Transcripts For CNBC Squawk On The Street 20131007

2. 61 . As we do every morning, lets take a look at europe and see how those markets are already fairing. Largely, a good deal of red on the board. The percentage declines, well, not too great. Although, a couple there around the 1 mark as you see it there. Lets start with our road map this morning. It starts with day seven of the Government Shutdown. The markets may have been unphased by the shutdown but the possibility of a breach of americas debt ceiling, that is probably the reason you saw the futures deeply in the red. Then, apple getting positive notes from several firms. Jeffreys upgreats the stock and increases its price target to 600. They say the 5s is number one at all u. S. Carriers. Home builders getting hid this morning. Goldman downgrades Toll Brothers saying they dont need to be kro concentrated at the highend of the spectrum. Shares of cooper are going to be down sharply as that deal appears to be unraveling. Lets start off, of course, with that Government Shutdown. It continues. Both sides in the budget battle refuse to budge. On the sunday talk shows, jack lieu says congress is playing with fire adding that the president will not negotiate until lawmakers pass a clean funding bill to reopen the government and raise the debt ceiling with no strings attached. No deal until the president comes to the bargaining table. The nations credit is at risk. Because of the administrations refusal to sit down and have a conversation. They are saying it is at risk because of your refusal to pass a clean debt limit increase. We are not going to pass a clean debt limit increase. There is no way when the votes are not in the house to pass a clean debt limit. The president is risking default by not having a conversation with us. Jim, i will turn to you. Truly, befuddled by what an investor is to make of all this or anybody who is a concerned citizen without any money in the stock market is to make of all this. I think we are beginning to hear new terms, there is no prioritize after we go over the debt limit, meaning that the government will pay interest but maybe not anything else. So that we dont default on our bonds but we slow down the u. S. Economy. So when you start hearing that percolation on squawk. Thats frightening, by the way. What you are talk about is people are not going to get their Social Security checks but we are going to pay interest on the debt. I think the fact that this is now part of the conversation. The fact that we are even having that conversation. I am still in the camp that says the bonds are showing you that they are going to pay. Im saying we had a congressman on squawk saying, hey, listen, there is prioritizing going on. We know what they are going to pay and what lieu will pay. Is this the new thing . Where we split the baby, kill the baby but the bonds get paid off and some other things get paid off. This would be a permanent reduction of spending that would clearly hurt the domestic product. At what point do our allies say, guys, you are killing us . There is kind of an other worldly nature. Im sitting here trying to figure out, is kelloggs the right price . We have this situation where there are some companies that very much need credit. The banks rely on treasuries. I am surprised the banking packs arent targeting some of the guys that are willing to let it so that the banks get in big trouble. Can you imagine if they are trying to figure out what they should do with their cash, the banks, because they cant trust treasuries . You have to put everything in something that rolls over. What is that piece of paper . Breaching the debt ceiling for the day, the idea of going past it in any significant way, you can go down significant rhodes and none of them lead anywhere. That leads to this catch 22 in reference to the Joseph Heller book from many years ago, which is, we seem to be waiting for the market to fall to get the attention of house republicans, particularly those associated with the tea party, for example. Yet so many people are still in the market, because they think it will go just like it did last time. They dont want to miss the big rally when we get a deal. How about friday . The word was, there was going to be secret talks. Instead, you put on boehner. Not only are there not secret talks but forget about it. All the rejectionists, from any party, are saying, listen, there are no discussions. There is no conversation. We wont go over we wont punch through the ceiling. You automatically punch through the ceiling. Im just wondering whether there are some people that think that everything, all the scare tactics are just scare tactics and the world will be the same after. There are people that felt that had we let aig go after we let leeman go, that nothing would happen. They are surfacing again. Say, hey, listen. This is how many times, leeman . There are those that believe we should have let them go, because we would have truly been able to reorder the Financial System in a much better way. While we would have taken enormous pain, we would be in a much better place now five years later if with he let the market work. Well never know. I dont know that i would put that in the same camp as defaulting on the United States debt. Social security is pretty safe. Medicare. What is this about . As you said, what gets paid . Do they not pay Social Security . I dont know. I think that thats dangerous. I would say that is dangerous. A question here becomes the rating agencies themselves. You may recall back when s p did down grade the rating of the u. S. The bonds did nothing. Rally and there went the yield to alltime lows. Maybe nothing matters. I think that having sold treasuries and bought treasuries, not just in u. S. Savings bonds, the system doesnt function if treasuries dont function. Everything is based on treasuries. We had moody earlier. He seaid the chance of a u. S. Default is extremely unlikely. That reflects our thinking that it is extremely unlikely that the government treasury is not going to continue to pay on the treasury securities. Hopefully, it is unlikely that we dont go past october 17th and fail to raise the debt ceiling. Even if that does happen, then we think that the u. S. Treasury is still going to pay on its treasury securities, prioritize those payments. Prioritize. Lets bring it back to the market today, which we are seeing the futures are down. What and how do you approach it this week, next week, and think longterm as well . I still think you have to there is always this is one of those where im sure the defense part would say, listen, there is always a chance for nuclear war. They never took nuclear war off the table. They cant take nuclear war off the table. We cant necessarily take the equivalent off the table. When you are talking about prioritizing, what you are basically saying is that moody is saying, we are not going to down grade. We know that interest is going to get paid. You have a big gdp hit. The president and the house saying there are no negotiations. I think we have to presume we are going to live under this sword for. Another week. A couple weeks. A couple weeks gets us past the 17th. If we assume this week another shutdown, everything, it is all coming together as we knew it would. It is no longer with the shutdown. Now, it is about the debt ceiling. Not hearing about obama care but an overall talk. Lets talk about entitlements. How much is fannie going to kick back . Is freddie going to kick back . They sell the General Motors stakes. Are there things the government can do . Like sell ft. Knox to the chinese, which was the actual plot. Good book and a good movie. Lets move on to one stock we like to watch, apple. I was waiting for our viewers at home to guess. It is now a buy over at jeffries. They have indicated a substantial shift in attitude toward apple. They expect the companys Gross Margins to surpass forecast. New data show apples iphone 5s, hit above all five major carriers. Gross margin is code. Thats code for samsung doesnt have an answer. What that says is, listen, there is no price cut. Samsung does not have an answer to apple. This is a technological leap. There is a lot of pipers trying to their socalled axe. Trying to figure out a new way to say, maybe we missed this, because we didnt. The iphone, the wearables. Look, whats happened is that apple has a shot here to retake the technological lead so they dont need to be in some sort of price war. Now, apple, you could argue, has never lost that. All they did was lose the price point. I think these are significant calls. They are based on, i think, something that no one wants to talk about who didnt like the stock. Apple is doing better. They have to ferment new reasons. This Research Report in particular mentions the iphone 6. Because piper didnt like the iphone 5. He is filling the rod duct gap. Jeffries is saying new product. There is a big skane of thought. Listen, we misjudged that apple could come back. Now, the question is, why isnt apple stock through 500 . And . I think that there was a big run in p ale, because apple bec the tweet heard around the world. We have been trying to digest the tweet technically, not technologically, technically, because the stock went up so much. On the original tweet back in august where he mentioned he had a position. We now know thats around 2 billion he has confirmed on air. He is asking for a 150 billion buyback. What we understand is immediate with a commensurate raise in debt by the company, which would equal the nine largest Investment Offerings of all time combined. Is that true . That is true. So the idea of it, not to mention, i dont know how you go into a market cap without moving the stock where the stock doesnt move before you. All that being said, we can talk fundamentals which might be more interesting. I think apple could do a tapering here. I think they could taper if they develop the technological lead. I think tim cook is about to put a taper on the table. That could shock people. He says, i need to i cant taper. Will he get a continuing resolution or breach the debt ceiling . Whats he going to do . I think it is up to him. If he tapers, stock goes down. Samsung, meanwhile, talking about innovations, has introduced its latest advertisements for its watch. Take a look. With this miniature transmitter. What time is it . 8 29. Thank you. This is 86 reporting into control. How is it going . I have an emergency situation. Relay the information to head quar tefrmts headquarters. Jason, can you read me . I read you. This is secret agent rock. Lets make a little spectacle of ourselves. Anything in particular in mind. Atomic punch. There is only one man that can get us out of here in time. We are on our way. We are on our way. I am on my way. Listen, for me, it is basically going through all the programs of my childhood. If they had agent 99, i would be more inclined. She was hot as a pistol, agent 99. This thing could fall into a code of silence. Given the review. It could be a cone of silence. It might be no more powerful than the shoe phone. Love that shoe phone. It is also hard to use the shoe phone, because you are standing on one foot. Yes. Maybe samsung, next for samsung is a shoe phone. It could be. All of it only works if you actually have the actual phone with you. I just keep thinking in the end, if you want a phone, we just heard from what, all these different analysts, that apple has a better watch. Apple has a better watch. It takes a licking but what does it do . It keeps on ticking. There is a watch for you the man some say is in the running to succeed steve balmer at microsoft ceo. Stay tune for an interview with Satya Nadella. Taking another look, we are set up for a lower open. More squawk on the street live in post 9 at the nyc when we come back. Were down, unexpectedly down, at least in terms of significance. Almost 5 with no news. After the bell, we got news. Cooper coming out with a lawsuit against its os ten cybil merger partner. We are going to compel you to close our deal. There wouldnt be any question we were aware of, those that followed these deals in the pun lick realm of real questions about it. In reading the complaint, well, there might have been reasons for cooper to be concerned. There have been a couple of concerns along the way. You may remember this deal originally. Apollo is far smaller than cooper. The money that was being borrowed overseas. You had a significant fall in shares of apollo right away. It is about a 500 million market cap company. This, a much larger deal. There it is 34, 5 a share. 43 premium. They have voted on cooper. There are those concerns. Then there is a labor deal to be worked out at the usw. Thats a key concern. There is also a joint venture in china which cooper owns 65 but where there are also some significant issues in terms of, for example, releasing financials that will allow the banks to, ma k market the debt have committed to finance this deal until november 15th. On friday, we learned a lot in this complaint that came from cooper. The thing that has alarmed most Share Holders that feel like this deal is on life support. Either you get a big price cut or it is going to go away regardless of what cooper may want. The thing they would point to is the following quote. On october 3rd, apollos representatives again informed cooper that they wanted a price renegotiation. At one point, references 8 or 9 a share. This says referencing. I have spoken to people close to apollo. They say there has been not any real talk about an 8 or 9 price cut. There has been talk about a price cut that would make up with whats going on in terms of dealing with the joint venture. We have seen this playbook before from 08. It does appear from me having following so many of those deals, when another Company Wants out, they manage to get out. This will cost them about 112 million in a reverse breakup fee. They may be willing to pay that to get out of a deal. I dont know what it says about the fundamentals of the tire business, whether it is a cooper problem viewed by apollo or not. Thats what fascinates me. The tire business is on fire. Good year has had this remarkable move. Borg warner has done well. I dont understand this. Why wouldnt they want cooper . They may want it at a lower price. I cant tell you where it really comes down. I am not hearing they want out. They would not tell me they really want out. That may be where we end up. You may recall the fight over huntsman, between another apollo and huntsman, a leverage buyout firm. You may win the case if you are cooper but you may lose the battle and the banks will walk away after the middle of november. You end up with a break fee. Thats it. Well see whether the deal happens or not. It is certainly in doubt and cooper shares will be down. If i were cooper, i would be arguing that business has gotten much better since i started this deal. Apparently they are not. A number of investors are upset because they feel at the cooper tire, Shareholder Meeting they were given hand holding so to speak on the sanctity of the deal. Up next, making money the cramer way. Getting ready for the mad dash ahead of the opening bell. More squawk on the street from the nyc straight ahead. Peace of mind is important when youre running a successful business. So we provide it services you can rely on. With centurylink as your trusted it partner, youll experience reliable uptime for the network and services you depend on. Multilayered Security Solutions keep your information safe, and secure. And responsive dedicated support meets your needs, and eases your mind. Centurylink. Your link to whats next. Transit fares as in the 37 billion transit fares we help collect each year. No . Oh, right. Youre thinking of the 1. 6 million daily Customer Care interactions xerox handles. Or the 900 Million Health insurance claims we process. So, its no surprise to you that companies depend on todays xerox for services that simplify how work gets done. Which is. Pretty much what weve always stood for. With xerox, youre ready for real business. Were five minutes before the opening bell here on a monday. Time for cramers mad dash. Were going to talk a little twitter and getting out ahead of research. Research getting out ahead of research. I want to say point blank. People say cnbc hyped this thing. That is not true. I have said from the beginning it is ridiculous. What i mean by ridiculous, suntrust comes out today, twitter initiating prei. P. With a buyin and a 50 price target. How do we know how many shares and what the valuation is . What is the market cap . They are projecting zero. I think there are 675 million fully diluted shares. Multiplied by 50, thats a really big number. People that, therefore, put in for this deal. If anything happens negatively with twitter between when they Start Talking about it and when they price it, they are going to have a problem. What is the point of this. If we dont refute the premise of this or stay skeptical, we are not doing or mark caines like job. When i see a 50 price target, i say to people, listen, you dont know anything. How can you come up with this . I think this may be irresponsible. The clients apparently let him do it. We got the opening bell coming up next. Stay tuned. We have a lot of trading up ahead. [ 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. You are watching cnbcs squawk on the street. The opening bell set to ring in about 30 seconds. Here we are. Day seven. Government shutdown. I guess we started midnight, last monday. If you think back to 1990, when iraq invaded kuwait, every weekend, they expected a deal with the iraqis. Every weekend, we opened monday when there was no deal. You see that opening bell, lots of red on the screen back at the real time screen at cnbc. Here at the big board by the way, habitat for humanity celebrating the 30th annual jimmy and Roslyn Carter work project. They rang the opening bell at the nasdaq. To provide free workforce training and job placement for ju underserved women in new york city. Apple is one of the few exception. Stock is up a little less that have one half percent. Tesla also. We can talk tesla and apple all day. You need a further incident, tesla. You can only watch that video so many times. I know that many of the firms are coming out with their list of biggest. They will not just shut down any more but debt ceiling preach. Do we focus on the financial . Should we be looking at the banks more than any others. I have been thinking about mad money tonight. We felt like we have to try to improve our portfolio. I think it is not going to mean a down proof portfolio. The s p is going to take down everything if this happens. That has been any pattern of any disaster. Not the raid yancy, the futures. I thought it was interesting, moodys discussion. How much of moody is saying, does anybody want to be targeted by the u. S. Government . Do you there there has been a Chilling Effect . S p has claimed it was a target on subprime securities and that lawsuit that followed. They say that. I have no idea what they have to prove that is the case. One might wonder whether you are ever going to do it again if you are a rating agency. They are always backwardlooking, not forward looking and they are of little help. Look, if i were the s p, i would say, listen, i have to put it on watch. It has to be fathomable by somebody. Right now, if president obama said, look, im not going to negotiate from the debt limit. I do want to negotiate on some issues the republicans bring up all the time about entitlements. I think people fear the market could be up 5 on that one line. In other words, lets take that off the table but i am worried about entitlements. Thats what i think, people are afraid of shorting or selling this market. What about the larger issue, jim, when i hear you talking about any idea that there could be something that involves cooperation and an end game where we get a beneficial result. I think thats impossible. Here we are. No immigration bill. No energy bill. No farm bill. We cant get anything done. What makes you think we are going to get Something Like that done. I know. I think its unlikely. Even if you describe people, jim cramer on twitter, do we call these people rejectionists who are against everything . What do we call them . They defy it. They dont like to be labeled. Clearly, there are two parties. There is a Republican Party that says, wait a second. Our people own bonds and then there is a Republican Party that was detailed by my friend, jim stewart, this weekend, in the new york times. We had nothing to do with that stuff. It is not about the finances. It is about the issues. Maybe we have got to teach the government a lesson. In the meantime, a lot of people are going to get hurt, not people that work for the government, but people that have businesses involved with the government. I think they are getting crushed. No one is going to give them money. They are not going to get a check for the government for what happened. There is not going to be backpay. The guy in front of the pentagon. Hey, pal, there is no money for you. Like the soup guy. No money for you ibm is down about 1 . There was a down grade im sure you saw. Sisco actually down 1. 5 . Thats a very muted response to some research on ibm. You can see it. Jcpenney shares down another 3 . 7. 61 a share. In a world where you are worried about credit, look, if you are worried about a bank. Mike ohman had given insurance as that they would not pursue after the offering and then they did it in part because of reaction to a Goldman Sachs fixed income piece that got people very concerned. Then, goldman does the equity offering, which was amazing. That was a day that shook the world in the sense that goldman comes down with a piece that triggers the stock decline that forces ullman into a deal. We have not heard from mike ullman. I hear now he is not talking to anyone. Oh. They are now a code of silence. I was a backer of ullman. I backed up ullman meaning that i felt he got it started. It may be on the fundamental side of the business engineering a very difficult turn around from what some say was almost a mortal wound. He will do it slowly but surely. It is interesting, the cds, the credit side, would have been strengthened by this 800 million this company raised. The company, if they are selling anything at all, they are not going to have a problem. They have raised a war chest going into the holidays. They are trading wider. Hit on all sides. On the one hand, we have twitter trading at 30 billion and the other hand, we have jcpenney becoming a small cap. The twitter people are saying, the idea of calling the suntrust irresponsible, i am getting feedback from people, saying that i am irresponsible in calling the 50 price target irresponsible. I come back and say, they are irresponsible to criticize me for calling their research irresponsible. Lets stipulate we have a Republican Democratic situation on here. We do. I am not negotiation on the irresponsibility of this twitter report. They want to make no deal either. No, they dont. Maybe we need a bargain. We need a bargain. 20 billion and im okay. If they were to come back and cut the price target. I think they should cut the price target. They got us talking about it. When do we talk about that firm . What we need to do is turn everything into washington. Just like the taper, no taper. There will not be a bargain on this twitter. There will not be. This thing is going to be expensive. There will not be a bargain. Coming back on, i did take one look at ctb, cooper tire, is down a while, 12 . Getting new floor from the stock, which perhaps if you are apollo, you can try to negotiate a price cut on a 35 deal when you are talking about a 26 stock. It makes things better. Not back to where it was before the deal. It was up sharp. You can see it there, the move up in june, whether they announced it. Not quite back to that level. This is a leverage buyout. The apollo, a far smaller company. The money was there and the ratios werent terrible. Now, of course, it is really a question of the unions, the j. V. In china and apollo seemingly wanting a significant price cut and or maybe they just want out. Humor me. All we know is during the time of this deal, we have had increases in the statistical auto numbers. We know the field has gotten bigger and the business has gotten better for the car industry. Why dont you want to close on this deal . It turns out the Car Companies are better. I dont get this. Raise the ceiling on the cooper tile deal lets get to a man that always knows whats going on. Bob pisani is on the floor. We try. An important thing today, an ugly open. It was not a great overnight in asia. All the major markets down. Europe, everything is down 1 . Italy might be up. We have been in the red all night. No surprise. You look at the futures overnight, we have been down since the very beginning. A lot of people dont think this is necessarily bad. Grinding lower. I have a lot of value friends out there that think the market is a little high priced. Good news dpfor value investors. We wanted to pull back more. I kept saying, isnt this playing with fire . A lot of people felt another 5 could be the further down line. Nobody thinks we are going to default. Even then, we can go further. This is the grinding lower they are talking about. If a deal is announced this week, we are going to get a snap rally, 2 , 3 snap rally and the value will start screaming again. In the meantime, people are looking for opportunities buy lower. Speaking of lower, take a look at the housing stocks, strange report from Goldman Sachs. Toll brothers downgraded because it is not necessary to concentrate on the highend of the market. I understand the logic. Some guys that are more entry level are still down here, like pulte, overall. They upgraded realty. More importantly, for all of us that watched the market, finally, earning season starts this week. Alcoais tomorrow. Thats not that important. We are going to get jpmorgan on friday and wells fargo on friday. We have had a lot of problems with banks. Let me list the three big once. Number one, a lot of talk that trading is going to be crumby, particularly on fixed income. Number two, a lot of talk the Mortgage Business is going to be slower. Number three, a lot of talk that the legal reserves from the bigger banks are all going to go up. The good news is, we have been talking about this. This is wellpriced into the markets. Financials are down but not dramatically underperforming overall. Some of the banks are up to the down side. Finally, i hope you dont miss my exclusive interview with daniel gallagher, one of the sec commissioners wechlt are going to talk to him at 11 40 exclusively on squawk on the street about High Frequency trading. Is it really a casino out there . Is the individual investor getting a fair shake . You hear that a lot. I am going to talk about Dan Gallagher and what he and the sec thinks about that and what they are doing about it. 11 40 eastern time. Back to you. I have never heard individual commissioners say anything about High Frequency. Thats a great get, bob. Why isnt there any worry in the bond market. Rick from chicago. Rick, take it over. There is no action here, really. Yes, we are at 265. Now, we are at 261. Here is the chart everybody should Pay Attention to. It starts out on the 24g9 th of september. Focus on the right side, low closing yield, 260. High closing yield, 265. This is going to be the tenth day. Should it close in that range, even though there is a lot of anxiety and we are hovering, lets start this out at august 1st. We can clearly see we are down towards lowend yields. We are in a range since most of this d. C. Circus has gubegun. Here is one that stands out. Lets look at the jgb, hovering at the lowest yield since may, around 64 basis points. A time not many months ago where it looked like it was going to breach 1 . This is the odd man out. Lets switch gears to the Foreign Exchange market. You can clearly see this on your dollar index. The year to date of the euro versus the pound, they are all at extremes hovering right around february, even in january to the pounds case. There is very slow trading here, even though many traders believe that the longer this goes on in d. C. , the more europe will seem to have an effect, think bad weather and retailers specially potentially the dollar index. David faber, back to you. Thank you very much, mr. Santelli. Kelly evans joins us now here at post 9. We are going to talk debt ceiling, i would think. Well, it is the outcome no one wants, not even the fed. The longer the shutdown persists, the more likely it is that qe will persist as well. A little bit of news going into the weekend where we didnt get a lot of news with regard to the resolution at the debt ceiling and shutdown debacle. Ethan harris cutting his q 3, q 4 growth forecast in part because of the direct hit and the confidence hit we have seen from the shutdown. The longer the shutdown continues, the more that math matt cli, this is just math, is going to weigh on Government Spending in terms of the portion of gdp into year end and 2014. One reason why the fed is less likes likely to start tapering now because it doesnt have the same Economic Data it usually has. There is down side risks because of everything coming out. You can see that into the market. I want to make another point about what we are seeing as we head toward the possible breach of the debt ceiling. Maybe it is not going to be october 17th. Maybe the big payments dont come until november 1st. The bottom line is, the longer this goes on, the more it gets wrapped up into the need or a grand resolution or whatever, the more likely this drag will persist. No one in the market. We are in this kind of weird situation where the status quo is the likeliest outcome. Growth is weak, a fed thats acome day tiff. We are not getting to that point in the cycle where Everyone Wants to see where the fed hands it over to fiscal policy or where growth kicks in and you dont need the fed there in the first place. If you look at the dollar index below 80, it is seeing a different outcome. Thank you for bringing this up. I know Goldman Sachs is trying to put a number on how much the gdp would get hurt by if nothing happens with the debt limit. We are dealing with real countries. What happens with the countries that rely on foreign investment. They are loving it. The longer the fed is likely to be acome day tiff, the longer some of these emerging markets that do have a balance of payments and crisis. If all that liquidity would go away, the longer they can rely on investors here. They need to chase yield and investing in their xhes because they are not getting it here. At the same time, this whole sense that hitting or breaching the debt ceiling is going to be a cat clichl. There are a lot of people that are less concerneded about i acataclysmic event and more so shaking their head and saying it is going to exacerbate what they see in place now. Could the fed say, you dont need to pay us interest . Just pay everybody else on our holdings . They are up what, 2 trillion on their balance sheets. They are probably going to keep paying investors or they might not pay on a onemonth tbill, deciding they are not going to fund other parts of government. If we follow the vix, maybe that will tell us. It is spiking. It is still not bad as it was in 2011. We are going to have to watch and see how this plays out. Coming up, twitter gets into the tv ratings game. We are going to look at what this means for investors. Take a look at the markets. We are off the lows of the morning at least as it looked in the early going there in terms of where the futures might lead us. We have more squawk in the street coming back right after this. Opportunities arent always obvious. Sometimes they just drop in. 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. The 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. You can see the dow, 30. We are not that many weeks past. We have one name in the green, at t. Lets get over to Sharon Epperson who joins us from the nigh mack. Oil prices that are down more than 1. Now that Tropical Storm karen has passed without incident. We are looking at many of the operations in the gulf of mexico resuming their full capability. We are looking at prices that have come down considerably. The other big factor traders are watching is what is going on in washington and also anticipating what may happen if the debt ceiling is not raised, what impact that will have on the u. S. Economy and on energy demand. That is also pressuring crisis. It is also pressuring wholesale gasoline prices, gasoline futures and gasoline prices at the pump. We are looking at prices that have seen the biggest dip in the last two weeks. Down about 14 cents by the october survey. A couple cents lower after that over the weekend. 3. 35 is the national average. Thanks very much, sharon. Take a look at shares of blackberry. The blackberry maker up about almost 4 in the early going here. The Company Reportedly in talks to sell parts of itself. Any number of reports keep coming in. Maybe there is an interest in some parts from google or sisco or sap. Ard could go to reuters. The possibility of merging an alternative to a planned buyout by the Share Holders, fairfax financial. They have a lot of doubts as well. 9 a share. They are moving ahead in terms of Due Diligence but that 9 seems to be acting more as a ceiling than a floor. It was put in there by fairfax. They would get an inscentive fe. People are coming through the data rooms. But are they distressed investors largely . The security aspect. The chinese have never been able to reach that, have they . No, i dont think so. They will keep trying. We got 6 in 60 with the man right next to me coming up next. 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. Thats what they can do with you. Evebut only three in tenents of them are women. Th and science. To have enough graduates to fill 21st century jobs. Well have to solve this gender divide. Lets inspire more young women to pursue math and science. Lets light the way for a new generation. Join exxonmobil in advancing math and science education. Lets solve this. Time for six in 60. Lets start off with my kron. You want immunity, micron is the corner. The stocks going higher. Piper goes up. Irwin simon, this is a great proprietary story. A secular wave of good food for you. I had some this morning. A facebook upgrade. Modern nation, instagram, people love that story. Tesla . Yes, tesla, what can i say . I just put it on there because it is talked about. It is up. It cant be stopped. We did not discussion with my friend, barry rosen stein. This is meaningful. This is the old red box. It is the old red box. Talking about activists, hess. Bfa says they still have a lot of great properties. Bachen. The largest producer in the world of gas and oil in the u. S. Of a. You do a great job. Thank you. Im doing it tonight. One of the Great Oil Companies you never hear about is simmerex. Speaking of technology, david, this grand theft auto, we have to find out how big it is. It is bigger than anything. Is there a sanitized one. It is not like bishop too too is goi is going to say this is a game of a lifetime. Say mon, over to you. In the second hour of the program, the excitement is clearly building about twitter coming to the market. Were getting the latest word on that. Were obviously report live from washington on the debt. We talked about whether this could be the week janet yellen is nominated to leave the fed. Hour two of squawk on the street. I love having a free checked bag with my united mileageplus explorer card. Ive saved 75 in checked bag fees. [ delavane ] priority boarding is really important to us. You can just get on the plane and relax. [ julian ] having a card that doesnt charge you foreign transaction fees saves me a ton of money. 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[ 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. Welcome back to squawk on the street. Day seven. Sign of the times, twitter is teaming up with nielsen, tv ratings. How will this change the tv landscape . Boeing losing a valuable customer. Japan airlines is knocking on airbuss orders for its firstever order from the european company. Well get analysis on that. We start with the shutdown of the government and the march toward the debt ceiling deadline, which is one week on thursday. House Speaker Boehner speaking out this weekend saying the nations credit is at risk. The nations credit is at risk because of the administrations refusal to sit down and have a conversation. They are saying it is at risk because of your refusal to pass a clean debt limit. I told the president , there is no way we are going to pass when the votes are not in the house to pass a clean debt limit. The president is risking default by not having a conversation with us. The votes are not in the house. Thats what Speaker Boehner said. Chief washington correspondent, john howard, there were others that would argue that the folks a votes are in the house. Nancy pelosi has published a letter with democrats signing up asking for sort of vote and the republicans that might be swayed to vote with them. Whats your judgment . There is only one way to find out. We may find out on the extension of government funding, the socalled clean c. R. To reopen the government as well as on the debt limit. You put it on the floor and find out whether the votes are there. The administration maintains there are. The democrats maintain there are. I wouldnt presume to count votes better than speaker pressure. He is clearly feeling the pressure that jack lieu tried to keep up on meet the press yesterday. We saw in 2011, there was no default. It hurt the economy to get close to the line. We saw it in the stock market, confidence, invest. If we cross the line, we are going to a place that we have never gone. A week to go until we get some sort of resolution to this. Both sides at this point are simply watching the public fallout and feeling the pressure from the markets and their constituents and donors and trying to figure out how to manage and find a way out of this crisis. More pressure is on republicans than democrats. Everybody is feeling it. It would seem like there is not enough pressure. It seems like they are all waiting on a panic to get anything done. Not enough pressure yet. Im pretty confident that if we go on for a few more days without a resolution, the pressure will get greater with every passing day. John harwood out of washington. Stocks are lower as we mentioned as the shutdown continues and the debt ceiling looms. The dow is giving up triple digits this morning. Lets bring in jim paulson with Capital Management and bob bauer. Guys, good morning. Good morning, kelly. All i heard last week, jim, all weekend is how eager investors are to buy the dip. Where are the dip buyers today . I think they are lurking around the edge. I really do. People realize this could go lower. As time marches on toward the deadline, we might get lower. The good news is investors do realize, this is a twoway trade. It still has got huge odds of eventually being resolved and when it does, you are gonna have at least some rally in stock. I actually think, right now, kelly, because stocks arent off that much, that the bigger change might be the bottom yields, might go up more rather than a big rally back up in stocks. I do think that the american psyche is in a better place. When you say the bond yields might go up, do you mean today or generally in the future . No, i mean on resolution. People are looking at how much stocks could rally on a resolution. I think the bigger rally might be in bond yields on a resolution. Sure, sure. People are arguing it could be upwards of 10, 15, maybe even 20 basis points. It is ironically enough that tells us the part of the reason borrowing costs are following is precisely because of this crisis. No doubt about that. A little bit of a safe haven in the treasury. Thats going to come out with resolution. I think we look back at the economy, which is doing fairly well, kelly. I think economic surprise momentum is very strong. The bonds will have to go back up to reflect that if we have resolution. Ultimately, ultimately, we will put taper back on the table as soon as we resolve this. All those three things are going to make bond yields go up z it is worth pointing out. It is one month since we rose above 3 on the tenyear. Therefore, we have tracked back a staggering 40 basis points during that period of time. Lets pick up this question about the fed that jim raises there. There is damage presume believe ali being done to the economy, albeit with more of the department of defense now back at work. Well, while the shutdown with government will probably have a somewhat limited impact on the economy. To us, it seems like the fed will wait until january. It seems they will wait to start their taper in january. We think the back down in yields you mentioned from 3 to 2. 6, is part of we think the 3 overshot the yield increase at the time but once we do have the taper and we adprgree with jim t the economy is doing reasonably will, the next move is likely to be up. The Central Banks are Getting Better at persuading us that it is going to be a slow move. What happens if just into that mix, the president decides that this is the week that he will announce he is nominating janet yellen to take over the fed. How would markets react to that . I think the markets would like that. She is thought of as a very dovish member of the committee. If she became the new chairman, i think that would pretty well cement a continuation of the policy. I think the stock market and the bond market would view that very favorably. There are also earnings this week, jim. We are going to hear from alcoaand and jcp. We have played this game before. It has never seemed to end in anything too badly. What about earning season this time around . How should investors play it . I think it is going to take a back seat to the drama that is our government, i guess, to some extent. I basically agree it is going to be an okay earning season. I think that when you look at the quarter that produces the earnings, you have a quarter where domestically, the manufacturing isms went back above 55. You have a quarter that had pretty good housing activity for most of the quarter. You claim numbers that fell to 300,000 during the quarter. Those are all pretty good numbers suggesting momentum that feeds through to earnings. On top of that, kelly, look at the international. It is not enough. For the Federal Reserve to have started removing qe. It isnt that strong. I dont think it is going to happen tomorrow. I think the fed. It isnt up to the fed to when they start q. E. . Private sector growth is in excess of 3 . It was 3. 3 in the Second Quarter. It shows know signs of slowing down. If the government sequester stops, the economy is going to grow 3 . I am seeing a weak dollar, a rise in the baltic freight rate index. Some bottoming out in commodity prices. If it werent for whats happening in washington right now, you can see the story. You can see perhaps why bond yields were at the treasury, ten years up at 3 . We havent quite reached that velocity. Jim bob i didnt mean to put it like jim bob. Good night, jim bob. Some 800,000 people have been without pay for a week thanks for the shutdown. An Unlikely Hero is stepping up, the banks. The pay has stopped but the bills keep coming. Many of the employees will need to find a way to make ends meet. October 11th is the date when paychecks are supposed to be deposited even though four days have been wiped out by the Government Shutdown that started at midnight. On october 10th. Td bank will lane much td care, mortgage assistance, up to 1,000, a payday loan but interest free. The big banks have offered customers assistance on a case by case basis. Chase. Com offered a link to a customers help line for those worried about the stalemate bank of america is monitoring closely and working with customers to reach solutions. I am told the volume of calls from customers seeking help has been relatively low. They havent missed a paycheck yet. Most customers are optimistic that the government will compromise before the key friday date. Congress approved a bill issuing back pay for the days that were missed. The banks are expecting that the volume could pick up. Simon, toward the end of this week, when it becomes clearer what the fate of that money actually is. Kayla, thank you very much. Back at hq twitter is making big news with its ipo. More analyst plans coming in today. Could it be about to change the way we watch tv . This will save television. Well give you all the details aft break this monday morning. I put in the hours 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. Theyre the days to take care of business. When possibilities become reality. With centurylink as your trusted partner, our visionary Cloud Infrastructure and Global Broadband network free you to focus on what matters. With Custom Communications solutions and responsive, dedicated support, we constantly evolve to meet your needs. Every day of the week. Centurylink® your link to whats next. Welcome back to squawk on the street. Im Jackie Deangelis. Take a look at shares of marriott international. The Company Announcing they will transfer the listing of the common stock from the ncse to the nasdaq. Trading expected to commence on october 21st. They will continue to trade until that time. Marriott says this will provide them with costeffective visibility. With the stock down, those offers alongside the broader market, simon. Thank you very much of that. As we await twitters upcoming ipo, nielsen is out with a way to reach their information about the twitter shows. It shows that the finale of amcs breaking bad reached number one for the week of september 23rd. Lets get more perspective on what this means for investors. Chris, good morning. A senior Portfolio Manager of the turner titan fund. Im good. Im interested in twitter and what you think that this new move by nielsen will move the needle for potential investors, chris . Well, i think the nielsen commentary and the announcement they made with twitter today is very important. It really speaks to the inefficiencies in the advertising market. For far too long, advertisers had been looking for response from their advertising mediums. What they announced today with twitter, i think is very important. It is an important step forward in getting the idea how users are engaging with the advertisers. It follows on the footsteps of what we saw when nielsen announced with facebook. I think it is very important. It positions twitter very nicely going forward. There is so much discussion on what twitter might be worth. We have a preipo coverage if you like coming through from suntrust today. They are suggesting that actually it could double from the current valuation that the company assigns to itself. Do you think more importantly that with 250 million users, they have Critical Mass . That is also a big debate people are having because it is social media. It is less than a fifth of what facebook has. If you look at the density in the market like the United States, arguably, you dont have it. You have somewhere like 22 of u. S. Internet users actually using twitter, where as threequarters of them might be on facebook. You raise a very good point. Thank you for bringing up that engagement idea. Critical mass is very important for all advertisers. It is one of the reasons why facebook has been able to grow as quickly as they have. At this point, facebook is the king of User Engagement and time spend online. There are four companies that have Critical Mass. You mentioned facebook, instagram, owned by facebook, also has Critical Mass, linked in and also twitter. There are your four horsemen as far as the social networking industry. Advertisers need Critical Mass specially during this time we have imperfect information as to how it is tracking across these immediat mediums. They say in terms of valuation, the growth is slowing. Is there a risk for the space more broadly or is this part of the cycle of maturity if they start continuing to put up good numbers, people wont get to exercised about their evaluation . The maturity scale is what people are debating today. Facebook only started in 2004. Twitter only started in 2006. Tv has been around for over 70 years. Were talking about an industry here thats still very young. It probably has the best tools for advertisers to understand how people are int eracting and seeing the brand. Over the coming months, well be meeting with twitter management. That will be very interesting to see what their view is of the future of the firm and the future of social networking in particular. In the meantime, we know from the s1, that they are valuing their own shares at 28 times their current revenue. Where as facebook and linked in are 20 or 21. It is all about the growth. Chris, if i was to push you, do you think you are likely to buy twitters stock . Would you try to get in on the ipo . A little too early to tell on that. We like facebook quite a bit. We are big owners of linked in. We can talk about those two stocks where i think that the opportunity sets are very strong there. Twitter is still a year and a half, two years behind facebook. It is more immature than facebook. That allows you to think the growth rate could be higher as they catch up the maturity scale. Thank you for kicking your week off with us. Thank you. Coming up, the 9yearold boy who made it past three levels of Airport Security and on a flight to vegas all without a boarding pass. How in the world did this happen . Did he have a fake i. D. . Well have the details later. Back after a short break. , appl] 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. 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Sector weakness, not surprised. Emotionally cyclical group. The bottom line is the overall market is down ruffleoughly 0. 8. Sect sector leaders, those that have been among the strongest are the weak es. Biotech has been a real leader, retail, the airlines. Those are among the weaker groups i am talking about a percentage change. Take a look at retail stocks. There are some stocks that are weaker than others. A lot of them are in the retail group. I noted tiffany was down 2 , abercrombie, macys, also down a little bit more than 1 . The yields on Treasury Bills, you dont have Stock Traders normally talking about Treasury Bill yields. When you see the one month at. 012, thats a real move, the stress thats going on in the shortterm. I want to talk to jonathan down here at meridian equity partners. So many people saying i thought the debt ceilings was going to be cataclysmic. Is nobody worried about breaching the debt ceiling . Everybody should be worried but we dont have this panic celloff that people might have anticipated. Knowing these days were coming up specifically october 17th, a lot of investors and traders have priced in the risks. We are 2 off the alltime highs. We cant have priced in all of that much. A little more pricing is going to come in as days go on and as we continue. We are going to continue to see more measure. October 17th, thats not exactly the dropdead deadline. It is not. There is continuing to be some push and pull. We see a lot of media appearances by the president. We saw treasurer lew. Can we just ignore it all together . Is it helping or hurting volumes here . I this i it is hurting volumes. People dont know what to do and how to may the market. We are into a new quarter. When is that going to come in . That waiting game is going to continue. What happens if the fed stays put or keeps quantitative easing going. I think it will pick up toward the end of the year. As we continue to go through this and more information comes out and the details start to get dirty, investors are going to start to pull away from this market. The goal has been that safe haven. It hasnt played into the trade we have seen before in the past. As time goes on, we are going to get back to that. I think investors are going to have to find that one security they feel like they can hold on to. I dont know. Well see. If you want to talk about buying the dip, make an argument for gold. Jonathan corpino from there. Will it ultimately affect enrollment . Stay with us. Well deal with that next on squawk on the street. 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. [ male announcer ] eeny, meeny, miny, go. More adventures await in the new sevenpassenger lexus gx. Dare to be spontaneous. Good morning. If you have just joined us, one hour into trade. Here are the stories we are squawking about. 7 30 on the west coast, 10 30 on wall street. Southwest airlines hitting high. The discount carrier, traffic increases 1. 3 from a year earlier. The vix is up 8 , rising above 18. And pot belly is up 4 . This after friday, the stock more than doubled from its ipo price. There has already been speculation about how the fed will have to react to whats going on in washington. The future of quantitative easing will again take the spotlight this week with the release of the Federal Reserve minutes on wednesday. Going forward, what, if any, impact will the government shut down . We are joined by john heldsenrath and elon moody, reporter for the washington post. Good morning to you both. Hello, kelly. Does this mean we are back to qe infinity . Of course not. This does keep them on hold for the time being. They dont have data to look at for october. They have a meeting at the end of the month. It will be hard for them to make a cal to end it by the end of the month. Even though the december meeting is a couple of days before christmas. It seems like unusual timing. If we get decent growth and the markets come back, it is not a certainly but i think it is on the table. Why do you say that, jon . Would you describe the fed as still anxious to end these purchases or at least to begin tapering them . Yeah. I think there are a lot of people at the fed who want to get the process started. They were disappointed by the showing of the economy over the summer. Frustrated that they couldnt get it going. But, you know, like i say, there are a lot of people at the fed who are very uncomfortable with this idea of q. E. Infinity, q. E. Eternity. Part of what we saw this morning was pushing back on that idea. Elon, you obviously cover what happens on capitol hill. In the corridors of power politically, where are we on the possibility that it could be this week that the president decides that he is going to nominate janet yellen to become chairman of the Federal Reserve . We are not anticipating anything this week. I p not preparing for it now. This is something that the president has said. The vetting has not been delayed but it seems the announcement has been delayed by the process. You are finding he is spending a lot of time trying to expend political capital. The fed announcement is on the back burner. Why . It is not a difficult thing to do. You say you are nominating janet yellen for the job and you can start setting up hearings on capitol hill. Certainly, he could have started two weeks ago, a month ago, a very long time ago. This is something that they are simply not focused on. There are bigger fish to fry. We are seeing the d. C. Economy being severely impacted by this Government Shutdown, by the possibility of a debt increase. The region could be using as much as 200 million a day because of the shutdown. There are bigger economic pictures to focus on. We do expect an announcement to come before too long. Jon, now that the dust has settled on the surprise decision not to taper last time around, you were probably identified as having one of the closest contacts with the Federal Reserve. I know afterwards, there was some banter about whether or not you left open the possibility in your articles that they might do nothing. Where are we on our ability or your ability to tell us what is actually happening within the fomc . Do we assume that you know more than you know . I dont know what you assume. Every time you write an article, the market looks and the market can very often move on t you ait. You are the man. Lets be honest. Thats nice to hear. What we were reporting before the meeting, it was a really close call and that the data werent cooperating with what the fed wanted to see. A lot of people were on the fence. I was saying i didnt know which way it was going to go before the meeting. Before a lot of meetings, i have a pretty good sense based on reporting where they are going to go. This one, i just didnt. Thats what i tried to report this time around, that it was a close call. I mean, i think thats what it showed. The hilsenrath version of the unknown. That last jobs reported really complicated matters for them. Jon, what role, if any, does bernanke play in conversations about the debt ceiling about members of congress or others . I want to go back to the crisis himself. He played an Important Role there. Does he play a role here as the largest holder by the way of Treasury Bonds . He has been warning about debt ceiling crises since the 2011 event. He has been trying to give lawmakers an idea of what a good fiscal policy would look like right now. He has been trying. Basically, nobody is listening to him. I dont think he does play a big role. It is worth remembering what he did in september, 2008, when he went up to capitol hill and said, the world is going to end if you guys dont act. Maybe he pulls out one of those. Right now, no one is listening to him. Whats your best guess if the fed tapers at the end of this year or in 2014 based on the reporting you have done . I believe this is going to be data dependant. We will have to see what happens here in washington that will have a significant impact. One of the questions i would start asking is, the fed has left itself an escape hatch by saying it could increase or decrease the pace of purchase if we reach the debt ceiling. Would the fed be ready to increase assets or would it go in other directions . What are the conditions around that . Those are some of the things i would be looking at as well . What are the percentage odds you would be putting on the feds . I think it is pretty low. They dont want to get caught in the trap an get in the middle of the debt ceiling crisis . I think we would have to be in a recession or on the verge of one to get them to change their course. Jon, and ylan, we appreciate appreciately it. Some on wall street are warming up to companies that have more presence overseas. See Ma Seema Mody is here to explain that. They say the street has become less negative. The uncertainty in washington has resulted in the u. S. Dollar weakening. Thats a boon for these companies that generate a significant amount of sales outside of the u. S. Because it makes their goods more competitive. These stocks on average have been staging a major comeback of 8. 5 , while u. S. Focused stocks up only 6. 3 . That data according to thomson reuters. This is the exact opposite of what we have seen for this year. As some of the leaders in this pack include tech giants, apple, micron tech, both of which generate sales overseas. One pocket of strength is europe. Companies with exposure to the euro zone have on average been outperforming stocks. 9. 7 versus 6. 3 . Looking forward, thomas lee at jpmorgan, says keep an eye on companies with exposure. Not to mentions the weakening u. S. Dollar. That will be a trend to watch. Thank you very much, this morning. Six days after the launch of obama care exchanges and technical issues still plaguing the website, Bertha Coombs back at headquarters with more on this. Good morning, kelly. Despite ticking up parts of the federal exchange, federal officials are admitting that there are deep problems here. On day six, folks are still having trouble logging on. Josh and emily are losing their companysponsored insurance in january. New jersey is one of 34 states being operated off of the federal exchanges. They were able this morning to get past the start page more quickly but found the same problems they had all last week. We were able to start an account but unable to finish it. We were able to finish an account and then it told us our user name or password was incorrect. We were never able to see the different options. Health Department Officials said the problems were due to overwhelming volume. This weekend, they said it is more an a capacity issue. They need design and coding changes to improve efficiency. With the quick time frame they had to get these things up, the design appears flawed. It speaks to the design and it speaks to the infrastructure that was built wasnt adequate. So it is more than just adding a bunch of servers. A couple of the contractors involved including cgi group and experian plc which supports i. T. Services. The one thing they hope is they have time. The real crunch is going to come in late november, december. Hard to get this up and running properly while they have to try and operate it. I dont think government around the world has had success with billing i. T. Projects. Thank you very much. Bertha coombs up with headquarters. Boeing losing a valuable customer. Japan airlines is buying from airbus in europe for the first time ever. What does that mean for boeing in the future. More on that when we come back. For the first time ever, Japan Airlines is buying planes from airbus in europe and not boeing. The news putting pressure on boeing shares today, slightly lower. Phil lebeau is in detroit with more. Is this important, phil . Is this an Important Development . Reporter absolutely important, simon. This is a big deal for a couple of reasons. One, it is a large order. Two, this is another case of airbus being able to crack into a customer that boeing has long had an exclusive relationship with. American had a longtime relationship. Now, it is going to be sharing orders with airbus. Airbus was able to sell 31 of the a350s, the wide body planes. They will start delivery next year. The total book price for these 31 planes. 9. 5 billion. We say book price, because everybody realizes in the industry, airbus is probably giving jal a huge discount off of that price. Jal is a longtime boeing customer. Cnbc had the chance to talk with the ceo of airbus. Did the problems that jachlt al had with the dreamliner create a window of opportunity for airbus to sell some planes to jal . I dont think so. This decision to launch were made earlier than that. I believe it was selected on the grounds of two things, quality of the family. We should not consider that 37 customers have ordered 750 aircraft. Also, the fact that here in japan, we have decided to have a o longterm investments relationship. Reporter remember, j. A. L. Is one of the First Airlines to fly the dreamliner. It was a j. A. L. Plane on the land in boston that had one of the two airline fires. Even though boeing has come back mightily within the last couple of months, it is still being out paced by eads, the parents of airbus. This is a big deal. Airbus has long been trying to crack that japan market thaboing h that boeing has dominated. Back to you. I thought that was interesting, he also said that it was about Production Capacity in japan. We know, for example, that boeing had got contracts in the past. Werent some of the batteries made in japan. There is a quid pro quo as to what you manufacture there to get the orders. Reporter sure. It is all about relationships, simon. That has long been the case for boeing. Parts, not just battery, other parts, large components in the dreamliner are built in japan. It is largely expected that the wing may be built in japan. People have said that will for a long time keep the Japanese Airlines with boeing. Clearly, that is starting to shift. What did you make of this 9yearold boy who managed to board a delta flight from minneapolis to las vegas as a stowaway effectively undetected by the tsa . Only midway through the flight did the delta attendants realize they had an extra child on board who was uncompanied. Whats remarkable, simon, is that there were really three layers of security that this boy was able to get through. First, he had the tsa checkpoint. It is unclear what happened. It sounds like he was able to go through when another large family was going through and maybe the tsa agent lost track of him. Then, the gate personnel were distracted. He then got on to the plane. When he was on the plane, at first, the flight crew didnt realize that he was not supposed to be on that flight. That one is the least concern for me, because the flight crew is busy with a lot of things as people are boarding a plane. Any way you look at it, this is highly embarrassing, not only for delta and the tsa but it makes people question, is the security, does it have holes in this that allow a 9yearold to stow away like this . Still unclear whether he chose that flight at random or wanted to go to vegas specifically. We are waiting to find out about that. Nice to see you, phil, phil lebeau joining us on the latest from the aviation industry. Steve ballmer making a tearful goodbye. Microsoft president , Satya Nadella will join us live later. Squawk on the street will be back after a short he can bra. [ female announcer ] youre the boss of your life. In charge of long weekends and longer retirements. Ask your financial professional how lincoln financial can help you take charge of your future. How lincoln financial can help you take charge of your future. Stick with innovation. Stick with power. Stick with technology. Get the flexcare platinum. New from philips sonicare. Lets get straight out to the cme group. Rick santelli joining us. We missed you friday. Maybe you can tell us what John Boehners going to do here. Tell me what the president s going to do. Heres the way i look at today. I would look at today as stats in the belfry. The only thing i like better than 1960s car is Interest Rate markets. One week ago tomorrow, the 1st of october, we had onemonth bill auction, as we do every tuesday. I believe i was one of the first to bring up what we saw was a onemonth bill that went from the previous week of 1. 5 basis points all the way up to 12 basis points, right about where its trading now. You know, statistics, pretty wild group of numbers. Lately i think its stats in the belfry, okay . I pointed to this because, at the time, about a week ago, it was one of the few things that i thought you could really point to without all of the politics, okay . You could really point to it and say, aha, that is because of whats going on in d. C. , and theres little doubt there is but theres a couple of different ways to say it. My guess, is that a conservative would say, its up 12 basis points, 10 1 2 basis points and its a lot. If you want to know how important it is, ask a saver. Like viewers, listeners, if you folks are elderly, ask them, are they going to be celebrating with a big cake theyre getting 12 basis points on the onemonth bill . No. Everybodys pointing to it because of the following. If we went from 1. 5 to 12 basis points thats 10. 5 basis points. A percentage move its up a whopping 700 . Thats the way in my opinion, people on the other side of the fiscal conservative aisle would say it. Aha its up 700 basis point, or lets do some other numbers. Lets take 14 , okay, lets take 18 . And lets take 25 . What are those . Ill tell you what they are. How much the dows up for the year. How much the s ps up for the year. How much the nasdaqs up for the year. That looks darn scary, dont you . Or the fact that Interest Rates, when i tell people weve been in a closing range on tens for the last ten days between 260 and 265 they say, oh, you must be mistaken. Im not arguing whats going on or the moves arent important. But i guess what i dont understand is, i dont see the profit in trying to push markets over the cliff. Back to you. Thank you very much. See this diamond . See this diamond . Well, its roughly the size of an egg. Someone just bought it at sothebys auction. Find out how much it sold for when squawk on the street comes right back. She loves a lot of the same things you do. Its what you love about her. But your erectile dysfunction that could be a question of blood flow. Cialis tadalafil for daily use helps you be Ready Anytime the moments right. You can be more confident in your ability to be ready. And the same cialis is the only daily ed tablet approved to treat ed and symptoms of bph, like needing to go frequently or urgently. 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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. Transit fares as in the 37 billion transit fares we help collect each year. No . Oh, right. Youre thinking of the 1. 6 million daily Customer Care interactions xerox handles. Or the 900 Million Health insurance claims we process. So, its no surprise to you that companies depend on todays xerox for services that simplify how work gets done. Which is. Pretty much what weve always stood for. With xerox, youre ready for real business. A record breaking 118 karat White Diamond sold at an auction in hong kong. Robert frank joinses now. From hong kong. New york back at hq. Unfortunately, diamonds are becoming the investors best friend. 118 carat flawless dcolored diamond sold by sothebys for 30. 6 million. The most expensive white dough monday sole at auction. The oval shaped is the size of a small egg. Discovered two years ago in the mines of south africa. It was 299 carats before cut down. No word on who the buyer was. But experts say 80 of big jewel sales are coming from asia. Until today the record was 26 million for the winston legacy diamond this spring. Also a 34 carat, the second most expensive ever sold. The most expensive diamond sold at auction was 46 million, that was for a pink diamond three years ago. With more of the superwealthy seeing diamonds as the ultimate hard asset we may see the record broke again soon. Back to you. I just wonder, are the diamonds the new gold across asia . I was talking to a billionaire in asia last week who said, how else can you put 20 million in your pocket and get on an airplane and get through security . This is a very portable way to bring a lot of money somewhere very quickly. Get around capital controls. Exactly. Criminals or dictators fleeing countries . Im not saying anything about that. But you know, clearly, this is a sign of portable wealth. Its a hard asset. Its tangible. Its portable. In a sense, it is kind of like gold but more concentrated store wealth. Easy to steal. We should remind people, a lot of people go to places like hong kong, chinese, for example, who want you know, again, trying to get around the strict controls on their money to buy watches or gold or apparently now diamonds. Exactly. Those capital controls have been stricter. This is a way to get money out and maybe if you wanted to sell that diamond to buy real estate or have a store value outside the country, outside the risk of politics this is a good way do it. C capitals a big issue with diamond prices. They halved it. In order to cut it down so it would glint correctly, they halved the weight of the diamond. Robert . 299 down to 118. Incredible. All right. Lets leave it there. Were losing our connection. Im happy with some of the shavings. What you might have missed if youre just tuning into squawk on the street. Welcome to squawk on the street. Heres whats happened so far. I think its unfortunate that were here. The reason why were here is because Speaker Boehner went to plan b back in december, walked away from the negotiating table with the president that put us on this path. The debt ceiling, i think, in my mind, is a bigger issue than obama care. I want a real debt ceiling with real reforms and entitlement and a way to get the budget balanced in the next five years. The system really doesnt function and treasures dont function. Right. Everything is based on treasuries. Everything. This thing could fall into a all i could think about is the review. Koefcone of silence. Cone of silence. It might be more powerful than the shoe phone. A twowade trade and its still got a huge odd of eventually being resolved and when it does, youre going to have a at least some rally in stocks. Far too long, advertisers looking for response from their advertising mediums, and what they announced with twitter, its an important step forward in getting an idea how users are engaging with the advertisers. Monday morning on cnbc. Good morning, live from post 9 at the new york stock exchange. We were down heavy. We were down 150 points at our lows in the open. Obviously a lot of concern about what happens with politics of capitol hill, as we approach the debt ceiling which should be in theory according to jack lew, a week on thursday. Shares of apple are rallying this morning. The s. E. C. Is ending an investigation into tax and cash practices without taking action. Shares of qualcomm are slipping. Bank of america, merrill. Downgrading chipmaker to neutral, expects revenues and earnings per share pressured by slowing smartphone sales growth. And were entering day seven of the Government Shutdown. Stocks are taking notice. Slipping this morning as Congress Remains completely divided over the Government Shutdown and debt limit. Try to figure out what happens next and what it means for investments. Big changes are coming to microsoft as ceo Steve Ballmer gets ready to step down. An executive on the short list to replace ballmer in a few minutes. High frequency trading a problem for the markets . The commissioner thinks so and he wants to do something about it. Well talk about that with s. E. C. Commissioner Dan Gallagher coming up. We start in washington which is clearly still the focus of world markets. Its day seven of the Government Shutdown and both parties are still hopelessly gridlocked, making any kind of resolution seem further than ever off. John harwood in washington from where he joinses now. Is it fair to say, as aresult of all of sunday talk shows, that they seem as wide apart as they ever were, if not perhaps more widely apart . Reporter yes, they are as wide apart as they ever were. Republicans are insisting on certain things from the administration, the administration believes it cant do in order to reopen the government. John boehner, house speaker, feeling most pressure of anybody in washington. Some from fellow republicans, more from democrats in congress and the white house. And yesterday on this week on abc, john boehner pushed back. The nations credit is at risk because of the administrations refusal to sit down and are a conversation. Theyre saying its a risk because of your refusal to pass a clean debt limit. There have been were not going to pass a clean debt limit increase. I told the president , theres no way were going to pass the votes are not in the house to pass a clean debt limit. And the president is risking default by not having a conversation with us. Reporter you can tell from John Boehners tone the pressure that hes feeling. The administration and democrats on the hill are responding that, just put a clean debt limit, put a clean Government Spending bill to reopen the government on the floor, and well see where the votes lie. They believe those votes are there, though john boehner said they werent. Theres a suggestion from art cashin, as you know, runs floor operations here at nyse for ubs, its likely to acrimonious. Boehner needs to keep these Tea Party Conservatives on board with him until that point. And therefore hes got to walk their walk. Is that fair comment, do you think . Reporter i think art cashins got it right. I think John Boehners going to play it tough, as tough as he can, until he gets up to the moment where hes got to move. John boehners a patriot, reasonable person, doesnt want to hurt the economy, but hes got to manage the political pressures. And i think when he ultimately breaks with that tea party faction, it will be at the very last moment. Okay. For the moment, john, well leave it there. John harwood in d. C. Stocks off lows but the gridlock in washington continues. The question is, what investors should dow now as the debt ceiling deadline now looms. Put the question to the senior equity strategist at Wells Fargo Advisers and jim dounnigan at pnc. Having heard from john there, art cashin, plenty others weighing in on this this morning saying they see no resolution in sight, why are you a, confident well reach some sort of agreement here that both ends the shutdown and, as you say, will raise the debt ceiling . Well, kelly, really, i think you know while the probability of a default and debt ceiling not getting raised is not zero, it as close to zero as you can possibly get. I think these politicians, they always take these things down to the wire. I think we will see some give and take on both sides, and you want to keep in mind the treasury can prioritize payments. We have a couple hundred billion dollars at least coming into the treasury every month. We have plenty of money to pay the interest on these bond holders. Thats what theyre going to do, if they have to. The u. S. Is not going to default. And in the end, the debt ceiling is going to be raised. Scott, if they have to make a choice, a choice not to default but for example, to do a Government Shutdown 2. 0, in other words, not to make more payments, whatever it takes to manage cash, that will have an adverse effect on the economy. Are you not worried about that taking place or you think that is unlikely as well . No, i think certainly, kelly, the longer this drags out the more effect its going to be on the economy because the governments not spending money. If you look for the formula for gdp, theres a big fat capital g there Government Spending definitely makes a difference. I still think that even without that, you know, we are in a very partial Government Shutdown. And it is not going to have as big of an effect on gdp as some estimates have been. Its going to have some effect but not a humongous effect, at least in my opinion. Jim, is he right, in your view . I think scotts pretty much on mark there. I think this gets the feel of a manufactured crisis in that theyve had a number of resolutions that will pay furloughed workers so its less of an impact on the economy. I agree, i think the chances of us defaulting on our debt have about the same as the earth getting hit by an asteroid. I dont think as much of a chance. They will reach an agreement. Great way to put it. Exactly right. I agree with that totally. Jim, what, therefore, is at vice to shareholders . First four days we saw selling, down 1. 7 on the market and we rallied friday. Clearly people bought the dip. Jim, would you suggest to people if you are a strongly opinionated as you appear to be, people buy on weakness. This could get quite hairy if there is no resolution going through to a week on thursday . Theres no doubt. But based upon those chances i think there is an opportunity. If you have cash on the sidelines, now is the time to make adjustmented to your portfolio and take advantage of the dips. Economys growing. Its not accelerating. This doesnt help that. Certainly the fed looked like a profit when it decided to take a pass on tapering last month. Theres still supporting the economy. Coming out of this, there will be an opportunity for equities to go higher. Scott, i guess maybe the reason were seeing weakness this morning is that people feel no rush to have to get in here. Which would indicate the market keeps weakening for several more days and things get hairy as deadlines approach. I mean, i can hear both of you, i can kind of understand why people talk about complacency in the markets. While you may be right the possibilitys about the same as earth getting hit by an asteroid, its higher than any point weve been at in the past. Im going to use that when we talk to clients, too. Thats a great analogy. I do think that, you know, were barely off the record high here, a couple of percent. The bond market has actually rallied. The bond market didnt think were going to default. The stock market doesnt think were going to default. I think both markets are pretty good at handicapping outcomes. We certainly id love to see more pullback on this because it is a total buying opportunity, industrials, technology, consumer discretionary. Economically sensitive sectors. You want to be buying those things if we get more pullback here. Jim, will you be demanding a royalty check for the use of the analogy from scott . Not a problem. Full use of it. Thats fine. Or it will appear on a tombstone or something. Jim, scott, thank you both this morning. Appreciate it. Thanks, guys. Hope youre right. Have a good one. Steve ballmer made headlines after his tearful goodbye to a stadium of microsoft workers last week. As ballmers time at microsoft comes to an end, who will end up replacing him . Executive Vice President of microsoft Satya Nadella is among the internal candidates for that role of ceo. He will join us next on the program. First, Rick Santelli watching the markets, as he returned to work this monday morning. Rick . Yes. Were going to have peter in ten minutes im want to discuss really, is the fed nontaper really at the epicenter of the reason whats going on in the government . Did they have that much foresight . What would the world have been if they did taper . All of these questions youre dying to hear the answer to will be discussed. ] syd ney 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. [ male announcer ] eeny, meeny, miny, go. More adventures await in the lexus lx, rx, and new sevenpassenger gx. Dare to be spontaneous. Microsoft launches its full wave of Enterprise Cloud products and services today. Jon fortt has an exclusive interview with the man in charge. Jon . Reporter simon, thanks here with Satya Nadella. Here in charge of enterprise and cloud. Want to talk about the ceo thing in a bit. But lets start off talking about your business. Youve got a number of announcements today in this critical area from microsoft. What do you have that youre announcing thats going to push you closer to watching up with amazon and Cloud Services and others in other areas . Sure. Todays a big milestone across the entire depth and breadth of our enterprise portfolio. We have new services across Cloud Infrastructure, big data, new crm service. Over 2 trillion of i. T. Spend at play as Enterprises Move to the cloud. We are very, very excited about playing offense on that opportunity. New crm service . This is dynamic crm. A major, major update to our crm service, along with Cloud Infrastructure and the Device Management capabilities. How is that going to position you better versus sales force . When we think about our cloud play, we think there are three things that are critical and differentiating about us. One is we actually have the broadest sass politics, office 65 and dynamic crm represent that. The next one is we have Windows Azure, public Cloud Infrastructure, truly global on the scale. Its not just that but we also make a Cloud Infrastructure available for others to be able to bill their own cloud. The combination of three things is Cloud Strategy and thats sort of not what amazon does or google does. Thats sort of really defines uniqueness. Three huge things happening at microsoft now. A big reorg. Steve ballmer announcing hes stepping down, search for new ceo. Youve got this nokia acquisition in the works. Talk about the ceo. Would you take the job, if offered . Its the boards responsibility to decide that. What skill set does the next ceo need . You been at microsoft for a long time. What do you see . The microsoft board, as you said, is working the process, steves very much the ceo. I am really, really busy and excited about the enterprise job that i have, and ill leave it at that. The next part of the ceos job. Are you taking yourself out of the running or what . Ive said everything that im going to say on this topic. So i dont want to mufurther monopolize my time on that. Bill gates is spending more time on microsoft doing the ceo search as well as other things. Theres some controversy around a couple of big investors wanting him off the board, which to a lot of people in Silicon Valley seems crazy. Its like wanting Mark Zuckerberg out of facebook. How engaged is he in your business and the cloud as Growth Opportunity . Bill is chairman of the board and engaged with us on a parttime basis. Hes sort of asked the precision questions on how were doing on any particular product in technology. A lot of area of the Enterprise Business he cares deeply about. So hes very engaged on the topic on a parttime basis as well as chairman of the board. Anchors want to jump in with a question . Simon hobbs back here at the new york stock exchange. Welcome to the program. How do you see the future of microsoft . Oob yusly working with an enterprise, within cloud, as we look forward to who should run the operation, it is such a sprawling conglomerate now within technology. We admire the company for continually coming back on consumer products. What is the cent it ter of the business. What skill set does the next person have to have . The core of microsoft is about building applications and infrastructure for activities that users care about. If you look at what we described as a core strategy as part of one microsoft, its about devices and services but its devices and services in the context of the highvalue activities. Thats really whats defined microsoft ever since it started. And thats really at the core of what were going to do. We dont think about it as consumer business or Enterprise Business. Take something as office, its relevant to us on a daily basis as a consumer and its relevant at work. Its that combination thats unique to us. Yes. We were the consume urization of i. T. Company from the beginning and we think of that trend, a big trend for us to go forward as well. You have an insight obviously unique insight into what the atmosphere is like at microsoft at the moment. How it needs to be led. Does it need an alan mulally coming from ford . A more social media person like Marissa Mayer or somebody like you with your proven existing skill set as an insider . What do you think will best take the company where it needs to go . Does it need to redefine who it is . Ill answer the first part of the question, what is the mood like at microsoft . The mood at microsoft is bullish. If you take even just the enterprise opportunity and when we say theres 2 trillion of i. T. Spend thats going to be at play, my sort of attitude towards that and the attitude of everyone at microsoft is lets play offense. We have big business when it comes to enterprise, more than 20 billion. If you look at 2 trillion, were the low share player in the enter ter prize. As things change our attitude is, how do we innovate . How do we participate in the next disruption, if you will. Were asking you that question every way we can think of. Practically speaking, how is the reorg working . Is it achieving its goal to allow you to get more agility . If so, a concrete example . If you look at, if you want to be in the public cloud business, building out Cloud Infrastructure, the things most at scale that are going to test out your Cloud Infrastructure happen to be cloud property, its built on azure, 40 million subscribers terms of the way the business is operating the reorg was supposed to make it easier to move quickly and capture opportunity. Is the reorg working or are you still working on the case . Absolutely. If you look at, as i said, you know, in the engineering side, being able to bring the synergies that exist across all of the properties this is an absolutely right move for us. When it comes to the business side i spoke about this earlier, think about the cloud, its not just about azure, infrastructure, its about applications and infrastructure. Office 365 and Windows Azure and dynamics coming together from a business perspective and marketing perspective, thats where the reorg is going to achieve for us. Thanks for joining us. Lots of action in the cloud space. Microsoft a big player. Back to you. Great stuff. Jon fortt, thank you for that. We want to send it over to Jackie Deangelis with a quick market flash. Shares of tesla. Shares down up rather, excuse me, around 2 right now on a rough day for the rest of the market, as you noted. This, after jeffries maintained its buy rating on the company. Increased its price target from 160 to 20 10. The model s sedan is safer than most vehicles with the risk of vehicle fire lower than conventional cars. Jeffreys boosting model s delivery estimates from the Third Quarter from 5,350 to 5,500 units. Up more than 3, just about 2 . Hefty boost in the price target. It hasnt been a great day for markets. Off 150 points on the lows for the session for the dow. Now sitting below tripledigit losses. S p and nasdaq are off about half a percent as well. As we move closer to the debt limit deadline, a deal is inevitable. Well answer the important question when we come back. So i c an reach ally bank 24 7, but there are no branches . 24 7. Im sorry, im just really reluctant to try new things. Really . Whats wrong with trying new things . Look mommys new vacuum cat screech you feel that in your muscles . I do. Drink water. Its a long story. Well, not having branches lets us give you great rates and service. Id like that. A new way to bank. A better way to save. Ally bank. Your money needs an ally. How old is the oldest person youve known . We gave people a sticker and had them show us. We learned a lot of us have known someone whos lived well into their 90s. And thats a great thing. But even though were living longer, one thing that hasnt changed much is the official retirement age. The question is how do you make sure you have the money you need to enjoy all of these years. Welcome back to squawk on the street. Id like to welcome my guest today, thank forward taking the time, peter. Thanks, rick. Before the last fed meeting there are a handful of people, and many of which i interviewed here, like jim bianco who didnt think the taper was going to happen and it wasnt for the reasons given during the press conference, not necessarily about the data, not necessarily about d. C. , some just think that they dont want to taper and i remember bill gross tweets from a month ago talking about whos going take the place of the biggest buyer of treasuries when the fed leaves. Can you weigh in on the Current Issues of d. C. From the context of the fed and was it an excuse like bad weather for retailers or do you believe it figured in prominently on their decision . I think it mattered because we had to look back on the discussion with the sequester within the fed, how that was a worry of theirs and they talked about it in the minutes that we got after the meetings and it also shows the short termism of the feds focus on the sequester, on this, not looking at big picture economy and whether we need largess from them. I missed friday, my back hurt, take muscle relaxers you feel like its back to stornorm you get ready for work, are the programs going to find an acre of pain . Are they going to be the enablers to let the two houses not get together on the Current Issues and confronting d. C. . No question. Its been going on for years. When you artificially suppress Interest Rates and you create a very low cost borrowing environment, its a license to borrow. Not just sorry its not just Public Sector its the private sector. And bernanke knows that when this stuff reverses and the bond market starts to price in Interest Rates, the budget situation changes with respect to interest expense. So this is a long way from being resolved outside of the shortterm noise. Quickly, peter, last tuesday, 12 basis point, onemonth auction, another one tomorrow, do you think that is something to worry about . What im asking, is that motivated by fear or profit motives . Its a timing issue. Because the whole mess next week is a timing in terms issue and nothing more. Any Money Market Fund that wanted liquidity they dont want it in a one week or twoweek or onemonth bill because they may not get cash back. They want to be in a liquid instrument. Its timing more than anything. Thank you. Squawk on the street gang, its all yours. Sanction you very much. Bells about to sound across europe. Impact the close is having here. A minute and a half to go. Ive saved 75 in checked bag fees. [ delavane ] priority boarding is really important to us. You can just get on the plane and relax. [ julian ] having a card that doesnt charge you foreign transaction fees saves me a ton of money. [ delavane ] we can go to any country and spend money the way we would in the u. S. When i spend money on this card, i can see brazil in my future. [ anthony ] i use the explorer card to earn miles in order to go visit my family, which means a lot to me. At a ford dealer with a little q and a for fiona. Tell me fiona, whos having a big tire event . Your ford dealer. Who has 11 major brands to choose from . Your ford dealer. Whos offering a rebate . Your ford dealer. Who has the low price tire guarantee, affording peace of mind to anyone who might be in the market for a new set of tires . Your ford dealer. Im beginning to sense a pattern. Get up to 140 in mailin rebates when you buy four select tires with the Ford Service Credit card. Whered you get that sweater vest . Your ford dealer. 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What happening here on capitol hill is putting on a negative. Eurozone confidence, investor morale dipping from record. There are standouts and one i point out to you would be italy, which is doing investor well. Italian banks are higher. Its about the banks. Across europe, see the banks in general down, ubs, ing, Commerce Bank in negative territory. Standout amongst the greek banks we learned john paulson, hedge fund manager, aggressively into the plays. Thats in the Financial Times today. Other hedge fund following. Alpha bank and piraeus, those are higher. After the ceo of burberry, he suggested the chinese slowdown may not be a temporary accident but new normal. She suggested, and theyve cut having warned on china a year ago, shut half of the stores in china. Suggesting new Growth Opportunities in the world, latin america and indonesia as the new china. The airlines are down, i cant work out why across europe, but many are. Air franceklm, airbus. Eads, as we call it, airbus, won the 9 billion contract from the japanese traditionally have always gone with boeing. A 2 rally for eads. Uncertainty over the situation in washington. One of the big reasons the fed decided not to taper in its last meeting. Now in the middle of a Government Shutdown and staring down debt limit deadline. What happens with all of the decision function mean for the fed policy . Steve liesman joins us with more on that one. It means what you might think, economists have the belief the fed will not reduce its asset purchases until some time next year. And that likely extends to how long into next year the feds Quantitative Easing Program will be ultimately active. Fed gave us three tests. Look where we are in the three tests. Lower rates . Closer, those rates have come down, especially on the tenyear and mortgage as well. Confidence in the economy. Further away in part because we lack any data to know if we should be confident in the economy. How about physical fiscal restraint. A lot further away given the shutdown and the debt ceiling. Morgan stanley, quote we pegged the probability that tarp is the outcome of the fomc announces its decision to begin taper at 1718 december. Everybody else, if this happens tapering pushed off until march you wouldnt get another round of economic forecasts until then. Fed speak this week to watch though theres not a lot of Economic Data from the government. Evans, bullard, williams, powell, rosencren commenting. I suggest we get the comment of lack of data how it influences the fed making policy. The norelease schedule. Tuesday, no international trade. Thursday, no federal budget, which is what you might want given theres a federal Government Shutdown. And then no retail sales in ppi, look to the johnson red book on thursday, thats a monthly data that might give us a feel for whats happening with retail sales. The Labor Department will need three days from the day the government coming back to work to process the september employment report. Were looking at delays to the october report, remember, the 12th is the survey week, data comes in but they need Labor Department folks to process data. Thats two months of date that thats delayed here. Steve liesman, thank you very much. Appreciate the analysis. Art cashin, director of floor operations at ubs here. We havent gotten a lot of Economic Data today. I havent seen a lot of headlines out of washington. Whats driving stocks . That is. We started out with great anxiety, the weekend brought a little bit more venom and vi vitriol, 1 to 1. 25 , we started out that way but we havent had any heads popping up on your tv screen, pointing at one another. Making large claims. People are beginning to analyze a little bit better what the situation is that on the 17th we dont necessarily see capital dome turn into a pumpkin. Whats interesting about that pumpkin is that you did you call art cashin a pumpkin . No, im laughing at the reference. You can argue it would be better if we had the drop dead deadline sooner rather than later . The longer it drags out, the longer we can go without a resolution, the worst potential hits the economy . Well you, do need a deadline, thats the only thing thats going to get them actually working. In fact, the deadline could come sooner. Lets so so the viewers and listeners dont get confused, the 17th is when they have to stop borrowing. They can roll over debt, but they cant borrow new debt. They may get money in that allows them to continue to proceed. But, if tax receipts are slowing down, which is the gossip in washington, that pressure may come sooner. So, on the base of it, 17th youve got to stop bore roeshg end of month you run out of money, you may run out of money earlier. Well hear squealing and screaming about that shortly. Seems extraordinary were talking about the largest nation in the world possibly defaulting on its debt yet the market is holding its nerve. Will it continue to hold its nerve as we approach the deadline of a week thursday . Is this how its going to be . People are so sure of what a deal must be done. I think theres a good deal of that, okay . Theres a kind of sanity put where they think people will come to the end and come to their senses. Theres another perversity to this, though. Every other default dealt with the nation couldnt pay its debt, they had run out of something, okay . Now this is selfimposed. We actually, at the whim of the legislature could resume immediately. Look at the possible perversity of a default nearing and the bonds rallying, as a flight to safety takes place. So thats a distinct possibility. This is like virtually no other default that Global Finance has ever seen. May not be the last. Hopefully it is. Art cashin, thank you. Next, from Insider Trading to High Frequency, this man knows a thing or so when it comes to regulation. Dan gallagher will join us next. Peace of mind is important when youre running a successful business. So we provide it services you can rely on. With centurylink as your trusted it partner, youll experience reliable uptime for the network and services you depend on. Multilayered Security Solutions keep your information safe, and secure. And responsive dedicated support meets your needs, and eases your mind. Centurylink. Your link to whats next. 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. 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. Coming up on the half at new york stock exchange, all over the selloff as the Government Shutdown enters its second week. Were also going to hear from the analysts who says twitter divide, despite the stock not public yet. Apple upgraded. Finally, hall of famer jerry rice is here, hes going to talk stocks, golf and football as well. See you at the top of the hour. Thanks very much. Looking forward to it. A tornado advisory issue ford a wide swath of the northeast and midatlantic areas today. Its unusual, and greg postel joins us with more. Theres a chance of severe thunderstorms with the risk of tornadoes included through evening tonight. Whats going on in the d. C. Area. Right along i95, severe thunderstorms embedded there with a chance here, theres a Tornado Warning for the cities of fredericksburg, counties of spotsylvania and stafford moving to the east 35 miles per hour. The individual storms inside the line northeast at 50. On the i95, between new york and philly, looking good. But keep an eye to the line of storms to the west. Thats going to be working your way. Later on this afternoon. Right now looking good. Er to nay dotornado watch until. Between 2 00 and 5 00, watch the line. 2 00 and 5 00, greg, thank you. Thank you for the tornado green shirt as well. Exactly. Thank you very much. Weather channel with a threat to the weather system here. Bob pisani with his s. E. C. Commissioner Dan Gallagher. A special guest. We dont often get a chance to talk to s. E. C. Or commissionerans Dan Gallaghers one of the people who specializes in an important aspect of the market, Market Structure issues. Talk about whats on his mind these days. First, something clear, the s. E. C. Is up and running . Yes, absolutely. Full operational status. You have money to keep in business. Not indefinitely. In a resolution isnt negotiated soon, but now were up and running. Theres a lot of complaints about how fragmented the Market Structure is, people come on, complain all the time about High Frequency traders, people say its a casino. People cop me on air unhappy wi things now. Are you satisfied the average investor is getting a fair shake. I am. I think the average investor is experiencing markets that allow for lowest transaction fees, the most liquidity that theyve seen in decades. Especially for a buy and hold investor. If youre in there trying to compete every day, trade intraday against computers, you need to understand what youre up against. Are you satisfied the average investors getting a better deal than 20 years ago. They can go to the brokerage website trade at 7. 85, 10, better than a decade ago. What do you, as an s. E. C. Commissioner, would you like to see accomplished . Speaking for myself, what ive been talking about is the need in the Market Structure space for holistic review of the Market Structure. What does that mean . To me it means no sacred cows. Everything on the table, including existing rule book, statutory structure and data driven. Let me ask you, a couple of issues, keeping track of the markets can the s. E. C. Keep track of all data coming . Can they adequately analyze the Trading Information to make sure the average investor is protected Mary Jo White, who bought midas, a system to keep track of the trade information, are you happy na purchase was done . Can you analyze the information and protect the public . Were gng ere. I think still were trying to figure out how what the tools are that we can use to analyze that information. But for the first time we have data through the midas system. I called for the holistic review and i want it to be data driven. Im hoping the midas information will guide that. Trading glitches at nyse, nasdaq, facebook, everybodys had trading glifrping glitches. We need to recognize, no rule is going to stop trading glitches, right . Systems are systems. Trading markets are highly automated. You can put a rule out one sentence that says, no more glitches and it wouldnt work. The Market Forces are there all Market Participants should have every interest in ensuring there arent glitches but no regulatory action is going to ensure that. So there is a regulation in front of you now you can vote on that would set up standardized testing procedures for technology across all of the exchanges. Its in your hands, its ready to go. Would you vote for reg sci. We need to go forward with the final rule making. Weve gotten a lot of comment, though, a lot of folks told you us its too prescriptive. Would you vote for it. I think it needs substantial revision. You have an announcement to make. Nobody in on the s. E. C. Has a twitter account. Nobodys ever done anything. Until today, until today. What do you want to tell us. My twitter account is open. An s. E. C. Commissioner that now actually has a twitter account, that is right. I do. Announce it. I did. Hopefully ill be your first follower. First tweet should tell people im here with you. Asking for interaction with the public . Absolutely. Up. Putting things up there make sure folks are watching, public speeches, speaking engagements, things of interest they should be looking out for. Can i ask you a question, before we have to let you go . A, is life different on the Mary Jo White . You were going to get tougher as an organization, particularly against individuals on enfor enforcement, that is coming . Second question, do you personally believe that Insider Trading is endemic in this market . First, are things different with mary jo . Its different every time we have a new chairman. Its my third chairman. Mary jos terrific. Shes very tough. Comes from a prosecutorial background. Youve seen a lot of news in that space. Individuals, yes, the s. E. C. Taking a hard look at individuals and enforcement action. Do you believe Insider Trading is endemic in the market . I dont think its endemic but if we have to find it we can. Do you enough money to adequately protect the public . Theres always a call for more resources in the government. We have to make sure we do the best with what resources we have. I think were doing pretty well right now. Will you come back and see us . I will. Congratulations on having 250 followers. Fantastic. Ill credit you guys with that. Including yours truly. Frequent flyers, whether in los angeles or new york, next guest can help you find the closest airport lounge all with the push of a button when squawk on the street returns. Flying can be taxing. Our next guest wants to make it less stressful by providing location, hours, amenities avail ability of hours around the world. The cofounder and ceo of lounge buddy. Good morning. How does it work . You can download the app from the Apple App Store now for free. Tell us about your trip. You tell us the airline, class of service, airports your going through. In addition, you tell us any elite status, lounge memberships, credit cards. Tap on one of the airports, we show you available lounges either free or available for purchase for a onetime fee. Its quite a popular site or its been ranked as one of the best sites. Yeah, at this point weve been fortunate. Only public 2 1 2 weeks. Apple has given us the recognition of being featured on the app store in multiple places around the world. Weve been ranked as a top ten travel app in 80 countries around the world. I think thats a testament to the fact that people really want a better airport experience because travelers spend a significant amount of time in the airports. If you look at a typical traveler, they have a 1 in 6 chance of having a significant flight disruption or delay or cancellation and coupled with the fact that 60 of travel have one connection in order to get to their destination, time spent in an airport isnt productive or relaxing time. Airport lounges are here to make the most of your airport experience. Whats your Business Model . Currently now, focused 100 on building the lounge Buddy Community and making this your single resource for airport lounge information. Free app now . Free app now. You can tuesday completely for free. Do you take a Commission Based where you send people to lounges . As we continue to grow, our focus is going to be on not only show you lounges you can access for free, but lounges that you can pay a onetime fee to access as well as book it in a few simple tasks. Talking to airlines about making more available a lot of airports could make this a big opportunity, a lot of airlines who do the same thing. Ancillary revenue is the name of the game. 36 billion came from ancillary revenue last year. And airlines, you know, want to give choices to passengers and one of the choices is airport lounge access. We currently estimate the airport lounge industry value to be close to 10 billion, if you look at the top 300 airports worldwi worldwide. Close to 2000 lounges out there. 250 Million People passing through the lounges every year. Good luck. You pitch well. Thank you very much. Beverly hills, youve got competition. A new zip code trying to claim the title of megamansion capital of the United States. Where that one is when we come back. If yand youre talking toevere rheuyour rheumatologistike me, about trying or adding a biologic. This is humira, adalimumab. This is humira working to help relieve my pain. This is humira helping me through the twists and turns. This is humira helping to protect my joints from further damage. Doctors have been prescribing humira for over ten years. Humira works by targeting and helping to block a specific source of inflammation that contributes to ra symptoms. For many adults, humira is proven to help relieve pain and stop further joint damage. Humira can lower your ability to fight infections, including tuberculosis. Serious, sometimes fatal events, such as infections, lymphoma, or other types of cancer, have happened. Blood, liver and nervous system problems, serious allergic reactions, and new or worsening Heart Failure have occurred. Before starting humira , your doctor should test you for tb. Ask your doctor if you live in or have been to a region where certain fungal infections are common. Tell your doctor if you have had tb, hepatitis b, are prone to infections, or have symptoms such as fever, fatigue, cough, or sores. You should not start humira if you have any kind of infection. Ask your doctor if humira can work for you. This is humira at work. 90210 isnt just for tv shows and movies. When it comes to listings, Beverly Hills has competition. Robert frank joins us with more. Sales of trophy mansions remaining strong for the Second Quarter and most sales, almost all, are on the coast. Beverly hills top spot for sales 10 million or more. There were 18 sales during the 12 months ended in june, and 80 sales of homes priced at 5 million or more. Manhattans Upper West Side second place, followed third by upper east side. Aspins tied for third, number one in the top 20, only one in the top 20, not on the coast and Rocky Mountain resort the number one zip code for listings of 10 million or more. What do you get for your 10 million . Here in in aspen, main house, gt suites, short walk to the ski lift. Beverly hills 9. 5 million listing around 8500 square feet, five bedrooms, nine baths, subterranean garage up to ten cars. Manhattan, well, you dont get quite as much. A twobedroom, twobath with art deco styling. It does have closets, so thats good. Now parking for ten cars or one car. You do get a door man and concierge. Whats going on in aspen . Again, 50 homes, its not a lot of inventory but prices have gone up a lot. Its a very hot market right now. A lot of it is u. S. Buyers. Its becoming one of those towns, used to be a ski town in winter. Now its a summer resort. It really is the place for the wealthy. Its where they want to be. The picture you have of the apartment on the Upper West Side does look strikingly similar to david fabers. There we go. So few homes selling at this price range. You were showing 35 . I would have thought there were more. This is whats captured by mls and other services. Could be some offmarket as well as some that dont for whatever reason register through mls. Its a small number. Growth compared to last year is steady. Still strong market. Megamansions, who knew . Great to see you again. Kick things over to scott wapner and the halftime. Thanks so much. What were following today. At controversy, twitters not public yet but why is one analyst calling shares of buy with 50 price target. The greatest ever, caught more tds than anyone else. Jerry rice stops by to talk stocks, golf, and the nfl. We begin with the selloff on wall street as the shutdown enters its second week. The dows down 5 from its sept