As for earnings central, mcdonalds results will be in the spotlight. 8 00 well expect those numbers. It will be a busy week on the economic front. A number of key numbers. The september jobs report. Thats right, on tuesday we get that jobs report we were supposed to get a couple of weeks ago on a friday. Also, well get last months Consumer Price index and then september cpi on wednesday. Our economic newsmaker of the morning on squawk box, Charlie Evans will be joining steve leaseman in a cnbc exclusive. Joe. Thanks. Back to our top corporate story of the morning. Jpmorgan coming up with a settlement. This is mandatory reading. Im going to talk about it later. Well let you do your report and then well talk about what it means. And then we can go for it . Then we can go for it. After weeks of tense negotiations with the government, jpmorgan appears to be very close to a resolution to the tune of about 13 billion, which is a bit more than expected originally. In a phone call friday night Jpmorgan Ceo Jamie Dimon agreed to the elements of the pack with eric holder that would wrap up the civil phase of a Justice Department investigation into a number of its past mortgagebacked securities. The deal which would also settle outstanding claims by the federal Housing Finance agency and the new York Attorney general, eric snyderman, will carry a record settlement amount for the doj and would take an astonishing amount of money off of j. P. Morgues balan jpmorg Balance Sheet. The balance will go to the Justice Department along with a payment to new york state. A substantial settlement has been in the works for some time now. Something jpmorgan acknowledged by boosting its legal reserve by 9 billion in the recent quarter after what dimon described as escalating demands for penalties. So the magnitude of the settlement while high may not take investors by surprise. The problem is the continued uncertainty with what may happen with this criminal aspect of this suit. Thats something, joe and becky, they were not able to resolve as something they expect in the coming days and maybe even week. J. P. Doesnt have much choice as pointed out. If dimon were to fight the charges at this point the screws would get turned even harder. The journal makes the case that a lot of these banks are now really almost utilities and the real lords of American Finance are eric holder, jack lew, and the boss in the white house. Dick parsons wrote a piece, too. Dick parsons piece is that next time theres a systemic crisis, good luck asking some banks to buy the weaker players because of the liabilities they might incur. This was mostly bear stearns in the first place. Although there is some legacy jpmorgan that are wrapped into this. Well, who are we hurting here . The shareholders are going to lose half of the half of the profits that the bank made for an entire year. It will also be tougher to get credit. What it accomplishes, i like the analogy the journal is giving it, will put stakes on the head. The last guy andy brewer didnt bring any criminal charges. He got so much flak from the left theyre not bringing any charges against dont have any ceos so now well get it in money. See what you think of these, kate. The truth is lenny brewer didnt indict bankers because the crisis was a result of bank fraud. In fact, it was a result of classic credit panic caused by bad government and bad government policy coinciding with the rational exuberance, rational exuberance to bankers who were responding to the incentives forex ses sieve risk taking that the government created. If you want to get to the crisis, you have to arrest barney frank. The journal, a lot of times its called the morgan shakedown. A lot of times the journal doesnt pull punches, but in this case and then you have dick parsons, right, across on the other side of the fold talking about youll never have anyone help next time. I dont know. I know where youre coming from. Im trying to talk a lot. You know where im going to come from. I have a pretty good idea. I think theres no doubt that the government has jamie dimon over a barrel here, and one of the interesting analyses i think for us today is you saw a little bit of this in the new york time and in the journal he had to make a 180 from sticking it to washington, talking tough, to being more conciliatory. There was a call from him to eric holder in late september that reversed the situation. It was leading to a News Conference for public charges against jpmorgan by the doj. We had a truly devastating financial crisis in 2008. The American Public wants heads. I dont think its on the part of the regulators or the doj and eric holder to bring hard charges. Maybe its too little too late. These are astonishing numbers. Thats total crap. Saying that the mob outside the castle with the pitch forks deserves to go in and get the people that didnt do anything and tear them limb from limb because it feels good, thats ridiculous. Anyway well, in terms of barney frank here, heres the question. What about the derivatives that ended up biting us in the bottom in 2008 as well . There were attempts to regulate those time and time again and thats another missed opportunity arguably. He said it the best. He was surprised that they didnt use soarbane oxley. There would have been players more centrally involved. The entire government the entire government wanted us to give bad loans to people to build up d you know, to get to 70 on housing ownership and ironically jamie dimon saw this coming which is why he wanted to pay 2 a share for bear stearns. He thought the legal liabilities of purchasing a company with that much mortgage exposure meant they were probably close to zero because he would be paying out in legal exposure down the road. He was absolutely right. Poor fannie and fredie, they had no idea. They were shocked that some of those loans werent going to be paid back. They were setting the standards, thats for sure. They certainly were. Im not saying its one party or the other. It goes back to the clinton administration, the american dream, owning a home, and everybody using the piggy bank of the Home Equity Loan and flipping california real estate. Kate, thank you. Youre welcome. The wall street journal on the reporting side, reporter side. I was a wall street journal reporter. I know you were. I called you a rook. You might as well be at the New York Times. Lets bring in jacob frankel. He has an interesting perspective. Hes a former prosecutor and an sec attorney. Jacob, im really eager to hear what you have to say coming from the sec background, coming from a prosecutor background . Is this the right deal . The short answer, its absolutely preposterous. Its almost as if what were getting now, federal regulators, the Justice Department, sec, is a roulette wheel or whether he hit some kind of jackpot. How much can you jack up the fines. Fundamentally here you can understand if its about trying to make the mortgage holders whole or i mean, where theres a logic to the number. Here you have 4 billion to a plaintiffs claim that was brought on behalf of the federal government, 4 in collections to improve things Going Forward and 5 billion in penalties. At some point Corporate America is going to say, you know what, we just want to pdont want to the u. S. Capital markets anymore. Now what comes on the heels of a Government Shutdown, a 13 billion fine against one of the biggest banks which in essence is being penalized. Is it a shakedown, jacob . Theres no question. The pattern logically leads to that conclusion. The journal editorial is dead on. To say its a shakedown, the fact is you do have an agreement between the parties in the sense of jamie dimon and eric holder having negotiated a settlement. You do have very experienced lawyers on the bank side who really understand this process. Okay. I was going to say, what the bank needs is closure and unfortunately to get that closure it needs to write a really, really big check. This is unfair to wall street. Where is the money going to go . The journal also points out that the charges relate to the mortgage security. Those were the big institutional investors. Well see how many big buyers get any relief. The journal makes a point that we really want to see in the administration how many checks arrive from this settlement in swing congressional districts before the 2014 election in the house. But thats actually part of the problem. Advocacy groups, friends of the you know. I mean, unfortunately the shareholders of the large institutions themselves arent institutions so it really is this notion of heads on stakes public clam morgue. The cases should not be brought bus of public clam morgue. There is evident and facts and i believe that for jpmorgan writing this, they should have closure. They dont. Theyre not getting a nonprosecution agreement. I do think the lawyers are making a good assessment, that we are not going to see a prosecution of the banks. I think what you have is you have this perception being created although i think the cooperation has been all along to really root out those individuals. Ultimately when we talk about any type of corporate liability, whether it be civil or criminal, its because individuals acted a certain way. Its fair to say hold the individuals accountable but dont penalize the shareholders. Dont pemlize the corporations and dont incentive advise the government to continually raise the stakes and raise the numbers. It used to be on the pennsylvania turnpike they would say, okay, the fine is x if you speed. So, okay, its worth my while to speed. The fact is, thats not the case here. Now what you really have is creating a fear factor. I dont even think that analogy works because if you were speeding, you know the fine is going to be 200 of your money that youre paying. Exactly. If youre paying shareholder fees, thats not your money, its not going to start somebody from doing it again. I agree on you for going after the individuals. If you want to stop this behavior, go against the individuals that have done something wrong and prosecute that from something not happening in the future. And dont penalize the shareholder and the bank. Everybody is playing with monopoly money, too. I have problems with this on two counts. One in the idea that youre going after the money because you think you can get the money, whether or not you have the case. Second, with the penalty thats being paid is not something thats ever going to stop somebody from doing anything thats ever been done wrong because its not their money. Your analysis is exactly right. Joe, back to your point at the beginning as well, which is the journal item. It did not really hit the issue on the head. This is a bad precedence. Try fighting the government. I dont want to talk about this. If you get in an audit, try fighting them. Try saying youre wrong. You cannot fight city hall. Thats an old expression. If i were jpmorgan and had these guys in this position, id be going im afraid i would do the same thing. Its like arguing with a policeman on the spot. Right. See how that works for you, getting smart with a state trooper. Becky and joe, youre both making the exact same point, and its a great point. Which is fines like this create a disincentive. Its a disincentive to take away from fighting for a fares solution. Its not an evening playing field. At some point growing members cant do that. You have a Major Corporation saying, again, why should we be public . Lets go private and minimize the risk. Right. I think this is a dangerous precedent being set m washington. Jacob, thank you very much. We appreciate t. We will talk to you soon. Thank you. Time for the Global Markets report. Ross westgate is standing by in london. The nfl didnt play in london which you didnt have any college football. You didnt have any nfl. The world series, you didnt see any of the boston series or detroit. Was there anything on tv . Downing ton abbey, soccer . Soccer, futbol. I dont know how we get through the weekend. That was my point. Maybe you go outside and get activity. We had wow, what a weekend for us over here. Im not rubbing it in. You have a great country over there. Okay. We did okay. Were okay. We have some things to keep ourselves amused, joe. Thank you for the concern. I appreciate that. Yeah, here we are. First trading day of the week without nfl in europe, and we are going to get three regular home season games next year at wembeley. No major moves at the beginning of the week. Overall investors are fairly cautious. Like the United States, the s p is reporting big heavy earnings here. The footsie ftse down. Lets kick off with philips up 6. 5 on the dutch exchange. Ongoing head winds will affect sales growth but the key point is they beat expectations. It tripled its Third Quarter profit. S p, big competitor oracle stock giant stock up 6 in frankfurt. Net profit up 23 to 762 million euros. Mainly because it has declining costs. But this is another company, s p, thats coming out and talking about the strong euro beginning to be a head wind. Software Company Warning that Exchange Rate effects could hit its Fourth QuarterRevenue Growth to 5 . The dollar below the 137 level. There are companies coming out saying its a bit of a problem. Rbs, down 5. 28 . Seriously considering breaking up the banking into good and bad banks. Thats around about 3, 4, 5 years too late. Of course impacted by the settlements from jpmorgan as well. So the Banking Sector is extended to rbs today. Thats some of the key stories around europe. Back to you guys. Rugby . Rugby. Rugby. Like professional teams that people follow and have standing . Really . Yeah. Yeah. Let me ask you a serious question today. Do they wear those rugby shirts . Do they wear them . You know those rugby shirts that we can buy over here. Do they wear them . Yes. That is a tough yeah. I cant say i was a with less padding. I would get squished. Youd need a blotter to pick me up. They dont play on astroturf, they dont play on your collarbone theres one thing, joe, they play on artificial pitch. Your clavicle would be shattered. Yeah. Especially its a new type of artificial pitch. It has give in it. They dont wear equipment. They wear a jock, thats it, man, thats it. Never mind. Ross, thank you. People are called jocks when theyre sports greats. Nothing wrong with mentioning that. Just the image. Thank you. Thats your problem. Get your mind out of the anyway, stocks rally into the end of last week after washington took the Government Back to work. Joining us to talk monday morning strategy is david joy, ameriprise financial. Chief market strategist. Mark vitner is wells fargos economist. In retrospect, i like the way the market acts, david. I sort of feel the 85 billion. Is that it . I mean, its helping, isnt it . Money does find its way in the equities. Earnings are okay, but were talking about maybe not tapering now at all this year. Maybe not, you know, early next year. That helps the equity markets, doesnt it . Well, apparently so. I would have thought that there would be some ramifications to the economic shutdown. Obviously it has stinted Fourth Quarter gdp. The market seems to be looking right through it because the fed is still on the job and because weve bought a little peace in washington. I would have thought we would have had the trading opportunities. The market adjusted. We he did. Weve had nothing. The fullback to where people said if we get 5 or 8 , i want to get it. Then it looked like there was going to be a sell on the news the day after but that was mostly ibm. I think the s p was way up that day even though the dow barely made it back. We even get a sell on the news. No, we didnt. I think, you know, the lesson here is you maybe still get a trading opportunity at some point in the next few weeks, month, but if youre a longterm investor, clearly markts looking over this speed bump. I think you have to stay the course. I think equities will go higher over time, absolutely here. Mark, lets subtract some i dont know. How much do you subtract from what happened off gdp . Then thats sort of a Rearview Mirror look at gdp. Do we do 3 next year . I dont think we do 3 . We think that the loss to gdp growth is around. 3 . 3 . 3 . Thats the midpoint of the range we thought it would fall in. The shutdown began on the first day of the quarter. We have the whole rest of the quarter to make up for any lost activities. I dont think its going to turn out to be all that much. Next year i cant see how things are going to get better. The idea that were going to get a taper at some point next year. Then growth will ramp up to 3 . That just doesnt add up. I think somewhere in the 2 to 2. 5 range next year because the estimate is 2. 4. So what does that say about unemployment, mark, coming down . The more we its troubling. Its troubling in terms of parttime jobs getting so common and its also troubling if you look at how many people in the work force, what the Participation Rate is. It seems to be kind of a lousy job market which seems to indicate the fed needs to stay but might never be able to leave. 85 billion a month for a few more months and then beginning to taper. Thats a lot more. Were probably adding another 400 billion of bond purchases by this delay. Will we get under 7 and will it be a real sub7 jobs number . Not for a while. We will get under 7 . They have to back off the Unemployment Rate target, threshold, whatever it is because were going to get there a lot sooner than were going to finish tapering. Certainly well before we begin to raise Interest Rates. Its not that meaningful because we see a huge drop in the labor force interest rate. We are seeing a bit of a rebound for prime rates. They put off hiring late this year and get off to a real weak start next year. Mark, were going to lose you. David, do you have a year end target for the s p . Do you think it continues to go higher next year . Yeah. Ive been at 1650. It looks like that wont happen unless we get that trading activity. I