Transcripts For CNBC Squawk Box 20131001 : vimarsana.com

Stay the greatest filt in the world, bar none. Thats what im fighting for. Thats what you and your families deserve. Economist mark bandy says a shutdown that lasts several weeks could reduce the nations gdp by 1. 4 . We will talk more about the shutdown with john harwood in just a few minutes. Also, later this hour, we have congresswoman Debbie Wasserman schultz and congressman Mick Mulvaney debating the issues. Also we have steny hoyer who will be our special guest at 8 00 eastern time. Lets get over to andrew. On to the next potential government crisis, it is, of course, the debt ceiling. Jpmorgan, jamie diamond are expected to meet with the president tomorrow. The white house official tells the wall street journal they will make while theyre in town for one of their annual meetings. Jpmorgans 11 billion settlement of the government mortgage probe became a little bit more complicated. The fdic has now an issue over the responsibility for losses at the former washington mutual. That was the failed Bank Jpmorgan took over during the financial crisis. Now here is the complicated part. The agency could be on the hook for billions of dollars, probably close to 3. 5 billion while jps panel could be reduced. This all has to do with indim dem anifications. Also, wales fargo, theyre going to be paying freddie mac 780 million to settle mortgage claims. This would resolve all repurchase liabilities on home loans sold to freddie prior to the financial crisis. Joe, over to you, sir. Okay. Didnt get out of hand yesterday. Down 128. It watts down 150 for a while. Today its going to rebound at least a little bit. Lets check on the markets this morning. In the past, shutdowns after theyre reopen, it does a little better than it did before they were shut down. Probably not worth it to do it, but hopefully that will be the case again this time. 52 points is not bad. Wrapping up september, the dow did add more than 2 . For the quarter, the inded decks rose by 1. 5 . For the s p, it added nearly 3 just last month, nearly 5 for the quarter. And the biggest winner was the nasdaq, which was up 5 in september and up nearly 9 for the quarter. But apple . Was that the big driver . Apple helped, i would think. You know, the internet stocks have been doing really well. Facebook has rebounded, too. Facebook is the nasdaq, you remember the even though its two. Even though theyre doing and netflix and other netflix, priceline. Priceline is killing it. Others are, too. Its kind of amazing. It is kind of amazing. You wonder whether its do you see any did you read that article in the wall street journal today . The article in the wall street journal simply quited two investors we had on a week and a half ago. It was Warren Buffett and carl icahn. The same people . It was the same people. I mean, but the two Main Investors that they quote, they put the pictures on, they spoke on krn, they quote them on cnbc from a week and a half ago. But that piece is i dont know. Well see how many people take too much away from that piece today. Its interesting, people asking if weve gotten too high. Oil prices were, in fact, down yesterday by about 0. 5 or so. Theyre down another 32 cents to 102. 0 on 1. The tenyear note at least at this hour is yielding 27655 . The dollar has been weaker, but youre fought going to see it necessarily against the yen. A little weaker against the yen. But the yen has been under pressure, too, because of shinzo abe deciding to go ahead with some of the tax increases in japan. You can see right now that the euro is at 1. 354. Gold price res slightly higher, but there was a big drop off yesterday for gold prices. This morning, up by about 7 to 1,334 an ounce. The Government Shutdown has both the leaders of the house and the senate pointsing fingers. The house has made its position known very clearly. We believe we should fund the government and we think there ought to be basic fairness for all americans under oh bam in care. The senate has continued to reject our offers. But under the constitution, theres a way to resolve this process and that is to go to conference and talk through your differences. And i would hope that the senate would accept our offering to go to conference and discuss this so that we can resolve this for the American People. We like to resolve issues, but we will not go to korns with a gun to our head. The house has to pass a clean bill, theyve had that before and they can do it right now. If they do that, then well agree to work with the government and funding the government for the remainder of the fiscal year. Joining us now, cnbcs chief washington correspondent, john harwood. When, john . I mean, something will happen soon, wont it . What are you hearing . Think so. Think so. Republican leadership aid ves said they dont believe the shoutdown is going to last very long. The shutdown may be useful to them, useful to john boehner because the more pain that republicans feel as a result of this, the more leverage that boehner will have to reassert control of his caucus and try to get a deal. And wa a deal appears to, you know, life is full of surprises, but what we believe is a deal is ultimately going to end up with, given the unity among democrats and the divide among republicans is an extension of government funding, maybe some negotiation on a budgets deal. You know, what are some people who still think t possible, because remember, wa were fighting about now isnt about the budget. This is about the desire of some members to try to launch one last assault on obama care. Its not the budget talks. Both house and senate have passed budgets. They have not gone to conference on the budget. And this could be a lever or a mechanism to get that going. But sooner or later, john boehner is going to have more ability to move his caucus toward what seems to be the inevitable end to this. Yeah. Right. And then we get to move on to are you boning up on the next stuff, john . Are you getting ready . H, my goodness. One of the hopes of people who have been watching this, some of both sides, is that if you have a shutdown, which, you know, its bad. It hurts some people. But it is not longterm harm for the economy if it doesnt last too long. But that might be useful by generating a certain amount of shock in markets and voters that would cause both the extension of funding and the debt limit to get raised at the same time. You would have kind of a big bang solution, but there is some belief among the caucus, leadership was saying the other day, no, were going to have to go through this again. And thats why the president is brinking bankers down to talk to him at the white house and why you have an increasing drum beat. And i think youll have increasing nervousness among markets. I just got a message from our friend, Mohamed Elerian who said the longer this goes on, the time between now and october 17th, that is going to raise the stakes, raise the pressure, and thats what ultimately ought to drive a solution. John, do you see that there would be some sort of solution where, you know, the house has already proposed this whole idea of getting rid of the tax for the medical devicemakers . That is something that the senate has voted in favor of in the past by Something Like 73 senators or something. Do you see that being part of the negotiation, if you could wrap up, lets say, the debt ceiling, the budget, all in one and do some sort of tradeoff for that . I think absolutely that could be part of the solution in the end. You had 79 senators who are on record as saying that they oppose the tax. Its not very important to obama care. Its 30 billion over ten years. It has nothing to do with the functioning of the law. It just helps pay for it. So, yes, get rid of that law. You could make the deficit bigger. Remember, our deficit has come down quite a bit in the near term or you could replace it with some other source of revenue. So yes, i dont expect that tax to survive longterm, but i dont expect given the way this crisis is playing out, i dont expect that to happen as part of the immediate solution to government funding or the debt limit. But why are you so convinced that this is all going to happen happen yidly . Im anxious that were going be youre anxious . I am anxious. I dont really i dont see the wall of worry were you going to the statue of liberty today . Do you have any plans . Can you even get on the statue of liberty these days . Yeah, you can. I thought you couldnt go. You could until today. That was my plan and now that its no longer there, im anxious. The reason that im sang win about this is that it is so obvious what the rationale solution to this is that they get past these two issues. Theyre not going to stop obama care. You get past these issues and you get into a budget negotiation. Everybody knows but thats if you have rational people literally, Everybody Knows that the what the country needs to do is have a longterm budget deal that whatever it does in the shortterm to the deficit may not have to do anything given the way theyre coming down. But it proposes some longterm discipline on entitlement programs and that is going to require democrats so swallow the entitlement reforms, republicans to swallow a little bit more revenue. That is the deal thats on the table. Everybody knows it. And its just a question of when we get there. But i understand andrews point. Whats is the short path to get them from here to there . Prices. I mean, you know, we do respond to crisis in the country. And if you have a big market shock that causes people to move, you know, there are many pressures on members. Youve got republican members who are concerned about primary challenges. Youve got National Republican strategists who are concerned about the partys ability to win prtal elections and youve got democrats who want to govern, they want to hold the senate and, you know, the president doesnt want to leave Office Without having addressed the entitlement process. Its entitlement. And andrew, when does the depression before anxiety or does depression follow anxiety or no, depression is after anxiety. You heard even harwood says that here is the narrative. For the Mainstream Media. The term in the house of representatives theyre trying to strangle and just deliberately hurt the country. When, in fact, in the back of their minds, they think that the entitlement and longterm budget issues are i mean, theyre all you would say that theyre all i daresay patriots. Thats heresy to say that one of the right is doing this. But did you see google today . Mean stream media. You know who google is celebrating today. This is just perfect. Who is that . The anniversary of yosemite. You cant go there today, even though you know, you laugh about it, but i feel bad for all these kids who are going to washington, d. C. Who if i were making the kids id be anxious if i was. Which you have. Yes. And, john, did you see that the daily shows moment of zen again last night . No. The second time in two weeks. What . For the second time in two weeks, an exchange between you and me on this program was the moment of zen on the daily show. Wow. Before, it was on National Pirate day and you informing me that it was National Pirate day. Or talk like a pirate day. Last night, it was our exchange yesterday on, you know, the line about the president will negotiate with iran, but not with the members of congress. Oh, they probably didnt like me saying that, did they . You know, its like 15 seconds long. You can take a look. Okay. Ill do that. I would like some of their demographically correct viewers, i can tell you that much. Well, we keep this up the local channel guides for where to find us. Because i dont think ralt of those people watching jon stewart are necessarily watching us right now. We keep this up and jon stewart and the daily show will be a Conveyor Belt for this program. I wonder if he would be a guest. We know his brother. His brother works at the New York Stock Exchange. We could work on jon. Make it happen. His viewers arent up at this hour, though. No. But they might get up. You know how i found out about it . My daughter. Thats what im talking about. Its just a thought. That would be a whole new idea for us. 18 to 49. Arent there some people like that watching . Come on in. John, thank you. Big ten. I like that expression. Because . Im not sure why. Because i think we need a big ten. I think we do, too. Welcome everyone. Time for the Global Markets reports right now. Louisa bojesen is standing by in london. Hi. I love it. Here in europe, thats compactly what were doing this morning, popping up a bit. Yesterday on the close when we spoke, we were looking at all of our european markets in negative territory. But this morning, though, it does seem by and large that weve been baking into the pie that a partial Government Shutdown could indeed happen. St stoxx europe 600, up right now by 0. 3 . A lot of people are saying it might be a buy opportunity, especially if we dont see anything before october the 17th. Theres no reason for them to get any deal done by the 17th. And if it draws out a bit after the 17th, that, again, might be a buying opportunity for markets given that both the u. S. And european markets are stronger than where they were a couple of years ago or a couple of months ago, even. The stoxx europe 600, on the last three months, weve seen gains of approximately 10 . So youll note during the month of september which, of course, now is behind sxus were into october already. Weve managed to see gains coming off a little bit here over the last couple of days. But by and large, the quarter has been positive as set up by just over 10 . Our main european bothers this morning, most of them in positive territory. The xetra dax, the cac 40, ftse mib all higher. The ftse not quite making it, led lower by tliex of unilever amid a warning on profits. As we take a look at the fixed income markets, theres been a lot of noise about the italian yield. We have had a vote of confidence taking place where the Prime Minister needs at least 19 points coming from the pdl party or from the fivestar movement in order to stay in his position. Right now, yields are lower but were nowhere near the 7 plus level that berp looking at from the italian yield over the last couple of moss. Guys. Thank you for that report. Were going to talk about japan right now. Prime minister abe announcing a significant tax increase. Its his first major step towards tackling the nations massive debt burden. Were going to go to tokyo now. For more on this story, im told we cant talk to you too much well, we cant talk more about it. Anyway, how are you this morning . Good, ross. Thanks a lot. Yes, were going to talk about the sales tax. Its going up to 8 from april. That may not seem like a lot to people in the u. S. , but this is the first time in nearly 16 years the sales tax is going to go up in japan. Its starting in april. I think that was pretty much expected from the Prime Minister. But he tried to counter that and the negative impact its going to have on the economic picture with a stimulus package. But a little bit of disappoint that were going to have to wait until early december to get the details on that. The markets tomorrow, when they wake up here, might react with a bit of disappointment because we were expecting a bit more det l detail, potential Corporate Tax cuts. And instead, the Prime Minister just referred out there and said hes going to talk to his ministers and think about kb consider a Corporate Tax rate cut. So on the one hand, its time to lure more Foreign Investors back into japan. But he didnt really detail any sweeping measures. Instead, its a piecemeal approach that investors might not like. But i think the feeling in the Financial Markets is that theyre willing to give the government the benefit of the doubt for a while. And that is why tenyear paper is still going at 0. 7 . The Economic Data we had out of japan this morning suggests that were getting the wrong kind of inflation. Sure, were coming out of deflation, but its cost push inflation. And whats happening is the household spend sg still very negative. So put together with the consumption tax hike, theres a lot to worry about in terms of how much of a slowdown we could expect from the japanese economy next year. Kaori, thank you for that. We have the slowdown there and we have our own issues. Not so great for everybody. Coming up, find out who is still getting paid five years after the financial crisis and breaking bad breaks records. Its awesome. It was so awesome. I thought it was just sort of a theres nothing wimperish. If i could end a show, this is how it would end. What about homeland . I watched it last night. And . No comment. Well talk about it after the break. Maybe well talk about it in executive edge. Probably not. As we head to break, check out a couple of the best and worst quarterly performers. Netflix leads the way over the last five months. And jcpenney, which not only saw the departure of bill ackman, but a big spub offering. They added another 80 . The ocean gets warmer. The peruvian anchovy harvest suffers. It raises the price of fishmeal, cattle feed and beef. Bny mellon turns insights like these into powerful investment strategies. For a university endowment. It funds a marine biologist. Who studies the peruvian anchovy. Invested in the world. Bny mellon. Time now for the executive edge. This is our daily focus that gives Business Leaders a leg up. This morning, we have a story under the radar. Berkshire hathway is about to collect on a financial crisis era investment. He converts gold mak sacks into live shares. That initially gave berkshire the right to buy 43. 5 million shares at a 9 stake in goldman. Now, that deal was aemed earlier this year to give berkshire a smaller stake, but one that would not require it to pay any money to exercise the warrant. Berkshire will get about 13. 1 million goldman shares, making it the banks sixth largest shareholder. So, becky, my question on this and you are the Warren Buffett expert on this. How long does he tell does he stay in Goldman Sachs . Is this a path to exiting the firm . I dont think so. From everything he has said about goldman along the way, he likes the company, likes lloyd bla blankfein. I think as smsh who is going to put his usual investment thesis to work here, this is a stock i believe hes going to hold on to for quite some time. When lloyd was on, and he was very politically correct about that investment and whether it was mutually beneficial, in reality, i think lloyd feels like that was very, very expensive. For Goldman Sachs. And if you if your bank ever sent you, like, credit card charges or Interest Rate charges, on money that you borrowed from your bank, you would feel like right. Fair enough. But remember i know where they are. Buffett called im pretty sure lloyd called buffett. You are 100 correct. They needed him. But in hindsight, its like oh, my how much money . How much money overall was it that changed hands there . 5 billion. To the benefit of warren. And what do you think the Interest Rate was for the time oh, it was huge. Wasnt it like 9 or something . 9 or 10 . But then they had appreciation and everything else. I remember buffett talking, he had clocked it down to the minute about how much he was making down to the minute because of those preferred shares. Im just saying warren government the best end of that deal . Lloyd in other context had suggested this was a very expensive friendship. I was hoping to get lloyd to say that. Hes politically correct. But theres no question that that investment, while expensive, has been a huge boost to the Goldman Sachs franchise. Such a kindly, avuncular individual, talk about warren and just, you know, when if hes smiling and being real nice, just hold on to your wallet because he is going to get the best of you. But like i said, this is not a deal buffett came up with. No. Hes laughing. Hes like, youre kidding, right . Really . At the time, though, the transition no, way. Not with ge, too . You have to put yourself back in that mentality. You had to believe that the government was really going to be there. But it wasnt just the government. I mean, just because the government was there didnt mean that your shares were going to do well as a result. What you needed to show was that an outside investor had faith and was willing to put money in. And that was the kind of thing that was keeping a run on the banks. Youve got the cream of the crop. Any Financial Services firm is going to survive, it was going to be goldman. And thats why i think hes not going to be selling shares. This is something that people have told me that if you are going to bet on the on end of the world, your timing thats be really, really good. Yeah. Because it only happens once. So if you were betting that it was going to happen that time, there was risk. If you were thinking this probably isnt going to be in, and you know its going to cause that if you read the complete editorial in the wall street journal today, we know the end of the world is coming and we know whats causing it. But its not climate change. Now, it is. Im adding to it every day. Yes, you are. Anyway, i was out yesterday, guys, but the water cooler buzz was all about breaking bad finale. Over 10. 3 Million Viewers tuned in to see the High School Teacher turned meth kingpin wrap up all unfinished business. The finales record ratings put breaking bad only behind the sopranos and sex in the city. Wait until walking dead. Thats coming soon. The scenes that were showing are very i saw jessie with a beard. I dont want to know anything. But thats because youre many seasons behind. No, im not. Im in the middle of the third season. Let me just check my machine. You check your email. Ill say it again, the best finale ever. Really . I dont know if you had view owes sopranos. People had views on the dexter ending. This was an ending to beat all endings. It was done so perfectly. The whole series was done perfectly. And yesterday i was thinking, how can it end, is there a way i can like walter and like jessie do you like skyler . That sounds like a yes. Did you finally end up liking skylar . I know you dont like her. I never disliked her. Yeah, you did. Because youve argued with me. Your wife like skyler, you like walt. I do like walt. But thats not because i dislike skyler. Shes not watching. I know. You can say you dont like skyler. Is taits takes one to know one. When we come back, wall street hates uncertainty. Right now, capitol hill is generating a lot of uncertainty from the future of the debt ceiling. What should investors do right now and is the economic recovery in jeopardy . That is next. And at the top of the next hour, Value Investing master legg masons bill miller will be our special guest. He is guest holding this morning from 7 00 to 9 00. Squawk box will be back right after this. vo you are a business pro. Maestro of project management. Baron of the buildout. You need a permit. To be this awesome. And you. Rent from national. Because only national lets you choose any car in the aisle. And go. You can even take a fullsize or above, and still pay the midsize price. aaron purrrfect. vo meeeow, business pro. Meeeow. Go national. Go like a pro. Mine was earned in djibouti, africa. 2004. Vietnam in 1972. [ all ] fort benning, georgia in 1999. [ male announcer ] usaa Auto Insurance is often handed down from generation to generation. Because it offers a superior level of protection and because usaas commitment to serve military members, veterans, and their families is without equal. Begin your legacy, get an Auto Insurance quote. Usaa. We know what it means to serve. Sdmroo good morning and welcome back to squawk box on cnbc. Im joe kernen with becky quick and andrew ross sorkin. A Government Shutdown is in effect for the First Time Since 1996. Lawmakers failed to resolve the dispute over the continued government funding by the midnight deadline. Much more on that in a moment. In other headlines, amazon. Com plans to hire 70,000 workers for the Holiday Season. Did you see macys yesterday . Did you see it . I did. It was 85 up from 80 last year, wasnt it . It was an increase of 3,000, i thought. What was the company to yesterday that so much of their staff actually comes from these temporary workers. That they hired afterwards. That they hired afterwards. Here it is, 83,000, up from 80,000 last year. Right. And their yearround employment stands at 176,000. So this is a pretty massive chunk of their labor force. For amazon, that would be higher than last year. Its going to convert thousands of those jobs in the season when the Holiday Season ends. Check out a shortterm extension of their agreement over the Networks Like epsn and the disney channel. The two sides didnt know how long it would last. Theyre trying to work out a longer term deal and have key issues including the costs of sports programming, espn, and everybody at nbc, fox, its so awesome. Its just wsh you know, no dvrs. But did you get get pushed on to a premium tier, i think the economics will all change. The economics of sports, right . Epsn oh, you mean for espn and fox . One day, im convinced that a steady march, sports will get put on a premium tier. Because will the nonsports watchers be willing to subsidy decide . Because theres all sorts of debates about how much. Those who say oh, its 20 of the population who are watching and 80 are subsidizing. You just dont know. But will they pay ten bucks, 20 bucks, 30 bucks a month . Did you call nielsen . We have a viewer than 18 to 49. We dont have a viewer. Ive gotten seven or eight tweetes from guys who say they tape the daily show and watch them in the morning. Can you send him the nielsen phone number . Im favoring a bunch of people. When i said they have 20 questions, they said bo is your most admired journalist . Did you say jon stewart . I did. A huge portion of the nation get their news. Anyway, just how much economic and financial fallout can we expect from this Government Shutdown . Joining us right now to talk more about it is Michelle Gerard, chief economist at rbs and darrel kronk, wells Fargo Private bank. Ive been looking through some of the numbers and some of the forecasts. Ihs is shaving 0. 2 Percentage Points if this is a week long showdown. So they were looking at 2. 7 in the fourth quarter. Everyone, those are the kind of numbers that people talk about, a tenth or two tenths of a percentage point off growth for a week. In 96 we were out for 21 odd days we lost a quarter of a percentage point. I think those are the kind of numbers which in the scheme of things are not necessarily that large in terms of it doesnt risk derailing the expansion. It will have an impact. It simply depends on the duration, i think, in terms of what the ultimate fallout will be. Ive seen much longer numbers if we go 21 days like we did in 1996 of. Those feel too large to me. Again, you have people who think that the sequester took a percentage point to have off of growth in the first quarter. So thats i think it depends on the assumptions you may about the multipliers, of less spending and so forth. But i think whether or not away from the government sector, all of this undermines activity in the private sector in the sense that it keeps businesses from doing things. The truth is, it feels like weve gotten a lot more used to these kind of events. Looking at the markets, were not seeing the disruptions weve seen the last time. Businesses themselves are starting to take this in stride. In that sense, it may pose less risk than you might think. If you look at the futures this morning, the futures indicated up by the dow by about 50 points. Government shutdown, thats what the Market Reaction is. The markets are just kind of pushing it aside. I think if you go back, becky, this is now the 18th partial shutdown in 1996. The prior 17 times, weve seen the markets from the point of shutdown, the equity markets specifically from the point of shutdown to 30 days, 60 days later. Over twothirds of the time, the markets have been positive. Positive shutdown. So if we get a reaction from the markets, it generally speaking is in advance of the shutdown. Is it different this time just because of the debt ceiling that is looming, that debate looming just around the corner . You dont usually have the two coupled together, right . A Government Shutdown with a need to extend the debt ceiling almost simultaneously on the calendar, which is really a problem. I think as we look at the Government Shutdown and we look at what are the forces now that are going to propel us to get to the deal, there arent a lot up until the debt ceiling. So we can be shut down to michelles point for the next to the 17th within which will have some economic impact. It will be the impact in the fourth quarter. What about at which the market says database its always hard to pick the day. Sort of how long into this do you think the market says, okay, enough. Right now, im going to stomach it. Its fine. We cant stomach it any more. I think if you get into next week, middle part of next week towards the end of next week, i think the markets will start to get into anxieties. The reality is as foolish and as dumb as it is to shut the government down, and we all acknowledge that, the dangerous thing is the debt ceiling. So you can move from a foolish dumb scenario that the government has working through and they channel that energy towards a more dangerous scenario. I guess the hope is that, perhaps, if things come to a head as a result of a shutdown, that maybe the debt ceiling battle will be less. He has proven hes willing to go to the mat at this point, maybe hell be able to pass a debt ceiling extension even if its just, you know, with the democrats voting in favor of it. You know, that hes if hes proven. I mean, i guess to some extent its a rationale world. The problem is, you need to markets to put pressure on washington to do something. The more the markets think this is a shortterm thing, the less pressure they feel and the long they are drags out. Unfortunately i think thats why weve gotten to this point. If we had had pressure. But, you know, thats the other thing. Washington has heard all of this brp. Weve been warned the economic impact. Unfortunately, this reinforces that view that, you know, this is not something that is that poses as much risk to the economy as people are saying. And i think the economy is in a much better place today than it was, for example, in 2011. Whether we like it or not, the budget deficit is half of what it was at the beginning of this year. I think we like that. When you look at the budget deficit as a percentage of gdp, its dropped from 7. 2 at the beginning of this year to 4. 2 . We had the payroll taxes income and Corporate Tax revenues are feeding into the system. The Housing Market has recovered. So thats given us a little bit of indianapolis lagz. Its given the markets security and insulation in this environment. Its definitely much more balanced. Thats less vulnerable. Michelle, darrel, thank you. The Government Shutdown is just hours old. Will lawmakers be able to rise above and find some middle ground . Dnc chair congresswoman Debbie Wasserman schultz and Nick Mulvaney bring the debt and Health Care Debate to the squawk floor, thats next. Welcome back. Take a look at the u. S. Equities at this moment. The dow is up by about 50 points, nasdaq is up 7 points and the s p is up 7 points. Joining us annoy at this hour, Debbie Wasserman schultz is joining us and congressman Nick Mulvaney is a republican from South Carolina. Let me start with you, nick. Congresswoman, ill be right with you. But what was the rationale . Is it kind of a symbolic move, do you think, by some of the more conservative members of the house just to but the put the unpopularity of obama care front and center . Is that kind of a pr campaign . Because there was never any end game in sight as far as i can tell, was there . I dont think its a popularity game. So the extent we raise awareness about the bill, theres valuable to that. But the real thing is were fiepting it. We dont think its good for the economy. Go look at the numbers on what obama care is going to do to gdp. Were serious about this. Its the most important thing to us and thats why were taking this position. But theres no way to win in this context. I was more or less sort of and there are some people that think you can lose the pr battle and youre going to in 2014, if youve won enough seats in both houses in 2014, you could actually do something about it. So if this ends up hurting the partys chances in 2014, you wonder whether the pr or keeping it front and center, you wonder whether it was worth it. I get that calculus went into the some of the thinking, didnt it . Again, you have to think at the end of the day, that good g policy and good politics or else you night as well give up and go home. If youre doing what you think is right, you hope people will look favorly upon that. I think 60 of the population doesnt like the bill. Were on the side of the majority of the population of the United States. I think its a good place for us to start. Congresswoman . Yes. Well, lets look at the people who have been asked who would oppose obama care whether or not they think this was a good thing to do. Overwhelmingly, people who oppose obama care think we shouldnt defund it as a strategy to change it or get rid of it. And they thought that the republicans serm should not shut down the government over delays or defunding obama care. This is a dangerous game were playing. It is going to damage our economy. We have 800,000 federal employees who cant come to work today and wont be paid. National parks closed and all over what . Over whether or not you have the ability to make sure that everybody has access to quality Affordable Health care. There are almost 750,000 uninsured and eligible South Carolinans today that now can sign up for the exchanges. They can sign up for health care coverage. You have almost 50,000 young adults in South Carolina that can stay on their parents insurance and that is what my colleague wants to deny them. This is an idealal you cant sign up because the exchanges arent ready yet. Nick, that is completely untrue. There is an exchange up and running right as we speak in South Carolina. You can go online, sign up for it, compare coverage, make sure that you can get access to quality affordable coverage. And you know wa youre doing . Youre telling almost 2 million South Carolinans that as of january 1st, who have a preexisting condition, that they could still be dropped or denied coverage for that preexisting conditions. Youre willing to shut down the government and the economy to do it. Those are absurd numbers. Its also absurd that you have shut the government down over a settled matter. You know, if there are problems as obama care is complexed, then we should sit down and Work Together and hammer out those problems. But obama care is law and its going to remain law. And you guys are we have been trying to sit down with you for three years, since we got here, to work with you on this. But were not going to dedelay or this up. This is from an opinion piece today in the wall street journal. And scott gotley helped pin this piece. Hes at the hhs federal health i. T. Policy committee. He points out there have been a lot of problems getting some of these things up and running. Half a dozen state exchanges wont offer full online enrollment. Some of these things werent tested before this morning. The first test is going to be live and running today. Some of the oversight watchdogs half a dozen is six, there are 51 marketplaces open today across the country. There are going any time you have changes in my state theyre using a fax machine excuse me. Any time you have changes this significant, there are going to be kinks. But over the next six months, you have americans across the country who dont have Insurance Coverage who have never been able to get access to it. 150 million of whom have a preexisting condition who cant be dropped or denied coverage for that preexisting condition. And that is what the republicans are even willing to jeopardize the health of our economy over. Theyve shut the government down and now in two weeks we have looming. This is a prelude to a disaster. You know in two weeks were going to have the same fight over whether we can pay the nations bills. Its almost as if the republicans need something. Can we ever just do a clean cr . A clean cr. Can that happen at this point . Think it through from a negotiations standpoint. We sent them something, they sent us a clean cr. We sent them a third thing, they sent us a clean cr. Is that a good faith negotiation . You tell me how you get off the center with that . They have got to come forward lets be clear, were not negotiating over the there you go. Were not negotiating obama care over whether or not we keep the government i was hoping we could get you two to agree on something how we can do this. And i hear the music playing. So i dont know, maybe we can keep your mikes on, talk amongst yourselves. If you do arrive at something, tell the producers and we can open back up. Thanks. Thank you. I think its a good idea. See . Bipartisan trying to bring people together. Get the rise above pins back . Yeah. Coming up, the Health Care Exchanges are open. Howard dean and Toby Cosgrove, theyre going head to head in the next hour. But not energy or even my mood. Thats when i talked with my doctor. He gave me some blood tests. Showed it was low t. Thats it. It was a number. [ male announcer ] today, men with low t have androgel 1. 62 testosterone gel. The 1 prescribed topical testosterone replacement therapy increases testosterone when used daily. Women and children should avoid contact with application sites. Discontinue androgel and call your doctor if you see unexpected signs of early puberty in a child, or signs in a woman, which may include changes in body hair or a large increase in acne, possibly due to accidental exposure. Men with Breast Cancer or who have or might have prostate cancer, and women who are or may become pregnant or are breastfeeding, should not use androgel. Serious side effects include worsening of an enlarged prostate, possible increased risk of prostate cancer, lower sperm count, swelling of ankles, feet, or body, enlarged or painful breasts, problems breathing during sleep, and blood clots in the legs. Tell your doctor about your medical conditions and medications, especially insulin, corticosteroids, or medicines to decrease blood clotting. In a clinical study, over 80 of treated men had their t levels restored to normal. Talk to your doctor about all your symptoms. Get the blood tests. Change your number. Turn it up. Androgel 1. 62 . Get the blood tests. Change your number. Turn it up. At a ford dealer with a little q and a for fiona. Tell me fiona, whos having a big tire event . Your ford dealer. Who has 11 major brands to choose from . Your ford dealer. Whos offering a rebate . Your ford dealer. Who has the low price tire guarantee, affording peace of mind to anyone who might be in the market for a new set of tires . Your ford dealer. Im beginning to sense a pattern. Get up to 140 in mailin rebates when you buy four select tires with the Ford Service Credit card. Whered you get that sweater vest . Your ford dealer. Getting the right nutrition isnt always easy. First, i want a way to help minimize my blood sugar spikes. Then, a way to support heart health. And lets not forget immune support. But now i have new glucerna advance with three benefits in one. Including carbsteady ultra to help minimize blood sugar spikes. Its the best from glucerna. [ male announcer ] new glucerna advance. From the brand doctors recommend most. Advancing nutrition for diabetes. The government may be shutdown, but wall street is open. Take a look at the futures and youll see at this hour, dow futures indicated up about 51 points. When we come back, investing when washington is playing politics. Our guest host is bill miller of legg mason. As we quick off the fourth quarter, squawk box will be right back. Ready to 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 youre sick or hurt . [ japanese accent ] aflac. Love it. [ under his breath ] hate it. Helps you focus on getting back to normal . [ as a Southern Belle ] aflac. [ as a cowboy ] aflac. [ sassily ] aflac. Uh huh. [ under his breath ] i am so fired. Youre on in 5, duck. [ male announcer ] when youre sick or hurt, aflac pays you cash. Find out more at aflac. Com. You really love, what would you do . [ woman ] id be a writer. [ man ] id be a baker. [ woman ] i wanna be a pie maker. [ man ] i wanna be a pilot. [ woman ] id be an architect. What if i told you someone could pay you and what if that person were you . When you think about it, isnt that what retirement should be, paying ourselves to do what we love . Paying ourselves maestro of project management. Baron of the buildout. You need a permit. To be this awesome. And you. Rent from national. Because only national lets you choose any car in the aisle. And go. You can even take a fullsize or above, and still pay the midsize price. aaron purrrfect. vo meeeow, business pro. Meeeow. Go national. Go like a pro. No deal, and the federal government has shut down. What it means for your money, the markets and where we go from here with guest host and market master bill miller. Health care exchanges up and running. The cornerstone of obama care goes live. Millions of americans can start shopping for Health Insurance but how many will actually turn out . We hear from doctor and former president ial candidate howard dean. And from the ceo of the Cleveland Clinic Toby Cosgrove. And steve israel on getting washington back on track. Its a busy day on wall street and squawk box is open for business. Good morning and welcome to squawk box on cnbc. We are open for business. The government is not this morning. Im andrew ross sorkin. Take a look at the futures with the government closed. The dow looking like its going to open up about 50 points higher, the dow, s p 500 about seven points and the nasdaq up a little over 12 points. White house ordering a shutdown of areas of the federal government including National Parks and federal offices as lawmakers fail to reach a deal by the midnight deadline. Did i just take your lines, joe . I dont think so, but they took my is this my read . It might have been. Its early lets go back. There it is. Joe. The floor is yours. Its just a question. I mean do we want to keep viewers or not . We want to keep them. In which case, becky should start reading. Exactly. The white house ordering a shutdown of areas of the federal government including National Parks and federal offices as lawmakers fail to reach a deal by the midnight deadline. What areas will be affecting businesses and the market . Hampton pearson joins us with something about just when i heard nonessential employees, it struck home with me. And i dont know whether i dont feel essential or somethings hampton, but you know, that rang true for me. Reporter yeah. Essential and nonessential in the eye of the beholder. Specifically the reason were here in front of the Labor Department behind me. In the grand scheme of things, the government says Labor Department functions, especially Data Collection are nonessential that markets might take a different view especially since one of the early casualties is if this building behind me is still closed, we will not get a jobs report on friday. The last piece of relevant Government Data that markets care about will be the insurance claims we will get on thursday. Commerce is already shut down saying theyll have no data releases this week as long as shutdowns in effect. On the flip side, by the way, across town from where i am right now, securities and Exchange Commission open for business, they have funding to at least last a few weeks before things would get critical there. Now, in the oh, one other housekeeping matter, president obama did, in fact, sign the military pay act, signed passed by the house and senate last night. So troops on active duty will get paid on time for however long this lasts. In the wee hours of the morning, last night, we do have pictures of some things here around the nations capital. Iconic monuments like the Lincoln Memorial being closed, the national zoo. We also had producers out and about checking in at some of the government buildings that were in the process of being closed. And believe it or not, there were Government Employees going into their buildings in the wee hours of the morning essentially to shut down the buildings, shut down the offices and then go home. Some of those nonessentials, if you will, joe, on the job in the wee hours of the morning after congress, in fact, had essentially done nothing. So we do have the Government Shutdown and here we are gak to you guys. Yeah. I want the now im thinking, again, about me and becky quick and andrew ross sorkin. I understand i totally understand. Initially, this is if its quick, we get some ratings and then we get the market goes up. We want our numbers on friday. But on friday, if its going to mess up our friday employment report bounce in ratings, then ive got to draw the line, for me. Hampton, what is the story on that, though . Is this a situation where they have to be closed down until friday for us not to get the friday numbers or if theyre closed down three days this week theyre not going to have bodies around to tabulate this stuff during the week . What has the Labor Department said on that . Youre breaking up a little bit on me. Heres what i understand. Beyond the whole issue of critical nonessential employees, the issue with the jobs report is this, all the surveys and all the data in and, you know, the report was essentially done. Or was there still work to be done to finalize the report . If its the latter, obviously you would need key people to crunch the data, get it ready and get it out. Now, 17 years ago, the last Government Shutdown, there was an issue with the cpi where they were so concerned it was going to get leaked omb green lighted a contingency group. That option were told is available this time. But it all depends on essentially what happens in the next 24 to 48 hours. But as i said, bottom line, if these buildings behind me are closed on friday, we wont get the release of the jobs report. And its going to be you friday, right . You could sleep in or something, i guess. What are you hoping for . Well, i i dont get to make that decision. As you know, joe, a lot of other people who decide at any given point if any of us are essential or nonessential. You mean the essential employees unlike us. Okay. I hope we see you friday, hampton. He might be there friday anyway. Especially since the weathers going to be great. Exactly. All right. Thanks, hampton pearson. He does a great job he does. And, you know better get it right. Every time. Our guest host this morning is legendary investor bill miller. He is the manager of the Legg Mason Opportunity trust fund. And its a pleasure to have you here today. Its great to have you here today to kind of interpret what this all means for the market. Thanks, becky, its nice to be here. You look at the Government Shutdown and think wall street might panic over that. But the futures are set to open about 50 points. Is this just the beginning . Were shrugging things off. I think on your show yesterday, you guys put out some data showing the previous Government Shutdowns have no impact. And were seeing it again today. We spoke with i dont know if it was an economist Michelle Gerard who pointed out the market has gotten used to this emergency situation. And as a result youve seen smaller and smaller reactions. Less pressure put on the congressional leaders and the administration to try to get to some resolution. Does that mean it could last for weeks and weeks on end. If it were something serious, obviously the market would react to it. The Government Shutdown for a few days or even a few weeks will have a marginal impact on the overall economy as has been said about this show and the shows the last few days. So if we get to the debt ceiling, which is only subpoe17 away and theres still no resolution, then what happens . From the markets perspective. The last time we had this was in august of 11 and the s p downgrade. But that was in conjunction with the European Crisis. We dont have that European Crisis now. And theres virtually no chance well have any kind of default or they wont make payments, treasury can prioritize. You know, read a time in the times yesterday that the president will declare the law to follow will be to pay the debt. The markets understand the debt ceiling will not be catastrophic. That would make Lehman Brothers look like a kindergarten show if they didnt pay interest on the debt. You dont think its going to happen . I hope it doesnt happen, yeah. You know, we have had a number of guests who have come on cnbc in recent weeks. The journal kind of wraps up some of this today by pointing to carl icahn and Warren Buffett who have told us in the last week and a half that stocks at these valuations dont look cheap to them. That, you know, its a lot harder to find deals these days. Do you find the same thing . Absolutely. The markets fairly roughly valued. Last year you could find things and we bought them last fall, netflix in the 60s, where it was pretty obvious unless something really was untoward, the risk reward was fantastic. Reasonably have a chance to be up 50 to 100 in the next 12 months. Is that just the case in the u. S. . Are there opportunities that look like that in europe or other places . You know, we mainly do u. S. Stuff. Europe is a different europe is getting a little better. But im not im still not wild about europe. The euros way over priced. And there are companies over there were looking at and might do. But, again, nothing looks like an easy 50 to 100 in 12 to 24 months. There because of the qe, right . You know, the euros are probably there for a variety of different reasons. First, its not coming apart. Second, if you look at the balance between the euro and the dollar from a chinese export standpoint, they tend to kind of balance out. If they had tapered, i think the dollar could be 1. 25. Well, it ought to be about par, really. Thats where it ought to be. All those markets. Do you think theyll start this year . Tapering . I dont know. Does it matter to you when you look at the market . Well, i think charlie monger at the berkshire meeting. Charlie made a comment about nobody would predict what youre seeing right now. What the economy would look like. So the feds running a giant experiment. And we dont know what the answer to the experiments going to be. Were playing out in realtime. You say when you look around, its very hard to find bargains like youve seen in the past and you still have a lot of stocks you like, Something Like apple. Is that a stock you could see doubling in the next 12 to 24 months . Apple, apple is funny. Theres when i listen to cnbc on the radio and when im driving, theres a commercial where a guy used to talk about refinancing being Something Like its the biggest nobrainer in the history of the earth, right . Thats what apple is right now to me. It just makes no sense for apple to trade where it is. 14 , you know, in essence, Free Cash Flow yield. 10 simple Free Cash Flow yield. If apple was a junk bond, it would trade 40 higher. But junk bonds, you know, junk bonds are a contract, they have a claim. But they have a claim on a typically bad balance sheet. A lot of large numbers. If it doubles, its going to be almost 1 trillion. Double, i think, is probably not likely. Its already the most valuable company. If it goes back to where it was if it takes two years to go back where it was a year ago, its 50 . Whats the trigger . This is a psychology game at this point for a stock like that. Someone has to decide and enough people have to decide its actually worth more. It was a psychology game when netflix was 60 and now its 300, right . That was a year ago. Best buy was 13, now its 38. The psychology can change quickly. To me, the when we saw the iphone get introduced, all the analyst, thats overpriced. Sell 9 million phones, the highest decimal is 7 1 2. The store in london, a mile long line outside of it. And weve got a little video of people in tokyo in a typhoon sitting outside the apple store. They wouldnt go in during the typhoon. So, you know, yesterday came out that it was the most valuable brand in the world better than cocacola. How much does coke grow . 6 , 8 a year . Where does it trade . 18 times . The whole world what . Al qaedas tweeting now . Did you read that . The president of iran. Al qaeda is tweeting . You can follow yep. And they probably tweet on iphones, terrorists, right . I mean, on homeland, they well, hes dead. Whos the magician . Have you heard of him . I heard about the magician. But the magician has i thought you say you havent seen homeland. I wanted to see how you kill off 200 people the entire, you know you saw what happened. I dont know how they resuscitate of last season. I cant tell the end of last season . The same thing with breaking bad all over again. All right. Maybe it wasnt 200, maybe it was 199. Well, we are lucky enough to have bill miller with us for the rest of the program. Thank you and we have a lot more to come. Thanks. Very quickly, a couple of corporate headlines this morning. Berkshire hathaway collects on a deal it made during the financial crisis. Going to be converting Goldman Sachs warrants into Common Shares today. Under the terms of the deal that were amended this year, berkshire will get about 13. 1 million goldman shares worth worth about 2. 1 billion. Walmart is opening Distribution Centers dedicated to filling orders online in response to a surge in the retailer business. The facility in ft. Worth, texas, is already open, the other one in pennsylvania is set to open next year. And dish Network Customers will still be able to watch Walt Disney Owned Cable Networks for now. The two sides have struck an extension. They did not say how long that extension will last. But, again, they do have that shortterm deal. Andrew . Coming up next, Health Care Exchanges going live today. Millions of americans are expected to be filling out online forms. But will the new law do what president obama intended . Were going to discuss that all next and take a look at the futures this hour with green arrows. Dow would open up about 46 points higher. Squawk box will be right back. Its as simple as this. At bny mellon, our business is investments. Managing them, moving them, making them work. We oversee 20 of the worlds financial assets. And that gives us scale and insight no one else has. Investment management combined with investment servicing. Bringing the power of investments to peoples lives. Invested in the world. Bny mellon. Farmers presents fifteen seconds of smart. So you want to drive more safely . Stop eating. Take deep breaths. Avoid bad weather. [ whispers ] get eight hours. [ shouts over music ] turn it down and, of course, talk to farmers. Hi. Hi. We are farmers bum pa dum, bum bum bum bum welcome back to squawk box, we are following the Government Shutdown closely this morning as well as the opening of Health Care Insurance exchanges all over the country. Joining us now to talk more about this, dr. Toby cosgrove, the ceo of the Cleveland Clinic and howard dean the former governor of vermont and a cnbc contributor. Good morning to both of you. Good morning. Im going to start with you. We have been expecting this. Theres been some efforts to stop this. Immediate impact. Is there any Immediate Impact that actually the consumer, the public is actually going to see in all of this . No, were not going to see any impact of this bill probably until the begin of 14. People are signing up now, were delighted to help them sign up and understand their opportunities. Toby, when you think about price, though, are we going to see it as a distinct difference in the price immediately . Or is that also isnt coming . Well, you know, its very hard to tell what the total effect is. Some predict the prices are going to go down, some places the prices will go up across the country. Were probably going to see an increase in the inflation rate of health care. While its been going down over the last couple of years, looks like its going up because of the additional people coming into the market. Dean, i want to come to you in one second. But you guys made some cuts. How big are those cuts . And have all of them been made already . Its about 330 million. Well, we need to reduce our costs some 330 million, and its impossible to do that without beginning to understand the effect on employees because theyre about 60 of the cost of almost any Health Care Organization across the United States. So were offering early retirement for some 3,000 people. We expect about 1,000 to take us up on that. But it remains to be seen. Joe was giving me a hard time. No, im not. The producers are laughing in my ear weve got tony and dean, thats a band, isnt it . It could be. Howard, different question for you, which is, big question about whats happening here in washington right now. If we actually take away the medical devices tax, what do you think happens to obama care across the board . First of all, its not going away and second of all, causes 129 billion deficit over a tenyear period. This is all silliness. I do i just want to editorially say that its a delight to be on with toby because the Cleveland Clinic is one of the really Great Health Care companies in the country for how they charge for their stuff. Thanks for having me on. Thank you. You dont like obama care. I do look i honestly think you would like it to fail to get to single payer. Youve said that before. That is not true. I think obama care is going to work, i think its going to work well. I actually do think theres going to be some impact between now and january 1st. Most of them are going to find out, a, they can get insurance. You used to say it was a crappy bill, howard. Why did you not like the bill initially . The reason i didnt like the bill initially, i think we desperately needed a public option so you could explain the bill. If wed put everybody into medicare, we wouldnt be having this fight right now because people understand medicare. Everybody . Well, i would have put i would have left a public option for people to go in or stay in their public insurance. Would you like everyone to be covered by medicare . Would you like that, Toby Cosgrove . Well, i know what we have to do. Weve got to change health care in the United States and were in the process of major transformation. Is that a yes . Youd like everybody in medicare . Thats not what i said. I think the main thing we need to do is we need to be responsible about the cost. And theres a number of ways to do it, whether its one payer or a mixture of government and private pay. We know that we have to reduce the cost of health care and weve been at this for a long time now. Toby, should we be happy as members of the public that youve had to reduce your cost by 330 million . Is that right . No, i think what were looking at right now is almost a patriotic duty to reduce the cost. And im sure were going to be able to do that. Were going to continue. Howard, assuming you think the other side is completely irrational, is there a way for you to come to a compromise with them . What . With the Tea Party People . Yeah. I wouldnt pay any attention to them. Theyre a minority, they dont get to dictate a bill thats been passed by the congress and approved by the Supreme Court. This is nuts. What theyre doing is crazy and i think itll be reflected. This goes on 17 days like it did when gingrich shut the place down, i think were going to take back the house. Or you could lose the senate and maybe the bill actually were already kay hagan in North Carolina is going to get reelected and that was a tough seat for us. People are not going to put up with this kind of stuff. This is way outside the mainstream. Howard, it all goes back there. You know what spawned the tea party is the way democrats passed health care. You lost ted kennedys seat. If that wasnt a metaphor for as it was proceeding that maybe you should have had something that big, maybe you should have had some participation from the other side. I mean, all the a lot of the people are saying this was the worst political environment since the civil war. It stems from the way obama care was passed, howard. I dont agree. This has been going on since 1994. But listen, why debate all this stuff. Im looking forward because its 17 of the economy. And if, you know, there are problems with the bill and if it ends up hurting the health care for the people that already have it are making it much harder. You expand the demand and then the supply doesnt keep up pace. The only reason we dont know what the problems with this bill are going to be, but we do know its going into effect. Theres a 33state federal exchange. If that works well, were on our way to a Health Care Program just like every other industrialized nation in the world which will give Health Insurance to all the American People. They still come here to come to the Cleveland Clinic. Im happy to have the people go to the Cleveland Clinic, a first rate medical organization and they actually understand how the system has to change. I dont know. An incremental bill with rahm emanuel, got rid of preexisting conditions, got rid of the only two insurers per state. There was a way to do it when you take 20 of the economy. Every other big entitlement, youve had both sides have had a say in it, howard. And i blame you because you were dnc chair and you pushed us even further. Weve got to leave it there. Toby and howard, otherwise known as tony and dean. Tony and dean. Its a good band. They had three or four number one hits. Pleasure. We will have much more with our guest host bill miller of legg mason. Well ask him about value stocks and where hes putting his money to work and then steve israel on the Government Shutdown and what is next for lawmakers. Squawk box will be right back. Time now for todays aflac trivia question. What was walts original car . The answer when cnbc squawk box continues. Ry . Yo, yo, yo. Aflac. Wow. [ under his breath ] that was horrible. Pays you cash when youre sick or hurt . [ japanese accent ] aflac. Love it. [ under his breath ] hate it. Helps you focus on getting back to normal . [ as a Southern Belle ] aflac. [ as a cowboy ] aflac. [ sassily ] aflac. Uh huh. [ under his breath ] i am so fired. Youre on in 5, duck. [ male announcer ] when youre sick or hurt, aflac pays you cash. Find out more at aflac. Com. [ male announcer ] when youre sick or hurt, aflac pays you cash. In a we believe outshining the competition tomorrow requires challenging your Business Inside and out today. At cognizant, we help forwardlooking Companies Run better and run different to give your customers every reason to keep looking for you. So if youre ready to see opportunities and see them through, we say lets get to work. Because the future belongs to those who challenge the present. But at xerox weve 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. Hows that for an encore . With xerox, youre ready for real busine how old is the oldest person youve known . We gave people a sticker and had them show us. We learned a lot of us have known someone whos lived well into their 90s. And thats a great thing. But even though were living longer, one thing that hasnt changed much is the official retirement age. The question is how do you make sure you have the money you need to enjoy all of these years. Now the answer to todays aflac trivia question, breaking bad edition. What was walts original car . The answer, a 2003 pontiac aztec. When we come back this morning, what traders can expect now that the governments shut down. We can hear from those with skin in the game about what theyre planning on doing with their portfolios. And steve israel joins us about getting a deal done. The debt ceiling and much more. Right now, though, as we head to a break, check out the u. S. Dollar. Squawk box will be right back. [ male announcer ] when we built the cadillac ats from the ground up to be the worlds best sport sedan. People noticed. The cadillac ats 2013 north american car of the year. Lease this cadillac ats for around 299 per month with premium Care Maintenance included. [ female announcer ] youre the boss of your life. In charge of long weekends and longer retirements. Ask your financial professional how lincoln financial can help you take charge of your future. Welcome back to squawk box this morning. In the headlines, lawmakers failing to reach an agreement on the continued funding for the government. A shutdown went into effect at midnight. Were going to be talking about the effects of the shutdown in a moment. Nations automakers report their numbers. Predicting Industry Sales down 3. 7 from a year ago. That would break a 27month streak over yearoveryear increases. But says maybe mostly due to a calendar quirk. This years Labor Day Weekend sales were mostly counted towards august whereas they occurred in september last year. Other Economic Data out today, weve got to keep an eye on august construction and spending, also the ism september manufacturing index, both of those at 10 00 eastern time. Well, it you cant go to the statue of liberty. If youre planning to go to the washington monument, turn around. It stands 555 feet tall, it was completed in 1884, it is closed thanks to the Government Shutdown. Crickets . Crickets, yeah. Nothing going on there. Although, hk, didnt he who was it . Whos helping . David rubenstein, i believe is helping with that. Helping with during the earthquake. Remember, the earthquake about 2 1 2, 3 years ago it was damaged by it. Would you have any problem taking that elevator in that little closed area and ive done it. Its no problem. Im okay with it. I did it in up in New Hampshire in that mountain i told you a story, i was stuck in an elevator for like 12 hours once and im okay with this. Was it big enough to sit down . I did. I sat down, i was by myself. You were buy yourself . By myself. Can i tell you some news at least it was someone you loved. Thank you. News out from merck. Theyre announcing a global initiative. Theyre affirming their fullyear target of 345 to 355 which is already the street looks like its there. Theyre also talking about plans to have new workforce reductions of about 8,500 positions. In addition to pending previously announced reductions. Their goal is to try and have target net reduction in annual operating expenses of about 2. 5 billion by the end of 2015. The news here is 8,500 jobs they are now talking about cutting in addition to the other cuts theyd talked about to this point. Right now, its time to talk markets and what you can expect today now that a shutdown of a federal government is in place. On currencies this morning, we have boris, on oil, carl larry from oil outlooks and opinions. Plus chuck gabriel. Our guest host this morning is bill miller, the Legg Mason Opportunity trust fund manager. And boris, why dont i ask you about the dollar. We just mentioned the effect, the impact that the Government Shutdown is having on the dollar. Do you see this continuing as the shutdown continues . You know, i was just talking to howard dean. And you know whats wrong with this shutdown . They didnt close down the airports. If they closed down tsa, how long do you think the shutdown would last . Maybe one second. Thats why the markets are having a half hearted reaction to it. Wait and see mode, the dollar is mildly weaker but not significantly weaker. But the longer we go, it kind of becomes like a lobster being cooked in hot water. More of a problem it becomes as far as government services. The more an impact on the downside. Is that something a week from now or a month from now . I think a week is about the maximum amount of time the markets are going to have patience for. The one key take away, the taper off the table for october. And only if we have the best possible scenario where everything goes hunky dory. Do we have a chance of a fed taper in december. The dollar in my opinion is capped because of this developments. Youve seen this before, what it does it mean for the markets . Is this time around different . No, probably not, becky. We think on a scale of 1 to 10 with august of 2011 being a ten, this is more of a four or five. Its really not about money, its about obama care. And, frankly, you know, what the markets might be reacting to this morning is the reassurance that, yes, this is front loading debate and squabble that was going to last a few months anyway. How can that be too bad . And weve got a bernanke put on the other end of it as boris pointed out. If this is something that lasts 17 days and bumps into the debt ceiling, does that change the picture . Well, again, we are heading toward that one way or the other. If it lasts 17 days, of course, everybodys going to i think the conventional wisdom is every two to three days it knocks a percentage point off. It pushes back tapering. But everybody should know that mid october was always what this, you know, where this battle was really going to be waged and fought and october, you know, was going to be a bit of a day of reckoning or a testing of this incredible sentiment. Carl, oil prices have come down. How much of that is because whats been happening with iran . And how much of that is because what were seeing with this debt . The Government Shutdown . Well the Government Shutdown has an Immediate Impact on us. Theyre talking about people who arent going to work, people who arent driving. And the bigger or the longer the shutdown goes, the more people we start seeing cut back. Once you cut out the United States Postal Service and at some point theyre going to have to cut spending at the dod, which is the largest buyer of fuel in the world. These things start to affect us and prices will go down. But that temporary dip is maybe a false hope for a lot of people looking for low prices. Right. Carl, chuck, boris, gentlemen, thank you for your time today. Right now wed like to spend more time talking to bill miller too. You said at this point in time this is something you shrug off. You talked about apple being something you see as a real bargain. You talk to us six months ago. When you told us, look, this is a new paradigm for investing in airlines. That still continues. You still hold many of these stocks. Yeah, ive heard jim cramer talk about the shutdown being a negative for airlines. Its a shortterm negative for airlines. An opportunity to buy them if they dont go down very much. The one we like the best is united. And whats interesting about united, the delta, which is one of the top ten performers in the s p 500 this year up 98 . Delta and united have the same rough revenues. And yet the market cap of deltas 20 billion, the market cap of united is around 11 billion. The reason is that delta has better margins, deltas integrated northwest faster. And i think over the next couple of years, the margins will converge which gives you a 50 move and united just to get to where delta is today. And you also like u. S. Air. Where does that fall . U. S. Air has one of the highest returns on capital relative to the cost of capital in the industry. If the amr deal goes through, its great for u. S. Air. If it doesnt go through, its less great for u. S. Air. Do you think the deal should go through . I do. You think it will go through . I dont know. They lost the initial battle with having the thing pushed out until the spring. The chances of a settlement probably are greater because of that but i think its a tossup. In terms of the airlines overall, theyve moved a substantial amount too. Is there a point where they get a little too rich for your blood . Theres always a point they get too rich. What is the point . Part of where i see the airlines. Basically the cruise line industry except with a really bad history. Its very similar except people dont have to go on cruises and they do have to fly. And if you look at where carnival trades, twice the valuation of airlines, mainly because that industry is consolidated, its also been historically quite profitable where the airlines have been historically terrible. I would use that as a template over the next three to five years. And i remember you arguing at one point this was the railroads. And i think we talked to Warren Buffett about this either in omaha or either on the show and he said, you know, you can still always get an upstart in this business. Theres always somebody. Theres a glamour to this business that somebody some entrepreneur out there is going to come in and try to ruffle some feathers. Yeah. Theres basically very little entry into the business. They hope, they hope to get to 2 market share. So theres really nobody out there that either spirit, which is one of the newest ones. Theres basically no one out there that can go after the market share of a united or delta, which is 25 . Would you touch southwest or jetblue . I think theyre all reasonably attractive. I think the legacy carriers are much more attractive. Deltas 5 1 2 times. Reporting record profits. All right. You like poulty homes. If it takes two years for them to go back to where it was in may, you make 50 . 50 in two years will beat the market. Just at the housing conference, by far the best housing analyst in the world got the top right, bottom right. And what was very clear at that conference was we had a little bit of a hiccup with the Interest Rates going up in july. But weve picked up again in home sales. All the Home Builders are optimistic. Stewart miller made the point that it was roughly 1. 3 million to 1. 4 million new shelter units needed per year. Well do 900,000. That just pushes the cycle out again. We like them all, basically. But lennar is already close to peak gross margins, peak operating margins and early in the cycle. Thank you very much, were going to continue these conversations. Bill miller is our guest host today. And up next, well head to washington and hear from the chairman of the Democratic Congressional campaign committee. New york congressman steve israel joins us after the break. announcer scottrade knows our clients trade and invest their own way. With scottrades smart text, i can quickly understand my charts, and spend more time trading. Their quick trade bar lets my account follow me online so i can react in realtime. Plus, my local scottrade office is there to help. Because they know i dont trade like everybody. I trade like me. Im with scottrade. announcer ranked highest in Investor Satisfaction with selfdirected services by j. D. Power and associates. Help the gulf when we made recover and learn the gulf, bp from what happened so we could be a better, safer energy company. I can tell you safety is at the heart of everything we do. Weve added cuttingedge technology, like a new deepwater well cap and a stateoftheart monitoring center, where experts watch over all drilling activity twentyfourseven. And were sharing what weve learned, so we can all produce energy more safely. Our commitment has never been stronger. At bny mellon, our business is investments. Managing them, moving them, making them work. We oversee 20 of the worlds financial assets. And that gives us scale and insight no one else has. Investment management combined with investment servicing. Bringing the power of investments to peoples lives. Invested in the world. Bny mellon. Just by talking to a helmet. It grabbed the patients record before we even picked him up. It found out the doctor we needed was at st. Annes. Wiggle your toes. [ driver ] and it got his okay on treatment from miles away. It even pulled strings with the stoplights. My ambulance talks with smoke alarms and pilots and stadiums. But, of course, its a good listener too. [ female announcer ] today cisco is connecting the internet of everything. So everything works like never before. Andrew, youre between anxious and depressed about the yeah. Can i get a kleenex too . My tears government workers in various departments sleeping in this morning. Thats one of the good things. You do get to sleep in, but its not for a good reason. Congress failed to agree on a funding bill. Leaders on both sides still unable to come together for a compromise. The house has made its position known very clearly. We believe that we should fund the government and we think there ought to be basic fairness for all americans under obama care. The senate has continued to reject our offers, but under the constitution theres a way to resolve this process and that is to go to conference and talk through your differences. And i would hope that the senate would accept our offer to go to conference and discuss this so we can resolve this for the American People. We like to resolve issues, but we will not go to conference with a gun to our head. The first thing the house has to do is pass a clean sixweek cr. They have that before them, they can do it right now. If they do that, then well agree to work with republicans on funding for the government through the remainder of the fiscal year. And joining us now, congressman steve israel. Congressman, you know, im worried were at a point where its already happened. If were just going to scream and yell and disparage the republicans, its not going to help. You go into the chamber every day with these guys. I know you dont throw mud. Theres no fights. People arent down on the ground fighting. How can we what do we need to do to put out an olive branch . Lets settle this right now. What do we need to do realistically to get this cr done . What do you need to do . Were willing to do what the republicans asked us to do. They said heres our budget figure, take it or leave it. Yesterday we took it and they left it. Heres a solution that gets us out of this mess. The republicans have said they want to continue the operation of government at the level of 988 billion. Democrats initially said thats too low, we want to go higher. Yesterday we said to Speaker Boehner, made an explicit offer. All right, you wanted 988, well give you 988. In between the house and the senate. But lets keep the government functioning while we negotiate those differences. So you have said take it or leave it, well take it. And, unfortunately, the response was well leave it. As a result, the government is not functioning today, it is not open, that is reckless, it is irresponsible, and it puts the economy at risk in order to achieve a political gain. And i think thats unfortunate. Do you think the republicans are at a point now where to save face they need some token . Is there anything you can think of that would work that way that you guys could part with . We gave them not a token, we gave them their deal. If im negotiating the sale of a house, i want to buy a house. If somebody gives me the price, i say, okay, ill accept your price. Theres something wrong with the negotiation. This is not a token, we gave them what they wanted. We havent gotten to the medical just the medical youre still talking about they still want to delay a year on obama care, right . What was the most recent offer you got from them . Delay a year and do the medical device . Where are you . Well, there have been so many offers and counteroffers at this point, the state of the union is now silly. The last offer that they put on the table after rejecting their own offer of 988 billion was the issue of the continued employer contribution to members of congress and staffs, members of Congress Must leave the federal Employee Health benefits program under the Affordable Care act, go on the exchange, so they said, thats fine, except they want to take away the employer contribution. Thats the vitter language. They had contraception in there, restrictions on contraception and the deal theyve presented over the weekend. Look, every time you know, my colleague from new york, peter king has said they go from dead end to dead end. Every exit strategy is another dead end. We need to get beyond this, the American People are sick and tired of this finger pointing and blame and we have the solution. The solution is the republican budget they themselves offered. Okay. When do you think if whisper to me. How is this going to play out . Maybe no one will hear. Will it happen today, will it happen tomorrow . How is it going to work . Whats going to be arrived upon . Well, you know, theres too little whispering in washington these days, theres a lot of screaming at one another. Heres what has to happen is it going to happen . Do you think it will happen . Oh, it can happen youre with those guys every day, how will this really end and when . Im going to be brutally honest with you. Anyone that tells you they know whats going to happen with this tea party caucus, you shouldnt be listening to because nobody knows. Nobody knows. But heres the thing, this doesnt have to happen this way. There are enough votes on the floor of the house of representatives this morning to pass a clean cr at the republican budget level without all of these extraneous positions, without defunding obama care. We could get this done in a matter of an hour. But it hasnt happened. But it hasnt happened. Whats going to get you there . Ultimately, Speaker Boehner has to decide, does he want to continue to govern by pandering to the tea party base in his caucus . Or is he willing to suspend the rule and allow enough republicans to get this done . There are at least 218 votes, i think theres probably more like 230 votes, a Critical Mass of democrats, which is what got us away from the fiscal cliff last january. Theres a critical theres enough democrats. And i think enough moderate republicans to get this thing finished and have some Solutions Rather than the continued chaos. Boehner could do it if he if he did what you just said. There are two examples. He could say enough and just let it go to a vote . Well, he did it twice before with Hurricane Sandy and the fiscal cliff. What worries me is this is just the overture, the dry run for the debt ceiling. A republican member of Congress Said to me yesterday in the elevator, you aint seen nothing yet. This is pregame. And that would be deadly and you didnt hit him . What do you guys do then . Youre in the bathroom together. Hey, hows it going, frank . Thats weird. Its weird for us to watch that. Well, its weird and its its tragic and, again, it doesnt have to be this way. Theres so much. The president gives a speech every day just hammering the republicans. What do you expect . And there is hes got the bully pulpit and i dont know i dont see anything good happening ever again. Well, you know, one thing about washington is we tend to get into these kind of reruns and repeats. We had the fiscal cliff in january. Everybody was saying washington cant get anything done. When john boehner said well take as Many Democrats as you can give us and a few republicans, we passed it. When on Hurricane Sandy when for the First Time Ever the Tea Party Republicans refused to provide my state and other states with relief. Finally at the end of the day, the democrats in congress were able to find a few brave republicans and we passed that. We have to do that again. And im hopeful that Speaker Boehner will take the deal that not that we offered that he offered that we agreed to. Its not too late to solve this problem. And he cannot hold the whole faith and credit of the government wheres your district . Well, my district is in new york, extends in queens out to central suffolk in the town of smith town. The north shore of long island and northeast queens. Nice. Did you endorse the blasio . I have a small part of new york city, small part of new york city. I think hell be a good mayor. Do you think hed be a good mayor . I think hell be a good mayor, yes, sir. Okay. I wanted that tape in case we see you again. Well see what happens. We appreciate it. Thanks, congressman. Thank you very much. Coming up, weve got stocks you need to watch. And the top of the hour we have House Minority whip steny hoyer joining us with reaction to the shutdown. And Texas Governor rick perry will sound off. Squawk box will be right back. So i c an reach ally bank 24 7, but there are no branches . 24 7. Im sorry, im just really reluctant to try new things. Really . Whats wrong with trying new things . Look mommys new vacuum cat screech you feel that in your muscles . I do. Drink water. Its a long story. Well, not having branches lets us give you great rates and service. Id like that. A new way to bank. A better way to save. Ally bank. Your money needs an ally. Maestro of project management. Baron of the buildout. You need a permit. To be this awesome. And you. Rent from national. Because only national lets you choose any car in the aisle. And go. You can even take a fullsize or above, and still pay the midsize price. aaron purrrfect. vo meeeow, business pro. Meeeow. Go national. Go like a pro. If your travel plans involved any of the National Parks or museums managed by the National Parks service such as yosemite or yellowstone thats iconic. What is that . Oh, i know it i was just thinking what is it . El captain. Look at that. Beautiful. I want to go. When squawk box returns, minority whip steny hoyer. And later rick perry. Checking the futures right now. Youll see despite the Government Shutdown, futures have been indicated higher. Squawk box will be right back. Bny mellon combines Investment Management investment servicing, giving us unique insights which help us attract the industrys brightest minds who create powerful strategies for a countrys investments which are used to build new schools to build more bright minds. Invested in the world. Bny mellon. In a we believe outshining the competition tomorrow requires challenging your Business Inside and out today. At cognizant, we help forwardlooking Companies Run better and run different to give your customers every reason to keep looking for you. So if youre ready to see opportunities and see them through, we say lets get to work. Because the future belongs to those who challenge the present. Transit fares as in the 37 billion transit fares we help collect each year. No . Oh, right. Youre thinking of the 1. 6 million daily Customer Care interactions xerox handles. Or the 900 million Health Insurance claims we process. So, its no surprise to you that companies depend on todays xerox for services that simplify how work gets done. Which is. Pretty much what weve always stood for. With xerox, youre ready for real business. Congress failing to reach a deal to fund the government. Shut this down. I want a different answer. The house and senate reaching the midnight deadline without one. Shut it down. As of today, 1 million nonessential government workers will be furloughed. Shut it down. And some National Parks and government offices will be closed. Shut it down. Well talk to House Minority whip steny hoyer. What a shameful day this is in the history of house of representatives. Plus, Texas Governor rick perry will join us onset. And Health Care Exchanges launched today despite the Government Shutdown. Well talk to the chairman and ceo of insurer ehealth on his company is working with the new health care law. The third hour of squawk box starts right now. I dont want to do this show anymore. Shut it down. Welcome back to squawk box here on cnbc. First in business we are. Worldwide. Im joe kernan along with becky quick and andrew ross sorkin, our guest host this morning market master and the one i would say essential employee on the set he is essential. Hes a key man. Yeah. Bill miller, manager of the legg mason u. S. Futures have backed off a bit. Now theyre up about 37. And i i dont think id bank on that if these guys continue to just yell at each other. Youre going to get headline watching all day everything that comes out of washington could end up eventually pushing the markets one way or another. Overseas in europe where all those governments run so smoothly. Theyre down 22, up 27, up 45. What happened in italy, just said were leaving and theres like 12 different parties anyway, i think. So weve weve got our problems but, you know, could be worse. And in asia overnight, the nikkei fell 1. 5 . That after abe, the japanese Prime Minister announced a significant tax increase in the first step toward tackling the massive Government Debt burden. Congress failed to reach a deal as you know to fund the government. The shutdown is in effect. John harwood with more. Is he all excited and, i was on squawk box, look at this. I dont think its not the same is it . Why is that . I guarantee hes going to tweet it out as soon as he knows hes on our show. Youre being sarcastic. Like all the yes, i am. Like all the congressional people weve had on. What do we ask people now, john . You just know theyre going to yell about the other side. Anyone we have on yells about im asking, you know, how does this end . I want to know you know its going to end. Can you just tell me how . Isnt it yes. Its going to end when republicans decide theyve taken enough punishment. How can they do that . Do they need any what is it at this point . Ill buy a bagel or something . What is it at this point theyll say i got to say enough . I think its going to be when the damage to the National Party is sufficient that donors that Republican National strategists that john boehner himself, that Mitch Mcconnell say enough, the party is hurting, maybe some governors, as well. And then john boehner goes into his caucus and says to the 30 or 40 tea party guys who have been forcing this strategy on him weve tried it your way, didnt work, now were going to just cut our losses and move ahead and try to find another vehicle to fight on, perhaps a budget negotiation which, after all, is what were supposed to be talking about. The how to fund the government of the United States. But what we saw last night, joe, was one series of back and forth between house and senate, the house tried to get the senate to go along with defunding obama care, with delaying obama care, with getting rid of a medical device tax. And the very last episode before midnight is when the house then voted to say were going to go to conference with the senate and try to get them into a negotiation here and harry reid said that was going to meet the same fate as the others. Here are the two leaders last night. We were hoping that the senate will take our offer and go to congress. We also want basic fairness for all americans under obama care. We like to resolve issues. We will not go to conference with a gun to our head. As a result of that, theres not going to be a conference, the senate will affirm that today. Answering their phones and seeing what the reaction is. Most people expect on both sides that republicans are going to take the brunt of the blame. But the white house understands the president s going to be hurt too. Looking for a break as a result of Public Opinion and public pressure. You dont want to i thought you were going to toss out one other sound bite that i dont know the one other sound bite. Work with me, will you . We had boehner and reid. Youll negotiate with iran but wont make a call to the leaders of the house . I mean that is thats one of those things that sounds good but doesnt mean anything. I know, but still, people remember that. Well, that was chief washington correspondent john harwood and squawk no, thats the one i thought you were going to start with. Im sorry. Im sorry. I was behind the cue. Work with me. The sound is in. So its basically something that you play and dont say anything. Its like the sound of one hand clapping or Something Like that. Youre supposed to youre supposed to reach its supposed to make you think. Supposed to make you think. You have made people think with that comment. Jon stewart is going somewhere, wow, i finally made it. His lucky day. Maybe not. And hes going to har about it from all the grandmothers watching this show who let their younger children and grandchildren know that he was on. Weve gotten, you know, tens of dozens of younger people that have written in that they watch both im 24 and i watch. Thanks, john. Weve got to get to leader hoyer. For more on the Government Shutdown, we are joined by representative steny hoyer. Leader hoyer, thank you for joining us this morning. Youve heard us this morning and youve been serving in Congress Since 1981. So you have lived through some of these Government Shutdowns, how do you think this one ends . I dont think any american can feel happy about the situation we confront right now. Every economist predicts its going to be costly to the economy, dangerous to our National Security and undermine the confidence of the American People. And of the people who work for them in the United States government. This is a policy that is very negative, very harmful and rejected by approximately 3 4 of the American People as a strategy that ought to be pursued. So no american ought to be happy today. This shutdown which is the first in 17 years. The last shutdown we had, of course, was under similar scenario, republicans in the congress of the United States, particularly in the house of representatives were confronting a president of the other party, bill clinton and said if you dont do it our way, we wont do it. And thats whats happened here. And thats thats not the way democracy ought to work. In this instance. I know previous people have said weve agreed to a number for interim funding for the government at the levels set by our republican colleagues. They wont take yes for an answer and its a very sad day for america. Is there any way for the republicans to back themselves out of this corner . Is it our way or the highway . Well, id like to think theres a face saving way and we need to think about a face saving way. They have to give some help on that as to what direction they think they can move. Their constant focus, their destructive obsession as i call it with repealing the Affordable Care act with which they dont agree. We know they dont agree with, the American Public knew in the election that didnt agree with it. But the American People reelected the sponsor of that bill, barack obama. They reelected and expanded the majority of the United States senate that adopted that piece of legislation. So it is unreasonable and irrational in my opinion to simply reject the voters of america who made a choice just a few months ago and say if you dont agree with us now, were going to shut down the government which is what has happened. The way it was passed ushered in the tea party. So they have constituents too at this point. And i know both sides have you know, the republicans weve decided that theyre in the wrong here. But, you know, the president at some point, did you just think between now and 2014, he doesnt talk to the house at all . Because these are people he just cant possibly talk to. Its going to be day in and day out at another College Campus with everybody laughing and nodding as he bashes the republicans day in and day out . Is that what were looking at until 2014 . Joe, thats not an acceptable strategy and you know that and i know that. We have a country for which we are responsible. We pledged an oath to respond effectively and positively to running that country on behalf of the American People. So thats not a strategy. Weve got to sit down, weve got to talk. Very frankly. We wanted to do that on the budget as you know. Six months ago, three months ago, four months ago, we asked to go to conference on the budget so we could reach a number and come to an agreement. Theres been refusal in the senate and the house to do that. Youre absolutely right. The president and the democrats as well as the republicans have a responsibility. But we have a responsibility and i think the American People understand that to come to Common Ground in places where that is possible, not simply to say the election occurred. Youre going to ignore the elections results. Let me say, joe, let me say something. Im glad you raised that. The tea party, i think, is a relatively small faction of the republican conference right now. I would say its anywhere between 30, as small as 30 and as large as 60. The problem is not that the tea party who say that theyre representing their constituents. Lets assume for the sake of argument that thats true. But there are 150 to 160, 170 republicans who are not in that place but are allowing themselves to be led around by ted cruz and the most radical element of their party. That is not acceptable. It cant happen in a responsible democracy. Assuming you believe that entire group, then, is irrational, if thats what you believe. Is there anything you can do, the democrats can do that they can offer as a fig leaf, an olive branch, as anything to try to get this across the finish line . Well, i think we have a responsibility to find out what would do it. But right at this point in time, joe, you know my m. O. , i do exactly that and thats what we need to do in a democracy. I have not yet found that element that they would agree to because theyve been so adamant the only option for them is to repeal or delay the Affordable Care act. And when they say delay one year and that sounds reasonable, none of us believe on our side of the aisle theyre going to change their opinion in 12 months. They havent changed it in 24 months or 36 months. Theyre not going to change their opinion. Now were going to be confronting as you know the debt limit extension. Then assuming at some point in time we pass this legislation. Were either going to be facing november 15th or december 15th deadline. And that demand will be the same. It would be irrational for us to think if you do this the next time will be easier. It hasnt proved to be the case. Yeah. Actually, andrew asked a couple of those. I dont know which ones you liked and didnt like. If they were all okay, ill take credit for them. You know what, i saw most recently the university of maryland i saw was like in the top five party schooling. That i did not i went to colorado, so i get tarnished with that every time it comes out. If were going to to go to the university of maryland, lets go to the 40. Beat West Virginia 370. West virginias pretty good, youre right. West virginia beat Oklahoma State and they were 11. If were going to focus on university of maryland, lets focus on the positive. They got boomer esiason. Im still working on steny hoyer. Youre my man. What about a heisman pose . Well, thats a little levity at a time when, unfortunately, theres not much to be happy about. I hear ya, but i know i can get you we try to end sh on i appreciate that, joe, very much. Always with a smile. Thanks, steny. Also a couple of corporate headlines. Berkshire hathaway collecting on a deal made during the financial crisis. Goldman sachs warrants converted into Common Shares under terms of that deal. Berkshires going to be getting about 13. 1 million goldman shares worth about 2. 1 billion. Merck cutting about 8,500 jobs calling it initiative to sharpen the commercial and r d focus. By the end of 2015. With this in previously announced reductions, it will have cuts of about 20 of the global workforce. Also, chrysler reporting august sales increase of. 7 . Thats in line with estimates. And chryslers best september performance since 2007. Ford and gm will be out with their numbers later this morning. Coming up, will the Government Shutdown mean a shocktober in the markets . Guest host bill miller is going to weigh in. John rogers and harvey eisen. Later rick perry will join us right here on the set. And then were going to ask the chairman and ceo of ehealth how the company is dealing with the Health Care Exchanges. Were back in a moment. [ bagpipes and drums playing over ] [ music transitions to rock ] make it happen with the allnew fidelity active trader pro. Its one more innovative reason serious investors are choosing fidelity. Get 200 free trades when you open an account. Welcome back to squawk box. We are feeling a little lonesome, its about eight hours since the Government Shutdown. Lets get to our esteemed market round table. Joining us now from chicago, john rogers. Aerial investments chairman and ceo. And harry osmond chairman of wright investment holdings. And our guest host bill miller of the Legg Mason Opportunity fund. Since you are sitting next to me, just help me. Do you have a view thats any different than bills on whats going to happen here with this potential well, not potential, were now in a shutdown. How long itll last and what it means . Oh, on that . No, total nonevent. And its not changing. You will not buy anything today . You will not sell anything today . Its irrelevant to you . Being in a 12step program. I probably buy or sell something today, andrew. Not as a function of whats going on in the government . Carl who you talked about earlier said apples a nobrainer. I think ill buy some apple today. You going to buy some apple today . John, would you buy apple today . Bills made a compelling case. I saw him last week. And i said we have to look at apple for our large cap product. What do you do, john . Weve been batting it around. How long does this Government Shutdown last . What does it mean to the debt ceiling . And as a value investor, is there an opportunity here . Or do we chalk it up to a big nothing . I think its probably a big nothing. And inevitably itll end. And if the markets go down because of this problem, i think itll be a great opportunity to buy, take advantage of bargains that are happening because of this temporary phenomenon. You sort of teased us during the commercial break. Im going to out you here. You said you might have an Investment Opportunity for the great oracle Warren Buffett. I do. And he may be watching right now. Well, you know, hes probably on an exercise bike or with a trainer. Thats what he does now. Hes 83 you know. Do you want to speak to him . Hi, warren, how are you . You dont have anything to buy, the markets expensive. You just gave 50 billion to a guy named bill gates. Bill gates has a Company Called microsoft, trades at ten times earnings yields 3. 5 and raises the dividend 15 a year. And even you, warren, can buy your position this morning. I would encourage you to look at microsoft. I think its one of the nobrainers ive seen next to apple. Hasnt microsoft supposedly been a no brainer for the past decade . Whats the rush . In terms of the tipping point. Bill, we were talking earlier about apple. We said what could go up 50 to 100 in the next two years. People for the past decade have been saying thats a stock that could or should go up 50 to 100 in the next two years. It has not. No, i thought microsoft it was a disaster for the last ten years because whenever i see mr. Gates, all i have to say to him is how is your mobile phone doing . And smoke comes out of his ears if hes watching, you know, smoke comes out of his ears. And now you think smoke is not coming out of his ears . No, i think hes a grownup now and doing fantastic things and thats why the nantucket project that you and i attended was great because we talked about stuff like that. But the bottom line is bills 100 correct. Hes the best stock picker i know. These guys are hitting it out of the park and why . Because stocks are cheap and everybody is terrified because they went up. I want to go back to the microsoft call for a second. Is this a function of steve b l ballmer leaving . What put you on to this now . When i can buy a company thats an aboveground gold mine but they just generate cash, not gold, number one, number two, theyre one of the five greatest brands in the world according to the survey yesterday. Number three, theyre buying back only 40 billion worth of stock. They trade at ten times earnings. And you got youre paid to wait. And if you look at any metric of microsoft since ballmer has been running it for ten years the sh. The stock price. And just shows you the margin compression since it was at 50 times earnings. Heres the cherry on the cake, not for you and me but for andrew. If you buy it at 3. 5 today at 33. In six years, your yield will be 7 , 33 and raise the dividend every year 15 . But in 12 years, your yield is going to be 14 and thats what andrews going to do for his two kids who have a birthday coming up. I have kids. Im going to be here in 12 years, right, harvey . David rubenstein said the average age for white males to die is 81, but you better start thinking about it. John, weve got to go. If you had one stock for Warren Buffett this morning, what would that be . International speedway. Nascar tracks, they got a new contract up 46 with fox and nbc. Its terrific. If its related to nbc, i think it is terrific. John, thank you for coming on this morning. Thank you for giving bill that big suggestion. Well see if he takes it. I eat healthy, im running, swimming, im me too. Okay. And im waiting for the singularity. We may be on a grid. We may download our brains on the hardware eventually. Singularity is near, harvey. Cheer up. Coming up google may cure death. Much more on the Government Shutdown including a live report from nasa in houston where only about 6 of the employees are cleared to work. Well be right back. At a ford dealer with a little q and a for fiona. Tell me fiona, whos having a big tire event . Your ford dealer. Who has 11 major brands to choose from . Your ford dealer. Whos offering a rebate . Your ford dealer. Who has the low price tire guarantee, affording peace of mind to anyone who might be in the market for a new set of tires . Your ford dealer. Im beginning to sense a pattern. Get up to 140 in mailin rebates when you buy four select tires with the Ford Service Credit card. Whered you get that sweater vest . Your ford dealer. Oh, right. When we come back this morning, the Government Shutdown is on, scott cohen will rejoin us from Nasas Johnson Space Center where only about 6 of civil employees are cleared for work today. And Texas Governor rick perry well get his take on the Government Shutdown. The world is changing faster than ever, creating new opportunities for those who stand ready to seize them. In a time when the biggest risk is playing it safe, we believe outshining the competition tomorrow requires challenging your Business Inside and out today. At cognizant, our flexible, collaborative approach helps forwardlooking companies not only run better, but run different. To give your customers every reason to keep looking for you. So if youre ready to see opportunities and see them through, we say lets get to work. Because now more than ever, the future belongs to those who challenge the present. Welcome back to squawk box this morning. Lets take a look at stocks in the news. Theyre going to be helped by the Dow Jones Industrial average. Shares are higher in premarket trading on news of a Cost Cutting Program that would trim about 8,500 jobs and save about 2. 5 billion a year by the end of 2015. That makes no sense. Going to be helped by merck shares. Were also watching jc penney hedge fund Perry Corporation is cutting the stake in the retailer a month after cutting holdings. Now 4. 5 from the prior 8. 6 . And Buffalo Wild Wings is under pressure after Raymond James ed it from outperform to strong buy. Concerns over what it sees as a core demand environment for the Restaurant Industry in general. And ive got to say, i love wings, i dont know whats going on there. A partial Government Shutdown is in effect. And scott cohen is live at Johnson Space center in houston where only about 6 of employees have been cleared to work. Scott, good morning. Reporter good morning, andrew, those were the employees necessary basically to protect life and property. Include people who support the International Space station which is still orbiting the earth. And you wouldnt necessarily know it to look at the Johnson Space center right now that it is subject to a wideranging shutdown here because people have been arriving. They started arriving before sunrise. A lot of these people are contractors. There are presumably some employees who are finishing up matters before they are forced to leave. But this could very quickly become a very quiet place. And it is a big economic engine for this part of texas, certainly not the height of employment that it had during the space race. Nonetheless, theres not only the Johnson Space center, but a lot of contractors that support this place and a lot of businesses around it that rely on the personnel. When the president was ticking off the effects of the potential Government Shutdown yesterday, nasa was high on the list. Nasa will shut down almost entirely, but Mission Control will remain open to support the astronauts serving on the space station. But that is a very small workforce. Heres the impact according to nasa. At the Johnson Space center, the total workforce here is about 3,200 people. The people cleared to work about 193 of them. And a couple hundred more that are on call if something were to happen. System wide, nasa employs about 18,000 people, of that, 554 people cleared to work through this Government Shutdown. So there is a big impact here, and theyre bracing for it here in houston and throughout texas. Back to you. Speaking of, scott, thank you. Got governor perry here. The shutdown is on and many government workers are staying home today after congress failed to pass a continuing resolution to fund the government. And Texas Governor rick perry joins us with his reaction in studio. Awesome to have you here, governor, thank you. Thank you very much. You are not i dont think youre in trouble in terms of elections and youre not in the house. So you can give us just an unvarnished take on what is is this a good thing for the Republican Party and its prospects in 2014 . The Mainstream Media says this is a disaster. Yeah, i dont look at it as a partisan issue. Its not good for america, its not good for our men and women regardless of where they may be, regardless of your politics. The states are great laboratories of innovation. Were required to get our budgets balanced and work with both sides of the aisle. I dont understand why washington cant do that. Was this the time for the fringe of the Republican Party to make a stand on obama care . Well, i think it was an appropriate time to talk about obama care and really get the American Peoples attention. Weve known its been coming for a long time. We tried to educate as many people as we can about what a disaster its going to be. Its the reason we did not expand medicaid in the state of texas, its the reason we did not participate in the exchanges because it is going to be an absolute economic disaster. Heres the bigger point for me from the standpoint of someone who has been involved in this business for almost three decades. The governor coming on for 13 years, i sit down with democrats and republicans and i negotiate and i work with them. These are texas democrats. A week ago. A week ago, i thought that maybe they would come to their senses in washington, d. C. And sit down and negotiate a middle ground or negotiate it all. But we saw harry reid and the president of the United States stand up and say were not negotiating. This is not negotiable. Well, ive never seen something in the government thats not negotiable. So from my perspective, you have this absolutely immovable object. And we saw joe manchin who is a former governor who understands the art of negotiations standing up and saying, you know what, we can push this off for a year. We probably would be better off to do that. You have the unions. You had the teamsters standing up and saying this is not good for our people. So time after time youve heard all of these considerations that obama care is not what it was sold as. Its going to be very costly. Its not going to be a process that is good for the American People. Yet the president of the United States says, sorry, were not negotiating i got this without any republicans and were going to push it through. I made the point that it might have been a tactical mistake on both party sides. I think it probably is from the standpoint the law might be better if it was worked out better over the next year and the republicans might have been better off if they let it try to go in effect today and not work well. Both sides were put there by the other side where they both might be i think that both sides look equally poor in this from the standpoint of the American People looking for solutions to issues that face the how would you cover all the people in texas that dont have insurance . Well, we put Health Savings accounts into place . Personal responsibilities we would have the flexibility with federal dollars that come in rather than this onesizefitsall. Thats the problem with washington. There are 50 different states out there, laboratories of innovation. Let them come up with the ways to implement health care. But washington is so stuck on we know best, were going to implement these programs that are going to be effectual for all the country. Theyre proving it day after day. Steny hoyer was on a bit ago and pointed out, this was the law of the land, it was validated be i the Supreme Court and the American Public has had the chance to vote on the man who sponsored the entire bill and voted him back into office. We changed pieces of legislation all the time with those same types of parameters. Youre talking about changing, not repealing. And thats what i talk about. Should it be done in the context of the possibility of a Government Shutdown . Should we not should we do is there an opportunity to do it in a different way . Well, absolutely. There should have been. The idea that youre going to, again, my way or the highway is not the way to run a government. Who gets the blame for that . I think they all get the blame for it. Theres plenty to go around. Do you think its unfair that the republicans are getting the blame for this . And will they in 2015 or 16 . I dont know. Government has been shut down before. Since reagans time, theres been multiple shutdowns of the federal government. Its not the end of the world. Theyll get this worked out. Its great political drama. But the fact is, they need to get their business together, fund this government and obama care is at the heart of the issue. So if theyve got the votes, theyre going to pass the votes. And the fact is, then were going to find out whether or not obama care is going to function or not. Heres what it does to the state of texas if it is implemented the way it fully is put into place. Its 18 billion more over the next ten years. Its 100 billion of all funds. And then theres still going to be millions of people in this country i think 31 Million People in this country still dont have Health Insurance. We dont keep score in texas by seeing how many people we can put on public assistance to judge whether or not were successful. We judge success by how many people have a job in the state of texas and they have the alternatives to buy insurance from various resources. Thats how america should be judging success. You know, governor richard issuer issuers been on a number of time. Hes made the point, people write off texas success, economic success, well, they got all that oil down there. He says it has to do with tort reform, low regulation, low taxes. He rattles off a list of things that make it easier for the private sector to succeed in texas. Whats the one thing that we need to do on a federal level to try and just jump start this tepid economy we have . I would do three things. I dont think theres just one. But i think there are three things. One is on the energy side. And hes absolutely correct. The gross state product in texas percentage today is the same as it was in 1984 relative to the oil and gas industry. Weve had this huge growth of the texas economy and youve had increased cost of energy. I mean, oil and gas over 100 now. Yet, its still the same percent of the gross state product. So expand the Energy Business in this country, open up the xl pipeline. I mean, those are some Simple Solutions to getting a lot of people to work. Just focused on the energy industry, as well. I put a flat tax into place. And then repatriate this money thats offshore with bringing it back in here at a very low tax rate instead of this very heavy tax and those three things i will suggest to you will kick start this economy and americans will be back to work. And we wouldnt be having these conversations like theyre having in washington, d. C. And youre a striking man. And theres Nothing Better than a uniform. A striking man in uniform. And i remember your shots when you were younger. You just love him, right . You dont care what he does . Well, i do care what he does. Its so exciting, though, hes the most exciting player he handles himself fairly well. You think so . You give a thumbs up. Im glad they didnt have video cameras when i was 20 years old to follow me around. Yeah. Even an exciting football player, you cant help but be excited to watch who theyre playing. Hes an exciting football player. Its awesome for College Football this year. Anyway, as you know hes an aggie, a proud aggie. Thank you for being here. When we come back, the Health Care Exchanges outlined in obama care launched today. The chairman and ceo of ehealth and get insight into the challenges of new health rules. When you do what i do, you think about risk. I dont like the ups and downs of the market, but i cant just sit on my cash. I want to be prepared for the long haul. Ishares minimum volatility etfs. Investments designed for a smoother ride. Find out why 9 out of 10 large professional investors choose ishares for their etfs. Ishares by blackrock. Call 1800ishares for a prospectus, which includes investment objectives, risks, charges and expenses. Read and consider it carefully before investing. Risk includes possible loss of principal. vo you are a business pro. Maestro of project management. Baron of the buildout. You need a permit. To be this awesome. And you. Rent from national. Because only national lets you choose any car in the aisle. And go. You can even take a fullsize or above, and still pay the midsize price. aaron purrrfect. vo meeeow, business pro. Meeeow. Go national. Go like a pro. But at xerox weve 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. Hows that for an encore . With xerox, youre ready for real business. Its lonely in washington today. Today, of course, is the day the kickoff of the Health Care Exchanges. What impact do insurers think its going to have on business . Joining us now to talk about it, the chairman and ceo of ehealth. And good morning to you. Good morning. Great to be here. So heres the question i have, weve been talking about the politics of putting off these exchanges. I want to talk about the practicality of whether these exchanges are going to be successful on day one since you guys have been in this business for a long time. What are the chances were going to see a lot of hiccups . What are the chances its going to go smoothly . Well, you know, like anything, this is the first day of something thats very complex. And in the technology world, these are not easy things to build. Youre talking about government going into the ecommerce business. And if you look at the success failure rate in ecommerce, its not a great ratio. I dont have any inside knowledge, but i would expect that theres going to be turbulence and some hiccups. But i think even more importantly going back the comments i heard previously, thinking government can do this alone, i think, is a mistake. Whats the answer if government cant do it alone . Well, putting aside the politics of obama care, but it is the law of the land. And weve felt a long time to make this successful you really need a partnership between both the public and private sector. You know, weve been doing this jaup line long before the words exchange and Health Insurance were part of the same sentence. The federal government is operating in exchange because the states elected not to. 14 states, mostly democratic states have elected to try to go it alone when it comes to enrolling subsidy eligible individuals. We think thats going to optimize enrollment and cost taxpayers money. How does this affect you . No effect at all. Were a private sector company. And depending on how this may have impact over time on, i guess, exchanges, although im hearing not. Probably we become more important resource for consumers to go to. But, you know, the Government Shutdown doesnt affect us at all. In fact, we have recently seen volumes of people coming to as consumers looking to learn more about the Affordable Care act. Increase significantly, we expect that to continue. The states that arent partnered that are doing it on their own, are there specific states youre worried about . Are there systems youve looked at or heard about that have you anxious . Well, not anxious. We operate in all 50 states. People have the option of using us in all 50 states unless theyre subsidy eligible. These are lower income people. So my home state of california, for example, the largest population state in the country has elected at this point you cant use google here in the silicon valley, why dont you go to the library. And we dont think it makes any sense. In fact, in california, every time we enroll a subsidy eligible and generate revenue. How much money could you save . Well, its a good question. We can every time you enroll someone online, it costs money. So the exchanges are going to have a cost in doing that. But more importantly in california every time someone enrolls, whether its through the Government Exchange or outside it, the subsidy eligible individual well over 13 a month is generated from that Health Insurance policy. Thats paid directly to the exchange to fund and support the exchange. Every time we enroll one of those individuals, we support the exchange and generate revenue in this state. How concerned are you about accessibility . Well, i think thats a great question. You know, we saw over 20 million americans come to us last year, historically over 40 of individuals who have done business were previously uninsured. I think government has got an awful lot of work to do to generate awareness visibility. I think you could argue the administration has done an ineffective job up until this point. We just saw a gallup poll yesterday that said 65 of the uninsured are going to get Health Insurance under obama care. Thats how they responded. But less than half said theyd use the Government Exchange. Whether because they dont know about it, i dont know. But this, once again, argues to me that you need more than government work here to make this successful and effective. On that score, i completely agree with you. I dont think anyone understands enough about this to know what to do. We appreciate your time this morning. Appreciate it. Thanks so much. And coming up, the Government Shutdown is in effect. What does it mean for stocks . Well ask jim cramer next. The most Free Research reports, customizable charts, powerful screening tools, and guaranteed 1second trades. And at the center of it all is a surprisingly low price just 7. 95. In fact, fidelity gives you lower trade commissions than schwab, td ameritrade, and etrade. Im monica santiago of fidelity investments, and low fees and commissions are another reason serious investors are choosing fidelity. Now get 200 free trades when you open an account. Cnbc is celebrating a big milestone tonight. The 2,000th episode of mad money with jim cramer. Hes doing the show from outside the New York Stock Exchange and, in fact, hes so excited, hes there already. Jim, has it really been 2,000 shows . I dont know how that happened. One of the reasons is of course we do 250 a year because theres no time off and no cohost and they do kind of acouple late, one month after the bottom of the market. I cant wait to see this tonight. Youre going to be outside the New York Stock Exchange. I want to get your take because bill mill ser is here. Weve talked about the airline. He still loves the sector. The sector is good. Theres not a lot of competition. If us airways gets the deal, my, i think that stock is a double. If you have a long shutdown, the airlines did get hurt last time in the sequester. But they percolated back. Its good to watch because they havent had to watch in 30 years. Bill, you came on and talked to us just about the time bill came on, jim, you guys were looking at the same things with these stocks, right . Revenue per passenger mile, very good. Its very hard to get a plane. All the planes are located. If they get new planes, their earnings go right up because 40 of their cost or fuel, the new boeings are so much more economic. I caution people, if this shutdown, which you guys were talking about all morning last, thats where the earnings per share are going to be earned. Jim, thank you. Well talk to you at the top of the hour and well see you tonight for the 2,000th episode. Come on up. Come on up. Our invested in the world. Bny mellon. Our guest host bill miller, the last word. You didnt chime in on microsoft being a great buy when harvey isen talked about it. We own microsoft. Do you . They raised the dividend 15. 9 . I think its much more likely the Dividend Increase will be 20 or more the next five years. So microsoft has been a terrible stock for a decade, started out stupidly overpriced and now its stupidly underpriced. Is the catalyst going to be if i told you alan mulally got the stock im getting steven elan gets the job. Does it matter to you where the tenyear goes . Do you assume its going up . I assume were in a 30year bond bear market but its a benign bear market to begin with. I think 39 we saw is probably it for the next few months money. What about two years . I dont think two years. I think the fiscal drag will be less than the economy accelerates. At 3. 5 , just any stock with a 3. 5 yield if its a quality company, if its not going to just go bankrupt, you can assume there will be fluctuations in the stock price but if youre getting 3. 5 over zero, its not that bad. Its sort of a nobrainer, again to use that term. At t, pfizer . Well, im less enthused about an at t or verizon. Pfizer would be better i think. People hang on every word. Any other nobrainers . General electric . Yeah, ge is another one. Most of the big cap names with dividend yields at or about of 10year treasury the s p 500 payout ratio is on in the low 30s. I think thats going to go up and Dividend Growth will be double digit for the next several years. You play media at all . Not really. Its hard, isnt it . And its daunting and its challenging and the landscape. Why does he love comcast . I wasnt going to say that because im not quite as shameless as you. I just saw a piece in the post. Bill miller, thanks for being here. Thanks a lot. Squawk on the street begins right now. Good tuesday morning. Welcome to squawk on the street. Im Carl Quintanilla with jim cramer and david faber at the New York Stock Exchange. We are in a partial Government Shutdown for the first time in 17 years. Futures are working their way through it. Gold actually down 35 today after a very long night in washington, as we also kick off the 4th quarter. Tenyear yields around 2. 63,