>> that's great. i was going to do that at the end. >> that's what they told me to. >> jpmorgan to do, loved the action yesterday. think it's going harder. >> murph. >> buy home depot on the dip. >> weiss. >> great job expressing the case for aig, buy aig. >> pete, by the way, you wouldn't debate. "power lunch" begins right now. and it does. we start right now with the markets which, of course, are really on the move. triple-digit advance in the dow jones industrial average, up 110 points. the s&p is up almost a full percent now, 14 points, and the nasdaq, basically that is a 1% move to the upside, up 33 points. that's just one of the developing stories we're following right now. also on the agenda, key hearings on syria happening right now, and yet another trading glitch. tyler is out this week. simon is my partner down at the nyse. hi, simon. >> yes, sue. good afternoon to you. it's become apparent within the last 90 minutes that the electronics trading system here at the nyse is not talking to the server at the nasdaq that

well at the moment, and in a moment mary thompson will join us for the nyse side of the debacle but first bertha coombs is live from the nasdaq. bertha. >> reporter: simon, this was a bit of a sort of son of the flash freeze that we saw back on august 22nd, the nasdaq saying that, its quote system, its ss.i.p., the system and data feed that gives out quotes, failed this morning at 11:35. they say the outage lasted six minutes and it was contained to a range of tickers. now, the nasdaq says that this time it appears the problem was a back end server failure and that the backup system did kick in. it took about six minutes. you'll recall back on august 22nd it took about 30 minutes for them to get the system back up and running and figure out what the problem was. back then the issue was a software glitch. a software problem that caused them to shut everything down on so-called tape-c, the nasdaq

distribution feed, so we saw a three-hour halt before they finally were able to bring everyone back online and bring the system on in a way that people felt would not be too disruptive after that major halt. now the nyse arca says it's broader than what the nasdaq is saying, but what everyone agrees on is right now the system is back and up and running but clearly, guys, it does call into question the fact that this system has gone down for a second time in as many weeks. >> yes, and indeed questions down here at the nyse as well. mary, what are you hearing? >> nyse says first of all everything operated normally during this glitch, but what we said which is different than what we heard from the nasdaq is they are saying it affected all tape-c stocks, and this happened for three minutes longer than what the nasdaq said, that it affected the tape-c stocks, the trade at the nyse arca for nine minutes, not six minutes.

a difference of opinion as to, a, what stocks were affected and how long this glitch happened. but in a statement it said all of its equity systems operated normally for the duration of the event and all systems continue to operate normally at this time. >> matter, thank you. sue, back to you. >> "fast money"'s trader jon najarian is with me, the second time in as many weeks, shorter obviously than the first time. >> thank goodness. >> a little bit of fingerpointing between the two exchanges going on right now. >> yeah. >> what does this do for investor confidence? >> luckily it got up a lot faster, sue, so that's the good news. the bad tuesday is twofold, one, that there's a disagreement about how long it was out. >> exactly. >> and, two, that it affected all symbols according to the new york stock exchange rather than a select few so this will obviously be part of mary jo white and the s.e.c. talking to the exchanges. >> and they say they are inquiring about that right now. >> you bet they will, and they will say have you finally fixed it and why do we have all these multiple exchange tapes? why don't we have a consolidated tape and so forth. >> exactly.

>> i'm sure the questions will be raised. >> with the competition between the two exchanges will we ever get one consolidated tape. >> it's a big business. >> mandated by the s.e.c. the same way it's mandate that had they share the print revenue, if you will, based on the percentage that trades on the exchanges, so we'll have to see, sue, how it ends up shaking out, but a lot of this is basically to support the payment for order flow, high frequency traders get. >> absolutely. >> one of the things i really disagree with. >> jon, thank you so much. appreciate it. let you get back to work. >> okay. >> breaking news, kate kelly, s.a.c., more -- she's on the phone with us right now. what have you got? >> interesting news out of s.a.c. capital fighting hard to keep their portfolio managers and analysts on board amid the corporate indictment and other legal issues. they have announced a higher base salary and higher incentive bonuses for people who stay on board for the next year or two. these payouts will add to trader compensation, at least through early 2015. so you can discern from that

that they have plans to stick around for at least another couple of years. they have always said they are going to fight these lawsuits and they are going to try to keep people on board and these indications are that they are doing just that. for this year, for example, sue, they will get 3% bonus of whatever profit the trader makes on their books in addition to the usual bonus, and starting next year long short managers will be creating an increased base salary of 300,000, up from 200,000, so a lot of interesting incentives there, sue. >> do we have an idea what the attrition rate has been so far, kate, before this particular retention program was announced? >> we. do they have had some departures. there was a group of industrial traders. i believe it was eight or ten folks who announced plans to start their own hedge fund and leave somewhat recently. other than that the departures have been few and far between. opened, i'm not sure that i would read into that as people being loyal to s.a.c. as much as it's a bad time of year to leave a firm. compensation tends to happen in the first quarter, so i think

the real move is the one that this announcement is intended to stave off, and if that happens it would probably be early next year. >> kate kelly, thank you so much. kate has the latest onsy. . a c. >> let's send it over to dominic for a quick market flash. >> shares of konno phillips are being helped along by the news of a legal win saying that an arbitration panel at the world bank has ruled venezuela acted illegally when it seized the company's assets in the country back in 2007. while this is a win, the company did say that the remainder of this arbitration process could take some time to complete. the energy assets, remember, were seized under now deceased former president hugo chavez's administration and led to conoco taking a 4.5 billion charge, simon, so we'll see how those shares react. they are at least positive for the time being. >> president obama has been making his case on syria forcefully again today on the way to the g-20 summit in russia during a stopover in sweden. he says if congress votes no, it

will put american prestige and credibility at risk. john harwood, our own john harwood, is following congressman in a key oklahoma district. see what the last 24 hours have been like for him dealing with the grass roots emotion on this issue in a moment, but first we go to capitol hill where eamon javers is monitoring the situation in europe and also, eamon, several committees that have taken up the issue today on capitol hill. >> reporter: yeah, that's right. today secretary of state john kerry is testifying for a second day in a row on the hill. this time in front of the house of representatives, and for the second day in a row he's been met with protesters from the group code pink. they show up at a lot of events up on capitol hill today, and they showed up behind secretary kerry holding up blood red hands to make their point that they don't want to see a new war in syria. nonetheless, kerry making the case, making the administration's case here for this attack. take a listen to what he had to say just a few moments ago. >> as we debate, the world is watching and the world is

wondering not whether assad's regime actually did this. i think that fact is now beyond question. the world is wondering whether the united states of america is going to consent through silence. >> reporter: now secretary of state john kerry is also leading some classified briefings up on capitol hill. the defense secretary is up there, the chairman of the joint chiefs of staff is also up there. they are having classified briefings, giving intelligence to members of congress to give them a better severance exactly what they say they know about what's going on in syria, but one person who says his mind hasn't been changed is senator rand paul. take a listen to him. >> i don't see a clear cut or compelling american interest. i see a horrible tragedy, but i don't see that our involvement will lessen the tragedy. i think it may well make the tragedy worse. >> reporter: so, sue, we have the defense secretary chuck hagel testifying even as we speak right now up on capitol hill. we'll have to take a listen to

his testimony and the reaction of some of those members on the house foreign affairs commit and see what they say after this hearing to see how much likelier we are to be having a military attack or a vote on a military attack that the president wants to see by the end of the week next week as some people have said might be the earliest possible time that they can do this, sue. >> right. eamon, thank you very much. we look forward to your continued reporting as those hearings continue on capitol hill. meantime, righters is reporting that syria just saw the highest defection from the assad administration since the civil war began in 2011. his name is general ali habib, a former syrian defense member and a member of president bashar al assad's allite sect. congressman from minnesota now joins us. pleasure to have you with us. which way are you going to vote next week? >> my intentions are to vote no, and i'm doing everything i can do to stop this act of war from

occurring. i've had around long enough to be at both ends of the so-called wars choice. i'd like to be able to weigh in and successful in stopping everyone for it. >> the president's arguments for military convention have been not been compelling enough. what have you heard from the leadership about that, and what more would you either like to hear or see that would change your vote? >> well, i'll tell you what. i've listened to all the briefings. i've read the classified documents. i've discussed it with the white house, secretary kerry. here's some things we do know, okay. number one, just got word from the chairman of the joint chiefs of staff it's going to cost $500 million to set up this attack. it's going to cost $1 billion a week going forward with no boots on the ground, and the possibility of the damage it will inflict it much more costly and this is all a time that we don't know exactly these missile

strikes might accomplish. we don't know for a fact what kind of a retaliation and response there might be, and it's a great risk. there are other ways to deal with. this one is the international criminal courts where leaders are taken to task for crimes against humanity, and that's what we should do. >> all right. >> i'm a business guy. i'm in the sawmill factory business here and i own an expert trading company and have done a lot of business in the middle east. >> congressman, your line is breaking up a little bit. >> we have no friends in this conflict. >> congressman, i'm sorry, the line is breaking up a little bit so we'll have to leave it there. thank you very much for giving us your perspective. we appreciate it. simon, down to you. >> the good news is we're 110 points higher on the dow on one of the major reasons for that, phil lebeau in chicago, is now what the best automotive sales in a month for almost six years. >> yeah. you're looking going back to 2007, simon. this is one of those infliction points that traders need to pay

attention to because there are some who are saying from here on out the auto industry should be above a monthly sales pace of 16 million vehicles. at least that's the estimate of one gm executive and they are on pace, the industry as a whole, on pace for greater than 16 million vehicles for the month of august. that would be the strongest monthly sales pace since mid-2007. take a look at all of these automakers. the key thing to keep in mind here, all of these sales coming in anywhere between 5 boston and 7% above what analysts were expecting. pickup trucks continue to be a big driver for the big three. in fact, in the month of august pickup sales were up anywhere between 15% and 29% depending on the brand you're talking b.ford sold an f-series pickup truck every 42 second in the month of august. that's why ford is going to be increasing production, not just for the f-series, but for all of its vehicles by 7% in the fourth quarter. in fact, the number of automakers will be raising production schedules in the fourth quarter because of this

demand that's out there. again, one general motors executive on the conference call today said the 16 million vehicles sales pace, it's here to stay. not just a one-month pull forward spike in sales. they believe that we are going to see the industry continue to trend higher from here. that's why we want to take a look at shares of all the auto stocks. don't see moves like this often where ford and gm are up greater than 3.5%, and it's because many believe that we are just beginning to seat automakers continue to move higher. simon. >> great news. thank you, phil. meantime, shares of microsoft are in negative territory, billions lost there. morgan stanley becoming the first major firm to downgrade the firm. morgan stanley is cite being the risk and cost involved in executing the integration of the nokia unit, sue. >> a 2% move to the downside. simon, thank you. coming up next, the great american housing market. mortgage applications telling a new story today, and we have one

of the biggest executives in american reigh real estate, the ceo of caldwell banker on "power lunch." see where he stands coming up next. n in the industry. i set goals and worked hard to meet them. i've made my success happen. so when it comes to my investments, i'm supposed to just hand it over to a broker and back away? that's not gonna happen. avo: when you work with a schwab financial consultant, you'll get the guidance you need with the control you want. talk to us today.

welcome back to "power lunch." i'm dock nick chiu. we're watching shares of aztec pharmaceuticals, this on report out of japan's nikkei news that the company will be acquired by otsuka pharmaceuticals in japan for around 90 billion yen, $100

million given where current exchange rates are. aztec pharmaceuticals, a report out of nikkei in japan, that they will be acquired by otsuka pharmaceuticals. no confirmation so far so keep that in mind. now on to diana olick in washington, d.c. >> reporter: mortgage applications moved up 1.3% last week drive-by by small gains in refinances. applications to purchase a home were down a little less than 1%, and they are down 9% for the past four weeks. refis rose 2% week to week after falling for most summer. they are down 15% in the past month on higher rates. refis bumped up as the rate on the 30-year fixed fell slightly from 4.8% to 4.73%. while the rate fell, this is second week in a row that the conforming rate is actually higher than the jumbo loan rate. usually it's the other way around. sue? >> indeed it is. diana, stay with us. let's bring in coldwell banker budge husky. thanks for being here. >> delighted to be back. >> let's begin with the state of

the market as you see it. diana very accurately every single month gives us all the data but the data isn't always consistent. how do you see it in a broader view? >> what we're seeing is a continuation. recovery. as we expect, what we really experienced over the last few years was not a housing correction but an overcorrection so we had a very rapid pace, i kind of compared the best analogy of pulling down a rubber band and it snapping back into place. what we're beginning to see now is a move back towards equilibrium in the market so while we should continue to see great direction, a very good positive pace, we'll start to see a little trim as far as the year-over-year gains. >> what about the move in interest rates? granted we're at historically low levels and everybody forgets that if we haven't been in a housing market for a number of years, but that creep up in mortgage rates last month did seem to spook some people. >> i think it did cause a few people to actually buy earlier. in fact in the cycle and that's where you saw resales up 16% in

july versus the same period last year. undoubtedly there's a correlation, but i would suggest it would require a much greater swing in interest rates to impede the progress of the recovery. >> yeah, diana, an area that you've been following very quickly, very closely rather, that it does get those look y ls off the couch and into the refis and there's a bigger question whether longer term it has an impact. >> and i think more than the raising interest rates, it's the lack of inventory for homes for sale on the market and would i love to hear from bud what he thinks is going forward. what exactly is keeping so many home sellers from listing their homes given that we're seeing a rise in prices? >> that's a great question, diana, and i think the observation is accurate. when we speak to many of our agents out on the marketplace they are far less concerned about the slight uptick in interest rates which is also indicative of the improving economy and they are more concerned about inventory.

as far as inventories we know, a slight uptick. we would anticipate that to happen as more homes move into positive equity position and, of course, we know what's happened in the distress cycle, that's greatly been reduced as the number of distressed assets in the marketplace eventually. at some point the traditional channel has to fill that gap that has been there from the -- been really filled by the distress market over the last couple of years. >> well, what are the home sellers saying that's keeping them on the sidelines so much? i mean, we know that they have gotten more home equity. we've seen millions of people come into positive territory. i'm curious what your agents say about why people are so they are vows to sell. >> i think there always is a tendency to try to time the market which we know is becoming a little bit harder to do, but, you know, i think more than anything it's -- it's an assessment of their overall impressions of the economy. i think there's still a little hesitation. people want to see stronger economic growth and more progress made towards

unemployment rates and just feel better about moving on, but what we are saying i think that has been the case, you have had more traditional sellers enter the channel, and i think we're reaching a point where many of them have hesitated over the course of the last few years and are now reached a point where they are ready to take their lives off hold and simply move on. >> are sellers realistic in what they can get for their houses? when i hear people, now i'm hearing the phrase it's a seller's market so maybe i don't have to reduce the price the way i might have had to the way i did two years ago. >> it's remarkable how quickly the pendulum has swung. >> absolutely. >> from a buyers to a sellers' market and now we're reaching a point where the recovery is all about the hyper local conditions and the availability of inventory and do you have a number of people who have a position where they don't have to move so they are assessing it on the benefit of, well, if i can get this particular price

then i'll do it. >> feel like they have a little pricing power. >> sure. >> diana, thanks as always, my dear. >> thank you. >> simon, down to you. >> ahead on the show, sue, a first look at the new samsung smartwatch. that's after the break. will people buy it? the burning question, and more on the surging markets. general motors is up now almost 5%. the bulls are back today and automotive intel is leading tech. juniper networks doing well. more "power" in two minutes. >> coming up, power pitch, startups give us their 60-second pitch and we give you insight into the fast-paced world of venture capital. >> what's the feedback that you get from the students? >> how is questioning actually enhancing the learning? >> do these founders have what it takes? >> now we have to work out whether or not we are in or whether we are out on top hat. >> stay tuned to find out. ♪

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time now for our series "the power pitch" where entrepreneurs get a chance to pitch us their big idea. >> i'm mandy drury and on today's power pitch we have a company that wants to improve education by letting students use their smartphones in class instead of putting them away. andrew desouza is the c.o.o. of

top hat. before that he was a consultant with mckenzie's media practices and this is his power pitch. >> hi. we believe the classroom is broken and we're using mobile devices to fix t.thinking back to the college lecture. the professor is up in the front talking, scrambling to try to take notes and probably not retaining very much. professors put in a ton of time and effort preparing the lectures but have no way to know how much of that is being retained. students can't just wait and cram for an exam. this is just the beginning. we also use this platform to drive live discussions, realtime simulations and in-class tournaments. we're being used in over 300

colleges around the world and our goal is to get this in the hands of every student and every classroom to significantly improve their learning experience. >> okay. well, andrew is on the right side of your screen. he can hear us but can't react just yet. also here with me in the studio is luke williams, the executive director of the berkeley center for entrepreneurship and innovation at nyu stern business school and josh elman and josh's current investments included education startup creative live as well as media startups. guys, great to have you on the show. let's huddle up and have a discussion about what we think about top hat. >> as a professor i can't tell you how annoying it is to have people distracted on their cell phones or computers. what i want to find out more about is how is questioning actually enhancing the learning. >> i love the idea of changing the call of getting people on

their smartphones. i have a little bit of question of what this does to both really change the learning. >> i was going to transform it into a crowded market was one of my first questions and the other is he's got 80 employees. that's a lot of people to pay. okay, andrew, you're now in the hot seat. luke, first question goes to you. >> your pitch just looks like it's replacing those annoying little, you know, clickers that people have to respond to multiple questions. how are you labeling this? is this a platform, a system? >> it's a realtime mobile learning system. it's a platform for engaging large audiences of people on their technology, and that can be on their laptops, tablets, smartphones, even simple sms cell phones. rather than the lecture being a one-way content delivery mechanism, we want to really enhance engagement and provide that realtime feedback. >> josh, would you have a question for andrew? >> how does your product really take this outside the classroom so students engage in learning beyond just the lex tour?

>> because it's web-based and all hosted in the cloud, a lot of instructors will assign content and activity outside the classroom and go through the results and then really focus the lecture on the areas where there are gaps. >> what revenue do you have, for example, at the moment? >> tonight talk about the revenue publicly but in over 300 oounsz, and there's a couple of business models. one is we get professors to adopt this in the classroom and then every student -- students buy a subscription, a $20 subscription, and what we're starting to find now are universities are coming to us as an institution and saying we'd like to be able to purchase this as a site license for all our professors and faculty to use. >> what's the feedback that you get from the students, something that the professors force them to do or something that really makes them more excited about learning as well? >> students are very excited about being able to use technology they are familiar with in a productive way t.changes the dynamic of the classroom from being, you know, just really passive to a much

more active experience. >> take me inside the classroom. as a professor this is how i would pose the question and this is how i'd synthesize the output and do something with it in class. >> as you're discussing a brand strategy or a company's strategy, ask people to type up one word, what do you think nike's brand stands for. instead of cold calling or each student raising their hand, you have everybody answering simultaneously and then throw the results up on a word cloud in realtime and discuss those results and then allow people to change the results and view how those change pre and post the class. >> you heard what andrew has to say and we need to decide whether we're in or out on josh hat. josh? >> i'm a little bit concerned whether this is something that is sticking in the classrooms and classrooms are sort of starting -- lectures are becoming less relevant, but i think i'm overall based on the progress and kind of this idea of bringing the smartphones into the classroom i'm in. >> what about you, luke, an in so far. >> i think if you can make your

pitch pore specific at each point so it's not a matter of making it longer but thinking about each component, like what's the label? who it's for, what's the key skiing benefit and then how it works and getting all that as succinct as possible, i think you'll have something really powerful here. if you get that together, i'm definitely in. >> the fact that you're trying to get the students more engaged in their educational future, engage in the lecture and subject and engaged with the professor i'm going to be an in as well so that's three ins for you. what's your excited? >> luke, we'd love to get your advice, love to get you using it in your classroom so we'll definitely follow up with you on that. >> thanks to andrew and our panelists. >> you heard what the panel has to say. we want to hear what you have to say. are you in or out on top hat? logon to powerpitch.cnbc.com. cast your vote or tweet us with the #powerpitch.

simon? >> let's get back to the markets, sue. stocks are higher, commodities lower. gold prices closing now. jackie deangelis is tracking the action at the nymex. welcome. >> good afternoon, simon. a pretty rough day for gold in the pits today. once we broke below 1,400 we moved south and gold is closing down pore than $20 today, traders telling me the next level to watch is 1,373, and they are also saying this is a purely technical trade right now and we moved lower today because there was some comments out of washington earlier this morning indicating there may not be congressional support for a strike in syria. meantime, just want to point out that silver saw more pressure than gold today. it was the worst performer in the complex. back to you. >> jackie, thank you. let's bring in mary thompson to look at this 118-point surge in the dow. >> 118 points. obviously the concerns about syria which undercut the markets yesterday have moved to the back burner today. that's why we're seeing a rally. take a look at some of the dow movers. today strength in intel. semiconductors in general higher. there was a fire in one plant in

china but semi sales were up 5% in july. coca-cola rebounding from yesterday's decline after a downgrade and verizon, too, looking very strong. it was under pressure yesterday as investors reacted to the news and bought the rest of the stake in verizon wireless. microsoft remains under pressure after buying nokia's handset business. a couple of other stocks we're watching, jc penney, yet another hedge fund, glenview investing in this stock and dollar general coming out with stronger than expected results and also for the last quarter, helped by some sales of branded goods and cigarettes and h & r block. revenue is stronger than expected. however, the company's ross was wider in large part because of some higher expenses so it's under pressure, but the dow, we're waiting, of course, the vote from the senate commit and also the beige book coming up in just a bit. we'll see how the markets react. >> juniper network doing very well on the comments from the c.o.o. and on that note let's head to the nasdaq and bertha coombs on the details of what's shifting there. >> reporter: just an update in

case you're unaware. we saw yet another glitch in the nasdaq data feed for quoting systems it. called about six minute. nasdaq says it was a server failure, but the systems brought it back up quickly. meantime, a fire is what has chips on fire quite literally today. memory think chair, in particular. a chinese memory chip-maker had a big fire this morning t.raged for about an hour although they say it did not impact their fabrication in a material way. we are seeing a surge in names like micron and sandisk. you might see some of the players buying some of that memory ahead of the very busy season. meantime, sienna also strong today, beating on its third quarter and raising its fourth-quarter outlook ahead of estimates and apple also contribute together surge today. apple holding an event right after its event here in the u.s. on september 11th in beijing. back to you. >> thank you, bertha. let's not forget that in 25 minutes time the federal reserve will release the beige book.

rick santelli is standing by in chicago. rick? >> reporter: and i bet you it's beige, simon. yes. we're going to be anxiously waiting that. also anxiously awaiting football season so with the charts let's go deep first, go long. let's look at a chart from may on the 10s. can you clearly see it's gone up an aggressive style and this afternoon aggressive fashion. let's go back in time. august, middle of the chart, there's the high-need close for over two years at a 289, the 21st to be exact. look at a two-day chart. see the way we flirted with that level yesterday and it's in the crosshairs today. exactly right there right now, five-year already made a pass at a fresh two-year and two-month high yield. with its current 1.72. should we close anywhere above 1.68, and the last chart, this is the dollar/yen, and we've talked about how the dollar index is basically at best level since about the 19th of july. well, here's a six-week high on the dollar versus the yen, and

believe me everybody is looking to see if it will test that magic 100 level. simon, back to you. >> thank you very much. rick santelli live at the cme in chicago. samsung is unveiling its new smartphone watch. we've heard so much about. the unveil came, as you can see, just a few minutes ago in berlin, germany. here is your first look, a triumphant samsung employee there. obviously samsung will be betting big on this new piece of i.t., but will the wearable computer trend catch on with consumers, particularly, of course, if it's not actually subsidized by the carriers in the same way that handsets are by telecom. tyler torrenceon is men's creative and editorial head. welcome to the show, sir. >> good to be here. >> are you a fan? would you buy it? >> you know, you've got to hand it to samsung. they are trying stuff. they are throwing stuff against the wall. i mean, there is that sort of reward and penalty for being an early adopter. i won't buy it, but i'll keep an eye on it. it has a couple of things

against, it right? one, it's a little big, and it doesn't really work without a phone. i think these things are going to get really exciting when you can actually use them as a replacement for the phone, and the other thing it goes against everything that's happening in the watch market right now, vintage watches, mechanical watches have never been more popular. selling tons of them and i think that's -- >> tyler, the problem is you're not a 16-year-old girl in south korea or wherever, and i remember when the ipad was first launched, and it was suggested on air by one of my colleagues at the time that it sounded as if it had been named after a sanitary towel and it wouldn't work and it was a complete category changer. surely this could be here as well. >> you're right. nobody wants to be the guy that says the internet is just a fad. newspapers are forever, but i've got to say, just from a style perspective, the idea of wearable tech is still a bit dubious to me. i think a watch versus google glass or something has more potential, and i'm telling you, like when the right thing comes

along, and maybe it's the next generation, it may well create that game-change market and be a market creator. but right now, it's a little bit of an iffy proposition. >> okay. >> purely from a style perspective. >> man about town, tyler joining us. thank you very much. sue, did you like it? >> i'm intrigued by it, let me put it that way. i probably would not wear it because i've got an ipad, and i've got a phone. if i have the phone do i need the watch. i'm intrigued. would you wear it? >> probably not. >> that's a no. i know you well enough. that's a no. >> sorry. >> coming up, the founder of a multi-billion dollar hedge fund just got busted for prostitution. we have the story after a quick break, and don't miss a special edition of the "closing bell" co-hosted by aig ceo robert benmoschy. ♪

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welcome back to "power lunch." let's talk about a lunch option you'll have in the future. this comes courtesy of campbell's soup and green mountain coffee. these two teams teaming up to

get this sell single brew and k-cups, the first time a snack option is on the menu. gmcr shares have spiked higher in the last 20 minutes or so. watch the gmcr soup shares. i think that's really interesting. >> me, too. >> carry them around in your purse. you wouldn't but i would. a very big story on cnbc.com. john carney is on it and it has to do with a big hedge fund. tell us what it is. >> a $3.2 billion fund of fun called common sense investment management, and late last week the founder of it was busted in a sting where the cops had put on all-night advertisements for prostitutes, and he allegedly was one of the guys who responded, went to the hotel. he's been arrested. the hedge fund has come out with a statement and said he's going to remain ceo and chief executive officer. they may have to rethink the name, common sense.

>> i'm surprised given the fiduciary duty that he has that he can stay in that position. >> we've contacted a big couple of public pension funds asking them will they pull out their money and so far no common from them. >> common accepts, might want to think about changing that name. >> not quite common sense. >> read more about that on cnbc.com. it's the number one story on the wednesday i'm thanks, john, as always. president obama's proposed syria strike could run up a huge military bill at the same time that the pentagon is looking at billions in sequestration cuts, so how is all of this going to play out on the defense sector and what about the fed and syria? might it have an impact on tape centering some thoughts now from steve liesman along with cnbc contributor and politico's chief economics correspondent ben white. welcome to both of you. steve, i'll start with you. the cost involved in syria, the risk, the headline risk to the markets involved with a possible strike in syria. how closely does the fed watch, that and how might it or might not it affect their actions?

>> i think they watch it pretty closely, and i think they are going to watch what you just said which is market reaction. if there's a big market reaction, a lot of uncertainty created, i would think the fed would think that this is not the right time to begin this tapering process, and they may indeed say so. they may say because of this uncertainty created by war, it's also, you know, typically not the best time. as for the costs, you know, it really depends on the action itself, right? we had general mccaffrey on the other day which i'm quoting, folks. he said -- somebody asked about the concept, a few hundred cruise missiles, only a few hundred bucks you a piece and it doesn't seem like with a limited operation that with the cost and deficit it would be that great. >> might be a headline risk to the markets. >> exactly. >> ben, do you agree and the issue of sequestration and the impacts on the market? how might the fed react in your opinion? >> i think steve is right on how the mission is carried out, whether it's a wider conflict we

get involved in. if it's surgical strikes carried out over a couple of days and not a lot of further u.s. activity i don't think it impacts the fed very much. i think the taper would stay on schedule. if it becomes more expensive and more destabilizing, something goes wrong, i think that would change the fed's point of view. on the sequester it's very unlikely that we'll get that unwound unless this somehow costs a lot more than we expect. house republicans live and die on cutting spending. they won't come back in november, december, january and say because we launched a few cruise missiles we can re-establish all these cuts that we already made. it's a very tough leap for them to make to reverse that sequester. it would have to be very expensive for this to get reversed. >> i agree, but there's not a lot of talk about what happens next year with the sequester. the last i heard this thing escalates and gets even greater the next cut next year and even economists say the economy will bounce back because the effects of the sequester wear o.what's the right story, ben? >> the effects wear off because you're measuring gdp based on

what spending was before and what's the sequester is baked in it's not pulled out of gdp, but in terms of its actual impact on the economy it will probably continue to be a drag and the austerity will continue to affect the economy next year if the sequester does get bigger. >> gets bigger, that's the key. 5% 208%. >> precisely. >> and on top that have you've got to get the debt ceiling increased and continuing resolution to fund the government. does the white house and the administration and democrats agree to more cuts in order to raise the debt ceiling. they may have to do that so you get more austerity next year than people are talking about right now. >> a lot of bumps in the road potentially ahead. >> pleasure. >> back at 2:00 with the beige book. >> with the beige book. >> you were going to say that. >> i interrupted you. >> that's all right. you can just read my mind. we are simpatico. coming up next, the beige book at 2:00, plus money and divorce. how to prevent financial questions from ending your marriage. guess who is giving the advice? believe it or not, it's the fed.

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two researchers at the federal reserve have been taking time-out from studying monetary poll traits and bond buying to take a deep dive into the subject of divorce and retirement. on today's moving target on cnbc they look to the fate of 30,000 couples over 14 years and concluded that the more mismchd a couple is the more likely they are to end in divorce. the researcher's advice, peach partner must know how much the other earns and where they spend their money. couples must act, they say, as one financial unit, and they

recommend shared bookkeeping, and good luck with that. up next, a congressman caught in the middle of the emotional fight now over syria. john harwood has spent 24 hours with him in his district. that's next. coming up on "street signs," a lot of things are happening at 2:00 p.m. eastern, in other words, ten minutes time from now. first of all, the senate foreign relations committee vote on whether to go ahead with a

military strike on syria. we also have the latest snapshot on how our economy is doing with the beige book, and did you see the blockbuster auto sales for august? well, we have two auto dealers who will be talking to us about what they are saying on the front lines. lots of things happening, guys, in ten minutes time from now. do join us on "street signs." back to you. >> we will, mandy. we'll see you at 2:00 p.m. eastern time. now to john harwood out in oklahoma. john, welcome, first of all. you just spent the last 24 hours with a very key congressman in a key district, representative tom cole. he's kind of i guess you could say caught in the middle of the situation in syria. what did he tell you? >> exactly, sue. you know, it's been a roller coaster summer recess, and tom cole led us ride for 24 hours with him as he dealt with budget shutdowns, the sequester and now the war in syria, a new element. it started with a visit for coffee at the chamber of commerce where as usual the message that he heard for business people there was why can't you guys make a deal?

>> the perception that most of us see is that washington is just in such gridlock, and particularly within the house, it's so divided just by itself. do you see any hope for some healing there and some actual work being done? >> reporter: same message at massive tinker air force base over lunch. 23,000 people have been worth there, hurt financially by furloughs from the budget sequester, and a general told a congressman over lunch he doesn't see how they could cope financially or in terms of combat readiness. >> i don't know what you would do on the flying operations and how that would operate, especially, you know, with the missions that they would have to do, the nuclear mission that the navy is responsible for on a day-to-day basis, the counter and counter drug operations that you have along with the north american defense, i'm not sure how you do that in a total shutdown. >> come to my town hall tonight.

>> reporter: well, just as tom cole predicted at the town hall a whole bunch of feisty conservatives more than willing to shut the government down, not to mention to say no to the president on syria. >> where does he get this, you know, out of a crackerjack box or what? it's not in the constitution. just because the president made a statement that he should not have made should not bind the congress to go ahead. >> that's right. >> reporter: now, this is par for the course for the tom cole in his district. extremely conservative district, and he's aware of the need to balance the views of oklahomans with the blue states such as california. here's tom cole on the nature of his district. >> other parts of the country may have a different view. i mean, he's gotten the votes and he did win the eviction and that's hard for them to understand. i think in an oklahoma town hall meeting it's sort of what in e world is wrong with the rest of the country and they can't see this, and i'm sure, you know,

california looks that way at oklahoma. >> reporter: tom cole is a conservative who tries to split the difference, and that is true on the set of issues facing him right now. he plans to vote no to the president on syria, says tease not in our u.s. national interest, but he does think there's a possibility that that debate, because it's not so partisan, could ease the way to a budget deal which he thinks is necessary which would help his home air force base. tom cole is hoping they can still work it out on financial issues. guys. >> all right. thank you very much, john harwood. very interesting. we're back in two minutes time. triple-digit advance in the dow. neil and buzz: for teaching us that you can't create the future... by clinging to the past. and with that: you're history. instead of looking behind... delta is looking beyond. 80 thousand of us investing billions... in everything from the best experiences below... to the finest comforts above. we're not simply saluting history...

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samsung unveiling its galaxy

gear. would you buy one. 64% of you say no. i think it's a dumb idea. simon? >> okay. we're going to take a quick break. don't forget the beige book is almost upon us. >> that's right. "street signs" now.

all right.

welcome, everybody. three big stories. the senate foreign relations committee set to vote on potential authorization for military strike in syria passed. a full senate vote next week. breaking news right now from the federal reserve. steve liesman is here. what is it, steve? >> reporter: the federal reserve saying in the beige book that the economy expanded at a modest mod latt pace, pretty much what they said in the prior month but the underlying commentary is better. consumer spending was strong for automobiles and home goods. manufacturing expanded modestly. real estate increasing and also what we're hearing is limited inventories pushing up prices. interested to hear tntary. here's the focus like every month, focusing on real ta