art industry intact. all that and much more on "cbs this morning," saturday, february 1st, 2014. welcome to the weekend. we have great guests in studio 57 including what may be the best blues rock band going. they are going to play for you here this morning. you. >> then a chef traveled to asia and brought back the good stuff, to street food and translated into fine diner here at home. >> john har baa won the super t bowl. we begin with the super bowl and the massive security measures er way to under way to protect fans and focus players. the focus is the stadium across acros the hudson river in new jersey where they are in the final ges of stages of preparation for tomorrow's big game. >> concerns stretch into new york. pregame festivities on super bowl boulevard. we are here with that and how some security measures were put mea into action yesterday.ion good morning. go >> reporter: good morning to youte both. and welcome to super bowl boulevard. it's 13 blocks here in times bo square. it's basically been turned into e a fan zone.ically been even if you come out this morning, security is tight.ing, sec same deal ten miles away if you are across the hudson it's the toward same deal there. the security teams say they are ready for anything. the first scare came yesterday when envelopes containing a white powder were found in r was hotels and one sent to former mayor rudy giuliani's office in udy manhattan. none were hazardous, but they did not take chances. they didn' it's part of a beefed up security effort before the biggest game. ef with most of the 80,000 fans expected to use mass transit to the get to the game the chief says they are prepared. >> we are in a post 9/11 environment. we know terrorism is something that we need to be concerned about.lo is so, we are trying to make an environment here as people board trains to move to metlife stadium as safe as we possibly can. >> reporter: the federal air >> marshal service will be on the rshal lookout for terrorist activity. michael will lead the team. >> we are prepared as a team a group. we are specialists and are as prepared to handle any threat any that may come about this weekend.re hopefully, there are non. >> reporter: all for fans to fans c focus on what is most important, super bowl xlviii.owl 48. >> we love our team. we are we are the secret weapon. >> seahawks!seahawks. sea hawks! >> reporter: speaking of the fans and the game for the last week or two, there's been all the this talk about the weather. what if there's a blizzard?bl what about the snow clouds? snow what if the game has to be be moved? around kick off time temperatures will be in the 40s t around or so and considering the s weather we've had in new york city, i'd say it's not a bad thing. back to you. >> i know it's the first morning in awhile i have seen you without a hat. morni >> reporter: yeah. >> thank you. we have another big nfl story coming up later. th could the st. louis rams be hav moving back to los angeles 20 years after they left? >> from one big game to the olympic games in sochi, russia. officials are dealing with the only sporting event with bigger security concerns than the super bowl. mark phillips is there.is there. good morning.d morning. >> good morning, anthony. officials here will be dealing with security and also with the other issue that's been dogging these games, gay rights groups complaining about russia's anti-gay law as they see it. there's stories where the gay rights groups are attacking the they see games where they hope it hurts with the sponsorship. as threats go police in sochi are more concerned about the se grim weather than the terrorists. the games held among the palm g the pa trees may become better known for rain and mud than snow.ain and a last minute clean up is under nup is u way and a lot going on. the main olympic site built on a former swamp by the seaside wille be protected by a security force by about 40,000 strong part of a so-called ring of steel that so-calle surrounds the entire sochi area. the first members of the u.s. sochi team have begun to arrive, speed skater davis showed little fear. >> i have no problems with problems wi russia. russia is a great place. >> >> reporter: gay rights have been brought to the forefront. in an open letter, activists urged sponsors to speak out on the controversial law barring 're borr gay propaganda. it's an issue the organizers hope will go away but it won't. >> we'll welcome everybody me regardless of sexual orientation, gender and gender, and religion. everybody will be safe here. be >> reporter: welcome, but they hope quiet. muc it's a clash of cultures and it to promises to be just as duri interesting as the competition. >> mark phillips in sochi, >> russia, thank you. now to the latest in the traffic jam scandal. christie attended a star studdedstar-studd birthday party for howard stern.terns he is in a high simmer this morning, thanks to an official close to the controversy. he claims to have evidence but ave has not provided it. we are following the story. >> reporter: governor chris christie denied he knew about ied he the lane closures at the george washington bridge that snarled for traffic before or while they were occurring. >> i don't know what to say except to tell them i had no knowledge of this of the planning, the execution or anything about it. no i first found out about it afterning, ex it was over. even then what i was told is it th was a traffic study. >> >> reporter: the lawyer for the man who helped carry out the closings disputes that saying a person within the christie to administration says it came from closed a his office tieing mr. christie havi to having knowledge of the lane closures. david wildstein is the former hority e port executive who set the allegedl closings in motion after he received an e-mail from bridgette kelly, who wrote an e-mail saying time for some traffic problems in fort lee.ime the lane closures were a pay back against the fort lee mayor for not endorsing the election campaign. wildstein replied, got it. the letter went on to say he "got contests the accuracy of variouso say m statements the governor made about him and he can prove the inaccuracy of some.n made in a statement released friday the christie administration said his lawyer confirms what the d m governor said all along, he had at no prior knowledge of the lane closures before they happened.e whatever mr. wildstein's motivations or clotsing them to urday," begin with. the white house says it will it consider the state department's recommendation for the controversial keystone pipeline project. the pipeline would extend from would western canada to nebraska and nebraska connect with existing pipelines en c to texas refineries. the report stopped short of an n endorsement. it said the project does not pose a threat to the environment not as opponents claimed. the final decision on the nal decis project is not expected until summer at the earliest. thousands of credit and debit card numbers may have been in stolen. hotel "the new york times" reports white lodging services which manages 100 hotels from marriott hilton and starwood was the target of a data breach.f it's the latest on hacks. joining us to discuss this is business analyst, jill. good morning. >> good morning. >> let's talk about the breach. we have seen e-mail accounts good stores, now hotels. is every business susceptible to >> attack? >> yes. we have to be individual lent.best thing understand that threat exists. read the credit card statements don't just pay the bills. get your credit report once every 12 months. once you are looking for odd activity. don't just throw that credit a card out and give it to somebody o without watching the process. some is out of our control. your some is being aware. >> we are about to have a it's changing of the guard, which is another reason we want to talk to you. is there going to be a significant change with the switch?nt >> i don't think so. ben bernanke who left yesterday, handing over the reigns to janet yellen they are intellectual gns to jan partners. they were working together.today. she was the vice chair under bernanke since 2010. she helped crack the policies inraft the place. to some extent it's like ome bernanke version 2.0 and she's going to be very very focused on employment in the united states and what policies the fed is going to actually keep in to place to foster employment and also has to really be careful be about inflation. some of the policies could se create inflation down the line. >> a lot of opinion pieces f written about this the words were delayed consequences. what is she inheriting? what was his legacy? what >> it is really split. we don't know what the legacy isle going to be until the next few won' years unravel. the number one thing people accused him of is taking emergency measures buying se emerg bonds, expanding the balance sheet to $4 trillion.balanc we understand it's because of an emergency. but down the line, people are concerned inflation pops up. a lot of the market is dislocate dislocated. janet yellen's issue is how do i's unwind the policies without disrupting the world markets and wit how do i unwind them and not t plunge the united states back the into a recession. >> meanwhile, we saw this week a strong fourth quarter gdp. the market has been uneasy. what's going on do you think?markets >> i like to say the stock market is not the economy, it's a vote on what investors believe on w companies are going to earn in rs the future. to we know the first half of the e year, very slow growth. it happened because of two factors. interest rates, sorry, taxes went up and government spending as was curtailed. a weak first half.ong the second half was strong.g it looked half coming into this sto year. stocks were up 30% last year people, come on. 4% or 5% drop in january, no freaking out, please. drop this is not a panic mode. this corrections are 10%. we are long overdue. what i can tell you is it will drop, i just don't know when. an that means keep the diversified portfolio, don't sell out just op, i because you are scared. k be clear of when you need your money. >> we haven't had a correction since 2011. we are all going to relax. >> take a chill pill. ji now to immigration and a proposal that twiggered a fight tri inside the part. jeff, good morning. >> good morning, anthony. the debate was largely held behind closed doors at a gop w it's s retreat. it's spilling out as republicans grapple over how to move forwardenate s that could alienate voters.tive the president hasn't ruled out the action on the issue.ine in a town hall friday the president expressed optimism there could be an immigration reform reform breakthrough this year but not without what he sees as essential to a deal. >> we should make sure that at the end of the day, people are are able to become citizens. we don't want a situation in which we have two categories of people in this country.ies >> reporter: there was a gop call to action. house speaker john boehner is quoted saying it's important to act on immigration reform. we will address it in a step by step common sense fashion. a he unveiled his principles for immigration, tighter border fash security and legal stats. the principles do not include th citizenship. according to a recent gallup poll, 3% of americans see immigration reform as a top priority. for some republicans, it's c important when it comes to part broadening the reach of the party. mitt romney lost the hispanic vote by more than 40 points st t after taking a hard line on the th issue by suggesting that a immigrants self-deport. how house republicans move forward may depend on gop. o jeff sessions called the currentd immigration reform legislation aform bad idea in a recovering economy. >> it would lower wages, it increase unemployment. this is not what we can afford to do now. >> it's still too early to tell if immigration reform will move forward in the house. some suggested it's better to keep the issue at arm's length. they believe they have a winning strategy with a focus on the nt's health care law. >> jeff in washington, thank wa you. there's plenty of politics to talk about tomorrow on "face the nation." "fa it includes house majority eric cantor and president obama's chief white house staff.s she says she won't ever return to italy. now, amanda knox may have no ow choice. an atallitalian cord ruled her guilty. legal analyst is here with what's next in the knox case. good morning. >> good morning. >> did this guilty pa reinstatement, i should say, of a guilty verdict surprise you? >> i think it surprised most of did us in the united states. it did not surprise people in in italy. t one of the things about public opinion, in this particular case is we have had a collective in the united states of feeling about amanda knox.ed state a feeling as much as there is much intellectual ability to say the l evidence was really faulty evidence there isn't really much evidence. in italy, there's a great itly defense of the family of the victim and defense of the italian judicial system. >> they don't have double iously m jeopardy. this is tried multiple times.le jeopa >> three times. as double jeopardy is not a concept >> three within the italian judicial system. what that means is that you cannot be tried twice for the itali same crime.em. however, one of the things, c again, that we forget in the same discussion about all of this is amanda knox was convicted beforeda knox she was acquitted. this is really in essence a reinstatement of that first conviction. >> was there new evidence in this trial? >> it's the same evidence. same i didn't examine all the th evidence in detail like in the etail first place. there's a tiny speck of blood on a tin the knife of amanda knox, not the victim and it's found in another apartment. the evidence is not new. >> she's been vocal saying i won't go back. what about extradition? we have a treaty with italy. will she be forced to go back? >> that's the ultimate political the question. she must be mindful. stay where she is. sh she should stay in the state of washington. she should never go out of the washingt country. right now, the case is going up on appeal. we expect that final appellate court that sent it down for retrial to begin with they are logically going to convict her. logi we would be shocked to say cked t anything if they acquit her. they do not have to send her o not back. send it's a political question. i have heard too many experts eard too say of course we are not going cour to send her back, it's not that simple at all.traditio we have extradition tweetreaties with all kinds of countries. going while looking for edward edward& snowden, we are not going to say make a this time, we are not sending someone back. >> right. right. we'll see what happens. it's interesting. thanks. >> thank you. a weekend winter storm is bringing a mess from kansas to mess michigan today.nsas to plows were out in full force trying to clear the road that is left man left many cars struck. folks in chicago can expect can eight inches of snow. detroit will see a few inches before the snow turns to sleet.ns to millions are celebrating the year of the horse in new york. the top of the umpire state building was in red and gold lights to signify prosperity. we have the report on how china up celebrates the occasion. >> reporter: it's a crush of humanity during the lunar new year holiday. chinese take $3.5 billion trips,e combining multiple modes of transport jest to get home. the images are startling. only more so if you are one of th the travelers. this woman and her husband are this leaving beijing to see their in the parents in central china.al what do you think about going going home today? >> we are so excited. >> spring is coming. everybody needs to be together. >> reporter: we tagged along to brave the crowds at one of beijing's four strain stations. they call this the largest annual migration on earth. here, it certainly feels that tion way. o it makes waiting areas feel more like holding pens. how difficult is it to get a train ticket during this holiday during period? >> within five minutes, pe everything is sold out.ything >> reporter: 6.5 million people >> travel daily by train during the spring festival. migrant workers pack into train for cars while platforms and curb sites are barely visible. she is happy just to get on a train.n. >> today is no ticket. >> reporter: no tickets for seat so you have to stand? >> yeah.kets >> reporter: and by the bathroom. this used to take them more than 20 hours. >> and as china expanded the high speed rail network, the trip was cut has to just over seven. still, that's not fast enough train, for her mom. c >> we have two hours but she probably has already been at thely alrea station waiting for me.ing for >> reporter: she's excited for come you to come? >> yes.d. >> reporter: we saw that when we reached the station. her parents were home preparing dumplings that are a new year's staple. once they were all reunited they on were speaking chinese. really there was no translation needed. for "cbs this morning" saturday china. the sun herald of headline mississippi says a train carryin carrying oil and toxic chemicals der derailed in south mississippi i friday friday.from s oil from some of the tank cars leaked forcing the evacuation ofaked f a dozen families living nearby famil and closing the highway. lived the spill has been contained. "the new york times" says the drought in california is so is severe it's forcing conservation. water from reservoirs will not be distributed to local agencies that serve 25 million residents and covers 750,000 acres of farmland. most have other sources from mo which they can draw. two men have been arrested dr in con an ex with thursday's smash and grab robbery at the cart cartier jewelry store. "the los angeles times" says a former security guard at the lakers practice facility was practic arrested for stealing what he thought were three of the team'sght we championship rings as well as hundreds of thousands of dollars in gift cards. the rings were lookalikes in case the originals were lost or stolen. prince george is off on his first foreign holiday with his mother. they are visiting a caribbean island. his father is staying in foreign england. it is about 22 minutes after the hour. it's n here is a look at the weather for your weekend. the for your weekend. well eel take a look at the angles. later, with beer lists getting longer how about a beer to help you choose the perfect brew. you are watching "cbs this morning" saturday. resolved. >> we'll be right back. you're watching "cbs this morning saturday." [uncle]this is hopscotch,okay? uncle go one,two,one,two,one two,one. [niece]okay! [uncle]okay? [niece]one,two three,four,five,six,seven,eight! [uncle laughing] okay,we go the other way,okay? [niece]one,two,three,four,five six,seven! [uncle laughs]there's ten spaces,you want to try again? [uncle]yeah? leets's see what's happening in washington. yesterday they would unveil a then they could teach it to americans. >> i don't believe that -- you see this as a dry run but you hope if it goes okay they'll say, okay, cold weather is okay. >> when we made the presentation, this is the greatest game in the world and now it will be played on the greatest stage in the world. this is the first super bowl that's being hosted by two teams. so the first 47 games were played in warm weather, controlled environment. let's play the game in the element. let's take it back to the roots of the nfl. >> oklahoma.ay. before we say that, is there anything wrong with a domed stadium? >> there's nothing wrong with the domed stadium. we looked at it. the wrong thing is the cost. we wanted the roof. we wanted to have the cold weather advantage. learn how to play in cold weather and a lot of roofs they open with a little sliver. to open the roof to full which we wanted to to to the very end is around $400 million. >> can i ask you? i'm new to new york city. my son pointed it out. there's helicopters in the sky but they're security. how much is security and do you guys get briefed on what exactly our government is doing to protect? >> the preparations norah, have been going on for about 2 1/2 years, a tlnld is a lot of coordination between new jersey state police, nypd secret service, homeland security. >> have you interfaced with john miller yet? >> maybe we need him to tell us what's going on. >> but al kelly, host of our committee, he's been doing a great job. there's a security operation out at the stadium that i saw a couple of days ago. it is unbelievable. obviously first and foremost is the safety of the fans. sofa... desk... you know what? why don't you go get some frozen yogurt. i got this. you're so sweet. you got this, right? i do got this. from the shelf and to your home. starting at $99. sofa... desk... you know what? why don't you go get some frozen yogurt. i got this. you're so sweet. you got this, right? i do got this. from the shelf and to your home. starting at $99. welcome to "cbs this morning saturday." i'm anthony mason. >> and i'm vinita nair. a top story this half hour an nfl mist. an owner of the l.a. rams may be thifrging of moving his team back to l.a. >> or maybe not. >> the rams how sweet it is. >> the idea that we don't have a football team boggles the mind. >> reporter: now the tables may be turning. on friday stan kroenke, the billionaire owner of the st. louis rams confirmed that he just bought a 60-acre parking lot in los angeles. >> i'm dying for a finally team to come back and i'm hoping it's the rams. >> reporter: his team confirms the purchase but isn't revealing much more saying in a stable we have yet to decide what we're going to do with the property but we will look at all options. nfl commissioner roger goodell seemed to dampen the hype. >> instead of overreacting we should make sure we do what's necessary to support the team locally, which the fans have done in st. louis and make sure we can do whang we can to make sure that team is successful in the st. louis market. >> reporter: but lately it hasn't been. for the past sick years the rams have ranked near the bottom of nfl teams in attendance figures and the team is asking for $7 million in upgrades to the current stadium which the city isn't willing to play. >> he's threatening st. louis. >> reporter: writer dennis has been following proposals to bring football back to l.a. for the past four years. >> it seems to me the owner of the rams is making a play to get concessions in st. louis because he wants to upgrade the stadium there and he wants the taxpayers to pay for it. >> so use l.a. as leverage? >> yeah. i mean l.a. is the perpetual city of leverage for nfl teams. that's one of the reasons it's valuable as a place without a team for the league. >> reporter: if friday's reaction by st. louis's mayor is any -- it might be working. bill whitaker, cbs news los angeles. >> it's crazy last. doesn't have a football team. i don't want st. louis to lose their football team. >> it's been a long time. now here's a look at the weather for your weekend. up next scientists find a clear link between testosterone supplements and heart attacks in men and five heart tips for women. dr. jon lapook and medical kromt dr. holly phillips. this is "cbs this morning saturday." >> announcer: this portion sponsored by hershey's spreads. ads. bring the delicious taste of hershey's chocolate to anything - everything - you can imagine. explore the endless possibilities of the delicious chocolate taste that only hershey's can deliver. with new hershey's spreads, the possibilities are delicious. jake and i have been best friends for years. one of our favorite things to do is going to the dog park together. sometimes my copd makes it hard to breathe. so my doctor prescribed symbicort. it helps significantly improve my lung function starting within five minutes. symbicort doesn't replace a rescue inhaler for sudden symptoms. with symbicort today i'm breathing better. come on, boy! 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[ male announcer ] if you can't afford your medication, astrazeneca may be able to help. right here at table 8, little karen debuted a haircut she did all by herself a couple on their first date agreed to a second date next week, and roomates filled up before their final leg to yellowstone and that was just at one table in one day at one chili's. more life happens here. treat more. play more. go more. now... save more at the petsmart stock up & save sale. save up to 25% on thousands of items including all sentry® dog & cat calming solutions. at petsmart®. ♪ hearts, stars and horseshoes ♪ ♪ clovers and blue moons ♪ ♪ hourglasses, rainbows ♪ ♪ and tasty red balloons ♪ let's go! ♪ lucky charms ♪ ♪ frosted lucky charms ♪ ♪ they're magically delicious ♪ time now for "morning rounds," and joining us are cbs news medical correspondent dr. jon lapook and dr. holly phillips. there's a clear link between testosterone supplements and heart attacks. >> they're taken by millions of men but this study to date raises large questions. insurance claims from more than 55,000 men looked at the writ of heart attacks within 90 days of starting testosterone. in men starting 56 and older the risk more than doubled. in men younger than 65 with a history of heart disease the risk almost tripled. testosterone treatment is only for those with low "t." documented low testosterone levels. but many men without low "t" are being treated for a variety of symptoms. a study this month found 43% of the men receiving the hor hone had a normal level. cardiologist dr. steve nissen of the cleveland clinic. >> we don't know much about this therapy. what's going on is a giant experiment with american men's health at stake because we don't have the long-term data on the safety of these products. >> reporter: annual prescriptions of test toft trone happen because of results like this. >> they appear on television with seductive ads that make men think they're a fountain of youth. >> we've heard about these risk before. what's new about the study? >> anthony the arc here is so important. we heard in 2010 small studies show there might be a cardiovascular risk. this is now the biggest study to date and it shows that not only is there an increased risk in men over 65 but there's a new group. under 65-year-old men who have had a previous history of heart disease. now, this is not the gold standard test. it doesn't show cause and effect. but thinking about how this use has exploded over the last few years is really a reason to be concerned. >> but why? why do researchers think it's happening? >> one thinks it might increase clotting of the blood vessels of the heart and they could cause a heart attack. also new this week the road toe to obesity starts by age 5. more kids are likely to be obese by eighth grade. that's startling. >> it is. it's basically showing us that the dye is cast so incredibly early in our lifetime for obesity risk. they look at 7,000 risks and found that for the kids who are overweight in kint more than a third of them would go on to be obese by the abt grade and you had a 100% chance of being obese in the eighth grade or beyond so there really isn't such a thing as baby fat. it all matters. >> how do you know when your child is ee bees or overweight? >> really it starts about age 2. we can calculate a body mass in. if you're over the 95th percentile, you're obese. these things matter as young as age 2. >> we all know what the risk factors are and what happens in adults. are they the same for kids who are overweight? >> they're just the same only even more severe because kids are going to have these symptoms for longer. they're going to be more impactful in their lifetime and now we can predict they might have a shortened lifespan. >> all right. february is american heart month so this morning we're bringing you ouren to five tips for a healthy women. what are the health tips? >> blood pressure blood sugar and cholesterol. the thing about these things they're silent. high blood pressure, silent, high blood sugar, you don't know, high cholesterol, you don't know. you have to know the number, ask the number. and a third ofpeople in the united states have high blood pressure and doan know it. >> holy mentioned silent and i think of genetics as a silent risk factor. are there others that women should be aware of? right. genetics is probably the most important but i like to think of heart disease, as sort of the paper, rocks scissors game. there's genetics diet and exercise. genetics might be the most powerful but you can overcome it with diet and exercise. diet loosely using that term because that also includes not smoking but really it's about focusing on a plant-based diet avoiding sodium and exercise regularly. it doesn't have to be hours and hours at the jim. 30 minutes once a day will do it or staying active. get up walk around take the stairs if you can. all of those things can lower your risk. >> what are the possible warning signs for women with heart trouble? >> well, for women there's a little bit of a misconception because they can have unusual signs but still the most common sim thom is chest pressure or discomfort in their neck or back, a little bit of shortness of breath. fatigue, vomiting nausea a little bit of sweating. these should not be things that should be blown off and it's not just women who can have these atypical symptoms. basically if you're feeling rot ten, something's up call your doctor. >> finally most of us know exercise can help people including seniors. carter evans visited one gym where strength training is taking usual form. >> reporter: this isn't your granddaughter's aerobic class. call it a new twist on an old art form. cheng-fu. >> we turned the fitness equation on its head. >> mike moreno is ceo of nifty after fifty. a chain that develops a class with a fitness goal. >> it makes the senior feel powerful with something that normally represents frailty. >> sometimes when they see you they think, oh poor thing. >> berta is 77. the exercise itself is also a weapon helping to prevent falls which every year send more than 2 million seniors to the emergency room. according to the centers for disease control. only 35% of americans over 65 are considered physically fit. the aches and pains take their toll. >> five years ago i had a broken pelvis and then a year ago i had a knee replacement. now i can do a mile on the treadmill. i couldn't a year ago but i can now. >> i love this. turning a symbol of what we might think of as weakness to strength. >> i love how she holds the cane. >> exactly. >> this strikes home with me. my 95-year-old dad fell. fortunately he's oklahoma but it knocked him for a loop. >> dr. jon lapook, dr. holly phillips. thanks so much for being here. up next. a new level of beer sophistication, how you can become a certified expert in suds. you're watching "cbs this morning saturday." 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[ female announcer ] nature's bounty® hair, skin & nails. because beauty starts on the inside. in delicious gummies too. of beer during tomorrow's super bowl, but while you can count on getting expert help to seek a wine to suit your budget what about a beer? >> these days you could face a choice of dozens of beers with various styles. you need someone who knows what's inside those bottles or tap. dean reynolds takes a look. >> reporter: while a wine expert is known as a sommelier, a beer expert is considering a drunk but a man named ray daniels is hoping to change that. >> americans used to treat beer like a can of soup. you buy it, put it in the cabinet, leave it there for months and years on end, take it, open it warm it up, it 'going to be as good as it was. >> reporter: as an author of four beaks on beer dan felt it necessary to set standards. the various people in this room are at the forefront of his experts. they're taking a test to become beer experts identified as sis roans. there's an initial test online followed up by a second in-person exam that involves multiple choices and tastings. lorna is among the hopefuls. >> i'm really hopes i pass today. it's a serious examination. they're not messing around. >> reporter: daniel created the program six years ago and they must teach them about beer styles flavors, and longevity. how did this start? >> bad beer. you know, i've been a beer enthusiast my entire adult life and i was always amazed at how many places had -- would have 25 beers on tap, didn't know anything about them. >> reporter: daniels believes beer ignorance is widespread and on this occasion he didn't have to look far to find it. >> you can smell the first one. get the sense of that. >> smell ss like beer. >> the second one. >> oh, yeah there's a big difference. >> big difference, right? >> it seems sort of flatter to me. >> something wrong with it. exactly. a buttery flavor is called die as tall and that's a very common off flavor in beer. >> so a trained server would pick this up and say, all right, we've got to get rid of this. >> yeah, exactly. we've got a problem here. >> jerry's bar in chicago has 48 craft beers on tap and the staff is required to seek at least the certified beer server status. daniels' basic qualification. nick bondy is the bar manager. >> we need to have people that can say, okay, what do you normally like to drink and if somebody says i like to drink stella, then we can guide them in the right direction toward a beer that has similar qualities. >> reporter: so the next time you walk into a pub and the bartender says what will you have you could ask, what would you recommend? for "cbs this morning," dean reynolds, chicago. >> i like a bar that has 48 beers on tap. >> everyone in here was drooling truth be told. >> yeah. >> it's interesting. you always hear that the test for a someier was difficult. but only a third of those who took the beer test passed. >> that's a tough test too. >> coming up late night wars still flaring. jay leno is leaving "the tonight show" for the second time. >> can jimmy fallon succeed where conan o'brien failed or will letterman soar even more. for some of you, your local news is next. for the rest of you stick around. you're watching "cbs this morning saturday." did you gamble on the super bowl? you know, you want to be careful when you gamble on the super bowl. last year i made a super bowl bet with jimmy fallon. i think we know how that turned out. hideous. stupid. stupid. stupid idea. you raise her spirits. we tackled your shoulder pain. you make him rookie of the year. we took care of your cold symptoms. you take him on an adventure. tylenol® has been the number 1 doctor recommended brand of pain reliever for over 20 years. but for everything we do, we know you do so much more. tylenol®. mine was earned in korea in 1953. afghanistan, in 2009. orbiting the moon in 1971. 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[ dad ] jan? ♪ ♪ bad luck turned into good luck. on air they told cbs their ticketing were stolen. the commission mer was watching the broadcast and immediately called to get connected with the fans. >> right now she's on the phone with the nfl. >> are you serious? ? >> the call was bittersweet for one of the women. he father was a trainer for the seahawk in the 1990s. both her parents were killed by a drunk driver years later. now she's going to watch the team at the super bowl to honor her father's memory. >> what great story. >> coming up a year ago, a team beat his brother's team in super bowl 47. we'll ask ravens head coach john harbaugh what it took and what it will take the seahawks and broncos to win tomorrow. this is "cbs this morning saturday." playing in the super bowl matters how much? >> it matters a lot. you understand what they're going through, the game day, the preparation for the ek woo. the game's different. it's an unusual sunday. you go out, warm up, ten minutes later you're on the field playing. now you have the whole pregame show. it's a lot longer. it's a different feeling. >> who has the different running game. >> if i was the quarterback i'd want marchand lynch as my running back. sale is going to try to run the feeble. if they can keep it where russell is only throwing 25, 30 times, that's the kind of game we want. >> can we talk about jonathan martin and ricky incognito? do you think it's possible for football players to bully other football players? when you heard about this what did you think? >> i didn't know what to think. it got to a point now where, you know, it's embarrassing for the miami dolphins and i'm a former dolphin. i will say this. you know, i talked to mr. ross a few times and he's going to be committed to making it right and doing the right things in the future as far as you know, how you act in the locker room and the things that you're supposed to do as a professional athlete. >> isn't it a culture trash talking? >> there is. there are things they do. i've been around it too. there's a point where, you know they have the top. i wasn't there personally. i wasn't in the locker room. >> did you ever have a quarterback come a you and say, hey, moreno, throw it at me? >> yeah. >> what did you do? >> i said, i will. don't worry. welcome to "cbs this morning" morning saturday. i'm anthony mason that and i'm vinita nair. coming up this half hour it's just about here. super bowl 48. the denver broncos against the seattle seahawks. we'll meet a guy who knows about winning the big game. john harbaugh head coach of last year's super bowl winner the baltimore ravens. and most of the greats of jazz played at minton's. now this jazz jewel is restored and it's shining again. we begin this half hour with you guesset is. super bowl 48 and the tightened security as we approach tomorrow's big game. last-minute prep is being made at metlife across the river from hudson. pregame festivities are also under strict watch here in new york. terrell brown is in times square on so-called super bowl boulevard. good morning, tr really. >> reporter: good morning to you. behind me the big toboggan run they've been dying to go down for the last hour it's this kind of fun that fans have been having all week long and even at this early hour there's a high security presence here. as we move through the day and tomorrow, that presence will move toward the stadium and getting fans there. about 80,000 fans expected to use mass transit, buses and trains to get out o metlife stadium and once they arrive they'll go through airport-like security to get through the stadium. the stadium will be on lockdown. there's a no-fly zone and every car, bus, and truck that gets through the prems will be stopped and screened. all of this is part of a security effort. it's for the fans to enjoy the game, the comfort of enjoying the game, not focusing on anything else. speaking of comfort when it comes to to weather, looking like 40s around kickoff time. of course, weather being the headlines around the last few week, the super bowl not being in the single digits and teens is a very very good thing. we'll take it anthony. back to you. >> feels almost tropical. terrell brown. thanks, terrell. coming up later we'll get the inside scoop from john har bow, the coach of last year's winner, the baltimore ravens. the 2014 winter olympics in sochi, russia. mark phillips is there. mark, good morning. >> good morning, vinita good morning, anthony. hopefully with any luck within the next few days we'll start talking about the actual olympic competitions, the skiing and skating and, of course the hockey. but they have had trouble keeping control of the narrative. they're in their final preparations here. the venues are all ready. they say the security -- there's a little cleanup going on. they say the security is all in place and unprecedentedly large security force. they're admitting to about 40,000 people altogether in establishing the ring of steel as they call it. they're providing security without being obtrusive but other issues dominating as well. the whole gay rights argument about russia's anti-gay law and there was a protest about they should talk to the sponsors about easing up. the russians are saying everyone is welcome and they'll be afforded a warm russian welcome. perhaps a little too warm. but in any events everyone's finally waiting for the games to begin when we can finally talk about the sports. >> imagine that. mark phillips in sochi, russia. thanks, mark. a flight made an emergency landing in new jersey after fumes in the cabin sickened passengers and filled the cockpit. it landed at newark liberty airmen last night. several of the 220 passengers were taken to hospitals. the flight originated in washington. the authorities reportedly checket out the plane but did not find anything unusual. >> there's another possibility of a major control data breach. this time thousands of hotel guests may have had their credit card data stolen. white lodging services a company that manages, marriotts, hiltons, and starwood is among those attacked by the hackers. they're telling millions to reset their passwords. the hackers could use the information to get into bank and credit card accounts. john blackstone has more from san francisco. >> reporter: yahoo! provides e-mail for 273 million users around the world. 81 million of them in the united states. the theft of names, passwords and contact lists provides much more than a target for spam. yahoo!'s ceo marissa mayer recently acknowledging the importance of e-mail security. >> your inbox carries the keys to your life. >> hackers stole yahoo!'s i.d.s and passwords from another database. they said we're resetting accounts. >> the personal e-mail accounts are very very juicy targets for attackers. >> hackers may sim will i be reselling the information to other criminals and they sell it to other criminals for who knows what purpose. >> it sounds just like what the legitimate internet companies do. >> as it turns out, information is the new oil. it's very very valuable. >> as breaches of websites multiply, cyber criminals can steal more online information to build profiles. >> criminals can combine multiple breaches and they can use that to take over another account. >> that origins are often traced overseas. frequently to eastern europe. russia has provided a safe harbor for many of the schemes. for "cbs this morning saturday," john blackstone new jersey. glonchovern chris christie is on the defensive this morning. it resulted in days of massive traffic jams. wildstein claims there's evidence the governor knew about the closings as they happened contradicting christie's public statements that he found out after the fact. the governor's office denies the claim. superstorm sandy's assault in the northeast affected millions of people including photographer randy tailorylor who lost thousands of images. he tried dipping each damaged photo in rubbing alcohol and the results were amazing. the photos were dramatically altered by the mode yet the art survived and randy taylor is joining us this morning. good morning. >> good morning. >> first of all i'm sorry. you lost more photos than most professional photographers will ever take. what happened in that storage facility? >> it was really horrible. when i found out i descended into this dark gooey mess. everything had flooded and it all settled down and it was just a mess. >> you had to wait literally how long to get back in there? they wouldn't have let you in for a while. >> no. it was a couple of weeks. >> what are you doing? >> this is me trying to pry the filing cabinets open. eight filing cabinets 8,000 cabinets. this is what i had to do. >> we're watching you basically destroy your own art. >> yes, yes. >> that's painful. how many were you able to rescue? >> out of 30,000, about a hundred. >> how did you know that that would stop what was going on? >> you know this was complete desperation. it was kind of like triage. everything was being destroyed, disintegrating and it was the mold that was deteriorating. i thought alcohol destroys mold let's try this. >> does it halt the process or stop in phases. >> it immediately halts it. this is very dramatic. i don't recommend it to anything. everything is disintegrating. i dipped it in alcohol and it stopped the mold and helped it to dry faster. >> these are pictures you took as a photo journalist but you were also your family's archivist, weren't you in. >> that was the hard part. give me your pictures i can take care of them better than you. parents, great grand parents. >> you lost your family history. >> down the drain, yep. >> obviously you've gotten a lot of attention because there's something so beautiful about the way they eroded. do you have some sense of i wish they were original or can you look at them now and appreciate them as a different art? >> if i had my choice i'd want all the originals back, absolutely. however, some of the images, they're remarkable. there's this one picture of an angel's face. ice kind of miraculous. what it's done i would have never been able to figure out. >> there was one particular image as well that had some significance to you because it involved a possible award, didn't it? >> yeah. that's the picture of the shoot-out in paris. basically a gunman had seized the embassy and there was a shoot-out between the police and iraqi guards afterward. but what was amazing about this this was the entire roll of film and one single frame survive and just the center of the frame, the peek action of the moment of the french policemen shooting the guard. >> you were actually considered for a pulitzer prize for the picture. >> my name was put in the hat, it's true, but i did not win. >> hindsight is a difficult thing but i'm curious. did you not have any backups or were they within the storage facilities themselves? >> all my archives were in the facility. it was eight filing cabinets. i had. scanned it. it was just there. >> randy taylor thanks for sharing with us. i'm so sorry it happened but wu some of the images that survive ready so striking. thank you very much. >> it's about 8:10 now. here's a look at the weather for your weekend. np this weather segment sponsored by bayer aspirin. take charge of rain shower heart health with iaproheart. >> up next now after decades of decay, a great harlem jazz club is back. we'll take you there. you're watching "cbs this morning saturday." this is for you. ♪ ♪ [ male announcer ] bob's heart attack didn't come with a warning. today his doctor has him on a bayer aspirin regimen to help reduce the risk of another one. if you've had a heart attack be sure to talk to your doctor before you begin an aspirin regimen. 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[ bettina ] my dentist said to me that i had acid erosion. he actually told me that a lot of the foods that i thought were really healthy for me can do damage to the enamel on my teeth. my dentist recommended that i use pronamel. pronamel will help protect the enamel from future erosion. ladies if you have over active bladder, imagine not being near this so often. imagine not getting out of bed again and again. and imagine finally taking control of your symptoms with the oxytrol for women patch. now fda approved as otc. it's safe and effective when used as directed. and it reduces frequency, urgency and accidents. just imagine how your life could change for the better. take control with oxytrol for women. available in the feminine care aisle. i like that sound. so what does a jazz loving corporate executive do with his time and money? >> richard parsons used his to restore a famous harlem jazz club to restore it to its former splendor. cbs correspondent james brown got a personal tour. >> that is the soul remaining original piece. >> onnal piece. >> we've done everything on the inside but we kept that mural because it's iconic. >> reporter: when richard parsons talks about his restoration of minton's the legendary jazz club in harlem he talks more like a mufg aficionado. >> you would have to start with him. he was actually in the house band. and this was back in the '40s and he attracted numbers of others who basically kind of came here and mounted what was bee bop. that would be charlie parker the bird dizzy gillespie. >> indeed one can hear yesteryear in the jazz dive opened by saxophonist minton. >> benny goodman all the greats from the '40s and '50s. if you played in new york, you played in minton's. >> reporter: the club closed down and was seized by the city in the late '70s because of overdue back taxes. since then many have tried and failed to revive minton's. what was successful before that you believe you can capitalize on to make this successful? >> you need two things to make a business work. you need capital and you need management and fortunately by my own good fortune and luck i had the capital and i found the management. >> reporter: prance no one is better suited to bring minton's back than dick parsons known as mr. fix-it. you have a reputation as a cool customer, unflappable, one who can certainly be improvisational when making deals. almost sounds like you're describing jazz. >> i think that's why i like the music so much. it fits with my sense of self and maybe even with who i actually am very the new minton's opened in october and is designed to be a supper club where patrons enjoy good live jazz and good food at the same time. the music is provided by older musicians sponsored by a nonprofit. the food is handled by his long-time fren and business partner executive chef alexander smalls. >> it's a spirited relationship. we have a lot in common. we're zbik aficionados of jazz we like to eat, and we're storytellers. we make good company. >> reporter: and for richard parsons, the company at minton's somewhat's all about. >> the concept here is to meld the music with the food with the ambience with the, you know surroundings so that each is an accompany.iment to the others and people come in and have a relaxing exhilarating time. >> and the words you want rolling off their lips when they leave here? >> fabulous. >> reporter: fabulous. for "cbs this morning saturday," james brown, new york. >> i hope that's successful. it's great idea. >> it really looks beautiful. and har lechl is up and comecoming. up next we'll hear what the baltimore raichbs kwpz john harbaugh has to say. he's in the green room. you're watching "cbs this morning saturday." 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[ female announcer ] with 40 delicious progresso soups at 100 calories or less, there are plenty of reasons people are saying "progress-oh!" share your progress-oh! story on progresso.com. and the ravens have won it. 34-31. the super bowl belongs to baltimore. >> it was a great game. baltimore ravens' head coach john harbaugh last february after beating his brother jim with a career win/loss record of 62-34, john harbaugh is who we want to talk about football and the challenges facing the seahawks and broncos. great having you here. >> great to be here. >> what's it like playing in the football? >> it's great. it's exciting. it's a football game in the end. >> you were playing against your younger brother do. you still talk about the super bowl in the house? >> it's off limits. we don't talk too much about the game. we would get into an argument. >> how did your parents cope with that. >> i think they were 100 elated and 100% completely disappointed at the same time. in the end my mom and dad spent time with jim and his family. you can only be as happy as your unhappiest child. >> let's talk about this year's game. way off the bat. who do you think is more under pressure with this year's super bowl? >> i don't know. i haven't thought about it that way. you're excited to play the game. i don't think there is a lot of pressure in this game. you've already accomplished the fact that you're there. you've already won in a sense. >> a lot of people are saying this is a big game for peyton manning. certainly he's the more experienced quarterback, correct? >> right. >> how much of an advantage is that? >> it's a big advantage. all this stuff about peyton having to prove himself, i don't think that means anything. i think it's going be him against defense, russell wilson against defense. it's football. it's kind of segmented that way. >> what's your sense about the coaches. since you're a coach, john fox and pete carroll. could could either be the stadium for one coach or the other. >> you'll find that the crowd's not loud either way. the crowd is split. it's not that loud of a game as when you play in your home state. both teams get on the line. they make calls on the line. communication shouldn't be an issue. it should be a great game. >> there's a lot of concerned about the weather. it's turning out to be actually very balmy for this part of the world. >> right. it's almost tropical with what we've been going on here. >> a lot has been made about the matchup and a lot of talk has been made about richard sherman. i heard people saying what if there's something like car massachusetts. what do you think about the two teams and how they've been affected by the media. could it affect it? >> it could. richard sherman is great player. he's not going to be scared away by the situation of the statement and stuff like that. when it's all said and done it's 100 yards long, 50 yards wide and it's going to be a football game. great players go against each other. he'll have a game plan and they'll have a game plan the other way and they'll play off. >> you're going to get the award which is for your work with the military. you're actually going be headed the afghanistan and turkey monday? >> yes. turkey first and then afghanistan. >> what are you going to do? >> get with troops. spend time shake hands, be with them. i can't wait. >> a very different experience. thanks so much. >> thank you so much. coming up a new round in the late-night tv war. is the new host jimmy fallon the next conan o'brien? you're watching "cbs this morning saturday." your two sons of course great football players they've been in the last five of the eight super bowls. 's a pretty good record. what's the super bowl like each year? >> for parents, it's wonderful. for players, i played for a long time. we never even made the playoffs, so we didn't get close to the super bowl. that's the ultimate for the super bowl. that's what you want to do. as a parent to do it five times, we kind of look at each other and pinch ourselves. i'm not trying to be greedy here and it's more fun to win these games when you get in but i wish all parents -- i really wish any parent who has a son playing could experience this also. >> when you watch them on the field, this is a hard question for a father to ask -- answer. who's better eli or payton? >> i don't go there. >> you know fwail rates her children in front of us all the time. >> it's hard to pick. i could never pick. >> quarterbacking -- i think too many times we individualize in football. john's had a tough year. broncoss had a good year. his team's having great year. >> when you watch the game do you watch it from inside do you watch it at home? to you watch it -- >> we go to some games. we come up here and see some giant games. we go to denver. but we like to stay home and watch it on tv. >> what are you going to be when it comes to the super bowl? >> i'm going to be inside. we'll be outside, see what that's like. i keep telling peyton, i keep telling my kids, enjoy the journey. it's always nice to keep working, sure it is. am i extremely grateful? do i understand the circumstance? yes, of course. >> this is what i don't understand you. 're still number one. >> think because you have talents people only wait so long before you get other opportunities. you don't want to loose out on opportunities. that makes sense to me. and i thought jimmy has been extremely gracious and polite. >> you said all the same things exactly the same when you spoke about conan. >> did i? yeah, maybe i did. we'll see what happens. >> that was jay leno on his upcoming departure of the tonight show. welcome back to "cbs this morning saturday." i'm vinita nair. >> and i'm anthony mason. jay leno steps down for the second time. >> jimmy fallon will return to new york. will it work or flop like it did with conan o'brien. let's speak with steve and linda. good morning. >> good morning. >> good morning. >> linda, aisle just start with you. a lot of o people say abc has kimmel. he's a younger guy. is it all about -- >> absolutely. leno beats everybody else in that coveted demographic but this is like a 1960s mentality where they think women don't buy things, they think people over 49 don't buy things. i also think that that's what they're thinking and that's all they care about and that's why they're moving and that's -- not that it's not a good idea to switch up but i think that's the absolutely only reason. >> they tried this five years ago with conan. it was a complete disaster. they undid it. is this time going to be different, do you think? >> even five years the economics of television and late night television has changed. "the tonight show" was probably making more than $100 million in profits back when they made the first change from leno to conan oh'brien o'brien. now it may be $25 million. there are a lot more competitors on cable. people are playing back their dvrs. jay had to take a pay cut pause the situation has changed so much economically. they're moving the show to new york they're getting a big tax break, nbc. jimmy fallon will get paid las. a smaller staff. they laid off people. nbc is looking a the future. they're looking to make the show more profitable and they believe they circulate a guy that can do it for the next 10 15 years? >> what about the p.r. we heard jay talking with steve cost. it got mixed reviews. do people believe he's ready to go and he's sincere in his hand-off? >> i don't think people buy it. it's almost like he was coached by olivia pope. he's saying all the right corporate speak things. he's very much a gentleman. he's very much a gentleman and he's not taken this as a street fighter. he says over and over this is the only job i ever wanted. no one wants to leave. >> no one wants to leave. i'm sure he wanted to be caret out of there. but it is happening and he can ran rationalize. if he wants to be on television again, he can. there are a lot more places to go today. >> does somebody get an advantage out of this because obviously there's a period of time jimmy fallon has to settle in. >> he's been on late night and "saturday night live" for years. he doesn't come from the same type of standup sense built that jay came from or david letter men came from. i think he'll scare other viewers. >> i agrey but a lot of them are more comfortable with him. >> we'll see what happens. thanks so much for being with us. now for a final look at the weather for your weekend. up next chef leah cohen brings the street foods from asia to "the dish." you're watching "cbs this morning saturday." when you find the one... you just know. new almay smart shade makeup made it easy with just three skintone-adjusting shades to choose from... not hundreds. new almay tonemimic technology intuitively transforms to your skintone. almay smartshade. it's my one...and only. good job! still running in the morning? yeah. getting your vegetables every day? when i can. 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[ female announcer ] just about anywhere you use sugar you can use splenda® no calorie sweetener. ♪ ♪ splenda® lets you experience the joy of sugar without all the calories. it's a very good reason to enjoy something sweet with the ones you love. think sugar, say splenda™ ♪ ♪ ♪ [ male announcer ] you say tomato. ♪ ♪ old el paso says diced tomato stand 'n stuff chicken tacos. ♪ ♪ you say what's for dinner? old el paso says start somewhere fresh. one thing you can always count on in new york is variety. that's why chef leah cohen has such an eclectic tastes. she's traveled to asia traveling street food everywhere. >> she's the chef owner of pig and cow in manhattan. we're delighted to have chef leah cohen. what have you got for us? >> it's a beef short rib with potato puree and kale and a pork youle with brussel sprouts and our muss el dish is with pineapple curry. >> and i'm told we're drinking tequila this morning. >> oh, yeah. >> what's in the drink? >> tequila, chilies and sugar and a little mango juice. >> that's really delicious. you can taste the curry in there. >> yeah. >> leah, what got you into cooking? >> my grandma was great cook and taught economics and she got me cooking at a really young age. it's something i fell into like i was good at it. i wasn't good in school and i was very passionate about working in a kitchen and my parents were happy i found something i could succeed in. >> and something you love. >> yeah. >> i was reading an article you were in. you said i do asian hipster food. what is that? >> it's a terrell that you know the general public kind of coined. it's younger. kind of hip. >> your food is filipino and thai which is something i never heard of. >> i'm half filipino and spent time in thailand. when i was thinking of the concept i wanted to only do thai food. my mom said you cannot do filipino food if you're going to open up a restaurant. i thought, okay i have to pay some homage to my heritage and i got the idea to do thai and filipino but we do some other stuff. vietnamese. it's a mix of southeast asia. >> you alluded to having spent a year in southeast asia. >> yeah. >> what was this for? absorbing everything? >> i basically packed my bags and decided to knock on people's doors at their restaurant and let me ask them if i could work for free and i spent a year doing that just to try to learn the flavors. i think you have to -- in order to do a cuisine, you have to be very hands on and you have to learn about the culture and the country and the people. so i just really wanted to immerse myself. >> what -- how did top chef change you? we've had several "top chef" guests on the show. a lot of them said they're more bold. >> before "top chef" i wouldn't be here doing a morning show. i was so scared to be in front of a camera. it kind of just challenges you and makes you have to think outside of the box and pushes you to do things that you don't think that you could do. >> i'm going to hand this oh over to you to quickly sign. quickly tell us if you could share this meal with anyone who would it be sth. >> jimmy fallon and justin timberlake because they're hilarious. >> and they'd sing for you. >> yeah. what happens when you mix the voice of susan die december ski and the guitar of alman brother's. you're watching "cbs this morning saturday.". >> announcer: "cbs this morning" sponsored by toyota. let's go places. ♪ ♪ ♪ ♪ [ male announcer ] build anything with the new toyota tundra. toyota. let's go places. 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[ female announcer ] only with abreva. ♪ ♪ ♪ new hershey's spreads. bring the delicious taste of hershey's chocolate to anything - everything - you can imagine. explore the endless possibilities of the delicious chocolate taste that only hershey's can deliver. with new hershey's spreads, the possibilities are delicious. i've got a question for you, anthony. what you do call a grammy singing band with a singer who can belt the blues of janis joplin and a rock -- >> these easy. the tedeschi trucks band. they're going to play for you in a minute. first an introduction. i talked with them in the former east village cradle of punk rock see degee bys. >> you put your band together in the middle of a recession, didn't you? >> we're not businesspeople. >> got a calling out. she was calling out to you. >> after years of success as solo art iflts derek trucks and his wife susan tedeschi wanted to be more than soulmates. they wanted to be band mates. >> we talked about it. if we're ever going to do something like this now's the time. we're both young enough to have the energy to do it but maybe old enough to know how to make it happen. >> the telldeschi trucks band worked around a slide guitar and a voice. >> even on our solo careers, a hard of hard core fans are why are you doing this? it's not the allman brothers or her band or my band. i feel like you giev tot shed your skin ever once in a while and hit it. >> a guitar prodigy derek trucks was born a rambling man. he was soon performing with bob dylan and eric clapton. in 1999 at age 20 he was made a permanent member of the allmans bus just this last year he announced this would be the last year with the allmans. >> i think even in the last few days greg said this is it. >> greg was ready too. >> we'll see. with that band -- >> you never know. >> i would never bet on it one way or another. it's full of surprises. i thought it was done ten times in the 15 years i was there and it would come roaring back. >> the tedeschi trucks band are on tour again behind their new album "a made up mind." when the couple who have been married 12 years now hit the road their relatives help out with the two kids. >> the hardest change for me as a mom is now the two of us are gone and so our kids are feeling that a little bit differently. >> my mom and dad live four doors down from us and when we hit the road she moves into our house, my brother and his wife and baby are -- >> 12 houses up. >> it's a little village. the trucks are taking over bringing property values down. >> so here they are, the tedeschi trucks band. >> from the album "made up mind." this is "do i look worried." ♪ back in the day when i lie he always find now here you are full around out every night ♪ ♪ i don't have to take it anymore and i'm tired of always keep it slow ♪ ♪ all i say do i look worried to you oh do i look worried ♪ ♪ stand in the face such a disgrace you were wrong ♪ ♪ i tried it again stay till the end but how long ♪ ♪ we've been here so many times and i know you've spent me so many lies ♪ ♪ all i say do i look worried to you ♪ ♪ oh do i look worried ♪ ♪ 'cause i ain't worried oh you'd better be worried ♪ ♪ ♪ ♪ fool me once or twice you know they say shame on you ♪ ♪ now that i know with the man he isn't after you ♪ ♪ i find my way to an open door because nothing is the same as before ♪ ♪ all i say do i look worried to you ♪ ♪ oh do i look worried oh do i look worried to you oh you'd better be worried ♪ ♪ ♪ do i look worried to you ♪ ♪ worried, worried, worried ♪ >> don't go away. we'll be back with more from the tedeschi trucks band. you're watching "cbs this morning saturday." >> announcer: this portion of "cbs this morning" sponsored by lifestyle lift. looking years younger has never been easier. 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[ female announcer ] yoplait greek 100. 100% greek. 100% mmm... so mmm, you might not believe it's 100 calories. yoplait greek 100. there are hundreds of reasons to love it. everybody. we leave you more music from the tedesche trucks band. this is "it's so heavy." ♪ oh, what have we done to this kingdom we proclaim to be the chosen one ♪ ♪ everything is choosing in each and every domain everything is frozen burning just the same ♪ ♪ oh, it's so heavy oh it's so heavy ♪ ♪ oh it's so heavy i've got to let it a little let a little go ♪ ♪ oh, i thought we were past all the lies they will come for us with darker mirrors and paint our skin with colored eyes ♪ ♪ oh i thought we were past the time when injustice was the leader and liberty the last ♪ ♪ oh, it's so heavy oh it's so heavy ♪ ♪ oh, it's so heavy i've got to let a little let a little go ♪ ♪ ♪ oh we are marching we are fighters without a cause 'cause it's easier to be in a crowd then cry alone crying out load ♪ ♪ you've got to feel the pain ♪ >> announcer: for more about "cbs this morning" visit us on cbsnews.com. the state is making a cut never done before. l helps 2 young women... drastic measures being taken during the drought. now the state is making a cut that's ever been done before. the nfl helps two young women who had their super bowl dreams stolen in san francisco. and the giants ready to start spring training. but before they take the field, they will be greeting fans this morning. it is 7:00, saturday morning, the 1st of february. thanks for joining us. i'm ann makovick. >> i'm mark kelly. >> it is cool across the bay area this morning, temperatures a little bit more seasonal as we start off february. a live look from our roof cam at the bay bridge. you can see it's only 29 degrees right now in santa rosa, very chilly, 34 in livermore, 44 in san francisco. here i
stocks soaring yesterday on all of this news about a potential deal out of washington. yesterday, the market was up by better than 2%. a gain of 323 points for the dow. that's one of the best market days all year. the futures this morning after that big rally are actually, believe it or not, indicated slightly higher. barely up there, but you did see a downturn earlier in the futures that turned around after it looked like a deal was at least a very good possibility. as for the public's opinion on the whole situation, americans are saying fire them all. there's a new nbc news "wall street journal" poll that finds the majority wants to toss out the entire congress. just 14% say the nation is headed in the right direction. that's about 0.5% of who felt that way just a month ago. 78% call the country on the wrong track. that tells you a little bit about how bad things got in the last couple of weeks and that might tell you why the two sides sound more willing to negotiate. john harwood is going to join us with more in just a few minutes. but now, andrew, over to you. >> thank you, becky. for all the people that want to throw everybody out, i imagine in a couple of years they won't throw everybody out. jpmorgan and wells fargo, jpm's numbers expected to hit the tape about 7:00 a.m. eastern time. we'll bring them to you here on squawk. analysts are looking for a share of revenues at 1.79 aboutel. and we're going to have a preview from a banking analyst at 6:15 eastern time. conference calls on both of these earnings are going to be what everybody is going to pay attention to, including whatever settlement on the jpm side we get or get close to. joe. >> this poll will have harwood on. i saw brian talk about it last night and then release the numbers. also saw costello's report. did you see that? >> i saw that. >> on the first week of trying to sign up. there are literally places where they went over it and thousands -- and like one person. >> i was listening to an npr report. >> it was a pretty scathing report on how things -- i don't know whether they're trying to help, you know, light a fire under the administration's butt or whatever it was, but it was very negative. >> because the clock was ticking. people who are expecting to bfr covered by january 1st, this clock is ticking. >> the numbers do show republicans getting more of the blame, but the numbers are bad for everyone involved. this is the one i got that the headline was ask about the current budget battle and they emphasized 70% said republicans in congress are putting their political agenda ahead of what's good for the country. >> right. >> how about the president? what percent? >> i don't know. >> 51 %. a majority of people asked think that the president is putting his political agenda ahead of what's good for the country. 51% is not a good number, is it? you can win an election. a lot of numbers are still kind of representation of that same election, the numbers that were there. 51% is the number that -- or 52% is the number that you win. >> i wonder how quickly public opinions change if it looks like the government is reopened, if they sit down and talk. obviously, the markets have huge sold will i -- >> i think they'll be just as unhappy. >> but no one has switched party affiliations based on the latest -- >> correct. >> and it's still 52/48. >> if you're a republican and sits around and goes, you know what? i hate these guys so much, all of a sudden i love the democrats. and if you're a democrat, even if you're frustrated with how you think they're approaching it, you don't say, well, actually, i have to tell you i love ted krooudz now because you just don't. >> you would think -- but they don't even -- >> well, independents might be swayed by it. but if you're an independent and 31% of them blame obama and 54 bers blame congress, if the independents come down, maybe a few more -- >> right. but then there are still going to be people -- >> everybody is holding their nose on this. >> but there will be still people who look, some are more fiscally conservative and they can see some merit -- they just don't lie how this was done? >> you tell me, i think most of the establishment in terms of the republicans, whether it's the same betters or others are upset. >> most of the what? >> most of the establishment of the republican party -- >> but another one norbert said he was mad at ted cruz. there's solidarity on the left and on the right. the republicans want something and the democrats want something. ross westgate probably will talk about the rutgers outcome. was that big in london, the rutgers/louisville game, ross? >> that was huge, as you know, ross. royal blue. >> and the giants, 0-6 of. >> yes. >> i don't know, was it detroit or oakland? i don't even know. >> those are the only two games i know. >> detroit won. >> there's a third. they're going to host a third game now, a third regular season game in london next year. >> you're going to get a team. i've seen them start talking about there's -- so much of it is on tv, anyway, and since you people are coming around to what the real football -- what football actually is. would you rather watch a nothing to nothing soccer game or a 51-48 football game? we have action in our sports, ross. >> yeah, but it takes so long to play. how long do you have to be in a stadium to watch an nfl game? >> you're drinking beer and having hot dogs. what, do you want to get in and out? do you want a 15-minute game? >> 60 minutes of action spread out over hours. >> ross, these games start -- on over here, we start in the parking lot at 6:00 a.m. with beer. and brats. >> well, there's nothing wrong with that we job pe. >> i knew i'd get you on that. >> it's more akin to rugby. let's mott worry about the sport. let's just stay in the parking lot. here we are, we're three hours into the trading day, joe. 6-3, advancers jourt pacing declineser. 92 points higher. not quite as big of a move as we saw stateside. and today, we've had some gains. not fwig moves, around 0.7% today. xetra dax up 0.7%. kwet ra dax up 0.3%. cac 40 up 0.1%. ftse mi byup 0.18 bers. banks up around 0.6%. financial services are stronger. you've got health care up along with basic resources. a little weaker in telecoms and utilities. we'll see what happens with the dollar and the commodity prices, as well. one company that is in big focus today is royal mail. yes, the british government told a 52% stake in the royal mail, which is its main delivery post in this country. and the issue price was 330, up 35% on the open. currently trading at 4 pounds 39. investors couldn't get enough of this. 800. 20 times. it's the conditional trading at the moment. but big, big interests in getting a slice of that. and the government is taking about $1.7 been pounds out of that po pay down their debt. would did have an auction out of italy. italian yields, 4 .29%. we saw the lowest yields there since may and on the 15-year, the lowest level since february, as well. it's a pretty good demand for per r per r perrefereeal debt out of europe. >> john, the latest poll numbers show why the two sides may be willing to talk to each other. >> well, no, they showed why republicans are giving in on their position. this is a poll that shows it's bad for everybody, bad for the economy, bad for the public mood, but it's worse for republicans and a lot worse. >> i saw this was the lowest marks in the history of journal polling. >> if you look at what happens, like big picture, president obama's approval rating actually went up since the crisis began. support for funding obama care went up. republicans have the lowest approval rating in the history of the "wall street journal" poll. republicans are under water by 20 points in terms of evaluations of their performance. and -- excuse me, guys, i have a cold. when you ask about who's to blame, by 53 to 31, the american public says that republicans in congress rather than president obama are to blame. during the clinton gingrich standoff in 1995, the proportion of americans who blame republicans never got to 50%. >> you're kidding me. >> it's over 50%. >> didn't gingrich lose his speakers? didn't he have to step down from the speakership after that? >> it was a couple years later. yes, he did. on every measure, it shows impact for everybody, but it's a lot worse for republicans. >> you know, john, the way that they're going about trying to achieve their end is probably what you're talking about there. but i bet you ask it in a way that this looks at what the underlying arguments are about. and i'll bet you they're not nearly as polar. >> but it didn't help their cause. >> but there's a lot of people that we want to get started on dealing with these unfunded -- you happen, these unfunded promises that we made. >> sure. >> but all i'm saying is the country is still split on whether we should be pieg more money from china to spend on infrastructure or whether we should start looking at handling entitlements and everything else. >> bill mcenturf, the republican pollster said basically the result of this episode has been a political boomerang for republicans. that is the proportion who want to defund obama care has gone down. the ones who want to fund it has gone up. and in a question that we ask consistently a question. is government doing too much or should government do more? the proportion of people who say government should do more has gone up since this happened. it's now 52% say government should do more. 44% say -- >> it just means stay open. >> it's 47% says stay shut, 53% says stay open. >> and one of the reasons that this is worse for the republicans in congress than it was for gingrich in 1995 is that in 1995, gingrich and clinton passed a bunch of spending bills, so the shutdown was partial. this is a circumstance where even though some exceptions have been made, no spending bill has been passed.it is a broader shutdown with more impact. so when you ask people, have you and your family been affected by the federal shutdown? in 1995, the note that we got over a couple of months was 18%. the number in this poll, 31%. >> john, people are feeling it and they don't like it. >> what i don't understand and maybe i don't get it, what is possibly going to happen over the next month or two months? >> what are the three things again? >> poly anna, ignorant, naive, whatever, i'm all of those things. when you say we'll negotiate over these things, they wanted to negotiate over these things the whole time. i'm not sure what the big deal is here. >> the democrats have been willing to negotiate, republicans have not wanted to. >> i'm not sure that's true. i think republicans wanted to negotiate over tax reforms, too. >> no. >> no. >> both sides have wanted to do this. nobody has ever got it to the table. >> no, no, andrew, you're not paying attention. the republicans made a demand. they said we're not going to pay you, senate, unless you pass the budget. the senate passed a budget. they asked to go to conference with the house and have a negotiation. the house was unwilling to go to the conference. and the reason that they've been unwilling to go to the conference all year is that under the rules of conferences, republicans were worried that the outcome of the conference was not going to be what they wanted. so they resisted. >> yeah. they didn't feel like they have enough leverage in conference, right? >> yeah. if you go to conference and the conference doesn't wrap up in a certain period of time -- >> you go with the senate, right? >> you lose the ability on the house floor to control what goes to the floor. so they have been resisting having a conference. and the reason, why have they been resisting having a conference? >> because they thought they were going to lose. >> well, yes, but there's a more specific reason than that. their strategy has been to squeeze very much the domestic -- the discretionary parts of the budget, which are not the long-term budget problems. they've gotten to the end of the road on that strategy. in fact, they cut those so much that when they put their own appropriations bills on the house floor to try to pass them, they couldn't pass them because not enough republicans thought there was enough spending in those bills. so if you then go to entitlements, which is where the real problem is, guess what? that's not very popular. that's medicare and social security. >> that is -- >> so they're not pushing that discussion. >> that has been paul ryan's point for a long time and that's what he anged earlier this week in an op-ed. that kind of gets you back to that position. but both sides are looking for the way that they can get the most out of it. >> on andrew's underlying question, becky, i've also been a polyanna. i totally have been someone who looks at the potential grand bargain and says that's obviously in the interest of the country, they need to do it. but it is difficult because if you go big, if you go after medicare and social security in a serious way, democrats are going to insist on tax revenues. well, if the republicans say no to tax revenues, you can't have a grand bargain. so what paul ryan has been talking about is a down payment bargain, something smaller. now, that's not going to be the easiest they can get it, which they should be able to get it, a rational negotiating strategy should be able to produce that. it will be lesser entitlement reduction and no tax revenue or maybe some user fees or things that, you know, are kind of quasi revenue. that is what could happen in a deal. >> but that's where we're different, john. and i think that's how we see the world differently is if you add in the obama care taxes and the tax hike that the democrats got last year, you add all that in, to a lot of people with how much government has grown just in general in the last 10 or 20 years in terms of, you know, how much it actually is doing, it seems much more reasonable to some people that we should just handle our entitlements and not even be talking about more revenue at all because you've got your revenue. >> yes, that's the philosophic difference. >> i've heard a lot of people say democrats are the ones who are unreasonable by not be willing to take on entitle manies without troog to go back to the revenue well where you and probably others would say, it's not an unreasonable demand. >> they keep calling it a balanced plan. and that means they're going to raise more revenue and we're going to be at 60% or 65% marginal rates with state taxes and everything else. >> joe, you are right there the. you just put your finger on the nub of it. but then it requires you to make a choice. >> i know that. >> if you're concerned about the size of government, the safety net -- >> or the size of the debt. >> the safety net is for the people that truly need it, it should be really big. and then for other people that maybe, you know, i don't know, it seems like we don't -- you know, europe has a different system. there's a safety net for people all the way up to probably the 90% of the people. and that takes away, you know, the ability to earn your own success. >> extreme positives. >> what you've just outlined, joe, is the precisely the nub of the problem. and it's the reason why we haven't been able to get a deal. it's because the people on the right and the people on the left, they both have a lot of clout sxp the people on the right, their concern is not really the deficit and long-term debt. it is the size of government. and the problem is, the people who believe in the size of government that we have is large enough to prevent them from reducing the size. if they decided to focus on the debt and deficit, they could come to -- >> even republicans, recipients of medicare love their medicare. i understand all the ironies and the incongrewties of -- i don't know what we're going to do. i plan on living forever. i don't know, it's going to get more and more expensive. >> how about for you guys on the panel? what's more important, debt and deficits or size of government? >> i think they go hand in hand. >> no, but they're different issues because if the issue is debt and deficit, then you say, okay, revenues and options and i can make a deal with democrats. if you say it's the size of government, then you say forget about it. no more revenue. >> that's in the way of fund. >> if the government can work like -- i don't think it can. if the government can work with the private sector with accountability and people having to report to someone to keep -- i mean, look at the way this thing has rolled out. >> we are giving our producers heart attacks. >> yeah, we are. thank you, john. we are going to move on and have a quick conversation about jpmorgan and wells fargo, which are kicking off their earnings for the financial sector later on this morning. here to talk about winners and losers and what he sees ahead, eric wastrom from sun trust. how are you? >> good morning. how are you? >> help us with this. we're going to get jpmorgan at 7:00 and wells fargo right after that. we know i think everyone has a sense of what the numbers are going to look like, but maybe you could shed light on that. but everyone i think is waiting for the conference call and what ultimately we hear about this settlement. is that going to be the big news today? >> well, i think you're right in that it's certainly what the market is hoping for. although i don't know if jpmorgan's management is really prepared to speak about it. obviously, it's a particularly sensitive topic. i mean, it looks like from the media reports we were headed for .kind of resolution, but it seems like those conversations have been suspended with the government shutdown and the doj currently -- current staff obviously not functioning. >> let me read you something that dick bove just row. he said the predominant view of jpmorgan is once the bank makes a large settlement, all activity returns to normal and the bank returns to $20 billion net. he says while i've not adjusted my earnings estimate yet, i do not share this view. i believe the short-term earns of the have been can be affected by the changes being forced on the company. is that the rye or whong? >> i'm not sure if i agree or not here. what we've seen with the volcker road rule and some of the other models, the business model has change. so i think i end up agree, dick that the outlook for jm morgan and its peers is that the future is not particularly like the recent past. >> and when we look at this quarter, total revenue is expected around $23.4 billion. what's your number? >> my number is ahead of that. on the whole nod of a fikly strong quarter, but i vary from the consensus on a few different items. >> and when you look at out after this quarter, is this a flip or do you think it gets better or worse from here? >> well, you know, i think the conversation that you just had poses one of the major questions, which is what is the macro back drop heading into the fourth quarter into early next year? i think our view was that, you know, the 2014 was not going to be a fan ft take year for the macro economy, but it should be stable. obviously to the extent that these issues aren't resolved, the outlook gets worse. so, on obviously, that will have a big influence. >> eric, give us one thing to look for in the wells earning report that we should be paying attention to. >> two, one is asset growth and the other is the msr evaluation. i think both of those could end up pushing the numbers ahead of consensus. >> thank you for joining us this morning. >> thank you. coming up, why new york city mayor michael bloomberg is getting dragged into a fight in mexico. first, though, squawk sports news. the detroit tigers downed the athletics 3-0 in oakland. to advance of the american league championships. justin varlander, who has time to date super models while doing this worked eight inninges and gave up only two hits and ma gill cabrera belt add two-run homer. the tigers now play the red sox in a classic american league matchup. it's great, the st. louis, l.a. and the other two. this is turning into a really good -- baseball needs it. they could use about news. but boston is always fun and now they have those beards. welcome back, everybody. it's time for the executive edge. michael bloomberg is ooig being dragged into a mexico soda tax hike. the mexican government waits to raise tax on soda. mexico has the highest soda consumption and now has higher obesity ads than the united states. some of the ads target bloomberg. his charity has contributed potentially to mexican protax groups. although i think what really happened is he set aside millions of dollars. >> i aplow what's going on in mexico. >> i do, too. >> i love it and i think it's the right thing to do. >> they drink like 43 -- how much do they drink every year on average? more than 43 liters or gallons. i forget what it was. >> 43 gallons. >> i guess we're three for three because i don't care what the mexicans do in terms of taxes. i don't. they can tax things, not tax things, they can go wild, do whatever you want. >> hold on. i have a question for you. this goes to a free market -- this is one of those instances where i say the market isn't working. >> well, here's the problem with this. >> they create incentives. >> there's a lot of money that's been put into advertising in mexico to fight this tax and the people in favor of this tax can't get time on the spaces or billboards because the television stationes and billboard advertisers don't want to alien ate companies that give them a lot of money. >> taxes isn't great, but i would prefer this to making all the producers have a certain size bottle and change all the manufacturing 23589s the way bloomberg tried. if you want to make it more expensive tore people to consume sugary drinks, that moves down the list on how -- >> okay. great. >> i agree with that. let's talk about the second story. the ft is reporting that google funneled $12 billion of royalty payments to bermuda last year. that is a quarter mon more than it did in 2011. the tech giant has been at the center of an international corporate tax controversy. it earns foreign income in ireland and there's crazy schemes from there. >> the uk is particularly incensed about this. it's sales happening in the uk and have been final united statesed in ireland. >> eric schmidt testified in the uk. there's articles every which way. this is the issue that's going on in the u.s. in many ways about where we're moving moenl. >> money goes to the places where it can most quickly move. all kinds of arguments about why you need to change the tax codes. >> right. when we come back, stocks tracking every twist and turn out of washington. we will ask what the latest means out of washington when we come back. it's a growing trend in business: do more with less with less energy. hp is helping ups do just that. soon, the world's most intelligent servers, designed by hp, will give ups over twice the performance, using forty percent less energy. multiply that across over a thousand locations, and they'll provide the same benefit to the environment as over 60,000 trees. that's a trend we can all get behind. at a ford dealer with a little q and a for fiona. tell me fiona, who's having a big tire event? your ford dealer. who has 11 major brands to choose from? your ford dealer. who's 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. i'm beginning to sense a pattern. get up to $140 in mail-in rebates when you buy four select tires with the ford service credit card. where'd you get that sweater vest? your ford dealer. lawmakers in washington showing an ability to resolve all these things. yesterday, a glimmer of hope saw stocks rebound and get back maybe half of what they lost in this latest government induced debacle. joining us now, karen and thomas, i want to start with you, thomas. you've got a 1675 s&p target. at the worst, you look at this as a way to maybe deploy some dry powder. hopefully you would have something and be able to buy more. >> i mean, that's right, voe. i think the only person who should be raising cash right now would be someone who's got a much higher exposure to markets than what they're comfortable with. but otherwise, you know, i think there are a substantial portion of the risks that are reflective. and we could see them in the hedge funds, mutual funds data. it's about where it was in august of 2011, people people have derisked. we haven't disowneded a default. there's still substantial risks out there, but i don't think the risks are so great that we need to liquidate our decisions. >> no. from here, it's 5%. certainly if you got a pullback and that 1775 would represent 10% or so by the end of the year, you would want to jump on with both hands. >> that's right. i think that the market is still capable of hosting a receipt good rally of relief when we get resolution. but as you said, you know, i think there's a chance of volatility in the next couple of weeks. i don't think it's smooth sailing. we'll start in november. >> yes. >> tom, i'm unclear why you don't think we're going to have some form of a slowdown more broadly in the economy as we get ahead of the holiday season. all of this will be dragging out in the press and on our show and in the media every single day. i don't think people are feeling particularly brilliant about all ooh this. i don't want to throw a well blanket on it, but -- >> if the market was trading on the economy instead of qe, maybe that would make a difference. >> yeah. >> people who are on hotels, people who are booking travel, they say there might be some slowdown, really. >> yes. it's pretty hard to figure out what the second older effects of the shutdown is which is what everything you've described and everything that's being reported in the media. i think it's going to come in the back drop of what would have looked like itself would have been pretty good results for companies. but i think the up shot is it gives us somewhat of an insurance possibility when it comes to monetary policy. i think the markets are going to feel like, well, this is going to give the excuse for easier money for a bit longer, it's still a pent up demand story. a lot of these are temporary disruptions and i think that's why the markets are going to show some relief. >> plus we're going to be gelling with yellen. i would probably add the zero go & go out to 2025. things are things that you -- anyway, margaret, i'm trying to decide how to view what we've seen in the credit markets in the last month. my take is that they've been amazingly doe siel and i -- because you watch it so closely, you see the -- you know, you see a one-month bill go up to the highest level since the crisis. and it looks like oh, my god, because you're watching it so closely. but a quarter point versus 5% in the crisis, does it really matter whether it doubled or triple it when we're at 25 basis points? >> i think it's more an indication of the stretch in the front of the market due to the debt ceiling debate. we did see selling of the october the t-bills surrounding the date. and i think most people went through the two sets and figured out what could be impacted. rooet right now we're seeing debt being pushed into the november date. while it's not overall stress, it is indicative of what's going on on the front end. the problem is the risk/reward is a one-month bill. at the same time, you're risking the chance that you have a bond that hasn't paid. and in that snaredo, most people think that the treasury would extend the maturity one day at a time and you really don't know how long that maturity will be extended. there are national security issues involved and what we did see is we saw government mutual fund selling both sets. we saw people going through. there are collateral pools looking for those bonds and rather an unwillingness to take those securities as collateral. >> the -- >> i was looking at a three-month or two. and i don't follow it as closely as santelli or you, margaret. four basis points? for real, four basis points? >> well, everything is expected to be solved by then. so the front end is still held down by the fed on hold and i think yellen's credibility and in addition to that the belief that they will keep rates low for a long time. >> it doesn't look like a lot of stress on the system or a lot of angst. i don't know, it just seems like if -- you know, if you were really to gauge the probability of something really bad happening, i don't see how they could be down there. you know? >> yeah, i agree. with regard to, you know, the stress states, i think that, you know, the kicking the can of six weeks really just pushes the issue into november for the front end of the bond markets. but certainly you're not seeing any real stress out of the curve and bonds from this situation. >> that should be interesting to watch the yield curve based on the time frame these guys start putting on how long they raise it for so we can prepare for the next -- you know, for the next argument that we know is coming at some point. and we can watch it on one month, six months, anyway, thank you, margaret. we appreciate it. they wrote b-e-e-m-o into the script for me, margaret, so that i don't -- >> andrew and i appreciate that. i might see it and i might say beamo and i may not. >> beemo is a frisbee company. you don't have anything to do with that company. >> you would have said something like bee-em-o. >> man, is my brain -- anyway, coming up, washington is the key drivers in stockses right now. we'll get the latest from capitol hill when republican kevin brady joins us next. plus, a very big morning for bank results. we'll hear from jpmorgan and wells fargo. earnings season, it is open for business. we're back in just a moment. you really love, what would you do?" ♪ [ woman ] i'd be a writer. 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[ woman ] i'd be an architect. what if i told you someone could pay you and what if that person were you? ♪ when you think about it, isn't that what retirement should be, paying ourselves to do what we love? ♪ wroib to "squawk box." in washington, capitol hill staffers negotiated late into the night. there is another meeting this morning between senate and republicans. joining us now is kevin brady. congressman, what do you think the odds are that, a, the government will be open by monday and that, b, we will have some sort of res lug to the debt limit? >> good morning, becky. i don't know the timetable, necessarily. i think the negotiations are pretty encouraging. i think the appropriate, look, let's buy six weeks to come together with a solution on the debt ceiling, let's put the budget committee back together among -- between the senate and the house final resolution to our budget figures for the next year and then finally, let's start talking about how do we open the government and what that final solution is on the debt ceiling. i think this could be a break through. >> the idea of defunding obama care seems to be completely off the table at this point. do you think that that move to try and do that hurt your party in these negotiations and hurt you with the public? >> you know, there is a lot of speculation about that. i do know that no president in modern history has ever repealed a major signature law that was just passed. so that clearly was a bridge too far. our frustration, obviously, with is that law and its impact on the economy, small business, on patient care itself. but going forward, i think the bigger issue is how do we really start tackling the sustainability of washington's finances? they're just nowhere near where they need to be. we need some real changes. and historically, the debt ceiling as tough as it is, and i can tell you we are not going to fall on this debt, absolutely not. but we're not going to have a blank check. we have to make some changes. this has traditionally been a historical opportunity to have some discussions. i hope they're fruitful. >> at this point, obama care might not be quite as expensive as you thought. apparently you have to cover about four people so far. i don't know if you need to defund those four people that have been able to sign up at this point. >> those four people will get a sweet deal probably from that. but boy, the numbers that came out yesterday were awfully for the white house disappointing. 51,000 for the first month. that works out to a little over a million in the first six months. the white house was shooting for seven million. so there's a real problem there. >> and i saw a report last night. they all said you're not ready. the code is not there. >> it is not there. >> it would have been good for the white house to think of some kind of way -- you know, they did it with corporations, some kind of way to come to a -- and it probably would have been good for you guys not to give them a delay, to let us all see how poorly this was handled. you were both on the wrong side of the issue. >> it may be. but what we know is i lead the health care committee on wayes and means. two weeks before the rollout, the white house has not sent successfully a pile of exchange in the process. i think one of the smartest things both kaerts could do is say today, give americans a choice. if people want to go into this plan as an option, terrific. but back off the mandate. let this thing work itself out. give people a choice at this point >> >> congressman, the 30 or so congressmen of your colleagues who were dead set on defunding obama care andparty? >> well, i would disagree that there are 30 members of the house willing to go over the debt ceiling. republicans are not supportive of breaching the debt ceiling. we want to see this resolved sooner rather than later. >> 30 people could not pass a clean cr. >> there you go. >> under any terms. >> yeah, well, there's a big difference between the two issues. truth is, back home, i can tell you people are so upset about this new law. businesses are certainly are, families are, they see special treatment for many, but not equal treatment for themselves. >> you think they will go along? or are they going to go kicking and screaming with any deal? >> it is hard to know at this point. . what i do know is we've got to find a way out of these back-to-back financial crisis. i think the country is tired of it. later today, a vice chairman and i are holding a hearing with two economists. about how do you find a way forward? how do we tackle the long-term challenges of the country without this crisis after crisis? i think that's the big issue at this point. >> congressman, thank you very much for your time today, we appreciate it. >> thank you. still ahead on "squawk box" this morning. a man who needs no introduction and never minces words, veteran corporate leader jack welch will sound off on the fight in washington. plus, quarterly results from two big banking giants, we have jpmorgan and wells fargo. we'll have the numbers and instant analysis. stick around, "squawk box" will be right back. next week, we have a huge lineup leading up to thursday's debt ceiling deadline. on monday, former citigroup chairman dick parsons, aetna ceo and erskine bowles, deficit destroyer. and on wednesday, three hours with warren buffett. you can't afford to miss "squawk box" next week starting at 6:00 a.m. eastern. ey always will. that's why you take charge of your future. your retirement. ♪ ameriprise advisors can help you like they've helped millions of others. listening, planning, working one on one. to help you retire your way... with confidence. that's what ameriprise financial does. that's what they can do with you. ameriprise financial. more within reach. ttrust your instinctsdo to make the call. to treat my low testosterone, my doctor and i went with axiron, the only underarm low t treatment. axiron can restore t levels to normal in about 2 weeks in most men. axiron is not for use in women or anyone younger than 18 or men with prostate or breast cancer. women, especially those who are or who may become pregnant and children should avoid contact where axiron is applied as unexpected signs of puberty in children or changes in body hair or increased acne in women may occur. report these symptoms to your doctor. tell your doctor about all medical conditions and medications. serious side effects could include increased risk of prostate cancer; worsening prostate symptoms; decreased sperm count; ankle, feet or body swelling; enlarged or painful breasts; problems breathing while sleeping; and blood clots in the legs. common side effects include skin redness or irritation where applied, increased red blood cell count, headache, diarrhea, vomiting, and increase in psa. ask your doctor about the only underarm low t treatment, axiron. welcome back to "squawk box." starbucks planning to circulate petitions, urging lawmakers to reopen the government and avoid a looming default. howard schultz says he wants to give americans a platform to express frustration with politicians. i'm surprised you haven't said anything about this yet. the petition will be available in starbucks stores online and in tear out ads running today in the "new york times." the "wall street journal," usa today and "washington post." schultz will join our friends on "squawk on the street" at 111:0 a.m. eastern time. he tried to do something similar before he suggested you don't make donations to these folks. >> he's really nonpartisan. >> it's a rise above kind of thing to do. >> it's only directed at congress. >> no, it's not. he's had conversations with the white house too. >> he wants them to -- >> he's had conversations with the white house and patty murray in the senate and with paul ryan. >> those two words, stand strong. >> we're going to be back in a moment. we've got quarterly results from dow component jpmorgan. it's a growing trend in business: do more with less with less energy. hp is helping ups do just that. soon, the world's most intelligent servers, designed by hp, will give ups over twice the performance, using forty percent less energy. multiply that across over a thousand locations, and they'll provide the same benefit to the environment as over 60,000 trees. that's a trend we can all get behind. welcome back, everybody. jpmorgan just out with its earnings. looks like the company came in with the net income of $1.42 a share. that's when you exclude litigation expenses and reserves that were brought back through. the street was looking for $1.17. of course, with litigation expenses and the release reserves, you're looking at a loss of 17 cents a share. revenue came in at $23.9 billion. >> do you remember earlier this week we had people on that said the reason they're going after jpmorgan is because they're so -- >> the money. >> they make so much money. >> bill daly. >> yeah, right. so is this good or bad they beat expectations? actually, if you do the lower number and did you see the litigation expense? that's a pretty big number. >> it's a huge number. >> $7.2 billion. >> while we have strong underlying performance across the businesses, they go into how the number one ranked in just about everything. we continue to evaluate our legal reserves. with escalating demands and penalties from multiple government agencies, we thought it was prudent to significantly strengthen them. we expect our litigation costs should abate and normalize over time, but they may continue to be volatile over the next couple of quarters. >> they earned $1.42. their legal expenses are wiping out the profit for the quarter and then some. >> and there's no -- we will talk a lot more about jpmorgan. but just right off the bat. the stuff with jamie dimon, what do you make of it? you're afraid to -- you'll get audited if you say something and you've got plenty of money to worry about. watch what you say. >> i don't mind being audited either. it's the piggy bank. and if you cross these fellas down there and don't play ball, you get nailed. that's just the way they play. >> should've never said i'm barely a democrat at this point. he should've never said that, right? >> well, seems that lloyd's done a good job of signing up as a good democrat. >> blankfein because he's been in the clear. >> and he's saluting fue -- >> i'm sure he has his concerns about the way things are being -- he's a businessman. >> i'm looking from a distance. i mean, the facts -- jpmorgan's a piggy bank right now. >> i'm not sure whether it's the regulators and the white house. >> goldman sachs is a piggy bank too. >> they haven't gone there for a while. >> yeah. >> let me tell you about a few more comments that jamie dimon makes. this is more than you might have expected to hear from him given how much the government has come after him at some point. he says the board continues to seek fair settlement and one that recognizes the extraordinary circumstances of the bear stearns and washington mutual transactions undertaken at the request or encouragement of the u.s. government. so he's continuing to kind of talk about -- and we've had a lot of guests who have come on from hank paulson to warren buffett who have said they don't necessarily think it's fair to go after these companies for things that happened before they took over the companies. your thoughts on the idea -- >> i mean, let's face it, they asked them to do that. and they did it and now they're getting whacked in the head for it. but it's a tough game down there, i'll tell you that. it's not puff ball. >> let me give you the -- not "huffington post." i'm not going to mention that guy's name that writes for rolling stone. it would be the biggest fine in history. jpmorgan's in the paper every day. every day for some regulatory concern. by definition, jamie dimon must be responsible for a lot of the problems so he should go. yes or no? >> no, he shouldn't go. you crazy? >> with all this that's happening? >> he bought a bag of junk and he's tried to clean it up. and every time he cleans it up, he gets nailed again. >> you have made the point that he -- even before the government induced him or asked him for help with, you know, to try to bail these out. he was eyeing these cheap assets, something he wanted to -- >> no, no, no -- i quoted an article to hank paulson that made that point. that is not a particular point i -- i'm making. >> okay. >> no i'm -- >> you can't be indemnified. >> i think they should have indemnified him. >> they should nailed him right there. >> but they didn't. >> and therefore he did take on that risk. and what do you do about that? and it becomes complicated. i'm with jack. you rob the bank because that's where the money is. if you're the government, that's where the money is. >> so then the perception that the average man on the street has reads about jpmorgan every day, can -- could you point to the regulators being overzealous and say it's not necessarily jpmorgan is in the wrong but these guys are basically shaking down -- shaking the money tree? >> well, he's tried to make that point. made it again. becky just read that quote. he's trying to articulate a point and walk a fine line. in this crowd, you don't want to -- you've got to play a pretty -- >> which crowd would that be? >> that'd be the administration. >> all right. i need to know what you're actually saying. who knows who this crowd is. could be us, could be -- i know who you're talking about. but you're right. back -- how many of the fines that spitzer was finally able to raise were just companies saying, look, i don't want to go any further with this and i'll pay you off just to leave me alone. >> look, settling has been for a long time. you can settle and not plead guilty to anything. >> right. >> and you can pay the money and get them off your back. >> looks bad. but here's one question. we've got to get to quick headlines. is there a deterrent effect. meaning jpmorgan's announced they're going to spend $1.5 billion on more lawyers and compliance, which i'm not sure necessarily is a good thing. but maybe it does prevent similar things like this happening in the future? do we look at it and say, okay, maybe it's actually forced the hand and if they had only sued them for $1 billion or tried to slap them on the wrist that that kind of structural step would not have been taken? >> look, $1.5 billion more is not going to solve the bad actor doing this and that in london or somewhere else. you -- you're not going to -- the regulators were sitting in their offices. they had regulator -- almost one regulator per one trader standing over them. you can't regulate against bad behavior if they have it. now, i don't think the bad behavior occurred here by jpmorgan and the mortgage issue on the trading thing, they had a bad actor. let's face it. you can't stop a bad actor. >> it should be easy to go after individuals, i don't know how much it changes behavior to set up big fines that companies pay. it's the shareholders' money. may be shareholders that weren't there at the time it happened. >> we read the papers every day and watch how many government back actors pop up all over the place. whether it's over here in this agency or that agency. and that didn't say the administration's bad because that's happened. that says you can't manage bad actors that well. >> this is a larger conversation because people will then say -- >> and we're boring people by -- >> no, i don't think we're boring people. jack, you never bore people. let's do some headlines and come back to this conversation. in the headlines this morning, the fiscal gridlock has put america in a very bad mood. according to the latest nbc news "wall street journal" poll, only 14% of americans say the nation is headed in the right direction, that's half the reading of a month ago and the lowest since the financial crisis. get this, 53% blame congressional republicans for the government shutdown, 31% blame president obama. the u.s. is about to become the world's biggest oil producer according to the international energy agency, overtaking russia for the top spot in 2014. it's grown at dramatic rates, china replaced the u.s. as the biggest oil importer. and howard schultz is on a one-man mission to end washington's gridlock. he's circulating petitions in starbucks stores calling on lawmakers to end the shutdown, end the debt ceiling battle. coming a few days after. he instituted a promotion that gives a free coffee. you want a free coffee? to anyone that buys someone else's beverage as a way of showing lawmakers how americans can support and connect with each other. so everyone's getting a coffee on me this morning. >> so he's saying he wants these guys to work things out. it's his point. >> that's his suggestion. >> i think that's good. >> the rise above. >> yeah, i hadn't thought about that. i think that's nice, that's good. >> all right. we get it. sarcasm is dripping. >> we all want that. you don't need to come in and save us, howard. >> i'm buying you a coffee. here. >> you know what is implied and you say he's assigning equal blame. >> he's contacted the white house, contacted patty murray. it's not just about the house republicans he's been talking to. >> all right. our guest host for the next two hours is jack welch. executive chairman of the jack welch institute. you were at the old mother ship for how long at ge? >> 40 years. >> not everyone knows your legacy there because they're new. people are aging, dropping out of our key demo and other younger people are moving into our key demo. what was revenue when you started at ge? >> $25 billion. >> and when you left? >> $130 billion. >> so that was good. >> you were only ceo for -- >> 20 years. >> the stock when you took over was adjusted at a buck, wasn't it? >> it went up 4,000%. >> oh, but who's counting? >> i'm guessing. i'm winging it. >> was it 4,000%? >> 4,007, or something. >> so i made the point with john harwood, our guy earlier that we do these polls and the they're as good as you can get in terms of the quality of the poll. but the question that you're asking people, i think it has more to do with maybe they don't like the method to what they're doing. but i think you could get a more even split if you ask people, do you want the government growing more and taxing more and spending more? or do you want to actually, you know, start getting our house in order. i think you get a much more even split if you ask that. maybe the republicans went about it wrong, but don't you think most of the country wants us to get our house in order? >> of course you do. but these polls end up being who's the best marketing manager. they can't market anything. they come out of the white house and make a statement that's nothing and then harry comes out and takes the stage for a while and talks about all the bad things they did. it's crazy. we've got the worst marketing in the republican party you can imagine. >> looked like a trap, didn't it, that the white house set for these guys? >> i think they put themselves in there. >> they put themselves in these things. >> but they loved it. >> negotiation 101. you sit across the table. first of all, you put yourself on the other side of the table and say -- what can they do, what can't they do. you get the lay of the land. the second thing you do is make an offer that they will accept some in that range, and you'd be willing to take. and the third thing you want to do in a negotiation, you want to end up as you walk out the door with a win/win. now, both sides went down the wrong path. the republicans take on the president's signature bill and they say de-fund it. by definition, that's not sitting across the table and saying what will they take? and can we work with that? and then the republicans, the president says i will not negotiate. that's not a position that the other side can accept either. so you've got two guys breaking the basic rules of negotiation. and then you end up with the president -- he changed 15 regulations at least from the time it was law. so this is law. law is enforced bill regulation. and he changed the employer mandate, put congress in. did that whole series of things. so he says i won't negotiate. one side changes the law as it was approved, the other side sits there like -- >> like. >> i mean, there are so many ways that this could have been marketed. the -- >> which part? >> the republicans could've marketed the president's behavior. he was able to call them right wing, nuts, terrorists. you pick the words that were used. >> right. >> they could have brought the nih victims of this thing, right to the stage, mr. president, i have funded nih and look at these children. look at them. please, mr. president, accept this. come on. you can -- he did so many -- he gave them so many chances to come back. he changed all these rules arbitrarily. because one of the big problems we have in generalness argument, the presidency has become too powerful relative to congress. that's been happening for a long period of time and it's accelerated. >> hold on -- >> you think it predates the obama administration? >> yes. it's been happening. absolutely. >> you think the president has more power now. because some would argue the reverse is taking place. >> some people are wrong. let's put it that way. the facts are he can arbitrarily legislate around congress on clean air, change the game. change the game for carbon. with the epa, voter i.d. has been approved by the supreme court. >> right. >> so they can do it by legislation. the nlrb, all of a sudden they pop up and appoint -- >> i love -- that is the "new york times" take, though. that the president because the house has tried to stop them on anything he wants to do, suddenly the house is more powerful. that's a joke. >> you go through the things he's able to do and has done through holder, there mccarthy, through solis before. >> you say this predates the obama administration. >> i think early in the bush administration, a bit in the clinton administration. >> is that because of the growth of the regulatory agencies? >> and the ability -- look at what the president does. the irs scandal. i don't know where he was. slaps it away. and the republicans sit there and have these hearings. >> that could be bad actors, government's not able to control bad actors too. >> but it doesn't come out that way. he slaps it away. jim clapper goes up to congress and tells them that the united states is not as safe as it used to be. try that one for size. what's the president's main job? keep the state faafety of the c. the last sequester thing, they had 48 predictions of what would happen. 11 proved out to be true. by the "washington post." >> we've got a lot more to talk about. >> come on. >> nothing's changed for executive power. executive power has always been there but you think he's wielding it. >> i don't blame him any more than the last guy. they have said -- >> i want to continue this conversation when we come back. >> so do i. in the meantime, we're watching shares of jpmorgan, the company coming out with quarterly results. the number, the net income number was $1.42 a share. the estimate was for $1.17, but that $1.42 did not include litigation expenses or reserves. we'll get reaction from the street after this. "squawk box" will be back after a quick break. people welcome back. jpmorgan reporting quarterly results moments ago. joining us on the "squawk" news line, the banking analyst. surprised by this, the expected and what do you make of the legal reserve issue? >> well, it was going to be interesting to see how much they could actually put away this quarter. because they didn't have a settlement in hand or at least we don't know of a settlement in hand. so they must be pretty close and must know that their estimate would let them put about $9 billion away to address this and to build reserves in expectation those settlements are near. >> so you think the reserve number is pretty much what they think the settlement must be. if it comes in higher, how does the market react? >> doesn't mean it can't come in higher. just means this point, this is what they're comfortable with. they wouldn't be any less than this. so when you're setting up reserves, it's a minimal number, not a maximal number. they basically put away one quarters worth of earnings. relatively break even once you get past the litigation reserve they took. >> so jamie said he expects those legal costs to abate and normalize over time. we also -- i read earlier on the 6:00 hour from dick bove who said, look, long-term, this is going to have an impact on the company. that things may not normalize. not on the legal cost issue but to the extent that they were on a trajectory that you can't see my hand now but looks like it's going to the moon that things are going to become a little tougher. >> only in the sense that, you know, what we had was announcement of incremental resources they're putting in place. these large signs are tone at the top address. that the regulators are putting on jpmorgan to make sure it's big enough that it gets their attention throughout the organization, they're putting the resources they put up, tighten up the controls, such as, a lot of these things you said earlier, these issues don't reoccur in the future. >> 20 seconds. is jamie's job in jeopardy? >> no, we've been through that battle. i think that's behind them. i think that's one of the reasons they're addressing this so aggressively. it has the confidence of the board, of the shareholders. if you look at fundamentals, they're still producing around, you know, take out all the noise, about a 15% return on tangible common equity, which is worth much more than what the stock price shows today. he's trying to clear the decks, he's taken a page out of brian moynihan's book, which is clean things up, get your fundamental reported and you'll get the benefit from it for your shareholders. >> who are you liking in the nlcs, marty? >> say that again? >> who do you like in the nlcs. >> well, the national league, we'll have to go with the dodgers. >> okay. just wondering. >> he has a special relationship with them. >> we might have a little connection there. >> you got good seats? >> well, i'm in mississippi, so i'm quite a bit away, but we keep it up through the company. this is -- we're definitely go big blue. >> i'm worried about ole miss, by the way. >> for those who don't know guggenheim owns the dodgers. anyway, hoping for a good game. coming up, most powerful woman in banking, beth mooney joins us. "squawk box" will be right back. time now for today's aflac trivia question. virgin records founder richard branson credits his success to a career move he made 40 years ago when he signed what artist? the answer when cnbc's "squawk box" continues. on your recovery?lps you focus yo, yo, yo. aflac. wow. [ under his breath ] that was horrible. pays you cash when you're sick or hurt? [ japanese accent ] aflac. love it. [ under his breath ] hate it. helps you focus on getting back to normal? [ as a southern belle ] aflac. [ as a cowboy ] aflac. [ sassily ] aflac. uh huh. [ under his breath ] i am so fired. you're on in 5, duck. [ male announcer ] when you're sick or hurt, aflac pays you cash. find out more at aflac.com. 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(both) i'm happy. i'm happy. happy. happy. happy. happy. happy happy. i love logistics. virgin records founder richard branson credits his success to a career move he made 40 years ago when he signed what artist? the answer, mike oldfield. it is estimated that the wildlife economy estimates to about $144 billion annually. but the government shutdown is now threatening the beginning of hunting and fishing seasons. there are over 37 million hunters and anglers in the united states accounting for $1.5 billion in revenue. through the licenses they would normally be getting because of this government shutdown right now, 329 wildlife refugees are closed to hunting. about 270 will closed to fishing and many of these areas were under pressure already thanks to the sequester, which included a 27% cut to the budget. what does this mean to business? it means retailers who depend on the beginning of this annual season could get hit if the shutdown continues. almost $86 billion in direct hunting and fishing related sales occur each year. names like dick sporting goods, cabela could be names to watch over the next few weeks. still to come this morning, wells fargo ready to report. we'll get the numbers at the top of the hour. but before we do, we'll meet the most powerful woman in banking, the ceo of key corp., beth mooney will be joining us. "squawk box" will be right back. it's a growing trend in business: do more with less with less energy. hp is helping ups do just that. soon, the world's most intelligent servers, designed by hp, will give ups over twice the performance, using forty percent less energy. multiply that across over a thousand locations, and they'll provide the same benefit to the environment as over 60,000 trees. that's a trend we can all get behind. welcome back to "squawk box" this morning. in the headlines, we've heard from jpmorgan chase, now we're going to be looking forward to wells fargo at the top of the hour at 8:00 a.m. the bank expected to earn 97 cents per share for the third quarter on revenue of nearly $21 billion. also, the ongoing government shutdown taking three reports off the economic calendar today. prices won't come out at 8:30 eastern time nor will september inventories at 10:00 eastern. but we do have jack, so you can watch him. we're also going to see the university of michigan's preliminary october sentiment index at 9:55 eastern time. also, some more hopeful signs that the debt limit standoff will end. treasury secretary jack lew and ben bernanke told the g-20 officials last night that the debt ceiling standoff will end before the october 17th deadline. do you believe that? i don't know. that's according to russia's finance minister who attended a dinner held in conjunction with the imf world bank fall meeting that's taking place in washington. becky? our guest host today is jack welch. he's executive chairman of the jack welch institute. jack, we just mentioned all of the economic numbers we're not getting right now. we don't have a good read on things. the job numbers have been skewed from computer problems even before the shutdown. but you have a pretty good read on what's happening in the economy just from all of the business you're involved in. can you tell us what you're seeing right now? >> in 2013, we are seeing just what we saw in 2011 and '12. we get ready for launch and then it rolls over. i mean, we had -- if you asked our ceos and a variety of companies i'm involved with, what second half of the year would look like in may. they were all on ward and upward. thought it was really going. at the end of june, in the middle of june, it started to roll. and we had every business i'm associated with still growing, but at a -- they all will miss their third quarter. and things have really sort of flattened out. and we seem to lose momentum every year in one of these quarters. it's the second quarter in '11, the fourth quarter in '12. and now looks like the second quarter in '13. so we never take off in this recovery. >> what happened? a lot of times we talk about and blame washington, blame uncertainty. is it that or something else? >> you know, it's tough to really pinpoint. when we look at what -- at what's going to happen going forward, ed lezier had a great piece where he talked about unemployment. in terms of a number of people working age that are employed. we really have now 58% of the people of working age employed. we've had a tradition of 63 or above. so you can talk about that silly unemployment rate, which you and i have had debates on over the past. that isn't the measure of what the economic activity in the country is. it's 58% of the people of working age are now working. it used to be 63 before the recession. we haven't gotten millions of people back to work. and the other thing that's happening is we used to have churn. people used to be thrown out, fired, they used to be downsized because the company had troubles. or they quit. no one's quitting these days. we're down 30% a year in churn. so no one's leaving. as a result, no one's coming. we're down 30% in churn. people are hanging on to their jobs, they're afraid to go -- >> businesses you're associated with -- >> no, in the country. >> oh. >> i want to go back to politics for one second if i could. >> yeah. >> which is you're republican and traditionally the business community has been focused on the republicans, has been considered republican. there's a number of people who have come out in the past couple of days given what's going on in washington and said that the republican party has moved away from the business community. this is the head of the nfib who says there clearly are people in the republican party whom in the business community and interest of the business community, the jobs and numbers they represent don't seem to be their priority, don't really care what the nfib thinks, chamber thinks, probably don't care what the round table thinks. >> we saw it. >> you saw it. >> i saw it, read it, got it. >> i want to know from somebody who cast his lot with the republican party whether you think that's accurate. and by the way, there's other people, lobbyists for the retail federation, same thing, the ideological brand of conservatism. >> they jumped over to the obama side. >> i don't think they are jumping over to the obama side. i'm trying to understand what you think is going on here. >> not much. not much. i hang out with these guys all the time and i don't see -- they're so irritated over aca. i don't see any -- >> suddenly they think higher taxes regulates, they think that's all the answer now. most of these. >> joe, do you think democrats are jumping away, the moderate democrats over the aclu? >> no, we talked about since 6:00 hour. i don't think the democrats are becoming republicans so quickly and i don't think the republicans are becoming democrats so quickly. but there may be some people in the middle that move. i don't know. and i just don't know where parts of the business community are when it comes to -- >> i'm in the middle and i'm not moving and there are a lot of people in my crowd. i just don't -- i see this as more fear tactics. >> does it change the dynamic, though, in terms of the way the chamber, the business round table, the others in terms of donations, in terms of who they support, in terms of how that works? >> do you think it's the most anti-business president -- and this isn't fresh in your mind? >> when you sit around the table. >> with regulations, epa, keystone, all the stuff suddenly you think the way this debt ceiling negotiation has gone and they're deciding to abandon the core principles of private sector? >> no, i don't think that. but i think there are some people among the business community that look at what's taken place and say -- >> it's ludicrous. >> man, i wish we weren't having this debate and we wouldn't be having this question over the debt ceiling and it was done in a different way. i think there are people in the party that say that. ceos that say that. >> well, there's no question, but they don't have any alternative. what's the alternative? negotiate with harry reid? >> there's a left brain and right brain. there's cat people and dog people. you're never going to get people to say i love big government and i think big government's the answer. >> you wouldn't argue that the republican party has split at all? and that there is an ideological split? >> there are people that want -- >> no, no, no -- you're right. >> there are people -- >> people in the business community. people that are too far right, taken it too right. >> and on the left. there's scorched earth guys on both sides. >> i think if you look at why the republicans lost the last presidential election and the challenges they're going to have in the next one is to get through the primaries, you're going to have to run -- >> i don't know how long that lasts. >> particularly with social issues. and if you run that far right -- >> i agree. >> and the tea party was spawned by the way the aca was passed. that's what got all these guys energized was when not a single republican vote came when controlling 17%. >> you're right theoretically. but the facts are, running companies, and not one of them is going to pull the lever differently than they were before. >> i agree. but i question that the money gets steered back so you think there's a right that's gone too right that somehow the money gets steered towards people who are going to try to bring the party back closer to the middle. you think that's happening. >> you don't think there's been a migration from business leaders that supported obama the first time around? the migration has been one way. it's been that way it hasn't been that way. how many of you know that are still saying, wow, i'm glad i did that. >> there are business leaders who had supported obama who are now supporting republicans. i'm just saying at the same time, there seems to be another debate going on within the republican party where there seems to be a pushback. and i'm just sort of -- >> no one likes the way right and no one likes the way left. but this is a way overstated right-hand column, front page propaganda. that's what that is. that's scaring people. that's just trying to get them -- >> what was your point? >> that's putting out something on the right-hand side. >> it's the "new york times," you're saying things we already know. but back to the 58%. >> i know. >> but back to the 58%. corporations have learned how to make the same amount of money with fewer people. and technology has a allowed them to do it. and globalization overseas. and i can think of a lot of other things that have happened for why we're at 58% that might not have to do with regulation and government -- >> do those jobs come back? >> yeah, are they gone and is it nobody's fault they're gone because of technology and globalization? >> no, if you -- we're running at 1.7 time gdp. that's not going to -- if we get a 3.5% to 4% gdp growth, a lot of this discussion will go away. >> right. >> and we do it through energy which is what you've talked about before. >> through energy, absolutely. let me go back to another point, which i think is -- when you sit around a table and you listen to the costs of obama care in terms of the 26-year-old issue, it ranges from $2 million to $7 million a company. when they take that, what do you think they do to get the $2 million to $7 million back? they look at layoffs, cuts, et cetera. so when you have these costs going, there are consequences. obama care is just another cost. so now how do you deal with that cost? >> right. you deal with it through ways of attrition and productivity that you look for. so the people that -- that 30-hour week thing, that just cost people jobs. there's an op-ed piece and there's a piece in the journal today from a gentleman that runs a restaurant on cke or something. and he's right on the button. temporary workers were added in the first half of the year because people didn't want that cost. >> right. >> if you're a ceo, you're not thinking politics, you're thinking, damn, i got hit with $7 million. how do i make it up? and who gets hurt? the workforce. >> okay. that article should have been brought up. you should've brought that up yesterday. it was yesterday's article. >> it was yesterday's article. but -- we didn't have jack here. >> but -- okay. >> all right. >> it's a once and for all -- >> but translate that to the actual sitting around the table, which i did this week and watch guy after guy tell you the cost increase that he's incurring. >> right. >> because of the 26-year-old issue. and what are they going to do? they're going to -- you see it every day. spouses are being pushed off of coverage. >> all right. >> you see all of these things that impact workforces. >> so once and for all, all your guys, your 20 guys, are they not jumping over to deblasio because of this? they're not going into the fund -- >> are you sure? >> he's going to have to leave. >> they're not going to deblasios? >> most of them don't live in new york. >> all right. wanted to one more time find out. >> we will continue the conversation with jack welch, but up next, beth mooney, among the most powerful women in banking. we'll speak to her next about what it means for financial. take a look at futures, we do have a minor green arrow. dow looks like it would open up about 5 points. 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or is it business as usual? >> it's business as usual but i think it's good for women in our industry as well as business to see the american banker honoring the 75 most influential women in our industry and gives a lot of determination to those coming behind us to work hard and aspire for things. >> i've been watching your stock price and it's done incredibly well, up over 40% over the last year or so. what is happening in the industry right now? finding new revenue, is that the biggest challenge? >> well, it's a balance of two things. i was listening to your commentary earlier and i was going to agree with jack, this is an economy that feels like it's stuck in second gear. and so it's really a combination of you have to find new revenues as well as really work on your efficiency. so it's a two levers all the time. how do you grow? how do you get more revenue and what can you do to bring down your cost? because the bottom line needs both at this point in time. there's no tail wind in this economy. >> what -- why do you think that is? jack was just kind of pondering what he thinks is happening in the economy. what happens from your perch as a bank where you're making loans and bringing in assets? >> well, what we're seeing is continued caution among our business clients. i think it was well put when you said that every year people have a much greater expectation for growth and than they end up ending the year with. and our clients would echo they're putting their thoughts into 2014 now. so borrowing for expansion is less but our clients are doing well. they're highly liquid. american business is very profitable. but it is still a very muted economy. so we do not see a lot of demand in what you do see. banks are highly competitive for the good assets, good loans and good customers. you have to grow your own capabiliti capabilities, grow your revenue and invest in being productive. >> what do you think about the nomination of janet yellen to head the federal reserve? if she is as dovish as some people have expected, what does that mean for your business? >> well, i think it's going to be a continuation of the fed policy. she's obviously been part of the dialogue, part of the debate and part of the decision making of the fed. i see it as a consistency a policy coming out of the federal reserve. i think from -- she was an unspoken hero as the most powerful central banker she will become and. and as vice chair, i think it indicates a desire to keep consistency and policy. >> what did you think of the policy? >> i think it had been very accommodative to support markets and growth. >> has it worked? >> i always say, how can you prove the alternative? >> like, do you -- do you worry about the exit? if rates were to go up a point on the long end, we know how many own those bonds and we know it's $2.3 trillion globally. is it going to be a messy exit strategy? or was it all going to be okay and it was worth it? >> chairman bernanke says there's an accent. and very soon if you ask me to speculate, that's all i would be doing, that we're going to start tapering. i think there's pressure on the long end of the curve already. you can see some desire for long rates to go up. and i'm not sure a sustained low interest rate environment is what this economy needs anymore. i do think there is a quality and a strength into this economy that just falls short of true growth. but it is strong. i don't see the downside risks in the economy that i would have seen in the prior years. >> no inflation -- with no inflation, do you do it? >> joe, if you think about janet yellen. he's talking about -- she has over the years talked about jobs more than inflation or anything else. if she believes in jobs, she's not looking -- and bernanke has commented on this. you're not looking at the unemployment rate. looking at 58% of the people working and it's down from 63%. that's where they're going to measure against. i would argue that the tapering is likely to be later than earlier. if you think of where we are today with her appointment and focus on jobs and the 58% of the working force. that working force working, you've got to believe you're more likely to be later than earlier. >> i would agree with jack. on that point, if you're going to use the primary metric being jobs related, there's nothing in the data that would suggest it's time to start tapering. i don't know how they balance that with the underlying strength of the economy even though, like i said, stop on second gear. it is true as we talk to our business clients, we are not hearing people talking about hiring. >> you think -- oh, go ahead. >> no, i was going to say quick question, which is, you know, we just at jpmorgan's earnings, we just had wells, you're a smaller bank than some of those. do you have different views on too big to fail than they do? >> we're certainly in a different size group. but i will tell you, we are a regional bank. the way i look at it is banking is an ecosystem and i think part of the financial industry in this country and part of our global distinctiveness is to have this wide array of banks meeting different needs, having capabilities. >> you don't think you're at a competitive disadvantage? >> i don't think that's healthy for the ecosystem but i also like being a mid-sized regional bank because i think it is a very nimble and competitive position. >> we shouldn't sell short, though, $88 billion in assets. so, beth, thank you very much for coming in. >> thank you. >> appreciate it. >> congratulations. when we come back, he's ripped up the government's credit card on the floor of the senate. what's his plan to get the country back on the fiscal road to success? we'll talk to senator tom coburn in the next hour. 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[ female announcer ] today cisco is connecting the internet of everything. so everything works like never before. coming up, republican senator tom coburn of oklahoma. "squawk" coming right back. at farmers, we make you smarter about insurance. because what you don't know, can hurt you. what if you didn't know that posting your travel plans online may attract burglars? [woman] off to hawaii! what if you didn't know that as the price of gold rises, so should the coverage on your jewelry? [prospector] ahh! what if you didn't know that kitty litter can help you out of a slippery situation? the more you know, the better you can plan for what's ahead. talk to farmers and get smarter about your insurance. ♪ we are farmers bum - pa - dum, bum - bum - bum - bum♪ ido more with less with buless energy. hp is helping ups do just that. soon, the world's most intelligent servers, designed by hp, will give ups over twice the performance, using forty percent less energy. multiply that across over a thousand locations, and they'll provide the same benefit to the environment as over 60,000 trees. that's a trend we can all get behind. the presidency has become too powerful relative to congress. >> one more hour with jack welch. plus -- >> i think i'll just tear it up. it's time we quit borrowing money. >> senator tom coburn says the u.s. will not default on its debt. he'll join us at 8:30. after his last "squawk box" interview, paul krugman called us zombies. >> let's do it. >> well, we called in an expert. >> there's go to be a way. >> darrell dixon from "the walking dead" will join us onset. earnings alert, wells fargo reporting we're going to dig through the report with an analyst. the third hour of "squawk box" starts right now. >> welcome back to "squawk box" here on cnbc first in business worldwide. i'm andrew ross sorkin. our guest host all morning, jack welch, and we've been having a lot of fun together this morning. we are waiting, i should say, for wells fargo to report its earnings that usually comes around 8:00 eastern time. and it is out right now. joe? >> oh, oh. well, i didn't want you to come to me. yeah, i'm just telling you it is out. 99 cents a share is the number that is the first one to appear on the screen on $20.48 billion. >> better than expected. >> 97 was expected. 20.48 is -- i think they were looking for 20.973. a lot of times the revenue number with banks can be affected like the bottom line number which sometimes makes it hard to do apples to apples comparisons. 975 million, provision for credit losses, 75 million. a noninterest expense of $12.1 billion. i haven't actually clicked into the press release yet for commentary. we'll take a quick look and see what our "squawk" friend say about all this stuff. but referring to it as continued strong results in record net income. i guess 5.6 billion was the number if you use not the per share number. that was up 13% from the year ago period. the diluted earnings is also a record. but revenue was actually down from the year ago period, down from 21.2 in the year ago period. >> some of the commentary, you know, we've been looking at this, wells fargo has huge -- in terms of homes and mortgages packages and we've been looking for commentary they might offer to suggest whether things had been turning or not. because when interest rates spiked, we did hear a lot of commentary about how this pushed business down, especially on a quarter over quarter business. the improvement in the housing market has been beneficial to our customers and significantly contributed to our broad-based credit improvement in the quarter. doesn't say anything at all about very specifically in terms of the rates. although, the cfo tim sloan says as expected mortgage banking revenue was lower in the quarter and the recent increases in interest rates, reduce refinance volume. but offset by improved credit and lower expenses. year-over-year, strong loan growth, double digit increases. and they continue to build on the capital and return toer shareholders through buybacks and dividends. >> things look like they're getting better. return on equity. >> the quick jump that came. >> return on equity up 69 basis points. can you -- you did at general electric, you had someone else do the actual numbers, right? you were overseeing all of the operations, but do you want to comment? is that a good number for a bank? >> you know, i think it's pretty good in this economy coming back. i think it's pretty good. >> what's the key metric you would use for a company like wells fargo would you think? nonperforming assets? >> earnings, return on assets. >> yeah, the ones we already gave. you want to know anything else? >> no. >> no, i think -- >> the stock's up. the stock's up. >> just caught it. the facts are that it did slow when the rates spike and now it's coming back a little bit. >> right. >> and it's interesting. it'll be interesting to see what they say on the call. at least in the comments in the press release, it didn't suggest that things are dangerously low or dropping below what people already anticipated. so maybe that's good news. we'll see what they say. >> here's third quarter mortgage applications. 87 billion. a year ago, 146 billion. >> wow. >> so that -- but when we had bank of america on, at least one of the numbers. >> brian moynihan, right, a 40% decline. >> which the fed heard too. >> a lot of that had been refinancing. >> and that was one of the things we said. they got down 40% on -- even though it's been a great. you're going to have three steps forward, two steps back in the housing market. when you see 40%, it gets your attention and you don't want rates to go up too much more that quickly. we'll have much more on wells fargo still ahead and we're going to dig through the report with an analyst in a few minutes. that guy at sandler o neil partner there's other big stories. >> jpmorgan reported better than expected earnings, revenues were roughly in line. the bank increased litigation reserves, though, jamie dimon says he expects litigation costs to abate over time. they continue to be volatile over the next several quarters. and that reserve, by the way, $9.2 billion effectively wiping out any profits for that quarter. let's get a quick check on the markets. stocks soared on hopes of a deal out of washington. this morning, to work on a deal and you can see futures at this hour are up on expectations that maybe we do get -- oh, things turned around. we were up before, now the dow is off, looks like it would open off about 10 points, nasdaq off about 8 points and the s&p 500 off marginally 1 1/2 points. >> we were up five points. >> if it was a 15-point swing in the s&p -- >> then we'd be excited. >> our guest host is jack welch. the executive chairman of the jack welch institute. and we've been talking about the economy. we just had beth mooney on and you asked her a key question as she was leaving the set. >> a keycorp question. you asked her if she was seeing some of the midwest industries really start to roll over in terms of not being as profitable. >> and she answered affirmatively, which is exactly what i'm seeing across industrial america. now that this economy has micropockets that are absolutely -- you can't look at the overall economy. autos are good, oil related businesses are good. cities are good. boston is redoing the whole water front. and looks like construction site. the whole water front is huge. so there are pockets of activity in this economy that are strong. but you will have a gdp if i had to pick one. but probably betting on the downside more than the upside. 1 1/2 to 2 versus 2 to 2 1/2. >> for this year? >> no, the third quarter. >> the third quarter. >> and where we come out in the fourth quarter. >> that's what i was going to say, what do you think the real economic impact of the whole situation will be in the fourth quarter and first quarter. >> it'll have a modest impact. 83% of the government's working. it hasn't had a big impact. >> you don't think it's affecting psychology whether people are going to buy, go on vacation this winter? >> try getting reservations at all of these restaurants. i was in europe. i spoke to probably 10,000 people over four days a week ago. one person, one business person asked me about this shutdown. not one. questions all day. >> because they assumed it would be resolved? >> and they do business. >> they're asking how to deal with the democratic party at this point. >> oh, stop. >> isn't that what? oh, okay. >> these were europeans. >> they were already democrats. they didn't have to switch. there was no switching going on. >> but there's a lot of optimism. the same optimism that was here. and if you go from negative two to plus .4, it feels good. and that's what they're feeling over there. there was incredible optimism in europe. really feeling that they've got the troubles behind them to a great extent, which we have -- we felt that way in may. >> right. >> amazing. guys buying greek banks. putting money in the greek bank. did you ever think it would happen again? >> these things all have cycles. so, yes, i mean, look what happened here and everybody jumped back in. >> right. right. but, you know, greece is not -- it's a nice place but they don't have quite the ability for -- >> spain feels better. unemployment youth is still a disaster. and that's a problem for all of us. we got that here. i mean, when you have youth not getting jobs because people aren't quitting and doing other things -- >> yeah. the churn effect you talked about. >> we have our own brand of that. >> not the same numbers, but it's bad. >> it's bad. >> jack, how do we ever hit escape velocity. we keep we're on the verge of hitting stronger growth and it hasn't happened year after year. >> a government that truly comes to work. i've told you this before. that agency after agency comes to work without an attitude of get the bastards, but how do we help them grow? that will change it. you'll get epa, you'll get labor, all of these agencies working towards making this economy great versus get the bastar bastards, control them, regulate them, do this to them. that's the reality. >> the comments by exxon that this is a morally bankrupt company and the sooner they're out -- that's the attitude. >> i mean, that is the issue. you've got an administration that frankly doesn't like business. whether you want to call -- and that's what's going to change. in the end, that comes down to the right-hand column. that's why people aren't changing. >> four years ago you said every regulation, everything done should be viewed with the -- through the prism of jobs. >> right. >> and they didn't listen. >> just the opposite. so if you get an attitude, get the bastards versus grow the economy you'll get the bastards and you won't grow the economy. >> and that's how you end up with 58% of the population, working age population. >> right. that's how you get it. that's -- we've been in the 60s for years and now we're at 58%. that is absolutely it. you can't get escape velocity from this economy. >> there's a story in the "wall street journal" today talking about how the poverty levels are starting to level off for some. but this is still not good news. you're talking about 15% of the americans that fall below the poverty line and a rising percentage of those who fall into deep poverty. something like 6.6% of americans who fall into that deep poverty. part of this is trying to find jobs that maybe don't exist anymore. if you've lost some of the manufacturing base, you lost the higher paying jobs you can get without a college education. how do we fix that problem? >> you get it through growth, becky. all of these things go away with growth. they don't all disappear, but you get enormous momentum, attitude, excitement, et cetera. that changes the game. and instead of this cost, do you think it's good for morale? it might make a few people happy this guy's fine, that guy's fine. this guy carbon comes out. this happens. all of these regulations, do you think that makes people feel good? might make somebody who is an activist feel good, but doesn't get the general population feeling good when their bosses have to -- when you impose a cost on business, the ceo has to go find that cost somewhere else. you've got to understand that. if a guy gets whacked and has a budget and it costs him ten, he's got to go find ten. and where does he look? over here, over here, maybe people not buying. every one of these has a consequence. the idea that you can $11 billion, $5 billion, or $2 billion. and it's no impact on employment, it's crazy. the ceo sits there with a number. he's got to meet it. he goes into other pockets of the company and who gets hurt? unfortunately, the less advantaged of all of us. >> right. we're going to continue this conversation with jack. he's our guest host for the program today. coming up, wells fargo out with quarterly results minutes ago. up next, we'll dig through the report with an analyst at 8:30 eastern time. senator tom coburn on why he thinks we shouldn't fear the debt ceiling. and then the man of the hour. joe, where are you running to? is he here already? the star of amc's walking dead is going to join us when we come back. >> it's darrell. your representatives in congress have failed to compromise, failed to do the job you elected them to do. so we called someone who is used to dealing with deadweight. >> sorry, brother. >> coming up on "squawk box." darrell from "the walking dead" will join us onset. >> you don't owe us anything. >> don't miss it. opportunities aren't always obvious. sometimes they just drop in. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group: how the world advances. a lot can happen in a second. with fidelity's guaranteed one-second trade execution, we route your order to up to 75 market centers to look for the best possible price -- maybe even better than you expected. it's all part of our goal to execute your trade in one second. i'm derrick chan of fidelity investments. our one-second trade execution is one more innovative reason serious investors are choosing fidelity. now get 200 free trades when you open an account. welcome back to "squawk box," everybody. the futures this morning, at least at this point looking like they're just below fair value. dow futures down by 12 points, s&p off by over two points. but remember, this comes after a gain of better than 2% for the markets yesterday. so it was a pretty massive move. also, wells fargo posting third quarter earnings just moments ago joining us now on the "squawk" news line to break down the numbers is scott. good morning, scott. >> thanks for having me. >> give us the headline from your perspective. >> yeah, couple good, couple bad as you might expect from the industry. let me start out on the good things. so first, you know, they reported 99 cents. that beats the consensus by a couple of pennies. importantly, though, that allows them to do -- they've had 15 straight quarters of re.at leas perspective, they're still finding ways to make their numbers. two, credit's still improving. that's obviously a very good thing. they released about 900 million of reserves, that's about 4 cents better than we anticipated. the credit environment continues to produce some tail wind here. and third, they're attacking the expense base. expenses down 1.5% better than we had thought and that's definitely key given the soft revenue environment. having said that, couple of things. mortgage down as you would expect. we knew that was going to be the case. but it's just going to be a rough ride. >> more than you expected? >> no. thankfully the cfo had given some sort of telegraphed some things into our quarter. i'm looking at originations down about 30%. that's exactly in line with what they had thought. bad but not surprise. margins still under pressure, it was down about eight basis points. unfortunately, twice as much as we would've thought. i think as long as we stay in this low environment, that's going to remain a head wind. finally, a tough environment to generate core loan growth. they're generating about 2.5% analyzed loan growth which is not what you want to see at this point in a so-called recovery. >> just give us your sense of what this means for the housing market given wells' role in the housing market as an originator. >> by far the number one in the industry. they're an excellent read through for what's going on elsewhere. you know, i think at this point, we don't have anything to suggest that credit is going to start to roll over in housing. that's a good thing. having said that, there's a rule of thumb that for about every 100 basis points, increase in mortgage rates affordability goes down by about 10%. so, you know, at a time when we're supposed to be in a recovery, higher rates at the long end of the curve aren't helping things. i don't think we're really rolling over significantly in terms of overall pricing, but we're not making any easier for people either. >> did we lose scott? scott was making a very good point. oh, you can hear him? >> we can hear him. >> i can't hear a word he's saying. >> i'm still here, guys. hopefully you can hear me. >> i'm hearing nothing. >> your battery's probably done. plug into the hard line. >> are you able to hear me now? >> we've got you, scott. it's not you, it's us. trust us. >> scott, you're back, i can hear you. >> that's not the first time i've heard that i'm afraid. usually not a flattering comment. what can i do. but i was saying for every 100 basis points in rates, about 10%. at a time we're supposed to be improving, we're certainly not helping things i'm afraid. >> did you see their numbers this morning? >> i don't cover them. i took a brief look at the numbers as you can imagine. looks like you've got the big litigation reserve in there. jpmorgan's a bit of a unique animal in that they've been under this regulatory attack for so long. to the extent the market has perhaps some resolution here to some of those costs, it can't be a bad thing. >> scott, one of the things -- why is wells fargo stock down in the premarket? >> the issue is that -- and while they beat on a headline basis, there are going to be questions about quality. i made that comment that reserve relief is where about $900 million. and tend not to pay a higher multiple. what they want to see is revenue growth. and in the face of this pressure on mortgage, on margins, slow loan growth, that's not something that people would necessarily consider high-quality earnings. >> right. scott, thank you for joining us. and i couldn't hear you, but you could hear the rest of us. and it really wasn't you. it really was me. >> i appreciate that, guys. thanks a lot. senator tom coburn says the united states will not default on its debt even if we pass the debt ceiling deadline in congress. and then, norman, darryl dixon. usually right among the top three with the cross bow and he's cool. he lost his brother last year. we're going to talk to him a little bit about meryl and how he's getting on without him. but meryl was kind of -- he turned out good in the end. he will join us on the set to kick off the hit show. 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[ female announcer ] today, cisco is connecting the internet of everything. so everyone goes home happy. this year's nobel peace prize recipient announced today the winner is the netherland based group for the extensive efforts to eliminate chemical weapons. the opcw is currently overseeing the destruction of syria's chemical weapon arsenal. >> jpmorgan's stock, andrew, is called higher by 60 cents -- >> yes. >> i don't mention the names of irrelevant media entities. and there's one in particular where they will call jpmorgan an international crime syndicate. a major international crime -- and they think it's funny and cute and, you know, they're so edgy and everything. so now they're saying that by reporting the results were positive and that the stock's up so we're enablers of these capitalist pigs. these are your -- this is why i try to bring you over to the normal side of reality. the one that -- >> and i try. >> jpmorgan is an institution, the financial system is important, they provide capital for entrepreneurs and prosperity increases. it's stupid. are they communists? do you understand where does that come from? are they sandinistas? >> i do not represent this line of thinking. >> don't be afraid to trash them just because they'll say something about you. >> i'm afraid. very afraid. >> i know, they are nasty. they're haters. >> the twittersphere is a dangerous place. >> we're not going to say who it is. but is a black board made, right? >> oh, now you're giving away clues. don't go there. >> i know. when we come back. we're going to have much more with our guest host jack welch. plus details from the jpmorgan media call. we'll be right back. it's a growing trend in business: do more with less with less energy. hp is helping ups do just that. soon, the world's most intelligent servers, designed by hp, will give ups over twice the performance, using forty percent less energy. multiply that across over a thousand locations, and they'll provide the same benefit to the environment as over 60,000 trees. that's a trend we can all get behind. a confident retirement. those dreams, there's just no way we're going to let them die. ♪ like they helped millions of others. by listening. planning. working one on one. that's what ameriprise financial does. that's what they can do with you. that's how ameriprise puts more within reach. ♪ welcome back to "squawk box" this morning. kayla tausche joins us with details from the media call that just took place. >> there's always news made on this call and especially with the legal issues hitting jpmorgan this quarter, of course, that was top of mind. how much in total it has actually stowed pay way for legal issues. that number is $23 billion. that is a huge number and i think that's pacifying some investors who were worried that they could eventually get caught. they also said that the settlements could be up to $5.7 billion, costs and legal expenses included above that $23 billion number. but that is lower than they'd expected previously. yeah. and previously said $6.8 bill n billion. so it's a big number. they said this is a new reality but they do hope their reserves that they have to set aside each quarter will start to abate. they couldn't comment on the status of the settlements but said ultraimately the number waa board decision. there was a spicy comment in the press release about how they want to get the credit for the bear stearns and washington mutual deals. they did it at the behest of the government. it's particularly noteworthy now they're in the middle of these talks and that's still the line he's taking. >> real quick. do you think there's going to be a true global sentiment that captures everything. the this, the that -- >> no. >> is it just going to be the mortgage piece? >> no, i think it's going to be the mortgage piece. that's why they say it's the new reality. they're going to continue having some of these issues. they say there's going to be no effect on management change. that is the first question that was asked right at the top of the call. jamie, of course gave up his chairmanship of one of the subsidiaries, they said that was in consent with regulators trying to meet some regulatory demands there. but that we shouldn't expect any other management changes. no changes to capital plans, dividends, buybacks, what have you. >> in business you define the market. what is the market? they've just defined it for the regulators. $23 billion there. sitting there going how do we get it? how do we go into the piggy bank and take the 23 out? that doesn't create jobs. back to our earlier discussion. >> that's traditionally why the regulators ask for that number but they never make banks disclose it to the market because they know that as soon as you know what that piggy bank stands at, that's what they're going to go after. >> are you kidding me? what a party this is going to be. we've got $23 billion to go get. who's getting it? which agency? >> last comment, i know you have to move on, but he did comment on the debt ceiling saying there's no way our country can default on his debt. that's all he said about that. >> thanks, kayla. >> i wondered what he felt about that. >> he says he doesn't want them to default on the debt? >> says the country cannot default on its debt. >> contrarian view. >> exactly. >> all right. let's get the treasury secretary, talk about jack lew testifying. our next guest argues that the debt ceiling does not even exist. joining us now with more, senator tom coburn, a member of the banking committee. senator, it's good to see you. did you watch secretary lew the other day? he went to great pains to dispel the notion there's a way of prioritize payments. was he telling us something that's not true? or dissembling in some way? how is that different from how you see it? >> well, every federal agency can manipulate things to the advantage of the president right now. they don't want us to believe that we can handle it. it's been four years since the president's had an appropriations bill on his desk. that shows you how dysfunctional congress is, we won't pass bills. and my point is if you always raise the debt limit, there's really not a limit. and the debt limit is the one thing that will force reality on congress that we have to deal with our unfunded liabilities. >> why do we even have it? that's a good point. all we do is raise it. why even have it? >> it's always been raised. and over half the time it's been raised to -- along with something else used as leverage. so i guess the leverage does work. but the point is, we have a debt limit out there. it's the international financial markets. and when they don't see us addressing the very real problems, the thing that's causing us to continue to have deficits, then they're going to price our securities in such a way that we can't afford them. and so what we have to do and the reason i'm kind of hard over on the debt limit is there's nothing going on right now that makes the politicians make the tough choices to prioritize things. and that's what we ought to be saying is why aren't you fixing medicare? why aren't you saving social security? why aren't you reforming medicaid in a way that makes it much more efficient and gives better access? and as you do that, why aren't you trimming the other $250 billion to $350 billion a year of pure waste and fraud and duplication. >> maybe the president hasn't done the whole cr thing. that shut down the government. you're right, why have -- the only reason to have a debt ceiling is to -- because you're always going to -- you're never going to not raise it, but you would want to have some discussion about how to slow the rise in debt every time you get up to it again. that would be the reason. or don't have one at all. but you don't shut down a government and it is affecting some people. >> joe, i agree with you. i wasn't a proponent of that strategy. but we are where we are today. and -- but, again, i'd make -- i'd make the point that we have not sent the president regular appropriation bills in four years. >> yep. plus you had the president -- >> and harry reid hadn't put them on the floor. >> you had the president who voted against raising the debt limit in 2006. and he says, oh, it's a mistake and i wish i hadn't. okay. now the tables are turned, it was good for the goose, not good for the gander. you had him there where he had done it. but when you shout down the government, it puts everyone in -- is blame will be assigned to the republicans on that. >> i agree with that. but i think it's irresponsible to shut down the government, one. number two, it's irresponsible not to pass appropriation bills to give our federal managers the capability. number three is it's irresponsible to let people at the end of the year waste money so they can use it or lose it syndrome here in washington which was billions in the last two days of -- $40 billion was spent because they're afraid if they didn't spend it, they wouldn't get it next year. we're out of control and i'd make one other point. you wouldn't invest in a business that had $128 trillion in unfunded liabilities and assets of $94 trillion and also a $17 trillion in actual debt. >> all right. >> and that's where we are today. >> we've got you, senator. they're calling you a denier. debt denier, i see that. it's weird, we get religious with climate change. there's deniers, heretics, birthers, it's all so weird right now. i don't know, maybe go back and practice medicine and oklahoma might be -- i don't know. >> might be. >> you chose this life for yourself. but i appreciate it. thank you, senator. we appreciate seeing you today. >> all right. coming up, daryl from the "waugh dead" will jowalking dea. maybe the biggest guest id say we've had on "squawk box" coming up. i love having a free checked bag with my united mileageplus explorer card. i've saved $75 in checked bag fees. 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[ anthony ] i use the explorer card to earn miles in order to go visit my family, which means a lot to me. ♪ when we come back, we'll have more from our guest host jack welch. plus two stocks to watch. we'll recap the reports from jpmorgan and wells fargo right after this. opportunities aren't always obvious. sometimes they just drop in. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group: how the world advances. the most free research reports, customizable charts, powerful screening tools, and guaranteed 1-second 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. i'm 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. you either know that music or you don't. amc network's kicking off the much anticipated season four, "the walking dead" this sunday night at 9:00 p.m. joining us now on this. star of amc's "walking dead." great to see both of you. both of you gentlemen. i didn't watch at the very first season because zombies -- >> you didn't? >> i didn't understand. i mean -- >> you've never -- >> i've watched repeatedly since even on the marathon days, black and white, i've seen that too. but then reading about -- you've almost changed the whole business model for dramas on tv. there was a time where the show that followed "walking dead" that talks about the episode was getting higher ratings than any other drama on any other network. >> it has been a phenomenal. it's been one of those shows people have been passionate about for the reasons we hoped they would. we knew the core zombie fan would be engaged. it's a drama about survival. the choice you'd make if you were the last dozen people on earth. what would you do? would you stay or go? lead or follow? and i think people really sort of responded to those. >> and you would think if you were to describe the plot of the show, it's like, okay, how many episodes can you get out of that? you've got -- i think i've talked to josh about this. you've got the rights to this all yourself. you don't even share it and the comic books will go on forever. this could go on for 50 years. >> robert kirkman who created the comic book and series, they had their 100th edition of the comic book celebrating that this week at comicon. it's been a great partnership for us to have the source material but also be able to veer from it. >> i saw shane in some movie, but norman, you don't want to get killed in this thing. >> please don't get -- >> do you know about the last show of this year? you don't, do you? >> i mean, i know a bit of a story line. but they're very good at making us wait our turn. >> are you out of the prison this year? >> we do -- he's my boss right now, i don't know what i can tell you. >> sort of carry the cross bow. >> do you have an agreement with these guys? >> i'm smiling just trying to get through. >> it's cool. >> he's phenomenal. >> he's fantastic. >> you move me when you -- you -- that was pretty good. you dug deep when you saw him his body. it was a hideous looking -- >> i'm going, oh, this day's going to be hard. and, you know, we love -- the cast are such good friends with each other. we are a big family. >> don't get too attached to anyone. >> you do, though. you do, though, you get attached to these people and we shoot down in georgia in our own little bubble and we're very fond of each other. so when one person dies on the show, one character dies -- >> actually, if you don't shoot them in the head, they live forever anyway. >> just have a bunch of pets. >> right. like the governor's daughter. uh. >> i want to know what you think of the role of netflix. >> sure. >> the success of many programs on your own network. >> sure. >> vince gilligan said the large success was because people caught up on netflix. i think some people for the first season of your show caught up on netflix. "madmen," huge. >> you watched our marathon, watched the black and white versions. they've been a great partner of ours, but it's one of many ways we try to get people back to the water cooler event. someone earlier on the show talked about ecosystem in finance we talk about ecosystem in television where we say the live water cooler event is still the moment. but then after that, you really start your own engine to go -- all right. how do we get the marathons to work? vod on our cable partners to work? >> you had a marathon last night. is that all leading up to the premiere? >> every episode airing, we did the same with breaking bad. it's been a great success story and netflix is one part, but our partners starting with itunes the next day. >> what does that say about vod and binge viewing and the success you think the netflix or amazons will or will not have where they're not dependent on sort of a live sunday night where everybody has to watch. >> well, i think, you know, something about even the word water cooler. that live sunday night still works. these guys put together the highest rated show in television and people are showing up -- >> on cable. you know, black and white, you know, casablanca. i said, amc, are you kidding me? "madm "madmen," "breaking bad." >> there are more than just your little community in this post apocalypse world. you should be doing another -- there is going to be another show, right? >> we have a companion series in development and it's just that. and we get the question, that's what's happening there, what's going on elsewhere. >> atlanta i know is the epicenter. but you -- are you totally happy with what's happened? you're an artist, did you want the notoriety. did you want to be somebody in a zombie tv show that became so famous you can't go get a starbucks? >> i mean, it's definitely my favorite show i've been on so far. and the thing with television, too, you have -- we've had four years to develop these characters and tell these stories. so the writers know our characters so well and the actors know the characters so well. sometimes if you have that much time, you can weave your way around and drop these little seeds as you're doing it and sometimes they turn into trees and story lines and it's very fulfilling. >> the one word or one line -- fear the -- fight the dead, fear the living. that sums it up there. you've got to worry about the zombi zombies, they're always around but it's the living that are -- >> well, the walking dead, if you read robert kirkman, the forward to his comic book compendium talks about how it's not a story about zombies, it's about survival and it's about, again, choices you would make that are so, you know, at the core. what would you do if you were the last person on earth? what would you do to fight for your family? would you observe the laws that were the laws? and are they still the laws? >> absolutely. >> how do you come up with another act? i would say a second act. you've had so many already. what do you follow this up with? >> this is thriving and we're excited for this. and mad men comes on right after it, but we have a development slate that goes 52 weeks a year. we have new shows next year. >> what's the show about the software guy? >> sure, yeah. there's a show that's coming next year called "catch fire." >> entrepreneur, silicon -- >> this is -- i think it will be. >> walking dead might not be. >> can it have the draw that zombies does? >> i think that's the goal always. we set out to create pop cultural relevance with everything that we do. you know, one of the things i'm most proud of besides the fact that the walking dead is so successful is it can live on the same network that has but all with the through line of quality. that's the goal. >> you're an artist. you do photography. you could have foreseen a life where you just have galleries and people see your work, right? was this a means to an end? this wasn't the end you were thinking of? >> i remember reading the pilot. it was so different and it was -- i knew it would be great. to tell you the truth, i watched amc shows pretty much only before i was on amc. it's true. it had such heart, this story. like charlie was saying, everyone's clock is ticking and it's your two feet on the ground and what are you going to fight for and who are you going to fight against? it sucked me in. >> you really changed. >> did you know darrell was going to be -- other than rick, you're probably the guy now. i don't know what happens to carl in all this. >> i don't know. darrell sort of has a different story line. he was destined to become his brother. i didn't want to say racist things and take drugs and do the things my brother did. i sort of tried to play him where i was embarrassed of what happened growing up. this opened up a new zone where there's a sense of worth. >> "world war z", the whole genre is on fire right now. you know what, if there's ever an activity that kills our grid for about a year and a half, i don't want to be standing there in my house like with a spear when everybody else has got -- >> cross bows. >> and i'm also getting a generator that's not as loud. >> why are you able to get some of these dramas that some networks can't? i won't say that about nbc. >> you just did. you're blacklisted. >> nbc had a great couple weeks. we all develop with one goal in mind, which is to create great television. in any -- >> do you think the bar is different? >> we're certainly in a different business on the cable side than the broadcast side. by definition they're trying to be broad. we're trying to serve certain target audiences. >> great having you. other than bicycle zombie or well zombie, you are the number one pick for someone to -- bicycle girl, if we could have had her just dragging her with her arms or something. we have the action figure. >> i'm ready for talking dead, my friend. >> if i do "talking dead," will you come on? >> and if the world goes down, i'm coming to your house with the generator. >> i was implying. i registered, took me nine months, i'm prepared. >> i'm just going to call sol. >> there you go. >> excellent. >> thanks, guys. >> is this good enough for amc for you guys? >> our guest host all morning has been jack welch. up next, who will be the next ceo of microsoft when we return. the pursuit of a better life for our children is something we all share. but who can help prepare them for the opportunities ahead? who can show them how to build on your success, but not rely on it. who can focus on making your legacy last for generations to come? that someone is a morgan stanley financial advisor. and we're ready to work for you. ido more with less with buless energy. hp is helping ups do just that. soon, the world's most intelligent servers, designed by hp, will give ups over twice the performance, using forty percent less energy. multiply that across over a thousand locations, and they'll provide the same benefit to the environment as over 60,000 trees. that's a trend we can all get behind. let's get back to our guest host for the last word, jack welch. we didn't get to a few issues today. one of the them is the microsoft succession story. one of the thoughts i liked was mulally. do you have any thoughts about who could step in? >> without question i don't know the inside candidates but i think if they had one, with the exception of the guy that was running nokia -- >> elan? >> yeah. they would have announced it when steve made his decision, i would think, a normal transition, steve's leaving, his, mr. x. i love alan, i know him at boeing, i know him from ford, he's done a hell of a job, he's a great guy. i happen to think there's a better guy. >> who? >> sam panasano. he's 62 years old. 60 is the new 50 so i tell him he's 52 years old. he's coming from a hardware company. he knows the industry in his toes. >> you think he'd take the job? >> that's another question. but if i were the microsoft board, i'd back a truck up to his house, a brinks truck, and i'd say pick out what you need here out of the brinks truck and come and take this job. sam is a great leader, probably one of the best leaders by far in the last decade. he knows the industry. people like him and respect him. he did the bloomberg research. >> review? >> yup. >> he's just a great guy and he knows the industry in his fingertips. he knows big data and all that stuff. >> but you're probably talking about someone who is more of a restructuring person than a visionary. >>. >> no, he grew the hell out of the place. >> but lou was the guy who was the visionary behind? >> no, he was there as a lieutenant. he knows that, he's been through there. the last then years he's been ceo growing that company in the toughest market there is. he could have been a lumbering old, big server company and instead he's turned into a nimble company with a great market valuation. you asked me who i would pick. there are other people i'm sure and there may be internal candidates i don't know about. the question is going to be who is going to take it with the two guys staying on the boar, td. two ceos on the board. >> you think they both should be off? >> no. i don't think think bill should be off. >> i learned from my predecessor. he gave me the keys and said go get it. i did the same thing. >> ballmer is still one of the largest shareholders. he owns 4%. >> that's a different situation, you have a founder. it will definitely have an impact on the attractiveness of the job, to an outside candidate. >> what about the idea of gates himself coming back? >> i don't know but i think he's so involved doing good work with his foundation that i can't see him back. i don't know, though. i have no personal information. and the inside candidate will be thrilled to get the job with bill and steve still there. an outside person -- >> you don't want some young gun, a 20, 30-year-old, even a mark andreesen type, visionary. >> sam has done a hell of a job taking this company, he's strong in big, big data, the word "cloud" doesn't scare him. >> jack, thank you so much for coming in. that does it for us today. right now it's time for "squawk on the street." ♪ ♪ good morning and welcome to "squawk on the street." i'm david faber with kelly evans and scott wapner. we're live from the new york strange. carl quintanilla and david faber off today. we are opening with potentially a lowpe
>> i'm not going to vote for any plan that will get a majority of republicans in the house. >> as a result take a look at the futures this morning. you will see that there are some red arrows once again. dow futures down by 93 points below fair value. the s&p futures down by 10 points. andrew, i'll send it over to you. >> the bond market today not open because of columbus day which may have a little bit of an impact in terms of the odd dynamic between the stock market and what people think is going on. also reaction this morning to the situation in washington. imf chief christine lagarde she's now warning of, quote, massive destruction to the global economy if the u.s. debt ceiling is not lifted. deutsche bank ceo says it would be, quote, a very rapidly spreading fatal disease. i haven't heard it put in those terms in a very long time. jpmorgan boss jamie dimon warned banks are spending money. quote, we need global growth. we are on the verge of getting it. please, let's not shoot ourselves in the foot. on a similar note, former treasury secretary larry summers pending an op ed in the financial times he argues a small rise in the economic growth would entirely eliminate the budget gap. if even half the energy that had been devoted over the past five years to budget deals were devoted instead to growth strategies, we could enjoy sounder government finances for restoration of the power of the american people. joe, i think that's a message that republicans and democrats have to learn. to hear larry summers say that and if he can get some of his democratic friends on board, it could help a lot of things. >> he lives. >> he lives. >> we're going to try to get him back on the show. >> kind of like he's coming out. debutante. >> he was not around and now he is. what was the store bring before that that you said, andrew? >> we had jamie dimon, we had -- >> jamie dimon. jamie needs some growth. needs to make a little money for the bills, the legal bills, right, from last week. >> definitely needs growth. >> we all do. >> i don't know what larry's growth is. instead of arguing about a budget should have been doing proactive things to create growth or -- >> no, he's back on infrastructure. he's back on what is the role. some of it is how do you reduce some of the regs and things like that. a lot of it is what else can we be doing on the infrastructure side. it solves all the problems as you like to say. >> you're borrowing money from china to do the infrastructure stuff. >> i bet republicans would take spending for cutting entitlements. >> it's monday, "walking dead." this other stuff, i feel like it's out of my hands now. i've tried. >> you know what, i feel -- >> i've tried. do something. just get it done. mcconnell. >> two steps forward, one step back with this. now we're back to looking at sequestration level. >> i know. obama. just i feel like it's out of my hands, andrew. >> you feel like you're going to washington on thursday. >> i think you're going to washington on thursday. tomorrow is the day i'm worried about. today i'm not so worried. >> i don't think you should be worrying. >> you think they have it organized so there's nothing to worry about? >> no. i think it's going to happen. i'm tired of the back and forth. >> i think it will happen so late on wednesday we'll already be in washington. that's my prediction. >> go down there. anyway -- >> jill, why don't we take the last -- what's the last flight out? >> yeah, i'm not tlieflying. i like the train. get buffalo chilly. >> -- chili. >> you try new seafood items on a train. say what? you have a muscle crab risotto. okay, bring it. china's official news agency is calling for the creation of a deamericanized world. i'm not sure what that means. it sounds scary. the destinies should not be left in the hands of what it calls a hypocritical nation with a dysfunctional government. >> they have the taliban. >> yeah, their -- right. let's throw them together, china, russia, the taliban. the news agency doesn't want the dollar used as the international reserve currency. >> even though they've pegged the dollar for how many years. >> kick us while we're down. we'll remember this. check the markets. the futures are down. we made up 400 on thursday and friday. >> that's because there was hope. >> yeah. >> there's always hope. >> 15:2,237 is where the dow wa. we came rolling back up. if i were mr. gold, and i'm talking about bouillon, i'd be showing signs of life. we'll look at that. energy, that makes sense. you figure that might go down. the dollar, maybe we're not quite as nice as the best house in the neighborhood with what's happening. it's only -- what month is it? is it october? i'm thinking of europe in the summer. would he have time to get back below 130 and maybe below 120. this should be moving. let's go. the world is -- i mean, this has never happened before and no one's rushing to the quality of gold. that's weird. if we're going to default, i think gold would be reacting a little bit more positively than 12,076. we're getting near the multi-year low. time for the global markets report. ross westgate is standing by in london. i guess you've got some stuff over there, but i think about saturday and what i saw with college, i think about all of the nl and al championship games. i think about tom brady yesterday watching what happened and all of the other -- bengals. i feel sorry for you. you don't have all of that. what went on in the u.k. over the weekend worth talking about in toermgs of sports? can you name one thing? i hope you get a football team. >> world cup qualification games, joe. >> world cup qualifiers. that was it? >> yeah. it's the last -- >> are you open to saying that's something worth -- >> if you like that, sure. >> in brazil -- this is what's coming to brazil next year. >> could you get nfl games if you wanted to over there? is there a way to do it? >> yes, you can watch them. yeah. >> but you -- >> i think there was -- >> you know what, i'll bet you you saw more football than andrew? >> probably true. it is probably true. i spent the weekend at a pumpkin patch. >> oh, yeah? >> that's nice. that's nice. >> i did. we went on ponies and did all sorts of things like that. not sports but, you know, we're working on it. >> where is that? 31st and lex? where is the pumpkin patch -- >> had to leave the island. >> what? >> we had to leave the island. >> what? >> yeah. we rented a car. >> a zip car? >> we left the island. >> a zip car? >> it was a real car. >> a real car. it was an suv. >> to largo. >> i drove. >> no way. >> i drove and we went out and we spent the day out there. >> in what state? >> in los angeles. we got corn and we got pumpkins and we did ponies and we ran on camels and llamas. >> did your kids love it? >> they did. but we have business to attend to. >> you're now set for five years or so seeing all the greenery. sorry, ross. ross is like, do do do, i come here, wait, finally get introed. anyway, sorry. >> no, that's okay. i'm pleased andrew got out of the city for the weekend. that's good news. despite where futures are trading right now, which you were just pointing out, joe, european he can witt its haven't done very well. we're pretty evenly paced around decliners. little more relaxed. global investors, no one thinks the u.s. is going to default. there schbt huge pressure. you can see it's up 600. absolutely flat. ftse has been flat this morning. it was up a little bit on friday. up half a percent. the cac up .10. now we're not too concerned. there are other issues we're looking at. basic resourgss are up. that's despite chinese data is down to a 17 month low. it's contracting. basic resources would normally fall on that number. the good news is that there are imports and they're dogs fairly well. technology down a little bit. auto is very much in focus off 1/4 percent. here in europe, down to the two stocks. peugeot, the french car maker, they are talking about a 3 billion hike. a chinese partner will have to come in. they may take between 20 and 30%. down a quarter percent and bmw talked about chinese sales up 20% for the last nine month period. they're talking about another record number of sales. pretty contained session. now back to you. >> sorry about the interrepresentation of ponies over the weekend. >> no, you're riding llamas? >> i wasn't riding the llamas. >> camels. >> camels. i don't think you can ride -- can you ride a llama? you can ride a camel. >> you can try. >> probably can try. i don't know if you'll get bucked off. >> camels definitely spit. >> there was a lot of spitting and bucking going on in washington. john harwood joins us to give us a little bit of an update over what happened or rather what didn't happen over the weekend, john. >> well, what didn't happen was the deal got purt in place to resolve the debt ceiling and reopen the government. i think we're getting closer. you have knnenknow negotiations mitch mcconnell and harry reid. the longer it goes on at current levels the more democrats feel like they can't alleviate parts of the sequester. already the republicans want a short debt limit extension. democrats want a longer one. i do think that mcconnell and reed are likely to work that out. if they do, then you could get a deal through the senate that the house would have little choice but to accept and i think that's a strategy that even house leaders are counting on, too. something comes over from the senate. the speaker puts it on the floor and it ends up passing whether or not conservatives within the house republican caucus object to it. >> john, what's the timing at this point? >> i think the -- we're looking early today for some sort of agreement from reid and mcconnell. if that happens, the senate can put it on the floor relatively quickly. the target date since you know since you've scheduled your show to come down here is thursday. there's still time for both things to happen, that is senate consideration of passage and house consideration and passage by thursday, but if they don't get an agreement today, that's in jeopardy. >> there's some talk, john, that if the senate doesn't get a deal going today, boehner plans to put up a new proposal tomorrow. what would that look like? >> a short-term debt limit extension, perhaps a government spending bill as well to reopen the government, but something very short term and i think look, the senate has no deal and boehner passes that, that has a good chance of becoming the outlook as well. i sense the commitment shared by leadership in both parties that will likely be controlling that we are avenue not going to breach the debt ceiling on thursday. >> if you wanted to handicap it, you would put the odds that we don't go over? >> i think the odds that we go over, that we breach the debt ceiling are pretty low. i think that, you know, one in five? >> no. >> stop worrying. >> i like that. except that one in five shot comes true and we do breech it, the consequences are pretty grave. so i think -- >> i'm packing my bags. >> i love you but i'm not packing my bags. >> what do you mean? >> i'm not coming down on thursday. i'll be down that weekend. >> you're not coming? >> note thursda thursday. >> he's betting we'll get a deal before wednesday? >> oh, okay. >> is that what you think, we'll get a deal before wednesday late on it will go down to the wire? >> i think it will go down to the wire. wednesday midnight. let's put it this way, i don't think it will be done before 6:00 p.m. on wednesday. >> wow. guys, in looking at what happened in bringing the sequestration levels back into it, the democrats are going to push the advantage at this point. is this just talk a who he had of it or making a point that, by the way, we had agreed to go ahead with the sequestration talks. >> yeah, i do think there's a human danger that at the end of this process the democrats pushed their leverage too far the hubris having beaten back the republican demand which they considered way out of bounds, they pressed too far. there is a common desire. remember, the house republican proposal to the president was also about alleviating sequestration cuts in long term entitlement changes. what they're doing in trying to press their advantage is to make sure that the debt and deficit negotiations that follow this agreement don't foreclose them getting anything because if republicans rule out revenue and if you also rule out alleviation of the sequester, all there is are additional entitlement cuts. >> assuming you get a deal, is there a lasting impact for either party or does it matter or is this just the messy game that is washington? >> there's lasting damage to the democratic party. they're pushing it too far. >> even if the deal gets done? >> yes. but i think the intensity of the damage sort of fades over time. this is a pre-existing condition, if you will, for the republican party that hurt them in 2012 that is getting burned in now. >> also of kind of in the middle of people that are still -- you know, they haven't decided whether they want what we talked about last week. you saw the one poll came out about who wanted a clean cr and it was like 60% said, no, i'd like to cut. the "times" big piece yesterday was maybe the republican's chances of taking the senate have been diminished. it wasn't about losing the house, it was still even with the idea that they could retake the senate in 2015. it was a front page piece that said maybe the chances of doing that are at the margin. we'll see. >> i agree with you. it is at the margin. memories fade. people's attention moves on quickly. republicans need to deal with the perception that they are a party that's speaking to a small number of people and not the broad swath of the american public. that will get solved when they get a nominee and chris christie redefines the party. >> there are people that would make the case that governing by polls isn't the way to go anyway. if you have ideas about what's right and you don't damn the torpedos, it's not about poll, then it stands for something instead of sticking your finger up every five minutes in the air to see which way the wind is blowing. >> i know what your' saying. it's true but it's about the realistic exercise of the power that you want that the voters have given you. >> i'm with you. there's a lot of important things happening in terms of the national league, the american league. >> did you watch the end of that game last night? the roiblgs and -- >> no. >> no, it was too late. >> oh, my god. >> 6-5 i saw, the red sox pulled it out. >> that was a game for the ages. >> did you see the patriots as well yesterday? >> yes. >> great stuff. >> yes. i also saw the redskins get whipped by the cowboys. that was not good. >> yeah, i know. i know. that's why i'm mad at these guys. it's like i need to focus on some of this other stuff. you know -- >> bengals in overtime. >> that was something, too. >> they've beaten the packers and the patriots which i would never have predicted. anyway, we're getting yelled at. >> john howard in washington. thank you, sir. lady in red. >> he can say thank you back if you want. >> we need to thank him. >> we do need to thank him. every monday morning felling us wh telling us every weekend what did happen. we have erskine bowles joining us. he's going to bring his rise above. bob corker will tell us what's going on. then we have mark bertoloni. >> who? >> bertolini. >> as long as you get mark right. >> don't worry about it. >> how twitter is getting a great deem from the banks. being really cheap, aren't they? they're allowed. you know what, you have power. you have power. anyway, it's the lowest in the year for the fees. first off, here's what we were talking about, some of the stuff. sports news in the sunday night game. the cowboys beat the redskins 31-16. what an ending in the patrio patriots/saints game. he heaved it 17 yard touchdown pass to kenbrell tompkins. five seconds left from the 17 yard line for new england to beat the previous unbeaten saints. big night for boston sports as well. david ortiz hit a game tying grand slam in the eighth inning and then watch this. a walk-off single in the bottom of the ninth which gave the redskins -- the red sox a 6-5 bins win over the tigers. now it's 1-1. the dodgers have to get it going. the tigers will host game three. now the forecast. >> hey, guys. the storm system moving here in the plains. this is a big weather maker. this is going to open the door to a lot of very cold air across the country over the next few days into next weekend be. for today looking at severe storms in places like nebraska in through kansas. rain out ahead of that in places like minneapolis. the rain tomorrow tracks into the biggest cities like chicago, indianapolis. we could see maybe severe storms here tomorrow. pretty wet and unsettled. by wednesday the storm system reaches the east coast. more gloomy skies there in new york city, boston, d.c. going to be getting more rain as well. as i mentioned though, more cold weather ahead. in fact, 10 to 20 degrees below average. those temperatures spilling out across the u.s. by the end of the week. more "squawk box" when we come back. welcome back. it's time now for the executive edge. focus on giving business leaders a leg up. twitter is said to be getting favorable terms from the banks to go public. they're going to collect fees of 3.25% of the money raised. that would be the lowest amount paid on a u.s.ipo. twitter is finalizing a $1 billion credit line. it can use it to help their finances grow. they're squeezing firms on both ends, the banks on both ends. >> you know, it's funny. traditionally there is an argument made that it's an au antitruant antitrust issue. pandora paid 7%. however, what we didn't note there dsh. >> they paid 1%. >> absolute dollars, more than twitter. >> facebook squeezed the banks and got a huge loan. >> that's right. >> the idea there's collusion at 7%? >> there's been a long debate as to why is there no competition going on in this market. it's because this is like a -- this is a reputation enhancer. that's why people are willing to give very little. >> facebook, they say you get what you pay for, 1%? >> well, because the question is do the banks make it up? i don't know this. is it made up on the debt side? >> is that why grub ber has the best auction? >> that was one of the reasons the fees have been there. >> you take money out of an atm at 7%? >> no way. no way. >> i did 3%. >> you did 3%? >> that's yesterday. >> that's crazy. >> were you in vegas? >> no, i had to take out $400 to get it at 1%. >> that's what i did. >> i feel better. they should have bought me dinner. >> vegas, 7%. >> i'll make it back. >> they're a dibted. they'll pay anything. 3.25 still sounds like a lot to me. it does in the stock business. >> it does. >> everything else has been squeezed much lower than that. people used to pay a mutual fund front end load 8%. >> those were the days when the brokers had big clients. another story. the home builders are trying to lure buyers. sales in some markets have been hurt by rising prices and by higher mortgage rates. the upgrades that you can get at this point, free appliances, blinds, premium flooring, closing costs, covering some of the downpayment on paying to reduce the buyer's mortgage interest rate for a year or two. we thought you'd have to get past the point where you needed give aways, but they're back with full force. >> is that ep hansing or masking a larger problem in the indus y industry? are we not appreciating what's going into this? >> i think for a while that had gone away. that was a great sign that the home buyers had the upper hand. this is what happens when you raise the mortgage rates 4.5%. it's still an incredibly low mortgage rate. when you're talking of rising 30 or 40% -- >> like you said earlier, three steps forward, three steps back. we're at that 58% number in terms of they can get a great job, lose the current job. we're not rocking and rolling in the employment picture. >> until we get going, you can't imagine the pre-2007 type of activity that we had. >> right. >> even with rates this low, that's what's a little disconcerting. that's why the fed is still here. full bore. >> do you think they're going up? >> i don't know. i don't know. it wouldn't surprise me. 85 is such a-who picked 85? why not do a hundy and leave it there? >> oh, boy. we'll have to ask them how they came up with 85 billion. >> round it up. >> potentially. in the meantime, let's talk about the chinese smart maker, ute. they sponsor the houston rockets hoping they can boost their brand in the united states. the company could be a security threat. zte's ceo says they've long been looking to build a connection with the u.s. public. they're sponsoring a game between the rockets and indiana pacers. >> you can get a good deal at the new york giants. >> do they need a little help? >> need a sponsor. >> you can get it cheaper than the -- >> yeah. i'm not that bothered by that. are you bothered by that? >> would you own one of these phones? would you are would be rird everything you say -- >> do you know how hard it is for me to get to where i am now? >> is it on the iphone? >> from the blackberry? >> yeah, white. something i have been doing. >> talking. >> using siri? >> yes. i did a six sentence e-mail and i had to change one thing. >> way to go. i'm impressed, joe. >> you don't have to use the fingers. >> you can do it. think if it really works. >> that's true. i wouldn't have to worry about not being able to drive. >> that's what i mean. >> okay. >> i'm there. i'm there. >> think about it. own the iphone. >> i think i'll have one before christmas. >> you think android is what you're thinking. >> no, i think iphone. >> he is. zpl i'm already thinking i want to test it. >> battery life is longer. >> i want to see. >> i want everything on one thing. >> it's a better phone. you can have the mac phone, ipad. i want one thing. >> i'm done because i can't run multiple systems and transfer files and everything else. i'm going to do one system, that's that. >> did you take shots of the pumpkin patch? >> i do. during the break i'll show you. when we come back, still no deal on the debt ceiling or the government shutdown in washington. as a result you can see that the futures are giving up some ground this morning. right now the dow futures are down. we're going to talk about the list from the markets in the days ahead right after this. plus, richard branson firing back at critics. he says that he is not a tax exile. we'll have that forstory when "squawk box" comes back. woman: everyone in the nicu -- all the nurses wanted to watch him when he was there 118 days. everything that you thought was important to you changes in light of having a child that needs you every moment. i wouldn't trade him for the world. who matters most to you says the most about you. at massmutual we're owned by our policyowners, and they matter most to us. if you're caring for a child with special needs, our innovative special care program offers strategies that can help. maestro of project management. baron of the build-out. you need a permit... to be this awesome. and you...rent from national. because only national lets you choose any car in the aisle... and go. you can even take a full-size or above, and still pay the mid-size price. 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(vo) meee-ow, business pro. meee-ow. go national. go like a pro. at a ford dealer with a little q and a for fiona. tell me fiona, who's having a big tire event? your ford dealer. who has 11 major brands to choose from? your ford dealer. who's 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. i'm beginning to sense a pattern. get up to $140 in mail-in rebates when you buy four select tires with the ford service credit card. where'd you get that sweater vest? your ford dealer. welcome back to "squawk box" this morning. we have headlines for you. this one is for ross westgate if he's still watching. richard branson is denying being in tax exile in the u.k. in an article in the u.k.'s "guardian" he said he moved his main residence to his private caribbean island seven years ago for what he says are health reasons. branson has made nekr island the island he bought in the 1970s his tax base. i don't understand. do you pay taxes to yourself if you own the island? >> reason to buy the island. >> as a result he have can only spend between 46 or 183 days in the u.k. income is not taxed in the british virgin islands. he plans to spend his remaining years on nekr for the sake of hess health rather than to protect his bank balance. comments? questions? what do you say about that? >> i'm saying you are in a unique position to tell us about that place. are you not going to cop to having been to -- >> i have been to nekr. >> i know you have. are you going to sit there and say nekr island, like i've never heard of it. what's it like? >> it's amazing. out of control. i'm sorry. >> if you are able to -- >> it's one of the coolest places you'll ever go. there's a main house which had a fire a couple of years back. >> i remember that. >> maybe only a year or two ago. >> maybe five or ten other bedrooms. i think they charge if you want to rent the island, you can. it used to be about 200, $350,000 a week and people bring -- >> you didn't pay that? >> i did not pay that. i went there on a reporting trip. >> oh, yeah. >> that's why now you can -- at least you can report -- >> reporting trip. it's pretty crazy. it is a pretty crazy place. the ratio of staff to people has to be maybe one to one if not more. if you want be to learn to kite surf, i took a lesson. >> i understand what he's done. i think it's fair to say that i'm doing this for health reasons. if that's the case, if you're just doing it for health reasons and not to evade taxes, pay your taxes in the u.k. >> i don't know. he says it's so much more comfortable to live there. >> i can understand. you're saying, do it. i did this so i don't have to pay taxes. >> richard branson, he's always next to union jack. he sort of wraps himself in the whole u.k. thing. >> for all of his businesses, virgin businesses. >> right. he is almost an icon of london, of the whole country. >> that would be the first guy that -- >> but that -- >> on that side of the aisle. >> say you did it because the taxes are too high. you need to work and find ways to keep that money here or keep it there. >> there's a reason to do that. this would not be a lear jet. this would be a boeing business jet liberal probably. >> he had a very nice plane, that i do remember. >> duh! he owns an island. >> you couldn't land on an island. you had to land on the island next door and take a boat. >> look at the value added you're bringing. you were just sitting over there. >> i was sitting there. >> we asked you for comments about the story. >> that was an amazing -- >> it was a weekend. you didn't know i knew, did you? >> it was about climate change and green. you remember everything. >> you have a steel trap of a brain. it was a climate change weekend back when -- i'll give you some names that were there. elon musk was there. tesla was just there. everybody thought he lost his mind. it seemed like a crazy idea. larry page showed up with his main girlfriend. i don't think he was married at the time. >> no. >> he went surfing. then the thing i will never forget is we went to an island next door. it was called mosquito island. >> that's crazy. >> tony blair was on this boat. we were all going across. this is all our friends on this little boat going to mosquito island. we get there and there's music playing and literally girls in bikinis. the whole thing was crazy. i would never forget richard branson going there and saying normally they'd be naked but the prime minister is here. >> really. >> the travel brochures, i don't think that's a good -- mosquito island. that's a place where, hey, let's go to mosquito island. mosquitos everywhere. >> it's like this. >> mosquito island. >> they have one in the video so they named it that. >> mosquito. >> just listen. >> your life. i could sit here and, i mean -- >> as you know, you're quite a story teller. it's really good. the markets ending the week. who's out there? >> paul allen's boat was docked on the side and tvs supposed to land on the boat. the markets are ending the week where they grew more optimistic. futures are trading lower this morning. there's limb progress starting a weekend in the nation's capital. you have to figure out what you're not going to do to figure out what you can do. i think you would say that there was progress even though it's not done. jeff is joining us. and aaron is joining us, chief economist at ihs will tell us what we can expect in terms of economic numbers overall. jeff, any pullback? did you buy on weakness? are you hopeful this gets worked out and you can stay long? >> i was actually in washington, d.c. i've been on the road for the past couple of weeks. i was in d.c. during the shooting, as a matter of fact, close to the studios. i agree with john, what your guy in d.c. said earlier in the show. i think you'll see a last-minute deal this week. that's the way it works. you saw the same thing happen with the fiscal cliff. i think a deal gets worked out this week. if you get a hit today, tomorrow into wednesday it's a by. >> and you figure something will happen by then. what's the maximum long-term effect you see if we do finally get something done this week? >> well, i think the big hit, assuming they get something done this week, the big hit for the fourth quarter, we could see growth below 1%. already a lot of damage has been done. we saw that in the unemployment claims numbers. they spiked up. a lot of that was because of glitches in california. 15,000 was because of layoffs in nonfederal workers affected by the federal shutdown. so already it's having an effect. so i would say big hit in the fourth quarter. and if it's all done, then the first quarter and second quarter we could see a bounce back. >> a bounce back above where we would have been normally or -- >> yes. >> -- back to our crappy 2% level? >> no, more than normal in the sense that there are two things happening. one is there's some expenditures happening, spending, cars, that will come back. there are some we'll never see again. spending by federal workers on restaurants, for example? >> how much of that that we'll never see again? we'll get back -- if it's below 1, people would go, wow. that's bad. if you get -- are we getting half of it back? >> we'll probably get half of it back would be -- rough guess we'll get half of it back. >> 2.5. we could use that. jeff, everything else notwithstanding, do you expect 2014 to be the year where we break out of this long-term trend of sort of just above stall speed? >> i think you're going to accelerate. i think the economy is stronger than the superficial figures show. a lot of people got burned with credit cards and they're transacting in cash which is not readily captured. i think that's what the stock market is pointing towards. >> i defended you last week. we had this i.i. stuff. it's all the big banks around the i.e.. they get all the analysts but they're never at the top of the stock picking surveys. raymond james is usually there. some of the more localized firms. i want to let you know that i pointed that out. >> thank you vemp. >> what's your year end target for the s&p. >> i don't have targets, joe. if you go back and look at what the best and brightest they were saying in the end of 2008, they were so far off the mark. i think we will be higher at year end than we are now and i think we'll be higher at the end of 2014 than we will be at the end of this year. i think the chances we're in a secular bull market are high. >> that will be -- if we knew that for sure, that would be something because we'd be above 1700 at the end of this year and then above wherever that is at the end of this year. you're not looking for 20% next year but maybe somewhere up around 1800 on the s&p? >> i think you're looking for 12% earnings growth year over year between this year and next year and it wouldn't surprise me to see the market track that as well because multiples, they might stay where they are. >> naerman, what is janet yellen going to do, do you think? >> well, i think she's been sort of pigeonholed as being a dove. i'm not quite convinced that she is but, okay. i think she is probably going to continue what bernanke has been doing. what we've got with yellen was continuity. that's a good thing in this environment. we have a huge amount of uncertainty about fiscal policy. i would say she'll probably follow in the footsteps of bernanke. big debate about when are they going to start tapering. the earliest i'll do it is december. even then depending on what the economy is doing they may wait. they'll wait until next year. continuity i guess is what we've got. >> you're not convinced she's a dove? >> no. remember, she -- >> i see the boston background. she's from berkley. maybe you're from cambridge. she's -- >> she -- >> if you see something walking going quack, quack, quack, it has paddles, a big yellow bill, do you say that might be -- i don't know, that could be a dog? >> remember, she's been pushing this 2% inflation target pretty hard. >> you're scaring me. you're scaring me. you're not sure she was a dove. i don't know what would cause you -- quack, quack, quack, quack. >> that's the consensus. the consensus is probably wrong on this one. >> okay. interesting. >> what if her first act is to -- >> what if it's going to 65? >> all right. >> concession. >> thank you. >> thanks, jeff and naerman. i think he's on the other side of it, of the charles river. >> on the cambridge side or the m.i.t. side? >> cambridge. cambridge and m.i.t. and harvard are on the same side? >> oh, are they? >> yeah. >> all right. when we come back we have your morning squawk planner. the business plans for the day. at the top of the hour, former citigroup chairman, dick parsons. 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[ 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." it's time for your "squawk box" planner. i can play vanna white here. it is columbus day, that means the bond market is closed. the day marks christopher columbus' discovery of the americas back in 1492. presidential proclamation calls on americans to observe the day with ceremonies and activities and stars and stripes be displayed on all public buildings. and i want to know why we keep the bond market closed and stock market stays open. look for that news at about 8:00 eastern time. hopefully we'll bring that for you on "squawk." and it is, of course, day 14 of the government shutdown and you should head over to cnbc.com to vote for top ways to punish congress for the shutdown. little way to express your frustration if you have any. and that's your "squawk" planner today. anyway, coming up, we've got former citigroup chairman dick parsons going to join us. plus erskine bowles is going to bring his call to rise above "squawk box." stay tuned for that and a lot more. americans take care of business. they always have. they always will. that's why you take charge of your future. your retirement. ♪ ameriprise advisors can help you like they've helped millions of others. listening, planning, working one on one. to help you retire your way... with confidence. that's what ameriprise financial does. that's what they can do with you. ameriprise financial. more within reach. they're the days to take care of business..ou. when possibilities become reality. with centurylink as your trusted partner, our visionary cloud infrastructure and global broadband network free you to focus on what matters. with custom communications solutions and responsive, dedicated support, we constantly evolve to meet your needs. every day of the week. centurylink® your link to what's next. transit fares! as in the 37 billion transit fares we help collect each year. no? oh, right. you're thinking of the 1.6 million daily customer care interactions xerox handles. or the 900 million health insurance claims we process. so, it's no surprise to you that companies depend on today's xerox for services that simplify how work gets done. which is...pretty much what we've always stood for. with xerox, you're ready for real business. coming up, u.s. equity futures under pressure after friday's big rally. really, thursday was the big one. but we continue then on friday. we will welcome former citigroup chairman dick parsons when "squawk box" comes right back. opportunities aren't always obvious. sometimes they just drop in. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group: how the world advances. good morning, everybody. welcome back to "squawk box" here on cnbc. i'm becky quick. and the futures this morning are under some pressure. this is coming as it is clear there's no deal, at least not now in washington. dow futures down by about 82 points, s&p futures down by close to 9 1/2. in our headlines this morning, as we mentioned, still no agreement to ending the government shutdown. now in the 14th day. also, no agreement on raising the nation's debt ceiling. that optimism that fueled the stock rally on friday faded over the weekend. with democrats and republicans still apart on key issues. democratic senator dick durbin told nbc's "meet the press" that reaching a deal to raise the debt limit is crucial. >> if in four days we default on our debt for the first time in our history, it is going to have a dramatic, negative impact. this may be heresy, but i think simpson/bowles got it right, put everything on the table. >> in the next hour, we'll have one of those men that got it right. erskine bowles starting at 8:00 eastern time. and the company is using that to its financial advantage. according to the "wall street journal," twitter has been able to put bank fees for the initial public offers to 3.25%. that's the lowest for a listed ipo in over a year and close to arranging a credit line for the bankers as well. and netflix is in talks for services through set top boxes. those negotiations, though, are said to be preliminary with no agreement expected any time soon. lawmakers on each side of the aisle pointing fingers at each other for failing to reach a compromise on the debt ceiling battle over the weekend. here now barry and our guest host for the next two hours richard parsons who is a senior adviser of providence equity. former chairman of city group and all kinds of -- like an iconic figure. great to have you here. you're iconic sort of. >> in my own way. >> well, we've made you iconic. predated coming on "squawk box," but you're there now, barry. if you were to just start -- >> i was wondering how you were going to get -- >> it's not easy. >> if you were just to give me the -- how you've been viewing this for the past three weeks, let's say. how would you summarize your feelings? >> probably like most americans, it's sad. there's no good story to tell. there's nothing that you can say, at least out of this will come x, y or z. this is just a case of massive dysfunctional lack of leadership. i think that's what most americans think. >> we just said, i don't know, on our website, we're allowing you to complain, get mad at congress and punish congress. do you think -- okay, fine. congress has its policy. do we think we should get mad at the obama administration, the white house? there's blame on both sides. >> yeah, this is like anything else that you encounter in human interactions. it's never all one guy's fault, right? it's never all one guy's fault. everyone is contributing this. and in my judgment, it's -- it's a function of lack of leadership and -- and narrow focused as opposed to broad gauged focus. people wondering, what, how do i keep my job? what does my district want as opposed what's good for the country? >> it doesn't help, though, when there's this much animosity between the two sides. >> no. because even in the past where you have seen totally different opinions about what we should be doing, big government, small government, more spending, less spending, all of that. but it did seem to be some collegiality. and that, these guys -- there's a lot of republicans that don't want to give anything to the president. and the president is so, you know, you can almost see his revulsion to even dealing with a lot of people on the other side of the aisle. it's bad, really bad. >> i think it's bad. and i don't profess to have insight into how it got so bad or why it got so bad. but there's no trust. >> obama care didn't help. >> well -- >> iraq didn't help. i mean, it goes back years. >> i think there's a new breed of politician. i think a lot of the highly conservative element that's come in -- >> i was reflecting -- they're actually anti-democratic. not anti-democrat. it's the will of the people, the will of the majority. it's no longer relevant. it's only -- it's relevant what i want and what my constituents want. and so we're going to hold out and we're not going to -- >> yeah. the latest guy says bankruptcy of shutting down, going on the debt ceiling is not as bad as the bankrupt country. >> right. >> and that's what they're thinking. >> but i saw a poll this weekend on "meet the press," talking about how the middle of the country is 51%. if you add up the far right and far left together, you still get less than the majority. >> that's true. that's true. >> but they're the ones -- >> a lot of people holding public office actually don't believe when you strip it down that the majority should determine. >> well, they may reflect the views in their district. maybe it's a problem with the district. >> but i go back to the redistricting and gerrymand gerrymandering. it's we've set up a system that allows the polar opposites -- >> we've always had this system. wouldn't you think that after you have a huge financial crisis, it would create this polarization. it's an extreme in terms of the macro economic outlook and situation. and so, look, roosevelt was a polarizing figure to be sure. and there's, you know, people still litigating that fight as to whether he did the right things, or not. i suspect the country will come back to the middle. i take a more sanguine view of all of this. the fact of the matter is, we manage to get the budget deficit above 10% of gdp to below 4%. the government spending has dropped, so we've gotten back to about the six-year average in terms of spending. and if out of this deal, we get some trading of discretionary cuts for entitlement cuts, they'll be small, they won't solve our long-term debt problem, but if they cross the rubicon, you have to view that as encouraging, we know that's the long-term driver of the debt. we may have some good come out of all this despite, you know, all the acrimony. >> you think it was going to get done otherwise. you think you needed this blunt instrument. >> i think it was always likely to be highly contentious given the magnitude of the depth of the recession and increase in unemployment. there were always going to be divergent views on how you do it. i was studying economics in the early '80s. the debate was heated. and in that case, reagan and kempf and that crew won that fight. now we've -- we've had the same fight 30 years later and it was always going to be a contentious battle. >> there's a book called that. we keep fighting that over and over again. when did -- i mean, the great books on economics. we thought we settled this in the 30s, didn't we with hayek. we thought we settled it. >> the difference, though, i think, and i was a part of the earlier fights. we didn't get close to the edge that we've gotten close to this time in terms of government shutdowns. and looking at a potential default on our indebtedness. which, you mentioned a minute ago, joe. someone said well, i'd rather have us, you know, default, run up against the debt ceiling and default on the payment of our debts rather than go bankrupt, you know, and have the -- our liabilities ultimately exceed our assets. it's been a long time since i practiced law, but my recollection is either one of those is bankruptcy. bankruptcy is either our liabilities exceed your assets or you can't pay your debts when they fall due. that's what we're looking at. so it's kind of a question, do we want to be a dead beat or be broke? either one is not so good. >> but, you know, if we did get 3% or 4% growth again, i bet you we wouldn't be as mad at each other either. >> that's true. that's true. >> and look at the unemployment picture and it's just -- it's 80% of the country thinks we're headed in the wrong direction. so, robert, it's the nobel memorial prize in economic science, it's a nobel prize. >> it's added in 1968 as a memorial to nobel. >> lars peter hanson and robert shiller. americans winning for their empirical analysis of asset prices. i was looking really quick to see what he's written. the last thing i saw him write was from october of 2007. interpretation in terms of changing popular economic policies. >> he loves animal spirits and i think he's -- he probably would've won if he wasn't on "squawk box" as much as he is. he probably still would've. this did not hurt. >> is there a campaigning that goes on behind the scenes? >> he's a market master. >> do you have surrogates behind the scenes working? >> nothing just happens. >> nothing just happens. >> he's is one of our market masters. >> he is one of our market masters. the nbc team working behind the scenes for this. >> cnbc teams. we're not part of the "squawk box" team. >> "squawk box." >> we're not part of nbc news, andrew. you know that, right? >> we're owned by nbc universal. >> friends at comcast. >> i understand. i understand. never mind. anyway, barry, thank you. richard will be sticking around for the rest of the show. >> symphony. >> yeah. >> we work closely together with them. we love them. >> what's going to happen in markets? >> well, we -- sure. we thought we'd have a 4% correction like we had in '95, '96 because there wasn't a risk of a big fiscal drag coming out of any deal that gets done. and so we always thought it was going to be sort of a minor reaction. i think the reaction's done. the other effect it does create enough fog we've pushed tapering into next year. this clears up in the next day or two -- >> the futures look like they're down about 90 points this morning. if we don't get a deal done tomorrow. they're pushing their advantage saying they have questions about the sequestration. >> that's why we don't have a budget in the first place. >> they had agreed to that. now that the house said no thanks to that, the senate is kind of standing tough saying forget it, we're not going to agree to what we agreed to. >> they never agreed to that. >> harry reid said they had a back room deal, he and boehner agreed to that. he told them if he couldn't get that, he would bring the house. >> well, look, if you have a couple of days of fighting and it lingers and the market sells off, you should buy that selloff. there will ultimately be a deal. and the point here is this is not going to be like 2011 where you have huge spending cuts coming out of it. we've done the bulk of that work. we're not going to have a big tax hike coming out of that. we've done that work. so what you might wind up with is actually stimulative in the sense you change -- trade short-term spending cuts for long-term entitlement cuts and you've got the fed on hold now. the outcome of this is likely favorable for the markets not unfavorable. >> in terms of how to come up with some sort of agreement, do you expect we will see more tax increases in order to get entitlements brought down? in the longer term. not in the next few days. >> in the longer term, yes, i do. >> okay. >> it has always struck me as odd that almost anybody who has any common sense would know. when you're running the way this country's running, we're borrowing way too much, spending more than we can afford to spend. the answer has to be in two buckets. and you'll hear this from erskine bowles when he comes on, one, we've got to cut our expenditures and, two, raise our revenues. i think bowles/simpson got it about right. i think there will be some revenue increases in the form of tax increases but those tax increases may be simply eliminating loopholes, subsidies, doing things, increasing as the president has proposed the level of participation, social security, changing the inflation and those kinds of things. there'll be revenue side to any ultimate resolution, i believe. >> got it. stick around. a lot more to come. he's going to join us to discuss fixed income, the fed and what's going on in washington. "squawk box" returns right after this. tomorrow on "squawk box," omega's chairman and ceo peter fisher, and sandy cutler is helping rise above the debt ceiling. all leading up to our exclusive interview with david teper. business leaders and the world's best investors come to one show, "squawk box." starting at 6:00 a.m. eastern only on cnbc. millions of people are estimated to have visited health insurance exchange websites during the first week of enrollment, but many had trouble signing up. an a.p. poll of 1,200 adults found that 7% tried to sign up for insurance on the exchanges, when applied to the general population, that could be as many as 20 million people. 3 out of 4 respondents had trouble signing up, 1 in 10 successfully bought insurance. the obama administration is expected to release enrollment statistics at the end of the month. our guest host is dick parsons. one of the things we've looked at is the health care rollout. it hasn't gotten a lot of attention because of the government shutdown and debt ceiling debates. how would you rate this to this point? this rollout? >> well, the rollout per se is obviously troubled. lots of glitches. that was inevitable given the complexity of the tax at hand. and i think that's -- that's -- that's the challenge the administration's going to have. fundamentally, most americans, i think, believe that there shouldn't be 40, 45 million people in this country without health insurance, without access to quality. but how do you provide it? how do you do it in a way that ultimately becomes seamless? how do you create a system that will rival, you know, social security system, rival medicare and do it in a hurry without hitting some blips. >> is it inevitable because the government was doing it? because google didn't do it? if google or facebook had done this, would we be in the same place? >> the answer is -- >> if time warner -- >> well, that's a different question. that's a different question still. it's a complicated piece of business. you know, i watched -- let's take your first choice google. i watched them grow up and make mistakes and stumble. they did it over time. this is going to take some time to get right. it's going to be a lot more expensive than i think people had anticipated or at least some people had anticipated. >> expensive from the cost of technology or because the whole process isn't going to work -- >> exactly. the rule of unintended consequences has to bite on something this large, this complicated. but they'll get it right over time. >> one of those problems, dick, is that you're talking about something, health care's already 18% of the gdp. >> yeah. >> and obviously we had a massive problem that you had 45 million people who didn't have health care insurance. but this bill doesn't necessarily tackle some of the cost curve issues. there were two problems with health care. we're looking at trying to fix one, we haven't tried to figure out how to fix the other. >> that's because the other's very tough. i don't know if you saw the piece in the times on sunday about -- >> how difficult it was. >> not only how difficult this was but the cost of drugs and generic drugs and prescription drugs and all that sort of stuff. and the comparisons to what those cost in other countries. >> right. >> a fraction. i mean, like 1/10 of what they cost in this country. we're going to have to tackle that. fundamentally our health care system costs twice as much as any of our other developed country competitors. >> do we do that by putting price controls, blunt price controls across the board? or do we -- >> no -- i'm not a price control person. i think that. >> that's how they do it over there. >> i think -- >> with drugs, i mean and get no innovation and we develop all their drugs and they cap their prices and, you know -- >> we're going to have to figure out ways -- and i think this was the thrust of part of the obama care piece to get market competition, to get more competition going in the health care markets effectively to pull prices down. because joe's right in part, not complete, but in part. >> if i were going to -- when you say to get -- let's let the government control all of the health care so that market forces start working. does that make sense to you? does that not sound like a conflict in terms? >> well, i think, you know, what's the role of government? right. the role of government is to make sure that markets function effectively. and the other side of what you're saying, joe, is let's get the government out of it and let competitive forces. >> there are free market ways that it could have been done, i think. there's free market ways that you could -- >> you're talking about that article yesterday about the drugs. the market is not going to fix that problem. >> no, but the individual mandate is huge. you can't -- without making -- >> with generics, it's all about how long you give exclusivity, what is it worth to spend $1 billion. how long should you be able to sell that without competition. those are all things you need to figure it out. >> you can buy those drugs -- >> because there's price caps over there. >> correct. >> they aren't innovating anymore. >> right. but assuming their price caps remain because those aren't going to change, what do you do here to actually lower the price and continue the innovation? >> i don't know if globalization, we've got all these arbitrage. i don't know how you do it at this point. i can tell you it's alive and well, innovation in this country in terms of drug development and -- >> because -- >> one of the reasons it's so expensive here because we're ziziziz i subsidizing the rest of the world. >> i'm not sure the companies would say it's well. there's so much regulation. >> that's true. >> we use a lot of basic research in this country for the government and make that basic research available for people to then build on. sort of like creating an open system if you want to use a technology analogy. however, we don't do that anymore. so these companies now have to go all the way back into the basic research. >> the nih and nsf. the universities are still -- >> even there. that's right. that's primarily where it happens. but the level of u.s. expenditures in terms of total u.s. expenditures which goes to basic research. it's like infrastructure if you will that goes to creating a platform of which other people can innovate has been cut dramatically because, again, i think shortsighted. >> discretionary stuff, we've already done what we can do. if we can do something on the entitlement side, you can bring it back to the discretionary side. >> i agree with that. that means that people that are rational and have the interest of the country, long-term interest of the country in focus have to sit down and work their way through this. >> we're going to slip into a break. thank you, dick. coming up, seattle and kansas city vie for the honor of having the loudest fans. the details after the break. and black rock's peter fisher is going to join us when we return. time now for today's aflac trivia question. when was the debt ceiling created? the answer when cnbc's "squawk box" continues. ready to run your lines? okay, who helps you focus on your recovery? yo, yo, yo. aflac. wow. 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[ male announcer ] when you're sick or hurt, aflac pays you cash. peace of mind is important when so we provide it services you bucan rely on. with centurylink as your trusted it partner, you'll experience reliable uptime for the network and services you depend on. multi-layered security solutions keep your information safe, and secure. and responsive dedicated support meets your needs, and eases your mind. centurylink. your link to what's next. opportunities aren't always obvious. sometimes they just drop in. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group: how the world advances. when was the debt ceiling created? the answer in 1917. >> you need to rise above the debt ceiling. >> did you know it was 1917? >> it was a while. >> i thought the case made last week was interesting. there's no debt ceiling. really? it's going up. i don't even know why we talk about it. >> it's weird we even have it. >> it's going up. >> hank paulson -- >> it's going up. it's never going down. going to keep going and going and going. for years arrowhead stadium the home of the kansas city chiefs is known as one of the loudest places to play in the nfl and yesterday it officially became the loudest place. the screaming fans in kansas city reached an ear splitting 137.5 decibels in their game against the rivals. that's a new all-time high, beats an old record set by these other maniacs out in seattle. last month, 136.7, roughly about the same volume as if you were standing next to a jet engine. >> are you kidding me? >> the fans in k.c. have good reason to be so cheerful. under andy reid -- >> they're 6-0. >> they are. only three remaining undefeated teams, they only won -- >> denver? >> denver, k.c., i don't know the third. >> did new orleans win? >> no. new orleans got beat in the last 20 seconds by -- >> i have to look that up. >> by brady. did seattle lose? they lost, didn't they? >> i think so. i know giants are 0-6. >> they're the opposite of undefeated. >> while we figure out the third, we're going to welcome black rock's peter fisher when we come back. plus, much more from dick parsons, former citigroup chairman and then the top of the next hour, erskine bowles will join us. the co-chair of the fix the debt campaign. sits on the boards of companies like facebook, morgan stanley, norfolk southern. in a world that's changing faster than ever, we believe outshining the competition tomorrow requires challenging your business inside and out today. at cognizant, we help forward-looking companies run better and run different - to give your customers every reason to keep looking for you. so if you're ready to see opportunities and see them through, we say: let's get to work. because the future belongs to those who challenge the present. welcome back to "squawk box." in the headlines. we have sort of a headline to tweak from right before the break which is that there's now only two undefeated teams left, denver and kansas city. >> three teams with the perfect record. four teams with the perfect record. >> two of them are wins. >> we're only -- >> giants are 0-6. >> if it wasn't for -- if it wasn't for -- we're trying to figure out how we messed it up. if they hadn't played the last 20 seconds of the saints/patriots game, there'd be three. it's just a mistake about the -- >> timing. >> timing is everything. >> timing. >> talking about timing, it is columbus day which means the government would be shutdown even if it wasn't already shutdown. the stock market is open, but the bond market is not. we're going to talk to peter fisher about why that's the case. no economic reports on the schedule. and a few earnings report of note, as well. another victim of the government shutdown, holders of winning lottery tickets in the district of columbia. the d.c. lottery issued a statement saying no winning tickets would be paid out until further notice but also said winning tickets would be honored once the shutdown is over. i wonder if there's any big winning tickets out there. also the thriller "gravity" which i saw over the weekend remains atop the weekend box office. easily beat "captain phillips," starring tom hanks, which earned $26 million in ticket sales. i saw it in imax 3d with the glasses and it was pretty cool. >> apparently both movies are equally accurate. in terms of the level of accuracy that you can see in both. >> captain phillips is based on a true story. gravity is -- >> except the people there say it is no way representative of what happened. haven't you read? >> the astronomer from the natural history museum had a lot of problems. >> you should see how much debris is flying by at the speed of light and they're somehow dodging. one little speck if -- >> don't ruin it for -- >> and the chinese space station is a couple hundred yards from the one. let's just go over to that space station. do you know how big the spaces anymore -- >> don't tell me anymore, i want to see it. >> it's neat special effects. >> wearing the 3d glasses. >> she's talking about her daughter that she -- >> stop. >> or when clooney -- >> i'm going to ruin "walking dead" for you next week when you don't stay up late enough. >> and you thought you were here to talk about -- >> and robert shiller. won the prize for their -- in the -- what society is this? the economic society. it's like some subgroup. their empirical analysis of asset prices, peter fisher passed over again. >> not going to happen. >> research began in the '60s credited with spurring the krags of index funds and hanson's work dealt with the risk and return there. and shiller, best known to cnbc viewers for the monthly case shiller home price report. won the award for his work on the relationship between stock prices and dividends. wrote a book called irrational exuberance too. and he's big on animal spirits. which we are in terms of how that affects investor sentiment. and he's a "squawk" market master. he had that honor -- >> beforehand. >> before -- >> no, you don't think the nobel committee took that into consideration? >> maybe they did. maybe they did. >> but you're kind of snickering over there. aren't you? all right. we're going to give you a chance to -- >> all those guys deserve the nobel prize. >> let's bring in peter fisher, senior director at the black rock institute. he is also a senior fellow for the center of business and government at dartmouth. it's a pleasure having you here today, as we're looking at the government shutdown extended into these final days as we're about to hit the debt ceiling, people are wondering what the bond market reaction is going to be. we've heard that fidelity is selling off short-term bonds. have you seen other issues that really show the bond market is feeling any stress at this point? >> i think it's a curve flater in flattener. people that run money funds, people are likely to want to cash in their money market fund in event we have a default, which i don't think we'll have. therefore they've got to stay liquid. they've got to sell the short-term bills even if there are other investors happy to gobble them up. >> has black rock been a net seller? >> i understand my colleagues in the money fund business have sold out of the very short dated bills. it's just -- you have to do that. those funds have to stay liquid. at the long end, hasn't backed up much. i'm afraid if we had the horrible outcome which wont expect of the government not paying its bills, it would be bad for growth and that means the long end would come down. >> that's interesting, though. you said the big problem is the government not paying its bills. so on thursday morning, if we wake up and there's not an agreement at that point, is that the day that the market really reacts harshly? or is it later when we miss a massive payment? i think it's closer to the end of the month when you are looking at big payments. >> the payments i'm told on the 21st or 22nd. next tuesday. >> i ran domestic finance in the treasury. this is an art not a science. it's such a massive flow of payments that's got to go through the system that the financial management service is running and the bureau of fiscal affairs. i think what we see going on in washington right now is the usual shenanigans. once a bill has to pass. it creates dysfunction. >> in your judgment, what happens if we don't get past the 17th? if a bill doesn't pass? >> well, if a bill doesn't pass the 17th and the treasury is then stuck, the disruption to the economy is going to be massive. the economy looked like it was doing well. one of my favoriindicators is household income, jumping up from five years of anemic readings. so right now we could've seen the economy picking up speed and i really think it'll be a hit to confidence. there's also an irony. what if congress did the right thing and said, look, we're going to sit down and talk about serious tax and budget issues. what's going to happen to business fixed investment? i think a lot of corporate planners will say, well, there's a serious tax reform on the table. you were saying earlier maybe we'll have tradeoffs of loopholes. they'll slow down investment. >> although, a lot of those things would potentially be things you're looking at several years down the road. some way of reaching a deal might be to raise some of the -- >> yes, but that's -- >> spending up right now from sequestration levels and longer term. >> but business leaders, corporate leaders have shown they'd rather be buying back shares and making tough investment choices. give them another excuse to delay that another six months. >> listen. i think people buying back shares because they know -- at least they think they know what they're buying. most businesses still on the growth agenda, right. to be a public company in this country, in these markets, growth has to be at the top of the agenda. and if they had confidence they knew what the contours of the landscape were, they would start investing again. but buying back shares is is a conservative and kind of default way to go when you have excess cash, which a lot of companies now have. and you've got to do something with it. >> that just may be not very good for picking up speed here in the economy. >> no -- >> might be the right thing. >> i agree with you. the economy's doing better than most people estimate and the government shutdown obviously is a hit to that. and a default would be -- everyone says massive disruption in the economy. nobody spells out what that looks like. i think you almost can't. >> have you done anything in advance of this? is there any preparations you've made? any models you've created? any sort of instruction manuals you've told your people, look, if this happens, this is what we do? >> well, i'm not running the fixed income group anymore. i've got colleagues doing that. but as we did in august 2011, we talk to our clients, try to make sure their guidelines reflect how they want us to respond to them. you don't want something someone wrote down on a guideline five, ten years ago to guide what's going to happen. we've got to rally. >> it's unthinkable. >> yeah, but if you're running a business, you have to have contingency -- >> jpmorgan and fidelity sold down all the short-term stuff, right? and i imagine -- is everybody doing that? >> everyone with short-term funds, you've got to be prudent to do that. there's a much bigger problem we're all facing here in the fixed income markets coming from the intersection and the fed. >> the fed. >> so the fed is clearly with less insight into the economy now without the data and with the shutdown going on and the risk of default going to be stretching out the taper. when will they start tapering further and further out? but the longer they delay that and they've said this in speeches, the more likely it is when the time comes they'll have to let rates rise faster. however far off in the future that is. now, my way of thinking, that's like someone telling you, don't worry, i'm holding this beach ball under water and i'm going to let go of it later than you think. but when i let go of it, it's going to be harder to come bring it up to the surface slowly. they're really telling us there's future volatility in our future. they're telling us manana. >> it's inflating as you're -- >> they're going to say, we're going to let go of it later than you think. it's going to be harder to hold down. >> that sounds like a big market delocation. we thought maybe we had seen it when interest rates spiked a couple of months ago. when the fed didn't start tapering, are you telling me we're going back to big market dislocations? >> qe has been volatility suppressing with all of their bond buying. and it's going to come back to haunt. i think there's a much simpler way to think about what the fed learned in the last six months. they were telling us a year, two years ago, not to worry, qe would have a stock, not a flow effect. they buy these bonds, hoard a little risk. it wouldn't have a flow efgt. effect. what did they learn this summer? they learned it had a big flow effect. just talking about taking away the flow effect moved markets. so now, they've got to realize the flow effect is much bigger than they thought on markets therefore the exit's going to have to be more gradual. >> you think they realized that sitting around the table? >> that's what the whole summer was about. they didn't like the tightening and financial conditions when they told us they were going to start to taper. >> what you're saying, though, they're not going to be able to manage. >> it's going to be hard. >> it's going to be hard for them. >> what does that mean to an investor sitting at home listening? what do you do? >> i think you have to worry about volatility and be ready for it. we've lived in a world of very low volatility the last few years. that's what all the qe and forward guidance has done. i think the trick is, we're also living in a low nominal growth world. even though the u.s. is doing better, the imf is revising down its forecast. i don't think we're about to jump to very rapid growth and very high rates. i think we're going to have a little volatility in our future in 2014, what it feels like to me. it doesn't yet, i don't see the evidence of a really rapid growth rate for the u.s. or the world. so i would tell the investor, get ready for a little volatility, but don't do anything drastic. >> maybe don't keep a lot of stuff on margin. >> yes, i would not do that. >> peter, thank you very much for joining us. >> thank you for having me. coming up next, more from dick parsons and the country is on a path to bankruptcy and says holding out on the debt ceiling is the only hope the country has to stop the spending in d.c. he'll join us in a couple of minutes. still to come, fix the debt campaign cochair erskine bowles. plus, mark bertolini. it's a growing trend in business: do more with less with less energy. hp is helping ups do just that. soon, the world's most intelligent servers, designed by hp, will give ups over twice the performance, using forty percent less energy. multiply that across over a thousand locations, and they'll provide the same benefit to the environment as over 60,000 trees. that's a trend we can all get behind. welcome back, everybody. as we enter this 14th day of the government shutdown. you can see that the futures are under a little bit of pressure. no agreement in sight yet. and as a result, the dow futures down by about 94 points. s&p off by 10 1/2. up next, alabama republican congressman mo brooks on the ongoing debt ceiling battle on why he's holding out against a higher debt ceiling. and at the top of the hour, erskine bowles will join us and mark bertolini with his perspective on what's going on in washington. on december 17, 1903, the wright brothers became the first in flight. 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(vo) meee-ow, business pro. meee-ow. go national. go like a pro. the treasury department warning the government won't be able to pay its bill after wednesday. taking over negotiations with majority leader harry reid and mitch mcconnell speaking by phone yesterday. but the two failed so far to agree to deal. something perhaps in the works. mo brooks, congressman from alabama, congressman, do you expect a deal before the 17th? >> i don't know. a lot will depend on whether we can get a package, a proposal from the other side of the aisle that is financially responsible. one that both opens up the government under spending terms our country can afford, raises the debt ceiling, again under spending terms our country can afford and also takes into account the need to minimize bankruptcy resulting from five consecutive years of deficits that average over $1 trillion per year. >> what does that mean? does that mean going ahead with the sequestration levels that you'd be okay with that? >> well, i'm open to any kind of suggestions on how best to walk this narrow path. it both opens the government, raises the debt ceiling and adequately minimizes the risk on an american insolvency and bankruptcy. to date, there have been zero proposals from the other side of the aisle that does that. and that puts us in a quandary on the republican side. we can open up the government at the spending levels that the other side wants, raise the debt ceiling, but all that does is kick the problem down the road where we are weaker and less able to address it because the additional debt burden we have taken on. >> do you want more discretionary cuts? is it all about entitlements with you, congressman? >> i'm flexible on where the cuts can be. certainly, there is no part of the federal spending that is immune from efficiency, from spending cuts. personally, i prefer the give away programs, the welfare programs, the foreign aid, things of that nature that are less productive than the fbi which is law enforcement or the military which is national security. we're going to have to do a tough job of prioritizing. as long as we raise the debt ceiling, we kick the can down the road. eventually we'll have to address this issue. if we don't, then we're going to have an insolvency and bankruptcy. and the longer we wait, the more difficult it's going to be because the weaker our country will be because of the increasing debt load. >> congressman, dick parsons is here, we had a conversation earlier in the hour where you suggested there were certain factions of the republican party. i think that's what you were referring to that you thought were being anti-democratic, not just anti-democrat. when you think -- congressman, when you think about the polarization of both your party and the country, do you think there's a part of your party that's anti-democratic? >> no, i don't. not at all. i think we're pro american. we recognize the seriousness of the financial issues that we've been in. heck, the president's own comptroller general sent us in writing a letter this year to the white house and the united states congress saying we were financially on a quote, unquote, unsustainable path. we need to heed these warnings. this is very serious for our country. we could slip down the road of grease where the unemployment rate is 20%. >> congressman, we -- we understand that we need to deal with some of this stuff for sure. but the financial calamity that could come from if we actually did default. and i'm not talking about if we just go over the 17th and we, i don't know wait a few days and some people think there's a way of prioritizing. but the default itself and the financial near term financial calamity that could cause. it wouldn't be worth bringing that on just to get our long-term entitlement house in order or to make some kind of a point, right? >> well, to make a point, no, but to get our financial house in order, absolutely. a bankruptcy is far worse than not raising the debt ceiling as bad as not raising the debt ceiling may be. >> that's way off. bankruptcy is years off, right? you would take a near term meltdown of the global financial system to make the point about the long-term entitlement issues? >> i'm not talking about making a point. i'm talking about trying to fix a problem before it's too late. >> let's say the other side will not allow you to solve all our entitlement issues in the next three days. >> well, then we're in a world of hurt if they continue to be as financially irresponsible as they have been with the solvency of a nation that has taken two centuries to build. >> i guess the question i have is, you know, you're defining insolvency as being unable to sort of having our liabilities exceed our assets. it's been a while since i practiced law, but usually insolvency was also failure to pay your obligations when they come due. either of those constitutes bankruptcy. and i'm trying to understand the differentiation you're making. >> fine. if you're talking about a default and the financial markets were really talking about the ability to pay our creditors. we have roughly $2.5 trillion in revenue according to the gao. roughly $250 billion a year. we have have the revenue -- >> you believe jack lew is lying to you? >> the gao says the president has discretion to pay our creditors if he wants to. >> do you think jack lew is lying to the 17th date, not as the date we default, but getting close. >> he uses it in a more expansive way than i'm using it. >> congressman, we appreciate you coming on this morning. coming up, a man who knows a thing or two about u.s. debt and possible solution, erskine bowles is our special against when we return. tire event? your ford dealer. who has 11 major brands to choose from? your ford dealer. who's 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. i'm beginning to sense a pattern. get up to $140 in mail-in rebates when you buy four select tires with the ford service credit card. where'd you get that sweater vest? your ford dealer. they're the days to take care of business.. when possibilities become reality. with centurylink as your trusted partner, our visionary cloud infrastructure and global broadband network free you to focus on what matters. with custom communications solutions and responsive, dedicated support, we constantly evolve to meet your needs. every day of the week. centurylink® your link to what's next. but at xerox we've embraced a new role. working behind the scenes to provide companies with services... like helping hr departments manage benefits and pensions for over 11 million employees. reducing document costs by up to 30%... and processing $421 billion dollars in accounts payables each year. helping thousands of companies simplify how work gets done. how's that for an encore? with xerox, you're ready for real business. ♪ here we are, me and you ♪ on the road ♪ and we know that it goes on and on ♪ [ female announcer ] you're the boss of your life. in charge of making memories and keeping promises. ask your financial professional how lincoln financial can help you take charge of your future. ♪ ♪ oh, oh, all the way ♪ oh, oh this hour on "squawk box," a triple play. we'll kick things off with erskine bowles. >> these politicians are playing games, jerking our country around from crisis to crisis. >> and then senator bob corker on the odds of getting a deal this week before the debt ceiling deadline. and aetna's ceo going to join us onset to talk about the challenges of obama care and finding a solution to the debt crisis. the third hour of "squawk box" starts right now. ♪ welcome back to "squawk box" here on cnbc. our guest host this morning, dick parsons, senior adviser. first of all, andrew has more morning headlines. >> it's columbus day. there's not a lot of headlines. it is columbus day which means the government will be shut down even if it wasn't already shut down. the stock market was open. on the flip side, the bond market is not. fading over the weekend with democrats and republicans still apart on key issues. we'll talk more about those negotiations with erskine bowles in a moment. we are down about 100 on the dow, s&p would open about 11 points and nasdaq about 17 points, as well. and you can see what's going on in asia. things closing there actually up. the hang seng up over 1% and the nikkei up almost 1.5% on the day. and you take a look at what's happening in europe. it's a little bit of a mixed picture. i'll call that marginal across the board. we should also note that three americans have been awarded the nobel prize for economics. eugene, peter hanson, and robert shiller have won the award for their empirical analysis of asset prices. robert shiller is a name familiar to many cnbc viewers, including those here on "squawk." one of the names behind the monthly case shiller home price report. and also "squawk box" market master. that's the real prize. >> there's no evidence that it'll help. >> i think that put him over the top. >> began in the 1960s and is credited with spurring the creation of index funds. and hanson's work dealt with the relationship of risk levels to returns. >> i don't see how won nobel prize for -- >> genius. that's changed a lot of things. >> and they do pretty well. it's good for average investors. you're not paying the fees you were paying for money managers that may or may not do as well as the markets. >> an index fund. >> i like index funds. >> i think it's a great invention. >> our guest host this morning is dick parsons and we've been talking all morning long about what's happening in washington. how we reach some sort of a solution. have you -- you're a businessman. you're somebody who negotiates. you're somebody who knows how both sides have to walk away with something. what's a winning solution you could possibly see at the end of the day? >> if i could answer that question, becky. you know, i'd be in washington right now. it's very difficult because the fundamentals to any successful negotiation seem to have evaporated. there's no appreciation -- this is kind of like world war i. everybody's in their trench. and, you know, they move one trench to another, they move up 3 feet and back 3 feet, up 3 feet and back 3 feet. nobody gets out of their trench. there seems to be a breakdown of trust. and most importantly, in a very fundamental way, we've lost sight of the interest of the country as opposed to our adherence to our ideological point of view. joe just said something i agree with completely to wrap up to the last session. he says you don't burn the house down to save the house. >> right. >> right. and that's kind of the path that we're on. now, i think we'll get off that path. i think that something will happen in the next several days that will avoid a complete, you know -- one of these days we're going to fall off the edge because we've lost the fear of falling off the edge. and we're going to burn the house down in an effort to save the house. >> there's been a lot of people buy a house and tear it down and put up a new house. >> that's because they can afford to. >> right. >> we can't. >> that's very true. but that is something that, man, it happens. you see that a lot. >> you do see that a lot. i guess -- if we were still looking for a grand bargain, that's something that erskine bowles and alan simpson have been preaching for for a while. if we were still looking for a grand bargain, could that be the silver lining that comes out of all of this? >> well, not in the short-term. it could be if there is going to be a silver lining. that can't happen in the short-term. there isn't enough trust and will to get it done right now. >> the president appointed that panel. he did not like the findings of that panel. and there's been no interest in pursuing. there's a lot of stuff we don't like here. >> there's one of the reasons i don't think it happens in the short-term. >> it's about trust and the idea that the president hasn't invested in the other side. and there's a trust issue. two people who didn't know each other before that situation, i don't believe -- you can tell me if i'm wrong on that there was probably zero trust and somehow magically you gave him a big old bear hug and did something in a short space of time. >> is that true? >> well -- >> >> shoulder grab. but it wasn't magic, right? it wasn't magic. i had a problem, he had a problem, we had to solve the problem. and we focused on, you know, how do we get ourselves out of where we are as opposed to, you know, i'm right, you're right, let's fight. and so you work on that. you work on that. you go, you visit, you talk, you try and understand where he's coming from. you try and meet people half way. >> that's two rational actors. >> in fact, joining us right now is the cochair of the campaign to fix the debt. erskine bowles. he and alan simpson are launching a national ad campaign calling for lawmakers to fix the debt. erskine, we're looking at some of that video right now on this campaign that's launching. you see where we were last week, what's happened over the weekend. hopes are the senate will step in and reach an agreement. do you think that's a likely path? >> i think it's going to be tough, becky. all i can tell you is i walk through every single airport. people yell at me, you know, for god sakes, stop the madness in washington. get these people talking. solve the problem. they want real action. they don't care about the inside up there. they want to see the government opened again, they want to see us pay our bills. they think the talk of default is nuts and it really is. and they want these guys to get in a room and start negotiating. just like we did with gingrich back in 1996, '95, when we got the government back open again. and both of us made compromises. and that's what they want to see. they want to see some logic brought back to washington. >> we've talked about the logical plan with you before. we've talked about it with dick parsons here today. >> yeah. >> and every time we've been on the verge of having some sort of a deal that would attack some of the long-term problems and maybe invest in today to try to help with the economy right now, every time we get close to that, you end up with a situation where basically the can gets kicked down the road. none of it is for the best interest of where the nation's headed. why is this time different? or is it? >> well, because we're right up against default, which is -- as you know as everybody has said today, everybody globally has said would be globally catastrophic. so hopefully we can get time line set up and an agreement that people will get in the room and talk about three or four things. they've got to talk about reforming the tax code so america can be globally competitive. secondly, they've got to talk about reforming these entitlement programs, particularly bending the health care cost curves so health care costs don't grow faster than the gdp on a per capita basis. and thirdly, we've got to make social security sustainably solvent so it's there for the people who need it. we made a promise on social security, we've got to be able to commit on it. lastly, you've been talking about this sequester, there's an easy solution to the sequester. there's a reason why even the republicans in the house have found out they can't pass the appropriation bill because the sequester levels are too low. the sequester was stupid. it's across the board cuts and discretionary items. let's make some real substitutes of cuts in other mandatory program where there's broad agreement. that will help us in the long-term and also give us the funds we need to invest in research, education, and infrastructure and also make sure our military has real readiness. >> how do we do that, erskine? how do we do that in the current climate of washington? is that -- is that just a wish list? or do you see a way that can actually happen? >> oh, it's not a wish list. i hate to tell you how many people come up to me when i'm in washington. i'm walking around and, of course, i've got my button on here which i believe rise above. they've got on their congressional buttons and come up to al and me and say save us from ourselves. get in there and get some negotiations started. if we can get some people in a room and build up some trust and put the ultra politics aside, the economic solutions are easy. it's the way we did it in -- >> can these players do it? is it too far gone in terms of the trust? >> i think it's never too far gone. look, we did it when they were trying to impeach clinton. it was pretty partisan back then i felt. but i spent months and months locked up in conference rooms with gingrich and lott and we worked it out. >> should ome people say there'n to everybody's head and the markets are fearful that the global economy is fearful. there's all sorts of issues. or done with things are calmer. is this the only shot. we talked about it -- joe, what was your phrase? >> well, we were going to try to extract -- yeah, we need to do it. it needs to be done by thursday, right? it's the one way or another by hook or crook. >> yeah. my best bet is thursday's a soft date, i think it'll have adverse effects on the market if we don't go by thursday. but here's the deal, joe. i would open the government, i'd pay our bills and set up a tight time frame to negotiate this deal. >> that's what i thought we decided. >> let the people understand. >> that's what we decided to do last week. and that got -- >> yeah. >> you're okay, mr. president, you're not negotiating, fine. all you're doing is we're going to write this now and we're going to make a plan to have a plan. let's raise it and do exactly what you're seeing. raise the government, let's start negotiating. whatever you want to call it, we're like little spoiled brats on both sides of the aisle. >> if you look at this -- and i say they're like children except they don't have any manners. it's unbelievable, childish, the way they're operating. >> you can't use the word negotiate. okay, we'll talk. does talk constitute -- i thought it was -- i still think that's all you need to do. raise the near term, but try to do something for some of the entitlement stuff and not just talk about that in five, ten years. >> how much do you -- >> joe, we've made promises, we've made promises we can't deliver on. and that's what we have to admit. whether it's on medicare, medicaid, social security, even dick durbin, you can't get any more liberal than dick durbin, said that yesterday. >> if he says it -- >> we've got to make changes. >> how much do you worry, though, that the plan for another plan creates a whole new level of uncertainty between now and christmas or thanksgiving and just from an immediate economic impact we feel that? >> i am worried about it bouncing from crisis to crisis and not a good thing. because of a christmas shopping center, i'd probably make this negotiating period longer than i would otherwise and longer than i think is necessary so we don't disrupt the christmas shopping. people who want to close the government again or threaten default again, they've got that option in january if they want to do that. let's get busy, get people in the room. i think if we get people in a room, i think that will help restore confidence and give people hope. >> the president said he was not going to negotiate. the republicans have said they are not going to open -- they're not open to the idea of new revenue. is that wrong? i feel like they gave the revenue back in january. >> look, they gave a little bit of revenue. $600 billion, $700 billion, we've got about $2 trillion worth of cuts. what we need to finish this process off is another $2 trillion of real cuts, not these phony cuts they were talking about this last weekend. but real cuts, things that make sense, have much bigger legs in the out years than they do in the early years. but real cuts and then have a small amount of revenue that comes from reforming the tax code. if you look at those tax expenditures, those exemptions, loopholes, deductions, credits, things i like. look, there are about $1.3 trillion a year. over ten years, that adds up to around $15 trillion. they're only talking about using $400 billion of that. that's not much. >> erskine, you know -- >> if i could get $2 trillion worth of cuts to go with that. >>. >> simpson/bowles. and i guess the question is, if we don't do something different. in other wordsious we've been down the road of putting wise men in a room and having them try and develop a plan to sort of rationally get us out of this. and it hasn't worked. what needs to change now for -- to begin to put this country back on the right road? >> actually, i'm not re-living simpson/bowles. what i'm saying is you could go whole hog and really solve this problem and the future of a country will be very, very bright. and i'm not saying, look, we're going to fall off the end of the world. you can do a smaller deal. come together and do it in steps. there are lots of ways to do it but you have to get in the room to get it started. >> i just want to make sure i have our numbers right. you said we need about $2 trillion in cuts in terms of spending cuts and about $1.3 trillion in additional revenue for closing loopholes? >> you only need about $400 billion to $500 billion in revenue and $2 trillion in spending cuts. >> when you talk numbers, we listen, i want to make sure we got those right. erskine, thank you so much for joining us and we'll be watching that campaign on television. we appreciate it. >> thanks so much. i appreciate it. >> index funds, we're shutting down a molecule that causes skin cancer. >> different category. >> coming up -- yeah, one's a real nobel prize. key debt negotiations moving to the senate after talks broke down in the house over the weekend. senator bob corker is next with more on what to expect from the government this week. and later, aetna ceo mark -- >> i'm not. >> bertolini. 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[ anthony ] i use the explorer card to earn miles in order to go visit my family, which means a lot to me. ♪ negotiations in the house of representatives broke down on saturday. talks in the senate may be the best hope for a debt deal to end the government shutdown. joining us now bob corker, member of the banking committee. i don't know when you get to tune into us, but we talked to john harwood earlier. he still gets the feeling talking to the various players that the senate, mcconnell and reid, something's forthcoming, maybe even today. do you have any input we don't know about? what's the latest? >> i think that's very possible. i've had some good conversations early this morning. it is between mitch and harry. and i think people want to see that come to fruition. you know, let's face it. republicans have overreached on the health care bill and i think that's widely acknowledged. over the last 48 hours, democrats feeling a little jumpy, if you will, overreached on wanting to actual bust or break the budget control act, which also is set a law. i think we're back to a place, joe, where we hopefully will resolve this in the senate. and the wild card is what happens if we do something here when it goes over the house. we've got a major expectations game that needs to be managed here. and hopefully, hopefully we will do that. >> it seems to me if you did something half decent in the senate and then, you know, you give it over to boehner, he'd let the whole house vote at that point. he's held off enough saying i'm not going to turn my back on the far right on this. at this point, if it was anything that, you know, got the government running, kept us, you know, pushed it off into january. i don't know, do it for -- till january. that's not that long. >> yeah. >> and i think he'd let that come to a vote, don't you? >> you know, joe, the problem -- and i heard the last segment. you know, we keep putting off these episodes. and i do think on the other hand the moment, sort of the twitching hour is going to be when the next level of sequester kicks in on january 15th. that's a pressure point that, you know, democrats don't want to see happen. they obviously were trying to overcome that over the last 48 hours. but i think that is a point at which maximum pressure on discretionary spending is in place and maybe it's that point in time when we have the opportunity to do some of the things that erskine was talking about. and that is to substitute some longer term mandatory spending reforms in place of those. so, you know, again, i hate to see us kick the can down the road again. i do think that, look, we're in a place where we're certainly, as you've mentioned earlier, we're not going to solve the biggest issues over the next three days. if a framework can be put in place, if we can do something for a period of time that gets us to that place, maybe we finally do those things that we all know need to happen and have been working on for so long. >> if you say -- it's almost like there seem to be universal truths. and that means we've overpromised. we need to get our entitlements some day under control. we also know we don't want to default on our debt. if you go far enough left, there are people that say, no, we don't. what we've promised already is already a promise. we need to pay up on that by raising -- and then you've got guys on the right that say, hey, if we default, what's the big deal? that's the problem. what you just said, it's so obvious. >> it is, yeah. >> we need to do these things. you figure adults could come together and do this. >> you know, joe, believe it or not, i took a little bit of an issue with the last segment. and erskine is one of my -- one of my heroes, i really enjoy working with him. but, you know, there are candidly a lot of adults here. there have been some movements, you know, in a wrong direction. we've ended up in this canyon that candidly i predicted months ago. there are people that want to solve these problems, and joe, what we've got to do and we've got to start in the senate doing this, we've got a deal between the 35-yard lines. we've got to get those folks not on the fringes on either side and solve this problem. what may come out of the senate is one of those between the 35-yard line solutions. when it goes to the house, it is a wild card and i've been clairvoyant on the outcomes and i'm still -- again, it's such an expectations difference when you've moved from totally defunding the central element of the president's agenda as your goal to now just doing some things that put us in a place to solve these problems over the long haul. that's a major expectations change we need to manage over the next several days. but the first step is to move something in a bipartisan way out of the senate. that's something that needs to happen soon. go ahead, yeah. >> you have been clairvoyant. so tell us what's going to happen next couple of days. >> well, i said -- as i've said, this one's a little more difficult to pretty. because, again, the expectations have been at such a level. so, look, i do think there's a good chance that we will get back on the right page in the right paragraph today in the senate. and i think we have an opportunity to move something ahead on a broader, bipartisan basis. the question is, how is that dealt with in the house of representatives which has been off on a total, not only a different page, almost a different book, if you will over the last several months. so, again, managing those expectations, understanding the realities that all of you know. i was with a large group of finance ministers on saturday night and i do understand the impacts of all of this right now, even, before we've even brushed up against the 17th. go ahead. >> senator, you claimed the middle ground of your party. so i'm curious, when you have conversations with people like ted cruz, how do those conversations go? what do you say to him? >> so i've been very blunt and direct from day one. and when i first heard the notion of this idea come up several months ago, i almost came up out of my chair at a lunch meeting. and, you know, it's a very direct conversation. i don't want to get into -- and, look, for what it's worth, i think that, you know, our republican caucus when you say i represent the middle, i think people are now very, very unified towards focusing on the things we should have been focusing on on day one, which is spending. and the kinds of things we know, you know we have to deal with. you know, i think this chapter, this sort of chapter that we've been through leading us into a boxed canyon is over, okay. and now, again, i think we're all back where we should have been in the first place. and what i regret about this most is a lot of time has gone by where we could have done those things that erskine was talking about had we focused on this in the first place. >> okay. senator, thank you. >> thank you very much. coming up, mark bertolini. if you have the audacity to believe in straight talk, not double-talk. if you have the nerve to believe that in a puzzling financial world, clarity is king. 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[ male announcer ] for 90 years, it's how edward jones has made sense of investing. opportunities aren't always obvious. sometimes they just drop in. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group: how the world advances. welcome back to "squawk box," the launch of the exchanges has been marred by heavy web traffic. joining us now to talk about the health care law and the debt showdown in washington, aetna ceo mark bertolini. he is the head -- i don't know, you're not the head of it, but you're on it, the fix the debt campaign. >> right, i was one of the initial people. >> let's talk about obama care for a second. >> sure. >> you guys worked on the rollout of this, or at least behind the scenes of some of the beta stuff. did you know it was going to be this bad? >> we were pretty nervous as we got further along. we helped them build blueprints on how to put the system together. and as they started missing deadlines, we were convinced it was going to be difficult -- >> did you tell them, don't do this, move it? >> we started to help them prioritize how to move ahead with the project. and, you know, they had their perspective on when they wanted to start. so we did our very best to help them get started on time. >> dick said in the last hour this was bound to happen when you have big projects like this, stuff happens. how long will it take to fix all the kinks? >> well, that is a big question. when you implement a project of this size, the first thing is unit testing then application testing and then integrated testing and then scaleability testing and user testing. that plan is usually a lot longer than some of the application development itself. that's happening on the fly. >> none of that was done beforehand? >> all of it has been on the fly. we didn't get probably a month before the system went. >> well, you don't know what scaleability issues you have until you get all the functionality working and everybody starts hitting the system. so you've actually got to get the functionality up. you don't know how many files you're going to hit or how many people will hit them. >> i guess what happens january 1st. if people are having troubles now, maybe they go through a few weeks of tough time. is everybody going to sign up by january 1? >> no, enrollment still open until march 31st. but i think the bigger issue is will enough people sign up to make it work? >> i want to talk about -- the economics of fixing just the technology behind it. then the larger economics. >> are there some people that don't come back and try again? they needed a lot of people to give it a shot because so many young people have to pay for so many sick and older people. will people say, i'll pay the fine. >> i think the attention span of the younger generation, if it doesn't work the first time, it's going to be tough to get them back the second time. as a result, website technology, we are actually testing it with the types of users we want to use it. >> it's not like we have as long as this takes to get it right. we -- >> well. >> i think -- it's the law of the land, number one. number two, public exchanges are going to be here to stay. we need to make them work somehow. >> how do we get there from here? >> well, penalties may go up. >> penalties could force the issue. >> the question i would have is six months between now and march 31st. that's not a long time when it comes to doing all the testing and prototyping and evaluation and scaleability of a system this large. is that enough time? >> i don't know. we're in a place now where there's so much wrong you just don't know what's broken until you get a lot more of it fixed. >> i think we have to plow through it. it's nothing you ever like to repeat. it's a career ending event in a lot of cases. >> he worried if it's delayed a year. once you get people in entitlement, you never get them out. he p wanted to get it started, right? >> if the program blows up because the people don't sign up, then the program's not going to move ahead either all that well. >> so they delayed it a year? >> i would have if i would have been in their seat. but i'm not in charge and they couldn't politically -- >> republicans were telling them to so they definitely couldn't. >> and the politics got in the way of a good business decision. this is going to be 2017, 2016 -- i think the bigger issue for folks to think about is private exchanges have kicked off as a result of the private sector innovating against the law. and as these private exchanges move ahead and good experiences in a lot of cases, we'll be launching a number of them. we'll be in 15 this year alone. you'll start to attract people to a different kind of marketplace. what will that do to the public exchanges over time? and how will that work? >> we had toby crossgrove in the last month, and he said they've announced a big cutting plan. others are doing the same thing. should we look at that as a good thing or a bad thing? >> i think it's a good thing. i think we need to redo the capacity of the system. and the only way that will happen is through economic events. >> when we see big headlines -- >> i thought the cleveland clinic was one of the examples. if it's affecting them too. and they're to the point where they have to have massive layoffs. >> this is going to be a messy and difficult time. i think we're going to have to let it shake out. if we were to do it rationally and stand back and say how do we fix the capacity of the system and how would we plan to move ahead? that's what we had in the '70s with health systems planners and we got rid of them because they got in the way of economic progress. i think we'll have a messy situation and there'll be a lot of casualties as a result in the system. >> when we see headlines in the next year or two, i imagine we will see lots of them. different health plans are cutting back, different hospitals. we should say this is what it takes to shrink the system and we want the system to be shrunk. there was an article in the "new york times," article yesterday about generics and the cost of generics at broad and cost of generics here. those type of headlines ultimately, good, bad? >> we have to rebuild the system. >> from the ground up. >> unfortunately, we've got a system in play. >> how much capacity do you take out? >> some say 30% of what we spend every year is waste. >> do you believe that? >> yes. so if you think about that $2.7 trillion we'll spend in the last year on health care, 30% of that's 810. >> we have two things going on. we're shrinking the system so we don't have as large of debt, the bad news is, those people don't have jobs either and either have to be retrained to do something else. what happens to them? >> here's how i would approach the system if we were to fix it. let me relate this back to the debt discussion. both parties are right in what they're trying to accomplish. the democrats believe we need to create entitlement programs and spend to help those less fortunate and damaged by this current economy. that's true. the republicans saying we're spending too much money, that's going to affect our economy. that's true. if you put the two thoughts together, the only way you do this is to fix entitlements. make them work better. if you were to take medicare, which by law and structure and charter does not allow the government to get in between the patient and the physician and structure programs that change the system that affects care. if we were to go at the system and say let's change the revenue model, let's put a budget in place, let's do it with the private sector, medicare becomes a blocking fullback going through the line. the health plans follow behind and we restructure the revenue model in the business over the next 18 to 24 months. huge change. the second is that 5% of the medicare population drives 43% of the $550 billion we spent on health care. those were largely unmanaged. half of them below 65% and if we get them into better programs, managing them more tightly, passively enrolling them in programs that get the care right, if we have an impact there, cut 20% of that, you've got $110 billion a year that go back to the system. those are two places i would start. and the third is the affordable care act needs to be touched. congress runs medicare, by the way, i should note by virtue of the law. if we fix the affordable care act with a few changes, those programs could begin to restructure health care entitlements. >> where have you been the last year? >> spending his time overseas. >> real quick, this issue, i don't know if it's on the table anymore about medical devices and the tax on medical devices. what should happen there? >> i think if you're going to fix the affordable care act, you get more flexibility, get rid of the health insurance taxes, the medical device taxes, everybody's paying taxes on their premiums. it's all being passed through to the customer. if we fix, again, the underlying entitlement, $810 billion a year, you could pay for the affordable care act and reduce the debt by almost 35% if we actually got those two parameters -- without raising taxes at all. >> let me ask you this, things are the way they are for a reason always. so you're suggesting that up to 30% of the total health care spend is -- an efficiency and lack of focus in terms of how we manage programs. who are the constituencies that keep that in place? >> it's the interest in the health care system today so you need to change the revenue model. you need to say this is the budget. this is what we're going to spend on health care. and if we go after the sickest in the united states and make them -- make a program that's better for them and we change the revenue model so you're rewarded by putting people into the lowest cost venue of the lowest cost providers that are effective for them, we start to change the cost structure of the industry and that's where the re-employment begins. we're going to need people in the homes working with people and technology to help them stay home and stay healthier. >> okay. thank you for coming in. >> thanks, good to be here. coming up, much more from our guest host, dick parsons. netflix shares trading higher on rumors of a new partnership. that story after the break. n a . with fidelity's guaranteed one-second trade execution, we route your order to up to 75 market centers to look for the best possible price -- maybe even better than you expected. it's all part of our goal to execute your trade in one second. i'm derrick chan of fidelity investments. our one-second trade execution is one more innovative reason serious investors are choosing fidelity. now get 200 free trades when you open an account. welcome back to "squawk box," everyone. we're going to keep an eye on shares of netflix today. making online video service available as an app onset top boxes. the tv providers reportedly includes cnbc parent comcast and sudden link communications. netflix recently announced a similar deal with virgin media. we have much more coming today from our guest host. dick parsons, stick around, "squawk box" will be right back. 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(vo) meee-ow, business pro. meee-ow. go national. go like a pro. they're the days to take care of business.. when possibilities become reality. with centurylink as your trusted partner, our visionary cloud infrastructure and global broadband network free you to focus on what matters. with custom communications solutions and responsive, dedicated support, we constantly evolve to meet your needs. every day of the week. centurylink® your link to what's next. welcome back to "squawk box" this morning. we're going to have more now from our guest host. dick parsons, also the former ceo and chairman of time warner. and the conversation we were just having around the table right now -- >> it's hard to produce this show because you just did a story over there. >> it was a story becky was talking about over there. >> which i liked because i don't want to hate netflix. >> you said why can't comcast have -- >> then we can all just get along and share the revenue. i wish netflix had never been invented so comcast had all the stuff they had on xfinity and i wouldn't need netflix. >> the question, why didn't it happen? >> because first of all, netflix is not new. it's been around for a long time and evolved into the space. >> i've got to go to my play station to -- >> well, it's all about the economics. ultimately if netflix has both the market clout and the economics, they'll get on the set top box. >> we'll be fenemies at that point, right? >> you won't be frenemies. >> friends? >> you'll be friends. >> that market cap, it should have been on comcast. >> you think it should have been on comcast? >> yeah. >> but there's an argument that -- that's what i said during the break, they started -- >> well, you need to say it again. they have great mountains and good skiing? >> no, they were an upstart. nobody thought of them as a competitive threat. now people think of them as a competitive threat. >> to a certain extent, that's true. the big guys all have deep suspicion about the other big guys and a new service comes along when netflix first started, they weren't a threat to any of the big guys and now that they're larger, the issue is, you know, how do we expect friends and that's all about the economics. you're right, when netflix first started, they had off window times. they got to movies, but six months down the road. they weren't a threat to hbo, they weren't a threat to the pay services, to the big cable companies. and then as they got stronger, they sort of closed all of those distances. and now, you need to contend with it. >> and who has the bargaining upper hand here? i would like to hit one where i go to on demand. i'd like to see netflix in there and go like that. >> everybody always underestimates the cable companies. they're the incumbent, they've got the in-home presence, they've got the clout. >> netflix, we ought to be able to get a deal. >> what happens to a company you spun off, time warner cable? >> it's grown -- >> you think it gets bought out? >> i don't think so. it's twice the size. >> do you think it it gets bought out by anybody? >> no. we always kind of figured we'd end up in a place with two major telcos and two major cable companies. there are now two major telcos. i think the two major cable companies. time warner and comcast. >> and everyone else gets merged into those? >> ultimately. that's my view. >> and the folks in washington allow that to happen? >> i think so. i think so. >> it's a lot of other things that to happen? >> i think so. >> there are a lot of other things going on? >> folks in washington have problems right now. that's not imminent. that's not today. i think that's where it is going. these are scale businesses. you need to have a certain amount of scale and a certain amount of competition. there is room in the market for two big telecoms and two big cable companies time ink, the spinoff of the magazine, would you invest in the publicly traded version of time inc? >> i would. i think. people always told me that eventually the same thing is going to happen to the movie business, magazine business, tv business. i don't believe that. i think that publishing, the value ad is twofold. one is the distribution value ad which has been disrupted by the internet and digital technology. the other is editorial value. you can't dingitize what she does. that editorial aspect or compontent is not represent cli kabul. >> you still think you can charge a premium? >> yes. >> another quick break. that's a good answer for becky, and those that apply a little bit of a trade in print. more from dick parsons. gulf oil is posting record production numbers. we have more on that story when we return. tomorrow on "squawk box," lee on cooperman will join us for an hour and then an exclusive interview with hedge fund guru, david, tepper. you can't afford to miss "squawk box" tomorrow at 6:00 a.m. eastern. welcome back to "squawk box." take a look at the futures right now. we are pointing to a red open. dow, off about five points, the s&p, 10 points. we have headlines for you. the increase in north american oil production expected to chip away at opex's market share. the iae estimates that saudi, kuwait and the uae and qatar set production records in the last three months. in september, it accounted for 18% of global demand, a level matched only twice since the 1980s. the sandra bullock/george clooney thriller, gravity remained atop the movie board. the new drama starring tom hanks was topped by it. you can choose your own seat online. our guest host, former citigroup chairman, dick parsons. we're going to give him the last word when "squawk box" returns. o way we're going to let them die. ♪ like they helped millions of others. by listening. planning. working one on one. that's what ameriprise financial does. that's what they can do with you. that's how ameriprise puts more within reach. ♪ ♪ [ male announcer ] the parking lot helps by letting us know who's coming. the carts keep everyone on the right track. the power tools introduce themselves. all the bits and bulbs keep themselves stocked. and the doors even handle the checkout so we can work on that thing that's stuck in the thing. [ female announcer ] today, cisco is connecting the internet of everything. so everyone goes home happy. opportunities aren't always obvious. sometimes they just drop in. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group: how the world advances. >> back with dick parsons. jamie dimon, great bank ceo, a witch hunt or overrated? if you were chairman of jpmorgan, would you be wondering about whether you need to replace him at this point? >> no, i wouldn't. jamie is terrific, a gooden ma. i don't think he is overrated. i just think that the banks are in the penalty box. they have been for the last four or five years. >> bank? >> banks. >> don't you think they are being singled out a little bit here? >> they are at the moment. citi was for a while when i was there. fortunately, for us but not for j.p., the puck moved. right now -- >> you didn't say anything bad about the white house. >> you have to play these things like they lay. he acquired -- it is not so much j.p. and franchise. he acquired bear stearns and those things have kind of blown up in terms of the problems he has right now. jamie is terrific and they are lucky to have him. >> there you go. >> a lot of questions about that. he just settled it. >> well, we've had a lot of people settle it and it stays unsettled. >> now that there is a $23 billion price tag for the piggy bank out there. >> dick, thank you so much for joining us today. >> it was fun. >> that does it for us today. make sure you join us tomorrow. right now, it is time for "squawk on the street." good monday morning. welcome to "squawk on the street." i'm carl quintanilla with david faber and kelly evans and the new york stock exchange. cramer is off today. we are in day 14 of the government shutdown. futures are down. what appeared to be promising talks heading into the weekend. the debt limit expires on thursday. the bond markets are closed for the columbus day holiday. europe is giving up some ground. our road map begins with the risk of the u.s.
washington. and the health of the exchanges, and now that some of the issues plaguing the federal health marketplaces have been identified, are they too complex >> that is a shorter period of time than republicans wanted because they wanted to preserve the lower sequester spending levels as long as they could. the debt extension level would be through the middle of february, february 7th to be exact, shorter than democrats wanted, there would be a budget, a negotiation at that time. there does not appear to be a rollback or appeal of the device tax that some republicans asked for. there will be income strength and subsidies under obama care, and as a trade for that, democrats are going to get something labor unions have asked for, which is the delay in insurance tax, which labor unions complain hit their taxes too hard. >> hi, john, it sounds like some of the main issues that were on the table in the beginning have been pushed off. this is all about pushing all the problems down the line. is this what it has come down to? there is no credible plan about getting long-term spending under control, right? >> well, the plan susie is to commence negotiations. you know, this is a stop gap first to reopen the government, second to remove the threat of a debt default. but it is in the service of creating a budget negotiation between the house and senate, accelerating one that was stalled earlier in the year. but yes, the assumption on all sides is that they negotiate some sort of deal, big or small, that relieves part of the sequester, but substitutes longer term entitlement savings. and the longer question is whether it is a small deal and whether there is revenue that democrats have asked for in the form of closing tax loopholes. >> thank you so much, john harwood reporting from washington. and optimism about a possible washington deal sparked a sizeable u-turn in washington today, the dow released a triple digit loss, good things came in big packages for investors, the small cap stocks and the s&p 400 index of mid-cap companies closing at historic highs. at the end of a breathless day of waiting for any news out of washington, the dow rose 64 points, the nasdaq up 23, and the s&p added seven points. and joining us now to talk more about the latest developments in washington and what the uncertainty means for the washington and the economy is the chief strategist. greg, good to have you with us. you heard what john harwood just said. i would like you to add to that if you know of anything that is different. a week or so ago there was talk we were not going to negotiate anything having to do with obama care as part of any deal to raise the debt borrowing limit or reopen the government. and what john just described is there would be some movement on income verification as part of obama care, and the tax on unions, that they found objectionable is going to go away. should we just watch what they do? >> absolutely, i hate to be the skunk at the picnic, but i would point out i haven't heard anything from the house, these bipartisan groups are getting closer to a deal. the house will weigh in, it will not be warm and fuzzy from that body. number two, even if we get a deal, guys, all we do is postpone the crisis, we kick the can down the road. there will be another crisis in january on the government staying open, a crisis in february on the debt ceiling. so it is not as if we're just to just wrap it up in a neat little package. >> and i think you just nailed it there, greg, because everybody watching this process, whether you're a democrat or republican is so frustrated. everybody around the world is so frustrated. who won when we do get the deal, who won and lost, and where are we going with the next round? >> well, you're exactly right. and i would say obviously, there is not going to be a default. chances of default are like 2%. that is not what the market is worried about. i would say, though, if we just have continuing crises, one after another, are we going to shut the government down again? that has a corrosive impact on the government. for business psychology, it is going to be fragile. >> can you imagine a world where we really came to long-term agreements on budget policy and tax policy and on levels of debt and what that would do to business confidence and growth in america? >> amen, brother, what people want is predictably, and even later in the week, there is still not predictability. we still have a lot of issues to go through. two very positive stories, the fed will have to keep very do s dovish for weeks or months to come, i think the first time they really think about tappering will be in late january, that is a good story. number two, despite the budget deficit, it is plummeting. we get the numbers on the previous fiscal year, these will be shocking figures showing that the deficit is falling dramatically. >> in a few words, greg, does the government open by the end of the week and what if there is no deal, real quickly? >> yeah, i think it opens by the end of the week, but we still have a lot to get done. >> all right, chief strategist at the potomac group research. and with no real deal on reopening the government, companies big and small are left in the lurch. and they can't make long-term spending and planning decisions. mary thompson has more. >> reporter: as lawmakers battle over the budget, the corporations face a struggle of their own, how to plan for next year. here is the ceo trader, bill gerber. >> i think people are just not able to assess because the markets are so uncertain, on where they should be, the type of environment they should be in. so people get in a wait and see mode. >> reporter: for over a year, americans kept a tight grip on their cash, a grip ligkely not o be loosened. if the deal is not reached, mandatory budget cuts known as sequestration could take everything. here is former city group chairman dick parsons. >> if they had confidence they knew what the landscape would be doing, they would start to invest again. >> reporter: given that washington kicked the can down the road, that is a big if. now, a director at sprint, honeywell and prudential said it is likely they don't know when to spend because they could step on a bomb. firms like the new jersey based flex line, a maker of metal hoses. in an e-mail, the president wrote, the temporary fixes don't allow us to plan, it makes revenue streams and planning chaotic, the blanket orders go out the window, lead times get cost, and it is a mess, a mess a temporary fix wouldn't clean up. for nightly business report, i'm thompson. and word thatçó another company will be idle. boeing, the aerospace giant says they may furlough workers at their security unit because of stock work orders and installations where some of the employees work, funding cut's with washington and a shortage of government inspectors. some top bank inspectors are worrying about the dire consequences reaching the borrowing limit, something that never happened before. they described a bleak situation, saying as you get closer to it the panic will set in, and something will happen. i don't know personally when that problem will start. deutsche bank has been making contingency plans in case of the default, adding you don't want to go into all of it. this would be a very quick spreading disease. and the managing director of the monetary fund speaking on nbc's "meet the press" sunday. lagarde warned about the disastrous impact of a default on the world and the country. >> if there is a degree of destruction, that lack of certainty, the lack of trust in the u.s. signature, it would mean massive destruction the world over. and we would be at risk of tipping yet again into recession. >> lagarde also said that creative accounting would not be the solution. that the u.s. has an obligation to the rest of the world to preserve its safe haven status. but perhaps the most critical word on keeping the government open came from china. the nation called for a de-americanized world, along with the u.s. american dollar and the currency issue. the spokesperson said the destinies of the people around the world should not be left to those in a hypocrital government. and what they see in washington, at the government, we take a closer look. >> reporter: the political grid lock in washington is almost as big a topic in china as it is in the u.s. that is what happens when your country is the largest foreign holder of your debt. i hope they can talk it out, one man says, that is our hard earned cash. china is frustrated that the u.s. is playing what it sees as a political game with the global economy. if american lawmakers can't reach a deal by an october 17th deadline on raising the debt ceiling, the united states could default on its debt, potentially hurting the world and china. the u.s. debt ceiling debate is in all the chinese papers. this one says, the clock is ticking, china urges the united states to clean up its debt problems, and this one says that the us debt ceiling is ruining america's credibility. in one editorial, the news agency called for a new de-americanized world order. but america is not the only one being blamed. people here are angry at their own government, too. chinese politicians need to do something about this, he says. china maintains controls on its currency, helping to support exporters here. so it has ammassed huge dollar reserves and can't do anything about it, other than invest in treasuries, $2.3 million worth. they are looking at the surprised public. america sees itself as a super power, he says, now we know they're injury like everybody else. for nightly business report, in beijing. >> still ahead on the program, why the government shutdown is forcing one rural family into a more expensive mortgage. paying more for a new home than they ever expected. first, we'll look at how the markets closed today. >> well, if the government shutdown stretches into a third week, time may have run out for some home buyers. a small but critical program for home buyers is still on hold, leaving the would-be homeowners in the lurch and costing them thousands of dollars. >> reporter: the good news is, the couple were able to sell their small home. the bad news is the government shut them and their kids out of a home. >> we get the call, you're approved. but the government is shut down, and your government-backed usda loan can't be processed so therefore you have to wait. >> reporter: the malloys had planned to use a department of agriculture loan, 30-year fixed product designed for families like them. but with their current home sold, and them scrambling, they couldn't wait any longer. >> we were earither looking at e contracts or move to less desirable loans. >> reporter: the family switched to another loan, which required a $10,000 payment, and higher fees. their payment is $150 more than it should have been. >> my wife and i are just middle class working americans, and to have a fighting match between congress and the senate and the white house cost my family their home. and my family $10,000. that is a lot of money to us. you know, we don't normally have that. >> reporter: the usda program is small, barely 2% of the market, but it is a big deal to rural communities who rely on this type of financing for more than just loans. but for real estate, construction, new jobs, even updating infrastructure tell telecommunications. >> reporter: for the family, it meant putting a hold on new furniture and other items for the family. >> it sure affected all seven members of this house, costing us dearly. >> reporter: diana oleg, nightly business. and we begin tonight's market focus, netflix is in talks with the cable company about building new cable boxes. it could include comcast and suddenlink. the news sent netflix to $324.36. shares of whirlpool dropped, customers were delaying big ticket purchases in the last week of september and into october because of the approaching debt ceiling deadline. but it is not all bad, the research firm also expects purchases to rebound once a deal has been reached in washington. meanwhile, stocks fell today. and price cut to $51 a share. the firm believes expedia will decree increase competition here in the u.s., the stock lost, and shares of micro devices. web bush updated that company to out-perform for neutral. they say the chip maker will trade higher if sales of new gaming consoles grow. the stock up more than 3 and a half percent to $3.97. >> so how long do you think that you will have to keep working? a new survey says longer than ever. that is because of the recession's impact on retirement investments and home buyers. a new poll shows that nearly half of respondents over the age of 50 now expect to retire later than they previously planned. and many say they will have to keep earning money even after they officially retire. if you're looking for a size building increase in your social security check or veterans benefits it is not likely to happen. they suggest the year's increase will be about 1 and a half percent, the suggested boost since the benefits began back in 1975, the main reason, consumer inflation as measured by the government has not risen over the past year. it is almost two weeks now since the rollout of those health care exchanges. computer problems stopped millions of americans from signing up for the new insurance plans. but is there any progress in fixing those problems and can they be fixed? >> reporter: government contractors are continuing to make fixes to the federal exchange. last week, health and human secretary kathleen sebelius says that the problem will be resolved, but couldn't say when in the future. >> that is what we're aiming for, no wait time. >> but analysts and insurance executives say the on-line flaws in the way the insurance market was constructed are more complex than a simple glitch. it could take longer to solve them. >> we're in a place where there is so much wrong, you just have to get more of it fixed. we have to plow through it. >> it is early in the enrollment process which runs for six months. but the obama administration has targeted covering 7 million people under the affordable care act through the exchanges, amounting to an average of 39,000 people a day for 180 days. industry analysts say that insurers have so far seen a few thousand enrollees make it through the bottle neck, and there were many mistakes. it required manual correction. >> right now it is not that big of a problem, because the carriers can do manual intervention and clean it up. but again, once we get it done in large numbers there is no way they can handle it. >> the obama administration compared the rocky start to the federal exchange to the launch of medicare part d in 2006, which was doubled with problems, fixed in months. but this could be more complicated. in no small part because of the complications. and coming up, how the three winners of the nobel prize make you a better investor. and the bond market was closed for columbus day. >> price of crude oil ended slightly higher today, but gasoline prices are falling fast. gasbuddy.com says that consumers in 16 states can now find gas for under $3 a gallon from new jersey to mexico and ten more states seeing prices dip that low later this week. a national average for a gallon of gasoline would right now, 3.e cheapest found in texas, just $2.70 a gallon. and three will share the nobel prize for economics, not peace. more on the winners for today. the university of chicago, nobel prize winners, determining what the price of stock value is, eugene fama, called the father of modern finance, says that all new information is immediately priced into stocks value. and after the news comes out, it is folly to try to predict it. according to fama, they can't do it. but the american from yale says that markets can sometimes behave irrationally, depending on human psychology, going through missed periods of pricing. think of the soaring housing boom, and now the long bust. >> i have a certain belief, that i tend to think of my own work as a minor addendum to a huge body of work that others have generated. >> the third winner, swede lars peter hansen, found that mis-pricing because of irrational behavior is at issue. the nobel committee could be saying the state of modern financial theory is that both schools have merit and need more study. ultimately they're awarding the ground-breaking research from these three that have stood the test of time. they are looking at buying because they can't predict the future, or investing. they talk about changing over time. >> congratulations to the three of them. it is really interesting that they can't really predict the short-term direction of the stock market, but they can predict the long-term. and that is why the index funds came into existence. >> i think they give you the best bang for your buck, the index funds. >> i think they do. and that is it, i'm susie gharib. >> and i'm tyler mathisen, have a great evening, we'll see you back here, deal or no deal. >> nightly business report has been brought by street.com. tools for ever-changing world, our dividend stock adviser guides during a period of low interest rates. we are the street.com.
health marketplaces have been identified, are they too complex >> that is a shorter period of time than republicans wanted because they wanted to preserve the lower sequester spending levels as long as they could. the debt extension level would be through the middle of february, february 7th to be exact, shorter than democrats wanted, there would be a budget a negotiation at that time. there does not appear to be a rollback or appeal of the device tax that some republicans asked for. there will be income strength and subsidies under obama care and as a trade for that democrats are going to get something labor unions have asked for, which is the delay in insurance tax, which labor unions complain hit their taxes too hard. >> hi, john it sounds like some of the main issues that were on the table in the beginning have been pushed off. this is all about pushing all the problems down the line. is this what it has come down to? there is no credible plan about getting long-term spending under control, right? >> well the plan susie is to commence negotiations. you know this is a stop gap first to reopen the government, second to remove the threat of a debt default. but it is in the service of creating a budget negotiation between the house and senate, accelerating one that was stalled earlier in the year. but yes, the assumption on all sides is that they negotiate some sort of deal big or small, that relieves part of the sequester, but substitutes longer term entitlement savings. and the longer question is whether it is a small deal and whether there is revenue that democrats have asked for in the form of closing tax loopholes. >> thank you so much john harwood reporting from washington. and optimism about a possible washington deal sparked a sizeable u-turn in washington today, the dow released a triple digit loss good things came in big packages for investors, the small cap stocks and the s&p 400 index of mid-cap companies closing at historic highs. at the end of a breathless day of waiting for any news out of washington the dow rose 64 points, the nasdaq up 23, and the s&p added seven points. and joining us now to talk more about the latest developments in washington and what the uncertainty means for the washington and the economy is the chief strategist. greg, good to have you with us. you heard what john harwood just said. i would like you to add to that if you know of anything that is different. a week or so ago there was talk we were not going to negotiate anything having to do with obama care as part of any deal to raise the debt borrowing limit or reopen the government. and what john just described is there would be some movement on income verification as part of obama care and the tax on unions that they found objectionable is going to go away. should we just watch what they do? >> absolutely, i hate to be the skunk at the picnic but i would point out i haven't heard anything from the house, these bipartisan groups are getting closer to a deal. the house will weigh in, it will not be warm and fuzzy from that body. number two, even if we get a deal, guys, all we do is postpone the crisis we kick the can down the road. there will be another crisis in january on the government staying open a crisis in february on the debt ceiling. so it is not as if we're just to just wrap it up in a neat little package. >> and i think you just nailed it there greg because everybody watching this process, whether you're a democrat or republican is so frustrated. everybody around the world is so frustrated. who won when we do get the deal who won and lost and where are we going with the next round? >> well you're exactly right. and i would say obviously, there is not going to be a default. chances of default are like 2%. that is not what the market is worried about. i would say, though, if we just have continuing crises one after another, are we going to shut the government down again? that has a corrosive impact on the government. for business psychology, it is going to be fragile. >> can you imagine a world where we really came to long-term agreements on budget policy and tax policy and on levels of debt and what that would do to business confidence and growth in america? >> amen, brother, what people want is predictably, and even later in the week there is still not predictability. we still have a lot of issues to go through. two very positive stories, the fed will have to keep very dovis dovish for weeks or months to come, i think the first time they really think about tappering will be in late january, that is a good story. number two, despite the budget deficit, it is plummeting. we get the numbers on the previous fiscal year, these will be shocking figures showing that the deficit is falling dramatically. >> in a few words, greg does the government open by the end of the week and what if there is no deal, real quickly? >> yeah, i think it opens by the end of the week, but we still have a lot to get done. >> all right, chief strategist at the potomac group research. and with no real deal on reopening the government companies big and small are left in the lurch. and they can't make long-term spending and planning decisions. mary thompson has more. >> reporter: as lawmakers battle over the budget, the corporations face a struggle of their own, how to plan for next year. here is the ceo trader bill gerber. >> i think people are just not able to assess because the markets are so uncertain, on where they should be the type of environment they should be in. so people get in a wait and see mode. >> reporter: for over a year, americans kept a tight grip on their cash a grip lightkely not to be loosened. if the deal is not reached, mandatory budget cuts known as sequestration could take everything. here is former city group chairman dick parsons. >> if they had confidence they knew what the landscape would be doing, they would start to invest again. >> reporter: given that washington kicked the can down the road, that is a big if. now, a director at sprint, honeywell and prudential said it is likely they don't know when to spend because they could step on a bomb. firms like the new jersey based flex line, a maker of metal hoses. in an e-mail, the president wrote, the temporary fixes don't allow us to plan it makes revenue streams and planning chaotic, the blanket orders go out the window lead times get cost, and it is a mess a mess a temporary fix wouldn't clean up. for nightly business report, i'm thompson. and word thatçó another company will be idle. boeing, the aerospace giant says they may furlough workers at their security unit because of stock work orders and installations where some of the employees work, funding cut's with washington and a shortage of government inspectors. some top bank inspectors are worrying about the dire consequences reaching the borrowing limit, something that never happened before. they described a bleak situation, saying as you get closer to it the panic will set in, and something will happen. i don't know personally when that problem will start. deutsche bank has been making contingency plans in case of the default, adding you don't want to go into all of it. this would be a very quick spreading disease. and the managing director of the monetary fund speaking on nbc's "meet the press" sunday. lagarde warned about the disastrous impact of a default on the world and the country. >> if there is a degree of destruction, that lack of certainty, the lack of trust in the u.s. signature, it would mean massive destruction the world over. and we would be at risk of tipping yet again into recession. >> lagarde also said that creative accounting would not be the solution. that the u.s. has an obligation to the rest of the world to preserve its safe haven status. but perhaps the most critical word on keeping the government open came from china. the nation called for a de-americanized world, along with the u.s. american dollar and the currency issue. the spokesperson said the destinies of the people around the world should not be left to those in a hypocrital government. and what they see in washington, at the government, we take a closer look. >> reporter: the political grid lock in washington is almost as big a topic in china as it is in the u.s. that is what happens when your country is the largest foreign holder of your debt. i hope they can talk it out one man says, that is our hard earned cash. china is frustrated that the u.s. is playing what it sees as a political game with the global economy. if american lawmakers can't reach a deal by an october 17th deadline on raising the debt ceiling, the united states could default on its debt potentially hurting the world and china. the u.s. debt ceiling debate is in all the chinese papers. this one says, the clock is ticking, china urges the united states to clean up its debt problems, and this one says that the us debt ceiling is ruining america's credibility. in one editorial, the news agency called for a new de-americanized world order. but america is not the only one being blamed. people here are angry at their own government too. chinese politicians need to do something about this he says. china maintains controls on its currency helping to support exporters here. so it has ammassed huge dollar reserves and can't do anything about it other than invest in treasuries, $2.3 million worth. they are looking at the surprised public. america sees itself as a super power, he says, now we know they're injury like everybody else. for nightly business report, in beijing. >> still ahead on the program, why the government shutdown is forcing one rural family into a more expensive mortgage. paying more for a new home than they ever expected. first, we'll look at how the markets closed today. >> well if the government shutdown stretches into a third week, time may have run out for some home buyers. a small but critical program for home buyers is still on hold leaving the would-be homeowners in the lurch and costing them thousands of dollars. >> reporter: the good news is, the couple were able to sell their small home. the bad news is the government shut them and their kids out of a home. >> we get the call, you're approved. but the government is shut down and your government-backed usda loan can't be processed so therefore you have to wait. >> reporter: the malloys had planned to use a department of agriculture loan, 30-year fixed product designed for families like them. but with their current home sold, and them scrambling, they couldn't wait any longer. >> we were earthither looking at the contracts or move to less desirable loans. >> reporter: the family switched to another loan, which required a $10,000 payment, and higher fees. their payment is $150 more than it should have been. >> my wife and i are just middle class working americans, and to have a fighting match between congress and the senate and the white house cost my family their home. and my family $10,000. that is a lot of money to us. you know we don't normally have that. >> reporter: the usda program is small, barely 2% of the market but it is a big deal to rural communities who rely on this type of financing for more than just loans. but for real estate construction, new jobs, even updating infrastructure tell e telecommunications. >> reporter: for the family, it meant putting a hold on new furniture and other items for the family. >> it sure affected all seven members of this house, costing us dearly. >> reporter: diana oleg, nightly business. and we begin tonight's market focus, netflix is in talks with the cable company about building new cable boxes. it could include comcast and suddenlink. the news sent netflix to $324.36. shares of whirlpool dropped, customers were delaying big ticket purchases in the last week of september and into october because of the approaching debt ceiling deadline. but it is not all bad, the research firm also expects purchases to rebound once a deal has been reached in washington. meanwhile, stocks fell today. and price cut to $51 a share. the firm believes expedia will decree increase competition here in the u.s. the stock lost and shares of micro devices. web bush updated that company to out-perform for neutral. they say the chip maker will trade higher if sales of new gaming consoles grow. the stock up more than 3 and a half percent to $3.97. >> so how long do you think that you will have to keep working? a new survey says longer than ever. that is because of the recession's impact on retirement investments and home buyers. a new poll shows that nearly half of respondents over the age of 50 now expect to retire later than they previously planned. and many say they will have to keep earning money even after they officially retire. if you're looking for a size building increase in your social security check or veterans benefits it is not likely to happen. they suggest the year's increase will be about 1 and a half percent, the suggested boost since the benefits began back in 1975, the main reason, consumer inflation as measured by the government has not risen over the past year. it is almost two weeks now since the rollout of those health care exchanges. computer problems stopped millions of americans from signing up for the new insurance plans. but is there any progress in fixing those problems and can they be fixed? >> reporter: government contractors are continuing to make fixes to the federal exchange. last week, health and human secretary kathleen sebelius says that the problem will be resolved, but couldn't say when in the future. >> that is what we're aiming for, no wait time. >> but analysts and insurance executives say the on-line flaws in the way the insurance market was constructed are more complex than a simple glitch. it could take longer to solve them. >> we're in a place where there is so much wrong you just have to get more of it fixed. we have to plow through it. >> it is early in the enrollment process which runs for six months. but the obama administration has targeted covering 7 million people under the affordable care act through the exchanges, amounting to an average of 39,000 people a day for 180 days. industry analysts say that insurers have so far seen a few thousand enrollees make it through the bottle neck and there were many mistakes. it required manual correction. >> right now it is not that big of a problem, because the carriers can do manual intervention and clean it up. but again, once we get it done in large numbers there is no way they can handle it. >> the obama administration compared the rocky start to the federal exchange to the launch of medicare part d in 2006 which was doubled with problems fixed in months. but this could be more complicated. in no small part because of the complications. and coming up, how the three winners of the nobel prize make you a better investor. and the bond market was closed for columbus day. >> price of crude oil ended slightly higher today, but gasoline prices are falling fast. gasbuddy.com says that consumers in 16 states can now find gas for under $3 a gallon from new jersey to mexico and ten more states seeing prices dip that low later this week. a national average for a gallon of gasoline would itright now, 3.24, the cheapest found in texas, just $2.70 a gallon. and three will share the nobel prize for economics, not peace. more on the winners for today. the university of chicago nobel prize winners, determining what the price of stock value is eugene fama, called the father of modern finance, says that all new information is immediately priced into stocks value. and after the news comes out, it is folly to try to predict it. according to fama, they can't do it. but the american from yale says that markets can sometimes behave irrationally depending on human psychology going through missed periods of pricing. think of the soaring housing boom, and now the long bust. >> i have a certain belief that i tend to think of my own work as a minor addendum to a huge body of work that others have generated. >> the third winner swede lars peter hansen, found that mis-pricing because of irrational behavior is at issue. the nobel committee could be saying the state of modern financial theory is that both schools have merit and need more study. ultimately they're awarding the ground-breaking research from these three that have stood the test of time. they are looking at buying because they can't predict the future or investing. they talk about changing over time. >> congratulations to the three of them. it is really interesting that they can't really predict the short-term direction of the stock market but they can predict the long-term. and that is why the index funds came into existence. >> i think they give you the best bang for your buck, the index funds. >> i think they do. and that is it, i'm susie gharib. >> and i'm tyler mathisen have a great evening, we'll see you back here deal or no deal. >> nightly business report has been brought by street.com. tools for ever-changing world, our dividend stock adviser guides during a period of low interest rates. we are the street.com. [chanting in spanish] many of us are trying to find ways to build a more sustainable world for future generations. we're concerned that our planet's well-being isn't as secure as it once seemed. but on every continent there are new environmentalists who are committed to change. whether it's an individual a small group, or a grassroots organization they've made personal sacrifices that most of us couldn't even imagine. man: a valley like this would be populated with drilling rigs. the scarring of the landscape would simply destroy it. woman: seeing so many children impacted by health issues,
health marketplaces have been identified, are they too complex >> that is a shorter period of time than republicans wanted because they wanted to preserve the lower sequester spending levels as long as they could. the debt extension level would be through the middle of february, february 7th to be exact, shorter than democrats wanted, there would be a budget, a negotiation at that time. there does not appear to be a rollback or appeal of the device tax that some republicans asked for. there will be income strength and subsidies under obama care, and as a trade for that, democrats are going to get something labor unions have asked for, which is the delay in insurance tax, which labor unions complain hit their taxes too hard. >> hi, john, it sounds like some of the main issues that were on the table in the beginning have been pushed off. this is all about pushing all the problems down the line. is this what it has come down to? there is no credible plan about getting long-term spending under control, right? >> well, the plan susie is to commence negotiations. you know, this is a stop gap first to reopen the government, second to remove the threat of a debt default. but it is in the service of creating a budget negotiation between the house and senate, accelerating one that was stalled earlier in the year. but yes, the assumption on all sides is that they negotiate some sort of deal, big or small, that relieves part of the sequester, but substitutes longer term entitlement savings. and the longer question is whether it is a small deal and whether there is revenue that democrats have asked for in the form of closing tax loopholes. >> thank you so much, john harwood reporting from washington. and optimism about a possible washington deal sparked a sizeable u-turn in washington today, the dow released a triple digit loss, good things came in big packages for investors, the small cap stocks and the s&p 400 index of mid-cap companies closing at historic highs. at the end of a breathless day of waiting for any news out of washington, the dow rose 64 points, the nasdaq up 23, and the s&p added seven points. and joining us now to talk more about the latest developments in washington and what the uncertainty means for the washington and the economy is the chief strategist. greg, good to have you with us. you heard what john harwood just said. i would like you to add to that if you know of anything that is different. a week or so ago there was talk we were not going to negotiate anything having to do with obama care as part of any deal to raise the debt borrowing limit or reopen the government. and what john just described is there would be some movement on income verification as part of obama care, and the tax on unions, that they found objectionable is going to go away. should we just watch what they do? >> absolutely, i hate to be the skunk at the picnic, but i would point out i haven't heard anything from the house, these bipartisan groups are getting closer to a deal. the house will weigh in, it will not be warm and fuzzy from that body. number two, even if we get a deal, guys, all we do is postpone the crisis, we kick the can down the road. there will be another crisis in january on the government staying open, a crisis in february on the debt ceiling. so it is not as if we're just to just wrap it up in a neat little package. >> and i think you just nailed it there, greg, because everybody watching this process, whether you're a democrat or republican is so frustrated. everybody around the world is so frustrated. who won when we do get the deal, who won and lost, and where are we going with the next round? >> well, you're exactly right. and i would say obviously, there is not going to be a default. chances of default are like 2%. that is not what the market is worried about. i would say, though, if we just have continuing crises, one after another, are we going to shut the government down again? that has a corrosive impact on the government. for business psychology, it is going to be fragile. >> can you imagine a world where we really came to long-term agreements on budget policy and tax policy and on levels of debt and what that would do to business confidence and growth in america? >> amen, brother, what people want is predictably, and even later in the week, there is still not predictability. we still have a lot of issues to go through. two very positive stories, the fed will have to keep very do s dovish for weeks or months to come, i think the first time they really think about tappering will be in late january, that is a good story. number two, despite the budget deficit, it is plummeting. we get the numbers on the previous fiscal year, these will be shocking figures showing that the deficit is falling dramatically. >> in a few words, greg, does the government open by the end of the week and what if there is no deal, real quickly? >> yeah, i think it opens by the end of the week, but we still have a lot to get done. >> all right, chief strategist at the potomac group research. and with no real deal on reopening the government, companies big and small are left in the lurch. and they can't make long-term spending and planning decisions. mary thompson has more. >> reporter: as lawmakers battle over the budget, the corporations face a struggle of their own, how to plan for next year. here is the ceo trader, bill gerber. >> i think people are just not able to assess because the markets are so uncertain, on where they should be, the type of environment they should be in. so people get in a wait and see mode. >> reporter: for over a year, americans kept a tight grip on their cash, a grip ligkely not o be loosened. if the deal is not reached, mandatory budget cuts known as sequestration could take everything. here is former city group chairman dick parsons. >> if they had confidence they knew what the landscape would be doing, they would start to invest again. >> reporter: given that washington kicked the can down the road, that is a big if. now, a director at sprint, honeywell and prudential said it is likely they don't know when to spend because they could step on a bomb. firms like the new jersey based flex line, a maker of metal hoses. in an e-mail, the president wrote, the temporary fixes don't allow us to plan, it makes revenue streams and planning chaotic, the blanket orders go out the window, lead times get cost, and it is a mess, a mess a temporary fix wouldn't clean up. for nightly business report, i'm thompson. and word thatçó another company will be idle. boeing, the aerospace giant says they may furlough workers at their security unit because of stock work orders and installations where some of the employees work, funding cut's with washington and a shortage of government inspectors. some top bank inspectors are worrying about the dire consequences reaching the borrowing limit, something that never happened before. they described a bleak situation, saying as you get closer to it the panic will set in, and something will happen. i don't know personally when that problem will start. deutsche bank has been making contingency plans in case of the default, adding you don't want to go into all of it. this would be a very quick spreading disease. and the managing director of the monetary fund speaking on nbc's "meet the press" sunday. lagarde warned about the disastrous impact of a default on the world and the country. >> if there is a degree of destruction, that lack of certainty, the lack of trust in the u.s. signature, it would mean massive destruction the world over. and we would be at risk of tipping yet again into recession. >> lagarde also said that creative accounting would not be the solution. that the u.s. has an obligation to the rest of the world to preserve its safe haven status. but perhaps the most critical word on keeping the government open came from china. the nation called for a de-americanized world, along with the u.s. american dollar and the currency issue. the spokesperson said the destinies of the people around the world should not be left to those in a hypocrital government. and what they see in washington, at the government, we take a closer look. >> reporter: the political grid lock in washington is almost as big a topic in china as it is in the u.s. that is what happens when your country is the largest foreign holder of your debt. i hope they can talk it out, one man says, that is our hard earned cash. china is frustrated that the u.s. is playing what it sees as a political game with the global economy. if american lawmakers can't reach a deal by an october 17th deadline on raising the debt ceiling, the united states could default on its debt, potentially hurting the world and china. the u.s. debt ceiling debate is in all the chinese papers. this one says, the clock is ticking, china urges the united states to clean up its debt problems, and this one says that the us debt ceiling is ruining america's credibility. in one editorial, the news agency called for a new de-americanized world order. but america is not the only one being blamed. people here are angry at their own government, too. chinese politicians need to do something about this, he says. china maintains controls on its currency, helping to support exporters here. so it has ammassed huge dollar reserves and can't do anything about it, other than invest in treasuries, $2.3 million worth. they are looking at the surprised public. america sees itself as a super power, he says, now we know they're injury like everybody else. for nightly business report, in beijing. >> still ahead on the program, why the government shutdown is forcing one rural family into a more expensive mortgage. paying more for a new home than they ever expected. first, we'll look at how the markets closed today. >> well, if the government shutdown stretches into a third week, time may have run out for some home buyers. a small but critical program for home buyers is still on hold, leaving the would-be homeowners in the lurch and costing them thousands of dollars. >> reporter: the good news is, the couple were able to sell their small home. the bad news is the government shut them and their kids out of a home. >> we get the call, you're approved. but the government is shut down, and your government-backed usda loan can't be processed so therefore you have to wait. >> reporter: the malloys had planned to use a department of agriculture loan, 30-year fixed product designed for families like them. but with their current home sold, and them scrambling, they couldn't wait any longer. >> we were earither looking at e contracts or move to less desirable loans. >> reporter: the family switched to another loan, which required a $10,000 payment, and higher fees. their payment is $150 more than it should have been. >> my wife and i are just middle class working americans, and to have a fighting match between congress and the senate and the white house cost my family their home. and my family $10,000. that is a lot of money to us. you know, we don't normally have that. >> reporter: the usda program is small, barely 2% of the market, but it is a big deal to rural communities who rely on this type of financing for more than just loans. but for real estate, construction, new jobs, even updating infrastructure tell telecommunications. >> reporter: for the family, it meant putting a hold on new furniture and other items for the family. >> it sure affected all seven members of this house, costing us dearly. >> reporter: diana oleg, nightly business. and we begin tonight's market focus, netflix is in talks with the cable company about building new cable boxes. it could include comcast and suddenlink. the news sent netflix to $324.36. shares of whirlpool dropped, customers were delaying big ticket purchases in the last week of september and into october because of the approaching debt ceiling deadline. but it is not all bad, the research firm also expects purchases to rebound once a deal has been reached in washington. meanwhile, stocks fell today. and price cut to $51 a share. the firm believes expedia will decree increase competition here in the u.s., the stock lost, and shares of micro devices. web bush updated that company to out-perform for neutral. they say the chip maker will trade higher if sales of new gaming consoles grow. the stock up more than 3 and a half percent to $3.97. >> so how long do you think that you will have to keep working? a new survey says longer than ever. that is because of the recession's impact on retirement investments and home buyers. a new poll shows that nearly half of respondents over the age of 50 now expect to retire later than they previously planned. and many say they will have to keep earning money even after they officially retire. if you're looking for a size building increase in your social security check or veterans benefits it is not likely to happen. they suggest the year's increase will be about 1 and a half percent, the suggested boost since the benefits began back in 1975, the main reason, consumer inflation as measured by the government has not risen over the past year. it is almost two weeks now since the rollout of those health care exchanges. computer problems stopped millions of americans from signing up for the new insurance plans. but is there any progress in fixing those problems and can they be fixed? >> reporter: government contractors are continuing to make fixes to the federal exchange. last week, health and human secretary kathleen sebelius says that the problem will be resolved, but couldn't say when in the future. >> that is what we're aiming for, no wait time. >> but analysts and insurance executives say the on-line flaws in the way the insurance market was constructed are more complex than a simple glitch. it could take longer to solve them. >> we're in a place where there is so much wrong, you just have to get more of it fixed. we have to plow through it. >> it is early in the enrollment process which runs for six months. but the obama administration has targeted covering 7 million people under the affordable care act through the exchanges, amounting to an average of 39,000 people a day for 180 days. industry analysts say that insurers have so far seen a few thousand enrollees make it through the bottle neck, and there were many mistakes. it required manual correction. >> right now it is not that big of a problem, because the carriers can do manual intervention and clean it up. but again, once we get it done in large numbers there is no way they can handle it. >> the obama administration compared the rocky start to the federal exchange to the launch of medicare part d in 2006, which was doubled with problems, fixed in months. but this could be more complicated. in no small part because of the complications. and coming up, how the three winners of the nobel prize make you a better investor. and the bond market was closed for columbus day. >> price of crude oil ended slightly higher today, but gasoline prices are falling fast. gasbuddy.com says that consumers in 16 states can now find gas for under $3 a gallon from new jersey to mexico and ten more states seeing prices dip that low later this week. a national average for a gallon of gasoline would right now, 3.e cheapest found in texas, just $2.70 a gallon. and three will share the nobel prize for economics, not peace. more on the winners for today. the university of chicago, nobel prize winners, determining what the price of stock value is, eugene fama, called the father of modern finance, says that all new information is immediately priced into stocks value. and after the news comes out, it is folly to try to predict it. according to fama, they can't do it. but the american from yale says that markets can sometimes behave irrationally, depending on human psychology, going through missed periods of pricing. think of the soaring housing boom, and now the long bust. >> i have a certain belief, that i tend to think of my own work as a minor addendum to a huge body of work that others have generated. >> the third winner, swede lars peter hansen, found that mis-pricing because of irrational behavior is at issue. the nobel committee could be saying the state of modern financial theory is that both schools have merit and need more study. ultimately they're awarding the ground-breaking research from these three that have stood the test of time. they are looking at buying because they can't predict the future, or investing. they talk about changing over time. >> congratulations to the three of them. it is really interesting that they can't really predict the short-term direction of the stock market, but they can predict the long-term. and that is why the index funds came into existence. >> i think they give you the best bang for your buck, the index funds. >> i think they do. and that is it, i'm susie gharib. >> and i'm tyler mathisen, have a great evening, we'll see you back here, deal or no deal. >> nightly business report has been brought by street.com. tools for ever-changing world, our dividend stock adviser guides during a period of low interest rates. we are the street.com. [chanting in spanish] many of us are trying to find ways to build a more sustainable world for future generations. we're concerned that our planet's well-being isn't as secure as it once seemed. but on every continent there are new environmentalists who are committed to change. whether it's an individual, a small group, or a grassroots organization, they've made personal sacrifices that most of us couldn't even imagine. man: a valley like this would be populated with drilling rigs. the scarring of the landscape would simply destroy it. woman: seeing so many children impacted by health issues,
the toughest words yet for washington. and the health of the exchanges, and now that some of the issues plaguing the federal health marketplaces have been identified, are they too complex >> that is a shorter period of time than republicans wanted because they wanted to preserve the lower sequester spending levels as long as they could. the debt extension level would be through the middle of february, february 7th to be exact, shorter than democrats wanted, there would be a budget, a negotiation at that time. there does not appear to be a rollback or appeal of the device tax that some republicans asked for. there will be income strength and subsidies under obama care, and as a trade for that, democrats are going to get something labor unions have asked for, which is the delay in insurance tax, which labor unions complain hit their taxes too hard. >> hi, john, it sounds like some of the main issues that were on the table in the beginning have been pushed off. this is all about pushing all the problems down the line. is this what it has come down to? there is no credible plan about getting long-term spending under control, right? >> well, the plan susie is to commence negotiations. you know, this is a stop gap first to reopen the government, second to remove the threat of a debt default. but it is in the service of creating a budget negotiation between the house and senate, accelerating one that was stalled earlier in the year. but yes, the assumption on all sides is that they negotiate some sort of deal, big or small, that relieves part of the sequester, but substitutes longer term entitlement savings. and the longer question is whether it is a small deal and whether there is revenue that democrats have asked for in the form of closing tax loopholes. >> thank you so much, john harwood reporting from washington. and optimism about a possible washington deal sparked a sizeable u-turn in washington today, the dow released a triple digit loss, good things came in big packages for investors, the small cap stocks and the s&p 400 index of mid-cap companies closing at historic highs. at the end of a breathless day of waiting for any news out of washington, the dow rose 64 points, the nasdaq up 23, and the s&p added seven points. and joining us now to talk more about the latest developments in washington and what the uncertainty means for the washington and the economy is the chief strategist. greg, good to have you with us. you heard what john harwood just said. i would like you to add to that if you know of anything that is different. a week or so ago there was talk we were not going to negotiate anything having to do with obama care as part of any deal to raise the debt borrowing limit or reopen the government. and what john just described is there would be some movement on income verification as part of obama care, and the tax on unions, that they found objectionable is going to go away. should we just watch what they do? >> absolutely, i hate to be the skunk at the picnic, but i would point out i haven't heard anything from the house, these bipartisan groups are getting closer to a deal. the house will weigh in, it will not be warm and fuzzy from that body. number two, even if we get a deal, guys, all we do is postpone the crisis, we kick the can down the road. there will be another crisis in january on the government staying open, a crisis in february on the debt ceiling. so it is not as if we're just to just wrap it up in a neat little package. >> and i think you just nailed it there, greg, because everybody watching this process, whether you're a democrat or republican is so frustrated. everybody around the world is so frustrated. who won when we do get the deal, who won and lost, and where are we going with the next round? >> well, you're exactly right. and i would say obviously, there is not going to be a default. chances of default are like 2%. that is not what the market is worried about. i would say, though, if we just have continuing crises, one after another, are we going to shut the government down again? that has a corrosive impact on the government. for business psychology, it is going to be fragile. >> can you imagine a world where we really came to long-term agreements on budget policy and tax policy and on levels of debt and what that would do to business confidence and growth in america? >> amen, brother, what people want is predictably, and even later in the week, there is still not predictability. we still have a lot of issues to go through. two very positive stories, the fed will have to keep very do s dovish for weeks or months to come, i think the first time they really think about tappering will be in late january, that is a good story. number two, despite the budget deficit, it is plummeting. we get the numbers on the previous fiscal year, these will be shocking figures showing that the deficit is falling dramatically. >> in a few words, greg, does the government open by the end of the week and what if there is no deal, real quickly? >> yeah, i think it opens by the end of the week, but we still have a lot to get done. >> all right, chief strategist at the potomac group research. and with no real deal on reopening the government, companies big and small are left in the lurch. and they can't make long-term spending and planning decisions. mary thompson has more. >> reporter: as lawmakers battle over the budget, the corporations face a struggle of their own, how to plan for next year. here is the ceo trader, bill gerber. >> i think people are just not able to assess because the markets are so uncertain, on where they should be, the type of environment they should be in. so people get in a wait and see mode. >> reporter: for over a year, americans kept a tight grip on their cash, a grip ligkely not o be loosened. if the deal is not reached, mandatory budget cuts known as sequestration could take everything. here is former city group chairman dick parsons. >> if they had confidence they knew what the landscape would be doing, they would start to invest again. >> reporter: given that washington kicked the can down the road, that is a big if. now, a director at sprint, honeywell and prudential said it is likely they don't know when to spend because they could step on a bomb. firms like the new jersey based flex line, a maker of metal hoses. in an e-mail, the president wrote, the temporary fixes don't allow us to plan, it makes revenue streams and planning chaotic, the blanket orders go out the window, lead times get cost, and it is a mess, a mess a temporary fix wouldn't clean up. for nightly business report, i'm thompson. and word thatçó another company will be idle. boeing, the aerospace giant says they may furlough workers at their security unit because of stock work orders and installations where some of the employees work, funding cut's with washington and a shortage of government inspectors. some top bank inspectors are worrying about the dire consequences reaching the borrowing limit, something that never happened before. they described a bleak situation, saying as you get closer to it the panic will set in, and something will happen. i don't know personally when that problem will start. deutsche bank has been making contingency plans in case of the default, adding you don't want to go into all of it. this would be a very quick spreading disease. and the managing director of the monetary fund speaking on nbc's "meet the press" sunday. lagarde warned about the disastrous impact of a default on the world and the country. >> if there is a degree of destruction, that lack of certainty, the lack of trust in the u.s. signature, it would mean massive destruction the world over. and we would be at risk of tipping yet again into recession. >> lagarde also said that creative accounting would not be the solution. that the u.s. has an obligation to the rest of the world to preserve its safe haven status. but perhaps the most critical word on keeping the government open came from china. the nation called for a de-americanized world, along with the u.s. american dollar and the currency issue. the spokesperson said the destinies of the people around the world should not be left to those in a hypocrital government. and what they see in washington, at the government, we take a closer look. >> reporter: the political grid lock in washington is almost as big a topic in china as it is in the u.s. that is what happens when your country is the largest foreign holder of your debt. i hope they can talk it out, one man says, that is our hard earned cash. china is frustrated that the u.s. is playing what it sees as a political game with the global economy. if american lawmakers can't reach a deal by an october 17th deadline on raising the debt ceiling, the united states could default on its debt, potentially hurting the world and china. the u.s. debt ceiling debate is in all the chinese papers. this one says, the clock is ticking, china urges the united states to clean up its debt problems, and this one says that the us debt ceiling is ruining america's credibility. in one editorial, the news agency called for a new de-americanized world order. but america is not the only one being blamed. people here are angry at their own government, too. chinese politicians need to do something about this, he says. china maintains controls on its currency, helping to support exporters here. so it has ammassed huge dollar reserves and can't do anything about it, other than invest in treasuries, $2.3 million worth. they are looking at the surprised public. america sees itself as a super power, he says, now we know they're injury like everybody else. for nightly business report, in beijing. >> still ahead on the program, why the government shutdown is forcing one rural family into a more expensive mortgage. paying more for a new home than they ever expected. first, we'll look at how the markets closed today. >> well, if the government shutdown stretches into a third week, time may have run out for some home buyers. a small but critical program for home buyers is still on hold, leaving the would-be homeowners in the lurch and costing them thousands of dollars. >> reporter: the good news is, the couple were able to sell their small home. the bad news is the government shut them and their kids out of a home. >> we get the call, you're approved. but the government is shut down, and your government-backed usda loan can't be processed so therefore you have to wait. >> reporter: the malloys had planned to use a department of agriculture loan, 30-year fixed product designed for families like them. but with their current home sold, and them scrambling, they couldn't wait any longer. >> we were earither looking at e contracts or move to less desirable loans. >> reporter: the family switched to another loan, which required a $10,000 payment, and higher fees. their payment is $150 more than it should have been. >> my wife and i are just middle class working americans, and to have a fighting match between congress and the senate and the white house cost my family their home. and my family $10,000. that is a lot of money to us. you know, we don't normally have that. >> reporter: the usda program is small, barely 2% of the market, but it is a big deal to rural communities who rely on this type of financing for more than just loans. but for real estate, construction, new jobs, even updating infrastructure tell telecommunications. >> reporter: for the family, it meant putting a hold on new furniture and other items for the family. >> it sure affected all seven members of this house, costing us dearly. >> reporter: diana oleg, nightly business. and we begin tonight's market focus, netflix is in talks with the cable company about building new cable boxes. it could include comcast and suddenlink. the news sent netflix to $324.36. shares of whirlpool dropped, customers were delaying big ticket purchases in the last week of september and into october because of the approaching debt ceiling deadline. but it is not all bad, the research firm also expects purchases to rebound once a deal has been reached in washington. meanwhile, stocks fell today. and price cut to $51 a share. the firm believes expedia will decree increase competition here in the u.s., the stock lost, and shares of micro devices. web bush updated that company to out-perform for neutral. they say the chip maker will trade higher if sales of new gaming consoles grow. the stock up more than 3 and a half percent to $3.97. >> so how long do you think that you will have to keep working? a new survey says longer than ever. that is because of the recession's impact on retirement investments and home buyers. a new poll shows that nearly half of respondents over the age of 50 now expect to retire later than they previously planned. and many say they will have to keep earning money even after they officially retire. if you're looking for a size building increase in your social security check or veterans benefits it is not likely to happen. they suggest the year's increase will be about 1 and a half percent, the suggested boost since the benefits began back in 1975, the main reason, consumer inflation as measured by the government has not risen over the past year. it is almost two weeks now since the rollout of those health care exchanges. computer problems stopped millions of americans from signing up for the new insurance plans. but is there any progress in fixing those problems and can they be fixed? >> reporter: government contractors are continuing to make fixes to the federal exchange. last week, health and human secretary kathleen sebelius says that the problem will be resolved, but couldn't say when in the future. >> that is what we're aiming for, no wait time. >> but analysts and insurance executives say the on-line flaws in the way the insurance market was constructed are more complex than a simple glitch. it could take longer to solve them. >> we're in a place where there is so much wrong, you just have to get more of it fixed. we have to plow through it. >> it is early in the enrollment process which runs for six months. but the obama administration has targeted covering 7 million people under the affordable care act through the exchanges, amounting to an average of 39,000 people a day for 180 days. industry analysts say that insurers have so far seen a few thousand enrollees make it through the bottle neck, and there were many mistakes. it required manual correction. >> right now it is not that big of a problem, because the carriers can do manual intervention and clean it up. but again, once we get it done in large numbers there is no way they can handle it. >> the obama administration compared the rocky start to the federal exchange to the launch of medicare part d in 2006, which was doubled with problems, fixed in months. but this could be more complicated. in no small part because of the complications. and coming up, how the three winners of the nobel prize make you a better investor. and the bond market was closed for columbus day. >> price of crude oil ended slightly higher today, but gasoline prices are falling fast. gasbuddy.com says that consumers in 16 states can now find gas for under $3 a gallon from new jersey to mexico and ten more states seeing prices dip that low later this week. a national average for a gallon of gasoline would right now, 3.e cheapest found in texas, just $2.70 a gallon. and three will share the nobel prize for economics, not peace. more on the winners for today. the university of chicago, nobel prize winners, determining what the price of stock value is, eugene fama, called the father of modern finance, says that all new information is immediately priced into stocks value. and after the news comes out, it is folly to try to predict it. according to fama, they can't do it. but the american from yale says that markets can sometimes behave irrationally, depending on human psychology, going through missed periods of pricing. think of the soaring housing boom, and now the long bust. >> i have a certain belief, that i tend to think of my own work as a minor addendum to a huge body of work that others have generated. >> the third winner, swede lars peter hansen, found that mis-pricing because of irrational behavior is at issue. the nobel committee could be saying the state of modern financial theory is that both schools have merit and need more study. ultimately they're awarding the ground-breaking research from these three that have stood the test of time. they are looking at buying because they can't predict the future, or investing. they talk about changing over time. >> congratulations to the three of them. it is really interesting that they can't really predict the short-term direction of the stock market, but they can predict the long-term. and that is why the index funds came into existence. >> i think they give you the best bang for your buck, the index funds. >> i think they do. and that is it, i'm susie gharib. >> and i'm tyler mathisen, have a great evening, we'll see you back here, deal or no deal. >> nightly business report has been brought by street.com. tools for ever-changing world, our dividend stock adviser guides during a period of low interest rates. we are the street.com.
as for earnings central, mcdonald's results will be in the spotlight. 8:00 we'll expect those numbers. it will be a busy week on the economic front. a number of key numbers. the september jobs report. that's right, on tuesday we get that jobs report we were supposed to get a couple of weeks ago on a friday. also, we'll get last month's consumer price index and then september cpi on wednesday. our economic newsmaker of the morning on "squawk box", charlie evans will be joining steve leaseman in a cnbc exclusive. joe. >> thanks. back to our top corporate story of the morning. jpmorgan coming up with a settlement. this is mandatory reading. i'm going to talk about it later. we'll let you do your report and then we'll talk about what it means. >> and then we can go for it? >> then we can go for it. >> after weeks of tense negotiations with the government, jpmorgan appears to be very close to a resolution to the tune of about $13 billion, which is a bit more than expected originally. in a phone call friday night jpmorgan ceo jamie dimon agreed to the elements of the pack with eric holder that would wrap up the civil phase of a justice department investigation into a number of its past mortgage-backed securities. the deal which would also settle outstanding claims by the federal housing finance agency and the new york attorney general, eric snyderman, will carry a record settlement amount for the doj and would take an astonishing amount of money off of j.p. morgue's balan-- jpmorg balance sheet. the balance will go to the justice department along with a payment to new york state. a substantial settlement has been in the works for some time now. something jpmorgan acknowledged by boosting its legal reserve by 9 billion in the recent quarter after what dimon described as escalating demands for penalties. so the magnitude of the settlement while high may not take investors by surprise. the problem is the continued uncertainty with what may happen with this criminal aspect of this suit. that's something, joe and becky, they were not able to resolve as something they expect in the coming days and maybe even week. >> j.p. doesn't have much choice as pointed out. if dimon were to fight the charges at this point the screws would get turned even harder. the journal makes the case that a lot of these banks are now really almost utilities and the real lords of american finance are eric holder, jack lew, and the boss in the white house. dick parsons wrote a piece, too. dick parsons' piece is that next time there's a systemic crisis, good luck asking some banks to buy the weaker players because of the liabilities they might incur. this was mostly bear stearns in the first place. >> although there is some legacy jpmorgan that are wrapped into this. >> well, who are we hurting here? the shareholders are going to lose half of the -- half of the profits that the bank made for an entire year. it will also be tougher to get credit. what it accomplishes, i like the analogy the journal is giving it, will put stakes on the head. the last guy andy brewer didn't bring any criminal charges. he got so much flak from the left they're not bringing any charges against -- don't have any ceos so now we'll get it in money. see what you think of these, kate. the truth is lenny brewer didn't indict bankers because the crisis was a result of bank fraud. in fact, it was a result of classic credit panic caused by bad government and bad government policy coinciding with the rational exuberance, rational exuberance to bankers who were responding to the incentives forex ses sieve risk taking that the government created. if you want to get to the crisis, you have to arrest barney frank. the journal, a lot of times it's called the morgan shakedown. a lot of times the journal doesn't pull punches, but in this case -- and then you have dick parsons, right, across on the other side of the fold talking about you'll never have anyone help next time. i don't know. i know where you're coming from. i'm trying to talk a lot. >> you know where i'm going to come from. >> i have a pretty good idea. >> i think there's no doubt that the government has jamie dimon over a barrel here, and one of the interesting analyses i think for us today is you saw a little bit of this in the new york time and in the "journal" he had to make a 180 from sticking it to washington, talking tough, to being more conciliatory. there was a call from him to eric holder in late september that reversed the situation. it was leading to a news conference for public charges against jpmorgan by the doj. we had a truly devastating financial crisis in 2008. the american public wants heads. i don't think it's on the part of the regulators or the doj and eric holder to bring hard charges. maybe it's too little too late. these are astonishing numbers. >> that's total crap. saying that the mob outside the castle with the pitch forks deserves to go in and get the people that didn't do anything and tear them limb from limb because it feels good, that's ridiculous. anyway -- >> well, in terms of barney frank here, here's the question. what about the derivatives that ended up biting us in the bottom in 2008 as well? there were attempts to regulate those time and time again and that's another missed opportunity arguably. >> he said it the best. he was surprised that they didn't use soarbane oxley. >> there would have been players more centrally involved. >> the entire government -- the entire government wanted us to give bad loans to people to build up d you know, to get to 70% on housing ownership and -- >> ironically jamie dimon saw this coming which is why he wanted to pay $2 a share for bear stearns. he thought the legal liabilities of purchasing a company with that much mortgage exposure meant they were probably close to zero because he would be paying out in legal exposure down the road. he was absolutely right. >> poor fannie and fredie, they had no idea. they were shocked that some of those loans weren't going to be paid back. >> they were setting the standards, that's for sure. >> they certainly were. i'm not saying it's one party or the other. it goes back to the clinton administration, the american dream, owning a home, and everybody using the piggy bank of the home equity loan and flipping california real estate. kate, thank you. >> you're welcome. >> "the wall street journal" on the reporting side, reporter side. >> i was a "wall street journal" reporter. >> i know you were. i called you a rook. you might as well be at "the new york times." >> let's bring in jacob frankel. he has an interesting perspective. he's a former prosecutor and an sec attorney. jacob, i'm really eager to hear what you have to say coming from the sec background, coming from a prosecutor background? is this the right deal? >> the short answer, it's absolutely preposterous. it's almost as if what we're getting now, federal regulators, the justice department, sec, is a roulette wheel or whether he hit some kind of jackpot. how much can you jack up the fines. fundamentally here you can understand if it's about trying to make the mortgage holders whole or -- i mean, where there's a logic to the number. here you have $4 billion to a plaintiff's claim that was brought on behalf of the federal government, $4 in collections to improve things going forward and $5 billion in penalties. at some point corporate america is going to say, you know what, we just want to pdon't want to the u.s. capital markets anymore. now what comes on the heels of a government shutdown, a $13 billion fine against one of the biggest banks which in essence is being penalized. >> is it a shakedown, jacob? >> there's no question. the pattern logically leads to that conclusion. the journal editorial is dead on. to say it's a shakedown, the fact is you do have an agreement between the parties in the sense of jamie dimon and eric holder having negotiated a settlement. you do have very experienced lawyers on the bank side who really understand this process. >> okay. >> i was going to say, what the bank needs is closure and unfortunately to get that closure it needs to write a really, really big check. this is unfair to wall street. >> where is the money going to go? the journal also points out that the charges relate to the mortgage security. those were the big institutional investors. we'll see how many big buyers get any relief. the journal makes a point that we really want to see in the administration how many checks arrive from this settlement in swing congressional districts before the 2014 election in the house. >> but that's actually part of the problem. >> advocacy groups, friends of the -- you know. >> i mean, unfortunately the shareholders of the large institutions themselves aren't institutions so it really is this notion of heads on stakes public clam morgue. the cases should not be brought bus of public clam morgue. there is evident and facts and i believe that for jpmorgan writing this, they should have closure. >> they don't. >> they're not getting a non-prosecution agreement. i do think the lawyers are making a good assessment, that we are not going to see a prosecution of the banks. i think what you have is you have this perception being created although i think the cooperation has been all along to really root out those individuals. ultimately when we talk about any type of corporate liability, whether it be civil or criminal, it's because individuals acted a certain way. it's fair to say hold the individuals accountable but don't penalize the shareholders. don't pemlize the corporations and don't incentive advise the government to continually raise the stakes and raise the numbers. it used to be on the pennsylvania turnpike they would say, okay, the fine is x if you speed. so, okay, it's worth my while to speed. the fact is, that's not the case here. now what you really have is creating a fear factor. >> i don't even think that analogy works because if you were speeding, you know the fine is going to be $200 of your money that you're paying. >> exactly. >> if you're paying shareholder fees, that's not your money, it's not going to start somebody from doing it again. i agree on you for going after the individuals. if you want to stop this behavior, go against the individuals that have done something wrong and prosecute that from something not happening in the future. and don't penalize the shareholder and the bank. >> everybody is playing with monopoly money, too. i have problems with this on two counts. one in the idea that you're going after the money because you think you can get the money, whether or not you have the case. second, with the penalty that's being paid is not something that's ever going to stop somebody from doing anything that's ever been done wrong because it's not their money. >> your analysis is exactly right. joe, back to your point at the beginning as well, which is the journal item. it did not really hit the issue on the head. this is a bad precedence. >> try fighting the government. i don't want to talk about this. if you get in an audit, try fighting them. try saying you're wrong. you cannot fight city hall. that's an old expression. if i were jpmorgan and had these guys in this position, i'd be going -- i'm afraid -- i would do the same thing. it's like arguing with a policeman on the spot. >> right. >> see how that works for you, getting smart with a state trooper. >> becky and joe, you're both making the exact same point, and it's a great point. which is fines like this create a disincentive. it's a disincentive to take away from fighting for a fares solution. it's not an evening playing field. at some point growing members can't do that. you have a major corporation saying, again, why should we be public? let's go private and minimize the risk. >> right. >> i think this is a dangerous precedent being set m washington. jacob, thank you very much. we appreciate t. we will talk to you soon. >> thank you. time for the global markets report. ross westgate is standing by in london. the nfl didn't play in london which you didn't have any college football. you didn't have any nfl. the world series, you didn't see any of the boston series or detroit. was there anything on tv? downing ton abbey, soccer? >> soccer, futbol. >> i don't know how we get through the weekend. >> that was my point. maybe you go outside and get activity. we had -- wow, what a weekend for us over here. i'm not rubbing it in. you have a great country over there. >> okay. we did okay. we're okay. we have some things to keep ourselves amused, joe. thank you for the concern. i appreciate that. yeah, here we are. first trading day of the week without nfl in europe, and we are going to get three regular home season games next year at wembeley. no major moves at the beginning of the week. overall investors are fairly cautious. like the united states, the s&p is reporting big heavy earnings here. the footsie ftse down. let's kick off with philips up 6.5% on the dutch exchange. ongoing head winds will affect sales growth but the key point is they beat expectations. it tripled its third quarter profit. s&p, big competitor oracle stock giant stock up 6% in frankfurt. net profit up 23% to 762 million euros. mainly because it has declining costs. but this is another company, s&p, that's coming out and talking about the strong euro beginning to be a head wind. software company warning that exchange rate effects could hit its fourth quarter revenue growth to 5%. the dollar below the 137 level. there are companies coming out saying it's a bit of a problem. rbs, down 5.28%. seriously considering breaking up the banking into good and bad banks. that's around about 3, 4, 5 years too late. of course impacted by the settlements from jpmorgan as well. so the banking sector is extended to rbs today. that's some of the key stories around europe. back to you guys. >> rugby? rugby. >> rugby. >> like professional teams that people follow and have standing? really? >> yeah. yeah. >> let me ask you a serious question today. do they wear those rugby shirts? >> do they wear them? >> you know those rugby shirts that we can buy over here. do they wear them? >> yes. >> that is a tough -- >> yeah. >> i can't say i was a -- >> with less padding. >> i would get squished. you'd need a blotter to pick me up. they don't play on astroturf, they don't play on -- your collarbone -- >> there's one thing, joe, they play on artificial pitch. >> your clavicle would be shattered. >> yeah. especially it's a new type of artificial pitch. it has give in it. >> they don't wear equipment. they wear a jock, that's it, man, that's it. never mind. ross, thank you. >> people are called jocks when they're sports greats. nothing wrong with mentioning that. >> just the image. thank you. >> that's your problem. get your mind out of the -- anyway, stocks rally into the end of last week after washington took the government back to work. joining us to talk monday morning strategy is david joy, ameriprise financial. chief market strategist. mark vitner is wells fargo's economist. in retrospect, i like the way the market acts, david. i sort of feel the 85 billion. is that it? i mean, it's helping, isn't it? money does find its way in the equities. earnings are okay, but we're talking about maybe not tapering now at all this year. maybe not, you know, early next year. that helps the equity markets, doesn't it? >> well, apparently so. i would have thought that there would be some ramifications to the economic shutdown. obviously it has stinted fourth quarter gdp. the market seems to be looking right through it because the fed is still on the job and because we've bought a little peace in washington. i would have thought we would have had the trading opportunities. the market adjusted. >> we he did. >> we've had nothing. >> the fullback to where people said if we get 5 or 8%, i want to get it. then it looked like there was going to be a sell on the news the day after but that was mostly ibm. i think the s&p was way up that day even though the dow barely made it back. we even get a sell on the news. >> no, we didn't. i think, you know, the lesson here is you maybe still get a trading opportunity at some point in the next few weeks, month, but if you're a long-term investor, clearly markts looking over this speed bump. i think you have to stay the course. i think equities will go higher over time, absolutely here. >> mark, let's subtract some -- i don't know. how much do you subtract from what happened off gdp? then that's sort of a rear-view mirror look at gdp. do we do 3% next year? >> i don't think we do 3%. we think that the loss to gdp growth is around .3%. >> .3%? >> .3%. that's the midpoint of the range we thought it would fall in. the shutdown began on the first day of the quarter. we have the whole rest of the quarter to make up for any lost activities. i don't think it's going to turn out to be all that much. next year i can't see how things are going to get better. the idea that we're going to get a taper at some point next year. then growth will ramp up to 3%. that just doesn't add up. i think somewhere in the 2 to 2.5% range next year because the estimate is 2.4. >> so what does that say about unemployment, mark, coming down? the more we -- it's troubling. it's troubling in terms of part-time jobs getting so common and it's also troubling if you look at how many people in the work force, what the participation rate is. it seems to be kind of a lousy job market which seems to indicate the fed needs to stay but might never be able to leave. >> $85 billion a month for a few more months and then beginning to taper. that's a lot more. we're probably adding another $400 billion of bond purchases by this delay. >> will we get under 7% and will it be a real sub7% jobs number? >> not for a while. we will get under 7%. they have to back off the unemployment rate target, threshold, whatever it is because we're going to get there a lot sooner than we're going to finish tapering. certainly well before we begin to raise interest rates. it's not that meaningful because we see a huge drop in the labor force interest rate. we are seeing a bit of a rebound for prime rates. they put off hiring late this year and get off to a real weak start next year. >> mark, we're going to lose you. david, do you have a year end target for the s&p? do you think it continues to go higher next year? >> yeah. i've been at 1650. it looks like that won't happen unless we get that trading activity. i think it goes higher next year. i think it ends up 1825, 1850. >> your 1650 has been terrible. you understand that's 94 points? >> yeah, absolutely. but i've been invested all the way through. i'm at least enjoying the ride. >> okay. good. all right. david, thanks. mark, like the races, you can all the count on him. i can't tell what's on today. >> like bulls, maybe? >> bulls. >> making that up. when we come back, why some furloughed federal workers may get paid twice. first we have some squawk news for you. peyton manning did not get the homecoming he wanted in indianapolis last night. they beat denver 39-43 handing the broncos the first loss. manning passed for 386 yards and three touchdowns but he threw a fourth quarter interception and he fumbled out of bounds. now to the national weather forecast with alex wallace. alex, good morning. >> good morning. tracking chilly conditions plus the threat for some snow showers coming on in through the mid part of the week. cold air across the upper midwest, great lakes. this system will dive its way in bringing a few snow showers across the dakotas. by tomorrow moves into the midwest. wet snow mixing with rain across parts of iowa into illinois. chicago, you're going to stay chilly. it's a chilly rain. no snow there for you. check out the temperatures compared to average. a lot of 40s. that includes minneapolis. that's 16 degrees below average. that colder air continues to sushlg towards the south and east tomorrow. the ohio valley, you get a chance to see sub60 degrees readings in louisville. wednesday, hits the east coast. d.c. expected to get up to 70 today. by wednesday, 57 degrees. it's one of those bundle up up and coming days across a lot of the eastern half of the country. that's your national forecast. "squawk box" coming up. more of that next. welcome back, everybody. right now it's time for the executive edge. this is our daily segment focused on giving business leaders a leg up. "usa today" is reporting that some federal employees will get paid twice for their time out on furlough. several states are allowing those who got unemployment can keep their money and the back payment. >> it's a loophole. >> it's too complicated to get back some of the money. forget it. it illustrates the stupid at this of the shutdown. we have these people and you lose the productivity. then we issue back pay and you have the unemployment. if you're going to do a shutdown, say it's a shutdown and not do anything. keep the people coming in and keep paying them. >> the total of all of that money. >> it shows the stupidity. it slowed down the private sector. you couldn't get things like the irs to confirm they had the income they were claiming. >> it department happen in '95 and '96. >> they didn't get unemployment benefits? >> they did but they knew exactly -- they had to pay back the unemployment benefits. the law that provided them with the back pay, tvs workiit was w. 4400 filed for unemployment, 1300 took other steps needed to receive a week of benefits and then part of them will get to keep it because they can't -- >> go back and try to figure it out. focusing on obama care and the website. any i.t. people, they should be -- >> sent there? >> wouldn't you? i would bring anybody that knows anything. >> i think they are at this point. >> they are. boy geniuses, young people, hackers, all welcome. come for a seminar. all come to washington and there will be a contest for someone that -- >> like facebook. they would sit around and have hackoffs. >> supposed to be 7 million in by early next year. >> yeah. some of the state exchanges are running well. >> the state exchanges, not a single federal exchange is working. >> i saw some numbers yesterday of who had started. a lot of the processes. there's something like three steps along the way. >> right. >> first you have to sign up, then it has to be verified, then have you to pick the plan. >> when it's all said and done we'll go and the postmortem is writt written, i don't mean the postmortem that it dies. >> the launch. >> how much pressure to make sure you had it there. once you give something to someone, it's hard to take it back. it's a signature deal. we have to get it rolling because once we're rolling, then you will never get rid of it. >> i don't think that's the problem. >> even if one person -- >> they laid out what he would have done if he were doing it in private industry. the problem is they weren't doing it soon enough. a lot of this went live and that was the first they were testing it. >> why? >> i'm not sure. incriminations are coming. it could have been done earlier. aetna was warning, get your act together. they had been warning them for a long time. do more. not just do it, do more. >> you need to be doing more. they said, no, we haven't. then they roll it out because we want people -- >> the problems were earlier when they had time to fix it. >> they didn't have to launch it if it wasn't ready unless they wanted it there. once you start it, you can't take it back. >> the president i think is going to be speaking about this today. >> we have that going for us. all right. anyway, in science news, a biological clock finding the young at heart have new meaning because heart muscle, researchers report that most of your body is aging in a koof coordinated way. there are odd anomalies. your heart may be younger than the rest of your tissues and women's breast are older. tumors are oldest of all. this researchers might help scientists understand cancer and explain why breast cancer is so common. if you look at the way -- if you use methylation as a way of saying something is old, then you can see how old tissues are. >> tumors are old because they grow rapidly and age rapidly? >> it looked like part of the way cancer is able to make a foot hold is by fooling the biological clock and it continues to -- that's why when you think about ways a couple of years back there was a way of making an individual cell live longer, the telomeres are like a little fuse that gets shorter and shorter. if you make a cell longer, that doesn't mean the organism lives longer. you make it easier to get cancer. it's tough. a difficult one. i want to see the twitter story. >> okay. >> everybody quits twitter. >> you haven't quit yet? >> i kind of have. i only do one thing on twitter. >> you like to watch, too? you watch what's happening. >> excuse me? >> you like to watch. >> i do like to watch. >> mark cuban -- >> that's a news feed, but some people drive me crazy. then i stop following them. >> some people use it actually as work. our final story on this, as twitter prepares to go public, you're getting more statistics. some analysts are worrying about this. the twitter quitters. a rating poll says 36% who join twitter, they say they quit. 7% of facebook users say they don't use it. for those of us who use it for work, that's an indispensable tool for work. facebook i never found anything for work. >> rugby world cup season starts saturday. times in u.k. >> i'm finding that out on twitter. >> it's a useful news tool. >> it is. a lot of propaganda from other news shows. don't you see a lot of propaganda? >> yeah. i think if you're looking at reliable sources -- >> we do a lot. it's not propaganda. i have to squawk. you can block some of these people. >> getting political. we'll take a quick commercial break. when we come back, erngs season is about to kick into overdrive. we'll look at some that have reported and come back later. 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(vo) meee-ow, business pro. meee-ow. go national. go like a pro. peace of mind is important when you're running a successful business. so we provide it services you can rely on. with centurylink as your trusted it partner, you'll experience reliable uptime for the network and services you depend on. multi-layered security solutions keep your information safe, and secure. and responsive dedicated support meets your needs, and eases your mind. centurylink. your link to what's next. markets are gearing up for another barrage of quarterly results this week. joining us is sharaz neon. also the ceo and chief research advisor of cal research group. if i had to look back on what we've seen in earnings season, my thought is it's been disappointing when it comes to revenue. some of the top lines. >> that's true. i don't think it's as systemic as it was in the previous quarters. i think we have seen some decent top line growth with a lot of companies. it's not as broad based and as systemic as it was in the past with negative revenue. there have been some pockets of different strength. we're looking at 1.5% revenue growth and 1.5% earnings growth as of right now. that's pretty good. >> i'm thinking of big name companies, somebody like ibm who misses by a million. these are high companies like goldman sachs came out with better than expected earnings per share. that stock was down. coca-cola, volume growth was down. more deeply. >> that's true. google on the other side. you have -- i think it's been kind of split. if anything else, the revenue growth has been a little bit stronger than it has previous quarters. >> how would you quantify what we've seen and how would you quantify how the earnings season has gone? >> totally uninspiring in terms of not much growth was expected to begin with. expectations had sharply come down as the quarter evolves and it would be very easy for companies to jump through the significantly lower expectations. what we are seeing now, the companies are struggling with beating expectations. there are some pockets of strength, but in the aggregate what we see is that it's tracking to be more than what we have seen thus far from the same companies in the last quarter and the average for the last four. so overall it's turning out to be a weak earnings season. >> what are the pockets of strength that you both have talked about, sheraz? >> google is good. everybody is zeroing in on it. the investment side of ge bodes well for what we could potentially hear from others in the investment sector and there is some positive hope in the uptick in the pmi surveys, both here and globally, could potentially provide a tail wind for a group which has been hit harder in recent quarters. that categorizes it as a positive. overall the trend at least at this stage, withhich is to a la extent leading towards finance is uninspiring. >> we have a lot of names coming up, 140 on the s&p 500. a bunch. dow components. mcdonald's towing, boeing, caterpill caterpillar, dupont, all coming this week. >> much better earnings this week than last week. consumer spending up 6 to 8%. oil prices, in the past a few earnings seasons we've faced a lot of tailwinds in terms of -- a lot of headwinds. i think we'll face a lot of tailwinds. this week financials are setting a solid mood with goldman sachs, jpmorgan the earnings weren't as strong. this week you get stronger earnings. a few things to keep in mind, we're still expected to earn over $100 for the s&p for this year. another 10% expected next year. i think you look at earnings in context, they're not as strong as probably we've seen in previous earnings cycles but, you know, things are still starting to get a little bit better on the top and bottom line. >> thanks for coming in today. >> thanks for having me. coming up, shares of earnings giant sap. we'll talk to the company's co-ceo. other corporate news, hasbro is up better than expected. i love having a free checked bag with my united mileageplus explorer card. i've saved $75 in checked bag fees. 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does it end after you've expanded your business? after your company's gone public? and the capital's been invested? or when your company's bought another? is it over after you've given back? you never stop achieving. that's why, at barclays, our ambition is to always realize yours. at a ford dealer with a little q and a for fiona. tell me fiona, who's having a big tire event? your ford dealer. who ha maj to choose from? your ford dealer. who's 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. i'm beginning to sense a pattern. get up to $140 in mail-in rebates when you buy four select tires with the ford service credit card. where'd you get that sweater vest? your ford dealer. may, 2014. that's good. that's a huge company. not always american. will you be the first american to run the company? >> yes, i will. >> that's neat. >> thank you. . . . the world's fastest data base. >> an island in hawaii. >> just rocket fast and, joe, what's the big difference? it does transactions, analytics, machine to machine, mobile, social. so a ceo can take a complete realtime purview of how their company is running at any instant in any day. this is the bridge to the future that we built for our clients around the world. >> and you're moving away from fixed location hardware to the cloud? >> yes, and i actually need your help on this. >> i told you everything i know. >> here's why i need your help. the transition to the cloud is the move that we started making with the company in 2010. we are now the second largest cloud company in the world as measured by revenue. salesforce, because they were the one in the cloud first and that's all they do. but we do everything now, including running entire enterprises in the cloud. so when i see you say revenue has slowed and -- your editors have said that. i want to clarify a few things. >> they know more than i do. so your revenue's slow? >> no, our revenue's up 13% year-over-year. >> year-over-year. >> and what you see -- >> our cloud revenue grew 162% year-over-year. so we're taking the core, which will grow slower and we're transitioning the company to be thee, thee cloud company. when you think of s.a.p., you'll think big data leader, cloud market leader, global market leader and everything runs on a consistent core so companies can perform better. that's what we're doing. >> let's talk about just the environment for -- because s.a.p. is one thing but the environment you're operating in is another. how is it in this country? is this your most important market? >> well, this, you have to have the united states. we grew 17% year-over-year in the americas. >> what is that? revenue? >> that's revenue. 17% in the americas but, again, the transition in the americas to the cloud is unbelievable. third of our revenue now is coming from the cloud in the americas. three years ago, zero. >> how profitable is that? >> that's a good question. in the early years, people say clouds are less profitable. you don't recognize it all up front, you recognize it over three years intervals. if you have high renewal rates with cloud revenue, the margins actually accelerate beyond year three. >> and are you seeing that? >> yes. we're already seeing that. we're profitable in the cloud today, but three years from now, we'll be incredibly profitable in the cloud. europe, very interesting with europe. we grew 10% in europe year-over-year. as an example, oracle down five. >> we love throwing that in. the reason i bring it up is we are doing well even in southern europe, not just northern and compared to other large i.t. companies, we seem to be doing better than everyone. >> we've got to run, but your stock is going to have a big pop today. you close at 73, 75, it's going to trade up around 77.90 or so, it's going to be up four or five dollars. >> i want to say thank you. i want to say we have a great strategy, we put it in place in 2010 and it's now yielding all the dividends we've predicted. >> because of your leadership, i think. >> and my co-ceo and your great friend. >> anyway, bill mcdermott thank you for coming in. when we come back, two news making guest hosts, one runs a conglomerate with businesses in every part of the economy the other sends warning signals about the trouble in the world. we'll welcome jim tisch and marc faber. it's a growing trend in business: do more with less with less energy. hp is helping ups do just that. soon, the world's most intelligent servers, designed by hp, will give ups over twice the performance, using forty percent less energy. multiply that across over a thousand locations, and they'll provide the same benefit to the environment as over 60,000 trees. that's a trend we can all get behind. jpmorgan ready to pay. jamie dimon cutting a deal with the doj to settle probes into the mortgage business. the details and the street reaction. plus, marc faber and jim tisch, we'll talk about the debt ceiling and the impact on the u.s. economy and get their outlook on what's to come. and then we huddle up and talk the economics of the super bowl. jonathan tisch treasurer of the new york giants and former lineman sean o'hara as the second hour of "squawk box" begins right now. good morning, everybody. welcome to "squawk box" here on cnbc. i'm becky quick along with joe kernan, andrew is in hong kong this morning. we'll hear from him in a few minutes. the futures this morning have been indicated a little bit down at least for the dow and s&p. s&p futures off by close to three. the nasdaq up by one point. >> jpmorgan, close to a $13 billion settlement over financial crisis. that's just -- it's a big, big number. i don't care who you are. when it starts with a "b" and it's in the teens, it's amazing. tell us more. >> it's the kind of headline figure that we used to say at the "wall street journal" causes yo uh to choke on your cheerios, joe. the $13 billion that jpmorgan is preparing to possibly pay would tie up a number of loose ends for it legally. outstanding claims by the federal housing finance agency, the new york attorney general and perhaps most importantly the department of justice over mortgage securities packaged during the housing boom. it would also contribute about $4 billion to consumer relief efforts. just as notable is what the amount won't cover, namely the criminal aspect of the doj's ongoing case which reportedly involves a whistleblower cooperating with authorities who is familiar with the mortgage practices. also leaves out the federal deposit insurance corporation which at least as of friday was not involved in these settlement discussions. although anything could change as this thing gets put together. the settlement now being negotiated between jpmorgan and the attorney general has been -- has not yet been finalized, rather, and a few details remain to be seen, including what some of the nonfinancial language is. however, it could be a watershed for regulators who have never leveed such a large fine on a corporation. bp's $4.5 billion payment over the deepwater horizon disaster, for instance, was the doj's biggest penalty ever dwarfing a glaxosmithkline fine not long before. bank of america it should be noted paid about $8.5 billion to settle outstanding mortgage issues but that was not with regulators, joe, a group of private investors. >> yeah. it's amazing. and then -- bank of america, man, i mean it's -- what are we doing? it's a lot of money. i think we ought to, i don't know. we ought to be able to do something with all this. can we cut the deficit or something? or give the defense contractor some money? this is adding up isn't it? >> reporter: well, the doj money goes to the treasury, right? and we're having issues closing the budget gaps here. i did want to say something to your earlier point when we were talking around 6:00 in terms of whether jpmorgan is being punished for helping the financial situation in the 2008 crisis. we were out here in front of their headquarters and someone muttered, bear stearns did this to us. >> yeah. dick parsons was on last week and then he said some of this -- and i think he thought about it even more and wrote a big piece in the journal today about how this could change the future behavior. i hope we don't need, you know, the banks to help again with -- to take over for the government. if we do, they may not be ready to take on someone else's liability. >> they certainly wouldn't do it without the liability. >> one said it's like buying some property with environmental concerns. >> i don't think it's the same because if you're buying a property with environmental conditions that you know are there, it's one thing. and the government says please do this. so you will prevent the system from having major headaches. you do it over the course of 48 hours. >> what's interesting is -- >> your due diligence is very limited at that point. >> we haven't introduced you yet. it sounded like a voice in the wilderness. >> jim tisch is here, we have marc faber. very quickly in some of our other headlines, president obama's going to be addressing the glitches that have plagued efforts by consumers to try to sign up for health insurance under his signature health perform program. he'll do so in a white house statement. the government's going to begin to catch up on the economic numbers this week delayed by the recent shutdown. . we have the september employment report. that was the friday number we missed a few weeks ago. it will now be out tomorrow morning, of course, this is a back ward looking number. dow component mcdonald's among the companies set to issue company earnings this morning. we should be getting those numbers in an hour. mcdonald's is expected to earn $1.51 a share on a revenue of $3 billion. >> the economy, the markets, winning back the american people and in terms of the government and much more with our guest host. jim tisch the ceo of lowe's corporation. i can't see that tie well enough. but it's heartwarming that the jets win and did woody ask you to -- that's really -- i know your cousin and you have your moments -- but this is -- this is nice that you're doing that. aren't you a giants fan, still, though? >> i'm definitely a giants fan. >> look at you, though, because of the patriots. >> it's like it's christmas time here. we've got a little red going and green. >> all right. and also in studio, marc faber, publisher of the "gloom boom and doom report" joining us with their economic outlooks. jim, nobody has a better gauge on even, i think global economic activity because lowe's -- i've got to ask marc to start with. i asked our producers to go back. and i'm not sure of the month and date when we talked about -- we were in qe-1. and those were the good old days because when they did qe-1, they said it's going to be six months, this much per month and then it's going to be done. and we talked to you about it and you said there would be a qe-13, requeqe-14. >> i said it would go to qe-99. >> and this was like two years ago and then by the time qe-3 came it was qe-infinity because they didn't put a time limit on it and you were absolutely right. >> look, every government program that is introduced under urgency -- >> never goes away. >> and temporary measure is always permanent. and in my view, the fed has boxed themselves into position where there's no exit strategy. the question is not tapering, the question is at what point will they increase the asset purchases to say 150, 200, $1 trillion a month. that is the question. >> at some point, the market's going to react. >> yeah, of course. jamie's right, the market has already reacted. at the press conference in september 2012, mr. bernanke said the objective of qe-3 which turned into qe-4 was to lower interest rates. but what has happened the bond yield on the ten-year touched a low. july 25th, 2012, in other words, more than 12 months ago at 1.43%. we went to over 3%. now interest rates are easing again. i think we may drop on the ten years to 2.2%, 2.3%. we're not going to see new lows in my view unless we have a depression. >> but what would -- and jim, you can address this. because, mark, you say some things from time to time that are incendiary. and it's great for us. i like it. i like when you say $1 trillion a month. just the idea of that. i'm not sure that will happen. that would mean this economy is in really bad shape that they would have to increase it that much. and that -- what they're trying to orchestrate in the unemployment numbers and everything else that they'd be ineffective in trying to bring down unemployment. >> in my view, he said ben bernanke is his hero because he stepped in definitely with very strong measures, with qe-1 in 2008, 2009, in the early stages of the crisis. okay. i can accept that view. but to have qe at the present time, i think is counterproductive. and they are statistics that actually show that the qe doesn't flow to ordinary people, it flows essentially to a very limited number of people. >> but they would say -- >> would you agree with that? >> no, i think that's totally -- >> but inflation has not been a problem. why not do it if inflation isn't a problem and the economy -- too many people are still looking for a job if there's no negative effects we can see yet, you say there will be negative effects. >> one will be taking off quantitative easing. the fed balance sheet has gone from under $1 billion in '08 to almost $1 trillion in '08 to $4 trillion now. >> it could be taken back in, right? >> no, but when they take it -- the quantitative easing is wind at the back of the economy. but when they unwind the quantitative easing, which they will ultimately have to do, it will be wind in the face of the economy. and then it won't be so much fun. >> yes. and by the way, when you said $1 trillion a month is impossible, i want to tell you something. i started to work on wall street in 1970. the total global stock market capitalization, all the stocks in the world was $740 billion u.s., less than 1 trillion. the total capitalization was $780 billion u.s. a big bond issue in those days was $50 million u.s. that was a big bond issue. $75 billion was a huge issue, new issue. you remember. nowadays, $1 billion here, $1 billion there is nothing. you know, we're talking about big numbers today and if this continues explosion of money and you say there hasn't been any inflation in here, in this room, we are the inflation. we are the bubble. we have a colossal asset bubble in the world. leverage, government, debt bubble. just consider. the government spends every year in this country $3.7 trillion. $3.7 trillion. these are huge numbers and people say there hasn't been any inflation. >> all right. >> the other thing going on with qe, back in the 70s, we were worried about crowding out wh e where -- >> right. >> the government bond market was enjoying to crowd out all other investment. well, today all that public money is going every place other than the government bond market. that's what's helping to drive up equity prices and what's driving down interest rates. >> and hurting savings. >> that's right. >> how is just -- with all your varied businesses at lowe's, you would give the economy a -- >> i was going to give it a "b" minus, but i'll give it a six or seven. it's okay. >> but your oil stuff -- that's going gang busters, does that make up for some of the weaker areas? >> insurance is doing very well. the hotel business is not too bad. >> not too bad. >> no, no. >> the rig is great. >> but you have to understand, it's not lowe's. it's good management of lowe's. it's above the average of the economy. an old friend of mine, i can joke with you. >> yeah. that's right. this side of the business. how's your cousin doing? >> he's doing great. >> but he's a giants fan and not a jets fan like you. >> well, we'll see if he's wearing a blue tie today. tonight might be the night. i felt that yesterday about the redskins. about washington. i thought that might be and they did beat the bears. anyway, we'll be back with these gentlemen in a second. think of some crazy, i love when you're on. >> i love to be here. and i would prefer if it was in the evening and not so early in the morning. normally i get up in the afternoon. >> i know you do. let's talk off camera. we're counting down -- you live in thailand half the time. >> yes, not half the time but when i'm not traveling, i'm in thailand or vietnam. we have to talk about vietnam. >> we are counting down to our big interview with charlie evans, the chicago fed president, the economic impact of the shutdown all the way to janet yellen taking the fed chair. and still to come, a big weekend around the nfl. the bengals taking control in the afc north and andrew luck stealing the show from peyton manning. the business of the nfl with sean o'hara and giants' treasurer jonathan tisch. welcome back, everybody, take a look at the futures this morning. we've seen things under pressure, not by a whole lot. dow futures down by about 14 points. the maker of brands like north face and wrangler earn $3.91 a share for the third quarter. also approved a stock split and 21% increase. we're watching tellabs today. and just announced $891 million deal. that's $2.45 a share. >> do you know richard parsons' middle name? >> what does it start with? >> "d." >> this is j. parsons. >> that's not dick parsons? that's interesting because he said similar things. >> i know. this guy richard j. parsons is a former bank of america executive vice president. the author of "broke." >> but dick parsons. >> richard dean parsons. >> our dick parsons said some similar things last week. >> it's funny, yeah. >> all right, andrew in hong kong today for the first "new york times" book conference there. he joins us with highlights. great to see you this morning. >> hey, becky, i miss you over there. a couple take aways, given conversations i've been having around town here in hong kong. the first is for all the conversations we've been having around the table recently about our standing, the u.s. standing in the world, the treasury and whether people will be buy treasuries and whether they trust us and whether the circus in washington has had any impact. oddly enough or maybe not so oddly, it seems, actually, people in hong kong here, the financial professionals actually look at what happened in washington and don't think much of it which may come as a surprise. at least a surprise to me. that was a big issue here and i asked everybody and nobody seemed to bat an eyelash. the other big issue this morning, jpmorgan chase, the $13 billion settlement. one issue important in china, is the ongoing investigation by the sec into whether jpmorgan has hired the sons and daughters of politicians to gain business. everybody here seems to think it happens a lot and maybe even more than you think. but they all think it's not a problem. wade christianson the ceo of morgan stanley china and here's what she had to say about it. >> first of all, the kids have to be confident. they have to have the right background, the right skill sets to be hired. second, the process has to be followed. and it has to be transparent process. a lot of people have to interview them. there has to be a majority vote. and third, you cannot do anything specifically different and special for these kids. if you follow these rules and i think you're fine. >> when i come back in the 8:00 hour, i'm going to bring you comments from hank greenberg who had some very interesting words about the jpmorgan/jamie dimon situation. this, guys, is an ad in the international herald tribune for "squawk box" asia. there's me and bernie lowe. and i will be hosting the show tomorrow morning right here from hong kong. so we're going to transplant for the day. apparently i'm told, there's -- i'm told there's posters and other things, someone said they saw a picture like this in the airport. i haven't seen it yet. i'm going to go take a look. back to you guys. >> is it in hong kong? where does "squawk box" asia? we should know this. i haven't been over. >> it's it's in hong kong. and i'm going to do it with bernie lowe and do a couple hits during "squawk" and i'm going to be on their version of "the call" a little bit later with bernie, as well. >> do you find that to be? could you move there? is it a livable city? are you -- this is -- >> you know, keep my seat warm but not too warm, i'm coming back. i like it here. i also you know me. i'm a new yorker. >> i know you. >> we had a great time here. >> and you got -- let's see, "new york times," international "new york times," deal book, "new york times," international, you've got -- where's too big to fail? maybe you could just hold the book up while you're -- >> well, no, and we can't -- we can't show you. i'm told it'll pixulate, but there are cnbc signs. they've been broadcasting this. >> all right. you're with cnbc. and we're proud. we're -- you know. >> he's ours. >> we're very proud. anyway, i'll see you in the next hour. coming up, dimon's deal with the doj and street reaction and find out what it means for jpmorgan. and check this out. it's the huddle shuttle. the super bowl committee recently kicking off a mobile tour in a new york, new jersey area. jonathan tisch will tell us. it's in new jersey, i'm sorry. it's the new jersey super bowl. i'm sorry. time now for today's aflac trivia question. what does the word groke mean? the answer when cnbc "squawk box" continues. o run your lines? okay, who helps you focus on your recovery? yo, yo, yo. aflac. wow. [ under his breath ] that was horrible. pays you cash when you're sick or hurt? [ japanese accent ] aflac. love it. [ under his breath ] hate it. helps you focus on getting back to normal? [ as a southern belle ] aflac. [ as a cowboy ] aflac. [ sassily ] aflac. uh huh. [ under his breath ] i am so fired. you're on in 5, duck. [ male announcer ] when you're sick or hurt, aflac pays you cash. find out more at aflac.com. with my united mileageplus explorer card. i've 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 doesn't 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. ♪ now the answer to today's aflac trivia question. what does the word groke mean? the answer, to stare at somebody while he's eating in the hope he'll give you some of his food. okay. up next, jpmorgan close to a deal with the government to settle probes into its mortgage business. we'll find out what it means for shareholders. and then we add another tisch to the mix, jonathan will join us along with super bowl champ and pro bowler shone o'hara. we'll talk business conditions and football. "squawk box" will be right back. at a ford dealer with a little q and a for fiona. tell me fiona, who's having a big tire event? your ford dealer. who has 11 major brands to choose from? your ford dealer. who's 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. i'm beginning to sense a pattern. get up to $140 in mail-in rebates when you buy four select tires with the ford service credit card. where'd you get that sweater vest? your ford dealer. welcome back, everybody. take a look at futures. dow futures down by about 14 points. in our headlines this morning, at&t is on the rise in the premarket trading, up about $5 billion by selling or leasing. it's raising nearly $5 billion by selling or leasing 9,700 wireless towers. upbeat on the economy but not so much unemployment. that's how economists surveyed by the national association of business economics are feeling these days. they say there's a good chance of rising economic growth in 2014. but only 37% expect to see more jobs at their companies that is down from 39% in the prior year. gasoline prices down 2 cents over the past few weeks. this is the average price now at $3.36 a gallon. the cheapest gasoline found in albuquerque, new mexico at $3.03, the most expensive in san francisco at $3.81 a gallon. oil now below $100. wti. >> wti broke $100 for the first time since july. >> that's pretty amazing. thatst going to be one of the tail winds that other companies see when it comes to earnings. but with the crude oil prices coming down so quickly, that's a stunner. >> well the question is how far down does it go? my guess is it won't go much below 85 because production starts to dry up. it costs that much to find that next barrel of oil. >> okay. >> i don't know what that says about the global economy. sounds like we need more qe, doesn't it? >> more. >> it also means we're finding more oil. >> yeah. >> this is jpmorgan, they've been inching ever closer to reaching a record $13 billion settlement with the fha. joining us more to talk about it is eric robinson. and we've been trying to figure out, what does this mean? should they sell at this point? is it too late? what happens? >> i actually think that a settlement when it's finalized to understand the parameters and the terms could be a cathartic event for the stock. >> even if the criminal probe is not finished up at this point? they still have the option of taking a look at any criminal charges. >> yeah, well, i think that's why it's important to understand what's covered, what's not covered and what remains outstanding. >> right near a high, right? it's $2 off a high. and that's a high -- is that an all-time high? i didn't go back far enough to see. pretty close. >> it's pretty close. but also, this is a company with tremendous earnings power. when you backed out the charge, this was a company that earned north of $1.40 in the quarter, heading towards $6. in an environment that isn't strong. i think there's a disconnect here between the underlying fundamentals which we see are reasonably good given all the challenges in the world today in qe and all the other issues. and this litigation issue which clearly is the major overhang which not only compressing the earnings, but also the multiple. >> but the risk isn't reflected in the stock. is there any reputational risk to jpmorgan and jamie dimon? >> it's trading at a major discount to its peers. >> where do you think it would be without this overhang? >> well it's about a two hch point discount, that kind of tells you to trade that level of a discount. it mean, the market's kind of telling you what they're taking a point or two off for that. >> and what do you think the scale of the cost of some sort of criminal element could be? >> i'd hesitate to speculate. again, without knowing the parameters of what's left out there. we know very little of what's being investigated. >> you're not sure. you have to get the details before you decide this is something that clears up the issues for you with jpmorgan? >> yeah, i think the market's focused on two things. one is obviously the dollar cost. six weeks ago we were talking about $4 billion, and two weeks ago, $11 billion, this morning we're talking about $13 billion. that seems relatively well bounded by the $23 billion of litigation reserve they disclosed. >> what's the criminal activity we're talking about. the two bear stearns guys -- was that the most glaring possible criminal case that's already been brought? and what else is there? what are we talking about? >> yeah, i mean, i wish i knew. i'd have a better answer for you. i think the other issue the market's focused on is what is left out of this agreement. and to the extent we know very little about what that is, it's hard to speculate. >> they tried to get the bear stearns -- remember, the mortgage guys, that was the most glaring thing. they were unable to make that stick. >> yeah, i think -- >> why are people worrying about a criminal case there's nothing there? >> i don't know if there is or isn't. >> you don't know what area their business? >> no, all we know from their disclosure, it's outstanding, being run by the, you know, the sacramento -- the attorney general in sacramento. i think the issue is, you know, what -- what remains unresolved and what time frame can it be resolved? >> what about other major banks? should we worry they'll be the next one the government turns its sight on. we're hearing the fha wants $6 billion from bank of america, do you have issues or concerns about any of the other big banks? >> clearly the industry is at some stage or another with settlement on some authorities. either as a consequence or as a consequence of their mortgage banking activities. >> should investors feel comfortable buying these stocks or not? >> we're broadly pretty neutral on this space because it looks fairly fully valued. but there are certain names where we think they're undervalued and that's where we would concentrate. >> how would these settlements affect the requirements. >> the good news it's massively overcapitalized by a standard to the extent that's still being sort of an evolving standard. it's less of a capital issue. it's much more of an earnings issue because of the continued payouts as we saw with jpmorgan. 9 billion took them down to about zero earnings but didn't affect the capital position. >> eric, thanks for coming in today. >> thanks. coming up, two men who know a thing or two about super bowls, shaun o'hara and jonathan tisch. the markets are waiting to hear from the fed. well, wait no longer. wow. fiery and outspoken chicago fed president charlie evans will join us. i mean, all the fed guys are wild and crazy. these guys really wild and crazy. 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[ female announcer ] today, cisco is connecting the internet of everything. so everyone goes home happy. checking the futures this morning, we've seen that, yeah, things are barely budging this morning. dow futures down by ten, nasdaq up by 4 1/2. >> the government shutdown extracted a steep price from industries like travel and leisure, an estimated $152 million. here now is jonathan tisch, co-chair and chairman of lowe's hotels, also the chairman of this year's super bowl committee and the treasurer of the new york giants. also with us is shaun o'hara, former lineman and an analyst at nfl network. you never met vladimir putin because you still have your super bowl ring. >> i do. i do. you're going to have to pry this from my kung fu grip. >> can i see it? >> no. your reputation proceeds you. >> i know. jonathan, thanks for coming in. >> thanks, joe. >> one little correction on your numbers. >> yeah. >> that was $152 million a day. >> okay. >> $2.2 billion during the shutdown. >> that doesn't help anyone. and tonight i'm hopeful. >> we're all hopeful. we are 0-6, it has not been a great start. but the team is very focused. the players are upbeat, great coaching staff. he worked for coach. >> you know what's going on. and some people don't like what you say you've been a little bit outspoken. is it -- eli's a great quarterback. is it the line? what's the real? >> i mean, of course it's ease is sy -- >> have they called you? >> i'm not going to say that. i'm not going to say that. you know, it's really just the ultimate example of how tough it is to win football games in this league. and we've all seen that, you know, they make mistakes, you know, and it's easy to say it's on eli. but i look at the defense too. the jets have a rookie quarterback and he's throwing interceptions and they're finding ways to win games. it's a collective effort. it's never all on one guy. it's a team concept and you mentioned tom, he's one of the best coaches to coach the game. it's very frustrating, i know for myself as a former player, even more so to see this type of performance. but i think tonight, i think they turn the season around and get that first "w" against a team that's starting a quarterback in josh freeman. >> and your jersey -- >> i'm a jersey guy, yeah. >> everything, new york -- it's a little irritating, isn't it? they hate jersey all the time, make fun of it, but newark airport, oh, that's a new york area airport. the super bowl this year, it's going to be in the new york area. it's in new jersey, is it not? >> yeah, it's in new jersey. i'm shocked you were able to get john to come across -- >> i know. both of these guys. both of these guys. >> both of us were born in new jersey. >> he breaks out in a rash every time -- >> no. no. governor christie has been great, governor cuomo, mayor bloomberg. >> what have they got to do with anything? i just said this. >> played in new jersey. the practices will be in new jersey but the hotels, the restaurants. >> the meadowlands, the game is being played in new jersey this year. you're doing it again. >> i'm not doing it again because we're the people -- they're going to stay everywhere. >> all right. i don't know where i am. >> the thing you're confusing is the fact there's a super bowl game but then the super bowl week. and i think that's really the biggest part of the super bowl. everything leading up to the game. i mean, for the players, you're so focused on. you don't realize what's going on but for the fans and the teams coming out of state and coming in. they want to come to a great hotel. >> there are more of them in new york city. >> is there -- is there a lowe's in new york? that's right. i forgot about that. >> january 16th, the lowe's r e regency hotel. >> the huddle shuttle, that's one of the innovations the host committee came up with this year. it's going to travel to both states. this is a chance for the young people for fans of all ages to really engage with the game. the day of the game only 82,500 people are going to be able to sit there in metlife stadium and watch. here they have a chance to look at the super bowl trophy, look at eli's locker room, do some drills and they're really engaging in our huddle shuttle. it has been very well received. >> i want to ask you about what happened with the government shutdown. you quoted those numbers, $152 million a day that ate into tourism and leisure. did that come back immediate lip when the government reopens? or is that going to take time? >> it's going to take some time because people are rescheduling their trips. the people that got hurt are the mom and pops who are operating hotels and restaurants outside our nation's parks. they're the ones who took a big hit. also, there was some international press that hurt us. people internationally put off trips and that international traveler is so important for us. they stay longer, they spend more money. it is going to take some time for them to say, okay, the government is working now, my trip can take place as i plan. it's going to take a little while to rebuild that. >> particularly when you have the deadlines pushed off to january and february. do you think it'll come to the same sort of fed or are you convinced that washington will -- >> i'm not convinced about anything in washington. but for us to go through this again in two or three months is going to be a problem for our industry. our industry created jobs faster than any other segment since 2010. and we still have the ability to do that and that's why the international traveler is so important. we have to make sure they know government has reopened they can take their trip. >> you want to weigh in on that too. >> it's not just the hotel industry that's affected by the government shutdown. it's all industry. it's our business confidence and consumer confidence. it's a sense of not knowing what direction the government's going in what taxes are going to be, what's spending going to be. creates tremendous uncertainty. puts a big head wind to the economy. and i hope that they -- the politicians on both sides of the aisle decide to go with statesmanship rather than partisanship because that's the thing i really think is going to help us get out of this mess we're in. >> do you expect, either one of you that there's a big deal that will take place? the "wall street journal" points o out that the president could have trouble with the progressive wing of his party that they don't want to see anything done to social security or any of the other entitlements. >> there's absolutely no reason to think there's going to be a grand bargain. it's been talked about for the past several years. it's never happened. i'd just be happy with a small bargain. something to get us through the next year. and then once confidence is built up among the sides, once the rhetoric comes down, then maybe they can sit in a room not on the stage but in a room and negotiate rather than giving speeches to their bases. >> jonathan, you're the treasurer. and you -- you were right about the $150 million. do you know like actual numbers about gambling and how much is done on the super bowl? >> i do not know that. the number that we use is about $500 million to $600 million. >> that's just for -- you're not talking gambling? >> no, i'm not talking about gambling. that's not my area of expertise. we don't use that word. >> i wonder per week, i wonder how much is legit in vegas and atlantic city and other places. i wonder how much is done with -- >> you're going to have to do your own research on that. i cannot help you. >> which would be another, you know, from what i hear about jersey, pretty good place for gambling too. you know what i'm saying. >> i do not. >> you do not. >> you're speaking gibberish right now. >> i'm speaking gibberish. >> can you -- well, you're a jets fan. do you -- you've had something to bet on this year anyway. >> i was going to say, is it gambling or betting? >> is it gambling or betting? depends on whether you're calling, you know, your bookie or placing a legal bet. i think denver is the favorite. >> denver lost yesterday. >> i know they did. >> i'll take the colts. you want to bet? >> i'm a bengals fan. i will bet against the bengals winning the super bowl, i've been a fan for long enough -- i'm not crazy at this point. anyway, gentlemen. >> all right. good. >> are you crazy? >> let me see that. that is cool. thank you very much. wow. and they're all different -- >> i'm faster than i look. >> you are. i don't think you could take it back from me anyway, to be honest with you. >> commercial break. >> oh, yeah, there it is. >> he's really a giants fan. >> yeah. that's right. all right. guys, thanks, appreciate. what's wrong with the lowe's new jersey? there is land out there. >> we had one at one time. >> you did? >> yes, your family comes, the first business was in new jersey. >> that's where we started. >> started out in the pines. >> where's the attitude now? >> what do you mean? >> no, i'm kidding. >> thank you, and jim, you'll be here for another 20 minutes or so -- ten minutes. when we come back, we'll talk about marc faber's next big prediction. his final thoughts and we'll hear from jim tisch one last time. at the top of the hour, charlie evans joining steve liesman. check out oil this morning as jim was talking about earlier. back below $100, $99.74 for wti. we'll have more on what's moving this and more when "squawk box" comes right back. opportunities aren't always obvious. sometimes they just drop in. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group: how the world advances. joining us right now for the last word is jim tisch the ceo of lowe's corporation, also marc faber. and jim, we have not talked enough about your business and what you see. we've talked about the broad story. but with oil prices coming back down, what does that mean for the oil parts of your business? >> for the energy parts of the business, i don't think it means too much just yet. oil's been hanging between $100 and $110 a barrel for the past three months. i'm not concerned it's going to go down to 50. >> is it coming down because of economic activity and concerns around it? >> no, i think it's actually coming down because we're so successful in generating new supply. so it's not demand as much as it is additional supply coming on the market. >> but when we were off camera before, you said it's what $85 a barrel and that's when the production here in north amer a america. >> $85 a barrel, you'll see drilling start to dry up quickly. >> can i ask faber one more thing? do you think the wealthy people in the world will eventually lose 50% of their wealth? >> yes, the question is from what level. you know, do you have $1 billion maybe goes first, $2 billion or $3 billion. >> what you have today you will not necessarily lose half of? >> i think it's not likely but from a higher level. but you understand. >> what's your basic reason? >> you said earlier there is no inflation. inflation can be consumer prices, it can be in commodities, it can be in wages. it can also be in assets and we are in a gigantic asset bubble around the world with prices of real estate having risen a lot. i do not deny some property prices have come down in the u.s. we have a decline in 2007, since then we also have a recovery. in the hamptons, in london, hong kong, singapore, and we have a high inflation overseas so i think that one day this asset inflation will lead to deflationary collapse one way or the other. we don't know yet what will cause it. in 2007 that in spite of their easy monetary policies property prices in some areas would fall by 50%. it's like jamie said, oil has been down. i say oil is down maybe because in my view there is at the present time in emerging economies practically no growth. the growth has slowed down to trickle. and some sectors like tourism and asia is still growing rapidly. but other sectors are not growing. so if you go to hong kong where andrew is, he sees essentially a boon town but it's not growing, it's at the high level of economic activity. same in singapore, you look at global exports they're flat. so i think the demand for oil is weakening. >> we've got 30 seconds. you can't give us the time frame or how high we will be when this happens? >> i don't know. >> within -- was it within five years? >> look, i can show you statistics from the federal reserve, the bottom 50% of the population in terms of wells. they have lost 44% between 2007 and today. this is the bottom 50%. if you think that high end will never lose anything. >> are you listening, jim? >> high end. >> this is all the result of quantitative easing. the fed wanted to get the stock markets going. that's what qe-1, 2, and 3 are all about. move people out the risk curve and so far it's worked. >> all right. we've got charlie evans coming up who will talk to steve liesman about it. next time you're in, you come to jersey, you know, this horrible place we heard about again. cnbc exclusive coming up. steve liesman joining us with charlie evans, taper, government shutdown and the economic. optios really appreciate our powerful, easy-to-use platform. no, thank you. we know you're 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 1-888-280-0149 now. optionsxpress by charles schwab. call 1-888-280-0149 now. they're the days to take care of business.. when possibilities become reality. with centurylink as your trusted partner, our visionary cloud infrastructure and global broadband network free you to focus on what matters. with custom communications solutions and responsive, dedicated support, we constantly evolve to meet your needs. every day of the week. centurylink® your link to what's next. at a ford dealer with a little q and a for fiona. tell me fiona, who's having a big tire event? your ford dealer. who has 11 major brands to choose from? your ford dealer. who's 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. i'm beginning to sense a pattern. get up to $140 in mail-in rebates when you buy four select tires with the ford service credit card. where'd you get that sweater vest? your ford dealer. outspoken fed president charlie evans joins us on a cnbc exclusive. timing for the taper, economic head winds. jpmorgan putting $15 billion on the table to settle some of the government's investigations. we'll tell you what it'll mean for jpmorgan shareholders. and mcdonald's out with quarterly results. the third hour of "squawk box" begins right now. welcome back to "squawk box" here on cnbc first in business worldwide. andrew ross sorkin is in hong kong. he'll join us a bit later. mcdonald's is reporting. >> came out with earnings of $1.52. revenue right in line at $7.3 billion. the company also said it's increasing its dividend of 5% to 81 cents for the quarter. if you look at what they expect for numbers coming out, they do say that they expect the current environment to persist. the dynamics of the current environment, it hasn't been a great one. they say the company is looking for global comp sales in line with recent quarterly trends with restaurant margin percentages expecting to decline at a level relatively similar to the first quarter. they say global comp sales for the month of october are expected to be relatively flat. now, that may be why the stock has traded down a little bit. it's down by about almost 1% on some of this news. >> yep. >> even though earnings beat by a penny. >> kind of in the middle of the range, 83 on the low, 104 on the high end. if you look just at the last two years or so, it's right in the middle. seen kind of mixed results. >> they've been in asia pacific and middle east and africa. some of the challenges reflected weakness in china, japan and australia again in part to what they're blaming on an ongoing challenging environment. jpmorgan reaching a tentative $13 billion deal with the justice department and other government agencies. this will settle investigations into bad mortgage loans that the bank sold to investors before the financial crisis. the deal will not release the bank from any potential criminal liability. we'll talk more about the jpmorgan settlement at 8:30 with an analyst that covers the stock. in other banking news, u.s. housing regulators are looking to fine bank of america more than $6 billion for its role in misleading agencies during the housing boom. the fhfa is pursuing claims on behalf of the finance agencies freddie mac and fannie mae. let's get a check on the markets this morning, again, the u.s. equity futures are indicated down a little bit. down a little bit by 16 points. mcdonald's is a dow component. if you're reflecting overseas in asia, you can see how the market's closed there. a little bit higher across the board, shanghai up by 1.6%. nikkei by almost 1.6%. a little bit of weakness in france and germany and the ftse relatively flat. if you take a look at oil prices this morning, wti dipping below $100 for the first time since july 2nd. right now, 99.79. all right. let's get to steve liesman in chicago. he joins us with a special guest. good morning, steve. >> hey, joe. how are you? joining me is chicago fed president charlie evans. charlie, a lot of questions to get to. let's start right away. >> all right. >> you were quoted last week saying october was going to be almost impossible for the federal reserve to taper. is december possible? >> well, sure. i said we would look at each meeting at what the data are and what the circumstances are. given that in september we thought that it was much too close a call. we needed to see evidence of more sustainability of improvements in the labor market. and we haven't had a lot of data since that meeting because they stopped publishing data during the government shutdown. so october's a tough one, december. i think we need a couple of good labor reports and evidence of increasing growth, gdp growth and it's probably going to take a few months to sort that one out. >> one of three reasons you gave in september for not tapering was concern about fiscal restraint. a three month on the debt ceiling. how can you feel comfortable in december that you won't have another bout of fiscal restraint come january and february. it's difficult to feel confident. given we're going to repeat part of what just took place in washington. there's a lot of fiscal drama which caught everybody's attention, business people that i talked to or, you know, still concerned about how things are going to play out. so december will be pretty tough. and we could, you know, in fact, get more restrictiveness. we've seen the government lop off over a percentage point from growth this year by many estimates. and over the last couple of years, it's been virtually impossible for the private sector to just plow through that in terms of accelerating gdp growth. >> what's your assessment of the recent impact of the recent shutdown and debt ceiling debate had on economic growth. >> i don't have a great estimate. i've seen a lot of assessments by people and it ranges from a couple of tenths to something more like .5. we're just going to have to see, we need the data to start coming out. >> why is there a disconnect between the federal reserve and congress right now? the federal reserve seems to be saying done cut deficit and resolve these issues of uncertainty and congress keeps doing the opposite? >> i don't know, we're looking at the state of the economy and our inflationary pressures. that's what we're focusing on financial stability risk is all. as much accommodation as we have in place is going to be helpful for overcoming these head winds that every second half of the year, every few years we seem to be running is into. congress and the president are focusing on something else. we're doing our best to keep things moving quickly. >> how would you feel about the possibility of more deficit reduction in january and february? >> well, you know, i agree with a lot of analysts, the chairman has said this before. we need to address our fiscal challenges over the medium and long-term. absolutely, but we also need better growth right now. fiscal stimulus done smartly that could add to growth. if you go back to the early '80s. in the early '80s we saw a big downturn and we saw it ramp back up. we saw it close the resource gaps within a couple of years. current period's very different. why is that? well, government spending at that time was adding two percentage points to growth at a time the economy needed it whereas now it's subtracting one to 1.5% this year and it's been bad before. the other reason is that the fed at that time could lower interest rates until it knew the economy was back on track. >> could you see the federal reserve doing more quantitative easing in the face of more deficit reduction. >> i think we're going to have to go into every meeting and look at the landscape. i would like to believe that the outlook for the economy is stronger than what you're currently suggesting. the chairman in june pointed out the fomc's outlook was somewhat better than other people had been mentioning. second half of the year would be better than the first half and then next year would be an acceleration. we thought that was possible. and the chairman pointed to if this outlook comes about, we need to begin to reduce our flow purchases. you know, if we saw a different kind of outlook or if inflation started turning down, we'd have to ask ourselves whether or not we could add more accommodation. i favor putting in place as much accommodation as we need. >> would you like to do more right now? >> i think we need to get other factors in the economy that are slowing things up to be quieter, to let the business community focus on what they do best. everybody is primed to take advantage of the opportunities that are in front of them. businesses have good balance sheets, they've refinanced households have been making a lot of progress. there's more hiring, more capacity. we need more customers walking through the door and anybody who can aid that by just calming down and getting things back on track, that would be the most helpful. >> in the fed is going to begin tapering later, it already has later than had been essentially forecast in june. does that mean it will end later? the forecast or the con censs c seems to be a summertime ending to the tapering. is that possible? >> i know everybody would like a nice time frame. >> well, not everybody, just me. >> you're not the only one. >> and i think the chairman has been very clear and saying it's going to depend on the data. it's going to take longer, clearly, given the fiscal drama in washington, the already slight weakness that we were seeing relative to our outlook. so we could begin to reduce our flow purchase rate, you know, later, several meetings in the future, couple meetings, not sure. if things really started to take off. if various actors in the economy stepped back and let the business community really take hold and consumers too, we could see a big expansion in growth and then we could pull back that much more quickly, delayed at the beginning, but then we could do it faster at the end. i don't know what it's going to be because i have to see the data. >> i have one more question for you. which is i want the answer now. is there any practical limit to the size of the fed's balance sheet? hold on, we're going to answer that on the other side of the break. >> all right, steve, thank you. we will take that break and we'll be back with much more from the chicago fed president. >> you've got your first question. >> i do. >> steve already asked it. >> he'll ask that question too. we have some other questions for him. we'll take a look at the shares of mcdonald's. we'll bring you the september same store sales right after the break. welcome back to "squawk box," futures right now, have been flat lining the day. it was the fair value being up 17, which has us down, the futures only up three. tomorrow is jobs friday even though it's tuesday. >> does the number matter this time? it's an old number. >> i think it does. before the government shutdown. the state of, we never got that number. after -- it was a crappy number before that and we were already worried about the slowdown. >> that's what charlie evans was talking about. the weakness. >> and the fed is supposedly -- the fed needs that -- and we all need it to gauge how the economy's doing. >> this is the last jobs number. >> zandi was the most popular girl in town. >> yeah. >> that's a sick thought. anyway. we are watching the shares of mcdonald's. we mentioned the third quarter earnings beat the street by a penny. we're also getting september same store sales. the street was looking for an increase of 1.2%. sales in the u.s., europe and asia, pacific, mideast and africa. all missed the mark. we'll talk to an analyst about that in a couple of minutes. >> let's get back to steve liesman and charlie evans. president evans, thank you for your time this morning. we were just talking about that friday jobs number that we'll be getting tomorrow morning. and you had said that the fed really needs more data. it's going to need more time to look at the unemployment picture, the employment picture. when you say it's data depending, can you run us through two or three of the most important numbers you're watching. i think the labor report is important. payrolls, we need to see numbers getting up to 200,000. that'd be very important. we need to see the unemployment rate continue to improve. we need to see it improve because more people are actually turning up to look for work. i think the labor force dynamics have been a bit unpleasant suggesting continued weakness. we need to see improvement there. we need stronger growth and, frankly, i think we need better consumer spending. one thing that's been discouraging is that outside of durables consumption, consumption growth has been weaker. and that is sometimes a harbinger. i'd like to see better consumer prospects there. >> and steve, i know you had a question you asked before break too. you want to reiterate that? does the fed have a limit to its balance sheet? >> yeah. charlie, is there a limit? you're headed towards $4 trillion. could it be $5 trillion, could it be $12 trillion? what limits the size of the fed's balance sheet? and do you start to panic about the possibility of inflation? >> well, i think the fed needs to do whatever is necessary to help meet our dual mandate objections. so if for some reason we thought we needed greater expansion because inflation was moving down. i think if inflation moved down and down around zero, that would be most distressing. i think if the economy turned the other way and it was very weak, that would also be distressing and we might need to do more in terms of asset purchases. is there a limit? i don't really think about it that way. i think there's a tremendous amount of capacity. we could go on as long as necessary especially if we were in a period of falling inflation. look, i'm not looking for that to happen. i think the economy's going to do better, especially once, you know, a number of these head winds step down and stop causing trouble. but you know, if we had to, we could do that. i think we haven't placed the forward guidance on short-term interest rates that is capable of adding an awful lot of accommodation during those periods where things might be turning down because people would have confidence we're not going to step back prematurely. that's our number one risk, people think we're going to step back and somehow add restrictiveness to the economy at all the wrong times. we've already seen that from other people. we don't need that. >> back at global headquarters. >> yeah, that's where i am, steve, you're right. i love that. i love the global headquarters. you guys probably didn't have ifps in for marc faber. and the name of his report is the boom gloom and doom. and he says crazy stuff sometimes, incendiary. i don't know i'd say crazy, some of has come true. he thinks it's going to go on for a while because he doesn't think there's any growth in emerging markets and we're going to knee h neneed it. in his view, there's an asset bubble from qe that eventually have to be dealt with that will only get bigger from here on out. since people are buying bonds necessarily because of the yield they've moved out on the risk curve further than they should have and at that point, it's inflated and only going to get bigger from here with a day of reckoning some day. does the wealth effect, the positive wealth effect we see, t does that offset this he's talking about? >> well, we look carefully at the concerns you just expressed. we're constantly thinking about whether or not our policies or any other events are causing risks of financial instability. i think that, you know, the run-up in the stock market is explainable by the fact that, you know, corporations have been doing pretty well. they've been doing well on the basis of bottom line, you know, improvements not so much top line. we need more top line revenue growth. we need more customers walking through the door. i think that, you know, you can always look at stocks and ask whether or not they're overvalued or undervalued and an awful lot of people who think they're undervalued. we just sort of look at what we're trying to do with quantitative easing and our forward guidance is to provide low financing costs for everyone so they can go out and make some investments, buy some durable goods, get things kick started because i think good things are going to happen once that takes place. but we look at financial instability risk, look at all kinds of data on markets and products and at the moment, i don't have a lot of concerns in tharea. >> charlie, we just had an analyst on "squawk box" and he goes by the name of richard effen bernstein, that's his nickname. he says we're in a classic mid cycle here. i started thinking about that and started thinking, you guys have promised to stay low look at the fed forecast 2015, maybe even 2016 and even when you begin raising rates, it's a long way to a normal interest rate. is this a mid cycle time in the business cycle or early cycle in your opinion? >> well, that's a catchy phrase. i'm not quite sure what it means. it doesn't feel like mid cycle in terms of business cycle to me. the unemployment rate's too high. normally, you know, when the economy's doing pretty well the unemployment rate would be far south of where we are. that's why 6.5% is really too high relative to sustainable unemployment rates, a lot closer to 5.25%. i would say. we still have an awful lot of room to grow once things begin to pick up and i'm not worried about inflationary pressures. >> you talked earlier that, you know, one of the biggest risks is people not believing in your forward guidance. but what you did in may and june, isn't that a loss of credibility for forward guidance from the fed? how do you get that back? >> well, we have been -- i have been surprised that the markets have not been able to look at our separate tools of quantitative easing and forward guidance. there's nothing we said that will cause anyone to step back prematurely before we hit 6.5% and we might go on longer than that. but the markets have sort of only been paying attention to one element at a time, maybe half an element at a time. and they'd become entangled. >> that's not the market's fault, charlie. the market is the market. it's the fed that communicates with the market. where's the fault in the fed's communications. >> i take that point, people tell me when i'm speaking very clearly and people aren't understanding me, then i have to take that point. we need to go out and communicate more. i think that the chairman did an excellent job during the summer. after the june press conference, he went to boston, he explained it more, things settled down and interest rates stopped going up. it settled down in september. we don't have enough data to make the assessment that the labor market improvement is sustainable. so far, that hasn't been proved wrong. >> how does policy change if janet yellen becomes chairman? >> well, i think -- i think janet will be a great chairman. she has an awful lot of experience with monetary policy up close and personal. and i think we'll see a lot of continuity and, you know, we'll be looking at the economic situation and inflationary pressures as they present themselves and respond accordingly. >> charlie, thanks for joining us this morning. >> thanks, steve. >> guys, charlie's going to sit with me for another few minutes here and we're going to do some stuff for the web on price level targeting, participation rate stuff. all the great stuff you know we're interested in here. you're going to do that and that's going to appear on the dot com later today. in the meanwhile, back to you guys at global headquarters. >> faber said it could get up to $1 trillion a month. i'd say he's a little bit hyperbolic. you should tell charlie that. >> he's listening. >> it could get up to $1 trillion a month because it's going to be so bad. which i'm all for. i don't know where -- stock market would be by then, charlie. great interview. thank you. it was a good day to have -- >> the two. >> the two on. >> our thanks to fed president evans. >> charlie evans. >> for being here to answer all those. >> jpmorgan's $13 billion settlement, the tentative one with the govent.we'll talk to at it means for shareholders. up next, we'll dig through the mcdonald's quarterly report. opportunities aren't always obvious. sometimes they just drop in. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group: how the world advances. mcdonald's out with earnings a few minutes ago. let's get some quick analysis on the numbers. he is director and senior research analyst at the advisory group in new york. how would you characterize mcdonald's performance, peter, over the last year and the last quarter? >> well, thanks for having me on. i would say it's, you know, pretty challenged, they're struggling to find any sort of growth and i think why you see the stock down today is not necessarily on the september same store sales numbers but more so on october. they're expecting october to be about flat on a global basis and they're lapping the easiest compare from last year. deceleration and traffic trends from september into october despite the launch and all the advertising behind that. i think that's what's concerning investors is regardless of all the advertising and the new products they're trying to put out, nothing seems to be grabbing the traffic and driving it through the doors. >> that's actually something company specific and it has to do with innovation and what mcdonald's has been pretty good at over the past five years or so. but you don't see it as a commentary on different regions of the world and how the economies there are fairing? >> it is. i would say overall economy is probably not so strong, the restaurant sales have not been across the board, not particularly strong, some operators are doing well. but generally speaking, mcdonald's has been struggling. and if you look at europe, the uk and russia business is doing well but the rest of europe is struggling. china continues to struggle, as well. it is about innovation for mcdonald's and trying to find that home run type product. and so far, they haven't been able to nail it down. >> in the last six months or a year. they had consistently been finding some stuff two three years ago which got us all thinking. >> was it the coffee? >> the coffee, apples. >> premium wraps. >> yeah. and rib thing. >> yeah. no, i would tell you that the struggles they're having is a function of their own success over the past five to ten years. the unit volume is well in excess of anyone else's qsr. they're driving on absolute basis a lot more traffic than any of the other competitors in the burger space. the problem is growing on top of that. yeah, mccafe was a huge success and mcrib when they launched it and all the other products they have have been great successes. it's growing on top of that. >> there's pushback from fran ch franchise franchisees. there are only so many items you can put on a menu. >> yeah. the drive through speed standard is 120 seconds in this sector and, you know, the more items you put on, the more challenging it is in the back of the house. you've got to limit the number of items on the menu for sure. >> yeah. that's true. thanks, peter. >> thank you. we're also talking this morning about jpmorgan. another dow component and the record breaking $13 billion tentative settlement and what it means for jpmorgan investors. joining us on the "squawk" news line is raymond james equity research manager. the stocks not far from a high. then we heard versus its peers, it's still selling lower because of all this -- all this regulatory overhang. does the $13 billion put things to rest? or do people still worry about the criminal investigation after that? >> well, good question. the stock is cheap as you said, 8 1/2 times earnings for a company typically trades at 10 or 12 times. the deal is adequate in removing the lion share of the residual mortgage risk. how long will it take the street to realize that? i think that's the key question. and also we don't know if the company has to admit to any wrong doing. and if they do, this could pave the way for subsequent losses. >> yeah. do you -- i was asking someone earlier, they went after bear stearns and those two guys and they were unable to make that stick. but then they got fab. things have changed a little bit. it was the goldman situation. do you think now they could make a criminal charge against something done at wamu or bear stearns? >> it's tough to say. it's hard to see it getting up to the level of the bank executives of jpmorgan being criminally prosecuted. but there could be some employees along the way. now, supposedly justice department has a key witness. we'll have to see how damaging that testimony can be. most likely given the fact that jpmorgan has $23 billion in legal reserves right now, most likely for shareholders for jpmorgan it's more of a cloud, more of an overhang than it is financial exposure at this point. we could probably damage the income statement as much as we're going to have to. >> okay. and when it's done and settled, you figure that would be a time where you'd buy the stock since it's trading below what it normally would. well if you have a longer term horizon, you have a business model that is well positioned for this challenging environment. they're growing revenues have an international expansion program. tops in the league domestically and m & a. a lot of positives for the stock. we just have this residual mortgage exposure. and you can file it under the category of who said life is fair. but at the end of the day, this is an event for jpmorgan current shareholders right or wrong. and we're close to putting it behind us. but we still have residual. you either think he's unfairly sort of targeted, that's probably some people think that and he's a good ceo and a good risk manager. or you've already thrown him in the lot with all the bankers that cause the financial crisis is what the other side thinks. has anyone's opinion been changed? >> certainly mine has. and i think he has the full support of the board. and i think wall street in general is on jamie's side and he's been improperly villainized. actions were done by a company that he basically rescued. >> right. but knowing -- >> only the "wall street journal" editorial board really can really take his side. everybody else is scared they'll be next if they speak up which is a great environment to be in right now. >> anthony, really quickly. do other banks face a risk? we now hear about fhfa going after wells fargo or bank of america. >> that's a good question, the fhfa if you look at the original filing, they basically had 17 companies listed, one of them is jpmorgan. there's only three i remember settling, u.s., citi and ge. b of a has the biggest exposure, even bigger than jpmorgan when you look at the numbers. and the fhfa has offered b of a a $6 billion settlement. ironically, that's pretty much in line with their legal reserves right now. so there is a potential settlement with b of a looming or probably something in the $4 billion to $6 billion range. and good news for b of a shareholders is they have those legal reserves already set aside. >> all right, anthony, thank you. when we come back, netflix quarterly results due after the bell today. we'll get a preview from an analyst in a few minutes. plus, checking in with andrew in hong kong, he has comments from hank greenberg on jpmorgan. also kate kelly caught up with jamie dimon as he arrived at work this morning. tdd#: 1-800-345-2550 trading inspires your life. tdd#: 1-800-345-2550 life inspires your trading. tdd#: 1-800-345-2550 where others see fads... tdd#: 1-800-345-2550 ...you see opportunities. tdd#: 1-800-345-2550 at schwab, we're here to help tdd#: 1-800-345-2550 turn inspiration into action. tdd#: 1-800-345-2550 we have intuitive platforms tdd#: 1-800-345-2550 to help you discover what's trending. tdd#: 1-800-345-2550 and seasoned market experts to help sharpen your instincts. tdd#: 1-800-345-2550 so you can take charge tdd#: 1-800-345-2550 of your trading. welcome back to "squawk box." few stocks on the move, s.a.p. posting earnings in line with estimates but then the software giant backed its full-year foreca forecast. the stock's up. we spoke to bill mcdermott in the 6:00 hour, he's co-ceo, soon to be sole ceo. earnings beating the street estimates by 13 cents. also declared a stock split and raised the quarterly dividend by 21%. and at&t is selling or leasing the rights to wireless towers for $4.9 billion. >> andrew is in hong kong today for the "new york times" deal book conference. cnbc has the exclusive broadcast partner and among the topics being discussed there, jpmorgan. andrew, good morning again. >> hey, becky. you just can't get away from me. you go around the globe and the only topic anyone wants to talk about is jpmorgan and jamie dimon. spent much of the day talking about that issue. one of the people we spoke with was hank greenberg. of course, former chairman and ceo of aig and he had some very pointed criticism of the government, not of jpmorgan saying this entire episode is unfair. listen to what he had to say. >> i do. i think that -- that's colored everything. it really has colored -- he's not getting a fair shake. and what we're going to do, we're going to destroy -- not destroy, we're certainly going to shrink a great institution. >> and i have to say, his view echoed by many other speakers and also just attendees, people i spoke to throughout the day talking about how they felt that jamie dimon was getting an unfair shake. you know, joe, i heard you talking earlier about how you say that, you think you're going to be attacked these days. at least in asia, there's a very high regard for jamie dimon. the other thing i wanted to bring you quick was hank greenberg's comment on obama care. as you may know, he's been a critic of obama care but he seems to have changed his tune. take a listen to this. >> i think that we should stop talking about obama care. it passed, it's law, the supreme court has ruled on it. forget that. what we should be focusing on is making our industries more competitive. we have the highest tax rate in the world. you want to pay for obama care which is going to be very expensive, make corporate america more profitable. >> guys, that's the story from hong kong today. a lot of interesting perspectives on a lot of different issues. and i'm going to be headed back to see you very soon. as i said earlier, keep the seat warm, i'm not going to hang out here too long. >> andrew, i guess it's probably not a huge surprise to hear some of hank greenberg's comments about this. he's taken issue with the government too for what it did to his company aig. >> he has. he has. and, in fact, he wrote an op-ed in support of jamie dimon just a couple of weeks ago. but when you put the $13 billion settlement and that number out there, he was even more vociferous about it as were other people here on this issue who felt -- but interestingly, one point that's worth making. i said to a couple of the ceos of foreign companies. i said does this make you less inclined to want to do business in the u.s., do you think any differently about it? and they said, no. take that for what it is. an interesting or different view from hong kong. >> andrew, thank you very much, we will check in with you again. andrew was there, he'll be back here on thursday, though. in the meantime, kate kelly caught up with jamie dimon this morning. kate? >> reporter: thanks so much. i managed to catch a minute or two with jamie dimon. he answered a couple of different questions about the supposed $13 billion settlement talks. let's listen to what he said. >> any chance of a quick comment on the discussions? >> you know, it's -- we're trying to get it resolved. >> the "wall street journal." >> people coming in bright eyed and bushy tailed. >> and they're not happy to see us. >> people doing a great job for our clients. we're gaining market share, doing great stuff, trying to get our product behind us. i'm so proud of this company. >> i hear ya. >> these other things i know we have to fix. >> reporter: i hear ya. do you feel this is a shakedown as the "wall street journal" says? >> i'm not going to go there. i want to get our problems resolved. so we can focus on the main mission serving our clients. >> how worried are you about the ramifications of criminal charges? >> we're going to try to resolve every matter the best we can and then we're going to move on. i've got to go. >> okay. >> reporter: so as you can hear, he is not going to get into the politics of this, becky and joe. he doesn't want to talk about the "wall street journal" shakedown story line. he also would not address whether or not these criminal ramifications that may be lingering even after this expected $13 billion lawsuit is finished. he's just trying to move forward and highlight the company's business successes. >> yes. i advise him to continue along his current path of the way that went, kate. anyway, stop trying to get him to say more. i saw you trying to do that. come on, jamie, shakedown. could you imagine if he said, yeah, it's obvious -- >> reporter: i tried twice, joe. i had to get it out of jamie. >> can you imagine if he said, absolutely, this is extortion pure and simple. i don't appreciate it and i'm only doing it because i have to. could you imagine if he said that? >> reporter: then what would happen? >> i don't know. make it $26 billion maybe. i don't know what that would be worth. anyway, kate -- i think it's nice, you know, i would have walked right by you at this point. he can't do that either. >> that's gracious. >> it was gracious. netflix shares have been on a tare in the past year. company announcing quarterly results today after the closing bell. up next, a preview of the report from an analyst. i'm excited some day to have that as an icon on my xfinity thing. crude is trading below $100 a barrel for the first time since back in july, july 2nd. [ male announcer ] the founder of mercedes-benz once wrote something on a sheet of paper and placed it in his factory for all to see. ♪ four simple words where the meaning has never been lost. the challenge always accepted. and the calling forever answered. ♪ introducing the all-new 2014 s-class. mercedes-benz. the best or nothing. at bny mellon, our business the allis investments.ss. managing them, moving them, making them work. we oversee 20% of the world's 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 people's lives. invested in the world. bny mellon. netflix is set to post third quarter results right after the bell this afternoon. joining us right now onset with the preview is brett harris. and brett, i guess the big number's got to be the u.s. subscribers, paid subscribers coming through. >> absolutely. netflix is a growth stock. trends at 77 times this year's ebitda and 40 times next year's ebitda. and everybody's going to be looking at the subscriber -- the domestic subscriber number. >> it's estimated they now have over 30 million subscribers to pass hbo as the most subscribed and most paid. >> and the number we're looking for is 1.3. a gain of 1.3 million subscribers. >> the other thing people will be looking at quickly is 63 cents is the estimate on the street. what they're guessing the company earned. what do you think? >> we're at 55. but the eps number for the quarter is going to be significantly less important than that domestic subscriber net edition and also the domestic -- the domestic segments margin expansion. right now, they're currently generating about 22% contribution margin from that segment. and in order for the company to justify the valuation, it needs to both grow subscribers and expand that margin. >> is reed hastings plan with content, is that working? >> i think so. certainly "house of cards" was a tremendous success. orange is the new black is a tremendous success. netflix originally made their money by having a better user interface. they had deep library content, but you could access it better. with the cable channels improving their interfaces, netflix needs to move away from the better interface and moving to original programming making it different than -- >> where's the xfininty thing stand right now. >> it's been ruled out. >> will netflix end up just being -- >> on your settop box? >> well, we think it highly unlikely that netflix gets distribution on traditional cable networks. >> how would they count subscribers then? i have them already. if it got that easy to where it was just something on -- >> right. i mean, i think what reed . . which cable and netflix are natural competitors. over the top and specifically netflix is the number one reason we have court nevers, which are people that come out of college and don't buy that off the bat. there is a natural competition there. >> the second issue is going to be what happens with the other pay tv providers. if netflix gets to be off and on the cable subscriber, they would want that as well. and that would facilitate a la carte. >> you don't think come cost and netflix become frenemies. >> i don't like what you are saying. >> thanks for coming in. >> thanks for having me. >> when you come back, start your week off with jim cramer stocks to watch. we're going to head down to the new york stock exchange. >> tomorrow, the day is over. it is jobs tuesdays. we'll get a read on september employment and inflation. delta airlines ceo, richard anderson, will join us, first, on cnbc. don't miss "squawk box." starting tomorrow at 6:00 a.m. eastern. at a ford dealer with a little q and a for fiona. tell me fiona, who's having a big tire event? 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wen wendy's is better. this is a tough time for this company. >> it is a tricky question. the franchisees are upset. you need new innovation. when you are a fran chai see and y you are expected to have 150 items on your menu and then the dollar menu, which some blame for not being able to sell more expensive food. >> panera has too many simple things. >> wendy, very simple. chip po chipotle, very simple. mcdonald's thinks they need a makeover. come on, you are mcdonald's. just gli just deliver. the new york giants, you are so good. what are you doing? didn't you guys win the super bowl. we are struggling to try to figure out how to value this company? >> they point to a weak global environment. it sounds like you are not buying that. >> i am seeing too many other companies say good thing. i would ask, joe, joe, maybe if they moved to new jersey and get out of there. i live in jersey. i have never gone to metlife and found myself at 34th street. >> i'm glad you are with me on that. everything else. they snicker, they laugh with jersey until they fly out of a newark area network. they are talking about newark. i went to a giants came in the new york area such. the super bowl is in the new york air why area? >> chris christie speak up and give us a google map. >> wait until the president is from new jersey. see how they like that. >> mcdonald's, disappointing. see you in a few minutes. macoming up, several stocksn the move. only one will be the stock of the day. is it in your portfolio? find out next. serving you, the american people. so we improved priority mail flat rate to give you a more reliable way to ship. now with tracking up to eleven scans, specified delivery dates, and free insurance up to $50 all for the same low rate. 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for what happens next. in corporate news, becky, apple hold ago product event in california today. the company is expected to unveil the latest event to the company's new line. mavericks operating system. in other tech news, nokia launching its first tablet today along with two large screen smartphones. these are among the last products the company developed to compete with apple. and samsung. before deciding to sell its hand set business to microsoft. microsoft, service 2 and service 2 pro tablets go on sale in 22 initial markets today, including the united states. both are updates of the first generation surface tablets released last october. improvements include increased battery life and higher resolution screens and camera peps joe, get your geek glasses on today. >> you know what, steve? i am more interested in this jobs report than the next one. i don't -- >> why? >> because i'm not interested in what the shutdown did. i'm interested in the basul level of -- >> the next two will be a mess. the expectation is in the third quarter when you started seeing more concerns of the tax increases that came in and the sequester numbers. >> the report brit was already weak. >> right. >> so was it slowing down? this is like -- when you put in the shutdown, it's like reporting earnings with one-time items. >> the one-time items coming in and then the next one going out. >> more interested in reference to what janet yellen and the new fed next year is going to be dependent on what the underlying economy is doing. not what the shutdown did, too. >> steve, is it fair to assume, especially prosecute what we have we heard from charlie evans, is it fair to say that there's no way they're tapering this year? they're going to have to get more numbers. >> no, i don't think that's fair. it's fair to assume charlie evans has numbers. i think charlie is a little bit kind of left of center. you put the doves there. i don't think -- look, what he said makes sense, that if you're looking for a real picture of the economy, you're going to have to wait. but whether or not the center of the board doesn't want to wait, that's what we need to hear from guys like dennis lockhart, we need to hear from the chairman about how much they want to wait. >> if we get a number that's weaker than 180, then would you say it's fair for -- >> i'd say below 150 would be a threshold that we would give the fed pause and i think they'll be looking at the unemployment rate and why it's moving either way. >> dupont is out and the stock is trading right near a 52-week high. so i'm not sure how this is going to be taken today. but the revenue number was okay. 7.7 billion. but there's two numbers to compare to the 41 cent estimate for earnings. one is 30 cents, which is the net number, and the number from continuing operations is 28 cents. so 41 cents was the estimate, both of those are below. the company is backing full year net of 385. and the estimate is 380 on the nn here. so they're going to need to make some -- they're going to need to make some up because this is the third quarter. so the fourth quarter would have to be better than the 55 cents that people are looking for. and then the company's comments, none of them are really saying that things are better. like they're trying to explain things. we see slightly lower full year growth rates for global gdp .industrial production. we now see a larger negative currency impact and a lower base tax rate. so that's a little bit better. a fourth quarter operating earnings will be substantially up from last year. well, they earn eed 1 1 cents l year. so that was already factored in. and the bid and the ask on the stock is too wide at this point. but it looks -- maybe that's a real number down 16 cents or so. >> operator earnings 35 cents per share? >> i didn't see that one. from continuing operations, it's 28 cents. that would make sense if it was 45 because they know thekdz easily deliver on the full year. >> this is operator earnings of 45 cents a share. >> and the business wire for that number appears nowhere. >> it's not in any of the headlines all the way down. >> yes. it's a 28 cent number and a 30 correct number. i don't know how they're going to hit their year number if they missed it by that much. >> a few comments from ellen, she says industrial market demand will remain smooth. they say fourth quarter operator earnings will be up substantially from last year. >> because it was 11 cents. >> third quarter sales volumes and operator earnings, stronger compared to most businesses last year. >> after the bell, there's a couple of things, but netflix is the one we really want to talk about. it's a different business model just starting on the content side of things. but the company's earnings beat the street, but it was the largest subscriber gains that -- that's the metric that people watch for netflix. and you can that that stock was up $40 after hours. it's still -- you know, if you want to talk about the potential for more growth, it's only a -- it's a big market. it was 20 billion. but it's still -- you know, i look at other companies and if they're already at 80 or 90 billion, you wonder how many more times they're going to double. >> they did say they're hopeful that the company will reach a deal with comcast. we had an analyst that said they probably wouldn't get it for the host boxes, but hastings saying they're hopeful they can do that with comcast and the others in the industry. >> i'm resentful, don't like them. >> why? >> because it's 20 billion cap of market cap comcast could have had. >> if they do -- >> no, remember, if we want to deliver comcast at home, it was the rental dvd thing. it's in the mail. suddenly they have the software to deliver it directly to their home. >> the kids watch it over playstation. they firgd it out before i did. >> because they were an upstart, they were able to sign a lot of the upstart deals that allowed them to carry all these things. if comcast or time warner had tried this, they wouldn't be able to do this. >> i'd like to take their business and put it on infiniti. >> that sounds like perfect monolistic behavior. >> at first, it was a little over 5%. >> even if it was space that -- >> think about amc buying all of those black and white movie that's no one wants. it's like -- you know, what was the one with joseph cotton and teresa wright or whatever, shadow of a doubt or something. and that's what's they had black and white. then they do breaking bad, walking dead, mad men, suddenly it's -- >> netflix has followed with its own original content. >> one. >> and orange is the new black. >> i met all the people from that show when i played a benefit for the women's prison association in new york. they all came and the author was there. >> i met the woman whose life it was based on. that's even cooler. >> we'll delve into the sensitive -- you say women's prison to me and i don't know why, but it's just -- >> what do you mean you don't know why? >> it's sensitive material that i -- i want to talk about tech which reported earnings in revenue that topped consensus. current quarter guidance fell short of estimates. and discover financials earnings and revenue both fell slightly short. we'll watch that stock today. tjx is issuing a full quarter outlook. sounds like tjmaxx, right? because it's the parent of tjmax dx. the quote now doesn't match the -- it's given up on these. >> i don't know why the stop is not related. 59.50 is the number. >> but it's down. >> no, it was down before the markets closed. after hours is when you saw the move. >> it's like the obama care website, some of these charts that we have. we have the same people we hired. internet and revenue disappointing. i shouldn't say that. that's not nice at all to our people. they have access is to your e-mails. >> that's way too nasty to the people -- to our people that develop this stuff to compare it to obama care. anyway, the street under rental company slashed its full year profit outlook and shares of vm ware getting loose. the cloud softwaremaker reported a higher than expected profit as it sold more licenses to enterprise customer. that one looks fine. >> that was up. >> except it looks like it closed at -- no, 89.75. >> all right. let's get a check on the markets this morning ahead of all of the earnings that we're going to be -- yeah, listen to what he says, not what he's pointing to. take a look at the futures ahead of earnings. you're going to see right now those dow futures are down by about 15.5 points. s&p futures down by 2. nasdaq futures are up once against this morning up by 8.5 points. take a look at what's been happening with oil prices. it's not just the jobs numbers that we're going to get today, but oil inventories that had been delayed. we will be getting a look back at some of those numbers today. oil markets ahead of that, once again, wti below $100. this time, it's below $99. $98.89. there's been a massive amount of pressure. we've had different guests who said, a, it's the economy that's weakening. we've had other guests saying, no, no, that's not it. take a look at the fundamentals because there's so many energy that's been pumped. probably some of the tensions in the middle east, not that they've gone away, but they've gone off the front pages of the newspaper. that's why you've seen some of the action, too. the ten-year note is yielding 27606%. the dollar at this hour is up a little bit against the yen. 98.approximately. euro is trading at 1.3673. and gold prices right now are down by about $3.80, $1,120 an ounce. >> did you see steve liesman is here for us? >> i didn't. i was on a plane to check and i ended up here. i don't know how that happened. >> have people are tweeting that andrew is anchoring asia "squawk box." like bernie low and -- apparently it was unbelievable, those two guys together. >> chemistry. >> a total crackup, bernie and -- >> why are you looking at me like that? >> i'm just wondering where you're going with that. >> i'm not going anywhere. not going anywhere at all. staying right here. >> i'm convinced i was here because you have a story on baldness later. >> it was cute and endearing last night because harry smith did the piece. >> did he? you know my problem with how we talked about this, right? it's the cure for baldness, right? like a cure for herpes or -- like it's some disease. >> lisp to me, they made that very clear that it is. >> supposedly it would be the biggest remedy for the most terrible affliction that's ever be set man kind. >> and i sat there, why did they ask me to come in today? then i saw the baldness story when i came in. >> i watched it. it involves stem cells. >> and cloning. >> and you put it on their butts. >> and you grow mice hair. >> at this point, it's great news for any mice that might be hairless. that whole group. there's celebrations and -- >> that's right. >> on their what? no, just somewhere. nowhere special. >> you said put it on their butt. >> no, i didn't say put it on their butt. i said she has frequentels on her butt. she had freckles on her -- but she's nice. have you heard that one? >> no. >> have you ever heard that. ♪ she has freckles on her butt -- >> no. no. >> let's bring in ross westgate. he's standing by in london with our global markets report this morning. ross, how do you want to tackle this one? sne ♪ she has freckles on her butt >> it's nice to see steve sitting there. where are we? five to four decliners outpacing advancers. not a huge margin for european equities. the dow jones stoxx 600 is completely unchanged. no one really wants to do anything ahead of the tuesday. jobs report has been talking out this morning. the ftse 100 yesterday we were up just a little bit. 31 points. just up 9 points. pretty flat elsewhere for the german french markets and the ftse mib, as well. there are some individual stocks worth taking note of this morning. perhaps the most surprising investment this year is into this, fcc, fomento de const. why? bill gates has push chased 6% of this construction group for around $155 million. it now makes him the second biggest shareholder behind the chair woman. fcc, of course, is a huge hit from the spanish property crash. since june, though, its shares have doubled in value. so there we have interesting investment. arm holdings, a chip designer up major ideally this morning. this is a company that designed chip processors that are used in the majority of smartphones including the iphone. they announced today they had a record 48 licenses from 24 separate companies in the last period. which boosted third quarter revenue up 27%. pretax profits up 36%. there is some concern that as we get more cheaper smartphones, their margins will go down a little bit. but the kre o came out this morning and said, no, that's an opportunity. and lufthansa, down 0.5% today, as well. the 2011 operating profit will not rise on the year. the reason i mention it, it's coming out talking about the problems associated with the strength of the euro. the german companies are starting to produce a little bit. back to you. >> okay, ross. thank you. thank you. reading about all this pressure on ellen coleman to split the company up because the agriculture business is -- and pelt. we should talk about that. >> we have an analyst coming up soon. >> to talk about dupont. 45 cents is okay. the earnings are there, but apparently the company is going to hear it from analysts that it's time to spin off the the agricultural portion. >> from analysts or active investors? >> from nelson and says here in the journal increasing pressure from analysts or investors, the sell or spin-off of the cultural portion of the business which has been generating most of the growth. michelle is here. and i don't mean that michelle, i mean this michelle. the internal jobs was played, according to the shutdown. michelle gerard -- why do you have two names now? most people don't go down. they just keep adding, don't they? you know who has a lot of names, if you're in the spanish royal family. >> you actually i think hit every single -- >> i know, i know, because it used to be a beautiful name. when she was at rbs. it still is, managing director. here is my question and it's deep. i'm saying i want to see the -- where we were before the shutdown. and then i have people writing in saying that the shutdown isn't a one-time item, that it's going to hurt us for a long time. there's lasting damage. there's not any lasting damage from this. what, because we think it might happen again? >> i think first of all, i think you're right. i think you raise a good point. i know lynching to you earlier. it is interesting to see whether or not the economy had momentum going into the shutdown. so that is true. i have to say, i've been a little dismissive of it like, well, what i really want to know is where we are when we come out of this all. the shutdown is going to be more -- i think the impact is going to be more than a month or two. it took u.s. sentiment four months to get back to where it was. the whole thing will be drawn out and because when we do it all in january -- >> no, we won't. >> i don't think we will, either. but that point may linger and keep -- >> and consumers don't have four months this time because they have to start shopping for christmas like in two weeks. exactly. >> there will be less. >> less because of that, exactly. there was one other thing i wanted to follow up on with that, but now i'm thinking about christmas. anyway, john lynch, which take do you have on this? oh, i know what i was going to say, john. that last report that we did get was so bad that we were all like, whoa, and it was the revisions and everything else. it gave us a whole new idea and it cause today fed to make that crazy decision to, you know, all the preparing it did for us, the tapering, then they didn't taper because of that report. we were already in a slowdown, weren't we? >> your point about revision was pressure. but i suspect he had misgavings about the political process, as we'll call it. so i think that was in retrospect the smart move. i think confidence will be more an impact than economic activity. if you get 800,000 people with a koump back paychecks, by the time they get that, that could help spending going into the holidays. >> of them are getting their backpack plus unemployment insurance. >> there is an article about that. >> they get to keep it. >> given some of the rules in the states, i guess some of them are able to keep it. i'll tell you, talking about that last report, there is a strong historical tendency for the july/august data to get revised up. so that is something. we had come into the second half of the year expecting upward movement. that last report seemed to put a nail this that. we were abandoning hope that the second had a was looking better than the first. >> i want to ask you a question becky asked me yerlt. october almost impossible, december is going to be tough. >> i think so. >> are you start toog dial in? >> the fed chief, right? >> and a new fed chief. i mean, we have gone in september all the way into march. before we knew we may have concerned in january with all of this being pushed out in terms of the government issues, into january, i think it's doing it this year is going to be tough. and the data, too, maybe called into question. so the fed may not feel like they have a clear read. >> it's the wrong day to quit sniffing glue. we do. there's never a good day to taper. >> never. >> john, i'm going to ask you a question just to highlight a point. is the next move by the fed to do less than 85 or more than 85? because that's what we heard yesterday from mark faber. there's not going to be a taper, they're going up. i saw that interview. i questioned whether or not they would have to buy more. i do think december has been pushed off, also, because if you remember this super duper committee is die december 7th and then i guess the fed -- no, december -- >> 13th, i think. >> and then the fed meets a couple of days after that. so i suspect right after thanksgiving we're going to have a lot of headline risk as i suspect or anticipate, you know, both sides dealing that into the grounds to think that's going to ask for volatility. >> just putting forward that question shows you we were in wonderland. at this point, i don't know. >> the last two days of trading were really an erie calm. wouldn't you agree? if 85 billion is going to go in, and the other thing faber called it something, there's a crisis, the government puts in the program to handle a crisis and then the program is permanent. there's a name for that and economists talk about it and you can go back 8el 0 years and see erchl there's been a fanl crisis and you put in something to deal with it, it becomes a berm program. i'm ready for the economy to run on. i'm ready for us to have a permanent qe -- why not? >> we asked evans what the limit was. his answer is really there is no limit. >> i think he would have said a hundred trillion, quad trillion. >> i think one of the largest weapons is here p. america runs on dunkin and qe. qe is the coffee for the economy. >> i don't know what evans is saying, too. he can sort out this number that qe is only going to be 1.25 trillion. and you do the mrarth. if they're not tapering this year, they've only got another the 200 -- maybe you should explain that. >> he does suggest maybe you ramp up the speed of the tapering. but he's focused in a way that janet yellen is focused, i might add. >> they stay that way for a while, which like i said, we were in wonderland. keep it going. john lynch, thank you. michelle colley lauf lynn gerard. you like michelle gerard now? >> let's just keep it simple. >> sure, all right. coming up, why the government needs verizon's help. but first, a stock to watch this morning. whirl pool's earnings beating the street by 11 cents. revenues falling a bit. is the chart right, joe? in squawk sports news, new york is finding getting their first win of the season. giants beat the minnesota vikings. bad beat worse. eli manning threw for 23 yards happy for the giants, no doubt about it. we're tracking showers, moving closer to the east coast. you can see along the cold front that's activity moving on through. we're starting to fizzle out as it heads east. ee don't anticipate that to make its way to the 95 corridor. joining us to see the showers through the interior. places like syracuse, al ban knew, towards state college. could see the better chance for the rain today while we stay dry in d.c. philly and new york. behind all of that, things chilling down a bit. look at these high temperatures for the day. 40 in minneapolis to chicago. minneapolis, your average high this time of year is 60. we'll watch that cool ir air. this morning, getting ready for 20s in the twin citys in chicago subfreezing. so cold times ahead and this is all going to work its way into the south. be ready for it. that's your national forecast. more "squawk box" coming up next. mercedes-benz has pioneerd many breakthroughs. ♪ breakthroughs in design... breakthroughs in safety... in engineering... and technology. and now our latest creation breaks one more barrier. introducing the cla. starting at $29,900. ♪ what do you do when you can no longer get around like you used to? when you fear losing your independence? who do you call? call hoveround now, to see if you qualify for america's premier power chair. hi, i'm tom kruse, inventor and founder of hoveround. now you can do more, see more, enjoy life more. here's why hoveround makes it easier than any other power chair. hoveround is more maneuverable to get you through the tightest doors and hallways. more reliable. hoveround employees build your chair, deliver your chair, and will service your chair for as long as you own your chair. and most importantly, 9 out of 10 people got their hoveround for little or no cost. call now for your free dvd and information kit. and now every hoveround comes with this tote bag and cup holder for handy access to your favorite items. you don't really have to give up living because you don't have your legs. call now for your free consultation. and right now, get this limited edition hoveround america travel mug free with your hoveround delivery. call or log onto hoveround.com right now! time now for our executive edge, a daily segment focused on giving business leaders a leg up. verizon has reportedly been asked to help the government fix the federal health exchange. the company has been tasked with improving the performance of the healthcare.gov website. this sa big story, one that is not going away anytime soon. even squeak emanuel, yesterday on msnbc pointing out that he thinks there need to be daily briefings and weekly measures of how much progress they've made. >> yeah. it's been -- at this point, becky, i don't know what more we can say. the journal's lead editorial about it today, i haven't tried to go on the website. the one thing that was interesting is i guess you can call -- you do one or the other. you call the thing and it refers you to the website and you do the website and it might refer you to the call center. >> well, the president yesterday said go ahead and call the call center. >> you never do get to actually do anything. what's interesting is there's these rumors that you hear like in some states they have zero people successfully signing up. and they're not telling us. >> the obama administration has not given numbers so far. >> the glitch, they can use that and say we really don't know and there's a glitch. but you wonder how much of it is a smoke screen. it's bad. but the bigger thing is, if the website is that messed up, they need to do some very sophisticated things in terms of act ewe aerial stuff. here they're going to get about 19% of the economy.uarial stuff. here they're going to get about 19% of the economy. you don't want the gop government really doing important stuff, i don't think, if your life. >> the idea was for the government to facilitate a market. >> that's how you talk about it, yeah. but they -- >> these are all heritage foundation ideas, right? they're the ones that came up with some of these -- >> anyway, the bottom line is, i agree with you. the problems on the front end create serious issues on the back end. if the young don't sign up, then the whole concept of spreading out the risk -- >> that's too -- but what about when you're actually in sort of one of the programs and you're trying to call. you know, if you find a lump and you get on the website and can't get -- you call smp, you can't get ahold of anyone. what if it's the same order of efficiency or the same competent level? >> i don't know that the front end is reflective of the back end. at least i hope. but we'll -- >> you sign up once and then -- these are beginning problems that you don't -- you sign up once, you don't sign up all the time. >> that makes me feel better. >> the government does not do things efficiently. >> i'm going to keep running every day. >> nobody stands here and argues that the government runs efficiently. >> lucky they're going to run 20% of the economy. >> the government does things in an equitable way, not an efficient way. >> hopefully they get the right people in to fix these things. the guy, one of the founderses of coming up with a simplistic design for all the websites, the modern website theory and his point was basically you need to get a few of the right people in and get rid of 99% of the people who have been working on it. the way that it was set up is a clunky, difficult to use, asks you pages of questions before you get into it. it need to be set up more like when you're shopping for a mortgage rate. you put information in up front and quickly get some pricing. >> and then you go through the process. >> and then you go through the process. >> and i wonder if the conversation -- it probably should have been made -- and to the president or the administration, we're really not ready. we should delay this a year. and he's like, delay it a year? no, no, that's what ted cruz wants. >> we'll have to show a picture of ted cruz when we -- >> in fairness, it's been 3 1/2 years since the law was passed, but we spent most of that time arguing whether it was going to be -- >> hundreds of millions. there's places that have set up websites for $30 million that worked pore infectly. the states did it perfectly. >> it screws me up when the president goes no one is more frustrated than me. he didn't have to go and sign up for it. >> and the ft, water carrying -- he is so rangery over what happened. no one is more angry than him. he's not -- it's not the glitches is not the headline. it's just that he's angry. angry about this, angry. when we come back -- >> another speech with -- has there ever been a speech where there aren't people mind him going like this? >> did you see the whom would fainted, though? that was a good catch on his part. when we come back -- there we go. >> normal cross-section. he turned around and caught her. that was a good catch. wa consumers and investors can expect from today's apple event. first, though, andrew is in hong kong today. he's spending time with our colleagues in cnbc asia. here is just a little sample of that experience. >> we sit around on the squawk -- i just lost my mike. >> there's always that piece. >> they haven't changed him in 12 years. >> no, no. apple is expected town veil the new it rest ipad today. joining us from san francisco is tom fo orte. tom, the new ipad, do you have any thoughts about what it's going to look like? >> sure. the way i think about today's product announcement, i think it's phase two of three phases. the first one was the updates for the smartphone and the addition of a less expensive smartphone. today i think you're looking for a product refresh on both the ipad mini and the ipad with retina display. and the third face could see the i watch and an actual apple television. but for today, i'm looking for a thinner, faster processor and the core retina display ipad and then for the mini to also have a retina display. >> is that a big driver of sales for the holiday season? >> i think the big driver is going to be having a product refresh. so if you look at the june quarter, sales on the ipad were a little on the slow side. so i think that having new products, both at the upper end of the tablet market and an ipad mini, that could be a big driver for holiday sales for apple this year. >> what does it mean for the prices of the existing products? it usually comes down. what does it mean for apple after this? >> i think they'll lower the price of the existing mini and the existing -- you know, the tablets have continued to produce some of the last generation devices, even when they roll out a new product, which isn't always the case for the smartphone. they may keep the most recent iteration of smartphones, but discontinue earlier versions. so this could give them an opportunity to have slightly lower priced tablets out there, as well. >> tom, do you buy the stock as you approach this important holiday season? and that because of the new holiday products or because of what you're hearing from carl icahn and some of the active investors. >> you 100% buy it for the new products. i look at the buyback for create ago floor for apple. it's going to be the update on the smartphones, today the update on the tablets and potential lay watch or television that would drive the stock higher over the next 12 months. >> tom, thank you. >> my pleasure. coming one the street is going to react today to dupont's quarterly results and to calls to spin off part of that company. and analysts will join us next. but first, another clip from andrew's visit to cnbc asia today. >> hello, everybody. welcome to this tuesday edition of "the call." i'm bernie lowe in hong kong. >> and i'm andrew ross sorkin. i can't believe i'm here with you. this is great to be with you here in hong kong. >> great to have you here. >> very cool. 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(vo) meee-ow, business pro. meee-ow. go national. go like a pro. welcome back, everybody. at 8:30 eastern time, the september jobs report, we finally get those numbers. forecasters say that the economy likely added 180,000 jobs last month. also, on the bls catchup list, we have september's ppi. that's coming up at 8:30 eastern, as well. and on the earnings front, we've heard from dow component dupont this morning. analysts will be joining us to break down the numbers in just a minute. set to post results before the bell this morning, we have united technology, travelers and lockheed martin. former fed chairman alan greenspan, his new book goes on sale today. it's called the map and the territory. the maestro will join us live on squawk tomorrow at 7:30 eastern time. he's going to be right here on set with us. people are pretty excited about that. >> sounds great. and a lot of questions to ask all alan greenspan. >> will you be back? >> i'd be happy to do that. i love talking to alan greenspan. dupont reported quarterly results just a short while ago. joining us now to break down the numbers, mark gully at bgc financial. what did you think of the markets this morning? >> they're basically in line. a tax rate benefit of 4 cents, steve, made the underlyiniying earnings 411 cents. pretty much in line with consensus. >> mark, for an old line industrial company, there's a lot going on with this company here. there's an investor in play here. there's the idea of a split. what do you think of the future here of this country? >> certainly activists have been active in the industrial sector and chemicals recently. dupont is one of targets. trion investment, nelson phelps reported 2% of the company. and he's calling for the same thing we called for back in november. that is a break-up of dupont into the two pieces, ag and industrial chemicals. and i think that nelson peltz is right on with his idea. because there's greater value if you break it up? >> we believe. some of the parts naturalsies tend to suggest a target price that may be in the 60/65 area. but i think performance is just as important as value. you take a look at dupont's peers and the ag sector, you take a look at sangenta. m monsanto. i think a separate ag could do just as well. >> do they step on each other's feet? something like berkshire, you buy companies that are doing really well. was wrong with a company doing something in its portfolio, if it doesn't cause certain people not to deal with one of the other companies because of a conflict -- i never understand this, mark. and some of your peers will try to come back in two years and try to sell dupont on buying an ag company. >> all good points, joe. investors typically have a good reason for buying something. you like the ag sector, you like the protection chemicals business. but if you buy dupont and you're like all those businesses, you may be bothered. performance materials going into the auto industrial. so if you have a choice, if you like the ag business and you don't like ko2, you're going to buy monsanto, you're going to be sangenta. why bother with dupont? >> this is a biology mergelinging with chemistry story? >> that's the story that management has talked about for about a decade. i think the results are a little bit short of expectations. yes, they have a biobased materials business that goes into the carpeting area, going into the apparel area. those fibers are biobased. but after ten years, i would have expected to see more progress in this area and i think that's the issue. >> no multiple in the stock is what you're saying. >> you got it. >> which is why you would play that. >> mark, back to joe's point, though, are you opposed to conglomerates in general? if you look at berkshire, general electric, a lot of different companies, it's the same theory. >> yeah. for those of us that have been around a little while, we can remember peter lynch, named portfolio manager at fidelity. he called this deworsification. you take a look at the success of its peers, 3m, for example, and performance materials. people like 3m because of the problem there. i think dupont's industrial materials business could compete with 3m. >> if i remember, itt and rand harris and all that stuff. deworsifi deworsification. that's -- >> an economics nobel prize? >> yeah. is there anyone who didn't win one of those? >> there's plenty of people, joe. that work is really interesting. >> i like the idea of biology and carpets. you don't have to mow the carpets, do you? >> no, you don't. >> but if they wear out, do they self-regenerator something? >> okay. we'll talk i've got to go. >> got to go. still to come this morning, a new york penthouse you have to see to believe. . . robert frank joins us with the details and how it can be yours for the mere price of $80 million or so. and later, we'll take a flight with the ceo of delta airlines, richard anderson talks about the state of consumer spending 8:00 a.m. eastern time. plus, two of wall street's best known investors gathering in the screen room. co-founder blair efron will be joining us at the top of the hour to talk deals and the global economy. americans take care of business. they always have. they always will. that's why you take charge of your future. your retirement. ♪ ameriprise advisors can help you like they've helped millions of others. listening, planning, working one on one. to help you retire your way... with confidence. that's what ameriprise financial does. that's what they can do with you. ameriprise financial. more within reach. ttrust your instinctsdo to make the call. to treat my low testosterone, my doctor and i went with axiron, the only underarm low t treatment. axiron can restore t levels to normal in about 2 weeks in most men. axiron is not for use in women or anyone younger than 18 or men with prostate or breast cancer. women, especially those who are or who may become pregnant and children should avoid contact where axiron is applied as unexpected signs of puberty in children or changes in body hair or increased acne in women may occur. report these symptoms to your doctor. tell your doctor about all medical conditions and medications. serious side effects could include increased risk of prostate cancer; worsening prostate symptoms; decreased sperm count; ankle, feet or body swelling; enlarged or painful breasts; problems breathing while sleeping; and blood clots in the legs. common side effects include skin redness or irritation where applied, increased red blood cell count, headache, diarrhea, vomiting, and increase in psa. ask your doctor about the only underarm low t treatment, axiron. one of the greats in the fashion world has put his new york penthouse on the market. robert frank broke the story and joins us in chairs this morning. >> robert frank -- >> i just broke a story. >> okay. >> the great -- no, the great that we're talking about, the great man is tommy hilfiger, the man that defined preppy cool. he's defining the ultimate classic real estate. he's putting his penthouse at the famous plaza hotel on the market. the apartment is on the 18th and 19th of the plaza right there in the golden corner of central park. five bedrooms, four baths, sweeping terraces and hilfiger bought two apartments, combined them in 2008, spent about $25 million for the accommodation and spent an additional more than $17 million to renovate it over three years. the asking price on this, $80 million. if it sells for that, it would be the second most expensive condo ever sold in new york. he told me he wanted to sell the apartment because he's spending more time in greenwich and wanted to renovate this, looking like the old plaza with those red carpets, the brass, the wood panelling, the mirrors. it's filled with artwork, a lot of warhols as you'll see there. he says, these are not for sale. now, in addition to these artwork, he has a lot of pieces in the apartment that could be negotiated that used to be owned by the duke and duchess of windsor. he'll if anythi selling this property, his neighbors include bob craft who is a friend of "squawk box," you know, jimmy cane from bear stearns. >> you know when he's home. did hilfiger say i'm selling it for two -- i have two words for you? >> no. >> deblasio. >> no, he didn't say that. and you know, what's interesting about this apartment. he actually has the old "new york times" banner from the "new york times" building in his library. so i think, you know, one of your favorite papers. >> couldn't be more of my favorite. >> he has a young wife, gorgeous wife you saw there and they're spending more time in greenwich with the kids. the cool thing about this apartment, you know the dome on the plaza, he built a room where the administrator did murals. >> you don't it has anything to do with the shifting political winds? >> he didn't say anything. he didn't mention that. he's got a lot of properties. miami, the plaza, greenwich -- let's call it a love story. >> that's so weird. >> like the last time i -- investors falling head over heels for netflix. we'll talk about the move to mobile and the stock's huge run-up. >> you want a glass of wine? >> i love wine. >> red -- >> i love red wine. >> same! >> that's insane. >> is corporate america ready to climb aboard? a closer look at whether or not companies are signing back on for private aviation and what it says about the economy. and it's a special jobs friday on tuesday. guest host ceo of evercor join us to help investors rise above in this liberal love fest as we get ready for september data. the second hour of "squawk box" begins right now. >> good morning, everybody. welcome to "squawk box" here on cnbc. i'm becky quick along with joe kernan and steve liesman. andrew is in hong kong this morning where he's been hosting "squawk box" asia with bernie lowe. here he is. he's going to be back with us on thursday back on the u.s. set here. the futures this morning have been indicated a little bit weaker. at least, well, just barely. things have barely budged. dow futures down by about 6 1/2 points, nasdaq up by nine points. in our headlines this morning, we do have dow components hitting the wires right now. travelers reporting profits of $2.35 a share. the street was looking for $2.07. revenue in line with estimates, but the insurance company also thunderstormsed an additional $5 billion in share repurchases. you know what happened here, they were able to raise premiums because of all the bad weather we'd seen in some of the rough circumstances. you didn't see a repeat of that weather this year, they haven't had to pay out like they did before. >> yeah. >> stock up 3.85%. united technology $1.55 a share. that was a penny better than the street expected but the revenue came in short. the company says the revenue coming in short because of ongoing weakness in military aerospace markets and the slow pace of recovery in europe. united technologies did raise the lower end of the full-year earnings forecast by 10 cents now looking for $6.10 to about $6.15 a share. and in the last hour, we heard from dow component dupont came out with third quarter profit of 45 cents a share, 4 cents better than the street had been expecting. dupont sees modest earnings growth for a few year despite a significant decline in the results for chemicals unit. >> joe, couldn't you play your global warm skepticism by going long the insurers and the reinsurers which are maybe trading -- >> i wasn't going to bring it up. >> storms anticipated. >> it's been the lowest year in decades. >> so that's -- you could make money. >> and someone did this already. >> did they? >> it was our friend warren buffett after the katrina year. do you remember we needed new letters. we had to go to the greek alphabet. we ended with wilma or -- i can't remember there was a "w" that was big the katrina year and was like, do we raise premiums and the next year they made a bundle. working together on a blueprint for tax and spends policies. and joining us now two leading financiers speaking with the president and congressional members on what's needed to help grow the economy, ralph is ceo and blair efron is co-founder and partner at center view partners. both -- i'd call you guys kind of legendary to some extent in the business world. just kicking butt and taking names and it's a great time for a niche player. >> we're doing okay. >> that's what you said last time. is it modesty or something? >> no, it's just every day. >> you don't want to jinx it? >> every day you have to rebake the bread in our business. and the moment you start taking whatever modest success we have for granted, you slip. >> and -- >> we say every day. >> same with center view. >> well, the worst thing about this business and the most exciting is you announce a deal or you close a deal and the next day you get up and you say, okay, now what do i have to do? >> january 1st is never a the good day in banking. >> we're going to talk a lot about -- hopefully we'll focus on business. we'll talk a little bit about that, as well, since you both do advise people that are in high places. and we were just -- you asked me where i was from. i said new jersey, i was kind of like kidding and you talked off camera about whether someone like chris christie can garner enough support in the core of the republican party to actually get the nomination. and what do we decide? the party is possible. maybe the mentality is rubbing off on me. >> i think we'll know more as we start to see 2014. what happens in a state like kentucky, there's mitch mcconnell. he actually primaried and is there ramification of that. i think in 2016, it would be nice to think the debate really does go back toward the center. and that we are going to be talking from a centrist position. >> if you look at all the trends, that's not happening today. look at a state like indiana in the last election. dick lugar, really fantastic senator was defeated 65-35. in the primary. >> we'll see these guys challenging and the latest challenge after the last shutdown that's going to come from the right. let me ask you something quickly. we've heard that now that the president has been able to put on the table some sacred cows to his base that the republicans should look at that and say, wow, we need to move a little bit and try to meet him half way. then we saw the piece yesterday that there are large parts of his base that won't say he better not touch social security. he better not touch medicare. and have you seen druckenmiller, what we are promising, how are our young people? there's nothing left. even tom friedman -- i'm sorry, we ate it all. that's what we're doing right now with how much we're promising in terms of medicare and social security. there's nothing left for the young people. >> we have some really serious intermediate and longer term. >> they come around to see we've promised too much. you can't raise taxes enough to pay for it. >> over time, i don't think we have a choice. 2 1/2 times the spending of discretionary. 2% of total outlays of the lowest we've seen since the eisenhower era. it's not sustainable f. you're going to reinvest in the country, look for long-term growth, you want health care, you want education, school lunch to nasa, you're going to have this debate. >> is that debate going to have to happen sooner rather than later. the president has made it clear that immigration is the next issue he wants to move on and that's an important issue too. it's one that forward u.s. -- >> well, we have -- >> as its agenda. >> well, i think, going back to your question and joe's, i think we have to get to a point where the wings of both parties get marginalized and the center, the middle of both parties works together to produce a solution. and if we don't get that, we're going to have continued lines in the sand. and, you know, immigration is a great issue. what i believe they need in washington is to get a little practice at working together. they have to succeed at something -- >> but ralph, when you talk about both sides have to come to the middle. what you mean, if i'm not mistaken is entitlement cuts and tax increases. and that's the way that the middle, i think, believes we get there. >> well, we've done a lot on taxes already. and -- >> not as far as entitlements. >> no, what i would say is we have to erase the lines that both have drawn in the sand. the democrats as you saw in the journal yesterday, don't touch entitlements. there is no path to long-term competitiveness for america and fiscal stability without seriously addressing the entitlement problem. and the truth is, it's a much worse problem in the second and third dade frecade than it is i next decade. >> the aarp has come out and said they don't want to see anything happen other than lifting the payroll tax, taking off any limits on it and that will easily solve the problem. is that true? >> no, i don't think so. >> i think social security, it may be. >> medicare and medicaid. >> social security. >> but similarly on the republican side, this idea, you know, no new taxes. not a dollar of revenues is not a helpful idea. let me explain why. we've got over -- >> i'm going to disagree with you. >> over $1 trillion of tax expenditures. if you take that position, no new taxes, you're basically saying, okay, if we get rid of the tax subsidy for ethanol, we don't agree with that because that's a tax increase. if we had a spending program for ethanol, oh, we could cut that. they do the same thing. it's not a sound position. >> same concept. >> we're supposed to get rid of -- and weren't we talking about simplifying the tax code and getting rid of loopholes so that we could lower rates to broaden the base? well, we've raised rates and now you want to keep all the money from closing the loopholes. >> i think we would all agree that the real debate can't happen until 2016. what you want to see is at least talking about these issues sooner than that. obviously the next several weeks are going to be an interesting challenge, the sequester. >> do you think the president is uncomfortable with the wings that we just talked about -- i think he's closer to that progressive wing than -- >> the president has already put out $400 billion on medicare, already put out $230 billion from cpi as concepts. he's been very clear there's someone to discuss the issues on the other side. >> he just doesn't like republicans then? because he certainly didn't get in that room and roll his sleeves up and try to -- there's a lot of animosity on both sides. the atmosphere right now, clearly is not what we need for constructive dialogue. >> when they -- they wouldn't give him a victory on, you know, the smallest victory there are some that never -- they cut their nose off despite their face. >> and if i could disagree slightly with blair, i think we have yet another chance to do something of consequence. and i'm not sure it has to wait until 2016 election. i really believe that every couple of years we kick this can down the road, we make the adjustment harder and the landing is a steeper landing rather than -- >> i guess what i'd say is this, though. we have made progress on the budget, right? 150 billion, 4.5%, that's gdp this year. i think one, the business community would look at any incremental progress now because the bar's been set so low as a win. and, two, you have some basic near term issues around sequester that if you could actually make some progress -- and republicans also, running corporations in the house, already said that. you would prove that you can get small wins. >> yep. >> all right. just getting past this next three-month deadline is going to be a win which is no way to run up. >> i think one thing we have to really emphasize is if you go back to 2011, you know, the downgrade of the u.s. by s&p, the watch list this time, we're not getting, you know, put on watch list by the rating agencies because we don't have an ability to pay. it's a willingness to pay. it's an ability of our government to function. >> but the bonds never sold -- we were still -- it didn't matter. >> if you travel around the globe, you know, where we get today $5 trillion of purchases of treasuries, you know, people look at the united states and see this kind of governing. >> anyway -- i look at you and say 20 hard and you're like, excuse me? up next, can netflix do no wrong? better than expected outlook. we're going to talk to rich greenefield next about the company's prospects and take a look at oil, wti still below the $100 mark. as we head toward the september jobs data. it's jobs friday. >> not really. tdd#: 1-800-345-2550 trading inspires your life. tdd#: 1-800-345-2550 life inspires your trading. tdd#: 1-800-345-2550 where others see fads... tdd#: 1-800-345-2550 ...you see opportunities. tdd#: 1-800-345-2550 at schwab, we're here to help tdd#: 1-800-345-2550 turn inspiration into action. tdd#: 1-800-345-2550 we have intuitive platforms tdd#: 1-800-345-2550 to help you discover what's trending. tdd#: 1-800-345-2550 and seasoned market experts to help sharpen your instincts. tdd#: 1-800-345-2550 so you can take charge tdd#: 1-800-345-2550 of your trading. shares of netflix jumping in the premarket trading. when we say jumping, we really mean it. this stock up by about $40. the company reporting better than expected third quarter earnings of 52 cents a share on more than $1 billion in revenue. joining us now is rich greenfield. and hosts with the company's conference call last night. rich, looking through on netflix, it was the subscriber growth that even beat raised expectations. that was pretty phenomenal. >> i don't think it was the u.s. subscriber growth. i think what's really happening now, you've got netflix is now larger than hbo domestically with 31 million subscribers, looks like 33 million plus by the end of this calendar year. but the real issue here and what has investors excited and i think why the premarket trading, becky is the way you talked about is the excitement over international. and international, not so much even where they came in -- did they come in better? yeah, some of that due to some discounting they did latin america. but i think the real excitement is about 2014. during the video call that we did, management talked about getting into some of the large broad band markets. you know, they're only in three of the top ten u.s. broad band subscriber markets worldwide right now. the u.s., uk and brazil. they're not in big markets like france, germany, japan, south korea and russia. and i think the implication from last night's call is they're going to go into some of these large markets versus like scandinavia and the netherlands where they've gone over the last 6 to 9 months. >> is it your expectation they can move easily into those markets? are there barriers to entry? >> i think those are more difficult markets in terms of gaining the leverage of u.s. content. you know, one of the things netflix has done so well, they talked about this last night is the ability to make a show like house of cards and have it play so globally across their footprint. whether the markets we just discussed will be as accepting or as interested in that content meaning you can create content in the u.s. but benefit from it globally is to be determined. i'd say investors are looking at this much like amazon in a sense they're basically allowing reid hastings to run with international. they have confidence that they actually, that he will be able to execute well before he's even proven the ability to execute in some of these large international markets. >> they don't make any money and they don't. and i don't know how they ev ever -- it seems like -- as we -- to start out and -- dick parsons made the point that a small company was able to do this to start out. but to get where they are now, it seems like a lot of different people could do this. and seems like it's almost a commodity to deliver content over, you know, over the internet. >> an income of $32 million. >> well, it's a $400 stock and make 50 cents. >> that's what i mean. >> it's 200 times earnings. >> on $1 billion in revenue. >> and on a $20 billion market cap company. and, you know, and then, rich, we've got to talk about will the deal with comcast. will that get done? i would think that would make sense for netflix. >> let's break it into two pieces. start with, first, they do make a lot more money than they show on paper. they are consciously deciding to go overseas. two years ago the discussion was would they ever make money on the u.s. streaming business? margins were in the single digits. now they've got low 20s percent margins on the domestic streaming business. they're choosing to take their dvd cash flow, streaming cash flow in the u.s. and plow it into building international. if you think international's never going to work, you should clearly be selling this stock, it is not worth where it is today. the investors that like this stock believe it's going higher on executing overseas and getting those margins from losing, you know, call it $70 million in a quarter to getting to a 20%, 30% margin internationally the way they're already at that margin in the u.s. that's kind of the big rub there. do you believe in their ability to scale international the way they are domestic? on the question in terms of the set top box, they're clearly talking, they clearly have cleared up some of the confusion about how their contracts prevented them on being set top boxes whether it be comcast, charter or others. i think the question becomes how soon does that happen? and, remember, most of the set top boxes across the country, there's 100 million meaning with cable, satellite or verizon fios type service. most of those boxes are not easily upgradable to have netflix on them. these are a lot of antiquated hardware. i think as they mentioned on the call, it's going to take a long time to roll out even if they could get a deal in the u.s. across a wide swath of the u.s. given the state of boxes in the country. >> i would never sell reid hastings short of -- i've heard him speak, he's a brilliant speaker. he's going to succeed one way or another. but when you look at stock up $40 in the premarket, would you buy it here? especially when you lay out the idea that, look, this is the market thinking that they're excited about this launch expecting that they will be successful internationally. >> i think you have to look at the very end of the netflix statement that they made last night. they read a letter to shareholders. and at the end of the statement, reid hastings talked about the euphoria surrounding the stock. we asked them about that statement. and you know, he usually doesn't comment about the stock. and i think that is what concerns us is that we've been a huge bull on netflix, put a buy on it at $170 back in april. when it broke through, i think it was 312 in mid september, we thought that valuation had gotten relatively full. obviously that's 80 points ago now listening to where the stock is this morning. there's clearly momentum here. we thought it was a little too rich to be aggressively buying it at these levels. >> one thing that strikes me as content is really worth a lot. and even though we hear about digital nickels, you know, versus analog dollars. it's amazing. the whole international story. it has to be stuff people want to watch, right? >> well, you can't look at it as domestic. you can't look at it as digital content versus traditional consent. when you watch house of cards or "orange is the new black," you don't appreciate you're watching digital or television, it's just content. their ability to create content that looks like it could be amc, fx, or showtime, orange is the new black is a good show. they're definitely coming out of the starting from scratch and original programming and doing a lot better than anyone expected. and that's a large part of where the stock is where it's at today. >> and rich points out that netflix usage is 93 minutes per subscriber per day. >> if you look at total minutes per household, it was below disney now above disney. the only thing it has in its sights is nbc, cbs. >> richard, thank you very much for your time this morning. >> thank you. coming up, oil hitting a 3 1/2 month low. we find out what's driving the move. and then our corporation's ready to get in the buying and leasing private jets. cnbc's phil lebeau has the tough assignment at the national business aviation association conference. he'll tell us if america's biggest companies are getting onboard. time now for today's aflac trivia question. how many incumbent u.s. governors are female? the answer when cnbc's "squawk box" continues. yo, yo, yo. aflac. wow. [ under his breath ] that was horrible. pays you cash when you're sick or hurt? [ japanese accent ] aflac. love it. [ under his breath ] hate it. helps you focus on getting back to normal? [ as a southern belle ] aflac. [ as a cowboy ] aflac. [ sassily ] aflac. uh huh. [ under his breath ] i am so fired. you're on in 5, duck. [ male announcer ] when you're sick or hurt, aflac pays you cash. find out more at aflac.com. now the answer to today's aflac trivia question. how many incumbent u.s. governors are female? the answer, five. up next, a closer look at oil and the move lower for the second straight day. and don't forget, it is jobs tuesday. that's right, it's a tuesday. we're getting a big jobs number. we had that government shutdown out of the way finally. the markets are starting to see some of the delayed numbers from that. the september jobs report is just ahead. "squawk box" will be right back. in a world that's changing faster than ever, we believe outshining the competition tomorrow requires challenging your business inside and out today. at cognizant, we help forward-looking companies run better and run different - to give your customers every reason to keep looking for you. so if you're ready to see opportunities and see them through, we say: let's get to work. because the future belongs to those who challenge the present. my son just got a job going to becky's house to hook up her netflix. welcome back to "squawk box." apple holding the event in san francisco later today. the company expected to unveil new versions of its ipad and the ipad mini. it'd been thought that apple might release a new version of the apple digital tv receiver. i'm looking forward to the new mac book pro. microsoft also with product introductions today, the newest models of its surface tablet computer are available today as microsoft tries to make in roads into the highly competitive tablet market. and, of course, just an hour away, from jobless friday on tuesday as we finally get the september jobs report which was delayed by the government shutdown. it's out at 8:30 eastern time. that's good. >> our next jobs report is on a friday but it's not the first friday. >> not the first friday. >> jobs reports put me in a good mood. >> does that mean you're drooling right now? >> yeah, because i think it's friday. i have a feeling it's a jobs -- >> it's jobs friday, we're about to be done for the week. >> every month for how many years. >> for a long time. >> take a look at crude oil prices falling below $100 a barrel. this morning it's even lower. let's get to the trading block on this. and much lower, $98.97. matt smith is joining us. on gold, we have frank holmes, ceo and chief investment officer. and matt, let's start out talking a little bit about oil. this is a big story. this has been a pretty rapid drop. what's the reasoning behind it? is it the economy or something else? >> everything that rallied prices last month from libyan supplies coming offline to syria to ongoing tension with iran, that's all dissipated somewhat and that's why we've seen prices drop lower. >> how quickly could those tensions return? >> very quickly, indeed. and so while a lot of people are thinking that prices could move lower from here, i think we could well see prices bounce. especially even just yesterday, we heard from the militant group in nigeria so they could bring supplies offline in terms of sabotage. there's these pockets of geopolitical tension everywhere. >> i guess it makes you wonder what the fair price is given the economy and given global demand. is it $98, $95, $90 if you don't have these continuing geopolitical problems popping up. >> that's the thing and the government shutdown here impacted prices here in the u.s. we had a delayed report yesterday for the eia and we saw it increase by 4 million barrels. we have another report tomorrow, we'll see another build there. and that's also influencing things, as well. prices have considerably dropped in the last few weeks. >> how did the government shutdown hurt demand? >> it didn't necessarily hurt demand per se, we weren't getting the data coming through and really we were just flying blind. and so the impact of that data is now going to -- was seen yesterday and it will be seen again tomorrow, as well. >> so your bet for where oil prices are headed, let's say over the next three months? >> i'm not as bearish as some people are. i think they're going to kick around about this sort of level. >> even this level, though, i would think, gentlemen i'll ask around the table here. a level like this could be good news for consumers as you head into the holiday season. >> absolutely. we've had a consumer since labor day that has been weakened. you see the retail sales, i think this is very good news. >> okay. >> same thing. it's like a modest tax cut. >> that's good news there. frank, let's talk about gold prices. what happens? we saw all kinds of moves around the government shutdown. where are you betting gold is heading? >> well, i've always advocated a 5% in gold stocks. and that's a key part in a diversified portfolio rebalancing that. now, what happens each year in october is gold takes a correction move just like in oil. it's 35-years seasonal pattern that both of these commodities go through a shoulder month correction. and i think the last thing, becky, really important for investors is this bizarre high-frequency trading taking place in the commodities. commented on this, shows a very detailed chart of this pattern of flashing 43,000 contracts which is a multibillion dollar trade and then cancelling and 3,000 creating a cascading commodity prices down. but the physical demand in india and places like that is still robust and healthy. >> if this is an annual correction you see every year, do you sell it every year headed into this? >> no, it's just best to be diversified portfolio, long-term investing, for the past 3, 5 and 10 years having this 10% waiting and rebalancing each year has been helpful to investors to improve the long-term performance and lower the volatility. >> you should have 10% for just a zombie apocalypse, really. right? just in case, right? if the grid goes down. >> if you buy gold jewelry for your daughters. 5% -- >> what about crude? i want to have something i could actually use to bribe someone if i needed to some day. i don't know, to get somewhere. >> it's a zombie apocalypse, no one cares -- >> not necessarily zombie. >> u.s. dollar silver coins, they're not expensive, they're beautiful to look at and they're cashable anywhere. >> accepted by border guards, things like that? >> absolutely. >> will it placate the zombies, though? >> you need a quiet generator, number one. i've got generac working on that. >> are they going to take silver or gold? >> they just like intestines. >> so it's irrelevant. >> it's not irrelevant. >> well, you take a look at india, gold for the past three years is up almost 70% in rupee terms. there's political turmoil. >> you've always got an answer for why it's really not a $1,200 an ounce. you've got an answer, holmes. we always call him holmes. >> you always call him holmes. >> i'm agreeing with you, 10%, holmes, 10%. i'm agreeing with you, 10% is just to have it. >> you don't want to buy it the way he p wants to buy it, joe, you want to have it in your mattress. he's not telling you to buy physical gold, is he? >> yeah, jewelry. >> no, i say buy gold jewelry. beautiful gold jewelry. >> you want 10% of my portfolio to be physical gold? >> 5% in jewelry. >> 5%. >> 5%. >> 5% of your portfolio, no it couldn't -- you could buy a partial. >> an opportunity for joe to make fun of my salary. >> gentlemen, thank you both. >> i'm waiting for the zombie apocalypse. >> go to the border guard. here's my statement, i've got this gold in the cjf. it's great. coming up, is corporate america ready to hop back on that g6? i think that's the new one, the composite one. phil lebeau from henderson, nevada, with a look at what's coming up after the break. hey, phil. >> reporter: hey, joe, we're out here at the national business aviation convention where all of the latest corporate jets are shown. and we'll explain why executives are finally saying, you know what, sure, let's put down a couple million dollars or several million dollars for a new jet. we'll explain when "squawk box" returns. 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[ female announcer ] today, cisco is connecting the internet of everything. so everyone goes home happy. i don't know how to say this. >> group from the '90s. >> i feel like -- >> i know. >> with michael jackson is sort of my speed. >> that's why you have people of my era. >> may have been too sexy for their shirt, i do remember that song. but is your hyundai too sexy for you? >> what car? >> hyundai. >> he doesn't drive a car. that's why. but over there, you should know how to say hyundai. >> he's only filling in for a day. >> what did he go there for a day for? >> he was there for the deal book conference yesterday. he was there today. >> that was andrew hosting "squawk box" asia today. they actually do call bernie the joe kernan -- >> do they really? >> of asia. years ago, they did, bernie lowe. great guy, compelling, funny, genuine. >> then how come -- >> he'll be back. >> weren't you called the bernie lowe of america? >> i was. andrew will be back with us on thursday. and we can't wait to hear about his trip, literally we can't. when he goes to these places, he checks the entire area out. anyway. our business leaders ready to get back on board that corporate jet. phil lebeau joins us now from the national business aviation association convention in nevada. and i just saw something the other day, phil, that actual manufacturer of these jets has still got before it gets back to where it was, we've got another ten years, which is weird because there are some signs of life just in the leasing market, right? >> right, we're seeing some signs of life. that backlog that built up in '07 and '08 and saw a huge drop in demand. the worldwide sale of business jets, you can see it's been trending down over the last three to four years. this year, there's some optimism that perhaps they might eclipse the number of jets sold last year. overall, business jet sales are expected to top $18.4 billion this year. that's according to a study out by honeywell. the business jet makers are seeing greater range or greater demand i should say for longer range, larger jets because they've got to go more international than in the past. still, when you talk with the executives of the jet makers, all of them say there's a little bit of concern about the uncertainty of the economy. >> okay. >> we just went through a pretty tough patch. this one sort of self-inflicted. and i think the biggest concern a lot of our customers have, this was self-inflicted. all we've done is push off another bunch of uncertainty to january. >> what do you hear about from ceos in terms of their view of the economy right now and their hesitancy to put their name on the line for a new aircraft. >> uncertainty present in their mind. clearly the last episode in washington with the shutdown the debt did not help them being more comfortable. >> the ceo yesterday they announced the 5x, which is their newest corporate jet. it will be holding, it could hold anywhere from 12 to 14 people. have a range of going a pretty far distance internationally. take a look at shares of embarar, they are up this year. this is the most optimistic they've been in a number of years. they believe a number of executives realize they've got to get on these planes even through fractional ownership or finally saying, you know what, we need to either upgrade the fleet or finally buy a new corporate jet. we're going to be here all day long. lots of interesting stories out here, guys and the take from the executives about the economy, almost everybody says the same thing, washington's got to get its act together because a lot of their clients are saying until we get certainty in washington, we're holding off signing on the line for a new corporate jet. guys, back to you. >> thanks very much. coming up, still to come, final thoughts from today's guest host. and the top of the hour, richard anderson. he'll talk quarterly results, the effect of the government shutdown and the strength of the commercial airline business. looking at futures right now. right around the flat line there. well, actually turned around. we were negative, now we're positive. what else? nasdaq also. s&p on the downside. ♪ ♪ [ male announcer ] eeny, meeny, miny, go. ♪ ♪ more adventures await in the new seven-passenger lexus gx. lease the 2014 gx 460 for $499 a month for 27 months. see your lexus dealer. let's get some final thoughts from our special guest today. gentlemen, we've been talking in the commercial breaks about resurgence in activism. activist investors have been on the rise. carl icahn's out there. they're two of the more visible ones. but this is something that major companies that never had to worry about these things before. a company like a dupont, a company like a microsoft, an apple, a company like a pepsi. what's going on here? what's new? what's different? and is this really a resurgence? >> well, i think the first and most important thing is that institutional investors are investing in a big way in these activist pools of capital. you've got lots of capital and they've generated good returns because they have a catalyst that produces activity that produces shareholder value. so the first thing is you've got a lot of capital chasing opportunities and the size of that capital has allowed them to go after much larger companies. the companies you mentioned p & g, companies that historically would have been absolutely impregnable to that kind of activity. and would never even have been discussed in the board room the idea there would be shareholder activism or a hostile base. >> is that for the good or bad? >> first of all, embedded in the whole question of activism is the notion that boards aren't doing what they should be doing. it's not true. most boards today at most companies are their own best activists, point one. i think most companies have to figure out the balance between what is good for the short-term and what is good for the long-term. any company can cut its way to greatness on the margin. but at some point, you're not going to be able to reinvest in the business. you're not going to know what's good for 100% of the business. >> is there something they're exploiting here in the sense of go be obnoxious and you'll make money -- rather than, you're saying if the boards are doing the job and i figure there are cases where they're not. >> and i was going to say, it's not every case and not every case that the activist is obnoxious. but, for example, jc penney, i think most people would argue that jc penney is not as good a company today before the activism. irrespective of some of the issues they had. and then there's another point. shareholders don't appreciate how much time a management team spends over many quarters thinking about this when actually thinking about how to grow the business today, how to get to tomorrow. >> we should point out, blair, you also represent pepsi. >> right. >> let's talk about apple. they come in and say, you have all this -- i think they're right in that regard. apple needs to be pressed to do something with its cash. what's wrong with activism when it comes to apple? >> i'm not saying every situation is wrong. the question is with apple on its own, with its board get to a place with its balance sheet. and number one, number two is the issue just the balance sheet or is it the company doing what every company is doing. they spent so much time thinking about carl icahn, thinking about before that green light that i can't believe that some part of tim cook's mine share could have been better devoted to figuring out the next ipad. >> in a vacuum you could say maybe the activism was worse. on the other hand, you look at the decline of other great american companies without activism. jc penney was tough. that was a tough one. >> every company is different number one. number two, every activist is different. companies doing their job better be focused on balance sheet efficiency, better be focused on productivity, better be focused on reinvestment and thinking about the portfolio generally. the best companies, a lot of the companies you've mentioned do that. but to say every company's doing that, of course that's not the case. >> it's new there's so much money behind it. >> yeah. >> are companies coming up with defenses against the money? is that a new trend, as well? >> well, i think, first of all, every company this is on the agenda for management and for the board. and to the extent they are doing their job well, that additional aspect of it is a distraction. i think the concern we should all have is that the long-term effect of this makes it harder for companies to invest in things that have shorter term bane for shareholders and longer term gain. i'll give you a very simple example we don't have an activist, anybody would be crazy to be investing in our firm. >> that's not true. i would invest. >> but, you know, every year we have to decide how many partners do we add? every time we add a partner, it's dilutive to our earnings in that particular year because we have the expense, they don't generate revenue. we add good partners, it adds unquestionably to the value of the company two years ago out. but you sit there and say how much of this investment can i tolerate? take the company we talked about earlier, netflix, here's $20 billion of market value that's been created out of whole cost effectively. no big company could afford to make the investments, you know, particularly with an activist looking over their shoulder in, you know, with no earnings, no cash flow. to build that $20 billion of value. and, you know, it makes it more challenging. >> at the same time, an insulated way, that's really the reason. and maybe this is a good counterbalance in the market. >> i think the only thing, then, to underscore blair's point, you know, boards of directors today are as a general matter, you can't say every board. >> today. maybe because of the activism. >> well that's not -- >> i'd say this, much different situation today than even five, ten years ago, one. and two, i think everybody should be proud of corporate america generally in terms of the competitive gaps these best companies have created versus companies anywhere else. and i have to tell you, it is hard to walk into a bedroom today generally and not be impressed. you take the job very seriously. >> will you remember what you just said? and next time you're in with the president or some of his people talk about how proud you are of corporations in the private sector, can you just -- would you mind, can you see if you can convince them? >> happy to do it. >> i think he knows that and feels that in his bones. >> i know that stuff he said about insurance companies, oil companies, drug companies hmos, pipelines, i know that was all sort of for his base. >> maybe just reemphasize it, would you do that for me? >> deal. >> thank you. coming up -- >> he said assault rifle not a handgun. >> that's overdoing it a little bit. thank you. coming up, delta airlines ceo richard anderson. we have richard anderson on the company's latest quarterly results and keep it right here on "squawk box" for jobs friday. i'm sticking with that. because i'm not -- we're going to get a delayed jobs report thanks to the government shutdown. the numbers in the market reaction just ahead. 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[ male announcer ] open an account and get a $150 amazon.com gift card. call 1-888-280-0149 now. optionsxpress by charles schwab. call 1-888-280-0149 now. sometimes they just drop in. always obvious. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group: how the world advances. it's jobs tuesday. we'll get the september employment numbers delayed by the government shutdown. mark zandi will tell you what to expect. plus, we'll see how my employment estimate stacks up with the actual government numbers. >> september payrolls according to the "squawk box" team of economic reporters 158,000. >> and delta airlines releasing third quarter results. >> all the electronic devices have to be turned off. >> ceo richard anderson joins us to talk earnings, jobs and america's debt crisis. >> i just found ways to leave my phone on and nothing happens. >> yeah. >> as the third hour of "squawk box" begins right now. >> welcome back, everybody, this is "squawk box" here on cnbc where we are first in business worldwide. andrew ross sorkin is in hong kong where he hosted "squawk box" asia and the call earlier today. >> so you're saying that oba obama -- >> socialism, you got me. you got me nice. there you go. >> a lot more of the show to go. >> he is the joe kernan of asia. >> why didn't andrew ever say i got him on socialism? he never cops to socialism over here. he did -- did you see that? >> didn't think anybody was watching. >> we also have a lot more of the show to go. we are counting down this morning to 8:30 a.m. that's the release of the delayed september employment report. economists are looking for an increase in nonfarm payrolls of 180,000. the unemployment rate seen steady at 7.3%. mark zandi and kevin hasset will join us soon about what they expect from the jobs report and what we can take out of it. >> bernie could move here theoretically, did you hear him. >> right now, let's get a check on the markets. u.s. equity futures are now. they're not doing anything, they're up three points. yesterday wasn't that bad. >> probably true if you're -- >> up on the s&p as we've seen recently. >> if you're 1 in a million here in the united states, there's probably four of you in china just by population. >> well more than that. >> there's four joe kernans somewhere. >> there might be an actual me over there. >> that's right. theoretically. >> like a billion -- >> i think things are, i mean, $85 billion a month, rub it all over and it's not going anywhere, liesman. >> i don't think so. some earnings to tell you about. dupont reporting a third quarter profit of 35 cents a share, 4 cents above estimates. the company says it sees modest growth in earnings for the full year despite a significant decline in results for its performance chemicals unit. united technologies, the dow component a reported third quarter net. $1.55 versus estimates of $1.54. revenue was slightly shy of expectations. the company, however, attributed the ongoing weakness to the military aerospace markets in the slow pace of the recovery in europe. not here necessarily. united technologies did raise the lower end of the earnings forecast by 10 cents. and travelers reporting profits of $2.35 a share. well above estimates, revenue in line with estimates, the insurance company also authorized an additional $5 billion in share repurchases. >> airline stocks have taken off lately and delta airlines going along for the ride. the company reported third quarter results earlier this morning earning $1.41 a share. joining us now is richard anderson, the ceo of delta airlines and thank you for being with us this morning. >> thank you, becky. >> richard, we saw some of the numbers that came in. passenger revenue up 6.7% and passenger unit revenue was up 4%. yet an improvement in yield and 4.5%, those are all pretty strong numbers. what's happening here? is this strength in the economy? or is this something you guys are doing once you get people in the door? >> both. the domestic economy has been really quite strong over the summer and we saw good strength in europe particularly. the only weakness around the world really has been japan with the yen. but separately, delta has performed well above the industry in terms of unit revenue, free cash flow and margin expansion. >> how have you been able to do that? what specific operations have you been able to improve to show that growth? >> well, first we have run a really good operation. we've had 40 days this year with no cancellations on our main line and our employees are doing a very good job with customer service. second, we've really done well with our alliance partners around the world in terms of expanding our network through alliances in europe, latin america, mexico and in asia. and lastly, we've done a really good job of matching capacity to demand in our markets. >> looking through cargo revenue, i see it was down 6.1%. what's that a reflection of, commercial or -- >> well, it's really -- that's really been a global phenomena. we've seen cargo, weakness in cargo yields around the world. i think it's even reflected in fedex and u.p.s. numbers. and i believe because of higher fuel prices and fuel surcharges, much more the freight is moving by ocean or other means. >> richard, you point out that you have -- >> for delta, that's a relatively -- >> go ahead, sir. >> go ahead. >> i was going to say that for delta, cargo is a relatively small part of our business, byproduct of our business about $1 billion a year in revenue on a $40 billion top line. >> i think there's a little bit of aedly delay on the line. i apologize. let me ask you what you've been seeing in the economy. we have charlie evans, the fed president from chicago on yesterday. he said one of the numbers the fed's going to be watching most closely or at least he'll be watching most closely is what's happening with consumer spending. it's been a little bitd we weak. you haven't seen any signs over the last few months of consumers kind of pulling in their wings? >> well, becky we did see an impact, we believe, from the government shutdown in october. we saw about $20 million to $25 million of weakness versus where our forecast had been. but as we look out over the remainder of the year and into the holiday season, we're seeing good booking patterns and we've issued guidance for 7% to 9% margin up for delta about 300 basis points year to year. if you look around the world, asia seems to be strong. the yen weakness hurts us a bit. europe was our strongest performer this past summer. and the latin america and mexico markets have been strong. so overall while not, you know, 4% growing economy, we do think, you know, we're in probably 2% to 3% range. >> and i guess that gets us back to where things stand with the government talks. these talks have been put off that you're going to see them come up again in january and february. do you worry that if there's a standoff again it will take an impact -- it will have an impact on your bottom line? >> it will have an impact on everyone's bottom line. and as a nonpolitician american, i just think the government should figure it out. and the fact that we go from -- we lurch from one event to another in this country every 90 to 120 days is not acceptable regardless of whether you're a republican or a democrat. it just needs to stop and they need to fix their business the way we're required by our shareholders to fix our business. >> we've had some ceos who have come on and called for a grand bargain where you see cuts to entitlements raising revenue, raising taxes as a way of offsetting some of that. would you be in favor of that? or do you think it's more important to have any sort of a deal and if it's not a grand bargain, it's not a grand bargain. >> i'm not smart enough to know about grand bargains, i just know that as an american citizen and someone that has responsibility for 80,000 employees, you expect the most powerful, wealthiest government in the world to figure out their problems. >> richard, i want to thank you very much for joining us and we appreciate your time. >> thank you a lot, becky. it's always nice to be on your show. >> thank you, sir. coming up after the government shutdown forced a delay, we're finally less than half an hour away from the september employment report. mark zandi, kevin hassett will tell us what to expect from the government job data. "squawk box" on friday coming right back. the partisan bickering during the shutdown have many americans fed up with politicians. >> i wish i knew how to quit you. >> but cnbc isn't ready to give up. we're calling for a grand bargain in washington to fix the debt crisis. we're calling for compromise. we're calling for politicians to win us back. washington, show us that you deserve a second chance. >> you had me at hello. 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. welcome back, everybody. it is jobs tuesday but it is also tablet tuesday today. apple's holding a product event in california where the company is expected to unveil the latest updates to the ipad line, a new imac pro and an osx operating system. nokia released the first tablet today. these were among the last products the company developed to compete with apple and samsung before deciding to sell the handset business to microsoft. and microsoft surface two and surface two pro tablets go on sale today including the united states. both are updates of the first generation surface tablets released last october. improvements include increased battery life, faster processors and higher resolution screens and cameras. and watch out, google, microsoft is reportedly testing prototypes for web connected eye wear similar to google glass. microsoft has asked component makers to supply cameras and other key components for eyewear prototypes. i have no idea what i just said. coming up, before we get the september employment report, we're going to tell you what to expect. kevin hassett is the director of economic policies studies at the enterprise institute. and our guest host for the rest of the show is mark zandi. making his way to the set right now. the american dream is of a better future, a confident retirement. those dreams, there's just no way we're going to let them die. ♪ like they helped millions of others. by listening. planning. working one on one. that's what ameriprise financial does. that's what they can do with you. that's how ameriprise puts more within reach. ♪ we are minutes away from the september jobs report. joining us now with a preview, our guest host for the rest of the show is mark zandi. i look at him, i get happy because i think it's friday. >> me too. >> wednesday -- well, because it's a jobs -- no, but we have to work tomorrow. that's, you know, that's -- kevin hassett lately has become associated with good weekend feelings. usually we're with you on a friday. this will be the only time because the next one is on a friday. but it's a week later. but it's still followed by a saturday. but this one we got today. the labor markets clearly slowed down from the pace earlier this year that threatened to give us 200,000 a month. i think the s&p and moody's report. what is this? >> i don't know what that is. >> who's talking? >> i think that's kevin's notes. >> kevin. >> kevin. joe's going to -- >> you can go home. you can go home. >> it's always interesting. anyway, i'm going to ask both of you, gentlemen -- here's my -- both if we had no shutdown, i can see how that would be an important report. i still say the one preshutdown is still the more important report. because the shutdown report is like a one-time item. >> because of that crummy number we had with the bad revision. i want to see if this confirms that the job market has slowed before the shutdown. >> yeah, i think that makes sense. the number in two weeks will be a mess. this number will give you a clean -- relatively clean read on whether the job growth has been slowing or not. >> what do you think it's going to be? >> i think it'll be slowing. >> what do you think this number will be? >> 150,000. >> i came in at about 160,000. when you look at what they said when they decided not to taper, things slowed marketedly. we're going to hover around 150. so, yeah, i think a little bit better than mark said but 150, 60, probably lower than the market's expecting but what you ought to expect given everything else. >> gdp growth sub 2%. and it's difficult to get job gains much north of 150,000. >> right. and while the shutdown's an october story, everybody was expecting the shutdown in september and you hire people because you think the world's going to be better tomorrow and people definitely didn't think that in september. >> yeah. do both of you think the shutdown will impact more than just the one jobs number? i mean, did it hurt us? is it taking -- still taking growth away and jobs away? >> well, you know, the shutdown per se, i think we'll get over that pretty quickly. if not in october, certainly by november. but i do think the brinkmanship and the uncertainty created by what's going on in washington. and that's a broad statement. not just the shutdown and it's not just the debt limit. everything going on in washington has weighed on the collective psyche and the willingness of businesses to engage. >> the last time it didn't happen again for a long time. everyone learned their lesson last time. why would you think this is cathartic? >> well, i'm hopeful. you listen to the sunday talk shows listen to the senators talking, it sounded like change. >> it wasn't the senators' fault the last time around. >> that's true. >> well, yeah, all right. we know whose fault it was, steve liesman. >> senator ted cruz. >> senator ted cruz. >> senator ted cruz. we're going to call this the senator ted cruz jobs report. >> we are. >> and the jobless claims of senator ted cruz. >> do you remember -- how many times -- >> there he is. can we get music to go along with that? >> if we had a picture of "w" ready to go every time we talked about what happened in the for the first five years. >> preempting the excuse. you cut off the means of the excuse. >> every bad employment report for zandi. if we had a picture of "w" to bring up, we could've used it. now we replace it with ted cruz. >> i think, though, what you're talking about, though, is a reoccurring one-time item. and i thought last time we had you on, mark, one of your most interesting comments i thought was the idea this was a big reason for a long time we've been underperforming. and i think there's a lot of reasons. but you can go back and succe successively shave off points of gdp because of this uncertainty. >> there's a lot more research coming out trying to measure what uncertainty means. it's an opaque concept and then relating that to economic activity and increasingly the studies are finding it had a significant impact. >> richard anderson was just on, just saying $20 million to $25 million in weakness they saw in october because of the government shutdown. he knows there's another one coming up. if we could just stop lurching to the next crisis for the next 90 days or so, that would be huge. just stop with the crisis -- >> well, this is the point i was trying to make when we were in washington last week. it would be great if we had a grand bargain. fantastic, but it's not necessary. i mean, we need to just get a deal so that this uncertainty abates and keep moving forward. >> is it worth the fight when we talk about what was done in order to reduce the deficit? >> oh, sure. >> was the cure worse than the illness? was any reduction in the deficit going to add to gdp to the extent that the fight over the deficit took away from gdp? >> there's a sense in which we had this conversation exactly wrong. and mark and i were talking about this testifying before a joint economic committee hearing last week. the thing is, if you've got a massive deficit, we know you're going to have to cut spending a lot or increase taxes a lot. something's going to have to change. these showdowns are spikes in uncertainty. the uncertainty is more than just the fact we're going up close to the edge every few months. if you look at the spike that happened in markets uncertainty and t bill rates and stuff around this shutdown, it was actually lower than what we saw the last time in 2011. i think the fundamental problem is if we don't fix our big problems, there'll be lots of uncertainty about when we'll get around to doing it. mark and i both agreed in this hearing, i think my estimate was it was about 2 million jobs right now haven't happened because all this uncertainty. >> kevin, the federal reserve we talked to charlie evans yesterday, said, yeah, you need medium term and long-term deficit reduction. but the best and brightest minds for what that's worth. think now is not the time to reduce the deficit. you look at the markets. the markets do not seem spooked by the size of the deficit. they take down with some assistance from the federal reserve the monthly and annual issuance of the federal government. why is it that some people in the republican party believe they know more about economics than all the people i cited. >> that's a little harsh. first of all, you agree that the big thing we have to do is address entitlements and if i tell you, steve, look, ten years from now, your social security benefit's going to be lower. i'm doing you a favor. >> i wouldn't shut down the government in order to get entitlement reform that's needed ten years down the road. >> well, you've got to get it some time. and the point is this is the only angle the republicans tried to get the democrats to talk about it. and in some sense, they succeeded. >> obama had $400 billion on the table back the last time around and they walked away from that. >> because they didn't like the way they did it. this grand bargain has to happen. and you should use every bit of leverage you have to make it happen. and if you don't, the uncertainty from that is going to be bigger than the shutdown uncertainty. >> yeah, but the reality is, we have a deficit problem, a long-term deficit problem. well, 2020, whatever you want to call it long-term, medium term. the deficits are coming in. it was 1.4 trillion in '09, it's $600 billion in the last fiscal year. under reasonable economic assumptions. we'll be down to, you know, 200, 300 billion in a couple of years which isn't perfect. but that's enough so that the economy can get moving forward. >> what happens post five years if we're looking seven years. 2020's only seven years away. >> i think we can all agree we have to bend the health care cost curve. >> yes. >> saying we're going to solve the problem presupposes we know how to do that. >> we do know how to do that, people have to pay more out of pocket, people need a deductible in medicare if they can afford it. there are simple things to do if they can fix this. >> it's not rocket science. >> i think social security, that's straightforward and i think we have pretty clear understanding of how to do that. but to bend that health care cost curve, you know. >> right, have people pay more out of pocket and they'll be careful about what they're spending their money on. >> give people $5,000 more social security and you're going to bend the cost curve. >> kevin, in obama care, you do have those elements, right? the cadillac tax. >> well, they changed the entire health care system when they could have done just this targeted thing. they could have tried to insure the uninsured and fix medicare and they wouldn't have had to create this website that doesn't work. >> the macarena, that's what someone e-mailed should be the music for ted cruz. >> that's what kevin's saying and it's true. anyway, coming up, we'll get the september employment report. both of these guys will stick around and really make us feel like it's a friday although, you know, it's going to make it harder to get up tomorrow. as we head to break, take a look at u.s. equity futures. welcome back, everybody, we're just a few seconds away from the september jobs report delayed by the government shutdown. ahead of those numbers, the dow futures this morning have barely budged. well, right now, the dow futures up by about 13 points, s&p up over one point. hampton pearson joins us with the numbers. >> up 148,000 september nonfarm payrolls increased by 148,000 jobs, the unemployment rate is 7.2%. average hourly earnings up 0.1%. below the consensus forecast looking for gains in the neighborhood of 180,000 jobs and a tic down. and revisions, july was revised downward from originally 104,000 job increase to 89,000. however, there was an increase in august, we vised upward from 169 to 193, a net gain of 9,000 over those two months. september, private sector job to that unemployment rate, it's the lowest since november of 2008 when the unemployment rate was 6.8%. the labor department says we got there because the number of people who got jobs went up. the number of unemployed persons went down, the labor force participation rate stayed flat at basically 63.2%. there was no impact on the shutdown and the gathering of this data. it had already been gathered and pretty much analyzed, no impact on the government shutdown in these numbers. september job growth by sectors, construction plus 20,000, wholesale trade plus 16, professional and business services plus 32, transportation and warehousing plus 13. biggest job losses, leisure and hospitality down 13,000, the employment and credit services losing 8,000 jobs. the number of long-term unemployed stands at 4.1 million, 36.9% of the labor force. back to you guys. >> hampton, thank you. let's get to the rest of the panel for a reaction to these numbers. steve liesman, mark zandi. steve, anything else that jumps out at you? >> the job growth looks to be broad based. there's only a couple of negatives, financial activities and leisure and phospitality an government up 22,000 after being up 32,000. >> is that state and local? >> i don't know. i have a top line government number. >> the revisions were not worse. >> took away in july. >> i'd think this is maybe -- you're saying it below expectations but maybe it's not as bad as people thought. the market's reaction was to go up. qe's here to stay. >> you're going to get your qe and jobs too. >> we want some jobs, i think. >> and it's not as bad -- no, i know but the market, these people -- these warped people in the market. >> i'll tell you one thing i don't like is the earnings. what was earnings? >> average -- >> i think on a real basis, mark, that's going to come down to negative. right if you take away. >> what did hours worked do? >> average weekly hours? >> yeah. >> 33.7, unchanged. >> labor force participation still 63.2%. >> right. >> is that good or bad news? we'd like to see that number go up. >> it didn't go up. the unemployment rate fell despite the participation rate. >> well, the household employment number was stronger looks like. it's a soft report. average monthly job growth is -- >> you want 200. >> you need 200. >> sooner or later you have to change your tune. >> we've been averaging 200 for the last two years. >> sooner or later. >> really? >> it's been 150,000 to 200,000 has been the range for three years. >> i thought 180,000 was what you were giving me. through thick and thin, what was your average? >> over the past three years, it's about 175,000. >> it's better at 148,000. we just had two straight below that. >> was it unusual they had this long to work on the number and only came up with 148, couldn't they have done something -- >> someone just said it'd already been cooked by the time it was supposed to come out. >> well, apparently, and the only thing i wonder if it's a more complete survey in that more data comes in from establishments over from the course of a month and that's what leads to the revisions? i wonder if they ignored that? i'll have to call the bls later. >> they had the numbers pretty much in the cake. >> three days away. >> i don't think they probably had anymore. in august, was the government up in august? >> it's all timing, right? when teachers go back to school so they probably went back early. >> why would you have the number in september? >> i'm sorry, i got it backwards, they were a little later than normal. more in august, less in september. >> yeah. why don't you tell us what you think about this? 148 is still not a great number. he wants better than 200,000. that's what the fed's looking for, at least what he's looking for. >> with the revisions right about where mark and i were. if a couple of morons like us think, that's where it is, then the market felt that too. and that's why we're not seeing the big move in the market in response to this number. the consensus was probably a bit high. but we've seen enough since the consensus was formed that number was not surprising. i think the earnings going down. you can argue for employment that's a positive sign. what needs to happen, when you hire people, you're bringing people in at a lower wage than the people that are already working there and you can sometimes see these averages go down because they're actually cutting wages which, you know, the reason you have unemployment in some sense is because wages are too high. if we're going to start to see job hiring pick up, we've got to see wages go down a little bit and we'll see that. >> in my view, it's the fiscal austerity, right? it's the tax increases and the spending cuts. if you add all of that up, it's about 1.5 percentage points of gdp. and it's in q3 of this year. you would expect, you can see in the gdp numbers and now the employment numbers. the bad news is it's a major drag on the economy. the good news is that under current law policy makers do nothing, the net fiscal drive will fade into next -- >> there's something else that's starting to pick up that's concerning me. if you look at the percentage of small businesses in the nfib survey that say they're worried about regulation, it's tripled over the last couple of years. and it's spiking. i think this obama care mess and everything else that's going on in washington is still a concern for hiring going forward. this 1 1/2 number we've been saying since february, we decided to agree on that. >> just so you know to round out the last conversation we had. state and local education both up, federal down. >> okay. >> this september, right? before the shutdown effects and the brinkmanship effects and feels like we're going into this period with not a lot of momentum. so -- >> right. and then you see the other things that have compounded. this is the last big number the fed's going to be getting before the meeting at the end of this month. is this meeting on hold for now? >> i can't imagine they would taper in this environment. the economy's weak, the job growth is weak, inflation is below -- well below target. >> and our october number is going to be 120, 130 once we account for this government. we take the government, the raw calculus of it. it's got to be a 120 number. it's not going to mean a lot. we're heading into more weakness. >> where did you say ted cruz was from? >> texas. >> before that, he's cuban, right? >> i didn't say that. >> oh, but he is? if you're wondering why this was a weak report, i think knowing -- knowing if we could bring him up again. >> you are bringing him up. >> there's the -- >> i feel terrible, joe, you're blaming all this on ted cruz. i think this is unfair. >> walks like a duck -- >> i still think he's got -- this is on his watch. anyway -- >> kevin thank you very much for joining us today. great talking to you. mark zandi will be with us for the rest of the hour. >> and we'll have more reaction from the jobs report of the ceo of the nation's largest held staffing company. were you here last time when he said obama care was hurting? you might not agree with this guy. bob funk will join us next. he's former chairman of the kansas city fed. opportunities aren't always obvious. sometimes they just drop in. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group: how the world advances. at a ford dealer with a little q and a for fiona. tell me fiona, who's having a big tire event? your ford dealer. who has 11 major brands to choose from? your ford dealer. who's 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. i'm beginning to sense a pattern. get up to $140 in mail-in rebates when you buy four select tires with the ford service credit card. where'd you get that sweater vest? your ford dealer. we did get the september jobs report a couple of minutes ago. joining us now bob funk, ceo of express employment professionals. the nation's largest privately held staffing company. also former chairman of the kansas city federal reserve. bob, it's good to check in with you again. and let's first just talk about the shutdown and how your business was affected by the last month or so. was it hurt? >> well, our business was not hurt on the shutdown. of course, it's nice to see the unemployment rate coming down a little bit. but i have a problem with the reliability of it. last month, we put 30,000 new people to work and the total numbers 148,000, it can't be that accurate. and the labor force participation rate stayed flat. and that's what we're really concerned about because there's a lot of people out there really not looking for jobs and consequently the unemployment is much higher than what's been reported. >> i talked to mark, mark looks for -- like he wants to use actual data to try to prove there's a part-time issue with obama care or that some people are holding back with obama care. i remember you were very certain last time, bob, that at least in terms of running your business that you're seeing an effect. and mark has said it doesn't -- he thought it might, but he says it hasn't really shown up anywhere where you can definitive point to the health care law as actually dampening employment. >> well, in previous years the 60% of our employees went full-time. and now only about 40% are going full-time. the companies are reticent to hire at this point in time because they don't know what their costs are going to be and don't what their expenses are going to be in the future and, of course, i had one franchisee whose health care went from $300 a month to $1,000 a month. and that type of shock is really troublesome to small and medium sized businesses. they don't know where they're going to be in the future with their bottom line. it is affecting it. there's no question about it. and, of course, the people are not coming back into the labor market. and our educational system has let us down on the semiskilled. >> i would think it would show up in part-time employment. but if you look at the data of bureau of labor statistics from all part-time workers, it hasn't shown any significant increase. you know, it's high level because of the recession so there are a lot of part-time workers relative to a more normal time, but it hasn't risen in the last couple of three years. when you would think it would in response to the health care reform. >> it has, we're up 123% since the recession. that's risen with us and, of course, our competitors have risen as well. last month, the american staffing association reported that we're up -- our industry was up 5% for the month. so it is showing up and i don't know why the numbers don't show up at the bls because maybe they don't even take us into account. i don't know. >> yeah. >> what -- the long-term people not looking, why, bob? that's got to be more than just -- it's not all government activism, is it? things have changed demographically? >> well, it has changed demographically. of course the more matured retired individual come back into the workforce trying to find a job. and they've taken many of the jobs the younger people normally would've taken. because there's more people who are needed to -- needing to support themselves and support their retirement programs and support their families. it's really an anomaly, of course, that the mature individuals are looking for jobs and it's squeezing out, of course, the younger people who have now decided not to look for jobs because it's too difficult for them to find something. >> bob, is this increase that you've observed in part-time employment across all the different industries you service. or is it concentrated in specific ones? can you -- >> well, we serve about 90,000 clients on a regular basis. and so it's across all industries. it's not just one. the whole uncertainty of the obama care's really affected the mentality of the entrepreneur who as you know, the entrepreneur is concerned about their bottom lines. they don't know what it's going to be and they can't analyze it and know what's coming ahead. they're not going to hire permanent people. they may hire flexible staffing individuals but not the permanent -- >> here's what i wonder. i mean, if you thought it was the health care reform that was having the impact here, wouldn't this be most noticeable in the industries where insurance coverage is low? like leisure hospitality, retailing, construction that sort of thing? across all industries indicates i may be something broader than simply health care reform. >> well, 92% of most of the companies that we deal with anyway have health insurance for their people. for them to change and lose their health insurance is dramatic, of course. consequently it is a factor out here on main street. i don't know wha's l wall street out here on main street it's really affecting business to a large degree. >> i've got to ask you a quick question on the federal reserve. why does the board of directors of the kansas city fed keep putting presidents in place that descent and vote against qe. what is it about you guys out there? >> well, i think we have a system out here where we go to our businesses on a regular basis on a monthly basis and ask for input into the system as to what's really happening out here. and consequently, their thoughts are the thoughts of the regular business people in the communities in omaha, denver, oklahoma city, and kansas city. and so we have a better feel of what's on the ground, of course, and what we think might happen in the future. >> what's happening out there that makes it so you guys out there don't want qe? >> well, i think the fact they're concerned about inflation being a real factor going forward. that's the real issue. and talking withester la est ee week, she feels the economy -- we need to be concerned about the economy. >> midwestern and western common sense, steve. you know that. is that the answer? >> some business leader -- >> your liberal east coast elitist. >> from the san francisco fed. >> i rest my case. great. >> we know about the two coasts. >> thank you. >> i think we're close to the ground out here and we're very entrepreneurial. and that's -- whatever affects us -- >> up in the cloud. >> the best -- the best social program is the job and we're anxious to get more jobs and the economy to improve. >> amen. amen. >> thank you, bob. thank you, joe. coming up, jim cramer -- >> thank you. >> you're welcome. jim cramer's getting ready for the trading day ahead. what stocks have been fired up this morning next. [ bagpipes and drums playing over ] [ music transitions to rock ] make it happen with the all-new fidelity active trader pro. it's one more innovative reason serious investors are choosing fidelity. get 200 free trades when you open an account. in a we believe outshining the competition tomorrow requires challenging your business inside and out today. at cognizant, we help forward-looking companies run better and run different - to give your customers every reason to keep looking for you. so if you're ready to see opportunities and see them through, we say: let's get to work. because the future belongs to those who challenge the present. welcome back to "squawk box," everyone. the futures have been a little bit higher after we got some numbers from the employment. the futures are up. jim cramer is standing by at the new york stock exchange. we have some dow components. you want to talk about dupont, travellers? >> travellers is incredible. the ceo reported a great quarter last time and everyone read through a couple of numbers and thought they weren't so good, maybe they didn't like auto. he basically showed people that was the buying opportunity of a lifetime. the buyback here is so impressive. if you look at the share count, it's gone down from 48 to -- $48 million just a couple of years. this remains the best financial that is in the dow. >> they've had strong results for a long time that have come through. they're now talking about how they've been able to raise premiums and we haven't seen the big catastrophic events that you might have had to pay out for so -- >> and these guys are so well run. they really are the -- it's very funny because a lot of companies of the dow, they pick the companies of the dow that aren't doing that well and then along comes travelers, which has been a total stalwart. this is the best run insurance company, no offense to warren buffett, but these guys really get it right. and they're not the cheapest, but they may be, along with chub, the best. >> utx also out. earnings beat expectations. they did talk a little bit about some weakness in some areas, which may be why we saw the revenue lighter in some areas. >> you're starting to see the real problems with the government now. some guys prepared you, some didn't. the military drag on some of these companies is rather extraordinary. you did not see it in ge, you did see it in honeywell. i think the stocks they sell off for military are buy, not sells. >> even with january coming up, we've seen all kinds of lobbyists circling in washington, trying to make sure it's not their constituency that takes the cut. the military is scheduled for a big cut then. >> yes, it is. i don't fret over those numbers. aerospace play. non-residential construction is coming back. that's the driver for utx and honeywell. >> if you give netflix that valuation then companies like fox or disney -- it just seems like one of them, maybe you could set um a hedge or something, jim. >> netflix is a cult stock. a guy came out and said maybe the stock is too high, and it's reed hastings, the ceo. it's a cult stock. you're buying because they beat certain metrics, not because it's inexpensivnexpensive. it's case of we offer great con tonight. it was a remarkable quarter from the metrics. but is it cheap? no. it's obviously incredibly expensive, as is amazon, sass sol -- as is solar city, as is tesla. >> i guess he said $80 ago he said the price was a little rich. >> he's facebook, too. rich, a very nice man. >> you said that before. well, you agree with this call on netflix, right? >> i think netflix is a cult stock. i never opine on cult stocks. that's like tesla. i mean, these are stocks that are owned by retail investors who love the product. you on netflix, you like orange is the new black, you buy the stocks. these are the stocks of the future for kids but when you go to high school and speak to the kids, mr. cramer, i own netflix. why? because it's really good. one of those thing. >> they got the women's prison thing going, you go along. >> coming up, our guest host has been mark zandi. we're going to give him the last word when "squawk box" returns. ♪ [ male announcer ] staying warm and dry has never been our priority. our priority is, was and always will be serving you, the american people. so we improved priority mail flat rate to give you a more reliable way to ship. now with tracking up to eleven scans, specified delivery dates, and free insurance up to $50 all for the same low rate. [ woman ] we are the united states postal service. [ man ] we are the united states postal service. [ male announcer ] and our priority is you. go to usps.com® and try it today. but at xerox we've embraced a new role. working behind the scenes to provide companies with services... like helping hr departments manage benefits and pensions for over 11 million employees. reducing document costs by up to 30%... and processing $421 billion dollars in accounts payables each year. helping thousands of companies simplify how work gets done. how's that for an encore? with xerox, you're ready for real business. let's get back to our guest host, mark zandi, for the last word. >> well, the bad news is the job market was soft before the shutdown. the good news is that the fiscal drag is going to start to fade. if congress and the administration can just simply, tend that debt limit and fund the government, i think we'll be okay. >> i don't know why you say that. i think they're going to do more deficit reduction in january. >> i don't think so. on the edges. >> what about -- >> we see you. >> i'm carl quintanilla along with jim cramer and david faber at the nyse. futures hanging in there as three dow components report earnings today. 10-year yield down to 255 and europe as well, keeping an eye on the continent with a mix of red and green
thing. meeting them is another. and one man is going on a cross-country trip to remember. >> we begin saturday night with this close call between a commercial flight and a drone tch it appears the first time a passenger jet here in america almost collided with a small unmanned aircraft. we have a lot to get to right now but first we will talk live to a foreigner -- former american airlines pilot jay roland. but richelle carey with what we know. >> this is pretty jarring. march 22nd he came extremely close to what he called a small remotely pilotaircraft. about 2300 feet above the ground. tallahassee, florida. the incident became public knowledge just earlier this week. jim roland of the federal aviation association reported this. it was so close to his jet he thought for sure he had collided with it. it was a 50-seater from charlotte, north carolina to tallahassee, the pilot described it as small and camouflaged. according to the faa the drone sounds like a model aircraft flown by a hobbyist. whether it was civilian or government. authorities worry the risk of the drone being sucked into the engine is very real. according to the faa, it should be a thousand feet vertically and many miles apart laterally. mairn airlines is investigating this -- american airlines is investigating this problem. can you imagine? >> richelle, thank you. jay raulins, welcome. >> thank you very much john. >> how do you view this problem, how big is the problem? >> well, it isn't a problem yet because they haven't really gotten the uavs integrated into the air space but as they do i suspect this will become more and more of a problem. the faa is working on exactly what regulations will be in place to keep those aircraft separated from manned aircraft so to speak. but there will be inevitable close calls because you will have helicopters operating the off-airport locations. >> just down the street from our studio in new york there is a store that sells drones, they are drones can you get for several hundred dollars that go up several hundred feet high. it seems to me if birds are a concern you know in airports going into engines that these drones could very quickly become a concern for faa. >> well, you're absolutely right. right now, the faa allows recreational use like you're describing. they're supposed to be keeping those aircraft below 400 feet and away from airports without special numents had they're -- special announcements they're going to be using them close to airports. we're also allowing some police departments to use drones. bullets sooner or later they'll come into commercial use and that's where you'll goin see hundreds if not -- going osee hundreds if not thousands across the country. >> you don't think hobbyists are a problem? >> they are a bit of a problem right now but the devices generally have not created a big issue up to this point. i think that the faa is concerned with the increasing numbers, though, that they will. >> all right, as a pilot, if a drone you know comes near your commercial jet liner, what sort of damage, what sort of problems could it cause? >> well, it's a big problem. just like the large birds caused a great problem for the sulle sullenberger flight, that u.s. airways that landed in the hudson river, if a bird did that to a jet engine, imagine the same problem with a small aircraft like that, that's made of plastic and lithium batteries, all of that going into a jet engine is sure to cause havoc. >> we have a lot of airlines up in the skies, you look at those maps, you see how many jet liners are all over the skies in make today. -- in america today. you are saying when there's an increase in commercial use for these drones this is going to become a much, much bigger problem. >> that's what the faa is trying to head off. there's a big exhibition later this month. i was also reading of an incident that occurred with alitalia, near jfk earlier. this is not a huge problem but we can expect it to increase. the faa is going ohave to work that out. did nothing else, all aircraft are supposed to be able to visually see all aircraft. even professional drones the pilots are located someplace else and they can only see what the tv cameras are allowing them to see outside the aircraft. in some cases they're talking about adding extra planes, extra drones alongside the other one so they can serve as a lookout. they have to work that out, coordinating it with the airlines with the users of the air space from police departments, the tv news stations, all of the user, general aviation have to be coordinated with these things being introduced into u.s. air space. >> it sounds like something the faa is going ohave to work out. jay, thank you very much. >> thank you. >> a developing story in virginia, a hot air balloon hit a power line catching fire. there's a picture. according to police there were three people on board, one pilot, two other individuals, so far no wreckage, the people on board have been found. it happened on eve of the mid atlantic balloon festival. now to nigeria where new evidence suggests the military knew about boko haram's plan to abduct hundreds of school girls from a school in chibak. borno state where chibak is, credit officials knew but failed to act. amnesty international backs this up. yvonne ndege reports. >> are nigeria's military ignored twarnlings had boko haram was -- warnings that boko haram was about to attack this school. >> they were out-gunned and by the number of boko haram fighters who attacked the town and they had to flee for their lives together with some other villagers who fled to the bush. and that is a shocking revelation. we have been repeatedly calling on the nigerian authorities to provide adequate security for people of nigeria. and especially for schools because these schools have become vulnerable targets in the past couple of years. >> reporter: the you nierch government's response have -- the nigerian government's response last led to proses across the country. president goodluck jonathan admits he doesn't know where they are. specialists are in nigeria to help with the search. the nigerian government says it will investigate claims the military ignored warnings of an attack. if the claims are substantiated, it may continue the outrage. ee scroyvonne ndege, al jazeera. >> in crimea today a celebratory visit from russian president vladimir putin touring the region for the first time since it became part of his country. nadi manufacturdim bab afertion. >> hours after tenant victory celebration in moscow, as he alluded to crimea annexation just a month ago. >> i'm sure 2014 will go down into the annals of the country, where crimea dpirml -- firmly decided to become part of russia. >> earlier in the day a much larger than normal march watched by thousands of people. here in sevastopol they are also celebrating 70 years since the soviet army lib ratethe city from the nazis. many spectators drew parallels to break away as well. >> now i understand what they felt during their victory day. and when peace returns to ukraine, will celebrate their victory day. >> reporter: the day's especially poignant for veterans like ivan who several in world war ii. he's thinking of more recent events leer. >> translator: crimea became russian without the use of any force. there have been stories of people with force. it's all nonsense. >> reporter: for russians it's the day to celebrate the disappearance of fascism. nadim baba al jazeera sevastopol. >> joining the chorus of the resignation of eric shinnseki, 40 people died for va appointments in phoenix. >> it took months for you them to see him. it took months. they wouldn't call us back. finally when they did -- >> towel town hall meeting with senator john mccain. reports of va problems are surfacing nationwide. mccain vowed to get answers and stopped short of joining the call for shinseki to step down. president obama stepped inside a walmart store today. obama announced he's bypassing congress. to try lower energy cost. mike viqueria has more. >> it's another example of president obama going around congress to enact his agenda. this time on the environment. in california today the president announcing moves to promote solar energy. among them $2 billion to increase energy efficiency in federal buildings. support for training programs at community colleges around the country, training programs involving solar energy and new standards for electric motors including the type among them that power escalators, walk in freezers and coolers. he's also encouraging the use of solar power in public housing where the federal government last a stake and touting the increased use of solar in major american businesses like walmart. the president spoke at a walmart in mountain view california in the bay area where he hit republicans one more time for what he says their attitude towards global warning he says they have their head in the sand. >> unfortunately inside washington we still have some climate deniers who shout loud but they're wasting everybody's time on a settled debate. >> in choosing walmart the president has a backlash, the low wages paid at walmart flies in the face of another president initiative, why and the white house has finally come through. they promised back in august that they were going to put solar panels on the roof of the warehouse. they put a video to credit announce those panels are now online. mike viqueria the white house. >> ranked the most dangerous place to work in america. the survey done 50 afl-cio points to north dakota's booming oil and gas industry. workers are flocking there for high risk high paying jobs. the death rate has doubled over the past be seven years. there are 18 deaths per 700 workers. compare that to texas which has only 5 deaths per thousand. millions are out of work and including many young people. in sacramento looking for job is taking a toll on some. melissa chan has the story. >> brian has spent the past year looking for a job and has had absolutely no luck. >> it's been a struggle and i've been looking for a job and put in applications and gotten virtually no responses. >> he now lives with his mother. >> i felt bad for him. you know i've always raised him to be very independent. and it's hard to do that if you can't support yourself. >> my mom's been wonderful. without her support, i might be -- dare say i might be homeless at this point because my mom's been so supportive. she's allowed me to stay here virtually rent free when i'm trying to get back on my feet. >> he's heard the prediction that mil millennials will be the first generation in history to do worse than their parents economically. and he's heard the complaints that millennials look entitled and spoiled. >> you start to question yourself as an individual. >> while parts of the country have started to recover from the financial crisis the sacramento area is not one of them and continues to struggle with an unemployment rate higher than national average. it floats between 8 to 9% here and for millennials those between the ages of 18 and 31 it's even worse. almost 20% of them have no jobs in the sacramento region and almost 40% now live with their parents. according to the latest census, the damage can be permanent. >> for example, young people who enter the labor market during recession are observed with lower wages and higher unemployment rates even years after the end of the recession. >> for the past two decades, places have trended apart from places like san francisco and the recession has made this be difference more dramatic and more poignant. >> the upside, the millennials tend to be amobile bunch. if you are a young person in a city like sacramento look around. extend your job search to nearby cities, consider moving to san francisco. the jobs here are plentiful and your career will benefit in the long run. >> that's exactly what he decided to do, apply for jobs in san francisco. >> you're going to do so well. >> and that's whether he got the call finally for a job interview in customer service approving at least for him that there's better look in the bay area. melissa chan al jazeera, sacramento, california. >> the nba takes the next major step towards forcing los angeles clippers owner to sell the team. well-known corporate executive dick parsons, will oversee the daily operation of that franchise. sterling has been banned for life for make racist remarks. coming up counterfeit cash, bogus money can you tell which is face? next, finding facebook friends. the man traveling america to meet all of his facebook friends online. >> counterfeiting u.s. currency may be easier today than ever before. half of all bogus cash confiscated last year was made on household ink jet or laser printers. the federal government recouped more than 88 million in counterfeit bills. of all the phony u.s. currency the $20 billion appears to be motion most common. joining us is evie pomporu is, evie, welcome. >> hello. >> how big is this a problem in your opinion? >> this is a big problem because as technology advances and people from the luxury of their own homes to be able to create counterfeit currency, traditionalltraditionally creatn offset printer, now people can create currency and that's the epidemic problem. >> you give clerk $100 billion or $50 billion they sometimes hold it up to the light, what are they doing? >> when they hold it up to the light they are looking for that little strip of film that we see to make sure that each bill has that, that's emwednesday in the bill and they are also looking g for the thread. somebody can take a bill, and print over it a $100 face. if you see that strip you want to look at the microprinting on the strip. if it's a $5 bill, it will say $5. but if it's a $100 bill you know it's counters fit. when they do it on an ink jet printer they will draw the threads in. so you can show the difference between counterfeit and genuine. >> they draw something with invisible ink on the bills, what are they doing there? >> there is an ink you request draw on and it will tell you whether the bill is genuine or not. but they can bleach the bill, put a different face on the bill, taking a $100 will and making then a 100 bill. >> that's interesting. let's show a couple of these and we've got a graphic much one that is fake and one that's real. now, i know which one is fake. it's the one above. but can you explain how you identify what's fake and what's real in these $100 bills? >> you're correct, the top one is faked. first one you want to look at is the serial number. the treasury seal on the right, the letters db are exactly the same linear and evenly spaced across. they are not. they are slightly lower. the letters db are a different color ink than the rest of the serial number. the color green is supposed to be uniform. mean thing the db and all the numbers are supposed to nach-toh the treasury seal above. >> i have a difficult time seeing the difference. one looks like a different color. is that the main difference? >> the color is the difference, if you don't know what to look for that's difference. if something is played in an ink jet printer, the black and the green will almost touch and bleed. however if it's a genuine currency, it will actually float over the green seal and that's how can you determine the difference prp. >> on some of the new $100 bills i'm seeing it looks like a high tech new design. can you explain that? >> they added colors and layers to make it much more difficult to retchly cait. green and white -- replicate. what they're doing is adding a lot of different colors, hollowl hologr am scnches make it much more difficult for people to counterfeit. adding these layers for a counterfeiter to do too many things to make a strong genuine bill. >> we'll continue to collect that on other bills. thank you very much. >> thank you sir. how many facebook friends do you really know? one man decided to glump a car and track down all his 377 friends. first person report. >> recognized i had a lot of facebook fans and some of them had no knowledge about, no significant relationship at all. wondered if i could have some interactions and something more than a facebook friendship on them. day zero, go hour drive bloomington minnesota to st. cloud, minnesota. i've committed to maybe 31 days being away from home from my wife. i had a lot lot of second-guessing when i was driving, wondered if i could do this even if i wanted to do it for a full month. that was a little scary to start. i had a good experience on the first day with my friend and made me feel just really comfortable with the distinction i made. from there i website to the west until i got to the ocean. went south and essentially just returned headed east went through utah, colorado, nebraska, iowa until i got back to minnesota. that first leg took 31 days. i've met about 100 of my facebook friends. when i started i had 302 facebook friends. it's about a third of the friends i've met. it's an interesting thing, whoever i'm talking about on any given day that seems to be the highlight. it's really something where i'm enjoying whatever moment i'm in at the time. that seems to be my favorite thing. most of the time i just really like to talk with people hear what they have to say see how they live their lives, see if i can learn sphrmg what they have to say. big picture what i've taken from this is people are good. and i think maybe that's something that i'd forgotten at least to some extent. this has made me happy. reconnecting with old friends, make new friends along the way and sort of nurturing the relationships i already have. >> our first person with mike mclaughlin. coming up what you don't know about boko haram. the group claiming responsibility for kidnapping hundreds of school girls and launching violent attacks in nigeria. if i told you that a free ten-second test could mean less waiting for things like security backups and file downloads you'd take that test, right? well, what are you waiting for? you could literally be done with the test by now. now you could have done it twice. this is awkward. check your speed. see how fast your internet can be. switch now and add voice and tv for $34.90. comcast business built for business. >> boko haram, the ruthless radical group accused of kidnapping hundreds of school girls in nigeria. and the local outrage. a group so frightening many nigerians refuse to speak the name out loud. in the country rich in oil, this violence threatens to disrupt the global economy. what do they want? how can they be stopped? >> not thuf is being done to rescue our daughters. >> our special report, what you don't know about boko haram. >> i'm john siegenthaler in new york. boko haram, the words loosely translated, means western education is sinful. members say they want islamic state ruled by islamic law. their methods are cruel and fishes. killed 1500 just this year. the world paid more attention to boko haram after 256 girls were kidnapped on april 13th. experts into nigeria to help find the girls. britain says its experts will try rescue the girls and defeat boko haram. nigeria's military had a three hour warning about those abduction he. in nigeria protests by people who say the government ignored the warnings and have not done enough. al jazeera has the first international why journalist on the ground. amid edris spoke to some of the families. >> a traumatized plotting, esther hasn't come to ternlts th the abduction of her daughter. our daughter is over 270 girls taken by boko haram fighters. more than three weeks on they remain repliesing. >> i prefer if they were are my suggestion, they should go into my house burn my house break everything inside my house, it would be better than me than taking my daughter. even they take my life at that moment i think i'm satisfied more than they take my daughter away. honestly i'm not happy at all. i just feel like kill myself. >> her pain is shared by motion in this community. for them life will not be the same. homes and government offices were set afire by the attackers but the biggest pain was here at the girls secondary school. a month ago this school was full of life. hundreds ever girls were looking forward to fulfilling their dreams and now it lies in ruins and the girls are all gone. the attackers came just before midnight and bundled more than 300 girls on board trucks taking them into the forest. 53 escaped. this father who hid his identity fearing he might be targeted following death of protesters. >> i and three other girls lied to them saying we needed to use the toilet. that is how we ran away. they chased us but we kept running. >> there is a sense of fear in the community. but people are outraged at the suggestion that the abduction never took place. >> not only baffling and amazing. but that initial tragedy. a global calamity. >> the news that some help from some foreign powers is underway is reassuring but the scars of the april 14th tragedy are deep and the trauma long-lasti long-lasting. mohamed nedris, al jazeera, northeastern nigeria. >> tracking the growth of boko haram closely. >> every time the group has evolved particularly when their political demands or promises that they believed were made by political leaders particularly in the northeast, failed to emerge, the group and its relationship with various political leads broke down in 2009. you saw an uptick in violence and various confrontation between the group boko haram and state security forces and you saw the group expand in terms of its tactics and the violence it would pursue in terms of the violent it would pursue, going after politicians to going after onders citizens indiscriminate attacks, you've seen teachers, clerics, children, health workers, everybody now been under the focus of boko haram. the group claimed to be focused on wanting sharia law, wanted an islamic state, in the last four years we've seen this group emerge from an interim monster that is no longer controllable and i think it's walked away from some of the ideology that it's seeing unfolding from the northeast and it's coming down, further down as we saw into the federal capitol of nigeria. >> those who study boko haram say young men join for three main reasons. poverty, be lack of awareness of the teaching of islam and insecurity with the national leaders. for more on that, randall pinkston. >> for more than five years, boko haram's leaders have used viability attacks, wanton destruction of property. >> we are boko haram. >> self proclaimed leader, abu bakar claka, have says his group wants to establish islamic law in nigeria. leaders put a $7 million reward on his head. took over after the execution of the group's leader, mohamed yousef. boko haram does not have widespread appeal. >> boko haram is a fringe movement, it is a terrorist group which has assassinated muslim learned men, it has terrorized communities and it is a small group relatively speaking but it casts a large shadow. >> this month's mass killings and the kidnapping of school girls are the most recent teefnts in a series of -- events in a series of bold attacks. nigeria surpasses south africa's wealth, boko haram is based in the poverty stricken north which is mostly muslim. in 2010, boko haram engineered a prison break which freed more than 700 inmates. the next year it launched a suicide attack on the united nations credit outpost. and blew up a bus station killing nearly 100 people. boko haram has a credibility problem and so does the nigerian government. >> the biggest issue ask credibility. boko haram started out and preyed ton grievances of northern nigerians. they tried to fill a gap in which the government was not seen as credible or worthy. the problem is the nigerian government did not manage to step up and fill that void. >> reporter: most of boko haram's leaders are poverty stricken young men, one reason girls schools are targeted is because boko haram's leaders believe educated women are a threat to male authority. randall pinkston, al jazeera. >> emerald woods joins us from washington, d.c, from the institute of policy studies and focuses on diplomacy studies. good to have you. >> good to be with you. >> how sophisticated is this group when it comes to weapons and strategy and training? >> the issue is this is a fringe group that started off really elevating a decade or so ago, the demands of northern nigeria. nigeria is a country incredibly wealthy, exporting oil since 1956 and yet the northern part of the country remains underdeveloped, remains impoverished. they started back in the 1990s essentially elevating these very real concerns. and so what you have between now and then is a real platform being given to and expanded by the international community, given to boko haram, linking them with al qaeda, linking them with this designation particularity in the u.s., terrorist association, expanding the megaphone and the platform in which they operated. at the same time you have had a steady flow of weapons into the region. this is often the approximate -- the problem. so while there are efforts underway to have for example an arms control treaty which the u.s. has not ratified, you know weapons continue to flow to these types of extremist groups really around the world. so i think you're right to ask where the weapons are coming from. i think many of asking that question. how they are able to be able to get them into the country across borders. and so readily available throughout the region. i think it's a very valid question. >> why can't the government of nigeria stop them? >> you have a government that has africa's most powerful military force, nigeria partnering with the u.s. for decades now in terms of its military training and advancement. it's quite skilled and equipped and yet what you have seen is this military has also had its own issues of human rights violations. its own issues of atrocities against civilians even. so there's an issue of credibility and also an issue of really accountability. when it comes to the nigerian military. so i think there are calls now for the nierch government to do all -- for nigerian government to do all that it can, to protect human rights, human dignity of these incredibly courageous school girls that these dpeams are anxiously -- families are anxiously awaiting news on, all nigerians throughout the country should have that measure of hux rights protected of also -- human rights protected of also the rule of law throughout the country. >> maybe you can help us with the question we've been asking all along how is it that 276 school girls can be kidnapped from a community and almost vanish into thin air and no one knows where they are? >> what you have because of the political situation in nigeria is extremely volatile, we're going into an election year in nigeria and we have quite a few people who are expression discontent with the government. what you have is a situation where communities may not be as frank and forthcoming as they could be. where you have police, military, other officials that may be explicit. be -- complicit, you have a complex situation of conclusion and people doing not what they can to protect human rights, to protect human dignity. >> so sad, thank you for being ton program. >> thank you. >> the mass kidnapping of nigerian girls, violence against women is a global reality. lisa stark has more on that. >> the protests are growing. the pressure is growing to find the young nigerian school girls, the teenagers only crime was getting an education. amnesty international feel the girls are facing daily violence including sexual violence. >> i'm very concerned about their safety, i'm very concerned about the nearly 300 girls missing for three weeks with no action to find them. >> on the ground in nigeria and seven other countries working to empower women, credit they are rattled even though not in the area where the girls were taken. >> devastation and can as you can imagine for all girls in the area, seeing that this is happening and not being able to move quickly and do something themselves. >> the kidnapping of so many young women from the same place at the same time, has really caught the world's attention. >> i hope what's happening right now can continue to open one's eyes to, the violence against women and girls that are that is all too common. >> a study released last year by the world health organization found that 35% of women worldwide have experienced abuse by their partner or sexual violence by someone other than their partner. >> w.h.o. called violence against women aglobal health problem of epidemic proportion. >> sexual violence has gone hand in hand with wars and conflict. in the 1990s after the systematic rape of tens of thousands of women in bosnia became a crime, crime against humanity. >> we have seen people taken to the international court because of their perpetration of sexual violence in war situations. 40 years ago that would have not been imaginable. >> that's a start but these groups say to end sexual violence against women requiresl changes. the outcry is focused firmly on the kidnapped school girls and the effort to find them. lisa stark al jazeera washington. >> coming up next wealth and corruption. the role money is playing in the escalating violence in nigeria. and the oil paradox. nigeria is a big oil producer and yet its people are poorer than ever. >> award winning producer and director joe berlinger exposes the truth. >> our current system has gone awry... >> a justice system rum by human beings, can run off the rails. >> sometimes the system doesn't serve and protect, and the innocent pay the price. what goes wrong? >> it's a nightmarish alternative reality, sometimes you can't win... >> an original investigative series. when justice is not for all... the system with joe beringer only on al jazeera america >> the are brutality of boko haram is overshadowing another story in nigeria. vefers ar investors are gather being there, it's an economy plagued by poverty and corruption. and richelle carey is here with more on that. richelle. >> i don't thinkjohn, heads of e arriving, from abuja, as you can package the recent violence is getting quite a bit of attention. after this car bombing in abuja last we, the nigerian government put out an appeal to delegates heading to nigeria for the economic forum. don't let terror win. but the reents attacks are casting -- recent attacks are casting a shadow on the event. the focus would prefer to be on the country's booming economy, the goal to become one of the world's top economies by 2020. noornlg reent -- noornlg recent, makes $80 billion a year on oil. it is the world's fifth largest exportser. there are doubts however whether that money actually reaches the nigerian people. wash dog group transparency are international ranks it one of the most corrupt nations on earth. $20 billion in oil money is missing, and poverty is widespread. especially in the northeast, the home base of the armed group boko haram. there 70% of the people live on less than $100 a day compared to 50% of the south where most of the oil is located. >> boko haram. >> boko haram has tried to capitalize on that sense that northerners are not getting their fair shay. >> corruption could be said to indirectly contribute to the insurgency in the country. and it's said that corruption has led to a clear position of dislocation of economy. it has impoverished the people. it has destroyed industry and lives and it has also created a conducive atmosphere for extremism to thrive. >> and that's when observers say nigerian leaders have to face. >> the general authorities strategically nighstrategicallye that if nigeria is set to become a number 1 nation they have to focus on the north. >> malmalnutrition is more focud in the north as well. it shows that nigeria's visibilities as a developing country that that is really a problem. >> thank you, david rice is a professor at new york universi university. he joins us vie skype. david, welcome good to have you on the program. >> thank you, good to be here. >> could you give us a sense? this was supposed to be nigeria's shining moment, the conference. how has the violence overshadowed? >> the world economic forum choosing nigeria to host its summit is extremely important for country. it coincides that the country has been determined to be the largest economy in africa and it was meant to be a celebration of the fact that nigeria has a rapidly growing economy that's quickly diversifying and a lot of opportunity for international investors. but the conversation so far has been muted, the economic conversation has been muted by this national tragedy. but the message that's come out from the government as well as from a lot of the attendees from around the world is that terrorism will not be tolerated and people will not shy away from nigeria and the opportunities here and the need here simply because of an isolated incident that occurs in the northern part of the country. people are very upset. it is emotional, it's a tragedy but the best way to combat this situation is to create more economic opportunity for people around the country and throughout subsaharan africa. >> now there's another incident a massacre today in which or that apparently happened on monday that some are saying that boko haram is responsible for. talk about security there now. what is security like? >> well, security in the capitol is extremely tight. the city has essentially been shut down during this conference because of those concerns. but the rest of the country is moving on. the rest of the country is functioning. as far as the government's response i think that they're trying to balance the need to pursue the terrorists to try to get the girls home to their families, while also not trying to tip their hand to the terrorists. obviously they have satellite phones, they have access to television, they have access to information. the government is trying to walk this balance about keeping the public dpoard about what's being done but so as to not compromise their ability to get the girls home safely. >> thank you for staying up late tonight, we appreciate it. >> okay thank you. >> oil is a resource that can make any area wealthy but in the niger dale most people are living on less than $100 a day. we hear from photo photojournald cashi. >> over the last 20-plus years nigeria has become one of the top 10 oil producers in the world. at the beginning of oil and gas in nigeria, nigeria was a poor country at that point. and somewhat, quite undeveloped so oil was a very new commodity that brought in tremendous wealth. but with it brought you know real problems for the people. what's happened in the niger delta is a really classic case of something i've seen throughout most of the world where oil and gas is produced except maybe in the gulf states, the arab gulf states, it creates much wealth for the politicians and the credit government, but for local people on the ground and quite observ often for the e it ravages them. subsistence farmers and fishermen, now many of the waters that they used to fish in are degraded or the fish stocks are quite low. with farnlg a lot of the land -- farming a lot of the land has been taken up by the oil works the oil industry and the land has been polluted. it's less the people with fewer aopportunities in the traditional sense how they survived and made a living but oil industry has not created a olot of jobs -- a lot of jobs for the people. they are living on $100 a day the are average niger deltan. sitting on land that produce he billions of dollars of wealth -- produces billions of dollars of wealth, they are not of the size of the bp spill in the gulf of mexico let's say but this is a constant problem. you have infrastructure that is not only 50 years old but it's in a place that is quite inhospitable. the dangers of the impact of being theory the oil industry sort of hit on a number of levels. first of all the degradation of the land. another impact on the people is that there's been very little infrastructure development. so for instance, schools, the electricity grid, they're terribly lacking in that region. to look at a situation like the niger dell aand say well, that's their problem. because the reality is the united states takes almost half of nigeria's oil and gas. so we have to realize that we are connected to these issues. that we cannot turn a blind eye and say oh, that's someone else's problem. that we are explici -- complis n these stories. >> ed cashi has a book called curse of the black gold. a freeze frame, one of the mothers of the missing school girls, she was one of the mothers who was demanding that the government find her daughter. is attacks,. >> o"america tonight," under the gun. being be b albuquerque citizens try to take into their own hands. hollywood's big easy celebrities sleb --biggest celebrities. what is behind this loild