Were looking at millisecond level trading here and the question is whether or not an unusual pattern of trading indicates that information left that lockup room before the stroke of 2 00 on the atomic clock as was scheduled. Let me walk you through graphics here that detail that unusual possible trading. Starting with the mini futures. This is e mini futures measured in milliseconds after 2 00. The blue vertical line on the left side of your screen thats 2 00 exactly. This has to do, believe it or not, with the speed of light. These are tradeded in chicago. It takes about 7 milliseconds for data traveling at the speed of light to leave washington, d. C. , and get to chicago. The vertical yellow line there, thats the 7 millisecond line. Look what we see in between those two lines. We see trading in the emini starting to sky rocket up before the 7 millisecond speed of light travel time to chicago. The question is, how did that trading happen . Again, look in the gold features. We see a similar pattern here. Gold, blue line on the lefthand side, thats 2 00. This is measured in milliseconds. 7 milliseconds is the vertical gold line there and what we see in between those two lines, is a pattern of trading happening before the speed of light travel time to chicago from washington, d. C. The question here now is, was this information somehow in chicago at the same time it was in washington, d. C. Did it get to chicago, did it leave washington, d. C. , before 2 00 p. M. Did it somehow leave the feds lockup room is the question that the fed wants to know the answer to. They are contacting News Organizations and discussing with them the rules surrounding that lockup procedure. The fed has not told us which News Organizations in particular they are contacting and were working to find out on that right now. Sue. Eamon, stay withes. Well bring in Steve Liesman and simon hbo hobbs for power lunch. Youre the goto guy when the procedures come up. Can you walk us through the procedure in what you have to go to once you get into that lockup room. We sign some document that says were not going to disclose this before the embargo time. Once do that. You go in at about 1 30 or so, somewhere between there, they lock the doors at a quarter to 2 00. At about ten of they give you the statement, you read it and take notes on it. Were all if were on wifi were connected through the fed system into thats my question, how do they control that. At two minutes before, they escort you out to tv reporters out to the camera locations and youre only allowed to say a specific day of the menu. Food from the menu that day to give a sound check and only tell you that just before so you cant say in code to the people ahead of time. I see. If i say check one three four its there. You just have to say the menu or thats it. At 2 00, youre then allowed to give the statement. Is there a fed official in the lockup room with you at tall al times. Several, three or four i believe. Do you have to surrender your Electronic Devices. You do not. The wifi goes into the through the fed. The communication should be through the fed at that time is my understanding. Can i ask a question. Simon . Steve, you would never do this. You would never do this because you are an honest upstanding man and you remember cnbcs team but could you take a handset in there and text me no taper before that decision came out. I dont know the answer to that, simon. I never tried. So i dont know if i could do that. Sounds like it might be possible. I dont know. All weve ever done is connect through the fed system there. Their wifi they provide us. Ive never been in the locker room and looked at my cell phone to know if i could transmit over that. Im surprised they dont take the Electronic Devices away. I wouldnt want to judge what they would do. Of course not. And thats not what were doing. There is a cad dre of reporters that work for the fed and a lot of trust. We get embargoed material. Were careful with it. More often than just that decision . Right. More often than that decision. Its a market based Security System which is that if you mess up, you do not get on the list next time which is really debilitating for a News Organization. Exactly. Guys, if i could yeah. Let me bring in eamon here. You have reported now, i dont know if this is the third or fourth time where youve looked at charts and realized youre raising red flags because we can see by the trades going through. Do you get the feeling this is one or two problems or do the people around you believe you have an endemic situation here . A massive collision of technology. Whats happening with speed of light, technology and millisecond level trading these charts which were provided to us by nanax and an expert there named eric huntssayer show the millisecond level trading and you see that before we in theory should see it, before the information could have traveled at the speed of light to chicago. What were dealing with is systems of information released that were designed in the prespeed of light era that are crashing with this speed of light telecommunications capabilities and enormous amounts of money on the line there. Why should the guy, if it matters, should the guys in chicago actually be 7 milliseconds behind . My guess is a News Organization would have an argument were releasing it at 2 00, as is everybody else, but were making it so our people can get it. Now i understand that i guess the prohibition, im not exactly sure, it shouldnt leave the lockup room before then. Right. But theres no implication here as i understand it that the information got out before 2 00 00 stop me when i get to the millisecond point there. On the east coast, exactly. What were dealing with is as a potential speed of light Arbitrage Trade where some in chicago because they subscribe to data feeds as a hypothetical, that give them access to this information at 2 00, have that information now before other people in chicago who are waiting for the pokey old speed of light to bring them that information 7 milliseconds later. The question that so governments are struggling with here. Means dollar signs. Sort of the meta physics of the space time contin one is when is information considered to be public. How far down the pipe does it have to be before its Public Information and its fair game tore people to act on it and execute trades. Working through this, i was thinking in my head they obviously know that the trades were placed because we have the trading. So right. I would assume they can go back and find out who placed those trades. Right. And what News Organizations those traders or Companies Get their information or their feeds from. It leads you to a very direct series of questions that should yield an answer pretty clearly, absolutely. I think the traders themselves will say, look, none of this is done by human beings. Its a black box. The speed of light cable that goes right into the black box which executes trades without any human being weighing in on it because a human would slow the process down. Theyre saying were just waiting for the information to come in, when it comes in we trade. Picking up on simons question which is could somebody does the computer read no taper and its pramds to make that trade inside that 7 millisecond window . Its possible to do that . Thats is thats one of the questions here. What exactly the algorithms are reading and what is being sent. In theory it is possible to send a signal that says the taper decision was thus and so, the Computers Read that decision, analyze it and execute trades all in less than the space of a human eye blink. Guys, i have traders standing by here who are nodding who were going to bring on if in a moment. You cracked it in their view. Theyll know this better than i would, thats for sure. This is a complicated subject. Rick santelli, we have the bond market active today as well. Well, we just completed a 33 billion auction of twoyear notes, the grade cplus. The internals, the bid to cover was 3. 09. Now the ten auction average is 340 but the trend has been much smaller bid to covers. The four auction average. The yield point 348 was through and on the sunny side lower yield higher price but cplus, less aggressive demand as depicted by the bid to cover. Sue, simon, back to you. Thank you very much. If youre just joining us cnbc is reporting 600 million of trades may have gone through milliseconds before they might have done on the last release of fed information. Joining me now, ababigail, Technical Strategist with the c port group and cnbc contributor and ben willis, managing director with albert freed and company. You you were nodding as you heard the analysis we were listening to. Recap what you believe has happened here. Every major News Organization has a data feed machine readable only. Thats how the algorithms get their data and read it and react in milliseconds. The point was made, it takes a human eye 300 milliseconds to blink an eye. It happened that fast and the question remains, as Steve Liesman it touched on, once the information is released from embargo, was it released from the geography of washington or can it be released from another place in the United States and thats what this is going to hinge on. The belief, the day after this happened, this was released from a place closer to chicago than washington. And to be clear, this is how the exchanges these days are making their money. Theyre putting preferred clients physically close sore they get information. Called trade location. Otherwise, they rip a lot of the profitability out of it and thats the way they have found to make extra profits, correct . I think this is not all that surprising. Theres been evidence of this sort of High Frequency trading off of firms putting their servers closer to other data releasing organizations. I remember watching last week and i was watching gold in particular and it seemed to spike up just slightly before the announcement. I dont think this is so surprising. Whats more surprising to me, just to change the subject slightly, is the market shocked the no taper decision because gold had recovered well prior to the no taper decision. The dollar had dropped. So i think that thats more surprising to me. Simon, if i can jump in here, that market shock is ironically what allowed there to be a huge trading opportunity here, because those people who had analysis of that decision, knew market shock was about to happen, the computers did, and could foresee the signal would be a huge buy signal. See the buying happen within a millisecond. They buy everything across the board, every asset goes up and the reason is, because it was such a surprise and thats what provided the opportunity. Any time you have that kind of delta between expectation and reality theres an opportunity for people to make money in a millisecond or two. Thats what were looking at too. The location argument is one that goes on with companies that want that edge the way they make their money is edge so they move their computers closer to an exchange, closer to wherever they think the news is coming from into the exchange. Or the exchange. Sometimes, but a lot of the hedge funds are down the block from the exchange. They can do it both ways. My question to you is, that news is only released from the fed lockup room in washington, correct . Yes. Thats the only place where it should be available. So ben, thats inside the locker room. Thats the curious part about all of had this. I buy the location argument totally if it was simultaneously released from some place closer to chicago. But if its only released from the lockup room in washington, that complicates the situation. Eamon, how do they get it on the east coast . Say in new york, for example . Well, if you look at some of the work that nan next, the Market Analysis firm has done, they also see the speed of light differential between d. C. And new york and they also see trading to their mind should not be possible at the speed of light in new york based on the differential between d. C. And new york. Much smaller space of milliseconds between d. C. And new york physically closer and the Telecommunications Capability between this city and where you are standing is much better. The question is, you know, how was this information able to apparently travel faster than the speed of light. Unless somebody had a time traveling unless somebody got it wrong. Time traveling delor yan this should not the be possible. We knew it was a technological arms race. Thank you all. We have to move on. We have breaking news this time within technology. Cnbcs john fortt is in san jose. John . Simon, intuit is teaming up with square on payments technology. Intuit, 19 billion Market Cap Company that has turbo tax for taxes as well as quickbooks for Small Business payments. What theyre trying to do here is position quickbooks, the accounting software, as more than just an application as a tech platform for Small Business. They tell me theyre going to open up their apis a lot more and allow other Small Business software and Solutions Provider to hook into it. This Partnership Kicks off on the 19th of november. Intuit will continue to offer go payment, its credit card Swipe Technology position offering more for Service Providers versus square strength which is in retail locations. Its interesting, jack dorsey, hinted he might push Square Software into quickbooks territory, perhaps this move is meant to blunt that. I will have intuit ceo brad smith exclusively on fast money today. They had an investor day here today in Silicon Valley and thats where well be. Back to you. Thank you so much. Look forward to that. To dominic chu for a market flash. Shares of professional site linkedin getting a boost after analyst at evercorps partners boosted their price target to 280 from 250. Strong goes in its domestic jobs posting business and better management outlook is behind this particular boost. The stock is just about 9 away from getting back to the record high levels it hit, sue, earlier this month. Back over to you. Thanks so much. To earnings now, and two of the nations biggest Home Builders out with their results. First up, kb home, profits soared from a year ago topping estimates. The company reporting double digit Revenue Growth across its Home Building regions. The shares have been on a wild ride this year, up almost 8 at 1836. Rival linar out with earnings. The number three player selling more homes at higher prices. Revenue topped expectations. Orders for new homes rose 14 and lennar says the longterm outlook remains extremely bright. Shares in todays trading session last trade up 6. 5 to 3678 but the stock is down 8 this year on a whole. Jim cramer will speak with lennars ceo tonight on mad money at 6 00 p. M. Eastern time. Earnings at both of those Home Builders were helped by rising prices. Today we have new data showing home prices continue to rise, but a little bit slower pace. Diana olick is on the real estate beat for us in washington. Diana. Well, sue, thats right. For existing homes, not newly built homes. Take a look. Prices in the nations top ten and top 20 cities in july rose 12. 3 and 12. 4 respectively from a year ago on the s p caseshiller index. This is a threemonth running average. You have prices going back to may in that reading. All 20 cities positive returns, but 15 out of 20 showed gains slowing. That is likely due to higher Mortgage Rates and the fact that huge price gains in some local markets were simply unsustainable. Robert schiller one of the creators of the index said on cnbc this morning, that some markets were, quote, bubbly. Look at las vegas, San Francisco and los angeles all up over 20 year over year. Meanwhile lennar and kb homes jacked up prices 16 and 23 respectively. Kb says its because their strategy is to move into higher priced markets. Still, the premium for a newly built home over an existing has jumped from below 10 in 2006 to around 40 at the beginning of had this year. That according to capital economics. That spread is going to have to narrow given higher Mortgage Rates. Plenty more on line, realty check. Cnbc. Com. Chrysler is set to list once again on the new york stock exchange. Its a victory arguably for the company and for manufacturing in this country. Phil lebeau is live in des plaines, illinois, just north of chicago. Over to you. Simep, this is one of the more unusual ipo filings. Ive talked with a number of people in the Auto Industry and almost all of them say the same their. Theyre skeptical this will end up with chrysler having its stock listing. The ipo filing and details to keep in mind. Its for up to 100 million and thats the initial listing although many believe it could go higher than that. Theres no pricing or number of shares slated for the chrysler ipo. But heres the huge issue, it all comes down to the chrysler stake and the value that is being placed on the stake that veba owns that fiat would like to buy. Veba puts that 41 at 4. 27 billion. For sergio markon, he has a standing offer to pay veba 6 billion. He would like to pay a lot lower than that. Chrysler, also says that fiat could end the partnership with chrysler if this ipo is unsuccessful or in the future the company deems it needs to pursue other options. Fiat needs chrysler because it needs that cash flow to expand its very weak in asia and at the end of the day thats why it wants to buy the 41 owned by veba. Back to you. Nicely explained. Thank you, phil. Snap on tools having a good year. The shares up almost 30 so far this year. Its ceo joins us to get his outlook for the company, the budget battle, economy overall and fallo