Its debt. We are three days from potentially hitting the debt ceiling, a move one bank ceo says would be a very rapidly spreading, fatal disease. We are on the grown in washington with the latest details. The deadlock in washington is weighing on stocks today. We are counting you down to the market open 30 minutes from now. Netflix coming to a cable box near you. A new report says the streaming Video Service is in talk with cable providers and shares of netflix are higher in the premarket. Still, no agreement on ending the Government Shutdown. Now in the 14th day. Nor on raising the debt ceiling. The biggest leaders in banking sounding the alarm at the International Institute of finan finance conference in washington. I was a moderator at that event. Jamie dimon painted a pretty bleak picture of what could happen. As you get closer, the panic will set in and something will happen. I dont know periodically when that problem starts. Deutsche bank says his company has been making contingency plans. He says you dont want to go into this. This is a very strong spreading disease. For many, the trouble could be summed up this way. People think it will be so catastrophic, there is no way they will let it happen. Im not quite sure how you factor that in if you are an investor today. I do notice because of that, a great deal of complacency almost. In speaking to investors and asking that managers out there are still, perhaps, as they should be, convinced they will reach a deal and this will not occur. That rising level of complacency leads you to question whether, in fact, this will be the time. By the way, the mechanics of how the senate and the housework, it does take time. It is not going to happen today. We are looking at tuesday and wednesday and down to the wire. We are going to go into this cone of silence as the treasury secretary is concerned. He cant comment on the day to day finances. Some say the big due date is the end of the month where big Treasury Payments are due. We wont know. Mohammed alarian was at that conference. When asked about this issue, remember, bill gross said pymco will be buying whatever federated is selling when they were talking about getting out of some of the money market funds. The bond market is not open today because of columbus day. We will have to wait at least 24 hours. The situation towards any kind of agreement does not seem to be getting better. One reason, the futures are down 100 points. Lets gets to washington and get the latest on the budget stalemate. John harwood, our chief washington correspondent, is in washington. It looks like it is up to reid and mcconnell. Two men that have no love loss between the two of them. This isnt personal. This is professional at this point. Both sides and both parties realize we are really getting right down to the Witching Hour for resolving this issue, in part because of all the warnings we are getting from not just economists within the United States but internationally as well. Here is Christine Lagarde on meet the press on the prospect of what would happen if the United States defaulted. If there is that degree of disruption, that lack of certainty, that lack of trust in the u. S. Signature, it would mean massive disruption the world over. We would be at risk of dipping yet again into recession. This is why the republicans have essentially disregarded their demand of getting rid of obama care for raising the debt limit. Bob corker said it is difficult to adjust to the new conversation. Again, it is such an expectations difference when you have moved from totally defunding the central element of the president s agenda as your goal to now just doing some things that put us in a place to solve these problems over the long haul. Thats a major expectations change we need to manage over the next several days. The two people in charge of managing it are harry reid and Mitch Mcconnell. They had a conversation yesterday that reid described as productive i talked to aides to both men last night. They seem confident they are going to be able to come up with some sort of a deal. The principal sticking points are the length of the continuing resolution to reopen the government. Republicans want longer, because that means longer sequester cuts. Democrats want shorter. The length of the debt limit height, democrats want longer, because it means for certainty and less of a leverage point for republicans. Republicans want that to be as short as possible. They are also setting the terms for the fiscal negotiations that would happen after this deal passes if it does pass. I 2think the odds favor it passing before thursday. On that subject, timing and mechanics. Bringing a bill to the senate floor and the house and getting everything passed. Lay that out for me. How many days are we talking about . Can it happen that quickly . Things can happen extremely fast in both the house and the senate if the leadership can get consensus that they have to happen fast. There are mechanical hurdles that can be raised by people who object to deals and string it out but the ability of leaders to move quickly is there if they can get a deal ond both sides say, yeah, we are going to do it. John harwood for us in washington. John, thanks so much. So now how can you prepare your portfolio for a potential default if that is looking likely . Lets bring in harry clark, and chad morganlander. Portfolio managers. Good morning. Harry, first, to you, what do you recommend clients do here . Thursday and friday, we heard the loud vindication as people in saying the victory laps for the buy the dip crowd. Where do you think that crowd stands this morning . Is. I think they are lucky to buy a dip. If this market sells off, which it will be. It will rally like crazy. The market is only down 1. 3 of an alltime high. Thats pretty good considering whae whats happening with the nut cases in washington. It is very positive. I think the market will do well through this whole mess. Chad, thats precisely the worry a lot of people have. How can you have a market which is short of its alltime highs when the risk of the u. S. If not defaulting, shutting down more service. It seems to suggest it is increasingly divorced from the underlying circumstance there cob a rude awakening . I dont think there will be a rude awakening. I think john harwood hit the head on the nail when he suggested that they are going to get a deal by thursday. The fiscal drag because of all of this uncertainty, perhaps over the period of time of budget negotiations would be a quarter to a half percent. Thats down the road. I think the investors are looking as if in the next several weeks, there will be a deal. The markets will rally on this event. In regard to what the focus is, the focus should be on the economy as well as earnings in the next several weeks. Harry, to that end, people are worried about top line growth, mean reversion on gross margins, worried about the fed policy going into the last quarter of the year. You still think 1750 yearend is a decent target. I do. I do feel that way. If you look at the flow of funds, people buying in the equity markets, they are 100 billion this year. Thats only happened seven times in history. All six of the seven times, it was up a lot. All that noise around the market is just noise. The market will climb and do very well. Were in new secular bull. It is going to go on, i think, for several years. No time now to get squeamish and get out of the market. You have to be there. Harry, just to follow up on that point, how much further do you think this market can go. Where, ultimately, is your price target in the next, what is it, 24month period that you are talking about . I would say 2000 is a slamdunk. The next year and a half, two years, just on earnings, growth, on average p. E. S over the history of the market. 2000 is a slamdunk for sometime end of next year into 15. Chad, what about you guys . Im sure were talking about a situation that you just said, you want to be exposed here. Do you see the Fourth Quarter as playing out as well as harry just described it . I dont see that. We are looking at Earnings Growth to close to 3 for the end have o tof the year. You can get a 3 by 5 pop by the end of the year perhaps if the fed continuing to be supportive as well as getting past this uncertainty. The reality is that the economy in 2014 is going to be growing around 2. 25 . Our ex ppectations is around 1. We think it is 1700, 1650 on the s p 500. Maybe you can get some multiple lift. It is going to be high to come by. You need to see the economy kick into high gear. We dont see that happening in 2014. You do point out that historically the market has tested a new fed chief and in the First Six Months of yellens term we might see some hiccups. Yes. In my opinion, we will. Carl, there is always a test for the new feds, 18 new feds. Everyone has been tested, no exceptions. 16 is the average. If we get a fraction of 16 , 18 next year, that will end this current market, which is a good thing. Next year, they go through the preelection year of 2015. The average rally next year is 48 from the low next year to the high in 15. Thats 89year record. 48 rally is average. That puts the market in by the end of 15. For the investor here who is maybe not comfortable with the idea stocks could be on a little more volatile ride for the next quarter or two, how do you recommend they get defensive specially at a time when defensive stocks are at their alltime highs in terms of valuation . Thats a good question. What you have to do is move up the quality spectrum and look for companies that are consistently growing and consistently profitable and well capitalized. Let them have very little debt and a lot of cash on their Balance Sheet. On your fixed income portfolio, if you are a retail investor, you want to ladder your bond portfolio. You want to have the maturity of no less than four years and duration of no less than four years. Thats how i would play it. On the balanced portfolio, a 60 40 split would be a good option. Chad and harry, thank you both. Big news in economists. The nobel prize goes to three americans, one of whom you have seen frequently on squawk on the street. Yale professor, robert shiler and he and eugene fama and lares peter hansen have won the award for research that that is improved the forecasting of asset prices. I told you about shiler this morning, kelly and i thought you were going to pass out. I was a lot more excited about alice monroe. What was the category he won for . Housing. In the paper that people know him best from was back in the 70s on stock prices and dividends. Sure enough, if you look at this statement, the fact that it was him and fama seemed like a bit of an unusual pairing. If you look at what the committee that awarded the prize said, it is really interesting. They say there is no way to predict the price of stocks and bonds over the next few days or weeks but it is quite possible to foresee the broad course of these prices over longer periods, such as the next 35 years. Thats why they awarded it to this trio. Some feel uncomfortable about the sense that you can forecast prices with any more reliability if you take out factors like the fomc. Thats why i was joking. They should have been the fourth recipient of the prize. That is clearly not what the committee was concerned about this year. 8 million swedish kroner split equally. Shillett shiller was contacted. Fa ma, a few people didnt realize he hadnt already gotten it. Controversial in many circles but long overdue. Netflix is going to have a big presence on your cable box. Also, an exclusive with Nouriel Roubini. You will want to hear what he has to say about the market and the dysfunction in washington. A look at futures. The best two days for all three indices since january 2nd. A lot more squawk on the street live from post 9 when we return. 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. Thats a good thing, but it doesnt cover everything. Only about 80 of your part b medical expenses. The rest is up to you. So consider an aarp Medicare Supplement insurance plan, insured by unitedhealthcare insurance company. Like all standardized Medicare Supplement insurance plans, they could save you in outofpocket medical costs. Call today to request a free decision guide. With these types of plans, youll be able to visit any doctor or hospital that accepts medicare patients. Plus, there are no networks, and virtually no referrals needed. Join the millions who have already enrolled in the only Medicare Supplement insurance plans endorsed by aarp. And provided by unitedhealthcare insurance company, which has over 30 years of experience behind it. With all the good years ahead, look for the experience and commitment to go the distance with you. Call now to request your free decision guide. Netflix reportedly in talks to offer its services through settop boxes. Negotiations are said to be preliminary. No agreement expected any time soon. There is an inherent potential conflict if you were to agree to allow netflix to be part of the settop box, you are in a sense facilitating cord cutting, which we talked about often here, which is a threat in many ways to the Business Model of the cable providers. Broadband has become the main product. Nonetheless, a margin to be made on providing video as well, with the goodoldfashioned cable system. Netflix did do this with virgin media overseas. Not a lot of homes, by the way and john malone has talked often about the need to work with netflix or he kind of bemoans the fact that the Cable Companies have not worked well enough together. Why didnt they come up with perhaps something along the lines of a netflix product as everybody is trying to figure out how to allow you to have seamless tharansitions. We will watch this. It is going to help netflix shares as it did when they have that virgin deal, which was only, as i said, a relatively small group. Again, provides a service even more u bic quit. Back above 300 was a milestone last week as the markets have their legs and we will see what the action brings today. That story in progress, obviously, david, as you pointed out. Its early. Well see. When we come back, wall street veteran, art cashin sets the table for the action. Dara khosrowshahi, the ce. Of expedia. Well get that in a few minutes when squawk on the street comes back. Peace of mind is important when youre running a successful business. So we provide it services you can rely on. With centurylink as your trusted it partner, youll experience reliable uptime for the network and services you depend on. Multilayered Security Solutions keep your Information Safe, and secure. And responsive dedicated support meets your needs, and eases your mind. Centurylink. Your link to whats next. announcer scottrade knows our 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. Plays a key role throughout our lives. One a day mens 50 is a complete multivitamin designed for mens Health Concerns as we age. With 7 antioxidants to support cell health. One a day mens 50 . A few minutes here before the bell. Lets bring in art cashin, the director of floor operations here. There was that suspicion that everything came together a little too neatly thursday and friday. Now, we know it was basically true. Particularly today with the semi holiday. It is going to be a game of cat and mouse. U. S. Bond markets closed, canada closed, japan is closed, some fiduciaries are closed. The markets will be extremely thin and vulnerable. The cat and mouse game will be to buy. The dipers will hang back and see how big a dip develops. This is this morning a lot more of a buyers boycott and some light selling brings us down to these levels. I think last week in that rally probably has everybody assuming that they will be some magic midnight solution before the capitol dome turns into a pumpkin and well be all right. For today, viewers should be weary. It will be a thin market. These guys will be playing real cat and mouse from the floor. Do we test any of the extremes we saw in the last five or six sessions . Well, if the weakness were to develop, you really want to keep an eye on 1685. That was kind of a springboard moving up. Naturally, the up side if they turned around and rallied. Im a bit of a history nut. Columbus day has a 65, 70 bias to the up side. It is going to be a tough run today. On the up side, somewhere around 1710, 1715 for that. How important is that . Weve mentioned this before. Sfegs specially with the clarity thats come in the last week or two. How much does the 17th matter. Are they more upset about the general direction the talks seem to be headed or that more time has expired that we reach what may be a hard or fast deadline . The primary concern is that they might stumble into it believing that the other side will blink or somebody will move. The other side is not hard and fast. If you poll the guys down here, the feeling may be they may take it right into the 17th to see how much leverage that dead lip will give you. There is this added concern that even if a deal happens, even if we get six weeks out of it, eight weeks, who knows what, that it is still another notch against business confidence. Why would someone want to make a transformational deal when you know there is going to be the possibility of this thing happening again. And we have some other things still on the board. A saloon full of fed speakers this week. With yellen coming in, everybody will be trying to get a sense of whats there. Why were they, in fact, talking about tapering, if the economy was this week. Is there something wrong with q. E. That it needs to be taken off the table. A lot of things out there, if you are running a business, very tough to do. Well see you a little bit later on. Dont go too far. A pivotal week for the country and the markets. The opening