This morning defended the way hisses change defended the outage. He added that he was, quote, proud of the fact that we had an orderly close. Guys, heres how its playing on the front page of paper it is people have not seen. Nasdaq in fresh market failure is the way the journal puts it across the top of the fold. Nasdaq paralyzed by technical breakdown is the ft. And then, jim, usa today, wall street yawns as nasdaq goes dark. I thought that was the most cogent of all. No one really cared. Bob said everything was good. They did a great job. Its fine. I want to let people know we speak with people around here. They all scoffed and laughed at that. Bob said what he did. I felt what i felt which was that the lack of communication was terrible. I had the unfortunate moment where i had to be on air and had to try to speculate. The way you cut back on speculation is to come out and say, guys, heres what we think is happening. We were all stuck trying to speculate because the communication was so bad. What do you make of his comments this morning, that those who needed to know knew what was going on. I dont know. Id kind of struck by the fact that why do we need all of these exchanges if they dont really help to get the prices. I didnt understand how Bertha Coombs pointed out, how did the etfs continue to trade . I dont get the sense that the s. E. C. Was willing to come out and say. The little guy just needs the b bid and ask. I dont think anyone is going to get hurt by this. No one is going to lose their job by it. Not even bob greifeld. I think he will be fine. Yeah. He said he was fine, therefore, hes fine. Im sensing some passive aggression here. Well, look, i, too, have been beaten by this. I want very much to say, look, i think this is outrageous. But you come when you listen, everybody seems to be fine with it. A lot of interviews, people are fine with it. No one seems to think this is bad. Bob said it was done right for retail and everyone is taking that at face value. I find it hard. Ive been in the business much longer than bob. Im a little jaded. A question about this because a lot of people are saying had they handled the restale and professional audience the same. Its not as if anyone on the retail side is trading directly with the nasdaq. If were all trading through schwab and amr trade, arent those the people who nasdaq is talking to ultimately . Theyre claiming only retail would get hurt by this. Lots of exchanges, lots of price discov discove discovery. Retail trades, it was the etfs who had to be the most corrupted by this because 20 of the etfs of these kinds of etfs had nasdaq prices. Who had those prices . Who had it. Someone did or else it was just we were just trading back and forth. It didnt matter. Everyone was equally wrong. Guys, breaking news. On top of all of this im getting word in my ear that steve bammer of microsoft is to retire. Wow. Really . This is all we have at this moment. Obviously its something thats been talked about, speculated about. Holy cow. Jim, im probably five or six years . Yesterday they said the about vis was going to play a role. Steve was a classmate of mine as i am. Im not ready to retire. Hes retiring young. I didnt expect this. I know theres a lot of pressure on ballmel to deliver. People believe he failed to deliver. I would like to think he left because hes done but this obviously is a shock. Its a shock. Shares up 6 on the news. How do you feel of a ceo, 6 up on the news that you might retire. What some of the unlocked value. Ballmer stood in the way. Retire as ceo in the next 12 months upon the completion of a process to choose his successor. In the meantime, the release says he will continue as ceo, leave microsoft through the next steps of trans formation to a devices and Services Company that empowers people to the activities they value most. Upgrade at omera. Interesting he said the activists are playing a role. The activists dont own that much. David faber has been tauing about that for some time. Obviously i believe there was a huge amount of pressure coming from outside that we didnt know. Him to leave . Yes. Yes. For him to leave. More than leveraging the offshore cash . Yes. And buying back stock . Yeah. I think that people are very disappointed with steve. The market is bigger than anybody, right . The market is saying, thank you. 8 . Did you see that . Up 8 premarket on microsoft shares on the news that hes going to retire. The market is speaking very loudly. A lo of people know steve but not quite like you do, something gone to school with him a very long time ago. Hes a great guy. I saw him at my 35th reunion president a the beg. Sometimes you had friends before you were in the money beusiness. We used to call him shoe box steve when we played poker. He would bring a big box of coin, very clever. When i was editor of the harvard crimson, hes a great guy but i know that doesnt matter. Its all about what have you done for me lately, like the nfl. New cfo. Is his legacy going to be one that he an executive who led the company into a dead end, into a path that had no future . I think that if the next guy cant get it turned around, i think well see, you know what, windows business. Had all that cash. I think about yesterday with meg whitman on our show. A lot of people were saying, meg, maybe the business is just terminal. Now, shes saying, listen, generating a lot of cash flow. Microsoft generated a lot of cash flow but the stock has done nothing. In the end, its the arbiter. These are about as belichick or parcells would say, these are a about ls and we need ws. Internal or external, does it make a difference . It makes a huge difference. We need a shakeup. You need what we have seen over and over again. You get somebody in with a fresh pair of eyes. When you have that much cash you should be able to reinvent yourself. Theyve got the resources to bid. Now, i did think there were a lot of things going on in the entertainment device business coming around. In the end they are a utility. They are a bust company. Ever since ballmer took on the justice department, its been downhill. The board appointed a special committee to direct the search. Theyve retained hydrocon struggles. Bill gates is on that committee. He will work with the board to identify a great new ceo. John fortt who knows it is with us. Im just surprised that they just did this 12 months sounds about right. Ballmer always resisted a lot of conversation about what he was going to do next and when. As you guys point out, its time to start thinking about successors. I personally think that microsoft is going to look at somebody with more of a technical bent for the next phase. Will have a lot of credibility in the Engineering Organization given the pace of change that they are looking at. I expect name is batted around quite a bit. Hes heading up a lot of cloud effort. Im not sure whether key lus name will come up. Hes into online efforts. Meyerson who is doing a lot of hardware stuff. But thats there now. Jon jon, its true, jon, right, they miss social, they miss mobile, late to the cloud. The wholly trinity, they were nowhere. Im curious, jon, they just did a reorg in which candidates like don matrik who left. This timing is a little bit of unusual. You know, the thing about that reorg that struck me is it really invalidated the power in the ceo seat. To do a reorg it points everything up to krrksceo and c over the ceo is interesting. Timingwise, we just even the name who would have been right at the very top of the names that we would be thinking about for the next ceo, you know, he used to run windows. He left. Hes now gone over to horowitz as a board adviser. Its a time when theres not one clear person, not the likes of a Steve Ballmer. The sort of suspicion that the board makes on who to put into that position is going to say a lot about microsoft what they can and cannot do in the years ahead. What did ballmer miss here . Theres yahoo google, facebook. Who did ballmer team up with for phones . Nokia. His cloud effort, that salesforce. Com. Where did they show leadership . I ask you, jon, where was microsoft on cutting edge postwindows . Well, you know, actually done some of the right things for addressing the enterprise. I mean, look at what theyve been able to do in server software. You look at their server and tool biggs usiness consistently for years. But as we said, mobile, social, online. And these are not areas where microsoft couldnt see big truck headlights coming down the track. They saw them. They had some friends in many cases but microsofts internal culture of competition where the knives are out in a lot of cases, where the company had a lot of trouble working together, really did it in turn after turn. The latest reorg was supposed to feel good for a lot of that to keep people protected. Thats going major challenge of the next ceo. Wow. 8 is a massive move. Theres the plus side on Steve Ballmer. That is hard to do on a name like that. Jon, thank you so much. Jon fortt with quick analysis on microsoft. Well have more on Steve Ballmer now officially retiring from the company within the next 12 months. Well talk about who might be in line to take that gig. And John Williams will talk about rates and tapering. Live from jackson hole. And also ahead, cfo of pandora and get his first reaction of that companys results last night. One more look at futures. What a week of news. For the time being, futures relatively tame. I turn ed 65 last week. I turn the math of retirement is different today. Money has to last longer. I dont want to pour over pie charts all day. I want to travel, and i want the income to do it. Ishares incomes etfs. Low cost and diversified. Find out why nine out of ten 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. Its been talked about, speculated about for a very long time but it is now official. Steve ballmer, head of microsoft will retire within the next 12 months upon a completion to process to choose his successor. The stock is up almost 9 on that news. And hes obviously a long way from actually leaving but there was some unlock value of the actuality of him being gone. The piece yesterday, catch a big move. I dont think that rick did that as obviously we dont know. Rick ive known rick for almost as long as ive known ballmer. No inside information. I do want to point out that this stock is almost back to where it was before they reported the bad quarter that i think may have been a precipitating event. That was a terrible quarter. You can see that stock just they had to do something because they just did the reorder. One microsoft. Web that . Wrus have been that bad q. I did point out a guy did have the nokia phone. Theyve got a little bit of traction but too little too late. The person that had the phone was ballmer at my reunion. I saw it as an oddity. It looked good. Had a customer of one. The news flow on this friday morning in august does not stop because the Federal Reserve is holding a annual retreat in jackson hole, wyoming. They are discussing the future of Monetary Policy. Steve liesman is there and joins us now with a special guest. Steve . Thanks very must have. I am here with San Francisco fed president John Williams. John, thanks for joining us this morning. Weve had two other president s on this morning. One was kind of on the dovish side. Didnt think tapering was needed in september or he could wait and the other one said maybe we ought to go ahead. Do you want to break the tie . Well, in my view, this has to depend on the data. From my perspective, i think chairman bernanke laid out a reasonable approach back in the press con innocence after the june fmoc meeting. My view has basically followed more or less my expectations of how the economy would evolve since then. So im going to stick with what chairman bernanke said. He said the decision when and if to taper later this year will depend on the data. Specifically, are we still seeing signs of positive momentum in growth, in job creation . And we need to see inflation continue to edge back up towards our 2 longer run inflation goal. Theres not a lot of data between now and september. You think its okay to trip . Im not going to say about what meeting or not. But i do think if the data continue to progress as weve seen, then i do agree that we should edge down or taper or purchases later this year. Theres been some talk about what kind of move to make. A taper light or a taper regular, a taper heavy, i dont know. Like grades of gasoline or something. What is your sense of what increments would be the right ones to use . Well, i think, given that we stale have a long ways to go in terms of achieving a longer run goals, employment is still well above full employment levels. Inflation is still well below our 2 long run goal. I think, you know, i expect that well continue our purchases well into next year as the chairman said. Probably continue them until the middle of next year. So any tapering i think we would do would be in gradual steps over time. So whether thats light or heavy, i would see it as a gradual series of steps of tapering, assuming our forecast comes true. San francisco fed Research Department recently put out a letter, really doubting the effectiveness of quantitative easing. Does that reflect your views . I think its a Great Research product that my colleagues and the Federal Reserve has been working on for some time. Where their results were maybe a little bit different than others was not so much on the question of does quantitative easing effect financial conditions. I think theres overwhelming evidence that our policies as we put them in place and markets have seen we may be ending them, weve seen sizable movements. I think theyve been effective there. Open question is how much does the change in financial conditions generated by quantitative easing actually effect the real economy. How many jobs does it create. Its true, estimates were on the lower side of other estimates that people have seen. One thing they point out in the pap paper that i think is important if you do find quaund tative easing at the same time, for a long time so kind of a Forward Guidance up you get sizable effects. Let me ask you one more question and take a break. Ill bring it out later. The markets have risen by 100 basis points. Its guided that there would be some reduction in quantitative easing. Does the market have that wrong . Does the market are Interest Rates too high relative to what the policy rate is going to be . Its always hard to understand, you you know, what factors are driving the term premium, risk premium in market, bond market or stock markets and like that. I do my own interpretation is that there may have been some players in the market or traders or however you want to think about it, who were thinking the fed was going to keep buying forever. We always indicated thats not what our plan was. I think some of the adjustment in the bond market probably was kind of bringing people back to reality that this because program that wasnt going to continue forever and i think that may be limiting some of the fear in the bond market. Overall im not going to speak about whether the bond market is properly priced. John, if you might, stay right there. Send it back to headquarters or the New York Stock Exchange and, guys, well bring you more of this interview at 10 45 this morning your time. Sounds good, steve. Thanks so much. Great couple of days of coverage out of jackson hole. When we come back, more on the situation at the nasdaq. What it means for todays open in nine minutes. Plus, Steve Ballmer retiring from microsoft in the next 12 months. Futures might get some action on the dow. We are seeing a few more green arrows here on a friday morning. More squawk on the street from the nyse is straight ahead. 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Simon hobbs is over there giving us a sense of what the mood is is like. Good morning, carl. Robust performance from the ceo of nasdaq saying, a, hes very proud of what the team did yesterday despite the fact all the stocks were knocked out across the country for over three hours. The way in which they took their time to rebuild the market and open before the close means when we finally open again today, because we had 35 minutes of trade yesterday, theres no pent up kind of price discovery. More controversially he says hes disappointed about what happened yesterday and if anything, he seems to be trying to shift the blame down the road, i guess you could say, to the nyse. Yes, there was problem with their central computer, server, which transmits best bids and offers and trades around the country but we had a connectivity problem for that caused by