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 housing starts

and mortgage apps. keep your eye on gold if you're looking for clues about the fed. we did dip below 1,300 this morning. just hours away, is the taper finally upon us? we'll break down what it means for the markets. >> and the reviews are in. words such as gorgeous and game changer being used for apple's new operating system and the new verse of the iphone. but will it help the stock? >> fedex beating expectations. up more than 3% in premarket trading. >> and starbucks asking customers to please leave your guns at home. the ceo saying firearms are not banned in the stores but they're not welcome either. >> apple unveils it's new ios operating system today, included in the 5s and 5c. those phones will become available on friday. the reviews are in. walt of the wall street journal

says the new 5s is a delight, its hardware and software make it the best smartphone on the market. and from "the times," it's genuinely awesome. the haters can go jump off a pier. and ed, who will join us later on, taken in totality, the features new to the iphone 5s make what i consider to be the best smartphone on the market even better. >> first i'm going to buy one. >> that's because you have a 4. >> i do have a 4. i think these are gorgeous. >> i've been puzzled over apple. you're starting to hear good things about demand.

it will move the needle if they sellout. everybody got negative about it last week. i got negative about it. we're hearing some pricing in china that's good. this has to be the single most controversial stock i've seen in my career. you love the product. you love tesla, you love netflix. these are stocks that move on love. why isn't the apple love there? the answer is the institutions don't care for apple anymore because it doesn't have the new product that everyone was looking for. but this is a winning combination. >> it doesn't have the growth characteristics perhaps. >> but you're down maybe. >> it's certainly they would argue a value stock. it's the first word that comes out of people's mouth. cheap. >> it's very cheap. i think they can do a lot with that capital. but a stock that went up 50 points between a possible dinner between carl icahn and cook on a tweet. these are the actual positive notes on the fact that demand

could be better than expected. look, these reviews move the needle because i think people read these and say this phone is worth getting. it gets people back in the store. let's talk to verizon, you're friends with those guys, let's talk to at&t, let's see what it does. >> talked to people at apple over the past few days. they're clearly frustrated at what some call balance sheet jockeys. their argument has been wait till the phone gets in the hands of people and then you can make a judgment on where the stock should trade. >> you mean people want a financial engineer versus engineer? >> i think that's what they're referring to. i got to imagine in cupertino were happy when the stocks hit the street. >> the stock's been a very tough stock to own. you need to see positive momentum in earnings and you need to see a new product. these reviews feel like a new product. >> it seems like the reviews are

about the operating system rather than the hardware. though mossberg was frustrating going back to his old phone and having to enter four numbers. >> i want to be able to go to home depot and press this. it will have everything i need. there's technology that allows you to do that. i like this phone. i want the new phone. i want the identifier because i don't want my phone stolen but also because i want to be able to use it for transactions. so this is a very attractive thing. again, i'm in charge of trying to figure out the stock for "mad money" and the stock is interesting when you have expectations wrenched from it. but year-over-year numbers must be strong because in the end, that's what you're dealing with when you're dealing with salesforce.com, when you're dealing with google. only tesla and netflix are freed of pe multiple action and amazon, too. they're not in that pantheon. >> does apple benefit from the

fact that it doesn't seem that anyone is going to have anything new by the end of the year? >> where is samsung? is android just -- has it been leap frogged? the guy who is will know this are verizon and it the at that time and sprint and t-mobile. we have to stay close to what they say this weekend. fedex. ups. they have to tell us. ups told us that the 4 and 4s was good. ups gave us the insight we need. that's who i want to know. >> we are going to have the new iphones here on set at post 9 a little bit later on. you mention the fingerprint. apple says the odds of it being hacked, in other words, having someone else get into your phone using a fingerprint, 1 in 50,000, as opposed to cracking a code, the odds are 1 in 10,000. >> you just use your social or your birthday or your dog's name. right? there's not a lot of creativity.

this is not the manchurian candidate stuff. this is kind of pretty simple. i do think transactions are the next wave. if you can get a transaction so i don't have to wait in line and just go boom, boom, you're still here. obviously i don't have the identifier. >> you trying to make him go away? >> yesterday he was wrapping something around my neck. >> it's a transspoponder. >> is there something going on between us? >> i just want your approval. >> you got it. >> really? >> without a doubt. without a doubt. let's talks a little fedex. shares of fedex rising in the premarket. the company posted before the than expected fiscal first quarters earnings, 1.50 a share. the ceo says results were driven by growth and overall demand by the broad portfolio, adding they

remain committed to reducing costs facing challenging global conditions. >> you mentioned ups. >> it's like when you and santelli go at it. no, you guys are on the same page. i don't want his approval anymore. i do think when you look at fedex, what's interesting is the restructuring is clearly working because the numbers themselves are not that great. they're putting through a price increase, i thought that was exceptional, gdp growth at 2.1, that's in line. the fast express segment, people are still using the ground segment more. >> that is not going away. express domestic clially up 1, international up 4 and people continue to ignore the high-priced shipping option. >> one of the things we have to watch is amazon has really hurt these companies, particularly ups because amazon building warehouses everywhere so you don't need to do the expensive fly from seattle or arizona.

they put warehouses up everywhere. can you use ground service. that is a big change structurally. it's not like these guys are going to mention. they talk about e-commerce -- i don't think -- >> you go to the back of the fedex truck and look in, how many amazon boxes are you going to see? a lot. >> amazon is the driver here. it's the age of amazon. >> that would be the great name of a documentary. >> age of amazon. >> "washington post." he likes "the washington post." >> they are looking for 2-1 economic growth. i think international 2-6. they don't give quarterly di guidance anymore. how can they be so sure about the year -- >> because fred's an economist.

they know everything. >> but they don't really know. >> but they put through a price increase. that is the salient feature. that means they feel they can sustain it. very important. >> effective january 1st. >> you think the fed looks at this? >> meantime starbucks ceo howard schultz is asking customers to no longer bring firearms into its stores, but they have stopped short of banning guns outright. here's a letter from schultz addressed to fellow americans. >> "recently we've seen they carry debate become increasingly uncivil and in some cases even threatening. pro gun activists have used our stores as a political stage for media events misleadingly called starbucks preesh yaeg days that disingenuously portray stars bucks as a champion of open carry. to be clear, we do not want these events in our stores. of course this comes, jim, just

a few days after the navy jary shooting. this is not the kind of problem you need as a ceo. >> i got this statement early in the morning and i was like, wow, call attention to something i hadn't known was on the agenda. >> i didn't either. >> i go in for a triple capuccino and an ak-47? i don't see this in new york. maybe that's the problem. >> there's not a big debate in new york as there are in others. >> few retailers are as blanketed across the country as they are in starbucks. >> boy, are we out of touch in new york. that's amazing. i apologize for not knowing. it's a big issue. >> whether it has any issue on sales at starbucks is far from clear. schultz is not shy from straying

into issues in the past. don't forget the deficit reduction. it was bipartisan. he has been known to write open letters. >> this is an important issue. it's a riveting issue among my friends. i have friends who are very pro-gun. and i owned a gun for a very long time. for protection purposes. i saw this as i'm going to do more on this. i didn't know this was such a focal point. that's my bad. >> with everything else he's got to juggle, though a stock price that is not a problem. >> holy cow. you own that stock, you can do a lot with that. >> $57 billion market value. >> the same-store numbers were the best as any large cap in the country. >> think when he came on the show and said europe was turning way in advance of any of these numbers we're getting now. >> august last year and he comes on august this year and europe

had turned. and the china growth. i know there's like a hundred city you're just starting to open starbucks in. it's been a fabulous stock. >> when we come back this morning, former congressman and gop presidential candidate ron paul. you'll never guess who his pick is to succeed ben bernanke. >> and take one more look at futures. we'll see what kind of holding pattern we're in. yesterday's dow range the narrowest since july 19th. a lot more "squawk on the street" from post 9 in a moment.

♪ walking down the street well, if you're sick and tired of the word "taper," you're going to hear it a little bit more. kelly evans here to talk about more what we can expect. >> i figured we'd give people the cliff notes verse. -- version. the federal reserve today will end its two-day meeting, which it began yesterday. we'll have a press conference from bernanke this afternoon. we only get those four times a year. it's because of that that people expect the fed would make a pretty significant announcement

today. it's going to go from -- it will taper about $10 billion. now, if you're wondering why, what brought to us this point, you can start with the may time frame, for example. that's when ben bernanke was talking about the need to potentially reduce purchases and said it could happen within a few meetings. a few meetings have now passed, the unemployment rate has now fallen and that goes back to the why. why would the fed start to taper these purchases? there are concerns and there's been research to support this view that perhaps the purchases aren't doing enough to support the economy and perhaps the costs are more than the benefits. there's been research from very federal reserve branches that perhaps the taper boosted growth only by a little bit here and

there. this is ultimately a pivot. the fed is trying to pivot from using quantitative easing purposes to perhaps using promises. and the promise amounts to, yes, we may be tinkering with the amount we're biography each month but we promise we're going to keep rates super low for a super long time. since the fed's been talking about this in may, markets have gone on a bit of a -- i don't know what you want to call it. they've basically been out there saying we care more about your actions than your talk. if you're not in the market buying, then that 10-year is going up to 3% from 10.6. >> we saw what happens when rates go from 4.8 to 4.6 even. >> mortgage rates? >> yes. >> i was with one of the biggest mortgage brokers last night in the city. 5%, bad number. >> absolutely. what kind of form does the tapering take? does the fed decide to do all of the tapering in the form of

treasuries or does it taper treasury bonds and mortgage bonds? plenty people say you can point to a more useful and helpful impact with regard to bringing down mortgage rates and improving liquidity in the mortgage market. >> what about this idea of reinvesting principal and interest, too? could they conceivably stop doing that as well and therefore it would be larger than it seems? >> exactly. when people repay their mortgages, buy a different house or whatever, the fed has been taking the amount it gets and rolling that back into additional purchases. if they're not doing that, that would be significant. >> rebounds from mortgage bankers. is that because they fear a taper coming or -- >> it's maybe a better sense that people are locking in an historical low rate and some

rebound has got to be likely at this point. >> you heard what blankfein said earlier this morning, that any taper more than $10 billion would move markets. >> yes. the fed is probably going to lower growth projections. you have all of these shifting promises. the extent that any of that matters, especially when the people on the fed are about to undergo a huge change is -- >> you're saying this is going to be huge. my view is it's not what think-the-sthiney say. >> depends on what you mean by huge. >> you're just at the cusp of a major worldwide recovery. bernanke did something right here. he waited worldwide to come back. this is the least important fed meeting in terms of global growth that i've seen. >> certainly the fact that even though we've had so much movement on the 10-year, the stock market is still at or near all-time highs. that would suggest to you the concern about what happens today is not that great. >> exactly right.

i know that's not -- that's kind of an avant garde view that it doesn't matter but, come on, we had rates almost double and what are we going to do? you think boeing is trading off of the fed? look at that stock. it's trading off the dreamliners. we are in a moment that we're trading off stocks. >> we hope it stays that way. >> when we come back, cramer is in your corner when it comes to making money. his "mad dash" is on deck. take a look at futures. gold right at 1,300, the 10-year at interesting levels and futures restrained as we await the fed decision this afternoon. back in a minute. the most free research reports,

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♪ ♪ james brown. pounding the table for adobe. >> about six minutes before the opening bell. time for that "mad dash." let's talk a little adobe. >> this is all about -- i'm warning people at home. headlines were all bad, they missed the number, they missed the revenue, missed the earnings. it's all about switching to a cloud-based system. anything cloud-based is still loved, loved, loved. you mentioned cloud, i mention buy. adobe's got a whole new sweetuif

products that are going to be by subscription. >> the run in the cloud continues. >> the cloud is great. it ends in the store but we're not there yet. we're cumulus. >> which is a radio company. let's move to biotech. >> these stocks, very controversial, william blair raised his price target. steeple downgrades at jim cramer on twitter, you see this raging battle about whether they're letting people in for a trial for a certain kind of cancer. this has more shots on goal in terms of orphan status and orphan status is lucrative. this group of people who are really suffering. goldman sachs says they like regeneron. when this stock was at five

bucks, no one wanted it. they had this macular degeneration disease shot in the eye. you shut shooot this in the hig as much as the other guy. how many times do you want to get shot in the eye? i would prefer to be shot fewer times rather than more. they also have an anti-cholesterol drug. a lot of people are allergic to statin drugs. they have one based on another kind of technology. regeneron may bes strongest stock in the book. i'm including tractor supply. >> opening bell right after this.

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bob will retire when he's 153, which would be fine if bob were a vampire. but he's not. ♪ he's an architect with two kids and a mortgage. luckily, he found someone who gave him a fresh perspective on his portfolio. and with some planning and effort, hopefully bob can retire at a more appropriate age. it's not rocket science. it's just common sense. from td ameritrade. you're watching cnbc "squawk on the street," live from the financial capital of the world. the opening bell in just about 40 seconds. already so much news has come in. these reviews for the iphone i would say almost uniformly positive. we have housing starts. the most single family starts in about six years. >> that's very bullish.

maybe that i react to that and say that's very good. california less than three-month invento inventory. >> in the meantime, there is the opening bell and a look at the s&p at the top of your screen, kicking off at 1704 last night. mexican airline volaris celebrating its ipo today. benefit focus celebrating its ipo today. seems like every day, jim, every day. >> volaris when i visit mexico, it's much cheaper than what i'm taking down there. we have a cloud-based benefits company. this is an exciting time. we're in excitement mode here. >> i can barely contain myself. >> we've been through fedex's numbers. >> having covered the bear down

graded cap, neutral, price target at 90, saying the rebound is rebalanced risk and reward. >> cat's made some miscues. i talked about adobe being right. the guy really slams joy. there's no joy in joy. i mean, they should be in the joy like detergent business when you read that note. they ought to quickly go to that procter product. >> they're in the joyless luck club. >> speaking of detergent. cat is the worst performer. the second worst is p & g. >> i think colgate is going to be gaining steam. speaking of mexico -- colgate owns mexico. you go down there and it's incredible. >> i know we're going to talk an awful lot about the fed today. something we have yet to mention on the program in the 31 minutes is the lack of any progress

whatsoever in washington on a continuing resolution. >> gees, yeah. >> the closer we get to a government shutdown, not to mention of course then also the debt ceiling. this is going to become more of an issue each day. i can't imagine we're not going to be talking about it as the lead unless something unexpected were to happy. >> the tea party more than ever, they want a shutdown apparently. you can't ever speak in unison about a group. in another 48 hours, after we're done with this fed, that's what we'll be talking about, are social security checks going to come out? i heard someone last night say i'm pulling back on my real estate deal because of the shutdown. >> so it's starting. >> the chatter is starting. >> that same pattern we did see not quite a year ago, leading into the end of 2012. >> weird, though. you have the club for growth and the tech cruises obviously shooting for the moon, trying to undermine obama care. but the journal op-ed page says knock it off, it's not going to

happen, there's no reason to walk us down this road again. >> no, there's not but these things -- i was comparing it last night -- i used kind of a tote m that i like, which is th movie "the gauntlet," clint eastwood, you have to go through this gauntlet to get to where you have to go. this is the first stage of the gauntlet, the fed. every day republicans no talk, grand bargain, no grand bargain. every time boehner gets a microphone, you're going to have to short the futures. >> i don't know what they can get out of the house of representatives at will get to the senate that will allow us to continue. >> and jack from queens said no negotiations. that's no way to start with negotiations is no negotiations. >> he said he's anxious and nervous yesterday, as opposed to tim geithner who was like it will never happen.

jack lewis -- >> we tend to be anxious and nervous when you come from queens. >> do we run squarcared? >> we don't run scared but we know danger lurks around the corner. i never know when carl icahn is going to come and knock the hell out of you. >> sherr wwin williams, merrill lynch, the usual suspect ps. >> what's the route 66 list? and key bank raises a price target. next thing you know, whirlpool, which has virtually doubled, is off to the races again. i am amazed they just can't stop -- this is the remodel cycle they're talking about. watch home depot.

fabulous. the cfo was on this morning. >> she's amazing. amazing woman. >> stop trading and listen to her. >> haven't covered general mills yet. >> i thought they did a good job. kellogg did a good job. generous mills i call it because of the dividend. one of the absolute great performers over time. there are very few companies you can buy and forget. ken has done a remarkable job there. my hat's off to him. >> earlier this hour you say where is samsung in response to apple? blackberry is in the news today. they're launching their new flagship device, up 2% here, though people have longer term concerns. >> malaysia, they own the market in malaysia. i don't want to own blackberry.

they're in permanent sell mode. i can turn to you and say what's up with blackberry? there's always something. >> yes. but i have no idea what it is. >> as opposed to, say, safeway. >> it was yesterday. we were right in pointing out an activist was likely in those shares. it ended up a request for a continued return to sales. we had another case where safeway beat them to the punch, perhaps stopping them from wanting to buy more stock because the stock ran ahead of them. yesterday safeway shares up 10%. i'm not sure where it ended up date up but it had been up as much as 10, following through the small gain. >> they have that blackhawk division, you can unlock the value there and sell the rest of it. >> 24 hours ago we were talking

about the microsoft buyback. dollar tree is $2 billion versus $40 billion but a nice pop today for dollar tree. >> i love my dollar tree. it's the best candy aisle in the world. those readers, glasses, incredible. you go to five below, everything is five times what it cost at dollar tree. ever notice that? >> i never have. >> you've never been to five below, have you? you want halloween stuff, five below is your place. fabulous halloween stuff. fabulous. >> all right. >> did you go shopping. you went to a store the other day. >> i did. i did. >> and dollar tree is very good. my dad and i love dollar tree. we go to one in south philly. very clean. >> pop's good with it, i'm good with it. >> shares of dish and disney, keep an eye on both. we're getting towards a deadline here, potentially another big fight about carriage. this time espn.

>> those big full-priced adds again? >> he may have a different tact than time warner cable but probably couldn't withstand, especially watching subs start to go in places like l.a. where people were able to opt with dish, as opposed to us in new york who are stuck with fios. >> you have to pry my cold dead hands from the tv clicker. >> we know where you'll be on thursday night. >> let's go to bob pisani. >> this is volaris, an ultra low price mexican airline. a little better than $12 it will probably open at. that was the low end of the range, $12 to $14. ultra low priced mexican airline.

it's all about the fed today. i'm not going to kid you. i've been calling around all morning asking people what they think. it's amazing, the consensus is $10 billion to $15 billion. i heard credit suisse had $20 billion. here's the story. why will they begin to taper today? there's three reasons. unemployment is gradually declining, not tapering would indicate a cautious outlook and mr. bernanke wants to begin tapering on his watch. so in the market is $10 to $15 billion. no tapering would raise markets. tapering $20 billion would likely drop the markets. i've asked some other people what would move rates other than the taper. here's the three most common ones. a change in the forward guidance that could lower the threshold from 6.5% to 6%. number two, they could change

when the taper process might end. or they talked about a 7% threshold. they've already indicated they might use. and, number three, they could turn around and say, listen, we've tapered $10 billion to $15 billion this time, we may not do anything the next time. that might remove expectations at its next meeting in october. i think that's the end of october. another thing is the 2016 new forecast. they'll introduce them now. that could be a market moving event as well. let's move on. we've seen the major indices to the down side today. you'll notice transports are up. that's largely because of federal express. they had a good earnings report. all this news about slower growth in the international market, but they very much seem to down play that and beat on the top and bottom line. fedex sitting at a six-year high. >> terrific report, bob. let's go to rick santelli, the cme group in chicago. >> thanks, jim.

on a day when adventures in financial baby-sitting is the big debate, when we talk $10 billion on the taper, the $85 billion we're doing is probably more like 100 billion considering hough some of the recent budget issues are moving in a positive fashion. basically a 10% cutback really not all that much. we're spending a lot of time talking about it. maybe the issue is the digital nature that the process has begun. but we'll know more of course as mr. bernanke plays the role of the baby-sitter. sooner or later i guess our economy will be given adult stat to us stand on its own two feet. the market is already looking that the a bit. look at the intra day of 10-year notes. now, if we look overseas to the bunds, they've already undertaken that significant psychological 2%. if you look at the gilts, it's taken over and hovering at their

psychological 3%. let's talk foreign exchange here. we could look at a one-year chart of the euro versus the dollar or we could flip it around and look at the exact mirror image of the dollar index because the dollar index for the most part is heavily euro. but if you want to look at a currency that is moving and a group that doesn't think stimulus is needed, we'll see if it's true or not, look at the pound versus the dollar. right now it is hovering near and challenging the highest levels versus the greenback for all of 2013. carl, back to you. >> thank you very much, rick santelli. any company going public would love to have a first year like trulia's, the web site soaring 185% since its wall street debut. ceo pete flint will visit us at post 9 as we approach the one-year anniversary of that ipo. "squawk on the street" is back in a moment. ♪ the house is a rockin

♪

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♪ just hold on, we're going home ♪ real estate web site trulia had its ipo one year ago this week. since then the shares of the company have soared up 185%, 195% just this year. i got to tell you, this is an amazing company. we've got at post 9, the co-founder and ceo of trulia, pete flint. welcome aboard. >> good morning. good to be here. >> i'm trying to figure out your company. you seem to be the primary lead generation company, not just a real estate company. how is that working for you? we've had it for about a month, right? >> so trulia went public about a year ago. at core business historically we focus on helping consumers. we continue to do that giving them information about real estate and providing marketing services to real estate agents. we closed an acquisition, market leader, a huge deal for us. they're the leading providers of software services to real estate

agents, helping them run their business with the tools to help them manage their leads, turn leads into closings. we think of this like the operating system for the real estate industry, the same way spend half their days in front of linked in, real estate agents spend half their day with market leaders and now we have the largest number of subscribers in the real estate industry. >> there was initial resistance from the real estate industry. this is you working in hand with them. >> so, for instance, helping provide leads and turn those into transactions. the real estate industry has been underserved by technology over the last several decades and their world is turning to mobile. we have the broadest set of tools to help them run their business and to turn their business into the 21st century

and really improve efficiency for them. >> this rise in rates since may, how has it impacted the business? >> rates have gone up a little bit. you look at historic lows where we are right now. we're at historic lows where we trade. it's not derailing the housing industry. refis, purchase values have come down slightly. the year over year growths we saw at the beginning of the year, they're not going to continue at the same extent. we're not going to see a derailing of the housing market because of these rate increases. >> why should i use trulia over zillow? i'm in your page right now, summit. i go to zillow, they claim they have a million more leads than you do, they have hidden

properties and foreclosures. >> we go way beyond data. we go way beyond the listing data. we have crime information, school information, commute information are giving consumers insight. secondly, we provide a personalized experience. we built the pandora or netflix of real estate, enabling consumers to say i like this home, i like that home, show me more like that. that's unique and that helps consumers gets the inside edge on making this very important decision. >> pete, how much of this is real estate porn, people just checking to see how much their house is worth? >> that is not us. we think about this as you're about to make the single biggest decision of your lives, financial decision of your lives. this is helping consumers with that decision. it's not about pure eyeballs, it's about helping consumers find the home of their dreams

and helping you connect to the agent to help them close that transaction. >> i asked about capital resources for the company. you did a follow-on offering and raised more money and a large acquisition. any other plans to have to raise money? >> we've had four consecutive quarters of positive adjusted ebidta. i remember this conversation a year ago, like you raised this money, what are you going to do with it? what are you going to spend the money on? >> clearly revenue last quarter up 77%. our revenues for last quarter plus the acquisition are greater than the entire company's revenue in the year before we went public. so one quarter greater. so we even bettered that money to really accelerate our growth and take advantage of the opportunity. >> is there enough room for you and zillow to co-exist? would this capital allocation

extend to perhaps making an offer for them? >> so, look, it's a $24 billion market. we think of the market opportunity as residential real estate. it's clearly on fire. you've heard that for several months right now. plus mortgage marketing. and mortgage marketiers want to be where the buyers are so they k come to trulia. and rental business is on a tremendous tear. so combining real estate, rentals and mortgages present as massive opportunity. you know, there's only going to be a couple of players but not much more. we're super excited about it. >> well, it has worked. a lot of skeptics initially. but these have been winners, both yours and zillow. >> thank you very much. >> good to see you. >> get a quick check on the applause you may have heard a moment ago, the mexican airline

volaris. you have flown these guys? >> no. i'd like a little competition because it cost as fortune to fly to mexico up. >> got that right. >> delta's gone through a lot of changes. >> here's what's coming up next on "squawk on the street." coming up, has this market left you with egg on your face? well, clean that mess up and listen to cramer and his six stocks in 60 seconds. it will keep you from cracking. "squawk on the street" will be right back.

let's get "six in 60" with jim. >> goldman, with the taper call, you wouldn't want to buy this stock. maybe that means taper small. >> this is a love stock. everyone thinks this is the greatest semiconductor company in history. they are related to apple. >> bullish on pan era. >> i was told panera is going to turn it around.

>> credit suisse on sprint. >> you want to go again dan hesse, you be my guest. >> on lulu. >> they're saying this is the big run. you mind if i see who is the o ceo? lululemon is one of those companies, netflix, tesla. i love the way i look in lulu, i want to buy the stock. my friend is so suspicious of the company where you are like the product and you buy the stock. me, i like to say i like to game the people who like the product and buy the stock. i'm a second derivative guy. they all love lulu, i will tell people, it's from the church of what's happening now. i am reverend jim buy. >> brings back some memories. >> what's coming up on "mad" tonight? >> retail, retail, retail.

don wood, largest retail shopping claim. fabulous distribution, fabulous guy. >> we'll see you tonight, 6:00 and 11:00 eastern time. >> ron paul known for being fed up with the federal reserve. you'll want to hear who he wants to succeed ben bernanke as fed chairman. and apple's new iphones come to post 9. reviews that are mostly glowing when "squawk on the street" comes back.

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posts and stories into real-time business insights that help nascar win with our fans. ♪ welcome back to "squawk on the street." our road map begins with the fed decision. in just a few hours we will find out what ben bernanke and the fed have to say about tapering. find out how you should be playing the markets ahead of that decision. >> plus former congressman ron paul will weigh in on the fed and what a taper or lack of taper will mean for the economy.

>> and we'll get a firsthand look at the iphone models, the 5s and 5c a little later on. >> we're four hours away from the fed's decision on how much to reduce the cash the fomc effectively force feeds into the economy each month. here's how goldman sachs ceo lloyd blankfein described market positioning earlier on "squawk." >> i expect i think at this point there has to be some cut. i think if it's a number like down $10 billion, the market will be very, very happy. if it's more than that, the market will be very sad. there's a big tail wind from the fed. people think there is the first moment of withdrawal of abnormal support for the market. but it's not a big deal. >> steve liesman is in washington with the latest.

>> reporter: the market is expecting the announcement of a taper. that's likely going to make for a more complicated statement with new language. here's a guide and how to understand it. we're going to tell you whether the fed tapered and how tapered it was. and then what's the mix of assets to be tapered? will it be all treasury, some mortgage-backed securities thrown in? is there any guidance on how long the federal reserve will maintain the new tapered level and does it play around with the unemployment threshold for raising rates, which is now at 6.5%. looking for a taper of $14.5 billion on average, but a median there of $10 billion. the mix, 72% treasury, 28% mortgage-backed securities and the idea is they'll maintain

that for 10 1/2 months. finally, here's the fed's guidance when it comes to quantitative easing. the committee will continue its purchases until the outlook for the labor market has improved substantially and they'll maintain a highly accommodative policy until after the asset purchase plan ends and economic recovery strengthens. the question is whether the fed provides offset in the future. another way to think about it my be this, what if it doesn't taper? what does it actually gain? all that would do is push ahead market expectations for the next meeting. so i don't think the fed gains very much in terms of lower rates or even higher stock market in the fed holds off on the tapering. carl? >> steve, not to ask you to tip your hand but when you're called on in the news conference, where are you going to go? >> it always depends what order i'm in. if i'm the first guy, i might

ask about ben bernanke's future. ultimately i see my obligation as getting policy explained for the market as quickly as possible. so if the policy is unclear, the taper policy or the guidance is unclear, i feel i'd have to go there initially. >> we'll, watching of course. steve liesman in washington for us on this fed day. >> let's get to apple. people getting their first look at the new iphones and new operating system today. most drastic change to the operating system since the launch six years ago. i assume you've read the same reviews that we're reading here, jon. >> i have. largely pretty darn positive. apple has made these look pretty easy. we have to consider the scale here. apple shipped almost 700 million ios devices, most capable pulling down ios 7. take a look at the apple chart. it looks like the stock is

trying to claw back some of the ground it lost. a smooth ios 7 launch would help. the color scheme in ios 7 matches the 5c, features with the new camera work better with the camera and speed quality work better with the 7. apple has ditched the graphic treatment where there was a leather grain, a torn paper looking calendar, lined yellow paper and note pad, made it all look sleeker. this is hardware design guru getting a look at the software and putting his stamp on that. it's a contrast to google's android ios but a large majority of the people are using old versions and with apple most people upgrade to the ios. the update starts to be

available around 1:00 p.m. eastern time. also busy today, mobile developers, like pandora and mobile note who have readied new versions of their app to look more compatible with ios 7, this is a big day along with iphone launches and holiday says, where they expect to see a lot of people checking them out who might not ordinarily. kelly? >> thank you very much. fedex trading higher after first quarter results beat estimates. the company remaining confident in its full-year outlook despite what it calls tepid economic growth and taking down its projections. benjamin harper is a senior analyst who has a buy and also a $116 price target. guys, good morning. >> good morning. >> donald, first to you. people often focus on the two major segments here for fedex. it's got its express and ground

segments. express is a much bigger deal for the company's top line. revenue was down but operating profit was up 14% year on year. is that sustainable? >> it is in the short to intermediate term. they're making great progress on controlling costs, bringing cost down. weep say 50 basis points improvement in operating margin on a year-over-year basis in a $28 billion business,s that a big number. we saw only 45% of those accepting the early retirement package, attrition package have left. there's still 55% more to go there. we've seen a good number of the planes retired so we're seeing lower labor costs for pilots. there's still plenty of progress to be made. >> i guess what i mean is if this is extremely important how the company does in the next couple of quarters, is it going to be increase profit in this division by that much going forward and if not, is that going to be a head wind? >> i think it is because of all the things that are happening. we're seeing resumption of

growth not on in asia but also even in europe. we're seeing growth in europe for the first time in over two years, some resumption of growth there. you see worldwide air freight volumes start to recover and on top of a reduced cost base, i think there's still plenty of runway to speak. >> benjamin, do you think what donald is talking about there, improvement in the use of global express division, will help move some of the customers back away from that cleaner ground option and towards that express option? >> well, i think it can at least stabilize the tradedown from premium price products into lower priced deferred products, whether it's in the express network or from the express network into the ground network. i think over the past two quarters we've seen stabilization in fundamentals and air freight volumes. that's the first step to execute

the self-help component they're talking about. they reiterated that long-term $1.6 billion target within express and the second derivative is turning in both of those metrics and sets up a very favorable outlook for the shares. >> it's interesting, benjamin. you have a price target of $116, which is where we are at the moment. donald's is at 110, which is slightly lower. aren't you disappointed they're saying the bulk of those savings aren't going to come for two years. >> it certainly has a tail to it and we'd like to see that materialize sooner rather than later. i think what we need to acknowledge is the air freight environment has been exceptionally challenging over the past three years. and it's starting to stabilize. and they're getting out in front of this tradedown and out in front of the issues. it would be nice to have more of those cost savings materialize

earlier but the bottom line is if express margins continue to improve, they have over the past two quarters, if they continue to improve, that sets up a very strong back drop for the stock. >> you have a battleship here. it is a multi-billion dollar company. it takes a little time to turn a battleship. to expect them to come back that quickly is a little unrealistic. >> those in the industry would have wanted to see the ship moved a lot earlier. >> that is fair. but the ship is turning. >> thank you both for your perspective this morning. >> dow in a narrow rang today. let's get a market flash. >> dollar tree doesn't want to be left out of the stock buyback party. it's not nearly the size of microsoft. still the discount retailer announced it authorized a $2

billion buyback to replace a prior program and adopting a $1 billion accelerated buyback problem. the stock is up. back to you. >> speaking of things people will like, coming next on the program, former texas congressman ron paul will join us live with his take on the fed and what a taper will mean for the future of the economy. plus the reviews are in. find out what critics are now saying about the new models of the iphone and what it means for apple stock. "squawk on the street" will be right back.

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it is no secret that former texas congressman and presidential candidate ron paul has had some issues with the federal reserve. not surprisingly, paul has his own choice for his next chair of the fed. it isn't janet yellen. his pick is -- well, we'll let him tell you. former congressman ron paul joins us. good to you have back. >> thank you. nice to be with you. >> all these names out there, kohn, ferguson, geithner, summers, who would you take? >> none of the above because i don't think it makes any

difference. they all endorse the principle of manipulating interest rate and believing that they can decide how much money supply there should be and when to raise rates and when to lower it. you can't expect anything new or different than that. one individual might manage things slightly differently but overall it will be the same thing. it's still the monetary system we have to deal with, not the particular manager that's going to be involved. >> right. obviously you wrote end the fed a few years ago, the answer not too terribly surprising coming from you. but working in political contexts like we have, congressman, who do you think is the most likely nominee right now? >> well, it looks like it's yellen. i mean, but it's still early. they do a lot of manipulating, pushing back and forth. last week it looked like it was summers and all of a sudden it shifts. who know what is will happen the next month or two. right now i think the consensus is she would be nominated.

>> your son said his pick would be hayek or friedman, which is going to be a tough get. >> well, neither one of them like the fed. freeman wanted to turn it over to a computer, which that's not exactly my position. but it would probably be better than a few individuals and one in particular behind the scenes in secret pretending they no what interest rates should be. that's to me the most amazing thing that people accept this. the most important bit of piece of information for investors and for savers is interest rates and yet we give up on that and decide it should be cold by one person. it's positively amazing that the economy tolerates it. >> the unemployment rate has come down. that's one reason we've seen the holdings of gold take a bit hit, holdings your portfolio has.

has your portfolio take a hit? >> if you say it took a hit, well, at $35 an ounce and it doesn't seem so bad, especially if you do it for insurance and long term. we do know that governments will continue to spend, the deficit problem hasn't been solved. i'll challenge you on some of the employment statistics. they're not quite as rosie as some people believe. i mean, we're in big trouble and i challenge people on the inflation factor, too. this article today in the "times" says a woman is working two jobs and lives in a shelter. she can't even get a house because her cost of living is too high. a lot of inflation, a lot of unemployment. to say gold went down in the last year, that doesn't tell you a whole lot. you got to look at the whole

long term and basics. the markets deal with minute to minute and it can change overnight or within minutes it can change. who know what is the next one will be. i think most people who study free market economics knows that this is very, very fragile, the at statistics don't bare out that we have no inflation. so i think people should be more cautious than overly confident. >> congressman, in the middle of all that fragility, as you describe it, in two weeks every federal agency from the pentagon to the fbi is due to shut down, unless there is a deal by september 30 on the federal budget and then we have the debt ceiling argument. speak are boehner thought he could get that through without much fuss until yesterday when 40 conservatives within your party rebuild at a strategy meeting and now potentially we have a big problem. if you were speaker boehner, what would you do? >> i would insist that people

cut back. the choice is not so much inflate and spend and borrow and run up the deficits and continue on this path that we are because the alternative is detroit. you know, there's nothing that says that many, many cities, towns and states can't face a detroit. it's hard to talk somebody out of their addiction and say wean yourself off. it's not going to happen. i would always make the case that continuing the addiction of spending and deficits, printing money, manipulating the economy is much, much worse than taking your medicine, which would mean that you got to quit and you just can't wean it off. so i would say you ought to face the consequences. but that won't happen unless people decide what kind of government they want. if they want government where we have a military that police the

world and we have an endless welfare state, you can't do that. that's why nobody should expect anything to come of this other than stalemate. that's what's going to happen. >> i think people understand that, congressman, though you know as well as anyone that this round of negotiations seems to be tied at least from the club for growth and ted cruz to the defunding of obama care. would you be willing, if you were still in office, to follow them down that road? >> yes, i would think that you have to do what is necessary. and if you continue the process, you know, it just makes things worse. it delays the inevitable. so, yes, it is dangerous. i mean, it's going to be difficult. but if we don't do it, the consequences are so, so much greater. and besides, they're not going to do that. the most that happened last time is they got rid of unessential workers for a couple days and nobody noticed it, you know.

so they don't have to do this. they could do essential services, the nonessential people could go home and nobody would notice. and it's just scare tactics. it's just like foreign policy. scare everybody into it. up got to vote for the war. that's what they do in economics like when we had the bust five years ago, terrorize the people that you have to spend and do this and dig a bigger hole for ourselves. we have to quit digging the hole for ourselves because we'll get buried in it very soon. >> congressman, thanks for your time today. ron paul in new york. >> tesla is the latest to announce it's entering the race to build a self-driving car and says it can do it in three years. google is already making strides. is this really good news, though? plenty more when we come back.

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imagine a future with cars safely driving at 100 miles an hour on the highway just feet away from each other but no one has their hands on the steering wheel? tesla says it can make it happen. melissa lee gets behind the wheel at one prototype developed at carnegie mellon university that drives itself. >> this car has more than a dozen sensors and radar that measure distance and speed and cameras that can identify pedestrians and cyclists. as these feed data to the car's four on board computers, they provide a 360 degree view of its surroundings and the ability to navigate around them. >> my reaction is i want to grab

the seariteering wheel. you're just not used to seeing the steering wheel move by itself. >> very few people have. melissa lee joins us. this is amazing stuff. what was it like? >> it was mind blowing. you push a button literally. while the car is moving, you let go, move your feet away from the pedals and it goes. it is accelerating, decelerating and signaling to turn. we took the car on the roads where tesla has permission to be on the road and you see the car reacting. it can differentiate between people and animals and cyclists. >> simon? >> i was going to say does it run one over and not the other? this is an animal --

>> i guess that depends on how it's programmed. no, just kidding. it knows to stop, simon. >> i have to say the insurance element of this is going to be the main hurdle. talk about good timing. you guys have the announcement from tesla that they're going to do this in a couple of years. does that change for insured, and who is at fault? what happens when driverless car hits pedestrian? for instance, if you're using a device to monitor your health and that information is being sent to a doctor, can insurance companies use that information to jack up your premiums? we don't know the answer to that question either. the advances are so tremendous. they're working on sensors that will give you a notice 48 hours before you have a heart attack. simon hobbs, check in with your doctor, you're at risk of a heart attack.

imagine how many lives can be saved. >> there's a fundamental difference between the life of a car that can malfunction and a human body that doesn't tend to malfunction unless you're dead. it's a huge technological gap to bridge. >> if a car it could be potentially detrimental but most motor vehicle accidents are caused by human error. if you can remove some of that, it can save lives. >> you must feel we're at the beginning of the golden age. >> new industrial revolution. >> rise of the machines" this evening at 9 p.m. eastern. >> coming up at post 9, we'll give you the first look at the new iphone. that's after the break.

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welcome back to "squawk on the street." a big surprise here for the oil market as oil supplies in the past week decline by 4.4 million barrels, nearly three times the decline that analysts were expected. looks like supplies may be at the lowest level of the year. we are looking at bid in the oil market as a result with u.s. oil prices up about 62 cents, above $106 a barrel. the energy department also reported that gasoline supplies

in the last week fell by 1.6 million barrels. gasoline supplies were down by 1.6 million barrels and also distillate fuel supplies down by 1 million barrels. they were expected an increase. many waiting for the fmoc decision and tapering. >> sharon, thank you very much for that. breaking news out of washington this morning. eamon javers with more on this potential government shutdown. >> reporter: all eyes in washington are on the possibility of a government shutdown at the end of the month when funding runs out for the government. will they or will they not pass a continuing resolution, or c.r. to continue the funding.

here's the speaker a few minutes ago. >> this week the house will pass a c.r. that locks the sequester of savings in and defunds obama care. the president has signed seven bills over the last two and a half years to make changes to obama care and i sincerely hope our friends in the senate have plans to make this an eighth time. >> now, the reason why that moves us rhetorically closer to a government shutdown is that the president has said he will not sign any continuing resolution that has anything about defunding obama care, which is one of his signature pieces of legislation in that bill. also, it's not very popular over on the senate side. so they are not moving forward with anything like that on the senate side. if the house does this, it may be an opening gam bit to what it

will be and with that it moves us closer to a government shutdown. >> let's go over to david faber. >> since the acquisition of vodaphone will be down as one of the largest in history. jpmorgan was an underwriting of the deal. but will more deals follow as well? joining me at post 9 is jpmorgan's co-head of mergers and acquisitions. jim, good to have you. >> nice to be here. >> we talk about what the future is going to look like for m&a and many of this many have been, well, let's put it less than optimistic. where are you? >> i think if you look at corporate america today, over the last 12 to 18 months companies essentially had a free pass. as long as you announced a return of capital plan with

excess cash building, dividend plan, you essentially didn't have to talk about revenue growth. your stock is probably higher today than it was a year ago. that's changing. if you look at '14, there's an expectation that companies are going to grow. m&a is one way to grow. they can do it internally. now it's time to create growth externally. our expectation is an uptick as we feel that prove and move into next year. >> that pressure for revenue growth is always one of the drivers for m&a but we could have said that during the last year and year prior. incredibly generous debt markets for years now. it still seems as though we're at levels that we might not have expected, low levels, when this year began. >> that's right. it's misleading on the statistics. you may say north american m&a is up 27% on a dollar volume basis year over year but the

actual number of deals over 250 million is down 5%. it has been a sluggish, side ways m&a market. but there hasn't been a penalty for waiting. >> so why the penalty now? >> i now have a multiple on a stock price that unless i have something pretty interesting to talk to shareholders about in 2014 as i move lithrough the en of the calendar year, boards and shareholders want the stock price different higher, it's hard to do that in a slow, organic growth environment. you need a catalyst. m m&a is a great catalyst. in these debt markets, many companies are find they go can check all those boxes and deals will result. >> from the seller's side, there have been objections in the past thinking, well, we're just going to get that kind of appreciation in the stock market right now and in terms of what you're going to give us in any premium. >> i think that was a great theme in 2010 and 2011.

why sell now, we're at the bottom, there's up side ahead. many companies now are probably at a 52-week high if to the an all-time high. if you're a board of director, you're looking out into the future, you probably don't have excitement from a revenue growth point of view. you're looking at your stock price saying what's the next leg up for us? if someone comes along and offer as 20%, 30%, 40% premium, you compare that as your status plan and as a board -- >> we've seen a couple of smaller deals this week, whether it's the boise deal. >> keta metal from allegheny. interesting from the buyer ears point of view, they love the end market, aerospace and energy, highly synergistic. it fits as a growth element for them. go to the sell side, allegheny. hard look at their portfolio. do we need to be in certain businesses?

you don't need to grow through acquisitions. you can grow your company by shrinking. a lot of companies are looking at their portfolio saying maybe i can get out of things that aren't core and what's left over is a more interesting growth story for shareholders to support a higher multiple and higher stock price. >> as we head into next year given we're almost already in the fourth quarter and your theme becomes reality, where should our audience focus if they want to focus on a particular industry? are we going to see more cross border? >> we'll see cross border. technology, energy, health care have been consistent m&a markets and will continue to be. a lot of the cyclical industries are coming back. just the deals this week, the bou boise cascade, boise ink deal, huntsman yesterday had a deal. the cyclical, industrial-type companies are coming out of a cycle looking to put money to work. i think cross border is another

huge theme. the globalization of m&a continues. the flow of funds, outbound m&a versus inbound. more into asia pacific and china. a lot of companies have shied away from europe as an acquirer. i think you'll see more inbound m&a into europe and cross border is probably a quarter of the market today. it will move to a third over time. >> a positive look at the future of m&a. would i expect that but i've been surprised this year by how few of the guys in that industry are willing to engage in that. chris ventresca. thank you. >> coming up, a new look at the version of the new iphones. we'll have those live on set when we come back.

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welcome back to "squawk on the street." shares of cracker barrel are taking a hit today. the restaurant owner reported it beat estimates. it reflects higher commodity costs, expenses related to training and management meetings. those shares right near session lows today. >> thank you very much. >> from this afternoon, apple customers will be able to upgrade the operating systems in most iphones and ipads. along with the release of the operating system ios 7, we get to see the new 5 s and 5c. scott has both phones with him. what stands out to you, the

sensor sensor? >> i think the sensor because it's the new tech. they've built it into the home button. it's one press and you're basically in your phone. >> can you hold it up a little bit to that camera and show us exactly how it works? >> if you want to log in, you just do that and then you're on your phone. >> you would press that bulleton anyway and it would click. now it's reading your fingerprint. >> you don't even have to sweep to open. >> we have that technology at my gym and it quite often gets us wrong. is that secure from your point of view? >> i used it over the weekend with a variety of fingers, different people, i used my toe, which people get disturbed by, i wiped it down afterwards. it really does work. >> lock it for a second and let me see if i can log in. i would hold my thumb over the sensor. >> click once. don't hold it too long or it

brings up siri. just one click. try it once. >> click once. >> and then gently just -- and then if you want to try again, you just gently hold your finger over the button. >> doesn't matter which -- >> try again. >> you can log in five different fingers that use the same account. you could have your wife be able to log in, you could have a kid do it as well. it always defaults to the pass code if you can't log in. it's not meant to be a replacement. it's meant to be an easier addition. if you do too many incorrect log-ins, you also have to remember your pass code. it stores your itune pass code but nothing else. it's all stored on the chip, not in the cloud. >> if i look back at the other developments, like the ipad or when siri first came out, it was underplayed by people.

they didn't understand how these things were going to catch on and the iphone sold a lot more as a result of that. the initial reviews and reactions were perhaps too negative. is there something in that you think people will really run with, apart from that fingerprint technology? >> i think the camera technology is important. the role they are playing is camera replacements. they're small but very important improvements relatively speaking. >> what does it do? >> it shoots faster photos, slow motion. those are oriented toward capturing the moment faster. we're at this point where you want to get something and share it. >> so many manufacturers have these features already. >> they're competing. that's the thing. i think that's the problem here. a lot of the stuff they're building towards, the fast are ch -- faster chip, the promise of 64 bit computer -- >> hard to appreciate. >> very hard to appreciate. >> and it may wear with future wearable tech.

that sort of interest is building block. it's almost like this is the first step you the user will experience a better, faster version -- >> does it get me to go out and replace my 5 with that? >> no, i don't think it does. it brings up the point they're bring out the 5c. >> let's listen to the president this morning. >> thanks for the introduction. thanks to dave and andrew and john and all the men and women of the business roundtable. i've had a chance to not only present before this body before but many of you have been doing wonderful work with the administration on a whole range of issues. the point that jim just made about the commitment that some of the companies here have made in hiring and promoting our returning veterans is extraordinary. and so we're very, very grateful for that. last time i was here in december i told up once the mics were

working that i'm hugely invested in your success because this room represents not only an enormous amount of economic output but also represents the hopes and dreams of people who are working very hard trying to make a living, small businesses who are supplying large companies like yours. when you succeed, when you're doing well, when you're competitive at a global scale, then america can do well also. and so we want to be a consistent partner with you on a whole range of issues and we have. if you think about where we were five years ago, obviously we're marking the fifth anniversary of the collapse of lehmhmalehman's triggered the worst economic crisis that we've seen in our

lifetime. i think it's fair to say we've come a long way. at that point the auto industry was flatlining. you had the entire financial sector locked up. a number of banks were in deep trouble. and most acutely, for ordinary families all across this country, they were losing jobs, losing homes, losing their life savings and there was a genuine fear across the board that we might not be able to pull our way out of it. and we have, thanks to the grit and resilience of the american company and to work done by your companies, we're in a much stronger position than we were then and we've creating more than 7.5 million jobs in the private sector. some of them your companies. we've seen quarters of consecutive growth that are

still too slow, not as fast as we'd like but relative to other developed countries around the world we've actually fared a lot better. the housing market has begun to recover. exports are at record highs. we are producing more producing than we have ever before, and although in a world energy market, you know, for us to say we're entirely energy independent is a little bit of a misnomer. what's absolutely true is that the gee geopolitics of energy h shifted and that's made us a much more attractive place to invest. the deficits have been coming down at the fastest rate since world war ii. the deficit's been cut in half since i came into office. healthcare costs, which were -- and continue to be -- a major source of concern are increasing at the slowest rate in 50 years.

and for many of you in terms of your bottom lines, employer-based healthcare plans have gone up at about a third of what they were going up when i first took office. and so, there's a lot of bright spots in the economy. a lot of progress has been made, and a lot of good news to report. but i think what we all recognize is we're not where we need to be yet. we've still got a lot of work to do. and we know what it is that we need to do. we know that if we implement immigration reform that that can add potentially $1 trillion to our economy, and that we will continue to track the best and brightest talent around the world. we know we can do even more when it comes to exports, which is why i'm out there negotiating the trans-pacific partnership and now trans-atlantic trade partnership that will allow us

to create a high-standard, enforceable, meaningful trade agreement with essentially two-thirds of the world markets, which is going to be incredibly powerful for american companies who up until this point have often been locked out of those markets. we know that we've still got to make a lot of progress when it comes to our education system, and i want to thank the brt, because you've worked with us on issues like creating a common cause -- a common core, that ensures every young person in america has the opportunity to get prepared for the kinds of jobs that are going to exist in the 21st century, and i'm going to be talking to all of you a lot to work with us in making college much more affordable, because just as we've had to take a hard look at what we can do to start bringing down healthcare costs, we've also got to start taking a hard look at what we're going to do to bring down college costs. we now have over $1 trillion worth of student loan debt that

is hampering the economy, preventing young people from buying homes, starting families, and spending money, buying your products. the good news is that every one of the challenges that we confront, every one of the barriers -- whether it's education, immigration, infrastructure -- that prevent us being as competitive as we could be, they're all solvable. we have good ideas. there's actually pretty good consensus in terms of how we might move forward. the problem is right now that this town, washington, is locked up, and we are not seeing the kind of progress that we should on these issues. so immigration is the most obvious example. we have bipartisan agreement. we got a bill passed out of the

senate. it's sitting there in the house, and if speaker boehner called that bill today, it would pass. we've got a majority of the house of representatives that's prepared to vote for it. and we could transform our immigration system in a way that would be really good for your companies and really good for our economy. the reason it's not happening is because there's a small faction that insists that our tradition as a nation of laws but also a nation of immigrants somehow is un-american, and they oppose it. and that duplicates itself on a whole range of these issues. and now, in the next several weeks, it's going to manifest itself in what is going to be probably the most critical debate about our economy over the next several months, and that is what we do about our budget. so let me just speak very briefly to that issue. as i said before, our deficits are coming down very fast.

in fact, the imf and other international organizations that had cautioned us previously about our deficits are actually now concerned that we're bringing our deficits down too fast. that's the assessment of the economists. on the current trajectory that we're on, and if we were to pass the budget that i put forward, our deficits would continue to go down, and we would have a deficit to gdp ratio below 3%, which is typically the standard at which it's sustainable. now, in order for us to do that, we've got to do a couple of things. number one, we've got to continue to be tight-fisted when it comes to spending on things we don't need. we've got to continue to streamline government. we've got to continue to cut out waste. and there is waste to be had, and there are programs that don't work, or used to work and are now obsolete, and we should

eliminate them. we've identified a whole range of programs that we want to eliminate and programs that we'd like to consolidate. but what is also true is that if we're going to be honest about our debt and our deficits, our real problem is the long term not the short term. we're not overspending on education. we're not overspending on research and development. we're not overspending on helping the disabled. those things have all been flat for a long time, or are coming down. our challenge has to do with our long-term entitlement programs, and mostly have to do with our healthcare costs. so the fact that the affordable care act has been put into place and that many of you are taking steps within your own companies, we're seeing healthcare costs come down, we're still going to have to do a little bit more, because the population's aging and demographics means that people are going to be using more healthcare costs and the government's going to have to grapple with that. that's a long-term challenge.

the budget i put forward actually proposes some smart fixes on medicare, some smart fixes on medicaid and creates a sustainable path where we continue to invest in the things we need to grow -- education, infrastructure, research and development. deals with our long-term structural deficits that arise out of entitlements, and put us in a strong position for decades to come. the problem we have right now is that, again, that same faction in congress is no longer talking about debt and deficits when it comes to resolving the budget. initially, this was an argument about how much we spend on discretionary spending, how much do we spend on defense. you could sit down across the table, try to negotiate some numbers. that's no longer the argument.

what we now have is an ideological fight that's been mounted in the house of representatives that says, "we're not going to pass a budget, and we will threaten a government shutdown, unless we repeal the affordable care act." we have not seen this in the past, that a budget is contingent on us eliminating a program that was voted on, passed by boat chairmth chamber congress, ruled constitutional by the supreme court, is two weeks from being fully implemented and that helps 30 million people finally get healthcare coverage. we've never seen that become the issue around the budget battle. and so, that's a, right now, the primary roadblock to resolving the budget. what's worse, that same faction

has said if we can't succeed in shutting the government down and leveraging that to eliminate the affordable care act, we may be prepared to let the government default on our debt. now, this debt ceiling -- i just want to remind people in case you haven't been keeping up. raising the debt ceiling, which has been done over 100 times does not increase our debt. it does not somehow promote proficacy. all it does is it says you have to pay the bills you racked up, congress. it's a basic function of making sure the full faith and credit of the united states is preserved. and i've heard people say, well, in the past, there've been negotiations around raising the debt ceiling. it's always a tough vote, because the average person

thinks raising the debt ceiling must mean that we're running up our debt. so people don't like to vote on it, and typically, there's some gamesmanship in terms of making the president's party shoulder the burden of raising the -- taking the vote. and then there's some political campaign later that smacks them around for saying, you know, joe smith voted to raise the debt ceiling by $2 trillion, and it sounds terrible. and it's a fun talking point for politics, but it always gets done. and if there is -- if there is a budget package that includes the debt ceiling vote, it's not the debt ceiling that is driving the negotiations, it's just it's stuck into the budget negotiations, because if you're going to take a bunch of tough votes anyway, you might as well as go ahead and stick that in there. you have never seen in the history of the united states the debt ceiling or the threat of not raising the debt ceiling being used to extort a president

or a governing party and trying to force issues that have nothing to do with the budget and have nothing to do with the debt. so here's where we are, and i think this is the bottom line, and i want to make sure everybody's clear here. i have presented a budget that deals with -- continues to deal with our deficit effectively. i am prepared to work with democrats and republicans to deal with our long-term entitlement issues. and i am prepared to look at priorities that the republicans think we should be promoting and priorities they think we should be -- we shouldn't be promoting. so i'm happy to negotiate with them around the budget, just as i've done in the past. what i will not do is to create a habit, a pattern, whereby the

full faith and credit of the united states ends up being a bargaining chip to set policy. it's irresponsible. the last time we did this in 2011, we had negative growth at a time when the recovery was just trying to take off. and it would fundamentally change how american government functions. and if you doubt that, just flip the script for a second and imagine a situation in which a democratic speaker said to a republican president, i'm not going to increase the debt ceiling unless you increase corporate taxes by 20%. and if you don't do it, we'll default on the debt and cause a worldwide financial crisis. even though that democratic speaker didn't have the votes to force through that particular piece of legislation, they would simply say, "we will blow the whole thing up unless you do what i want."

that can't be a recipe for governing. and i have responsibilities at this point not just to the current generation but to future generations. and we're not going to set up a situation where the full faith and credit of the united states is put on the table every year or every year and a half and we go through some sort of terrifying financial brinksmanship because of some ideological arguments that people are having about some particular issue of the day. we're not going to do that. so the good news is that we can raise the debt ceiling tomorrow just by a simple vote in each chamber and set that aside. and then we can have a serious argument about the budget. and there are significant differences still between republicans and democrats when it comes to the budget.

but it is going to be important for all of you, i think, over the next several weeks to understand what's at stake and to make sure that you are using your influence in whatever way you can to get back to what used to be called regular order around here. doing things in a way that reflect the genuine messy negotiations of democracy, but do not promise apocalypse every three months. and i think this is the time for us to say once and for all that we can't afford these kinds of plays. i know the american people are tired of it. i'm tired of it, and i suspect you're tired of it, too, because it's hard to plan your businesses when these kinds of things are looming at any given moment. so with that, let me stop, and

let me open it up for questions. >> that is the president speaking to the business roundtable in washington, d.c., a group with whom he's been at odds in the past. but in this case, asking for some help and support in averting this potential government shutdown with congress, saying that the debt ceiling is, in his words, being used to extort the presidency, being used to set policy, a precedent that he is not going to allow, he says. eamon is in washington. eamon, this story is crystallizing pretty quickly here. >> reporter: you're right, carl. you're right, his relationship with business has been fraught since pretty much day one of the obama presidency. here he is going to the business roundtable, because he needs their help. speaker boehner, who is talking just a little bit earlier in the last hour, said that he acknowledged there are divisions within his own caucus on how to proceed on this continuing resolution. what the president is hoping to

do here is to take advantage of some of those divisions by pressing business and wall street and fiscally minded conservatives to take action here, to persuade the tea party group, the faction he was talking about there, not to take this drastic measure of linking obamacare and the continuing resolution. he's hoping to take advantage of some splits that he sees here in the republican party. whether that will work or not, you know, we'll have to see. >> eamon, thanks very much. eamon, by the way, do you have any idea why the question portion of that wasn't carried? >> i think it's pretty standard, right? >> reporter: yeah, we've seen that before, where some of the outside groups will cut out the q&a. it's extremely frustrating for reporters who obviously want to cover it, want to take it live. but the white house likes to control these events, and sometimes the directive comes from the outside group, as well. they don't want the q&a portion out there for the whole world to see either. so we'll see whether the pool reporters are able to get any insight into what questions were asked and what the answers were. >> all right, eamon jabbers out of washington.

thank you very much, this morning. the dow and s&p 500 today both lower as wall street waits on the fed this afternoon. the question, of course, is just how much the fed will decide to taper its bond-buying program, and how markets will react. joining us now is geno, head of regulatory affairs at cl coast, and former vice president at the new york fed, and also barry knapp is with us, head of new york portfolio strategies at barclays. guys, good morning. >> good morning. >> barry, first to you. what do you think accounts for markets weakening into the fed's decision? >> well, we think that the period of adjustment to fed policy normalization, the inflection point, is not fully reflected in share prices, notwithstanding steve liesman's survey the other day where most investors actually thought it was. even in 2004 when the fed was engaged in the same kind of transprar transparency policies they were back then, the bond market had made its adjustment prior to the actual first rate hike, but the

stock market sold off 7.5% over the next six weeks. so we think that if you -- if you combine that history of business cycle analysis with risks like another budget showdown and the fact that unlike the last four years the fed's actually weakening the portfolio balance channel, not strengthening it, we think the market's vulnerable to typical fall or autumn volatility. >> okay, dino, how do you think the fed is analyzing quantitative easing here? is this a policy change because they're concerned it's no longer effective? >> well, the economy has never really responded, you know, as powerfully as they thought it would, right? they've had pretty strong forecasts for the following year for four years running now. and the economy's always come in weaker. so the amount of actual delivery that you've gotten out of qe has been disappointing. what has happened is the markets have responded. you know, and maybe there's been some effect through the wealth channel effect. you know, but right now they are

in an awkward position where they are talking about tapering at a time when forecasts are actually coming down and the inflation outlook is actually a little well below their target. it's a tricky messaging challenge here. >> barry, i hate to pivot here. we are coming out of the business roundtable speech by the president. the market is in an narrow range but close to the lows. are you buckling up for the next two to four weeks? >> yeah, no, i think that there's some real risk around the budgetary situation. to be sure, the broad metrics have improved decidedly. government spending has dropped as a percentage of gdp by 4%, almost as big as it did during the clinton era. so the probability of a whole sovereign debt crisis is not all that great. and just to contradict the president a little bit, this idea we had negative growth after the 2011 event, it's not quite accurate. consumer spending, in particular, accelerated in the back half of '11. but that notwithstanding, this

risk is a significant one, and at the end of the day, we do think there will be some give on both sides. the possibility of some additional delays in affordable care. we do think it could be an outcome, and in exchange for some rollback of sequestration. but between now and then, you know, we're into this fall volatility season with the fed weakening the portfolio balance channels, as dino pointed out, when the debt numbers are going the wrong side, points to a downside in the market vulnerability. >> and right now, $2 trillion in excess reserves in the banking system. the normal amount is close to zero. so if you are really talking about not only tapering but then sort of redoing the fed's balance sheet back to normal, you're talking about a lot of reserves that would have to leave the system. that would have an effect on the markets. the fed knows this. they're talking about an elongated process. this will take a long time to work its way through. >> oh, joy. dino and barry, thank you very

much for your thoughts. meantime, today, your iphone will stay the same, but it might get a different look. apple is rolling out ios 7 today. the biggest change to the operating system. jon fortt has more on that live. good morning, again. >> reporter: good morning, carl. if you have any doubt about what a big deal in the o.s. overhaul can be, let me rattle off a few software updates that didn't go so well. mike ro microsoft windows vista. remember last year's maps? i'm sure they're hoping you have forgotten. it's a dramatic change, and consumers don't have a choice. if you want the latest software, you have to put up with new looks and functions. if the download process goes smoothly for io 7 and it's warmly received, it's a big positive for apple because ios 7 is a teaser for the new iphones. it matches the 5c features, cameras in the phone works better. what's new in 7? lots of things.

first thing you'll notice apple's ditched the textured graphic treatment where there was lined yellow paper, notepad, wooden shells, made it more basic. this is software johnny ives style, and ios 7 update is like google's android update, which is popular, but the large majority of people are using old versions and with apple, most people upgrade to the latest version of the ios 7. updates will be around 1:00 eastern time. tens of millions of people will be slamming apple servers trying to get it at once. another big feature they'll be downloading, itunes radio. it competes with pandora, spotify, and others. this is the biggest music retailer in the world, launching a premium software-driven radio service for the first time. that alone is pretty big, guys. >> jon, that radio will also be available at 1:00? >> should be. with ios 7. >> wow, all right, jon fortt with the latest on what to watch

for in the next couple of hours. thank you, jon. speaking of apple, the new iphone is getting glowing reviews. edward says taken in totality, the features new to the iphone 5s make it what i consider to be the best smartphone on the market, or what i consider to be the best smartphone on the market, he says, even better. edward will, in fact, join us later in the show. stay with us. meantime, is $3 the new normal? the price of a regular gallon of gas has topped $3 for 1,000 days in a row and counting. we'll tell you if gas prices will ever fall below $3 a gallon again. first, rick santelli, you're busting some myths about the fed taper this morning. >> yeah, no, and we only have three minutes with jim bianco to cover that. we probably won't include the president's speech, because i don't think we can add another couple of hours. but we'll talk about the fed and taper, all with jim bianco. myth busting is pretty fun. we have a long list today. be there, 15 minutes from now. ask me what it's like

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and find a retailer near you. welcome back. let's look at the tech sector, the best performing sector on the s&p, the only two sectors in the green. dominic has more on this. >> stocks, kelly, just taking a leg a little lower to the downside ahead of today's big fed rate decision. so far, tech stocks really are

providing some of the leadership in the s&p 500. now, software maker adobe systems is up big, and it's the best performing sector in the s&p 500 tech sector overall. that's after the company missed analysts' estimates on profits and sales but managed to show growth in subscription based customers. speaking of record highs, that's where shares of salesforce.com are. apple is working on the second straight day of gains, also in the tech sector and we get the newest version of the mobile operating system, ios 7, that jon fortt just spoke about. and corning, also helping to lead the tech sector overall, higher. carl, back over to you. >> dom, thank you so much for that. dominic chu back at hq. the average price of gasoline has topped $3 a gallon for over a thousand days now. the question is, can we expect any relief at the pump soon? joining us this morning on the phone is tom cosa, chief oil analyst. good to talk to you again. >> hi, carl. >> a thousand days, a madeup

metric, but historic by some measure. you've been asked whether we'll see $2.99 or $4 first. >> and i think we'll see $2.99 first. i mean, it took a little time in the next 15, 16 months, unless we had something that really involved iran or the persian gulf countries, in coming up with the $4-plus u.s. gas price. there's simply too much gasoline out there in the world. the u.s. is the last of the large gasoline economies, and it has become kind of the throwaway product perry finers for seven, eight months out of the year. >> you make the point, the average price, it's a very big country with a lot of different markets and sometimes a misleading number. you're beginning to see sub-$3 gallon gas break out in some markets, right? >> yeah. if you travel across the rural south, the southeast, you can do as well as $2.75 or $2.90. those are numbers that go back to 2010. and i suspect that in the midwest and the rockies, as we head into fall and winter,

you'll see those prices go below $3. the chicagos and new yorks and californias, they'll be higher. but i think on average people are going to be able to do about as well as they've done in terms of expenses on fuel as 2010. and that's notwithstanding the premium that's there in the price of crude oil now because of syria and the what-if scenarios. >> well, tom, there are a lot of people who will say, wait a minute, given all those changing supply dynamics, demand dynamics that you've talked about, is there something structurally changing in the refinery or delivery process whereby gasoline now is just over $3 a gallon, because it is? >> absolutely. there are things that are changing. you look at today's report from the government, we imported about 2.2 million barrels less crude this week than we did in the same week last year. and we're producing more product than ever in the middle of september. so the u.s. refiners have become the refiners to the world, or at least to the western hemisphere

here. and there's plenty of production. there's plenty of domestic crude. and it really takes something extraordinary to throw us back into a 2008 scenario. >> tom, you know, you come on to talk about gas prices not fed policy. but everybody's talking about the fed today. you call bernanke the accidental architect of the u.s. oil boom. you know, a lot of critics said he would drive gasoline and all commodities to the moon. >> well, he did drive commodities higher. i don't think there's any question about that. if you look at the size of the oil futures as an asset class relative to before all of the easing it's a much, much bigger market, and that has propped the price up, because there's been money riding in crude. so he's helped on that end, and people have been able to invest in projects and know that they're going to get a good return for five years. on the other hand, the consumer's been the beneficiary of an incredibly low interest rates and the vehicle turnover is, like, something we've never

seen. and the new cars are getting 25 miles to the gallon or better. >> that's fascinating point, tom. thank you very much for joining us this morning. again, as we mark the fact it's been over 1,000 days since gas was back below $3 at the pump. so is tesla misleading its customers? a group of car dealers seem to think so, and they're pushing for a dmv investigation to prove t we'll get you the story in a moment to prove it. (vo) you are a business pro.

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welcome back. tesla's promotion of some of its finance programs are deceiving customers. that's the claim from california's new car dealers association. on monday, the group sent a letter to the dmv director requesting a state investigation into these ads. we have reached out to tesla, and they gave us a "no comment." brian moss is the president of the california new car dealers association, and he joins us on the line now. brian, good morning. >> good morning. >> so what's the charge here, brian? in what way is tesla deceiving

customers? >> well, the concern is that the internet advertising by tesla is misleading the consumers based on the savings claim that the consumers would get when they purchase a tesla vehicle. if you click through all of the various potential savings, you could buy arguably a model s for as little as $114 a month, which is less than most (unintelligible) car offer manufactured in the united states. >> right. now, as you say, or as the people in the letter claim, this is deceiving to customers because, in fact, it costs quite a bit more than that. and we know that tesla is an expensive car, and retails north of $70,000, $80,000. but car dealers are upset with tesla because it doesn't have a car dealer model. >> well, in california, that's not true. tesla's allowed to sell their

vehicles in california as long as they don't open franchise dealerships to compete directly with them. other states have different rules. our concern is much more specific related to tesla's advertising. and we're concerned that tesla is trying to do what no other car dealer or seller of vehicles could get away with, and that's why we want the dmv to investigate. >> now, just to play devil's advocate here, you could say even if tesla draws people's interests by claiming they can get a car that low, if they ultimately can't, they won't buy the car, so no harm done. >> well, but that's not the purpose of advertising laws. the purpose of the laws, and they're both federal and state statutes that govern tesla and all car dealers' behavior, you don't want to mislead consumers and draw them in thinking they can get one for as little as $114, when they'll pay several hundred dollars a month to

purchase such a vehicle. we want the law applied to tesla just like we want it applied to all of our dealer members. >> brian, when we're dealing with projections, which clearly tesla is, how can you prove that they're wrong? how can you prove that another person's projection is any better than theirs when it comes to potential savings down -- during a lease or a purchase? >> well, it's not a question of proving that a projection is right or wrong. it's the fact that the savings claims made in tesla's internet advertising are unsubstantiated, and that's what the law prohibits. and if you look at our letter and the attached dependencies, which include screen shots of tesla's advertising, they make claims like you can save money by waiting for a certain amount of time by not having to wait for a certain amount of time to buy gas. you have no idea whether that's accurate, and frankly, it's unprovable. it's just speculative. and that's the kind of thing the federal and state advertising

laws were trying -- trying to prohibit. >> and we'll see how the feds decide to respond to this one. brian maas calling us from california with his concerns. thank you, brian. >> thank you, appreciate it. >> interesting debate. the new iphone has almost arrived. brand-new models of the iphone hits store shelves this friday. of course, you don't have to wait until then. we're going to give you an inside look at the new phone in just a few moments. it will be right here at post 9. plus, the bells are about to sound across europe, a few minutes left in their trading day. simon will have that and details on the impact in the u.s. after the break. ♪

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let's get some breaking news. mary thompson has it for us. mary? >> hey there, carl. as expected, the s.e.c. approving by a margin of 3-2 a proposal for how to calculate the ceo pay ratio. this has been mandated by dodd-frank, and now the proposal will be out for public comment for 60 days. the s.e.c.'s proposal looking to limit the administrative burden on the companies that will be mandated to calculate this. it's been something that a number of activists have advocated for, because they believe it will provide shareholders with additional information that they need about ceo pay. however, two commissioners issued very strongly worded opposition to this proposal. one of them, commissioner gallagher, saying the pay ratio is sure to cost a lot and teach very little.

the only purpose of it is to name and shame executives. but again, the s.e.c. approving this proposal, which now goes out for public comment for 60 days. back to you. >> mary, thanks very much for that. let's turn to simon hobbs with a look at what happened -- >> the european markets are closing now. [ bell ] >> you can see europe managed to make some advances. of course, they now shut down and will play catch-up on this afternoon's trade after the fed, first thing tomorrow morning. what's interesting as far as central bank commentary is concerned, and it's all today really about the central banks and the politicians, in the u.k. we got the minutes of the last meeting from the bank of england. remember mark carney from canada now in charge? and there's a real aboutturn there, suggesting there's no need for additional stimulus, quantitative easing if you like, in the u.k. and that sent sterling up to an eight-month high. you'll see here over the last six months, it's gained almost 6% against the dollar, a huge move for the pound. a lot of people questioning whether that is sustainable. back to the politics, the latest

read we have from italy is that sylvia berlusconi will release his video message in 28 minutes' time. at noon/midday here in new york. he's not expected to try and form the italian coalition. 2:30, the commission will vote on whether to expel him from the senate in the wake of the fraud charges. it doesn't look at this stage as if he will try to bring down the government. we'll watch that this afternoon. and one more, let me just take you to germany. of course, in germany, we have the election there. on sunday, angel merkel is expected to retain power for a third term. but a poll out today suggests she may not be able to do that with conservative parties on her own. she may have to link with the left of politics, a grand coalition the like of which we had from 2000 to 2007 if memory serves me correctly. we won't analyze that now for you guys. let's leave it for monday

morning. a grand coalition has more implications internally for germany than it das for european policy, because it's as pro-european as it gets. >> interesting. i can't believe it's here. we've been talking about it forever. >> so many things, and tapering, as well. >> yes, yes, thank you, simon hobbs. let's get a check on energy and commodities. sharon has that for us. good morning. >> good morning, carl. oil traders are still reacting to the surprise supply data we got from the energy department at 10:30. we're looking at oil supplies here in the u.s. up a dollar -- more than a dollar at this moment. again, it was a decline in supply that was three times greater than what analysts had expected. and that is contributing to the pop here that we're seeing in the wti oil price. we're also seeing an increase in the gasoline futures, and that has to do with the supply decline that we saw in the energy report for gasoline supplies. of course, as we've talked about in this hour, as we've seen, futures are down as well as retail gas prices down considerably over the last month, over the last two months,

as well. and then in the gold market, we're looking at a decline there. the first time gold has been below $1,300 an ounce, and in five weeks' time. we're still waiting for the fed decision, what they'll say about tapering. it will have a lot to do with where gold prices go from here. back to you. >> all right, sharon, thank you very much. we're keeping an eye, of course, on index levels here. bob, weaker today, but still close to all-time highs. >> the important thing is, we had a three-day win streak. we're a little down here. the tapering is very simple. it's amazing the consensus. $10 to $15 billion doesn't move the markets. no taper, stocks go up. $20 billion taper, stocks go down. i've never had so much clarity in my life. >> so simple! >> they'll change the guidance, forward guidance with the commentary, get 2016 estimates coming in, as well. and all of that could make this a very complicated stew. i just want to show you that we have the 10-year yields, just so the stock market moves with the yields, 10-year yields higher for the first day in six. we're seeing interest rates sensitive sectors, which have done well in the last couple of

weeks, at least september, to the downside. home building stocks have had a nice recovery. show you how sensitive we are. home building stocks are on the downside today. so they move in relation to 10-year yields. that's why we call them interest rate-sensitive stocks. apple is getting a break. did you see the reviews? they were terrific in all of the major papers for the 5s. adobe systems, good enough numbers for the earnings, and some of the other earnings here, the application software companies, like salesforce, also to the upside. ipos. still pretty hot. we had an interesting one today. first mexican ipo of the year. valeras, but bottom line, $12, at price, $13.50, where it is now. low-priced mexican airline doing well, debuting stock exchange. big one, thursday night, security for corporate networks, the magic word, anything to protect corporate security, 14 to 17. they upped it. it was $12 to $14.

it's a very hot space. been uneven activity in this group in the last year, year and a half. look for example at vg tech, it went public a little more than a year ago. and the price was little more than a year ago, it was at $42. it's been moving around, but still above the initial offering price. that's going to be the big one here. anything -- anything that helps protect corporate security is a really hot space. biotech is the other hot space right now. >> absolutely. >> it didn't come public too long ago, palo alto. >> it's been choppy, but still above the initial offering price. >> thanks, bob. rick is in chicago. he is taper mythbusting, i'm told, ahead of the fed announcement. hey, rick. >> hi. yes, we are taper myth busting with my pal, jim bianco. jim will put a boilerplate on this. most of these are your opinions.

they certainly seem to be shared by most of the people i interact with every day. number one, the reason we'll see a taper is because the economy is doing better. >> wrong. it's just that simple. the reason we're seeing a taper is because the fed is either coming to the conclusion that the qe doesn't work or that qe is distorting markets. if it was about the economy, they started it a year ago, the economy's worse than it was a year ago, or at best it's no better than it was a year ago. if it's all data-dependency, there would be no reason to talk about tapering. >> the amount matters. if it's five, it will be different if it's ten billion, then 15, 20, 50, or all 85. >> unless the amount is an extreme, it doesn't matter. the market will price in the end game. it wants to see the number -- 5, 10, 15, 20 -- and it will say in all of the scenarios, the fed ends in june and will price in the fed ending in june. that's all it cares about, when the fed will end. it's a signal that's the beginning of the end. >> so today, it's like an eviction notice. the landlord might not be able to get you out day one, week

one, month one. but the process has begun, and sooner or later you'll have a new address. >> right. the mind-numbing discussion of treasuries or mortgages, it doesn't matter. they're starting. that's what matters. >> the next one, he'll have a plug for my buddy steve liesman. are you listening, steve? it's all a lock! the taper will happen today. >> steve's survey said 48% expected it today, which means 52% don't expect it today. >> you going to play with any of the m.i.t. economic models? you know, you have to make various judgments. >> yes. >> and so, an affirmative can be 51% or higher. just to throw that -- >> it's a coin toss today. it's a coin toss. by the end of the year, most people will think it happens. but today, a coin toss. >> this is my favorite, i was smelling this scent before anyone. this isn't a titan. >> oh, god, that couldn't be more wrong. three years ago, dudley told us -- that's the new york fed president -- $600 billion of

purchases was equivalent to 75-basis point cut. decreasing purchases is a tightening. now, it's not a major tightening, or, as bernanke said, we're taking our foot off the gas. what happens when you take the foot off the gas? the car slows. what happens when you -- >> no, no, no, only slows when you hit the brake. >> it slows more, but it still slows -- >> especially if you're on a hill and you take your foot off the gas. >> tapering is -- >> i'm going off the reservat n reservation. feeling brave? >> go for it. >> did you hear part of the president's speech today? i have one question for you. first of all, he doesn't read polls, which really surprises me, because everybody in every poll i read say raising the debt ceiling is not something the public wants. but he said raising the debt ceiling doesn't mean that you're raising debt. you say? >> raising the debt ceiling is kind of like lowering the blood alcohol from .1 to .08. it doesn't change anything. the public doesn't want to raise the debt ceiling because they don't want the government spending more money. that's what it is. >> i wonder what the consumer protection agency would think about sending a student with a

credit card with $50,000 car with a $50 though limit. would they like it? >> no, they wouldn't. >> all right. thank you very much. we have two hours to go before we get the decision. also, coming up, apple will release the latest version of the operating system. and coming to the "squawk on the street," the new iphones. [ mal] staying warm and dry has never been our priority. our priority is, was and always will be serving you, the american people. so we improved priority mail flat rate to give you a more reliable way to ship. now with tracking up to eleven scans, specified delivery dates, and free insurance up to $50 all for the same low rate. [ woman ] we are the united states postal service. [ man ] we are the united states postal service. [ male announcer ] and our priority is you. go to usps.com® and try it today.

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all right. coming up on of "the half," wha taper means. and how many of the k-cups does green mountain really selling? and what does it mean to its stock, up 2% over the past year? and oracle reports in a matter of hours. carl, we'll see you in a couple of minutes. >> all right. a busy afternoon. if you haven't seen them, we have them. apple's newest iphones go on sale friday. they're here courtesy of ed. a huge article in the paper today. thanks for being back. >> nice to be here. >> you seem to like it. i'm having trouble understanding if reviewers are liking the hardware or the software. >> well, it's both. look, these are both better phones, and this is the -- this is the 5c, which is the $99

device, the cheaper iphone, if you will. it's not that cheap, but cheap for an iphone. of course, this is the 5s. this is the flagship. and it does have some hardware innovation. there's this fingerprint scanner which would let you unlock the phone with your thumb. or another finger, for that matter. >> right. so what model do you have to have right now to justify an upgrade, an upgrade to the new phone? a 5 or older? >> well, no, the upgrade to ios 7, the software, goes back to the 4. but, yeah, i think if you have the 5, there's no real compelling reason to upgrade at this point. unless you want that fingerprint scanner. there is a better camera in here. it has a bunch of features. it's a nicer phone. but if you invested a year ago in a 5, you could probably wait, and you'll still benefit from ios 7 soflt ware, which is a free download. >> and consumer friendly? because a lot of people might be intimidated by the fingerprint scanning. are these easy, simple devices to use? >> i was concerned about that.

this is very easy. can i show it to you, if you'd like to see it. a locked phone. i've already trained it. >> yeah, demo to -- >> yeah, i'll demo here. this is a phone that's locked. i press my thumb against it, and with any luck, there you go. >> voila. >> easy as that. the other thing is you can authenticate purchases in itunes with this. >> yeah, has it been reliable, 10 times -- >> i missed a couple of times. if you miss, there is, of course, the backup of a pass code. but it's been very reliable. >> where is your head, this morning we had the conversation, okay, apple is, clearly their turn. >> yeah. >> where is samsung, right, blackberry is unveiling the z-30 in malaysia. does it feel to you like they are now ahead? >> yes. >> and as a competitive answer coming soon? >> always a competitive answer. i like this phone a lot. but there's a zillion good phones out there. i think this is at the top of the heap. but certainly samsung, htc, all of the usual suspects are innovating as we speak here. and to some degree, apple's

played catch-up with some features. you know, ios 7, a control center. we've seen that sort of thing in android before. having said that, i still think apple does it better. in totality, they bring everything together. it's the user experience. >> although, there's one thing users often complain about and that's the keyboard. and walt mossberg's review, quite positive like yours, said i was disappointed the keyboard isn't more improved. i've heard some people say, as well, after all of this time they actually do miss the blackberry keyboard. what happens there, do you think? >> you could still get a blackberry, of course. but not many people are taking that route. look, this is a good keyboard. are there better keyboards out there? you can argue that point. i would have liked to have even them open that up to third-party keyboards. they say they don't do it for security reasons. i have my own quibbles. we've seen the large-screen devices, especially on the android side, 5 inches and more. this is still 4 inches. it's fine. there are a bunch of reasons apple stuck with that. i would have liked to have seen a larger screen choice.

there's always a quibble. having said that, this is still the best phone out there. >> tim cook has been asked about screen size, obviously. he said, you want a bigger screen, you'll have to compensate on battery life. how is battery life on this? >> so far so good. i got through my workday, which is what most people want to do. apple claims it's the same or better than the prior generation. you know, sometimes we say over time, as the battery -- as you use it a lot, but so far so good. >> you're saying you can only get through the workday with one charge? >> no, it's gotten -- it's lasted through the full day with mixed usage on the phone. which is really all i would expect. i'm in the habit of charging my phone whenever i see power, i plug in. >> yeah. >> i do that with every phone i use. >> is it your expectation that the advances we're seeing on the phone are going to be ipad advances soon? >> yeah, i think so. you know, the rumor points to an event next month. we'll see. apple, of course, doesn't say. i think we're going to see a lot of that coming to the other devices for sure. >> i know you're not in the business of projecting unit sales, which --

>> no. >> -- and i'm not in that business either. does it feel to you like people will respond to? >> yeah. >> we're seeing some reports, i think thinly sourced, that preorders are underwhelming. >> yeah, yeah. the short answer is, i don't project sales either. i think they'll sell a lot of them. they'll sell a lot of this one, the 5c, the color one, because $99 is a very inviting price for an iphone. you're getting a better iphone than the iphone 5 for $99 to start. and that's an attractive price. >> you know there are plenty of people who are simply cracking the glass on their iphones. >> i've done that. >> absolutely. >> and everybody should take a look at your review today in the money section of "usa today." thank you for coming in. >> thank you. >> ed baig joining us here, talking about the iphone, which is obviously a big story today, kel. we'll see if it moves the stock. that was cramer's question earlier. does making a popular product mean your stock price goes up? >> the answer for today seems yes. but there's a longer-term question, it continues to have over the apple shares.

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the reviews are out for apple's new iphones. we heard from ed baig, but like a broadway play, multiple reviews are everything. and we have the next of the review titans shaping expectations. david pogue joins us this morning from "the new york times." of course, the tech columnist over there. david, good morning. good to have you.

>> good morning. >> the haters can go jump off a pier. it has to be one of the lines you would put on a post-it or a marquee. how impressed are you? >> i was talking about the fingerprint reader, which is the first time a company has gotten it right. it works. it works every time. the first time -- on any laptop or phone, you didn't have to -- ugh, ugh, ugh! so kudos to them for that. the other news, the camera is the other huge news in the 5s. it's the best camera put in a cell phone, except for the nokia 1020, and nobody will buy it. the best real camera in a real phone. other than that, it's incremental improvements. the question is, is it because steve jobs is not there anymore, or is that just the way the market is now, that all of the phones have all of the features you need? there's not a lot of big holes left to be filled in features. >> it's interesting, david, because a lot of people are describing this phone as playing catch-up with what we've seen from a lot of other devices.

and again, that's fine. i mean, you have -- you have to do that. you have to catch up with what the latest and greatest is. the fact that they would kind of add all of the important features while keeping the screen size the same, is this phone just going to look too small for a lot of people getting used to bigger sizes? >> well, catch-up is sort of weird, because nobody's done the fingerprint sensor that works. nobody's done this camera. nobody's done 64 bit in a phone. so catch-up is a strange term. so the screen size, yeah, apple is steadfast on that, although i do have to say the new operating system, ios 7, eliminates all of the clutter around the edges. so in effect, you do get a slightly bigger screen. you know what? samsung has 5-inch, 6-inch, 7-inch, 8-inch phones, they're there if you need them. >> david, people are trying to put themselves in the mind of a buyer, asking, well, am i a "c" consumer, am i an "s" consumer? which model is targeted towards?

who do you justify buying the "s"? >> you know, it's $100 more for the "s." the answer is, if you take a lot of pictures with your phone, get the better camera. it's a no-brainer to me. the "c" is perhaps intended more for the overseas markets, maybe for students. but $100 difference, either $100, $200 amortized over two years, i don't see it as a huge difference. this is last year's model. the "c" is last year's model in a plastic case. >> and perhaps maybe in, i don't know, feminine colors, david, some have suggested. would there be anything wrong with making a black "c" or "silver "c"? >> it would have been smart. >> hey, david, curious, when it comes to the operating system, people can download in just about an hour. do you think there will be a mad scramble for that one? what should people look for? >> that will be a huge mad scramble. it wouldn't surprise me if we have the usual servers busy messages. ios 7 is from a feature and

layout and structure standpoint, it's really great. i mean, they have eliminated so many annoyances. they've put so many things right where you want them. on the other hand, it's really weird looking. it is so stark. it sometimes is just -- i bet i could type on a white background. you're, like, there is no design. be prepared for a visual shock. but if you can get used to that, the features themselves are fantastic. >> all right. david, great to get your point of view. thanks so much for joining us. >> my pleasure. >> david pogue of "the new york times" talking about the new iphone. >> we'll take a quick break. more "squawk on the street" continues just after this.

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we want to correct a mistake on graphic that was on our air earlier. it made it seem as if the following quote was attributed to tesla. it should have looked like this. the quote was, in fact, supposed to include tesla motors in the text itself. the correct source is the california new car dealers association. on the conversation about their disputing california. now, a dispute in italy. simon is here to tell us the latest on silvio berlusconi. >> the video is coming out from berlusconi, expected to be ejected from the senate because of his fraud charges in italy. it looks like he is not going to challenge the italian coalition government at the moment.

he's going to reform his old party. he says he will stay in politics and attempt to make a comeback through that. but importantly, so far, from what we know so far, he's not actually going to challenge the status quo. >> thank you, simon. back to headquarters with scott wapner and "halftime." >> all right, guys, thank you so much. welcome to "halftime report." four hours to go until the close. let's look at the wall and see where we stand at this hour on the street. somewhat of a down day as we wait for the fed. there's the dow down 45. s&p, nasdaq negative, as well. here's what we're following on "the half," trading the taper. with everything you need to know about how to maneuver today's huge news. peaks or valleys? green mountain shares up nearly 200% the past year, even as some question how many k-cups the company is actually selling. we'll investigate that coming up. first, our top story. the market's moment of truth. that's what it is.