it's too complacent. the most likely outcome is bide some too many, kick the can down the road. >> answer your phone in case they need you again to restructure something. >> that does it for us today. make sure you join us tomorrow. right now it's time for "squawk on the street." good wednesday morning. welcome to ""squawk on the street." the s&p is threatening to fall for five days in a row today, something it has not done all year long, as the market watches the republican budget filibuster now under way. 10-year note could see action as mortgage notes come in okay but durables disappoint. europe did see decent consumer confidence numbers out of germany and italy, mixed numbers over there. the s&p at risk of logging a

five-day losing streak and nearly the same position since a very similar budget battle. >> jeff bezos saying he doesn't care if his new kindle makes money when they buy it, only when they use it. >> and jpmorgan avoiding a wave of separate litigation. >> and alibaba planning to list right here in the old u of a. >> if the s&p finishes to the down side, it's the index's first five-section losing streak sinces fiscal showdown at the end of 2012. one of the recent headwinds about a government shutdown. republican governor ted cruz of texas and allies have been on the floor, but do threaten to

strip a defending provision of obama. harry reid has scheduled a test vote today at noon, like live one of several procedural votes. there is an increasing amount of chatter that we might get a continuing resolution. >> it does seem like there is something hidden going on, even so we have the s&p down five, the depth of decline is not that great the nasdaq was up yesterday, transports were up yesterday. last 20 minutes were certainly l were ugly but better than i thought. >> continuing resolution, maybe we get something done till the middle of november but now we're focused more it seems on the debt ceiling. we're heard harry wilson referring to the senators they had on as guests from the both sides of the aisle saying there's not really a big lplan o

figure out the road map to get there. >> no, there's no trip-tik. remember aaa? it said speed trap when you went through 414 in georgia. ism thi-- i think things are acg a little better. the shorts are afraid to be short. a lot of bids underneath, some takeovers. just not a bad moment. i expect a worse moment. >> and the nasdaq you mentioned, which had been really trading up in teandem with the other indics has pulled ahead up 25 for the year, 19%, 20% for the dow. the top gainers, tesla, netflix, micron, gmcc. that's what's leading the nasdaq. >> at jim cramer on twitter, you

don't have to go back and forth. >> remember i told you tesla's one of those -- if the triple a were to come out and say they think tesla's great, these things trade above 200. people by the stocks, netflix, that's a sign of bullishness. i know people want to say that's a sign of excessive bullishness. >> we've also had people, there's nay sayers and say this thing is trading at per vehicle. i can remember amazon, per book, it's bigger than the book. this is years ago. in this case with tesla they're look at ford and say one is making millions, the other one is 20 something thousand. when does that start to matter again? >> there was a cover story in

"business week" that merck passed gm. how ridiculous was it really? >> but then they didn't do anything. >> i'm not saying there's is merck. people spin tales. these analysts like to get behind stocks. facebook is now like a vegas routine. did you hear the one about facebook walks into a bar, i'm taking mine to 55. >> we have the 23rd straight day goes prices are down, $3.46 a gallon, down 35 cents year on year. we're expecting another 20 to 25 cents down. >> wasn't that something? i think at a certain point that

kicks into retail. remember the price of gasoline is a tax. we know heating is not going up because the natural gas stays low. so there's going to be a little more money in the consumer's pocket. does that mean chipotle? does that mean panera? >> did you get the invite at neiman markus? >> were they good? >> i think they looked extraordinary. i think you'd look good in a cashmere sweater. >> judging from the last sweater experience, i don't know if you want to go down is that road. >> that was green. that was kelly's sweater i had around my neck. >> the chinese communist, celebration of north korea. >> it was a deputy dog hat, at the conrail meeting -- >> we'll have to find the video. >> it was blowing in the wind

and it was minus 20 degrees. i looked like deputy dog. >> you were a trend setter. >> i was. >> no one ever trended again. >> that trend has yet to occur. >> talking about trends and talking about high flying stocks and ip multiples that stay strong, kindle revealing two tablets with faster and lighter versions than previous generation. and also a may day button, an online help feature. >> jeff bezos spoke with our jon fortt. >> we don't make money when people buy these devices. we want to make money when people use our devices by buying kind kindle ebooks and movies and tv shows.

we think we're better aligned with our customers when people use the device, not when they buy them. >> he's the man. it's that simple. what he says goes. you can argue all you want about 160 multiple or whatever the number is, i don't even know -- >> 200. >> 200. >> but look, it's a gillette model. that's what you do. here's the razor, right, and then you go into cvs and pay $28 for four blades. >> of course they don't tell us how many they sell. >> it's none of your business. >> we don't know how that model is even working. >> my question this morning is he says we break even on device, we're going to get you on the content. apple does both. they sell a device for a profit and then they sell you a song on itunes for a profit. >> people have always discounted that screen. i think what happens if they do original content. yesterday you asked me a question, which is -- i'm going

to leave his name out, it's the adams family, another kind of tv show like that, but he has been saying there's a glut in apple -- >> i got it. i know who it is! >> other show. the guy went to harvard. >> ed guinn. >> '54 i think at harvard. >> he was good when he was the judge in "cousin vinny." >> dan had him on last night. he's very tall, ceo of sprint, huge, huge seller of apple products. i asked him directly, i said, liste listen, i'm hearing there's a giant glut. he said send me some, i'm out. send me some because we don't have any. how do we believe the analysts?

>> here's what dan hesse told jim last night on "mad money." >> i know you have up to thement and -- to the minute analysis. how is the demand? >> strong. too strong because we're againiagai beginning to run out of inventory, especially the 5s. >> meanwhile, it's not a good quarter. >> when the stock fwas at 2, he came on "mad money" and said people think we're going out of business, we're not. and then the stock is at 5 and suddenly the stock is up 50% -- >> i wonder about timo, i think they're taking some business. >> there's no doubt about it that sprint had to cut back on advertising because they're doing this transition from nextel and in some places, you

go on twitter and people say it doesn't work in toledo. it was down a lot in chicago. it's not a great quarter. it's not. but they're taking a 300-year approach. how many quarters is that? >> it's like 1,200 quarters. >> that was fast! >> i'm raising numbers, 20 for the out years, raising numbers in 2323. in the year 2525 this thing is going to bust out. >> they'll be there to take it from you, whatever they need. >> they are very health conscious. >> by the way he owns some alibaal alibaba. >> he does? >> yes. soft bank does. >> it will be probably a first quarter event, i think we'll talk more about that. we'll see what twitter does in the fourth quarter.

very important when it comes public. >> i think twitter is going to be much bigger than people think. >> i think it's going to be an $18 billion to $20 billion a year. it doesn't mean i'm saying buy it, it doesn't mean it's not inflated. i don't want people at home to say cramer said buy it. no. >> just for fun, the new york post publishes vegas odds on a number of metrics. exchanges, nyse leading with 4-7 odds, the ticker, twtr wins with 5-6 odds, bird has 35-1. the over/under on the ipo price, 35.50, over/under on the first days close, 54. 50. so vegas of course is betting on a good day. >> i like that. we got to stay close to vegas. >> when we come back bei, recor

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welcome back to "squawk on the street." i'm eamon javers from washington. john boehner estimating when the

treasury estimates the united states government will be unable to fund itself going forward. jack lew saying extraordinary measures will be exhausted no later than october 17th. we estimate at that point treasury would only approximately $30 million to meet our country's commitment. this amount would be far short of net expenditures on certain ba days, which can be as high as $60 billion. they say it will be impossible for the united states of america to meet all of its obligations for the first time in its history. >> eamon javers in washington. jpmorgan chase trying to recover. it's a big range as the bank tries to weigh whether toy avoi

settling a long, protracted fight versus what a settlement opens you up to in civil litigation. >> my sources are saying the other way. >> saying they're going to fight? >> no, that the justice department is not the least bit interested in settling. >> i think the justice department would rather settle than go to trial. >> the justice department wants to keep opening investigations everywhere. it's like the bp deal. this is a get jpmorgan -- >> it is. the government doesn't necessarily want to go to a trial either. fighting the government is extraordinarily difficult. >> why has holder allowed this perpetration of cases all over the country? why have they made a proliferation of cases in many districts if they really want to do a national settlement? if i were jpmorgan i wouldn't do national settlement because i could pay $4 billion in legal fees or pay $7 billion to the

government. >> they're big numbers. i don't know the answer. i know that the reversals of -- reserve reversals only go so far. at some point it begins to hit things. riemt n right now they've been able to reverse loan reverse. with washington mutual, they had a contract that said we can't get sued for the stuff wamu did. bear stearns, there was an understanding we're going to help you out, don't come back and sue us, that was 1997, i guess time ran out on that one. >> are you coming with a due process argument with me, a fifth amendment, fourth amendment analysis? this is the government.

do you think they care? >> it will be interesting to see, does the government really want to litigate over that? >> i think the government is trying to make it that jpmorgan/dimon look bad, stock goes bad, this is incredibly hard for shareholders because the charitable trust has it. someone wants to float there may be an arrangement, so be it. i think holder has blessed this get jpmorgan campaign. >> in the mean time, you have comments at a summit yesterday saying it's not a money changer, it's not about collecting fees but talking about the budget constraints of his own office. are they after the check or admission or guilt -- of guilt what? >> i took that dershowitz class

at harvard. the government wants to say they're constrained by money. they're not constrained by anything. they can put anybody out of business in the world they want to. forget the money and fines. this is about making of institutions heel. they're saying listen, jamie dimon. we're not even after a settlement. we're out to make you look bad. you guys said you were geniuses, no more. they're using the whale as a reason to do it. when you speak with lawyers involved in situations on both sides, it isn't like the justice department is trying to get money. the justice department is trying to make jpmorgan look horrible. and in order to be able to show that they're tough, rfk, get

hoffa. this a hoffa situation. i've never seen the justice department do this other than with hoffa. just say, listen, due process -- >> jpmorgan will pay a lot to move on. >> jpmorgan wishes it was as easy as someone saying move on. >> that's not robert kennedy in your ear, by the way. >> i loved rfk. >> we count down to the opening bell on this wednesday. one more look at futures and "squawk on the street" is back in a minute. ♪ [ male announcer ] staying warm and dry has never been our priority. our priority is, was and always will be serving you, the american people. so we improved priority mail flat rate

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we got six minutes before the opening bell. it is wednesday, "mad dash" wednesday. >> hump day. >> okay, now stryker needs growth. people worried about the affordable care act and whether they'll have the growth. and buying mako, i now count one, two, three, four, five in the last quarter, 5 for 5, they missed the number. >> why not pay 100% premium, an all-cash deal. this stock was $16 yesterday. when you wake up to this, you are very happy. a lot of these deals, whether it's devices or health care, sometimes carry extraordinarily

high premiums. we'll pay your 52 week high and then some. >> how much did stryker need growth. the son of intuitive surgical, it had been a very popular name with retail. retail gets bailed out. >> that is a huge premium deal and one of the few we've got. let's move on quickly to noble. >> ne, very interesting. this is a company doing okay. they decide to split in two kinds of drilling companies. this is again something that keeps happening, david. we see these companies say we're not happy with our stock price, let's do something that's going to bring up value. you talked about it, this activist, split-up thing going on. it's replacing the normal m&a. >> shrink to grow. >> shrink to grow. i was 5'9" when i got in this business. i've grown. >> i hope i don't shrink but i

would like the grow part. i don't know. we can always hope. >> these are examples of companies that say, you know what, don't be short us. mako had been an annuity short. >> i'd rather be bit by a great white than be short mako. the s&p is looking to end a four-session losing streak. the opening bell, that usually comes up about four minutes from now. >> well put. >> thank you.

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that recently gapped up. [ male announcer ] now the world is your trading floor. get real-time market scanning wherever you are with the mobile trader app. from td ameritrade. you're watching cnbc "squawk on the street." the opening bell in about 60 seconds or so. the s&p threatening perhaps its first five-day losing streak of the year. the dow has had six down straight within the past month. we'll be watching that closely. keeping our eye on washington. and then these durables, the collision between the durables and isms. >> europe and china very tied in.

that's where the action is. if you sell into those markets, you've got good business. if you sell into autos, you've got good business. i think that i'm going with the higher ism. >> and with that, there is the opening bell and the s&p at the top of your screen. and the prime minister of italy is here. >> what a turn around in italy. we've got to salute them. the greatest trade is whether you went and bought those italian bonds, they couldn't finance it. >> that was a great trade. >> it needs more growth but i think they'll pull it off. it's a great country and we don't salute how well they come back. >> consumer numbers highest since june of 2011. over at the nasdaq, a biopharm

company, celebrating its ipo. we have autozone numbers out today. >> i like the autozone numbers. people saying it's not moving. the buyback is quite tremendous. >> the journal -- they shouldn't right these articles in the day the companies report. you get to the journal by 2:00 in the afternoon, you're thinking, wow, you got to wrap that blue fish in it, you know, maybe some of the stripers. remember, it's 38 inches now. >> is it 38? i went fishing this summer, it was great. and the stripers are running now and the blue fish, too? >> yes, in september they run. you want to use that autozone article. i like to cut blue fish with milk to get rid of the oil. >> i want to point out shares of jcpenney are lower yet again. i'm looking at $11 now.

you've got a bunch of smart hedge funds who own big chunks of this country, whether it be heyman, harry capital, soros, name only, george soros is not making those investments. ackman's out, worries continue, jim, about the fourth quarter outlook or about traffic for the fourth quarter, about -- well, any number of things here in terms of what's going on with this company. >> macy's has been doing this gigantic sales, macy's stock has been going down. but when macy's -- when that stock goes down, it's very difficult to stem the tied for jc penny because they have been perceived as being a little zero sum. jcpenney getting out of martha stewart. the lawsuit has been endless. i don't know. you said to me these guys won't

able to get out as quick as you think and that was a great call. >> they don't know anything -- they're looking at a share that will be 3 bucks or more, they will have the financing they need to get that done and that they will emerge victorious from this position. right now not going their way. >> and they're apparel based. you mentioned the interesting "new york post." we haven't mentioned jones. they claim there's about to be a deal. that's apparel. apparel has been so tight. >> a lot of research out on goldman on apparel, enough free cash to open new stores for a decade, they say. >> one of my absolute favorites, ross. i think they are one of the

beneficiaries of the decline in apparel. remember, they're close-out. they sell apparel cheaply. justice, the old dress barn and maurice, some people call me maurice, love for the stock today. >> they do take dollar tree off the conviction list. they added it in october of last year. since then they like to brag. >> they deserve a little kudos. that was an absolutely great call. came in right when dollar general was saying that margin pressure was -- and cigarette wars were occurring. that was just a great contrary call. my hat's off to them. we do slam a lot of research. they got that one right. >> a couple of ipos may be up sharply. fmi. we saw one in the opening bell,

i believe. similar -- i mean, in some ways what we saw last week to rocket fuel and the other one. >> fire eye. >> fire eye. >> these are in different areas, foundation medicine is one i'm talking about. one was a google ventures. google ventures. i don't know if this is the first time they've taken some -- >> been trying to keep up with all the new companies. this we reminds me of the '83 to '85 period, you get hit with this prospectus, you got to sell this one, got to sell this one, which one's hot, which one's hot and of course very few are still around. but, wow, this is just a plethora of ipos. >> foundation medicine sounds interesting. first clinical product, comprehensive molecular information product designed for use in the routine care of

patients with cancer, based on treating the patient individually based on their molecular -- >> some of these stocks have had amazing moves and they've worked. >> i think the one that has had the best first day debut so far is still sprouts, if i'm not mistaken, they still lead with better than 100% gain on day one. >> pot belly, noodles had a great one. >> noodles. >> whole foods, remember how everyone said that quarter was bad. have you seen that stock? it's off to the races. gluten free. well, not really. i just think that whole foods is the umbrella. this is an amazingly powerful move, organic and natural. if you see the packaged goods

that don't do organic and natural -- >> it's not cheap. the whole foods prices is extraordinary. >> walter roberts would tell you it's not that inflated versus the rest. >> you might be buying some of the fresh baked things. >> i'm not buying anything but it does show up in the house. >> you know who has some good things on the trend is kelly evans. >> holy cow, how did you sneak in here? >> if we're talking about whether alibaba lists it's a shares in new york, i wanted to give people a sense of what we're looking at in terms of who is winning the ipo business. hong kong had become the biggest market for ipos in terms of listings from 2009 and 2011. here's what we're looking at so far this year. the new york stock exchange in first place, 27% of ipo

proceeds. interesting the nasdaq has had more listings, 82 to the nyse's 71 but haven't raised at much money. london in third, hong kong has dropped to fifth. >> the deal itself will be, as you said, it will be enormous, dwarf the likes of twitter in terms of what they're selling. yahoo! has the right for them to sell 12% of the company, yahoo! owns 24%. what happens to the other 12%? is it possible for yahoo! to distribute that to shareholders in a tax-free manner? that may be a story for another day. but back to alibaba, $100 million value, they have yet to pick an underwriter.

first quarter business most likely at this point is the alibaba. they want to watch how twitter does and it seems that's leading into the first quarter of next year. twitter will be an important barometer at least for the market, those far smaller. >> charles lee is defending hong kong in a blog post. what does that mean for china for the market over there more broadly? but it is a turn around from what we saw back from the '09 to '11 period. >> what's the price of when alibaba when the yahoo! stake is wore more than yahoo!? >> you have to tax adjust it, 12% especially.

when it comes to yahoo! there is a thought why couldn't they distribute the remaining in a tax-free manner, the way john malone would do something like that with liberty. >> that's a great way to look at it. >> the bulls, that's why they're in it. >> it's affected that whole internet group. google has been the outlier, hasn't moved here. it just snuck up on us, alibaba. what was microsoft going to pay? >> 30? >> so ballmer was not so wrong. >> if you wait long enough, eventually ballmer always wins. >> kelly, thanks. see you in a few. let's get to bob pisani on the floor with more.

>> good morning. another low volume open. we're getting what traders are calling fiscal fear fatigue. i like that phrase. the bottom line is we have concerns about what's going on in washington but we've seen this all before. stocks are just sort of listless. a real problem is that the ten-year yields are at six-week loads. interest rate sensitive groups like reits and home builders and utilities, we're not seeing any move up in any of those that are really appreciable. speaking of home builders, the mortgage bank association has applications up 6% to buy a home. that is encouraging that lower interest rates are starting to be noticed. alibaba was the hot topic this morning. the new york stock exchange has

no comment about whether they've been contacted. but a lot of talk about why they would list here is that new york based china stocks are doing terrific this year. so take a look at some of the big names here in internet commerce in china. dangdang is up, all of these names are really doing well this year and a lot of people down here watch these stocks. that's one of the main reasons hong kong is interrested in listing here. whether there be interest about alibaba's partners, it might be an issue here as it was in hong kong, i don't know. speaking of ipos, we have three biotech ipos over on the nasdaq today. foundation medicine, a cancer diagnostic company, only evoke

pharma is at the low end. morgan stanley estimating $22 billion in stock has to be sold in pension funds to rebalance. they do this at the end of every month and every quarter so we'll see a little gyration in stocks very soon. back to you zip want to see what the opens are like on two of those ipos. i want to come back to the story earlier in the week, that being blackberry. that was an interesting story. we covered it at the time. it was not during our show but jim and i both on the air at the time. fairfax making that offer, letter of intent i should say, $9 a share. when you look at the math and having spoken to a number of bankers, those who were involved in perhaps trying to sell the company and those who simply know their way around, as i tend to do after covering m&a for so

many years now, ilt going to be a tough deal to pull off. the key there is the financing. let's assume it is a $5 billion deal. they do own 10%, that being fairfax. you'd want it to be overcapitalized. you're talking about raising $3 billion in debt for the company. what multiple to ebidta? four times? five times? can fairfax find the financing is a fair question and a key one investors should be asking as they conduct their due diligence, taking that roughly six-week period to decide whether they are going to move to a definitive agreement. no growth here at all. nothing to grab ahold of and say, okay, we're going to be able to finance it, we can restructure and believe we can restrictier towards growth. that does not appear to be the case. all that being said, what i am hearing from people familiar with the situation is there are

companies taking a look. you have intellectual property, you do have some cash. i don't know if that means you end up at 5, 6, 7, above 9 whereby fairfax would get paid its incentive fee, about $157 million. they're the largest shareholder. we'll see. >> private equity being shopped. a lot of big private equity firms passing. >> they're not interested. >> what i've heard is the gem is the security system. the security system is a way to be able to fight a lot of this -- you've done the spy work. and that security system could be worth a couple of bucks to someone. so keep that in mind, that's the hidden jewel here. >> security system and intellectual property. but those are big maybes. they're moving with all determined speed here. every day that goes by is another day of cash going out. >> yeah.

>>. >> why don't we shift to bonds and the dollar, rick santelli, cme group in chicago. rick? >> we have about a 3 basis point range, roughly 263 to 266. if you open the two-day chart up, you can see how important it is. is the interest rate market building a base for higher yields based on the momentum for the last two days? maybe could you auger for that. 8:30 eastern we did spike down a little on weak durable goods but it didn't last long and the market came back to what it wanted to tried anyway. open the market up on the 12th of august, we'll call it 6 1/2 week low yields. if we keep that chart time frame, the 12th of august and put in the boone, can you see they're exactly at six-week low yields going back to the 14th of

august, which was a wednesday and hovering into the 80s here, very similar pattern to the treasuries. they did get off kilter a bit with that spread as pregerman elections sealed, if we looked, you can see we're in a zone trading around 135, hovering. if you do the pound versus dollar, it's the best zone since january. but let's add another year to the chart on the dollar index. we've done the zone to 79 1/2 to 80 1/2. it still looks side ways where the buy is lower. back to you. >> thank you. when we come back, former labor secretary robert reich is out with a documentary called

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you're going to want to keep your eye on jcpenney this morning. that is below $11. year to date down some 43%, people beginning to ask very big questions about -- >> they are. had an opportunity to make a couple of calls during the break. don't think any of the big shareholders are selling. if they were to, they'd have to file. you have a little bit of time. there was a breakfast this morning sponsored by stern ag with mike holman, the ceo of jcpenney. that was this morning, right? today's wednesday, september 25th. yeah. >> we are expecting perhaps some

sort of court decision regarding the martha stewart case, somewhere in the 10:00 a.m. hour. i think they called for court to be in session at 10:30. looking for other would-be catalysts today. >> there's this worry they're going to have to issue equity, right? >> right. >> so that kind of plays into the -- listen, it's a big fight here between the bulls and bears. you got a big chunky base full of bulls. >> you just got to keep in sight the fact that what they sell is not doing well in the -- you might say jcpenney, the gang who couldn't shoot straight. remember macy's missed the quarter, nordstrom made the quarter.

tjx made the quarter. i great quarter of what i would pay at macy's for that stuff, including the jockey stuff. >> there's a mental image i need to erase. so ally bank really has no hidden fees on savings accounts? no hidden fees. it's just that i'm worried about you know "hidden things." ok, why's that? well uhhh... hey daddy, what's your job? daddy's a uhh florist. are you really a florist? dad, why are there shovels in the trunk? there's no shovels in my trunk. i see shovels... you don't see no shovels.

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i think the dominant theme for housing over the next few years is filling the hole of production that has not been filled over the past years. there will be speed bumps as you noted before that derived from interest rates, public policy, international events, but the trajectory in our view over the next three to five years is generally positive. >> that's stuart miller from lennar last night on "mad money." >> there are four comments about facebook doing very well in mobile today. stern ag talking about the possibility of facebook getting its foot in the door in china. alibaba look out!

>> and morgueans ccut on carniv. >> yes, obviously the cut is bad. >> boeing. >> boeing using 146, 147 target. i'm using 152. >> apple, a lot of people saying that's over. >> please, it's not over. >> i mention that mako gets a bid, they're like a junior intear tiff surgeon. >> red hat? >> red hat. we have to find out whether this particular stock is slowing and vivek, we'll see how they pulled

that off. >> a lot more from jeff bezos when "squawk on the street" comes back. ♪ every day, every day i write the book ♪

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welcome back to "squawk on the street." we have august new home sales up

close to 8% at 421,000, seasonally adjusted and annualized, last month revised from 394 to 390. the 390 is the lowest level since october of last year, but the 421 would be the second lowest read outside of that going back to the same period and we haven't had a three-handle sense last year. so it's better than expected from a worse level but still matched -- actually, exceeded expectations. karl, back to you. >> let's get to diana olick. after durables disappointed, not too bad, right? >> we do have to take into account july's numbers were revised down from 394,000 to 390,000. an increase of 7.9% month to month, that's pretty good.

inventory came down. inventory has been the story in both new and existing homes. there's just too little out there. prices for a new home up 2 $54,600 is the of a price a new home, even as mortgage rates were increasing and you have to remember that these new home sales numbers in august are based on signed contracts, not closings. so you had mortgage rights pretty high in august and still they're able to raise prices and make the sales. the question is how much higher can they push those prices if the rates go up again? it is a solid number again for august. back to you. meantime is -- guggenheim

partners said the threat of a shutdown is increased. gentlemen, good morning. >> good morning. >> good morning, simon. >> it's something of a lone campaign as we've seen through the night. how important is what senator cruz is attempting to do here? in other words, can he succeed? >> no, he can't. all he's really doing is delaying the inevitable, which would be the senate passing some type of clean bill that keeps the government funded. that will send it back to the house probably sunday evening. the markets will probably open on monday without resolution on this. ultimately we believe the house will pass a resolution sometimes on monday, keeping the government open. the big risk here, though, is that this is only the undercard, the real fight is over the debt

ceiling health insurance going to begin and end in october between two retractable positions. both are just assuming the other side is go to blink. that's no way to run a government. >> let's come out to that in a moment, the ekd deadline we have. just on the more immediate future, carl was pointing out for every minute that cruz is on his feet, it's less time boehner has to marshall support. do you ultimately think that the house republicans will pass it through and we will get a continuance? >> ultimately yes. keep in mind even though ted cruz is speaking on the senate floor, the house doesn't come back until votes later tonight pup all the house republicans will be tomorrow at 10 or 10:30 a.m. tomorrow. we'll find out which way the house republicans are going to

go. if they side -- likely keep the government open on october 31st. >> do you agree that the debt crisis is the bigger fight, one more difficult to solve potentially? >> i would agree with chris there. i also think there's going to be a continuance of government in the short term. if there is a shut down, it's not going to affect earnings in a significant way. but, yes, certainly the bigger issue here is the day bait over the del krelg. it's been clear from the rhetoric that en, effectively even if we stopped talking about a shutdown now, we could still be talking about one in a couple of weeks. rob. >> absolutely. i mean, that is certainly a possibility. i do think at the end of the

day, even though both sides will threaten armageddon along the way, as chris sort of implied as the deadline approaches for the debt ceiling, i do -- it's just unmath omable they wouldn't. >> there are still some who say the market has become desensitized to these type of showdowns and the last four, five days are still about some sort of monetary policy, fed discussion lingering in the background. do you think that's true? >> to a certain extent. we've seen all of the boy cries wolf story over the last two years. keep in mind, taking this right up to the brink, which is what it looks like it's going to do, that's going to increase uncertainty and volatility regardless. sometimes in october we're probably looking at a fed chair nomination as well as perhaps five other fed chair

nominations. even if we get through this month and next, we'll have a government shut down fight again either in november and december. you really just have this endless horizon of policy fiscal cliffs. >> before we let you know, there was an idea floated by deutsche bank that in the end you may find that the president bends and that there is a provision for delaying the implementation, rather than the defunding of obama care for one year and that politically might be acceptable for democrats. it push. >> no. you see in the wake of syria, the failed summers nomination. the only thing the president is focused on right now is the successful roll-out of his signature health care law, which is probably going to be the extent of his legislative legacy, that and sort of trying

to break the will of congressional republicans over what he views as sort of weaponizing the debt ceiling. those are the top two priorities and we see no indication of the president bending on his signature legacy issue on october 1. >> it's been great to have both of your on al sis. thank you. >> now coming up on the programming, we'll hear from amazon ceo jeff bezos. but first, robert reich is taking his fight to the big screen. the former clinton staffer's new venture is being called an inkling of truth on the economy.

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welcome back to "squawk on the street." i'm dominic ho. infinity said it's now going to focus on a drug meant to treat rare blood cancers and asthma. back to you. >> there's a new drama called "inequality for all." here's a sneak peek. >> all of the developed nations, the united states has the most

unequal distribution of income and we surging toward greater inequality. it looks like a suspension bridge. >> last year we made $36,000. >> i probably make 50,000 a year working 70 hours a week. >> the middle class is struggling. >> robert reich is the former labor secretary under president clinton and he joins us this morning. >> good to be here. thank you. >> one thing that strikes me, there's no empirical data that can argue about what you're seeing in the film. >> we're surging toward greater and greater inequality and it's a problem for the economy because if the vast middle class and everybody aspiring to join the middle class doesn't have enough money, they can't go deep into debt anymore, we don't want to do that again, then how do we create enough buying in the

economy to generate economic growth? i mean, this is really a huge problem. consumer spending is 70% of economic activity in the united states. we are not dependent and will not be dependent on net exports for years if we ever get there. so we depend on consumer demand. and yet consumers are running out of money. 95% of all of the gains since the recovery started have gone to the top 1%. >> we all understand that here, of course being on the floor of a giant trading floor. others might argue we're in a deleveraging process, households are deleveraged, they have cleaned up their balance sheets, delinquencies are down, they're paying their mortgages on time more. is that not step one of progress? >> it is definite progress. but median household incomes keep dropping adjusted for inflation. and the new jobs created since the recession pay on average less than the jobs that were

lost. so as the median household keeps on really having less and less income, there is a very profound and important question about where demand is going to come from in our economy. anybody who is looking at the structural challenges we face, this is not a matter of fairness, this is a matter of just keeping the economy going and it also goes to some measure to explain why the recovery has been so anemic. >> we were just talking about the president's legacy and what happens into fall and next year. his legacy is at risk. using the same source you cited, they say the economy is worse under president bush and present and et cetera. so what does he do? what is the policy answer here? >> there is no magic bullet. there are a number of policies that have to be invoked. the problem is as you know, washington is completely in deadlock. there is no chance of anything

coming out of washington. we can talk policy until we're blue in the face. changes in infrastructure are su absolutely critical. we have to redo education and tax regulation -- >> i would agree with you on education. the logical progression of capit capitalism, it is the biggest, homogenous market in the world. and some people are better rewarded for the labor skills they have. the rest due to technology or whatever are just left hanging. there is no great solution to that, is there, unless you interrupt the capitalist process and talk about redistribution. >> i am a capitalist. and this country has shown a genius over the last hundred

years for continuously saving capitalism from its own access. >> by blowing bubbles. >> no, just the opposite. in the progressive era, 1901 to 1909, in the 1930s and 60s in terms of voting rights and so on. >> but the mechanism has speeded up many, many times faster. you're going back to an era when things moved very slowly. >> you're right, the challenge has become greater. but if you become a global determinist, the rich are going to get richer, what happens to the economy? then the economy implode. >> but you have to identify that as the problem. you can't just describe the problem again is the point i'm making. >> it has to be big. the purpose of this movie is to say regardless of your political ideology or your party, you've got to understand the problem. this is not a matter of blame.

stop blaming the poor or the rich or government or big business or wall street. understand the forces that are at work here. understand this is very big and we've got to, you know, there are a lot of potential solutions, there's not one individual solution. but if we don't get together, roll up our sleeves, stop bickering and do something about, this our economy is going to suffer. the rich would be much better with a smaller share of a rapidly growing economy than they are doing now with a big share of an economy -- >> is it just me or are you sounding a little less partisan? they say it's not about fairness anymore, it's not about blame. would you argue you're not coming at it from an ideological standpoint as much as you have in the past? >> no, for 35 years i've been saying much the same thing. if you want to talk about fairness and morality, that's fine. but the way to appeal to everybody, to understand the reason we titled this film

"inequality for all," it's important people understand this is getting worse and eroding everybody's standard of living potentially and causing huge divisiveness in this country, it's undermining our democracy -- >> and around the world. >> and around the world. the united states has a more unequal distribution of income than any country. when we surge of inequality in china, many of the same forces are at work but it is dangerous. >> can't wait to see the film. >> this friday. go out and see the film. >> robert reich, who left with unemployment at 5.3. >> i created single handedly 22 million new jobs. >> congratulations. >> thank you. it was hard work. >> take the office again. >> coming up, find out why jeff

bezos says it's okay the company doesn't make money from the new kindle. he's speaking out in a rare interview next. has it's ups and downs. seasonal... doesn't begin to describe it. my cashflow can literally change with the weather. anything that gives me some breathing room makes a big difference. the plum card from american express gives your business flexibility. get 1.5% discount for paying early, or up to 60 days to pay without interest, or both each month. i'm nelson gutierrez and i'm a member of the smarter money. this is what membership is. this is what membership does. ♪

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amazon is launching its third generation of kindle tablets and our own jon fortt sat down with amazon ceo jeff bezos for a rare interview. take a listen. >> thanks for sitting down with us. you've got some new products to show you us, jeff. tell us what's new. >> we're announcing a whole new line of kindle fires, with other entry level hd starting at $139,

which is a break through price point for a kindle tablet. we're introducing a button mayday, an a tech instructor will co-pilot you on your screen, they can draw on your screen, show you how to do things. we're trying to make it easier for people staying in control of the technology instead of the technology being in control of the person. it's a big day for us. we're excited to be launching this new family of kindle fires. >> and it looks like you've got a lot of higher end features built into these new devices. i want to ask about some of the purpose behind, the thought behind what you're doing here. how much more engaged in amazon services is a kindle buyer say

an ipod user? >> people who use tablets in general are very engaged in amazon services. when you think about our retail service for example, mobile has been a big big tail wind for retail business. when people can lean back on their sophfa, that's good for amazon. we have big content, video, the music mp 3 store, games and apps and so on and customers who have kindle fires are very heavy participants in the digital ecosystems, as well being physical product shoppers as well. >> you haven't said exactly on a unit basis how many kindles you've sold. >> all we say is millions and we're extremely grateful to those customers. ever since we -- we've only been in the tablet business for two

years but since we entered that, our kindlefire line has always been our best selling product. >> when i look at that, amazon web services and media, a significant portion of which is digital, it seems like from amazon's perspective, digital content or delivery might even be approaching 50% of revenue before too long. are you approaching that and how significant would that be? >> well, our physical products business is also growing very rapidly so i don't know when or if that day will come. but it's a high-quality situation because we've got multi- businesses that are growing fast and we're, you know, that's a knock on wood a situation we hope will stay around for a while. you know, we have our amazon web services business, which is doing well, we have our digital ecosystem and device business, which is growing well and we have our retail business which continues to grow well also. >> and up said that these

kindles, don't just think of them as gadgets, think of these as services. >> yes. >> i know that you talked about the importance of experimenting and innovating. you're doing some grocery pilots, some flowers even recently. how does all of that fit into these kindles we're seeing today and what you can do with them. >> when you think about some of the things -- the hardware, if you think about these tablets, the hardware is extremely important. you need a fast processor, you need a beautiful display with high resolution, but once you have a great piece of hardware, the next question that customers have are what are the services on top of that hardware that i really want to be able to use? when we think about that, we think about things like prime instant video, we think about things like the kindle ebook store, so those are the services that sit on top of our hardware. another kind of slice at that is this new may day button feature we have just announced.

so those are the kinds of things we mean when we talk about services. >> i know that you take pricing very seriously and cost very seriously. the larger tablet last year was $299, now it's $379, you've built in a better camera, a much higher quality display. given that you view these as services, why are those things important enough to justify the higher price? >> so the new 8.9 inch fire hd is 35% lighter than it was last year. it's got a processor that's three times as fast. it's got a graphics processor that's four times as fast and it's got twice the memory. and that is really the -- that is kind of the high end of the kindle fire family of tablets. so for people who want the very best hardware, that's the right tablet to buy. the 8.9 inch forum factor is useful for doing things like browsing the web, e-mail and movies and tv shows look great

on it. and then we have for people who are buying a tablet for the family, who are $139 kindle hd has the same processing power that our high end had last year and the same display quality our high end had last year. so at $139 it's at a breakthrough price point. >> jeff bezos speaking to jon fortt. i know we have more of the interview to come up later in the day. i just can't help myself, the contrast, the launching devices at cost, still the stock is up 25% this year and the experience that tim cook has when he comes out with products and a stock that is down now 9% for the year, totally different approaches to more or less the same products coming to market. >> yes indeed. and very different market caps, too. apple's market cap is still in

the stratosphere, despite all the gyrations the stock has been through. bezos trying to get these devices out there as cost as a way to get amazon services in front of people. he was really very specific that the digital content is what these digitals are pushing. he gets more philosophical about how he motivates his team and casts vision for the future and how he looks at the world when he strategizes. that was very interesting, too. he gets pumped about the products. >> these billionaires are almost the same. you won't see them until they finally got a consumer product. they are kids with toys, they want to launch, they want to tell the story. in this case it's a special pop-up window. >> it's interesting. you mention the billionaires. we see larry ellison and his

team ditching the keynote. you see their passion and the various things they're involved in. for jeff bezos, this may day feature of getting help, it's classic him. >> jon fortt with the latest kindle announcement. >> it's nice to see business is powering ahead because we are just again just days away from a possible government shutdown. the question is how worried should you be about your money and the impact on markets. find out what some of the biggest investors are doing with their portfolios as the deadline looms. we'll be right back. clients are always learning more

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court is in session in downtown manhattan. the judge in the macy's versus martha stewart living/jcpenney case, calling lawyers in for a 10:30 a.m. start time. courtney reagan is back with more details. what's going on with the stock and the story? >> new york supreme court judge has still not issued his decision in the lawsuit. closing arguments were heard nearly two months ago. we don't believe there will be a decision today but truly anything can happen at this point. the judge has called the lawyers back into court beginning just three minutes ago.

the official action at appearance has been left blank on court documents but macy's lead attorney ted grossman told me the judge has been a little unclear about his aim, though he wants the parties to report on issues that have been reported in the press, primarily regarding interactions between jcpenney. i understand that the senior jcpenney design team was in the lmso offices yesterday placing orders for 2014 in the nondecor category, which would appear that part of the relationship is in tact. in the meantime jcpenney shares continue to fall today, down 12% in the past two days, trading at lows not seen since january of 2001. it is the most shorted stock in the s&p 500. we know those concerns are

hovering over weak sales and a possible debt raise. >> courtney, thanks very much for that. in the meantime, where elbows are rubbed, you can bet gary come inski will be. we want to take you to gary. what are the big money managers telling you? >> good evening. if i have a 5:00 shadow, it's been a long day so apologies for that. for viewers who have listened to the commentary, viewers know the narrative here typically tends to be right. this is what the big money is doing. as it relates to the government shutdown, the answer here is it's a big yawn. very little concern about the theatrics associated with that. nobody making major financials

as a result. if we do have a debt default discussion, that is something unlike a government shutdown that will take the attention of the big money players here in singapore. >> i mean, i guess, gary, the thing that people are trying to figure out right now is markets haven't moved too much, stocks have weakened. if you want to get really gr granul granular, credit default -- cds spreads jumped, in other words, on the u.s. government. are people looking at this as some kind of opportunity or is this a way you get on the sidelines until the whole storm has passed? >> these professional investors, the best investors, they have to go to work every day. so they can't pay attention to much of this noise so they try to find the macro themes. some of the themes are the japan macro trade, still very much in tact and in the minds of many. in terms of the bond bubble, the

so-called bond bubble, very little believe the bond bubble will burst. they think the tapering and tightening is years away. so maybe the bond bull market is over but no bond bubble burst. i would say we're seeing money move back into the emerging markets, which has cheap because of the taper talks back in the states and i would say things such as u.s. financials five years after 2008, some of the strongest in the world and a lot of people believing our financial institutions, believe it or not, are the best on the planet. >> gary, we still are yet to have a formal announcement from the white house as to who will be nominated as the next chairman of the federal reserve. there is a man the president would dearly love to take the job, timothy geithner. did he turn up at the meeting or say anything that might be of interest to markets? >> fantastic questions.

i did interview mr. gieeithner hour and a half ago. while the discussions were off the record and i can't discuss the specifics that we talked about, i can tell you one of the few things there was 100% consensus on is after mr. geithner left here, there was a strong feeling that if in fact he decided to take this fed job, that everybody here in singapore believed it would be the most bullish thing in terms of u.s. equity markets for continuity in terms of fed policy. a big unanimous decision, they'd like to see him take that job. >> but there is a problem. i don't know how much he was paid to turn up there at the conference but i imagine it was $200,000, $250,000 for one day's work and travel. the official salary of the chairman of the federal reserve and what ben bernanke gets a is

$190,000. when the man says i don't want the job, financially the incentives are skewed away from him stepping into the federal reserve and dealing with all that. >> yes, simon, i think when you're talking about money and looking at apples to apples, one can't argue with your analysis. as you and i have discussed and debated friendly for many years back there in englewood cliffs, there a lot of people, bleaelie it or not, that make decisions and determinations that aren't based on money. there haven't been any discussion based on whether the job was offered but he would be a great person to run the treasury and a lot of people would like to see that.

>> gary cokominski out of singapore. thank you. >> we want to get back to jcpenney. shares are continuing to tumble. what are you hearing? >> this morning we've been able to make a number of different phone calls, sort of give officer sense as to why those shares have been so weak and what is going on with the retailer itself. there were a couple of researchers out in the last 24 hours that caught the attention of investors. one was on the bond side from goldman sachs, that was out yesterday, didn't end up in in boxes perhaps until this morning. they said a combination of weak fundamentals, inventory rebuilding and under performing home building will likely challenge jcpenney's liquidity levels. we also have cleveland research

out with a note augering for similar types of trends, appears to be dialing back on initial order intensification strategy and promotional cadence does not appear to be yielding better sales/traffic trends. couple that with the fact that the company's ceo, mike ullman has been in new york today at meetings. i know a number of large shareholders who are going to be meeting with mr. ullman one-on-one. some investors were expecting a more positive tone. but someone who did attend the meeting said turning around this company is going to take a lot of time, through 2014 and perhaps threw cold water on the idea that you would see double digit up comparable store sales.

that may not be the case if you're looking at cleveland research. that's a key change here for jcpenney. couple that with the belief they need to raise perhaps more money, whether through a debt offering or through an equity offering. in the last few weeks we've seen bill ackman sell the entire stake. so the opportunity for the company to have sold equity, they didn't take it, they let these large shareholders take it. that window perhaps closing. would they need to raise equity. how much would it be and at what price continues to be a key consideration? finally, while there have been rumors that large shareholders, whether it be perry or haimen or soros, i have not been able to discern whether that has been the case with any of the large shareholders, all of whom are suffering with the stocks down

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for a second straight session, shares in carnival are trading sharply lower, wiping out more than $3 billion of market cap. this could be an important turning point after the ceo warned they were left profitable than the market things. analyst jamie rollow said it's held up significantly well on other earnings downgrades over recent years because investors were willing to look forward to a normalization of earnings but now that norm at keeps getting pushed out and he said even for

2015 projections, the shares look expensive. not only is the incoming ceo choosing to disclose that yields will continue to fall through the first half of next year, whilst arnold donald sounded upbeat in his exclusive interview with us yesterday, he's not talking about a major restructuring, nor having extra cash to return to shareholders. >> we see fundamentally a very strong business, we are still cumulatively if you added together the other publicly traded cruise companies, our net income and earnings exceeds those combined. we're still the largest, we have tremendous scale and opportunity and our fundamentals are strong going forward. >> the interesting thing will be whether the newcomers like norwegian and royal caribbean, norwegian has younger since that don't require the refits. to see whether they can capitalize or you have an industry slump as a result of all the crises.

>> let's get to the cme group. rick santelli with today's "santelli exchange." >> hi, rick. >> we have a lot of strange times. can you almost set your watch by them with regard to government, politics, issues, debt piling up in most developed economies but i think that nothing reaches level of hypocrisy with the people leading the country. i've been looking at the last time we had debt ceiling issues with with we had a republican in the white house and we're talking 2006 with "w" in the white house. and having a slightly different slant on the debt ceiling, debt and creating debt and how unpatriotic it is, but i found something interesting in all places the "new york times." march 16, 2006 to be exact. let's take a walk down hypocrisy

memory lane. harry reid, i like this one. put it on the screen. any objective analysis of our country's fiscal history would have to conclude this administration and this rubber stamping republican congress are the most fiscally irresponsible in the history of our country. it isn't just the democrats, okay? march 2006 when they took that vote, it was 52-48, okay, to raise the debt ceiling. all the democrats of course voted against it, a handful of republicans. but look at what charles grassley said, republican. iowa republican. he said, this is great, "increase the debt limit to $8.97 trillion was essential to preserve the full faith and credit of the federal government. what is he saying now? is he any better? no. hypocrisy on both sides of the aisle. but there are a few standouts

beep had senator coburn of oklahoma on. he said identify we don't have too little money in the government. what we have is not enough will to cut the funding or reform the programs." right now we have difference, whether you think it's hat tricks, at least we know where he stands, an he's standing on principle whether you agree with it or not. one final note, while we're biting our nails about the debt ceiling, in reuters regarding the "moody's" report, a shutdown is unlikely to hurt the sovereign rating. you know, quick the scare tactic, guys, and be real. address the debt. address the debt ceiling, but do it in a responsible way and maybe remember what you said a couple of years ago. back to you, kelly. >> all right, rick, thank you very much, sir, this morning. up next, we'll take you inside florida's versailles mansion and why she needs 11

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than the white house, and as robert frank found out, that means it takes quite a while to get from one end to the other. >> reporter: to show you how big america's biggest home is, i'm going to run the entire length of the first floor. here we go. ahhh, ooh! ♪ still running. still running! ooh! still -- okay. [ winded ] this house is way too big, because there's a lot more to go. >> if someone offered us the -- the asking price right now, he'd have mixed feelings. very mixed emotions. >> now somebody wanted to buy it, i'd probably sell. >> yeah. so -- >> and robert frank joins us here at post. that's incredible. that's more than a 40-yard dash, i'm guessing, right? >> yeah, i'll have a new sport, called "mansion marathons." either i have to get in better shape or the mansions have to stop getting so darn big.

90,000 square feet. 13 bedrooms, 11 kitchens. there are 30 bathrooms. you could use a different bathroom -- >> three-zero. >> a different bathroom every day of the week in the month and then go back -- >> are the kids going to be grown up by the time it's done? >> they are. i asked them how they're going to get around the house because it's so big and they can't run all of the time. segways. and there's a great clip tonight. she was showing me around the house and shy got lost. i'd ask her, okay, what room is this? she would forget. because there are so many rooms. i mean, it's huge. >> you know, robert, for those people -- we should get everybody up to speed. >> yeah. >> this is the couple that there was the big documentary about him going bankrupt possibly with -- >> aired on cnbc. >> a very emotive -- you saw these people in all reality going through a very bad period in their lives. >> right. >> they've bounced back? >> it was such a great symbol of the boom and the bust. and now the recovery for both housing and the wealthy. and they are back. they did this house, it went

into default. they had to give up the private jets. his company, which had $1 billion in debt, is now reporting record profits, so they're back, building this house. it's going to be finished in 2016. and it's one of the most amazing financial comeback storiesment but we spent a lot of time -- they're very fun on tv. >> yes. but how will it be affected by the government shutdown, robert. [ laughter ] >> not at all. >> that would be the quick answer. >> are these built by any homebuilder we would have heard of? is it like a lennar project or a toll -- >> no, he's got a private army of -- when i was there, just one day, they were putting marble -- again, it's versailles, modelled after versailles. the entire exterior was done in marble. they had 34 marble workers just on the outside. and then they start the inside, it will be -- >> what's the number? >> beginning to end, do we know how much -- >> how much -- you know, tens of millions. >> what are they asking? >> they've put more than 20 into it. my guess is 40, 50 maybe. >> what's the asking -- she said about the asking price. >> 100.

>> ah. >> they would sell it for 100. >> worth bearing in mind, guys. with bonus season coming. >> yes. "secret lives of the superrich" premiers tonight on cnbc. coming up, why other retailers aren't happy about the new iphone success. we'll have more on that story when "squawk on the street" returns in a bit. has it's ups and downs. seasonal... doesn't begin to describe it. my cashflow can literally change with the weather.

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welcome to "squawk on the street." here's what's happened so far. >> i hope we won't go down a bunch of political rabbit trails that actually take away from the seriousness of trying to solve our country's fiscal problems at large. this is kind of political theater at its worst when at the core what we ought to be talking about is how we get our nation's balance sheet back right, which means both political parties will have to give. things are acting a little better, and i think that's because there's a sense, all right, we've been there before. they screw off. it goes down -- the shorts are afraid to be short, end of the month, end of the quarter. a lot of bids underneath. some takeovers. just not a bad moment. >> yeah. >> and i expect a worst month. >> we don't make money when

people buy these devices. we want to make money when people use our devices by buying content, buying kindle e-books, tv shows. [ bell ] >> and with that, that is the opening bell. >> if they decide to amend the senate bill, that probably triggers a shutdown. if they take the senate bill, we will likely keep the government open on october 1st. >> this problem is go getting worse, an it's eroding everybody's standard of living eventually, even of the very, very wealthy. and it's causing huge divisiveness in this country. it's undermining our democracy. ♪ good morning. we're live here at post 9 at the new york stock exchange. let's start with a check on markets, which are largely flat today. we're keeping an eye on the s&p 500 in particular to see if it will continue its recent losing streak. all of this as the focus is pretty much on washington, what's happening there with the policy debate and a couple of big names falling today.

a terrible day for jcpenney. the shares of that company falling to 12-year lows. goldman sachs did initiate the company's debt with an underperform. cleveland research has warned the third quarter may be worse than expected. shares of jcp down almost 50% this year. shares of carnival also slipping today following a wave of analyst action. the world's largest cruise line was downgraded to underweight at morgan stanley, had the price target lowered at jpmorgan and susquehanna. >> yes, and what a night and morning for ted cruz, and marco rubio, the senator still talking on the floor speaking out against obamacare. while they talk, a government shutdown looms in the distance. we'll take a look and tell you what it can mean for your money. and amazon announcing the next generation of tablets, but jeff bee zoes doesn't care if the new models make money. you'll hear him explain why later this hour. apple is hanging its hat on

this number. 9 million new i foeps sold in the first three days, but does good news for apple mean bad news for retailers? we'll explain. first to washington where senators ted cruz and now marco rubio are speaking on the floor, continuing their sort of filibuster against obamacare. it comes with less than five days away from a government shutdown. john harwood joins us from washington. john, perhaps help walk viewers through the procedure here. we understand that perhaps this current sort of filibuster can only go till noon, but a lot can happen after that. >> reporter: yeah, there's a sequence of votes that will occur, kelly, before -- if all of the time is played out, all of the time is consumed by those who want to speak. that will conclude on sunday when the senate is expected to strip out the defunding of obamacare and finally pass an extension of government funding. but there's several hoops that have to get through. we believe that all of those will be cleared. we think harry reid will get more than 60 votes to go to the bill today.

there'll be another vote on friday. to end the debate on the bill. and that debate will, in fact, end on sunday. but it hasn't produced what one would call a serious debate. you know, bob corker in the intro, you talked about saying i hope we don't go down rabbit trails so we can have a substantive debate. overnight, the debate in the senate about the extension of government funding came to this. here's ted cruz. >> an opportunity that i don't usually have when i'm in d.c., to read them a couple of bedtime stories. do you like green eggs and ham? i do not like them, sam i am, i do not like green eggs and ham. would you like them here or there? i would not like them here or there, i would not like them anywhere. i do not like green eggs and ham. i do not like them, sam i am. >> reporter: and the relative point here is that democrats and most republicans alike do not

like government shutdowns, and they do not like debt crises, which is why there is so much pushback against what ted cruz and the tea party members of the house caucus will try to do, have been trying to do. it appears that they're not going to get their way on the extension of government funding, but the open question, guys, is what happens on the debt limit? that's in a couple of weeks. in fact, the treasury secretary, jack lew, said in a letter to congress a few moments ago that we had lit the debt limit for good on october 17th, which is a new deadline for congress to raise the debt limit. >> yeah, in the meantime, the page from the congressional record quoting "green eggs" making its round on twitter this morning, john. thank you so much, john harwood in washington. for more on the economic impact on the government shutdown, let's bring in david kelley, chief global analyst with morgan stanley, and jane. good morning, guys. david, you were critical, i think like a lot of other people, when the fed decided not

to taper last week. i wonder where you think we would be if we were dealing with a taper and what's going on in washington? did they not see around this corner pretty well here? >> no, i don't think we'd be in a different place really. i think you've got to look past what's going on in washington right now. i think it's strangely appropriate to have "green eggs and ham" being quoted, because it's an ininfantile level of discussion. any shutdown that occurs only lasts a few hours, and i believe that we will -- we will raise the debt ceiling in time to prevent any default on the debt. if that's true, then by the end of this month, by october 30th, when the fed next meet, you'll have a lot of this problem behind you, plus you have good housing numbers this morning, plus you'll get a good jobs report for the month of september. so overall, i still think we're probably moving towards the argument for phasing out qe despite what's going on in washington this week. >> in october, david?

>> that's what i would have done, before september. >> okay. >> but i don't want to make that prediction given how dovish they've been so far. >> okay, diane, that's interesting. because if anything, more and more the rhetoric out of washington seems to be, okay, we'll get to a resolution on this piece of it, to keep the government funded through mid-november. the real fight happens around the debt ceiling which may fall october 24th, or earlier, because jack lew said yesterday tax receipts over the summer were weaker than anticipated. if that's the big fight, i'd be surprised if the fed will turn around six days later and do something to change the course of the monetary policy. >> i don't think they'll do that at all. i don't think october tapering is in the cards. i'm actually even doubtful now, and i'm the one that thought it would be september, with david, i was live with him, wrong in that, but it was a 51-49, i think i had said at that point in time. at the end of the day, it will be difficult by december, depending on how bad the fight gets. also what's important is to

understanding the fiscal drag. i agree with david, a government shutdown is not likely to be long if it occurs. and it could be disruptive and uncomfortable, but not going to derail the economy. but it's at a fragile stage of the economy and certainly a showdown of the debt ceiling with the implicit additional cuts, sequestration will go on, even if we have a continuing resolution. that will be a larger sequestration next year for the 2014 year than it was this year. and we'll also see additional cuts we've not seen, $139 billion funded for medicare fix, and other effects in there that could be implicit, headwinds for real economic issues for the federal reserve to deal with beyond just the brinksmanship and nonsense and infantile attitude, as david pointed out, in washington, d.c. >> yeah, david, separate from all things politics, right, and all things political, we did get durables that disappointed, sort of collides with what the isms have been telling us. the surveys versus the actual data, i wonder if there's a cloud in your mind over what manufacturing does in the fourth quarter? >> you know, there is a little

bit. and it's got to do with uncertainty, of koufrs, and washington is contributing to this. i think that's -- that business is still lagging and consumers are leading in this recovery. overall, when i look at the growth in wealth over the last year, that will continue to power consumer spending and i'm hopeful globally we're seeing a pickup of growth in china and europe. that will help the exports. overall, i still think the economy can pick up in growth going forward. you know, i agree with diane that the federal reserve is -- seems very, very reluctant to pull the trigger on reducing qe. >> well, and, diane, just briefly here, as well, we were talking with robert reich earlier about u.s. income inequality, the president's legacy, and the extent to which the federal reserve keeps its foot on the pedal here, the stock market, to a lot of people, seems divorced from the economic reality. is there something to that? >> well, i don't know if it's divorced from economic reality, and certainly david could address that more, because we have seen profits come back much more rapidly than incomes. the bottom line is, the fed works through asset prices.

asset prices of homes affects most households. that is something that helps the middle class as well as the upper class. the bottom line is, it doesn't even up income inequalities, and that's where the problem is. fiscal policy is more suited to that. we don't have any a fiscal policy in the united states. we have a default of fiscal policy, and it's going in the opposite direction. >> you can say that again. thank you for your time. we'll talk to you soon. >> anytime. now some news out of the u.s. post office. the price of a first-class stamp is going up to 49 cents. that's a three-cent increase, and it will take effect january 26th, 2014. so, carl, you have to wonder how that affects bernanke's term at the end of the fed. >> yes, that was my first question. how does it affect the fed. >> there is -- there is a parallel. a lot of people saying to the post office, a three-cent increase is not going to change things. it won't solve the problem. but people who bought forever stamps are feeling good right now. >> yes, absolutely, nice hedge. amazon unveiling a new line of kindle tablets today, but

jeff bezos says it's okay if they don't make money. he will explain in a moment. first, rick santelli, watching new home sales numbers, rick. >> i am. but first, you know, yesterday i really liked the kay schiller data, and i particularly like robert schiller, made some comments about the housing market and whether or not it's bubble-icious. let's reconcile the optimism of one and the anxiety of other, all at the bottom of the hour. ♪

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welcome back. take a look at the basic materials sector today. it is one of the best-performing sectors in what's generally a flat market. dominic chu has more on this one. >> hey, kelly. while stocks try to avoid the fifth straight day of losses, at least for the s&p, one sector that's standing out is materials. one of the best performers in the large cap index. so helping to lead the way higher are some names you may know. fertilizer maker, cf industries, up around, we'll call it, 2%. fellow fertilizer producer, mosaic, also up. also the steel companies helping with the gains. look at diversified steelmaker, u.s. steel. and specialty names like allegheny technologies. those four stocks are among the best performers in the materials sector so far. and, of course, in the s&p 500, carl. so materials very much in focus today. >> all right, dom, thank you very much. dominic chu back at hq. amazon unveiling the latest generation of tablets this morning called the kindle fire

hdx. our own jon fortt sat down for a rare interview -- and we mean rare -- with amazon ceo jeff bezos. jon, you have a lot more. >> yeah, carl. the second half of the interview, bezos talked to me about his guiding principles in media and in retail, and why he's not like thomas edison. take a listen. you have, as amazon, have made a lot of investments in content. you personally just made an investment in content, as well, with the "washington post." peel like to ask you what's going to change in ten years. i want to ask you what's not going to change in ten years as far as digital content is concerned. what is fundamental, you believe, about digital content? >> well, that -- first of all, that is a very good question. because i rarely get asked that second question. i often get asked what's going to change. i rarely get asked, what's not going to change. and it's usually better to build business strategies and product visions around stability. so in our retail business, we

know, for example, that ten years from now people are still going to want low prices. we know they're still going to want fast delivery. we never have to worry we'll wake up ten years from now and the customers will say, "mr. bezos, i love amazon, i just wish you delivered a little more slowly." that's not going to happen. and i think in content, there are some fundamental things that we know, too. often, these most fundamental things are really, really profoundly obvious, and sometimes in life, it's hard to maintain a firm grasp of the obvious at all times. but in content, you want -- you have to be interesting. that's -- you know, you have to be riveting. that's a key feature of content. that's what's -- you know, we develop content at amazon, we have amazon publishing, developing books. we have amazon studios, developing original tv for prime instant video. and the number-one rule in that business is be interesting. >> is that the only thing, or is there more?

i know there are things you pointed to when you talked to "the post," also. >> i think there are also possibilities around innovating with new kinds of content because of the new medium. so -- and even innovating around how you develop content. so for amazon studios, for example, we are bringing the pilot process and sort of crowd-sourcing the pilot process. instead of having a small group of studio executives and maybe a small focus group of people decide which pilots should be turned into series, we release those pilots and let everybody help decide. >> now, i understand you spent quite a bit of time in silicon valley at lab 126 where you develop electronics this summer. when you're with that team -- >> yeah. >> -- maybe developing products like this, what's your role? how do you either inspire or push or question what's going on in there? >> well, so this is a -- this is a very good question, also, because sometimes i think there's a myth of this -- of the

top-down leader who is, you know, inventing and this sort of what we have in our minds when we think of thomas edison. and that's not how large-scale innovation works inside of a company, in my experience. it really is the great strategies, the great product visions, even the great features that kind of emerge, and then somebody has an idea and somebody else has a refinement to that idea. and by the time you finish and have a real product, it's -- nobody is the father of that product. nobody's the mother of that product. you know, there's a saying, failure is an orphan and success has many fathers. that's a very true saying. and it captures something very deep, that anything large scale that gets done and is successful, you can count on the fact that there genuinely were many fathers. >> do you ask a lot of questions? do you insist on the impossible, what --

>> what i did this summer, for example, is we had three book clubs. the senior leadership team, we met. these were all day book clubs and we had nice dinners. one of the things we did was read business books together and then talk about the strategy and the vision and the context. and those books really just become frameworks. they're kind of skeletons we can end up using to talk about the business. so those were great conversations. it gives all of us a chance to get to know each other better. and then, of course, we have lots of brainstorming sessions. we're talking mostly about the future. you know, what's going to happen in 2014. what's going to happen in 2015672015. what's the future roadmap. the decisions, what we're announcing today, it's what we were talking about a year ago, two years ago. we're filling the pipeline with what we'll do next. >> i believe time is about to be called on me. so this is my last -- my last question for you. what does success look like on a product like this? because you've got a really low

price -- >> yeah. >> -- with compelling specs. ipad is still selling a lot. you're driving services. what will you look at and say either this worked the way i wanted, or not? >> success is for customers to say, "wow." i want customers to say, "wow, i've never seen an 8.9-inch tablet this light." i want customers to say, "wow, the mayday feature is incredibly helpful to me. "when i want to change something in my settings, i can do it right away." i want people to say, "this display is the most beautiful display i've ever seen." and so on. it's really about can you get customers to say "woug." >> i guess you want them to say, "wow," not just -- >> we even have a different approach to that, which is we have been very clear -- we sell these devices at break-even. we don't make money when people buy these devices. we want to make money when people use our devices by content, buying e-kindle books, music, tv shows, movies.

we think we're better aligned with our customers when people use our devices, not when they buy them. >> well, you're making this journey into mobility that more interesting and affordable -- >> and we're having fun doing it, too. >> it's fun watching you do it. thank you for sitting down with us. >> of course. >> you couldn't see it there, carl, but i actually opened up my wallet and said, you want people to say "wow"? not just, wow. they're in business to sell these things still. >> yeah. i wonder, jon, it's so great actually seeing him talk and move his arms and legs and realtime. i wonder, were you frustrated at all at his unwillingness to really open up in terms of metric, empirical data, all of the investors want to know about? >> yeah, you know, some people you get the sense if you just push on them again and again, you could eventually get them to spill out the number. he very clearly was not going to spill out anything that he hadn't intended as far as metrics are concerned. so we went on to philosophy, to try to figure out how he thinks about the business. >> you did your best, jon. thank you very much.

again, still a look at what amazon is up to. now, new versions of the iphone, meanwhile, are already a big success. a record 9 million sold over the first three days. while the record sales are great for apple, it could mean bad news for a lot of other companies who have nothing to do with technology. we'll explain that one when "squawk on the street" returns. (vo) you are a business pro. maestro of project management. baron of the build-out.

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♪ welcome back. while a record 9 million new i phones were sold this weekend, the launch of the new iphone is anything but good news for many other retailers like lululemon, williams sonoma, and coach, to name a few. matt neemer is the senior analyst at wells fargo with a new note on this trend, calling the iphone hangover. matt, good morning. >> good morning. >> you know, i was surprised to

read this, because i would have thought based on the mall traffic i saw this weekend that, if anything, the new iphone was helping people get into stores, and you're saying, no, instead, it's stealing wallet. >> we had a thesis the iphone launch would steal wallet from other sectors, so we looked at the first six launches. in fact, we did see in certain retail categories there's some share shift to the iphone. >> now, share shift to the iphone. in other words, what you're saying, and we've seen this in some of the retail sales data, is more and more of the money consumers are spending is basically on this product and this product alone. >> yeah, if you look at certain categories like clothing, autos, sporting goods, general merchandise, the sales growth decelerated along with the iphone launch in a number of occasions, and we think that that share shift to apple, you know, obviously, a lot of other noise in the numbers, so it's hard to tease it out. what i would say is last week the international council of shopping centers said that sales

growth was the worst it's been since june. so it does seem like there is some tie-in with the iphone launch to other categories of retail sales. >> yeah, definitely interesting to see what's causal here and what's not, matt. i wonder, is it your thesis that it takes -- that an iphone takes share away from other would-be luxury names? or are people truly extending their wallet to the limit, splurging on an iphone, and then not going, say, to a discounter? >> yeah, we also looked at a number of companies that we cover, wells fargo securities. and there's certain sectors that weren't impacted like grocery, consumable sectors, the dollar stores, walmart, whole foods. and then there were other s sectors you did see a pronounced impact, tiffany, coach, lululem lululemon, blue nile, dick's sporting goods. it does seem to be a split between needs and wants, consumable sectors. and the sectors more

aspirational. >> right. you still need to eat. you still need to buy household goods. just curious, matt, if this is something people, then, should trade around iphone launches? or is it actually a more important longer-term trend that we're seeing here? >> yeah, we're not recommending that this is the sole, you know, reason for a trade. but i think to the extent you're looking at retailers, and you've come out of a choppy back-to-school season, and you're looking at potentially easier comps in the fall, this is a little bit of a red flare. i think this is a warning signal that we need to be aware of. certainly, i would suspect that the september and maybe even the october sales in some of the discretionary categories are impacted by the iphone launch. >> yeah, and a good thing for all of us to keep in mind when we talk about that disappointment if, and when, it happens. matt neemer from wells fargo on the iphone hangover. thanks, matt. >> thank you for having me. >> fascinating thesis. new info coming out of the macy's jcpenney case. courtney reagan has details at hq. >> that's right.

new york supreme court judge jeffrey owen called all three parties into the court and met the lawyers with jcpenney, martha stewart living and macy's in chambers. he called everyone into court to get information about what's been said in media reports, that there was a lot going on and he wanted a straight story. now he has it, he'll go forward with issuing an opinion. we don't know when that will be. court is adjourned for the day. we don't know what the street story is, because it happened behind closed doors. >> all right. keeping an eye on both of the names -- actually, all three. courtney, thank you so much. dow's up almost 35 points. a few minutes left in europe's trading day. finally, a little bit of beta in the intraday session. we'll get europe's picture and a look at the afternoon session in 40 seconds. (announcer) scottrade knows our clients trade

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[ bell ] the european markets are closing now. >>. >> simon has a look at the european session. simon? >> i guess we held in check in europe, for all of the things we could talk about here -- capitol hill, the fed -- but also, importantly, the clear assertion from dragi, that if needs be, he will extend the maturity of the 1 trillion euros of cheap cash the banks are sitting on beyond three years if necessary. very important thing this week. in the meantime, below that lack of market action, you have very big european stories, in fact, driven by a lot of the analysts at the moment. carnival we spoke about yesterday, saying we're much weaker than you think we are in

terms of earnings. you have a host of downgrades today. morgan stanley, ubs, steve forbes, credit suisse, all cutting price targets. of course, we look to say at what point will you recover, and the shares become a buy. also, two other big downgrades came through today. within was on comos bank. this is the second day that they've fallen. jpmorgan had an interesting call on that giant u.k. retailer tessco saying the german -- how would you call it, like audi, will change the landscape for them moving forward, underweighting tesco. the stock falls as a result. let me give you one more deal, which on the surface here in the united states, you'll go, huh. but this is huge. telefonica is effectively going to take over telecom italia. the headline figure is $1.5 billion. it's a complicated deal. you have to understand they're sitting on $39 billion of debt.

it's a huge deal. it also raises the question to buy out the italian shareholders, raises the question of whether other highwater marks of italian industry, like air italia, the airline, might be up for sale as the italians kind of stand to one side. guys, back to you. >> interesting. thanks a lot, simon. now to some controversy surrounding last week's fed decision. a few people in chicago appear to have had access to the fed's data before anyone else. eamon broke that story and he joins us with the latest. good morning, eamon. >> good morning. the federal reserve told us yesterday that they're contacting news organizations to go over the policies and procedures surrounding the fed's lockup. that's the area inside the federal reserve where they give the fed decision early to reporters who cover the fed, and they expect that they're not going to report on it until 2:00. the question here now is going to become, did anybody inside that lockup room -- any of the reporters or news organizations -- transmit any information out of that lockup

room before 2:00 p.m.? unusual trading in chicago would seem to suggest, according to the market firm nanx, that people in chicago had access to that information before 2:00, before they should have, if this travelled from washington, d.c., on the telecommunications lines. we've been asking the news organizations who participated. a lot of them told us they did not transmit a thing out of that room. i want to give you the statement from dow jones, which declined to answer a question of whether or not it transmitted any information. instead, they say, we will continue to work with the fed cooperatively to report in full accordance with their desires. that's the statement from dow jones. thomson reuters has told us this morning that they did not transmit any data outside the fed room before 2:00 p.m. now, the question here in all of this is the new level of weirdness is what were the fed's rules last week? the fed has not answered a direct question from cnbc about whether or not it was, in fact, against the rules to transmit any data at all outside of the room before 2:00 p.m.

so we're going to wait on an answer here from the fed about what the rules were before we can figure out whether anybody may have broken them or may not have broken them. >> exactly, eamon, because that will tell us whether there could have been anything illegal going on. so anyway, we'll find out. >> that's one of the questions, yeah, absolutely. >> thank you very much, eamon out of shin let's kick things back up to bob pisani with a look at what's happening at the nyse. >> i suspect the rules the fed has are not clear, not written down, and they'll clarify that, and make it clear that sending messages to a server is not in the spirit of the agreement. that's probably what's going to happen. they'll do it very quietly, by the way. we have churning. and i'm calling it fiscal fear fatigue. it's annoying. look what's going on. the white house and the congress are far apart, particularly the republicans on the continuing resolution here. so traders just say, why am i getting involved in that? we have low volume, low activity here. there's generally, everybody agrees, we'll probably make a deal.

about you it could bleed into october. most people believe we'll avoid some kind of shutdown. the irony is, the fiscal situation in 2014 is better because there's less government cuts and that will help the gdp. the closer we get to that, the better the gdp will look overall. it's not helping us now. i know we're down. put up the s&p. down five days in a row. oh, heavens. it's one of the low-volume sell-offs. down 1.6% from the historic high we hit last wednesday. that's the way the pullbacks have looked this year. low-volume pullbacks that have been buying opportunities. what worries me more is the 10-year and the treasuries. we have seen yields declining now, i think 10 out of 11 days in the 10-year. that's normally good news for the stock market. it's not really happening. obviously, there's concerns a slow-growth economy won't be helpful to earnings. that's why the stock market isn't doing much. look at the builders here. interest rate-sensitive group, it should be benefitting as the interest rates go down. we're not seeing much. homebuilders up a little bit on mortgage applications.

utilities, reits, not doing much overall. elsewhere, department stores are having an awful day. you heard david report earlier about jcpenney, the turnaround could take a while. down 11%. macy's, lowest since april. and biotech, ipos, anything around oncology, the hot thing this year. oncology, ipos, we saw today foundation, look at this, $31, priced at $18. and that was above the price talk, opens at $31 and has held up there. anything this year in oncology, biotech is doing terrific. but particularly cancer research. also it's great breakthroughs coming through. >> we're in a golden age, some argue. a good thing. thank you, bob. new home sales data released earlier this morning show a 7.9% jump in august. but sales still hovering near their liest levels of the year. let's get to rick santelli in chicago with his take on housing and mark canton's, too, rick. >> absolutely. before we get to our guest,

mark, i'd like to play something robert schiller said yesterday on cnbc. roll the tape. >> i'm still worried -- i'm starting to worry more about bubble. and some cities, it's looking bubbly now. this might be the beginning of a slowdown. it could be the beginning of a bubble, but i don't know. there's really a fundamental change in the housing market. part of that is just explained by change in tastes. people seem to want to rent more. >> all right. i'd like to welcome my guest, mark hansen. >> thanks, rick. >> mark, why don't you respond to robert schiller, and respond in the context of up close to 8% today, and reconcile what appeared to be on the surface good news and the anxiety robert schiller obviously harbors regarding housing. >> new home sales this morning, they beat -- consensus beat could have come from two houses. remember, they round up and they round down. if you take a look at the

no-seasonally adjusted numbers, they were flat. month over month. 35,000 houses this month, 34,000 houses last month. however, the subcomponent regions were identical month-to-month, meaning that if someone took one house and added it on to 499, you would get an extra 500 houses times 12, and all of a sudden have a 421,000 beat. however, if the grand scheme of things, the year 2013, we were supposed to be at 500,000 to 600,000 seasonally annual rate, and post-the surge, we gapped down to 390 last month. let's say 400, 420 this month. but these are real low rates. but keep in mind, also, new home sales as a percentage of total house sales are only 6.99%. throughout history, they've been 20%, 25%. they added a lot to gdp. in fact, existing sales, just

the broker-commission component alone, is 50 -- five-zero -- percent of totaler builder residential investment. it's never been lower. so real low levels, still depressionary levels, still arguably room to go to the upside, but we haven't seen that demand transpire yet. >> all right. one final question, because you hit something i see all the time. seasonal adjustments seem to have gone awry. we're in this new normal post-the crisis. do you think at this point it's more informative to also be monitoring the non-seasonally adjusted housing data, specifically the data you referenced this morning on new home sales? >> obviously, housing is very -- well, it's very tied to interest rates. when the fed's in there pushing around yield curve with a bulldozer, and from month to month we can get price swings that change affordability by double-digit percentages, you saw what happened post the rate surge.

it had more than the cooling effect. it was a catalyst. it was a credit event. new home sales gapped down 27% month over month on that rise in rates. so, yes, i like to look at not-seasonally adjusted rates. >> all right, excellent. mark, thank you for taking the time to be our guest. and back to the "squawk on the street" crew. >> yeah, a couple of great data points in there. thank you, mark, and thank you, rick. senator ted cruz, meanwhile, is still pulling his all-nighter on the senate floor to protest health care reform. his speech can't actually stop it this morning, but it might bring us to a government shutdown. what does it mean for the economy? art cashin joins us when we come back. ♪ all night long ♪ ♪ [ male announcer ] the new twin turbo xts from cadillac. 410 available horses.

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while dramatically reducing waiting time. [ telephone ringing ] now a waiting room is just a room. [ static warbles ] coming up next on "the half," who knew what and when ahead of last week's fed meeting and who may have traded on it? is the u.s. still the best place to invest? we'll get the word from asia, and also from london. plus, it's one of the dow's newest member, but does nike belong in your portfolio? two of our trader also debate that. we'll see you in about 15 minutes. >> all right. it's in the dow now, so we'll have to stay tuned to find out. scott, thank you very much. with the government shutdown looming, the next guest says the markets are approaching the key technical level you want to keep an eye on. here's art cashin, director of floor operations, joining us at post 9. art, good morning. >> good morning. >> right now, we have about 15 minutes left to go in the

filibuster of sorts that's happening down in washington. are markets trading off of that? >> they're watching it carefully. sometimes with a little tongue in cheek, as i said to you off-camera, it is slow enough that people are running around doing parodies of "green eggs and ham" with a political theme through it. and it is a little tough. they had one this morning on the right doing, "i will not fund my uncle sam, because i don't like the health care scam." >> okay. >> and a couple you can't repeat on the air. on camera. [ laughter ] so they're watching that as a backdrop. >> we have the dow now climbing 28 points. the actions since the fed's meeting last week, has it been about what's happening in washington? >> it has been. it's about cautious. but again, the markets always internalize. this morning i sent a note out to some friends that the s&p was approaching a kind of temporarily critical neckline support at 1,693, 1,695.

we got down in there and tested it and tested it. and it didn't break. i think if the filibuster weren't going on, you might have gotten a pretty decent rally out of that. instead, you got a kind of half-hearted bounce. but the viewers should watch, if negative news comes up, watch for that area, because it will be important. >> some point out s&p hasn't had five days in a row down since the fiscal cliff at the end of last year. others say the market is desensitized to a lot of the shenanigans in d.c. what's the truth? is this an automatic response to what we see down there? >> well, i said with pisani several days ago, the markets have built in a kind of rationality put, the idea that, yeah, confrontation going on in syria, there's confrontation going on here, there, economically, militarily, geopolitically, and at the end when they get nose-to-nose, people go, "well, let's not go that far. let's buy some time, let's delay

some things." you know, people remember barbara tuckman wrote a great book called "the guns of august," and it was how we accidentally marched into world war i, because nobody believed the other guy would blink. so we've got to be careful. this one, you have to remember, we're in washington. and rationality and washington don't necessarily go hand in hand. somebody might misstep. it looks like when they get back to the house, there will be less than 24 hours to act on it. you can accidentally trip over it. people express that concern. >> all right. we'll keep an eye as we head into the weekend. art cashin, thank you very much. the smartwatch era is almost here. samsung's version of the smartwatch scheduled to hit store shelves soon. but the question everyone's asking, is it simple? what kind of stuff can do with it? we'll talk to a company behind one of the first apps for the samsung smartphones in just a moment.

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>>. >> in a cnbc exclusive, courtney reagan sitting down with men's warehouse ceo following recent headlines with a clash from the former face of the company, george zimmer. courtney joins us more with a busy day for courtney. >> that's right. sick of me yet? his termination garnered a lot of attention. the ceo says he hasn't seen any evidence in the business of the falloff of zimmer no longer rvinv commercial spokesman. what happened, mr. zimmer?

>> well, you know, i'm going to have to refer you to the statement that the board put out soon after it happened. >> so the only option was to terminate mr. zimmer, because he was disruptive? >> well, i can tell you that the board tried very hard to find another resolution, and was really left in this position. >> and is there no contact with mr. zimmer at this point? he is still the largest shareholder, although it's only 3%. >> no, we haven't had contact with george since then. >> zimmer' termination as executive chairman, men's warehouse reported a 20% drop in quarterly profit and lowered guidance, but they cite economic pressures and traffic slowdown in some of its stores. goldman sachs initiating coverage of men's warehouse with a buy rating, a $45 price target, lifting shares here almost 5%. and while men's warehouse extended its exclusive relationship with david's bridal for an additional five years, ewert says this year, 2013, is scaring superstitious brides to

push their weddings and subsequent tux rentals into 2014. ewert says they rent more tuxedos than anyone else in the u.s. the average age is 27. if you're a valuable millennial client, they hope you switch over to other suits and goods. carl? >> courtney, fascinating. people are putting their weddings off to 2014 because of the number? >> i couldn't find any data, and i asked him if he had any data. he said we're seeing evidence that some brides feel superstitious about the year 2013, getting married in a year with '13. he said it happens when a saturday falls on the 13th. on the flip side, 7-7-7, he said, was one of the best wedding days ever. >> and i imagine popular among the chinese, as well. isn't number 7 in -- that's one of the really -- what's the opposite of being a bad luck? a good omen? >> yeah, 8's positive. >> oh, 8. >> 4 is the one you want to avoid. all fours. >> that could be trouble next year in general. >> that's true.

>> neumerology. >> burying the lead, court. thank you so much, courtney reagan, back at hq. speaking of retail, we're keeping our eye on jcpenney, which for a brief period this morning did have a 9 on the price, 9 and change. got just below 10 before rallying a bit. but clearly not a good day. in fact, it's the worst two days for the stock in about six months. this is a 12-year low for the second consecutive day. year-to-date, down 43%. favor mentioned some of the big names that have been reportedly on the long side that are clearly having a tough time today as people wonder about comps, wonder about the future of mike ullman and other things. >> exactly. green mountain coffee also a big loser today. we'll tell you why in a moment. "squawk on the street" will be back.

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let's send it over to dominic chu to get a quick "market flash" on green mountain. >> that's right. the shares getting roasted. the stock is down another 2%,

off session lows, down about 11% during its current losing streak. the worst five-day loss for the stock in a year. keep in mind, though, shares are still up 86% so far in 2013, and a quarter of green mountain shares are sold short. so lots of investors, carl, kelly, betting at least on a fall for green mountain coffee. >> interesting. the nasdaq 100, which is pulling away from the s&p and the dow, green mountain is the fourth biggest gainer of the year just behind tesla, netflix, and micron. shows you what a tear it's been on. >> yeah, exactly. 2% today. meantime, samsung announcing plans to make a smartphone with a curved screen at a galaxy smart launch event in seoul, south korea. the company wouldn't elaborate on specs. recent patent filings says the screen would be curved inward. carl, i can't say i totally follow all of it. it looks like samsung shares are weaker in that session, down .3% this morning. we have seen pictures, potential

plans for this kind of device. you know, i wonder how much of a game-changer that would be? is it enough to make a person who would buy an iphone buy a curved samsung phone instead? >> makes you wonder if we're getting to the edge of the innovation envelope when it comes to some devices, because that's been the knock on devices, that we put as many bells and whistles as you can get on them. >> it's probably more interesting for the samsung watch. if you can curve the screen, get the chips to be smaller, even with the iphone people have said to us, it's about the chip and getting things on a scaled-down-enough platform you can put it around your wrist. >> right. we keep our eye on the hill, of course. senator ted cruz, looks like he's about to wrap up. >> he's got to. he has only a minute left. >> until noon, which we'll see procedural votes. one of a series of votes that we'll see in the senate over the next, what, 24, 48 hours. >> yeah, it sounds like it's tough to follow. >> and then, of course, every minute he has spoken has been one less minute john boehner has to get some sort of response to

the senate out of the house. but that's going to be a discussion for the weekend and next week. in the meantime, the market really riding a 20-point range here. >> right. will you take big positions with that looming over the weekend? doubtful. >> with that, let's get back to headquarters for this afternoon's session. scott wapner and "the halftime." here's what we're following. the front-running of the fed. who knew what about the taper and when? and who profited as a result? a slam or dunked? the dow newby nike reports tomorrow. should you get long ahead of the numbers or wait? first, the s&p hoping to avoid the first five-day decline as fears of a government shutdown continue to linger. how should you maneuver the markets which sit just 2% from new highs, and is the u.s. still really the place to be for your money? it is "the half." let's play the action. pete najarian, is t