Transcripts For CNBC Squawk Box 20131018

Releasing the september jobs report next tuesday. So on forget our jobs friday. Its now jobs tuesday. Last months Producer Price index will be announced on the same morning. Then on wednesday, were going to get september cpi. Steve liesman, of course, and all these numbers are going to join us 8 30 eastern time with more on what we can expect. Before we do all of that, michelle has this mornings top stories. Andrew, do that again what you did with the fear index. Ooh, the fear index. It sounded like homer simple standard operating procedure, it was really funny. In global news, chinas economy glooe grew 7. 8 in the Third Quarter. In line with expectations. But the countrys sta. Ic bureau said growth showed signs of slowing in september. Speaking of china, chinese computermaker lenovo has signed a nondisclosure deal to examine blackberrys book. But the Company Reportedly faces regulatory obstacles if it bids for all of the company. It is said to be likely to pursue parts of blackberry. Bank of america reportedly considering a plan to introduce a Checking Account that curbs overdraft practices. The wall street journal says the plan will not allow customers to overdraw their balances at an atm or when making an automatic bill payment. No word on whether bofa is considering boosting fees as part of its Checking Account overhaul. Joe. Thanks, michelle. I was going to ask him to do that, too. Great minds. Hes pretty brave today now that weve got a deal. You were ooh, but you were trembling about going over before. Werent you anxious . I was a little anxious. I was. Well but now we can all relax. Take a breath. Weve got three months. To hold our breath is what we have. In the market yesterday, that was impressive. Because ibm was down like 10 bucks or something. And people still i dont know whats wrong. But this is all the fed. This is some kind of bizarreo backwards psychology. Its not bizarreo. This is not a function of, oh, well see how that in washington is sorted out. Its now everything in washington is so screwed up. But if we have another deadline that they have to anticipate not going well, which means theyve got stay loose. Its all good. All good. Theres a few after the bell movers. Google posted betterthanexpected earnings and revenues. Shares rising on the news. Look at that. Wow, 961 for google. That is a thats a horse to just get on and ride, is it not . Did you read the New York Times story . If you read the New York Times story, you would think things werent going very well. Is that a wishful article or an actual article . That the pace of growth is slowing, and, therefore, you dont get as much revenue still. All right. I did see a couple of things. And im start to go think like you. In fact, i was with you last night and i did think. No, i brought you up because i was using ways again. I dont know how many hours it will add to my life of not sitting in the lincoln tunnel, but ways is the greatest ways . Ways. Its an app. Oh. I saw writ will change your life. It shows my where the traffic is. Its phenomenal. And heres a couple of things, just quickly. Then im going to get to capital one, i promise. All the Internet Activity went from 60 mobile to 50 mobile. I passed a bus the other day when i was down in d. C. And the lady driving said look over at that bus. There was a line of window and everybody was on their phones. Everybody is connected all the time. With ways now i hit to see where there is a copper something and a home depot ad came up and it was like, ding, ding, ding, ding. Did you click on the home depot tab . I didnt. But i thought of it in a positive wait, home depot and frank blake and the way he looks in his apron and everything. But its possible to monetize mobile. But not as much. But who sits at home now and who opens a big laptop now . Its all and i said these smartphones and then penelope said i dont even have a she doesnt. She has a piece of crap blackberry. Its not a its a blackberry. Still, getting on the internet is so hard on a blackberry. No, no, youre on the old boels. The new ones are better. I dictated an email the other day with huge words in it, two paragraphses, perfect on iphone. The chinese wanting to buy all that hot security that blackberry is always famous for in terms of email. I dont know i dont know about that. Is that what they want to do . I dont know. Lenovo wants to buy blackberry. I didnt want them to buy the pork. But now they can buy all your emails, too. Theres nothing going on in my nooels. Capital ones results. Capital one, alec baldwin, the viking. Hes the ceo, right . Alec baldwin is now a colleague of yours. I know he is, god bless him. Hes a gregariously engaging fellow. Hes very talented. Its not easy to act that naturally about everything. Anyway, beating the street for capital one and chipotle. The worst mexican food is great, in my opinion. This is great mexican food. Hes just saying that its great. You dont have that expression sxregz . Ill tell it to you on a break what its actually all about. Better than expected sales, boost in rt kwaerly profits. Insisting it may raise prices in 20134 to offset higher food costs. And advanced microdevices. Why were anyway, its 3. Advanced micropost ago 6 decline. Every quarter we report on this company, the company dampening hopes that its fast growing gaming console business can take up the slack. Poor company for 30 years ive watched it. Amd, one of the four horses of the nasdaq. 2. 9 billion at this point. But youre not in all the mobile phones were talking about. Even intel has never regained its late 1990s mojo, really. Its a crazy time. Check on the markets this morning. Futures right now are suggesting that were going to have a positive open. The s p would open slightly higher. Dow would open higher by five and the nasdaq would open by more than 20. Will, wti is at 100. The tenyear yield has fallen. 2. 55 as we saw what andrew was talking about. Maybe the fed will be around for a long time. The dollar is at an 8 1 2 month low. 97. 65 yen for every dollar. Euro will cost you 1. 36. Almost 1. 37. The pound is going to cost you 1. 62. The price of gold is lower, 1,230 per ounce. Time for the Global Markets report, roscoe p. Coaltrain is standing by in london. Michelle, good to see you this friday morning. Equities a little firmer here around europe as we wait for the u. S. To post later. Advancer outweigh decliners by a racho of 7 degrees. Yesterday yesterday, just up another 18. The housing mkt has been in the uk. The cac 40 up nearly 0. 5 in paris. Now everybody in the states will be looking at what happened with google yesterday. We get on to that. This is the sector i wanted to look at here. Travel and leisure, Household Goods doing fairly well. We had some news out of china overnight. Third quarter gdp growth up 7. 8 . A little bit of disappointment with the breakdown of that because it was still sort of government led growth raerchb private bess. Still theres a concern about what that is going to do for the future, as well. The Fourth Quarter, going to look a little deeper. But normally if youve got a number that you thought was good, you might see basic resources up amongst these sectors, but its not. Technology down 0. 2 despite what google was saying. Of course, and ill just show you the frankfurt quote here for google, 7. 6 up google in the frankfurt trade as its nearly that 1,000 mark in the United States, as well. One other, corporate is worth keeping your eyes on here. Loreal 2. 3 today. The cosmeticsmaker coming out and saying, look, were pretty comfort where with things are. Confirmation, the cosmetics business is in exclusive talks to buy two japanese companies, as well. Theyve been in a pretty sweet spot, loreal. Wrap up with a quick look at where we are with the bond markets. Pointing out the tenyear treasury yields, 2. 55 for tenyear treasuries. Up bond markets here following to italy and spain. Interesting thing is, italy is now yielding less than spain once again. So were out of the yields for now. And yieldz also lower today, next treasuries, 1. 82 . Although that spread has narrowed just a little bit. Thats it. Thank you, ross. Good to see you this morning. We mentioned china earlier. Ross just mentioned it. Lets get to eunice yoon with more details on it. Hi, eunice. Hi, michelle. St numbers came in at 7. 8 . The big question is how is the economy going to look Going Forward . A lot of people are talking about how the september data showed us peaking out a bit. The retail Sales Numbers came in at 13. 3 . Industrial numbers came in at 4. 3 . This comes after the september export numbers made people nervous. Theres a lot of uncertainty there. On top of that, the people here are focused on a november meeting. This is a Party Conference when all officials get together and start forming policy for the next several years. People are wondering what are their policies going to look like . What kind of reforms could we have . And then you throw on top of that all the uncertainty that people are feeling about the u. S. Debt ceiling debate. Theres been a lot of chatter about that and how that could impact sentiment in the United States and that, of course, affects everybody here in china, especially in the manufacturing sector. Now, the government here did weigh in on this. Again on an official level, very happy with the resolution in the United States. But on an unofficial level, the state press was blasting washington. There was one editorial that said that the deal really just pro longs what it calls the fuse of the u. S. Debt bomb. Also, there is a chinese Ratings Agency that downgraded the United States because of all the politicking. This is not a household name in the United States, barely a household name over here. But at the same time, it does show a signal. Send a signal of how china is feeling about the deal and the politics getting in the way of the safety of their investments. Guys. Thank you so much, eunice yoon. Andrew. From china to washington, were really talking about washington today rather than yesterday where we were in washington. Washington back finally to work, but what do they need to do to win us back . Thats been the question weve been posing. And morning moneys ben white of politico joins us now on the set. Do you think they im not going to say do you think they can win us back. I dont want to be cynical. Did they never lose you . Its not that they never loft me. Its just that i dont know if there is a low. You have a long way to win people back when youre at like 20 pefrs approval. Across the board. One of the more dirveth things, you havent seen each other, actually. I saw you. You looked good on camera. You looked good on cam wash as well. I was a little suppressed with any of the questions we asked these folks in congress about what they were prepared to do. They were prepared to do basically nothing. You didnt get depressed when the president spoke he spoke before before it was actually signed. That didnt seem helpful. Let me ask you if these words would ever be used in terms of the president. Constellatory, gracious in victory, collegial, open. Did any of those words ever be in the lex confor theyre not the first things that come to mind when you think about the president , which is a problem for the budget talks Going Forward. How do we start the conversation on the right foot . I dont think the president started it necessarily on the right foot by going out and saying, if you want to make big changes, republicans will say we won a lot of elections and we control the house of representatives. And speaking for the vote in the house was not that helpful. Were starting off on a bad foot. And i think the idea that youll get a grand bargain right now that includes entitlement reforms, it will be hard. Democrats will demand more revenue. What is the path . Not too business all over again. The path is getting an agreement on funding levels for 2014, we know the somewhat over 1 trillion that democrats want and the sequest every level of 67 billion the republicans want. You get somewhere in ta range, less than a trillion. Maybe you reprogram the sequester a little bit. Then we dont go into crisis mode again. If everybody shoots really high and wants to get a grand bargain, maybe its possible. I think its not. I think you get a funding level deal and you get from there. Do you think its a mistake to shoot high . I dont think its a mistake. You want to talk about Corporate Tax reform, repatriation, theres a lot of things that could be done that would be helpful. The problem is you always run into demands from democrats for significantly more revenue. And thats just a place republicans are not going to go. They gave their tax increase how is you know, i talked to steve israel yesterday. How emboldened do you think democrats i mean, you talk about the president. For three months. And thats what they won . No, but thats what im i just want to know in terms of, therefore, how they approached the negotiations. And, therefore, also how republicans approached the negotiations. I think democrats feel emboldened in that they believe they broke republicans demands on the debt limit. Theyve broken the cycle of were going to default and crash the economy unless we get a, b, c and d on obama care. Do you think they just broke on obama care or do you think it was its mainly they broke on obama care. I dont think theyre going to try again to have a deal with the shutdown and the debt limit, you know, crash as the end result if they dont get obama care changes. But they havent broken them on were going to give you more revenue. Theyre not that emboldened and they shouldnt be. This occurred to me last night. Its sad that im not thinking about the dodgers or something, but it wasnt. I was thinking about this. When they change their tact from obama care to overall budget negotiations to try to get the president to negotiate on that prosecute this, they didnt. He got this. But does it matter that the president made it to october 17th without negotiating . And thats the victory . But now theyre basically where they wanted to be they wanted him to negotiate on budget issues. We went through the 17th. Now he has three months, but now he has to negotiate. So all he did was win a week well, i think what the thinking in the white house was you cant give in to unilateral House Republican demands as part of a negotiation. You cant set up a scenario in which the debt limit every time is going to be a weapon that House Republicans well, not anytime. Senator oh bam in ma in 2006 thought waits good strategy, but no longer a good strategy. He was our that was in the context of a vote that nobody thought was going to fail. Im not saying that the. But thats what they would argue. Boehner and everybody else, meaning how does he operate now . He let the rightist of the right wing they like us now. Drive him. What does he do this time . Its an excellent question. I think he probably counseled them not to try again to make n unrealistic demands in return for a debt limit increase. Although they didnt listen the first time. But they like him. They knew they were bad boys and he let them be bad. And he let them push it to the end before caving. He sort of let he gets strung around by all sorts of groups. He could try to change tactics. He doesnt have much choice because he doesnt have much control over that group of republicans who are going to do what they do no mart what happened. You can hang on to the tactics, but i dont know what other tactics he can use. Wow. Appreciate it. The crazy crackbarian still has a few gaps of light left. Mr. Sorkin corrected you. Theres still reading twitter all day. That was the entertaining part. In the death throws. But theres one last thing. Thank you, ben. Coming up, if you didnt get a good notes sleep, youll want to hear our next story. Why a lack of shut eye could do more damaging than it makes you fat, number one. And none of us around this table get enough rest. Squawk box will be right back. vo you are a business pro. Maestro of project management. Baron of the buildout. You need a permit. To be this awesome. 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. I put in the hourswhere i am today by luck. And built a strong reputation in the industry. I set goals and worked hard to meet them. Ive made my success happen. So when it comes to my investments, im supposed to just hand it over to a broker and back away . Thats not gonna happen. Avo when you work with a schwab Financial Consultant, youll get the guidance you need with the control you want. Talk to us today. Time now for the executive edge. Daily segment focused on giving Business Leaders a leg up. Most people know that its a good nights sleep thats so important. Theres a new study that suggests a reason for why good shut eye leaves you feeling sharp. Scientists say theyve discovered a system in our bodies that scrubs away neural waste as we sleep. Mostly active when you are at rest and stops when youre awake. I am not surprised by this at all, guys. I remember in college with in the uro anatomy and things like that, sleep was poorly understood. We didnt know why anyone i mean, its obviously that youre in a resting state and something is happening that needs to happen because when you do sleep deprivation studies, people cant last beyond a certain point. And that makes perfect sense. Something is building up. Its all chemically mediated. So things get broken down. You would need to and your in the ural waste is not being cleaned out on many mornings, ive noticed that. Youve noticed . Ive smelled it. Wow. Ill tell you, what worries me about this, though youre a worrier. Theres a suggestion that plaques are related to alzheimer and things. So its a big itssue for me. Its a big problem. We both dont get enough sleep. I cant lie and say im great on four hours. Im not. But there are people who are great on four. No. That would be greater on seven. But some people did, like, calculate life hours that theyre alive and they think theyre wasting eight of them. And its like, thats not the way to think about it. But some of the most successful people i know claim they dont need a lot of sleep. When you dont sleep very long, do you remember i dont remember my dreams very well, but when i do, theres a lot going on. Theres a lot going on that i love to have all those crazy dreams. You do . Yeah. And if you nap, i find i can get more dreaming. Can you do me a favor . Whats that . Can you put some clothes on in my next dream about you. I dont know what it means. This squawkward moment has been brought to you by joe kernen. Cover up . A robe. A robe. Oil companies. Weve got some more. Toga. How about a toga. Toga, toga friday. Sorry, michelle. Oil companies are being sued for wasting natural gas. Mineral owner res seeking millions of dollars in lost royalties. Companies deliberately burn natural gas when they dont have the pipeline to transport all that is produced. The process is called flaring. The value of flared gas in north dakota is said to be worth nearly 100 million a month according to those who are suing. Property owners believe theyre losing money when royalties arent paid on whats flared. Its my understanding, theres no economic incentives due to the price of natural gas to capture this natural gas. I bet its unbelievable. Theres no way to capture it . You can capture it. Its just is it worth the money. Yeah. The infrastructure is not there at this point, right . Okay. Dare i say is there any i dont want to say it. By flaring it, is that bad for the you know where im going with that. Maybe i shouldnt even ask. Is talking bad for it . Yes. Is breathing bad for us . Yes. Im just saying burning the stuff into thin air its killing. If you believe co2 is a harmful gas, then it is bad, yes. Quarterly results from dow component General Electric coming up, so dont move. The American Dream is of a better future, a confident retirement. Those dreams, theres just no way were going to let them die. Like they helped millions of others. By listening. Planning. Working one on one. Thats what Ameriprise Financial does. Thats what they can do with you. Thats how ameriprise puts more within reach. Good morning. Welcome back to squawk box. Im joe kernen along with Andrew Ross Sorkin and Michelle Caruso cabrera. General electrics results are hitting right now. Looking at these, after worrying about ibm and whether there was some macro sort of headwinds, this you know, unless im wrong, this is pretty good. 36 cents a share was a penny above expectations, number one. Thats up 18 including restructuring. Now, what do we worry about a lot of times with ge ref knew . And revenue was 35. 7 billion. The company attributes that to faster than expected shrinking of ge capital, which theyve said in the past sometime to explain why it misses estimates. But the estimate was only 35. 9. So 35. 7, there was an fx impact of 100 million. So that is going to hurt it to some extent. But, you know, this is not far off. In terms of what some people think has been a slowdown. Revenue, youd call that just barely below. A record backlog of 229 billion. Thats something that the Company Always likes to trumpet because it does sort of set you up for a more positive future. Good strength across all regions, including the u. S. Up 18 . Europe up 17 . And Growth Markets up 22 . I guess the restructuring charges were known about because if you exclude those, it was 40 cents which would have been above analyst expectations. But the company is saying its only a penny ahead up 36 from an estimate of 35. Ge capital earnings up 13 . And tier one common ratio, 1 1. 3. They have to worry about basul 1, too, andrew . They do, they do. They have something called ge capital. Oh, yeah, yeah. And the overall framework for 2013 remains unchanged. Jeff immelt says Third Quarter results were very strong. On an improving Global Business environment, so it was improving. I guess europe is better. Orders through 2. 9 . Stwril margins up 120 basis points and were on track of plans of 70 basis points for the whole company for the year. And ge capital continues to perform well. So at this point, for this stock to trade at a new high and i dont mean an alltime high, but 24. 95 is the old high. So its up 15 cents at 24. 83. Jack began as he usually does, chief Investment Officer of harbor advisory. Jack has owned this stock for so long that, you know, he knows everything about it. So thats why you stuck with it. Do you remember 5, jack . Ill bet you do. I do. I remember march 9th, 20309, doubling down for some clients that liked 769, which helped because, boy, we owned it from like 1996. But, joe, this is a great report. The industrial Margin Expansion oh, yeah, you were on. Did you get an ending net investment in capital . No. Thats why youre on. This is a quarter where i thought it might be hard to hit the numbers. Its basically in line. I thought that was a positive. Thats a real good revenue number. I thought it would go to 3. 75. It probably went lower if thats what theyre telling us. And thats a real good reason for a revenue shortfall. Were finally done with the revenue decreases. But orders were great, industrial Margin Expansion, that was much better than expected. So this is a good report. It will move the stock. Im expecting a Dividend Increase and if we didnt get it in these bullets, im hoping were going to get it at 8 30 on the conference call. Each of the last few years, joe, it was this quarter that they announced the Dividend Increase. It should be about 10 from 19 cents to 21 cents. And ge capital returning revenue to finally profitable to the top. That would help that, right . Are you satisfied with that . Does it need to get smaller . I didnt hear that number. Could you run that by me again, please . Hold on. Let me put on my glasses. Werings was 13 . Real estate and consumer businesses. Ge capitals were up 13 . Ge capital earnings up 13 . Eni at 385 billion. Yeah. In light of taking down revenue, i mean, any net investment, thats a good number. And youre absolutely right, thats what michelle is going to allow them to do more stock buybacks to increase the dividend, repatriating that cash upstream is really allowing them to juice their capital allocation. 2 billion in dividends to the parents. Yeah. Thats great. And you point out, so when was the last time that revenue grew year over year . Gosh, i i think it was i think it was 08, joe. It was a while ago. Oh, you bet. You bet. 2496 now. I dont know whether people believe you or are listening to you, but youre right, it is trading higher. 24. 96, this is a new let me look at a longer looking chart. There it is, the last time it was this high. Might even hit 25. Who knows. As a journalist, i guess i can hope for prosperity increasing for some people. Its not allowed. You have to be cynical all the time, joe. You really do have to. Considering these people are trying to earn a profit all the time at the expense of these people, right . Yes. Jack began. Thank you. They are, andrew. Theyre evil. Trying to make money. Im trying to line their pockets, trying to give shareholders more money, constantly. And they dont even deny it. I read it in the New York Times. This is a business show and that is what people are trying to do . Your read here. I dont know how to respond. Its earnings season. Were going to talk expectations next the but first, if you want to know whats going on behind the scenes of squawk box and, boy, i dont know if you want to know this week, but if you do, check out talking quack. Go to squawk. Cnbc. Com. Boy, can you learn a lot. Were back in just a moment. [ man ] on december 17, 1903, the Wright Brothers became the first in flight. [ goodall ] i think the most amazing thing is how like us these chimpanzees are. [ laughing ] [ woman ] can you hear me . And you hear your voice . Oh, its exciting [ man ] touchdown confirmed. Were safe on mars. [ cheers and applause ] hi. [ baby fussing ]. Welcome back to squawk box this morning on this friday morning. Take a look at u. S. Equity futures at this hour. After ge after just reported dow looks like it would open about 13 points higher. Nasdaq up close to 23 points and the s p 500 up over three points after what was a great day for the s p yesterday and the dow ultimately turning itself around. Also, as we discussed before the commercial break, shares of ge boosting getting a boost this morning following the quarterly report. So you have that news. Plus we had a couple other headlines for you. And this is for those that in Northern California this morning, if youre a commuter and i hope youre up watching us. I know its early for you. But if youre out there, you should know it could be a very messy morning. Commuter rail workers in San Francisco bay area are on strike today after talks with management over a new contract broke down. The Bay Area Rapid Transit Management and the unions have been fighting for months overpay and benefits. And if youre making your way to work this morning, you take the rails, it could be complicated. All right. As the u. S. Government reopens for business, lets get the latest on whats happening in the bond space. Plus, a gauge of the global economy. Here with us now are chris corso of cut Water Asset Management and paul donovans global economist at ubs. Fed easy forever here because of the standoff . And were going to get another one in january. So if what, Second Quarter next year . Theres a difference between quantitative policy and Monetary Policy. The Monetary Policy is all about im talking about taper. You know what im talking about. Its quantitative policy. No, they stop. Even if theres another fight in january . Oh, for goodness sake, who cares whats going on capitol hill. Quantitative policy is about the circulation of money. Are banks lending or not . If banks are lending it out, you stop pumping so much in. I think youre a contrarian to the market. Well, the very good news here is the fed is run by economists, not by market traders. Something we can all be very, very thankful for. Economists run the fed. Economists know the consequences of this. Janet yellen is an economist just like the rest of them. So were probably going to have another fight in january. Tapering doesnt happen until at least may or june next year. You dont believe that . If the banks roll over and say you know what . This lending weve been starting to do, this critical thing thats happened this year, if they dry up on that, then the fed doesnt taper. But if they carry on as theyre doing now, there is simply no need to keep on putting this much money in. How are you acting . I think the economists control the front end, the traders control the back end of the market. Even though the fed has been buying out on the curve . Theyve been prekaump about it. Of course, the market is rejoicing. 2. 55 this morning. 2. 55 , rejoicing about the fiscal cliff. That means taper is delayed. So you disagree with him. My concern is this. My concern is that if the fed sticks with this target of 6. 5 inflation unemployment. Yeah. Thank you. Were not that far away from that given our view on the economy, the economy is picking up speed. I think well get through this temporary we get to 6. 51 you think . Quicker than we think. Tapering could be more forceful. So do you think we have another big fight in january . Well, yeah. I think if we have a big fight in january, theyll hold off for that. But at some point, the kneconom is going to pick up speed. Theyre going to look at the fundamentals. And we should be tapering. The economy is getting better, not worse. So i think the longer we delay it, the more the price to pay. What impacts on the economy in terms of people out of work or the killing of confidence and knowing that were going to go through it again, which has an impact on economic action in the next three months. Well, theres an impact on confidence in the states, absolutely. The problem is, confidence has become increasingly unreliable. As a metric. As a guy to whats going on in the economy. What you are getting can confidence is hysterical overreaction. Everything is always black or white. Theres never a shade of gray. And so the confidence data is not actually telling us a great deal. As youre seeing on cnbc or cnn or whatever, every night youre all case yoes on capitol hill, youre going to say, actually, i dont feel like confidence. So id better go down to walmart and spend more cash, anyway. Thats the american past time. Youre not going to get necessarily reaction. We estimate you lost 0. 2 gdp. And wa impact have you assigned any number to the next three months if you send people you dont think people will retrench at all . I dont think were going to get it, no. I think the fed has to be careful. Theyre not going to change policy in december or anything like that. You dont mess with christmas. But well go through to First Quarter of next year with a reasonable momentum. So youre a cio. Youre telling people to do what now . Its a risk on market. So were riding the risk right now. I think you have to look forward six months now. Toward what i was talking about earlier. I think there will be tapering. And guess what . The market is not prepared for tapering. Theres a risk on market. Why arent yields rising . Well, i think its a complex question. I think the bond market right now is looking more towards the slowdown in tapering. And saying, guess what . Ill clear on the bond market for now. So we get what is an odd pattern historically, which is that people buy both stocks and bonds. Yes. Youre in a weird market. Its on fire right now. I think you have to bear in mind, treasury markets are rigged. Youre not going to go back to fair value. Because of the fed . Not just because of the fed. Because of the regulations. If barclays is 200 pages of regulation of buy bonds, buy bonds, buy bonds. You have Foreign Companies coming in and buying bonds because they have to buy bonds. Do these people remember what they did when everybody was encouraged to buy mortgage bonds and the regulations lead to unintended consequences that can cause the very thing that theyre trying to prevent. Absolutely. Basul is packed with unintended consequences. Maybe in ten years time, it will all go horribly wrong and well have basul 4. Youre telling people to buy everything . Im telling people to be careful about what theyre buying. Buy risk, but do it smartly. And the bond market defensively. Were recommending a bar bell between long dated Municipal Bonds which v unduly beaten up and incredibly cheap. They have price risk, though, so you want to balance that out with floating rate securities like levered loans. Get twice the yield of the market. Youre worried about puerto rico causing widespread infections . Perhaps. It has widened all mini bonds out. So 75 of Municipal Bond funds owned from puerto rico because of a triple exemption . They do. Its been a baby with the bath water syndrome on things like aaa texas. Aaa texas is a great state. It has a lot of revenue, a lot of diverse the field there is what . Wow. Yeah. Its a great deal. Price sensitivity. I caution you. Balance it. Hold to maturity and get paid. Thank you. Good to see you this morning. Thank you. Coming up, why a swiss bank is closing shop. First, though, a little news on jc penney. The retailer announcing its going to open its doors on thanksgiving evening to compete with its rivals. Its also bringing back a tradition, its going to give away holiday snow globes. No more silly pins, right . No more silly pins. announcer at scottrade, our clients trade and invest exactly how they want. With scottrades online banking, i get one view of my bank and brokerage accounts with one login. To easily move my money when i need to. Plus, when i call my local scottrade office, i can talk to someone who knows how i trade. Because i dont trade like everybody. 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Call now to request your free decision guide. O0 cthe ocean gets warmer. The peruvian anchovy harvest suffers. It raises the price of fishmeal, cattle feed and beef. Bny mellon turns insights like these into powerful investment strategies. For a university endowment. It funds a marine biologist. Who studies the peruvian anchovy. Invested in the world. Bny mellon. Maestro of project management. Baron of the buildout. You need a permit. To be this awesome. 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. Swiss private bank is closing shop, cites unsustainable costs stemming from the countrys dispute with the United States over alleged tax evasion. This is the second swiss bank to shut as a result of the fight between the u. S. And switzerland. All right. In the chairs. We are in the chairs. Weve got a couple of stories to talk about this morning. The story i wanted to talk about. Joe, and none of us have talked about steve cohen in a while and the fact hes going to pay 1 billion to end this whole thing. And theres part of me that s s says biggest find e in history ist enough . If the case is so good and the governments going after the guy for however long theyre going after him, he shouldnt be able to buy your way out of it. And its not a knock on steve kohn, its just a suggestion either bring the case or dont bring the case. Theres a calculus going on here that the sec has decided that 1 billion settlement is somehow better than going to court and possibly losing. And possibly losing. And it seems to me given all the headlines that have gone on for years around this, this seems to me almost like the worst outcome. Look, if youre steve kohn, i understand why you would do this. Id be happy its always about the money. Isnt it . Unless youre madoff and then madoff that was weird. Drexel out of business, obviously, parked in a little stock. Those guys had no idea to really break the rules. They did a little. It looks like childs play, doesnt it . It does at this point. I dont know. Anyway my two cents for the morning and thats all theyre worth. Okay. Im sort of in friday sports mode. Go for it. Its just, you got the youve got baseball. Both series are really great teams, great pitching, exciting and theyre both still going on. And theres going to be so these are things to watch. Tonights a big game and tomorrow. And then College Football is always great. And then theres this story about i dont like i like tom brady now. We do. And if you saw last week against the saints why tom brady is one of the best quarterbacks, top five probably in history. The jets think they might win. I like the jets, im a new york fan, but i worry i worry a little bit about how theyre going to do against the pats coming up. But this guy says that the officials when he gets too close, hes a jets defensive tackle. When he gets too close to brady, the officials say, hey, this guy is important to, you know, the league. The same way tiger woods is important to the pga. Kind of the same way. Kind of the same way. Look, i dont think thats true. I think bradys pretty tough. Weve got to go. Coming up, omb director jim nelson and Steve Rattner. Vo two years of grad school. 20 years with the company. Thousands of presentations. And one hard earned partnership. It took a lot of work to get this far. So now im supposed to take a back seat when it comes to my investments . Theres zero chance of that happening. Avo when you work with a schwab Financial Consultant, youll get the guidance you need with the control you want. Talk to us today. Restoring faith in the government. Can washington win back investors. Former omb director jim nussel and Steve Rattner, both here. Earnings central, honeywell and Morgan Stanley reporting within the hour. The numbers and Market Reaction just ahead. Plus, a vulture is circling. Billionaire wilber ross on whether lawmakers will rise above and where hes putting his money to work ahead of the next looming deadline as the second hour of squawk box begins right now. Good morning and welcome to squawk box here on cnbc. Im Andrew Ross Sorkin along with joe kernan and Michelle Carusocabrera. It will argument has begun. Well properly introduce them in a moment. In the meantime, take a look at how futures are setting themselves up. Dow looks like it would open about six points higher and nasdaq about 20 points. We should note were going to hear from ge news in a minute, but thats probably going to be weighing a little bit on the dow and this jobs report. We should feel good about it. This is good that we have tuesday. Its a big day for stocks. It is official, jobs friday will be next tuesday. Thats when the Labor Department plans to release the september jobs report which was postponed, of course, because of the Government Shutdown. And the next one doesnt come right away. It comes a week after it would normally come. But weve got two of them coming. We get good ratings and its exciting and were able to play it up and everything and its interesting to watch. The backup, we thought we missed it the first time around, were going to get get it back. Like all those furloughed employees. Thats what im saying. Thats what im saying. Things may have slowed down a little. Were going to see because of ted cruz. In your view. In the headlines this morning, taking a hit in overseas trading this morning on news its considering a bid for all or parts of smartphone maker blackberry. The pc maker had signed a nondisclosure agreement to look at blackberrys books, lenovo has been looking for ways to ramp up the smartphone business. And joes been getting emails from blackberry haters all morning. Jc penney joining the ranks of retailers opening on thanksgiving. We heard macys opening at 8 00 a. M. Now the stores at jc penney opening at im sorry, i said 8 00 a. M. , 8 00 p. M. Some earnings to tell you about this morning, andrew. Dow component General Electric earning 36 cents a share in the First Quarter. Beat estimates by a penny. Waiting to hear whether there might be a Dividend Increase. Now theyre under the gun. If they werent planning one, now theyre its the highest price since 2008. It is. Throw us a bone. 10 . Revenue slightly shy of consensus with ge citing reductions in the capital unit which is paying dividends to the Parent Company. I remember ge options at 40. 43. Yeah. Suntrust bank earning an adjusted 66 cents, revenues at 1. 9 billion. Both of those numbers below estimates. Oil Field Services company schlumberger, revenues coming in ahead of expectations at 11. 6 billion. And baker hues reported an adjusted 81 cents a share. 3 cents ahead of expectations. Revenues basically in line at 5. 8 billion. Okay. Ladies and gentlemen, its time to rise above this morning. Skepticism lingering as Congress Tries to win back the confidence in the American People. The former omb director and currently runs the group. And the former Obama Administration car czar, both gentlemen are cnbc contributors. Gentlemen, heres the thing. We were down in washington yesterday, and it was quite depressing. Youd ask a senator or congressman what are you going to do . What are you willing to give up . How are you going to get there . And it was if nothing had happened over the past two months. In fact, i would argue the democrats felt emboldened, the republicans didnt feel any less emboldened. So my question for you, steve, is this. Can a deal be done without tax increases for the democrats. Can they give that up on day one because that seems to be one of the holdups on getting anything moving here. This is not the end. This is not even the beginning of the end, this may be the end of the beginning. We have a long way to go. And to your point, there is not a lot of reason, i dont think, to be overly optimistic about it. I suspect a deal with any kind of meaningful tax revenues is going to be very, very hard to do. You may be able to do some stuff with socalled loopholes, deductions, Things Considered tax expenditures that republicans can wrap their minds around. But the issue if you just simply take the Senate Budget that was passed by patty murray, the house budget passed by paul ryan and put them next to each other. You see a huge gulf between the two sides and theres a gulf within the republican party. You remember last summer, the republicans could not pass the transportation housing of urban Development Deal because how rogers said it was too tight within the caps of his own partys budget. Its a real complicated. Hes the same guy who said that americans dont do anything until the last minute. They try Everything Else instead of doing the right thing and finally do the right thing. The alternative before doing the right thing. Were talking about churchill a lot. A lot of churchill. Yeah, two of them. Never never we could use didnt you run the budget deal or something . Yeah, this is all my fault. Trust me. Youre here for the next two hours. Youve got to have something to say. Steve is right, this is probably one of the hardest tricks theyre going to try to pull out of a hat in the next three months. Those of us who have done it before, ive run three of these committees. One of the things youve got to do up front, youve got to put down rules of the road. Part of the problem, andrew, you get in this situation where you say are you willing to do this . Are you willing to do that . Thats the first conversation. The other night when they wheeled in the pizza at 11 00 at night and all of a sudden magically, another deal came out. Lets start with the pizza this time. Seriously, these people dont know each other. Theyve never talked to one another. That happened to you yesterday. Well, in part because what they do is they talk to one another through the television or through press conferences or through twitter and rather than do that, start with the pizza. And so thats number one. Number two, dont come to the meeting without a plan yourself. You cant criticize someone elses plan until youve put a plan on the table. So thats the second step. And the third, i would suggest, is there is no deal until there is a deal on everything. You cant pick and choose these litt little, you know, nits and gnats, youve got to have one deal before you announce to anyone else. Not a mini grand bargain but a truly grand bargain. Its totally worth trying. People like jim and i are both involved in the campaign to fix the debt. And anyone who looks at numbers, knows anything about numbers and looks at the federal budgets numbers knows we have to have a big deal at some point. Were not only forget about the question what you think the deficit should be. Our priorities are all completely misguided. Were cutting the wrong things. If you look inside revenues, you have the tax code riddled with loophol loopholes. Youve got a process set up in which theres no enforcing mechanism, no super committee, no sequestration. Its only and with holidays in the way. The dog that finally catches the bus and its like, you know, now what. The president was able to avoid having to negotiate to get this done. And that and i dont know whether ed klein, did you read the ed klein piece that said, look, were going to do this, use words like hostage takers and, you know, the press picked it up and it worked beautifully. Maybe it did. Now that were beyond the 17th, weve got a three month deal. Hes in a position where he cant say im not negotiating anymore. No. Is he capable of negotiating in good faith with these people he reviles, do you think . Hes totally capable of negotiating. He has a different style than jim would have, others would have. Hes not going to so youre sure of this . Because we all are confounded by what that style actually is in terms of negotiating. Look, i believe, and you can jump the two of you, my two good friends over there. Youve got your boy andrew here who is hes yeah, hes a man. I mean, when but hes with you. Hes on your side. Im michelles boy. The fact is, the president is totally capable of negotiating, has negotiated, what he said here, and i think he did a service to the country is to get this debt ceiling thing off the table as a negotiator. He learned his lesson in 2006. He learned his lesson. And after that experience in 2011 he said the debt ceiling isnt going to come up again . No, its going to come up again, but its been a teachable moment. Heres what i think we have learned. I think we have learned the American People do not believe in using the debt ceiling as a negotiating tool. I think they understand the concept of default and what it means to the economy. Does not mean default. Those are two separate events. You have to have the first to get the second but dont necessarily get the second. We get it quickly. You eventually get it. If you dont raise the debt ceiling you eventually get it. I think the American People have said no mas to that. I think the American People have said no mas to trying to get rid of obama care to the back door. Let it just youre quoting youre talking about the national polls. When you talk about the hard right, when youre talking about not using the debt ceiling as a tool, those folks were elected locally. And im not convinced that what theyve done doesnt actually get them they just suffered they just suffered the worst defeat since the charge of the light brigade. Individuals but individually in their districts theyre having parties and celebrations back home. Okay. And ted cruz got unendorsed by his own newspaper. Oh. Everybody looks at the editorial papers. I mean, i understand what youre saying, steve, but thats not doing anything for his motivations. His motivations too optimistic is what im saying. Im not optimistic at all. How many twitter followers he has and how many people are contributing to his National Campaign and how often he gets invited to iowa right now, quite frankly. Thats whats driving him. Those invitations, twitter feeds and followers, theyre coming in still. After the shutdown in 95, i think youre right. I dont think thats what happened this time around. But i do think when we were sold the idea of tax reform where you get rid of loopholes and then you lower the overall rate, it wasnt that you first raised the overall rate and then closed the loopholes and keep the revenue. And the president seems to think thats not gaucnegotia. If they use that balance word, you have to have revenue. Cant we lower the overall rate if we close the loopholes . Weve had 3. 5 trillion of deficit reduction since you go back to the time of simpson bowles. None on entitlements, steve. 3. 5 trillion, only 700 billions been revenues, its been 80 spending cuts. You can keep your discretionary cuts. Weve got almost two more hours to go. So we can continue this conversation. Well be back hearing more from our guest hosts. Oh, up next, we turn our focus to the markets, what should investors do now that the government has kicked the can down the road for a few months . Im getting tired of that phrase. And then as we head to a break, check out shares of ge, the company reporting Quarterly Results a short time ago. This is the highest level weve seen in the stock since 2008. Those dark days. 25. 30 a share. Above 25. We are expecting Morgan Stanley earnings when squawk box returns. Morgan stanley right off the bat is trading higher on this number. Its 45 cents, but from a continuing on a continuing basis, continuing ops its 44 cents versus expectations of 40. But theyre giving one revenue number of 7. 9 billion. Even that is above the estimate of 7. 7 billion and it would be different than what we saw with goldman, which the trading revenue was disappointing. If you do net revenue, it was 8. 1 billion. The 7. 7 billion estimate, either one of those numbers is above. Theres a lot of other metrics, do you care, andrew . What do you like . Sales and trading . 2. 22. You care about fixed income. No, it was 835 million versus 1 billion estimate. Investment banking was a beat, 992 million against 919. Wealth management was basically in line. Investment management a slight beat. You know, its not a bad report. But, you know, you look at what happened to Goldman Sachs yesterday. Its 1. 27 now. Andrew, you can do a little more work on this but i am seeing i know where youre going on this. I dont have the ratio. They paid these dirt balls 3. 79 billion. They didnt pay them yet. You know, gouging blood suckers, leeches. Contribute nothing to society except moving paper around. I thought you were capitalists. I dont know what the ratio is, but its 3. 97 billion, which could have been spent on day care or something, but instead, its being spent on im sure theyre going to ask deblasio is going to take care of this. When bono sings, i listen. I dont want to its have you already sucked up to him, rattner . No. Jim gorman will be on at 11 30. To promote good. Im sure theyre going to ask him about the comp. I know. Andrew, youve got to sic em. Markets can focus on corporate earnings, the s p 500 closing at a record high, but lackluster Quarterly Results weighing on the dow. Here now with us is the Portfolio Manager at Quantitative Management Associates and richard bernstein, ceo of i have named you. This is an old gag. It is. It is. You dont have a middle name. Your mother did not give you one, i gave you one. Its cool, it sounds cool. You get a high five after it. Hes a cnbc contributor. The fed is not tapering anymore. People say, weve got three more months to mess this up, theyve got to stay out. The 85 billion continues, the party continues, is it that simple . Theyll stay where they are for a couple of months, but i do expect them to taper soon. They were supposed to taper in september or november or march. I think what happened this week is part of the reason why they did put it off because they were concerned about the possibility is that another fight in january. They cant do it again. Is that enough to i think the economy is gaining traction and i think the fed realizes that theyre going to be willing to start to taper maybe the end of this year, maybe this year. Okay. So the economys improving and we have the fed. Thats pretty goldie locks. We did raise a little cash during this fight. You did . Yeah. I think were in a lets remove washington for one second. I think were in a very classic mid cycle environment. You get a tug of war between improving fundamentals in the economy and the question of will the fed ruin it . That is the discussion we are having right now. Whats very ironic is people dont even think theres a cycle let alone were entering the mid cycle environment. Thats why i think both ed and i are very bullish. People dont believe this is happening. Are you saying that ruining it means not giving the 85 billion forever per month . Is that ruining it . No, no, no. Im saying always in the mid cycle you have a question of is the fed going to raise rates and are they going to raise rates too rapidly . This sounds like thats what everybody says every cycle. The fed taking the punch bowl away from the party. When was the last time you had a recession that bad . The questions always the same. Is the fed going to take the punch bowl away from the party . The tapering is not taking the punch bowl away. Just the foot off the gas. I disagree. All those blood sucker traders. Too much of the fed and fed tapering. Whats the underlying economy doing . And that, i think, is starting to accelerate. And itll be more obvious in a couple of quarters. Did you not see what happened in the market when we started tapering . The fed wants people to believe tapering is now tightening. The market told them very squarely that tapering is tightening. And it was clear what the market was saying the economy is not yet ready for tightening. That was the message that came out very clearly. The fed quickly backed off. Thats also not unusual. The fed is a lagging indicator. They react to the data. That thats what were going to see. The headline is the fed will not be deterred from tapering in december. It says from eyeing december tapering. Eyeing. Well, that depends on what the data if the data in the next several months is quite strong, theyll probably start tapering. They leak stuff to different people. Right. They have 20 guys leaking Different Things to right. Does ibm, did that mean anything to the broader . Is that specific . The work i do, i dont spend that much time thinking about individual companies. I look at the overall earnings picture. I think were going to see about 6 growth when all the numbers are in. And the other thing is that the sequential growth. Every quarter for about eight quarters the s p 500 earnings per share have been going up a little bit. Youre making slow, but steady progress. And i think the key thing to look for over the next not so much this quarter or next quarter but into next year, i think going to start to see Revenue Growth pick up considerably. Was the analyst on your show who had the theory that the ibm weakening in china was pay back . I dont remember. No, that came up on squawk on the street. Thought maybe it was the individual its one big yeah. Do people not understand, im a Morgan Stanley backer and i was channeling you. Being facetious. Im being facetious. Im not matt taibbi. I dont view a giant squid and this is a its a very good number. 11 30, james gorman. Weve got to run. A lot more coming up on squawk when we return. Time now for todays aflac trivia question. What former nfl wide receiver currently works at barclays . The answer when cnbc squawk box continues. Okay, who helps you focus on your recovery . Yo, yo, yo. Aflac. Wow. [ under his breath ] that was horrible. Pays you cash when youre sick or hurt . [ japanese accent ] aflac. Love it. [ under his breath ] hate it. Helps you focus on getting back to normal . [ as a Southern Belle ] aflac. [ as a cowboy ] aflac. [ sassily ] aflac. Uh huh. [ under his breath ] i am so fired. Youre on in 5, duck. [ male announcer ] when youre sick or hurt, aflac pays you cash. Find out more at aflac. Com. [ male announcer ] when youre sick or hurt, aflac pays you cash. Sometimes they just drop in. Always obvious. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. So she could take her dream to the next level. So we talked about her options. Her valuable assets were staying. And selling her car wouldnt fly. We helped sydney manage her debt and prioritize her goals, so she could really turn up the volume on her dreams today. And tomorrow. So lets see what we can do about that. Remodel. Motorcycle. [ female announcer ] some questions take more than a bank. They take a banker. Make a my financial priorities appointment today. Because when people talk, great things happen. Now the answer to todays aflac trivia question. What former nfl wide receiver currently works at barclays . Wayne chrebet. Coming up next ti like the jets and i wish him well. So, all right. Coming up next, the tools of the trade, a closer look at fixed income markets and the dollar which hit 8 1 2 month low this morning. Standing by to get ready for the weekend. And vulture investor wilbur ross will tell us how washington can win back corporate america. Squawk box is back after a quick break. vo you are a business pro. Maestro of project management. Baron of the buildout. You need a permit. To be this awesome. 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. 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. Welcome back to squawk box this morning. In the headlines, Morgan Stanley shares are jumping following the latest earnings report. The firm Beat Estimates on both the top line and the bottom line on strong results and equity trading and Investment Banking, Morgan Stanley earned 50 cents a share. This was a much better story than what happened at Goldman Sachs yesterday. That was excludeing certain items. 10 cents above estimates. And we should note chairman and Ceo James Gorman will be doing a victory lap on squawk on the street at 11 30 eastern time this morning. Also, a big reversal for the video Game Industry which has seen sales slumping for months. Npd groups says september sales jumped 20 over a year ago fueled by joe. Its grand theft auto 5. You watch a lot of that . I do. Doesnt it give you angst . Watching it . Yeah. Speculation growing over the future of ford chief executive alan mulally. Refusing to confirm or deny reports hes being courted by microsoft and boeing. Mulally was asked during a visit to china about those reports and all he would say, quote, is i love serving ford. The ultimate politic. Time for the trading block. Fixed income and currencies. Joining us now is bk Asset Management managing director and sharon stark, managing director and fixed income strategist. Hello, ladies and gentlemen, 8 1 2 month low on the dollar. Is this because you think or the currency markets think the fed is on hold for a very long time . Yeah, not a surprise at all. Last time i was here, i said the one key take away is from the whole shutdown fiasco was the fed was going to stay on taper for much longer and the end result is a weaker dollar. But having said this, its a twoway street. One of the other reasons why the dollar has been so weak is because its the other trading partners have been nonchalant. Its been surprising to me how nonchalant the europeans have been. And even the australians are okay with aussie at 95. I think if they push them higher, youre going to hear more rhetoric from the other side and the dollar will start to come in. Yeah, i think thats because of the germans, right . Even though it hurts them the most, they seem to love the way the ecb is acting over there. Sharon, whats your assessment . We keep talking this morning, the ft cover story says the situation is not going to deter the fed from considering, perhaps, a december taper. Whats your bet . And is that whats driving the december taper to 2. 55 . I think the fed is probably going to taper later in the year. Perhaps in early 2014. I think, you know, the expectations prior to all this were for december move. But frankly, given that the governments been shut down for two weeks, i think were going to see slower gdp growth Going Forward. Theres not a lot of confidence amongst consumers or businesses to spend or to hire. So we i wouldnt be surprised to see the fed wait until march. And if we get another fight in january. Is that why you think march is a possibility . Very much so. January 15th is the day with which were supposed to get some final, you know, budget coming through. And that doesnt seem to be plausible. This is, you know, kick the can american style. I think with yellen likely to be confirmed in january, budget negotiations going on, i dont see the fed really acting inin the march meeting. It actually helped Australian Dollar a little bit. The chinese gdp still very, very investment sensitive and looks like theyre still following the old play book of trying to pump and dump government stimulus. I think it soothed the market. There isnt a major slowdown. I am going to take the opposite side of conventional wisdom. I think theres zero chance theyll do a second shutdown in january. This was such a distasteful horrible event and its so recent that i actually think theyre going to work out some kind of a deal. And the fact that they were able to come up with a deal right now before the christmas selling season may be a ray of sunshine. Usually im a prophet of doom. You are so optimistic compared to every other person. I disagree. Really . Yesterday we had mccain right on the record saying that back in 95 when they did it, there wasnt another shutdown for however long its been. It was a familiar, bad taste in your mouth its not going to happen in three months. I think youre in the consensus. Theres not going to be another shutdown. I think the worry of the market. A lot of analysts are expressing the fact there may be another shutdown, huge amount of uncertainty. I think theyre going to solve this and its going to be more positive. Were not going to reform medicare, were not going to do a ryan voucher. Whats your definition of solve . Right. I think it was zandi who said all they have to do is come to some kind of deal, get out of the way and let the economy take care of itself. You think therell be another shutdown . No. Sharon . I dont know if thats possible. I dont think therell be a shutdown, but look at what happened last time. They formed the supercommittee to get something going and they couldnt come to an agreement then. I dont understand how the incentives will be different in january. On capitol hill yesterday because nobody really on either side wants to hurt the American People for no reason. Right. Right. And i think that will create a much more workable environment and itll be net positive of all of us Going Forward. You would buy the buck i would guess. I think were getting close to yeah, if youre a longterm trader, this may be were getting close to valuation. In the meantime, by the way, the fact that the dollar is so low should be positive for multinationals. That should also be positive sharon, what are you doing with the short and long end here . I think the short end obviously is starting to recover as is the long end. We think rates will stay low for a longer period of time just because of the uncertainty that all of this causes there may not be a shutdown but theres not a whole lot of incentive to go out there and spend and to grow and i think that keeps rates low for a longer period of time. Whats low . The tenyear around 2. 75 , maybe 3 in 2013. But were already seeing the impact today with the tenyear trading at 255. I think the economys in slow growth mode, maybe 2 at best. Thank you. Good to see you this morning. Thanks, guys, byebye. You cant do three months, you cant run a country that way. And i think the president realizes that. You cant. But we have. I was going to say. Im not saying its right, but we have. It was longer than three months. I think not just the president , i think anybody with a brain recognizes thats no way to run a country. But youve got some guys more willing to commit suicide than, you know what i mean . And theyll get reelected anyway. He may really if youre running a business during all this, though, do you just play through and just decide you dont care . Is that the deal . But if there becomes talk of a real grand bargain, i wonder then if you slow down. If the world may change, i may have to adjust. There may be another fight. It takes a big toll on planning. You add the fed on top of that and add that together and get 2 . Right. Which is enough to create a few jobs, keep you know, youre not going to thats the sad thing. The biggest impediment to growth in this country is washington. Whether you think about it in terms of the uncertainty they create, in terms of the fiscal drag from the deficit. All that stuff. We can debate regulation. They are the biggest problem in the economy. Always. Always. Both sides would say government but from different viewpoints. Lets get rid of government. No. Anyway, coming up you said governments the problem. Both sides of government are the problem. One side wants privacy of government. Thats what i heard the president talking the other night. Not the entrepreneurs and private sector. Im just listening to robin thicke right now. Is this that guy . I hear it every morning. I dont like him, i dont like the song. Wilbur ross his dads okay. No, actually, i dont like him either. Wilbur ross on getting a deal done on the budget. And in the next hour, alan krueger is going to be with us. Hopefully hell be onset. Squawk box coming right back. 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 ranked highest in Investor Satisfaction with selfdirected services by j. D. Power and associates. All right. Were going to win us back, the u. S. Back, its a play of that period but really means us. The washington drama over the Government Shutdown and the debt ceiling influence Corporate Cash flows in the campaign. Wilbur ross joins us with more. You know what i want to ask you as a savvy guy, youve turned around businesses, you know you know how to run things. Do you think its possible to run a business right now when were doing things three months at a time . How do you do it . Do you just prod ahead as a ceo and, you know, you do have the fed, the fed has your back. But other than that, you just keep doing what youre doing, not expecting anything great to happen in the beltway . Well, i think that is the case. My best guess is that this next go round will simply produce a little bit of tinkering with sequester. I dont think much more than that is going to happen. And i think therell be a lot of rhetoric. I dont think therell be another shutdown. I surely dont think therell be a default. But i think its going to be a very, very small amount of change from sequester. Did you see and itll be great because i remember harry and mitch, you know, theyre slapping each other on the back, historic. Historic agreement for the American People that they finally came to and if we did, if we got what you just said, just little sequester stuff and maybe a plan to have a plan about medicare or entitlements and were going to see another theyll be congratulating each other at that point even though its not much progress even though well get that hopefully at one point. Well, the most ancient political trick is accomplish nothing but declare victory. And i think were getting close to that. All right. When what would it take to do tax reform, to do entitlement reform . Will it take a different president. Will it take an election where the house changes hands in 2014 . When do we get something done in your view, wilbur . My guess is not until after the november elections. Every month we get closer to it, i think makes it more and more difficult for anything real to happen. But then, okay, what are you saying . The republicans get thrown out of the house or they get they add to the house . No, i dont know it will make an awful lot of difference. But i think thats what everybodys focus will be, not on the immediate things of legislation. Still need the president to let them go through then. So you dont think itll take until 2016 for us to get a grand bargain . I think once we clear the air one way or the other in november of 2014 and therell be relatively little change coming. Maybe some faces change, but i dont think the math is going to change very much. Because theres been so much gerrymandering that the vast majority of seats in the house, have saved seats on one side or the other anyway. I dont see the dynamic. One which is hopeful, baucus and camp are both retiring at the end of next year. They would like to go out in a blaze of glory and get something done on tax reform whether i think its a low probability, but its possible. But i guess, wilbur, i dont quite agree with you, i think after the 2014 election, all were talking about is 2016 election. And the idea that were going to get tax reform in years seven and eight of a twoterm president , any president i think is pretty remote. Although, there is Historical Context well, i dont think it would be initiated by the administration. I would agree with that. I think if it were initiated, it would have to come out of the congress. And i realize its hopeful, but the most significant refo s reforms, historically, have come during a congress of one party and a president of another. So, you know, whether you look at welfare reform, Social Security reform, tax reform in recent history in particular, its come during divided governments. So while there is a lot of pet mitchell about whats happened, there is some Historical Context for both sides coming together and figuring this out in divided government. Thats a good i think if you think if you go back to those instances, it was mostly president ial leadership. Exactly. I think thats one of the things lacking. Well, i think president ial leadership but you also had a different situation on the hill where you had a speaker of the house who did well for the country the past couple of weeks. I give him credit for that. But nonetheless, hes a speaker that doesnt have control of his own caucus. Its hard to have a negotiation when one side of the table doesnt have all its people lined up. Well, i think that its more complicated than that. I think the real problem in the congress is that with the gerrymandering and the seats being made so safe, the only real danger people have is in the primaries. Because in the primaries, both parties run to the extreme. Thats very true. So youve killed the moderates. It used to be that the way that legislation got through was the moderates were the swing votes. Now its the extremists on both sides. One other thing, wilbur, as a restructuring guy. Steve is a restructuring guy. How does obama care look, Steve Rattner . In a year, will it be . Wilbur, how would you fix it . Will it be fixed . Theres worries if they dont get enough people, theres a real problem if they dont well, theres one problem if they dont get enough people. The other problem is if they dont get the right people. Theres a big assumption and namely that healthy young people will sign up. I think thats a very doubtful assumption. I think the healthy young people are going to wait until they get sick, worry through the six months. Yeah. Thats an elephant in a room, steve. He wants to protect us. That was part of this whole thing we went through. Its a signature achievement. Meanwhile, if the republicans hadnt been, you know, sucking up all the news cycle, we may have been focusing more on how badly this has gone. We would have been, and theres no question it has not gone as well as it should have. They built this complicated contraption in the garage with everybody weighing in. Now theyre trying to figure out if they can drive down the street. Obviously the Computer Systems are a problem. The point wilbur raises is a good question that were all going to be watching. But i think its the sticker shock, which is what hes speaking to. All that. No private company no private company no private company would ever roll out a nationwide program all at once. The sensible way to roll out a gigantic complicated program is do a test here, gradually expand it, get the bugs out and then do it. Hold on. There are a lot of reasons why that couldnt happen. And remember that the conception was not that the federal government was going to run these exchanges. The state was supposed to run all these exchanges and decided not to run. All im saying that was an assumption, it wasnt a fact. All im saying is give it a chance, lets talk about it in a couple of months and see where we are at that point. I think the jury should be viewed as being out on the success of obama care. The jury is out and no final verdict has been voted yet. But i dont see why any sensible young person who is healthy would sign up. This is not a jury system. This is a consumer system. And if the consumers dont show up, thats the decision. Its not a jury decision. Thats the jury im talking about. Lets see who shows up. Using a metaphor. Using a metaphor. Wrapped in a riddle. Since were quoting is that churchill again . I always attribute it to churchill. You know to know my favorite quote . The perfect martini, you glance at the and use the gin. Coming up, we have more from our guest host, jim nussle and Steve Rattner. Alan krueger, former chief of staff Ken Duberstein, the futures this morning, dow could open about 12 1 2 points higher. Squawk box returns with a lot more. Ve. They always will. Thats why you take charge of your future. Your retirement. Ameriprise advisors can help you like theyve helped millions of others. Listening, planning, working one on one. To help you retire your way. With confidence. Thats what Ameriprise Financial does. Thats what they can do with you. Ameriprise financial. More within reach. Welcome back to squawk box. That is denver right now. It is snowing big time. If youre a skier, its a good thing, my sister lives out there. Staying dry today. Big snow in denver. Anyway, still to come in the next hour for those of you in denver and elsewhere. Former reagan chief of staff Ken Duberstein, alan krueger and senator you know what, i never pronounce her name right. Klobuchar. We planned this. Line up an interview that andrew and i even said her name to you. A key player in raising the debt ceiling. I like her a lot and i never pronounce it properly. Check out mondays lineup, weve got a big one planned including bill mcdermott, mark faber, im missing everything today. There you go. Shaun ohara, as well. And charles evans, not so difficult. Starts monday at 6 00 a. M. Eastern. Squawk box returns with a very big 8 00 hour. Were back in a moment. Its as simple as this. At bny mellon, our business is investments. Managing them, moving them, making them work. We oversee 20 of the worlds financial assets. And that gives us scale and insight no one else has. Investment management combined with investment servicing. Bringing the power of investments to peoples lives. Invested in the world. Bny mellon. Sometimes they just drop in. Always obvious. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. With this temporary deal in place, its time for washington to win us back. Weve all got a lot of work to do on behalf of the American People and that includes the hard work of regaining their trust. Well ask senator Amy Klobuchar if the president can rise above the partisan politics to tackle the countrys debt crisis. Plus, Ken Duberstein and alan krueger. Did you experience data withdrawal during the Government Shutdown . Well, your wait is almost over because Steve Liesman is here to tell you when you can get your next data fix and how the numbers will be . The third hour of squawk box starts right now. Welcome back, squawk box here on cnbc, first in business worldwide. Im joe kernan along with Andrew Ross Sorkin. Jim nussle, former omb director, and Steve Rattner, former auto czar. Youre also part of fix the debt arent you . Im also on fix the debt. Both are cnbc contributors. And theyre at the pinnacle of the respective careers. Absolutely. I think the first time we introduced you first. Did you see how we introduced him first . I think thats fair. Fair and balanced. Were trying to show these guys how to do things, andrew in washington. In washington. Set an example. Well see how that goes. We get along swimmingly. Weve got headlines for you this morning to get you through. Earnings reports. The big one being Morgan Stanley. They earned 50 cents a share. While revenues, with 8. 1 billion. Also beating wall street consensus. Ceo James Gormans going to be on squawk on the street later today. May take a bow at 11 30 a. M. Eastern time. It is a cnbc exclusive. So youre going to want to watch that. And were going to talk more about the Banking Sector earnings in just a few minutes with Brennan Hawken at ubs. Also, dow component ge reporting earnings of 36 Cents Per Share in the First Quarter beating estimates by a penny. Revenue was slightly shy of consensus with ge citing reductions in the ge capital unit. New high. New high for ge. Wow. New 52week high. Since 2008. And were waiting so hes we could have a Dividend Increase announced. Well see. That other time and finally, if you have been experiencing a data withdrawal with the Government Shutdown, relief in sight. Septembers jobs report, not on jobs friday but on well call jobs tuesday. Thatll be next tuesday. And then check it out, on wednesday, were going to be getting septembers cpi and Steve Liesman will join us at 8 30 eastern time today to give us a little bit of preview of what to expect next week. Lets get a check on the markets. U. S. Equity futures suggest we are going to get a move higher. Dow opened higher, s p by 5, the nasdaq by 25. Moving to overseas in asia. The nikkei was lower by 25 points. Shanghai composite higher by five, and the hang seng by 245. Across europe, stocks are higher, the ftse 100 by 1 , and the german dax higher by. 25 . We got through the 17th, didnt we . Just barely. I think you it was signed after midnight. After midnight. You done think i have to go to cincinnati. To pay off harwood . Washington, obviously, were all talking about it. Weve got three months, a long way to go when it comes to winning back the confidence of the American People. Joining us now is alan krueger, professor of economics at Princeton University and former chairman of the council of economic advisers and Ken Duberstein. And former white house chief of staff to president reagan. Alan, ill get with you in just a second, let me just let me just start with you, though, ken because you were in the reagan white house. And i got nussle here and he always just sort of differentiate yourself from current Tea Party Types by saying youre a small government, limited government reagan type guy and i ask him, well, how is that small government activity going for you at this point . How is it working out . Is it working . And what did you tell me . Its tough. Is it working . No, of course its tough. Youre losing ground. Youre on a treadmill thats going hasnt given up, i know thats for sure. What can we do to get back . We did seem to i wont mention the 7 gdp growth or 800,000 people being added a month, what can we do to get back to normalcy . I think the president has to lead and congress has to realize they cant just dream the impossible dream. They cant be don quiote. Everyone is looking for both sides to get together. Both ends of pennsylvania avenue. The trouble we have today unlike the reagan days is the 100 or nothing. In the reagan days if you got 80 of what you wanted, took it and kept moving and cake back the next year for the additional 20 . Somehow thats out of fashion. I think thats what has to be done. I dont think thats been happening in the recent past in washington. Which, i dont, you know, if i told president obama if you get 80 but dont get any revenue increase to do entitlements or if i told republicans that, you know, theres going to be a little new revenue raise from closing loopholes, but your youre going to get the other stuff, i dont think either side would say, fine, lets do it, ken. Well, i think the cardinal, the red line, so to speak is no rate increase, not revenue. So that if youre closing loopholes and generates more income, i think that is something that is sellable. As long as you dont increase rates. You know, ken, if we got some growth, we might increase revenue. Absolutely. But you also get a tradeoff if you get the significant reductions in entitlement spending which is the fundamental problem we have. Alan, you probably have the president s phone number, dont you . Its on speed dial. I think all of americas got his phone number. Would you call and offer him that deal . Yeah, i think then there was a speaker that could deliver. We saw Speaker Boehner cant achieve what he wants with his caucus and hes walked away from deals he probably wanted because his caucus wouldnt go along. Thats why weve been going through these constant budget wars over the past couple of years. Ken, is that is that the problem . What you have to do what reagan did is sometimes say to your strongest supporters when theyre on the far right or far left, no, were not going that way. They dont want to be satisfied, thats how they make their money and get their members. You do what you think is right and get 80 of what you want and come back the next year for the additional 20. Thats what governing is all about. And whether its saying thats exactly thats exactly what the president has done. He left out his last offer to Speaker Boehner. Got difficult entitlement cuts there, switch to the chain cpi, less revenue he wanted at the end of last year. As ken said, were not talking about higher rates, talking about closing loopholes, thats exactly what the president s done. Hes done difficult things for his party to go along with. The party is, and we saw theres not a functioning majority in the republican side or the house and thats what cost the economy so much. And when youre just talking about growth rates, comparing now in the early 1980s, these constant budget wars have created a lot of uncertainty. Theyve been big fiscal drag, we havent gotten the kind of stimulus you had at your back in the 1980s from military spending. In fact, were cutting spending very quickly. I think thats the difference between now and what was going on in the economy in the 1980s. Theres that old saying, though, youve got to accept the things you cant change. If the president is facing that in the house, then what do we do . Wait until we try to get a new house in 2014 . If its boehners fault and boehner cant wrangle any of his cats, should the president not try to do anything then . No, im not speaking for the president , an outside economist, but i think the best thing to hope for is they do no harm. Theyve done quite a bit of harm and kicking the can down the road for a few more months. Again, i would say the best thing we could hope for is they do no harm. They minimize the amount of damage theyre causing to the economy. The debt problems, weve got a window where we can fix them. The bigger problem we have now is high unemployment rate, the enormous increase in inequality. Those are the problems id like addressed along with the debt. So the best we could hope for is they minimize the amount of harm they cause. Alan, i am much more hopeful than you are, but try to be realistic, i think it is uphill but it is doable. I think the shock of whats gone on in the last two or three weeks has brought an awful lot of people to their senses. The question is whether or not the president on the entitlement side can deliver a Democratic Group in the house of representatives that is more than 20 or 30 who are fix the debt types and can broaden the consensus so the Democratic Caucus and majority of the republicans can sign on on entitlement reform and tax reform and see if they get a new package done by december 15th. The president delivered that at the end of last year. I think the issue is whether the republicans will accept additional revenue. The president , i think, showed in the negotiations with the speaker at the end of last year he was willing to do those very hard things and that the democratic leadership in the house and senate were willing to go along. The speaker walked away from that bargain then, i dont see whats changed to cause him to stay at the table this time. I think the last two weeks brought a shock wave, especially to the republicans but also to all of washington that something has to be done to win back the trust of the American People. Thats going to that is going to be on a sound bite did you hear that . Somethings got to be done to win back the trust of the American People. God bless you, duberstein. Did you know that was our campaign . Did you just come up with that . Guess what, its always your campaign and i subscribe, how is that . Youre going to be in the promo. And youre not working with us at all. I mean i agree with ken. Totally. If you want another sound bite, i agree with ken we need to do something to win back the trust. You see. Look at where the stars are aligned for a deal. Probably more likely immigration reform. I think we have a shot at the budget, i really do. Well, steve, whenever i hear all these daunting challenges about the economy, unemployment and income disparity and all these things and i hear its because the speaker cant control the house to allow government to fix all these things, isnt dont we know who really needs to fix most of these things . And isnt thats what bothers me about the primacy of the Public Sector instead of the private sector. What weve talked about for the last hour is you have a Public Sector thats a drag on everything. Its different than borrowing a lot more money to do infrastructure and to do all these other ideas. Its a drag. What you heard alan say, lets get it to do no harm and there are those of us who think it could be a positive force. Its not going to solve all the problems, i agree with you. The private sector whats wrong with the private sector . Excuse me . Whats wrong with it . There are other things that are wrong with it. No, there are roles that government play. Theres fallout that government needs to address. For example, the private sector has done a master philadelphia job of turning the Corporate Tax code into swiss cheese where nobody pays pretty much nobody pays what they should pay. They build facilities other places. That doesnt help us. All that stuff. And so you need the tax code to be fixed. All right. Thats my point. There are things government can do that will make it better. But obviously the private sector is where the growth theres a difference between unencumbering the private sector its a fine line. I have to tell you, i think the president believes in the primacy of the government and not the primacy of the private sector. Correct. There isnt a single problem like george w. Bush, by the way, didnt think there was some Big Government program that wouldnt solve a problem. New big financial legislation, new big interventions. Weve had four terms of people who like Big Solutions for problems. Wait, we needed everybody, i think, agrees we needed some version of dodd frank, whether you like this version or not. But we needed were still dealing with sarbanes oxley. And i could counter you over and over again that it would be consequences of bad government regulation that caused unintended consequences. I agree with that. We need better government regulation not no no, less. Steve, what youre saying is governments the problem. Isnt it . I government at the moment but i think government should be part of the solution. Absolutely should be. It has to be. Alan and ken, were going to continue this conversation, im sure, for many a day. At least three months. In the meantime, small pools is playing right now. I like them. Nice. Morgan stanley reporting Third Quarter earnings of 50 cents a share beating estimates by 10 cents. Well talk more about the Banking Sector next with an analyst. And later, well talk to senator Amy Klobuchar. I got it right. You did . And the prospects for a grand bargain before the next crisis kicks in. Amy, i really do love you. Were back in a moment. [ banker ] sydney needed some Financial Guidance so she could take her dream to the next level. So we talked about her options. Her valuable assets were staying. And selling her car wouldnt fly. We helped sydney manage her debt and prioritize her goals, so she could really turn up the volume on her dreams today. And tomorrow. So lets see what we can do about that. Remodel. Motorcycle. [ female announcer ] some questions take more than a bank. They take a banker. Make a my financial priorities appointment today. Because when people talk, great things happen. Welcome back to squawk box. Morgan stanleys q3 earnings, joining us now to talk more about that, Brennan Hawken. Good morning to you. Good morning. Lets talk morgan first. Stock is up. Impressed generally . Yeah, i thought the results were really, really encouraging. Morgan stanley has been going through a turn around. And in my opinion, we saw convincing evidence of that turn around in this quarters results. As you mentioned before the break, 50 cents earnings, thats actually xdva. All that noise, its about 45 cents. There were a few gains in the institutional securities business, but you know, not hugely meaningful. Still definitely a beat above consensus. What was really, really encouraging, Wealth Management pretax margins, actually increased this quarter. We were looking for them to be flat to moderately down. Which is the focus of their business now. It is. Very much the focus. About half their earnings and way more stable. Its sort of a key piece of how theyre restructuring that business to be more stable, more predictable and so, you know, we see your former colleague obviously doing his part to help out. What did you make of the Investment Banking earnings also beat. I thought that was surprising. Yeah. When you looked at Goldman Sachs, that was it was a horror story yesterday. Absolutely. And it was very, very encouraging on Morgan Stanleys side. Whats interesting here is that Morgan Stanleys in the process of shrinking what was a problem for Goldman Sachs. The business for Goldman Sachs was remarkably weak and really missed expectations dramatically, it has been a business thats helped derive trading profitability across the firms. Heres the question, then. On goldman and the business writ large, secular or cyclical problem . I think its a combination of both, right . Clearly we had leveraging going on, leveraging cycle as a tail wind for the last decade. Were now in a process of deleveraging. So Interest Rates will start rising. Separately, youve got regulation thats putting larger and larger capital constraints on those businesses. Thats going to cause these businesses to shrink, theyre going to be facing head winds and were in a period for multiple years where theyll be generally under pressure. Morgan stanley has a much smaller business, equities house, equities franchise really showed through the strength of that franchise this quarter and i think thats going to help really propel the stock. Okay. If you were to line them up, who do you like . And what order would you be placing your bets then . Looking across the firm altogether . Yes. Ubs has ratings on Morgan Stanley, jpmorgan and citigroup. In my opinion, youve got Morgan Stanley, i like Morgan Stanley a lot. I think the results here today extremely encouraging. I think were in the process of transforming the multiple. So personally, thats my favorite. Jpmorgan is right now under pressure because of a lot of these legal issues. Theyve got a 23 billion reserve on the legal front. And so youve got to be increasingly confident in how theyre going to be able to weather that storm. Thats likely giving you a great chance to buy an ultimate franchise at a cheap multiple. With citigroup, youve got a massive capital locked up in that firm as they begin to release capital. Then youre going to get the capital coming down, getting return to shareholders. It supports returns and leads to multiple expansion. I think they all work. Thank you for joining us this morning. Weve got a quick programming note. Dont miss james gorman, hes going to join squawk on the street at 11 30 a. M. Eastern today. He really just attributed the morgan to kminski. I love gary, and he really did just and yes. Fleming hired gary. Fleming gets credit. Does gorman get any credit . Gormans doing a phenomenal job. And it was gormans strategy. It was gormans strategy, and we love gary, but we knew Morgan Stanley needed him more than we needed him so we let him go. Right. Coming up we should have komanski on the show too. We should and you should introduce them both. Were going to have senator Amy Klobuchar. Just to entertain the audience. How washington can win back the trust of the American People and compromise on the budget and get 80 . Both sides get thats 160, though. And in squawk booze news, highend bourbon heist in kentucky. Things i prefer to do. But when it comes to investing, i just think its better to work with someone. Someone you feel you can really partner with. Unfortunately, ive found that some Brokerage Firms dont always encourage that kind of relationship. Thats why i stopped working at the old brokerage, and started working for charles schwab. Avo what kind of Financial Consultant are you looking for . Talk to us today. Welcome back to squawk box. In squawk, booze news. Someone has stolen a lot of very valuable kentucky bourbon. Nearly 200 bottles of 20yearold Pappy Van Winkle bourbon was stolen over the course of several months. The suggested retail price is 119 per bottle. The low supply can push the actual retail price above 200 per bottle for those lucky enough to find it for sale. Only about 7,000 cases produced per year compared to jim beam about 7 million cases per year. The local Sheriffs Department believes the theft was an inside job. Can you say american greed coming up . Dont you think . It would be great. I love american greed. I do too. I love it. It gets good ratings. Im switching around, why . Its so predictable, theyre buying land and art and everything. Hes great too. His voice. I know someones doing something wrong when i hear his voice. American greed on cnbc prime. Coming up, the Government Shutdown is over and number crunchers are playing catchup. Steve liesman will join us next on the gorging youll be able to have on Economic Data. The updated schedule next. [ bell ringing, applause ] five tech stocks with more than a 10 . Change in aftermarket trading. All the tech stocks with a market cap. Of at least 50 billion. Are up on the day. 12 lowvolume stocks. Breaking into 52week highs. Six upcoming earnings plays. That recently gapped up. [ male announcer ] now the world is your trading floor. Get realtime market scanning wherever you are with the mobile trader app. From td ameritrade. Welcome back to squawk box. Lets look at some of the stocks on the move this morning. General electric earning 36 cents a share. Revenue fell slightly short which the company attributes to the shrinking of its ge capital unit. I think it began hes owned ge so long, hes jonesing for an increase. Its december normally when the last couple of years. Its usually december. So i dont know about the likelihood of a dividend. Today at the 8 30 call. Maybe today, but if you look, its been december the last couple of years though. I wouldnt count on it, but maybe in december. Well watch. There you go. Morgan stanley earning 50 cents a share for the Third Quarter, beating estimates by 10 cents. Revenue above consensus. Upbeat earnings reports from two Oil Field Service company, baker hughes earned 90 cents a share on improved results in the north american market. Schlumberger coming in with 1. 29 per share, 5 cents above estimates, schlumbergers results were driven by strong results in the middle east and asia. Youre not going to criticize the way i say schlumberger. It was beautiful. It was good . Okay. I say a lot of things. I say chair. Whats wrong with chair . Sonny and cher. Bono. Thats close to something else, so be careful. Thats why beckys normally here. The shutdown is over and that means the return of Economic Data and the return of Steve Liesman. Do i get some music . Are you so happy . Im very happy. Tuesday well get the september data so tuesday is jobs friday . Is jobs friday. Why not . Why does it have to be friday . Right. And the next one is delayed by a week but still close in the zone. In the zone. This is good. Itll come after the october meeting for the federal reserve. November 8th or something. Yeah, theyre or late october. But the october numbers come come november 8th. November 8th. Its too soon anyway. Right. We dont have a schedule for the rest of the data like the retail sales data, all this other stuff. I think its worthwhile right now to go back and look at the threepart test the fed gave us for tapering. Weve been discussing this all morning. Okay. Let me show you why i know what the ft said today. A very bold headline. Shutdown will not deter fed from eyeing december taper. But what you look at right. The first thing we wanted was confidence in the economy. My point would be no data, no confidence, right . And when i say no data, i dont mean just not having the data, they wont really know the effects of the shutdown until maybe the december meeting. And what im reading, guys, a lot of folks bringing down their Fourth Quarter forecast around 2 . Shaving anywhere from a full point to 1 2 point up because of the effects of all of this uncertainty. Fiscal restraint, twomonth reprieve but maybe a more benign battle. I would point out the fed maybe did a better job of forecasting the political situation in washington than they did the Economic Situation in the country. They were right this was going to be bad and they were early in making that call. Of course, the high rate situation, i dont really know what the fed is after. I want to show you a quote here from the yellen factor is prominent. May require the administration to consider more moderate candidates for the three vacant seats. Remember that the last two were democrat republican package that were given to the senate here. That was part of the politics of getting them passed. Yellen, whoever yellen is, the point here this morning is that wait a second, it matters what the yellen fed is like. And one more point i want to make today is are you guys celebrating the republican victory when it came to spending . Did you see what happened to the it kills me. It kills me. I have a chart. Its a huge victory. Look at that. Those two numbers there about Discretionary Spending, the percent changed year to year. You can go back in the history of mankind in the United States. You cannot find two percentage declines that strong in Discretionary Spending. I agree. The moneys in entitlements. One mans victory is another mans terrible policy. Well, im just asking that is the story. And i thought you did not lose the sequester, you got the sequester. It would not Discretionary Spending, joe is right, its 20 of the budget. But for republicans, it was they got their number here. Now, whether how that changes and influences the dynamic in the january discussions is really an interesting and that includes defense spending there . Yes. Last time its nondefense discretionary. Nondefense discretionary went down under clinton and reagan. Its going down in a big way. What does this mean for the fiscal drag . As you saw, the fiscal drag will be less in 2014. Its still going to be there. You said not to look for effects of the shutdown until which number . Well, you might see it in the november maybe in the october data. But we are ready for all of your reports. Weve got this ready to go. Any time we can talk about a slowdown. And this will be brought up every time. Okay. So thats ready to go every time we talk about the slowdown. If its november, well put it in our master rundown. Reveal ted cruz. Retail sales, reveal ted cruz. So ive got it ready cruz control. Cruz control. Ive got it ready for you every time we have a bad number. Reveal ted cruz. The one up side, joe, theyll stop blaming george w. Bush. Thats true. It can be a co sort of. Not to be argumentative here. But are you saying this was a good way to do budgeting . Im trying to just are you creating a fabulous environment in which to invest in higher was that your point . No. I just saw i just saw one of our colleagues say how glad he was when the president blamed bloggers he blamed radio pundits, all these people and this guy said, but he didnt blame anybody on tv. And its like, duh right . I dont get it. I dont get it either. Because everybody on tvs already in the tank basically. Oh, right. Now i get it. Why would he blame the pundits on tv when they basically did all the selling for of course its only radio and bloggers. Tv, thank you, you helped me win. Not to be serious about this. But we bring up ted cruz again. In case you were wondering, theres the problem. Theres the problem. There is and millions of americans who have been hurt by obama care. Isnt that what he keeps saying . Thats the biggest tragedy. We didnt really focus on how well that was going. But do you think you might have gotten something if you focused on the debt and fiscal side . Steve this is twice the republicans got a worse deal than they otherwise wouldve gotten. He wanted to not negotiate before the 17th. Now were through the 17th but now he must negotiate over the next i dont know how you spun this around. Bad spin. Why, thats what they wanted all along was a negotiation on the budget. Absolutely. And now we have it. Ted cruz lost. I just showed you that. Heres the thing. There you go. There you go. You do not know that. If he didnt have a basic knowledge of schoolhouse rock how the bill comes along. I understand. Seriously. He has not been able to be effective as a legislator so he decided to go to the air waves. Fine. Okay. I agree with all of that. Lets move on. The republicans in an odd way, they lost politically, it was a disaster for them but they got their sequester. Its in place. Its going to ratchet another 20 million in january. So now he will negotiate. He was saying im not going to negotiate. What is the baseline now for negotiation in that youve essentially already given a major victory to the gop here when it comes to the spending level. Now and now i know were going to break. Now that puts the onus on the republicans no, you got your revenue. You got your revenue. The trade is you get some revenue, you give entitlement reform. You get a little bit closing loopholes. Tax hikes. Im not convinced itll work, i think youre right. Weve got to go to break. Shut it down. Ted cruz is why weve got to go to break. Amy klobuchar. In a world thats changing faster than ever, 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. A lot can happen in a second. 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. Government shutdown stretched on for more than two weeks, damaging economic credibility oh, they just asked me to bring that up again. Could it have lingering effects without a longterm budget deal in place . Here to talk about winning back the confidence of the American People, we need help, senator Amy Klobuchar, the vice chair of the joint economic committee. We figured out ways to do this, senator, in terms of both sides maybe giving a little. I think what we decided on was maybe that the republicans let a little revenue come in from closing loopholes and maybe the president does a little bit on the chain cpi. Do you think that are we going to do Something Like that . Well, i think that the good sign was the Budget Committee heads have already met and seem very committed to finding Common Ground. And i was listening to the earlier discussion with some interest and remember, when you talk about, i was somewhat interested you thought some people thought it was a republican victory because i think if you look at the initial democratic proposal it was for a time period to allow those two sides, the senate and the house to bring their budgets together. This is what this is really about. Thats what your song is about, getting a bill done on capitol hill. And this is the opportunity. I think you should see some kind of Common Ground on a mix. Now, remember, at the end of the last year, the president put on the table some entitlement ideas and they werent all about chain cpi. There was also a Delivery System reform. And i think he put about 400 billion on the table. So there are some ideas, knowing, im from minnesota, where we have a highquality, lowcost Health Care System and theres more we could do that would actually encourage better Quality Health care with medicare and could save us some money. If you could get everything you wanted and the president could get everything he wanted on the sequester, would the insistence be on raising revenues . Again, i think youve got to let the budget people do their negotiations. We had a Bipartisan Group that came up with ideas that i hope well continue to meet. But i think we heard some good words from there. If you talk about restoring the faith of the American People, its about stopping the insults, stopping drawing lines and really trying to find that Common Ground. The 80 senator, you cant conceptionally say, you got everything you wanted, you couldnt say billionaires cant have medicare or ought to pay more . No, im sorry if i didnt make that clear. I think looking at some more means testing is right on the table. We already do some of it. I think that could be a very positive way to go forward. I also think you could look at the income level for the Social Security tax and raising that some or looking at putting it in place again at 250,000. That could bring in money. Negotiating under Medicare Part d would bring in over 200 billion in ten years. On reducing costs on medicare. There are a number of things that could be put on the table that could be very important in the entitlement area. And i think one of the problems with the sequestration cuts and one of the reasons its an incentive, you want to continue that trend you showed on your charts on the Debt Reduction but you want to do it not just on that 20 of the budget which involves, you know, nih research into alzheimers and things that could save us money in the longterm. I remember watching harry reid and he seemed like he was just so intractable couple of weeks ago. And then when he got with mcconnell and i watched him, he was such a like my grandfather. I really liked him. And people can do it. And mcconnell and they look like buddies and they werent fighting. And then i think of the president and how he feels about republicans and the tea party and how they feel about the president. And i just dont ever know we can how can we ever have that moment . Okay. First of all, i thought this was an emergence of moderate republican voices being much stronger, were willing to take on the tea party. Our group in the senate, people willing to say we want to go a different route here. I thought that was important, the house members that stood up and said they want to open the government again. Thats a new thing that wasnt quite as loud before that was important. When you look at how we move forward, thats going to be a factor. The second thing on the president , look, he has shown a willingness to negotiate at the end of the last year, remember how close he and Speaker Boehner were. He did meet with Senate Republicans through the summer and i think right now hes putting a lot on the table willing to talk about things. What we were up against, as you know, the last month, was a shutdown government, people literally saying it didnt matter if we defaulted on our debt and a situation where people were trying to throw things on like Birth Control issues in order to open the government. You can understand why he was drawing the line on that. But i think you can see a willingness in the words of patty murray to talk about negotiating an actual budget. Thats how we restore the faith of the American People. Senator, look, i think your optimism is great and we certainly all want this to come out the right way. On the other hand, youve got a house budget that paul ryan engineered that is massively different from what you guys did on the senate side. I think hes got 6 trillion of Discretionary Spending cuts over the next ten years. It has the repeal of the obama care embedded in it. Seems to me, between what the House Republicans will come to the table and what you guys will come to the table with. I think weve been very clear. Were not going to support their budget and theyre not going to support ours. Thats not news on this program. But i think a new direction is to look for the Common Ground issues and weve identified some of them with some of the reforms that could be made that i think you could find enough votes to get something through. And which isnt really doing anything thats going to set back middle class families, its going to set back our economy. Looking for revenue where theres Common Ground. And i think there are things, loopholes and incredibly complex tax code where you can find some money there without sending us back again. I think thats where were going. Look at the gang of six, gang of eight. How many more proposals can we have out there. Where the people have looked at this stuff. The debt commission. All of them, by the way, had ratios different than what were seeing right now with our Debt Reduction which is currently 70 on the cut side. They had more than 21, 31 ratios. Senator, steve is not rising above. Weve been watching this for a couple of hours. Im happy to rise above. It doesnt sound like it. And, senator, we had Heidi Heitkamp and she informed me that fargo, the movie was not about fargo. It was about minnesota and youre the people exactly. Youre the people that talk like that. You betcha. You dont think her accent sounds a little more fargo than me . Yes, i did think that. But she immediately said no, no, no, no, thats amys problem. Well, no, ill explain this. The cohen brothers, great directors what put that movie out, they are from minnesota, and they did do a lot of the filming in their home state of minnesota. In their home state of minnesota. Where is paul bunyan . Hes in minnesota. You can come and see both of them if youd like. I would like to. You bet you i would. Thank you. Its great having you. Hope fly well have you again. I would love to be on again. Be optimistic. Okay. Coming up, guys, dont close out the trading week without jim cramers stocks. Were going to head to the New York Stock Exchange next. And dont miss squawk box on monday. Well have a live exclusive interview with chicago fed Charlie Evans and squawk market master and jim and Jonathan Tisch are going to join us, cochairmen of lowes. Big week ahead. See you on monday. Look, lets put it to rest right now. This is a much better than expected earnings season. A lot of people say big disappointment. You look ge, slumber. What do you think of Morgan Stanley . 100 basis points better than i expected. This was a monster quarter. Looks like they were right to take that big Brokerage Group from citi. Is it from a model perspective in do you think others try to take a lesson from all this . I think gorman took a chance. A lot of people felt ala what the citi guys felt. Gorman was saying this Wealth Management company can be terrific. Bank of america, its so lost in the shuffle. Goldman did not have anything to write home about, global wealth. Im sure they can argue with me but this was a remarkable quarter from the point of view of the retail broker who is making a lot of money for his company. Its gorman, fleming and come is come inski . Why are you putting kominski third . This was the quarter a lot of people were waiting for. Ive got to tell you, i havent seen any flies on it. It looks really good. Okay. Dont forget google. Amazing. Chipotle. Oh, chipotle growth is incredible. That should be easy to right, jim . Mexican food . No, the worst mexican food is dont forget the new vegan product ive been waiting for. Rolled out in baltimore come on. Youre not a vegan, are you . No, my daughters. Safrita. Whats it called . Safrita. Its made out of tofu but tastes as good as the stuff thats not. Really . Yeah, its for really. Safrita is when you take your olive oil, onions and peppers and saute it all, safrito. Really . Yeah. Thats why you have a minority on the show, to inform you of these things. Our guest hosts, well give them the last word when squawk box returns. [ male announcer ] this store knows how to handle a saturday crowd. [ male announcer ] the parking lot helps by letting us know whos coming. The carts keep everyone on the right track. The power tools introduce themselves. All the bits and bulbs keep themselves stocked. And the doors even handle the checkout so we can work on that thing thats stuck in the thing. [ female announcer ] today, cisco is connecting the internet of everything. So everyone goes home happy. This is going to be the best day of my life, my life, my life this is going to be the best day of my life stock of the day. Its not our Parent Company in any way, shape or form. It has nothing to do with the stock of the day or why we picked it. We all hold so much of it. General electric, shares of the dow component rising in early trading, follow results, people thought maybe 4x or shrinking ge capital would cause revenue to mix. Revenue was just about in line. Next quarter they talked about seeing gains in revenue and earnings per share, which has been tough as they shrunk that ge capital unit just about every quarter since the financial crisis which resulted in the book too big to fail. Thank you. Gets another little thanks to our guest hosts, jim nussle and Steve Rattner, good to have both of you in today. Im struck sitting here between the disconnect in the private sector and washington cant get from a to b. Im acknowledging that. Hes coming to your viewpoint. Thank you. Everybody have a great weekend. Make sure you join us on monday. Squawk on the street begins right now. Cant believe it, weve made it through this crazy week. Good friday morning. Welcome to squawk on the street. Im carl quintanilla, david faber and jim cramer at the New York Stock Exchange. A teflon bull market as usa today calls it. Plenty of earnings on tap. The 10year note the yield at 2. 58 essentia