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tv   Squawk on the Street  CNBC  October 3, 2013 9:00am-12:01pm EDT

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i don't know if it was an alien thing. we have to be careful, these little metal things hitting -- if it hit you in the head, it would be bad. good job today, andrew. >> well, your battery powered -- >> my pacemaker? is that what you were going to say, something like that? >> no, i wasn't. a huge thanks to the university of chicago booth school who stayed up all night to make this thing happen. >> make sure you join us tomorrow. right now it's time for "squawk on the street." ♪ ♪ good thursday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer and david faber at the new york stock exchange. we are in day three of the government shutdown. with little progress in sight, the future turning to the
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question of the bigger debt ceiling question. it is the five-year anniversary of t.a.r.p. 10-year hasn't moved much, hovering around 2.62. europe showing more momentum over there as well. our road map begins with the president telling cnbc this time the market should be concerned about the dysfunction in washington, but is the shutdown the biggest weight on stocks right now? >> trouble for tesla, at least yesterday and again today the shares are falling after the video surfaced of a model s that caught on fire. >> big win for bp. a federal court halting payouts in the oil spill. >> and some harsh words for samsung. quote, nobody will buy this watch and nobody should. >> i stopped. immediately i was going to buy one. >> i wonder what his opinion is on this. hard to tell. >> neutral. >> day through of the partial
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government shutdown after a stalemate. a meeting resulted in no breakthrough to resolve the impasse. the debt ceiling is just two weeks ago. >> i think this time's different. i think they should be concerned. you have a situation in which a faction is willing potentially to default on u.s. government obligations, then we are in trouble and if they're willing to do it now, they'll be willing to do it later. >> more and more people are beginning to say they're not going to rule out a technical default, maybe not on treasury securities but something that does get people's attention. in buffett's terms today, we're going to go right up to the point of extreme idiocy.
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>> i think that redefined the issue. he said we're going to go over that deadline. stop thinking that deadline means the end of the world or there's money to be found. it can't go on too much longer than that. that changed my view. i came away from john harwood's excellent interview thinking holy cow, maybe the market's totally wrong. then i listen to warren buffett and i say split the difference here. the market is not as complacent as i thought. warren buffett himself said the deadline is not hard and fast. >> interesting. goldman out with a note last night saying the september data has been strong enough and politicians have a history of solving these things eventually. i think in their words "we see little cause for concern." >> you know, you go from thinking doomsday and don't forget, goldman's ceo, lloyd blankfein portrayed it as being
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a bit of a catastrophe. you go from at that and circle back and listen to warren buffett and you say, look, it's going to get solved, maybe not in time but all the bills and interest will be paid and move on. you know what, i'm going with buffett. i'm going with buffett. that was a significant interview. >> do you believe that that was a change in some way? >> well, i just felt that was the first big time money guy to come out and say, yes, we can go over. >> listen to buffett on ""squaw" earlier this morning. >> we'll go right up to extreme idiocy but not beyond it. if it goes one second beyond the debt limit, that will not do us in. if it goes a year beyond, that would be unbelievable. >> there you go. "not do us in" is the new quote i'm using. it won't do us in as opposed to catastrophe.
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yesterday on "squawk," erskine bowles used very catastrophic terms. i think there are a lot of people who may be overexaggerating what happened here. if warren buffett says it's not going to do us in, am i going to tell you warren buffett doesn't know what he's talking about? >> they may be talking about different things. buffett may be talking about the equity markets. i got to understand context. one second bir, by the year andn he said a year. clearly if a year goes by, we're going to have some real issues. >> a second is a -- >> so is do us in. i think erskine bowls is coming from a different perspective. >> i think you're right. every day you say this is lunacy we're not down big. and then you listen to warren
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buffett and he says this is not the end of the world, it won't do us in. i don't want to be complacent. if we're where we are october 17th and we're up big the next day, maybe that's lunacy. but the idea that we're going to have the october -- well, let's just say i don't like to use a particular word associated with october -- big decline, that was somewhat taken off the table. >> interesting. "washington post" today looks at government contractors that are laying off workers, contracts aren't being awarded fast enough, they raise the possibility that homes get taken off the market rather than people leaving their homes on and letting them get stale. kelly evans is here at post 9 talking about some of the impact on earnings and the economy. >> we're heading into third quarter earning season and it's interesting to know that viafax said we have a regular high number of preannouncements going into the quarter. why is that interesting? frankly not because it's the length of time they've been keeping track back to 2006, it's higher than it was at the end of
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2008. if you wonder what's going on with corporate america that it sees earnings as materially weaker, 82% of the companies that have come out for the third quarter say that they're going to -- are doing so and they're taking down their guidance. so that number the 82% is the highest that it's been yet. 89. only 70% of comes back in 2008 were similarly coming out with a negative guidance. it kind of goes back to what we were just saying, which is we got the jobless claims figures out this morning. we know firing isn't necessarily picking up in a material way right now, but to the extent the companies remain nervous, unclear about what the trajectory of earnings and apparently top line growth is going to be into next year, don't expect some sudden pick up or acceleration in hiring. and that is what you might expect to happen. if you got a goldman sachs out there saying they think the economy is picking up momentum and it's going to be at 3, 3.5%
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into next year, great. but another trader put it to me economists are all trying to ascertain what the heck is happening in the second half of 2013 partly because of the shutdown and the sequester and lack of data unfortunately we're going to have in the next month. >> largest payroll processor is paychex, marty came on last night and said we have 14 straight months of more people being added. i've interviewed this man every quarter and this is the most bullish he's ever been. he just said, look, government, see you later. he said because of the federal government creating a pall over everything, he does not expect even this head of steam to continue. i mean, how do you raise numbers, raise numbers sequester? raise numbers debt ceiling? you have to have a reason you raise numbers. >> "time" magazines puts it all in perspective.
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>> they still have a cover? >> those are the words, "majority rule" crossed out with a red pen. i was walking in this morning. one of the security guards said lock them up in a room like the vatican until there's a deal. >> smoke coming out of the top of the capital. >> when companies come out and issue guidance saying they're going to be above and below -- >> so it's only of those companies that issue guidance? guidance is below what was previously their guidance? >> they're guiding below where -- at this point they're guiding below what the market expectations. >> the net versus above? >> 89 total have issued negative guidance. >> 89 companies. >> 89 companies. and i believe 19 have issued positive guidance, that works out to about 82%. both the number of companies which have issued negative guidance and the percentage is at its highest yet in terms of what the series has been tracking. higher than it was at any point
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in 2008, which is interesting. >> i know corporate america doesn't like anymore to preannounce the up side. >> part it haof it is game. the second quarter was the previous record high. they had 88 companies coming out with negative guidance. of those companies who issued guidance, 86% of them beat. in other words, it's about bringing expectations down. >> on the other hand, is there a shorthand. >> and who has a massive hiring plan right now? >> oil and gas. >> there seems to be a bias toward equities. >> look, interest rates dropped during this period. >> right. >> that's another thing i'm listening to warren buffett and thinking interest when due and maturities when due, there will be no default. so what buffett i think is saying is, look, interest rates, they're not going to skyrocket. i mean, the skyrocket thing versus con-ed, i got dominion on tonight, letter "d."
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3% yield. i don't know. looked better. the cds, how can these banks get away with these cds being where they are? you make nothing. >> i look at buffett's comments which you picked up on a day after the president comes out and says wall street should be worried. buffett takes 12 hours and goes, eh, maybe not. >> warren buffett is -- he's the market. by the way, paulson said that warren -- he called warren five years ago and warren said we're going to be okay. i mean, warren is the modern day jpmorgan. do you remember jpmorgan stopped the panic? if the modern day jpmorgan says we're going to be okay, i'm not going to go and say did you listen to what we had to say on
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"squawk" yesterday? no. >> meantime, a fire that destroyed a tesla vehicle began in the car's battery pack. a metallic object made a direct hit on one of the car's module. fire was related to the front of the car. there were no injuries. we've been watching the video all night. deutsche comes out and says after 83 million miles, this is the first, it was bound to happen. >> david knows the hedge fund world. arson? hedge fund arson? i mean, look, because did you watch -- i was transfixed by the film. >> it didn't sound like it. it sounded like a couple of guys, although it could have been well orchestrated. >> that's a tesla! >> that's a car fire. car fires do occur. >> that's good for 6% down on the stock, which i think goes to the lack of conviction, perhaps,
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that some of the holders have. >> it does hurt the momentum. >> also on a day where it was cut to a neutral. >> and deutsche is saying it's going to be under pressure. i like to watch "usa today" -- i read "usa today" online. it's like, ooh, click on that, ooh, car fire, tesla down 10%. why? because tesla's only up here because of the handling of the screen, of the way it works. so suddenly if there's a fire -- remember, this is like a cool cars pe. as long as the cool cars stay cool, the pe is high. >> remember nhtsa came out in august and gave it the highest safety rating. and they said "it's worth mentioning that no production tesla has caught fire.
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i think that sometimes a viral video can trump what people have to say. and the video is a little jarring. it's a jarring video. it's not a pinto. remember the pinto? >> yeah, i remember the pinto. >> remember there was a network that kind of juiced up something? >> that was not a pinto. >> that was a pinto. >> and i don't remember the network. >> you don't, huh? >> no. >> what's the movie where somebody just barely touches the pinto and it explodes? >> i love that. i love that. it should have been "dumb and dumber," which remains my favorite movie. >> coming up, a live interview with the golden bear, jack nicklaus, golf's all-time major
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winning is ringing the opening bell this morning, has some thoughts, too, on politics and the economy. we have claims up. more from post 9 in a moment. you're 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. ♪ how lincoln financial can help you take charge of your future. at a ford dealer with a little q and a for fiona. tell me fiona, who's having a big tire event? your ford dealer. who has 11 major brands to choose from? your ford dealer. who's 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. i'm beginning to sense a pattern. get up to $140 in mail-in rebates when you buy four select tires with the ford service credit card. where'd you get that sweater vest?
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♪ ♪ nobody will buy this watch and nobody should. that's what "new york times" tech columnist is saying about samsung's galaxy gear. in a scathing review, pogue says the gear is a human-interface train wreck, all of it. the software design, user guide, english translations and design consistency. by the way, he says be careful not to damage your finger nails when you release the buckle. my favorite line, just throwing a bunch of trees into a pit doesn't make it a log cabin. >> why can't you drive and do this, one-handed driving? he says you have to put it to your ear. what's the matter? people do that all the time. this was one of those reviews that said, okay, compare the apple, what he had to say about the 5s, which he just basically said these are the mona lisa.
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this is not even a paint by number. it's very clear he ended this. this is it. remember the old days when the "new york times" used to be able to close a play with a bad, you know, this is a disaster. >> vincent camby. >> this is it. the curtain closed on this. the curtain closed on this device. >> but the curtain hasn't closed on wearables and that is an emerging area of product development for many companies. they may have shut the door on people buying this for a while. and it is expected apple will come with a more refined product if and where they do. >> you know who will have a product that is killer produ, r under armour.
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you're not going to read a pogue review about under armour. >> you have the jaw bone product. >> i like the jaw bone product. >> you do? >> yeah. >> thankfully they don't get those reviews for their phones. >> no, they don't but don't you get that shift in favor of apple, kind of against samsung by the dissente? it's changed. it's changed. i think that samsung has suddenly become what we used to think of samsung and apple has become what we used to think of apple. >> we do have breaking news. a citigroup union the has been fined $30,000 by massachusetts. research analyst kevin change provided institutional clients
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with indications of a cut of an iphone production by apple. three clients sold apple stock after receiving that information before it was made public. not the first time we've seen things like this, jim. >> where did apple go after that? was that like the 400 to 700 or the 700 to 400. i'm glad to hear the massachusetts attorney general was in charge of the markets in the country. the state government steps into the tvacuum. this is the tenth amendment taking over. >> you don't do something about it, i will. >> take that. if eliot spitzer had won the controller, can you imagine how he would have filled in the vacuum at the s.e.c.?
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>> i'm very thankful he didn't win. >> what do you mean? did you just make a political statement? >> yes, i did. >> are you still able to go to restaurants? >> i don't know. >> he's like the marathon man. remember that scene? >> one more look at futures. some moderate weakness here. the president talks more about the shutdown. a lot ahead when "squawk on the street" comes back.
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. [ bell ringing ] >> there's jim with the "mad money" team ringing the closing bell yesterday. >> almost fell off the table, regina gillman grabbed it. >> we got about five minutes before the opening bell. let's get to the "mad dash." we have not talked about british petroleum. a huge victory. >> a victory by the fifth circuit, reigning in a federal district judge, you and i should have filed a claim, i once flew over louisiana, my eyes hurt. this is one of these incredible renegade, runaway justice situations who is being reigned
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in. louis freeh will be the monitor on a lot of these claims. >> the court ruled saying these claims cannot be part of the fund. in other words, ones where they can't actually prove damage of some kind. >> now, this stock was going higher until we started seeing the claims. and the possibility of a $30 billion, $20 billion number got bandied around. now the buyback will kick in. this stock should be at 45 to get to where chevron is. >> they've already paid $42 billion or so in clean-up efforts. >> i don't hate them. >> say the company paid out $42 billion and they're even still around is significant. >> and they haven't cut back on their production. they are the number one foreign investors in america. >> and jack nicklaus getting
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ready to ring the opening bell ready to ring the opening bell [ indistinct shouting ]
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you're watching cnbc "squawk on the street" live from the financial capital of the world. the opening bell set to ring in about 30 seconds. obviously a lot of attention continues to be paid to washington but the nasdaq is still on track for five straight up weeks, jim. i just learned today the s&p currently has the biggest point gain for a year ever still. >> wow. >> the dow needs about 300 points to beat its record for '99 in points. >> that's an amazing figure. we have positive comments on celgene, positive on biogen, positive comments on vivis. these are the kind of things that keep driving the nasdaq. yahoo! alibaba.
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>> cardinal health celebrating the president's cup in dublin, ohio with world golf hall of famer jack nicklaus. at nasdaq, susan g coleman foundation recognizing breast cancer awareness month. have you already touched on the notion that ackman has restructured 40% of his short? >> i think that's a prudent way to approach. if you think there's going to be a squeeze, you do a put. what am i going to say? right thing to do to limit your ri risk. >> it's a wonder he hadn't done it sooner. a very difficult position to risk adjust is what many people will tell you, having taken up as much as 12% or more of his funds under management. you have to imagine it was a
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concern for him after the jcpenney debacle, down 50% or more and his installation of ron johnson as ceo, which hurt so many people and herbalife. but he did have a win on air products. we'll see how the stock actually does over i'm. but interesting moves on his part. interesting letter. talks a great deal about humility. i'll leave that for others to decide whether in fact he displays any. >> okay. well, as someone who used to short stocks all the time when i had my hedge fund, i am retired, i almost always used puts because the investors, who are your real bosses, were always horrified to know they could have such unlimited infinity risk on the short side. you said don't worry, the shorts i have, i'm using puts. >> to come out publicly to let the entire world know you're
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short and how much you're short is rarely done. >> i always thought it was manipulative. >> it can be both ways, it can be manipulative, and it can be very constructive when everybody know what is you're short and decides they want to go again. >> a lot of moves today. tiffany coach getting some today. >> a lot of love. we're getting -- this is the backlash. these are power plays that are suddenly doing better. manny chirico is doing fabulous job at pbh. everybody is counting that stock out and what a shame, manny is so good. >> and tiffany, called a diamond in the rough, say they could triple their cash flow in the medium turn, potential takeover
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talk. >> they didn't have a great outlook before but maybe they were underpromising. i think coach has been more difficult because they've missed a bunch of quarters, new management coming in there. but i do think these are contrary calls to what we expected because we just keep hearing about how bad retail is. >> and airlines, too. >> delta. >> delta again. the fourth biggest gainer in the s&p. evercore bringing targets up after yesterday's revenue growth guidance. >> morgan stanley saying it's high end. we were led to believe the airlines would get hurt by a showdown in the government. that was the way it was with the sequester when it first was announced. no one has seemed to want to get behind apparel and accessories and suddenly we have these upgrades or recommendations. stay tuned. the negativity seems to be being cut by some of these calls. >> but is it a real change?
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what are they based on? are they sensing some sort of change in the stores themselves that indicate it's a reinvigoration of apparel sales? >> i think there's some changes internally going on at coach but i think they feel these have lagged. i mean, coach could be a turn around situation but, look, i just think we haven't had a lot of good news in retail and i thought it's kind of interesting that it happens on day three of the shutdown. >> on a day when the nrf publishes a forecast for the holiday season. they see 3.9 growth. last year we had 3.5. >> remember, there's a lot of apple phones being shipped. we talked earlier that that's kind of a benchmark. again, i come back to warren buffett. look, warren buffett just made you feel a little better. i'm not saying that things aren't urgent down in washington, not for a minute. but i just feel like if you could get your arms around these
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problems, at least you could understand why the market hasn't fallen. that's all i'm trying to do. your nasdaq figure is stunning. would you think that's like 94, 95, 96 when the internet was just coming in, the intel was cutting the cost of a pc. those are remarkable figures, carl. that's a bull market number that seems to fly in the face. or they say, listen, the buyers do not care about washington. they don't care about redistricting, they don't care about tea party, they don't care about majority rule. they only care about momentum. >> yes. that has a way of reversing itself, though, when reality sets in. >> yes, it does. and you know my view, which is until it does, they're not going to stop. they'll keep buying. i'm not saying they shouldn't. i'm working on a piece next week about taking money off the table for some of these wins because the wins are insane. there's a great company this
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morning, i don't want to mention it because i had them on that's up 260% and got a recommendation today to buy. is that early? >> is that ulta salons? >> no. did you see the number bump? >> i am raising numbers, price target, ulta, lumber liquidators and, david -- >> tractor -- >> tractor supply. my tractor supply was so jammed. >> ulta is only up 26%. shame on me. >> lumber liquidators, you have to send better than the fish and game people down there. >> fish and wildlife. i'm assuming they're on if you recall -- furlough, too. >> we are seeing numbers on dominos -- >> i saw that. >> lack of engineering cat li
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catalysts. >> the pizza is better than ever. you ever had cheesy bread? >> no. >> you ought to try it. dominos is the best. and that app is so amazing. now can you pay on your apple. >> have you ever even had a domino's? >> yeah, it's good. >> the banana peppers are extraordinarily good. can you also get a pie without cheese, which is like low cal. >> can i mention blackberry for a moment. >> we should tell you as well fairfax is following through at this point with their letter of intent. they had to submit a potential definitive agreement, at least work towards that, to do due diligence. that is reported as having been submitted. there's a look at blackberry at this point, still down about 1%. >> i am hearing there are people in the data room that are
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distressed and who are they and who are they after? fairfax's $9 a share letter of intent is more of a ceiling than a floor. >> did you see the comment they're burning up cash at huge amounts? bernstein says hold the sale. $2 billion they're losing in the next few quarters. wow. it's like the clock is ticking, blackberry. >> the quicker the better. no doubt about it. >> does blackberry have a debt ceiling? >> not as far as i'm aware. >> tesla is putting back to about 176. that's going to take you back about two weeks. of course after the news yesterday about that fire, i believe we have a statement out of tesla. the fire was caused by the direct impact of a large metallic object, one of the 16 modules within the battery pack. because each module is by design isolated by fire barriers to limit potential damage, the fire was contained to a small section
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in the front of the vehicle. that's part of deutsche's defense today, they maintain their buy and a $200 target because it was collision related. >> yeah. i mean, it didn't spontaneously explode. it didn't just like one minute it was fine, the next minute it was a gas-soaked rag. >> i don't know. i was not there. oh, so in other words, because you weren't there, you think it might have spontaneously exploded? >> i have no idea what happened to that tesla. >> i do. it was an accident. they said it. >> okay, that's fine. >> let's get to bob pisani. >> i'll state y out of that one. >> so of the emerging markets have been under pressure. the long slog is setting in. the number of commentaries about this has sort of dropped off in the trading community.
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i'll put it to you in the simplest way possible. if it's short, it not a big deal. if it goes on longer, past october 17th, then it is a bigger deal and that is not priced into the market. but in between now and october 17th, you can do a lot of treading water. that doesn't mean there's nothing else that's important. everybody is wrong about that. the economic news is very important. cd-adp yesterday. watch the service number, out in 20 minutes. everyone is looking as employment for a potential proxy for the non-farm payroll, which we may not get on friday. the number for the ism factor, that was very strong. if the services employment component comes in today at 57, that's a very positive indication. i've talked to some people. they said that could often indicate a non-farm payroll higher than consensus, maybe
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250,000. consensus is about 180,000 numbers. and, by the way, ism is a private company so we're going to get the data, just like we were promised here. ipos, three big brand names today all trading up today, remax, burlington, empire reality. we're going to get another brand name that's going to be going public again tonight and that's pot belly, the sandwich manufacturer. that's priced tonight. i'll talk more about that later. one interesting point here, the new york stock exchange, ice deal, getting very close to completing this deal. yesterday overcame one of the last regulatory hurdles in europe. they're waiting for one more set of approval for the people who run the regulatory bodies in the five companies they operate in europe. that is expected fairly soon. it may be in the next couple weeks this deal is about to close. back to you. >> you're so right.
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i keep feeling what will it be like? will it be a big change? bob, do you think it will be different? will we feel different? what will it be like? >> no, i don't think you're going to notice any differences at all. there's a different kind of operator. jeff operates things a little bit differently. he comes more from an electronic trading universe. i don't think the floor is going to be going away. there might be differences operationally. they're going to look for more opportunities in the derivative business again. they've announced they're going to ipo euronets. this company very much looks for growth. >> thank you, bob, that's great. that makes me feel better. i don't want a big change. >> let's switch to bonds and the dollar. rick santelli at the cme group. rick? >> automatic scaling, make sure
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you look at the scale on the right. let's look back to the 17th, basically the heart of the fed meeting. you can see how it affected rates. we always talk about what's priced in. bob pisani talks about what's priced in on the debt ceiling. priced in was considered a certainty before that meeting. obviously wasn't priced in correctly. now, let talk about volatility. not stock volatility, treasury volatility. here's a chart going back eight days on the five-year note and eight days on the ten-year note. notice the scaling. this is going to be, if nothing changes, the eighth day we've been in a six basis point closing range for 5s, five basis point closing range for 10s and as far as the market that seems to have some follow-through right now, it seems to be the foreign exchange market, whether you look at euros, or the pound versus the dollar or a one-year chart of the dollar index. granted, it's like watching something in slow motion but we
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continue to deteriorate and spend more time under 80. what are the dynamics there? take your pick. you could see the movement in early july, early august, different aspects of the jobs report, the fed meeting and of course what's going on in d.c. back to post 9! >> thank you, rick. >> when we come back, we'll get into the swing of things with the golden bear. jack nicklaus will join us from the home of the president cup's tournament in ohio. "squawk on the street" will be right back. ♪ ♪ [ female announcer ] what if the next big thing, isn't a thing at all?
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fresh from the opening bell, legendary jack nicklaus is joining us from the site of the president's cup in dublin, ohio. jack, what a treat for us. good morning. >> thank you. nice to be here. >> you know what they said when they heard you were ringing the bell, people said are we in for a golden bear market? >> don't need that. maybe the golden part. >> we're looking into a great few days of golf. it's a course that you designed.
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i wondered when you envision a new course that you're going to draw, what goes through your mind? how tough are you going to be on the player and how kind are you willing to be to the player is it. >> basically you find out who is going to play the golf, who is going to be there, what's your membership, resort, public, private, whatever it might be. and you go by whatever the land gives you. if the land is a nice piece of ground, you try to work it within the land. if it's a nothing piece of ground, you have to create it. every process is different. >> you said you're fairly confident that tiger is going to surpass 18, despite a level of competition, jack, that you said is as good as any that's ever been in golf. >> i didn't say i was confident. i just expect him to. but, you know, tiger's a great player. he's got a great record and he's going to continue to have a great record, but there is a lot of competition today.
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there's probably more good players in the game today than there's ever been. >> jack, jim cramer. thank you for coming on the show. you're a personal hero, you're fabulous. i'd like to know your opinion on all the things happening in washington. you're a student of our country, of our culture and a common voice. have things gotten off the rails? >> you really want me talking about washington? i'm here talking about the president's cup. washington's got its own mess. i've got enough problems right here. >> that's all i need to know. i felt that way. where's the sport of golf in america right now? a lot of young people i know can't get enough, but i also know the golf stocks so to speak have not taken off the way i would have thought given the love of the sport. >> well, the game of golf from a tournament and showcase standpoint is fantastic, never been better. from the average golfer standpoint, people try to come
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into the game and leave the game are we're having too many people leave the game. our whole focus now is how do we bring people in the game, how do we keep them in the game and how do we encourage the game of golf to grow? we've got a lot of programs with kids, a lot of programs with women, a lot of programs -- pay is forward is a program from pga of america to have people enjoy the game more and have more fun. that's the way we keep people in the game. >> jack, you have a pretty good set of eyes in terms of the economy and business at least all around the world. a couple of years ago you talked about the impact of the global economic strife on companies like china. do things look better now? >> things have picked up just marginally in the united states, not very much, not from my standpoint. china is absolutely booming from our standpoint. russia is a place where we're doing several golf courses, but
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asia is probably the biggest market that we have today and probably i said china is most of it. >> i know jim tried to get you into the political realm. i'm going to try again. you said this, "i feel very strongly, i just don't like the direction you're heading -- this is when you were supporting romney during the campaign -- i don't like the divide in the country, i've never seen the country get split like this and i really dislike that." >> i would stand right by that. i don't think we're any better than we were. as a matter of fact, i think we're probably worse. >> do the events in washington this week inform that view, jack? >> well, you know, i'm not privy to what's going on totally. i mean, we get what we get in the news. but i'm not -- i don't see a rosie picture from standpoint from what a see from a lot of people's standpoint. i think we can do a lot better in washington. >> we can't wait for the cup to
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happen. next time you ring the bell, will you come down to the exchange? >> that would be a privilege. thank you. >> jack nicklaus, pga legend. great having you today. >> thank you. >> "six in 60" coming up next. 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.
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time for "six in 60." time for five below. >> i love this stock. this is not the dollar store. they've got real momentum. >> rite aid better than expected. >> they continue to astound. i continue think they're going appreciably higher. >> noodles. >> if you think pot belly is going to go up, buy noodles today. >> credit suisse on micron up today. >> this stock can go higher. >> finally, lilly challenging to meet the target? >> i mean, big farma, yesterday was a very bad day for summit because merck, big layoff. these companies just don't have growth. >> interesting the dichotomy
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between big pharma. >> raising numbers celgene, cutting numbers, merck. >> what's up with dominion? >> i think they're the most forward thinking and tremendous wealth for their shareholders. >> it's been a challenging week. it's been wonderful to have you here. the weekend is not too far away. >> i know, i'm very excited about that. >> when we come back, economic data that is not being shown because of the shutdown. we'll get ism services and market reaction in just a moment. and everything that goes along with it. [ thunder crashes, tires squeal ] ♪ ♪
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you and roger could get married in our backyard. it's robert, dad. [ female announcer ] come in to find the right credit options for your needs. because when people talk, great things happen. welcome back to "squawk on the street." normally today at this time we'd be bringing you breaking news on ism non-manufacturing and factory orders, but due to the government shutdown, we're not going to get the factory orders dated today, we'll only get ism. rick santelli?
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>> this number being weak i'm sure is not dramatically affected, 54.4, by the stalemate. this is the lowest number since june. the 58.6 that stands for the august read was the best since december of, what, december of 2005. and the markets did what one would expect, the treasuries moved a bit lower. back to you. >> first it was president obama warning wall street about the consequences of a u.s. default. now the imf director christine lagarde has ominous words as well. she tells a george washington university audience as bad as the u.s. government shutdown is,
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failure to raise the debt ceiling would be worse. and she's worried about the reverse of quantitative easing saying it mus t be very carefuly managed. >> and warren buffett this morning. take a listen. >> they feel if they can't get their way on some other issue, they will use the threat of, in effect, defaulting on the government's credit to get their way. that won't work long term. and they know they're going to find out it won't work long term. the public will turn on them and they'll all of a sudden have a counterrevelation. >> in the meantime, the dow is down 98 points. how down should the markets be? this is what the president had
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to say exclusively on cnbc yesterday. >> i think they should be concerned. when you have a situation where a faction is willing potentially to default on u.s. government obligations, then we are in trouble. and if they're willing to do it now, they'll be willing to do it later. >> let's bring in rich bernstein and david katz joins us. gentlemen, good morning. >> good morning. >> david, how worried should the markets be? >> well, you should be worried if washington basically shoots itself. we think ultimately before all is said and done, they're going to come up with some sort of resolution to this and any losses that the market has in the next week or two is going to be recovered pretty quickly. >> interesting. rich, that's kind of how goldman put it. it's saying that this is huge opportunity here. goldman is selling its clients what we see causes us little concern. the current data are forward
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views and a simple look back at past shut downs all show it will likely be short lived. do you agree? >> simon, that's right. the underlying assumption is that people will ultimately act rationally. if you assume that washington will ultimately react rationally, that's the correct thing. that's what i believe. i'm a little nervous in that i'm not alone in that thought but, yes, you have to believe that ultimately washington will act rationally, despite what's going on right now. >> at the same time, david, as long as the current uncertainty and shut down exist, you can't expect the federal reserve will do anything aggressive. is it a safe bet the longer this in washington exists the more likely the federal reserve keeps being aaccommodative now as it has been? >> absolutely. the federal reserve is making up for the government's misbehavior or bad behavior. there's no way they're going to start the taper while this is
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going on. this creates a new level of uncertainty. if this was to go on another week or two, it really would impact the economy, which would keep easing on for longer than they expect to. >> what would that mean for the market? >> for the market, you're going to have an overhang. stocks aren't going to go up until there is clarity. we would buy individual stocks as long as you have a three-to-six-month time horizon. >> ubs feels the year-end trade will be long of risk and therefore you could have quite a decent acceleration in the market. his own question is the entry point, david. >> we would agree with that. we think the market has a good fourth quarter, ends higher from here. any weakness, we would buy individual stocks. we think there a lot of good businesses at good prices.
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the u.s. economy was on the end so if washington doesn't kill the economy, we think things are moving in a better direction. interest rates will stay low for quite some time. >> i'm thinking the extent to which president obama says to wall street you should be worried, we're down about 100 points or so on the dow today. but then at the same time we have warren buffett coming out and seeming to kind of suggest, look, maybe this won't be anything close to a disaster. >> well, i think if you look at the underlying fundamentals, and i think what mr. buffett and what david alluded to as well, is the underlying fundamentals and economy continue to improve, right, but the longer that the stalemate progresses, you're going to shave off morgan stanley estimated we'd loss 1.2% of gdp per week as long as this goes on. the longer this goes on, the longer -- i think it's ironic that the group that wants
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government out of business -- get out of business's hair is now the group that is disrupting business. >> let's be clear about that, rick, for the record. more than 2 million federal workers, now going to get their paychecks delayed, 800,000 of them may never get paid for the time that they're furloughed. this conversation slightly worries me. all the comments seem on the same side of the fence. what is the contrarian view? >> the contrarian view is that the president is correct and this goes on for longer than people think and that we do sta start etching away at gdp to the point where the underlying trends begin to collapse. if that were to happen, then we have a very different outcome here, one that's more conservative than we're positioned and much more conservative than the consensus. >> for the moment, let's bring it there. >> rich bernstein and david katz, thanks so much.
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>> consumer reports calls the tesla car the best it has ever tested. in the wake of the recent fire, is that still the case. jeff, it's good to you have back. good morning. >> good morning. >> let me ask you if you're familiar with what happened. >> apparently this driver struck a metal object and it must have penetrated something, presumably related to the battery area that led to a fire. this is the first such incident that we're aware of and is certainly a statistical anomaly for tesla. >> how do you build this into your models? however you track the safety of various models? >> well, just like buyers, we take safety very seriously, but while we'll monitor the situation, it doesn't directly impact our recommendations or even our test findings, which are already locked down per se. this being just one incident is a very rare anecdote.
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fires in cars actually happen with frightening frequency. there are over 100,000 fires in cars a year, but still it's a very rare thing given how many cars there are on the road. >> 100,000 and we're making a big deal about one, which does make you -- has a lot of people asking today, jeff, would this have been different if it had not involved a collision? would that have been a completely different story. >> you say "collision," the car struck an object. i don't know the specifics. analysis hasn't been completed in terms of how this object damaged the vehicle. but we do know that the tesla performs great in our dynamic performance test and it absolutely aced the government crash test. so this is a vehicle that is by far safer than most. and this particular incident exposed one potential weakness, but we don't know if other cars would have reacted differently. >> jeff, is there something
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about batteries -- obviously the fire is in the battery, the way that bowing had a problem with its battery. are they more difficult to deal with, more difficult to put out? >> lithium ion batteries have been shown because of incidents with laptops and airplanes that there are certain inherent risks in managing temperature. i don't know what caused this particular fire, but we do know it is a volatile set of chemistry. but if we step back and look at cars, cars carry around a full gas tank full of combustible fuel. every one of them can go up in flames with just the right impact. so while this is something to look at closely from tesla's perspective, it's not something that we feel consumers should be worried about at this point. >> when is consumer report's next crack at evaluating the s? >> well, let's not use the term
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"crack" here. >> fair enough. >> when there are dramatic and significant updates. i'm not expecting such an update to the model s on the horizon but we're looking forward to testing the next tesla, which is rumored to be a model x, a crossover/suv type vehicle. >> the stock is active. thanks so much for your insight today. >> thank you. >> coming up, there are 82 days left before the holiday season is upon us. "squawk on the street" is back in two.
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it's been about a day, actually a matter of hours, since the president said wall street should be concerned about the showdown regarding the government shutdown. the dow says, okay, we're down 105 points, just slightly off the lows. interesting to watch interest rates as well. >> yes. >> people are buying a few treasuries, the 10-year yield down to 2.61. if you are really worried about getting paid back, why would you buy a treasury? that's one question for investors today. >> might be seeing backup on the very short end of that. if people are wondering why it seems to be a growth offtrade it, does reflect what happened with the ism index. >> can i just point out for the last month if you track back to the 4th of september, we're
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actually up over 3%. >> yup. >> that is where we're coming from when you see these on the screen today. it's important that the market isn't selling off. either discounted it or completely in denial. >> we've got some breaking news now out of treasury regarding the shutdown. senior economic reporter steve liesman back at headquarters. >> the treasury department in a report being released right now making some very strong remarks about the economic threat of a shut down saying it would be unprecedented and potentially catastrophic staying a default could lead to a financial crisis and recession worse than 2008, credit markets could freeze and the dollar value could plummet. unusual for them to be making comments about the values. interest rates could skyrocket for businesses and consumers. even the threat of a default, and this is a major point of this report that's coming out now, can be disruptive to
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financial markets, the threat of default in 2011, quote, took a measurable toll on the economy. along with the default, the economy faces a new threat from a government shutdown as well. a treasury official talking to reporters saying they're already seeing some signs of the debt ceiling concerns in financial markets, certain interest rates higher and credit spreads higher. the government will have $30 billion of cash on hand october 17th. however, payments are sometimes $60 billion. they could be caught short. that's their concern. they declined to discuss plans for dealing with the breach of a debt ceiling and how they might come up with it. president obama to john harwood saying this time it's different. here's what he said. >> i think they should be concerned. when you have a situation in which a faction is willing potentially to default on u.s.
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government obligations, then we are in trouble. and if they're willing to do it now, they'll be willing to do it later. >> so, kelly, if the president said this time it's different, this report from treasury says this time it's really, really, really different and they put some numbers and some words around that. kelly? >> the problem that they have, steve, is they're not scaring the market, which is clearly their aim. vincent reinhart today says they won't run out of cash, as you point out, on the 17th of october. they'll have $30 billion. as far as morgan stanley is concerned, that means they'll last until november the 1st. nonetheless we believe there is a zero percent chance of a federal default at that time, the u.s. government will pay its bills. they're not getting traction on the street, not able to scare the conservatives. >> simon, i think that's right. i think that's what this report is trying to do. it's part of the negotiation, it part of the discussion that's going on, and there's an attempt
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to make the market more aware, more concerned about this and pressure house republicans. i'm not sure the house republicans really care what wall street bankers think here. i think they have their own concerns, their own political dynamics at work here. the question becomes, simon, whether or not the treasury will tell us what will happen when we reach that october 17th date. that's specifically why they're not telling us. because if all those things you say are accurate, it's not quite as a precipitous fall as the treasury is making out here. >> on the five-year anniversary of t.a.r.p., one goes back to the vote, remember, i mean, first it was turned down on the house floor. what was the day? you and i were 700 points i think they were down? then they kind of reversed themselves a little bit. maybe it's going to take that. >> or will it take jack lew getting on his knees from front of john boehner. that might be something to think about. that's what it took last time
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for hank paulson to get the t.a.r.p. passed. who knows what it going to take this time. both sides are ramping up the rhetoric at this time. >> does the potential shutdown move it back a day, a week? >> the treasury saying there's not much of effect of the shut down on the date of october 17th. the treasury is processing electronic payments where the vast majority of revenue comes from for the government. the things they are not processing are checks written to the government, but that doesn't move the needle very much. >> steve liesman, thank you very much. coming up next, forecast for this year's holiday shopping season has so far been pretty upbeat. the question is whether the shutdown is changing all of that. should retailers fear the worst
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welcome back to "squawk on the street." investors are raising a glass and toasting to strong results
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from constellation brands, the company behind big alcohol labels, like mondave wines, they beat profit estimates. it missed slightly on sales but raised its full-year profit forecast for 2014. constellation is hoping for more momentum out of the beer business from anheuser-busch. back over to you. >> thank you, sir. we've got just 82 days to go until christmas. in this latest forecast out this morning -- don't laugh. you know holiday shopping starts well ahead of time. >> the favorites will be ready already. >> my shopping never begins or ends, never occurs. >> the national retail federation expects holidays sales will raise. the question is will the got shutdown put a damper on the holiday shopping season. matt shea is president of the
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national retail federation. good morning. >> good morning, kelly. >> whether this will affect the shopping plans, what's the headlines? >> i think the headline is the 3.9% is reflective of what's happening in our economy, what's taking place in washington, the uncertainty coming from washington and trying to balance all of that including what's happening this week with what are really some strong fundamentals in the economy. so you look at the other sectors. we talked about it before in housing and real estate, the equity markets manufacturing so the economy should be doing pretty good. we're getting held back still by the uncertainty coming from this town. and the inability to really solve some tough issues. >> this is what i want to drill down on. there's going to be a lot of people figuring out what kind of trades to put on. the 3.9% yearly gain you're forecasting is better than the 3.3% 10-year average and that's
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great. however, you have this specific question where you ask people are you planning to reduce your personal spending as a result of the federal government shutdown? two-thirds say no at all. you have about a third of people saying yes. how significant is that? >> well, i think at the moment it's not very significant. that was a poll, we were out on the street on october 1st, the day of the shutdown, we were asking consumers. that's what we're trying to balance is how long is this going to last and balance that against it's incremental, it modest, moderate growth but we see employment gains, we see gdp growth, we see a little bit of gain in wages and overall productivity. so things ought to be good. the question is when do they lines really start to cross? >> you have 2 million federal workers who are not going to get paychecks and 800,000 may not get reimbursed for the period they're not working. that is a sizable kick in the
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economy. what we can't understand in the moment because it's happening in realtime watching the television is what that means to your members, the risks and at what price they can sell. are they cutting back on their seasonal workers? are they saying we don't want to stock as heavily? this is really going to affect the economy now, isn't it? >> simon, let me be clear. it's a tragedy that there's anybody out of work and the government's shut down. we in no way mean to minimize what's happening at this moment if time. if this got resolved in the next week or so, there's plenty of time to make up a great holiday season. if this drags on it's not just those 800,000, the 2 million, the ripple effects take effect across the whole economy, it will have serious consequences. i don't think you're going to see any problem with inventory. retailers are planning inventory
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every day, segment by segment. they do this for a living. there are going to be promotions and discounts and that's taken into consideration and all being planned now. >> thank you very much. >> getting some breaking news on verizon and its technology spending. good morning, jon fortt. >> verizon announcing they're shifting the wear that i buying technology through their cloud technology. verizon cloud launching a service that competes with amazon in stores. but here's the more important part here. they're saying that they're changing the way they buy hardware, they're working with amd to design their own servers, reducing spending on hardware and moving more toward software, more to software defined networking, less traditional gear from the likes of cisco.
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what makes this particularly interesting is just over a week ago at&t made a similar announcement about their capital spending plans for 2014 and 2015. they're going to spend $2 billion less in each of those years because they're shipping the way they buy toward more of a cloud-centric model. more diversification. these are big customers, guys. >> straight ahead on the show, president obama is getting ready to make some remarks about the shutdown in maryland. he's scheduled to start speaking in just a few minutes. will he offer an olive branch to the gop? we'll bring it to you live next on cnbc. and that gives us scale and insight no one else has. investment management combined with investment servicing. bringing the power of investments to people's lives.
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. breaking news on natural gas. natural gas supplies rose by 101 bcf, greater than anticipated and greater than what we saw this time last year and the five-year average. as a result we're looking at slightly lower prices for natural gas but it is still hovering right around the $3.50 mark. right now it just dropped a little below that level. although there is some some
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bear, sentiment here, tropical storm karen is likely to be upgraded to a hurricane entering the gulf of mexico and may affect some oil and gas platforms on the eastern part, according to some of the researchers we're talking about. we're continuing to watch tropical storm karen and see if that will provide an impact to natural gas. we normally see this type of reaction at this time of year. >> let's have a look of where we are on the markets at the moment. we're down 129 points now on this session in the dow. so far the markets have been relatively relaxed about what they're seeing on capitol hill, though it is a main point of discuss. art cashin has a fascinating like that it could be very messy because if obama decides to use the 14th amendment in order to
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raise the debt ceiling so low, the house republicans will have to seek a way to challenge him in the supreme court. the only way they will have standing in the supreme court is if they attempt to impeach him. >> wouldn't we love to hear a little discussion about this option. >> not in the market, no! >> the white house by the way continues to say and treasury continues to say he will not pursue that course of action. the 14th amendment section 4 says the authority of the president shall not be questioned. >> he won't do it unless he has to do it. you won't give up some position of leverage until you had to give it up. >> probably more concerning in the short term is both the dow and the s&p and now the mdx have taken out yesterday's lows, which has sort of been a test that the ndx --
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>> what's the ndx, forgive me? >> the nasdaq 100. the fact those are below yesterday's intra day lows is more than a big concern. >> could be triggering some technical signals around here. >> you're looking at a live shot of a construction company in rockville, maryland where the president is expected to speak on the shutdown in any moment. john harwood yesterday thhad th exclusive interview with the president. >> reporter: kelly was just talking a moment ago about the so-called constitutional option. administration officials have been very consistent in saying we're not going to do it, the president has a constitutional lawyer said he felt on advice of the lawyers that he has he didn't have a leg to stand on in that. privately i've heard administration officials reiterate that in recent days. and i gave him, as you may remember, an opportunity in the
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interview yesterday to address it. i mentioned the constitutional option. he didn't want to go there, didn't want to talk about it at all. but as david says, if they ever feel that they want to do that, it's going to be at the very last minute or in the midst of a crisis and they would not signal that right now because it would take all the pressure off republicans. meantime what he's hoping is for wall street executives to begin sensing a market reaction and make that clear to republicans on capitol hill. he think it is could make some difference. here's the president. >> wall street can have an influence, ceos around the country can have an influence. i think it is important for them to recognize that this is going to have a profound impact on our economy and their bottom lines, their employees and their shareholders, unless we start seeing a different attitude on the part of that faction in congress. >> so i'd expect to hear this
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message pounded in various different venues and public events by the president all the way from now all the way to october 17th. >> good morning to you, john. great interview yesterday. the problem with it is a lot of the business community doesn't want to get involved in what is a tcontinuing a polarized political scene. even if they did get involved, these two dozen conservatives surely don't respect those institutions anyway. the real institution they respect are the primary voters, their own constituents and their own seats. they don't care what the chairman of goldman sachs says, for example. >> there's a lot of truth in what you said, simon. i think there's a difference between little influence and no influence. the rank and file members in their districts fearing primary
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challenges, yes, they are insulated and they may not care all that much. on the other hand, leadership cares. they have to raise a lot of money to try to keep their majorities in place, campaigns are very expensive and the national strategist for the republican party who after all do at some point want to win the white house again, they are ones who are affected by the idea that the business community would somehow turn around and look at the republicans and say, as our friend ben white wrote in politico this morning, "are you nuts?" >> john, just quick to your own reporting, i'm curious anything you can share with us in terms of picking up on an optimist being note conversations that may be taking place or an idea of wrapping a c.r. with the debt ceiling, with entitlement reform. i know it sounds crazy, giving up sequester. anything at all to share with us? >> well, i do think there is a positive macro sign, and that is that the debate is getting away
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from obama care, which was an irrational and unreasonable demand on the part of republicans, to budget talks where they have a reasonable case to make if they choose to make it. republicans have been saying we have to get entitlements under control. that is true. the president has acknowledged that's true. they've had a disagreement over whether or not tax revenue also has to be part of that equation, but the president wasn't very emphatic about tax revenue. they've accepted the near term spending levels from republicans. so if you get a back and forth on how to adjust the sequester, which people in both parties don't like, some of the cuts to defense and domestic programs, replace those with entitlement cuts, which both sides say are necessary, there's a zone of agreement but i don't think given the signals the president sent yesterday he is prepared to engage in that discussion until after they open the government, raise the debt ceiling. but could you have some sort of agreement on process, you know, a budget summit, a budget set of
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talks with a particular end point. those are ways it could get solved. and, you know, as you guys know, i've gone broke repeatedly being overoptimistic. i'm still optimistic that by the 17th they're going to raise the debt limit. >> let's see if the president indicates that's a possibility when he speaks in just a moment. john, stay with us in the meantime. let's also mark that we're in day three of the shutdown and find out what that manse eans n. >> we've have at least 8 hoon,000 government employees laid off. yesterday the administration stopped national security officer and told lawmakers that includes 17% of intelligence analysts. here in washington, the world war ii memoriam has been a flash point and pressure point over the shutdown. yesterday it was open to veterans of that war but closed
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to all others. watch and listen to what happened when texas congressman confronted a park ranger demanding she open the memorial to everybody. >> the park service should be ashamed of themselves. >> a congresswoman overheard it and defended her. >> this woman is doing her job. it's because the government won't do its job and pass the budget. >> there's an example of the kind of pressure points and flash points we're seeing. just in last half hour, house republicans showed up in the press gallery recruiting doctors and health care professionals to support action taken to support medical funding for research, including clinical cancer trials. now it's part of a shift in tactics, basically trying to get through individual bills that hit home with key voting groups. again, back to those pressure points that will only intensify the longer the shutdown continues. kelly? >> thank you very much, sir.
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the big question in all of this is how this is affecting the economy. steve liesman is back with us with some details on all of that. what can you tell us, steve? >> justless listen to what hamp said, the 800,000 people laid off. that's going to show up in the jobless claims number and it will show up the way a natural disaster would show up. we went back and looked at some the biggest times jobless claims have spiked in a week. this will register along with hurricane katrina, hurricane sandy. it has to do with the timing of when some of these folks file for jobless claims. they're only eligible after a full week of unpaid wages and then they'd have to give this money back. the treasury talking about the debt ceiling today and overall effects on markets. we've seen some credit spreads rising, some interest rates going higher.
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we're seeing something in the market. so these are the things the treasury is warning about. these are the sort of economic numbers we're triying to put on not just the shutdown but the effect on sentiment has a real economic impact. >> and a note we should mention in the jobless claim series, which at least we will continue to get from the government, they're going to separately breakout those who are filing because of the shutdown, yes? >> that's right. and they'll file in maryland, washington, d.c. and they'll file all over the country. there are people all over the country that are federal employees and they will be eligible to some extent for jobless claims. a 0.2% hit in the fourth quarter, you probably get back all of it, if not most it have in the first quarter. >> did you not say after 12
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weeks? >> no, after a full week. >> excuse me. >> i was thinking about a question you asked earlier. to some extent the market seems to be treating this a bit like britain before hostilities actually broke out in germany but the treasury warning this morning there's a real storm coming. >> thank you, steve leaiesman, we await the president. wish we were playing some rem here. we'll be back after a quick break. at a ford dealer with a little q and a for fiona. tell me fiona, who's having a big tire event? your ford dealer. who has 11 major brands to choose from? your ford dealer. who's 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. i'm beginning to sense a pattern. get up to $140 in mail-in rebates when you buy four select tires with the ford service credit card.
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[ 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 ♪ rem says don't go back to rockville, but the president is anyway, about to give a speech
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from this construction site. >> in the moeantime, renting homes has long been a source of income for mom-and-pop businesses. now rising prices say it's time to get out. diana olick is telling us why. >> reporter: we've seen this huge jump in home prices, higher than anyone expected, over 12% from a year ago nationally, higher in markets in big investor markets. higher prices means the math doesn't work anymore. a great debate at a conference entitled -- many were there, oak
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tree. oak tree is getting out now on the public side, the reits are looking longer term. colony told me they don't see this as a trade but as a business. they're biograpuying over a tho homes a month. and they're buying homes from other investors who are getting out. >> if you get a reasonable cost of capital, both debt and equity, you can actually not only create a very attractive return on a current basis but in today's market, to your point, the house price depreciation that we think is still in the market is extraordinary. >> one source on the sell side who did not want to be identified tells me looking at the dismal data for household formation, jobs and consumer income, it seems pretty obvious
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2013 may be the peak in terms of price appreciation for the cycle. realtors said they expect prices to be flat next year, rental demand very strong. younger potential home buyers, they are not coming back to the market. >> i keep thinking of a john paulson who has a big structural bet on a seven-year recovery and trades reflecting that thesis across the board. >> you to remember this was a very long housing recession, seven years. you can't expect it to just come back in a year and be absolutely fine. there are still a lot of plays and a lot of money to be made in a stressed market. >> it was a big play on gold. >> and also shorted housing. >> let's get to rockville, maryland and the president. >> hello, everybody! good to see all of you. please, please have a seat. hello, rockville.
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let me start by recognizing three public servants who fight hard every day for maryland families and businesses. first of all, congressman chris van holland is here. congressman john head of the small business administration, gina huelet is here. and i also want to give a big thanks to your bosses, for being such gracious hosts. i had a chance to meet them at the white house. thank you. now i know where they got their good looks from because i had a chance to meet mom and dad and their beautiful families and so i'm so glad to be here. i had a chance to learn a little bit about their story. so when their parents brought them from portugal to america,
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almost 40 years ago, no one in the family spoke a word of english. but that didn't stop their father, manuel, and their mother al bertina from having a big dream, believing if they worked hard they could get ahead and even though they never had any schooling, maybe their daughters could go to college. maybe in america you could make it if you tried. that's what they believed. so they started their own construction company with a pick-up truck an a wheelbarrow. and when sedalia and natalia turned 14 they began to help, cleaning tools, translating documents, and they became the first in their family to go to college and after graduation they started their own business and later they bought the family business from their parents. so today, m. louise construction
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is a $60 million company with about 250 employees. [ applause ] and i understand you're opening your fourth office at the end of this month. so this story is what america is all about. you start off maybe you don't have a lot, but you're willing to work hard, you put in the time, opportunity is out there, and you're able to pass on an even better life to your family, your children, your grandchildren. and it's good news that after how hard the construction industry got hit during the recession, things are starting to get a little better. remember, it was just five years ago that our economy was in a free fall. businesses were shedding hundreds of thousands of jobs every single month and the recession ultimately cost millions of americans their
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jobs, their homes, their savings, everything they had worked hard to build. today, over the last three and a half years, our businesses have added 7.5 million new jobs. our deficits are falling, our housing market is healing which means construction is improving, manufacturing is growing, the auto industry is back, america is on pace to become the number one energy producer in the world this year. [ applause ] more small businesses have gotten loans so they can grow and hire just like this company did with the help of the small business jobs act i signed three years ago. so that's part of what allowed this company to grow. so we still have a long way to
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go. we still got a lot of work to dop. especially to rebuild the middle class, but we're making steady groegs. and the reason i'm here is, we can't afford to threaten that progress right now. right now, hundreds of thousands of americans, hard-working americans, suddenly aren't receiving their paycheck. right now, they're worrying about missing their rent or their mortgage or even making ends meet. we can all relate to that. imagine if suddenly you weren't sure whether you were going to get your next paycheck with all the bills that might be mounting up. well, that's what's happening right now to hundreds of thousands of americans across the country. companies like this one worry that their businesses are going to be disrupted because obviously particularly in an area like maryland, virginia, where there are a lot of federal
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workers, you don't know how that's going to impact the economy. veterans, seniors, women, they're all worrying that the services they depend on will be disrupted too. and the worst part is, this time it's not because of a once-in-a-lifetime recession. this isn't happening because of some financial crisis. it's happening because of a reckless republican shutdown in washington. we've all seen the offices locked down, the monuments closed, we've heard about services denied. we've heard about benefits that are delayed. but the impacts of the shutdown go way beyond those things that
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you're seeing on television. those hundreds of thousands of americans, a lot of whom live around here, don't know when they're going to get their next paycheck and that means stores and restaurants around here don't know if they will have as many customers. across the country, you got farmers in rural areas and small business owners who deserve a loan, but they're being left in the lurch right now. they might have an application pending as we speak, but there's nobody in the office to process the loan. the sba gives a billion dollars of loans a month to small businesses. a billion dollars a month goes to small businesses all across the country. right now those can't be processed because there's nobody there to process them. veterans who deserve our support are getting less help. little kids who deserve a head start, have been sent home from
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the safe places where they learn and grow every single day. and, of course, their families then have to scramble to figure out what to do. and the longer this goes on, the worse it will be. and it makes no sense. the american people elected their representatives to make their lives easier, not harder. and there's one way out of this reckless and damaging republican shutdown. congress has to pass a budget that funds our government with no partisan strings attached. [ applause ] now i want everybody to understand what's happened because sometimes when this gets reported on, everybody kind of thinks well, both sides are squabbling, democrats and republicans, they're always arguing. neither side is behaving properly. i want everybody to understand what's happened here.
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the republicans passed a temporary budget for two months at a funding level that we as democrats actually think is way too low because we're not providing help for more small businesses doing more for early childhood education, doing more to rebuild our infrastructure but we said while we're still trying to figure out this budget, we're prepared to go ahead and take the republican budget levels that they proposed. so the senate passed that with no strings attached. not because it had everything the democrats wanted. in fact, it had very little that the democrats wanted, but we said, let's go ahead and just make sure that other people aren't hurt while negotiations are still taking place. so that's already passed the senate. and we know there are enough republicans and democrats to vote in the house of
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representatives for the same thing. so i want everybody to understand this. there are enough republicans and democrats in the house of representatives today, that if the speaker of the house, john boehner, let the bill get on the floor for an up or down vote, every congressman could vote their conscience, the shutdown would end today. the only thing that is keeping the government shutdown, the only thing preventing people from going back to work, and basic research, starting back up, and farmers and small business owners getting their loans, the only thing that's preventing all that from happening right now today in the next five minutes, is that speaker john boehner won't even let the bill get a yes or to vote because he doesn't want to anger the extremists in his party. that's -- that's all.
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that's what this whole thing is about. we've heard a lot from congressional republicans the past couple days saying they don't want this shutdown. there's a simple way to prove it. send the bill to the floor, let everybody vote, it will pass, send me the bill, i will sign it, the shutdown will be over and we can get back to the business of governing and helping the american people. [ applause ] it could happen in the next half hour. national parks, monuments, offices, would all reopen immediately. benefits and services would resume again. hundreds of thousands of dedicated public servants who are worrying about whether they're going to pay the mortgage or pay the car note, they'd start going back to work right away.
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so my simple message today is, call a vote. call a vote. put it on the floor, an let every vidindividual member of congress make up their minds and show the american people, are you for a shutdown or not? if you're not for a shutdown you'll vote for the bill. if you're for a shutdown you won't vote for the bill. we don't have to twist anybody's arms. that way the american people will be clear about who's responsible for the shutdown. or alternatively, more hopefully, they would be clear that this is something that doesn't make sense and we should go ahead and make sure that we're looking out for the american people. it should be that simple. but as i said, the problem we've got, is that there's one faction of one party in one half of one branch of government that so far has refused to allow that yes or
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no vote unless they get some massive partisan concessions in exchange for doing what they're supposed to be doing anyway. in exchange for doing what everybody else agrees is necessary and they won't agree to end the shutdown until they get their way. and you may think i'm exaggerating but just the other day, one tea party republican called the idea of a shutdown wonderful. another said, that a shutdown is exactly what we wanted. well they got exactly what they wanted. now they're trying to figure out how to get out of it. just yesterday, one house republican said, i'm quoting here, because i want to make sure people understand, i didn't make this up, one house republican said, we're not going to be disrespected, we have to get something out of this, and i don't know what that even is.
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that was a quote. we're not going to be disrespected, we got to get something out of this, and i don't know what that even is. think about that. you have already gotten the opportunity to serve the american people. there's no higher honor than that. [ applause ] you've already gotten the opportunity to help businesses like this one. workers like these. so, the american people aren't in the mood to give you a goodie bag to go with it. what you get is our intelligence professionals being back on the job. what you get is our medical researchers back on the job.
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what you get are little kids back in the head start. what you get are our national parks and monuments open again. what you get is the economy not stalling, but continuing to grow. what you get are workers continuing to be hired. that's what you get. that's what you should be asking for. take a vote, stop this farce and end this shutdown right now. [ applause ] if you're being disrespected it's because of that attitude you got. that you deserve to get something for doing your job. everybody here just does their job, right? you don't -- if you're working here an in the middle of the day you just stopped and said, you know what, i want to get
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something, but i don't know -- i don't know exactly what i'm going to get but i'm going to stop working until i get something, i'm going to shut down the whole plant until i get something, you'd get fired. [ applause ] right? because the deal is, you've already gotten hired, you've got a job, you're getting a paycheck, and so you also are getting the pride of doing a good job and contributing to a business and looking out for your fellow workers, that's what you're getting. it shouldn't be any different for a member of congress. now, unlike past shutdowns, i want to make sure everybody understands this, because again, sometimes the tendency is to say, well, both sides are at fault.
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this one has nothing to do with deficits or spending or budgets. our deficits are falling at the fastest pace in 60 years. we've cut the deficits in half since i took office. and some of the things that the republicans are asking for right now would actually add to our deficits. seriously. so this is not about spending. this is not about fiscal responsibility. this whole thing is about one thing, the republican obsession with dismantling the affordable care act and denying affordable health insurance to millions of americans. that's all this has become about. that seems to be the only thing that unites the republican party these days. through this whole fight, they've said the american people
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don't want obama care so we should shut down the government to repeal it or delay it. but here's the problem. the government's now shut down, but the affordable care act is still open for business. so they're not even accomplishing what they say they want to accomplish. by the way, in the first two days since the new marketplaces, basically big group plans we've set up, first two days they've opened, websites where you can compare and purchase new affordable insurance plans, maybe get tax credits to reduce their costs, millions of americans have made it clear they do want health insurance. more than 6 million people visited the website the day it opened, nearly 200,000 people picked up the phone and called the call center. in kentucky alone, this is a state where i didn't win
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kentucky, so -- so i know they weren't doing it for me, in kentucky nearly 11,000 people applied for new insurance plans in the first two days, just in one state, kentucky. and many americans are finding out when they go on the website that they'll save a lot of money or get health insurance for the first time. so i would think that if, in fact, this was going to be such a disaster that the republicans say it's going to be, that it was going to be so unpopular, they wouldn't have to shut down the government. they could wait, nobody would show any interest, like two people on the website, and, you know, everybody would then vote for candidates who want it to repeal it. it's not as if republicans haven't had a chance to debate the health care law. it passed the house of representatives, it passed the senate, the supreme court ruled it constitutional. you remember all this.
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last november voters rejected the presidential candidate that ran a platform to repeal it. so the affordable care act has gone through every single democratic process. all three branches of government. it's the law of the land. it's here to stay. i've said to republicans, if there are specific things you think can improve the law to make it even better for people, as opposed to just gutting it and leaving 25 million without health insurance i'm happy to talk to you about that, but a republican shutdown won't change the fact that millions of people need health insurance. and the affordable care act is being implemented. the shutdown does not change that. all the shutdown is doing is making it harder for ordinary americans to get by.
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harder for businesses to create jobs at a time when our economy is starting to gain traction again. you've heard republicans say that obama care will hurt the economy but the economy has been growing and creating jobs. the single greatest threat to our economy and businesses like this one, is not the affordable care act, it's the unwillingness of republicans in congress to stop refighting a settled election or making the demands that have nothing to do with a budget. they need to move on to the actual business of governing. that's what will help the economy. that's what will grow the economy. that's what will put people back to work. and more than that, house republicans need to stop careening from one crisis to another in everything they do. have you noticed that? since they've taken over the house of representatives, we have one of these crises every
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three months. have you noticed? and you keep on thinking this is the last one, they're not going to do this again and then they do it again. i know you're tired of it. i'm tired of it. it doesn't mean they're wrong on every single issue. i said i'm happy to negotiate with you on anything. i don't think any one party has a monopoly on wisdom. but you don't negotiate by putting a gun to the other person's head. or worse yet, by putting a gun to the american people's head by threatening a shutdown. and by the way, even after congress reopens your government, it's going to have to turn around very quickly and do something else, and that's pay america's bills. i want to spend a little time on this. it's called -- something called
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raising the debt ceiling and it's got a lousy name so a lot of people think, i don't know, i don't think we should raise our debt ceiling, sounds like we're raising our debt. but that's not what this is about. it doesn't cost taxpayers a single dime. it doesn't grow our deficits by a single dime. it doesn't allow anybody to spend any new money whatsoever. it's not something that raises our debt. what it does is, allow the u.s. treasury, the u.s. government, to pay the bills that congress has already racked up. i want you to think about this. if you go to a restaurant, you order a meal, you eat it, maybe you have some wine, maybe you have two glasses of wine, great meal, and then you look at the tab, it's pretty expensive, and you decide, i'm not going to pay the bill. well, you're not saving money.
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you're not being frugal. you're just a deadbeat. right? if you buy a house, and you decide, man, this month, yeah, i'd rather go on vacation somewhere, so i'm not going to pay my mortgage, you didn't just save yourself some money. you're just going to get foreclosed on. so you don't save money by not paying your bills. you don't reduce your debt by not paying your bills. all you're doing is making yourself unreliable and hurting your credit rating. and you'll start getting those phone calls and those notices in the mail. and the next time you try to borrow, somebody's going to say, no, because you don't pay your bills, you're a deadbeat. well the same is true for countries. the only thing that the debt ceiling does is to let the u.s.
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treasury pay for what congress has already bought. that's why it's something that has been routine, traditionally it's not a big deal. congress has raised it 45 times since ronald reagan took office. this is just kind of a routine part of keeping the government running. the last time the house republicans flirted with not raising the debt ceiling, back in 2011, some of you remembers this, our economy took a bad hit, our country's credit rating was downgraded for the first time, just like you'd be downgraded if you didn't pay your mortgage. this time, they are threatening to actually force the united states to default on its obligations for the very first time in history. now you'll hear john boehner and mitch mcconnell and these other republicans say we don't want to default, but everybody knows
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it's written about it in all the papers their basic theory okay, if the shutdown doesn't work, then we are going to try to get some extra concessions out the president, we'll put like a long laundry list, the things that we want that we can't get passed on our own and if we don't get it we'll tell him we don't -- we won't vote to pay the country's bills. we'll let the country default. i'm not just making this up. i mean it's common knowledge. every reporter here knows it. and i want you to understand the consequences of this, as reckless as a government shutdown is, as many people as being -- as are being hurt by a government shutdown, an economic shutdown that results from default would be dramatically worse. in a government shutdown, social security checks still go out on time. in an economic shutdown, if we
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don't raise the debt ceiling, they don't go out on time. in a government shutdown, disability benefits still arrive on time. in an economic shutdown, they don't. in a government shutdown, millions of americans, not just federal workers, everybody faces real economic hardship. in an economic shutdown, falling pensions and home values and rising interest rates on things like mortgages and student loans, all those things risk putting us back into a bad recession which will affect this company and those workers and all of you. that's not -- that's not my analysis. that's every economist out there is saying the same thing. we've never done it before. the united states is the center
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of the world economy. so if we screw up, everybody gets screwed up. the whole world will have problems. which is why generally nobody's ever thought to actually threaten not to pay our bills. it would be the height of irresponsibility. and that's why i've said this before, i'm going to repeat it. there will be no negotiations over this. the american people are not pawns in some political game. you don't get to demand some ransom in exchange for keeping the government running. you don't get to demand rapsome in exchange for keeping the economy running. you don't get to demand ransom for doing your most basic job. and the sooner that the republicans in congress heed the warnings, not just of me or democrats like chris and john, but heed the warnings of the
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chamber of commerce and ceos and economists and a whole lot of republicans outside of congress, they're all saying, do not do this. they're all saying to congress, do your job. the sooner you do your job the less damage you'll do to our economy and to businesses like this one. pass a budget, end the government shutdown. pay our bills. prevent an economic shutdown. just vote and end this shutdown and you should do it today so we can get back to growing this economy, creating jobs and strengthening our middle class. let me close by sharing a story i heard as i was getting ready to come here today. many of you already know it. two years ago, a mulch factory next to here, main equipment
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storage facility caught fire. and most of the company's equipment was destroyed, causing millions of dollars of damage. but even while the fire was still burning, dozens of employees rushed over to the facility and tried to save as much as they could. some of you were probably there. when they finished cutting fire lines and spraying down the perimeter of their own property, they went over to help their neighbors. and afterwards even though all the employees here are on salary, even though the company had take an big financial hit, they paid everyone overtime, and along with each check they included a personalized note saying just how much they had appreciated the efforts of the workers. sedalia said, everybody says the biggest asset to a business is employees, some people mean it, some people don't, we actually
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do. so this company right here is full of folks who do right by each other. they don't try to see if they can work every angle. they don't lie about each other. they don't try to undermine each other. they understand they're supposed to be on the same team. you pitch in, you look out for one another. when somebody gets knocked down, you help them back up. you don't ask what can you get out of this? because you know that success doesn't depend on one of you, it depends on all of you working together. well, america's no different. i see that same spirit in so many cities and towns that i visit all across the country. it is alive and well. all as cross the country. it's alive and well in this community. where restaurants and businesses are rallying around the regulars
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and they're looking out for all the dedicated public servants who have been furloughed. restaurants are saying you know what, while you're on furlough, come on, we'll give you a burger. we'll give you a meal. we'll help you out. that's the american ideal. we're working together. looking out for one another. meeting our responsibilities. doing our jobs. thinking about future generations. and that's why i believe ultimately reason and common sense will prevail. that spirit at some point will infiltrate washington as well. because i think the american people are so good and so decent, they're going to get better behavior from their government than this. and we'll once again make sure this is a country where you can make it if you try. thank you, everybody. god bless you.
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god bless the united states of america. >> that is the president in rockville, maryland, once again trying to place the blame for the government shutdown scarily on the shoulders -- squarely on the shoulders of speaker boehner. fairly fired up president, saying there will be no negotiating over the debt ceiling and stocks did fall close to their lows of the day. the dow right at 15,000 on the nose. the s&p is below 1679. a level that a lot of traders had been looking at as potential support, kelly. we were told by the way the pool report that the president's motorcade on the way to this event passed by some folks with signs that read, rough week, question mark. with that we'll bring in our chief washington correspondent john harwood. your take after hearing the president. >> i think he's delivering a message that we're going to hear repeatedly between now and october 17th until the debt ceiling gets raised. he always feels energized and better when he gets outside of
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the white house complex and downtown washington even though it didn't go very far away to rockville, maryland. a friendly district for him. chris van hollen the democratic member of congress, safe member of congress there, so he had a receptive audience but he's trying to frame his argument in a business context he thinks republicans can relate to. he invoked the u.s. chamber and, you know, yesterday he was meeting with wall street officials, now he's talking about main street businesses. and i think he's going to keep pounding that and count on the fact as public opinion polls come in republicans will feel the pressure and break and reopen the government, raise the debt ceiling and then he will be willing to negotiate at that point. >> you made the point in the last hour how the conversation appears to be maybe less about the affordable care act and more about spending in this country than it was say 48 hours ago. does that change the picture overall? >> yes. i think that's bullish for the
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idea of a deal, but you also have a situation where republicans need to decide what they want. let's just review where we've been on budget issues over the last year or so. you had the sequester cuts which republicans embraced and when they implemented their budget and then started trying to pass appropriation bills this summer republican members killed the bills because they didn't spend enough. a transportation bill that was going on the floor and members looked at oh, this is the level we have for sequester and these different projects got canceled. i'm not going to vote for that bill. they pulled the bill off the floor. the reason for that is, that republicans recognize, as many democrats do, they've hit the end of the road on cutting discretionary spending. what they need to do and the rationale place for the budget discussion to go is on the long-term entitlement problem n insolvency of medicare and social security. however those are popular programs so republicans have not
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been very aggressive as democrats haven't been, about cutting those programs. so in theory, if you're making the anti-spending argument and you're a republican, you need to go to entitlements and that's risky and not clear that republicans want to go there. >> thank you very much for putting that speech in some context and also just where we right now in the narrative of this entire event. john harwood in washington. there's a look at the markets right now. dow down 125, s&p down 14 ands the nasdaq down 30. michael is the chief u.s. economist for jpmorgan, gus is an economy for pnc. i know you don't cover stocks but some might argue the bears are feeling comfortable. michael, are you beginning to have a sense this is going to have a real effect on q4? >> well the shutdown we've estimated for each week it goes on takes about a tenth of a percent off q4 gdp. so it will have an affect and that affect would get mageny feud if we go into the debt ceiling negotiation and have the
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same sort of financial turmoil as we did in 2011. >> mike, can you give us a sense of what the estimates are for fourth quarter growth and how much momentum you're looking at as we start to look at the projections for 2014? >> right. we're looking for 2.5 in fourth quarter growth. we'll reconsider that as the shutdown continues. we do feel like the momentum going into the fourth quarter generally looks pretty decent. most of the manufacturing surveys look upbeat, jobless claims continue to move down. i think before this all happened we were feeling pretty good about the chances for fourth quarter. and for next year, i think we're generally also relatively upbeat given that we should have a lot less fiscal austery next year than this year. we have to wait to see how this plays out. >> gus, is there a way to quantify how much of a drag, what's happening in washington, everything from the sequester to the shutdown is having on the economy and where we might be without it? >> well, the congressional budget office has said that right now, the tax increases
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that took effect at the beginning of 2013, the spending cuts under the sequester they've slowed growth by about 1.5 percentage points. the economy would be growing faster, closer to 3% without all this fiscal drag. that didn't include the effect of the shutdown. as michael mentioned the longer the shutdown goes on, the more the drag on growth. it's not a significant impact right now, but if it persists it will be a factor for the fourth quarter. the big question what happens with the debt limit. if congress doesn't raise the debt limit, the u.s. doesn't meet its obligations that's disastrous for the u.s. economy. >> can you spell out, gus, your biggest concern about what happens if we reach the debt limit specifically. >> that's the problem. we don't know what will happen because we've never been through this before. we see interest rates across the board move much higher so that kills the recovery in housing, hurts auto sales, business borrowing for investment. the consequences would be unprecedented. >> michael and gus, this morning as we await carl, the verdict
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does the shutdown affect the vetting of your nominee. >> this is one of the most
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appointments i make. no, it's not slowing down the vetting. it's important to make sure we're investing in the things that will make the economy grow. this constant governing from crisis to crisis, we have to stop doing that. >> are you going to watch that ticker as we get closer to october 17th? >> i tend not to make judgments on the base of the stock market. welcome back. nonwashington news, as we get closer to twitter's ipo, we want to take a look at the company's shareholders. we know some of the big ones, mutual funds like black rock and t roe price. who else has a piece of the company? kayla joins us now with more on that. >> twitter's early days saw an influx of capital and high net investors pouring money through the company. many of those tapped have been widely held mutual funds even if they've ranged in the amount they've held. here's who ended up with varying pieces. according do regulatory filings, black rock around $100 million
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in shares when counting its january investment of 80 million it bought from twitter employees. t roe surprise, scooping up shares, and as of june 30th, $82.7 million in its growth stock fund. and quarterly reports morgan stanley show the bank across its small company growth and university institutional funds had some 40 million dollars in twitter shares at the end of june. now, those are the big wigs, but insurers and pension funds have been getting a piece of the prize. aig's funds, snapped up in '09, same year john hancock funds bought shares worth $1.6 million. ing and t roe price, $2 million, and met life had an additional 2 million as well. then there are the big players and we mean bit players. penn mutual $402,000. thigh vent capital, and delaware's cap fund $128,000.
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it's hard to say how easy it will be for the public to get a piece of the deal. the facebook ipo was criticized how much stock was sold by sophisticated investors to main street and twitter will likely play this card close to the vest. for those investors that want access to twitter shares, once we know more about the company you're likely going to have to do that through mutual funds, how large or small the holdingsings may be. back to you. >> all right. kayla, we'll see if their appetite is stronger now than it might have been after the initial facebook launch that didn't go so well. kayla tausche at headquarters, thank you very much. bob pisani with a look at what's moving at the big board. >> triple wham my that hit the stock market. three separate events. the dow jones industrial average and what happened. first thing that we had, we were weak going in. right about here a poor ism services report. the employment component was lousy. the overall report lousy. that didn't help.
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after that an apocalyptic language from the treasury department about the consequences of the debt default and then president obama speaking basically coming out and saying i'm not negotiating, i'm not negotiating on the debt ceiling, on the continuing resolution. we will talk about the budget, but basically no negotiation. we're sitting at the lows for the day, a triple whammy. some of the language, flame throwing language from the treasury department. they described the consequences of a debt default, it would be catastrophic, used the word twice in the press relief, unprecedented, a self-inflicted wound, ouch, and concluded the u.s. economy could be plunged into a recession worse than any seen since the great depression. pe forget to add the earth would spin off its axis. amused commentary about this but you get the point. pretty flame throwing commentary. some sectors of the market move ing here. housing stocks, reads, utilities
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to the downside. defense names, second day in a row, moody's issued a commentary saying defense would be vulnerable from a prolonged shutdown from the government. usual big names all down about 2%. and kelly, you were talking earlier about some companies commenting about unusually high levels of warnings or commentary on the third quarter earnings season here. i just want to point out we are now in the third quarter and normally what happens is, once you get the final estimate and it's 3.3% earnings growth for the s&p 500 for this quarter, usually it will beat by two to three percentage points. usually we're going to end up here almost certainly, 6.3%, somewhere around their earnings growth. the disappointment is there but we still end up beating every quarter once we get there. the lower and then the -- they end up beating. >> and they did last quarter. probably will as you say this time around. thanks, bob. >> all right. meantime as you know, it's day three of the government shutdown and also the third day since health exchanges went live.
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we've seen glitches due to heavy traffic in the first two days but how are things running on day three. bertha coombs is live in pennsylvania today with more. hey, bertha. >> you know, carl, here at the universal health clinic in ambler they would like to see more people get enrolled for hospitals, they want to see that happen so they have less bad debt. but the challenges to getting on the site continue, particularly in states like pennsylvania that are on the federal exchange., they have seen more than 6 million unique visitors since they started up on tuesday. however, with the interactions we've seen with the users with them on twitter, they are still having problems with delays still having problems, with drop down menus and a number of things timing out while they're on the site. officials say they are working on it. maryland meantime yesterday, i spoke with rebecca pierce the executive director there, she
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believes that hopefully things will be better today. they have been working with their vendor to try to ameliorate a server issue. they're trying to reconfigure it and hope that they make more progress overnight. new york did overnight overnight and say they doubled the capacity and added more servers and also modified some of their software. california updated overnight. they told us they had about 6 million unique visitors. now they say it's a lot less than that. some of the numbers that we're hearing we need to take with a grain of salt in the early days. back to you. >> bertha coombs for us this morning in pennsylvania, thank you very much. the question is what happens if obama care actually works? in an article in "the wall street journal" this morning davids weal poses that question. let's bring in him, economics editor with the "wall street journal." good morning. >> good morning. >> you know, a lot of people were saying wait a minute, "the
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wall street journal" thinks obama care can work, explain about the argument here we should note is not an op-ed, not an editorial piece. this is your column taking a look the at the fact that these exchanges ironically are the one thing up and running today. >> exactly. i don't speak for "the wall street journal". i only speak for myself like fed bank presidents always say. here's the deal. they're off to a rough start. they were overwhelmed. the software wasn't ready. but let's say that six months or nine months from now they're working. people are comparison shopping for health insurance, really for the first time. that could really change the way people buy health insurance. while these public exchanges are getting all the attention, there are a number of companies, walgreens, ibm, darden restaurants, turning to private exchanges to do much the same thing. to get people to shop for competing insurance plans because they think that might be the trick to bringing down
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costs. >> you make some comparison to part d but turn around and say the political opposition is so much better organized to this than it was to part d, what's the effect of that? >> right. that's great question. so part d the medicare prescription drug plan, works like orbitz or amazon. pick your plan, a lot at first, no one talks about it because it works pretty well. you're correct to point out there was worry about part d but wasn't this organized political opposition. that could make a difference because if young healthy people don't show up for the exchanges and only sick, uninsured people show up, then the economics of this thing don't work. so that's why these -- the number of people trying to log on is a sign that in that particular battle, the proponents of obama care seem to be winning. the rhetoric hasn't scared people away from going to the website. >> regardless of what happens over the next, three, six, nine
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months that the exchange model the private sector are using is likely here to stay? >> i think it's here to stay provided that they get the software glitches, provided that insurers show up. some big insurers stayed away and they get a big enough pool of people. what if. a big what if. but we know that all this controversy, political controversy today, will fade just like the previous controversies over other shutdowns. once these things get institutionalized they're really hard to undo, particularly if they work and people get used to them. >> and we'll wait for the numbers as well to indicate that demand. david from "the wall street journal" this morning, thank you very much. >> you're welcome. >> meantime the federal government is not the only thing shut down these days. new york's famed carnegie hall had to cancel its season opening concert because of a labor dispute. scott is at headquarters with that story. a lot of jokes about the fat lady sippinging. >> how do you get to carnegie
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hall, same way as always, if you get there today here's what you'll find. picketers in front on west 57th street in front of the hall. members of the international alliance of theatrical and stage employees. look at them live. the union has been in contract talks more than a year and one big area of dispute is whether the union has jurisdiction over a new education wing set to open next year. carnegie hall says if the new wing is unionized funds that should go towards education, go to pay union stage hands. last night's convert supposed to feature the philadelphia orchestra which emerged from bankruptcy last year. the opening night gala dinner benefiting the education programs did go on as scheduled at the waldorf astoria. carnegie's website says the rest of the season, including tonight's concert by the american symphony orchestra, remains on schedule at least for now, but everything it says is pending resolution of the job action. >> scott, thank you, sir.
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the fight over the government shutdown continues in washington. if it continues we'll miss out on a key economic indicator. everyone knows what it is, the monthly employment report. supposed to be due out 8:30 tomorrow morning. who who needs the government's numbers. trim tab is here to tell you how many jobs were added in september in just a moment. we'll be right back. vered call s to generate income? with fidelity's options platform, we've completely integrated every step of the process, making it easier to try filters and strategies... to get a list of equity options... evaluate them with our p&l calculator... and execute faster with our more intuitive trade ticket. i'm greg stevens, and i helped create fidelity's options platform. it's one more innovative reason serious investors are choosing fidelity. now get 200 free trades when you open an account. at a ford dealer with a little q and a for fiona. tell me fiona, who's having a big tire event? your ford dealer. who has 11 major brands to choose from? your ford dealer. who's offering a rebate? your ford dealer. who has the low price tire guarantee,
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coming up on the half, the president says wall street should be concerned, so what do our traders think about that with stocks selling off hard. small caps, big gains, how much more can this record-setting run in the russell 2,000 go? the latest twist in the apple/icahn battle at the top of the hour. >> sounds good, scott, thanks. it is official the department of labor says there will be no jobs report tomorrow but trim tabs is open for business. rick santellis has that. hey, rick. >> yeah. trim tabs is open for business and we have the man here. thank for taking the time on this thursday morning, charles. >> good morning to you or good afternoon wherever you are. >> all right. so put a face on it. we don't have the number tomorrow. we did have adp yesterday, the employment component of ism
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nonmanufacturing today and my guess is the deterioration isn't probably under the calendars of d.c. what do your buddies, what are everybody in the private sector looking at and handicapping with jobs currently? >> we saw a little pick-up in september at about 150,000 some odd from very low number in about 50,000 or so, but the most important thing is, year to date, our numbers, which are based upon wages and salaries as evidence by withholding collections, with wages and salary, jobs have been averaging under -- about 115,000 a month year to date. that compares to 150,000 a month last year. in other words on achblg this year having slower growth than last year. higher taxes that took effect the start of this year. yes, you had a little boom because of lower mortgage rates and auto sales but housing has
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turned down with higher rates, auto sales have peaked and we're seeing sales year over year lower so there's no real engine of growth here. higher taxes, we have a government much too big, maybe they should stay shut. >> you know what, whether it's weather or the shutdown, everything that deteriorates from this point forward, of course, there is a giant thing to point to. >> right. >> i don't know how good that's going to work out. let's go a different direction, let's look at flows. one of the stories has been wow, there's inflows for the first time since july and some of the bond funds what would you attribute that to, charles? >> we're seeing a huge inflow into corporate bond funds, outflows from treasuries. rates went down, prices went up, when the feds said it was not going to taper, rates went from 3% to 2.6. >> the correlation of those inflows coordinate from a
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timetable of september 17th and 18th? i guess that's really the crux of my question? >> over the last four weeks we've seen about 5, 6 billion go into corporate bond funds, both -- >> how much in the money markets? >> a lot more into money markets. >> we're out of time but i still find it all so fascinating that investors continually look at money markets as the place to be. >> could i just say -- >> bill auction wasn't good. >> real quick. >> happy birthday to trim tab's flow tf we're up 60% versus the dow 38. >> we'll see next week how that looks. thanks, charles. back to you, carl. >> i wish the dow were up 38. thanks a lot. down 167 points. 40 points away from a 5% correction from the all-time highs. we'll see what the afternoon brings. you probably heard of a choose your own adventure book. how about choose your own investment theme. motif allows you to create your
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today squawk break through offers a new twist in on-line stock investing. motif lets people buy and create collections of 30 stocks or etfs around one investment theme called a motif. 15,000 have been created by the motif investing community.
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beginning today motif investors can make money when they create and share motifs on-line. we have the co-founder and ceo and he joins us here. >> thanks for having me again. >> how you make money on something you build, what could i possibly do and how much could i make? >> you can build a motif, put an idea to work, put it out there on the web, on the twitter you're a prolific tweeter, any time someone buys that motif you earn a $1 royalty payment. if i build a motif on obama care or repeal obama care, my the want to all the 30 stocks you put together, buy custom version of that or i might have an ongoing rebalance where i change it every week, any time any of those activities happen you collect a royalty payment. >> there's something called chinese solar, that makes sense. but another one called that new car smalell? >> those are new car companies. we're trying to make the ideas
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intuitive and easy to understand. these are some of our top performer motifs. shale oil, for example, it's hard to invest in a pure play approach in u.s. shale oil. this gives you exposure to the companies. >> what's interesting it's effectively micro e it tfs, do you know what i mean? did you intentionally almost create a similar sounding thing. >> it's better, a customized no fee etf, we're not a fund so you own the underlying securities so you can put as little as two $50 to work on 30 stocks or million dollars, only cost you $9, purchase all 30 stocks with a single click. >> don't have to worry about a premium. >> some of the big problems of liquidity, transparency not understanding. >> you're going to disrupt them. >> you have a couple things built. obama care motif and they repeal obama care motif. >> the repeal obama care motif a nice way to play. unlikely we're going to get a full repeal but even a repeal of the 2.3% excised tax, the blue
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line there, under performing the s&p by about 4 points right now. if there were a repeal of that, these companies, the device companies, assisted living companies will do well. the obama care motif benefits from not only the additional of 30 million additional insured but also the pressure to contain costs so think of generic drug companies, pharmaceutical benefit companies, electronic exchange, electronic records, all of them are in the motif and this is beating the s&p year to date by 14 points. >> couple people responsible for most of the creation of these things? >> it's quite remarkable. we've got individuals, financial advisors, ibd is launching their 25 in partnership with motif. a lot of different stakeholders. >> cnbc one in there. >> looking forward to that. >> thank you for coming by. >> thank you. >> motif investing. >> the market sell-off is accelerating, the dow down about 160 points, the s&p 500 is off more than 1%. we're watching the ten-year
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welcome back. lots of red on the screen today but pot belly hoping for green tomorrow when it goes public. phil lebeau is at the original
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pot belly store in chicago with more on this one. hopefully a sandwich, phil. it's near lunch time. >> kelly, i have the wreck right here. the signature sandwich from pot belly. many people familiar with the wrapping on the outside of the sandwich, made fresh and hot. going public tomorrow, prices after the bell today, the range the 12 to $13 range above what street was expecting. the ticker pbpb. when you look at the other stocks this year, it's been all over the place. you have some like chipotle, others like noodles, depending on the stock it's either been off to the races or it's been struggling a little bit. pot bellies is excited with 295 stores in the midwest and east coast there is a lot of growth potential and i'm glad to have this assignment. any time i can get a wreck in the middle of the day, no the a bad day. back to you. >> oh, yeah. we've been watching mcdonald's stock getting close to lows, lowest levels in a very long time, maybe based on competition
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from pot belly. let's switch gears, talk a little tesla. i'm sure you've seen the notes out of deutsch trying to defend the company in the wake of the fire. what's your take? >> i think most of the analysts are reiterating their buy ratings for two reasons. the fire caused by hitting a metal object and contained to the battery department. when you take a look at the overall fire rates this is the first one that's been reported with a tesla. about 187,000 gasoline powered car fires every year. look at the ratio and a lot of analysts are saying spectacular pictures no doubt, but in the end it will not have a long-term impact on tesla. >> phil lebeau in chicago, we'll see what pbpb does tonight. we know what they do at lunch time. jealous of the wreck. phil, thanks a lot. >> i could use a pbj right now. >> the tesla chart hard separate from the market. the dow down 180.
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a lot of people may be selling some of the names that have treated them well. tesla one of those. >> interesting to watch the market falling steadily throughout the last 30, 45 minutes. just looking for some kind of floor. maybe we'll get it in the next hour or two. >> toss it over to scott and the "halftime" back at hq. >> thanks so much. welcome to the halftime show. here's what we're falling, small the new big. the russell 2,000 on pace for its best year in a decade but after rising 28% this year, are there any values left? call of the day. what do big buy calls for coach and tiffany mean for the stocks with the holiday shopping season looming. is retail going to come through? we begin today with the latest out of washington where it's day three of the government shutdown, the president telling cnbc that the markets should be concerned and today they definitely appear to be. it is halftime. let's play the action and get to the stalemate in d.c. john harwood, spoke with the president yesterday, he is live with the latest on mr. obama's message an


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