economy continues on a very slow pace. it means the economy is off of its death bed but we do not have a clean bill of health. not yet, at least. we will be watching tomorrow. that will do it for today. the dough up 34 points. stay with us. >> live in new york's time square this is fast money. here is tonight's line-up. fed up. will they taper or won't they? what's a taper anyway? the fed whisperer himself of the wall street journal gives you his take ahead of tomorrow's big meeting. bail out nation. it's a great american come back story and gm is on a roll. fire up the engines for a drag race but you won't want to miss. from smart phones to smart

watches, qualcomm wants to be part of the next big thing. paul jacobs joins us with the strategy of the smart tech revolution. >> i'm melissa lee. brian kelly, jim, karen, guy, and mike. let's get straight to our top story. taper games. will the fed pull back some easy money tomorrow and how are you trading it tonight? what should we expect? >> they clearly have to do something because they put it out there for so long. the market spikes that 1725 level that we talked about. i think karen is in it. look for an opportunity to sell. >> why caterpillar? is this on a broader market pull

back? it's starting to try to play catch up like it has done a number of times. a number of times but each high is a lower high and that's what i think is going to happen. >> china's fixed domestic investment was lower than expected and came in flat as opposed to up 12%. china pumping along and building new roads and buildings. >> this is is a nice little trade that has gone up for about a month now. karen and i have -- >> ten to 15. what kind of market reaction will we get if we get?

but i would have to be right on what do they do. i still want to own what i want to own. >> and then there is another monkey wrench. that is the news conference that ben bernanke will hold afterwards. we don't know what language he will use in order to characterize whatever action or non-action they take tomorrow. >> and it's a real high wire act that he will do tomorrow because here is what he is trying to attempt. he is trying to attempt forward guidance which means you have to believe him. and that the federal reserve has the ability. >> why four to five years? why not one year down the line? why are you so far out? >> one year, because they are

already saying to 2016, three years. they will keep rates low. probably going to be wrong on that. so add another one or two inches for good measure. >> one thing they have been right on is low inflation. >> they have been right on that. >> and the monkey wrench is, of course, that ben bernanke is stepping down next year. how do you factor in the news conference tomorrow and factor in what bernanke may or may not say? >> i think one thing about bernanke stepping down is you would think that perhaps he would want to initiate some tapering before he left. karen alluded to the fact that we have not within seeing signs of inflation. we have not seen real wage growth. and i think that suggested that maybe their work is not

completely finished. i wouldn't be stunned if what we hear is more talk of taper but we don't actually get the 10 to 15 billion that the street is expecting. >> let's go to the senior economic correspondent. his work, his articles widely read on the street. john is also known in some circles as the fed whisperer, which i know you hate. >> i do. >> good to have you with us. your most recent article is interesting. it described a pickle that ben bernanke is in. >> what kind of language are you expecting out of this news conference? >> in terms of the pickle, here is the problem. they will be putting out 2016 forecasts. back to around where they want it, between 5 and 6%. it will probably also sew an

interest rate below what they think is normal. they are trying to sell the message that rates will stay low for a long time. i think that is one of the strong messages that comes out tomorrow. the fed does not want to upset the market at this point. rates stay low for a very long time. i think if anything they will try to reinforce that. so they have got that and then there is the question of what do they do on the bond buying program. here is what i can tell you on that. a lot of fed officials have been on the fence to even after the job report came out a week ago. i think a very important factor is the discussion that you guys are all having right now. the market expects them to do something around 10 or 15

billion, and frankly after all of the chaos they really don't want to surprise the market and set off more volatility. >> john, let me ask you this. to what extent do you think the rest of the governors are thinking this just has not worked. we want to back out of this just because it has not worked and we're not sure what the risks are? >> so, in fed lynn gis ticks they talk about the cost and benefits. the housing market has really picked up steam. auto sales has really picked up steam. growth has totally underperformed what they hoped to get out of this economy. and it's also the case that in their minds the longer they do this the greater the risks become on a number of different

levels. they don't want to keep doing it forever. and that is one of the reasons they are starting to think about getting out of it. i think they have pushed back on the idea that it has not worked at all. >> it is interesting that you say that they don't want to accept the markets. you think of the fed as this body immune to the other cross currents. at the same time market spectators come on the show and other shows saying the fed does not want to waste the rise in interest rates so therefore it will start pulling back. how much does the market actually factor into the fed deciding what to do or not do? >> i think it matters in a couple of respects. if r the market was out of sync with the fed going back into march and april.

as a result, long term interest rates got lower than they should have. there has been a violent correction f since then. i think a lot of fed officials felt come july, august, that the market was finally getting the message they say that the fed was going to slowly pull back but still committed to the low rate policy. they are very voe kused on the signal they send with this meeting. whether they do 10 or 15 billion is trivial. but it's all about the message. it's about what can they do that best reinforces the message? they think that the market got that message and they just want

to reinforce it without unsettling people. >> i want to go back to the market and those within the fed. at what point do they change their policy to say we now can prevent bubbles and it's their job it's certainly not ben bernanke. >> bernanke did say back in i think it was in may that one of the benefits of this shock that we saw in the long term rate market was that it drove out some unhealthy leverage positions. you have to listen tostein. it's important to him there has been a long running debate that do they use the regulatory bubbles? what we have seen is monetary

policy is a very powerful weapon here. we're not talking about it any more. >> we just talked about one of them. >> we would know that he always talks risk reward. we know great unemployment reports now has it skewed.

as traders we have a much better idea what he is looking at to understand here is a risk that will outweigh any type of reward. >> what are you all worried about? i'm a reporter and i got to start asking questions. what would throw you off balance? >> i mean i think anybody would be worried about the pace and size of continued tapering. 10 billion as you mentioned is a drop in the bucket. so at what pace and also what sort of data points are they looking at? >> yeah. >> john, always great to speak with you. >> thanks a lot. >> the stock is down over 1% right now. coming up next, qualcomm jumping to the wearable technology game

of its talk smart watch. what is next for qualcomm? we're going straight to the source with the chairman and ceo. plus could the latest grand theft auto be a big moneymaker? straight ahead.

>> welcome back to fast money. adobe is reporting profit that missed analyst expectations but the company's cloud based subscriptions rose helping to move the stock higher. this is interesting. they finished the quarter with 1.031 million subscribers. so it looks like their transitioning to a cloud based subscription model based system is taking some hold. >> that's the only met trick that people are looking at. they missed on guidance. operating margins are worse than they expected. here you have a stock now trading at levels we last saw in 2008 and 2008. i would be very careful here.

>> fit bits, fuel bands and more are the latest in wearable computing and part of a trend of connected devices that are changing the way we live. it's a game changer for many tech companies. including qualcomm. joining us now is the ceo of qualcomm. thanks for making the time. >> when we think about the large trend of the internet of things and how it could drive results and the roll that you play in this, is it similple to of it a wearable computers or is it much bigger than that? >> i think sit much bigger we believe in the digital sixth

sense. there are things that will come from sensors in the world arnold us. like you go into a coffee shop and they might give you offers. you sit in your car it might tell you how to control aspects of our car. health care sensors making a tremendous change in the way health care is done. they will come to our smart phone and our smart watch as well. they will give us notifications about what is around us. that is why the smart watch is so interesting. it allows us to see what is going on very quickly. we don't have to pull the phone out and unlock the screen. we just look at the watch and flick it away. it takes very little time. >> there are so many applications in health care, not just taking your pulse but also monitoring your glucose level, actually doing ekgs on your smart phone. do you interface with the health or medical industry and discuss ways that they can be used?

what kint of market is that? >> in the future lit be a tremendous market. we have been working in the health care space for about eight or nine years. when things happen that detect something going on, those alerts can also show up on your smart watch so you can react to changes in your health right away. we all know that health care needs to be fixed. it costs too much in available countries. we actually have a $10 million prize called the triquarter prize to build a five pound device that would diagnose 15 diseases better than or equal to a panel of board certified physicians. rsh and in terms of how this will impact qualcomm, you play a key part in this. how should we think about this

opportunity? the internet of things, opportunity for qualcomm? >> there is projections of 24 billion connected devices by 2020, half of which will not be hand sets. then we look at all of these other devices whether they are sensors in the world around us. there are things embedded into our cars and houses and buildings. all of the things that we interface with. i think those opportunities will be tremendous as well. >> i have got to ask you one more question about returning cash to shareholders. a lot of investors and analysts walked away with the question that you would return more cash to shareholders. but on shore cash. could you give us guidance as to whether that is in your thinking? we kwot got a new authorization

from our board for another five billion. we are very focused on returning capital to shareholders. we are really waiting for the u.s. government to make fundamental changes. the display on our smart watch was invented in the united states but built in taiwan because of tax policy, the cost would have been so much higher, it would have made the product cost that much higher. tax policy needs to change so we can make the investments in the united states. >> let's say there was a holiday, what would you do with that money? would you do a special dividend? what would be your first move? >> certainly we would look at returning capital. we do already spend a tremendous amount in r&d, over $4 billion in r&d. but there are things that we would look at as well. just the flex bltd for us and a

lot of other tech companies to be able to bring that money back and put it to work in the united states would be a tremendous positive. >> thanks for your time. we appreciate it. >> thank you. >> paul jacobs, ceo of qualcomm. >> right there, i mean, we have talked about it. the reason why it is underperforming is people used it as a broxy to get short. i think qualcomm is a completely different world. i still think it's a buy. >> in terms of playing smart phones is it doesn't matter which phone it goes to. >> it is a cash flow generating machine. this is is a fabulous company and it's cheap for a fabulous company. >> i am never one that likes to buy at 52 week highs but over a long term basis when you look at the cash they have. i think you could see this thing go up to 100 where it was in the

90s. >> that is actually the subject of my latest documentary which premiers tomorrow. it's called rise of the machines. one aspect is the self-driving car, which i was able to take out for a test drive. this car may look like any other, but look closer. and you will find more than a dozen sensors. including lasers and ray dor that measure distance and speed and cameras that can identify pedestrians and cyclists. as these devices feed data to the car's four on board computers, they provide a 360 degree view of its surroundings and the ability to navigate around them. >> my reaction is i want to grab this steering wheel. you're just not used to seeing the wheel move by itself. >> very few people have. >> that is is a link in that was

outfitted with technology to make it self-driving. it is able to drive itself in actual real traffic. >> can you tell it how fast to go? >> i think it's -- everything is set by computer but it goes the speed limit. >> you just said you test drove -- you didn't test drive it. >> i did air quotes. >> you have been hanging out watching a movie. >> i did a vine. i did a vine while the car was driving. >> that is the scarriest thing. with all the hacker s out there? >> i could have this wrong but i don't think this is what the world needs to be a better place. a lot of people like driving and i don't want to sound like a crack pot but but how easy would it be. >> do you have cruise control? >> that is a button. we're not talking about a computer taking over. >> decades ago, people would

have made the same argument about cruise control and the cameras that give you the view in the back. you don't realize, it will happen. >> my only complaint is about cruise control is when somebody gets in front of me not on cruise control. they got to move over. >> how many bad drivers outd there? >> now we would be saved. >> but do you have to profile it in? if you program in bad driving? i mean garbage in, garbage out. >> anyway this documentary rise of the machine premiers tomorrow 9:00 p.m. eastern and pacific. so please do watch. sticking with the car theme, gm is launching a new less expensive electric car that will be about $50,000 cheaper. karen will duke it out in a gold

old fashioned street fight. and the stock buy back does it put more pressure on tech names? a deeper dock straight ahead. [ tires screech ]

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paying ourselves to do what we love? ♪ ♪ ♪ >> that is the worst song ever. ever. the next gm car is not sel self-driving, but it will be electric. gm revealing its plans for a long term -- karen, kick it off.

>> my bull case is nod predicated on that at all but i want to talk about what is happening at gm. it will be very profitable for them as they add new lines like the suburban. the second is we have seen a remarkable rebound that i really don't think is over. 16 million car and the company on the last call said they could have sold more cars. the third thing is europe has been a real albatross for them i actually think is turning. and this is not your father's gm any more. it is really cheap there. >> they are going to need that cost structure and savings because when you look at what is going on and the metrics of people who buy the cars is going on. we have cars around 11.4 years,

as people buy cars they don't have to necessarily buy them. and the cost of cars as a function of personal income is actually going up. it is now up to 23 weeks and increasing. and finally when you look at the cost of what gm is selling, that has peaked. you have all of these things converging. the only way gm has their run is if they can cut costs. i don't think they can do it because there is too much competition out there. >> i have a stupid question. if people are waiting longer to buy new cars, doesn't that wash out? >> if they are waiting -- >> it takes three weeks of salary to buy a car but they hold on to the car long sner. >> they held on to the car longer already. >> i don't think we are through that bubble of aging cars. it was a very dramatic change that has only started to turn around. things always go to extremes. >> they do.

>> we have not even come close to that mean yet. >> but it is peeked. it is rolling over. if you look at fuel efficiency, you are starting to see fuel efficiency go up. >> i noticed that neither of them touched the electric car concept. but ultimately where we are in the cycle actually favors karen's argument that there is going to be more car buying and more pick up truck buying as the economy recovers. you may be right about the cost structure but the cycle will win out. so karen gets the win. >> we want to know who you think won the street fight. tweet us. we have got the results at the end of the show. we will see how options traders are playing gm today. >> the options traders are going to side with karen.

they're going to look at the fact that this thing is trading about three times ebitda. they were buying the december 37 calls paying about $2 for those. above 39 by december expiration. >> all right. pops and drops, the big movers of the day. a pop for aeropostale? >> a huge pop in the retail space. it was not very aggressive 13 d. i would hang out and wait. >> a pop here for u.s. steel. >> where were you last night around 5:03 p.m. >> here. >> what did we talk about? >> there is no we. you were talking about this deal. they are finally playing catch

up. >> pop here for pandora up 5%. >> most traders will tell you when a secondary is announced and a stock goes up that that is is a positive sign. clearly management has planned for what to do with the cash. the market trusts the management. >> pop for herbalife. >> this may be the nail for bill ackman. remember this company has a market can't zhags of less than 7.5 billion bucks. the valuation is starting to run out of steam. >> drop here for mosaic. >> they cut their forecast. this whole space has been a roller coaster ride. the problem is you're talking about russian politics and whether or not they're going to bring that cartel together. i think you need to stay away from this space. >> and a drop for the blob fish.

the bottom feeding beast known as a blob fish has been voted the world's ugliest animal. the unsightly sea creature lives off the coast of australia but the outcast had some ugly competition in the contest including a monkey and the british bat. >> that's not fair. >> it would look great in a bikini? >> no. >> the social networking giant saying is there more room to run plus we are checking in on the transport trade. first quarter results tomorrow before the bell. will it deliver another impressive quarter? guy will give you the trade. stay tuned. [ indistinct shouting ] ♪ [ indistinct shouting ]

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we help collect each year. no? oh, right. you're thinking of the 1.6 million daily customer care interactions xerox handles. or the 900 million health insurance claims we process. so, it's no surprise to you that companies depend on today's xerox for services that simplify how work gets done. which is...pretty much what we've always stood for. with xerox, you're ready for real business.

>> welcome back to fast money. we are live at the nasdaq market site. let's turn to news about microsoft. 40 billion $stock buy back.

we sat down to discuss microsoft. >> that's right, melissa. it was a little tough getting details on microsoft because they are in the middle of stuff. up is the activist investor whose firm disclosed a $2 billion stake earlier this year a few months before steve balmer announced plans to resign. in the meantime, microsoft is searching for a successor to make other moves to be more shareholder friendly. in an interview just about an hour or two ago, he talked me through why he preferred microsoft's business model. >> generally speaking, i think it's a low fee business to get on a hampster wheel and not sell

more of a product and black box every year. they like the slow change not the rocket change. >> as for google, he sees two problems. the first being a fickle ad market. it is -- could work for a long period of time. we have seen models get discounted over time. >> at some point the government says you can't have 100% of search he said to the broader audience. all in all it seemed like a withering critique of microsoft competition. >> thank you very much for the latest. and of course, you know, the dividend interpretation was that it was a 22% increase.

>> i'm a little bit surprised. i would have thought what could they do? i'm surprised they got a board seat? i don't know if that was related to him leaving. as you know i'm bitter in the name and out. >> they talk about buy backs but they have 40 billion with a b. that's a significant number. and the stock had a good take today and went effectively nowhere. you would have hoped to see a little more than what you have got. >> $40 billion buy back versus perception of a dying business and no ceo on the horizon? >> and that is the signal that a

dividend says we have nothing to reinvest in so let's give it back to everybody. this looked terrible. >> that's the issue that we get at which have been breakneck pace. the $507 billion have been announced. and then you have microsoft and qualcomm. this is the highest level since 2007. what happened in 2007? a market peak. what does that tell you? >> it doesn't tell you that there is a peak coming. i know there are s a lot of people who don't like buy backs. my thought is look, if you can buy an asset that has value, then fine. put the money to work. in most cases i would rather

have a buy back as a shareholder as opposed to just doing the dividend. >> it does matter what company is doing the buy back. some companies are notoriously bad at buying their own shares and some are very good. >> it is interesting to see. i was surprised to see that green mountain who is actually exceptionally good at buying back their own shares. >> would you be the chairman of that committee? >> chairman? chair person. okay? it's 2013 for you. >> let's get another market flash for you. this time on another buy back out there. dom? >> that's right. we are looking at what's happening with dollar tree, dlt the ticker. this company, a dollar store has

announced that they have authorized a $2 billion share buy back. it's not as big as microsofts. also saying that a billion dollars of it will be in accelerated repurchase. so again, $2 billion in the buy back. in addition, another $1 billion variable buy back subject to different ma isturety and that will be financed by debt. >> what should you be watching for? let's get the fed play book. john? great to have you here on set. >> good to be here. >> let's say it's exactly what the market expected. what's your first play? >> the first play, equity markets are going to sell off. it's more than just 10 or 15 billion. the biggest thing is the possibility for misinterpretation.

and whether or not they will possibly lower the employment threshold combined with the forecast. unemployment in gdp will all play a factor in how the market reacts. i think the first reaction will be that knee jerk based on the size of the taper. what is more important is how much the fed emphasizes as it pertains to equities. >> okay. so give me the best case scenario in terms of what they can say and which sectors would you pick to play that? >> specifically to risk assets. they come out with no taper and no conference. remember the fed only does press conferences on a quarterly basis.

especially emerging markets. >> they couldn't at some later time announce another press conference? or is that another conference? they don't do that ever? >> the next over the halloween. clearly it is open to if the labor day improves significantly, which we see jobless claims. the payroll data has been weaker. and the big question out there is if they don't do the taper, i suspect that the fed has to do a mandate. maximum appointment and price stability. and then putting a press

conference over december. >> thanks for your time. coming up next, the former chairman of sun micro, a look at some of the bigger moments right after this.

>> welcome back. in case you missed some of today's top moments, here is a rapid fire recount of today's top executives. >> what do wealthy people do with their money? invest, spend, save or give away. and i guarantee you any weltdy person who created that value is going to do far better than taxing it and giving it to the government. >> you're incredible. >> thank you. >> i almost got in trouble. >> look at that. >> 22%. a new $40 billion buy back. >> home builder sentiment was unchanged in september after a one point downward revision to august's reading from the national association of home builders. the survey now stands at 58.

>> i think tomorrow, really the expectation is that you will see tapering. that's what the market is most going to pay attention to. >> the market is acting as though they want to buy the news. >> i don't think they go positive. i think they reduce treasuries more than they do mbs. >> right. >> they touch mortgage securities tomorrow? the market is going straight down. >> i expect them to touch it. >> i actually think the most important thing, looking on is some sort of change in outlook based criteria for easing. >> i thought that was an interesting point that they do touch on the market reaction. >> he has got it absolutely right. he had it 100% right if they touch mbs tomorrow.

housing goes down. market goes down. that would be a policy error in my view. >> in the meantime we got a warning. >> scary. i don't think the market has give an benefit of the doubt sense. and the stock performance today dictates that maybe that is in the card. i wouldn't be surprised to see this in the mid 115, 116 level and i smell a fast fire.

>> exactly. that's life. >> i like it. >> that's life and that's trading. another earnings record that we are watching closely, oracle has seen a number of ups and downs but remains flat in 2013. the results after the bell? >> it's a pretty cheap stock but they disappointed mightily in the first quarter. he's gotd his eyes on the america's cup. i think he has front loaded so he can sail. >> all right. final trades coming up next.

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>> who won the street fight? >> karen did. sorry. >> yeah, yeah. >> i'm married to it. i'm married to it. >> time for the final trades. >> if you have been riding herbalife, sell some calls. >> time to dance with the widow maker and buy natural gas. >> here is is a sleeper. bp. british petroleum.

5% dividend. >> disney. it's time to take some money off the table. >> he is on to something. >> i'm melissa lee. see you back here tomorrow at 5:00. don't go "fast." "mad money" with jim cramer starts right now. my mission is simple. to make you money. i'm here to level the playing field for all investors. there's always a bull market somewhere and i promise to help you find it. "mad money" starts now. hey, i'm cramer. welcome to "mad money," welcome to cramerica. other people want to make friends, i'm just trying to make you a little money. my job is not just to entertain, but i'm teaching and coaching. call me at 1-800-743-cnbc. when a market this strong, you can't just pin it on one particular reason. either it's been hurt endlessly today, the