opinion welcome to "squawk box" here on cnbc. i'm becky quick along with joe kernen and andrew ross sorkin. and the washington navy yard remains closed this morning except for essential personnel. today, law enforcement officials are trying to learn more about navy veteran aaron alexis and the grudge he may have had against the military. officials believe he was the lone is shooter and that as a contractor, he had legitimate access to the navy yard. but they don't know why he might have opened fire yesterday, killing 12 people. >> we don't know what the motive is. >> we continue to work to determine where he has been, who he has talked to, and what he has done. >> ayman jabbers will be joining us from the navy yard with the latest in just a few minutes. but first, andrew has a lineup of other headlines this morning. >> the fed will begin a two-day meeting in washington. a decision is expected tomorrow afternoon. that will be followed by ben bernanke's news conference. the fed is expected to announce it will begin tapering its bond

buying program. and steve liesman is going to join on us in the next hour with an exclusive finding of the latest cnbc survey. also on today's economic agenda, august cpi is coming at 8:30 eastern pim. economists say the headline inflation number likely rose by 0.2%. also, here is a little bit of news for wall street. u.s. grand jury has now indicted two former jpmorgan traders involved in the bank's london wales trading scandal. they accused of hiding hundreds of millions of dollars of losses on market positions in a credit derivative portfolio. kate kelly reports jpmorgan is close to paying about $800 million in fines related to the london whale losses. get this part, .this may be the most important of all of it, jpm will admit to wrongdoing aus part of a settlement and that will be perhaps one of the first time we've seen that. it could be a key change for how these legal settlement.son wall

street are made. joe. >> that's interesting. wrongdoing. i'm trying to figure out what was the wrongdoing at that point. >> it's going to be about supervision. this is not about criminal wrongdoing. this is about supervision and how things were overseen and the lack of safety -- >> so the question is whether the bank made a bet, right, instead of hedged its portfolio. they were still allowed to do that if they wanted at that time, right? >> that they are. this is much more about control. >> internal control. internal control. >> i would think -- if you want to have crappy controls at your bank, you can have it? >> not when you're regulated. >> all right. >> we can have -- >> but it's $2 million in losses for the london whale trade and $800 million in fines and the attorney general ask others can still go after them and they have to admit wrong. >> can i say one thing about this? who gets hurt in this?

>> the shareholders. it seems crazy that you pile up these fines. it's not like the people that you're -- >> and they lost $6 million. and now they have to pay themselves, anyway.the argument is do you pay that and if you're a shareholder, you potentially could have had the beneficiary of these trades .that's the flip side of it. that's at least the argument. >> all right. the dow didn't close on its highs yesterday b, but it was dealing with a lot on what happened with d.c. but it did manage to close up over 100 points. and we're looking for some more upward move today. we're going to move away from the summers move to see what the taper brings. 75 billion now, 70 billion? we'll see. it's a two-day meeting for the fed. let's take a quick look at oil, which was interesting. maybe not. that it went down yesterday, not on the weakness in the dollar. that would make it go up,

obviously. but this -- after the syria situation, looks like it is now not imminent at this point in terms of military action. god now how this is going to play out now. everybody has more time. the ten-year note, though, we figured that out, people aren't thinking inflation comes back in the vigilantes come back. they're thinking that she's even more accommodative. so you keep buying the mortgage paper, keep buying the bond. so we stay low and we'll check out the dollar, which as we just alluded to was weak yesterday. it's mixed today. gold at this point, it was the last week. it was going down because it was going to be summers. this week hasn't done much at this point. still down in the 1300 area. andrew, where are you now? >> i'm still standing here. a few after the bell movers of note, pandora warning its

businesses are declining and the company red box video operator's average transaction size fell blow expectations. and fertilizer company mosaic lowering its production forecast. potash slipped in extended hours. back to you, becky. >> it's time for the global markets report. ross westgate is standing by in london. ross, good morning. i think we're having some trouble trying to hear. >> hopefully you've got me now. can you hear me? >> he was just messing with us. >> sorry about that. it happens. it happens. this is where we stand right now. european equities down on the stoxx 600. around about 7 to 3, something like that, is the decliners being outpaced by advances. the ftse was up some 56 points.

down about 0.25% at the moment. had some data out today uk inflation saying dipping is expected, the annual rate in august. sort of inline with what market expectations were. the cac 40 off 12 points, ftse mib off 27 points today. markets are in focus and sectors, as well. we saw a new dip down in august registration falling in august, which it raids most of july again. it came to 7.84 million vehicles. that's the lowest ever recorded from the period since the series began in 1990 on. as a result, autos are the worst performers today, down 11.3%. banks off 0.9% as you can see. individual stocks we're looking at today, philips, they've got a share buyback coming up. down 1.8% because of the ceo fairly cautious in the near term and what's going on with the global economy. nokia, down 2.2%.

they decided to reschedule the launch of some new phones which were scheduled for the end of the month despite the microsoft deal. .lloyds banking group down today at 2%. the government selling 6% of its stake in lloyd's. they made about a $60 million pound profit. they sold that stake to institutional investors, a small profit for 73 pence which gordon brown's government bought into or had to take over the stake, a 38% stake now down around about 32 the%. five years ago almost to the day that lloyd's announced the takeover of hboss which is the reason eventually it had to be bailed out. we had a snapshot of german investor confidence today. that put a little more pressure on bund yields, a little below the 2% mark, as well. spanish yields still below italy. that's where we stand. apologies for the battery malfunction. now back to you. >> all right, ross, now back to

today's top story, the deadly shooting at the washington navy yard. ayman joins us with the latest. more than one shooter, that didn't turn out to be the case. at this point, where did he get the weapon? he brought a shotgun? did he have this weapon? did he pick it up? are you up to speed on that, too? >> that's right, joe. we're here at the washington navy yard and this is where the rampage began at about 8:15 yesterday morning. aaron alexi, a 34-year-old shooter entered building 197 just behind me. he bought a shotgun at a nearby shotgun store, brought that to the site, began shooting. at one point, he made his way to an atrium where he had access to be able to shoot down into a cafeteria area and that's where authorities believe he did most of the damage. and they also believe, joe, as you say, that he was able to pick up weapons on-site, one apparently from one of the

police officers that he shot there been by tend of the rampage, alexis had a shotgun, he had a handgun, he had an ar-15 military assault weapon on him at the time authorities were able to bring him down. we've been able to obtain overnight some new photos of aaron alexis, these obtained from a friend or acquaintance of his showing him in his normal civilian life. this is a person who was in the navy reserves. he was discharged, other than honorably from the united states navy. but nonetheless, was able to get a critical to work as a civilian defense contractor here on the base. he had a critical in order to get into the building. authorities believe he used that critical yesterday. one of the questions here, though, is here is a man who had a history of gun violence, several arrests, several incidents in his background. nonetheless, he was able to pass a security clearance and get on to the base here yesterday morning and begin a day of tragedy here in washington, joe.

>> yeah. i heard yesterday it was an automatic weapon. was it a -- are the military weapons actually automatic or was that -- they can trade those terms aut time or was it semi automatic, do you know? >> i believe what we're talking about here is a semi automatic ar-15 military-style weapon. that's the civilian version of the m-16. the ar-15 is a weapon that's been used in other mass shootings. i believe -- and i'm not a weapons expert, but a semi automatic long gun like the ar-15 could be able to do a lot of damage. you can fire that very quickly and from the elevation that he had right at 8:15 in the morning, people are getting their coffee, their bagels, going about their regular bifs, getting ready for the day, that's a packed, contained space and the people who came out of there told stories that were just horrific. some of the injuries were from people having chest xwlants from

run, people falling over, it sounds like a real scary scene inside in building here yesterday. >> and they're going to look for motive now. i don't know, get someone that may have been medicated, maybe ptsd, whatever. and obviously, it's hard to pick a motive with someone who might be just crazy. but is there -- there's no reason -- >> well, there seems to be a pattern here, joe. there seems to be a pattern here in the history of this man. he had several incidents of previous gun related violence. in one instance, he fired a gun into the tires of some vehicles at a construction site across the street. apparently he was upset about parking. in another instance, he fired a weapon in his apartment building, fired it through the roof of the apartment into his neighbor's apartment, through her roof. apparently there was a dispute dispute with the neighbor there. he claimed to authorities had they showed up to investigate that he had simply been cleaning his weapon, oiling it and it accidentally discharged. so there's been a historic of

incident here. the resident there at the apartment complex said she was terrified on this man and she actually moved out of the apartment complex because of the incident as saying that she was just afraid to be anywhere near him. so sh the a guy who had a history of incidence here and the question is how ekd have passed the clearance process to get the security clearance that you need to get on base here. all of these civilian contractor res going to go through a clearance process similar to what we go through to get on to the white house grounds as reporters. that process is managed by an outsourced private company. and i think there's going to be a lot of scrutiny now on that company and that process and who it is that they're picking to be contractors on these military bases. >> okay. all right, ayman, thank you. that will be a while as they have to -- you can't take anything for granted, i guess, or assume anything. anyway, thanks. joining us now with more on the shooting and the investigation is don clark. he's a former fbi special agent. don, again, this morning, there are a lot of questions that are still unanswered, but one thing we're trying to figure out if

there are lessons that we can take out of this about how we protect ourselves. what do you think? >> serm. anytime you have a situation such as what occurred yesterday, you have to look at it and see what happens and what could we have done to prevent this incident and what can we do in the future to try to make sure that this type of activity doesn't happen again? and no matter what it is, this incident or similar types one, we as a government agency or law enforcement agency or whomever may be in charge of this have to look at ways to see how does this happen and what can we do to prevent this in the future? because solving it afterwards, yes, that works, but what we need to look at is how can they prevent it? >> the questions asked this morning, as ayman was suggesting, trying to figure out how alexis could get on to the naval grounds there, but maybe more importantly, how he could get access to a gun having those types of arrests that have been

made in the past and having been discharged without owner from the military. what do you think about some of those issues? >> well, i think when you hear that type of activity, i think we all get a bit of a chill to say, you're right, how did this person who had perhaps been involved into a number of other things get cleared to be able to come into the organization and do whatever? so what i'm really saying is that we need keep a better record. and we think through electronics and all the things that we supposedly are keeping today, but yet we let something like this pass by, knowing that this person had a different type of activities that he had been involved in, negative activities that he had been involved in, somebody should have checked that. >> is the problem that there isn't enough cooperation between local and state agencies? i know that one of those arrests was in dallas, another was in seattle. do you generally have some sort of cooperation between municipalities that are in different states? >> yeah. you know, i wouldn't say that it's a lack of communication

with these organizations. i mean, clearly, each organization at every level have its job and its directions that it has to go and so forth. but i think in past years, that we've seen that decrease a lot in terms of one person saying it's all mine. and yes, that does happen today. occasionally, you will have something that becomes catastrophic because somebody didn't call and to some other agency and say, hey, i think i've seen this and let's work together. but in all, i do think that there have been huge steps made in the government in the last 15 or 20 years, actually, come up and even more so in the more recent times that the agencies are working together. occasionally, there's a mistake there. perhaps could have been here somewhere along the line. but i think you'll see them working together a heck of a lot more than we have in previous years. >> don, thank you very much for joining us today. >> my pleasure. thank you. coming up, researchers say they're work on a new form of

electricity with a battery. these are little bakhtiar kra. >> do you understand the technology behind it? >> no. i've read it. i don't know how we're going to -- >> i thought you -- >> no, no. >> you were going to carry this segment. >> i don't know how we're going to talk about it, either. >> i understand it. they've used similar things to make fabric for over a decade. >> and then there's another thing about conference calls. >> that i can help you with. >> people don't listen. >> now you're giving away the whole segment. >> what was i -- oh, you were listening, though. first, shoppertrak says it expects sales growths is going to be slower this year during the crucial holiday season. retail holiday sales should rise 2.4% compared to a 3% increase last year after they saw a weak back to school shopping period. first, as we head to break, let's check on the national weather forecast from weather

channel's alex wallace. >> good morning to you, guys. a chilly morning across the northeast. feeling like fall. we've got temperatures here that have dipped down into the 20s, thirds and 40s. 45 for us in and around boston. that's tying a record low for us. this afternoon, we're going to keep it cool wind our cold front that moved through yesterday. temperatures will be 5 to 10 degrees below average. that means a lot of 60s and 70s. not bad if you like the cool weather. if you like the warm weather, you may want to head into the middle of the country because we've got warmer air moving in here as we head on through the middle part of the week. today, still fairly comfortable. 60s and 70s. chicago, you'll be at 72 degrees. des moines, 69. look what happens in des moines between today .tomorrow. 90 degrees, big time warm-up seconded there. if you're looking for rain in the southeast, it's been a bit on the quiet side late in the week. we'll see the chance for storms coming in. that's your national forecast. more "squawk box" coming up in a bit. [ male announcer ] this store knows how to handle a saturday crowd.

♪ [ male announcer ] the parking lot helps by letting us know who's coming. the carts keep everyone on the right track. the power tools introduce themselves. all the bits and bulbs keep themselves stocked. and the doors even handle the checkout so we can work on that thing that's stuck in the thing. [ female announcer ] today, cisco is connecting the internet of everything. so everyone goes home happy.

welcome back, everybody. our first story has to do with the so-called living battery that generates electricity that comes from disdissolved organic matter, things found in sewage and wastewater, maybe the water that you flush doin' the toilet.

researchers ats at stanford say it's as efficient as the highest performing solar cells. this can generate as much energy is as needed to treat water. >> i don't understand this exactly, except to say that the one piece that was interesting news, it requires silver oxide, and that apparently is very expensive so it's very hard to do that at scale. >> yeah. they've got a pretty efficient battery, it's just a very costly one. and i guess there are some questions. it works by these microbes that feed off the the wastewater and waste material and then when they excrete things, when they poop, they poop out electrons. >> for an electric current. so they're as efficient as the highest performing solar cell. >> is that a knock on solar cells? >> not very efficient, right? >> i wondered if that was a big knock on solar cells when they said that. >> i think they're trying to say it's just as efficient as the

highest performing solar cell, but i don't think that's necessarily -- >> solar is better than wind these days, right? >> yeah, especially for birds. >> that's true. >> and for humans. >> and for bats and the noise that drives people crazy. >> did you read, separate and apart from this, in new york magazine this week, a fascinating article about people who live near the turbines and they're loogz it. they say they're losing their minds. it's unclear if there's scientific evidence to prove it, but there's a lot of poem who say there's noise. you can't even hear it. it's almost like a dog whistle that's constantly in your ear and giving you -- >> oh, wait a minute. oh, yeah, oh, yeah, wind power. great. great idea. nice work 37 no, we were on a big old wind power wagon there. exactly. it is -- that is one of the de -- it's renewable. there's no two ways about it.

and as you get better and better, there's a great piece, actually, by -- wasn't it your guy? >> who is my guide? >> freedman. did you read that over the weekend? >> we love tom freedman. >> we do, but the beginning of it irritated me, but if you want to look for innovation, this is the great -- this is what makes it exceptional. and a lot of it had to do with what ge is working on. i thought it was a pretty good piece. >> and you're a big supporter of -- >> innovation. >> innovation in terms of things lining solar power and wind power and stuff like that. >> you do not know how much i want clean air and clean water for my children and my children's children. yes, i am. whether it's counterproductive to be so focused on carbon dioxide, i think it is counterproductive, i do. anyway, today, it's the nipcc, which is the nonintergovernmental panel on

climate change. and then next week is the ipc. which in and of itself is still being composed. of in itself, there's going to be some -- at least a little bit of scaling back on maybe the climate sensitivity to co2. we'll see. although they're still totally alarmist about our future. anyway, go ahead, beck. >> let's talk about another story that's asking how four years of tuition free college sounds. if you're somebody who is looking at college, four years tuition free sounds like a really good deal. ben nelson ran the photo service snap fish until he sold it to hp in 2005. now he's founded the ma nerve va project. na nerve va schools don't yet have accreditation, they don't have a campus and is a full faculty roster, but it is trying to attract some of the most talented students. students enrolled after the enrolling class will pay tuition of about $10,000 a year and

classes that can be done with a lecture will be deny online. students will spend their first year in san francisco and rotate toer on cities in subsequent years. among the advisers to minerva, you have legislatu larry summers. it sounds crazy, but you're going to get access to some heavy hive, highly connected people and that may make the difference. >> they're hoping they have accreditation before they start. >> it's a very interesting program. i think it's more about the promise of what this suggests for education at large over the next, you know, 10, 20 years about how we learn and whether we're learning by lecture with a feature in front of us or sort of group projects and then

watching the best professors in the world. i think it will be hard for them to start it up and get the best students on day one. >> i thought about that first, but i thought if you can get access to ben kerry and larry summers, you're one of 19 students who is doing this, you're doing it for free, i think you'll have a very unique learning experience. but it is a heck of an experiment. if you truly are one of the top students in the country, it's a bit of a gamble to take. >> those are smt of the people who might have been willing to roll the dice. >> you're going to have to find some entrepreneurial students. >> exactly. >> i thought it was better to go to harvard where once you're in, you don't really need to do anything, anyway, right? >> that's what they say. they didn't let me in. i don't know about that. >> if you're looking at the entry level lecture classes, those will be taught online and they figure that's a waste of resources. if you want the most bang of for

your buck as an undergraduate, you need to focus on one-on-one relationships or small classrooms where you're sitting around and learning from somebody, not where you're sitting in a lecture hall. >> too sxins he right now. there has to be a better way. there's ways you could do it where -- >> it makes sense. >> but khan academy, all of these guys -- >> where were you last night? i was at the "new york times." they were doing an education thi thing there and i did a thing with him. but the question to me is how you actually incentivize people to watch these individual videos. >> and you're on another plane today? going to chicago after the show today because we have lloyd blank fine coming to the show tomorrow. >> you're doing so many different things at once. will you test a different kind of underwear on the plane going

out there? >> no. i want you to know -- and i think i can say this -- >> or with easy access? no, i am wearing my tommy johns today. but you should know senator chris dodd, he read the article and he wanted to see the undershirt. >> wait a second. you're showing his your undershirt during the commercial break? >> he wanted a peek on. >> just like that? >> bring the camera back. hold on a second. you guys go ahead and do your thing. >> he's in hollywood now. >> if you have a conference call on your calendar today, you're going to want to listen to this next story. a survey of professionals working in singapore's financial services industries finds that more than half admit to not paying attention on calls. one in five respondents was dialed into a conference call while taking a second phone call or while laying in bed. about 25% dialed in while they're commuting and one in ten individuals have participated while they've been out shopping.

some of the more interesting locates that people have taken place on conference calls include the golf course, the toilet and the shower. gentlemen, are you decent? >> what? >> no, you're not listening, i get it. >> conference call. >> were we still doing the -- >> yeah. >> are we still on? >> we're still on. >> say that again, then. go. >> it's all about conference calls. >> no, i heard. i heard. >> which clearly you get. >> i don't want to impugn all management. but -- >> you think this is what they do all the time? >> pretty much, yes. >> whether you're in the room or just on a conference call, i don't know how closely you need to listen to what's going on with most management types. >> not here. >> i just hate all conference calls. any -- >> when you're in the room? >> any call that has to be scheduled i think is a problem. >> who is in charge? who is in charge there right now? do you have to listen to them and they tell you what to do and stuff? don't you do most of it yourself? >> of course. there's always somebody at the top. >> and they help you? >> they help you.

i love them. i love them. i love them just like i love everybody here. >> here, yes, but not here, no. no, not here. >> i love all of on them. >> i wasn't saying that. we don't have a lot of meetings here. at least we're not invited to them. >> and now you know why. intl maybe that's the problem. when we come whack, we're going to talk about the stories lighting up the wires. and gasoline prices setting a record today. first, though, engineers believe that they have succeeded in pulling off one of the most complex salvage operations ever. a wrecked cruise ship costa concordia has been pulled off the rocks. it took months of preparations, hundreds of workers, and the in the end, 19 hours of pulling power. [ male announcer ] let's say you pay your guy around 2% to manage your money.

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welcome back. aaa is reporting gas prices will set a streak of $3.00 or more a gallon for 1,000 days today. and can you say free internet porn? >> i can't say free internet porn. i don't know where to find it, but i've heard about it. >> i know you don't. get with me after the show. >> incognito. >> the publisher of penthouse has filed for charter 11 bankruptcy. >> how many times has this

business gone bankrupt? >> well, i know, but now? who pages through a -- you know, things don't even move. >> they don't have an online something? >> they may have an online something. >> but you're not sure sfp. >> i'm not sure. that's why too -- >> conservative? >> no. friend finder networks needs to cut its debt load as it struggles to make certain loan payments. and general motors is developing a car to rival tesla. really? good luck. the electric car will be able to go 200 miles on a charge and -- why are you laughing so hard? you'd like to say these things. you just don't yet. it sells for about $30,000. no word on when the car is going to be available. gm executives says the technology is available, but the cost of the batteries remain too high to pull off the feat today. >> it's just how you said it.

it's not just -- >> it's what you were thinking, wasn't it? >> it was just the good luck part. we are serious news to get to. yesterday's rampage at the navy yard in washington raising new questions about workplace violence and security. joining us now to discuss it is robert. he's a security expert. good morning to you, sir. >> good morning. >> help us here a little bit. best practices, i mean, it's sort of a hard thing to avoid, i imagine. but if you were on a workplace, is there two or three things you can do to avoid this or does this just kind of happen? >> you know, this is not a technology problem that can be solved with bullet resistant glass or surveillance camera or bomb sniffing dogs. this is a people problem. and all of the active shooter incidents that have taken place, they all come down to one thing

is that the shooters themselves, at some given point in time, consider themselves the victims. either victims of their employers doings or fellow employees. they consider themselves victims of their classmates or teachers or even victims of their government. and they all speak out about their victimization at some given point in time. and what they plan on doing about it essentially to solve that problem. so the active shooter incidences that have been prevented all boil down to somebody seeing something and somebody saying something. >> are you saying there has to be almost an active surveillance program going on in the workplace, reading e-mails, looking at people's facebook pages, doing all sorts of things? i mean, people often think of that as that law enforcement does.

but is that what the employer should be doing, too? >> tease what -- that's what the employer should be doing, the husbands, the wives, the kids, the mom ones, the dads, the fellow coworkers. again, this is a people problem. and when you see somebody coming undone, getting unhinged, you talk about it, you mention it to someone. you bring it to someone's attention. you report it. you essentially drop that dime. you know, again, all of the incidents that have been prevented, somebody actually said, you know, i feel that this person may act out in a way that could hurt people. and they law enforcement intervened and they found stashes of guns. that's usually what happens when it is prevented. and you can't rely on our government to protect us from this. you can't rely on technology to investigate this. it really does boil down to you, when you see something, you alert somebody about it. and it's a -- if you think about how mad back in the day, you know, drinking and driving was

actually okay. and then someone said, hey, this isn't good. we start add huge education campaign. same thing with bullying. bullying is on people's minds. it's on our radar. and we're doing something about it. active shooters is something that we need to talk more about and do something about. >> but where is the line? and when i say the line, there's always been a cultural resistance to saying something for fear that we're implicating the wrong person. >> so what? so what, you know? so we implicate the wrong person, we apologize, we move and learn from that mistake. right now, we're doing nothing or not enough. so what happens is we say, oh, charlie is just carly. he's just acting out. he is a part of that paramilitary group and he loves guns. big deal. he's just a weirdo. well, that weirdo may come into your place of business and shoot it up and kill a dozen people. and eventually, it will be such top of mind that anybody who has

any intentions of doing something like that will go, well, wait a minute, maybe i really shouldn't. maybe it's not such a good idea because maybe i will get caught or maybe the consciousness of the shooter will evolve to the point where they begin to see that it's not really how to solve the problem. >> robert, we're going to leave it there. thank you for joining us this morning. >> thank you. >> thank you. coming up, a top market story. the fed is set to begin a two-day policy meeting. we'll have a preview and the possible market implications, next. ♪

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the fed is convening a two-day meeting. lou, ken, what do you think? maybe 75, 70 billion? what are we going to find out when it's all said and done? >> i think they would like to do as much as they can get away with. saying 15 billion to 20 billion, which still puts you buying 70 billion or 65 billion a month. i think that in order to soften that blow, that me might stiffen up their forward guidance on when they would raise the fed funds in order to try and hold the curve down as they taper. in other words, make it more clear that the fed funds are not going up for a couple of years and that they would even risk, you know, some level of inflation in order to get the labor market and the economy in

general back on track. and so that stiffer forward goois guidance in the fed's mind might allow them to do more than some of the market participants are doing for. >> do you think, mark, do you think 65 is possible? >> i think that's a little bit on the high side. i think that they're probably not going to want to reduce the security purchases by 10 to 15 billion, and i think ten is more likely. .i think it's possible they're just going to reduce treasury securities and not reduce the mortgages. i think the fed wants to back away as carefully as possible. and when you look at the economy overall, it's doing a little bit better than the headline numbers. much of the slowdown is coming from the government sector. the only exception is the housing industry, which is looking shaky. so they still need to be careful here. >> yeah. so this is in the market, lou? what would make the market go up -- stock market, what would

make it go down, do you think? >> yeah, that's a good question. when qe1 ended and when qe2 ended, the stock market had trouble both times, very well coordinated with the end of that. that may have been also because europe was a problem both of those times. but, you know, that's the one aspect of the economy that's clearly been helped by each of the quantitative easing strategies. the rest of the economy, i think, you can question it and i think that the fed is questioning how much the qe is actually doing. you know, one of the facts that just keeps gnawing at me concerning the qe is that the normal gdp, that annualized rate is at 3.1% and that's a level that's associated either with recession or a recovery from a recession. so if that's what you've got after this qe and we were over 4% when this qe started, i don't know, you know, how much you can say, oh, boy, which is really good, we better be careful with taking it away. so that's why i think they would rather take it away as quickly

as is possible. you know, more aggressive than not and within a certain parameter. and then also try and soften that blow with a forward guidance on the fed fund. >> mark, how do you think the ten-year basis as we start doing this? >> i think as long as they taper -- if they reduce securities purchases by at least $10 billion, i think we get a little bit of a rally, although getting the big rally after summers pulled his name out makes that a little bit of a tougher call because we really kind of rally an anticipation of no earlier exit from qe than we would have seen otherwise. >> are we going to be gelling with yellen? is it going to be her? everybody says it's her now, he's just going to -- you know, he's going to fold and say to all of his liberals, okay, you are right. it was really going to be her, by the way. the right thing to have done was to tell larry summers, hold the

fort. don't say anything. i'm going to announce yellen in three days. that's the nice thing to do, right? >> what about the bank of israel guy? i'd do him now. >> also, is ferguson still out there? you take fisher, ferguson, and i think don cohen is tim geithner's guy. >> stanley fischer was an adviser to greenspan, too. >> stanley fischer is summers guy. >> what? >> and the board of governs -- >> what? >> stein from the board of governors appointed by bernanke. >> i don't know. >> all right. you should mix green's tie with vitner's suspenders. maybe not. >> i think they may be the same brand. >> oh, look at that. are we ready to do what? can you guys see that? that looks pretty good. >> is this a cameo situation?

>> this is a little busy, though. >> it's a lot like a little cameo. camo in the office. coming up, a disturbing warning from the cdc. 23,000 people have been killed by super bugs in the u.s. each year. but first, take a look at what's going on in the green room. we have a legend in the tech industry in the house today. former sun microsystems boss scott mcneally. we'll talk to him about tech and much, much more. "squawk box" is coming right back. take deep breaths. avoid bad weather. [ whispers ] get eight hours. ♪ [ shouts over music ] turn it down! and, of course, talk to farmers. hi. hi. ♪ we are farmers bum - pa - dum, bum - bum - bum - bum ♪ it's been that way since the day you met. but your erectile dysfunction - it could be a question of blood flow. cialis tadalafil for daily use helps you be ready anytime the moment's right. you can be more confident in your ability to be ready. and the same cialis is the only daily ed tablet approved to treat ed and symptoms of bph

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welcome back, everybody. we're in chairs this morning. one of the things we're focusing on is an alarm put out by the cdc, centers for disease control about what's been happening with super bugs. these are bugs that are resistant to antibiotics because we've used -- overused antibiotics. at this point, they say 2 million people every year are infected by drug-resistant germs and 23,000 people are dying. there's a new bug at the top of the list, it's call ed sedificile. >> it's something you have to worry about a lot when people are in -- causes horrible diarrhea. >> what is it? >> a bacteria you get.

you can have people recovering from a stroke late in life and if you get c-diff, that might be it. and if you're there, someone who is healthy can get it, probably not, but c-diff is frightening. >> mrsa, the good news on this report is that mrsa that had been out there, a super killer for years, that, actually, they said, 30,000 fewer cases in 2011 than they saw in 2005. >> that's the scary skin-eating? >> yeah and gets inside. if you have a surgery, it can get inside and be incredibly difficult to get rid of because you can't get the drugs to the location easily. >> what are you going to talk about? >> this is the story of the morning. ronald pearlman, friend of the show. his daughter, 23-year-old daughter, he's funding a lawsuit -- talk about all in the family, there's a -- the daughter who is suing her uncle who runs hudson media. you ever go to the airport and see the hudsons? >> yeah. >> they spent $60 million on legal fees alone --

>> what's that guy's name? >> it's an inheritance case. >> yeah. didn't "vanity fair" write about this? >> a little bit a while back. but now it's heated up into this crazy -- >> i met -- what's his name, do you know? >> his name is -- >> the guy who had all the hudson. >> james kohn is her uncle, the wholesaler we all know. it's not an important story, it's a dishy story, i'll put it in that context. >> i think the problem i see is that this is in the journal, you always do "the times." people are worrying that the party is over in new york for getting big names to social events because of bloomberg. bloomberg according to these publicists, if you could get him, he was your number one guest and helped raise money for a lot of these philanthropic galas. he goes to every one. they're worried. i'm sorry to say, but do you

think that -- hey, joe loda might be coming to the gala tonight. people might stay away. >> but the mayor can go to all these things. >> he can. but they're worried about -- and this is where they've got a picture of bloomberg with gwyneth paltrow, maria josie. he's with all of them and dashing and always going to these things. this is where i realize we may have missed out by not electing weiner. because he could have been a huge draw at the party. >> he's still tweeting? >> he's headed to tv for sure. >> weighing in on what's going to happen with the runoff. >> yes or no, guest host for "squawk box"? >> 100% yes. not even a question. >> no question. okay. when we come back, we'll have more of this morning's top stories, including the

investigation into the washington navy yard rampage yesterday and questions about workplace safety this morning. "squawk box" will be right back.

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tragedy in the beltway. how the events at the washington navy yard have businesses rethinking employee security. the fed in focus, bernanke and company meeting as the markets await a decision on interest rates. the cnbc fed survey is out and we have the results of what the nation's top economists and experts think they will do. and a tech pioneer turns start-up investor.

scott mcnealy joins us to talk apple, google and a world of disrupters. the second hour of "squawk box" begins right now. good morning, everybody. welcome back to "squawk box" here on cnbc. i'm becky quick along with joe kernan and andrew ross sorkin. in studio, we have scott mcnealy, former chairman and ceo of sun microsystems. he's also the chairman and founder of the start-up weigh-in, and scott, it's great to have you this morning. >> great to be here. as soon as i wake up, california time, i'll be a little more helpful. >> it's early. we'll get you coffee between now and then. >> thanks. >> in the meantime, take a look at the futures this morning. after some continued gains yesterday for the dow with it closing up by 120 points. you can see this morning, the futures up by about 18 points. at this point, the dow has moved

back to just about 15,500. many expect the fed to begin cutting back on the bond buying program. the fed's statement will be out tomorrow followed by a news conference. we'll have much more on the fed meeting and the markets in a few minutes. also, holiday sales, they're going to be rising 2.4% this year. that's according to a new forecast from shopper track. that compares to a an increase three years ago. and a notable if unwelcome bempbl mark at the gasoline pump. as of today, the average price of gasoline will be above $3 a gallon for the 1,000 consecutive day. that's never happened before. that current streak began on december 23rd, of 2010. you all now have seen this deadly attack we had yesterday in the nation's capital taking the lives of 12 people at the navy yard in d.c. everything's close down there.

how far was it from the capitol? less than two miles. the motive from the mass shootings, the deadliest on a mill stair installation since ft. hood in 2009. the president spoke about the incident yesterday. >> these are men and women who were going to work doing their job protecting all of us. they're patriots. and they know the dangers of serving abroad. but today they faced the unimaginable violence that they wouldn't have expected here at home. >> cnbc's eamon javers joins us again outside the navy yard. what else have you got for us this morning, eamon? >> reporter: well, good morning, joe. this is the washington navy yard and this is building 197, the tall brick building just behind me. that's where the shooting began at just about 8:15 a.m. yesterday morning. 34-year-old aaron alexis entered

the building carrying a shotgun he bought in virginia last week. he then proceeded with his attack. he was able to pick up a couple of other weapons. at one point, he made his way to an upper level atrium area. where the bulk of the killings happened, ultimately 12 dead, an additional dead person was the shooter himself. bringing the total to 13. it was that shooting spree in the cafeteria that caused the bulk of those casualties. and authorities say they now believe he only had the shotgun when he entered the building but he was able to pick up a handgun and a civilian ar-15 military style rifle. a rifle with incredible power and velocity to do a lot of damage in the attack yesterday. we also have pictures now of aaron alexis obtained from a friend of his showing him in his normalcivillian life. he was discharged for a pattern of misconduct. he also had a number of gun

related incidents in his record in which he shot through the roof of his apartment building into the neighbor's apartment building above threatening her. that person moved out of the apartment, said she was terrified. also, another incident in which he fired his gun into the wheels of construction vehicles at a construction site near his house. clearly, this is a person who had issues with rage over the years. and one of the big questions today, joe, is going to be how did he get the security clearance to be able to get work as a contractor, to be able to get access to this base here at the washington navy yard, joe. >> yeah, with the shotgun. i don't know. all right, eamon, we'll stay tuned for that. >> okay. joining us now with more on the shooting, clint van zandt. help us to find some lessons from this if there are any. is this about gun control? is this about psychological profiling? is this about workplace safety? how do you think about all those

issues? >> well, you think about all of them, but it also tells us just how predictable and nonpredictable human behavior is. as you're reporter just suggested, there are long-term personal issues with the believed shooter. both in the navy resulting in his discharge, the weapons violations that he's had over a period of 10 or 12 years. these have been long and ongoing that should've come up in his background investigation and that, perhaps, perhaps could've precluded him for access to a government facility. but again, these can be explained away. i mean, when the police responded in texas when he fired a shot through the ceiling to -- because he was angry about his neighbor's music, he said, no, no, i didn't do it on purpose, i was cleaning my gun and a round went off by accident. well, so they believe that, they accepted that. and with the benefit of 20/20

hindsight, we say this guy has had anger management issues for a long time. then that takes us to the issue of violence in the workplace. these people, everybody in this facility would've trained for this. they know there's at least three things you do when an active shooter starts. number one, you run out of that building as fast as you can. you don't wait, you get out, you tell your coworkers get out, but you don't wait for them. number two is you hunker down in place, turn off the lights, turn the ringer on your cell phone down, get under your desk and wait until the authorities come and tell you it's okay to come out. and number three, just like those brave men and women did on 9/11 on that plane that went down in pennsylvania at the time, you find anything possible you can use as a weapon and you go after that person with a gun because you may not have any other chance. these are the lessons we take away every time from one of these situations. >> clint, i hate to assign blame, but was this truly preventable?

that's sort of the question about this event and frankly our ability to prevent the next one. >> you look at how many ways along -- how many times along this route might we have stopped him. could we have -- could the navy have dealt with him in a better way. could law enforcement have prosecuted him for these violations? could the background investigation have turned these offenses up and said, you know what, anger management issues, we don't want somebody with a security clearance. was there a way to stop that rental car from driving on to facility with him carrying at least a shotgun. the first officers that he encountered. is there a way they perhaps could have been better prepared so he wouldn't have caught them offguard. there are probably 5 or 6 check points along the way where maybe we could've stopped this guy before. but, again, we weren't able t to -- is this human error or chance and circumstance? >> there was a question we asked in the last hour, if you're an

employer and thinking about -- how do you monitor your employees? this almost gets into the kind of nsa style things. but how much should you be monitoring the e-mails of your employees? looking at their facebook pages? looking at their twitter accounts, social media and other things out there about your employees. and then, of course, all the privacy concerns that raises. >> yeah. well, i think, you know, you get into the area of big brother, nsa type of considerations like that. and realize, in this guy's case, the shooter's case, his roommate tells us yesterday that the shooter spent hours and hours locked up in his bedroom playing violent video games where he shot people for points. well, what that type of game allows somebody to do is develop shooting skills as well as desensitize themselves to the value of human life. but does that mean that everybody who plays violent video games is going to commit mass murder? of course the answer is no. so we're trying to separate it.

we're trying to predict human behavior. and to this date, even though we can suggest these flags should be looked at, we still can't accurately predict human behavior every time, especially, in a case like this. >> okay. thank you, clinton, this morning, for helping us try to understand all this. appreciate it. >> okay. he was cofounder of sun, micro, and a pioneer in silicon valley. he's now actively investing in more than a few start-ups, scott mcnealy is former chairman and c ceo of sun micro. you had a couple of lives already. still a young, youthful, strapping young guy. pretty amazing. how does it work for people who don't know? >> it's a social media company. what we do is we allow you to curate and present your social media conversations around your brand or around a sports team or a celebrity. put it on your website, put it

on mobile. you can put it up on air, tv screen or do it in venues. so a hockey game or football game, you can put it up on the big screen. we allow you to curate and bring only what you want out of the social conversation into a particular event. >> nothing to do with being fat. like i could do this, right? >> you could do this. >> it's called weigh in. >> way in. >> w-a-y. >> way in. where do you -- along the path of a start-up, where are you with way in? >> we're early days. we started a couple years ago. we're about 25 employees or so. and we're private. it's nice to be -- i was in the public pinata for a long time. it's kind of nice to be in the private world. >> and it's social media. >> social media. >> that's where it's at right now. >> that's where it's at. >> what's your commentary on where tech is right now? >> well, tech's moved.

we started off doing transistors and applications and computers, and services and moved into commerce and now we're into social media. and it's moved from like stuff you can hold to stuff that's virtual. it's a lot less head count. it's a lot better margins. but i'm not sure it's as productive as it was. >> i don't like it. what's next? can there be something after social media? do i have to be -- do i have to enter into this whole domain and be social and care about other people? >> you know, the beauty of it is you don't have to. >> i don't have to tweet every waking thought? i don't have to see their stupid pictures? i don't have to see their facebook and where they are and where they've been? >> you don't have to subscribe to those people. >> i have to do twitter for business and, you know, that's bad enough. >> i'm watching way in right now. they created a page.

>> how does that look? >> where it shows what we're talking about. social media's winning right now. >> chairmanmcnealy.com is the website. and you can see the social noise, you'd call it noise, but social activity around different topics, big data, around the shooting and you can see the spike. this becomes a very -- >> when i give you -- >> here's what social media is for. there is value beside activity. >> you'd have a hard time finding it. >> what we're doing -- what is real noise to me is advertising that i don't care about. i want to learn about soft spikes on golf shoes and what we're allowing social media to do is tap into that data and match buyers with sellers and sellers with buyers. that is ultimately a huge win as well as making the game more interesting or the viewing experience. people watching "squawk box" can talk. they can be part of the conversation. you don't just yell at the tv, scott, you're nuts, they can

tweet -- >> it started we mail. we would get e-mail from people respond one on one. >> used to get letters. >> evolved into twitter and now where everybody's talking to each other. >> it's now realtime and we're building the graphics and the actual visualization of all of that clutter out there and noise and turning it into real live information and people can now yell at the hockey game at the referee and they can see that they're part of that conversation. that's what we're doing. >> we're not going to do it now because they gave me no time to talk to you, but if i get you to say that the fed should be abolished, which is something you believe, there shouldn't be a federal reserve, so you don't care who is the next fed chief and also get you to say our current president is almost criminally incompetent. >> i said almost. >> he's not going to ask you that probably. and becky's too nice, probably, to get you to say that. but i'll try and get that in later to ask you about your

view. >> that's going to spike. >> because you don't want another fed chairman. you think it's better to abolish the fed than get a new fed chairman. and i don't know -- >> do you want -- this is -- >> this is a tease for what you're going to talk about. >> this is probably not 140 character response. but i think there's a lot we could do and i'd love to -- >> we want to talk about -- you created how many jobs do you think? >> sun microsystems gave out 235,000 employee -- that doesn't consider all of the accelerator effects of all of our partners, resellers. >> think about what java did. >> definitely more than we got from government programs, i was thinking and didn't cost $100,000. >> well of the 1 million created in the last year 3 out of 4 have been part-time jobs. scary. >> but it's the republican-controlled congress' fault that jobs aren't being created because they don't care about growing the economy. >> i thought it was bush.

>> it was bush -- equal blame 50/50. anyway, i wanted to get a little of that in before we got cut off. we've got a big week for the fed. the latest results for the fed survey. predictions from some of the smartest on the street that who may replace bernanke and the fed's plan for tapering. then can the summer's rally carry into today's trading session? we'll find out what's going to be moving the markets at the open. take a look at futures right now. see how things are setting themselves up. we have a green arrow on the dow. about 1 poi7 points if things od up. we're back in a moment.

welcome back to "squawk box." a u.s. grand jury has indicted two former jpmorgan traders involved in the bank's trading scandal. they are accused of hiding hundreds of millions of dollars of losses by marking positions in a credit derivatives portfolio at inflated prices. meantime, kate kelly now reporting that jpmorgan close to agreeing to pay about $800 million in fines related to the trading loss. the bank will settle charges with regulators about shoddy supervision and the important part is that the "wall street journal" is reporting that jpmorgan will admit to wrong doing as part of that settlement and that is part of a first and maybe a sea change in how the sec pursues these types of

cases. the latest cnbc fed survey is out. what are some of the top economists and experts looking for when it comes to taper talk? steve liesman is here and has the details. steve? >> good morning, becky. we did the survey on thursday and friday, but big fed news over the weekend. we went back into the field yesterday after summers on sunday withdrew his nomination to ask people about who they thought president obama would choose to be the next fed chairman. i want to give you these results which we got yesterday afternoon. so the question is, who's it going to be? don kohn 6%, roger ferguson, 2%, janet yellen, 88%. that's the expectation now on wall street, 47 economists, money managers and strategists answering our survey this time around. 88% looking for yellen. who should it be? who do they want? guess what, 57% say it should be yellen. john taylor coming in next, the stanford economist who has monetary policy rule named after him.

larry summers has support, don kohn who is thought to be one of the two guys that president obama is considering just 5%, and ben bernanke 5%. now i want to get to what becky teased for you, the taper talk and this, folks, is one of the new metrics we're going to have to watch. we ask people, what is the amount of taper that's going to happen? you can see it ticked up a little bit. we went back into the field after the september employment report and you could see it came down to 12.6 billion. ticked back up after a little bit of better economic news. the taper now seen at around $15 billion on average. back in july, it was 22 billion. what about the timing? 48% believe the taper will begin in september, the average month is actually around november. the fed is maintaining this taper level for about 3 1/2 or 4 months. qe is seen ending in august 2014. that's the average. another metric we have to watch, the taper amount and how about the mix of the taper? it's believed that 72% of the reduction in purchase by the fed

will be in treasuries and just 28% will be in mortgage backed securities. watch this when we get the announcement tomorrow, what is the mix of the taper? how much of this is priced in? the market says 81% of the taper is priced in for treasuries, 81% for mortgages. and as we've seen as time has gone on, only 70%. a little bit more movement we'll see in equities if we do, indeed, get that taper tomorrow. some other commentary we got. we call it the taper talk. the taper is hands down the single most clearly tailor graphed move in history. probably not too far from the truth. rob morgan, fed chairman ben bear noipg sarnanke said jobles will continue up. finally, we have starting the tapering is not beginning -- not being based on economic growth which is still not strong enough

for the fed to declare victory. we'll ask him about that at 8:30. we have all of this online at cnbc.com. you can read about it. and also, guys, we'll be watching tomorrow taper amount, is there a taper? the taper amount and the mix is going to be key. joe? >> thanks. i'm glad guy told us it was the single most important instead of the three or four most important things. when there's only one most important thing, i think it's much better. anyway, still to come this morning, can the summer's rally continue? we're going to ask peter what he's expecting from the fed. let's check the ten-year note right now which was just under 2.844%. starbuc we'll be right back. helping business run ♪ng uy ♪ build! we're investing big to keep our country in the lead. ♪ load! we keep moving to deliver what you need. and that means growth, lots of cargo going all around the globe.

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we say: let's get to work. because now more than ever, the future belongs to those who challenge the present. coming up next, your morning business headlines and then we're going to talk markets, the fed and much more, plus much more from our guest host scott mcnealy. we're back in a moment. tomorrow on "squawk box,"

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welcome back to "squawk box." in the headlines this morning. the government set to issue consumer price index figures at 8:30 eastern time. economists looking for a rise of .2% which would match the july increase. we're also going to be getting the latest on home builder sentiment that comes at 10:00 eastern time. . the monthly index from the national association of home builders expected to be down slightly from last month's reading. that number out at 10:00 eastern time. also gm's chevy silverado. edging out the ram 1,500 full-size pickup truck category is one of the more profitable auto segments generating profits

of more than $12,000 per vehicle. i've actually always -- i know you don't see me in one, but i always sort of thought about wanting to have a pickup truck. i know you found that laughable. but you can't even see straight. >> i feel like a computer, my hard drive went -- like from -- >> this squawkward moment has been brought to you by andrew ross sorkin. >> you want a pickup, you don't even have a car. >> if i were going to get one, i think a pickup truck would be cool. >> a big one? >> i'm talking big, like at a rodeo. >> you would forego the gun rack and gun, right? you wouldn't have -- you know, they have those normally too. >> moving to texas and do the whole thing. >> this is like -- this is great. this is progress, i think. >> we're trying. scott's helping me. >> my wife wants an f-150. >> it's not compensating for anything, right? >> maybe it is, i don't know.

>> the dow and s&p 500 rallying on news of larry summers pulling out from the race for fed chair. the fed starting a two-day meeting today. joining us now chief market analyst at the lindsey group and a cnbc contributor. very helpful every week, peter, when you give me the week. the good things and bad things. how long does it take you to do that? not everyone gets to see that. >> well, i have to go through the whole week. and since i've written most of all of the positives and negatives as we got to friday, it's a little easier to compile. but you have to differentiate what's value and what's not. >> do you keep totals in -- where are we, do you think? are things positive or negative right now? are they positive enough to taper? >> well, i think and i've been saying this for a while that central banks want everyone to think that things are positive. that it puts beer goggles on investors' eyes. if you look at 2013, we've had pretty sluggish, mediocre growth, low single digit

earnings growth, but another massive gain in the stock market and that's because of central bank -- not just with the fed, but bank of japan. bank of england kept full speed ahead. >> is it that simple that money being created flows downhill into risk assets? >> yes. i think it's that simple. >> does that -- can at least once that happens doesn't that help us feel better and spend more and a self-fulfilling element, at least, doesn't it do something like that with the wealth effect? >> temporarily. but individuals respond more to permanency. they want to know their income is going to be a certain level for a long period of time. someone's not going to buy a house because their 401(k) is up, especially after they saw what happened to it in 2008 and also 2001 and 2002. >> you know, maybe there's news -- i mean, this morning we've been talking about this new forecast that is looking for holiday sales this year of ju just -- a gain of 2.3% or 3.4%.

maybe that's a little bit telling of the whole thing. we know this is out here and consumers are getting more cautious. >> right. it boils down from the consumer standpoint, it's income growth and we're seeing very little of it. at the same time, cost of living is at all-time record highs. you went into a walmart and say to people, raise your hand if your incomes are at record highs. but their cost of living is. and the government tells us inflation is low but incomes are not keeping up with the cost of living and that is what's challenging consumers. >> scott, you made the same points. >> the whole point is if you're running deficits and printing money, you're devaluing the dollar and the buying power of everything denominated. and the consumer's feeling that. >> scott, isn't it compared to a currency somewhere else? >> that's a race to the bottom and everybody's doing that. and the fed has become a marketing department. you said it just -- they shouldn't be in any business at

all. they shouldn't be in the business of taxing people by devaluing the dollar and they shouldn't be in the business of setting expectations. we don't want -- >> you don't want them in business at all? >> no, the government shouldn't be in business, they shouldn't have a marketing department, and they shouldn't be doing taxes through spending and kw quantitative easing. >> but until you start seeing like hard assets reflect all of this printing, you would think we're still stopping up the excess demand from the last financial crisis. >> you can't say everybody else is devaluing doesn't matter that we do. if we hadn't devalued, we'd have stronger buying power and the consumer when they go to walmart would see their dollar go -- >> if you worry about deflation, which people were worried about, considering that was -- >> so if you're worried about deflation -- >> we have been for the last three or four years. >> fix the problems causing deflation like overregulation, government too big, inefficient

government, all of those sorts of things. and don't -- >> structural things. >> don't try and fix it through -- >> but there are people who don't believe -- >> fixable. >> we heard yesterday those are -- you know with another speech. those are the things that hurt growth, the things that you just talked about are things that actually hurt growth. government's not doing enough now to give us growth. >> well, depends on who you listen to and depends on whether -- >> oh, we're back in that debate again, somehow. >> depends on when you studied economics and basic supply and demand. basic logic versus what people say. and you know, you can't go to the government and ask them. they call -- they call redistribution entitlements, they call unaffordable loans affordable. if they were affordable loans, private industry would've given them out. so we have to go create fannie mae and freddie mac. they misname everything out

there. so they're going to definitely to create the power and the energy and get the masses to believe in government solutions they're going to misrepresent. >> i know just by asking the question i'm going to get killed for it. what is the role in your mind for government? >> i'm not an anarchist. >> right. >> and government prosecutes everything they do inaccurately, with corruption and all of it. but we still need a defense department, a justice department, we still need some basic fundamental government actions. but i don't think they should be in education. i don't think they should be in health care, i don't think they should be in finance. they shouldn't be out giving loans. >> no health care at all. that can all be done in the private sector. there should be a safety net. let's have a discussion about how big the safety net should be. should it be 1% of the population? 2%, 3%, or -- >> or 47%. >> 49 -- 50 million people on food stamps.

>> right. and it shouldn't be a velcro, it should be a trampoline. and right now we built a huge velcro safety net in the name of redistribution. >> we're going to come back to this in a second, but i have one question for you, peter. if it's not yellen, who do you think it'll be? >> i think right now it's yellen. >> impossible not to. but if it really was yellen, wouldn't have you said to larry summers when he calls and says i don't want in don't say anything and then two weeks later you come out and say i've chosen yellen. this way you leave yellen out there to hang out to dry. >> i think it's all image. they don't want to be seen as rushing into another pick after summers pulls back. >> why let -- why let larry even pull back? why not let it look like it's the president's decision? if, in fact, that's what you're trying to do. if everybody's really in ca h

cahoots. >> because i think you had people in the banking committee saying we're not going to go for this and the obama administration didn't want this fight. >> why not just tell everybody that larry's pulling himself out? >> i guess -- >> see where i'm going with that? i think that might have been the -- >> they're both cut from the same cloth. to scott's point, it's central planning, the fed is price fixing the cost of money. and is there going to be a difference between summers, yellen, kohn or these other people? >> i guess you were agreeing with what he was saying. >> all i have to do is nod. >> i agree with him. when we come back, we're going to talk more with scott mcnealy. he's got comments about the president of the united states. he's got thoughts about the fed we just touched on. and we're going to talk to him about what's happening in silicon valley right now. also, in light of yesterday's tragedy in washington, we take a closer look at workplace security, the ceo of diligent innovation whose clients include companies like hp, bae systems and lockheed

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welcome back, everyone. former sun microsystems chairman and ceo scott mcnealy.

no shortage of news out of silicon valley. and we'd like to get your take on what's happening, what's the future of silicon valley. why don't we start off with twitter and the ipo? you think this is a good idea for twitter to go public at this point? >> yeah. dick and i get a chance to chat and i sent him my condolences and congratulations at the same time. there's nothing more constraining than having to deal with the day-to-day, having to deal with the scrutiny and fasb and all of the other, you know, just crazy things we do to our public companies. but, you know, they want to grow, they want to grow internationally. they are really -- they figured it out, figured out the second screen, the 140 characters is perfect. you know, tv is kind of a lean back experience, but if you lean back too far, you fall asleep, so this allows people to engage but, you know, in achievable, bite-size 140-character moments. so they've really figured out the second screen thing. and it's time to -- going ipo is

a great pr opportunity. i think it makes sense for them but it's not going to be -- it'll be more satisfying, less fun as you go public. >> you know, zuckerberg made some comments recently where he said that he'd been very afraid of going public. now he wishes maybe he'd gone public a little earlier. if you look at the time line for twitter, are they doing the right thing by going public now, you think? >> i'm not on the inside of what the cash needs are and all the rest of it. in fact, i'd like to mention that we just announced today very, very big deal. this is a scoop for you guys, a partnership with them to be their partner to go on air and in venue as well as mobile and on the web. and we have an interesting partnership. and we've signed up to get full access to the twitter content and feed so that we can -- for our partners -- >> with way in. >> with way in. so it's a big partnership and we think the on-air and in venue

thing is going to be a whole new killer category for twitter as they go forward. and so we're heavily invested in their success and we think this is a good time. we want to go international with them and we're moving into japan with them, going to south america with them. i'm very excited about it. >> do you think they're going to be bigger than facebook? do you think somebody else ultimately leapfrogs them? i asked everybody in the room, how many people use facebook? and i said how many people use facebook more today than they did a year ago? no hands were raised. same question on twitter. it said to me not necessarily that twitter was better than facebook so much somebody new always comes along with -- >> remember aol you got mail? that was the end all, then myspace came along and facebook, each one had gimmicks. facebook was relationship status, linkedin, every time

there's the new next great thing, right now we think twitter plus wayin is an interesting combination. >> let's talk about continuing innovation, apple has stumbled in the stock market recently. do you think the run of innovation is over? or is this just a temporary cooling off period? >> i'm bias. i think it's always hard to follow the culture and the whatever of a very successful ceo. and steve was incredible and probably the only guy who has done it many, many times as opposed to being, you know, an accidental empire or whatever that a lot of us were a part of. we'll see whether wayin is a second act here or, you know, whether sun was just a magic moment. it was tough to follow the watsons at ibm, tough to follow hewlett and packard at hp and it was tough to follow at microsoft, and it's going to be

really tough to follow steve jobs at apple. he was special. so i think that's the bigger issue there is how do you follow really, really great ceos? because the company molds around their personality and their expertise. >> you brought up microsoft and the struggles that it's had. ballmer is leaving. there have been several candidates that have been mentioned to step and take the reins. how does that strike you? >> you know, gersner was the best thing to happen to ibm. and if you can find that magic and the right combination of understanding the past and putting some discipline in, i don't think ballmer's done a terrible job. the guy has very high integrity, the guy has been very straightforward. he's managed an enormous amount of cash out of that system. and it is tough to compete as a big, established organization against a totally focused, private, start-up in these areas.

so, you know, i think the poor guy, you know, did a great job in a very tough, tough scenario. another guy who took on a big company after an unbelievable 20-year jack welch run. it's hard to fill those shoes. it's much better to start over or to come in as a turn around specialist or whatever. i don't think microsoft needs a turn around, but it could use -- it's probably time -- >> would you break it up? would you do something? when you look at them buying nokia, does that say they're going in a whole different direction? >> i'd probably do different things with it but that's me and i'd do -- >> like what? >> a buddy of mine once said that ceos remake companies in the image in which they know how to manage. and any new ceo's going to go in and do that. i probably -- i'd probably move the company a little more open and start opening the apis and start sharing and getting the rest of the world to help me.

like google, if you look at what android is doing to the iphone, it's going right by it because it's mankind versus cupertino. the first thing i'd do, they haven't called me and i'm not sure there's enough in the marketplace to get me to go back and get into the pinata. >> you just -- you've got these old zombie ideas. you actually think that a world full of people is better than 100 really smart people? that means you think the free market is better than the government -- government has 100 really smart people that have gone to ivy league schools. >> just because they went there doesn't mean they're smart. >> you go to an ivy league school and you figure out we need solar, and suddenly fracking comes along and does it for $2 instead of $15. and you realize maybe the 100 smartest people aren't the way to go. >> one of my frustrations and

you figured me out already, am i that transparent, i think it's a shame that we are talking all of these people into giving their money away or paying taxes when i would much rather have -- imagine -- >> you mean the buffett -- >> yeah. the last thing i want to do is tell bill gates and warren buffett how to spend their money. but imagine if they'd take their tens of billions of dollars and pledged it to a business plan sponsored by an mba graduating from an mba school with engineers and marketeers and they got 50% of the company -- >> keep it in the company. >> instead of doing the $800 billion stimulus program and took all that money out of wealthy people. what do wealthy people do with their money? they invest it, spend it, save it or give it away. and i guarantee you, any wealthy person who created that value is going to do far better doing those four things than taxing it and giving it to pelosi and reid

and obama and all of the oth other -- >> bureaucrats. >> thank you. i almost got in trouble. i'm going to have a hard enough time walking out of here safely already. >> talked about a kevlar vest. we've got to learn again and again and again that the billion people that just acting in their own self-interests is probably better than the -- >> it is not greed when i take the wealth i accumulate and earned at sun -- and by the way, i had to borrow money from my dad -- >> how much was that you accumulated? >> not very much, it's a hardware company and ellison bought us at the bottom if you remember. he's a smart man. but, you know, i took that money and i'm investing it back in wayin and other start-ups and in my.org that is open sourcing k-12 education, we spend $8 billion a year on curriculum.

and we spend $130 on a math textbook. let's open that up and make that free. >> pendulum swing. how long the central planning pendulum that has swung back for the last however many years you want to count it. how long -- hillary could easily be elected. >> the problem was, it wasn't 47%, it was 49% when mitt romney made that comment. and what we have now is people who aren't participating in the whole process don't have skin in the game. and we have moved from the safety net to the troller net in terms of just -- >> you really believe that? >> i do believe that. absolutely. i do believe people feel -- >> so disenfranchised or enfranchised by the amount of money the government's handing out? >> i think it's really hard when multiple generations of voters have been raised by government sector union teachers and ten e tenured professors who have no

chance of explaining personal responsibility -- >> earned success. >> the capitalist environment of -- and i just think -- i think it's getting very, very difficult. i don't want to be negative -- >> there is a point of no return where -- >> there are tipping points. there are tipping points, yeah. >> the thing that frustrates me most is feeling virtuous about providing a safety net for three times of the amount of people that needed a safety net. now you -- it's about providing -- >> a conversation about welfare queens and all sorts of other things. >> we're not talking about -- >> there's a larger issue about technology. the other thing is that technology has changed the employment picture in this country and frankly globally and then you get into all sorts of imbalances. how do you deal with it? >> then you're saying it's different this time. >> and things have changed. it has become a winner take all society. i'm not saying that's a good thing or bad thing, someone's

got to deal with it. >> i don't believe that because if the winners reinvest and create jobs, all the rest -- >> 48% of births today are on medicare. that is a stunning number. we're going to continue this conversation. "squawk" will be right back. th

coming up, the latest out of washington. more details about the horrific shooting at the navy yard. plus, a check on inflation. the data will be out in just over 30 minutes. and we'll have the market reaction coming up. tomorrow on "squawk box,"

toll brothers ceo doug yearly, gary stern, the cfo of home depot and the cfo of wells fargo. housing, the fed and state of financials. it all leads up to our interview with goldman sachs chairman and ceo lloyd blankfein on "squawk box" starting at 6:00 a.m. eastern time.

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welcome back to "squawk box" here on cnbc. first in business worldwide. i'm becky quick along with joe kernan and andrew ross sorkin. ahead this hour, much more from our guest host, scott mcnealy, the former chairman of sun microsystems. we're going to talk about his new start-up, social media hub wayin. and an update on yesterday's shooting at the washington navy yard and we'll be talking to roger kressley. and later this morning, a look at security in the workplace, michael barrett. at 8:30 eastern this morning, we'll get a key read on

inflation as the fed kicks off a two-day policy meeting. cpi numbers are expected to show an increase of .1% in august. the u.s. equity futures at least at this hour are indicated higher. dow futures up by about 31 points, s&p futures up by just over a point. right now, let's get over to andrew for your morning headlines. among or top stories this morning, grand jury indicting two involved in the trading scandal. they are accused of hiding hundreds of millions of dollars of losses by marking positions in a credit derivatives portfolio at inflated prices. meantime, kate kelly reporting that jpmorgan close to agreeing to pay about $800 million in fines related to its london whale trading loss. a lot of money. the bank will be settling charges about shoddy supervision, the "wall street journal" and "new york times" reporting that jpmorgan will admit to wrong doing as part of the settlement. a sea change that could set a precedent for other banks. also, gasoline prices

setting a record aaa reporting average price of gasoline will be exceeding $3 per gallon today for the 1,000th consecutive day. that never happened before. the current streak began on december 24, 2010. the investigation continuing into that deadly attack in the nation's capital yesterday. 12 people killed, 13 if you include the gunman. the motive for the mass shooting is still unknown. eamon javers joins us with more. good morning again, eamon. >> reporter: good morning again, joe. well, it was almost exactly 24 hours ago yesterday that aaron alexis, the 34-year-old shooter walked into this building, building 197 here at the washington navy yard. yesterday morning, about 8:15, people gathering in the cafeteria area. walked in with a shotgun. at some point he obtained two additional weapons and began shooting in that closely packed cafeteria area killing

ultimately 12 people, 13 as you say including the shooter, setting off a day of chaos as police locked down this area, much of the surrounding neighborhood. also the united states senate, an incident late last night, ultimately bizarre incident involving fire crackers at the white house last night. chaos and confusion raining throughout the day. several points authorities here said they were on the lookout for two additional people. they now say this shooter acted alone here. and we've got some pictures of aaron alexis we obtained through friends showing him in his normal civilian life. they said he had a pattern of misbehavior while he was in the naval reserves. so there were clearly red flags here. authorities are beginning now to piece all of that together. we're told that the fbi has now visited his apartment where he was staying in some long-term housing at 333 e street

southwest. so they've also visited his mother's house. trying to piece together who this guy was and what could've prompted this horrific shooting yesterday, joe. >> all right, eamon, thank you. we do this every time. and i don't know the answers are never very satisfying. joining us now to talk more about the shooting, former white house counterterrorism official, also a terrorism analyst and a partner at liberty group ventures. i'll tell you, it looks totally unrelated at this point, but the first thing i thought of navy yard, you know, the top guy at al qaeda, what was it, three days ago said start doing the lone wolf stuff again and based on syria and have to spend more on security and hurt our economy. at this point, there's absolutely no reason to think that there was anything involved in terms of that in this situation, right? >> that's right, joe. i think when the reports were

out that there may have been two or three other individuals involved, there was more concern about whether there might have been political motivations to this. now we know there was a lone shooter, i think that has been put to the side. the challenge now becomes for the fbi and local law enforcement to really pull the string on alexis' past. who did he know? what were the motivations? they're going to go through his computer records, his cell phones, they're going to talk to the network around him to say, all right, what was it that triggered it? was he truly a lone wolf who decided to take this step. buy the shotgun, go into the navy yard, begin the process of premeditated murder. >> roger, it -- you know, one is too many, but it seems like the workplace shootings, i can remember ten years ago when people would even talk about, you know, a postal worker that became an acronym for someone satisfied with his job.

the actual workplace violence, the incidents, i guess it's always too high. but, i mean, that's what this looks like. was he unhappy with what happened with his experience with the navy? >> yeah, and became very disgruntled, had a grudge and decided to take it to the next level. and that's the issue here that we always grapple with post shooting, which is, what makes a person jump from being angry, from having a grudge to go about premeditated murder. is there a mental health concern here? and that's going to be part of the investigation. but this is fitting a pattern right now where we're seeing the type of multiple shooting deaths by an individual motivated for not political reasons but for other reasons triggered by emotional health issues or other things. and joe, we talk about this actor shooter phenomenon. and what we have seen in the workplace is far more attention paid to safety and security of employees in recent years where they're being trained, they know what to do.

shelter in place or flee immediately or if they have no other options, find the closest thing that resembles a weapon and go after the shooter. that type of training is becoming part in parcel of the daily workforce right now. >> in your view, roger, there is some -- you can argue both sides about whether gun-free zones are effective or actually ineffective or actually, maybe, maybe hurt the -- i don't know, make it less likely you're going to be able to prevent things. what's the current thinking on that? it seems like you've gotten one of the guns from someone there that had the gun, right? >> right. so one of the security guards. there are legitimate arguments on both sides of the aisle here. and as the nation and a government, we haven't figured it out yet. but the reality is, joe, we're going to have more shootings like this and a higher body count until we take some action that seems to address this problem. the reality is, mr. alexis went

into virginia and in one day bought a shotgun. he could've passed all the background checks because he wasn't convicted for any of those prior incidents where he discharged a gun in his apartment building where he shot out the tires of a vehicle in seattle. so there was nothing in the system that would've stopped him from buying that weapon. so this may have been one where we could not have stopped. but, again, once law enforcement builds the picture of his past, i think we'll be able to pass judgment then. meanwhile, we have 12 dead people that we have to bury, unfortunately. >> all right. it's easier with a gun, obviously. but then you got the guy in venice beach, dries on to the -- if, you know, the mental health component of it is definitely something that needs to be paramount. >> it's a big part of it. big part of this issue and part of the debate. so we're just going to have to grapple with that as we deal with the gun policy issues associated with it. again, it's the training of the workplace that becomes one of the greatest measures of safety right now. we all got to recognize that

regardless of what industry we're in. that is the world we live in now. >> all right. and i just can't imagine trying to protect a government building or a -- or the president or anything without -- try to protect those guys without armed protection. that's why, you know, it's not a chicken or egg thing. you need to meet force with force, but that opens up the possibility of having the force present for someone to take. it's a tough one. >> joe, you're on a military base even when washington navy yard, which has strong security but it's also designed to ensure the free flow of badge to credited both civilians and military people. so multiple layers of security, armed guards to prevent unauthorized car and truck access. but if one individual is motivated enough and has legitimate access, an insider threat if you will and can buy a weapon, then they have the advantage at the beginning. the attacker always has the

advantage. and so our defensive structure has to reflect and recognize that reality. >> right. roger, thanks. appreciate all that from you today. thank you. >> absolutely. coming up, much more from our guest host scott mcnealy. his start-up wayin helps brands tap into social media conversations as they happen, they happen right at this moment. wayin is expanding its partnership with twitter. still ahead, key inflation data. that's hitting the tape at 8:30 a.m. eastern time as the fed begins a two-day policy meeting, we're going to bring you the cpi numbers and the market reaction. as we head to a break, check out the market indicator. [ bagpipes and drums playing over ] [ music transitions to rock ]

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welcome back to "squawk box," the futures have been indicated higher. after the markets ended higher yesterday, the dow up by about 120 points yesterday. the futures indicated open up by about 30 points. check out shares of aeropostal. jumping on news an affiliate has taken a stake in the retailer. it's up by 15% this morning. and our guest host this

morning is the chairman and founder of the new start-up wayin. the company announced this morning a new partnership with twitter. have we actually seen the results of what this partnership looks like this morning a little bit in terms of how people are reacting to you? >> yeah, we have. i've been watching. i've got a couple of people who lost money trading sun stock at the wrong moment and don't think my views are worthy because of that. >> doesn't make them very unique, does it? >> no, most people did pretty well on sun stock. most people made a lot of money. it bounced around a lot. sort of looked like a bill clinton lie detector test for a while. >> wow. different question. >> speechless. i've never seen him speechless. >> because i look back at clinton now and think he was a god. don't you? at this point? >> i don't know what i was thinking. >> at the bottom of the hour, we left it off right before we went to commercial and raised this issue about the american dream. and joe would say i thought the american dream was dead and i was suggesting i didn't actually

think it was dead but i think it's harder. more challenging today. you don't agree with me. >> i think it's still there. i think the opportunity is there. i tell you, the regulations, how much paperwork you have to spend to go start a company. obama care's going to make it very, very expensive to move past 35 people and start getting into that whole routine. i haven't talked to a small business owner yet who has been happy with the amount of regulation and oncoming regulation. i think minimum wage makes it very hard to hire people to get stuff done and i think the -- >> do you think it's those -- do you think it's the regulatory challenge that makes the mobility issue hard or structurally, and this goes to you in the valley and technology. and this is where i was going with it. whether it becomes a winner take all society. >> no, i think there are network effects in social media and there are some network effects

in technology around api. we can't all -- at some point you have to choose which side of the road you want to drive on and technology tends to drive those tipping point things. but that doesn't mean winner takes all. if it's proprietary and you o own -- i mean, i'd love to own vowels. you know, if i own all the vowels and if you used one, that would make and that's what i used to argue that windows used to be the kind of written and spoken. >> and if you can get past the industrial revolution, do you remember what needed to be done by hand long ago? at the time when all of these machines that came in and automated everything, people back then said this is over for the worker now. but through history, through creative -- constantly, you know, look at the record. there's no record companies -- >> but the technology issue is something that has revolutionized globalization. you're no longer talking about a fixed pie of 250 million people, you're talking about billions of people. that changes the dynamic in terms of -- >> it changes what you have to do. there were 40,000 piano players

playing in the silent movie era in the movie theater and we learned about the musical scores. we have two piano players in l.a. who are very good. and everyone gets to hear good scores -- that's what we're trying to do. we've got 52,000 learning assets free and open source. and ten plus ten was is and will be twenty for a long time. so we don't have to spend $130 on -- everybody go and tell your local administrators to download for free. did i mention free off of this website and we can get everybody -- all those piano players are doing something useful, like maybe they could -- 280 in california used to be the most highway. now it's a garbage pit. get them out there picking that up, doing something, but we've got to get people applied to things -- shut down the u.s. postal service. not saturday, shut it down. i'm buying some property in nevada. my plan is to move to nevada. i like the environment there.

and we use docusign to sign the documents. we didn't have to fax, didn't have to do it. there's no paperwork involved at all, it's all done electronically. >> i love all sorts of technology, but ultimately doesn't that mean it's harder to create jobs? i'm not saying -- i don't want wasteful jobs, i'm suggesting this is the world we live in. >> seems there's a lot we need to do. >> stuff that needs to be done and minimum wage prevents some of the stuff from getting done getting done. regulations make it too hard to hire people. stuff is getting done outside of the united states because they aren't basically putting these -- and you know what, the international barriers to competition are falling big time in a whole bunch of ways. so if we don't become competitive internationally, the jobs are growing. >> when i went to china with boone pickens, we went to the great wall and boone looked at it and said this is what you can do without osha regulations. you're talking about not adding

additional -- >> no, what i do find fascinating is you have unions, they got created, i remember studying this a long time ago at an ivy league school, unions to protect themselves from abusive, big bad bosses. >> sure. >> the interesting statistic is there are 6.6% of the private sector is unionized here in the u.s. 35.9% of the government sector is unionized. we have decided that our government that we all love so much is so nasty that almost 36% of the population has to -- employees, have to be protected from our government. if they're so bad -- i mean, it's obviously corrupt for a whole bunch of reasons because they're basically voting for their pay raises at the -- >> right. >> but the real thing is our government so nasty we need to protect? >> there's no civil service laws. >> is the office worker environment so dangerous that we need to have collective bargaining and therefore pay them more than they get paid in the private sector? there's some really wrong things here. and all of that contributes to

sand in the gears of the capitalist engine that creates jobs, allows personal responsibility and allows this dream. >> but here's the question. the question is, what is the dream? and i talked about it as -- there used to be the leave it to beaver dream, which was you check the box, went to school, went to college. if you went to college, you got a nice job. two kids, a dog and a house, right? that dream, that sort of paint by numbers dream seems to be much harder to come by today. >> part of the problem, the schools have gotten out of control. my son just got out of college, i'm not going to say which one. here's some of the seminars to take. self-theorys. the other and the other worldly in america. i'm reading this, i'll give this to you. masters of disaster. this is mad women, women and mental illness in u.s. history. imagining women. writers in print and in person. writing women's lives. this is what people are learning at college. and we have, you know, 50% of

the college graduates now are underemployed or unemployed. they are learning -- >> i have to say when i went to college, it was the same thing -- >> that's one of the good ones. >> that's what -- i didn't say that. i challenge you to look at the introductory seminars and -- what are we learning there? >> that's much more about learning logic than the topics themselves. >> i do not want to hire somebody who is imagining women or something like that. or learning about -- >> i hate to say, when i went to college, there were a lot of courses like that, bugs and men, a bunch of classes that didn't qualify you to do anything when you got out of college. >> and we need to start. we need to have an education system that teaches people the trades. >> yeah. >> right? >> that's true. >> i was trained as an economist to be, you know, the president's counsel of economic advisers. but that doesn't.

>> you have an economics degree? >> yeah. >> honors. >> and you started sun micro. >> on an mba. i'm not a programmer. i'm a golf major. >> that is amazing, though. economics of all of this stuff -- >> i was captain of the harvard golf team which is like being the florida state snow ski captain. >> joe's reassessing because of the dismal science, the economics. >> i think economics is a joke. i do. i don't think you can -- i wish you'd learn just read adam smith, read, you know, read something that stands the test of time. read milton friedman, but then when you give nobel prizes to paul stiglets on one hand and krugman on the other. i mean, obviously, there's no -- >> the science is in there. >> there's no facts like chemistry or physics, no real facts. it's a pseudo science. >> it's a social science and that's why i enjoyed it. humans are not always rational, but there's science around it. social science. >> instead of all of that stuff -- all that drivel, i

think there should be chemistry, physics and biology should be the first things you learn. >> i think supply and demand, microeconomics is -- >> well, that's important. to learn that your own incentive to do something that benefits yourself is what sets prices. it's what allocates capital and what creates prosperity. and that's what you need to do. all right. your own self-interest. doesn't make you greedy, doesn't make you selfish. and fairness isn't necessarily a good thing. we'll have inflation numbers as the fed kicks off the anticipated two-day meeting. cpi number hit the tape at 8:30. forecasters expect an increase of .1%. [ male announcer] surprise -- you're having triplets. [ babies crying ] surprise -- your house was built on an ancient burial ground. [ ghosts moaning ] surprise -- your car needs a new transmission. [ coyote howls ] how about no more surprises?

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welcome back to "squawk box," everyone. engineers believed they succeeded in pulling off one of the most complex salvage operations ever. the wrecked cruise ship costa concordia has been pulled off the rocks and into an upright position. this took months of preparations, hundreds of workers, and it was is the ho19 pulling power. >> and you were thinking about it yesterday. how many pounds of fish were

rotting on that ship? >> 24,000 pounds of ship. >> and a bunch of rotten cheese mixed in with all the eggs -- the first person that went in there was -- i mean, you need -- >> yeah. i was thinking -- >> people are eating breakfast right now. come on. when we come back, we do have breaking economic numbers. a few minutes from the cpi numbers for august. right now as we head for a break, take a look at the u.s. futures.

welcome back to "squawk box," we're going to have august cpi out momentarily and the numbers up .1% on cpi, strip out the all important food and energy also up .1%. don't see any revisions to our last look. these are about as expected. you could argue you're looking for .2% on each, but no matter how you slice it, down here the biggest debate isn't on the inflation numbers, it's on how they calculate them, what they mean and what they don't mean. i'm looking at the marketplace, we see that ten-year note yields have come back up a bit from yesterday's exaggerated bottom. remember, if you were short looking for higher interest rates whether it was the autumn summer story or, of course, what

begins today in a two hi day meeting. definitely put the market in the box in terms of position. if we look at europe, the guild is climbing close to 3%, the boon hovering close to 2%. so, of course, try to separate fact and fix from the sustainability of what has been higher interest rates, benchmarked against -- maybe some slightly weaker data and, of course, what the fed will do regarding the taper. maybe the biggest story in the markets that i've witnessed in many years and, of course, the outcome in about, what, 28 hours from now. back to you. >> that's right. rick, thank you. for more on the data, let's get to steve liesman. steve, joe asked the right question.

>> joe doesn't think anything i do is interesting, so we're going to have to ask -- >> i'm ready. >> you're not objective. >> no, i'm ready to tell the government. listen, next time, we're going to skip your inflation numbers for a while. >> right. >> when you have something -- >> tell us, let us know. >> there are a few things worth mentioning. prescription drugs up .08, and medical care up .06. pushes up the overall index. i'm trying, airline fares down 3.1%. that could interest people out there. and what else is there? nothing else to talk about. fuel housing fuels, down -- that's it, i'm done. >> okay. >> all right. >> now i want to bring in joel -- >> yes, because we want to talk about what rick just said is going to be the most interesting market story he's seen in a long time. >> i've got a lot of things. start with what's interests you. >> well, i want to go back. rick made the point, this is going to be one of the biggest stories he's seen in a long time. whether the fed tapers tomorrow and if so, by how much. what's your expectation?

>> well, you know, i'm hoping they actually don't. i don't think the economy is ready for it, necessarily. you know, i think we could have a soft third quarter. we have the government that's sitting out there and who knows what's going to happen with sequestration. i think the risks are particularly great on the downside not necessarily a whole lot on the upside. and with inflation really trending downward, i'm not sure why they need to bother. but i suspect because the markets are demanding it, they'll make some, you know, move tomorrow. so that's basically it. >> markets are demanding it because the fed basically told them we were headed this direction. i think the markets are following what the fed told them. >> yeah. well, that's true, but i think the big mistake, mr. bernanke made was by saying that it could come later in the year rather than late in the year. that magical letter "r." if he had said late in the year, we'd be looking at december and nothing else would have been changing. there was no reason.

if we're talking about $10 billion, $15 billion, what does that matter? but with all the uncertainty, i think he boxed himself in and you're right, he made the statement later, not late. >> joe, i think they're in a place they don't want to be. i think they're doing $85 billion a month of these asset purchases. i think it makes them nervous. i think there's some discord on the board about this. and i think they did this with some sense they would be on a short leash here and that rolling this back now is part of an overall agreement that's been struck on the board between the hawks and the doves. you guys do this, do this for a while, see what kind of impact and now let's roll it back and do so in a measured way. that's what i think is the story right now. but, joe, i want to turn to something else which you and i have been corresponding about over the last couple of weeks. what's going on in the job market? and it shows people dropping out. and the labor force participation rate is going down but you're not concerned about this and i'm concerned you're

not concerned and i want to understand why you're not concerned. >> first of all, let's take a look at trends as far as the labor force participation rate is concerned. the government's been doing this number for about 65 years and for 65 years the male labor force participation rate has been declining. the female labor force participation rate which really soared in the '70s and '80s peaked about 13, 14 years ago and has been slowly coming down. so we've been seeing a decline basically in the labor force participation rate. it's picking up steam. but it's really been coming down for over a decade. and when you have a trend that's over a decade long, you can't dismiss it. this is a demographic issue. the boomers are slowly getting out of the market and social changes are occurring. >> rick, go ahead. >> go ahead. >> i've heard this argument, so i went back to 1970 and i looked at the employment to population,

labor force participation rate and, yes, there are some trends. but listen, if you cover up from '08 on and look at the chart, it would be like looking at a stock chart, right? and i've showed it to many people on the floor. and it could go -- >> rick, rick, if you look at the -- rick, if you look at the '70s, rick -- >> then you could -- >> rick, if you look at the '70s and '80s -- >> change the complexion dramatically, dramatically. >> in the 1970s during the carter administration, it went up by 2.6 percentage points. >> so bring carter back. >> had a great economy because -- >> carter's a better president -- >> i want to give some other data here, joel. there's two kinds of people leaving the workforce. those who are leaving -- or two types of people out of the workforce. those who are not looking for work, those who are. we have a chart up right now. those who are not looking for work, that's gone up if they're out of the labor force, those who are looking for work on the labor force, that's gone down or stayed steady.

>> that's exactly right. >> joel, if i'm not mistaken, your point is the green line is retirees, the blue line is some progress, although still a high number of people who are out of the workforce but looking for work. >> that's exactly right. i mean, there's a whole series of data that's out there that are indicative of a change in the trend as far as the labor force is concerned. i think that's one of the situations. it's also the same thing when we get into the discussion about part-time workers. if you take a look at what's happening to part-time workers, they're going up but jobs are going to people who are wanting part-time jobs. those are the baby boomers who are cutting back, they're not retiring, they're looking for part-time work, businesses see them as skilled workers and they're actually getting the jobs that they want -- >> the increase in disability ranks. >> that's a big deal. >> yeah, it is a big deal. we can't dismiss this dynamic. >> i want to bring this home to

policy here, which is it matters a lot because of what's happening in the society right now in terms of being able or notbeing able to get jobs. but there's a lot of slack in the labor force right now. and we don't risk an inflation problem if we should accelerate on employment. but joel, if you're right, it means the fed could be wrong here and there isn't as much slack out there because people are leaving the workforce and they ain't coming back. what's your take on that? >> that -- and that's exactly my view. i think what we're looking at is a very long-term trend in a declined and labor force participation rate. people are leaving, they're either leaving it completely or they're moving to part-time jobs. and what that implies is that maybe the full employment rate's a little higher than the fed thinks it is now. everybody thinks it's 5 1/2, that's probably a reasonable, you know, level at this particular point. but what it's really saying is slack is such that i think, you

know, the fed's 6.5% target rate, that could start triggering some reasonable wage inflation because i don't think there's a whole lot of extra slack once you get to that particular -- >> too much financial engineering. that's why people in the marketplace are sick of qe. everywhere you look, there's financial and social engineering. the private sector knows how to do it. the government's got to clear the zone. and that's going to start 28 hours from now! hopefully. >> you're right. >> i thought that was interesting, joe. i don't care what you think. i thought that was interesting. i want to thank joel for joining us today. >> you don't care what anybody thinks, you should run for president. >> wow, this park had a perfect game going into the seventh inning. >> pretty interesting. >> steve, rick, joel, gentlemen, thank you. >> what were you saying? >> this is the time when i pick a piece of paper up and i throw it at joe.

coming up, the investigation continues into the deadly shooting at the washington navy yard yesterday. up next, a closer look at workplace security with mike barrett of a consulting firm that advises the white house and defense department on homeland security matters. we'll have that when we return.

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points above fair value. this comes after a strong day for the markets yesterday. the dow is now sitting back at just about 15,500, s&p is back near 1700. we'll continue to watch as we get closer to the opening bell. shares of huntsman corporation are on the rise this morning, it's buying two businesses from rival chemical maker for $1.1 billion in cash. it will also assume $225 million in unfunded pension obligations. and the deadly shooting at theive navy yard. good morning to you. >> good morning. >> is this avoidable? truly preventable? and if so, what do you do? >> well, nothing is fully 100% preventable. and that's an important baseline people have to understand. so what we do, and particularly, actually, the military does a good job of what we call defense in-depth. a little bit like diversification, right? you reduce risk by having

multiple layers of security. some of that worked yesterday, but unfortunately, a determined adversary can always get through. >> isn't that the issue? isn't this always going to be the case? my understanding is your company suggests that you do random checks of employees on their way in, whether you have a badge or not. that helps, but as you just said, if you're actually determined, you're determined. >> well, that's right. but the randomness of the inspections for everybody, meaning that everybody whether you work there or not, whether or not you've had a security clearance done, whether or not you park there every day, still occasionally checking cars. what that does is deflects the threat. so if somebody's determined to strike you but you make the workplace too hard of a target, then they're going to strike somewhere else. so if you go into the hypothesis this is more workplace violence what it looks like, guy is upset with his boss, making a statement. he will go do that while the boss is commuting home as opposed to attacking the place of work. >> this is a question i've asked

about every guest this morning. what is the role of the employer in terms of profiling and investigating their own employees? obviously the role for law enforcement. but when it comes to reading e-mails, watching social networks, you know, looking -- looking through all sorts of telephone calls, that kind of thing. what do you think the employer should be doing? >> yeah, it's a great question and today and today's technology age, i think it's ever more important. one of the weird things about the defense world is that for positions that require security clearances, for example, it's the government that does the investigations. so we tend to just rely on the government to do the background. when you're talking about, you know, any other industry out there, the individuals that are in charge really need to build that into their plan. they need to have, you know, at least a third of their focus needs to be on hiring people that have clean backgrounds and records, you spend another third of your effort trying to make sure that the security protocols are reasonable. and as you see yesterday, when something does get through, you want to have another third spent on the response protocols.

they did very well yesterday. they had a tremendous response, s.w.a.t. teams got in there, people knew how to shelter in place. shut the area down. >> so, mike, if i hired you right on the spot right now and said come on in here, i want you to do a full work-up. and hopefully we -- there's nobody here who would come under the category of being a potential problem. what would you do? >> well, one of the primary things is metric checks. right now you have i.d. cards, but often it's just a picture. as long as it looks reasonably like you, security guards aren't going to notice. so you'd want to go to more secure access control points, go to biometrics. that's one point. second point, you want to run background checks on everybody, including current employees. often times we find it's the long-term employees who get upset if something changes and end up being the danger. >> how often are you supposed to do that? >> well, we do periodic reinvestigations every five years for top secret and every ten years for secret. frankly, as you pointed out in

today's social media age, you can do it more often. every couple of years if you use certain social media monitoring tools. >> right. mike, you raised some important issues and also raised some important questions. we appreciate your time this morning. >> thank you. >> thank you. coming up, the fed starting its widely anticipated two-day meeting this morning. will the central bank really do it and begin the taper? and what will it mean for the markets? we're going to check in with jim cramer at the new york stock exchange next. this week, we have a huge lineup on "squawk box." tomorrow, before we find out if the fed will begin the taper, we talk to goldman sachs chairman and ceo lloyd blankfein and then thursday, jimmy dunne, and former wachovia ceo bob steele. and wait until you see who we have lined up for friday. watch "squawk box" all this week starting at 6:00 a.m. eastern.

welcome back to "squawk box." jim cramer, they go to 75 billion. what's the market do? >> probably nothing. i think we're overbought.

so there will be a quick selloff and then the buyers come right back in because the buyers can't be kept out. if we didn't go down yesterday with a lot of bad news later in the day, including a terrible shooting and the president coming out and basically saying i'm going to shut down the government, it's very difficult for this market to stay down. >> what does the market do, jim, if they do nothing? >> if they do nothing, i think the market goes up again. they do nothing and maybe it's yellen. gees, i know there's a big political fight back and forth between you guys and rick santelli. in the end, doing nothing is good for the stock market. >> i'll take any fischer. how about you just put a fieschr in there. >> you have a great guest, scott mcnealy. does he feel oracle has done a good job with sun micro? >> larry has called me other

than when he asked me to testify against google. you don't want to buy a hardware separate from your software, you are don't want to buy a car and then download software to run your vehicle, you want it all integrated. >> i followed scott since we were in college to believe. i want to congratulate you on being a fabulous business person. >> i appreciate it. >> he was an upper classmen when you were there? >> and scott was a great, great athlete. he doesn't talk about it but he was fabulous. >> on the golf team, right, scott? >> i finally started playing hockey three years ago. the older i got, the faster i was. >> at a lot of things. >> that's personal. >> now you're coaching hockey. >> i'm coaching, yes. someday i'll be an owner. i'm on the board of directors of the san jose sharks. >> are you really?

wow. >> j.c., we'll be watching. >> coming up, our guest host this morning has been scott mcnealy. we're going to give him the last word when "squawk box" returns. a quick programming note, doesn't miss "squawk box" tomorrow. we'll talk to goldman chairman and ceo lloyd blankfein. you don't want to miss it.

. stock of the day. i wanted to ask you earlier what happened there, mr. underwear. what happened in august to aerpostale. >> i stopped buying. >> do you think they ordered all the wrong stuff? >> you mean it's like a jcpenney situation where they just missed the trends? >> it's so hard with teens. >> i have a hard time keeping up with it. >> they were killing it. where did -- >> are you saying -- >> even me with two girls, i'm trying to figure out back to school. they change their minds. >> sycamore partners has taken a

nearly 8% stake in the company. >> did you guy cargo shorts? >> i don't let my boy wear them. >> my wife doesn't let me wear them either. >> too sloppy? >> people have problems with cargo shorts. >> it's what i used to see people wear to construction sit sites. i said you're dressing up. the real problem is just to get them to grab a clean t-shirt. >> scott, we've talked a lot about what you're doing with wayin and how social networking is out there right now. we're trying to figure out what the future is for silicon valley. is there something beyond so long networking? >> if i knew, i'd be investing in this big time. there always is some new wave. but if you look at what is social media all about, it's fundamentally taking what used

to be drums and written letters and all the rest of it and we've just been evolving that. we moved from lots of barriers to access and entry to much fewer. and, in fact, that's one of the challenges government is having is their treasuries are no longer independent, separate things with electronic funds transfers and all the rest of it, you can pull the levers at one treasury department, it's totally offset by another political maneuver. so what we're continuing to do and what i think silicon valley will continue to do is disintermediate and they're disintermediating all kinds of activities. eventually the world i believe -- some of the big trends are big data. you see companies driving the big data activities big time and even the older companies like sap and hp are moving into big data. >> we have a segment on big data

every week. >> we do. >> you can't get away from the network now, even on the airplane. that used to be my nap time. now i find myself out here doing e-mail the entire way out. >> andrew, is it free and insidious? >> it's not. it is not free. it's free at cheaper hotels. if it's a cheaper hotel, they give the wifi away for free. >> i was at doubletree last night and it was free. >> i was at the ritz carlton and i had to pay for the wifi. >> the company had to pay for your wifi. >> that is true. >> we want to thank you for coming in -- >> you're awesome. next time tell you how we really feel. >> i'm a patriot, i believe in

this country but i believe in personal responsibility and we have to get back on the right track here. follow me @scottmcnealy at twitter and can go to chairmanmcnealy.com. >> join us for box bach tomorrow. "squawk on the street" begins now. >> good tuesday morning. welcome to "squawk on the street." i'm carl quintanilla with david faber. a fair amount of news this morning as we await the fed decision tomorrow. the 10-year yield around 2.84 this morning. folks continue to guess about