advertise. Guys who look like theyre high, theyll be like the grey poupon commercial. Theyll look like it. Right. And its the mom and pops who wont know the difference. Its the mom and pop people who have some money, but not extraordinary wealth. Some things about the returns, they historically have not been able to tell us. I like your antd rue, you know, you were a couple of steps ahead of me. Because where would they advertise . Hello. Hello. Mcfly, hello. You are a little slow on that one. A little slow. This is a really, really good things. This is a really instead of the ow with the guy with the ear cleaner, maybe we can get some Hedge Fund Guys to go directly into our right . Never mind, no sleaze in these commercial webs its all good. New sponsored segments very soon. Excellent. I like that. When we come back, fedex is set to post Quarterly Results before the bell and what is often a snapshot of the global economy. Well get the inside line when we come back. Later, dont miss andrews exclusive interview with Lloyd Blankfei inspect. Thats coming up at 8 30 eastern time. Just by talking to a helmet. It grabbed the patients record before we even picked him up. It found out the doctor we needed was at st. Annes. Wiggle your toes. [ driver ] and it got his okay on treatment from miles away. It even pulled strings with the stoplights. My ambulance talks with smoke alarms and pilots and stadiums. But, of course, its a good listener too. [ female announcer ] today cisco is connecting the internet of everything. So everything works like never before. You really love, what would you do . [ woman ] id be a writer. [ man ] id be a baker. [ woman ] i wanna be a pie maker. [ man ] i wanna be a pilot. [ woman ] id be an architect. What if i told you someone could pay you and what if that person were you . When you think about it, isnt that what retirement should be, paying ourselves to do what we love . Welcome back to squawk box, everyone. Art hatfield, Raymond James and, art, the street is looking for about l is 1. 50. What do you expect . Were looking for 1. 44. We think fuel may be a head whipped in the quarter. That may impact things a little bit. A mismatch with where jet fuel is and where their surcharges have the in the quarter. It puts us below the street. Wile were heard volume in their more deferred air freight segment has picked up throughout the quarter, pricing is still tough. We think the numbers will be somewhat anemic and flat with a year ago. Is that a reflection of the economy in the United States . Is that a reflection of tns continue troubles in europe . What do you think . Its interesting. I think its a reflection of the global economy. Keep in mind, i did say volumes are up a little bit. So i think it indicates that things are getting better. But theres still excess capacity in the market. Thats putting pressure on price. I think were moving in the right direction, just not quick enough for everyone, both volume and price to go in the direction the company would like it to. Thats a similar story to what we hear from economists every time we talk to them. The trend is moving in the right direction. The problem is that its just not moving as quickly as they would like to. Is it fair to look at fedex and the growth that may be slower than expected growth as a proxy for the economy . Yeah, i think thats fair. Thats the same song weve been singing for five years. But yeah, i think thats a proxy for where things are and until something happens, i dont know if its on the macro or the potential headwinds that we may have out of washington get cleared up when we get some longer term visibility in both what monetary and fiscal policy here in the u. S. That i think were going to continue to sing this song of slow growth. Art, youre looking for the numbers to be weaker than the street is expecting. What would you tell people in terms of buying the stock or not buying it and how does it match up to u. P. S. . Currently, were at a market outperform, which is consistent with a longterm buy. I would say that the focus here with fedex isnt so much about this quarter, its always about the guidance with them and more importantly, kind of where are their cost, reduction programs at. They talked about taking 1. 7 billion dollars out of expenses and improving operating income obviously by the same amount. The timing on that is key. So the key for the stock currently is where are they at with regards to that ram. Are they behind or ahead of schedule . And i think depending on what they say there depends on how aggressive you want to get in stock. When you look at it visavis u. P. S. , i would say relatively speaking its expensive. When you look at the longterm multiple differentials, fedex is paying at a pretty tight range close to u. P. S. Right now and historically theyve traded much wider. And thats consistent with the returns that the two companies generate for shareholders. And probably as a result, you know, u. P. S. Is a little bit better buy at current levels. Art, thanks a lot. Appreciate it. Youre welcome. Andrew, well send it back over to you. Great. Thank you, becky. Coming up, our exclusive with the ceo of Goldman Sachs, Lloyd Blankfein. But first, we have investment for you, the Investment Bank held a conference with some of the nations Largest Companies yesterday. Were going to talk to two of the top financial execs. Starwood hotels and American Electric power cfos right after the break. [ female announcer ] youre the boss of your life. In charge of long weekends and longer retirements. Ask your financial professional how lincoln financial can help you take charge of your future. Welcome back to squawk box. Were in chicago a day after Goldman Sachs held its cfo conference. Joining me now is brian tierney, Vice President and executive of cfo of electric power. Youre a first timer to squawk box, right . Yes. Also, besan provu is cfo of hotels and resorts. But we had a big debate going on on the program thus far this morning on the taper and what it means. So before we even get to weight means, do you want to wager a gamble . A guess . Do you care about what the ultimate number looks like later today . We care. Its a level Playing Field for us sxerchbls in our industry. So whatever happens across the board, its not a one way or the other . Do you want to throw a dart . I dont. Ill throw a dart. I think the market has given the fed the opportunity to do 10 or 15. Markets are anticipating it. They should do it. They should get the thing going, things have to normalize. And if the taper is an indication that economy is improving, thats a good thing. Its good for us in our business, its good for the country. Is there anything you have had to do in advance of this that youve actually changed in your business for getting ready for the taper . Not for us. Not for you . Its business as usual. So our borrowing impacts are going to be what theyre going to be. You havent had to borrow any money in the past month . Were always in the market of borrowing. And the markets have been available to us, open and ready to lend us whatever we need. No, rehavent been in the market, but in general, normalization of Interest Rates do something that reflect what markets would suggest they should be. Its good for all capital allocation. And we were just saying, the economy, you think, is getting better. Handicap where we are from where you see it from a consumer standpoint. Well, our sense and you have to un, we speak more for the high end. The consumer that we see has been doing very well for the last several years and is, in fact, the surprise this year for us, at least, was how will the u. S. Did in the first half of the year. So by and large, the consumer and Leisure Travel business especially in the summer. All that suggests that the consumer is quite confident. Let me ask you a different question. Relating to the news this morning about health care and obama care and getting ready for that, but also wa we saw was happening with walgreens this morning, they are now moving to a private exchange. Have you thought about moving to a private exchange . You know, we think in the short run, it doesnt require us to make too much changes. In the long run, the implications are not entirely clear. No, i dont think were moving in that direction at this point. Company by company kind of thing. And do you think that when you look at what wal dgreens is doing, have a lot of companies approached you and said this is wa were trying to sell our clients now and you should do it right now . And how much of that do you think is inspired by the upcoming move to obama care versus this going the to happen, anyway. Our sense is its best to wait and watch. We think theres a lot about business thats still not clear as to how its going to evolve in the long one. Our views are this are more concerns about what plays out in part two and three down the road than they are now. In the short run, our programs are good and dont really are not really impacted very much. What about you guys . Weve been able to take other meaningful action. Weve been able to cap future retirees post retirement medical benefits and examine doing that has allowed us to fully fund our obligations. So weve been able to do other things outside of putting people to exchanges in retirement. Wa does that mean for the retiree, by the way . It means at some point the risk shifts from the company to the retiree. Now, weve put those caps out far enough so that theyre not going to bind for several years. We gave current employees the opportunity to retire prior to those caps going into place and theyre only for future retirees, not on existing retirees, but it does shift the risk balance between the company and the retiree. And do you get a lot of pushback . We got virtually none. Because people are expecting this. Theyre expecting some form of sharing and the employee and the company of that risk. I think on the extreme year suing people put others through exchanges and obligations. I asked him to handicap the economy. Whats your view . Were seeing a mix on the industrial side. Were clearly off versus where we were last year. Our demand is down 6 for the year. Commercial and residential is plus or minus 1 . A lot of places were seeing increase in the economy is driven by shell gas. Places like eastern ohio, west virginia, texas, places with recently placed economies are seeing it there. Do you care who the chairman or chairwoman will will be . Want the person to do a great job. You dont want to vote . I do not want to vote. I think the best person for the job. Its an important job. You spent a lot of times yesterday with cfos from across the country. Any take aways . What were seeing is similar to what others are seeing. Cfos are saying their not sure if this economy is taking off or stalling. Were seeing a mix as well across our 11 state territory. What i took away is we might be on the cusp of improvement. Theres a feeling 3 growth rates are possible Going Forward. I hope theyre right. Thank you. Are we at a hotel right now star ward . We are not but thank you for waking up earler. Were an hour earlier here chicago. Back to you joe. Got the mic squared away . Was yours off too . Weve got a whole crew. You should see the set up. Its rather remarkable. Coming up, in the next hour well talk to top executives. Its fed day. Well talk to two great hosts, gary stern and toll brother ceo doug yearly. Hopefully hes not here because he didnt have anything else to do. Hopefully housing is okay. Well find out from doug and be right back. S of smart. So you want to drive more safely . Stop eating. Take deep breaths. Avoid bad weather. [ whispers ] get eight hours. 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Now with tracking up to eleven scans, specified delivery dates, and free insurance up to 50 all for the same low rate. [ woman ] we are the United States postal service. [ man ] we are the United States postal service. [ male announcer ] and our priority is you. Go to usps. Com® and try it today. Coming up, its the fed meeting weve been talking about for months. Could the taper be here . Steve joins us with his predictions after this. Well welcome a spring of news makers including goldman chairman and ceo and ceo of wells fargo. Our guest host president gary stern and Toll Brothers ceo greg yearley. Squawk box will be right back. Bernanke and company wrap up a two day meeting. Well preview the feds decision from former gary stern and the cfo of Toll Brothers. Two of the Largest Companies are here to talk business decision. The cfo of wells fargo join us with their business plans. Its all leading up to the exclusive interview of the morning. Ceo of gold man sacks is going to join me here. Good morning everybody. Welcome back to squawk box on cnbc. Andrew is going to join us in a few minutes. Futures are high again. Dow futures are up by 37 above fair values. S p up over 3 points. The market closed at a six week high yesterday. In our headline, its taper time. Most feds expect the monthly Bond Buying Program to be cut back. Steve will be here. Am is releasing the ios 7 system today. This is in the new two models from apple, phones available friday. The system will run on iphone 4, 4s and iphone 5. Companies may soon able to reveal how theyre employees are paid. It will help compensation structures more transparent. Poentds say the data is costly to put together. Weve covered everything from fed to financials in the markets. An zru is in chicago getting ready for his exclusive interview with goldman ceo Lloyd Blankfein. Steve is in washington getting ready for the possible taper. At this point its baked in. It is becky. What i want to go through is the taper is expected. If it does retain a reduction in asset purchases by the feds, the statement is likely more difficult to read. I want to go through you the guide in what you may see in addition to the normal economy and guidance set in there. Lets go through ed raing the fed today. Do they taper or not . Well see that in the amount of purchases. How much did they taper . Mix of assets to be reduced . Thats a big question. How much Mortgage Securities are brought down. Is there guidance on the qe level . Does you the fed tell us how long it stay there is . Theres debate about whether the fed changes that a6 1 2 threshold for raising rates. Lets go to our fed survey. The median being 10 billion. Mixes seem to be 70 treasuries, 30 Mortgage Backed securities. Ill tell you 40 of our group thought 100 would be treasuries. This new level is maintained six 3. 6 months. Thats the new stuff. Lets go back to old stuff. Whats the guidance on qe . The labor market has improved substantially. How about rates . A policy will remain appropriate for a considerable time after the Asset Program ends and economic economy recovers. Theres real things fed is going to do. Lets say lower the amount of asset purchases out there and give us additional. Theres virtual tools the fed has used in order to try and help out the economy. Well see the extent to which it uses these tools when it talks today. Becky. Steve, thank you. I wish you wouldnt do average, median and everybody thinks back to school. They didnt really pay attention. Its a median in the middle lets go to this. Its important. Average is 15 1 2 million. Respondents say its going to be 10. Help me out here a poll yesterday said 48 expected the taper to start this time. Thats low. I want you to work with me steve. This is all coming out at 2 00. Ratings for street times are huge. I want to imply that you might get this information early. Were not really sure. Maybe youll get it. It could be 7 30 when you come on with it. Could be 8 00, 7 45, 8 15 when leaseman gets an inside look at whats going to happen. Im not going to work with you on that joe. Theres no chance during squawk box ill come on with actual information on what the fed will say at 2 00. Great. All right thanks steve. Our next guest sorry about that. Worth a try. Think about it. He had to say that in case he does get it and comes on. Hes not going to get it. He has no sources. Our next guest no, he does. I was trying to do that. Its a slam dunk. Our guest for the next two hours former fed inside gary stern and federal president of the reserve bank of minneapolis. Im thinking about the next step gary. Im assuming i dont care if its 10 or 14. 5. The data depend ent part of it, do we know if the economy will cooperate . Could they go 1015 . Could we be here at 70 billion for a you year . Sure. I think so. Thats certainly not the feds preference. In your view do you think the economy is on track to allow them to exit every time they meet . I do. I dont know if theyll do it every time they meet. I expect at least quarterly. I do think the underlying trends in the economy are distinctly positive. Theyre not great. Theyre not all we could hope for. Theyre distinctly positive. I expect that to continue. I think the fed has worked pretty hard to get to this position, set themselves up to begin the taper. They wouldnt begin if they didnt expect they were going to continue. While theyre certainly flexible enough to change course if circumstances definitely dont want to go back up. Definitely if they can avoid it. They have worked hard to get here. Their expectations is theyll start today. Do you think thats a slam dunk . Close. I think they intend to continue. It will be 1015. I think youre right. Condition alty depending on how the economy evolves, addition alty will remain. Theres no question about that. I had another thought that i was going to oh, how much of our destiny is in our own hands . Would you say 50 based on what we do here. Were depending on europe, china and around the world to keep this economy do you think 80 is in our control . Relatively high number. Thats bad. We could mess it up with the debt ceiling. Those are definitely part of it. Its a broad matter. The policies they pursue theyve been cooperating over there. Its back burner. Its gotten better. Theres no question. Its a blessing and curse. It puts it in our control where we can screw it up ourselves. Theres always that risk. Theres more of a chance this time around. Unfortunately because of the disagreement about the budget theres chance for short run you saw the president. Did he seem like he was in a mood to work with the other side in the speech he gave two days ago . Both sides are positioning themselves. I dont claim to be a political analyst. Both sides are positioning themselves for the battle ahead. I wouldnt take statements today all that seriously. Im glad hes back on track with the true enmy of the country, the republicans, instead of syria, russia, assad. Now were focused on people that are trying to hurt the American Economy and public. I take your sarcasm but of course theres some people who think the enemy is the president. We should be careful about that. When you look at the stock market and the reaction, how closely is the fed monitoring that today . They feel they primed the market for this . Know the market is ready. Theyll discuss equity markets and fixed income markets. I think theres a good reason to believe the bond market is prepared for this. After all the ten year is well above what it was in june before bernankes initial statement about all this. The equity markets i assume most anticipate some tapering today. Futures are up early so they dont seem overly concerned. There may be something in the statement that surprises people. Maybe the magnitude of the tapering will surprise people. That could lead to disruption. We saw the jump in may. We looked at the ten year and whats happened over the last year. It was a quick, steep move. Do you think from here its a steady climb . No more quick a lot is in the market now. I think the reaction is Going Forward more likely to be muted. We will have to see how the Economic Data comes in. For example, it would be great if the economy would surprise on the upside by a substantial amount. That will have implications for the bond market for sure. People will want to reprice and people will anticipate that the Federal Reserve is perhaps going to be moving more aggressively than earlier expected. Its a complex sort of simultaneous anything yet, steve . Do you have something for us, steve . I have been working the phones, joe. They wouldnt give it to me now. I have a comment for you too, steve. Got a quick question for gary stern. Gary, fed tried to argue tapering is not tightening. The market has tightened ahead of tapering. Other than meeting expectations and following through on what the fed said it could do, can you think of a good reason to taper now . Theres no inflation in the economy. Whats the economic reason for tapering . I think there are a couple of important considerations, steve. One i alluded too earlier the underlying trends in the economy which i think are clearly positive. I expect them to prevail to persist. The economy doesnt need in some sense the same degree of stimulus that the fed was earlier providing. The second reason is a longer run consideration. The very large asset purchases and the resulting level of Interest Rates does affect economic decisions. One of the things it does is favors consumption over saving for example and moves spending from the future to the present. Thats the intent of the policy. Its not costless. So the question is how long do you want to provide those incentives . I think thats the second and longer run consideration to begin to revert to a more normalle policy, more normal Interest Rate level. Thats still not normal. Do you remember steve when we pointed out and they said really, really, really long time. That was your suggestion they said were going to do this and add a couple of really. Back then people said fed just told us they were going to 2015. Now weve still got that. Theyre going to slowly take us away and add a few more reallies. Its embarrassment we have. Its a commentary on how pathetic economy is. I think thats right. I think theres a lot of things that are really slowing the economy down. Some are selfmade and come from outside extraordinary what theyve given so far. Any way you know we are here. If you get anything steve, boom well take you right away. Go ahead. Youre reading. Up next, squawk box makes the ceo call. Were going to welcome Toll Brothers ceo doug yearley. Futures are indicated higher. Dow up 31 points. The squawk box will be right back. Welcome back everybody. One of the key sectors to watch after the feds decision is real estate. Well get a Home Builders opinion. Ceo from Toll Brothers, youre with us now doug. Do you expect the fed to taper today . I dont know. Its not something that we focus on tremendously. Obviously the decision will move our stock one way or the other because thats how wall street trades. What i do know is that no mat whaer ter what the fed says, it cant change demographics. Rising Interest Rates may getting into june impacted the sector. Rates jumped at a quick pace. Were still at low levels, but it moved quickly. Did you see a drop off in buying interest at that point . Has it changed sense . We have not. We see people every week. Rates went 3 1 2 to 4. 25 in three weeks. It was faster than anyone thought. I think it did shock the market short term. Ill take a 4 1 25 1 2 rate in a good economy. From 200006, a roaring time for housing rates for 5 1 28 . The market needs the time to absorb the 4. 25 rate. Still its a very low rate. We have five years when very few people bought homes. We built few homes as an industry. Theres a lot of catchup thats necessary to handle household formations, immigration, obsolescence from existing homes being torn down. Were in the early stages of recovery. Im not worried about rates running too fast. If they do, thats a different discussion. I think the fed understands that. I think the market is absorbing a 4 and three quarter rate. This country produced 1. 5 million homes for decades. In the last four or five years weve been below 1 million. The low point was 5 or 600,000. We have a fraction of homes needed that have been built. Were beginning to catch up. We have quite a way to go. Is the majority of demand coming from new families, people who are first time buyers, or people trading up after staying in their homes a long time . Our average house is over 600,000. Buyers have homes to sale. Buyers of their homes have a home to sell. We have a keen eye all the way down to first time buyer. Were focused on the move up buyer. They dont have the mortgage issues. Those that get a mortgage and 30 down. The one fortunate part for Toll Brothers, that is not one of our issues. 30 down is very different than a number it would have been six years ago, right . It stayed there believe it or not. Its not people have to put more down because its tougher to get a mortgage . Our client chose to be more careful. They had the equity in their existing home. They were cautious putting about 70 in the mortgage. When you look at where trends have gone. They talked about delivering more homes than expect and charged a higher price, have you seen similar trends . Its a local business. I cant speak to every market. Were in 50 states. 60 of locations weve had Pricing Power over the last year and a happen we have been raising prices. If it takes 12 months to deliver the next home because weve sold so ma yet takes eight months to build the home, well raise the price. Why sell the home today when we cant deliver for some time. Thats what happened with builders. We have been managing business through price increases. Were in early stages of recovery, labor market is tight in housing because people left. Sub contractors are working hard to get employees back. As backlogs have grown, weve been aggressive with pricing. Which markets are doing the best . Which are doing the worst . New york city for us is number one. We are very active in manhattan, brooklyn with highrise. Were on our 19th tower in this market. It is on fire. We opened a building at 22nd street and 3rd avenue six months ago at 1800 a square feet. Were already at 2400 a square feet with price increase. Southern california, Orange County and south bay and east bay of san francisco, right behind new york. Land is limited. The market as are back. Its very, very hot. Texas is doing very well. For us, half our business is washington d. C. To boston. Theres a corridor where theres not much land and not a lot of competition. We tend to dominate that corridor and have done well and have good Pricing Power. What market is doing the worse and has not had the reserge . South carolina off islaislan hilton head. Thats struggling. Midwest chicago were beginning to see signs of improvement which is exciting for us. Thats been slow also in the recovery. Doug is with us the rest of the hour. Well talk a lot more to him. Thanks doug. Coming up, what does google and tesla have in common . The goal of putting cars on the road without drivers. Thats next after the break. We talk fed, the consumer and business of home improvement. Squawk box on cnbc, profit from it. Ting. Therell be the usual presentations on research. And development. Some new members of the team will be introduced. The chairman emeritus will distribute his usual wisdom. And you . Well, youre the chief life officer. You just need the right professional to help you take charge. To help you take charge. Nascar is ab. Out excitement but tracking all the action and hearing everything from our marketing partners, the media and millions of fans on social media can be a challenge. Thats why we partnered with hp to build the new nascar fan and media engagement center. Hps Technology Helps us turn millions of tweets, posts and stories into realtime Business Insights that help nascar win with our fans. A car capable of running on auto pilot within the next three years. The company is so called awe ton mass car would allow the car to have 90 of the computer system. It would be developed in house using teslas own technology. The online job board currently has posting for advanced driver assistance control engineers responsible for helping that effort to pioneer fully automated driving. We have fully automatic driving from a human. Remember we had the guy that said it prevents you from accidents in certain situations. Its moving in that direction any way. When we come back, well find out whats driving business moves in two key sectors of the economy. We have the cfo of wells fargo and cfo of home depot. Well hear from them right after this. Office space. Yes, were loving this communal seating. Its great. [ male announcer ] the best thing to share . A data plan. At t mobile share for business. One bucket of data for everyone on the plan, unlimited talk and text on smart phones. Now, everyones in the spirit of sharing. Hey, can i borrow your boat this weekend . No. [ male announcer ] share more. Save more. At t mobile share for business. Welcome back to squawk box everybody. Im becky quick along with joe e kernen. We are getting ready for the interview with chairman and ceo of gold man sachs. Investors look ahead to 2 p. M. Eastern time. The bank is expected to taper the bond buying back program. Well have much more throughout the show. Mortgage applications jumped 11. 2 last week led by a surge in refinancing. The Association Says the 30 year Mortgage Rate fell to 4. 75 . China is said to be closer to the billion take over bid. Shang is closer to the deal. A deal is expected for next week. Star board value has been seeking improved bit. Did you actually go into the press release . It looks like 1 53. They made it hard to find that number. They gave us everything else. Its in the first paragraph. 1 53 is three cents above. Art was thinking they might run light. He was looking at 144 for fuel increases. Closed at 11068. Its up a. Full earnings per year 7 to 13 for a full year earnings per share. Net 439. Revenue 11 even which is a little below expectations right . I think. Any way, remaining confident in the full year despite tepid growth. A high on the stock for the year is 1. 13. Thats almost there. Its nice to get transportation in sync. Hat field have not been able to raise rates as quick as volume has come up. In 2014 theyre going to increase shipping rates 3. 9 for domestic u. S. Export and the u. S. Import services. That was one thing he pointed out they had not been able to do. Volume had been coming back but they had not seen the increases. Well see that in january. I see First Quarter results where they do high lights. Its in the first. Thats pretty clear. Now housing five years after the crash. What ground has been gained and where is the real state market heading . Well turn to our exclusive cfo Global Council with us in studio carroll tome, cfo of home depot and tim sloan cfo of wells fargo. Weve got Toll Brothers here. In case they want a new house, go to you. Fix up our new house and go to you to get the incredible mortgage. You can. Suited to our need let me start with the mortgage business. The stock of toll came down a little in the move from ten year. People go to the term pricing for some reason. Have you seen it reflected in the mortgage slow down when we backed to 280 on the ten year. Werent these people alive when mortgages were 15 . Some of them probably werent or in a position to buy a house. We think our originations are going to be down about 30 to about 80 billion this quarter. This is high from the last quarter. Prior quarters have been incredible. Still going to originate 80 billion but its going to be 30 . Rates are up affecting refinance volume. If you look at refinance volume, its down 60 for the industry from the high end in the second quarter. Youre good at this. Were very good. Weve got a great team. Youre a big player. Were the largest originator in the country. Wells had 60 of our business. Its now 3540 . They dominate. 30 is a huge number. Was it let the good times roll when it was not 30 . Or was it just a little better than it had been . We got here because we made a lot of good decisions precrisis being not involved in the crazy lending done prior to that period. Postcrisis were able to serve customers. Rates have been incredibly low for a long period of time. Fact of the matter is theyre still low. When you look at home affordability, the percent of the average persons income to pay their mortgage is still at historic levels. If you look over the last 50 years, the average is 27 of your disposable income. Its 18 today. The high we experienced in the low 80s about 50 . In 2007 it was about 30 . Its still a good time to buy a house. In the past weve always said home depot does it better either way. You like a housing boom. Dont you do 100 better when housing is going well . We have Higher Turnover in house depreciation than new home sales. We dont see a tight correlation to sales and high Interest Rates. We dont play to Home Builders. Today mortgages are 2 1 2 . They say im not going to leave 2 1 2 mortgage and go to 4 1 2 . Home depot does much better. Its been doing great. Thank you. Frank has done people love him. Wonderful person. I think he was on closing well. Thats okay. Its all in the families. That hurt me a little bit. I used to wore his orange sting and looked silly. I wore that trying to get him to come on. He liked the way it looked on maria than it looked on me. Thats fine. All right. I guess weve got to go. I could talk to cfos all day. He wouldnt sign my stuff. In fact you started twitching. You dont like that every quarter do you . We look forward to it. When youre wells fargo whos so above everything. You look forward to it and get to talk about your earnings. Thats the glass half full. Youre positive. Say hi to stump. He said hi to you. Did he . I saw him yesterday. And your buddy too. Maybe next time he can consider the flag ship show to come on. Bad, bad. I have to do this for you. Youre so politically correct. Up next, why the ceo of housing giant Toll Brothers is sitting right here, teaming up with the companys largest traded apartment company. That companys chief executive is here next. Well be right back. Hey lady noooo no [ tires screech ] nooo nooo nooo hey lady, thats diesel i know. Thank you orville and wilbur. Amelia. Neil and buzz for teaching us that you cant create the future. By clinging to the past. And with that youre history. Instead of looking behind. Delta is looking beyond. 80 thousand of us investing billions. In everything from the best experiences below. To the finest comforts above. Were not simply saluting history. Were making it. How old is the oldest person youve known . We gave people a sticker and had them show us. We learned a lot of us have known someone whos lived well into their 90s. And thats a great thing. But even though were living longer, one thing that hasnt changed much is the official retirement age. The question is how do you make sure you have the money you need to enjoy all of these years. Welcome back everybody. Taking a look at the futures. Market is indicated higher after closing yesterday at a six week high. Now dow futures up 34 points head of what we kmpt to hear from the fed later at 2 00 p. M. When we get the decision on tapering. Fedex reported first fiscal profit of 1. 50 a share. Revenue you also came in slightly above con sen tus. The company is confident in the outlook for the year despite tepid economic growth. Can renting and buying be profitable at the same time . David escaper cut is head of the largest trading company. Our cohost, doug is here with us from Toll Brothers. Thanks for having me. This is a 40 story tower you are working on together. Why the partnership . Its a site we had been looking at quite some time. The land purchased alone was 135 million. It was more than we wanted to buy at one time. One of our current employees used to work for dougs team at tochlt they put together a transaction floors 222 is rentals. Zoug will sell those out as condominiums. When you look at it, do you expect one side to do better than the other. Over time it insulates you to have both going. Are people more likely to rent or own now . I will tell you the rental market in new york is on fire. We have every expectation it will exceed our expectations. Doug you probably feel is same way. In manhattan its on fire. Well both do well. We have about 100 units, different entrances. Were share ago ming amenities building. I think well do great. Were excited about the opportunity and hopefully others. This is the first time you two have worked together right . Yes. Are there other partnerships like them . Are you trying it out because you had somebody in your office . Theres awful lot of Residential Properties with hotels or office. Its the first time weve significantly participated ourselves in something mixed use between condominium and rental. We have a hotel condo building about to start in brooklyn with barry sternlick. Thats example of hotel condo arrangement. When we had sam ornn, he this the rentals are going to be strong oechb with the strong Housing Market. Is that the way you see it . I dont think theres a question. Our footprint, boston, new york, wash warks san francisco, seattle. Those are extremely expensive Housing Markets where this generation, 80 Million People strong want to live, work, play. They appreciate the flexibility that rental housing provides them. At this point in their life, they have no interest in earning a Single Family home. Does it matter what the fed says today if they decide to tape senator. It will affect stock price. It doesnt affect demographics or change the fact there are 3 Million People turning 21 every day in the country or that theres 3. 5 million households being formed. Institutional core multifamily will attract a percentage of those. What do you think the market is getting and not getting in some part of this . The market believes that weve got minivans loaded and gassed up ready to go from our apartments running out to buy Single Family homes. Thats not the case. 43 of your units are occupied by one single individual that has no intention of moving to buy a Single Family home. They live in the city and really appreciate the lifestyle of the city. Our residents are not, at least in this point of their life, are marrying later and moving to the suburbs later. We appreciate it. Well watch the park avenue tower as it rises. It helps to be single. It really does. Right . Alcohol and good food. People dont live in our apartments. They live in the city. Our apartments are where people sleep and store belongings and live in the city. Its a lifestyle choice not simply economic. Were going to talk to this person now. He has children now. Like three miles to a three isnt it andrew . You share it with 14 trillion other people while there. We live across from the park. We have the largest backyard in america. Oh yeah, great. Hang out there at night. Think about it. Also known as central park, yes. Its a good place. Come on. You can get chinese food delivered up. So many of our viewers live in new york city. Not that many. A few. We broadcast around the world, andrew. This is what youve got to get. Go over the hudson besides coming to work. Go over fly over states you look down on literally and figurat e figuratively. Im in chicago. What do you want . I know. That was supposed to be funny. You didnt laugh. Quick, were going to get thoughts from doug yearley in a minute. I want to ask gary a question we havent gotten to. Sounds like the music is playing. The reason were in chicago this morn as good because Goldman Sachs having the cfo conference here. Were going to talk to Lloyd Blankfein shortly. He joined the dow. Hes got interesting thoughts about whats going on with diamond and cowen. Were going to talk to him about that and more. Squawk box is coming back live from chicago in just a little bit. We are going to host doug and also andrew, are you still down there . I am. You want to ask gary a question . I have one question for gary. I assume you know mrs. Yellen and don cone and all the players. I want to get the inside dope on what you think of these folks. I do know them all. Its remarkable how similar they are in many ways. Their long time Federal Reserve people, more than knowledgeable about the issues and the challenges. They have a lot of talent and smarts and expertise. I think this the cases of the leading candidates, the names at the top of the list, i think they all do very well as chair of the fed recognizing of course there are a lot of challenges on the table right now. There may be greater ones coming for all i know. Its by no means an easy job. I think very highly of those candidates. That gives me confidence and comfort that whoever is selected, it will be all well. Is yellen down somebody suggested yellen is damaged goods in the context that we have a situation where the president was clearly going somewhere else with larry, doesnt take him. There has to be some relationship between who runs the fed and president. What does that do . Does it matter . Some of that is overrated at this stage because theres been so much emphasis and concern about summers and his candidacy. At the end of the day, the chair will be judged by results. Youd like to have comfortable interaction with the president and economic leaders in the administration, but you dont have to be best buddies. Keeping things at arms length is probably preferable. Bernanke is gone for sure . I would be surprised if chairman bernanke wanted to stay. All right. Were below where we were at highest levels. In terms of average Mortgage Rate over the past 50 years were below average arent we . Way below. I mentioned from 200006, 5 1 2 mortgages and we were rolling. The market got so use to 3 1 2. We were in a lousy economy and Housing Market that there was a shock when you go to 4 and three quarters in a couple of weeks. That rate is absorbed. Were fine. In the early stages of this, there will be a few bumps. We feel great. What percent of housing ownership should this country have . Were running about 65 right now. What should we should we try to get that high so people have the American Dream or let the market take care of it . Let the market take care of it. We greased it. Theres a piece in the walle street journal saying Government Action is taken out and totally changed the way it happened. It was greased for too high for people that shouldnt have had houses. Government tried to get people into houses. We saw what the end result was. 0506 mortgages were way too easy for black jacks. American dream is how to own a home, show off our wealth. We want to fix up you the kitchen. I love david and his business. Nobody is renovating the kitchen or putting a swing set in a rental. Were good. The American Dream is alive and well. Homeownership will rise. I think it will be healthy. I think mortgages are controlled and properly regulated. We have a way to go off 65 ownership. We want pinned up demand. Little tick in the rate ill not worried. Ill take a higher rate and better economy any day. Thats positive of you doug. Hopefully it will be at a place to own a tree and have a Backyard Barbecue instead of some deck where people around you are smelling the fumes from the electric grill cooking tofu with the knife. Thats not life. Andrew back to you. We have a huge hour getting back to it. Were going to talk about fed tapering and whats going to happen next. We have a man that looks like mr. Zandy. Hes not watching what were trying to do. Austan is going to join us. This is all leading up to Goldman Sachs ceo blankfein. We have a lot to talk about on squawk box, coming back right after this. And longer retiremen. Ask your financial professional how lincoln financial can help you take charge of your future. Is today the day after months of speculation it could finally be taper time for the fed . Well start the final count down to this afternoons fmoc decision. Plus the squawk box exclusive. Lloyd blankfein reaches us for a far reaching conversation, fed tapering and much more. Breaking Economic News. Everybody stop what youre doing please. August Housing Starts and Building Permits 30 minutes away. The final hour of squawk box begins right now. Welcome back to squawk box here on cnbc. Im joe kernen along with becky. Andrew is with us. Hes in chicago. Thats why were playing sweet home chicago or something. Play good songs by the band chicago. Hes with us from chicago to interview you the news maker. That was one of the worst ones, like the third transformation of that group i dont know. Lloyd blankfein is going to join us at 8 30 a. M. Eastern. Meanwhile our guest host this morn as good gary stern, former minneapolis fed president who knows a lot about the fed and everybody that works there. Did you like summers . We were just talking about it. Do you think summers is going to end up . Intellectually, sure. The problem that played out with him was the confirmation process. You could see this coming in the sense you were going to have confirmation difficulties you werent going to have with other candidates. He would have needed it. He would have been arguing with members of his own base and party. Thats the last thing he wants to do. Thats why it happened. He couldnt align with republicans on anything else. He couldnt have aligned. He would have had to do that on syria too. Thats another thing he dodged. We can go back to what he loves doing. In our headline, fed is set to announce the policy decision at 2 00 eastern this afternoon, less than six hours away. Bernanke is going to hold a press conference 30 minutes later. The central bank is expected to announce winding down the program. The question is by how much . 10 billion, 15 billion, 20 billion . Thats in two hours. Housing starts and Building Permits. Starts are said to be risen 2. 13 . In corporate news, fedex posting better than expected earning and revenue. The company is confident the full year outlook is on track despite what it calls tepid economic growth. Fedex shares up this morning. House gop leaders are said to be ready to take a tough stand on health care. Theyre going to take a must pass temporary funding bill to use it to block implementation of obama care. Meantime the senate would likely strip out the Health Care Provision and send it to the house raising confrontation to lead to a partial shut down after september 30th end of the budget year. September 30th as we said. Theyre set to unveil a proposal to expose how executives pay check compares to average workers. The agency is expected to adopt a reform to allow overseeing Financial Advisors to city, councils. Those proposals are outstanding regulations dated by the reform law. Still really fun stuff for corporations to be involved with and try to figure out what the average employee makes when youre multity national and have thousands of employees spread over the world. You need to come up with some number so you can compare it to what the ceo makes which youre not going to do anything about it if its ten times over. Theres a site like this 15 times or longer. I dont see how you can get it. It sounds difficult and arbitrary to try to figure out how to find these. You Commission People and this once you have the information, what do you do . Tell people. Their point is that investors, its not going to make a difference to them. People that are mad about ceo pay should get an nba, go work in the mail room really hard and work their way all the way up and become a ceo. If youre jealous of what a ceo makes, go if youre jealous of the wall street firm, go work at a firm. I have someone in chicago that may want to chime in. Do you want to chime in . Austan goolsbee is here. Go ahead austan. Go wild. How deeply complicated is it to take the total payroll number and divide by the number of employees . What would that become . Thats not how you do it. The high paid guys with skewer higher wouldnt they . We already talked about this. Austan, why dont you do what you really want to do. Put a cap i like you said go get nba. I want you to come down. Were going to talk about means and medians. Why dont you put a cap on it . Shareholders can do something about it if they want. Thats not enough. Get the government to put a cap on ceo pay a. If thats what you want, go ahead and do it. Im going to go everywhere and say i disagree with joe we could put a cap on ceo pay. Gary, what does that point to . Its hard to point out transparency. We do know what ceos make, how they make it. Every quarter the New York Times posts these ceo pay of every single ceo you can find. Whats the problem, joe . There is no problem. You have the transparency already. I dont see why you need the average at this company. At this company its 42,000. At this company its nutritional information on the back of the box comparing numbers of milk to your daily allowance should be. Everyone is supposed to know what it is. Ten times the employees in europe, theres terrible guys here that make 50 times. Youre going to see the number, see 50, and everybody is going to say, thats really just not fair. They dont need that much money. Since thats a zero sum game, somebody should be sharing that money. They dont need nice stuff way. The outcome will force boards perhaps to be slightly more accountable or think a little more about how the compensation works. There will be public pressure. Thats a different issue. You should have boards accountable to shareholders. Thats absolutely true. Hopefully it will make it easier for shareholder who is frankly dont do their own research. This should line the pockets of the ceo obviously. Thats a totally different issue. If you have a board that wants to pay 30 or 40 times, then they should have the about to do that. It should be tied to performance. Do you know what your pay is compared to the average cnbc employee . Do you have any idea . I have no idea. Im happily ignorant. I have an idea its around 50 i would say. If mine is 50, is yours 100 . How does that work . Im not the one whining about it. Go ahead. The story across here and the country, global world today, the fed and tapering and what it means. Im here with my comrade. No, im not. Austan goolsbee and jim. Weve been debating what the ultimate number is were going to hear at 2 00. Do you want to take a stab at guessing . Do you have a coin we can flip . Theyve been expressing some time they want to start tapering. Theyll probably do that. Objectively if you had known what the numbers were going to be that the jobs numbers would slow down, inflation would be coming in less than expected and growth would be disappointingly significantly lore than what the fed was forecasting, i think you probably would not have committed six months ago generating this idea that we want to do taper. I hope its going to be as small as possible. What is small for you . I would bet they do 1015 billion. If its more, should we take that as a good sign . I wouldnt take it as a good sign. I think this is a great day. Ive been waiting for some time. We can argue about whether the economy sped up or slowed down. We have a fed giving more stimulus today than they did at the bottom of the crisis. You cant tell me the economy isnt better today than at the bottom of the 08 crisis. To back off aaway from crisis policy when the economy is no longer in crisis, it makes sense. It will lead to greater confidence and medicate this to suggest everything is so bad. I dont want to let out the animals. You take 10. You think what . Probably 1015 billion. If they do more, the market takes that how . I think market will be fine with this. Will it have a reaction to headlines . Absolutely. Its fine. Its telegraphed its going to be fine. I think the market would react if it was too big for following reasons. Feds forecast when bernanke gave comments that the market reacted badly, they were like oh what does that mean . Now theyre going to tie it to conditions. Fed has been consistently forecasting better performance of the economy weve actually seen. If the fed comes out with this aggressive extra aggressive tapering, that might generate the reaction we saw a couple of months ago. Leading up to this, everyone has been expecting tapering for some time. Look at the market. Were within a couple points of all time record highs. The stock markets are led entirely by stock, industrial, materials. Its not the stuff you think would lead if theres fear the fed may overtaper. Commodity prices are rising. Nothing in the market suggests anyone is too scared. I know youre not at the white house, but you can help us understand what you think is really going on. Does the president does not like yellen . Why in my mind if he wanted to select yellen, when summers calls over the weekend and says i dont want the job, the president is supposed to say thats good to know. Dont say a word for a week or two. Hes going to come out and announce he likes yellen. Now he is in the box and puts her in an awful box. The practical matter of naming somebody of the nominee of the fed chair has a tremendous amount of run up. Theyve got to do all this stuff. They, the white house, announced when they first got into rumors the president didnt start this he didnt use any names. What they said, were not going to decide until fall. I have a feeling, and they even said something to these exact words, this isnt changing the process theyre going through. It takes time. I think it was unrealistic. You dont think part of that campaign was against yellen i dont think they were against yellen. Larry has a lot of people for him. Janet has a lot of current and former people for her. Cone has a lot of friends. I know all three pretty well. All three are very smart candidates. You consider it got so political. It was basically the fault of the white house it got so political. It was clumsily handled, right . When these turn into a brew hah hah it turns into its own. The syria thing was clumsily handled. Was anything clumsily handled by the white house . I dont think thats how they wanted it to go, feds against each other attacking them. I think the implication of what youre saying is based on the white house is in perfect control of the media and gets to gauge the media reaction however they want. Yeah. This white house gets a hard time from the main stream media austan. What did he have for breakfast today . Its an hour earlier for us. Austan, you should run before you come on on a treadmill. Its not my problem if youre not awake and cant handle it. Come on. Im not in a bad mood. Maybe you were out last night or something. Tell andrew about it. We were all out late last night. Did hit involve dollar bills . You know, dont ask dont tell. Thats the policy here. What happens in chicago stays in chicago. Awesome. Except when its on squawk. No secrets here. Everything comes out. When we come back, well talk about why brazils president is cancelling a visit to the United States. Goldman sachs ceo Lloyd Blankfein joining us at 8 30 eastern time. Check out the squawk box market indicators. Well see what happens. Right now 10 ten year 2. 89 . Squawk box will be right back. N. With fidelitys guaranteed onesecond trade execution, we route your order to up to 75 Market Centers to look for the best possible price maybe even better than you expected. Its all part of our goal to execute your trade in one second. Im derrick chan of fidelity investments. Our onesecond trade execution is one more innovative reason serious investors are choosing fidelity. Now get 200 free trades when you open an account. Brazils president is postponing a trip to the United States. Michelle cabrera who luckily was on the set to translate some spanish tweets about andrew which was interesting right . Yeah. In pesos you can imagine how much. Hed be a trillionaire. Thats what i mean. You going to practice. The president of brazil says you have contacts right . I just got them. Today i put in the script to practice. They do feel dry. Youre absolutely right. The president of brazil says she is not coming to an official state visit that was supposed to happen in washington d. C. Late october. The visit would have been the First Official by the brazil president in nearly 20 years. Supposed to be a coming together of two largest economies in americas with trade as one of the main topics. She is angry at the president and United States after edwin snow den made allegations u. S. Spied on her. She wants an investigation into why and if its going to go on. Earlier this month rksz the two met in russia. Vladimir putin had them purposously sit next to each other knowing it would be uncomfortable. Analysts wonder will this situation of brazil put at chance boeings deal of getting new fighter jets from brazil . Brazil has been dragging the feet on a decision. Russo may be trying to rebuild in brazil when nearly a million protested in the streets in june. They were frustrated by joblessness, horrendous infrastructure despite tons of spending which is the result of rampant corruption. Most markets have rallied. Brazil stock market has fallen sharply. Currency has got opinion hammered. This may speak to president barack obama s standing in the world. This is a time this would have been inconceive pbl the brazil president would turn down a visit to the u. S. You hit it on the head with protest going back to june. Absolutely. Larry asked last night if this was an say or obama standing she must have been given more strength with the way putin treated us and president barack obama in the last month, probably gave her additional courage. Interesting, seating at the g 20 too. He loves to stick it in peoples eyes. Did the contacts work . You tell me what. Ive been wearing them for years. It takes some time. Are you getting faster at putting them in now . That day i saw you i never got them in. I was in there 45 minutes. Today it took me 20 minutes. I only have one on. One is reading. Its like living continual rack focus. Is it one per day . This is a two week one. I just went to one a day. They used to do the planned you know how much they charge for them . Its ridiculous. One a day is fine. Thats what im on now. You have two . I have two but one is bifocal to see close up. When you take them out at night, if someone breaks in your house and you cant see, im going to be like this. Thats why i have a dog. Michelle, thank you. See you later. Back to andrew in chicago. We have a couple of things coming up. We have breaking Economic News hitting the tape at 8 30 a. M. Well get the housing information and ceo of Goldman Sachs, Lloyd Blankfein right after this. And you. Rent from national. Because only national lets you choose any car in the aisle. And go. You can even take a fullsize or above, and still pay the midsize price. aaron purrrfect. vo meeeow, business pro. Meeeow. Go national. Go like a pro. How old is the oldest person youve known . We gave people a sticker and had them show us. We learned a lot of us have known someone whos lived well into their 90s. And thats a great thing. But even though were living longer, one thing that hasnt changed much is the official retirement age. The question is how do you make sure you have the money you need to enjoy all of these years. I know what youre thinking. Transit fares as in the 37 billion transit fares we help collect each year. No . Oh, right. Youre thinking of the 1. 6 million daily Customer Care interactions xerox handles. Or the 900 Million Health insurance claims we process. So, its no surprise to you that companies depend on todays xerox for services that simplify how work gets done. Which is. Pretty much what weve always stood for. With xerox, youre ready for real business. Welcome back to today squawk box. Take a look at stocks on the move. The Software Producer reported earnings below estimates. Investors are focussing on promising prescription growth for the suite. Dollar tree announced the 2 billion buy back program. Another discount retailer 5 below also in the nuchltz five below says a number of shareholders are selling a total of 7. 1 million shares including those sold by the executive chairman. The company itself says it isnt selling shares. That is down as you can see. Breaking Economic News. August Housing Starts. Our news maker of the morning Goldman Sachs chairman and ceo Lloyd Blankfein on at the bottom of the hour. Well be right back. Welcome back to squawk box everybody. Were a few seconds from the housing numbers for august. Weve been watching futures. We have been in the green all morning. Dow future up 23 points. Lets get back to rick santeli. August 891 thousand permits, 918,000. How do those compare . Permits down close to 14 . Were up just a bit in terms of starts, a positive percentage. What we want to look at in my opinion, baby sitting financial version to see how that turns out around 2 00 eastern today. Interest rates elevated. We overtook 2 in booms. Were ever closer to 289 significant level. This number was much as expected not huge revisions to last month. You did see the permits number upgraded to 954 and starts downgraded to 883. Those arent huge revisions. Back to you. Thanks. Well talk more throughout the morning. Andrew joins us from chicago with our special guest. Thank you. Were live in chicago. Goldman sachs just finished up the cfo conference. Thank you for being here on what we think will be a big news day. Ill ask you, what do you think will happen at 2 00, and does it matter . It matters more or less depending on what happens. I think it matters to people. I dont think it should matter as much as people are weighing in on. It probably will matter. What are you expecting . I expect i think at this point there has to be some cut. I dont think if its a number like down 10 billion, the market will be happy. The market will be sad because were losing the heroin injection or because that could be good news right . Ill use metaphor of head wind and tail wind. Theres a tail wind from the fed. People think this is the first moment when theres a withdrawal from the market. Its not as big a deal. Its not the first withdrawal. The biggest artificial support the markets had a long time, weve been withdrawing that steadily. The biggest support the markets had was the unbalanced budget we had. Spending more than we were taking in revenue. We have tie had the up. The payroll tax coming back. All those things are moving toward normalization as in rise in Interest Rates. The fact Interest Rates for 1 1 2 was influential to the market. This is not the first step. Also the expectations are embedded. Austan goolsbee on a moment ago, he seemed worried if we got to too much it would be bad news. That the economy is still too fragile. Where the are we . In substance its a recovery where trajectory is not as steep as it should be. All these support measures are a form of insurance not because we think it will turn back but because it might turn back. Its too high id rather be cautious. The odds of it turning back are not great. Are you a believer it worked . I think it was at the margin, it made a contribution. Who knows. You cant go back and see both paths. I would say i would have if i were in charge of running the economy, i would have done anything i could. This was in the positive direction. Joe has a question back at hq. Only in relation to another market. I want goldmans comments. Goeldman said gold would keep going down because of the taper. Lloyd, were you part of that are you there for decisions like that . Do you agree . Where do you think gold could go . Im not part of the process of generating that point of view. I always have a point of view on gold where i start at jr commodities. My first job was on the gold market. Gold is trading higher to other currencies. They trade against each other at a point people were questioning the behavior of every bank. All of a sudden, gold became the alternative currency or two currencies. By the way, with Interest Rates rising, gold doesnt pay. It becomes not only less important to hold gold as an alternative but more expensive but to hold as an insurance policy. Do you think it could go to a thousand . In gold, its always gold is not even a fiat currency. Gold is what people think its worth. Its not value. Its a direction from where you are. Thats the hardest place to figure out where it belongs. Thats down. I would think that would trend down. On the topic of all things fed related. Were you a fan of larry summers. Would you have wanted to see him get the job . I am a fan of larry summers. Who do you want for that job . Its a hard question. I would say at some level, at an important level, i will say ill have to work with whoever has that job. Its actually quite convenient that i like everybody. You have met yellen . Yes. You think shes as strong as the markets think or stronger . Both have different backgrounds and both have different temperaments. Both are equivalent and very strong. Each could do the job. Unrelated to the particular policies, janet yellen the big tool that the fed has available now when you put aside qe and measures is Forward Guidance. Forward guidance is more credible if its from an institution with continuity. With larry that would be a break. First of all would they do it with credible and how would the market take it . Forward guidance with a current vice chairperson is going to be the next chairperson has more credibility. Not saying whether you like the policies or dont, but to an extent Forward Guidance is more credible when theres continuity. Whats your opinion on the economy. We have syria, debt ceiling, a lot coming this fall. A lot dont know what to make of it. Theres a lot that can go wrong. I joked last night i spend 98 of time in 2 worse possibilities in risk management. I think in the largest probability that we muddle through thing, climbing the wall of worry and actually very well positioned for the economy to keep improving. A week ago Goldman Sachs became part of dow. How did that happen . Were there conversations . I didnt have a clue. If i did have a clue, i would have been obsessing and asking why it didnt happen yet. Is this something you wanted for a long time . Have you talked about it . It never occurred a possibility. I never thought it. The fact of the matter when you think what weve been focused on the last five to six years and where we were, this is not really in contemplation. We felt as an institution really terrific about it. In some ways you know this has not been an easy time for anybody. Nobody has enjoyed dealing with the context for the last several years. Weve been in the spotlight. To get a validation like that i get surprises in my line of work and few are positive. A wise person once said with great power comes great responsibility. I think it was spidermans father. Now with dow, theres a high priced stock. It used to be the bank of america, positive stuff. Youre in dow now. Its not all about Goldman Sachs now. Its about the dow. This black box, trading, making money everyday. Think about that okay . Its about the dow. Thats really not a question. Its more of a comment. I understand. We havent had the secret ceremony. They havent given me the ancient scroll. I havent read about it but i will and take it seriously. It must have been shocking. I agree with it. I think goldman is probably more representative of pure capitalism than bank of america at this point, but you must have been it was shocking to everyone. How did you find out lloyd . By hearing it on the news . It came over the tape. I read it like everyone else. The answer was you were watching squawk box. I was so engrossed watching squawk box i almost missed it. Do you take credit now that gold pl goldman is a dow component . I have a hundred people working on the roll out plan for the way ill take credit. Not at all. I havent spent a lot of time thinking about why it was the right or wrong thing to do. Im appreciative for the positive attention that comes with it. I want to talk briefly about the regulatory environment. Five years later we were talking about tonight. Five years ago today you ran negotiations over the weekend about whether to merge with citi group or wachovia, all sorts of people. A billion five will be spent on lawyers. I didnt think about it af left law after five years and went to finance. Youre in the right place. Whats that going to do to the bottom line . I do think things have changed. Regulation will stay with us a long time and some extent forever. Theres a bit of a moment in time here where were grappling with legacy issues, not what we want to really do. Both necessary making sure bad things dont happen again or if they do, theyre mitigated. Its not what we necessarily signed on. Theyre necessary things. At some point you chip away at those, get things set up like clearing and regulations that come through. I expect that you wont have as many people working on this five years from now as you do today. One of the things that is so interesting about this major settlement settlement jp is doing. What is this going to do to the industry and how would it have changed your reaction to the suit you settled two years ago now . Im not sure. Its case by case. In some cases that are in the paper, the people have already said this is effectively they admitted this was wrong behavior. Whether it rises to legal standard, theyre not admitting that. Theyre admitting to facts. A lot of facts are not in contention any. When it gets to an extreme case, people that want to settle these cases are not just the defendants. Its the regulators bringing the suits. At the end of the day, if you get a settlement nobody is paying a big fine. That is admission. Youre changing behavior. Its so consequential youll bring and succeed in fewer cases. Does it make sense when you look at jpmorgan scenario theyre losing money to pay for other peoples mistakes. Winners and losers and those that tie themselves to economic interests in the company are always shareholders. If shareholders feel burdened in the direction of paying big fines, thats management. Theres no other Decision Maker or ultimate place to put the burden. I agree. Another name in the news, steve cowen. He came on saying Goldman Sachs was going to support as a firm and continue working with them as a broker dealer for them. Take us inside the decision about that. How do you get to that place . What is that information like to say theyve been indicted and were going to continue working with them . They havent been convicted. At the end of the day we didnt have to make a decision to support them. We would have have to make a decision in the context of accusation of withdrawing support. Were a major provider and prime broker. That would be pay quiet a decision if they withdrew on has the world changed let me say the government wouldnt want us to withdraw that. If everybody withdrew he quitty you would vaporize the firm. The case of bringing the charges so great the government would be reluctant to bring charges if they knew the moment they brought the charge you would be the executioner. Its in the interest of the government. The government did come back and encourage firms like ours to continue to deal with sac. When you think about drexel, the second they were dietd, the game was over. That was the issue. Right. Do you think the world has changed . I think the world appreciated what happened with more information. After those cases, what happened was the government could never prosecute a financial firm. You ended up with non profit. The world didnt like that. They said why are you doing deferred prosecution. They were loathed to use the powers. It was only a nuclear option. The fact theyre getting people to cooperate and still support during the trial actually means its not an on off switch. You have something in between doing nothing. I think the government is supportive of maintaining relationships with the firms pending a trial. Andrew, what about the bank charter . Thats going away. Ask him when. When . When is the the bank charter going away . Dont ask him if. Ask when hes going to do it. I miss had the episode of your show. I must have been traveling. A lot of things that happened in those times, lloyd, buffett and a lot of tarp, this stuff is gone now. Why do you still keep that . Are you going to keep it . You know, the legislation theres a category called sifi which well be regardless of regulatory or not. By the way, people want us to be highly regulated for obvious circumstances. I think i dont think the question i dont think the answer is that important anymore. The difference of us being Bank Holding Company from the point of view of regulation, surveillance, focus, restrictions, limb titations, i cant say for sure. It wont be that big of a difference. Weve got to go. Hard commodities, real commodity, going to stay in that business . Others saying theyre going to get out of that business . Youre going to fight it . Regulators havent said that. But it may come. A lot of things may come. Well deal with that when it happens. Thats a core strategic business for us. Its a slightly different status than other banks for us because theres the legislative grandfathering solution embedded in the notion of being grandfathered we have been in over a hundred years. The role we play in that business is very pay good credit, regulated company will be the outcomes wont be good for the users of the market. Weve got to go. Final question asked last night. It was a great question with a great answer. A week from now, five years ago, you took a lot of money from warren buffett. If you could do it again five years later, would you . I think things have worked out pretty well. With warren, we got more than money. We got more than his validation. We got his advice and friendship as well. That was valuable to us. The fact of the matter is we got money from warren and then got money from the Capital Markets to Capital Raise and got unexpectedly money from the government. We had a lot of money. If we didnt have those particular, other money was granted to us. We got other things as well. Thank you lloyd. We were talking about how you debuted your beard for us on squawk six months ago. We wonder if youll shave it once bernanke leaves. Were a big company. Well decide whats the best thing to do. Guys, were going to come back to jim cramer after this short break. Thank you. Thank you. Bye bye. Today, thats easy. Ge is revolutionizing power. Supercharging turbines with advanced hardware and innovative software. Using data predictively to help power entire cities. So the turbines of today. Will power us all. Into the future. Into the future. In a we believe outshining the competition tomorrow requires challenging your Business Inside and out today. At cognizant, we help forwardlooking Companies Run better and run different to give your customers every reason to keep looking for you. So if youre ready to see opportunities and see them through, we say lets get to work. Because the future belongs to those who challenge the present. [ engine revs, tires squeal ] [ male announcer ] since we began, mercedesbenz has pioneered many breakthroughs. Breakthroughs in design. Breakthroughs in safety. In engineering. And technology. And now our latest creation breaks one more barrier. Introducing the cla. Starting at 29,900. Back in the new york groove still to come this morning, from Lloyd Blankfeins comments to fed expectations. We will talk to jim cramer about the days top stories right after this. [scream] dont tell mom. Dont tell mom. Dont tell mom dont tell mom. Okay. Dont tell mom. Dont tell mom. Dont tell mom . Yeah. The best stories youll ever tell start with, dont tell. Dont tell dad. Start yours in the new santa fe. From hyundai. Lets get down to the new york stock exchange. I dont know, jim, if you heard any of Lloyd Blankfein. He talked about how surprised he was to hear the news that Everybody Knows in the end hes always been able to take walk about lightly. Hes never been able to take seriously all the different criticism from goldman. I worked at goldman in the 80s. I liked that about him. In the end, hes bullish. Ive been there when ive seen hes temperamentally cool in the market. He can say i should have been bullish a 100 and im buying back stock. Theres just a lot of optimism going around ahead of the fed reserve meeting. I think thats good because its not all focused on bernanke. Not bullish on gold and he shows metals, right, jim . He sure does. Hes not taking a lot of risk. They turn the lights on, they make a lot of money. If the yield curve changes in a little bit, theyll be doing fabulously. Jim, well see you in just a few seconds. When we come back, we are just about five hours from the fed announcement. We have a prediction from gary stern right after this. [ male announcer ] these days, a Small Business can save by sharing. Like carpools. Polly wants to know if we can pick her up. Yeah, we can make room. Yeah. [ male announcer ]. Office space. Yes, were loving this communal seating. Its great. [ male announcer ] the best thing to share . A data plan. At t mobile share for business. One bucket of data for everyone on the plan, unlimited talk and text on smart phones. Now, everyones in the spirit of sharing. Hey, can i borrow your boat this weekend . No. [ male announcer ] share more. Save more. At t mobile share for business. Last word from gary stern, our guest host today. Gary, fed decision at 2 00. Any last thought . I think tapering is certainly in the cards, 10 billion or 15 billion, maybe more. This isnt the perfect time to start but its a good time to start. If you wait for the perfect time, youll never get going. I think its now. Thank you. Thank you. And thank you, vicky. Andrew, well see you tomorrow. Make sure you join us. Squawk on the street is next. Good wednesday morning. Welcome to squawk on the street. Im Carl Quintanilla with david faber and cramer. We await the fed decision and possible taper at 2 00 eastern time but plenty of news in front of that. We digest both