let's gets back to david darst for the last word. >> buy japan, we raised japan last week by 2%, took it out of cash, 40% growth in earnings, structural reform continues. back to you, becky, in under 20 seconds. >> way to go, david, we love you. >> he's good. >> "squawk on the street" begins right now. good tuesday morning. welcome to "squawk on the street." i'm carl quintanilla with david faber at the new york stock exchange and jim cramer. home prices at the bottom of your screen, all 40 cities higher for the fourth straight month in a row. futures are mild after the market's first three-day losing streak in a month and in europe, german business confidence rising for a fifth consecutive

month but just shy of expectations. facebook getting an upgrade. >> and tokyo electron is forming a $29 billion chip giant. >> and chrysler group reluctantly preparing for an ipo. but first, shares of facebook are poised to open at new all-time highs, boost being its price target to $55 a share from 38. they see facebook continuing to boost -- the total is "even up here it is socially acceptable" and they talk about even potentially being added to the s&p by year end, jim. >> look, this is one of those this evenin things, when i talked to bob iger at disney, everyone is

talking about this term in the future, it's the way to get the demographic. my trust does own it, we own it for almost a double now and not selling. why not selling? because this is tv of the future. >> explain that. >> okay, because -- you read all these articles about people, a big production companies, the cbss, viacoms are all searching for a way to reach younger people, a lot of advertisers searching for a way, another channel, a second way to get people. what people didn't realize is that mobile is pretty much going maybe 80% a year from now. >> wow. >> and there's a solution on mobile for -- with facebook in order to be able to reach them. people are watching. when bob iger tells you everyone's watching tv on my device -- >> it's still fascinating because we have aol's tim armstrong on yesterday, i reviewed the numbers. $200 billion will still be sprint on traditional television

and about $7 billion on digital. >> there's more. i think it's a share take. >> it's a second way. i like the stocks of time warner very much. i like via come. we work for comcast. this is not against comcast. at the end of the interview with bob iger, he's talking about making -- making, producing for devices. the analysts who were way ahead of this and then they fell behind it, facebook has developed the right product for 1.1 billion people -- tv is domestic. this is not a domestic product, it's a coca-cola product. >> in the meantime citi does say they're talking to advisers and agencies and seeing sudden growth, which they admit they missed, including quarter to date, video ads, ads on

instagram. say it does get added to the s&p by year end, is this a six handle or $55 target? >> on an earnings before interest, taxes depreciation, there was no ebidta before you coined it, d.a.? isn't that how -- >> ebidta favored. david. it's expensive, it's not even fully loved yet in the s&p is rocket fuel. >> rocket fuel. >> rocket fuel actually went public on friday. >> that was fire eye. >> both of those, wow! >> citi's target is 25 times ebidta. >> 25 multiple on ebidta is a big number but given the growth rate, many can justify it. perhaps when it went public,

that was not the case but now it has a new phase of growth. >> you remember something akin to what google had where you realize, holy cow, this is a real engine of growth. i think zuckerberg, the most abject thing he ever did was on this conference call say we blew this but you give me faith, we will figure it out. and they did. they did ahead of everybody. i think that google has stalled here because people feel that google hasn't had the right response. i don't know. i think google's got youtube. i don't want to bet against google. >> they still have a lot of the online market locked up. >> they're 600 billion in advertising worldwide. let's say you're mcdonald's and you have an unsatisfactory fry. you want to be able to advertise. suddenly can you do a worldwide carpet bomb with facebook. worldwide. i mean, that's not -- viacom is

still very domestic. >> very much so. >> time warner. domestic. this is an international advertising medium where people are going to say dominos is international. dominos is using social media very quickly. they're trying to embed. let's say you decided you really want to reach france, which believe it or not dominos is becoming a dominant pizza player in france. >> we had patty doyle on yesterday. >> india because of the vegetarian aspect. but with a native embedded and suddenly you have this demographic that is really watching tv on their ipad -- their device. i watch it on my device. that's why bob myer comes out and says that's how people are watching it. >> especially when you own espn. >> do you know they get payments

on watchespn? i think i pay the $5 a month. >> nobody really knows what they care and nobody cares. >> mid-america lacrosse game is on the high school and i'm paying -- >> make sure to get your dodge ball highlights. talking about globalization and facebook, we have a deal today that certainly reflects it as well. applied materials is going to be up in trading. it's going to be up sharply in the premarket. that company is entering into a merger of equals, essentially with tokyo electron of japan. applied materials holders will own 68% of the combined companies, but they're splitting the board of directors, splitting the ceo. but it is an interesting deal. it lab roughly $29 billion market value, if you will, when you combine both. we're not talking about a big

premium, 3.25 shares of applied materials for each share of tokyo electron. but again, 68.32 but structured as an moe, meaning a merger of equals and incorporated in, get this, the netherlands. why? the tax rate will come down from as much as 22% right now over time to 17%. big synergies here. very interesting, when you get to the heart of this, jim, you've got an industry in which there are more suppliers than customers. when you think about that. so that would argue for consolidation amongst the suppliers. while these two companies delivered a similar customers, they don't deliver the same products those customers so they do believe they'll be able to attain a great deal of synergy in the deal itself. they're talking about $250 million, if i recall. i got a $250 million annualized run rate by the end of the first

fiscal year, 500 million by the third fiscal year, bring that tax rate down, this is all about making smaller chips and devices for smaller -- chips for smaller devices. it's all about tablets and smartphones, the proliferation of those devices, everything becoming more complex. >> it's all about anti-trust. this deal with not go through. >> really? >> this deal will not go through. >> jim, they're talking about not similar products. >> overlap. deposition. that's tunxton. this deal will be stopped. it is a gary dickerson fantasy. my charitable fund owns this stock. unless holder and obama are on the board of tokyo electron. >> i don't have great insight on the anti-trust side. it's interesting you bring that up. the way it has been argued to me

is that the overlaps are not that great. >> intel and samsung. >> why should you have fewer customers than you do suppliers? >> that's the wrap. qualcomm, nvidia, they're going to look at this deal and fight this deal. i have to tell you you're going to see every single supplier go -- it wasn't until us airways that we were going with the anti-trust thing. i think i would be furious. i would see big screen tvs go up in price. i think this deal does not go through. >> very interesting. and certainly something to watch. applied material shares are going to be up again, more efficient tax structures, synergies if in fact the deal does occur. >> it you wonder why they didn' just do it as a purchase, you're dealing with japan, dealing with a cross bored. if it does go through, it's not

that easy to pull off a cross-border merger of equals and do it right. >> agreed. in this case, this is supposed to be the most westernized. >> it would be a great deal for shareholders, if it goes through, because they can raise prices. that's why i think the intels of the world will go to washington and say this is just a killer for our gross margins and it's going to raise prices to the consumer. now, the administration has turned on these issues when they hear the consumer gets hurt. that's my takeaway of the us airways amr. i think we have to watch these deals. >> when we come back, robert shiller on where home prices are jumping the most and his take on the state of the recovery. later on, jim mentioned

satisfries. they are come hearing to post 9. and take another look at the futures. september still on track for the second best month of the year, despite this three-day losing streak. we're back in a minute. building animatronics is all about getting things to work together. the timing, the actions, the reactions. everything has to synch up. my expenses are no different. receiptmatch on the business gold rewards card synchronizes your business expenses. just shoot your business card receipts and they're automatically matched up with the charges on your online statement. i'm john kaplan, and i'm a member of a synchronized world. this is what membership is. this is what membership does. what'swithout the thinking capitathat makes it real?? what's a vision without the expertise to execute it...

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i want to get back to the key housing data out this morning. the latest s&p case shiller numbers showing all 20 cities seeing monthly gains for the fourth straight month. robert shiller is the co-founder of the shiller index. professor, good to have you back. good morning. >> my pleasure. >> i think the most important line, maybe you disagree, since april, all 20 cities up month to month. are we in a second derivative kind of situation here? >> that's an interesting point because we don't look at the second derivative in other financial markets, but in the housing market, yeah, it has this smoothy look to it. so if you start receiving it slow down, that's a reason to worry that it's going to accelerate slowing down. i'm not being alarmist, i'm just responding to your point.

>> right. you say so there's a reason to worry. are you worried that we would start to see a more material slowdown? >> i'm not worried. i think that would be a good thing. i'm still worried -- i'm starting to worry more about bubble. in some cities it's looking bubbly now. >> las vegas, year over year, 27.5, san francisco, 24.8. and even lenarz, 16%. is that market to market or is this a nationwide phenomenon? >> the really dramatic cities tend to be cities that had bubbles in the recent past, california, phoenix, vegas. it's regional somewhat. the northeast is relatively mild. new york is doing nothing. >> robert, i'm looking at kb

homes headline. they say recent slowdown temporary effect but they say there is a slow down. lenar, they come in with 14. that's half of what i was looking for. isn't it possible already this number that you've come up with is completely out of date? >> well, it's two months out of date anyway, but i -- you know, i think that it might be slowing down because the thing that's driving this doesn't seem to be new, real excitement about a new era. that's what we saw eight years ago. but now it's more -- it's a rebound, interest rates are still maybe lower than they'll be in the year. it's that kind of thing. it doesn't really look like -- even though it looks very bubblying in sobubble

y in -- bubbly in some places. >> affordability has changed dramatically in the last three months. historically when you see affordable go this way, what happens to your index? >> we tried mortgage rates in our forecasting models and they don't across as strong as you might think. the really big forecasting variable is recent price changes. so the mild slowdowns are a concern. the second biggest forecasting element is employment. well, employment is slowly improving in this country, but it's awfully slow. plus, it's a mixed picture. i don't know where home prices are going to go. this might be the beginning of a slowdown. it could be the beginning of a bubble but i don't know. >> spoken like a true economist. on the one hand -- i know you're not a housing analyst in the classic sense, but a lot of people want to know

if this continues at this pace, the slowdown of gains, is it because large scale investors are entering the market or pe investors migrating? >> one of our strongest cities this month was atlanta, which has not been a strong city. if you look at reality traty tr there's really a fundamental change in the housing market with the advent of professional investors. part of it is just explained by a change in taste. people want to rent more so there's a new business, let's convert owner-occupied dwellings into rentals and that's happening. >> an important development to watch. thank you for your insight on the case-shiller numbers.

robert shiller joining us from harvard university. >> coming up tonight, lennar's ceo. >> coming up, cramer's "mad dash" is next. and later future hall of famer shaquille o'neal, who has become the newest owner of the nba's sacramento kings. that's coming up in our 11:00 a.m. hour. back in a minute. futures up 24. ♪ ♪ in today's markets, a lot can happen in a second. with fidelity's guaranteed one-second trade execution, we route your order to up to 75 market centers to look for the best possible price --

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we have about seven minutes until opening bell. this tuesday, time for "mad dash." red hat not looking good this morning. >> cloudy with a chance of fall this morning. we all love cloud, cloud, cloud. >> we love klaus kleinfelt, too. >> here's the issue here. i was looking for a 14% increase in orders -- in billings. they're only growing 8%. so that is a dramatic shortfall. this is a very well run company, it doesn't miss and this is a

big miss. whitehurst used to be ceo of delta, he's used to a lot of different things happening. this is disappointing. piper does down grade it. i don't know what to say. we have to hear from the company a little more. >> could it be a read into other parts or is it red hat? >> it's think it's red hat's problem, the way their model is set up. greenway did this deal this morning, that's another cloud play, that's an attractive model. we saw adobe move into cloud and people love that. let's find out more. people went went out of this because it is a momentum. >> watch the stock, listen for the call. >> chrysler we can't show you a stock chart now but we may be eventually be able to. that's not something that sergio marchionne wants to do but we can show you some cool videos of cars. he's in the position of trying to get the price down in one way so he can avoid going public, at

the other he's going to have to actually promote an ipo. >> you tell me they have the rights unilaterally to be able to say we want to sell our stock to the public? >> they have the right if they can't agree on a price in which their stake in price would be purchased by fiat. >> we know the public would love this stock. >> would it? >> i think so given where gm is trading, given the cash flow at gm. i think chrysler, there were some very good numbers in the paper this morning about how well they're doing. i would think that the public would pay far more. this market likes the autos now. i think it's a very important thing to watch. chrysler is a stock, like the old days, people would love. >> nothing says they can't reach a settlement with uaw that would prevent it from going public.

chrysler with or without an ipo has come a long way. >> the president doesn't want to take any credit because this was considered a bailout. there was a disaster for bond holder. >> they ticked off a lot of people about the rule of law. we have the opening bell just a few days away from this tuesday. we've had some bad sessions, at least if you're long. let's see if we can do any better today.

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...you'll bust your brain box. ♪ all on thinkorswim from td ameritrade. ♪ you're watching cnbc "squawk on the street," live from the financial capital of the world. the opening bell set to ring in just about a minute here. busy day shaping up, got some fed speak, the u.n. general assembly is here in new york city. the president speaks at 10:10. the white house reportedly saying they're going to leave the deal open for potential talks with iran. >> maybe that's why oil is going down. china, some people starting to question whether the taper decision should have been --

you're starting to see data that things are a little bit stronger. i come back and listened to shiller -- shiller really gave me on the one hand -- look at what's happened since shiller and look at k.b. homes and lennar and i say really they heard how and that's the last good number. [ bell ringing ] >> ply gem celebrating their recent ipo and rocket fuel celebrating their ipo. >> it was a double. fire eye and rocket fuel. interesting place they have between the provider of the advertising and the buyer of the advertising, where they can maximize it and figure out ways

to reach the desired end point much more effectively. >> that's what everyone's talking about, tim armstrong. >> they'll buy from armstrong and add on their value-added robot. they have a lot of robots. >> mean time lennar, people are liking the other things. lennar making a lot of money. kb homes maybe not as well liked. but i do like the fact that you're seeing profitability, gross margins, and what they're selling homes being good. a lot of cross currents here about how well things are really going. and i think that cross currents ahead of a fed shutdown not so good. >> fed shutdown, a government shoulddown or -- >> federal -- federal shutdown. >> i mean, you read the articles, it's like hold it, mitch mcconnell's not going to help, we're on cruise control or cruise missile, defending on the

analogy. >> cr-r-u-zc-r-u-z. >> right. >> the numbers seem to keep rising on the probability of the pundits who predict these kinds of things. >> and i just worry because yesterday i did a piece about the vix with this guy mark sebastian on "mad money." the vix is acting as if don't worry about it, don't worry about it. that's what you saw a few times before the last wranglings and then you got the spakes and ike >> you shouldn't have worried about it. >> we have lost all of our no-taper euphoria, jim. >> we have. at the same time the bank stocks have been horrendous. yesterday citigroup laying off

people. if you think that mortgages are going to continue the way the shiller thing did, you wouldn't if you were city laying off those people, if you're wells laying off those people. wells and city, particularly i have to say wells, they've got a real handle on these things. they fired very quickly. >> they did not wait very long. >> no. they just fired and they'll ask questions later. >> as the refi business softened and the 10-year got closer and closer to 3. >> again, if lennar can make money in this environment, good, with fewer orders, which i think they can. but if you want to put people to work, you want more orders. if the goal is to put people to work, bernanke's emphasis, you don't want to see orders go down. looks like lennar, stewart miller, ceo, probably has a good story to tell. >> we're getting a lot of headlines out of the conference that's taking place.

stuart miller will be on "mad money" tonight. at&t shares are down a bit. stevenson, ceo of at&t was asked do you have any plans to pursue consolidation in europe. people want to know if they're going to buy vodaphone, but he would not answer that. he appeared on "mad money" last night. >> as long as he isn't on another network, i'm cool with it. >> basically said has no fears about new entrance to espn's space, wouldn't rule out further acquisitions. here's a brief bit of sound of what bob iger told jim last night. >> the opportunities for creators to create given all the access they have, given all the new platforms, have never been greater. i wouldn't be surprised to see

in the near future the walt disney company creating product for some of these new platforms directly. >> unbelievable. could that be apple? could it be amazon? could it be netflix? who are they creating it for? who are they creating it for? don't you think that's an oep questi -- open question? >> it certainly is. of course he's still on the board of apple. >> apple halo, no halo, halo, no halo. >> and certainly the ceceo of apple -- is that his wife now? i don't know what happened to that stake. >> the morgan stanley, this is a hit machine, brookheimer no longer doing that deal.

i do think the future is very bright for disney. they've got a lot of different content that can't be time shifted. that's why you mentioned espn. espn growth, more people have added than fox sports has. there's a lot of good things at disney. at the same time, you have to have that mobile and he's saying we're going to have the mobile. now, if they do a flet flicks deal, i think that would be extraordinary. that would be extraordinary. >> what do you mean a netflix deal? >> make content for netflix, make content for apple. >> they already have this exclusive netflix. that's the deal that set netflix going. >> maybe they're going to do programming. >> it's disney related. it's not specific for netflix. >> the netflix stocks needs more and more deals. if bob is making disney product specifically for netflix, that's like the -- >> i'm not sure how that would

work, though. if you're making disney product, you just need a way to distribute it on mobile devices and get paid for it. >> that could be. i don't know. i thought it was quite exciting. >> carnival down, profits down 30%. they say some of our current challenges and cost precious will continue well into the next year, trying to get people back on board these ships. >> disney is doing well on its cruise ship, royal is doing well. >> got some currency headwinds, i guess you could argue, though fuel prices, they're blaming 4 cents on the june view. perhaps that moderates if crude continues to come down. >> crude doesn't matter tremendously as it does for airlines. you see when they pull up the ship, it just reminds you again and again that, wow, as between

carnival and somebody else, maybe i ought to go with somebody else. carnival is very well run, by the way, so i don't want to attribute what happened there to being the overall change. carnival has always been a great company. >> did want to add anti-trust be darned. amex is up over 8% on this deal. >> actually, a record high, right? >> it matters if they get it done. i just think that if you're intel, you just say, listen, we're not going to have this. it's going to drive up prices. >> so they need china, they need a lot of anti-trust approvals and they also may need sifus, too. it will take them a long time to get the deal done. >> we see this interesting here, sprint and -- >> japan is a huge -- >> it's an open door policy,

commander, whatever. >> it's been enormous this year in m&a. >> sony. >> highest level since september 2008. let's get to bob pisani here. >> good morning. consumer staples to the down side. good news is the odds of a government shutdown seem to be a little less. apparently reid and the senior republicans seem to have some sort of deal to go through with the resolution process that's clean, doesn't defund obama care. right now even though there's a lot of whining, the stock market is holding up very well. you look at industrials, health care, technology, consumer discretionary, all of those well under their 200 day moving average. the one group i'm worried about, financials. they're quietly breaking down. they have not hit new highs in september. on home builders, you guys talked about a lot this morning.

i agree with your fundamental point here, guys. i think the new order numbers were disappointing on both front. lennar only up 14. if you look at the comments from the ceos, they're all emphasizing the probability that rates will stabilize. that's what metzger said over at kb home, the uptip in mortgage rates is a temporary effect, he emphasized that a lot. and they may have a point, mortgage rates may stay in that 4% range and that's going to happen. i saw robert shiller. he looked very nervous about concerns about a bubble. you want to see a real bubble? we had a 12% increase in numbers this week. in 2004 to 2006, we had double-digit increases for something like 45 consecutive quarters. 12% is an anomaly we had last month, i still wouldn't call that a bubble. i think he's getting nervous prematurely. did you see carmax, we're at an

historic high, 4% premarket, they beat earnings and revenues. your point against chrysler is a good one. i think sergio has a job to try to get it cheaper. if the deal is closer to $10 billion, the uaw is right, if it's closer to $5 billion, we'll know fiat is right. >> it will be interesting to watch that process unfold. thank you, bob pisani. i wanted to talk a bit more about this conference taking place not far from here. >> time warner cable presents soon. the ceo will be stepping down in the not too distant future is not presenting. it is the cfo of time warner. the dispute with cbs, how many subs did they lose? is it material? i've heard hundreds of thousands -- it's much easier

when you have a home to put a directv dish on this to say bye-bye, time warner cable. but the other question of course continues to be one of consolidation. certainly going to get those questions. there had been a hope on the part of libya media that they might really be able to get progress on a consolidation approach that i first -- that hasn't got anywhere and i've heard very little on that front. one question that chartered had hoped would bes anded. even though the structure of a deal would be a difficult one to pull off on time warner cable, as we take a look there. but be very curious to see how many subs they lost when it comes to that cbs dispute. >> did want to talk a little more activism.

i have one story to share on bob evans. >> that's the second stock i ever bought! like the waitress. >> so you bought it. >> sometimes you have to go anecdotal. >> there have been a couple of -- >> '79. >> '79, bob evans. this morning tom sandell, used to be at barrear stearns, he se as letter over to the board of bob evans' farms urging them to take action, too, unlock shareholder value. this we've heard before. they have a packaged food business, they also have the restaurant business. >> they have great sausage. >> they want them to separate the food products business from the restaurant business and

pursue a leaseback and they're saying take these three steps and we think you'll be an $894 stock. a little bit of news there. >> when they split up, the sausage business, they could merge hillshire farm sausage with bob evans' sausage. it's been a good stock to begin with. >> the stock has done tearly well. >> performance is no defense against activism. right? >> no, nothing is these days. >> liberty is not a vice. >> let's shift to the bonds and rick santelli at the cme group

at chicago. rick? >> we're seeing interest rates continue to moderate and not in an aggressive fashion. notice the low yield on the clart. basically we're low yielding around 267. 267 was the low on the fed day, it isn't surprising we're going to hold here. the chart looks as if we're going to be moving a bit lower but we need to challenge some of the high to mid 2.60s on a break through and closing basis. but let's look at the bund. all of them are rolling over about the same. the central bank has an interconnectedness. think about of course no taper. as we low below 2% in the bund or let's look at the. it wasn't that long ago it

looked like it was going to challenge at 1%. at least from an interest rate rate side, it isn't being tall enged. keep them happy, maybe they k ken -- the real test, according to traders, is what it does at the 134 level. so traders versus the dollar. back to you, carl. >> thank you, rick santelli. >> agreeing with microsoft and aol to simplify the process to buy premium digital ads. we're getting closer to 32 here. >> i've been up earlier. is that the news? is that enough to trigger the stock up 3%? >> happy days are here again. i think a lot of people feel

that is the devices' moment. maybe we can find some ali baba stuff to dig up? >> chrysler we mentioned earlier, yahoo! can force the ipo by 15. but ali baba is probably going to do it in the first quarter. >> a lot of people argued lowe got this preferred space but he's doing well. everybody wins sometimes. >> when we come back, burger king looking to heat up business by revealing new lower fat frenchfries. does mcdonald's have reason to worry, when we come back. (announcer) at scottrade, our clients trade and invest exactly how they want.

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burger king upping the ante, revealing lower fat fries,

called satisfries. guys, this is a big business. we always talked about fries at wendy's and when mcdonald's went to no transfat. this is a big deal. >> these places have to adopt or die. i've been following inning's, white wave, whole foods. that's where the move is, you have to make things healthier or thinner. >> apparently the batter is less porous, which allows the oil to make its way less into the fry.

>> let me take a lipitor. do you need a lipitor? it's a joke there, burger king guys. >> if i'm blindfolded, i don't know if i can tell the difference. >> heinz and burger king go together because it's 3g. it's the brazilians who run both companies. >> really? >> yeah. >> bautista has nothing to do with this? >> no. >> you remember the heinz sale, it was a special purpose, ackman was involved, the brazilians merged it in there, took it public. you like it? i'm going to have another one. >> remember that scary guy king that was running around? >> that was frightening. >> available across the country beginning today, $1.29 for the value -- would you buy bkw?

>> no. i like the chipotle people. >> they got my vote. >> your vote but your dollars, they are different. they are delicious. we went out and asked people a simple question: how old is the oldest person you've known? we gave people a sticker and had them show us. we learned a lot of us have known someone who's lived well into their 90s. and that's a great thing. but even though we're living longer, one thing that hasn't changed much is the official retirement age. ♪ the question is how do you make sure you have the money you need to enjoy all of these years. ♪

time for "six in 60." >> nike better know something or it's going to be egg on their faces. egg mcmuffin. >> citi upgrades bid. >> there has to be something going on. you don't do that. >>. >> some questions as to the up side of starbucks at this level. >> jpmorgan is questioning, maybe they don't like the -- my executive producer did not like the muffin. it hurt her cell phone. >> broadcom getting worse? >> how could it get worse?

i don't know. >> and finally lennar. >> a lot of people feel rates have come down since they did this, maybe orders come back and the company is making a lot of money. stuart miller give us the answer tonight on "mad money." >> what else is on tonight? >> dan hesse, the first public comment about the deal. i can't wait. >> john rich, they blew up last week. they guided down and they got new products. maybe hope springs eternal. >> what is a big show. >> i got to go take some oxygen to go with that lipitor. >> when we come back, results and market reaction on the other side of this break.

thank you orville and wilbur... ...amelia... neil and buzz: for teaching us that you can't create the future... by clinging to the past. and with that: you're history. instead of looking behind... delta is looking beyond. 80 thousand of us investing billions... in everything from the best experiences below... to the finest comforts above. we're not simply saluting history... we're making it.

just by talking to a helmet. it grabbed the patient's record before we even picked him up. it found out the doctor we needed was at st. anne's. wiggle your toes. [ driver ] and it got his okay on treatment from miles away. it even pulled strings with the stoplights. my ambulance talks with smoke alarms

and pilots and stadiums. but, of course, it's a good listener too. [ female announcer ] today cisco is connecting the internet of everything. so everything works like never before. welcome back to "squawk on the street." september read on richmond fed manufacturing index unchanged. we're looking for 12. these are always super volatile. maybe more important, september read from the conference board on consumer confidence, a little light, 79.7, we're looking for 79.9. last look, however, for august was upgraded from 81.5 to 89.8 and that continues on that 81.8

to be the high water mark going back to january of '08 when we had an 87 handle. the goose egg on this current read, the goose egg on richmond, i'm sorry, i'm switching gears, that would count back to july when we were minus 11. but on that 79.7, we haven't been down there since may. so 74 was the read in may. then we moved into the 80s ever since. so light on richmond fed and august the new high water mark. carl, back to you. >> rick santelli, couple of misses there. get a quick check on the markets following that data. the dow is down about 30 points. it comes after our first three-day losing streak. in about a month we've lost all of the fed day euphoria, the no taper euphoria, after being down yesterday with a 16 handle at 1,697. >> and 2.69, it's mad a

comeback. >> now, president obama is set to deliver a speech to the general assembly in just a couple of minutes. we'll bring it live when it happens. michelle caruso-cabrera is outside the u.n. now. the president of brazil is speaking. >> yes, she is. we are here today not necessarily because of president obama's speech but because we could see the highest level interaction between the united states and the islamic republic of iran in more than 30 years. as you said, president obama expected to speak later. we haven't seen him arrive yet, roughly 10:10. we will carry that live. we'll be watching for whether or not there is a happenstance meeting between him and hassthe

president of iran. nothing is happenstance at these events, they were very orchestrated. if something like that were to occur, it would be symbolic and suggest these two countries are willing to move forward with discussion about the thawing of relationship. it has been impacting the oil markets. if you look at the prices of oil, it has fallen in part because we're not going to bomb syria and also perhaps because of the perception of the sanctions on iran. they find it very difficult to find buyers, india is one of the few remaining buyers for them. not all of the oil analysts are

convinced. he is not factoring any volume tensions or easing of the sanctions. he said if it were to happen, here is theoretically how it might work and what the impact would be. >> i think in the first phase of the reinstatement of iranian production, you could probably see iran's export rise from the current million barrels to day to 1.5 and edge back to 2 million barrels per day but that's very hypothetical. >> and he also thinks highly doubtful. >> syria, the elimination of chemical weapons and political resolution to the civil war, iran, dealing with the end of their pursuit of a nuclear weapon and the u.s. pursuit of peace in the middle east. back to you, guys. >> and to be clear, michelle, we're a long way from starting negotiations with iran to getting productivity on the nuclear issue and releasing oil.

that's an awfully long way away. >> absolutely, simon. >> michelle, we'll come back to you throughout the morning as we await the arrival of the president at the united nations. we want to focus on facebook this morning, citi is upgrading facebook to a buy. joining us on the phone is the analyst behind that upgrade, mark may, senior internet analyst with citi. so what's behind the upgrade? >> we've been spend being the last several weeks since the company recorded q2, speaking with some of the largest advertisers and ad agencies, the feedback is extremely positive. we believe the inflexion point that the company saw if q2 is in fact real and sustainable. we've been participating in the advertising conference here in new york this week. the buzz is quite strong for

facebook and we think it's sustainable. valuation still looks reasonable as well. >> in layman's terms, mark, what are they actually doing? >> both brand as well as direct response advertisers are seeing meaningful effectiveness and positive rois on ad campaigns they're running on facebook. if you think about it, in most advertising, advertisers are guessing at what audience they are actually reaching with their ad. on facebook, the advertisers know with significant certainty who is actually seeing their ad. the first time that an advertiser can actually put an ad in front of a person and not a proxy for a person they think they're reaching and that's proving to be quite effective. >> mark, so much of the rebound in air force base shares go back to the earnings report. how much of a potential catalyst

could that be in either direction of the shares, fab maybe doesn't deliver as much as people are hoping or again can come out and reaffirm its positive story? >> we like to certainly take long-term views of our recommendations but i think what's nice about this upgrade is we feel good about the quarter as well. some of the largest ad agencies that we're talking about are seeing same-advertiser growth up over 50% in q3 versus q2. the street is looking for 6% to 7%. we think there is up side to the quarter and we think that could impact. >> mark, you make note in your note that you were worried when you initiated about some of the concerns over monetization, i wonder how much you're kicking yourself for missing this 80% move since they reported

earnings in july. we're even hearing from some bulls here tho who are amazed we're this close in the five handle. >> i only take solace that i'm the only person who missed the -- i think you'll see a lot of the friend and also to be included in the s&p 500 index. it's the mutual fund direction benchmark against the performance. so i think they'll continue to see a lot to follow on. >> your line is begin og break up, mark, but just before we let you go, facebook is leading social media. does this lock on to the

other -- or is it because the advertisers are with him? >> i think you're really spot on. the entire advertising industry are starting to finally figure out how to utilize mobile. so companies like yahoo! and linked in are really doing interesting things in mobile. >> okay, mark, good to see you. thank you very much. >> thank you. thanks for having me. >> mark may from citi, a senior internet analyst. >> getting some breaking news on the twitter ipo. for that we turn to julia boorstin. julia? >> that's right. i'm hearing that twitter is leaning toward listing on the new york stock exchange, though there is no official decision been made. earlier this morning there was a report that twitter had made a final decision to list on the new york stock exchange, but my sources tell me that is not the case. there is still an active negotiation in place.

representatives of the new york stock exchange did visit twitter's headquarters in san francisco but it is still an ongoing decision and no pressure to make a -- we take you to the president now. divisions of race and religion and tribe were settled through the sword and the clash of armies. the idea that nations and peoples could come together in peace to solve their disputes and advance a common prosperity seemed unimaginable. it took the awful carnage of two world wars to shift our thinking. the leaders who built the united nations were not naive. they did not think this body

could eradicate all wars but in the wake of millions dead and continents in rubble and with the development of nuclear weapons that could annihilate a planet, they understood that humanity o could not survive the course it was on. and so they gave us this institution, believing that it could allow us to grow collaboration that would grow stronger over time. for decades the united nations has in fact made a difference, from helping to eradicate disease, to educating children, to brokering peace. but like every generation of leaders, we face new and profound challenges. and in body continues to be tested. the question is whether we possess the wisdom and the courage as nation states and members of an international community.

to squarely meet those challenges. whether the united nations can meet the test of our time. for much of my tenure as president, some of our most urgent challenges have revolved around an increasingly integrated global economy and our efforts to recover from the worst economic crisis of our life time. now five years after the global economy collapsed and thanks to coordinated efforts by the countries here today, jobs are being created, global financial systems have stabilized and people are once again being lifted out of poverty. but this progress is fragile and unequal and we still have work to do together to assure that our citizens can access the opportunities that they need to thrive in the 21st century. together we've also worked to

end a decade of war. five years ago nearly 180,000 americans were serving in arm's way. and the war in iraq was the dominant issue in our relationship with the rest of the world. today all of our troops have left iraq. next year an international coalition will end its war in afghanistan, having achieved its mission of dismantling the core of al qaeda that attacked us on 9/11. for the united states, these new circumstances have also meant shifting away from a perpetual war footing. beyond bringing our troops home, they have limited the use of drones to those where there is imminent threat to the united states, where capture is not feasible and no threat to civilian tragedies while working

diligently to close the prison at guantanamo bay. just as rerwe reviewed -- we've begun to review the way we balance intelligence. as a result of this work and cooperation with allies and partners, the world is more stable than it was five years ago. but even a glance at today's headlines indicates that dangers remain. in kenya we've seen terrorists target innocent civilians in a crowded shopping mall and our hearts go out to the families of those who have been affected. in pakistan nearly 100 people were recently killed by suicide bombers outside a church.

in iraq, killings and car bombs continue to be a terrible part of life. meanwhile al qaeda has splintered into regional networks and militias, which doesn't give them the capacity at this point to carry out attacks like 9/11 but does pose serious threats to governments, diplomats, businesses and civilians all across the globe. >> just as significant, convulsions in the middle east and africa have laid deep divisions in societies, as an old war is ended and people grapple with what comes next. peaceful movements have too often been answered by violence, for those resisting change and from extremists trying to hijack change. sectarian conflict has reemerged

and the potential spread of weapons of mass destruction continues to cast a shadow over the pursuit of peace. nowhere have we seen these trends converge more powerfully than in syria. their peaceful protests against an authoritarian regime were met with repression and slaughter. in the face of such carnage many retreated to their sectarian identity, christian, sunni, kurd, and the christian. our response has not matched the scale of the challenge. aid cannot keep pace with the suffering of the wounded and displaced, a peace process is stillborn, americans and others have worked to bolster the moderate opposition but

extremist groups have still taken root to exploit the crisis. assad's traditional allies have propped him up citing principles of sovereignty to shield his regime and on august 21st the regime used chemical weapons in an attack that killed more than 1,000 people, including hundreds of children. now, the crisis in syria and the destabilization of the region goes to the heart of broader challenges that the international community must now confront. how should we respond to conflicts in the middle east and north africa, conflicts between countries but also conflicts within them? how do we address the choice of standing callously by while children are subjected to nerve gas or embroiling ourselves in

someone else's civil war? what's the role of force in resolving disputes that threaten the stability of the region and undermine all basic standards of civil sized conduct? and what's the role of the united nations and international law in meeting cries for justice? today i want to outline where the united states of america stands on these issues. with respect to syria, we believe that as a starting point the international community must enforce the ban on chemical weapons. when i stated my willingness to order a limited strike against the assad regime in response to the brazen use of chemical weapons, i did not do so lightly. i did so because i believe it is in the national security interests of the united states and in the interest of the world to meaningfully enforce a

prohibition whose origins are older than the united nations itself. the ban against the use of chemical weapons, even in war, has been agreed to by 98% of humanity. it is strengthened by the searing memories of soldiers suffocated in the trenches, jews slaughtered in gas chambers, iranians pointed in the many tens of thousands. the evidence is overwhelming that the assad regime used such weapons on august 21st. u.n. inspectors gave a clear accounting that advanced rockets fired large counties of sarin gas at civilians. these rockets were fired from a regime-controlled neighborhood and landed in opposition neighborhoods. it's an insult to human reason

and to the legitimacy of this institution to suggest that anyone other than the regime carried out this attack. now, i know that in the immediate aftermath of the attack there were those who questioned the legitimacy of even a limited strike in the absence of a clear mandate from the security council. but without a credible military threat, the security council had demonstrated no inclination to act at all. however, as i've discussed with president putin for over a year, most recently in st. petersburg, my preference has always been a diplomatic resolution to this issue. and in the past several weeks the united states, russia and our allies have reached an agreement to place syria's weapons under international control and then to destroy

them. the syrian government took a first step by giving an accounting of its stockpiles. now there must be a strong security council resolution to verify that the assad regime is keeping its commitments, and there must be consequences if they fail to do so. if we cannot agree even on this, then it will show that the united nations is incapable of enforcing the most basic of international laws. on the other hand, if we succeed, it will send a powerful message that the use of chemical weapons has no place in the 21st century and that this body means what it says. agreement on chemical weapons should energize a larger diplomatic effort to reach a

political settlement within syria. i do not believe that military action by those within syria or by external powers can achieve a lasting peace. nor do i believe that america or any nation should determine who will lead syria. that is for the syrian people to decide. nevertheless, a leader who slaughtered his citizens and gassed children to death cannot regain the legitimacy to lead a badly fractured country. the notion that syria can somehow return to a prewar status quo is a fantasy. it's time for russia and iran to realize that insisting on assad's rule will lead directly to the outcome that they fear of increasingly violent space for extremists to operate. in turn, those of us who continue to support the moderate

opposition must persuade them that the syrian people cannot afford a collapse of state institutions and that a political settlement cannot be reached without addressing the legitimate fears and concerns of alo wh alowhites and other minorities. let's remember this is not a zero sum endeavor. we're not in a cold war. there is no great game to be won, nor does the u.s. have any interest in syria beyond the well being of its people, the well being of its neighbors, the stability of its weapons and ensuring it does not become a safe havens. i welcome all nations that can help bring about a peaceful

resolution of syria's civil war. america's committed over $1 billion to this effort. today i can announce that we will be providing an additional $340 million. no aid can take the place of a political resolution that gives the syrian people a chance to rebuild their country, but it can help desperate people to survive. what broader conclusions can be drawn from america's policy towards syria? i know there are those who have been frustrated by our unwillingness to use our military might to oppose assad and beliefs failure to do so leads to a weakening of the region.

others believe that we've learned nothing for iraq and we continue to try to gain control of the middle east for our own purposes. this mirror as a contradiction that has persisted in the region for decades. >> i realize some of this is inevitable given america's role in the world. but these contradictory attitudes have a practical impact on the american people's support for our involvement in the region and allow leaders in the region and the international community to avoid addressing difficult problems themselves.

let me take this time to outline what has been the policy in the middle east and south africa. the united states of america is prepared to use all elements of our power, including military force, to secure our core interests in the region. we will confront external aggression against our allies and partners, as we did in the gulf war. we will ensure the free throw of energy from the region to the world, although america is steadily reducing our own dependence on imported oil, the world still depends on the region's energy supply and a severe disruption to destabilize the entire economy. wherever possible, we will build the capacity of our partners, respect the sovereignty of nations and work to address the root causes of terror, but when

it's necessary to defend the united states against terrorist attack, we will take direct action. and finally, we will not tolerate the development or use of weapons of mass destruction. just as we considered the use of chemical weapons in syria to be a threat to our own national security, we reject the development of nuclear weapons that could trigger a nuclear arms race in the region and undermine the nuclear proliferation regime. this is not to say these of our only interests. we deeply believe it is in our interest to see a middle east and north africa that is peaceful and prosperous and will continue to promote democracy and human rights in open markets because we believe these practices achieve peace and prosperity.

but i also believe that we can rarely achieve these objectives through unilateral american action, particularly through military action. iraq shows us that democracy cannot simply be imposed by force. rather these objectives are best achieved when we partner with the international community. and with the countries and peoples of the region. so what does this mean going forward? in the near term, america's diplomatic efforts will focus on two particular issues, iran's pursuit of nuclear weapons and the arab/israeli conflict. wheel these issues are not the cause of all. region's problems, they have been a major source of instability for far too long and resolving them can help serve as

a foundation for a broader peace. the united states and iran have been isolated from one another since the islamic revolution of 1979. this mistrust has deep roots. iranians have long complained of a history of u.s. interference in their affairs and of america's role in overthrowing the iranian government during the cold war. on the other hand, americans see an iranian government that has declared the united states an enemy and directly or through proxies taken american hostages, killed u.s. troops and civilians and threatened our ally, israel, with destruction. i don't believe this difficult history can be overcome overnight. the suspicions run too deep. but do i believe that if we can

resolve the issue of iran's nuclear program, that can serve as a major step down a long road towards a different relationship. one based on mutual interests and mutual respect. since i took office, i've made it clear in letters to the supreme leader in iran and more recently to president ruhani, that we plan to act peacefully, we are not saeking regime change and respect the right of the iranian people to access nuclear energy. meanwhile, the supreme leader

has issued a fattwa against nuclear weapons. so these statements made by our respective governments should offer the basis for a meaning agreement. we should be able to achieve a resolution that respects the rights of the iranian people while giving the world confidence that the iranian program is peaceful. but to succeed, conciliatory words will have to be matched by actions that are transparent and verifiable. after all, it's the iranian government's choices that have led to the sanctions that are in place and this is not simply an issue between the united states and iran. the world has seen iran evade

its responsibilities in the past and has an interest in making sure iran fulfills its responsibilities in the future. i am directing john kerry to pursue this effort with the iranian government in close cooperation with the european union, the united kingdom, france, germany, russia and china. iran's genuine commitment to go down a different path will be good for the region and the world and will help the iranian people meet their extraordinary potential in commerce, in culture, in science and education.

we are also determined to resolve a conflict that goes back even further than our differences with iran and that is the conflict between the palestinians and israeli. i've made it clear that the united states will never compromise our commitment to israel's security, nor our support for its existence as a jewish state. earlier this year in jerusalem, i was inspired by young israelis who stood up for the belief that peace was necessary, just and possible, and i believe there's a growing recognition within israel that the occupation of the west bank is tearing at the democratic fabric of the jewish state. but the children of israel have the right to live in a world where the nations assembled in this body fully recognize their country and where we

unequivocally reject those who fire rockets at their homes or incite others to hate them. likewise the united states remains committed to the belief that the palestinian people have a right to live with security and dignity in their own sovereign state. on the same trip i had the opportunity to meet with young palestinians in ramallah whose ambition and incredible potential are matched by the pain they feel in having no firm place in the community of nations. they are understandably cynical that real progress will ever be made and they're frustrated by their families enduring the daily indignity of occupation. but they, too, recognize that two states is the only real path to peace because just as the palestinian people must not be displaced, the state of israel is here to stay.

so the time is now ripe for the entire international community to get behind the pursuit of peace. already israeli and palestinian leaders have demonstrated a willingness to take significant political risks. president abbas has put aside efforts to short cut the pursuit of peace and come to the negotiating table, president netanyahu has released palestinian prisoners and reaffirmed his commitment to a palestinian state. current talks are focused on final status issues of borders and security, refugees and jerusalem. so now the rest of us must be willing to take risks as well. friends of israel, including the united states, must recognize that israel's security as a jewish and democratic state depend on the realization of a palestinian state.

and we should say so clearly. arab states and those who supported the palestinians must recognize that stability will only be served through a two-state solution and a secure israel. all of us must recognize that peace will be a powerful tool to defeat extremists throughout the region and embolden those who are prepared to build a better future. and moreover, ties of trade and commerce between israelis and arabs could be an engine of growth and opportunity at a time when too many young people in the region are languishing without work. so let's emerge from the familiar corners of blame and prejudice, let's support israelis and palestinian leaders who are prepared to walk the difficult road to peace. real breakthroughs on iran's

nuclear program and palestinian peace, would have a profound and positive impact on the entire mideast and north africa. but a just and lasting peace cannot be measured only by agreements between nations. it must also be measured by our ability to resolve conflict and promote justice within nations. and by that measure, it's clear that all of us have a lot more work to do. when peaceful transitions began in tunisia and egypt, the entire world was filled with hope. and although the united states, like others, was struck by the speed of transition, and although we did not and in fact could not dictate events, we chose to support those who called for change.

we did so based on the belief that while theseions will be hard and take time, society is based upon democracy and openness and the dignity of the individual will ultimately be more stable, more prosperous and more peaceful. over the last few years, particularly in egypt, we've seen just how hard this transition will be. mohamed morsi was democratically elected but proved unwilling or unable to govern in a way that was fully inclusive. the interim government that replaced him responded to the desires of millions of egyptians who believed the revolution had taken a wrong turn, but it, too, has made decisions inconsistent with inclusive democracy through an emergency law and restribct n

restrictions on the press and civil laws. of course the u.s. has been accused of supporting the muslim brotherhood and engineering the removal of power. in fact, the united states has purposely avoided choosing sides. our overriding interests has been to encourage a government that legitimately reflects a will of the egyptian people and recognizes true democracy is respecting a role for minority rights, rule of law, freedom of speech in assembly and a strong civil society. that remains our interest today. so going forward the united states will maintain a constructive relationship that promotes interests like the camp david accord and counterterrorism, will support areas that directly benefit the

egyptian people but we have not proceeded with the delivery of certain military systems and our support will depend upon egypt's progress in pursuing a more democratic path. and our approach to egypt reflects a larger point. the united states will at times work with governments that do not meet at least in our view the highest international expectations, but who work with us on our core interests. nevertheless, we will not stop asserting principles that are consistent with our ideals, whether that means opposing the use of violence as a means of suppressing dissent or supporting principals embody in the universal declaration of human rights. we will reject the knows that these are simply western exports incompatible with islam.

we agree they are the right of every person. we recognize we will at times be limited and although we will at times be accused of hypocrisy and inconsistency, we will be engaged in the region for the long haul. for the hard work of forging freedom and democracy is the task of a generation. and this includes efforts to resolve sectarian tensions that continue to surface in places like iraq, bahrain and syria. we understand such longstanding issues cannot be solved by outsiders. they must be addressed by muslim communities themselves. but we've seen grinding conflicts come to an end before. most recently in northern ireland where catholics and protestants finally realized an

endless cycle of violence was causing both communities to fall behind a rising world. so we believe those same conflicts can be overcome in the middle east and north africa. to summarize, the united states has a hard-earned humility when it comes to our ability to determine events inside other countries. the notion of american empire may be useful propaganda, but it isn't born out by america's current policy or public opinion. indeed, as reent debates within the united states over syria clearly showed. the danger for the world is not an america that is too eager to immerse itself in the affairs of other countries or take on every problem in the region as its own. the danger for the world is the

united states after a decade of war, rightly concerned about issues back home, aware of the hostility that our engagement in the region has engendered throughout the muslim world may disengage, creating a vacuum of leadership that no other nation is ready to fill. i believe such disengagement would be a mistake. i believe america must remain engaged for our own security, but i also believe the world is better for it. some may disagree but i believe america is exceptional in part that we have shown a willingness through the sacrifice of blood and treasure to stand up not on for our own narrow self-interests but for the interests of all. i must be honest, though. we're far more likely continue to vest our energy in those countries that want to work with

us, that invest in their people instead of a corrupt few, that embrace a vision of society where everyone can contribute, men and women, shi'a or sunni, muslim, christian or jew, because from europe to asia, from africa to the americas, nations that have persevered on a democratic path have emerged more prosperous, more peaceful and more invested in upholding our common security and our common humanity. i believe that the same will hold true for the arab world. this leads me to a final point. there will be times when the breakdown of societies is so great, that violence against civilians so substantial that the international community will be called upon to act. this will require new thinking and some very tough choices.

while the united nations was designed to prevent wars between states, increasingly we face the challenge of preventing slaughter within states. and these challenges will grow more pronounced as we are confronted with states that are fragile or failing, places where horrendous violence can put innocent men, women and children at risk, with no hope of protection from their national institutions. i've made it clear that even when america's core interests are not directly threatened, we stand ready to do our part to prevent mass atrocities and protect basic human rights, but we cannot and should not bear that burden alone. we supported the french intervention that successfully

pushed back al qaeda and the african forces who are keeping the peace. in eastern africa we are working with partners to bring the lord's resistance army to an end. and in libya, when the security council provided a mandate to protect civilians, america joined a coalition that took action. because of what we did there, countless lives were saved and a tyrant could not kill his way back to power. i know that some now criticize the action in libya as an object lesson, they point to the problems that the country now confronts, a democratically elected government struggling to provide security, armed groups in some places extremists ruling parts of a fractured land. so these critics argue any intervention to protect civilians is doomed to fail, look at libya. no one is more mindful of these

problems that i am for they resulted in the death of four outstanding u.s. citizens who were committed to the libyan people, including ambassador chris stevens, a man whose creative efforts helped save the city of benghazi, but does anyone truly believe the situation in libya would be better if gadhafi had been allowed to brutalize and kill his people into submission? it's march for lifar more likel action libya will be involved in a civil war and bloodshed. the principle of sovereignty is at the center of our international order, but sovereignty cannot be a shield for tyrants to commit wanton murder or an execution for the international community to turn

a blind eye. while we need to be modest in our belief that we can remedy every evil, while we need to be mindful that the world is full of unintended consequences, should we really accept the notion that the world is powerless in the world of rwanda or srebrenica? if that's the world people want to live in, they should say so and reckon with the mass graves. but i believe we can live a different future. if we don't want to choose between inaction and war, we must get better, all of us, at the policies that prevent the breakdown of basic order, through the respect of responsibilities of nations and the rights of individuals, through meaningful sanctions for those who break the rules, through dogged diplomacy that resolves the root causes of conflict, not nearly its aftermath, through development

assistance that brings hope to the marginalized. and yes sometimes, although this will not be enough, there are going to be moment when the international community will need to acknowledge that the multi-lateral use of military force may be required to prevent the very worst from occurring. ultimately this is the international community that america seeks. one where nations do not covet the land or resources of other nations but one in which we carry out the founding purpose of this institution and where we all take responsibility, a world in which the rules established out of the horrors of war can help us resolve conflicts peacefully and prevent the kind of wars that our forefathers fought. a world where human beings can live with dignity and

basic needs whether they live in new york, nairobi or damascus. these are extraordinary times with extraordinary opportunities. thanks to human progress, a child born anywhere on earth today can do things that 60 years ago would have been out of reach for the mass of humanity. i saw this in africa where nations moving beyond conflict are now poised to take off, and america's with them, partnering to feed the hungry and care for the sick and to bring power to places off the grid. i see it across the pacific region where hundreds of millions have been lifted out of poverty in a single generation. i see it in the faces of young people everywhere, who can access the entire world with the click of a button and who are eager to join the cause of eradicating extreme poverty and combatting climate change, starting businesses, expanding freedom, and leaving behind the old ideological battles of the

past. that's what's happening in asia and africa. it's happening in europe and across the americas. that's the future that the people of the middle east and north africa deserve, as well. one where they can focus on opportunity instead of whether they'll be killed or repressed because of who they are or what they believe. time and again nations and people have shown our capacity to change. to live up to humanity's highest ideals. to choose our better history. last month, i stood where 50 years ago martin luther king jr. told america about his dream, that a time when many people of my race could not even vote for president. earlier this year, i stood in the small cell where nelson mandela enduring decades caught

off from his own people and the world. who are we to believe that today's challenges cannot be overcome? when we've seen what changes the human spirit can bring. who in this hall could argue that the future belongs to those who seek to repress that present rather than those who seek to liberate it? i know i know what side i want the united states of america to be on. we're ready to meet tomorrow's challenges with you. firm in the belief that all men and women are, in fact, created equal. each individual possessed with a dignity and inalienable rights that cannot be denied. that is why we look to the future not with fear but with hope, and that's why we remain convinced that this community of nations can deliver a more peaceful, prosperous, and just world to the next generation. thank you very much. [ applause ]

>> and that is the president addressing the united nations general assembly, a speech that essentially tries to push back at the criticism that the united states is trying to be policeman to the world, saying the u.s. has been humbled by previous efforts to influence outcomes in other countries. the headline, guys, may be he's directed the secretary of state to pursue a diplomatic path when it comes to iran, making the point, though, there is still reason for suspicion, given the history between these two countries, and also in syria, chastising the u.n., saying they have to enforce the ban on chemical weapons in order to save that institution's own legitimacy. michelle is outside the u.n. with more. michelle? >> reporter: yeah, i would add to that, carl, he chieded the u.n., and also reprosecuted the case for military intervention, unless we had threatened that, this organization wouldn't have gotten anything done when it comes to syria. that's the first point he made. when it comes to iran, yes, absolutely the headline is

having secretary kerry begin high-level negotiations, about trying to verify whether or not iran's nuclear program is peaceful. and he also hinted at what the united states would do in exchange for that, not try to seek regime change in iran. when you speak to experts who have watched iran for a long time, they say that the iranian leadership believes the u.s. isn't just interested in ending the nuclear program, but they're also interested in regime change there. so the u.s., they will expect will stop trying to promote democracy as we know it in that country. and then, also, talking about israel. israel's right to exist. perhaps saying that not as much for all of the members of the u.n., but for israel itself, and trying to assuage the concerns of the israelis as they watch what is unfolding with the irans. remember, israelis are skeptical, and many are saying negotiations with iran may be a moot point. they may be weeks away from creating a nuclear weapon. so at this point, verifying what they have may not necessarily achieve what we have long sought when it comes to iran. back to you guys.

>> all right, michelle outside the united nations building in new york. now, let's get some reaction from washington. eamon joins us. how do you think it played there, eamon? >> reporter: it was interesting. what the president laid out there was a very narrow vision for u.s. foreign policy for the remainder of his presidency. he said in essence, the united states for the remainder of the obama term here is going to focus on two things -- iranian nuclear weapons and their effort to get those, and also the israeli/palestinian conflict. he said those are the two areas where he will devote his attention and energy. he also, i think, criticized the u.n. implicitly saying they're hypocritical in some ways in their criticism of the united states. on the one hand, being too involved in the middle east. on the other hand, not stepping in to prevent atrocities or manipulate events in ways that could be beneficial. the president saying here the united states will stay very much in the region, and on sy a syria, he sort of laid that at the feet of the united nations as well, saying the question

here whether or not this body actually means what it says in terms of chemical weapons. so the president pushing back a little bit on the international community and also laying out a fairly narrow vision and sort of a humble vision, as he said, filled with humility of what the united states can actually accomplish and what it's going to focus on in the years to come. >> sure. although, still reiterating its exceptionalism at the same time, eamon. >> reporter: yes. a direct pushback on vladimir putin, who in his recent op-ed no one should call themselves exceptional. the president saying, no, wait a second, i disagree with you, vladimir. >> he said standing for the interests of all is what makes america exceptional. eamon, thank you for your reaction. coming up, goldman sachs david kostin will turn us with his short and long-term strategies. you can't afford to miss it. my customers can shop around-- see who does good work and compare costs. it doesn't usually work that way with health care.

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extra curricular activities help provide a sense of identity and a path to success. joining the soccer team. getting help with math. going to prom. i want to learn to swim. it's hard to feel normal, when you can't do the normal things. to help, sleep train is collecting donations for the extra activities that, for most kids, are a normal part of growing up. not everyone can be a foster parent... but anyone can help a foster child. the carnival conference quarter just wrapped up. it's lost about $2 billion in market cap. it looks like they're front-loading a lot of the problems they have into the earnings statement. they have a new ceo, arnold donald, who will join us exclusively on cnbc in half an

hour. >> in the meantime, the dow, as kelly mentioned before the break, has gone positive. hard to see what they're keying off of. whether it's the hopes for some diplomatic future between the united states and iran. would you have thought crude would have dropped. it was already lower going into the president aaddress. it actually came up a bit. >> maybe it was the fed's typical daily market operations making all of the difference. >> yeah. watching crude, it will be something to do for the rest of the day clearly, at $102.75. if you are just joining us, look at the dow. up about 15, 16 points after being negative for most of the morning. s&p, of course, back again with a 17 handle, 1,703. we've been waffling back and forth between the 1,700 level all morning long. meantime, shares of facebook rallying. the social network hitting new highs after being upgraded to buy at citi. citi raising the price target to 55, citing the sustainability of recent increases in growth. and shares of redhat falling sharply. the software company posting a

larger than expected second quarter profit, but did issue disappointing revenue projections for the rest of the year. so the roadmap goes like this. the economy is getting better but watch out for a slowdown towards the end of the year, so says david kostin. he'll join us in a moment to tell us where the bright spots in the economy are, and what companies you should be buying. plus, rough waters for carnival, as simon just said. cruise passengers turning away from the world's largest cruise company, despite strong brand recognition and deep discounts. we'll talk to the ceo later this hour, find out how he plans to right the ship. and from the hardwood to the owner's box, former nba star shaquille o'neal is now an nba owner, after buying a piece of the sacramento kings. how is shaq the owner different from shaq the player? we will ask him in just a few minutes. now, while the s&p 500 has gained 20% year-to-date, david kostin over at goldman sachs believes we'll have a more modest growth in the later half of the year, saying the index will gain just 15 points from

the levels. we're currently at 1,703, by year end. he's here to give us the short and long-term strategies. good morning. >> good morning. how are you? >> good. we're all right, i guess. we're looking at a market that's been on such a tear. and yet, everyone seems to be looking at it, well, we've either missed it, worried about buying at the top, or concerned about what the fed is doing. what's your take? what fundamentally is going on right now? >> i think this is an important opportunity to shift to single stock. there are major issues involving politics and geopolitical issues. when we think about the narrative of what's happened in the market this year, the first is the p/e multiple. the market is up 20%. it's almost entirely a function of multiple rising. but what's more interesting is the fact that the -- the range, the disparage, it's narrowed to -- >> wow. go over that for a second. >> that's to say why the overall market multiple has lifted to around 15. >> okay. >> the spread of the multiples,

both across the entire market and within the individual sectors, has narrowed. and that would set up an opportunity from a single-sock perspective as opposed to having an entire market climb. my forecast is that we will see the s&p 500 continue to go up over time, more modestly between now and the end of the year. looking out to next year with the economy getting better, it would suggest the overall market would rise. but we think about what is a potential catalyst that would separate those multiples? if everything -- >> you just had one last week. >> if everything is trading at a similar level, what is a potential catalyst? one idea is the idea of the economy getting better, which would enhance operating leverage for certain companies. the idea is that the economy growing roughly 2-ish-percent right now, would accelerate closer to 3% f you're growing at 3% level, those companies who have incremental sales, high operating margin, that will drop to the bottom line. so those companies -- amazon would be an example, citrix,

general motors, goldman sachs analysts have buy ratings on the stocks and also companies with high degrees of operating leverage. that's a strategy from now to the next six months. companies like that to take advantage of the fact that the dispersion is narrow. >> when you mention amazon, people think of anointing names with the companies like tesla, yelps. do they hold up at year end, even as the market chugs along? >> the market multiple is lifted quite a lot. obviously, there are companies who traded much higher multiples than that. on average, the market is trading around fair value. and you would think the trajectory going forward would be roughly in line with earnings growth. so companies generally with faster earnings should do better. the idea, again, is -- the idea between growth and value -- if everything is narrowly compressed, the argument would be to buy faster growth. it doesn't cost you very much. >> but you're saying the same thing, the scenario is one we'd love, growth picking up a little bit, maybe the job market is getting better, it looks great.

the trouble is we seem to be stuck in this holding pattern where payrolls are adding 160,000, 170,000 a month. growth is at -- i mean, if we don't get the scenario you're talking about, and this is where the fed comes in, it becomes an interesting question, more and more people are looking at the fact they haven't tapered at all, but that growth fundamentally isn't getting any better, and saying this is effectively just handing us more financial engineering and the stock market's getting more and more divorced from reality. >> well, i think you could look at the hard data and you could look at the survey data. my colleague, chief economists at goldman sachs, one thing about the survey data, that's getting better. it's showing positive supplies. the nonmanufacturing index, rising, look at other measures, the philly fed index, the survey-based data. forward-looking measures. >> not real data. >> well, real data, to use your terminology, the hard data, backward looking. so the argument is that -- >> but that's going -- [ overlapping speakers ]

>> -- more from an economic perspective, more valuable -- >> you don't think after the ism employment components burned up with the jobs number -- >> we're sitting here at end of september, three-quarters into the year, up 20%. so we look at from now through the end of the year, earnings period. the third quarter earnings results will come in the 8th or so of october all the way through -- the beginning of november. it's an important indication. earnings always interesting on a single-stock basis, get better information than in terms of the sales growth and what's the trajectory and prospects for capital spending on the part of individual companies. i think in the next three -- zero to six months, you know, you want to be focused on companies with high degree of operating leverage. if you look further out, next 6 to 12 months, companies with more international revenue. it's an yarea that's been down, but some data suggesting it is getting better. >> and to that, you look to

schlumberger -- >> yes, companies with revenue outside of the united states. >> is that based on -- >> longer-term horizon. the near term is the operating leverage, the idea that companies which will benefit most from a little bit improvement in the economy, which would drive sales, and, therefore, they are best positioned here. >> is that contingent on europe continuing to rebound, on china really rebounding? >> no, many of those companies, the higher leverage, have more domestic exposure. and there are companies in every sector. again, the starting point is big p/e expansion over the course of the first nine months of the year and narrowing multiple dispersion, multiples narrowed. >> we have our hardwork. >> i know, it's hard to argue with kostin. it's hard. like trying to find the hole in the doughnut. >> david kostin, thank you. meantime, chrysler is back on its way to being a publicly traded company. the company filed paperwork for an ipo up to $100 million last night. phil lebeau has the latest from

chicago. phil, what's an unusually reluctant move by a company here to go public. >> they really had their hand forced by the veba trust, that said, let's do an ipo. let's see how the market values this company. that's the huge issue when you look at the chrysler ipo. if it even happens. both chrysler, the owner, fiat, as well as the veba trust, where the shares are coming from, they have to agree on the valuation of 41.5% of chrysler. that's what veba own, which fiat would like to own. $2.5 billion in terms of how they value the stake versus what veba values it. for the ceo, he wants to own all of chrysler and he wants to get it for the lowest price possible, because he needs the cash flow to fund the expansion, not only of chrysler but of fiat as well. when you look at chrysler, look at this company. a lot of people say, well, it's a global automaker. well, it's global in name, but not really in terms of sales.

very small in terms of global sales. most of the sales are in the u.s., canada, and mexico. and there you see the rest of the world last year. just 227,000 in sales. and take a look at fiat stock over the last year, compared with its other global competitors. it lags behind general motors, volkswagen, toyota, and ford. in terms of how investors value this company. now, we should point out, you can look at the fact that chrysler doesn't have a big footprint in china and say, boy, there's growth potential there, and they will start building jeeps over there, guy, but at this point, this is a north american company. so if this ipo ever happens, that's one thing that investors are going to have to keep in mind. >> you'd know better than most, phil. thank you so much. our phil lebeau joining us, talking about the chrysler deal. it's most likely the most talked about ipo since facebook. twitter planning its initial public offering, and the question everyone is asking is simple -- what will it be priced at? we'll try to get the answer from one of the top valuation experts in the country in just a moment. first, rick santelli, what

are you watching today? >> well, we're going to be doing the "santelli exchange" in about half an hour, and we'll do the three musketeers route. all for one, one for all. instead of the three musketeers, we'll talk about the four biggest economies and something they're doing in common. you won't want to miss this one. tune in. ♪ with fidelity's options platform, we've completely integrated every step of the process, making it easier to try filters and strategies... to get a list of equity options... evaluate them with our p&l calculator... and execute faster with our more intuitive trade ticket. i'm greg stevens, and i helped create fidelity's options platform. it's one more innovative reason serious investors are choosing fidelity. now get 200 free trades when you open an account.

welcome back.

sources are indicating to our julia boorstin that twitter is leaning towards listing on the new york stock exchange when it goes public. how much is the company worth? this is the question. and asman has written several textbooks on valuation and corporate finance, and is profiled in "business week" as one of the top 12 business school professors, and he joins us now. good morning, professor. >> good morning. >> can we just start by trying to focus on the value of twitter, whether it's possible to assign it, and how you might go about figuring out how much it is, in fact, worth? >> it's almost impossible to value the company as it stands right now, because you know so little about the company. in fact, all we know are the revenues it made over the last 12 months. so valuation is almost impossible. but the focus of my posts, which i had on twitter, was that while you can't value the company, you can price it. price it based on what other companies are trading. for instance, if you looked at facebook and linkedin, and the revenue multiple those companies

trade at -- which is about 17.5 times revenues -- you come up with 10 billion. simplistic, but that's what pricing is. you base it on simple metrics and numbers you already know. >> isn't the problem, though, if you pick the wrong thing to compare it to, you could be wildly off in terms of what that price ultimately turns out to be? >> that's absolutely true. that's part of the reason i'm wary of pricing. the reality is that pricing is the name of the game. in fact, when most people talk about valuation, what they're really talking about is pricing. so i agree with you. it's a very dangerous way to approach investing, but it's the way most traders and most investors approach it. >> so you've done the math, and you point out this enterprise value gets to a shade little over 10 billion, but you think that looks a little high? >> here's the math, though. what i was trying to show was you can, with pricing, make the number whatever you want to make it. in fact, if you're a banker trying to sell me twitter at 12 billion, all you need to do is focus on linkedin and say,

you know what, twitter looks cheap relative to linkedin. >> right. >> i think because so much pricing is accompanied by selling, you can see why so many people are attached to price. my warning is buyer beware. just because a banker tells you that twitter looks cheap at 12 billion doesn't make it cheap to you as a long-term investor in the company. >> what do you think the -- what the enterprise value should be? >> until the numbers come out, you really can't value the company. i think it's too early to make a judgment if you're a long-term investor as to whether 12 billion is cheap, expensive, or just right. so i think investors need to hold their fire. i think when the numbers come out, i think we can start thinking about what the value of twitter is. but for the moment, all of the numbers you're seeing, are numbers being thrown around. >> absolutely. we just had this discussion on a bigger scale to some extent talking about the valuation of the stock market, more broadly the s&p 500, for example. what's the takeaway, professor, from facebook's initial public offering? you know, what is the message

for people who tried to price it then and maybe trying to price twitter now? >> i think price something a dangerous game. the way i describe it is when you are talking about market sentiment, market sentiment is impervious to facts. and oblivious to what's happening out there. you can't reason with markets. when you try to forecast where the market's going, you're trying to play a game of trying to forecast where market sentiment is. you can make a lot of money, but you can get whipsawed really fast. >> speaking of sentiment, we talk so much about various stocks being very expensive or cheap. apple is an example. you get people across the board saying the stock is cheap. most of the price basically valuing the cash. do you have thoughts on apple's valuation? >> i think apple is worth at least from a valuation perspective is worth a lot more than what it's trading at. my estimate is 600. i also respect where the market is. i can't control where market

sentiment takes the stock. so a week ago, it looked like apple is headed for 400, now it looks like 500. i'll take whatever the market gives me on this one, because i can't control what the pricing process delivers. >> but you say it's worth 600, why, just briefly? >> based on its cash flows. as an investor, i don't buy apple, because i think other investors like apple. i buy apple because it's a good company delivering solid cash flows and good earnings, and that hasn't changed. whether the stock is priced at 400, 500, or 800. the underlying reality is there. if you're a true value investor, in the sense you have to immunize yourself to what the mart is telling you the price is right now. >> sure, or hedge it so you're not carried out on big swings. all right. thank you for sharing your views on everything from facebook, twitter, apple. >> thank you. when we come back, from sacramento to shaq-ramento. shaquille o'neal moving to the owner's box after buying a piece of the kings.

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♪ ♪ you've got the looks let's make lots of money ♪ a decade ago, shaquille o'neal destroyed any dreams the kings had of winning a championship as the lakers defeated the kings in the playoffs for three straight years. today, shaq is back in sacramento. he is the team's newest minority owner. shaq joins us this morning along with kings' owner from sacramento. guys, good morning. congratulations to you both. >> thank you. >> good morning. >> shaq, we watched your business decisions over the years with a lot of interest. why is this a good deal? >> it's a great deal, first of all, because this gentleman next to me, and another owner by the

name of mark mastroff. mark was the one that revolutionized the fitness business, the original owner of 24 hour fitness, he helped me build a gym in florida. we've been friends ever since. when i heard he was part of the ownership group that was buying the old sacramento kings, i called him and had a conversation with him, and i met them, and the new vision is a vision of a sacramento 3.0. want to become more of a global brand. they're putting more than $1 billion into downtown sacramento. you know, we want to -- we want to use technology. we want to build the first cashless arena. you know, their vision is, you know, of the 21st century, a vision of the future, and i asked them if i could be an investor. >> vevak, shaq's point is a good one. i don't know need to tell you where the kings historically, at least, have ranked in terms of

franchise ranking. but people like espn have not been kind when it comes to those kinds of lists. it sounds like the ultimate kind of sports turnaround story. is that how you see it? >> well, we do. and, in fact, the evidence is already there. we went from last place to first place in new ticket sales in a matter of weeks. the same is true on a number of different business fronts. and i've always believed in surrounding myself who are smarter than me, so i have mark mastroff who changed the fitness industry, dr. paul jacques ones, who basically invented mobile trek nothing, and now the legendary shaquille o'neal. we're putting together a dream team of investors and executives to build a 21st century franchise. we call it nba 3.0, as shaq described. and we believe that while it's a process, the turnaround will come and it will come soon. >> shaq, the last time we saw you, it was promoting a line of soups with the original soupman

company here in new york. i think i tried the lobster bisque, which, as you recommended, was a activitiy one. you live in florida. you have a ton of different projects going on and now in sacramento. how are you making sure these are a good investment for you? >> i mean, you know, the greatest of leaders are smart enough to have people smarter than them, and in the business world, mark and vivek, it doesn't get any smarter than that. so i'm just glad i have the opportunity to be with some great business minds. and vivek is all about the 21st century. as i stated earlier, the plans for the arena, the plans for the revitalization of downtown sacramento is going to be tremendous. i know it's good. >> vivek, there's been so much public discussion about that arena. obviously, very heated issue regarding some of the public subsidies. >> yeah. >> we know where some of the municipalities are in california from a financial standpoint.

is it going to pay off? >> well, it's going to pay off big time. we're going to hire thousands of people, about 5,000 people. we're going to invest $1 billion into the downtown. it's going to rejuvenate sacramento. we're going to create this iconic structure, a stone's throw from the state capitol. and it will completely change the way that people look at this part of the country. so the economic activity alone will make up for that. last night, shaq and i had dinner with our governor, and he's been very, very supportive, as has the senate, the assembly over the last few months. we put a law in place, which has just been passed, which allows us to fast-track the development of this arena. so this has had wide support from all sides of the political spectrum. >> right. >> and there's a lot of momentum behind this effort right now.

>> vivek, if you want to help the team, why not have the guy sitting next to you there suit up? >> well, he actually is going to suit up this afternoon, and he will spend time on the court with the players. and he likes to say that a lot of it is about conversations, and so, he's already started those conversations with the likes of demarcus cousins, and to have him as an owner in the clubhouse, to have him on the court with the players, dr. o'neal will spend the next couple of teams with our team, and i'll let him talk to that. >> yes. you know, i said earlier, glad to be here with the guys and it's all about conversations. i can remember when i was a young player and didn't really know how to win. i had a conversation with a great man by the name of phil jackson, taught me how to be a winner and a leader. that's the same conversation i'll have with isaiah thomas and demarcus cousins and all of the

players. >> shaq, if you google shaquille o'neal and sacramento kings, the first thing that comes up is when you once called them the "sacramento queens." are you ever going to be able to live that down? >> well, i save everybody news stations of marketing dollars, so you guys will have to market the game. sacramento was a great place to play, a tough place to play. i just wanted to -- you know, i just wanted to egg the fans on a little bit. you know, with what we're doing in sacramento now, they'll forgive us. >> yeah, i think you should google it, like, tomorrow, the word that will come up, is shaq-amento. >> that's right. the capital of california. >> and yet i can see it happening. vivek, new owner of the sacramento kings, and shaquille o'neal, its newest investor. thank you, guys. let's send it to dominic chu, who has a quick look at a

"market flash." dom? >> welcome back. i'm talking about what's happening with kb homes here, at session highs. the company that caters to many first-time home buyers, beat estimates. but new orders fell shy as rising mortgage rates may have taken a toll on the new home buyers. ceo jeffrey metzger thinks the slowdown is temporary and customer also get used to higher mortgage rates and home prices sooner or later. and lennar is up after an earnings beat, and also a sales beat. it said its new orders and order backlog for unfinished homes grew last quarter. remember, the ceo of lennar, stuart miller, will be a guest on "mad money" here at 6:00 eastern. so, carl, we're all tuning in to watch that one. >> all right, thank you so much, dom. it's been a rough quarter for carnival, the profit down 30% in the quarter. how can the world's biggest cruise line turn it around? we'll find out more when simon talks directly to the ceo this hour. plus, the bell's about to

sound across europe. we'll get the close here as the dow is hanging onto an 18.5-point lead. back after the break.

the european markets are closing now. [ bell ] welcome back. let's look across europe where it was largely a green session, reversing yesterday's losses. stocks mostly higher after data showing german business sentiment rose in september for a fifth-consecutive month, although the results did come in a little bit below forecasts. meantime, the watch is on to see

if newly re-elected merkel can secure a coalition agreement with rivals. it could take time to play out. looking across the european forces, the ftse adding .2%, better results in germany, up .3%. france doubled that amount, and even further gains across italy and spain. interestingly enough, telecom italia, one of today's biggest gainers, and tell phone ka, agreeing to raise the stake that holds the telecom to 66% from under 50%. carl. crude is still off about a dollar. let's check on energy and dollar. hey, sharon. >> we're looking at lower oil prices now and a lot of focus on the six-week low we're trading at now for nymx. we're near the mark and still below $103 a barrel. a lot of the focus is what is happening at the u.n., and traders here are watching president obama's speech very carefully. they'll be listening to iran's

president rouhani's speech, as well, and waiting to hear what happens with the talks that are supposed to occur later this week over the nuclear program. of course, the key issue is going to be what happens to the sanctions that are in place, and if we see the sanctions lifted, as some analysts say could occur, we could see a million barrels a day of crude oil coming back into the marketplace. that could have an impact on prices. we're already seeing energy prices depressed over some time. look what that's done to gasoline prices. eight states where the statewide average is below $3.25 -- in south carolina, you may be lucky enough to be in one community that has gasoline below $3 a gallon. back to you. >> wow, sharon, that comes, of course, as it's been making headlines, the gas prices have been over $3 nationwide for more than 1,000 days. so some relief at least. >> some relief coming, yes. >> sharon epperson at the nymx. let's bring it back to bob. >> it was looking like yesterday, the big leaders were

trending downward, until suddenly, at 10:30, we turned around. the dow moved 90 points in the space of about 40 minutes here. that's what i'm talking about. it disappeared the minute i noticed it. look at that. a couple of things. number one, the president was speaking and some traders felt his heavy emphasis on diplomacy was a helpful factor. perhaps more importantly, rumors of a downgrade of italian debt. it wouldn't be a good thing. it was debunked at 10:30, and that's when the market turned around. that may have been a contributing factor. a lot of discussions on housing. you see robert schueler here on "squawk on the street," i love him, known him 20 year, have a lot of respect for him. put up what was going on here. put up his comment here. you want to see how confused and difficult it is for him rile now. here's what he had to say. he said this might be the beginning of a slowdown, but it sk could be the beginning of a bubble, but i don't know. i don't know, robert, what you just said. i think he's confused, we're all confused, where the housing markets are going. i want to point out, put up the next comment, this is important

where we are now. he's concerned about a bubble. we've had five straight months of double-digit gains. that's good news. that's the first time -- you have to go back to 2006 before that when we had any double-digit gains. you want to know what a housing bubble is? 45 consecutive months. that's a housing bubble. i don't think we've got one now. we may be in a slowdown, but i doubt we're going to see any dramatic crash in prices. lennar and kb homes a disappointment in terms of new orders. but margins were strong. let me move on to aerospace. did you hear what airbus had to say? long-term jet demand forecast will double in 20 years. they're talking about adding 29,000 new jets in the next 20 years, largely because of asian demand. think about this. 29,000 new jets in the next 20 years. boeing's up, rockwell is up, all of the big names are up. we're seeing the same situation in the airline, they've held up well as the demand has held up. delta at a historic high.

and southwest air, that's a 52-week high. overall, guys, the market turned around rather nicely. i think some of the stories out of europe may have been a factor. >> some headlines out of washington, as well, we may get a continuing resolution through november. >> that would be very good news for stocks. and avoiding the shutdown. >> indeed. bob pisani, thank you very much. simon hobbs joins us at post with more on carnival cruise lines. >> world's largest cruise line, carnival, announcing its earnings this morning. it's complicated because there's so much going on with carnival. essentially for the quarter, they've probably beaten expectations, but they've been quite clear that yields certainly in this country are going to be down for the first half of next year. that's one of the reasons why the shares are off about 5%, 6% as things stand at the moment. carnival, of course, is quoted both here in the united states, but also in london, it's also a member of the ftse 100, and it's from london that the conference call has just taken place. and we're delighted to welcome

now to cnbc for the first time the new ceo of carnival, arnold donald, who joins us from london. welcome to the program, sir. welcome to a higher public profile, as a result of your new job. thank you for coming on. >> hey, thank you, simon. good day to you. >> let's start by talking about the figures you've come through with today. it's quite clear that directionally you want to make people aware that the first half of next year is going to be tough, particularly in north america, in the wake of everything that's gone on, that everybody is aware of. is that an attempt to kind of clear the decks as the new broom which, of course, you are? >> well, you know, we were consistent with the guidance we gave in the previous quarter. we wanted to reiterate that, because there will be continuing headwinds, for the industry as well as for ourselves, going into the first half of next year as we recover from some of the

fallout from the incidents that happened earlier this year. >> do you know, it is extraordinary -- it's hard to think of another company that is not really having the eyes of the world upon it. i mean, last weekend, it was the righting of the "costa concordia" off the coast of italy, and congratulations on pulling that through, in the wake of the disaster two years ago in which so many people died. and then, in february, you had the "triumph" drifting five days and subsequent to that, two ships in difficulty. as the new ceo, what is your commitment now to customers? so many people with quite low incomes have been bitterly disappointed with their experience. what do you tell them now about the future? >> well, the first thing, simon, you know, 99.9% of all of those that cruise on one of our ten brands around the world have a fantastic time. and so, the first thing is most of those that cruise on a

repeated basis, they're still with us and they're still enjoying a great time. those are rare events. we've had a few of them. but we have 102 ships and thousands of itineraries a year. and they're still one-off events. and what we tell people is the obvious. number one, we learn from every event, and we move forward to ensure that the guests are comfortable, even in the event that some rare thing happens, such as loss of power in a ship, as what happened with the "triumph." we've learned from that. we've taken many steps to improve our ability to keep guests comfortable in such a situation, and to make sure it doesn't happen again in the first place. >> mr. donald, you are exactly three months now into the job. it was three months ago you were announced you would be taking over. how have you sought to prioritize the task at hand? i know you've been to asia. i know you did customer research. i'm very interested in what you're doing with the travel agents, particularly in this country, prioritizing bonuses

there, complimentary cabins, to really get the channel working for you. where are you on pricing? >> well, simon, what i've done is for the first three months here, i spent a lot of time listening. i listened to our employees. i've listened to our leadership team. i've listened to travel agents. i've listened to other key partners who have -- and i've done a lot of listens with our guests across the lines. i've travelled to every market in the world that we have, and we launched five new offices in china with our expansion there. i spent time with the improvements on the ships, our "fun ship 2.0" for carnival brand, the "royal princess" set sail, the princess line, the great experience we had here in southampton, in england, with the naming ceremony. so it's been a very busy time. but we're at that stage now, as we move into our planning for next year, where i'll be able to comment on that, spend time with the leadership team, and align

what changes -- i don't expect huge, dramatic changes, but we'll be aligned coming out at the end of the year in how we move forward. we see, fundamentally, a very strong business. we are still cumulatively, if you added together the other publicly traded cruise companies, the net earnings exceeds those combined. so we're still the largest. we have tremendous skill, we have tremendous opportunity, and our fundamentals are strong going forward. >> just a quick question, in your align, when you were talking about how your guidance may be towards the lower end of the range, because of geopolitical events in the mediterranean, sand we still see an adverse impact on companies like yours. is it better or worse lately over the last couple of days? can you give us any color on that? >> i just think that whenever

there's uncertainty, or even worse, unrest in portions of the world, obviously those ports are not safe for guests to go to. and then that can impact you. and clearly, the eastern mediterranean, there's portions of that where a number of itineraries have been rerouted to avoid certain ports in that part of the world. that changes -- the itinerary, it changes ' guests' appetite, because, in some instances, people are targeting those destinations as the reason for taking the cruise. those things do impact us and the entire industry. i think over time we're optimistic that we'll be back in those ports. >> you know, mr. donald, there's so many other things that we could talk about, not least your relationship, of course, with nicki aaronsouthern, n, who cono be the board. good luck. we look forward to seeing you the next time.

arnold donald there, the ceo of carnival, live. >> thank you all very much. >> all right. thank you very much, simon. you may not know the company, but you definitely know the brands. jimmy dean sausages, ballpark franks. a whole lot more. we'll take a closer look at the meat business with the ceo of hillshire brands. i did not know the jerky business was a $2 billion a year business. [ bagpipes and drums playing over ] [ music transitions to rock ] make it happen with the all-new fidelity active trader pro. it's one more innovative reason serious investors are choosing fidelity. get 200 free trades when you open an account.

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coming up next on "the half," why have the stocks give en up the fed gains? and mike mayo is here. he's naming the favorite bank stocks and even the ones to sell. and jcpenney at its lowest level since 2001. so why is one of our traders getting long? we're going to debate that at the top of the hour. carl, that comes in about 15 minutes. >> thank you so much, scott. shareholders of smithfield foods approving plan to sell to a chinese company. sean connolly is the ceo of hillshire brands. good to have you here. >> glad to be here. >> how is life on your own? >> doing great. year under our belt. everything is making tremendous progress. we've got a lot more to do, but very pleased with where we are at this point in time. >> last quarter, you already said fiscal '13 will be a transitional year. you're facing higher commodity

prices, fierce space. will that get easier in the next year? which headwind starts dying first? >> you have inflation happens, deflation happens. we try to focus on what we can control, which is the strength of our brands. last year, we had things break our way. this year, it looks challenging from a commodity and inflation standpoint. nonetheless, we'll continue to work our plan, with i is brand building. >> hillshire seems to be one of the companies that typifies the american middle class, which, we all wonder, is it on the way out? you know, whether it's a burger king introducing cheaper -- more expensive, lower-calorie fries. those kinds of moves. do you have to reposition your offering to better capture a changing u.s. consumer? >> you have to, because the consumer is dynamic. they're changing tastes all the time. we have great brands. we know if we keep them relevant and contemporary, we'll grow this business. >> you just acquired golden island, a jerky company.

>> we did. >> undisclosed sum. $2 billion business. 10% volume growth in the past couple of years. what's going on in the jerky world? >> it's a $2 billion category. we think it's a great initial entry. really what i think that's happen something snacking a huge behavior. americans lovs snack, but they want more protein and fewer carbs. that's where jerky comes in. we think we can do good things. >> you said it won't be material to results. >> no. >> is it the first in a series of sort of bolt-on acquisitions going forward? >> m&a is part of our agenda. it might be bolt-on or something bigger. it has to make good financial sense. >> and a quick sourcing question, will you use meat that's been processed in china? >> we -- we buy all of our meat from a qualified suppliers here in the u.s. we're very happy with our suppliers. we don't see any need to diversify our supply base. >> is smithfield one of the suppliers? >> we don't reveal our specific suppliers, but we feel terrific

about our supply relationships we have. >> so if any of the relationships included product made or processed in china, that wouldn't change your relationship? >> i don't see any need to import meats from other countries, we have great relationships with our suppliers here, we're in great shape. >> we do hear from some companies challenged in the commodity space. they say we could use pricing power going in the next year. what's the likelihood of that happening, do you think? >> pricing happens. inflation happens. you see consumer goods, companies priced to recover that inflation. that's part of our game plan. and we'll continue to try to innovate so we can bring better and higher-quality products to the marketplace. and they may be value oriented or premium. we'll see what unfolds as the overprogresses. >> you're in charge. we'll see what you do. sean, thank you for coming in. sean connolly. straight ahead, rick santelli has a question for you. what do four of the biggest economies all have in common? mull that over and he'll give you the answer when we come

back.

welcome back to "squawk on the street." jcpenney shares continue their slide. they've hit a new dubious milestone. it got as low as $11.09 earlier in trade this morning. that's the worst level since january 2001. remember, the stock was down big yesterday on reports that penney was possibly looking to raise cash in the debt and/or stock markets. so far in 2013, jcpenney is down 39%.

meanwhile, the s&p discretionary index is up, carl, 28%. back over to you. >> all right, dom, thank you very much. let's hop over to the cme. rick santelli with today's "santelli exchange." rick? >> thanks, carl. we know the topic of the day. everybody in the media, the social media, every magazine, every newspaper talking about debt ceiling. you know, all for one and one for all. when you look at the economies of europe, china, the u.s., japan, it's almost as though there has been a pact. we've talked many times about how stimulus in one country -- when everybody is interconnected globally, stimulus is fungible. it moves around the globe. when capital becomes more accessible, it doesn't necessarily matter where the country of origin is. it just starts working its way around the globe. now, consider. it's almost as though there's a self-insurance going on. if just one of the big economies had too much debt or too many problematic areas of leverage

within the economy or not enough growth to sustain long-term debt and obligations, the other major economies would clean the table. but when you have everybody with the same strategy, it's almost like self-debt insurance, because if anything goes haywire, one thing we have learned is the central banks will do anything to keep the central music playing. if something happens, a reset button is hit. then the same economies will pick it up and start afresh in some new fashion, because in the end, there's no other economies that can take their place. when it comes to debt and the debt ceiling, though. you know where i stand. the problem is that i think what's good for the short term isn't necessarily what's good for the economies. i didn't like the bush years when they raised debt. i want to read something. there was an article written by glenn kessler, "washington post," i think it was in may. it was referencing a campaign stop on july 3rd, 2008. i urge everybody to read the article. here's what it said. i watched the youtubes many

time. this is the president, but he wasn't the president at the time. the problem is that the way bush has done it over the last eight years, take out a credit card from the bank of china in the name of our children, driving up our national debt from $5 trillion for the first 42 presidents. number three, added $4 trillion by his lonesome. so now -- now that we have over 9 trillion of debt that we're going to have to pay back. 30,000 for every man, woman, and child. that's irresponsible. it's unpatriotic. i couldn't agree more. i totally agree. i think bush was wrong when he did it. the only thing i don't understand is, what's different today? back to you. >> all right, rick santelli, a bit jaded this morning, rick. thank you. >> i don't think jaded at all. >> rick, i suppose i meant jaded in terms of confidence. we'll continue the discussion. >> yes, yes exactly. >> okay. thank you, rick. it's only cemeseptember, and so

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chimneys around the globe, retailers are releasing hiring plans. so far, it seems like few workers will be hired this year than last. consulting firms predict retailers will add 665,000 workers, 11% less than last year, but lower total hiring doesn't necessarily mean that they're expecting lower sales. the sector has gotten smarter about staffing levels. target says it's gotten better at anticipating how to staff for the busiest parts of the season and when the extra workers make sense and when they don't. the big-box retailer said it's listening to current employees' desires for more hours. they retained a third of the 2012 hires. now, target still plans to hire 70,000 this year. less than the 88,000 it hired last year. the highest holiday hiring level so far this year. walmart hiring 10% more than last year. kohl's and toys "r" us about the same. further, government data shows retail employment has grown by 482,000, between march and august of this year.

that's up 42% from the same period in 2012. shopper track predicts the slowest holiday sales growth since the recession. others are still a little bit more bullish. back to you. >> about 90 days till christmas. it's coming soon. >> that's right, the countdown clock. back to headquarters and scott wapner and "the halftime." all right, guys, thank you very much. welcome to the "halftime" show. four hours until the close. going to the wall, green arrows on the street. 15,422 is where the dow is, a gain of 22. s&p and nasdaq are also green. here's what we're following on "the half," bank on the financials, mike mayo is here on set with his top pick in the best-performing sectors -- in one of the best-performing sectors of this year. pinching pennies, shares of the retailer cut in half, but one of the traders here is ready to buy.