Transcripts For CNBC Squawk On The Street 20131010

Morning. They said this is not about paying the japanese, not about paying the chinese, youre not going to get your Social Security check, doctors arent going to get paid. Ive been waiting for them to do this. That is devastating from even the most rock solid rightwing politician. But you cant go against socsack. The Interest Rate can go up and the japanese may not be paid. Boy, they got rid of that. Thats the jpmorgan argument, the bankers. No, its now retailers. Ling congressmen are going to be targeted. You cant get against Social Security. Its sacrosanct. And secretary lew said do you want to pay veterans or Social Security . You decide. This is expected to go for maybe another half an hour. Lets go back to capitol hill and secretary lew. The fact is that we have not dealt and in that compromise we dealt with Discretionary Spending almost entirely. We have not dealt with entitlements, which the administration seems to say are off the table and now weve got yet even more demands for greater tax hikes. And thats what the negotiations we want to engage in are about. Senator, the president has engaged on multiple occasions. Ive been part of those negotiations. We very much believe that a balanced approach where you do entitlement reform and tax reform would be good for the country. We tried in 2011, we tried in 2012. Were ready to try again. The president said when we take away the threat of economic disaster, hes ready to engage. If i heard him correctly in his press conference the other day, he said hed pay for dinner. So hes willing to talk, wants to talk, but it cant be that its with the u. S. Economy being threatened if one small part of congress doesnt get its way. So we need another trillion dollars or more of debt authorized before we can even discuss whether to start reforming entitlements, whether to start reforming the tax code . Senator, what we believe is the government needs to open, Congress Needs to open the government and Congress Needs to make it possible to pay our bills and we need to engage and were ready to do that. Well, just to conclude my questioning then, back to the issue of our longterm debt and the threat that it poses to our economy, are you telling me those fears have now been allayed . Senator, what i tried to say, and i hope i wasnt confusing, theres a challenge to deal with in the medium and the long term. It is not the same as a crisis, which is what happens if you fail to act on the debt limit in the next short period of time. I would very much like to do it sooner rather than later. I think its better for the country. It would have been better for the country if we had been able to complete the negotiation where the president and the speaker were very close until House Republicans said they wouldnt vote for it. And we would love to be in a place where we were talking about a sensible alternative to these mindless acrosstheboard cuts. Weve been very clear about that. But it cant be with the threat that the government is shut down and were going to default on our bills. That is not the way to engage in the kind of bipartisan negotiations that need to happen. Senator cantwell. Secretary lew, thank you for your testimony about how you think that serious prospects and uncertainty to the market are right now. I guess thats my question to you because everybodys talking about default as if thats the triggering point. I think your testimony lays out that this moment could happen at any time. And i guess the reason i brought this chart, if youre not involved in the financial market, havent been in the business community, theyre some mysterious thing. But this chart shows that treasuries are held not only in the u. S. By businesses but in europe and china and theres significant its a network. Its as complicated and complex as just about anything thats around when it comes to all the individuals that are around. Its not, as one of our colleagues said, picking up the phone and calling wall street and telling them to settle down. So my question is i just went on the web and said what about treasuries . You just google treasuries and all of a sudden comes up the most important market indicator, way more important than the dow and s p, how important a number it is as a number in the economy because of the Interest Rate being pegged off of its Interest Rate. And so here we are now basically almost talking the Interest Rate up with the talk in d. C. And in the last 48 hours i wish i could print out this chart because we have seen a spike, a dramatic spike from. 03 to. 07 , more than a doubling in almost 48 hours. My question is if the Interest Rate on treasuries doubles in the next 48 hours again, arent we already to that Tipping Point . Senator, i have been trying to be very careful and just report whats happened. Im not going to predict what markets will do. I do think if you look from last week to this week, a tripling of Interest Rates on shortterm bills is not a good thing. Weve seen stability in the longterm bond market. Markets are a delicate thing. I dont know how markets will translate one days news, one days action into discomfort. What i do know is that every week we roll over 100 billion of treasury bills and that relies on the market being open and willing to function. And i just think everyone has to remember that its not just the interest, it is also the principal. The markets have to keep working. I think the thing is miss hearing in the d. C. Is that everybody is at risk in the u. S. Economy. Its not just what you explained but everybody at home. Last time we had this discussion about whether we were going going to default or not, the stock market dropped 20 . So we could have this same discussion and then by friday or monday, you could see, in fact one of my constituents who is an analyst said you could see as much as a 25 drop in the stock market just triggered off of treasury. We dont have to go to default. Just the talk of default is causing the level of uncertainty were all trying to avoid. Senator, thats what we saw in 2011. We had an 11th hour agreement and we avoided seeing what happens when you cross the line. But we had the damage. We had the drop in the market, we had the higher Interest Rate costs. We also saw for the first time a downgrade in the u. S. Credit rating. So that is what happened when we didnt cross the line. I dont think anyone should want to test what happens when we cross the line. Were seeing with the Government Shutdown that every day new things are coming out that are really bad. People who thought it was okay to shut down the government are now rushing open up one piece or another at a time. It would be reckless to see what happens when you cross the line and dont pay americas bills. I think what were doing right now is reckless so i hope well come together. Thank you, mr. Chairman. Thank you, chairman. Senator roberts. Thank you. Pardon me. Thank you, mr. Chairman. I dont think we have a blindfold on and walking toward a cliff. I think were walking toward a cliff with our eyes wide open and thats the problem. All this talk about selfinflicted wounds, it was not a selfinflicted wound when we raised the debt limit well take a quick break here as we listen to some of the q a. Were a business channel, jim, not a politics channel. There are a lot of crossovers here. Business leaders saying they feel theyve lost touch with at least the right part of the gop. Everyones writing about a fall. Is that what youre seeing today . I think the pressures on. One of the things ive just been amazed about, who really gets hurt about this . Wheres target . Wheres walmart . Why arent they saying anything . Main street is recognizing this is going to affect us. This is no longer just about interest payments. Thats the pressure on the gop. The paul ryan article yesterday in the wall street journal was major. He said lets get away from without a mention of obama care, which we thought was the original holy cow. That was the key to say if youre the president to lets start talking. Its very difficult to go from hatred to love. Theres usually an interlude where you say maybe we shouldnt go back together, lets have one more type fooit. Its typical for someone to come out and say the president is in transition, im still not going to negotiate and sunday on meet the press, i hate you, i hate you, but theres something going on, carl. This market has correctly anticipated almost every move. I do sense that the pressure from the Business World is not bankers. This is not coming from lloyd blankfein. Grover norquist talking smack about ted cruz today in the Washington Post. This is the big movement. Chris matthews on last night, you mentioned right at the beginning this is not our kind of story. But Chris Matthews on, hes got a terrific book about tip and the gipper, where we used to get together right and left. He said this is the beginning, youll hear a senator, there will be a senator who emerges on tuesday with a deal. After the holiday. After the holiday. Of course theres a chance they cant get it done in time. But now lew says were just not going to send out any checks. You may think the 17th, the 18th is a phony deadline. Were not sending checks. Were going to talk more about what the trade is as a result of all these political moves in a few moments when the q a ends. In the meantime, futures still looking pretty good. The market trying to anticipate annd game, even if it is a shortterm raise to the ceilings. Were up triple digits in implied open and italy yeartoday high. Two years ago, the greatest trade in the world. Well take a break and come back with more q a in just a moment. Your own path . Who can build you a plan, not just a pie chart . Who can help keep your investments on course, whatever lies ahead . That someone is a Morgan Stanley financial advisor. And were ready to work for you. [ bagpipes and drums playing over ] [ music transitions to rock ] make it happen with the allnew fidelity active trader pro. Its one more innovative reason serious investors are choosing fidelity. Get 200 free trades when you open an account. Extremely negative effects that the Government Shutdown and the threat of default have on our Foreign Policy and our national security. Both now and in years to come. You know, the shutdown and the default affected some of americas nearterm Foreign Policy priorities such as the president not being able to go to the asian economic summit. And his absence, although certainly appropriate due to the crisis, feeds into existing fears having traveled to the region, that are rebalanced to asia as more rhetoric than reality. And who showed up and was more than willing to fill the void . China. And in doing so, americas loss is chinas gain. This is an opportunity about opening markets for u. S. Businesses to sell product and services. This is an opportunity to promote economic and security questions and i think our allies are going to wonder is the United States capable of meeting its promises, whether about economic initiatives or security initiatives . And perhaps the most damaging, i think, and difficult thing to reverse is the impact this has on americas reputation in the world and the economic consequences that flow from that. The entire Global Financial system depends in large measure on the faith that the United States government can and always will pay its debt. And america enjoys the unique privilege of having its currency act as the worlds reserve currency. So it seems to me by playing games, we give power to other emerging economies like china and brazil to rely less on the dollar and there are consequences. It puts our role in question with allies. I know in your role as secretary of the treasury did you give the committee a sense of the consequences, i know there are kwonss at home but there are kwonss abroad that affect us at home. I think it would be impossible to overstate the importance of the u. S. Playing the role in the world that we do in terms of the stability we provide. The world actually counts on us being responsible and making the kinds of decisions that they can continue to look to washington for that kind of stability. Up know, we have finance minister from around the world gathering in washington this week and yesterday i met with finance minister from africa and finance minister from latin america, and its challenging when they look at you and they ask whats going on in washington . It makes them nervous about their economies and we need them to have growing demand because thats good for our economy. On this question of World Reserve currency, its no secret that there are discusses around the world where others would like there to be a basket of currencies that might be used as an alternative to the dollar. I have to ask when our role in the world is so important to the United States security and well being and to the stability in the world, why would this kind of a manufactured crisis be seen as something that is necessary to pursue when it undermines that . I think the questions youre asking are quite significant. Let me ask you, there are those that suggest, oh, thats not a real issue because the rest of the world has no place to go. You know, im not going to speculate on whether someone else will emerge as an alternative, but, you know, we are in a place right now where its important for the United States and the world for us to maintain our position, and we have the capacity to do that. We have the economic ability to do that. Its only a matter of political will. And theres no reason to risk that possibility of continuing to find out whether or not theres some other universe of currency of which people to look to and theres no reason to risk having the potential Economic Impacts we can have globally that provide domestic opportunities for growth and jobs and opportunity. I certainly think theres no reason. I would go a little further and say that it is against our interest to invite that kind of discussion. Thank you. Senator ramsey. Thank you, mr. Chairman. Mr. Secretary. I think this is the 11th time ive been through this discussion about the sky is falling and the earth will erupt. Wyoming families arent buying these arguments. Theyre saying you cant spend more than you take in. You definitely cant doing it forever and ever and ever. Ive got a person that interned for me several years ago quick comment here as we listen to some of the q a. A lot of stocks moving in the premarket. Obviously were watching fixed income today and what the 10year is doing, back above 2. 7. The banks are rallying. The bank stocks had come down in anticipation in perhaps there was going to be a cataclysm. I think people are taking cataclysm off the table for now. Is that a wise strategy . Theres so much peace talk that people dont want to be short the financials into the earnings. Maybe the companies say, hey, you know what, things are okay, now that weve got peace, buy our stocks in. Not to mention jpmorgan but i dont expect good numbers. If you cover ahead of the numbers, thats todays action. Well talk about what claims did about an hour ago, well talk about the extent to which retailers still report samestore sales. Well take a quick break and be back with a lot more and the opening bell in just a moment. We take you back to capitol hill. Mike enzi of wyoming this time. Senator, those wyoming families know after they run up their credit card, they dont get to ignore it. They have to pay the bill. The debt limit is just paying our bills. You and i have talked. You know i would very much like to be in a conversation about longterm sensible tax reform to give the stability Going Forward that this country needs. This cant be done by saying we wont pay our bills next week. Thats whats wrong with engaging right now. The president wants to negotiate. We keep saying that this terrible thing is going to happen and this is just paying our bills. How many times can we say this is just paying our bills . The American Public doesnt get that same option. They dont think we ought to get the same option. The time to reduce what we need to borrow is when we make the decisions on what were spending, not after. If Congress Appropriates money and Congress Puts laws in place where people are entitled to benefits, if congress commits military resources, once those commitments are made, you cant tell a contractor who is doing work im not going to pay you because we changed our mind. Which takes me back that we should have been doing the budgets one at a time in a piecemeal fashion im not disagreeing with that. Mr. Secretary, its getting close to 9 35. There are many senators who have questions. The senators have been very good about sticking to the limits. Im hoping you can stay a little longer. Theyll shorten their questions so that you can stay. Its going to be very difficult to go more than five minutes over. Lets see what we can do. Senator carper. Mr. Secretary, thanks for joining us. I just stepped out of the room for a few minutes. I was watching the hearing on television in an adjoining room. And i must say people watching this on tv must be frustrated, disappointed with us. Some of the finest people who serve in the senate serve on this committee. Thats why i wanted to be on this committee, thoughtful democrats and republicans, pragmatic, find the middle, reasonable, principled compromise. Theyre doing our best to take a live mix of democrats and republicans because viewers want parody on that front, jim. Do they want us in a hush golf voice in ooh, looks like netflix we have to pay some bills and we want to do them before the opening bell in about four minutes. Well take a quick break and get you that bell in just a moment. [ male announcer ] once, there was a man who found a magic seashell. It told him what was happening on the Trading Floor in real time. The shell brought him great fame. But then, one day, he noticed that everybody could have a magic seashell. [ indistinct talking ] [ male announcer ] right there in their Trading Platform. [ indistinct talking continues ] [ male announcer ] so the magic shell went back to being a. Shell. Get live squawks right in your Trading Platform with think or swim from td ameritrade. Youre watching cnbc squawk on the street, live from the Financial Capital of the world. The opening bell set to ring in about a minute. You see the treasury secretary talking in front of the House Finance committee. The democrats will probably speak today. After the close, the president meets with 18 gop negotiators. We have trades to make. What are they . Some big dow stocks had meaning yesterday. Hewlett packard changing their view, meg whitman showing stability. Thats what shes saying. Nike, obviously very good discussion yesterday about their core business. Were also seeing, by the way, gilead. They made an actual trial stop because of a fabulous antilu antileukemia drug. And the nasdaq, which has had a rough couple of days, trying to find its way as some of those high flyers have come in a bit. Theyve been down 4 to 7 , some 10 . Hard to keep those boys down. Yup. Theres a look at the s p. Youre going to see a lot of green this morning. Down here at the big board, Columbia Property tus celebrating its listing on the nyse today and nasdaq, Tractor Supply celebrating its 75th anniversary. Congratulations to them. You mentioned some dow components. Boeing gets initiative at canacord with a buy. Try getting any of their planes. 10,000 orders now. Have you ever been to one of those boeing factories . They cant crank them out. Thats not canned soup they do talk about r d expense, maybe a bit of a cloud. Some of the production levels going into 2015, 2016, not entirely clear but it is a buy. The price target 140. The Gross Margins go up per plane, the yield is better. A lot of pressure in the cloud to the because of citrics. You have to be a weatherman to know which cloud is going badly. Its being hurt because of government spending. Champion chanos was talking about clouds this morning in an excellent squawk. I have to tell you, i thought it was telling that group could be under pressure. Did you see how squawk has tomorrow . No. They have darrell from the walking dead. Isnt that great . Do you think hes talking about the debt ceiling . Does he have the cross bow . Is he talking cabellas it . Chanos was great. Still short hp, despite what the stock has done this year. Someone who knows a lot of these names very well, david faber at the barefoot in larue, texas. Good morning, david. Good morning, guys. We have Steve Tannenbaum coming up in an hour or so. You can expect well talk about some of the bigger issues out there, including the debt ceiling. Were also going to be talking oil and gas with will van lowe, runs one of bigger firms in the sector. Thats the big story we keep trying to tell. As tore stocks, im watching and keeping an eye on liberty. Theyre having their investor meeting today in new york city. Theyve announced a number of transactions that are typical for liberty, somewhat complex, although the easiest one is syria is increasing its buyback. Theyll keep their level of ownership the same. Theyre basically raising money is what theyre reallying do at lmca is what i would kind of leave you with. And that seems to be leading people down the charter Time Warner Cable road a bit. Lets keep an eye on those stocks. I havent heard anything new to present to you that today charter is presented at the liberty meeting but will they Say Something . Are they going to up the pressure again on Time Warner Cable to come to the table to try to work something out . What could that possibly be given the divergence and sizes. Keep that in mind as you look at the trading day ahead. The kyle bass interview about puerto rico, i saw today puerto rico aqueduct i dont want to hurt the issuer but i was reeling from your interview about this situation. Having sold millions in puerto rican bonds in the 80s, that is a big story. I dont know even know how to hedge yourself from it. It is a big story and its one were going to continue to follow. Michelle carusocabrera has also been following it, jim. There are people on the other side of that trade, so to speak, and the other side of the argument to believe puerto rico will be able to figure out a way to raise more revenue, that theyre in the process of doing that, that they will apportion specifically for interest payments. You got to remember of course theres both sides to it. The key question is with population declining, in san juan its a larger percentage and there you have may have the higher income people. Theres a question of how you grow the economy, about 30 billion in unfunded pension liabilities. You can do the math. It does take to you a potentially worrisome place. Sometimes to get these things out of left field, thats are the ones you have to worry about. Subprimes, turned out those were devastating. What happens if puerto rico goes bust . Theres a lot of money in puerto rican municipals. Yes. And david did start a big debate about whether pore reuerto rico commonwealth or a territory. That is a debate for another time. David talked about the liberty thing. Sirius, when you see the number of cars going closer to 17 million and you see theyre getting in used cars, that stock is not done getting higher. Ruby tuesday, higher than expected. Comps down, almost a 19 move down, jim. It just kind of took my breath away. Darden had bad numbers and activists got involved and darden goes higher. Ruby tuesday is in a real secular decline. You know, i used to love to go there, fabulous salad bar, but i just david and i always go to ruby tuesday. David thinks ruby tuesday is probably a song by some british group. Doi do remember that, yes. That is how i know it. Its true. Though i have attended when i say cloud, he thinks, hey, hey you, get off of my cloud. Hp, talked about being comfortable with their progress, pockets of growth in 2014. They came out with guidance a bit earlier than i expected yesterday. The stock up yet again better than some had anticipated going into the meeting at least. Well see if they can maintain it and if they can maintain the positive tone that they seem to have set in the meeting, carl. 2014 is the key for this country. Meg whitman has pointed to this numerous times since she began this turnaround. This will be the test of whether or not hp can succeed or whether theyre going to have to go down another road at the end of next year should she not succeed. Got that group going. If hewlett says things are good. The gardner report saying not very nice things about pc shipments, 8. 6 down from the same period last year. The numbers just continue to go the wrong way. You have to say, well, maybe this is the Enterprise Business and hewlett packard, their printer business is very, very good. Theres a lot of belief that meg wlitman is a truth teller, shes not just blowing smoke, theres something going on at the company thats not expected. And finally last week kantor upgraded tiffany. Today stearns takes it to a buy, talking about 400 basis points of potential gross margin expansion. The inflexion point is here. All the wealthy stocks, the stocks that rely on the wealth effect, have been under tremendous pressure. This is the kind of move you expect. After they come in, someone says im going to start recommending this very fine company, reported a good quarter. By the way, big japan story big japan earnings. Japan, the machine numbers came out last night and they were the best since lehman brothers. I thought that was significant. Japan, you may not like the political of how theyre getting the economy going but thats a very positive sign. David, whats coming up later on today from larue . As i said, were going to be talk to Steve Tannenbaum from golden tree, a huge fixed income focused, distressed focus hedge fund. Were going to be talking about fixed income in the credit arena in particular. Well talk about high yield and things of that nature and then oil and gas, just fascinating production that weve seen, the increases in production weve seen in this country are shocking. Theres no other word to describe it in both oil and natural gas. Were going to try to figure out where theres money to be made. You will be in antero today. Jim chanos talking about winners and losers but theres more winners, i believe, than losers. We have a few ipos watching. Bob pisani a over by post 8. Good morning, bob. Nasdaq up 1 , s p 500, the dow industrials and transports all up 1 . Early end cases, financials, discretionary up to the up side. This is antera resources, independent oil and gas producer. Price was at 42, price is at 44. There ands some spirited bidding going on, 50 around there that it might open at. And this a Master Limited partnership, they raised the amount that theyre offering, prices to 22, above the 19 to 22 range. That is looking around 23, 24. Spirited pricing today. Right now were talking about a shortterm deal to raise the debt limit, keep the government maybe closed to work out spending cuts. Its a meager deal but people seem not surprisingly all the high beta names we talked about in the last couple of days are the ones rallying the most. So biotech stocks are doing very well today, some of the chinese internet stocks, these are trading names. They move around a lot because they have high momentum and high volume. Facebook, netflix all are outperforming today. Jim, you mentioned the Bank Earnings tomorrow. We had disappointments today. Ch chevron lowered. Exxon down and the Cloud Computing store, they didnt say why what was going on. Microsoft may be into citrixs base. Theyll offer a formal earning statement in october. Finally, the New York Stock Exchange has actually set a date for the merger with ice to actually finally conclude here. The date theyre set now is november 4th. That is contingent upon them getting final approval from the five National Regulators over in europe thats part of the you e youre. Rick antero, a 44 price looking at 53, 54. Thats a natural gas play. Its happening. Its happening. Lets switch to bonds and the dollar. Rick santelli is in the hot seat. Theres nothing more important. Go on, rick. I dont disagree. I think the bond market is important. I think studies and statistics and probabilities and outcomes is something to study as well. Okay, yesterday was not the 12th day that 10year note yields closed in a tight range. But before we go to the longernd of the market, lets pay some attention to the bills. Every story is about the bills and rightfully so. Look at a onemonth chart of the onemonth bill. Clearly theres some escalation of yield going on as we hover around basis points and we were given a goose egg followed by 1. 5 basis points. Can you see were comping to about a fiveyear history where we have last seen yields in the mid 0s. And im just a market guy. But if things were as bad as they contend, where is the threemonth bill . You can see its at 4 basis points. Yes, elevated a bit, remember scaling. But open the chart up for five years, it looks like a worm crawling around on a golf course freeway. It hasnt reacted. I think that has to be taken into consideration. Back to the tenyear, yes, we settle at 266 yesterday, outside that 265 kang range. Go to 945, thats the chart ive been showing. Open ul another month to 824, can you put it in some perspective. The reason a lot of these traders have done well by telling the treasuries is because they are watching how many people are buying the ek quits. It continues to be technically motivated to a high extent. Look at how it had some nice liftoff off of sup80 trade and indeed it is up on the day and it all seems to make sense when you look at stocks and Interest Rates. Rick santelli, dont miss a special edition of power lunch. The debt threat a panel of experts will take your questions on how to protect your money now. Tweet us the question and include the hash tag ask cnbc. And coming up, ron paul, well hear what he has to stay on the fed standoff and at janet yellen. This is obviously a long day ahead, as jim has said, but for the time being the best pop for the dow and nasdaq since july 11th. Were back in a moment. [ male announcer ] at optionsxpress, our clients really appreciate our powerful, easytouse platform. No, thank you. We know youre always looking for the best fill price. And walk limit automatically tries to find it for you. Just set your start and end price. And let it do its thing. Wow, more fan mail. My uncle wanted to say thanks for idea hub. He loves how he can click on it and get specific actionable trade ideas with their probabilities throughout the day. [ male announcer ] open an account and get a 150 amazon. Com gift card. Call 18883303136 now. Optionsxpress by charles schwab. 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. Just try looking for a dow component in the red this morning. Chevron chevron managed to do it with some of their guidance. Everything else, disney, boeing in the green. The refiners are up. You see holly moving up, valero. When people think about oil stocks, theyre thinking about pioneer, eng. The santero, it used to be major tech stock. This is simply a play on the pennsylvania and ohio shales and its acting as if its got a cure for some major disease. And that just shows you the independents are so loved. Ive been focused on the independents endlessly. Yes, you have been. I dont care. I think they have to be focused on. Look, capital owned gas is youll see the analog to antero. Those are people thinking how do i capitalize on antero going up. Cabot is a great play on marcellus. Every day it seems like some new manager says theres an oil and gas renaissance. Interesting. This is a guy who had a dream, he had literally a port he built. I went down to this area in louisiana to see it, it was meant to import natural gas. You shift it to an export play and cheniere has been one of the plays. Netflix is getting a little bit today. What happens after ostensibly say a deal is made next week. Does this continue . Historically it has for the high flyers, particularly in the fourth quarter, where people show i have genius. Netflix out of dareamworks sayig they find it a god send. Dont forget, were going to begin the focus on twitter again. Social media is playing a big role. You hear Congress People and senators talking about the idea, well, i googled debt and it came out kerflewie. Well be talking about yelp again and linkedin again. The rancor doesnt end. Its like 007. That bomb has to go to 007. Or mcgyver. Why didnt i drill in my back yard when i was growing up . Well get a lot more as the market is still up. Heres whats next on squawk on the street. Coming up, theres no doubt that this market can be rough, but there are ways that it can be tamed, one of which is just ahead. Six stocks in 60 seconds when squawk on the street returns. Evto earn degrees in mathan stand science. Ut but more than half leave their programs. So were missing out on 450,000 math and science graduates annually. But if we can help students prepare for these subjects well have a stronger workforce for our fastestgrowing industries. Lets invest in our future. Join exxonmobil in advancing math and science education. Lets solve this. 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. We got plenty today for six in 60 today. Credit suisse saying we have real problems here. Dress barn had a very good quarter. Maybe it can go higher. Citi goes buy to sony. Theyre saying hardware sales are weak. Doesnt jive with best buys. Couple things with netflix. The price target gets carted out by needham. Dreamworks calling it the patron saints. One of the most exciting areas of the market are 3d printing. And decker is going to miss. This is a weakness in uggs. They report the last week of october. Be careful. Tonight what else do you have. Im doings survival guide. I dont like to reveal which theres two. Its a fire and Coal Coalition im revealing tonight. This looks good, too. And the giants im revealing, a whole new offense and defense. I like the New York Post headline, just one, baby, meaning just one win. Ill see you tonight. Thank you, carl. When we come back, former representative ron paul. Got a rally here on wall street with the dow, up 183. Make that 184. Back in a minute. Clients are always learning more to make their money do more. ann to help me plan my next move, i take scottrades free, inbranch seminars. Plus, their live webinars. I use daily market commentary to improve my strategy. And my local scottrade Office Guides my learning every step of the way. Because they know i dont trade like everybody. I trade like me. Im with scottrade. announcer ranked highest in Investor Satisfaction with selfdirected services by j. D. Power and associates. In a we believe outshining the competition tomorrow requires challenging your Business Inside and out today. At cognizant, we help forwardlooking Companies Run better and run different to give your customers every reason to keep looking for you. So if youre ready to see opportunities and see them through, we say lets get to work. Because the future belongs to those who challenge the present. Welcome back to squawk on the street. Our rope map begins with the debt ceiling. Treasury secretary jack lew testifying on the hill earlier, saying theres no way of knowing the amount of damage that would be caused by a default. Will washington be able to get a deal done in time . And a member of finance committee will join us live to tell us how negotiations are going on behind the scenes and if there are signs now compromise. Plus sales of apple fall. And how will obama care affect the Health Care Industry in the long term . The former chairman and ceo of onyx will weigh in. Jack lew, treasury secretary, testifying this morning saying congress should fund the government and end the standoff. Senior economic reporter Steve Liesman is here with more on what treasury secretary lew had to say. Reporter we just got done with the hearing. There was a sharp exchange between senator pat toomey, republican, who has tried to pass prioritization legislation, which would instruct how to pay bills if we hit the debt ceiling and the treasury can no longer borrow. Are you prepared to assure us but more importantly the millions who are investors in u. S. Treasury securities and the entire American Economy that under no circumstances will you permit a missed payment on a u. S. Treasury security obligation . Senator, the only way to make sure we can pay all of our obligations is for congress to act and raise the debt limit. No president has ever had to decide whether to pay some bills and not others. I understand, thats a different question. The law is complicated and i am not the one who makes that decision, as you know. You would make the decision. No, no, its actually not my decision. It is something that the president would have to decide. And im telling you that it would be put us into default if we went to a place where we could play one bill and not others. Now, earlier in the testimony secretary lew was asked about this issue again of prioritization, how you would pay the incoming bills and whether or not that would constitute a default by the u. S. Government. Prioritization is just default by another name. Its just saying that we will default on some subset of our obligations, but we are still by definition if we dont have enough money to pay all of our bills, we will be in default on our obligations. There was also discussion about the treasurys Payment System and whether or not it could prioritize even if congress were to legislate that. And what lew said is we write roughly 80 checks a month, the system is automated to pay because for 220 years weve always paid bills. He said the system is designed to pay bills, not designed to not pay bills. Back to you. We are reporting for something weve been waiting for a while now, boehner said he will ask the house gop for a shortterm debt ceiling increase. The president set to meet with the minority caucus later today. Hey, john. Reporter what were doing is the speaker is running those by his conference. Theyll have a press conference today. Nancy pelosi will have a press conference this afternoon, both parties will talk to the president. All parties are sort of groping for what it will taking whats the duration of the debt limb the increase, whats the duration of the reopening of the government and what is the structure of the negotiating process thats going to be laid out . The key demand from the administration is going to be you cannot dictate the outcome of that process. Can you have a process and it can be time limited but you cant dictate the outcome. And what the republicans are going to try to do is portray this as a victory for beginning the conversation or increasing the conversation on longterm deficit reduction, something that would involve the alleviation of the sequester cuts, which both parties dont like and a shift toward entitlement programs. Key question is going to be which entitlement programs get cut. And the more those veer toward the issue of medicare and Social Security, which are so volatile, the more the administration is going to insist on some revenue from the republicans. They dont get that, you know were talking about farm programs and other lesser cuts in subsidies. But it does appear, carl, were reaching the chapter of this standoff that results in probably a solution before the 17th. Markets are jumping because they see the potentially shortterm deal coming together. But were talking about six weeks. What happens . Six weeks time if we hit that limit again and there has to be renegotiation all over again . Any time weve been told in the past, whether 2011 or since that this time would be used to strike a major deal, it has not happened. And now that they want to roll back on sequestration, part of the reason it has come down, how can they agree to reporter first of all, if they agree to sequestration, it would be to shift the onus of cuts from the domestic discretionary programs, defense and nondefense, which members believe have been cut too much already and shift them toward the things that ought to be cut, need to be cut, the longterm entitlement program. So that is not a retreat from spending reduction. But the key principle that the administration is trying to establish here, which i think that they can believe that they have established with a solution along the lines of what i mentioned is that they wont negotiate over the fact that the debt limit has to be raised and particular policy outcomes before its raised. So if you have a sixweek raising of the debt ceiling, would we be back in the same situation six weeks from now . Sort of. But if in fact theyve gotten republicans to agree that the debt ceiling is going to keep going up, regardless of particular policy outcomes, then i think the markets can be calm and take some comfort in that outcome. That doesnt mean, john, that were not looking at an additional six weeks of a shutdown, right . Were not talking about a clean c. R. Here, are we . No, no. I dont believe the shutdown will go on for six weeks. I believe it will be solved in tandem. Well see. There are a lot of hoops to be jumped through in order to get to that conclusion. But i believe when we settle the debt ceiling, were also going to see a settlement on reopening the government. Its hard enough for john boehner, whose party is getting pounded by the public in this standoff, its hard enough for him to do this twice, do a retreat twice. Better to do it all in one fell swoop and i think thats what theyre shooting for. Interesting. Thank you for that, john hardwood in washington. We are expecting the president to have a News Conference at 11 00. Well bring at that to you live. Some players that lend the government shortterm cash are selling tbills that are due to pay interest at the end of the month. Notably fidelity, the nations largest Money Market Mutual Fund manager. Yesterday evening on cnbc, bill gross identified pimco as a buyer. If, for instance, theres a technical default of a day or certain number of hours, then a Money Market Fund possibly has to mark down that debt do zero and it breaks the buck. So a fidelity Money Market Fund might want to avoid that situation. Pimco doesnt have that particular problem. Joining us now, andrew berkeley, head of institutional portfolio strategy at oppenheimer and george goncalves. Gentlemen, good morning. Good morning. George, can you argue that fidelity is being conservative. But on the other hand, were there to be a default, its binary for them and they would be accused of having stepped out in front of a train. Thats essentially the situation. Its prudent to do risk mitigation. Thats happening across the money market industry. Interest rates moving much faster. If you look out the yield term, its shortterm rate markets that are critical. For every buyer, theres a seller. The fear is we should explain the bigger issue is these tbills are like the s cement through the system, what people post at collateral. Everybody is using these as the back bone. So the danger in the repo market, as they call it, is that a number of sellers emerged, false sellers perhaps, and that there arent buyers nap is the nightmare scenario. Are you telling me thats not an issue here because there are enough people like pimco who have longer time horizons . Not necessarily. If this were to drag out and we went to a default window, most like li people would step back. But i think the news, the positive Development Today and the belief there is going to be always a lastminute solution is why people are willing to take the other side. Or not as the case may be, as fidelity points out. Yeah. I think in fidelitys case, they have a big retail, money market presence. There is a marketing, calm angle to that as well. What happens if i have Money Market Funds in my 401 k . What should i do . Certainly with the negotiations were hearing today and the potential for things to start to calm, would i stay where we are in terms of the money markets and look to allocate that money more to equities as we go forward. Thats been the big fund flow. Money has come out of fixed income. Now organizations Like Fidelity dont want to see that money going strictly to cash. They want it going to equity funds, which is the next progression in the bull market essentially. George, the difference between now and 2008 to some extent, while there are many but regard to whats happening in a shortterm market, anybody who expects disruption dont question whether theyre going to get the money at some point, its just how much of a hangup is there. Aside from this issue being resolved or not in the next couple of days or weeks, long term is there potential damage or change thats undergoing sort of whether its repo or other securities where people are exchanging treasury bills . Is there a chance they are no longer seen as quite the safe haven asset as there always has been or is there no replacement for their function. I would argue for the last five years theres been chinks in the armor. At the end of the day you get to the conclusion of where do you park all that cash . And theyre still going to pay you, right . So the 08 comparison to now is not fair, unless we work to default. Its a binary situation. 08 was a credit situation, a liquidity situation. This is something where the government finally will come through. For decades theres been a prediction the dollar would lose its safe haven status, that japan and china would no longer possibly buy treasuries. Does this move the needle at all . Both beijing and tokyo have warned the United States very explicitly over this. Do you ha do you think it changes longer term where they will put their money . Its one reason why the euro has been so mysteriously strong in a sense for so long. The capital flow will dictate if were buying chinese goods, the dollar needs to be recycled. Europe buys more goods from china so that will be recycled in that currency market. Its always a bit of a closed end loop. Would you agree with that, andrew . Absolutely. Longer term they are striving to diversify slowly. Something like this is not going to fast track it. Good to see you, guys. Thank you for coming. George and andrew, thank you. The obama care, changes have been up and running for more than a week now. How will that affect the Health Care History down the road . Squawk on the street will be right back. The most Free Research reports, customizable charts, powerful screening tools, and guaranteed 1second trades. And at the center of it all is a surprisingly low price just 7. 95. In fact, fidelity gives you lower trade commissions than schwab, td ameritrade, and etrade. Im monica santiago of fidelity investments, and low fees and commissions are another reason serious investors are choosing fidelity. Now get 200 free trades when you open an account. Welcome back to squawk on the street. Drug giant Teva Pharmaceuticals said its going to cut around 5,000 works are or 10 of its work force. Its part of a plan to say 2 billion in cost business the year 2017. A lot is happening in the pharma space. Joining us now from the Forbes Health care conference in new york is our own bertha coombs. Joining us with the former ceo of onyx pharmaceuticals. Thank you, kelly. Weve done very well since i became ceo, it was one of the top ten pharma acquisitions of all time. I dont think you can ask for a lot more. You like to think of this as a deal of the decade. I think the deal of the decade is the way to think about it. Were so happy the products will go forward in the hands of a great product for patients. Thats what its all about. Reporter over the last ten days, weve had two Big Government issues impacting health care. One of them of course being the shutdown. Youre concerned in this shut down continues, if we go over the breach next week, this will really Impact Health care overall, not Just Research but actual care of people. One of the things we have to stay focused on as americans is getting the Government Back to work. Its so essential. There are a lot of risks in front of us if we dont accomplish that. The actual delivery of health care, and there are so many stories, bertha, there is an aging patriarch with advanced alzheimers disease who is waiting to hear whether medicare will cover his Skilled Nursing care. Think about the food and the safety inspections that are not happening the way they need to to protect us. Yesterday we reported or there was report of a salmonella outbreak. Ordinarily inspectors get to this. To say nothing to the impact on research if this continues on for a while. As far as obama care also launching in terms of open enrollment over the last ten days, weve seen an awful lot of glitches, which has a lot of people worried about the jooverl implementation. What are your feelings on that . On any longscale program there are going to be glitches. But these are moments in time. We have to let the moment unfold, let the exchanges get up and running and let the processprocess unfold, in a natural, organ being wic way. A few weeks is not going to hurt us. Is obama care going to be good or bad for research . Those are two different questions. The Affordable Care act is providing health care for all americans and getting the health care they need. Thats todays question. The question around research for the nih, the fda, centers for disease control, these are investments for tomorrow. We have to unlock the genome, for example, for cancer. Weve got to invest in the next 30, 40 years. Thanks a lot, bertha coombs. When we come back, sales of Apple Computer slipping 1 in the Third Quarter. Will anticipation of a new generation of ipads keep investors upbeat about the stock . Not getting a lot of traction today. Well talk about it when we come back. Its as simple as this. At bny mellon, our business is investments. Managing them, moving them, making them work. We oversee 20 of the worlds financial assets. And that gives us scale and insight no one else has. Investment management combined with investment servicing. Bringing the power of investments to peoples lives. Invested in the world. Bny mellon. Stick with innovation. Stick with power. Stick with technology. Get the flexcare platinum. New from philips sonicare. 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. Stocks are rallying this morning on reports that House Speaker john boehner is asking the gop for a shortterm del dea debt ceiling increase. More impressive may be the nasdaq, thats the best weve seen since literally april 10th and the best since june for the dow. Although we have a long afternoon ahead of us, nice intra day gains, the speaker be speaking and well bring you that live. Of the top five u. S. Pc vendors, apple was the only company to post a decline in shipments. Joining joining us now, kolin gillis. If you go back and look, pc sales as a total of a down 17 from 2011. If you add the numbers, it correlates with tablet sales. Theyre cheaper and easier. The pc may be relegated to more of an office niche product. It may not get back to the 96 Million Units per quarter we saw years ago. Is that okay from apples standpoint . Are they willing to let tablets cannibalize the pc . It turns out that maybe the pc sales, the halo effect, is not happening to the same degree that may have been expected. On the one hand we get a nice new revenue stream for tablets, and on the other we have pc sales slumping and thats a negative. Potentially its huge for apple. They have a much more powerful ipad coming, 14 inches. They could also bundle in their suite of software packages, bundling in microsoft with word. This is very exciting. They could really move into the corporate arena and really dent microsofts core business with the office suite. Youre smack on the point with Microsofts Office is very run valuable, not on from apple but also from google. If i were a microsoft investor, id be worried not only about pc sales but second derivative, which is office sales are likely to take a hit as pc sales continue. How about a hit is this for apple . Theyre still suffering from the price impact of other competitors such as amazon that have tablets for 139 or 229. Google is coming in with 229. And even microsoft is trying to get into the game showing an rt is priced less than an ipad. Youre seeing android tablets have crossed over the margin. How do Profit Margins compare with the typical pc for apple . The phone is the highest profit margin out there. Its really the iphone company. We sell a billion smartphones total in the marketplace. Its a very high margin product. What are we talking about . The margins on tablets are second and pcs the weakest. Because the volume is higher . And also because its not subsidized by carriers. But even theyre moving toward higher margins sales. Is that not a positive thing for a well, it is. Unfortunately theyre going to lose a segment of the marketplace and it is what it is. You cant be high end and low end at the same time. Are we going to spend the rest of our lives between 480 and 500 . I have a 500 target. So i see only a few catalysts left. I think china mobile will be within of them. We know we have a good september quarter, holiday sales. You got the buyback supporting it, it gets up to 500, there seems to be resistance. Colin, thanks for coming in. Colin gillis. We are now one week toward hitting the debt ceiling. Speak are boehner is reportedly working on a compromise but will it win approval from the gop and ultimately get through congress. Chuck schumer will join us with his take next. You really love, what would you do . [ woman ] id be a writer. [ man ] id be a baker. [ woman ] i wanna be a pie maker. [ man ] i wanna be a pilot. [ woman ] id be an architect. What if i told you someone could pay you and what if that person were you . When you think about it, isnt that what retirement should be, paying ourselves to do what we love . 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. [ 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. Welcome back to squawk on the street. We just got the department of energys weekly storage report on natural gas inventories. The number coming in at 90 billion cubic feet, less than expectations, looking for 97 cubic feet. We are watching prices, theyre coming off just a little bit. The last two reports have been very bearish, traders were shrugging that off, expecting the cooler temperatures to bring demand back on the market. And seeing this number a little bit lower than expectations, that is a bullish sign. Traders are expecting these prices to hold up a little bit longer than today. Now expect the price of gas also to maintain what were seeing. Again, look i said, 375, in that level. Thank you very much, jackie. On that note lets head to the barefoot economic summit in texas. Top Asset Managers from around the world are gathering to discuss qe, Global Markets and where to invest now. Our own david faber joins us from texas with a special interview. David, over to you. Thanks very much, simon. Im joined by steven tannenbaum, the chief executive officers of golden. Weve discussed this, whether its a formal meeting or informal. Nobody seems to be that concerned or at least willing to hedge the risk of us passing through the 17th and hit ting o passing the debt ceiling. Because people dont believe either side is going to take it to the brink, even though theyve taken it to the brink or as claes as they can, they dont feel theyre going to let the economy go into recession and slow down materially because they cant come to an agreement. I believe they think theyre going to be voted out of office if they do and thats not what their constituencies want. As an asset manager, is that the way you should be thinking. Is there a reason guys are not thinking about hedging . Weve had concerns about collateral chains and all the bad things that conceivably could happen after the 17th . From a probability standpoint, people believe, 90 plus, that theyre going to figure it out like they did last year. I think the people who sold last year November December regret selling. They dont want to make the same mistake this year. Does that worry you at all . From a were pruning our portfolio to what we feel best about but we believe theyre going to figure it out and feel pretty strongly as of today that thats going to happen. And that very well may. Well see what we get. So many different rumors. Lets talk about ideas. You presented them here last year. You told a group of people here your best idea, spanish madrid bonds was a good idea. This year youre focused on Student Loans, in particular securitized Student Loans from the privately made, not the Government Backed. But why . We think theyre a terrific value. To just break up were a credit manager and we folks on two parts of the market. One would be fundamental, loans and bonds and the other would be systemic where basically you have to have a macro event, could be a government on shut down that cause as recession, a deep recession, which we dont think is probable but thats more sensitive to a macro event. A student loan would be in the systemic pool or structure products. And we believe that when you look at the losses on the season pools, that it is very remote youre going to have any hit to principle and yet youre getting 5 1 2 to 6 . On these pools, theyre static pools, on just like a mortgage thats been half paid off, a lot of these Student Loans that are season seasoned have been materially paid off. As a result, the next time you have a recession, what weve seen with more seasoned pools, they tend to have much lower default rates than even whats the average for the newer pools. So we think that if you have a multiple of call it two times to three times the peak default rates on your typical student loan, on a static pool its twice that or call it four to five times. We think its very remote and youre being very much overcompensated by the tune of knowing the selling bonds. Lets talk, as we often do, in the short time we have left about the cycle. Weve talked about credit cycles, you can be early cycle, middle and then be in that period where i think you say, i think your quote is i cant believe we just did that. Where are we . 2008 were in i cant believe i just did that and then we cycle to i think were being compensated. Route 21 is a retail bridge where the underwriters are going to take a ninefigure loss it looks like. Theres still some of that i cant believe i just did that but thats few and far between at this point in the cycle. I think were seeing deals where people are saying i wasnt compensated for the risk i took. You prefer loans to high risk . Absolutely. We believe loans are giving you a better spread when you track out for what you believe the return will be. We believe the world is becoming a better place and we believe the Interest Rates will trend higher and bonds are vulnerable to that. Steve, we got to leave it there. As always, appreciate your insights. Thank you. Steve tannenbaum from golden tree. Back to you. House Speaker John Boehner is expected to ask the house gop for a shortterm debt ceiling increase. According to the associate press and other reports. Hes about to speak in about a half an hours time. Will that compromise win over democrats . Lets bring in senator Chuck Schumer of new york. Thank you for joining us. Good morning. Nice to be here, kelly. Do you see the contours of a deal coming together . And specifically will you support any deal to raise the debt ceiling if it doesnt extend into 2014 . Well, id say two things. The good news, if Speaker Boehner asks for a sixweek extension without anything attached is the Republican Party and particularly the hard right is at least saying this is important and backing off their stand that they have to attach something to it. The bad news is to come back in six weeks and go through all this again is a big mess. So we prefer it to be much longer, the longer the better. If theyre already admitting that they should raise the debt ceiling without these political fights that theyve been causing, then why not just do it for a good period of time and get it out of the way . Well, because you may not be able to get some sort of deal, it sounds like, without each side giving a little bit here. There is more pressure on harry reid this morning as well to be able to turn around and say, okay, if you agree to do that without any strings attached, then we will bend as well as. I think we all agree a longer term is better. We see Real Movement on the republican side. I think theyre realizing they were playing with fire and were going to fight to get as long a term debt ceiling extension as we can because that is the right thing to do for the markets, for the country and for average citizens. To go through this again with the perils of pauline aspects to it remember, kelly, the more times you go over it, the more the dollar is weakened as a current circumstance the less full faith and credit there is in the United States. If the markets think that these games are going to become routine, another downgrade is possible. Within of the major rating agencies downgraded even though we didnt default last time but because we came so close. Are you saying the democrats would look harshly at a sixweeks extension . All im saying to you is we want it as long as possible. Too do this every six weeks would be quite devastating to the markets. Would it be as devastating as default . Absolutely not. Is there a better solution to look toward . Absolutely. Do you think it it would be done in conjunction with the Government Shutdown . Thats another issue. To raise the debt ceiling for six weeks and not solve the shutdown is a problem. Many of the republicans im talking to on both the senate and house sides want to do both together. I think that would make a great deal of sense as well. This is an opening offer by Speaker Boehner, its an improvement from his previous stand but its clearly not the ive deal solution or even close to it. Jack lew was great at the hearing this morning. We asked him to come to the hill to deal with the debt ceiling deniers, people who say it doesnt matter or people who say you can prioritize and it wont have much of an effect. The vast majority of experts, both on wall street and academics say that that doesnt work. Lew said it very well. He said that rearranging the debt and stratifying the debt is in other words default. He said we dont know when the markets would react to this if we came to the 17th. I think its a dose of reality for the republicans. One. Leaders in of rightwing conservatives in the house is a guy named brown. He says defaulting wont matter, its much less serious than governor deficits. He said a third of what he learned in medical school came from the pits of hell. We cant have people like that leading the country. In the house thats whats happened up to now and boehners sixweek proposal, if he offers it, may be a break from that and that is good news. So what is the correct way to lead the country at this stage . You will be aware that gallup has just come out with a poll saying no Political Party has ever been less favored than the republicans, only 28 , 62 have a Strong Negative view against the gop at the moment. Youre of the conviction that ultimately boehner will cave in. Why not pitch it all the way. Well, thats exactly right. The republicans are realizing the mainstream republicans, not these hard right people, are realizing the folly of their way. When the Koch Brothers come out against them, they realize theyre having real trouble. So to just settle for the minimal solution is not ideal and were going to push harder. Were going to push to get the debt ceiling as long as possible and deal with the Government Shutdown at the same time. Senator, there is still an issue where if you put the obama care issue to the side for one moment, the country is split and there are a lot of people who are upset with the path of spending over the next decade and beyond. With the promises that have been made through the entitlement system and thats where obama care again comes in. Theyre uncomfortable with our ability to be able to meet these obligations overtime. As part of any deal now, isnt it better to have some kind of grand resolution or, you know, effort to come together and bend that entire curve as opposed to striking a deal that basically reinstates the status quo, even if its for another six weeks. Let me make two points, kelly. First, weve cut the deficit in half. Its less bad as a percentage of gdp than it was a few years ago. We made significant progress there. Theres more progress to make. A grand bargain would be great but you need two side of it. Democrats have to give on entitlement reform and republicans have to give on revenues. The president please, kelly. The president has laid out a series of entitlement reforms he is willing to do. We havent seen a single major republican talk about any revenues. Thats where the focus should be if you want a grand bargain. Every time the grand bargain has fallen apart on the super committee, on the budget committee, on all the negotiations, its been because not a single republican would agree to revenues and youre not going to get much entitlement reform unless youre raising revenues. Not raising rates. They dont want to do that and i agree with that. But closing loopholes. Okay. It could be an interesting six weeks, an interesting 24 hours. Senator schumer from new york, thank you for your time. We are making some progress so thank god for that. The markets seem to think so. The dow is up 20 points, back above 15,000. The s p almost 25 points. Were basically looking at the best day, at least intra day for the market since the spring. One of the best performers on the s p is best buy, spiking on some news that is not easy to find. Well tell you why after a short break. announcer at scottrade, our clients trade and invest exactly how they want. With scottrades online banking, i get one view of my bank and brokerage accounts with one login. To easily move my money when i need to. Plus, when i call my local scottrade office, i can talk to someone who knows how i trade. Because i dont trade like everybody. I trade like me. Im with scottrade. announcer scottradeproud to be ranked best overall client experience. Store and essentially they just get sold something. We provide the exact individualization that your body needs. Before you invest in a mattress, discover the bed clinically proven to improve sleep quality. Once you experience it, theres no going back. Oh, yeah at our columbus day event, save 500 to 700 dollars on the final closeout of our Performance Series mattress sets. But hurryends soon only at a sleep number store, where queen mattresses start at just 699. 99. Sleep number. Comfort individualized [ male announcer ] no success is overnight. Its about working harder. And smarter. Its the culmination of a million decisions. Its where you see yourself going. And how you choose to get there. The 2013 gs. Our boldest response ever. Theres no going back. Welcome back to squawk on the street. Consumer electronic retailing giant best buy is jumping higher. Now, the move is being helped along by a Research Note saying the number of customers they plan to shop for products at best buy continues to rise from the same time last year. Now best buy shares have been on a tear. Theyre up around 230 just so far in 2013. So, guys, at the nyse, bby shares certainly ones to watch. Back to you. That would seem logical if you have so many products in the playing field. Thats great for best buy. Its amazing to see the run that company has been on this year. A different story from so many of the other retailers, carl, that seem to get into this death spiral. Yeah. Meantime the dow keeps adding to the gains, up 212 now. The vix coming in at more than a 2 decline, as a lot of traders on twitter and elsewhere saying you got to love a short squeeze. This is really a short squeeze as theyve gone so far this year. The s p 500 up 1. 5 , its best performance of the year except for january 2nd, if we stay up at these levels. 25 points is a move weve gotten more used to saying on the dow, up better than 200 now. Only one day so far this year has been better today for the s p and that was january 2nd, as we got into the new year fiscal cliff, there was a flush of relief coming out of that. Well see what happens after boehner speaks. Up now 17 for the year. Thats an extraordinary performance. Extraordinary performance. Want to keep an eye as well on tbill yields. That will tell us how much stress is coming off of that. Still ahead, ron paul will weigh in on the Government Shutdown, the debt ceiling and what washington needs to do to get a deal done. Yes, we will hear from ron paul. Squawk on the street continues after this. Americans take care of business. They always have. They always will. Thats why you take charge of your future. Your retirement. Ameriprise advisors can help you like theyve helped millions of others. Listening, planning, working one on one. To help you retire your way. With confidence. Thats what Ameriprise Financial does. Thats what they can do with you. Ameriprise financial. More within reach. Well, this is going to be an interesting exercise for the market. We have a significant short squeeze in play with the dow up 208. But in a few minutes, Speaker Boehner is expected to give remarks at that very podium. Well bring it to you live, and well see if it holds or if perhaps there is selling on the news. Meanti meantime, rick santelli. Hi, carl. Thank you. You know, one of the big topics around here in 2011, the last time we had somewhat similar kind of intersection going on with government, i remember one of my favorite discussions with some of the gang is that its very difficult to fix a car when its moving. Its difficult to adjust a transmission or put on a fan belt when the cars running. Its different difficult to do openheart surgery on a jogger while hes still jogging. You get what im saying. Well, i think david malpest today said it in a more financial dollarsandcentstype fashion. The article, the opinion section of the journal entitled the bigger battle behind the showdown. And the highlighted quote sums it up. Youll see where im going. A staggering 250 billion per month, 80 of spending, runs on autopilot without congressional control. Lets get through the rancor, through the biases. Lets acknowledge that strategies may be flawed. Lets try to look at whats incubating beneath all this for years, and that is the notion that if spending is on autopilot, and the economy, the biggest and most efficient in the world, there is no pause button, a static moment to actually go get inside this and try to tweak it. And in between these shortterm fixes, its impossible to get anybody to sit down and get anything done. So basically what hes saying is that of all of the funding for many of the entitlement programs is automatic, it doesnt need separate appropriations, were all learning about how the old days used to have a much different style of appropriations than we have now in these budgets, which we dont have, turns into resolutions where everything is bundled together. Its hard to do what the president said. And what schumer said, senator schumer, that they want to do, and attack some of the autopilots, and then think onesixth of the economy is going to fold into this is another autopilot, and we already know that behind all of the anxiety is a simple notion with the debt ceiling. We cant afford all the things we promise, because we take in less than we spend. Now, thats cutting through all of the rancor. Thats the reality. And if we think the part that we can get at, the Discretionary Spending, is going to make that up, we are kidding ourselves. So, yes, people can make fun of all of this. But think of the longterm implications. And if you really want to hear it said even better than that, i have a Santelli Exchange extra. Go to cnbc. Com and type in Santelli Exchange extra. And back to you. All right. Thank you. 200 points on the dow. I want to make the point that as we await Speaker Boehners News Conference lets go to that lets take a break and return for Speaker Boehner. In a world thats changing faster than ever, we believe outshining the competition tomorrow requires challenging your Business Inside and out today. At cognizant, we help forwardlooking Companies Run better and run different to give your customers every reason to keep looking for you. So if youre ready to see opportunities and see them through, we say lets get to work. Because the future belongs to those who challenge the present. [ bagpipes and drums playing over ] [ music transitions to rock ] make it happen with the allnew fidelity active trader pro. Its one more innovative reason serious investors are choosing fidelity. Get 200 free trades when you open an account. Welcome to squawk on the street. Heres whats happened so far. All of wall street thinks theyll reach a deal, because if not, wed be a lot lower. I think the consensus is, there was a small probability of a deal not happening. But it wasnt zero. Just know when the president took office in january 2009, we were in the middle of the worst recession since the great depression. We were in the middle of two wars and a deficit 9 of our economy. Weve cut that in half. Were making progress. We have more to do. Lew has changed the conversation. What lew said, look, we aint were just not going to send out any checks. You may think the 18th, 17th is a funny deadline. Were not sending checks. Thats the death nail for anybody thats saying we should continue to shut things down. Theres so much peace talk that people dont want to be short the financials into the earnings, because maybe the companies say, hey, you know what, its okay, now we have peace, fire stocks. [ bell ] from a probability standpoint, people just believe, its 90 plus, that theyll figure it out like they did last year, and i think the people who sold last year, november to december, regret selling. They dont want to make the same mistake this year. We see Real Movement on the republican side. I think theyre realizing that they were playing with fire. Were requegoing to fight to ge long a term debt ceiling extension as we can. Good thursday morning. Were live here at post 9 of the New York Stock Exchange, and what a day its been. The secondbest day of the year for the dow and the s p. The dow up almost 200 points. Were right around 15,000. Were awaiting House Speaker boehner to speak in just a moment on what we expect to be a request to the house gop, kelly, for a clean debt ceiling extension and perhaps six weeks. We will see. The vix has gone from 21 to 17. That tbill hump, as theyre calling it, appears to be flattening out a bit, too. This is a classic by the rumor, potentially sell the fact. A lot of people saying, wait a minute, we havent heard an announcement. Thats true. Were waiting to hear from Speaker Boehner if, in fact, he does say he will ask the gop, carl, for an increase in the debt ceiling. The key question, and this is something john harwood addressed the last time, are they going to accept a clean debt ceiling hike this time around, or is this a signal that the gop is softening its stance, and will potentially continue to agree to raise the debt ceiling in the future . That will be important. Right. This is also a precursor to perhaps a more important meeting after the close, around 4 30, 4 45, where the president will meet with about 18 gop negotiators, although the white house doesnt want to call it a negotiation. Lets get to john harwood in washington, and talk about what we might expect from the speaker in just a few moments. John . Reporter i think the speaker is going to let us know exactly what terms that he is going to pursue the shortterm extension of the debt limit on. You know, democratic aides last night were saying that theyd been assured by the republicans, or been hearing from republic s republicans, that there was not going to be unacceptable provisions from their point of view added onto that request, this was an attempt to actually move it in a way the senate could take it. But were going to have to see exactly what the speakers been able to sell to his members. And i do think, you know, carl, you were talking about the meeting this afternoon at the white house. I think thats less important than a couple of things. The internal meetings within the Republican Caucus in the house, and also the conversations that are going to take place, that have been taking place between the House Speaker and the sen e Senate Democratic leaders, aides, and the two principals ultimately when they sort of work out what the terms of this extrication of the u. S. Government and the United States from this crisis are. John, the focus does seem to be shifting that way towards harry reid, for example, and we had Chuck Schumer on i dont know if you caught that in the last hour who again seemed to be indicating, well, theyre coming around to our view. Reporter mmhmm. Is that the risk now, well need to see some compromise from the senate and potentially they feel as though they dont that the Democratic Leadership feels like, well, theyre playing pretty good hand right now. Reporter the Democratic Leaders and the president feel they are playing a good hand. And what theyre what theyre arguing is that, yeah, fine, we will have some negotiations and well agree on a framework for negotiations. But were not going to concede the outcome of the negotiations before the threat of a debt default and the burden of the Government Shutdown, or limit it. I dont think youll see democrats coming off of that. And i think the movement youve seen from republicans is in recognition of that. Is an indication that theyre they have concluded theyre not going to get the repeal, the defunding, the delay of obama care, and theyre not going to get substantive policy outcomes, among other reasons, republicans dont know themselves what they want from those budget discussions, and thats why, kelly, we havent had a budget conference all year. Even though the senate did pass the budget, as the house has insisted earlier, just a few months ago. John, obviously, theres been internal strife within the gop. Grover norquist, in the Washington Post today, saying, quote, i think it was very possible for us to delay the implementation of obama care for a year, until ted cruz came along and crashed and burned. How much damage to the gop brand . Youve just tweeted you think theyll look back at the past year and said and say to themselves that they went backward. Reporter well, look, well see when we get the nbc wall street journal poll, which comes out this evening, what that damage has been. But its clear from the polls that weve seen so far that theyve taken a hit. The president s also taken a hit, but the republicans are the ones who have a real Brand Reputation problem in national politics. I think grovers wrong. I dont think they could have delayed the individual mandate for obama care. But theres going to be a lot of rekrim nations on the republican side, even out in, say, the state of utah. You had a conservative leader, former state senate elected official, in utah, saying mike lee, the republican senator, has damaged his effectiveness in the senate with whats happened, his alliance with ted cruz, on this. So again, were not out of it yet. It does look as if the republicans have decided to extricate themselves from the mess that were in. The democrats will have to try to manage that effectively and help them do that. And once that happens, there will be a lot of infighting on the republican side. John, brand obama has not, you know its taken a hit, as well. No ones unscathed in all of this. The president reporter that is correct. Is included. A lot of people take issue with the way that while he doesnt want to negotiate over the issue of the debt ceiling, kind of turned that into a i will not negotiate with the gop and the way in which he repeatedly used his bully pulpit to attack the republicans instead of kind of laying out more of a vision that might appeal to more of the country. Reporter well, clearly, the president is taking a hit. You could see that from the way his numbers have eroded in the last few weeks. Its not good for anybody. But its not its not true that the president wont negotiate with the Republican Party. Hes just not negotiating in this particular circumstance. And if you look at the polls, about whos more reasonable, whos more willing to work with the other side, president obama comes out way ahead of congressional republicans. So hes in a decent position on that question, even though republicans have had some effectiveness in the last few days in saying, well, he wont talk to us. The president walked into this fight with a big advantage on perceptions of who is a reasonable and willing to work with the other side. While were waiting for the speaker, john, lets bring in former texas congressman, gop president ial candidate, ron paul, who i believe jones us on the phone. Congressman, good to have you back. Good morning. Thank you. Nice to be with you. How would you characterize the way the republicans have handled the standoff . Are you happy about what we expect the speaker will say . Well, i think its pretty irrelevant, because i think both parties are doing the same thing. Theyre grandstanding. Theyre politicizing this. They talk about a shutdown, which really isnt a shutdown. The big stuff continues, and they close down the monuments. And i think its all a political game and its a blame game. You know, even with the deficit the deficit limit was met in may. So government goes on. I think that the shutdown is not a real problem. I think the real worry should be the breakdown of the entire system. And as far as default goes, were always going to pay the interest. And thats just thats just a fake argument. Im concerned about the continuation of the default by paying off our bills with money that has less value. Thats where the real problem is, and theyre not even talking about it. Senator, shutdown leaves kin of dead soldiers without money for funerals. Its not a big deal . Well, its a big deal, because its totally unnecessary and the administration does this. Theres no law that says they have to do this. If they can put money back on every theres a question of degree. Youre right its not as if t the you know, better than half of the government is still up and running. But theres still, again, going back to the issue of whether you give aid to military families for funerals, these kinds of things that get caught up, because people are out there saying, oh, the shutdown isnt a big deal. Well, in some ways it is a very, very big deal. Yeah, it is. And thats why you should blame obama, because its arbitrary. He can do whatever he wants. They dont do whatever they want now. If foreign aid qualifies as necessary, you cant cut one penny. Youd think he could take care of the veterans. So thats just a political game. I cant imagine anybody buying into this, that it was the republicans fault for not doing what the president told them that the veterans are suffering and these benefits are removed. That is all pure, unadult rated politics, and i think thats why the American People have a rating not low for the republicans and not low for the democrats but for the government. The government is not credible in Foreign Policy. Theyre not credible with the Federal Reserve policy. And theyre not credible with bailing out the economy. Look at where the economy is. If anybody thinks the economy is booming, they have another thought coming. But people governments lost their credibility. And all we argue about is whose fault was it. Its both their fault. Its the nature of government. Too much spending, and theyre not serious about cutting back. This talk about cutting back is not serious any way whatsoever, because i think both sides want to continue the spending, or they would agree you know, they would stop the foreign aid or something. But they stop nothing. Its always politics, only politic, thats all you hear about, and the American People have the right to be very upset with it. Well, either that or various political supporters, the cover of the new york times, congressman, talks about the big business, the National Retail federation and others feeling that theyve lost touch with the right part of the gop. Do you think thats a fair characterization and how would you go about remedying it . I would say look to the markets and see if theyre worried. The stock market is up 200 points. The dollar in the last couple of weeks is not weak. They dont believe this stuff in the short run. Im always looking at the long run, the destruction of the dollar, the default that were in the middle of, the bond bubble, which is about to burst. And we continue the process of Big Government, domestically and internationally, and depend on the Federal Reserve to monetize the debt and whether you have summers or yellen, youre going to have the same ole pollty policy print the money until dooms day, and theyll get dooms day, because you cant print money forever. The people on the hill, congressman, as you know, we understand, i think a lot of our viewers know where you come from strategically, but people are talking about tactical moves. Do you vote for this proposal that the speakers about to give, for instance . Would you be in favor of that a shortterm extension . Well, i dont know the wording of it, but, no, the point ought to be made, to put the brakes on, the only way to put the brakes on is not just willynilly create the debt limit fully realizing it doesnt do anything but slow up the government spending. Think of the bailout position. Who bailed out most of the people around the world, the banks, and it was the Federal Reserve. They spent trillions of dollars. So this whole idea that things will continue for our dollar and paying our debt. So it continues. I think people have to see it in perspective. They have to eventually ask the question, do we want the role of the government of being the policeman of the world, have runaway welfare spending and print money when you dont need it . If you dont challenge that, believe me theyll argue and fuss over there, they wont admit this country is technically bankrupt and are depending not only on borrowing but of printing money. Thats a foolhardy attitude to have, and theyll all be sorry and the American People better blame the whole system, the philosophy, kezzian economics, the violation of the civil liberties. Thats where the problems with. Yet theyre arguing about whose door gets shut down. They better worry about the breakdown of the system instead of whose ox is being gored for one day or two. And not pretending not pretending that october 17th is d day. You know, october 17th is pure fiction. Nothing really changes. The debt limit went over in may, and theyve continued to illegally fund all of the programs. So its its game theyre playing. And the people are glued to it. And markets move up and down on it. But right now yeah. The markets arent that worried about the shutdown, and worried about the october 17th, and they shouldnt on the short run. But id like to have them think about the long run. You could have added fire to jack lews testimony this morning, congressman. That would have that would have been fun. Okay. Ron paul, former texas congressman, gop president ial candidate, ron, thank you very much. Youre welcome. The dow is still hanging onto gains here, off of of the highs. Well take a short break. Hopefully, when we come back, the speaker will make his comments. Bny mellon combines Investment Management investment servicing, giving us unique insights which help us attract the industrys brightest minds who create powerful strategies for a countrys investments which are used to build new schools to build more bright minds. Invested in the world. Bny mellon. Welcome back, as we wait to hear from boehner. Stocks are off the session high, but still a strong rally across the major indices. 189 points for the dow. The s p 500 up 1. 3 , 21 points on that index. The nasdaq, the strongest of the three, up 1. 7 at the highs, a little bit off that now. We want to get perspective from ben willis, and, first of all, do you make anything of the delay . The delay from boehner walking out . Sure. Yeah. I mean, its what i find interesting, you just had ron paul on, washington watches the tape. And the dow the dow industrials up 180 points is a great voting booth, and its telling washington, and boehner has their blackberries out, this is what the world needs to see. The rumors that they are going to come out and say theyll agree to raise the debt ceiling. Sorry to tell the rest of the world, wall street trades on rumors. Here we are. The rumor is, were sending a clear signal, go ahead, dont screw this up. Weve let you have the microphone long enough to play the games youve played with, with the american reputation. Dont get this wrong, get it done. Others might argue, i mean, ron pauls point just now, wall street is not worried. 5 off the high. Thats not a disaster, ben. No, its not. Again, the anticipation was that it was going to eventually come to some sort of conclusion. But as you mentioned, the vix index, the vix was trading up, because a vehicle, a professional investor, doing the fiduciary duty, protecting the gains that theyve already had this year. Thats starting to come off. Because we saw we saw it trade up in anticipation of, well, it might happen. Now its coming off, on the rumor, that, okay, were right, its not going to happen. You think that golong volatility trade is done for now in. For now, yeah. And i we were i was on with you probably last month or so thinking that the vix was a place, if i was going to put money in the market, id be buying that insurance. It was a great trade on a hedge on a long portfolio. That seems to be coming off. You may see a pop in that again when we start going back to the tapering discussion, as well. But i think the idea is we had a 5 correction. Yes, i would have loved to have seen a 10 correction. We had it. So some of the trade is coming off of the vix trade. Let me ask you this. Again, its interesting to think what might be happening behind the scenes now. But if it is just six weeks that theyre agreeing to raise the debt ceiling, thats not really a game changer. That is the ultimate definition of just kicking the can down the road, unless the six weeks really does buy some kind of time for a grand compromise. What does the market make of the scenarios . Do they love is this a oneday reaction . Because theres hope of a deal, or are they really saying this is it, this is enough in. No, this can be viewed as a oneday reaction to a continuation of a correction that i think is necessary. But again, that doesnt mean im bearish. I think at the end of the year we continue to go higher, that the 18 gain is something that we could look forward to and more by the end of the year. But again, its its become an understanding on wall street. We know washington is going to continue to play the games, and as long as we put microphones and cameras in front of them, theyre not going to do the business they were sent there to do. Well, but a lot of them see this as the very business they were sent there to do. Remember, theres a lot of people who are representing constituents who are unhappy with the size of government, who are unhappy with obama care. This is not just a media event. And thats great. When was the last time they sat down across the aisle from their counterparts and actually discussed doing something about it rather than stand in front of the microphone right. About how the other side is not doing it . Thats what im saying we now how that shouldnt we be skeptical we should get one big question is why gold has been such a bust ooh, somebody knocked down that platform. Why gold has been such a bust of a trade in the face of all of the fear that weve been through over the past ten days. I have to tell you, this is uncomfortable for me, because i dont really understand gold in the big picture. Its a pretty little thing that makes a great doorstop. If youre buying it for some sort of protection against the armageddon, you better be buying copper and lead first, meaning bullets. I dont understand the gold trade. Again, youre seeing money flows in and out of it, because its a safe haven. Its a kneejerk reaction to the people that have been in the market for a long period of time, when theres some some doubt in the marketplace, go to the u. S. Treasurys or gold. Thats youre seeing the ebb and flow of the dollars. Correct me if im wrong, though, but gold has not been responding well to the flight to safety move this time. Every day we saw pressure into safer assets, we did not necessarily see a bid in gold. Why is it getting sold almost as a growth proxy, or is it a liquidity play . I think it is more of a liquidity play right now, the money thats stayed in the Commodity Funds. Theres been a huge outflow of Commodity Funds on the world stage so to speak. And gold and oil had participated in that. Oil is a similar action, seeing some of the selloff. Its liquidity leaving the play itself, rather than im talking to david william, strategic gold, hes saying hes still seeing a great drive in ownership of physical gold, not so much in the stocks and the paper. Interesting. Reuters now saying the president is willing to look at this proposal to extend the debt ceiling for six weeks, but insists the lawmakers end the Government Shutdown, as well. Of course, john harwood does expect the two to be decided in tandem. We will see. Its been great fun waiting for the speaker to come out. We will take a quick break. Thank you, ben. Pleasure. Hopefully, when we come back from commercial, the speaker will be at the mike. A lot more squawk on the street is back in a minute. 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. [ 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. Goodfaith negotiations over the Long Term Debt drivers or the drivers over our date, over the security that we need for this country as well as the pressing need to open up this government again. Thats why were going to offer legislation that will that will offer a temporary increase in the debt ceiling to allow us some time to continue this this conversation, because it is time for solutions. The democrats unwillingness to have this conversation has actually resulted in a delay and an ongoing Government Shutdown, and its hurting the American People. Its gone on too long. We hope that the president will choose negotiation over crisis, leadership over inaction, and dialogue over silence. Its time to solve our problems. You know, the president is found of saying that no one gets everything they want in a negotiation. And frankly, i agree with that. Nobody gets everything they want. But over the course of the last ten days, weve been trying to have conversations with our democrat colleagues. They dont want to talk. The president doesnt want to talk. Weve tried to offer bills that would reopen parts of the government only to have them rejected by our counterparts over the United States senate. So what we want to do is offer the president today the ability to move, a temporary increase in the debt ceiling, an agreement to go to conference on the budget, for his willingness to sit down, discuss with us a way forward to reopen the government and to start to deal with americas pressing problems. Listen. Its time for leadership. Its time for these negotiations and this conversation to begin. And i would hope that the president will look at this as an opportunity and a goodfaith effort on our part to move halfway halfway to what hes demanded in order to have these conversations begin. You know, the American People expect both sides to sit down and work out their differences when youre operate in a divided government. So im pleased today weve had an invitation from the white house to actually begin to do that. And, you know, we have seen now for ten days a Government Shutdown. Its not what we asked for. It is what was the result of the two parties not being able to sit down and talk. And there is very little time left we cannot waste anymore time. And what we have discussed as a conference is a temporary ext t extext extension of the debt ceiling in exchange for a real commitment by this president and the Senate Majority leader to sit down and talk about the pressing problems facing all of the American People, and that includes a broad array of issues. We look forward to that happening. And if you look throughout history, president s who have governed in a divided government have all sat down and talked with the other side. Its about time this is happening. Im very hopeful for today. This is something that republicans have been waiting for quite sometime for. We never wanted to shut down. Thats why our very last bill said lets go to conference, so that door has always been open. Were thankful the president is willing to talk today. Were coming there with an idea of working together. Were coming there to find Common Ground. To find Common Ground that will deal with these economic drivers that harm the economy. The drivers that continue to add debt. So when we make an offer today for a temporary extension, were looking for a structure that puts us on a path to get a budget, to take care of the debt and move the economy in a stronger position and have all america win. A Little Common sense for the rest of the country. And ill take a couple of questions. Mr. Speaker, now that youre undertaking this plan on the debt ceiling, what do you need in order to reopen the full government . Thats a conversation were going to have with the president today. And i dont want to put anything on the table. I dont want to take anything off the table. Thats why we want to have this conversation. Mr. Speaker, whats the agreement that will prevent us unintelligible . Clearly, you could end up in the same place. We dont want to be there. Listen, i think the president wants to deal with americas pressing problems, just as much as we do. But in order to deal with these pressing problems, weve got to sit down and have a conversation that leads to a negotiation that begins to solve these problems for the future and for, frankly, our kids and our grandkids. Mr. Speaker, will you reopen the government if the president doesnt agree to unintelligible . Ands and buts were candy and nuts, every day would be christmas. [ laughter ] well, at least they can still laugh in washington. That is the speaker of the house, john boehner, saying that they will ask the gop for a shortterm increase in the debt ceiling. If, in fact, the president agrees to go to conference and talk about spending measures. John harwood is in washington. John, did boehner just blink . Reporter i think so. Im not sure its boehner blinking. I think its getting his conference to move. I think, you know, the speaker said its time for leadership, and i think we saw some from the speaker, in getting his people off of the limb that they were out on, on obama care, offering to do a shortterm extension of the debt limit. Well see what the particulars are, how long it is, whether there are any conditions attached that were not apparent at the News Conference. And then the related question of when you reopen the government. But i think i think the speaker is pulling his members back to a position where they can have a conversation with the president. And if that conversation yields a great or grand or mini bargain, thats something that everybody can be happy with, if, in fact, they can deliver. John, markets are obviously more concerned with the debt ceiling element of this than with the shutdown. The shutdown continues. Even though both cantor and mccarthy said it wasnt something they really wanted, there was no mention that would help move it. Do we understand it will be implicit in some kind of deal . When will this thing end . Reporter well, you heard john boehner say well discuss that with the president. So i think there are multiple chapters to the resolution here. And i think that will be discussed. And i cannot imagine a situat n situation in fact, the president has explicitly said hes not going to negotiate on anything until they reopen the government and raise the debt limit. So i would expect that that to be the followon announcement from the speaker once they agree to some framework for discussions. But were going to have to wait and see over the next 24 hours or so. All right, john, thank you for that. With that, the market has gotten essentially what it expected all morning long. Holding onto the gain, up 194. A shade below 15,000 on the dow. A lot more squawk on the street is back in a minute. [ male announcer ] eeny, meeny, miny, go. More adventures await in the 2013 lexus lx. Dare to be spontaneous. Welcome back. Big moves in the market. The dow is now up better than 200 points. 1. 6 just about for the s p 500. Bob pisani. Were going to say whats moving here, but it seems like everything. Thats right. Its 5to1, advancingtodeclining stocks. The dow, sitting near the highs for the day. The 90 upside days. 90 of the volume to the upside, 5to1, advancingtodeclining stocks. Much less stress in the system. What do i mean . Look at the vix, the volatility index. Ive noted for the past several months, the front month has been generally much higher than months out. Called backwardation. You can see that its still a little close, but the bottom line is the vix is starting to go back towards its normal curve. That indicates less stress in the system. Another sign of less stress, all of the old leaders are back. So biotech, health care, broker dealers, airlines, the market leaders, theyre outperforming today. Economicallysensitive stocks, cyclicals have been hit badly. They are the market leaders again today. This is what i mean when i say that theres been a lot less stress in the system. Whats not helping much, big oils down. Chevron had an Oil Essentially a warning there, the problems in the refining division. Thats down. Thats hurting exxon mobil. Thats not helping things in the dow. A big day for the ipos. We had a bunch of them, including macroagagenics, and to and shale plays in one of the cases, theyre all doing very well today. Back to you. All right, mr. Pisani, thank you. Lets bring in david, with deutsche bank. And jeff is chief Market Strategist with lpl financial, a couple of stock guys when we have big moves. Welcome. Thank you. David, first to you. What do you do with the market here, especially if six weeks from now were talking about yet another deadline to raise the debt kreeling . Sure. I think this morning secretary lew did a good job of reiterating the 17th deadline, not taking risks beyond that. That raises the chance of a deal in the next few days. However, if we dont get a deal now, monday, i think markets will be redisappointed and the s p could be down 30 points again, back to where we were just yesterday, the day before. So the risk is still on for the short term. Id advise investors to act tactically around the s p. I think we get a deal done before a default. And we get good Third Quarter earnings and the s p is at 1,750 by year end. Jeff, is it clear sailing . Or will we be back in this situation as david is talking about . Listen, weve gone from a game of kick the can to nudge the can. Were getting a few weeks at a time. What it does tell sus that defaults off the table here. Realistically, no one expected it anyway. This is clear now what the gops concession here, the default is truly off the table. That means the risk profile, the vix, more likely to see the highs we got to yesterday on the vix. So i think you can expect the vix to come down and the stocks move higher. I think you can buy now. You dont have to worry about the next six weeks, because the biggest negative case of default clearly off the table. Although you still it takes you back to fundamentals, guys. Earnings season hasnt gotten off to the most auspicious start, david. Well, it just started. I know, i know. It begins next week, the week after, particularly when nonfinancials start reporting. Were finally going to see healthy Earnings Growth and healthy top line from the nonfinancials of the s p 500 this quarter. Youll get 7 , 8 from the s p, the best in over a year. 6 Earnings Growth from the nonfinancials and also the best in almost two years. Jeff said it first. Kick the can down the road, as an investor, whats to be excited about if its a sixweek deal. I said nudge. Id like to have this can kicked over a mountain. Yeah. Yeah, i just have this mental image of nudging the can, jeff, thank you for that one. David, appreciate it, as well. We appreciate your time as we watch one of the best moves, weve seen, in fact, for the indexes all year. The new governmentrun Health Care Exchanges have experienced set backs. One former Health Care Executive believes it will transform the industry. That seems inevitable. Lets head to new york, the forbes conference, and joined with with bertha coombs, ron williams. Hey, bertha. Hey, kelly. Thanks very much. Ron, thank you so much for joining us. Now, you are involved in private equity, rw2, the second chapter. I want to get your sense of how things are going given the rocky start of the healthcare. Gov exchange. How do you think thats impacting insurers now . I think insurers are all set to go. They have their staffs standing by. They are waiting for applicants, waiting for feedback in how theyre positioned and how attractive it is to consumers. I think the exchanges themselves have gotten off to a rocky start. And i think as a brand, it certainly has not helped build brand credibility with the initial launch and execution. Long term, i think its noise. I think it will all settle out. It will work itself out and well get to see how the exchanges perform skblchlt this morning during the panel, you talked about the fact you think we are really at an Inflection Point in health care. Is aca part of that Inflection Point . I think aca is part of the Inflection Point. I think one of the things that aca did was legitimize the broader transformation of the Health Care Sector both by government but by the private sector. Hospitals, officials, physicians, feel its time to step up to create more value in the system. Aca is focused on access and hopefully will make important improvements in giving people access to health insurance. But what really is important is how we create more value. If you think about what we spend as a country, what we spend is equivalent to the entire Gross Domestic Product of france. Thats incredible. A big number. We all know that. You need a way to grasp how big is that number. I think well see innovation, see technology, clinical investments, use of outcome data, and a real opportunity for new winners and unfortunately, new losers in the system. Well talk more about that and youll be able to watch that on cnbc. Com. Right now, if you want to know more about how the insurers are navigating the new exchange situation, check out cnbc. Com and i have a piece about your former company, aetna, being very aggressive. All right, bertha, thank you very much. With ron williams. When we come back, move over, russia. Later this year, the u. S. Will take the top spot in one key area of the global economy. With fidelitys options platform, weve completely integrated every step of the process, making it easier to try filters and strategies. To get a list of equity options. Evaluate them with our p l calculator. And execute faster with our more intuitive trade ticket. Im greg stevens, and i helped create fidelitys options platform. Its one more innovative reason serious investors are choosing fidelity. Now get 200 free trades when you open an account. At bny mellon, our business is investments. Managing them, moving them, making them work. We oversee 20 of the worlds financial assets. And that gives us scale and insight no one else has. Investment management combined with investment servicing. Bringing the power of investments to peoples lives. Invested in the world. Bny mellon. Coming up on halftime report, the latest on the debt trade. And two of the traders debate which stock is the better buy ahead of earnings, jpmorgan or wells fa s fars fargo. And john will trade treasuries with the threat of default looming. Kelly. All right, scott, thanks. The u. S. Is well on its way to Global Energy domination. First, though. Lets look at markets, carl. Major indexes are showing major gains, towards the highs of the day. 225 points on the dow. Lets see, 1. 6 on the s p 500. 1. 8 on the nasdaq and the breadth here, as bob indicated, shows advancers across the board. And you dont see 26point move on the s p too often, just a couple of times this year. As kelly said, the u. S. Is well on its way to Global Energy domination. Later this year, the u. S. Expected to surpass russia as the worlds top producer of oil and natural gas. What does that mean for the u. S. Economy . Our david favor is in larue, texas, with more. Hey, david. Thats right. A good place to be, texas, when youre talking about oil and gas. Im joined by will, a private equity firm that makes investments, of course, throughout that complex, so to speak. Will, always a pleasure. We had you last year. We talked about the revolution. Its only picking up steam, isnt it . You told me, 840,000 barrels a day were added last year. Thats right. Biggest increase since 1955. Right. Yeah. You know, its really its the unconventional technology, the horizontal drilling, the fracking was just on the gas side. But were using the same technology to unlike oil reservoirs. And the growth has been extraordinary. What does it mean for a consumer . We all wonder, okay, were producing so much oil. We may become energyindependent by 2020. Thats only six years away. Yet oil prices seem to be stubbornly high. If you look at it, weve grown production in the u. S. , you know, about 50 over the last four to five years. And at the same time, weve, you know, cut foreign imports about 6 Million Barrels a day over the last seven years. Thats over 200 billion a year of additional money staying here in the u. S. That were into the sending overseas anymore. So, you know, i think its you know, the impact is going to be profound. On our economy. What about oil prices . When will do you believe they will start to moderate and or come down as a result of how much were producing, not to mention were not consuming quite as much. Right. If you look at it, world growth and demand, historically, has gone up about 1. 4 Million Barrels a yearment but after the big financial crisis in 2008, really that slowed substantially and its been going up to 800,000 barrels a year. And so, when you look at the u. S. , the u. S. Is actually producing its supplying all of the additional supply that the world needs to meet that demand. So, you know, when we look at it, we look at the fundamentals, theres a very reasonable, you know, scenario, where you could if we have any slowdown in a global economy, you know, opec production, surplus capacity at a multidecade high. And so, you know, you combine the Slower Growth and demand with the surging, you know, growth and supply, you could be setting up for a pullback in prices. All right. Lets talk natural gas, of course, talking about pullbacks. Saw an enormous one. Some have moderated. Whats the demand me kwigs . There particularly is coal coming offline, replaced by natural gas fired electricity plants. Yeah, thats the gas has fallen over 70 from its highs that we set in 2008. And it really kind of found a floor in the high twos, 3 a year or two ago. And so, when you look at that, and low prices stimulate a lot of demand. And so what youve seen is a tremendous move in demand, you know, on the electrical side, electrical generation, you know, about 70 of the increase of all of the additional gas has come online, has come into the you know, the electrical generation. And so, thats really the big story for gas is, weve got tremendous demand drivers setting up on the electrical generation, as we continue to retire the aging coal fleet in the United States, it was will supply most of the incremental, just the natural demand, about 1 a year in electrical generation demand. But we also have l g thats starting to be were going to export l g in this country. And as those export facilities come online later this decade, thats going to be another huge, you know, demand driver. So, you know, you start to see where weve got weve got a good supply base, but demand could be growing faster than supplies. Right. All right. A lot of sobering comments here, as is typical at barefoot on the broader economy. But this is certainly one of the good news stories in a lot of way. Will, as always, appreciate your time. Appreciate you having me. From quantum energy. Yeah, you would think the setting would do more to lift spirits. It looks beautiful down there. David, thanks. Straight ahead, tmobile ceo john ledger joins us at post 9. You really love, what would you do . [ woman ] id be a writer. [ man ] id be a baker. [ woman ] i wanna be a pie maker. [ man ] i wanna be a pilot. [ woman ] id be an architect. What if i told you someone could pay you and what if that person were you . When you think about it, isnt that what retirement should be, paying ourselves to do what we love . Zillion markets have been higher all morning long awaiting the speaker at 11 00 id say 11 30 a. M. We thought there might be a bit of a selloff. It hasnt happened. Now session high, up 230. S p is up almost 28 handles to 1,684, busting through what some have called some resistance around 1,680. Well see what happens this afternoon. In the meantime, tmobile has been trying to shake up the cell phone industry over the past year. Phase one was abolishing twoyear contracts and subsidies and phase two was the jump anytime upgrade program and last night, tmobile unveiled phase three, adding Unlimited International data to simple choice customers at no extra cost. Tmobiles ceo join us for a first on cnbc interview. Good morning. Good morning, carl. Good to have you. Why do this . Are there enough users who travel enough for whom this is a real issue . Well, i would say, carl, even with this brick of a phone that you carry [ laughter ] this would be this would be an issue. What weve been about is solving customer paying points. When i first came in, what i was about was listening to customers and i said this to you before. They hated contracts. They hated so much about the carriers. One of the things thats a big issue is people are petrified about using their phone as soon as they cross a border. And these have become so critical for us. And i think what weve what weve realized, try this out. 40 55 million americans travel 40 turn their phone off before they leave, usually yelling at each other, turn your phone off. 20 more, favorite statistic, said they would turn it off if they knew how. And the fun part is that what we have done is we have provided free International Data roaming and texting to countries and 20 cents per minute between those countries or home. A hypothetical. Last year my family came to visit me in london in christmas. Theyre on verizon. They arrived trying to set up some sort of International Calling plan only to find out the phones didnt work at all. Youre saying if they were tmobile subscribers, what would happen in that case . They could two things. One, see, this is designed for u. S. Travelers. So, for example, if ultimately somebody spends, you know, 289 days outside of the United States, this isnt the plan. Ill give you a second piece. We did announce a second plan called Stateside International talk and text. For 10 a month, what you can get is a subscriber in the u. S. Is never more than 20 cents a minute to 150 in the u. S. Making calls to other numbers. Right. What about if you leave the country . Is this only people in the now, if youre a u. S. Person and you leave the country now, you get International Data roaming and text free, no more, its 20 cents a minute to any other simple choice country in the world, or home, and the interesting part is the cost of this is free. So technically, if youre a customer of tmobile right now, when you wake up on november 1st, this is on your phone. You dont have to do anything or pay anything. The Stateside International talk and text is the outbound. The point i was going to make is we added something in. If you terminate to a land line in 70 countries, its free. So if your mother lives in india, and you wanted to call her and youre a at t customer, for 10, you can talk three minutes. If you have the cheapest rate plan, can you talk for 30. With ours, you can call and lay on the phone for the month if you like. The last thing, carl, if i could. Quickly. What we announced is 200 million pops of lte, so the network is nationwide. Its testing faster than verizon and sprint. And in 10 of 20 cities in the u. S. , were faster than at t. So we have the plans, you now have the network. You need the spectrum, i suppose. Next game, yeah. We have spectrum now, for several years. We know to load the spectrum, and thats an issue soon. All right, john, thank you. John ledger. Theyre not the only high performer. The markets surging. The dow and s p, now having the second day of the year. Plenty more on the rally when we come back. On december 17, 1903, the Wright Brothers became the first in flight. [ goodall ] i think the most amazing thing is how like us these chimpanzees are. [ laughing ] [ woman ] can you hear me . And you hear your voice . Oh, its exciting [ man ] touchdown confirmed. Were safe on mars. [ cheers and applause ] hi. [ baby fussing ] geothe last thing i want iswho doesnto feel like someone is giving me a sales pitch, [ baby fussing ] especially when it comes to my investments. You want a broker you can trust. A lot of guys at the other firms seemed more focused on selling than their clients. Thats why i stopped working at my old brokerage and became a Financial Consultant with charles schwab. Avo what kind of Financial Consultant are you looking for . Talk to us today. The market again close to the highs on the day. My impression, kelly, amazing how quickly all of the high flyers, the gileads, netflixs have come back, and leading the s p. Still slightly lower for the week, but more of this action, and well soon be positive. Still have to get through the meeting with the president and the gop, that happens after the close tonight. In the meantime, back to headquarters. Scott wapner and the halftime. Carl, thanks so much. Its a sea of green on wall street. The secondbiggest rally of the year for all three of the major averages. As you look behind me on the s p 500, heat map, nearly every single stock in the s p positive, but a handful. Heres the sector heat map today. The financials, the industrials, the discretionaries are leading the way. Good to note, the s p leading 44 points to erase all of monday and tuesdays losses. Not quite there yet. But certainly appears to be on its way to doing just that. Welcome to halftime. Heres what were following. The lone wolf, fixedincome guru, john, on how to trade