right now. good morning, everybody. welcome to "squawk box" here on cnbc. i'm becky quick along with joe kernen and andrew ross sorkin who is reporting live from chicago this morning. andrew is getting ready for an exclusive interview with goldman sax chairman and ceo lloyd blank fine coming up at 8:30 eastern time. we'll have more from andrew on that conversation in a minute. first up, the fed is set to announce its policy decision at 2:00 eastern this afternoon. chairman ben bernanke is going to hold a news conference 30 minutes later. the central bank is expected to announce it's winding down its $85 billion asset purchase program. the question is by how much? also on the economic agenda today, we have august housing starts and building permits. starts are expected to rise by 2%. permits are expected to fall by

0.1%. as for the markets this morning, take a look. the dow and the s&p both closed at six-week highs yesterday. the nasdaq ended the session at a 13-year high. 15,529. that was the close for the dow. if you take a look at the futures this morning, just to get a sense of this, cramer told us yesterday the market wants to get up no matter what. the futures are indicated up higher by 2.8% for the s&p. but the big question, joe, is what happens at 2:00 today. what do you think? >> i think they're going to taper by 10 to 15 billion. >> which? >> ten or 15? here is the thing. the market is almost 100% set on this. liesman wait a second was talking about it yesterday and only 48% of the experts that he polled said the taper is going to come today. i think by saying 10 or 15 today, i think i'm still sticking my neck out. what do you think? >> i love steve, but these are

just putting together a bunch of the clowns that we have on all the time. i know it's a composite look at that. but there's no way it was 48%. why should we give them any -- we'll see what happens. >> but the question is, the time sg weird. they're doing this just as we are getting back to this issue with the debt ceiling again. there is a question of what washington does with all of that. >> i was thinking of it purely in terms of you want to go to 70, which is a round number, that would be down 15. or a lot of people think 75, three quartseers -- >> it's probably going to be 10 max. >> i want to do 70. >> this is why i want to hire a monkey. who can throw the dart. >> that's what i'm saying, it might get to 70 instead of 75. >> do markets care one way or the other?

>> it's more likely that it starts in and out, right? >> i want to go to 70, but it's probably 75. >> i think 75. what about 65? >> no way. >> in corporate news, apple is going to launch its new operating system today called ios 7. it's being called the most drastic change in apple's mobile operating system since apple's 2007 launch. six years already for the iphone. among the improvements, better handling of photo galleries and air drop. whew! for sharing files with other devices. for -- air drop. is that when you just test it? >> is that like drop box, andrew? >> maybe it's where you touch it and those other phones you can -- you don't know? >> not really, no. air drop is when you can share the stuff with other phones. >> i thought it was other devices. >> yeah. no, you can listen to my music from my phone. >> for u.s. users, the update

includes itunes radio. andrew, looking good. a free internet radio service. that's why we're seeing some movement in those other competing -- >> but that's why pandora -- that is going to hurt pandora. nobody else gets hurt in that. >> right. meantime, blackberry unveiled its new z-30 flagship smartphone and they're not really sure how good it is, so they decided they're introducing it in malaysia today to see how it goes. the company battling the win back the market share. the new touch screen device that's a five inch display and a 11.7 gigahertz processor, which could get the delorian up to 85 miles per hour so you could time travel. it will initially launch in the uk and in the middle east. no, that was giga what? >> back to the future?

i don't know. >> yeah, giga -- we'll immediately get bombarded with e-mails because people love that. >> michael j. fox. >> run dmc. jp morgue's long whale problems may not end with a civil settlement. u.s. prosecutors reportedly still investigating the bank's trading scandal for potential criminal wrongdoing. this is a sign that an expected $800 million -- >> what was it? >> giga watts. >> the settlement may not be the put to rest for the firm. andrew, can you believe that? back in chicago. >> i know. andrew has been traveling this week. he's in chicago. he has more of this morning's top stories. andrew. >> thank you, becky. by the way, i still want one of those skateboards, the air skateboard. remember the one that michael j. fox had?

that, to me, if i could have that -- >> that was in later -- that was back to the future 2. because he had a -- >> really? >> yeah. he had a regular -- he had a regular skateboard in the first one. remember? he breaks it off and he's holding on to the back of the bully's car. >> yes, yes, yes. >> and then all of the cow doody gets spilled inside. >> bif or buff. has he ever done anyone else? i feel bad for that guy. he was in all three movies. >> later on, he was washing his car later. >> he was in all three "back to the future" movies. >> oh, you mean the actor? >> right. i've always felt bad for him. >> we're going the talk goldman sachs in just a minute, but we have some stocks to watch this morning. take a look at adobe, earnings and revenue falling short of estimates. but you can see that the growth

of the company says that it expected strong growth to top the 31,000 it add in the third quarter, adobe citing strong demand for corporate customers. discount chain 5, below, announcing a 7 million share secondary offering for old er admin international. and i should also say i was with lloyd blankfein last night. goldman sachs had their conference in chicago. that's why we're here. we're going to talk with him at 8:30 eastern. we're going to talk about fed tapering and he'll give you a guess perhaps on the 10 to 15 to $20 billion issue. he is a new component of the dow and what that means and he has some interesting interviews on jamie dimon, oog even

interesting news on steve cohen, who is still a client of the firm. so we've got a lot to talk to him about. and i know you guys are going to jump in. >> he still has the beard. >> still has the beard. >> this is the five-year anniversary of all the problems. we are using a picture that takes us back to what he looked like during the crisis. we did this on purpose. that's a time sensitive picture of where he was during the financial crisis. because we could have gotten one that looked like him now and that was actually current, but we wanted to get one -- >> you remember, he debuted the beard, though, on "squawk box." >> the beard is good. >> he's very proud of that. we talked about that last night, he was proud of debuting the beard with us. >> the beard and jeans is what i see. >> very casual. >> yeah, the beard and jeans. >> do you think it's a suggestion when you really feel like you have confidence when you have a beard?

what does the beard signal to you, joe? >> a lot of bald guys have beards. i don't know. it's almost like just to show i can still do it somewhere. have you noticed that, though? it's the overcompensation for -- about then again, a lot of poem like me that have a lot of hair, i don't know what my beard would look like. >> or you. it's very patchy. i could try and -- >> maybe we're the ones that are inadequate. i might be wrong about the whole -- too much? >> yeah. >> we also have a number of newsmakers who are joining us in studio this morning, including former minneapolis fed president gary stern. plus, we have toll brothers ceo doug yearly and two members of the cnbc global cfo council. we have the top executives at home depot and wells fargo. big show lined up.

>> yeah. marissa. >> not published, anyway. >> yeah. they also -- we're going to get to this right now, but they also switched michael j. fox's girlfriend. it was -- yeah, it was -- >> you know way too much about this. >> no, no, but all of a sudden they stick her in there and you're supposed to, like, think it's still her and it's a totally different actress. and it's like, we're not that stupid. i wasn't, anyway. in the first one, remember the brother married the woman from nbc? what was his name? shoe, elizabeth shoe. and then they switched it around. let's get to the markets this morning. but i noticed. no putting it over on me. there's the futures this morning. >> amy robach is not with cnbc any more. >> no, she's not. so with can he talk about her in a negative way? >> no. >> no, i like her. i like her. >> yeah, i'm sure. i'm sure. anyway, there's the futures this morning. it was okay yesterday, kind of never got going, got up to 50 or

60, but i think we closed up around 35 points or so. we're indicated higher. that would be more than a few days in a row. there's oil. now people are saying gas will never go below $3 a gallon again. >> it's been over a thousand days. >> but they say never again. >> but it had to go above $2 never again. >> yeah. we'll see. the ten-year note, taper day. $2.85%. that might mean the fed lost control if it was over 3%. take a look at the dollar versus the euro and the yen and said if anything is happening there. 98.96, 1.33. it hasn't been that much fun to watch the currencies lately. let's take a look at gold. there are people that think it's over now because once tapering starts, fred about it. gold is headed -- that little thing you see there, that trend will resume and will head lower. time for the global markets

report. and ross westgate, he's been consistently here for us lately. he's in london. it's good to see ross. someone talk to you or something? >> no, joe, i just decided i'd be here, help you out as we go through this. >> we benefit. viewers benefit. >> yeah. we are higher. we're up to the best levels of the day. we start the session towards the fed decision. 6-4, 3-2 advancers outpace decliners at the moment on the dow jones stoxx 600. not huge gains yesterday. you can see here the stoxx europe 600 up around 0.5% at the moment. but we're not far away from recent sort of five-year highs generally across the board. the ftse today jup just up 6,586. the ftse above 8,000 has been called by tend of the next year,

8,000. the xetra dax did hit a fresh record high, up 0.4% lower. the ftse mib up 0.5%. there's now a thought that keeps going on, here we're going to do with berlusconi, there's a thought that even if they do decide to reject him, he will broadly support the sector, as well. travel and leisure is lower. the gains coming from banks, technology and camera claws, as well. we'll keep our eyes, of course, on what's going on with yields ahead of the fed decision. treasury yields, 2.84%. the interesting thing this morning, the mover, while treasury yields have come down, 2.86, something on monday we say, the yield, gilt yields have gone higher, back over 3% and widening gilt to treasuries. the reason for that is we saw minutes today from the bank of england. no member voted for any more qe, despite the fact that market rates have gone up despite issuing forward guidance.

we might get at least one member saying qe. they also are talking about upgrading their growth forecast, as well. sterling has stronger, as well, against the dollar and the euro. that's where we stand. back to you. >> all right, ross. all of our duck necessary a ree here. >> learning more. claudia wells was the first girlfriend of michael j. fox. >> i was thinking of his mother. i was confusing it. >> no, leah thompson. but then she was replaced by andrew shoe's sister in two and three. all right. in washington news, this is much more important, obviously, than this other stuff. you know who else was in the first one, though? huey lewis. >> oh, his song. >> but then he was the judge of the talent at the -- >> you spend way too much time watching these. >> i'm not watching them. i just remember. house gop leaders are said

ready to be prepared to take a stand on health care. they're expected to use a vote this week on a must pass temporary government funding bill to block implementation of obama care. it will be offering to rank and file republicans at a closed door meeting on capitol hill later today. meantime, the senate would likely strip out the health care provision and accepted it to the house and this raises the possibility of a confrontation that could lead to a partial government shutdown over the september 30th end to the budget year. interesting editorial i thought in the "wall street journal" today. if you get a chance to, check it out. the president was back to business with that speech. no longer syria is no longer enemy number one. back to the republicans, enemy number one. the market is waiting to hear what the fed has to say. joining us now is bill smead at smead capital management and jeff mortimer at bny melon

wealth management. so we're at 85 billion. where are we going today? well, the tide is going out. >> 75? i want a number. we are microanalyzing this. 75 or 70? >> we'll go with the consensus of 15. >> that's what i think, 70. >> and we think that as the tide goes out, the first part of the tide only short people will be short to be naked, meaning -- and then you get way, wait into the -- >> wait a minute, tall people will be naked first. >> really? unless you're at the other end of the high. >> so what we're getting at, the switch has been flipped. capital intensive businesses, people that borrow a lot of money, this is rough on them. utilities and telecons are not doing that great the last year.

we think the taper is a continuation of the currency switch that occurred when the japanese decided to weaken the yen, in effect since the yuan is pegged at the dollar, you weaken the yen against the dollar, you cut the chinese off at the knees. so what you've done now is you've added the united states participating with the japanese and really given a struggle to emerging markets. commodities, gold, whatever. >> and do you care what it is, whether it's 10, 15, 20? >> and markets. >> and what with the next meeting, do they cut another 10 or 20 or see what happens with this first 10 or 20? >> baked in the cake is a $15 billion taper, probably more weighted to treasuries than mortgages. >> every time or just this time? >> i think the fed, you know, this is probably going to away long good-bye. they are going to be very data dependant as they look forward and i think we'll adjust as need be.

we believe we're going to get stronger data going forward. >> how long will it take them to get down to zero? >> it's probably a decent guess. middle of next year might be a fair assumption. data dependent. they've locked into that. >> don't forget the midterm. >> they've locked into the 7% employment, 6.5% up employment. you've still got the front end of the curve at zero. that's probably in our views not going to move into 2015. and the instead moving from a five, very, very accommodative to now absolutely less accommodative. but still accommodative. >> it used to be that they could make us feel really good by staying at zero and by just saying we're going to stay at zero for a long time. >> they're trying to scare us with housing. we love right now that there's people that doubt the housing recovery and they say that this uptick in mortgage rates is going to ruin it. we happen to agree with tim sloan, who is going to be a

guest i hear later, the demographic res powerful. there's 18 million americans between 18 and 37. they've been slow to get married and slow to have children. as soon as you have a chile, you don't want your screaming baby next door driving people crazy. so we think that you've got to go back to the late '70s and be reminded when the baby boomers were buying their first house that we were paying 10%, 12%, 14% mortgage rates and they're was a housing boom in the united states in the late '70s. it's need that driefls housing, it's not the price of money. so they're making a huge mistake to think that a blip up in mortgage rates is going to kill this recovery because there's a wave of -- a huge wave of people that are getting going. and we actually considered -- we kind of think that kate williams having a baby is a watershed event, the college educated people looking and saying, hey, it's a pretty good idea.

>> it's tipped now because of -- >> exactly. >> they're wealthy, college educated and they're making babies. that's what the united states needs. that's what we need. >> so both of you gentlemen have to decide on how to invest money. did you go 90/10 on equity right now? versus bonds? >> we've been overweight. our recommendation is to be overweight and just stay there. >> 80/20? what is it? >> with a 60 on/40 client, we're upwards of 70 equities. we stay fully invested. >> that's all you do? i thought you were -- >> value funds. >> okay. you -- so you're 70 for -- >> we're overweight -- we've been overweight equities really for a while now and just sort of continue to press those. >> how did you come up with that name, smead capital? >> a very expensive pr firm. >> how much did you pay for that? >> loads. >> anyone else work there? >> there's seven of us. >> there you go. it could have been any of those

other -- they settled on smead. >> yeah. >> so both of you stay long. markets not expensive? >> market is fairly -- it's a fair valuation. >> it could go higher if earnings continue? >> we think we could continue to pull higher. >> the thing that encourages it the most, and we could have a 10% krekcorrection at any time. but we are encouraged by the fact if you look at the large institutional investors do something like the nacabu study or if you look at high net worth individuals the way they've got their asset allocation right now, they're all very much underowning u.s. long only. therefore, declines are going to be limited. we're going to have decline webs but they're not going to be -- the black swan folks are going to be thirsty in seven years, probably. because that's probably how long it will be before the next black swan since everybody is all hedged for it. >> all right, guys, thank you. thanks for coming in this morning. appreciate it. >> thank you. when we come back, we have a

number of large companies that are saying they're changing the way that they will deliver health care to their employees. we'll have the details, right after this. first, let's check on the national forecast with the weather channel's alex wallace. alex, good morning. >> good morning to you. it's going to be a warm one for us in the midwest. we've got this storm system coming in from the west. out ahead of it, warmer and more serious air is going to come in. it will feel more like summer for you. des moines, up to 91 degrees. that's on the heels of the 70s yesterday. so a big warm-up, but it doesn't last too long. latter part of the week, a cold front sweeps through, the 90s, we see good-bye to that. now we're talking 60s and 70s. but that same front will be marching to the east. out ahead of it, that will increase our risk for rain for the east coast cities. most of the week, dry. but the weekend looks like wet weather and the same for us in the south. for our saturday, we'll be looking at showers and storms to kick off. lower mississippi valley and spreading its way on into the carolinas for the second half of the weekend.

that's your national forecast. "squawk box" coming back in just a bit. announcer: where can an investor be a name and not a number? scottrade. ron: i'm never alone with scottrade. i can always call or stop by my local office. they're nearby and ready to help. so when i have questions, i can talk to someone who knows exactly how i trade. because i don't trade like everybody. i trade like me. that's why i'm with scottrade. announcer: scottrade- proud to be ranked "best overall client experience."

toib "squawk box." it's time for the executive edge. walggreens is moving employees from coverage provided right now from carriers. 17 other large employers will

join the corporate health exchange. the companies includes sears and darden restaurants. this is part of that movement to offering employees catch to purchase their own plans. private insurance mimics the coverage mandated by the affordable care act. we're talking about other companies doing this, including dupont and caterpillar? >> yeah. we talked in terms of people that are already retired. this is current. i read everyone in the journal regarding this. it's funny to see people, if it's a good thing, they attribute it to obama care. but since it's viewed negatively, you see this has nothing to do with obama care, the companies were going to do this, anyway. but to me, it's as simple as what happened in retirement plans 20 years ago where they

went from a defined benefit where you had no idea how much it was going to cost you based on return to a defined contribution. this is the same thing. you have this much money. you have this much money to spend on health care. manage it. it could mean that, you know, you may need to spend more. and also you would be much more selective about going to a doctor and which doctor you go see. so it's personal responsibility, which is, i think, helping. >> andrew? >> so the good news, i agree, is personal responsibility. the bad news is, they've giving a lot of cash now, but the question is does the cash that they give catch up to what is the true cost? >> it's going to cost you more. but you'll have so much to spend. >> with the wall greens employees, there are 120,000 of them that have health insurance. there are two plans now. they can go to five plans in this new setup. 43% of them or something chose a plan where they were paying less

than they were right now. that means bigger deductibles. in that situation, you're crossing your fingers and hoping that nothing bad happens. it's going to be leaving people with preferred money, if you have a catastrophic event, you're going to have to pay a lot more. >> obama plan mandated that those cadillac plans -- you migrate away from those because they're taxed in 2018. that was part of it, too. one thing we know is if you like your plan, you cannot keep it. that's what we know now. if you thought that he was, you know, maybe -- >> that is true. >> there was no way if you liked your plan you were going to get to keep it because you're not going to get to keep it. >> my only question is whether you think this is ultimately going to keep prices lower. >> i think it will keep prices down, but here is the problem. it's going to hurt people who are in the lower middle class, people who are scraping to get by who say i'm fought going to spend the money now on insurance, i'm going to put it off and hope nothing bad

happens. if something bad happens, you have less of a safety net to catch you and pick up those costs. this chips away from people trying to get into the middle class, trying to reach up for some of those things. >> but obama care is not in yet. most of this is happening because it was going to happen, anyway. but if you didn't have any -- if you used to have more money before this recession, you're going to think spending it even on health care. but the reason it's come down so much is because no one at this point at 8% unemployment or wherever we are, no one has a lot of extra money to spend on anything. looming medicare constraints that are going to be enforced by obama care, too. but really, it hasn't taken effect, andrew. and we'll see, there's appear

argument about whether it makes it costly early once october comes or whether it continues. >> i don't think it's happening. >> it was happening. >> if you say ultimately again -- >> hold on. do you think that the move towards 401(k) was better for employees than defined pension benefits? >> i don't know if it's better. it had to happen, though. >> it had to happen, but i don't know that it's better. >> they had really great pensions. >> it would only be considered better because at least you have a chance of getting the 401(k). >> because the company is still in business. >> yeah. look at what we had to do with a lot of those old style plans. >> it's better than not having the company around, but it's not the same lifestyle that was guaranteed. >> but was it really guaranteed? that's like saying that our entitlements that we have now from the federal government are guaranteed. do you really think those are going to be available at the rate we have them now? they're not.

>> let's talk about this next story. get ready for an advertising blitz. only we are not talking about beer commercials on television or pop-up ads. the sec is lifting a ban on hedge funds to investors. this change starts on monday. private equity firms will now on be allowed to reach new investors for television, radio and the internet. there had been a lot of restrictions before and they didn't want people being preyed upon by unsavory characters. >> it's going to be fun. think about the guys that, you know, they're starting out. they have a couple hundred thousand in a hedge fund and they buy advertising time 37.

>> but rules are in effect. you can't go after everybody out there. you can't go after anybody out there. >> will they stoop? that's what i'm hoping for. then you have the guys that are high brow. >> no, i think the high brow guys are -- my worry about the high brow guys is they don't advertise. >> guys who look like they're high, they'll be like the grey poupon commercial. they'll look like it. >> right. and it's the mom and pops who won't know the difference. it's the mom and pop people who have some money, but not extraordinary wealth.

>> some things about the returns, they historically have not been able to tell us. >> i like your -- antd rue, you know, you were a couple of steps ahead of me. because where would they advertise? >> hello. hello. mcfly, hello. >> you are a little slow on that one. >> a little slow. this is a really, really good things. this is a really -- instead of the ow! with the guy with the ear cleaner, maybe we can get some hedge fund guys to go directly into our -- right? >> never mind, no sleaze in these commercial webs it's all good. >> new sponsored segments very soon. >> excellent. i like that. >> when we come back, fedex is set to post quarterly results before the bell and what is often a snapshot of the global economy. we'll get the inside line when we come back. later, don't miss andrew's

exclusive interview with lloyd blankfei inspect. that's coming up at 8:30 eastern time.

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welcome back to "squawk box," everyone. art hatfield, raymond james and, art, the street is looking for about l$is 1.50. what do you expect? >> we're looking for $1.44. we think fuel may be a head whipped in the quarter. that may impact things a little bit. a mismatch with where jet fuel is and where their surcharges have the in the quarter. it puts us below the street. wile we're heard volume in their more deferred air freight segment has picked up throughout the quarter, pricing is still tough. we think the numbers will be somewhat anemic and flat with a year ago. >> is that a reflection of the economy in the united states? is that a reflection of tns continue troubles in europe? what do you think? >> it's interesting. i think it's a reflection of the global economy. keep in mind, i did say volumes are up a little bit. so i think it indicates that

things are getting better. but there's still excess capacity in the market. that's putting pressure on price. i think we're moving in the right direction, just not quick enough for everyone, both volume and price to go in the direction the company would like it to. >> that's a similar story to what we hear from economists every time we talk to them. the trend is moving in the right direction. the problem is that it's just not moving as quickly as they would like to. is it fair to look at fedex and the growth that may be slower than expected growth as a proxy for the economy? yeah, i think that's fair. that's the same song we've been singing for five years. but yeah, i think that's a proxy for where things are and until something happens, i don't know if it's on the macro or the potential headwinds that we may have out of washington get cleared up when we get some longer term visibility in both what monetary and fiscal policy

here in the u.s. that i think we're going to continue to sing this song of slow growth. >> art, you're looking for the numbers to be weaker than the street is expecting. what would you tell people in terms of buying the stock or not buying it and how does it match up to u.p.s.? >> currently, we're at a market outperform, which is consistent with a long-term buy. i would say that the focus here with fedex isn't so much about this quarter, it's always about the guidance with them and more importantly, kind of where are their cost, reduction programs at. they talked about taking 1.7 billion dollars out of expenses and improving operating income obviously by the same amount. the timing on that is key. so the key for the stock currently is where are they at with regards to that ram. are they behind or ahead of schedule? and i think depending on what they say there depends on how aggressive you want to get in

stock. when you look at it vis-a-vis u.p.s., i would say relatively speaking it's expensive. when you look at the long-term multiple differentials, fedex is paying at a pretty tight range close to u.p.s. right now and historically they've traded much wider. and that's consistent with the returns that the two companies generate for shareholders. and probably as a result, you know, u.p.s. is a little bit better buy at current levels. >> art, thanks a lot. appreciate it. >> you're welcome. >> andrew, we'll send it back over to you. >> great. thank you, becky. coming up, our exclusive with the ceo of goldman sachs, lloyd blankfein. but first, we have investment for you, the investment bank held a conference with some of the nation's largest companies yesterday. we're going to talk to two of the top financial execs. starwood hotels and american electric power cfos right after the break. ♪

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welcome back to "squawk box." we're in chicago a day after goldman sachs held its cfo conference. joining me now is brian tierney, vice president and executive of cfo of electric power. you're a first timer to "squawk box," right? >> yes. >> also, besan provu is cfo of

hotels and resorts. but we had a big debate going on on the program thus far this morning on the taper and what it means. so before we even get to weight means, do you want to wager a gamble? a guess? do you care about what the ultimate number looks like later today? >> we care. it's a level playing field for us sxerchbls in our industry. so whatever happens across the board, it's not a -- one way or the other? >> do you want to throw a dart? >> i don't. >> i'll throw a dart. i think the market has given the fed the opportunity to do 10 or 15. markets are anticipating it. they should do it. they should get the thing going, things have to normalize. and if the taper is an indication that economy is improving, that's a good thing. it's good for us in our business, it's good for the country. >> is there anything you have had to do in advance of this

that you've actually changed in your business for getting ready for the taper? >> not for us. >> not for you? >> it's business as usual. so our borrowing impacts are going to be what they're going to be. >> you haven't had to borrow any money in the past month? >> we're always in the market of borrowing. and the markets have been available to us, open and ready to lend us whatever we need. >> no, rehaven't been in the market, but in general, normalization of interest rates do something that reflect what markets would suggest they should be. it's good for all capital allocation. >> and we were just saying, the economy, you think, is getting better. handicap where we are from where you see it from a consumer standpoint. >> well, our sense -- and you have to un, we speak more for the high end. the consumer that we see has been doing very well for the last several years and is, in fact, the surprise this year for us, at least, was how will the u.s. did in the first half of the year.

so by and large, the consumer and leisure travel business especially in the summer .all that suggests that the consumer is quite confident. >> let me ask you a different question. relating to the news this morning about health care and obama care and getting ready for that, but also wa we saw was happening with walgreens this morning, they are now moving to a private exchange. have you thought about moving to a private exchange? >> you know, we think in the short run, it doesn't require us to make too much changes. in the long run, the implications are not entirely clear. no, i don't think we're moving in that direction at this point. company by company kind of thing. >> and do you think that -- when you look at what wal dgreens is doing, have a lot of companies approached you and said this is wa we're trying to sell our clients now and you should do it right now? and how much of that do you think is inspired by the upcoming move to obama care versus this going the to happen, anyway.

>> our sense is it's best to wait and watch. we think there's a lot about business that's still not clear as to how it's going to evolve in the long one. our views are this are more concerns about what plays out in part two and three down the road than they are now. in the short run, our programs are good and don't really -- are not really impacted very much. >> what about you guys? >> we've been able to take other meaningful action. we've been able to cap future retirees post retirement medical benefits and examine doing that has allowed us to fully fund our obligations. so we've been able to do other things outside of putting people to exchanges in retirement. >> wa does that mean for the retiree, by the way? >> it means at some point the risk shifts from the company to the retiree. now, we've put those caps out far enough so that they're not going to bind for several years. we gave current employees the opportunity to retire prior to those caps going into place and they're only for future retirees, not on existing retirees, but it does shift the risk balance between the company

and the retiree. >> and do you get a lot of pushback? >> we got virtually none. because people are expecting this. they're expecting some form of sharing and the employee and the company of that risk. i think on the extreme year suing people put others through exchanges and obligations. >> i asked him to handicap the economy. what's your view? >> we're seeing a mix on the industrial side. we're clearly off versus where we were last year. our demand is down 6% for the year. commercial and residential is plus or minus 1%. a lot of places we're seeing increase in the economy is driven by shell gas. places like eastern ohio, west virginia, texas, places with recently placed economies are seeing it there. >> do you care who the chairman or chairwoman will will be? >> want the person to do a great job. >> you don't want to vote? >> i do not want to vote.

>> i think the best person for the job. it's an important job. >> you spent a lot of times yesterday with cfos from across the country. any take aways? >> what we're seeing is similar to what others are seeing. cfos are saying their not sure if this economy is taking off or stalling. we're seeing a mix as well across our 11 state territory. >> what i took away is we might be on the cusp of improvement. there's a feeling 3% growth rates are possible going forward. i hope they're right. >> thank you. are we at a hotel right now star ward? >> we are not but thank you for waking up earler. we're an hour earlier here

chicago. back to you joe. >> got the mic squared away? >> was yours off too? >> we've got a whole crew. you should see the set up. it's rather remarkable. >> coming up, in the next hour we'll talk to top executives. it's fed day. we'll talk to two great hosts, gary stern and toll brother ceo doug yearly. hopefully he's not here because he didn't have anything else to do. hopefully housing is okay. we'll find out from doug and be right back. s of smart. so you want to drive more safely? stop eating. 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 ♪

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. coming up, it's the fed meeting we've been talking about for months. could the taper be here? steve joins us with his predictions after this. we'll welcome a spring of news makers including goldman chairman and ceo and ceo of wells fargo. our guest host president gary stern and toll brothers ceo greg yearley. squawk box will be right back.

> bernanke and company wrap up a two day meeting. we'll preview the fed's decision from former gary stern and the cfo of toll brothers. >> two of the largest companies are here to talk business decision. the cfo of wells fargo join us with their business plans. >> it's all leading up to the exclusive interview of the morning. ceo of gold man sacks is going to join me here.

good morning everybody. welcome back to squawk box on cnbc. andrew is going to join us in a few minutes. futures are high again. dow futures are up by 37 above fair values. s&p up over 3 points. the market closed at a six week high yesterday. in our headline, it's taper time. most feds expect the monthly bond buying program to be cut back. steve will be here. am is releasing the ios 7 system today. this is in the new two models from apple, phones available friday. the system will run on iphone 4,

4s and iphone 5. companies may soon able to reveal how they're employees are paid. it will help compensation structures more transparent. poentds say the data is costly to put together. we've covered everything from fed to financials in the markets. an zru is in chicago getting ready for his exclusive interview with goldman ceo lloyd blankfein. steve is in washington getting ready for the possible taper. at this point it's baked in. >> it is becky. what i want to go through is the taper is expected. if it does retain a reduction in asset purchases by the feds, the statement is likely more difficult to read. i want to go through you the guide in what you may see in

addition to the normal economy and guidance set in there. let's go through ed raing the fed today. do they taper or not? we'll see that in the amount of purchases. how much did they taper? mix of assets to be reduced? that's a big question. how much mortgage securities are brought down. is there guidance on the qe level? does you the fed tell us how long it stay there is? there's debate about whether the fed changes that a6 1/2% threshold for raising rates. let's go to our fed survey. the median being $10 billion. mixes seem to be 70% treasuries, 30% mortgage backed securities. i'll tell you 40% of our group thought 100% would be treasuries. this new level is maintained six

3.6 months. that's the new stuff. let's go back to old stuff. what's the guidance on qe? the labor market has improved substantially. how about rates? a policy will remain appropriate for a considerable time after the asset program ends and economic economy recovers. there's real things fed is going to do. let's say lower the amount of asset purchases out there and give us additional. there's virtual tools the fed has used in order to try and help out the economy. we'll see the extent to which it uses these tools when it talks today. becky. >> steve, thank you. >> i wish you wouldn't do average, median and everybody thinks back to school. they didn't really pay attention. it's a median in the middle -- >> let's go to this. it's important.

average is 15 1/2 million. respondents say it's going to be 10. >> help me out here -- >> a poll yesterday said 48% expected the taper to start this time. that's low. >> i want you to work with me steve. this is all coming out at 2:00. ratings for street times are huge. i want to imply that you might get this information early. we're not really sure. maybe you'll get it. it could be 7:30 when you come on with it. could be 8:00, 7:45, 8:15 when leaseman gets an inside look at what's going to happen. >> i'm not going to work with you on that joe. there's no chance during squawk box i'll come on with actual information on what the fed will say at 2:00. >> great. all right thanks steve. our next guest -- >> sorry about that. >> worth a try. >> think about it. he had to say that in case he

does get it and comes on. he's not going to get it. he has no sources. our next guest -- no, he does. i was trying to do that. >> it's a slam dunk. our guest for the next two hours former fed inside gary stern and federal president of the reserve bank of minneapolis. >> i'm thinking about the next step gary. i'm assuming -- i don't care if it's 10 or 14.5. the data depend ent part of it, do we know if the economy will cooperate? could they go 10-15? could we be here at 70 billion for a you year? >> sure. i think so. that's certainly not the fed's preference. >> in your view do you think the economy is on track to allow them to exit every time they meet? >> i do. i don't know if they'll do it every time they meet.

i expect at least quarterly. i do think the underlying trends in the economy are distinctly positive. they're not great. they're not all we could hope for. they're distinctly positive. i expect that to continue. i think the fed has worked pretty hard to get to this position, set themselves up to begin the taper. they wouldn't begin if they didn't expect they were going to continue. while they're certainly flexible enough to change course if circumstances -- >> definitely don't want to go back up. >> definitely if they can avoid it. they have worked hard to get here. their expectations is they'll start today. >> do you think that's a slam dunk? >> close. i think they intend to continue. >> it will be 10-15. >> i think you're right. condition alty depending on how the economy evolves, addition alty will remain. there's no question about that.

>> i had another thought that i was going to -- oh, how much of our destiny is in our own hands? would you say 50% based on what we do here. we're depending on europe, china and around the world to keep this economy -- do you think 80% is in our control? >> relatively high number. >> that's bad. we could mess it up with the debt ceiling. >> those are definitely part of it. it's a broad matter. the policies they pursue -- >> they've been cooperating over there. it's back burner. >> it's gotten better. there's no question. >> it's a blessing and curse. it puts it in our control where we can screw it up ourselves. >> there's always that risk. >> there's more of a chance this time around. >> unfortunately because of the disagreement about the budget there's chance for short run --

>> you saw the president. did he seem like he was in a mood to work with the other side in the speech he gave two days ago? >> both sides are positioning themselves. i don't claim to be a political analyst. both sides are positioning themselves for the battle ahead. i wouldn't take statements today all that seriously. >> i'm glad he's back on track with the true enmy of the country, the republicans, instead of syria, russia, assad. now we're focused on people that are trying to hurt the american economy and public. >> i take your sarcasm but of course there's some people who think the enemy is the president. we should be careful about that. >> when you look at the stock market and the reaction, how closely is the fed monitoring that today? they feel they primed the market for this? know the market is ready.

>> they'll discuss equity markets and fixed income markets. i think there's a good reason to believe the bond market is prepared for this. after all the ten year is well above what it was in june before bernanke's initial statement about all this. the equity markets -- i assume most anticipate some tapering today. futures are up early so they don't seem overly concerned. there may be something in the statement that surprises people. maybe the magnitude of the tapering will surprise people. that could lead to disruption. >> we saw the jump in may. we looked at the ten year and what's happened over the last year. it was a quick, steep move. do you think from here it's a steady climb? no more quick -- >> a lot is in the market now. i think the reaction is going forward more likely to be muted. we will have to see how the economic data comes in.

for example, it would be great if the economy would surprise on the upside by a substantial amount. that will have implications for the bond market for sure. people will want to reprice and people will anticipate that the federal reserve is perhaps going to be moving more aggressively than earlier expected. it's a complex sort of simultaneous -- >> anything yet, steve? do you have something for us, steve? >> i have been working the phones, joe. they wouldn't give it to me now. >> i have a comment for you too, steve. >> got a quick question for gary stern. gary, fed tried to argue tapering is not tightening. the market has tightened ahead of tapering. other than meeting expectations and following through on what the fed said it could do, can you think of a good reason to taper now? there's no inflation in the economy. what's the economic reason for tapering?

>> i think there are a couple of important considerations, steve. one i alluded too earlier the underlying trends in the economy which i think are clearly positive. i expect them to prevail to persist. the economy doesn't need in some sense the same degree of stimulus that the fed was earlier providing. the second reason is a longer run consideration. the very large asset purchases and the resulting level of interest rates does affect economic decisions. one of the things it does is favors consumption over saving for example and moves spending from the future to the present. that's the intent of the policy. it's not costless. so the question is how long do you want to provide those incentives? i think that's the second and

longer run consideration to begin to revert to a more normalle policy, more normal interest rate level. >> that's still not normal. >> do you remember steve when we pointed out and they said really, really, really long time. >> that was your suggestion -- >> they said we're going to do this and add a couple of really. back then people said fed just told us they were going to 2015. now we've still got that. they're going to slowly take us away and add a few more reallies. it's embarrassment we have. it's a commentary on how pathetic economy is. >> i think that's right. i think there's a lot of things that are really slowing the economy down. some are self-made and come from outside -- >> extraordinary what they've given so far.

any way -- you know -- we are here. if you get anything steve, boom we'll take you right away. go ahead. you're reading. >> up next, squawk box makes the ceo call. we're going to welcome toll brothers ceo doug yearley. futures are indicated higher. dow up 31 points. the squawk box will be right back.

. welcome back everybody. one of the key sectors to watch after the feds decision is real estate. we'll get a home builders opinion. ceo from toll brothers, you're with us now doug. do you expect the fed to taper today? >> i don't know. it's not something that we focus on tremendously. obviously the decision will move our stock one way or the other because that's how wall street trades. what i do know is that no mat whaer ter what the fed says, it can't change demographics. >> rising interest rates may getting into june impacted the sector. rates jumped at a quick pace.

we're still at low levels, but it moved quickly. did you see a drop off in buying interest at that point? has it changed sense? >> we have not. we see people every week. rates went 3 1/2 to 4.25 in three weeks. it was faster than anyone thought. i think it did shock the market short term. i'll take a 4 1/2-5 1/2% rate in a good economy. from 2000-06, a roaring time for housing rates for 5 1/2-8%. the market needs the time to absorb the 4.25 rate. still it's a very low rate. we have five years when very few people bought homes. we built few homes as an industry. there's a lot of catchup that's

necessary to handle household formations, immigration, obsolescence from existing homes being torn down. we're in the early stages of recovery. i'm not worried about rates running too fast. if they do, that's a different discussion. i think the fed understands that. i think the market is absorbing a 4 and three quarter rate. >> this country produced 1.5 million homes for decades. in the last four or five years we've been below 1 million. the low point was 5 or 600,000. we have a fraction of homes needed that have been built. we're beginning to catch up. we have quite a way to go. >> is the majority of demand coming from new families, people who are first time buyers, or people trading up after staying in their homes a long time?

>> our average house is over $600,000. buyers have homes to sale. buyers of their homes have a home to sell. we have a keen eye all the way down to first time buyer. we're focused on the move up buyer. they don't have the mortgage issues. those that get a mortgage and 30% down. the one fortunate part for toll brothers, that is not one of our issues. >> 30% down is very different than a number it would have been six years ago, right? >> it stayed there believe it or not. >> it's not people have to put more down because it's tougher to get a mortgage? >> our client chose to be more careful. they had the equity in their existing home. they were cautious putting about 70% in the mortgage. >> when you look at where trends have gone. they talked about delivering

more homes than expect and charged a higher price, have you seen similar trends? >> it's a local business. i can't speak to every market. we're in 50 states. 60% of locations we've had pricing power over the last year and a happen we have been raising prices. if it takes 12 months to deliver the next home because we've sold so ma yet takes eight months to build the home, we'll raise the price. why sell the home today when we can't deliver for some time. that's what happened with builders. we have been managing business through price increases. we're in early stages of recovery, labor market is tight in housing because people left. sub contractors are working hard to get employees back. as backlogs have grown, we've been aggressive with pricing. >> which markets are doing the

best? which are doing the worst? >> new york city for us is number one. we are very active in manhattan, brooklyn with high-rise. we're on our 19th tower in this market. it is on fire. we opened a building at 22nd street and 3rd avenue six months ago at $1800 a square feet. we're already at $2400 a square feet with price increase. southern california, orange county and south bay and east bay of san francisco, right behind new york. land is limited. the market as are back. it's very, very hot. texas is doing very well. for us, half our business is washington d.c. to boston. there's a corridor where there's not much land and not a lot of competition. we tend to dominate that corridor and have done well and have good pricing power. >> what market is doing the worse and has not had the

reserge? >> south carolina off islaislan hilton head. that's struggling. midwest chicago we're beginning to see signs of improvement which is exciting for us. that's been slow also in the recovery. >> doug is with us the rest of the hour. we'll talk a lot more to him. thanks doug. >> coming up, what does google and tesla have in common? the goal of putting cars on the road without drivers. that's next after the break. we talk fed, the consumer and business of home improvement. squawk box on cnbc, profit from it. ting. ♪ there'll be the usual presentations on research.

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welcome back to squawk box everybody. i'm becky quick along with joe e

kernen. we are getting ready for the interview with chairman and ceo of gold man sachs. investors look ahead to 2 p.m. eastern time. the bank is expected to taper the bond buying back program. we'll have much more throughout the show. mortgage applications jumped 11.2% last week led by a surge in refinancing. the association says the 30 year mortgage rate fell to 4.75%. china is said to be closer to the billion take over bid. shang is closer to the deal. a deal is expected for next week. star board value has been seeking improved bit.

>> did you actually go into the press release? >> it looks like 1:53. >> they made it hard to find that number. they gave us everything else. >> it's in the first paragraph. >> 1:53 is three cents above. >> art was thinking they might run light. he was looking at 144 for fuel increases. >> closed at $11068. it's up a. full earnings per year 7 to 13% for a full year earnings per share. net 439. revenue 11 even which is a little below expectations right? i think. any way, remaining confident in the full year despite tepid

growth. a high on the stock for the year is $1.13. that's almost there. it's nice to get transportation in sync. >> hat field have not been able to raise rates as quick as volume has come up. in 2014 they're going to increase shipping rates 3.9% for domestic u.s. export and the u.s. import services. that was one thing he pointed out they had not been able to do. volume had been coming back but they had not seen the increases. we'll see that in january. >> i see first quarter results where they do high lights. it's in the first. that's pretty clear. >> now housing five years after the crash. what ground has been gained and where is the real state market heading? we'll turn to our exclusive cfo

global council with us in studio carroll tome, cfo of home depot and tim sloan cfo of wells fargo. we've got toll brothers here. in case they want a new house, go to you. fix up our new house and go to you to get the incredible mortgage. >> you can. >> suited to our need -- let me start with the mortgage business. the stock of toll came down a little in the move from ten year. people go to the term pricing for some reason. have you seen it reflected in the mortgage slow down when we backed to 280 on the ten year. >> weren't these people alive when mortgages were 15%? >> some of them probably weren't or in a position to buy a house.

we think our originations are going to be down about 30% to about $80 billion this quarter. this is high from the last quarter. prior quarters have been incredible. still going to originate $80 billion but it's going to be 30%. rates are up affecting refinance volume. if you look at refinance volume, it's down 60% for the industry from the high end in the second quarter. >> you're good at this. >> we're very good. we've got a great team. >> you're a big player. >> we're the largest originator in the country. >> wells had 60% of our business. it's now 35-40%. they dominate. >> 30% is a huge number. was it let the good times roll when it was not 30%? or was it just a little better than it had been? >> we got here because we made a

lot of good decisions precrisis being not involved in the crazy lending done prior to that period. postcrisis we're able to serve customers. rates have been incredibly low for a long period of time. fact of the matter is they're still low. when you look at home affordability, the percent of the average person's income to pay their mortgage is still at historic levels. if you look over the last 50 years, the average is 27% of your disposable income. it's 18% today. the high we experienced in the low 80s about 50%. in 2007 it was about 30%. it's still a good time to buy a house. >> in the past we've always said home depot does it better either way. you like a housing boom. don't you do 100% better when housing is going well? >> we have higher turnover in

house depreciation than new home sales. we don't see a tight correlation to sales and high interest rates. we don't play to home builders. today mortgages are 2 1/2%. they say i'm not going to leave 2 1/2% mortgage and go to 4 1/2%. >> home depot does much better. it's been doing great. >> thank you. >> frank has done -- people love him. >> wonderful person. >> i think he was on closing well. >> that's okay. it's all in the families. >> that hurt me a little bit. >> i used to wore his orange sting and looked silly. i wore that trying to get him to come on. he liked the way it looked on maria than it looked on me. >> that's fine. >> all right. i guess we've got to go. i could talk to cfos all day. he wouldn't sign my stuff.

in fact you started twitching. you don't like that every quarter do you? >> we look forward to it. >> when you're wells fargo who's so above everything. >> you look forward to it and get to talk about your earnings. >> that's the glass half full. >> you're positive. say hi to stump. >> he said hi to you. >> did he? >> i saw him yesterday. >> and your buddy too. maybe next time he can consider the flag ship show to come on. >> bad, bad. >> i have to do this for you. you're so politically correct. up next, why the ceo of housing giant toll brothers is sitting right here, teaming up with the company's largest traded apartment company. that company's chief executive is here next. we'll be right back. ♪

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welcome back everybody. taking a look at the futures. market is indicated higher after closing yesterday at a six week high. now dow futures up 34 points head of what we kmpt to hear from the fed later at 2:00 p.m. when we get the decision on tapering. fedex reported first fiscal profit of $1.50 a share. revenue you also came in slightly above con sen tus. the company is confident in the outlook for the year despite tepid economic growth. can renting and buying be profitable at the same time? david escaper cut is head of the

largest trading company. our cohost, doug is here with us from toll brothers. >> thanks for having me. >> this is a 40 story tower you are working on together. why the partnership? >> it's a site we had been looking at quite some time. the land purchased alone was $135 million. it was more than we wanted to buy at one time. one of our current employees used to work for doug's team at tochlt they put together a transaction floors 2-22 is rentals. zoug will sell those out as condominiums. >> when you look at it, do you expect one side to do better than the other. over time it insulates you to have both going. are people more likely to rent or own now? >> i will tell you the rental market in new york is on fire.

we have every expectation it will exceed our expectations. doug you probably feel is same way. >> in manhattan it's on fire. we'll both do well. we have about 100 units, different entrances. we're share ago ming amenities building. i think we'll do great. we're excited about the opportunity and hopefully others. >> this is the first time you two have worked together right? >> yes. >> are there other partnerships like them? are you trying it out because you had somebody in your office? >> there's awful lot of residential properties with hotels or office. it's the first time we've significantly participated ourselves in something mixed use between condominium and rental. >> we have a hotel condo building about to start in brooklyn with barry sternlick.

that's example of hotel condo arrangement. >> when we had sam ornn, he this the rentals are going to be strong oechb with the strong housing market. is that the way you see it? >> i don't think there's a question. our footprint, boston, new york, wash warks san francisco, seattle. those are extremely expensive housing markets where this generation, 80 million people strong want to live, work, play. they appreciate the flexibility that rental housing provides them. at this point in their life, they have no interest in earning a single family home. >> does it matter what the fed says today if they decide to tape senator. >> it will affect stock price. it doesn't affect demographics or change the fact there are 3 million people turning 21 every day in the country or that there's 3.5 million households

being formed. institutional core multifamily will attract a percentage of those. >> what do you think the market is getting and not getting in some part of this? >> the market believes that we've got minivans loaded and gassed up ready to go from our apartments running out to buy single family homes. that's not the case. 43% of your units are occupied by one single individual that has no intention of moving to buy a single family home. they live in the city and really appreciate the lifestyle of the city. our residents are not, at least in this point of their life, are marrying later and moving to the suburbs later. >> we appreciate it. we'll watch the park avenue tower as it rises. >> it helps to be single. it really does. right? alcohol and good food. >> people don't live in our apartments. they live in the city. our apartments are where people

sleep and store belongings and live in the city. it's a lifestyle choice not simply economic. >> we're going to talk to this person now. he has children now. like three miles to a three isn't it andrew? you share it with 14 trillion other people while there. >> we live across from the park. we have the largest backyard in america. >> oh yeah, great. hang out there at night. >> think about it. also known as central park, yes. it's a good place. come on. >> you can get chinese food delivered up. >> so many of our viewers live in new york city. >> not that many. a few. we broadcast around the world, andrew. this is what you've got to get. go over the hudson besides coming to work. go over fly over states you look down on literally and figurat e

figuratively. >> i'm in chicago. what do you want? >> i know. >> that was supposed to be funny. you didn't laugh. quick, we're going to get thoughts from doug yearley in a minute. i want to ask gary a question we haven't gotten to. sounds like the music is playing. the reason we're in chicago this morn as good because goldman sachs having the cfo conference here. we're going to talk to lloyd blankfein shortly. he joined the dow. he's got interesting thoughts about what's going on with diamond and cowen. we're going to talk to him about that and more. squawk box is coming back live from chicago in just a little bit.

we are going to host doug and also andrew, are you still down there? >> i am. >> you want to ask gary a question? >> i have one question for gary. i assume you know mrs. yellen and don cone and all the players. i want to get the inside dope on what you think of these folks. >> i do know them all. it's remarkable how similar they are in many ways. their long time federal reserve people, more than knowledgeable about the issues and the challenges. they have a lot of talent and

smarts and expertise. i think this the cases of the leading candidates, the names at the top of the list, i think they all do very well as chair of the fed recognizing of course there are a lot of challenges on the table right now. there may be greater ones coming for all i know. it's by no means an easy job. i think very highly of those candidates. that gives me confidence and comfort that whoever is selected, it will be all well. >> is yellen down -- somebody suggested yellen is damaged goods in the context that we have a situation where the president was clearly going somewhere else with larry, doesn't take him. there has to be some relationship between who runs the fed and president. what does that do? does it matter? >> some of that is overrated at

this stage because there's been so much emphasis and concern about summers and his candidacy. at the end of the day, the chair will be judged by results. you'd like to have comfortable interaction with the president and economic leaders in the administration, but you don't have to be best buddies. keeping things at arm's length is probably preferable. >> bernanke is gone for sure? >> i would be surprised if chairman bernanke wanted to stay. >> all right. we're below where we were at highest levels. in terms of average mortgage rate over the past 50 years we're below average aren't we? >> way below. i mentioned from 2000-06, 5 1/2%

mortgages and we were rolling. the market got so use to 3 1/2. we were in a lousy economy and housing market that there was a shock when you go to 4 and three quarters in a couple of weeks. that rate is absorbed. we're fine. in the early stages of this, there will be a few bumps. we feel great. >> what percent of housing ownership should this country have? >> we're running about 65% right now. >> what should we -- should we try to get that high so people have the american dream or let the market take care of it? >> let the market take care of it. >> we greased it. there's a piece in the walle street journal saying government action is taken out and totally changed the way it happened.

it was greased for too high for people that shouldn't have had houses. government tried to get people into houses. we saw what the end result was. >> '05-06 mortgages were way too easy for black jacks. american dream is how to own a home, show off our wealth. we want to fix up you the kitchen. i love david and his business. nobody is renovating the kitchen or putting a swing set in a rental. we're good. the american dream is alive and well. homeownership will rise. i think it will be healthy. i think mortgages are controlled and properly regulated. we have a way to go off 65% ownership. we want pinned up demand. little tick in the rate i'll not worried. i'll take a higher rate and better economy any day. >> that's positive of you doug. hopefully it will be at a place

to own a tree and have a backyard barbecue instead of some deck where people around you are smelling the fumes from the electric grill cooking tofu with the knife. that's not life. >> andrew back to you. >> we have a huge hour getting back to it. we're going to talk about fed tapering and what's going to happen next. we have a man that looks like mr. zandy. he's not watching what we're trying to do. austan is going to join us. this is all leading up to goldman sachs ceo blankfein. we have a lot to talk about on squawk box, coming back right

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is today the day after months of speculation it could finally be taper time for the fed? we'll start the final count down to this afternoon's fmoc decision. >> plus the squawk box

exclusive. lloyd blankfein reaches us for a far reaching conversation, fed tapering and much more. >> breaking economic news. >> everybody stop what you're doing please. >> august housing starts and building permits 30 minutes away. the final hour of squawk box begins right now. welcome back to squawk box here on cnbc. i'm joe kernen along with becky. andrew is with us. >> he's in chicago. that's why we're playing sweet home chicago or something. >> play good songs by the band chicago. he's with us from chicago to interview you the news maker. that was one of the worst ones, like the third transformation of

that group -- i don't know. lloyd blankfein is going to join us at 8:30 a.m. eastern. meanwhile our guest host this morn as good gary stern, former minneapolis fed president who knows a lot about the fed and everybody that works there. did you like summers? we were just talking about it. do you think summers is going to end up? >> intellectually, sure. the problem that played out with him was the confirmation process. you could see this coming in the sense you were going to have confirmation difficulties you weren't going to have with other candidates. >> he would have needed it. he would have been arguing with members of his own base and party. that's the last thing he wants to do. that's why it happened.

he couldn't align with republicans on anything else. he couldn't have aligned. he would have had to do that on syria too. that's another thing he dodged. we can go back to what he loves doing. >> in our headline, fed is set to announce the policy decision at 2:00 eastern this afternoon, less than six hours away. bernanke is going to hold a press conference 30 minutes later. the central bank is expected to announce winding down the program. the question is by how much? 10 billion, 15 billion, 20 billion? that's in two hours. housing starts and building permits. starts are said to be risen 2.13%. in corporate news, fedex posting better than expected earning and revenue. the company is confident the full year outlook is on track

despite what it calls tepid economic growth. fedex shares up this morning. house gop leaders are said to be ready to take a tough stand on health care. they're going to take a must pass temporary funding bill to use it to block implementation of obama care. meantime the senate would likely strip out the health care provision and send it to the house raising confrontation to lead to a partial shut down after september 30th end of the budget year. september 30th as we said. they're set to unveil a proposal to expose how executive's pay check compares to average workers. the agency is expected to adopt a reform to allow overseeing financial advisors to city,

councils. those proposals are outstanding regulations dated by the reform law. still really fun stuff for corporations to be involved with and try to figure out what the average employee makes when you're multity national and have thousands of employees spread over the world. you need to come up with some number so you can compare it to what the ceo makes which you're not going to do anything about it if it's ten times over. >> there's a site like this 15 times or longer. >> i don't see how you can get it. it sounds difficult and arbitrary to try to figure out how to find these. you commission people and this -- once you have the information, what do you do? >> tell people. their point is that investors,

it's not going to make a difference to them. >> people that are mad about ceo pay should get an nba, go work in the mail room really hard and work their way all the way up and become a ceo. if you're jealous of what a ceo makes, go -- if you're jealous of the wall street firm, go work at a firm. >> i have someone in chicago that may want to chime in. do you want to chime in? austan goolsbee is here. >> go ahead austan. go wild. >> how deeply complicated is it to take the total payroll number and divide by the number of employees? what would that become? that's not how you do it. the high paid guys with skewer

higher wouldn't they? we already talked about this. austan, why don't you do what you really want to do. put a cap -- >> i like you said go get nba. i want you to come down. we're going to talk about means and medians. why don't you put a cap on it? shareholders can do something about it if they want. that's not enough. get the government to put a cap on ceo pay a. if that's what you want, go ahead and do it. >> i'm going to go everywhere and say i disagree with joe we could put a cap on ceo pay. >> gary, what does that point to? >> it's hard to point out transparency. >> we do know what ceos make, how they make it. every quarter the new york times posts these ceo pay of every single ceo you can find. >> what's the problem, joe? >> there is no problem.

you have the transparency already. i don't see why you need the average at this company. at this company it's 42,000. at this company it's -- >> nutritional information on the back of the box comparing numbers of milk to your daily allowance should be. everyone is supposed to know what it is. >> ten times the employees in europe, there's terrible guys here that make 50 times. you're going to see the number, see 50, and everybody is going to say, that's really just not fair. they don't need that much money. since that's a zero sum game, somebody should be sharing that money. they don't need nice stuff way. >> the outcome will force boards perhaps to be slightly more accountable or think a little more about how the compensation works. there will be public pressure.

>> that's a different issue. you should have boards accountable to shareholders. that's absolutely true. >> hopefully it will make it easier for shareholder who is frankly don't do their own research. >> this should line the pockets of the ceo obviously. that's a totally different issue. if you have a board that wants to pay 30 or 40 times, then they should have the about to do that. it should be tied to performance. >> do you know what your pay is compared to the average cnbc employee? do you have any idea? >> i have no idea. i'm happily ignorant. >> i have an idea it's around 50 i would say. >> if mine is 50, is yours 100? how does that work? >> i'm not the one whining about

it. go ahead. >> the story across here and the country, global world today, the fed and tapering and what it means. i'm here with my comrade. no, i'm not. austan goolsbee and jim. we've been debating what the ultimate number is we're going to hear at 2:00. do you want to take a stab at guessing? >> do you have a coin we can flip? they've been expressing some time they want to start tapering. they'll probably do that. objectively if you had known what the numbers were going to be that the jobs numbers would slow down, inflation would be coming in less than expected and growth would be disappointingly significantly lore than what the fed was forecasting, i think you probably would not have committed six months ago

generating this idea that we want to do taper. i hope it's going to be as small as possible. >> what is small for you? >> i would bet they do 10-15 billion. >> if it's more, should we take that as a good sign? >> i wouldn't take it as a good sign. i think this is a great day. i've been waiting for some time. we can argue about whether the economy sped up or slowed down. we have a fed giving more stimulus today than they did at the bottom of the crisis. you can't tell me the economy isn't better today than at the bottom of the '08 crisis. to back off aaway from crisis policy when the economy is no longer in crisis, it makes sense. it will lead to greater confidence and medicate this to suggest everything is so bad. >> i don't want to let out the animals. >> you take 10.

you think what? >> probably 10-15 billion. >> if they do more, the market takes that how? >> i think market will be fine with this. will it have a reaction to headlines? absolutely. it's fine. it's telegraphed it's going to be fine. >> i think the market would react if it was too big for following reasons. feds forecast when bernanke gave comments that the market reacted badly, they were like oh what does that mean? now they're going to tie it to conditions. fed has been consistently forecasting better performance of the economy we've actually seen. if the fed comes out with this aggressive -- extra aggressive tapering, that might generate the reaction we saw a couple of months ago. >> leading up to this, everyone has been expecting tapering for some time. look at the market. we're within a couple points of

all time record highs. the stock markets are led entirely by stock, industrial, materials. it's not the stuff you think would lead if there's fear the fed may overtaper. commodity prices are rising. nothing in the market suggests anyone is too scared. >> i know you're not at the white house, but you can help us understand what you think is really going on. does the president does not like yellen? why -- in my mind if he wanted to select yellen, when summers calls over the weekend and says i don't want the job, the president is supposed to say that's good to know. don't say a word for a week or two. he's going to come out and announce he likes yellen. now he is in the box and puts her in an awful box.

>> the practical matter of naming somebody of the nominee of the fed chair has a tremendous amount of run up. they've got to do all this stuff. they, the white house, announced when they first got into rumors -- >> the president didn't start this -- >> he didn't use any names. what they said, we're not going to decide until fall. i have a feeling, and they even said something to these exact words, this isn't changing the process they're going through. it takes time. i think it was unrealistic. >> you don't think part of that campaign was against yellen -- >> i don't think they were against yellen. larry has a lot of people for him. janet has a lot of current and former people for her. cone has a lot of friends. i know all three pretty well.

all three are very smart candidates. >> you consider it got so political. it was basically the fault of the white house it got so political. it was clumsily handled, right? >> when these turn into a brew hah hah it turns into its own. >> the syria thing was clumsily handled. was anything clumsily handled by the white house? >> i don't think that's how they wanted it to go, feds against each other attacking them. i think the implication of what you're saying is based on the white house is in perfect control of the media and gets to gauge the media reaction however they want. >> yeah. this white house gets a hard time from the main stream media

austan. >> what did he have for breakfast today? it's an hour earlier for us. >> austan, you should run before you come on on a treadmill. it's not my problem if you're not awake and can't handle it. come on. >> i'm not in a bad mood. >> maybe you were out last night or something. tell andrew about it. >> we were all out late last night. >> did hit involve dollar bills? >> you know, don't ask don't tell. that's the policy here. >> what happens in chicago stays in chicago. awesome. >> except when it's on squawk. >> no secrets here. everything comes out. when we come back, we'll talk about why brazil's president is cancelling a visit to the united states. goldman sachs ceo lloyd blankfein joining us at 8:30

eastern time. check out the squawk box market indicators. we'll see what happens. right now 10 ten year 2.89%. squawk box will be right back. n. with fidelity's guaranteed one-second trade execution, we route your order to up to 75 market centers to look for the best possible price -- maybe even better than you expected. it's all part of our goal to execute your trade in one second. i'm derrick chan of fidelity investments. our one-second trade execution is one more innovative reason serious investors are choosing fidelity. now get 200 free trades when you open an account.

brazil's president is postponing a trip to the united states. michelle cabrera who luckily was on the set to translate some spanish tweets about andrew which was interesting right? >> yeah. >> in pesos you can imagine how much. >> he'd be a trillionaire. >> that's what i mean. >> you going to practice. the president of brazil says -- >> you have contacts right? >> i just got them. today i put in the script to practice. they do feel dry. you're absolutely right. >> the president of brazil says she is not coming to an official state visit that was supposed to happen in washington d.c. late october. the visit would have been the first official by the brazil president in nearly 20 years. supposed to be a coming together of two largest economies in

americas with trade as one of the main topics. she is angry at the president and united states after edwin snow den made allegations u.s. spied on her. she wants an investigation into why and if it's going to go on. earlier this month rksz the two met in russia. vladimir putin had them purposously sit next to each other knowing it would be uncomfortable. analysts wonder will this situation of brazil put at chance boeing's deal of getting new fighter jets from brazil? brazil has been dragging the feet on a decision. russo may be trying to rebuild in brazil when nearly a million protested in the streets in june. they were frustrated by

joblessness, horrendous infrastructure despite tons of spending which is the result of rampant corruption. most markets have rallied. brazil stock market has fallen sharply. currency has got opinion hammered. this may speak to president barack obama 's standing in the world. this is a time this would have been inconceive pbl the brazil president would turn down a visit to the u.s. >> you hit it on the head with protest going back to june. >> absolutely. >> larry asked last night if this was an say or obama standing -- she must have been given more strength with the way putin treated us and president barack obama in the last month, probably gave her additional courage. >> interesting, seating at the g 20 too. >> he loves to stick it in people's eyes. >> did the contacts work? >> you tell me what.

>> i've been wearing them for years. it takes some time. >> are you getting faster at putting them in now? >> that day i saw you i never got them in. i was in there 45 minutes. today it took me 20 minutes. i only have one on. one is reading. it's like living continual rack focus. >> is it one per day? >> this is a two week one. >> i just went to one a day. they used to do the planned -- you know how much they charge for them? it's ridiculous. one a day is fine. that's what i'm on now. >> you have two? >> i have two but one is bifocal to see close up. when you take them out at night, if someone breaks in your house and you can't see, i'm going to be like this. that's why i have a dog.

>> michelle, thank you. >> see you later. back to andrew in chicago. >> we have a couple of things coming up. we have breaking economic news hitting the tape at 8:30 a.m. we'll get the housing information and ceo of goldman sachs, lloyd blankfein right after this. and you...rent from national. because only national lets you choose any car in the aisle... and go. you can even take a full-size or above, and still pay the mid-size price. (aaron) purrrfect. (vo) meee-ow, business pro. meee-ow. go national. go like a pro. how old is the oldest person you've known? we gave people a sticker and had them show us. we learned a lot of us have known someone who's lived well into their 90s.

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welcome back to today squawk box. take a look at stocks on the move. the software producer reported earnings below estimates. investors are focussing on promising prescription growth for the suite. dollar tree announced the $2 billion buy back program. another discount retailer 5 below also in the nuchltz five below says a number of shareholders are selling a total of 7.1 million shares including those sold by the executive chairman. the company itself says it isn't selling shares. that is down as you can see.

breaking economic news. august housing starts. our news maker of the morning goldman sachs chairman and ceo lloyd blankfein on at the bottom of the hour. we'll be right back.

welcome back to squawk box everybody. we're a few seconds from the housing numbers for august. we've been watching futures. we have been in the green all morning. dow future up 23 points. let's get back to rick santeli. >> august 891 thousand permits, 918,000. how do those compare? permits down close to 14%. we're up just a bit in terms of starts, a positive percentage. what we want to look at in my opinion, baby sitting financial version to see how that turns out around 2:00 eastern today. interest rates elevated. we overtook 2% in booms. we're ever closer to 289

significant level. this number was much as expected not huge revisions to last month. you did see the permits number upgraded to 954 and starts downgraded to 883. those aren't huge revisions. >> back to you. >> thanks. we'll talk more throughout the morning. andrew joins us from chicago with our special guest. >> thank you. we're live in chicago. goldman sachs just finished up the cfo conference. thank you for being here on what we think will be a big news day. i'll ask you, what do you think will happen at 2:00, and does it matter? >> it matters more or less depending on what happens. i think it matters to people. i don't think it should matter as much as people are weighing in on. it probably will matter. >> what are you expecting?

>> i expect -- i think at this point there has to be some cut. i don't think if it's a number like down 10 billion, the market will be happy. >> the market will be sad because we're losing the heroin injection or because -- that could be good news right? >> i'll use metaphor of head wind and tail wind. there's a tail wind from the fed. people think this is the first moment when there's a withdrawal from the market. it's not as big a deal. it's not the first withdrawal. the biggest artificial support the markets had a long time, we've been withdrawing that steadily. the biggest support the markets had was the unbalanced budget we had. spending more than we were taking in revenue. we have tie had the up.

the payroll tax coming back. all those things are moving toward normalization as in rise in interest rates. the fact interest rates for 1 1/2% was influential to the market. this is not the first step. also the expectations are embedded. >> austan goolsbee on a moment ago, he seemed worried if we got to too much it would be bad news. that the economy is still too fragile. where the are we? >> in substance it's a recovery where trajectory is not as steep as it should be. all these support measures are a form of insurance not because we think it will turn back but because it might turn back. it's too high -- i'd rather be cautious. the odds of it turning back are not great. >> are you a believer it worked?

>> i think it was -- at the margin, it made a contribution. who knows. you can't go back and see both paths. i would say -- i would have if i were in charge of running the economy, i would have done anything i could. this was in the positive direction. >> joe has a question back at hq. >> only in relation to another market. i want goldman's comments. goeldman said gold would keep going down because of the taper. lloyd, were you part of that -- are you there for decisions like that? do you agree? where do you think gold could go? >> i'm not part of the process of generating that point of view. i always have a point of view on gold where i start at jr commodities. my first job was on the gold market. gold is trading higher to other

currencies. they trade against each other at a point people were questioning the behavior of every bank. all of a sudden, gold became the alternative currency or two currencies. by the way, with interest rates rising, gold doesn't pay. it becomes not only less important to hold gold as an alternative but more expensive but to hold as an insurance policy. >> do you think it could go to a thousand? >> in gold, it's always -- gold is not even a fiat currency. gold is what people think it's worth. it's not value. it's a direction from where you are. that's the hardest place to figure out where it belongs. >> that's down.

>> i would think that would trend down. >> on the topic of all things fed related. were you a fan of larry summers. would you have wanted to see him get the job? >> i am a fan of larry summers. >> who do you want for that job? it's a hard question. >> i would say at some level, at an important level, i will say i'll have to work with whoever has that job. it's actually quite convenient that i like everybody. >> you have met yellen? >> yes. >> you think she's as strong as the markets think or stronger? >> both have different backgrounds and both have different temperaments. both are equivalent and very strong. each could do the job. unrelated to the particular policies, janet yellen -- the big tool that the fed has available now when you put aside qe and measures is forward

guidance. forward guidance is more credible if it's from an institution with continuity. with larry that would be a break. first of all would they do it with credible and how would the market take it? forward guidance with a current vice chairperson is going to be the next chairperson has more credibility. not saying whether you like the policies or don't, but to an extent forward guidance is more credible when there's continuity. >> what's your opinion on the economy. we have syria, debt ceiling, a lot coming this fall. a lot don't know what to make of it. >> there's a lot that can go wrong. i joked last night i spend 98% of time in 2% worse possibilities in risk management. i think in the largest

probability that we muddle through thing, climbing the wall of worry and actually very well positioned for the economy to keep improving. a week ago goldman sachs became part of dow. how did that happen? were there conversations? >> i didn't have a clue. if i did have a clue, i would have been obsessing and asking why it didn't happen yet. >> is this something you wanted for a long time? have you talked about it? >> it never occurred a possibility. i never thought it. the fact of the matter when you think what we've been focused on the last five to six years and where we were, this is not really in contemplation. we felt as an institution really terrific about it. in some ways you know -- this

has not been an easy time for anybody. nobody has enjoyed dealing with the context for the last several years. we've been in the spotlight. to get a validation like that -- i get surprises in my line of work and few are positive. >> a wise person once said with great power comes great responsibility. i think it was spiderman's father. now with dow, there's a high priced stock. it used to be the bank of america, positive stuff. you're in dow now. it's not all about goldman sachs now. it's about the dow. this black box, trading, making money everyday. think about that okay? it's about the dow. that's really not a question. it's more of a comment. >> i understand. we haven't had the secret

ceremony. they haven't given me the ancient scroll. i haven't read about it but i will and take it seriously. >> it must have been shocking. i agree with it. i think goldman is probably more representative of pure capitalism than bank of america at this point, but you must have been -- it was shocking to everyone. >> how did you find out lloyd? by hearing it on the news? >> it came over the tape. i read it like everyone else. >> the answer was you were watching squawk box. >> i was so engrossed watching squawk box i almost missed it. >> do you take credit now that gold pl goldman is a dow component? >> i have a hundred people working on the roll out plan for the way i'll take credit. not at all. i haven't spent a lot of time thinking about why it was the right or wrong thing to do. i'm appreciative for the

positive attention that comes with it. >> i want to talk briefly about the regulatory environment. five years later we were talking about tonight. five years ago today you ran negotiations over the weekend about whether to merge with citi group or wachovia, all sorts of people. a billion five will be spent on lawyers. >> i didn't think about it af left law after five years and went to finance. >> you're in the right place. >> what's that going to do to the bottom line? >> i do think things have changed. regulation will stay with us a long time and some extent forever. there's a bit of a moment in time here where we're grappling with legacy issues, not what we want to really do.

both necessary making sure bad things don't happen again or if they do, they're mitigated. it's not what we necessarily signed on. they're necessary things. at some point you chip away at those, get things set up like clearing and regulations that come through. i expect that you won't have as many people working on this five years from now as you do today. >> one of the things that is so interesting about this major settlement settlement jp is doing. what is this going to do to the industry and how would it have changed your reaction to the suit you settled two years ago now? >> i'm not sure. it's case by case. in some cases that are in the paper, the people have already said this is effectively -- they

admitted this was wrong behavior. whether it rises to legal standard, they're not admitting that. they're admitting to facts. a lot of facts are not in contention any. when it gets to an extreme case, people that want to settle these cases are not just the defendants. it's the regulators bringing the suits. at the end of the day, if you get a settlement -- nobody is paying a big fine. that is admission. you're changing behavior. it's so consequential you'll bring and succeed in fewer cases. >> does it make sense when you look at jpmorgan scenario -- they're losing money to pay for other people's mistakes.

>> winners and losers and those that tie themselves to economic interests in the company are always shareholders. if shareholders feel burdened in the direction of paying big fines, that's management. there's no other decision maker or ultimate place to put the burden. i agree. >> another name in the news, steve cowen. he came on saying goldman sachs was going to support as a firm and continue working with them as a broker dealer for them. take us inside the decision about that. how do you get to that place? what is that information like to say they've been indicted and we're going to continue working with them? >> they haven't been convicted. at the end of the day we didn't have to make a decision to support them. we would have have to make a decision in the context of accusation of withdrawing

support. we're a major provider and prime broker. that would be pay quiet a decision if they withdrew on -- >> has the world changed -- >> let me say the government wouldn't want us to withdraw that. if everybody withdrew he quitty you would vaporize the firm. the case of bringing the charges so great the government would be reluctant to bring charges if they knew the moment they brought the charge you would be the executioner. it's in the interest of the government. the government did come back and encourage firms like ours to continue to deal with sac. when you think about drexel, the second they were dietd, the game was over. >> that was the issue. >> right. >> do you think the world has changed? i think the world appreciated

what happened with more information. after those cases, what happened was the government could never prosecute a financial firm. you ended up with non profit. the world didn't like that. they said why are you doing deferred prosecution. they were loathed to use the powers. it was only a nuclear option. the fact they're getting people to cooperate and still support during the trial actually means it's not an on off switch. you have something in between doing nothing. i think the government is supportive of maintaining relationships with the firms pending a trial. >> andrew, what about the bank charter? that's going away. ask him when. >> when? when is the the bank charter going away? >> don't ask him if. ask when he's going to do it. >> i miss had the episode of your show. i must have been traveling. a lot of things that happened in those times, lloyd,

buffett and a lot of tarp, this stuff is gone now. why do you still keep that? are you going to keep it? >> you know, the legislation -- there's a category called sifi which we'll be regardless of regulatory or not. by the way, people want us to be highly regulated for obvious circumstances. i think -- i don't think the question -- i don't think the answer is that important anymore. the difference of us being bank holding company from the point of view of regulation, surveillance, focus, restrictions, limb titations, i can't say for sure. it won't be that big of a difference. >> we've got to go. hard commodities, real commodity, going to stay in that

business? others saying they're going to get out of that business? you're going to fight it? >> regulators haven't said that. >> but it may come. >> a lot of things may come. we'll deal with that when it happens. that's a core strategic business for us. it's a slightly different status than other banks for us because there's the legislative grandfathering solution embedded in the notion of being grandfathered we have been in over a hundred years. the role we play in that business is very -- pay good credit, regulated company will be -- the outcomes won't be good for the users of the market.

>> we've got to go. final question asked last night. it was a great question with a great answer. a week from now, five years ago, you took a lot of money from warren buffett. if you could do it again five years later, would you? >> i think things have worked out pretty well. with warren, we got more than money. we got more than his validation. we got his advice and friendship as well. that was valuable to us. the fact of the matter is we got money from warren and then got money from the capital markets to capital raise and got unexpectedly money from the government. we had a lot of money. if we didn't have those particular, other money was granted to us. we got other things as well. >> thank you lloyd. we were talking about how you debuted your beard for us on squawk six months ago. we wonder if you'll shave it

once bernanke leaves. >> we're a big company. we'll decide what's the best thing to do. >> guys, we're going to come back to jim cramer after this short break. >> thank you. >> thank you. bye bye. today, that's easy. ge is revolutionizing power. supercharging turbines with advanced hardware and innovative software. using data predictively to help power entire cities. so the turbines of today... will power us all... into the future. ♪

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let's get down to the new york stock exchange. i don't know, jim, if you heard any of lloyd blankfein. he talked about how surprised he was to hear the news that --

>> everybody knows in the end he's always been able to take walk about lightly. he's never been able to take seriously all the different criticism from goldman. i worked at goldman in the 80s. i liked that about him. in the end, he's bullish. i've been there when i've seen he's temperamentally cool in the market. he can say i should have been bullish a 100 and i'm buying back stock. there's just a lot of optimism going around ahead of the fed reserve meeting. i think that's good because it's not all focused on bernanke. >> not bullish on gold and he shows metals, right, jim? >> he sure does. he's not taking a lot of risk. they turn the lights on, they make a lot of money.

if the yield curve changes in a little bit, they'll be doing fabulously. >> jim, we'll see you in just a few seconds. >> when we come back, we are just about five hours from the fed announcement. we have a prediction from gary stern right after this. [ male announcer ] these days, a small business can save by sharing.

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last word from gary stern, our guest host today. gary, fed decision at 2:00. any last thought? >> i think tapering is certainly in the cards, $10 billion or $15 billion, maybe more. this isn't the perfect time to start but it's a good time to start. if you wait for the perfect time, you'll never get going. i think it's now. >> thank you. thank you. and thank you, vicky. andrew, we'll see you tomorrow. make sure you join us. "squawk on the street" is next. ♪ ♪ good wednesday morning. welcome to "squawk on the street." i'm carl quintanilla with david faber and cramer. we await the fed decision and possible taper at 2:00 eastern time but plenty of news in front of that. we digest both