2. 61 . As we do every morning, lets take a look at europe and see how those markets are already fairing. Largely, a good deal of red on the board. The percentage declines, well, not too great. Although, a couple there around the 1 mark as you see it there. Lets start with our road map this morning. It starts with day seven of the Government Shutdown. The markets may have been unphased by the shutdown but the possibility of a breach of americas debt ceiling, that is probably the reason you saw the futures deeply in the red. Then, apple getting positive notes from several firms. Jeffreys upgreats the stock and increases its price target to 600. They say the 5s is number one at all u. S. Carriers. Home builders getting hid this morning. Goldman downgrades Toll Brothers saying they dont need to be kro concentrated at the highend of the spectrum. Shares of cooper are going to be down sharply as that deal appears to be unraveling. Lets start off, of course, with that Government Shutdown. It continues. Both sides in the budget battle refuse to budge. On the sunday talk shows, jack lieu says congress is playing with fire adding that the president will not negotiate until lawmakers pass a clean funding bill to reopen the government and raise the debt ceiling with no strings attached. No deal until the president comes to the bargaining table. The nations credit is at risk. Because of the administrations refusal to sit down and have a conversation. They are saying it is at risk because of your refusal to pass a clean debt limit increase. We are not going to pass a clean debt limit increase. There is no way when the votes are not in the house to pass a clean debt limit. The president is risking default by not having a conversation with us. Jim, i will turn to you. Truly, befuddled by what an investor is to make of all this or anybody who is a concerned citizen without any money in the stock market is to make of all this. I think we are beginning to hear new terms, there is no prioritize after we go over the debt limit, meaning that the government will pay interest but maybe not anything else. So that we dont default on our bonds but we slow down the u. S. Economy. So when you start hearing that percolation on squawk. Thats frightening, by the way. What you are talk about is people are not going to get their Social Security checks but we are going to pay interest on the debt. I think the fact that this is now part of the conversation. The fact that we are even having that conversation. I am still in the camp that says the bonds are showing you that they are going to pay. Im saying we had a congressman on squawk saying, hey, listen, there is prioritizing going on. We know what they are going to pay and what lieu will pay. Is this the new thing . Where we split the baby, kill the baby but the bonds get paid off and some other things get paid off. This would be a permanent reduction of spending that would clearly hurt the domestic product. At what point do our allies say, guys, you are killing us . There is kind of an other worldly nature. Im sitting here trying to figure out, is kelloggs the right price . We have this situation where there are some companies that very much need credit. The banks rely on treasuries. I am surprised the banking packs arent targeting some of the guys that are willing to let it so that the banks get in big trouble. Can you imagine if they are trying to figure out what they should do with their cash, the banks, because they cant trust treasuries . You have to put everything in something that rolls over. What is that piece of paper . Breaching the debt ceiling for the day, the idea of going past it in any significant way, you can go down significant rhodes and none of them lead anywhere. That leads to this catch 22 in reference to the Joseph Heller book from many years ago, which is, we seem to be waiting for the market to fall to get the attention of house republicans, particularly those associated with the tea party, for example. Yet so many people are still in the market, because they think it will go just like it did last time. They dont want to miss the big rally when we get a deal. How about friday . The word was, there was going to be secret talks. Instead, you put on boehner. Not only are there not secret talks but forget about it. All the rejectionists, from any party, are saying, listen, there are no discussions. There is no conversation. We wont go over we wont punch through the ceiling. You automatically punch through the ceiling. Im just wondering whether there are some people that think that everything, all the scare tactics are just scare tactics and the world will be the same after. There are people that felt that had we let aig go after we let leeman go, that nothing would happen. They are surfacing again. Say, hey, listen. This is how many times, leeman . There are those that believe we should have let them go, because we would have truly been able to reorder the Financial System in a much better way. While we would have taken enormous pain, we would be in a much better place now five years later if with he let the market work. Well never know. I dont know that i would put that in the same camp as defaulting on the United States debt. Social security is pretty safe. Medicare. What is this about . As you said, what gets paid . Do they not pay Social Security . I dont know. I think that thats dangerous. I would say that is dangerous. A question here becomes the rating agencies themselves. You may recall back when s p did down grade the rating of the u. S. The bonds did nothing. Rally and there went the yield to alltime lows. Maybe nothing matters. I think that having sold treasuries and bought treasuries, not just in u. S. Savings bonds, the system doesnt function if treasuries dont function. Everything is based on treasuries. We had moody earlier. He seaid the chance of a u. S. Default is extremely unlikely. That reflects our thinking that it is extremely unlikely that the government treasury is not going to continue to pay on the treasury securities. Hopefully, it is unlikely that we dont go past october 17th and fail to raise the debt ceiling. Even if that does happen, then we think that the u. S. Treasury is still going to pay on its treasury securities, prioritize those payments. Prioritize. Lets bring it back to the market today, which we are seeing the futures are down. What and how do you approach it this week, next week, and think longterm as well . I still think you have to there is always this is one of those where im sure the defense part would say, listen, there is always a chance for nuclear war. They never took nuclear war off the table. They cant take nuclear war off the table. We cant necessarily take the equivalent off the table. When you are talking about prioritizing, what you are basically saying is that moody is saying, we are not going to down grade. We know that interest is going to get paid. You have a big gdp hit. The president and the house saying there are no negotiations. I think we have to presume we are going to live under this sword for. Another week. A couple weeks. A couple weeks gets us past the 17th. If we assume this week another shutdown, everything, it is all coming together as we knew it would. It is no longer with the shutdown. Now, it is about the debt ceiling. Not hearing about obama care but an overall talk. Lets talk about entitlements. How much is fannie going to kick back . Is freddie going to kick back . They sell the General Motors stakes. Are there things the government can do . Like sell ft. Knox to the chinese, which was the actual plot. Good book and a good movie. Lets move on to one stock we like to watch, apple. I was waiting for our viewers at home to guess. It is now a buy over at jeffries. They have indicated a substantial shift in attitude toward apple. They expect the companys Gross Margins to surpass forecast. New data show apples iphone 5s, hit above all five major carriers. Gross margin is code. Thats code for samsung doesnt have an answer. What that says is, listen, there is no price cut. Samsung does not have an answer to apple. This is a technological leap. There is a lot of pipers trying to their socalled axe. Trying to figure out a new way to say, maybe we missed this, because we didnt. The iphone, the wearables. Look, whats happened is that apple has a shot here to retake the technological lead so they dont need to be in some sort of price war. Now, apple, you could argue, has never lost that. All they did was lose the price point. I think these are significant calls. They are based on, i think, something that no one wants to talk about who didnt like the stock. Apple is doing better. They have to ferment new reasons. This Research Report in particular mentions the iphone 6. Because piper didnt like the iphone 5. He is filling the rod duct gap. Jeffries is saying new product. There is a big skane of thought. Listen, we misjudged that apple could come back. Now, the question is, why isnt apple stock through 500 . And . I think that there was a big run in p ale, because apple bec the tweet heard around the world. We have been trying to digest the tweet technically, not technologically, technically, because the stock went up so much. On the original tweet back in august where he mentioned he had a position. We now know thats around 2 billion he has confirmed on air. He is asking for a 150 billion buyback. What we understand is immediate with a commensurate raise in debt by the company, which would equal the nine largest Investment Offerings of all time combined. Is that true . That is true. So the idea of it, not to mention, i dont know how you go into a market cap without moving the stock where the stock doesnt move before you. All that being said, we can talk fundamentals which might be more interesting. I think apple could do a tapering here. I think they could taper if they develop the technological lead. I think tim cook is about to put a taper on the table. That could shock people. He says, i need to i cant taper. Will he get a continuing resolution or breach the debt ceiling . Whats he going to do . I think it is up to him. If he tapers, stock goes down. Samsung, meanwhile, talking about innovations, has introduced its latest advertisements for its watch. Take a look. With this miniature transmitter. What time is it . 8 29. Thank you. This is 86 reporting into control. How is it going . I have an emergency situation. Relay the information to head quar tefrmts headquarters. Jason, can you read me . I read you. This is secret agent rock. Lets make a little spectacle of ourselves. Anything in particular in mind. Atomic punch. There is only one man that can get us out of here in time. We are on our way. We are on our way. I am on my way. Listen, for me, it is basically going through all the programs of my childhood. If they had agent 99, i would be more inclined. She was hot as a pistol, agent 99. This thing could fall into a code of silence. Given the review. It could be a cone of silence. It might be no more powerful than the shoe phone. Love that shoe phone. It is also hard to use the shoe phone, because you are standing on one foot. Yes. Maybe samsung, next for samsung is a shoe phone. It could be. All of it only works if you actually have the actual phone with you. I just keep thinking in the end, if you want a phone, we just heard from what, all these different analysts, that apple has a better watch. Apple has a better watch. It takes a licking but what does it do . It keeps on ticking. There is a watch for you the man some say is in the running to succeed steve balmer at microsoft ceo. Stay tune for an interview with Satya Nadella. Taking another look, we are set up for a lower open. More squawk on the street live in post 9 at the nyc when we come back. Were down, unexpectedly down, at least in terms of significance. Almost 5 with no news. After the bell, we got news. Cooper coming out with a lawsuit against its os ten cybil merger partner. We are going to compel you to close our deal. There wouldnt be any question we were aware of, those that followed these deals in the pun lick realm of real questions about it. In reading the complaint, well, there might have been reasons for cooper to be concerned. There have been a couple of concerns along the way. You may remember this deal originally. Apollo is far smaller than cooper. The money that was being borrowed overseas. You had a significant fall in shares of apollo right away. It is about a 500 million market cap company. This, a much larger deal. There it is 34, 5 a share. 43 premium. They have voted on cooper. There are those concerns. Then there is a labor deal to be worked out at the usw. Thats a key concern. There is also a joint venture in china which cooper owns 65 but where there are also some significant issues in terms of, for example, releasing financials that will allow the banks to, ma k market the debt have committed to finance this deal until november 15th. On friday, we learned a lot in this complaint that came from cooper. The thing that has alarmed most Share Holders that feel like this deal is on life support. Either you get a big price cut or it is going to go away regardless of what cooper may want. The thing they would point to is the following quote. On october 3rd, apollos representatives again informed cooper that they wanted a price renegotiation. At one point, references 8 or 9 a share. This says referencing. I have spoken to people close to apollo. They say there has been not any real talk about an 8 or 9 price cut. There has been talk about a price cut that would make up with whats going on in terms of dealing with the joint venture. We have seen this playbook before from 08. It does appear from me having following so many of those deals, when another Company Wants out, they manage to get out. This will cost them about 112 million in a reverse breakup fee. They may be willing to pay that to get out of a deal. I dont know what it says about the fundamentals of the tire business, whether it is a cooper problem viewed by apollo or not. Thats what fascinates me. The tire business is on fire. Good year has had this remarkable move. Borg warner has done well. I dont understand this. Why wouldnt they want cooper . They may want it at a lower price. I cant tell you where it really comes down. I am not hearing they want out. They would not tell me they really want out. That may be where we end up. You may recall the fight over huntsman, between another apollo and huntsman, a leverage buyout firm. You may win the case if you are cooper but you may lose the battle and the banks will walk away after the middle of november. You end up with a break fee. Thats it. Well see whether the deal happens or not. It is certainly in doubt and cooper shares will be down. If i were cooper, i would be arguing that business has gotten much better since i started this deal. Apparently they are not. A number of investors are upset because they feel at the cooper tire, Shareholder Meeting they were given hand holding so to speak on the sanctity of the deal. Up next, making money the cramer way. Getting ready for the mad dash ahead of the opening bell. 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Were going to talk a little twitter and getting out ahead of research. Research getting out ahead of research. I want to say point blank. People say cnbc hyped this thing. That is not true. I have said from the beginning it is ridiculous. What i mean by ridiculous, suntrust comes out today, twitter initiating prei. P. With a buyin and a 50 price target. How do we know how many shares and what the valuation is . What is the market cap . They are projecting zero. I think there are 675 million fully diluted shares. Multiplied by 50, thats a really big number. People that, therefore, put in for this deal. If anything happens negatively with twitter between when they Start Talking about it and when they price it, they are going to have a problem. What is the point of this. If we dont refute the premise of this or stay skeptical, we are not doing or mark caines like job. When i see a 50 price target, i say to people, listen, you dont know anything. How can you come up with this . I think this may be irresponsible. The clients apparently let him do it. We got the opening bell coming up next. Stay tuned. We have a lot of trading up ahead. [ bell ringing, applause ] five tech stocks with more than a 10 . Change in aftermarket trading. All the tech stocks with a market cap. Of at least 50 billion. Are up on the day. 12 lowvolume stocks. Breaking into 52week highs. Six upcoming earnings plays. That recently gapped up. [ male announcer ] now the world is your trading floor. Get realtime market scanning wherever you are with the mobile trader app. From td ameritrade. You are watching cnbcs squawk on the street. The opening bell set to ring in about 30 seconds. Here we are. Day seven. Government shutdown. I guess we started midnight, last monday. If you think back to 1990, when iraq invaded kuwait, every weekend, they expected a deal with the iraqis. Every weekend, we opened monday when there was no deal. You see that opening bell, lots of red on the screen back at the real time screen at cnbc. Here at the big board by the way, habitat for humanity celebrating the 30th annual jimmy and Roslyn Carter work project. They rang the opening bell at the nasdaq. To provide free workforce training and job placement for ju underserved women in new york city. Apple is one of the few exception. Stock is up a little less that have one half percent. Tesla also. We can talk tesla and apple all day. You need a further incident, tesla. You can only watch that video so many times. I know that many of