kernen and andrew ross sorkin. among the market stories we're following, china is front and center. new numbers out show manufacturing there contracted for the 11th straight month. even though activity is up slightly from august. some say that the news spurs hope that a slowing chinese economy night finally be stable i'd i stabilizing. jim chanos is best known most recently for being short on china. jim will be joining us at 7:00. we have a lot to talk about with him. also in washington today, man versus machine. there is an important hearing on high frequency trading. a senate committee will ask what the rules of the road should be. rhode island senator jack reed will join us with a preview. that's at 7:30 eastern time. and in tech news, if you are one of millions who pre-ed onned an iphone 5, you're very likely going to have it in your hands in the next 24 hour, but a few lucky reporters already have had a chance to play around with the

new device. one will be joining us on set with the phone at 6:40 eastern time. so we'll get our first look up close and personal today. "usa today" ed baig will be here at 6:40. plus the list of the most powerful women in business this morning. patty sellers will join us at 6:20 with a first on cnbc look at who matt cut. and made the cut. and the ceo of bojangles will be here at 6:50. rumor has it he's working on a new menu item named after squawk. so stay tuned for that. andrew has this morning's top headlines. >> here's some of the news this morning. bank of america reportedly accelerating a broad cost cutting plan. "wall street journal" now saying that the firm has set a target of shedding 16,000 jobs by the year's end. document given to top management is now also suggesting a

refocused b of a will have fewer branchs and smaulter mortgage operations. it actually will be smaller than citigroup and wells fargo. in other banking news, financial services industry group is warning that u.s. banks, brokerages and insurers need to be on high alert for cyber attacks. cautious coming after bank of america and jpmorgan experienced unexplained outages on their public websites. the problems came after an unidentified person posted threatening to attack b of a and the new york stock exchange as a first step in the campaign against u.s. companies. and in global market news, spain comfortably selling $6.2 billion of bonds today passing an important test of appetite for madrid's debt. yields falling sharply. this is happening as doubts remain of course over how long spain can make it without european aid. becky. let's get at some other headlines here. the cftc reviewing 46 whistle blower tips through august of this year. that's just a fraction of the volume of tips flowing in.

dodd-frank required both agencies to set up whistle blower programses to try to help them fight financial fraud. lloyd blankfein argues tougher regulation of financial institutions and higher capital ratios at banks are necessary in the aftermath of the global financial crisis, but he acknowledges that such safe guards carry costs. speaking to a room bankers and lawyers in toronto, blankfein says he sees financial regulation evolving now just as it did in the aftermath of the great depression. >> did you see this speech? >> no. >> what you would appreciate is what i thought the line of the speech, he said i'm not a socialist. he's a democrat. and maybe he's up in can made today, so he felt like he had to talk about it, but he talked a lot about -- >> why split hairs? >> no, he talked a lot about the redistribution of wealth. he said he's not a reds tri

redistributioni redistributionist, but -- >> oh, really? i see when he's walking in to his central park mansion, he looks very uncomfortable to me. he just looks uncomfortable. and the one out in the hamptons and everything he else. who is on the list of women? do we know? >> i know. but i don't think we're allowed to say. >> you had the early call on this. you pointed out not a lot going on today. have you been on drudge? >> no. andrew gave me a heads up, though. >> is lady gaga -- >> she's not in the top ten. >> she's not? pound for pound, she should -- >> that was a very lovely pun. >> the most amazing thing, they have the before stuff, too. and full figured gals, i love them as much as anybody, but you

might -- i don't know, modify -- you might not wear the same thing that you wore when shf shf. >> she's very successful. >> but they are the same outfit. because she's like -- she's going to rep through the seams of this thing. not that there's anything wrong with that. >> given her success, she could update her wardrobe. >> is her voice more fuller and you powerful? >> they have no idea what we're talking about. >> i said drudge. you just have to look. be prepared. >> full service. >> you said -- how long did you say you spent looking at those pictures? >> i look at the news before the show, and i said there's not a lot of news. >> you spent a half hour looking at those pictures. >> i don't know a full half hour. >> a full figured half hour. anyway, i'm -- i'm saying i got nothing against -- >> i'm not sure if she's just smoke -- she's not just smoking

cigarettes. and that can make you hungry. >> in the past, i mean, aim not saying -- i'm just saying that she's changed quite a bit. >> she's had a transformation. >> exactly. and i would -- adelle was being a successful. she wouldn't wear the same stuff -- >> and the white coat that she has on -- >> that's probably pre. that's long before. yeah, that's way before. >> the pre-show, yeah. that was wednesday. anyway -- let's get a check on the markets. futures, yesterday you saw muted gains for the stock market. this morning you do see some slight declines. >> oh, it is. lagada holdings limited.

>> is that related? >> i don't know. >> dow futures down about 36 points. the real story yesterday was what happened with oil prices. they dropped pretty drastically and it came after a combination of factors. first of all you had the eia report that shows there's a lot more supply than people had been anticipating. there was talk out of saudi arabia that they may be pumping more and there was talk out of the white house that they could tap the spr. >> i don't believe any of that was really what was behind this. >> what do you think it was? >> i believe we're planning a day long special on the oil shock running today. >> is that today? >> the o only reason i know, i s doing -- i was watching what was on before and i saw this huge all day oil shock and then the first thing i said out of my mouth is oil had the bigge eges drop to a six week low. and i realized the timing. by the time you get around to

covering it -- >> we have a graphic. >> we'll be using it all day long. and we can say that drop was shocking. it was shocking. that drop was shocking. that was a shocking drop. anyway -- >> back at $91 and change. take a look at the ten year note. right now the yield on this could continue to drop again yesterday, you'll see the yield at 1.742%. the dollar on the other side of things right now you'll see is up against the euro once again and finally you see the and you are row back below 1.30. again, though, that has been massive gains ever since we first heard about qe-3. gold prices sitting around 1775. actually back up at 17 -- back down to 1760, down about $11.70. . >> now time for the global markets report. we'll head across the pond to kelly evans in london.

good morning. >> good morning as i hustle over here to our daimler chart. i want to open up by showing you, first of all, what's p happening with this company. shares are down now 2.8%, but we're down better than 3% just a few minutes ago. daimler coming out and saying that its mercedes-benz unit this year will not match the 5 billion euros in earnings before interest and taxes that it earned last year. and second half will fall short of the first half. ceo said it's an increasingly difficult environment in europe, competitive pressures in china are increasing significantly and it's planning restructuring to boost sales and earnings. you can see again the impact here. daimler shares now down about 2.8% in frankfurt trade. let's put it in context because it is a morning where we're seeing pressure across the market. here the xetra dax down and a half a percent. daimler one of the companies weighing on that. but certainly sentiment across the board.

we got a bufshnch of activity figures. france came in weak than expected. ibex 35 down 1%. even though spain able to raise money in an auction and we can show you what's happening in the bond space. not doing much really to turn around sentiment because of course we saw spain issue three and ten year debt. people showed up for it. the borrowing costs were lower than last time around. but still perhaps too high. take a quick look, though, at the context here. u.s. german bunds getting a bid this morning. seeing a selloff in spain and italy. so investors are rotating kind of out of risk. the yield for the ten year in spain, 5.75%. italy back over the 5% level. and if we can key in on spain and just show the broader curve here, over here we're seeing again kind of a selloff in the ten year. 5.75%. not too much of a change relative to earlier this morning. at that auction spain paid 5.7%. it was 6.7% last time around.

the two year has been interesting to watch. this the price fluctuating up and down as investors try get a sense of whether this somewhat lackluster demand at the three year auction is a worry point or not. 3.1 3.18% is the level for the two year. so still seeing pressure there despite the ecb's bond buying plan. there's a sense of whether the market still will have to push ecb to ask for that. and again, and i know becky mentioned this, but take a look at the commodities wall. we're seeing pressures still across nymex and crude this morning. consistent with the broader risk off theme and markets almost 1% down for brent, over 1% for nymex which is at 9103. and again, you have to square this with what a lot of people in market are saying that we're seeing all the central bank action perhaps keeping a bit under gold, although pot this morning by the way. down 0.7%. but broadly speaking making gold perhaps more attractive than some of the more industrial commodities like oil, like copper because there's just not

that much fundamental strength in the economy. sure enough, citigroup among the firm that's lowering its 2013 view. it sees global growth of 2.6% down from 2.8%. and given the strength we've seen over the last couple years and where we thought we'd be, 2.6% just ain't all that good. back over to you. >> ain't ain't a word. maybe over there. it is in the oed, you're right. you are probably now using the oxford english dictionary. i can see it p. it's overcome you. madonna started talking like that. >> exactly. i've been told not to come back with a madonnaesque faux british accent. p. >> you got do it because you're sbigts entitled. when you take out all the stuff that builds up in your kitc is it rubbish? >> yes. >> a sweater is a jumper. >> what do you call the toilet? >> the loo. >> and your flat.

and when you stand -- all right. >> and i get in a lift and, yeah, there's a lot of britishisms including some unmentionables. but for the most part, i've just been warned not to pre-tend that being over here for four or five months suddenly gives me permission to start speaking like a native. >> i think you gain a lot of class. well, you are already classy. you need to get up to that level and exceed it. thanks, kelly. >> i'll go get a cup of tea. >> finger up. in political new, romney and obama will campaign in florida today. both campaigns are reaching back into the past, attacking each other with videotaped messages. and yesterday jack welch kept saying why 2016. romney's assessment of obama supporters and a secretly recorded meeting of a hedge fund guy during a private fund-raising earlier this year still causing problems for his campaign it says here. but now republicans are firing

back accusing president obama of trying to redistribute wealth, using a 1998 recording of then senator barack obama talking about make government more efficient at a loyola university chicago conference. check it out. >> i think the trick is figuring out how do we structure government systems that pool resources and hence facilitate some redistribution. because i actually believe in rediss friday abuse. at least at a certain level to make sure that everybody's got a shot. >> he said some years ago something which we're hearing about today on the internet. he said that he believes in redistribution. >> governor romney and congressman ryan would redistribute wealth for tr middle class families to the wealthiest americans. >> i didn't know they wanted to do that. i guess close. they want to collect all the money from the poor and give to

billionaires. that's part of the romney plan. i don't know whether you've seen that. they don't really admit that, but it's buried in there. yeah, we wouldn't -- some networks wouldn't run it because the actual reporter wasn't there. so she didn't feel comfortable running it unless she had been there. she was perfectly willing to run -- just check this out. here is president obama doing pirates day. he met with a pirate and made an arrgh joke. so thank you. although netanyahu is not happy because he met with a pirate you but he won't -- i don't know. that was the headline. all right. drunk thanks us. >> that picture was taken by the white house photographer. >> really? they weren't sensitive to --

>> on the netanyahu thing? >> i thought it would be offensive to pirates. >> joining us is the chief economist for fao economics. every time i read that i think you should be bringing toys. and manages over $2.4 billion with a b for douglas and associates. i'm starting with you because i just talked to this character like two days ago. i read in the notes, i think last time the notes might have been wrong, but you position that europe is about to see surprise on the up side? >> i think europe has stabilized quite a bit about that i don't think about up sight in the sense that you want to invest there today and be really well after six months, but i think a rate of deceleration has slowed. p so a year from now, your kochls won't be as bad as when we started a year ago.

so a lot of the bad news has been discounted. >> so what are you buying. >> >> we're buying global companies. i was just in n. china. 45% of their revenue comes from china. 10% secular growth. so you have to look at companies that will benefit globally. and you're rap might be a part of this. ford, we're buying ford. just like we were in the u.s. five years ago goi, you want to start investing in the companies now, pot when europe comps are up 5%. we've already had a lot of that bad news digested. we're not as bearish. the rate of acceleration has slowed down in china. you'll still get 6%, 7% growth, butou have arising merging market at once. so you have to pick your spots. >> would you take global companies that are traded in

china or would you buy them -- traded on other exchanges doing business there? >> i would buy them listed in the thaus have exposure to china. >> because there's been some problems. >> absolutely. and it has to do with transparency. but take a yum or qualcomm. every cell phone that is now being sold in china pays a royalty if it's on 3g or 4g including the new iphone. so that's how you want to par take in the global growth. china might be slowing down in certain area, but if you have the right manufacturing or right comes, autos are still doing fine even though it's come down. it's still growing three times what we are in the u.s. and if you have the right management team, i think you can make some money. >> since we last saw you, they sped them up. what do you think? >> so japan is joining in the game. >> we knew this was going to happen. >> yeah. >> they have a currency problem

and they'll try to use their brand of qe to attack that. they have a shrinking population. they are still recovering from their triple disasters. trying to phase out their nuclear reactors. japan has been turned upside down. >> isn't this a race to the bottom? meaning everybody's going to ease. just how quickly and when. >> the united states has not had a current the account surplus since 1991. if we were on the gold standard, we just might not have anymore gold left. >> didn't we pass that so long ago? >> the dollar is not a weak currency. the dollar probably needs to be weaker in order to be more competitive, but you can't say that about every currency in the world. certainly in japan the currency has gotten too strong and you now they have the additional problems because of all of the riots going on, the conflict in china over these islands. and that's going to hurt japan again. so japan needs more than just a

currency fix. the united states i think you can argue the currency is overvalued in a more fundamental way, but japan has lots of problems. >> do you play currencies? good >> only through companies listed in the u.s. we're not hedging. >> not hedges because -- >> because if we knew where currencies have gone, you'd be the smartest person around. the euro goes to 1.30 -- so it's hard. you have to get fundamentals right and then currency will take care of it. >> what's the difference between what china does to man in-late its currency and what we do with qe? >> china specifically manipul e manipulates it currency. >> aren't we talking about a more sophisticated plan to drive down the currency over time? >> no, it's more sophisticated, it's not targeted at the currency. quantitative easing is supposed to work in a different way. it's supposed to get people to

buy riskier assets by the fed taking the safe assets out. supposed to help push interest rates lower about lower interest rates should also make your currency weaker, but it's not targeted after currency. >> but it's creating all kinds of chaos for less developed nations, too. the lead story in the journal is about how all the other nations are trying to drop their interest rates so they don't get caught in this. >> brazilians are the first ones to scream bloody murder, but they have another export targeted growth policy. everybody has an exported targeted growth policy and u.s. has a deficit, but they all want a piece of our domestic demand. this current end well. this has to end badly. they need to develop their own economy. this is the big change in china. they have to develop their own domestic demand because they can't export to us the way they used to. they used to just ignore the united states government and now they can't ignore the u.s. consumer who isn't employed, who

doesn't have much wealth and who can't take on more debt in the same situation in europe. so the chinese by ignoring the united states and its advice over the last five or ten years telling them to change the currency, develop -- all of a sudden they have to to it overnight and they're not geared for it. this is the article on your website that i wrote this week. china has all kinds of problems. >> shameless plug. >> happy. >> we're happy to have both of you. we'll have to leave it there. do you have a view on the oil? >> it's funny you were saying it was timely. oil shock. i don't think oil should be in the 90s. it should have a acceseven hand. if you look at supply and demand, the ability to get new oil out, qe-2 pushed up the commodities. >> we have to leave it there. thanks, guys. >> you are familiar with the word chaos. but when it's -- when the letters are jumbled, you don't

see that it's -- >> bringing up very sore point. i lost in the jumbles like 14 times. >> but you just used chaos. >> i didn't see when it's jumbleded. aim never doing it again. when we come back, we have fortune's annual list of the most powerful women in business. first squawk sports. baseball in the al east, yankees taking a doubleheader sweep against toronto. baltimore earned an extra inning win in seattle. as of now, the yankees have how much of an advantage? >> you're allowed to do that. >> so it's one-half. >> draw, i saw this. they beat chicago. >> let's talk about the reds just for joe's benefit. cincinnati is well over it magic

number. clinched a playoff spot. >> oh, that's nice. >> reds magic number for a central nl title in three years. >> they're way -- second only to the nationals. at optionsxpress we're all about options trading. we create easy to use, powerful trading tools for all. look at these streaming charts! they're totally customizable and they let you visualize what might happen next. that's genius! strategies, chains, positions. we put 'em all on one screen! could we make placing a trade any easier? mmmm...could we? open an account today and get a free 13-month e ibd™ subscription when you call 1-888-280-0149 now.

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let's get a check on the weather. alex wallace joins us now. what's going on? >> not much. and that is the story. it's extremely quiet across the country. only a few areas seeing a few showers. florida seeing some activity, very light, though. and as we work our way up into the great lakes region, a line of storms moving on through. looks like this will slight just to the north of the motor city there in detroit. all thanks to this front moving on through. that will quickly nmove by. cool conditions in the middle of the country. warm across the west. and then right along the tail end of the same front that brought us some of the bigger storms on the east coast, that's what's keeping things unsettled

there in florida. and that will be the case here for today as well as tomorrow. today temperatures in the 80s. low 90s showing up around ft. myers. and again that threat for a few isolated storms into friday, as well. deal keep that going. meanwhile, we head into the midwest and a new system emerges. and this will be on friday bringing us another chance for some rain, a better chance than what the first system will bring us. for our friday, afternoon storms coming into indianapolis. and then that will begin to work its way towards the east as we head into saturday. notice behind the system, things really start to cool down quite a bit. we're talking highs on sunday buffalo stuck in the 50s. looks like sunday will be on the wet side. so behind the next system coming in, the cooldown is taking place and will definitely feel like fall in many areas. 5 to 10 degrees below average for friday afternoon. by saturday, chicago's high temperature stuck in the 50s. nearly 15 degrees below average. so sweaters and coats are starting to come back out. >> i'll break mine out of the

closet. alex, thank you very much. fortune is unveiling its annual list of the most powerful women in business. joining us is patty sellers. this is a list that we wait for every year. and when you debuted it back in 1998, there were only two women who were fortune 500 ceos. now there are so many they didn't even all make the list this time around. >> that's right. there are 19 now which is frankly still pathetic when you consider there are 500 fortune 500 companies. but, yeah, we have -- shall i reveal number one? >> go ahead. take it away. >> okay. ceo of ibm is our new number one. people are make it big in tech despite what people say.

she sleeds tleads the fifth lar company in the world in terms of market capitalization. it's kind of staggering to realize the two biggest tech companies in america are run by women. >> and it's the first time that you've had a woman at the top spot in technology since 2005, too. >> that's right. well, the first number one most powerful woman when we started the list in 1998 was carly fiorina who was running hp at the time. and then her successor was meg whitman. so we did have tech did dominate the list and then -- for a while. and then they left their jobs. and interestingly, meg whitman who used to be number one on our list for a few years is now ceo of hewlett-packard and is number

three on our list now. >> but it's in revenue? because in market cap, those aren't the biggest tech companies. >> no, believe me, it's amazing to realize that, okay -- >> apple is bigger in market cap and that's not a woman. >> right. absolutely. but these are the two biggest companies in revenue in america. but it was not a toss up between these two women in terms of who was number one. hp's market cap is $36 billion. ibm's market cap is $236 billion. >> patty, angela browley, is she gone? >> she's gone. >> that's depressing to me. it's all about the job you have at the time. so it seems like you would gain power and still be powerful, but the minute you lose your job, you're just back to nothing at all. >> unfortunately, you know, i like to say that real power is

what you have outside of your job description. >> can i never leave -- all i am is what i'm associated with with cnbc. if i'm joe kernen, i'm nobody. that's really depressing to me. >> unfortunately, joe, if we were doing the most powerful man list, you would be off it if you lost this job. >> more powerful toupee. i wouldn't even have that, andrew. you're a multimedia person. could you at least -- >> patty, so meg whitman's on your list and hp has obviously struggled. what is the chance she stays on this list and how much of this list is ultimately a prediction of where they may be in the importance of the world, if you will, in a year or two? >> well, we look at the size and importance of the company in the global economy. hp is an important company. we look at the health and direction of the business. hp is a very struggling company. we look at the direction of

woman's career. and meg whitman is -- this is probably her last big gig. she's 56 years old. but, you know, the last several ceos of hewlett-packard have been kicked out of the job. meg has a lot to prove, a lot to prove. so who knows. i mean, you know, we put her at number three because it's one of the largest companies in america. >> is that a prediction that she'll actually turn it around? >> no, we're not making a prediction. this is about power at the moment. >> marissa mayer is on the list. you talk about that career projection. and obviously she's jumping with the ceo of yahoo!. what number did she come in at? >> she came in at 14. we moved her up from 38 to 14. she is -- marissa is the youngest woman ever to appear on the most powerful woman list. she's 37 now.

the new ceo of yahoo!. fairly small company. it's only 5 billion in revenues. has an $18 billion market cap. she has a user base of 700 million users to work with. and so she has a lot of runway ahead. i actually think that if she fails, you know, people are going to say, gosh, no one can turn yahoo! around. >> i have another fear, that you can't do it while you're pregnant. people are looking at this as a new measurement stick, too. >> as a mother, becky, what do you think? >> as somebody with a 1-year-old, yeah, i think it's a huge challenge. i give marissa mayer all the credit in the world for doing this and i don't think anybody should be making judgments, but whatever happens with this, people will lalk will look backt was because of this. i don't want to say one way or the other because every mother

should have her own choices. >> well that eeat's unfortunate that that could be what she's judged by. >> the julys are all screwed up that that could be what she's judged by. >> the julys are all screwed upt that could be what she's judged by. >> the julys are all screwed up that could be what she's judged by. >> the julys are all screwed up. bonnie hammer, much higher than 33. the numbers are all skewed up. >> nbc u gets lthree women on te list. >> we didn't realize that until about 30 seconds ago. >> i was just noting how great they are what they do and i think they should be higher. but at least she did find them. >> pat is overseeing nbc news. >> oh, that's right. forgot about -- i wasn't mentioning it for that reason. >> all of those great nbc assets. yeah, she's -- >> much higher.

there these a returnee. we had her on the list years ago. >> oh, good. and should have been higher. >> if this was a proper prediction market begin her talents -- >> come join uses in studio soon. >> i'd love to. >> thanks, patty. coming up, oil price -- i didn't connect the two things. oil prices dropping to a six week low this morning. we'll head to the trading pits and ask what's going on next. first, though, more squawk sports news. rory mcilroy is going for a big finish to the pga. the 23-year-old from northern ireland is number one in the fedexcup and number one in the world rankings and number one on the pga tour money list. he has to win the tour championship, starts today at east lake. points have been reset that everyone has a mathematical chance to win. and i saw quickly some greg norman comments that tiger is

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ben liechtenstein joining's oil, the currency, the s&p? >> i think right now it's the focus is on the dollar. we've been watching the s&p rally. the dollar's been coming off to the 79 even level. really its lack of volatility, lack of interest, lack of participation across the board. p s&ps are set on the week low testing the 1449 level, but only ten handles.

so extremely low interest in participation. but we have the rollover right now, we have quad witching expiration tomorrow. so there's a lot on traders plates. just seems like they don't know what to do with it. multiple major markets on the verge and have the potential for beg moves. gold has been a huge run up. still holding key levels of support, but potential for a v top. euro currency, similar situation. but again really the focus appears to be on the dollar. it just is kind of that staple, if you will. and most of the major markets are trading in reaction to activity in the dollar. >> it's all about we've been fed dependent for for a couple years now. all right. ben, we appreciate it. thanks for keeping it short. when we come back, if you pre-ordered iphone 5, you might have one in your hands tomorrow. but we'll play with one onset right after this. bob...

oh, hey alex. just picking up some, brochures, posters copies of my acceptance speech. great! it's always good to have a backup plan, in case i get hit by a meteor. wow, your hair looks great. didn't realize they did photoshop here. hey, good call on those mugs. can't let 'em see what you're drinking. you know, i'm glad we're both running a nice, clean race. no need to get nasty. here's your "honk if you had an affair with taylor" yard sign. looks good. [ male announcer ] fedex office. now save 50% on banners.

early reviews of the iphone 5 are out and you might be surprised on what people are say. joining us more, ed baig, usa take oi today. author dummies. we've all been talking about the iphone. do you like it? >> i like it or not. there are a lot of android devices out there. >> is the screen big enough? >> yes. it gives you the extra row of

icons. you ccans ca display more surfie web or looking at maps. 3 abo 3.5 to 4 inches doesn't seem like a lot, but you appreciate the extra real estate when you get into apps. >> is it a mistake that they did not go bigger? >> no. >> i want wider. >> i just need to wear my glasses at all times with these deviceses. >> i like that it's longer, but i wouldn't mind a half inch wider. >> they obviously gave that a lot of thought. it's the same width as the current generation. >> if you look at the android phones -- >> you can read a newspaper article four paragraphs more. >> so would you buy an android? >> over this, no. >> because? >> well, first of all, all the advantages apple's had before, the app. 700,000 apps. a lot more than the rivals android and windows and others. software is beautiful.

this is the first iphone to take advantage of the fast lte networks. >> i use the map on my iphone all the time and it's powered by google currently. >> yes. >> i'm even told i can upgrade my new iphone -- or my old one to use the new software. >> that's correct. >> however, the google map gets kicked off. and i get apple one instead. is the apple one as good really? >> well, the big thing they've added is the audible turn by turn directions. that was missing. they work pretty well. there are things you'll miss. no public transportation directions. >> i knew that. did he tell you that? >> no, when you want to know which subway line to take --

>> you can do it on the old google maps. i suspect they'll get around to that. and you can do it through third parties. >> i did notice if you're anywhere near, the right one comes up. >> type your name. >> do you know who could not use this, lady gaga. her finger would just -- >> type your name. >> i have all these idevices.iphone, the ipad, and the cord issue. >> it's called lightning, plays off the thunderbolt director. that's an issue for a lot of people who have invested over the years in car kits, all the -- it had a nice ten year life. am i annoyed? yeah, it will be an added expense. that will annoy people no

question. they say people will buy the phony way. >> these guys strs behave been r own conversation about fingers. >> if you hit anywhere near, it gets the right letter. >> you have to get used to it. >> we have to say thank you. thank you for being here. >> thank you. >> when we come back, the ceo of bojangles, a tasty snapshot of the american consumer right after this. smart comes with 8 airbags, 3 a crash management system and the world's only tridion safety cell which can withstand over three and a half tons. small in size. big on safety.

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our american made series is focusing on one of the nation's fastest growing companies this morning, bojangles, randy kibbler is the company's ceo. you need to start from scratch, i guess like you did with this concept, and describe the restaurants, mostly in the southeast i think. i have not been to one. >> well you've really missed out. good morning to the entire "squbox" we're excited to talk about bojangles, and extremely positive momentum our brand is experiencing. we're in ten southeastern states, 525 restaurants strong now, known for great quality food, made from scratch products, we make biscuits from scratch, start with fresh chicken, we hand bread that chicken in the restaurant and

then we even go to the lengths of steeping ice tea the old-fashioned way. >> you're making a cajun fillet biscuit in honor of "squawk box." this says 12 to 16 inches in diameter. is that a mistake? that seems like it's -- i can't eat that. >> no, no, no, this is something special for you guys. >> oh, we can share it. >> we tried to create an it's bo time moment for you guys and a special biscuit. if it was there, it would probably feed the whole crew, probably the largest biscuit we've ever made just for you guys. >> the cajun fillet is a chicken. you got pork chop, too, all kinds of different things? >> we offer breakfast, lunch and dinner, one of the few brands that have all three day parts. 40% of our business, 50% of our transactions happen before 11:00

a.m. when a lot of our competitors are starting, and we offer sausage and steak, ham, pork chops, special product we have just as a limited time offering this month, but one of the biggest selling ones is our cajun fillet biscuit. >> same-store sales have been strong, one of the fastest growing companies in the country right now, right? restaurant? >> bojangles has been blessed with a fantastic 2012. our same-store sales are up 8.5%, and that's over a very solid 2011, much better than most of the industry and we're growing, we're opening 40 restaurants this year. there are 35% more bojangles today than at the beginning of 2008. it's an exciting time for our brand. >> do you worry about, i don't know, to me it looks great, i want to try everything but there are people that think we should be eating tofu and sprouts.

you see what we're doing in new york city. you got a 16.9 ounce bottle of tea you don't know if you're allowed to sell it anymore in this crazy place. >> well, you know, we are happy that we operate in the southeast, but the mayor there was, his intentions were good, but we think that nutrition is really about personal choice and moderation, not really about government regulation. the industry really has gotten, hadn't gotten the credit it deserves for being as progressive. bojangles works directly with our vendors to reduce salt levels, cook in transfat free oils and no transfats in our biscuit mix. >> i'd like to hear the rest and maybe you can come back and talk to us. thank you, randy, we appreciate your time today. >> thank you. when we come back, jim cheno

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the long and short of investing from a squawk market master. hedge fund guru jim chenos tells us how he's capitalizing on the latest market moves. his thoughts on china, the election, and what is keeping him awake. man versus the machines. >> he's a robot. without you, what could he do? >> there's no limit. >> rhode island senator jack reed is here ahead of a major hearing on electronic trading and investor confidence. >> let's finish it. >> the second hour of "squawk box" starts right now. ♪

good morning, everybody. welcome back to "squawk box" on cnbc. i'm becky quick along with joe kernen and andrew ross sorkin. what is this song? >> i don't know. >> i don't know. from spongebob i think. no, it's not. it's like when mr. crabbe thought he was a robot. mr. shorty? >> here we go. we'll find out what the music is. the futures are a little bit lower after we saw modest gains in the markets. success for spain and a widely watched auction of three-year and ten-year government debt. the sale of 4.8 billion in euros, yields falling a full percentage point from the prior auction. aig could draw bids -- i

always want to say aig. aeg could fetch $6 billion in sale. aeg is part owner of the los angeles lakers, l.a. kings, and other sports properties. bank of america is said to be speeding up previous job cuts. the bank will cut 16,000 jobs by year end. our guest host is one of the world's largest short sellers but he goes, you go long on certain things. >> yes, we have a hedge fund. >> famed hedge fund manager jim chenos, founder of kinikos associates. kinikos has greek origin and did it mean anything? >> well it's the root of the word cynic but i'm also half irish so it means you really shouldn't listen to me at all when it comes to finance. >> i've got some irish, too. let's just leave it at that. >> cynical. >> we have to start with china i

think, and we're still in a period where everybody can see that something's happening over there, but the consensus is, always has been and still is that it's not, nothing really that major, nothing really that big to worry about. if you noticed that, people finally will concede yeah, okay, but they're the same people that say china has got it down pat, know exactly what they're doing. is this the beginning of the day of reckoning? >> we get criticized because china is not lying there in smoke and ruins. we've done just fine in china. i think what we're seeing is the model, the economic model everybody trumpeted three years ago, when i first started talking about it here, is under a lot of scrutiny and there's two givens in the world financial markets that central banks will ease and china will stimulate and it's always around the corner. now, with qe infinity sort of

upon us, we know that's already, that given is on the table in the west but in the east i'm just not so sure and china is grappling with this issue and if you overlay that, some clearly new political things which of course is not, we're not political scientists but something's different. the bo xilai thing -- >> if you pick up on upheavals and tumult, this is going our way, too. >> but unexpectedly but that is an added layer of risk, you've seen the nationalism come out with the spratly islands and the disputed over the japanese/chinese islets. we've covered new positions -- >> if you had to talk about a net short position you're not less than you were when you started? >> no, we're about the same, about 20% of our global short fund. >> staying where you are? >> yep. >> this is not, though, the -- i

hate to channel jeremiah wright, this is not the chickens coming home to roost yet, is it, in china? the status policies? >> people still believe in that, joe and you and i joked about the fact these wonderful capitalists in the west seem to embrace this central committee. i think we believe in central banks in the west, as i said before, and central committee in china and i just don't think either might -- >> are there empty stadiums, empty apartment buildings? have they overbuilt? doesn't sooner or later the bad loans come -- >> there was a report this morning as i was driving in here that one of the western firms thinks non-performing loans tripled in the first half from the end of 2011. i'll know when more i go back to the office >> sounds like a lot. >> it is a lot. gone to almost 500 billion yuan,

which would be $80 billion u.s., these are relatively small numbers in the u.s., $27 billion in the u.s., and that's using chinese accounting which we could talk about, fill an hour worse. >> when europe gets worse or better, that has a lot to do with china, too. >> european economies depend more on china than they do the u.s. so the export-driven aspect of china is high, but so are the imports, so we've cautioned people that china's net exports is a very small part of their economy, but gross exports is very large, it's almost 40% of the economy. sort of 40% exports, 37% imports for net three, but if the 40 drops to 35, you can have problems. the other interesting thing that's new in china is that we are beginning to see not the trade export balance decrease,

which has been happening, but now capital is going out of china. so they're actually seeing a deficit in terms of investment. well, hot money is leaving. >> that's a big change. >> it's a huge, huge change and it's going to make the policy much harder to implement from beijing, in order to fix this problem, when money is not coming in, it's going out. >> would you have made more money if you had been a big short in europe three years ago instead of china? >> probably not after the last eight weeks. there's been an enormous rally. >> were you active in europe at all if. >> we were in the banks and still are. >> you didn't overemphasize to the china short? >> no, if you would look at our portfolio and say what's really sort of overweight, it would be china. >> can i just ask a little bit more about china? we had jim cramer on yesterday, we get to talk to him every day toward the end of the show. we mentioned you were coming on and he says that he completely

respects you and your work, but he disagrees a little bit with the idea that china is falling apart. i think some of the things he pointed to were electricity numbers that came up. >> yep. >> a bunch of different -- >> maybe he can ask more pointedly but you hear the argument from other people, numbers like electricity. >> the electricity power numbers were up 2.6% in august, which was still a bump in the low numbers and that's growth of 2.6, year over year. so i'm not clear what jim was talking about because the power numbers have been weak. >> he had some others. >> the baltic dry but that thing jumps all over the place but again it's sort of interinterspective. china's growth is slowing quickly. that's stated gdp. you'll never see a negative gdp out of china for a year, not under this regime but look at corporate profits, look at what's happening on the ground,

corporate profits are imploding over there and again -- >> you don't even believe half the profits are real. >> exactly, i have problems with that. >> this regime, you mean there's only one regime, isn't it in. >> that's what i'm saying. >> under this regime is the same one for the past -- >> they're going to show you growth no matter what. >> it's the permanent regime. >> take a look at the chinese stock market. it's gone nowhere despite having one of the highest rates of growth of any emerging market or any market, gdp growth has been 9%, 10% for years and you've made no money in the chinese stock market >> is there any way to divide the companies that you believe in china have real accountants, real accounting and real numbers and those that don't? >> you can put almost all of them on the side. they don't have real numbers. >> so there's no companies in china -- >> i wouldn't trust any companies. >> not even some of the larger international conglomerates?

>> state owned enterprises it was reported overnight by state ministry. >> i'm not suggesting the bigger companies or better or worse than the smaller companies but is there any model you would use to say these guys i buy this, the other guys -- >> as a western investor i would take issue with almost any of the corporate accounting in china. >> only invest in the ones where you can look at the numbers in chinese and tell whether they're real or not. they go from right to left so they start with the number they want and they end up with what needs to go into -- don't they? if you go from right to left you can't do that. >> i'm not in their culture which is 5,000 years old and that's not what this is about but indeed you look at the biggest of companies, state-owned enterprise, and they don't earn their profits in cash. the transactions with affiliates they don't return on capital enough of their cost of capital so any way you look at this, the share market in hong kong where

it's at designed for short sellers, designed to suck western capital into the country and never let it go back out and i keep pointing this out to people that you're almost in a classic emerging market roach motel except it's a really big one, in that it is very difficult to earn adequate returns of capital and get your capital back as a western investor in china. >> i was kidding about the right to left. you called the entire company a roach motel. >> the eight share market. >> oh, all right. >> let's be clear, and i think that -- >> you can't even go to europe because it's too close to china, right? >> you saw the american ambassador's car was attacked the other day, what would they do to short sellers. i was chided sometimes even on the set for not having been to china. >> who was that? i didn't chide you. >> no, it went he you. >> it was andrew, i remember. >> it was.

>> kevin farria wants to know what you think about reports about the commodity collateral not being found in the warehouses, things like cotton and copper. >> there's lots of reports now as there is this whole shadow banking system? china which doesn't get a lot of press and as people have found typical access to the big bank credit reduced, they've gone into the shadow banking regional banking markets and there's all kinds of cross-guarantees that different companies make money by guaranteeing other's debts and it's a mish more than of collateral problems and they've gone in many cases to seize collateral for defaulting steel traders and found it's not there. >> it was like the salad oil. >> so this i think we're going to hear more and more stories about this because at the end of the day, and we've discussed it here, this is a credit boom and when people say china is going to stimulate i say well they are stimulating. credit growth in 2012 will be north 30% of gdp all in, bank,

bond issuance and the shadow banking and these are huge numbers. it's still driven all by debt. >> it's amazing, you get righter and righter and yet the people get more and more set in their denial, and it reminds me of the previous times you've been right. it looks like you're being right but the same people that argued at the start continue to argue. >> there's a lot of vested interest in this one. lot of people have, are counting on china, and i think it's just increasingly problematic. >> we're going to sneak in a quick break and come back and continue this conversation. we have a lot more to come from bik chanos. later we'll talk about the rise in machines on wall street, from fat finger trades to lack of liquidity, a major hearing is going on in washington regarding electronic trading, senator jack reed will join us ahead of that hearing to share what he hopes to learn and what congress plans

to do about it. "squawk" is coming back after this. comments? questions? send them to @squawkcnbc on twitter, follow the show and look for updates from andrew, becky, joe and the "squawk" staff. "squawk box" on cnbc, and on twitter. ♪ [ male announcer ] introducing a reason to look twice. the entirely new lexus es and the first-ever es hybrid. this is the pursuit of perfection.

we're back this morning. we'll get back to jim chanos in a moment. president obama and mitt romney are going to be campaigning in florida today. both campaigns are reaching back into the past, attacking each other with videotaped messages. earlier it was romney's assessment of obama supporters as he was secretly recorded during a private fund-raiser earlier this year. republicans are firing back accusing the president of trying to redistribute wealth, using a 1998 recording of then state senator barack obama talking about making government more efficient at a loyola university chicago conference. take a listen. >> i think the trick is figuring out how do we structure government systems that pool resources and hence facilitate some redistribution because i actually believe in redistribution, at least at a certain level to make sure that everybody's got a shot. >> the rohment know campaign has signaled it plans to use those comments as a focal point in the

coming days. obama campaign spokesman ben labolt saying it's a sign that "romney is so desperate to change the subject." we'll hear more about that one, joe? >> um-hum. i -- listening to that doesn't -- >> neither of these tapes is good for anybody. >> i understand what romney was saying as he said, it's bad -- you probably don't want to call the entire 47% victims and people that don't want any responsibility but there's two minutes missing that came after that, in that tape on the one, and they said, someone said that was the complete tape. they said it definitely wasn't, two minutes missing, and he supposedly walked back or explained what he was saying. the president's comments don't bother me at all. to say that government can redistribute, give everyone a fair, most taxes are redistributed. i mean massive redistribution, if you want a wealth tax on fat cats like 80% or something, if you want to do that, i might

take jim's side on that, but just to redistribute so that -- >> that's what the government does. >> education gives you a fair shot, this gives you a fair shot. that's my whole thing. if we don't give people an opportunity, there's no way to earn your success. i don't want learned helplessness but i want people to be able to get a shot at it. >> but the campaigns having these petty arguments. >> after what happened to romney, you know "the post" they have one person, peggy noonan who never liked romney in the first place, but if you're going to, see, with the week that romney had if you find the president even, you don't even need the whole tape, just have him saying redistribution on a loop, don't put the context what have it is, if you just get him mouthing the words like i don't like redistribution, you cut out the i don't like and keep playing it over and over. >> we didn't bill that. >> no, that, have you watched

that whole thing? >> yes. >> that was not taken out of context. >> he was talking about roads and bridges. >> but the way he said it he genuinely didn't give much credit -- >> you're implying intent and i did not hear it that way. >> i watched it and i thought it wasn't, you know seeing it in print and actually seeing it was worse. >> you know how much time i spent looking at the stupid tapes from both sides of the aisle it's so stupid. >> jack welsh said something everybody could agree with, we need focus on bigger things, whether you're democrat or republican we've got some big issues in the future. >> does the fiscal cliff play into any of the things you look at when you look at shorting? >> no. it really doesn't. we were very active in the health care space a couple years ago, we talked about that and that is our biggest concern, is just ongoing health care costs, they've moderated a little bit recently, still growing 4.5, 5% a year. >> you can't be short companies.

>> we're not short, we're long. we were short a lot of things in '09. >> those are all covered. >> we covered those and i think that, but the analyzing, it's just these costs are really big, they're getting worse, and they are the entitlement problem we're facing, it's health care and something's got to be done with it. >> and it hasn't been tackled. >> the attempt and the problem in getting a deal done, a lot of what i think needed to be done again from my personal perspective was cost containment, instead we made it more inclusive and we cut back on the cost containment to get a deal done and i think that was a lost opportunity. will an obama administration gets back in, try to get back to that? i don't know. >> i know you're a democrat. when you look at the paul ryan plan, for example, does that make sense to you? >> in terms of -- >> on the health care side? >> no, because our analysis is that health care is not a

true -- couple of reasons, when you're sick you don't shop around, you go to a trusted provider by and large. number two, we already have socialized medicine, we just don't have the upside of socialized medicine in terms of cost containment. the federal government pays almost 60 cents of the dollar and most of it fee-for-service so you've got this sort of unended ability of people to charge or do more tests or whatever and then through all of the talk about death panels, the numbers are what they are, and a big part of what we spend is on the last year of life, and trying to find some solution, maybe end of care policy, that is you pay for yourself, and basic major medical and all of the other things are covered through medicare, whatever, i don't know, but something's got to be done, our costs are twice the rest of the industrialized world. >> i'm gratified we got chanos to say something that you pay for yourself instead of the government -- at least we're

making some progress with you, that there could be some individual responsibility somewhere. >> and the numbers are what they are. >> incremental and we're working with you, when the camera goes -- >> you agree it's not a true free market either. >> is anything really? what i've come to agree with you on is crony capitalism is worse than welfare. >> i think they're both bad. >> they're both bad? >> both bad. that's the problem it's not a real free market for a lot of structural reasons, there's one other interesting thing to compare to us other countries. we're subsidizing the rest of the world, that's another important point. >> right. >> but our reimbursement prices basically we allow the pharmaceutical companies, we're paying for it all. and the taxpayers of the rest of the oecd are getting a good deal based on us. and that's something that i think both parties could probably agree on, that needs redressing.

>> but we still got -- i'm excited about the next ten years, too, because all that basic science research that's been so hard to take to the bedside is coming soon and it's going to be unbelievable. of course we're living longer and having more health problems. >> but i think that's right. coming up, the founder of file sharing website mega upload. continuing his fight against extradition, oh that, guy. he's a full-figured dude, he could date lady gaga. oils recent slide, fat finger trades and concern over investor confidence have lawmakers in washington concerned. senator jack reed joins us to discuss the hearing today. we do not want these machines to get any more powerful, believe me. t's sandra -- from accounting. peter. i can see that you're busy... but you were gonna help us crunch the numbers for accounts receivable today.

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the man wanted by the u.s. authorities for copyright infringement was back in a new zealand court today, mega upload.com counseleder kim.com, he did change his name was one of four arrested in january as part of an fbi investigation. what are you laughing about. >> really? >> that's not his real name is what you're saying. what about ochocinco, was that

his real name? >> prosecutors say that dot-com, it's very hard to talk about him like that, was the ring leader of a group that made $175 million. >> it wasn't kim before he changed -- >> this is unfair to read this story this way. he was in court for an appeals hearing and the u.s. is now appealing a ruling that requires it to disclose the evidence they may have against him. dot-com, a german national, it's hard to say it. >> i want to see him do the -- >> -- is fighting extradition from the united states to new zealand, that is the story. >> it's hard to refer to someone as dot-com. >> remember madoff pushed back, that guy could push back and everyone would go flying, all 16 people. do you remember the madoff tape in. >> i do and there is mr. dot-comhimself. if you have comments, questions, anything you hear on the circus that is "squawk" this morning,

shoot us an e-mail squawk@cnbc.com and follow us on twitter @squawkcnbc is our handle. next, senator jack reed is said to hold a hearing on computerized trading, tech glitches and investor confidence. he'll be our guest after this quick break. copies of my acceptance speech. great! it's always good to have a backup plan, in case i get hit by a meteor. wow, your hair looks great. didn't realize they did photoshop here. hey, good call on those mugs. can't let 'em see what you're drinking. you know, i'm glad we're both running a nice, clean race. no need to get nasty. here's your "honk if you had an affair with taylor" yard sign. looks good. [ male announcer ] fedex office. now save 50% on banners.

welcome back to "squawk box" everyone. in our headlines this morning, the iphone 5 is not only soon to arrive at the homes of millions of consumers, it's also going to be landing in a courtroom. samsung says it will add the new phone to its existing patent lawsuits against apple. last month samsung was ordered to pay damages of $1 billion for infringing on six of apple's patents, this is one of many lawsuits out there. google is about to push facebook out of the number one spot in terms of display ad revenue. google will have a 15.4% market share this year compared to facebook's 14.4%. that growth has been fueled by more advertising on youtube, as well as google's 2009

acquisition of admog. daimler is cutting its profit target for the mercedes-benz target unit. it blames conditions in europe and china. we have jim chanos here, more with him in a little bit. back over to andrew. computerized speed trade something back in the spotlight after a brief dip in the markets for crude oil monday, is it time for new regulation? joining success senator jack reed, chairman of the banking securities and investment subcommittee going to be holding a hearing on this issue this morning and senator, thank you for joining us. >> thank you. >> so let's talk about what may be actionable or not that could come out of this hearing. what are you trying to learn? >> well, first we want to understand the new technologies that are being deployed. first, we are very concerned about the potential of a major systemic problem. we've seen some indications, the

facebook public offering, several others, knight capital, so we have to protect the system against a significant failure. second, we're interested in the fairness of the operations, whether or not investors do have fair opportunities, all investors, and then i think we're interested obviously in the long-term capital formation, that's what markets exist for, we're seeing high frequency trading, stocks are being held literally for seconds so we're very interested in all those issues and anything else that the industry experts can tell us. >> senator do you think there's an appetite to actually fix this problem? >> i think there's definitely an appetite to understand the scope of these new technologies, and also an understanding that this is not something that's going to go away. this is a very dynamic situation, where new technologies are evolving very quickly, new techniques are being used, algorithms are changing almost on a weekly

basis and if we don't shine a spotlight on this activity, we could find ourselves looking back, regretting the fact we didn't pay attention. >> is the goal for you to figure out, to simply shine the spotlight and try to force the issue for other regulators like the sec to take action or is the goal for to you think about how to rewrite and write new legislation? >> i think it's multiple goals. first to begin to understand more particularly what are the issues. there are obviously benefits in terms of increased liquidity in many stocks, decreased spreads in terms of trades with benefits to investors, but there's also we want to understand all of the issues. secondly we want to reinforce efforts the regulators are making preside making. we don't want the intention oslto slip away and we want to build up the record to see if

legislation is needed, we're going to look obviously not only to industry participants but to the regulators, they certainly come to us and say they lack legislative authority we're going to look seriously about providing that authority. >> senator, there's obviously a lot of money at stake for a lot of people and the lobbying on this issue has already begun. what have you heard from the industry? >> well the first, they are making the point that in many cases, this has resulted in reduced costs to investors. there's increased liquidity in the frequently traded stocks that in fact much less liquidity than some other stocks so we're hearing there's benefit. we're also hearing from some of the s testimony today that because of the shock to the system, the facebook situation, recent knight capital, there's a growing concern about the investment community about volatility in the markets and if we lose that confidence in the

markets, the huge cost, so what we're getting and i think appropriately so is we're getting it from every different perspective, those that are concerned about market performance, those that think that this is the wave of the future and should be encouraged. i think now is the time to get all this opinion evaluated and be prepared together with regulators to move forward. >> hey, senator, the concern may be that this has already done significant damage to investor confidence in the markets. we spoke recently with mark cuban who plays in the market himself and says he keeps money and trades on because is he expecting another flash crash to happen. there doesn't seem to be that a lot of action has been taken to really shore up investor confidence and when you have serious market players who say they expect that this is going to happen again, i can't imagine that does much to boost investor confidence when it comes down to main street. the concern may be that we try and get all of this talk out there but how quickly can something be done? we still don't have answers over

what happened over a year ago. >> that's one of the issues and again the potential for another incident, which weighs on the market, it's also the perception that's growing that there are different rules for different types of traders, given access to those algorithms, just the sheer speed, just the last week the new york stock exchange was fined by the sec the first time in history apparently for allowing someone to get information before other participants in the market, so all of this undercuts confidence. i'm encouraged that the sec is at least on october 2nd convening a round table, but our great fear and i think it's reflected in your comments is that because we don't understand the complex interaction of all these systems they could be unwittingly another crash that's not just a momentary episode, but could lead to systemic

crisis in the marketplace. that's the worst case whand we want to start now and continue and not going to let up to make sure this doesn't happen. >> senator, it's jim chanos. >> hey, jim. >> hi, how are you in. >> good. >> i think the fairness issue is one, sitting from my side as a hedge fund manager and becky, you and i were talking earlier about retail, something almost all of us can agree on, no one should have an enfaur edunfair . if you've got a better mouse trap in terms of how to invest your trade, great. >> the idea of paying the exchange to get faster access that's crazy. >> that's going back to beyond even this is the issue out there i think that's turned off a lot of retail investors is this general concept the game is rigged. no matter what your politics are, that we can agree on, that that perception can become a reality. that's not good. >> i'd ask both the senator and

jim, do you think it's a perception or do you think it's a reality that you can't get a fair shake if you're a retail investor? >> well, you know, and again, an investor might be the wrong term because if you're an investor, this shouldn't bother you that much i.e., limit orders, set your prices, buy it where you want to buy it and sell it. >> someone putting money in their 401(k) watching. >> it adds to volatility, that's an externality. if you're buying stocks because they represent value, this shouldn't impact you that much but again, the degree of impropriety or unfairness that's out there adds to externalities in other parts of the markets. >> the issue in terms of perception and reality, if the perception is held by a broad enough group of investors and market participants, it becomes reality, they don't want to participate, so we have to be very, very conscious and sensitive to that issue.

the question is, if these arrangements exist, at a minimum, they have to be fully disclosed. people have to understand that there's some people -- >> i don't think it can exist. >> that's one of the questions that we're posing not only to the industry, but -- >> like it's a scam. >> -- but the center of our consideration going forward. >> senator, i have one final question and i apologize if there's not enough time. this has to do with your committee and the perception of the system being rigged, so many people on your committee including yourself have taken lots of money from wall street, goldman sachs, jpmorgan, morgan stanley among your top ten donors. how do you deal with that issue? >> well, i always try to do what i think is in the best interests of the people of rhode island, my constituents and the nation, that's why today we're looking at this rather complicated issue, we're bringing different viewpoints, this is not slanted to one side or the other. this is a sincere attempt to find out what's going on and

frankly, my commitment is to try to do the best i can to make sure the system operates fairly for everyone, particularly the retail, the small investor. this perception of the system being rigged is corrosive. it's corrosive to markets and it's corrosive to the fabric of the country. so we just work very hard to make sure we do our work for the people of rhode island. >> senator, thank you for joining us this morning. >> thank you. >> appreciate it very much. >> i don't think those agreements can even exist. i don't think it's about clarity or being able to see these things or knowing it's there. it's a problem when somebody gets a head start. we'll have more of this discussion, much more from chim chanos, including what is working right now as an investment. a stocks to watch story to tell you about, look at shares of norfolk southern, the company putting out weaker than expected third quarter guidance, hurt by decreased shipments of coal and merchandise and piles on with what we've been hearing with the transports with fedex earlier this week. yesterday we told you about the recent sell-off in the

sector, talking about it all week with fedex.

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welcome back, everybody. take a quick check on the

futures. you're going to see the futures are a little bit lower, dow futures down by about 41 points, almost 42. s&p futures off by over 5.5. california amusement park knott's berry farm, 20 riders on the wind seeker were stranded 300 feet in the hour for four hours after the ride stalls. >> like my nightmare. >> every time i get on the rides you think what is the worst? the ride will be closed while park officials investigate the accident but four hours sitting 300 feet in the air. >> that's a nightmare for me as are ski lifts. i'm always scared they're going to stop and i'm going to be stuck up there. >> i don't know. no, no, no, no. no, no. no. i have seen people getting unloaded from -- i would have to stay. >> what about the top of the

kingdaka. >> they come down, you know, totally red and -- no. you know what? pass the i'm passed the thrills. somebody has to go with your kid. >> you can't let them go by themselves. when we come back, whether the markets are in for a wheeled ride and he is in charge of startup investing for google ventures, william maris talks about venture capital and today's hot tech startups. "squawk" will be right back. tomorrow a rare interview with ray dalio. >> were you surprised last week when he announced? >> the founder of bridgewater associates weighs in on the economy, quantitative easing and a lot more, it's an interview you can only see on "squawk box," starting tomorrow at 6:00 a.m. eastern.

there it is, the question, what is working for the world's biggest short seller? jim chanos will tell us what he's long on right now, and also want to talk perhaps more importantly still about what you're short on because that's also working for you in a big way and technology is something you've been short in a big way including hewlett-packard, talking about meg whitman earlier in the broadcast. >> we have some longs offsetting those as well in our hedge fund. we've been talking about the

concept of global value traps for the last better part of a year, which is areas where investors continue to hope that basically a broken business plan will somehow be righted by the fact the stock is cheap. these have not been working for most investors. they've been great shorts and one area that we think is just going to continue to stay under pressure, investors should voice the whole pc chain, and apple as well as the cloud are changing fundamentally the way we gather data. >> would you be long apple? >> we're not long apple. interestingly we're long microsoft and oracle against our huelet short and i think that there's a variety of reasons for that. >> explain that hedge, if you consider is a hedt a hedge. >> we do consider it a hedge.

you want to be sure the actual pc hardware you want to be short printers, you want to be short ink. >> how do you think of oracle in that hedge. >> again, data base and a market leading position. i don't know that i would be long oracle on the long side but again, as a hedge versus some of our shorts. >> oracle and microsoft are the two? >> the two bigger ones we've gone public on and i'm cautious, looking at any hedge fund 13fs, you don't see the other side of the book and it's scary to invest to say -- >> when you see us go on television, the second those 13fs come out -- >> if it's a hedge fund be careful. >> say you or david einhorn or lan dan loeb or steve cohen, do you look through those and say oh, that's interesting? >> if it overlaps with one of my longs or shorts my trade des lk

fl desk will flag it to me but it could be misleading. >> do you think there should be additional disclosure? >> that came out and the problem is once you put all of your positions on the book everybody can replicate your portfolio so there's the whole issue -- >> what would be the benefit of showing the longs but not the shorts? >> i don't. i don't know why the longs should be shown. i don't think either should be shown. they should be shown to the authorities or sec as needed but not to the public, in that if somebody is paying for that service, in effect you're giving it away for free every quarter. >> let's talk banks. que you've been long some banks. >> and short some banks. we believe in the concept of the he will leveraging credit python if you will and if you think about the three little pigs in the python, the u.s. is the pig

at the end of the credit python, europe is the pig in the middle of the python and our friends in china are the pig going into the python and i think you want to -- >> that's a really bad vision you just made. >> sorry, becky. in any case i think the u.s. is coming out of this. >> give us a couple names. >> we're long jpmorgan, we're long citi actually. >> you have been long bank of america? >> no. >> it's been on quite a run. but jp and citi have been on a run. how much more do they have to go? >> we've been short some of the spanish banks and chinese banks so it's a relative, you know, coming out of it -- >> is that a hedge in your mind or just -- >> that's a hedge. that's a hedge. >> any other longs? >> nothing we're jumping up and down on. things have gotten expensive quickly. >> why not bank of america? >> again, we just made some relative judgments and we didn't want to be long a portfolio of

five banks, and i think that citi and jpmorgan versus what we're trying to do in europe and china for investments. >> you talk about some of the bigger banks and sort of the supermarket banks, i'm curious where you stand on a morgan stanley or goldman sachs, that model, what do you think happens to that model? >> i don't know. we do business and so we see them in a slightly different perspective see them from a credit perspective and don't see any problems with any of the prime brokers right now. i think that model is a tough model, and you keep losing their best people, they start at their own shops, it's a tough model, not as easy as it was 10, 15, 20 years ago but the stocks are down quite a bit.

>> jim chanos will be sticking around. thank you for telling us some of the longs and shorts, what we're calling what's working so that's what's working for you. coming up carmax car founder and former ceo austin ligon on the election, angel investing and the auto industry. he is an actual obama surrogate i think. >> yes. plus it's thursday -- he's in the car business. now i get it -- which means weekly jobless claims are out, we'll bring you the data and break it down for you at 8:30 eastern this morning.

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start trading today with optionsxpress by charles schwab. a hedge fund titan known for his short call. >> if you would look at our portfolio and say what's really sort of overweight, it would be china. >> one more hour with guest host jim chanos. >> your money, why you are vote. >> you're the best. i just thought -- >> okay. you're on, mr. popular. >> the co-founder and former ceo of carmax says president obama is good for business, why we are better off now than four years ago. the managing partner of google's investment arm will tell us where the search giant is planning to invest $1

billion. the third hour of "squawk box" starts right now. ♪ welcome back to "squawk box" here on cnbc. first in business worldwide. i'm joe kernen along with becky quick and andrew dice sorkin. our guest host is jim chanos. i mix it up once in a while >> oh! >> oh! checking u.s. -- we're going to resurrect that guy's career single-handedly. we've tried with the "celebrity apprentice." he might not be even cable friendly for us with his, some of the, right? >> he walked out of an interview. >> we would need a delay. someone asked him is your career on the way back and he was -- >> really offended him. he took off his mike and stormed

out. >> checking u.s. equity futures this morning, most of the day we have been down about 35 points or so, we'll see what happens between now and the opening bell. we do know that bank america, that's still a dow component, isn't it? >> it is a dow component and they are laying off more people. in our headlines bank of america is reportedly accelerating a cost-cutting plan the "wall street journal" saying the firm is shedding a target of 16,000 jobs by year's end, a document dpic given suggesting it's going to have fewer branches and smaller mortgage operations and in our global headlines new data from china, pay attention to this one showing manufacturing there contracted for the 11th straight month, though activity is up slightly from august, some say the news spurs hope that a slowing chinese economy might finally be stabilizing. i think that you will probably be disagreeing with that, jim, and in europe, success for spain, at a widely watched auction of three and ten-year

government debt this morning, sale of 4.8 billion euros in debt drew solid demand with yields on the ten-year falling a full percentage point from the prior auction. we are counting down to election day, both candidates making their positions known to the voters. joining us is austin ligon, founder and ceo for carmax and also a surrogate for president obama. >> surrogate is always a strange word but i don't feel like i'm having a baby for anybody else but the rosy cheeks, celtic background, what can i say? >> austin, quickly, before we get into the full conversation we want to look at pictures of the space shuttle just taking off, "endeavour," leaving right now from houston and i believe it's leaving from ellington field, going to be flying over the johnson space center there as it's on its way to its new home in los angeles. it will be flying over tucson.

mark kelly was the last commander of the "endeavour." tucson is his home and of course else' the husband of former congresswoman kathie lee giffg d congresswoman gabrielle giffords. as someone who comes from the car industry why are you supporting obama and what he did with the car >> i. >> something i talked about long before the obama folks ever came along if you look back, when he took over, we were, we weren't stabilized at the bottom, we were collapsing and the auto industry was right on the verge, and in particular, general motors was about to fall apart, taken would have taken down the entire supplier industry with it, and as a result literally

caused a cascading event that would have made sort of the lehman brothers collapse look like small beer and what i was impressed with, the president put together a team, they went in and restructured, not bailed out and that's the key point, firing management was what made general motors successful. rick wagoner was a great human being but could never have turned that company around. the president had the courage to do something he knew people were going to criticize, send somebody in, fire the board, fire management, put new people in. bill ford is the hero in the auto industry he did that two himself, brought mulally in, why ford didn't have to be restructured. if gm's board was any good they would have done the same thing. in a moment of crisis you have no choice, the president took the action, too autosales up 60% from that point of view. general motors still not the world's greatest company but it's a survival, viable competitive company, chrysler is almost a miracle, you know, got

rid of a bad private equity firm there and so my view is when a guy does a good job at something, a job that's much better than anybody thought could be done, i tell you everybody in the auto industry thought that general motors was unsalvageable, but everybody felt like they were like aig, you've got to save them because they'll take the rest of us down if you don't, but we really are not very enthusiastic about it and you got a result that was really good and it's really powering an industry that's 21% of u.s. retail sales so that's a good result. >> mitt romney has had trouble in his home state of michigan because he was opposed to the structuring for how it went on. he's been on the record saying he would have preferred to see the bankruptcy court take action, you could have had financing that supported the companies in the meantime. do you think that could have worked? >> there was absolutely no financing out there. nobody in the world wanted to put a penny into general motors plus people were terrified of it and once again the key reason,

everybody understood if you put more money behind the management team they don't know what to do and if they did, they don't have the courage to do it. if they had, they'd have started down that path earlier and so you had to have somebody come in and take charge, who could not take a passive approach to this. >> even polls in michigan, they're even on whether people in michigan even support the bailout of the auto industry. ohio has a lot of union guys and probably going to play well. it's not unanimous even in michigan. >> the banks bailed out, the auto industry restructured. that's the difference. >> the president sometimes, they say well the auto bailout. it was not a bailout. it was a restructuring and they did exactly what you're supposed to do in bankruptcy and restructuring, get rid of the management, change the capital structure, wipe out the shareholders. i was short general motors. >> i wish they'd done that with some of the banks, we'd be

better off. >> i agree with you. >> what do you make of the certainty argument, you watch "squawk" and see ceos say we have the problem, there's not enough certainty in the system, too much regulation and too many issues. sometimes i push back and sometimes i don't. it's a real issue at the very least in the minds of the executives, a lot of executives in this country and may legitimately be a real issue in terms of the business. >> so for one thing, my focus now as an angel investor so i work with startup companies. we have never had this conversation in any of the seven startups. >> a lot of companies do it, it's not the same thing. >> these are tech, so i'll go on. you're right. you have some people who talk about this. we live in a very uncertain world. this is not something suddenly barack obama in the last 36 months created huge amount of uncertainty. 98% of the regulations were

there when we came in. we're going to argue the counter factual, we're stuck at 43 months above 8%. every other recovery we've ever had, this is below par. >> it's not true. you simply don't look long enough. >> have we had 43 months over 8%? >> yes, we have in the 1930s. >> prior to the depression. >> if you want to talk about relevant comparisons you have to go back to the 1930s. >> you're in the car business. i'm just telling you we have countless ceo after ceo after ceo that's controlling the purse strings on whether he hires employees and they're saying i'm not doing it. i'm flushed with cash i won't do it because of obama care or -- am i not talking? okay, i'll just listen. you go ahead. you just finish up until 8:30, go ahead. >> the challenge that you have is a lack of demand, and that's

what everybody -- >>is there a lack of demand? >> because the consumer isn't getting enough push behind him and -- >> we can go back in circles and chicken and eggs and do all this. there's a lack of demand for some reason, corporations are flush with cash, yes? >> corporations have borrowed a lot because they don't trust banks, because they've just been through a life-changing experience. >> rates are great, too. >> it's counter factual. >> i can just raise a couple of numbers? >> sure. >> as i go back to evidence. >> okay, sorry that it's just rhetoric. yeah, when these ceos come in, they're just all, they just all don't want their taxes raised, that's why they're saying it. >> ceos talk about not investing in uncertainty. capital spending in the s&p 500 was 4.1 trillion in 2008. it dropped to 2.9 trillion in o'09 you would expect, 3.3 in

2010, back up to 4.2 last year. so we're back up to capital spending levels in '08, and so there is investment going on. this is actual data. now, a lot of that investment, however, as opposed to adding jobs is downsizing jobs. >> is that investment in the united states or global? >> wel it's global and that's the s&p 500 but still, and that's happening elsewhere, too, the problem is technology investment is not adding jobs. >> it's productivity. >> there's a lot of the things going on. >> actually i think you're both right. >> maybe, i mean this election is about whether we lean government or private sector. if you can't feel that, if you really don't feel there's a difference between the vision of the future between doing it private sector versus doing it with government, you're not living in the country. you at least would acknowledge

that is the substantive argument that we're having here. >> i think it's a philosophical argument and i think the two parties in a lot of ways are different in terms of economics. >> hopefully we're not ready to do this immediately and not headed to a european welfare state, not in one foul swoop. >> i don't think we're talking about a change, i don't think the obama administration is changing, is talking about a change toward more government in a way that's any dramatic departure from what we've had for the last 40, 50 years. i think on the rohment know and ryan side they are talking about dramatically cutting government, which look, i'm not a democrat. i voted for george w. bush the first time. i'm an impiricist and -- >> you voted for john kerry? >> i voted against him the

second time. the problem is i don't think any of what the romney/ryan nobody is going to cut government the way they have proposed to do it nor should they. >> we need to address entitlements and raising taxes on people who make over $250,000 a year is not going to solve our entitlement or deficit problems. how would you fix medicare in. >> jim was talking before and he's absolutely right. the fundamental issue is not that we get too much service in medicare or in the medical arena, we actually get less than any other dysfunctional market, the real market we have to get everybody covered under insurance. we're not a company that lets people die in the streets. if you get sick you ultimately end up in the emergency room. >> it's a small part of the health care increase. >> all of it goes in together and the real issue, i was every year for 11 years when i did

budgets for khcarmax, how do we get below double digit health care for our employees. i don't think the bill is perfect but i think we're going in the right direction. >> you're not attributing the lower utilization -- >> part of it is recession driven. we're going in the right direction. >> obama care is not enforced yet. >> we've got to have a move to reduce costs, that's what the difference is. it's not reduced services. >> you have friends that are business people, right, you get in any arguments with them? you're an outlier. >> less than you think. you have the big, mature business guys on here. >> we have small business guys constantly. >> austin, thank you very much for coming in. >> thanks a lot. >> appreciate it. coming up more from our guest host jim chanos and disrr of the -- what? >> thank you, thank you. thank you. >> god almighty, william maris

is making his way in to the "squawk" set. it's sad. he's a managing partner at google ventures, the investment arm of google. tomorrow, a rare interview with hedge fund heavyweight ray dalio. >> were you surprised when bernanke announced his plan? >> i thought it was a good plan. >> he weighs in on the economy, quantitative easing and a lot more, an interview you can only see on "squawk box" starting tomorrow at 6:00 a.m. eastern.

welcome back to "squawk box" everyone. take a look at shares of conagra. the food processor earned 44 cents a share, eight cents above estimates. it's increasing its quarterly dividend. >> if you are a disruptor in the world of technology and looking for funding, google's investment arm is planning to invest $1 billion in startups in the next five years. joining us is bill maris, google ventures managing partner. we happened to be talking yesterday with cramer and he

talked about one of the brightest spots in the country is biotech and biotech investing and immediately when we hear google and google ventures i'm thinking i don't know, maybe i'm sick of social media but every idea someone has when they come in here is something that prevents me from actually socializing with anyone. i'm just going to be in my basement, like i don't know what you do on that stuff, but aren't there things other than just the digital age? >> sounds like you need to talk to different people. >> yeah. >> there's a whole world of innovation outside of social media, a huge growth area but we're investing a lot of money. >> any in biotech? >> sciences to are sure. >> what are the most exciting areas in. >> there are two areas. one i'm interested in macro trends that are five or ten years out, cryogenics, nanotechnology, and then there are sort of trends that are occurring sooner, there's a company called foundation medicine that we're invested in, that's created cancer diagnostic, the euro cancer so

we know what cancer you have and treat that -- >> personalized medicine. >> exactly. >> before our time but it's already happening in certain instances. >> correct. it's the way medicine is going to go. >> i wondered do we hit a wall, it's all media, isn't it? this social is somehow getting to people to advertise something but eventually you need something that you're actually selling them, right? >> we are invested in over 100 companies now, some of which are in social media, many of which make things. >> media in general seems like it's all we're going to have left. >> the media talks a lot about media. it's not jockeying but there are other things in the world, too. >> cryogenics, that's going to be a feasible thing and how many years? >> like walt disney type? >> part of my job is to discern the fine line between crazy and genius. >> did you see the article in the "new york times" today, one

in five kidneys get thrown out. we have a kidney supply of transplant items. >> you're touching on another trend. i didn't see the article. >> lead story, one in five kidneys get wasted. >> there's another trend we're interested in, organ replacement. the technology exists to do these things. >> to make your own organ. >> grow them? >> to grow them in a lab. >> which would not be subject to an immune response if it was your own. >> if it was from a pleuripotent deduced from your own stem cells. >> how realistic is cryogenics? >> to discern between crazy, realistic and impossible, we're looking for entrepreneurs that have a healthy disregard for the impossible. if i start from a place by saying that's not realistic or not possible we won't make any investments. so i think it's very realistic. >> do you think of your mission differently than the other venture capitalists in the

valley in terms of return, in terms of time horizon? >> i think so. significantly different. we have a much broader and deeper team but at a larger picture, we're investing for return first, but -- >> return first is -- >> return first is a venture fund, we get paid on our returns but there's a bigger picture here, the reason that i'm doing this job, that we're looking for entrepreneurs that want to change the world for the better. and that's important. so i do think our values are a little bit different than the typical sort of venture capitalist you might meet. >> when you say you have a deeper team, you have a lot of experts that you can call on to help people and mentor them through? >> typical venture fund is a confederation of eight or ten partners responsible for the full life cycle of a company. we have over 50 people on the team who are recruiters and engineers and designers and entrepreneurs, people that have built things before to try and help founders solve problems they encounter as they grow

their businesses. >> sorry to harp on this, cryogenics, i want to know if this is a reality we could see sometime in my lifetime. >> it's a reality now. there are companies that specialize in cryogenics, alcore, if there is a leading company in this space, i think it would be them. it's going to sound crazy again but if you want, after you die, they'll freeze your body in the hopes that someday medicine will be able to kind of reconstitute your consciousness. >> oh, great, how much is that going to cost when we do that for every person? >> didn't walt disney? >> it's not end of life we're capping in buying our own policies. we have to buy our own policies to come back alive. >> you immediately cut the cost, making our lives better. >> that is something we have to think about. that's an amazing idea. we still have einstein's brain, don't with he? >> i wouldn't know. >> i think we do. all right. are you rich yet?

>> that's not really a goal. that's not really -- >> i mean -- >> we're three or four years into the found, had a bunch of exits but these are long cycles and you asked about our time horizon, we think sort of longer term than most vcs. >> any exits to google itself, is that part of the strategy? >> it's a good question. i'm having trouble thinking of the answer because it's not something we think a lot about. we've had an exit to twitter, we've had companies go public. >> this is an early feeder fund? define companies later google could buy? >> it would be great if google wants to buy a company we're invested in. there's no kudos to me. milk, one of our partners, kevin rose started a company. >> to do lists. >> milk with as an ink cubator,

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we are just a few minutes away from the closely watched weekly jobless claims number. economists are looking for initial claims to come in at 373,000, down from 382,000 the previous week. more important than ever, as we get closer to the election, but we'll bring you the numbers and market reaction, after this. th , a crash management system and the world's only tridion safety cell which can withstand over three and a half tons. small in size. big on safety. we create easy to use, powerful trading tools for all. look at these streaming charts! they're totally customizable and they let you visualize what might happen next. that's genius! strategies, chains, positions. we put 'em all on one screen! could we make placing a trade any easier? mmmm...could we? open an account today and get a free 13-month e ibd™ subscription when you call 1-888-280-0149 now. optionsxpress by charles schwab.

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we're just seconds away from the weekly jobless claims number. s rick santelli is standing by and joe maris as well. the numbers, please. >> 382,000, 382,000, so we really see a ramp-up in this number to some that were looking to be more in the 350 to 375 range. this is where it was released last week prior to slight recessions. if very look at continuing claims, they're also pretty much lateral, you get these slight shifts, but we're hovering just over 3.27 million, our last look before slight revision was 3.28 million. the big news today shouldn't be big news.

dallas fed president fisher talking about there might be more inflation down the road with the programs and not a lot of impact on the unemployment rate. you think? boy that's breaking news, isn't it? some of the issues regarding europe and the pmi slowing there. i think even though we had good options and some of the challenged european economies it's almost ironic that the shift now to many of the traders down on the floors that i deal with is more about how the big export economies like china, like the u.s., like germany and it happens to be in that order, are going to find newer customers as everybody tries to put the kibosh on the strength of their currencies. >> you haven't been watching today, rick? >> pardon? >> you haven't been watching today in. >> i wasn't able to today. sorry about that, joe. i wish i could. >> no, the last 20 minutes you probably wouldn't have wanted to watch but we had richard, dallas fed president talking about why texas is doing so well, talking

about regulation and talking about uncertainty, and that got nowhere but i don't know, i had just heard some stuff that i wish you had seen it but you missed it. let's get to joe naroff, founder and president of naroff economic advisers. these claims numbers week after week indicate the jobs market, this is almost a leading indicator to an employment report, isn't it? >> yes, it is. this is a real disappointment. we were hoping it would trend down, by now, closer to 350, the fact that it seems to be stuck in this 375-380 range, that's not good news because the kind of job report we got last month seems to be something that we may be getting once again. this is really in contrast with some of the other numbers, whether it's the joltz report or the adp.

we're not getting a lot of job growth. >> who do we blame this time, joel, do we blame europe, china? "the journal" has an interesting piece on welfare reform inside the obama work waiver, it's worse than romney actually says. i heard it's not factually correct. can this migrate more people out of the workforce to lower the participation rate? >> well, the participation rate's kind of a tough thing at this point. first of all we have all the boomers slowly retiring. >> that's going to continue to go down then? >> that's going to go down. also you got to remember that the extended benefits on unemployment insurance, we have people on unemployment insurance for nearly two years. in normal cases if it was 26 or even 52 weeks, they would have off the benefits and probably dropped out of the labor force well before this time. so we're seeing some of that as we see the continuing claims go down, expect a labor force to go down as well, so there are other factors that really confound

what's happening with the labor force. it skyrocketed when the boomers got into the labor market. it's coming down as a result of that, and there's more than just a simple year-to-year change going on. i think it's a cyclical one. >> the only kind of uncertainty that democrat also really cop to was the debt ceiling uncertainty which was caused by the republicans, so i mean that uncertainty was a big gripe on unemployment. >> blah, blah, blah. >> what's causing it now? >> i think the biggest uncertainty is honestly the fiscal cliff. i don't think it's the election. if it was just the election, everybody would know on november 6th, early november 7th, when tfr happens, who the president is and whether you like it or not you have to deal with it for four years and you move on. it's the fact that no matter who gets elected we have to get through a lame duck congress and then deal with this problem, even if it's pushed off, it still has to be dealt with in the first half of next year, and

that's the uncertainty that's creating the cautiousness. >> fiscal cliff fatigue, no one acts like it's that big of a deal. durbin says maybe a six-month extension of the bush tax cuts, would that help? >> that's what i'm saying but it doesn't necessarily change the uncertainty. all it says to a businessperson, now we have to figure out what they're going to do by june 30th. we know that things may go forward. you're not going to invest, you're not going to hire if you think the cliff will be reached. >> kevin warrish wanted long-term solutions. six months -- >> that's way out. >> if we know six months it's a start. are you gone, santelli? >> no. as a matter of fact i'd like to make a little comment. you know, i keep hearing, i had some debates yesterday with some analysts, and they disagree and i think november 7th is when we know and they're not looking at all the combinations.

let's just suppose these polls aren't correct and let's suppose the republicans, the conservatives take the house, the senate, and the presidency. do you think there's going to be any doubt as to how the fiscal cliff gets resolved, long before those people are sworn in? so i do think that there's a lot more that's converging on the election date and the outcome in the fiscal cliff. it's just that some of the assumptions are based on what's being printed about things in the papers and the polls, and throw that in the bottom of the bird cage. i love that op. ed regarding the welfare reform and the previous president who spoke at the convention wagging his finger telling us these things weren't necessarily true. whenever he wags his finger, be careful what comes next. >> i've seen that finger wag. >> oh, yeah, we've seen it before. we won't talk about when, but we've seen it before. >> i've seen that before. all right. joe naroff, rick santelli, i can't reach out and touch either of you on the arm and thank you, but thank you. >> i'm kind of caught up with

walt disney. >> on cryogenics. >> apparently it's an urban myth, that he's not actually frozen. >> einstein we've got his brain still. >> we do have it. >> is it frozen? >> no, it's in a jar. >> i hope so. >> it's not slowly -- >> it might not be frozen but preserved. >> rumors are he's buried under disneyland's pirates of the caribbean attraction, it's all urban legend apparently. >> with the pirate theme again. >> argh! >> coming up, more from our guest choes jim chanos and don't miss "squawk box" tomorrow, we'll talk markets, the question and qe infinity with mohammed el erian and stanford's john taylor and a rare exclusive interview with ray dalio, founder of the hedge fund bridgewater associates.

welcome back. let's get more from our guest host today, jim chanos, founder and president of kynikos associates. jim, we've been talking about high frequency trading today, whether or not these guys have an unfair advantage and there are different blocks you can put them into, whether they're paying to get ahead of the line at the exchanges, whether or not you can use your own algorithm is probably another. since that conversation in the last hour, i've heard from someone who is a big value

investor who says he believes high frequency trading front running cost his clients a few extra cents a share to get into big trades. do you think that's likely, do you think that plays out that way? >> i don't know if he's talking about the rebate issue that we talked about off camera earlier or not. i don't know exactly what he's saying. if you are a limit trader, you know, if i want to sell something short of $100 a share and i get my trade in order, sell it short at $100 a share, he's not shorting it at $99.97. so i'm not quite sure what it's referring to, if that's the way you trade. that's the way we trade. we don't turn our portfolio over very much. once a year, that's glacial by hedge fund standards so this world is somewhat alien to us. >> it also brings up the idea though that greater volatility,

that that is something that investors consider greater risk, and as a result, it costs more to raise money for businesses. there's not as much liquidity. >> if you're in the mutual fund business that would have an impact because you have retail investors, we have institutional investors so it depends on your perspective on these things. going back we get lost in the weeds. the issue is the fairness issue. everybody could agree. >> you probably can't stuff the genie back in the bottle and get rid of high frequency trading all together. >> technology and trading goes hand in hand. there's always somebody looking for a better mouse trap. as long as it's disclosure and fair and if i have a better mouse trap i should be able to make more money. i think everybody is fine with that. >> asynchronous, that certain investors have more than the retail guy? >> if it's order flow, is that inside information, i don't know. i'm analyzing financial

statements better than you, that's the marketplace. that depends on what the information is and how valuable is it and talking about he has an advantage on me for a nanosecond or for whatever to get a half a penny. the average investor shouldn't worry about that. the average investor. your viewers should not be worry being that. the issue gets back to fairness and externalities that raises and that's something we really need to be vigilant about completely. >> let's shift gears a little bit. you talked at the top of the show when you joined us at 7:00 how you think central committee is referring to china and central banks, kind of go hand in hand and aren't going to be able to control this. we haven't dug into what you think about qe3. >> i don't want to disclose, i sit on a fed advisory committee so these are my opinions. i'm concerned as a lot of people are that the fed is taking away

market signals. by keeping rates artificially low for long periods of time we're distorting the marketplace and one of the things the marketplace is good for is sending us signals that something's wrong, disfal cliff -- >> what about the dislocation, what about the bubbles that result from -- >> absolutely. >> there's no signals, then you don't know -- >> to open-end anything don't you run the risk now, maybe admittedly small but it's there, what do you do when this doesn't work? we're doing qe3 or qe infinity because one and two didn't do their job and at what point do you erode the credibility of the institutions by increasing your mandate? and those would be the things i would worry about. >> but isn't it relative, if everybody is printing money, japan, europe and we are printing money, when you talk about eroding the reputation or the credibility of an institution, it's all relative,

right? >> yes. >> it means it will be a global collapse instead of a domestic collapse. >> and we'll all own gold and a shotgun. >> do you own gold? >> i don't. >> do you own a shotgun. >> no. >> that will get you the gold. >> have you been chased by someone with a shotgun? >> these are issues that i think really are -- >> jim, kynikos really, its, cynical sounds like kynikos, you know why? that's where it came from. >> yes, but the cynics were -- >> i read about you and i wouldn't want this to be, contemptously distrustful of human nature and motives. you like to watch the world burn. i was right about that. >> no, no. the cynics were seen as essential in the greek democracy to basically cutting through the bull of the time, if you will.

>> bacteria that decomposed -- >> bacteria? >> i don't know where you're going with this okay. >> they're essential to keep everyone alive. >> getting back to qe3, we're in uncharted territory, and you know, who knows. >> and the exit we four it was a four-letter word, exit. we have to take bernanke's word for it he can do this gracefully. i don't know if he knows he can. >> exit what? >> all of this balances, can he pull back in all of this extraordinary -- >> doesn't that present its own issue for the markets? >> i thought we went from the volcker era to the g. william milan areera. >> it's clearly unprecedented. >> you love it because it will mean more doom and destruction. >> i want to get my steak dinner paid back. >> from liesman.

i promised him you wouldn't bring that up. >> where is he? he's hiding on me. >> we'll talk to another person on staff who we are dying to hear his take on this, jim cramer is getting fired up, he'll talk china with jim chanos and we'll head down to the new york stock exchange right after this. stick around. the equity summary score consolidates the ratings of up to 10 independent research providers into a single score that's weighted based on how accurate they've been in the past. i'm howard spielberg of fidelity investments. the equity summary score is one more innovative reason serious investors are choosing fidelity. get 200 free trades today and explore your next investing idea.

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oh the two ladies. >> we're on air. good morning, kayla. zbl good morning, joe. yesterday chase was the latest victim to have their website go down first thing in the morning suffering relapses throughout the day. chase support handles on twitter about questions all throughout the day and into the night, but t sbres /* t interest shunting thing is that the bank of america and the new york stock exchange were targeted by islamist groups accord shunting to -- it is unclear whether any

of these are together and whether the data has been compromised. the chase website has a typeny apology say shunting we are sorry for the inconvenience and call this customer service number if you experience any additional outages. no such message on the bank of america website and we expect some of tthe problems have alre been dealt with. they put this under there for potential crimes. we'll have more news as we get it. back to you. thank you very much. jim, we are very glad you are here. we would like to put you both together on the site right now. i thought the most pointed comment you made was about fairness. high frequency trade shunting.

if you are not zip shunting and out, you wonder if it is legitimate for you and their save savings. the issue is the average investor get shunting a fair shake and there's a myriad of issues that came up during the crash and the financial crisis on this issue that have not been resolved. and i think that until we resolve some of these things and get people to think that no one in the u.s. has a problem with the markets going up and down. they don't like feeling somebody has an unfair advantage. what about the cry in smackdown,

kramer, come on. jim, i have to ask you this, i recommend any chinese stocks, but that is a legitimate asset. you had four things yesterday. mike sutherland came on as the ceo of joy global as plain as plain can be and said for the last two months electricity stabilized after a aheads you decline and then the freight jumped on monday. am i look shunting for green shoots sn i'm look shunting for something contra to the idea of everything bad to china. the real estate market we were first concerned about is still sort of bubbling along f you will. this is a weak number. as their company gets more service oriented as opposed to

manufacturing it is still a bad number. china is going to grow by 30% plus gdp. this economy is hooked on steroids and suddenly now they are all firing and i'm mix shunting metaphors, but there are a lot of things going forward and there's questions about leaders for the first time. we are see shunting real political issues for the first time in a long time. zbl you did just agree on the same point. jim, you wouldn't invest in chinese stocks. he's been shorting the shares. they just treat stocks as if they are mandated prices. anybody who owns stocks there reminds me of japan in 1988 when

you say, we are take shunting up tokyo railway tonight. it is as corrupt as you can be. it is not an investment price. when we come back, we'll get parting thoughts from our guests.

a program song. >> no one told me. the stock of the day norfolk southern. they have lower revenue and surcharges. they are trading lower on the news. and grecko was right, i give him

create for that. we'll get final thoughts from our guests. let's get some final thoughts from our guest host, jim chanos. you're up. would you be lightning up on your shorts or starting to think about getting long? >> in terms of the banking system, i think we probably would be more interested in the more short than less short given the rally. though they have had a huge, huge rally, the european banks. and i don't think structurally -- >> ready to get back in -- >> and head to the shorts. there's a bunch of interesting ideas in the u.s. >> nothing long yet in europe? >> not much. not much. >> how long are we going to be -- it's been how long already? over two years. >> yeah. but, again, keep in mind there's been a monstrous rally off the