>> who got what last time. >> but there's got to be negotiation and discussion. >> sam, thanks a lot for coming in today. we'll appreciate your time. >> that does it for us today. make sure you join us tomorrow. right now it's time for "squawk on the street". good morning. welcome to "squawk on the street." i'm here david faber here with james cramer. ca carl is off today. we're looking at 2.64 on that

10-year note. we hear that miners are dragging down the ftse. data from china was showing a slowdown in services sector growth. in germany, manufacturing orders below expectations, falling in august. that was the second consecutive month that we saw them. >> that surprised me. >> let's get to our road map. schultz is urging fellow ceos to turn up the heat. and jcpenney said it's seeing signs of a turn around or that its strategy is working. and the long good-bye. we're going to read you excerpts

from steve ballmer's letter. it's a good-bye now. >> the government shutdown and the debt limit battle also now dominating wall street's attention. president obama continues to call on the thousands vote immediately on ending the shut down. house speaker john boehner still insisting the government agree to talk about changes in health care reform or the obama care law as it's known and also broader budget issues. this is now we're nine days away from the debt ceiling deadline. this morning the "journal" after a conference they had, because they have a lot of money managers, not that worried. the front page of "the daily news" is china. >> well, matt lauer sex, too. don't want to mitigate that. a lot of people are more focused

on the matt lauer -- miley cyrus story. >> he's 55. i have a little time still to be active. >> they want to raise it higher but we don't know when or by how much and there is absolutely a gap between the 17th and november 1st that things must happen. i read all these complacent articles. will those people be saying the same thing if we're having this conversation the 18th? i don't think so. because of the complacency, market hasn't dropped much. it all seems kind of a play act. but trick or treat. >> catch 22, which i pointed out yesterday. we need the market to really be disrupted for people and some republicans, perhaps not the tea

party to say okay, let's take a vote, let's get it done. so many people believe it's not going to happen that nobody's selling. in fact, some are even buying -- the dip. >> so we never see the precipitous fall that potentially would bring an end to deet bait. >> i agree. i mean, look, you need crisis in order to be able to solve crisis? 19% decline in october, you know, in 2011. you had a 19% decline. you had specials on cnbc, you had everything cooking and it was crisis! here it's like, i don't know, maybe we ought to nibble at jcpenney. a little nibble there. so as long as you got like the nibble, you don't have the big chat. >> you don't. and we're getting some nibbling today after a significant down -- >> there's a lot of stocks that are down a lot. the problem is this is so garden variety. right? this is garden variety versus the 2011 where it was like,

okay, social security is on the line. you don't hear yet. you hear maybe they got to pay social security, nurses, a definitive break. they can prioritize. you and i, say you run a budget in the house, tell the wife -- do a little politically incorrect stuff. you tell the wife no more whole foods, you're going to the red apple. no more movies. we can stay home and washington not even movies. we can watch networks. those are priorities. they're prioritizing. the government doesn't seem to know how to do that. >> if we breach the debt ceiling, that's still very, very worrisome. >> do you know how much money is levered to treasuries? you still don't have to worry about hair cuts but i i know a

hair cut when it comes to margin. every single bank has to kb give a hair cut. how about the $1, 2, $3 trillion, japan, china. do you this i they have to be here? >> well, i don't know. i'm sure they're wondering the same thing. what is going to replace treasuries? are they going to sell $1.5 trillion in treasuries? where am i going there? where's the yield that i'm going to did. >> they obviously could help themselves. it's obvious that someone gets hurt. you know who gets hurt? the people not working for the government. the congressmen who want to teach the government a lesson, it's the private business who basically has a business somehow connected with people who work for the government. this is the coffee cart issue, the coffee cart guy is going to get killed because he happens to

be in proximity to the federal court. >> already eight days under way. >> and, by the way, the park system makes money. they're shutting down the stuff that actually makes money. >> fed's president fisher said "i deeply hope and i don't think we'll default, but it will come down to the wire." >> what about starbucks' howard schultz? >> he comes from a radical position. >> he does seem to like to get involved in these issues. he did it a year ago with the same issue. schultz urging fellow business leaders to get involved essentially is what he's saying, in a letter to fellow ceos he said "i'm utterly disappointed by the level of irresponsibility

and dysfunction we are witness to with our elected political leadership." this weekend i heard from several business leaders who shared their concerns about our relative silence and impact in urging the political slaedership to act on behalf of the citizenry. >> isn't it interesting that it's news that someone calls for civility in leadership? >> it didn't work the first time, why would it work this time? >> the business people -- i didn't use the term kickoff because i found that cliche. suddenly what will happen is the guys start to give an outlook. if you work, if you have a company that is in one of these districts where there are people who are voting against -- or in favor of rejection, i'm cutting numbers because of ted yolo's district because he wants to teach us a lesson. he's like, yo, yeah, i'm in

default. that will just show us. if you have a small business in that sicircuit you want to vote for that guy, you certainly do. >> confidence is easy to kill. it's been extraordinarily hard to build, easy to kill. not that we might have had a flood of deals at all but nothing's going on. >> the $50 million food deal still got done. >> that still got done. sam zell was a get on "squawk box." here's what he had to say. >> i think the tea party is a reaction to an imperial white house. and i think that we're seeing -- i mean, come on, how does the president deal with his daughters? i'm not going to negotiate? that's the way you deal with your children? my experience with my children is that never worked too well. i can't imagine it's going to

work very well here. >> i've tried that, too. mixed results. >> mixed results? >> mixed. >> is that implying john boehner -- >> cutting numbers, jim cramer family. look, it's obvious that the foreign markets are going to get hit more. emerging markets down 20% october 18th. scenario. >> they've recovered from when they had a terrible time in the summer. >> i understand the principle of rejections -- they don't want to be called rejections, they want to say exception. i remember going to the boch in 2011 and the foreman says i'm

not going to get my social security. i said, no, you're going to get it. how do you know, big mouth? i don't know. i started taking a side saying i don't know. maybe at a certain point people don't like not getting their social security, they don't if at any time want to hear it as an option. medicare. they like medicare. >> so start having a conversation about entitlement reform in a real way. >> that's what some of these people want. i can't blame them. there's a lot of good talk about the 14th amendment and the importance of it today and why did the president take that off the table because obviously a presidential crisis means you should invoke it. lincoln raised a couple billion to fight that war. >> talking about raising money, shares in the jcpenney are rising. they stay they are still in the early stages of a turn around but have seen the sales to continue to remain until the end of the year.

the liquidity is expected to be $2 million with an unexpected, very quick equity raise that sent the stock just reeling and it has yet to recover. yesterday the shares hit new low, down 60% simply for the year but this morning it's going to be up, jim. less yearn the way i would characterize it is this these guys are not drowning, they're swimming. they're doing the doggy paddle, though. it's not like they're -- they are barely moving. >> if i was jcpenney, they should be going to all the congress people who are trying to starve the beast, right? the beast is the federal government. they want to starve the beast and say, no, you're starving jcpenney, would you get this deal done? because they need a darn good christmas or holiday season. sorry. >> they need to stabilize. when i continue to talk to people around the country at least, what ron johnson did to this company -- it's easy for

them to say of course to the extent they can make themselves look more competent by making him look less competent. and he had no ideas what's going on in the stores. now they seem to be once again, okay, what are our customers telling telling us what they want. >> can you come up with a ceo -- he was like the torch man of this operation. >> it is hard. >> september sales ended october 5th were down 4% compared to september of 2012. a 580 basis point improvement over august. so the sales drop is not as steep. now they're hoping it will start to turn the other way. >> i approach this as granu

granulearity. we want to root for this company not to go under because there are so many people who work for it. ron johnson basically turned the place into wilson sonoma. that $280 cast iron thing that you and i both use this coming thanksgiving. >> oh, yeah, those pots, crock pots. >> that's the stuff he's bringing in. that's not cheap. >> no, $350. >> we have a williams sonoma near my jersey place. knock that price down. >> they communicated very importa important. >> goldman writes a piece that exasser bates already concerns that may not have been particularly well founded about their liquidity and then they have to raise money and goldman then does the equity offering

from them. >> coming up, steve ballmer's farewell letter to microsoft's employees as he gets ready to leave the company. also ahead, bart chilton's eye opening take on the shotdown. and futures, we are headed for up. >> what do you think of that? >> we'll see if we stay there. more "squawk on the street" after this.

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♪ good-bye to you, good-bye to you, good-bye to you ♪ steve ballmer's written a good-bye letter to microsoft shareholder as he gets ready to depart the software giant. he writes "we have seen incredible results in the past decade, delivering more than $200 billion in operating profit. i'm optimistic not only as the ceo but as an investor who treasures his microsoft stock. working at microsoft has been a thrilling experience. we've changed the world and delivered record-setting success and i know our best days are still ahead." i tried to read it to get you to tear up. i'm glad you are. >> i'm trying to compose myself. >> i'm sure the paper was wet that he wrote or typed it on. >> it's interesting he stands by that nokia buy.

that's together going to bring the best mobile device. apparently they're having some uptake in countries in europe. i have ceo gaines on last night and he was saying x-box is doing incredibly well. but the end this is still a utility company. i thought this was interesting. to increase it, the devices, they're doing the familiar litsch -- family devices but he said people love windows. is that true, david? do we love windows? >> yeah. >> do we love microsoft software? >> no. as you say, it's a utility. it's much more akin to con-ed edison. >> it's a utility. people didn't like windows but

we're stuck with it. we're all stuck with it. buy us. windows. why? why is that? >> i don't know. who are those guys, you know? it's kind of like the guys chasing butch sundance for like jobs. who are those guys? >> it's just beginning, keeps reminding us we don't know who is going to take over. >> no, we don't. but ford can drive itself so mulally is free to trade. >> we know who is going to take over there at ford. when are we going to hear about somebody new? >> it's time. i'm sure they don't like -- the vacuum of leadership, abhorrent. this is a big company kind of in

the eth ether. the services that people love, i've never heard anyone say, you know what, david, i love windows. >> they love their x-box. >> they do love x-box. i told you that this company should be split. zple ysh you have. >> but they went the opposite. they listened to the show and they said no. >> up next, it's the time of the morning you've all been waiting for. we have cramer's "mad dash" before the opening bell. more "squawk on the street" from the nyc straight ahead. she loves a lot of the same things you do.

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all right. six minutes to opening bell time. mad dash on this tuesday. what are we talking? >> the real mccoy. taking over at avon, finally getting the recognition, wells fargo goes hold the buy saying the turn around is at hand. shari might have gotten it, it went to goreski. we mentioned years of poor performance.

andrea young pointing out the company was run into the ground by her. >> you're willing to buy into the fact that the turn around is occurring? >> i will buy into mccoy. everyone tells me she's great. they've got a lot of key markets. they have to build in the infrastructure. look out, avon can come back because she's a strong leader. >> cody came after them and cody now a public company as well. >> yeah. i think it's time to buy. if you're going to go, you better strike right now. proctor, we'll upgrade that. why? leadership. they say they're finally getting together developing markets, they think they're going to make a comeback. be careful, unilever has stumbled lately. it's not that expensive a stock. it is a very well run company. >> it is, although a.j. is not going to be there a long time. there's a longer line in plano,

texas to take over for ulmer. >> you had him on the board of shame and then he came here. >> he came off. he was not that kind of guy, mcdonald. i thought when a guy gets together and then he had a bad concern quarter. hey, the tigers, st. louis was out. a couple of bad games and they're out, just like that. but the dodgers -- >> they're in there, man. >> we have the opening bell. we'll give you more baseball results in the playoffs and a lot more "squawk on the street" after this. weekdays are for rising to the challenge.

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[ cows moo ] [ sizzling ] more rain... [ thunder rumbles ] ♪ [ male announcer ] when the world moves... futures move first. learn futures from experienced pros with dedicated chats and daily live webinars. and trade with papermoney to test-drive the market. ♪ all on thinkorswim from td ameritrade. you're watching cnbc "squawk on the street" live from the financial capital of the world. the opening bell set to ring in 30 seconds on this day. the futures have looked up. i don't know where we're going to end up today. >> it's all rumors, david.

it's rumors of someone having lunch with someone. people are saying senate. >> today about 10:00 the rumors started. is that a dining hall? somebody walking down the hallway? >> do people realize there are a group of people who want to default and they don't want to break bread. there's not going to be any sort of middle ground with these people. they're not about middle ground. they're about starving the beast. >> the question also is whether boehner would hold the vote or not. by the way, you heard those opening bells. let's look at the s.e.c. realtime exchange. here at the big board revenue shares celebrating the recent launch of the revenue shares dividend fund. over at the nasdaq, we are

celebrating two new locations devastated by hurricane sandy. >> i worked that account over at goldman. that's fabulous. y? >> yeah, does great things for people. >> where do we want to look? >> how about the action -- >> talk to me about it. you have a much better feel in terms of energy, in terms of all incredible things that are going on in this country that we don't talk often enough about. >> this one has been left about. it's a canadian company, pioneer natural on tonight for "mad money." this is the development of the oil shales, eog, mobiles. they missed the mark. they're quickly switching to oil but i guess not fast enough for carl aye con, who remember, had

major, major things to do in checks a week, if not the high profile aubrey management. >> icahn is still in there. mcclendon has moved on and has now launched a new company that we reported on last week. >> that's right. in utica. >> the utica shale. >> there's this camp that i think is bigger than all of them. >> we don't talk about all the ancillary plays that have to do with this boom and it is a boom. >> whether it's $25 an work at mcdonald's? >> whether it's the typeline company, i don't even know all the businesses connected to getting this on the ground. >> hundreds of thousands of people. last night the snim next people

and we're finding new oil every day, pioneers claiming the second largest oil fend into the in america but in the world after ad ad. the web site is just incredible. they're saying this area not that far, is the biggest find, twice as big as prudo bay. and it's new. he thinks they're they're has l lid. >> again, do you want to play on some of the securities based on fines or are there plays that

regardless of that that are requesting benefits. >> people are word -- i look at a company like pioneer and i say to myself i know it's been a horse but if they have the oil that they say they have, this is a major company masquerading as a not major company. david, nibrar is outside of denver, you would not it. if you go to the pioneer i can't recall resources, you'll see man camps. it's where you don't have enough housing so you put all the men involved in getting that oil in dormitories because it infrastructure has been jofrtd

by. >> what can i say? last week $36 billion in the pipeline. >> i'm going down to texas tomorrow and the next day. >> you getting on the horse again? >> no, i'm not going to -- actually, i might. >> go to dejcpenney. i always look when you wear the khakis. >> that's what this resign was amend to do. a. >> oh, my. >> and how is the to you throwing between some of the edge funds? >> yes. you say, listen, it not -- >> rob: mill -- but that stock

is up tomorrow. we'll talk to any friend the -- we'll probably get a hit on that, on the credit but also the equity as well. >> remember you said one area he's done is incredibly correct, david and just really kind of m om -- a lot of these guys don't know. >> you and i talked about people in retail who have been doing it an extraordinarily long period of time. if you're a hedge fund manager, you believe it's a turn and and look at the numbers, it doesn't necessarily mean you sudden sli li have all those years of experience who people we've spoken to who continually say this going to be really, really difficult. i know all these guys and they don't know anything more than anybody else knows -- >> apparel is bad.

express has been good. some of these guys are doing targeted. look at jers-- >> meanwhile the intellectual property is down. netflix and tesla, we always have those going for us. >> remember there were some hedge funds talking. when hedge funds talk, netflix goes down. when they don't say anything, netflix goes up. it's like saying tesla is undervalued right now. >> our new system, i'm not as quick to get the quotes.

nuan has two members on the board, dave shekter and his son brett. and that's siri. this is your sound system. and siri's vastly improved. >> it is. so many things on the apple are just vastly improved. i know people -- i've had younger people on the show than me again and it's vastly improved. i think that nuance probably has some value. but carl comes into these situations and i don't know how much upside there is but haynes, we just had him on and look what happen happened. >> let's get to bob pisani. >> people talking about some grand bargain out there. i know. it's still not dead. some junior senator in ohio was

trying to put together a deal whereby you increase the debt ceiling, end the shutdown, maybe approve the keefestone pipeline. a lot of other people think w l will -- let's concentrate on things we have some real added value in. that's where i'm comfortable. the there. >> i tell you what i want to know, will they change the aluminum guidance? they said it would be up 7%. aerospace is fantastic, 9% to 10%. some of the automotive is 1% to 4%. commercial transport, you see that number? 3% to 8%? that's been doing great recently. the hope here, it's a long shot,

maybe they'll raise that number. if they do, they can make a significant difference in the guidance. this has been an underperformer for ages. aluminum has under performed the material sector, the turl sector has underperformed the s&p 500. the s&p is up something like 17% this year. my point is there's a lot of room for the things that move on the up side at this point. just a little change in the guidance particularly in that area on commercial transport could do it. let's move on to the bank earnings. i mentioned jpmorgan, wells fargo is going to be on friday. the banks have underperformed all quarter and that's because they've had issues they all know about. there's talk about higher provisions for legal settlements for the big guys like bank of america and jpmorgan. we've had a flatter yield curve that we've started to realize is going to be around for a while. that's a bit of a problem and another reason those banks are

underperforming. those numbers will start coming in on friday. i have a lot of questions friday on why retailers were underperforming so much. generally the retailers have done pretty well. there's your green line. retail verse outperformed. yesterday pretty dismal numbers. as i called around, i heard about mall traffic down, shorter holiday seasons and a lot of people very worried about jcpenney slightly desperate with really heavy promotions, forcing a response from these companies. jcpenney trading up today. they had september same-store sales increase month after month. >> das -- >> some of the lowest numbers of the year. >> the cardinals, i shouldn't rule them out.

i like them. i really do. litz go to rick san t-- let's g rick santelli. >> as i reported, it's one of the markets that's turning up in all of the markets. we're going back two weeks at 1 1/2 basis points. the week before that was it was a goose egg, it was just parking your money. one week ago today it jumped 700%, currently trading in the low 20s and there's all kinds of e-mails flying around out there of course as these traders understand the time frame they're dealing with between now and the end of the month. so this auction may be important. it's now for the first time in dozen years above one month libor, that really great rate we're also fond of, which has never responded after the crisis to the kind of levels we once saw.

if you look at an intra days of 10-year note sales, you see as we come into our time zones weeshs get a bit of a spike. it is currently going to be the 11th day that we're going to close between 260 and 265. many technicians like closings, weeklies, monthlies, quarterlies. that's very important. we look at the bund. we can see it had a similar day. it's hunkering down. many of these markets are starting to compress. if you look at year to date, we look at the dollar index, which is very euro centric. back to you. >> mr. santelli with the bond report. kelly evans joins us here at post 9, looking good in orange.

>> pumpkin has arrived early, this year, i believe. we could relate that to the debt ceiling as well. a lot of people starting to look ahead. what are the implications again as this looms? we could call today's piece it have. yesterday was all about the big picture, the way in which the fed is likely to keep doing qe. today it's a little bit more targeted that the fed is actually again trying to cushion the impact of what could happen around the default. so there are anywhere between a dozen and two dozen treasury securities in the market that may not -- that could be affected because they pay out this month and investors are probably going to shy away from. importantly for the functioning of funding markets, treasuries are used as collateral. they're posted overnight to make big positions, to trade between banks, to leverage in some cases all the kind of mediation which helps treasure flow out to the border economy. what's happening now is they're

concerned there could be a shortage, say, of these kind of skurlts, which aga skurlts, which again a-- securi which again are shorted overnight. the fed has tested this new facility, which allows them to put them into the market overnight at a super low rate and a limited basis on the amount it will give to any one player. the fed said this a way of basically ensuring it keeps the floor under where it wants rates to be so they don't go negative. what happens if there goes negative but there's such a big

picture of what the fed is going to do here and the much more targeted things it will try to do as we try to complacent here? well, there are some practical options, alternatives. >> the mechanics underlying the personal credit route are very, very important. arj -- they have this tool out now to exit one day from this quantitative easing. it also so happens it can get us a supply of treasuries in the market, precisely the time there's a high demand for them. >> we have to go. the supreme court, by the way,

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welcome back to "squawk on the street." i'm sharon epperson. right now we're looking at gold and silver prices that are basically steady as we wait to see the outcome here. if we do see some type of settlement, expect to see a 2% to 4% drop in oil prices immediately. tomorrow will be the last day we will get an energy department report on petroleum inventory. they say they're operational only until october 11th.

>> how are we supposed to know anything without these reports? how we doing? i don't know. the answer, my friend, is blowing in the wind. >> you have a good point. tracking data -- >> empirical evidence. >> that's right. it's one reason our economy has performed well for a long period of time in terms of being able to understand. we can go eight days but -- >> changes subjects a bit, if you haven't been hit to snapchat, the u.s. attorney had to learn about it from mr. cramer. >> can snapchat leap frog because you can't stop it? >> i don't even know what you're

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. all right, time for "six in 60." start off with whole foods. >> it's going higher. >> you love this stock. i do. >> temy health care. >> good stock. >> clean energy fuel? >> this is a call where says they've got the wrong fuel, they're using lng and people are using cng. >> hewlett packard.

>> they're going to miss estimates. intel can't afford cut-outs. pcs very week. >> they have their analyst meetings tomorrow. they have guidance for next year, new guidance. >> the opposite because it's cloud, sbr says business has to go up. >> what do we have on mad? >> we have pioneer, they're saying the bergons and they're saying they have the second biggest oil field in the world in their territory. in the world. >> can they prove that? >> reserves much bigger than bakken -- >> when did we hear about this?

>> they just started talking about it. you're talking about maybe the next big major in the world. this guy. >> i see you're going to have the gridlock -- >> every day i have a sense where you are. >> nobody's done a better job covering this industry. >> i am not kidding. you watch this guy. i've been trying to book this guy. this the guy. >> get all the guys in texas. simon is here. we have a look at what's coming up next. >> the imf has projections. the growth is going to be far, far better next year. we'll have the bart chilton to talk about the shutdown and why he's trying to persuade jpmorgan to admit they manipulated the market in the london whale.

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welcome back to "squawk on the street." you're looking at a live shot on capitol hill where speaker john boehner and others have been meeting are about to speak, presumably on the shotdoutdown

the debt ceiling. we want to bring in eamon javers, who is live for us. not a lot of marginal news but we understand there has been talk among the leadership. what can we expect now? >> what did the leadership hear from the rank and file? it had this meeting for just over an hour. they're trying to take the temperature of all the members of congress who went back home to their congressional districts, what did you hear, how is this playing, what kind of urgency do we have right now? that will affect the strategy going forward to that october 17th deadline. meanwhile overnight we got some interesting numbers -- here's the speaker of the house. let me stop here. >> americans expect us to work out our differences, but

refusing to negotiate is an untenable position. and frankly by refusing to negotiate, harry reid and the president are putting our country on a pretty dangerous path. listen, there's never been a president in our history that did not negotiate over the debt limit. never. not one. as a matter of fact, president obama negotiated with me over the debt limit in 2011. he also negotiated with the blue dog democrats to raise the debt ceiling in 2010. so the way to resolve this is to sit down and have a conversation to resolve our differences. >> good morning. in our last effort to fully fund the government, we asked for an end to special treatment for congress. simple. and we said if you're having a hard time using obama care's broken web site, you shouldn't be penalized for not signing up this year. very simple.

that's all we're asking for, a one-year delay of that tax is more than fair given how poorly the roll-out of obama care has been. and president obama gave the same relief that we're asking for to big business. but the president and senator reid wanted to protect that tax. so we asked to sit down and talk and they said no. in a divided government, the american people expect us to work together. whether it's on the government's funding or the debt limit, people expect to have negotiations when there are two differing sides. in 1995 both sides sat down together on the same type of circumstances and they ended up balancing the budget and in 2011 as the speaker just said, we all sat down together and now we'll have two consecutive years of reduced spending as a result. never negotiating a position of not negotiating is not a

sustainable option. and we ask this president and harry reid to sit down and let's iron out our differences. >> you're going to hear a similar tone from everybody that's up here because it's very simple. get into a room and solve our problems. the president made a decision not to go to asia. we stayed in washington, a perfect opportunity to communicate with one another. another weekend missed. another opportunity missed. i don't want any more opportunities to miss another opportunity. harry reid, go to the room. we're there. mr. president, give a call. we're ready to answer. >> so we're one week into this shutdown and i think most americans are looking at us wondering why can't we just negotiate? why can't they just sit down and have a conversation, have a dialogue about the way forward.

that's what most people do in their own homes. each one of us have been in those situations and you have to sit down and at least open up the lines of communication. that is what we are asking for the senate, the senate democrats and the president to do. we have been working in the house. we sent over four bills that completely funded the government and as people know, the senate rejected every single one of those proposals. now we've sent over eight bills that keep critical portions of the federal government open. nearly half of the fbs now we ha -- federal government now we have passed bills to open up the federal government. yet the senate refuses to act. that is it not leadership. leadership is when you say you're not going to negotiate, that's not leadership. or you say that they're just holding the united states hostage. that's not leadership. leadership is certainly not when you're not willing to address the big issues, the major issues

that face the country. we are elected to govern. we're elected to make the tough decisions and yesterday the president and senate democrats want to take the easy way out. that's not acceptable to us and that's not acceptable to the american people. >> i've been reminded the last few weeks about albert sign stein's definition of insanity, doing the same thing over and over again, expecting different results. the only thing more irresponsible or insane than the president letting us default on our debt would be the president's demand that we increase the federal debt ceiling without addressing our nation's spending problem this nation's spending addiction has finally caught up with us. today each one of us owes over $53,000 in federal debt. this is not sustainable. and we need to start addressing

it now. if we don't start now, when will we ever address our debt? when it hits $18 trillion? $19 trillion? or do we wait until our economy totally collapses? the american people expect more from their leaders and it's time both parties sat down and had a conversation, work out our difference and find a responsible way forward. >> reporter: when you say you want to negotiate, is there a particular dollar amount in debt reduction you're looking for in last time you got $1.2 trillion worth. is that what it is this time? >> last time the president and i sat down, it was $2.4 trillion over ten years. i want to have a conversation. i'm not drawing any lines in the sand. it's time for to us sit down and

resolve ours differences. >> reporter: [ inaudible ]. >> i'm not going to get into a whole lot of speculation. >> reporter: isn't that the central argument? >> no, the central argument is this, are we going to sit down and have a discussion or aren't we? >> reporter: [ inaudible ]. are we not hearing details because [ inaudible ]? >> all we're asking for is to sit down and have this conversation. there's no reason to make it more difficult to bring people to the table. and so there's no boundaries here, there's nothing on the table, there's nothing off the table. i'm trying to do everything i can to bring people together and to have a conversation.

yes, ma'am. >> reporter: was the second required or asked to design after the larunch of the obama care web site? >> that's a decision for the president to make. >> and that was the gop leadership speaking there on the shut down. it doesn't sound, eamon, if we can bring you back into the conversation, indicating that we see the gop talking about a short-term deal to raise the debt ceiling. that seemed to be a reiteration of the position. >> reporter: that gives you the answer right there as to what these members heard when they went back home over the weekend. no change at all when they say they want the obama administration to sit down and discussion with them the debt

ceiling. and you also heard what should happen with secretary sebelius again about the flaws of obama care on the roll out. clearly focus here on debt and deficits but also on obama care and republicans making the point that the rollout has been something far from smooth here. >> is it fair to say that opinion polls clearly suggest that republicans are bearing the brunt of the blame for the shutdown but it's not as one-sided as it was in '95 and '96, something that might concern democrats of the state? >> we saw president clinton getting a huge advantage out of that. we are seeing republicans taking more of the blame here but president obama does not have the margin that president clinton had back then.

clearly a little dicier here. >> let's get some market reaction. guy, good morning. >> good morning. >> the reason we've got you here is alcoa reports results today, earnings season getting under way more or less. we have a couple of big banks at the eastbound of the week. so thi -- end of the week. is any of that going to matter? >> we've been tracking earnings since the government shut down on september 30th. we fond that future earnings, especially the fourth quarter, earnings actually increased after the government shut down but has since increased about 0.2%. like i said that's fallen off a bit but it was interesting to see that due to the shutdown, estimates were on the rise for a while. >> would you phrase it that way? what were the sectors moving? >> consumer discretionary was

moving that. i wouldn't say specifically because of the shutdown. i thought it was certainly interesting. usually you don't see that type of move this early on in the season. >> i'm sorry, i'm really not following this at all. are you suggesting that the earnings estimates were raised because the government shut down? >> no, no. >> just explain to me. i'm sorry if i'm having to catch up at the back. >>. >> reporter: i'm just saying the day after the government shutdown, we did see an increas that. that was just something that we noted after the shutdown. >> even despite that little bit

of an increase, the bar seems low here. we've had been some accounts a negative number of preannouncements, expecting own 3% earnings growth here. and big components like exxon could weigh on overall results. >> we've had this high preannouncement ratio skewed negative for three quarters now. lowering expectations and then beating has been the pattern. we also have the lowest overall kind of year-over-year comparisons that we have to hurdle since 2010. so i actually think expectations broadly speaking are probably low enough. you know, earnings have been just good enough to keep the bullish story going but i don't think the market this year has been because of earnings growth. it's been because of the

maintenance of this level of earnin earnings. i am interested. it's the first time in the earnings quarter we've had a dc showdown. >> they'll all put it in the commentary, won't they, mike? they'll all write that in the commentary? >> yes. in terms of their outlook, do i think that's going to be the case. they're going to have something to fall back on, blame or at least at the per expectatio -- expectations. >> thank you both. >> up next, we'll talk to the senior portfolio manager with elliott management, which is still fighting to the paid. the op-ed says it's high time argentina talks to its creditors. >> and bart chilton is ready to

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problems stemming from the debt crisis in argentina which began 12 years ago, they remain unresolved. yesterday the supreme court declined to hear an appeal filed by argentina over its battle with a group of hedge funds on its debt restructuring. joining us now, senior portfolio

manager jay newman. he wrote an article "it's high time argentina talked to its creditors." welcome. >> thank you. >> you wanted talks to settle this situation. has argentina ever sat down at a table with you constructively in terms of trying to enter a dialogue? >> that's the whole point. in 12 years since argentina's default, never once has argentina offered to sit down with its creditors. that's why we decided to write this op-ed at this point. in 2003 we met with the secretary of finance and implofd her to negotiate in good faith.

but argentina took a different approach. i think many people are aware of that the dispute has been going on for a long time but not the fact that we've been trying to meet with them and resolve this dispute for over a decade rather than fight it in court. >> you did not participate in the exchange that you referenced. why should you, therefore, be treated different than than those who did participate? >> we're not the only people who have refused to take argentina's unilateral offer. we are one creditor but there are thousands of of argentines who are credit holders. what's happened at this point is

there is an inflexion point the second circuit court of appeals decided in august in a definitive decision that was very well reasoned that argentina really has to abide buy its obligations. argentina appealed to the supreme court and the supreme court just this week refused to take the case. this is a perfect time -- there have been many perfect times for argentina to settle this but this is the perfect moment to sit with creditors and resolve the dispute. >> it's also a perfect time -- it's no surprise you're joining us on cnbc, is it? >> it is the perfect time. one thing that is little understood is the benefits to the people are argentina is enormous, really on a few

levels. resolving this dispute would mean argentina could reduce it's a borrowing costs, enter markets that it can't borrow today. >> the argentine president has continually said they would rather default than see you get a penny. >> that's a prospect that is completely avoidable. it's within argentina's control. if argentina were to reenter capital markets by resolving this dispute, it could save perhaps $70 billion over a ten-year period the provinces could save $1 billion, businesses could save $2 billion. we're talking about savings

every year just in borrowing costs of over $10 billion. but it's beyond that. foreign investors looking at this litigation and wondering whether argentina would ever decide to abide by the rule of law would look at the settlement and say perhaps argentina is going to be receptive to investment. >> it's my understanding that just because cert was not granted this time doesn't mean it won't be in the future. might argentina go that route and try to wait you out until let's call it 2015? >> yes. an official just said yesterday that they intend to pursue every single litigation rouse and strategy that they can, but litigation is a tactic, it's not a strategy for reentering

capital markets, not a strategy -- it's a tactic but not moving argentina forward. they could increase employment by hundreds of thousands. >> and elliott would make a lot of money on his investment. >> it would be great for a lot of people, including elliott. >> jay elliott on the continued mess in argentina. back to you, simon. >> coming up, we'll talk to the deputy director for the imf right after this break. i am today by luck.

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next year economic activity in this country will move into e high gear, according to the imf. it says the impulse for growth will come mainly from the united states. we have with us the deputy director of research for the fund. good morning to you. >> good morning. >> i know you've reduced slightly your expectations for next year but the u.s. is going to grow at a rate that we haven't seen for a long time and because you know better than i it's far better than japan or europe. >> that's right. growth will be 1.5% held back by adjustment. as this moves out of the system, we are forecasting growth will be around 2.5% and this should help further reduce unemployment and bring more people in the labor market. it's good news for the u.s. economy and also the world economy. >> we're going to get according

to your stats now will be 2.6% growth next year in deth economy. why is this economy doing better than germany or france or japan or the united kingdom? >> made good respect with repairing the credit system so capital is flowing again and capital markets have sprung back much more quickly than banks. in europe and japan, capital markets are much less developed than in the u.s. and japan has a higher population growth rate and is more dynamic from the outfoot. >> how much fiscal drag is clued in that 6% already? >> we have fiscal drag of 1%

included if that projection. the most immediate risk of that projection stem from the government shutdown and debt ceiling. our pro dukes assumes that the shut down is short and is erased promptly. >> so i'm assuming a lot of that for next year fits that it wi will -- i mean that, would be extraordinarily high for the u.s. to achieve just in the afterpart of the credit crisis to get to a growth rate above 3.5%. that sounds lofty. >> that defend p penpends on wh fiscal qualifier you use. but even if there was 1% more growth, say there was 3.6% in an ordinary recovery, right, this

is a growth rate that you would expe to see as the economy emerges from recession. it's just been a very unusual recovery because it was a recovery from a recession caused by a financial crisis. >> i'd love to know what it meant for interest rates, jorge, thanks for joining us. jorge decressin, thanks for joining us. >> bart chilton will join us live right after the break. stay with us. you won't want to miss this one. ♪

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good morning. we are now over an hour into trade. here are the stories that we're squawking about this tuesday morning. 7:33 on the west coast, 10:33 here on wall street. shares of mckeson rising to an all-time high. they are in talks to buy the german drug distribute for more than $5 billion. blackstone is among the companies hitting new 52-week highs this morning. shares of the private equity giant up 82% over the past 12 months and stay america is

extending its ipo size. >> and the cftc is rolling up its sleeve as it goes to battle with jpmorgan. bart chilton joins us. >> good to be with you. >> what's your reaction to the news that jpmorgan is going to take you guys to court over this? it's news to me and we're the regulators. all i can say is a week and a half ago j.p. settled with activities involving the london whale. we go after them and take it

very serious, particularly involving manipulation. got to have the evidence but when we see it, we go after it. >> we can assume you have evidence that they manipulated credit markets and you will continue to pursue them until u get them to admit to wrong doing, pay a fine? what is it they have to do to if you're able to prove that? >> i don't want to tell you what to assume and i can't comment on anything that may be ongeing whether or not it's any bang after them, we are going to after them. i have to say that given the shut down -- so we have our work cut out for us, particularly with no regulation. >> ldo you have evidence in you view that they manipulated

markets or is that a big if on your part? >> i'll be real clear. i am not commenting upon any evidence which we may or may not have with regard to jpmorgan or anybody else. i just say we're going to follow evidence when we do find it, regardless of whatever that is. is it a bank, another financial institution? we'll go after them. >> okay. so the charges are out there. we'll see what the next -- >> why continually go after jpmorgan? if they've already paid $1 billion, as you pointed out, in fines. the s.e.c. is still going after them, the doj still has an investigation. why this relentless pursuit of jamie dimon. what is the point it have? >> i'm not confirming we're going after jpmorgan or anybody else. just two weeks ago we reached a settlement with icap for $65 million for manipulation of libor. we had ten cases other than icap

just that week. we're significantly hampered -- >> you're closed, for business? >> when we talk about how many new tips we're getting because we're not on the job, that program to monitor the tips is shuttered. i can't tell you how many tips we have. when it comes to look technical markets that we usually look at eyeballs on with 50 people, that's gone. we have just a couple of people there. so it's a significant deal. and i think it's something that people don't realize. all of the other government regulators and financial regulators are open because they are self-funded. they charge fees. but we're not. we're subject to appropriations, despite what i've suggested to congress and so we're shuttered.

>> a point of clarification from kayla tausche as well. the cftc has not voted to bring charges or jpmorgan. can you comment on the why it has not happened? >> kayla is a great reporter. i cannot comment either any way on any ongoing investigation and i'm not even suggesting we do have an ongoing investigation with jp. when there's an appropriate time, if there's an appropriate time, we'll be first to let you know and i'll try to let you all know. >> can i pivot for a second and ask you as well, you mentioned the government shutdown. there has been very little attention on the fact that over the last week a major move in the derivatives market, which itself is a $600 trillion market, whatever figure you want to try to put on it, spear aheaded by the cftc talks about

having a platform with more transparency but means it will have to comply with u.s. rules. will there be a move to push out time the length entities will have a chance to get involved or is all this playing out as you would hope? >> well, it's playing out sort of as i had hoped. we know what caused the crisis in 2008. it was these swaps, particularly credit default swaps this sent the chi into the ditch. we're working with global regulators. we may have to push things back a month or two in order to be more harmonized with other regulators, particularly the european union around the world but we need to put them in place this year and i'm very firm about that. we've got to get these things on board.

i look at global harmonization like "field of dreams," if we build it they will come. >> if the policeman isn't on his beat, as you put it, because the government is shut down, what can people get away with? or does it not work like that? >> no, it works like that unfortunately. we're not on the job. the exchanges are there. they're a self-regulatory option. again, we would have to go back, as you suggest, and these are milli second markets. it gets worse and wore every day. but that's not going to help a trader that may have lost money five minutes ago that we may come across something in two months. it's a really unfortunate circumstance. i appreciate you asking the question because people don't

know the cops aren't on the beat looking at the derivative markets in the united states. >> bart chillon joining us this morning, covering a wide array of issues. bart, thank you so much. >> thanks. >> is puerto rico going to be the next investors in this country? investors are growing increasingly concern about the pile of debt. michelle caruso-cabrera joins us this morning. >> a pile of debt is absolutely true. $72 billion of tradeable paper for a island that has been in recession since 2002. detroit had $9 billion in tradeable paper. they have more than 6 million muni bonds. they have $2.8 billion due in the next 12 months. how did puerto rico end up with so much debt?

they borrowed it but puerto rico has a triple exemption which drives sales. no matter what saturdaystate ta in can you by puerto rican dead and you're exempt from federal, state and local taxes on that debt. the distressed world, the hedge fund world, they're absolutely giddy because there's so little distress paper, so little high-yield to buy. look at one of the options you have. you can buy something that's due in 2039, 30-year bond, 140 million were sold in 2009 with a coupon at 6%. it's knew trading at 71 cents yielding 8.7% fully tax free. not too shabby if you get paid back. but take a look at the index here. so far people are worried about whether or not they're going to get paid back. that's something we'll be watching over the next several

months. >> sounds like you need a trip to san juan, a couple of live reports. >> if you insist. december or january. >> thank you very much. >> straight ahead on the program, jcpenney says it's still in the early stages of a turn around but it has seen improved sales trend. so is there hope now for the struggling retailer and can the stock bounce? find out when we come back. mine was earned orbiting the moon in 1971. afghanistan in 2009. on the u.s.s. saratoga in 1982. [ male announcer ] once it's earned, usaa auto insurance is often handed down from generation to generation because it offers a superior level of protection and because usaa's commitment to serve current and former military members and their families is without equal. begin your legacy. get an auto insurance quote. usaa.

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so everyone goes home happy. jcpenney shares showing a surge on news it says it's showing progress. just named a tap-ranked analyst,

congratulations, matthew, and thanks for joining us. >> thanks for having me. >> on the one point they're saying we're going to have $2 billion in liquidity, so clearly they'll live to fight another day. and on the other side the sales trend is down just 4% on the month in sales. shouldn't we be focusing more on the profitability and the margin on which they're selling things in the store? >> i think the most important thing is the sales-to-gross margin algorithm. december was down 4, august down 10. my biggest issue with today's announcement you're not getting sales and gross margin. you're getting some sales but it's coming at the expense of needing to promote and clear through this inventory. so while there's some signs of

optimism in the release, there's still a long way to go. >> matthew, one of your colleagues pointing out that they're selling $3 t-shirts and $7 pants when he was doing his channel checks. there may be a lot of good news for consumer looking for a deal who may be under pressure. but what's the longer term story here? >> i mean, that's the thing. it's trading at about .5 times on a sales basis. when you look at a bucket of distressed retailers, a lot of their peers with these issues trade at .3 or .4, which would essentially mean there's no equity value here, unless they can turn things around. we embedded -- they're up

against a negative 25 last year in this quarter. they're up against a negative 32 in the fourth quarter. so again, though this is a slight sign of optimism in september, you're still comping negative against a negative 25 last year. >> you have to be try to be positive on a negative 32. something else that struck me, no equity value? when are we going to figure that out? they had $2 billion in liquidity, though. that could take them for a while. they just raised $800 million from somebody willing to pay for equity. >> the liquidity is not as much of an issue. st i think it starts to get a little tight in the back half of '15 instead of '14. you really need i think better than mid-single digits next year

and beyond to gain back some of the sales they lost. >> do you have a neutral or sell? where are you? >> a neutral rating $8 price target. >> good to meet you. thank you for your you may not about snapdhchat, but your kids probably do. it recently raised $60 million in funding. up next, evan spiegel will join us to talk about the growing social networking company. "squawk on the street" is back in two. announcer: where can an investor

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welcome back to "squawk on the street." it's tuesday. and here's tuesday's edition of the "santelli exchange." and the debt goes on. ♪ and the debt goes on and on, and on, and on. after listening to chilten, listening to a lot of government employees, a lot of stories written, i think the problem with prioritization is just everything is too big. it's just too hard. and i don't think they can get it all done in an appropriate fashion, which is sad enough. but have you ever noticed? today, we're going to have $30 billion in one-month bills,

which everybody is just waiting with bait eed breath, and then auctions for 3s, 10s, 30s this week. no matter how confusing things are -- or how much disarray there is with the closing, or haphazard, nonessential -- i looked up nonessential. do we really have nonessential employees? but the debt is coming and coming. that doesn't stop. today's t-bill auction is important. it's important to pay attention to. why? because of the calendar of events and where the auctions fall. right now, it looks between 25, 26 basis points for the highest yield in a bill since 2009. i talked about government efficiency. today, there was a great column, "investors business weekly," regulators craft rules, now on the screen, in the fourth year since it was signed into law,

38% -- 38%, how weird is that, dodd-frank's rules have been completed, accords to a monthly newsletter by davis-polk-wardell, 61% of the rules have been missed. regulators haven't released proposals for 64 of the 172 missed. and they're taking over health care, and throughout that, prioritization is impossible. between the debates going on between the republicans, democrats, and the president, and i know no republican voted for the affordable care act, do you not have the right to information of the government you lead? i want to know how many people signed up. it shouldn't be that difficult. they want to look at apple. the stock goes down when the units are small. come on, republicans. i want to know. >> rick, thank you.

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if you have a $100 bill in your pocket, it's about to become outdated. a new $100 bill filled with the latest high-tech anti-counterfeiting technology goes into circulation today across the country. nbc's janet shamlian is live in houston with more. good morning, janet. >> reporter: hi, simon. yeah, we're at the federal reserve in houston. the first shipments went out from here this morning. conceivably, if your bank has ordered the c-note, can you get your hands on one today as i already have. the whole goal here is to make these easier to authenticate, harder to replicate. take a look at this. you see the blue ribbon across the front? when you tilt the bill, it reveals 100s moving from side to side. same with the gold ink well. as the bill is tilted, it reveals a green bell. security features, a watermark on the back. if you tilt, you can see ben franklin. the bill is a couple years overdue to the public.

there were printing issues involved with the security measures that delayed it by a couple of years. but now they're ready to go. they're out in circulation starting today. and, simon and kelly, this is a big day for collectors. a lot of people are going to banks looking for the low serial numbers that will eventually become a collector's item. kelly, back to you. >> all right, great stuff. thank you very much. i think a lot of people will be holding up their bills now to take a look at all of that. appreciate it. if you just tuned in, meantime, here's what you might have missed on the program this morning. >> announcer: welcome to "squawk on the street." here's what's happened so far -- >> the way in which this is being postured is as though the president sits on high and says, i will not negotiate, and everybody is supposed to lay down. i don't understand that. welcome back to "squawk box," the government shutdown

continues. so there's no real international trade data. -- catch 22, which i pointed out yesterday. we need the market to be disrupted for people -- some republicans, perhaps not the tea party, but others to say, okay, we have to take a vote, let's get it done. and i know our best days are still ahead. i tried to read it to try to get you to tear up. i'm glad you are. ? i need to compose myself. >> i'm sure the paper was wet that he wrote it on, or typed it on. [ bell ringing ] >> i want to have a conversation. i'm not drawing any lines in the sand. it's time for us to just sit down and resolve our differences. the policeman isn't on his beat, as he put it, because you guys are shut down. what can people get away with at the moment? or does it not look like that because you'll be back at trades because everything is printed. >> no, it works like that, unfortunately. we're not on the job.

♪ and good morning. we're live here at post 9 at the new york stock exchange. let's start this morning with a check on markets, which have been weakening considerably in the last couple of minutes. the dow jones industrials average now down by about 70 points. we're seeing losses of about .5% for the s&p 500, and nasdaq hit pretty hard this morning, down better than 1%. the momentum plays, the likes of facebook, among the biggest decliners. shares of tenet are rallying. the hospital stock has been upgraded to buy citing growth and outpatient revenue. and shares of proctor & gamble is seeing a nice lift. it was upgraded to outperform at wells fargo based on productivity, momentum, and improving market share. okay, then, here we go. this is what's on our next agenda for the next hour.

it's been a while, but today is a good day for jcpenney. the stock is rallying after the company said its turnaround strategy is already starting to work. should you believe the news, or is it too good to be true? plus, health care exchanges under obama care have been open for a week, and are still with technical glitches. it's already having a huge impact on the health industry. we bring you the winners one week in. and whilst facebook and twitter may be your social network of choice, your kids are likely to use something else -- possibly snapchat. users are sharing over 350 million pictures, all videos, through snapchat, every day. and the new feature is sure to make that number climb high other and we'll have that here when the ceo joins us. we're on day eight of the government shutdown, and u.s. stocks deny to trade lower. not much of a rebound after yesterday's decline.

let's bring in brian bellski, and steve, with web bush equity management, and, guys, good morning. >> good morning. >> good morning. >> brian, you know, i said not much of a rebound. it isn't a rebound at all. the sell-off continues from the pressure we saw yesterday. the refrain we keep hearing is everyone is buying the dip. where are the people who are buying this dip? >> well, remember, too, the market was up double digits prior to this. so there's some profits to be taken. the other thing, too, we have to think about is the majority of u.s. benchmark portfolio managers heading into this conundrum were underperforming. it doesn't surprise that people are capturing as many gains. we are not believers in buying the dip. at the endest day, we think people shouldn't be market timers but investors. we have to see how it pans out. >> so in order, you're not --

you're not buying here, then, that's what i'm hearing? >> no, we've been invested the whole time. this looks and smells, kelly, like august 2011. you know, the biggest problem that we see is we don't hear anything about positive accord. it's about the armageddon stories and the fear tactics out there. we don't think investors are positioned for a positive surprise. do they we think a positive surprise will happen before next week? doubtful. if and when it does, 23 investors try to time the market and get in and out, they could miss it, and that's really dangerous. >> interesting. steve, you know, the danger here, if there is a danger surely, is that everybody is way too complacent. hamstrung with what's happening on capitol hill. brian mentioned what happened a couple of years ago. they skated so close to the edge. they think they can skate it again. they might go past october 17th. this is potentially a very dangerous situation, isn't it,

that suddenly, bang, we wake up, and an unknown-unknown has hit us. >> potentially, simon. but i think it always looks darkest before there's a deal. there'll be a deal, like there has ever time before, in my estimation. the question is, what is the fed going to do? when will they do it? how steep a taper will it be? the third quarter earnings right around the season have the chance to disappoint. you have operating margins that are at an all-time high, profits as a percent of gdp at an all-time high. i don't see a lot of reasons for the stock market to go up. i don't think it will go down because of something that happens in washington, d.c. i think there'll be a deal, and it will be over with, and then the next story. >> brian, you're a cosmopolitan man. i find it interesting that china

and japan warned them not to mess with the obligations to pay back the money they owe. many people seem to be scoffing at that. do you think potentially longer term, brian, there are serious implications for potentially threatening to mess with the chinese in this way? >> sure, there is. the full faith and credit of the united states of america is not a bargaining chip. i mean, this is more about -- this is more about a lack of leadership and ideology versus just trying to do the right thing. if you take a look at the people that we owe money to and the people that own -- that have our notes and our dollars and all of that, it's a real issue longer term. but remember, the economy is improving, slowly. the fed is not going to taper this year. mr. bernanke clearly singled that in september. we think the market will go higher. because of that, it's more about momentum, simon, than

fundamentals. we will have to pay the piper at some point. >> are you sure that's the correct reading of what bernanke said? no taper this year? it may be that he said no taper this year, but i'm not sure he nailed the colors to the mast, brian. >> at the end of the day, we're analysts. we thought there was consensus of taper in september. people were surprised. listen, to be tapering, he would be more satisfied with job growth and the economy. clearly, he's not. and he also foreshadowed what's happening now in washington. he has to stand at the ready. he is not going to taper in the face of what's going on right now. he's just not going to. >> look, speaking of moent um, there are a couple of ways to see it's slowing significantly. we shouldn't overlook this. there's both the companies in the nasdaq, or generally speaking today, the momentum, the high-flying plays leading the market lower. we can show a couple. and also the fact that the consumer confidence, if you look at the daily gallup polling, or indications elsewhere, is taking a hit.

steve, we can't sort of, i guess, hope that there's some resolution that magically undoes all of that. all of this will have real consequen consequences. >> well, i think -- i agree. i don't think it's a washington, d.c., story. i think that bernanke was largely criticized for not tapering in september. there was a lot of criticism. i think it's very likely he does some kind of taper before the end of the year. it's possible he doesn't. we don't know the answer to that question. but i think that will have an ultimately much bigger impact on the market than anything that happens in washington, d.c. they're not going to default on the debt. they are going to come to a deal. there's going to be an arrangement. it's just inconceivable that there wouldn't be. i don't see a shot at that happening. at the end of the day, the mark market's expensive, relative to earnings, relative to operating margins. it doesn't mean it will go down. but i just don't see the stock market going a hell of a lot higher here. >> all right. got it. thank you, guys.

steven, brian, thank you both. a good day for jcpenney. the stock rallying this morning after the troubled retailers issued a sdatatement saying it' in the early stages of a turnaround, sales are improving. -- well, not improving, but sales are declining, but not as rapidly as they were. should you actually think about getting back into jcpenney? more on that in a moment. plus, if you want to know what social app kids are using, forget facebook. look at snapchat. it's now worth over $800 million in the eyes of some venture capitalists. stay tuned. we'll talk to the ceo of snapchat, evan spiegel, this hour. ellis investments.s managing them, moving them, making them work. we oversee 20% of the world's financial assets. and that gives us scale and insight no one else has. investment management combined with investment servicing.

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markets are down again today. take a look at the telecom sector. right now, one of the worst-performing in the s&p 500. dominic chu is back at hq. >> that's right. the telecom sectors are the worst performing sector in the s&p. but they did lead the way higher yesterday. perhaps some profit-taking here. shares of frontier communications and at&t are among the worst performers in the sector today. in terms of the bigger picture, telecom is still the worst-performing sector in the s&p 500 this year. verizon communications is the only stock in that index, the s&p telecoms, that's posted a positive gain for the year. from a chart perspective, the sector as a whole is still trading about 5% below its

200-day moving average, or longer-term batting average, if you will. that's something a lot of traders will be keeping an eye on, kelly. back over to you. >> okay, dom, thank you. it's been a week since health insurance exchanges went live, and hospitals are already one of the biggest winners under the new system. bertha coombs has more back at headquarters. good morning. >> good morning kelly. once people are covered by health insurance, hospitals are seen as one of the biggest obama care winners, despite the fact that it's outperformed the sector. analysts see more gains ahead. goldman sachs upgrading tenant to a buy, saying investors are underestimating the impact of health reform. despite reimbursement pressures under aca, the pickup in paid volume would be significant, especially for the larger urban players, according to goldman. goldman sees potential 19% upside after recent acquisition of vanguard.

tenet started united today at a buy. analysts at deutsche bank are keen on hca. beyond obama care, they see s&p additions, potentially. right now, tenet health is the only hospital in the s&p 500, but analyst darren lairic thinks it's due for more exposure, and i think hca is a good bet to be added. >> i think that's going to be a key catalyst for investors to be watching out for relative to the hospital sector. i think investors are generally pretty underweight this group and having bigger benchmark representation is going to be important for investors to consider. >> hca shares are already up 53% year to date. uhs shares are up 58%. guys. a lot of analysts say really despite this big move, that the market still has not price the

in all of the potentially new insured people. that is, if they can ever get through the process to actually enroll. >> they will. it's teasing troubles, bertha. we'll keep back to the subject. thank you, bertha coombs, on obama care. shares of jcpenney are -- have had a good day, a good start, up 5% so far this morning. the struggling retailer is in the early stages of a durnaround, but saying it anticipates ample liquidity, $2 billion through the remainder of the year. our next guest says their comps are likely to turn positive, but it may not be enough to stop its cash burn. rich schneider has a hold on jcp. good morning. >> good morning. >> how would you describe jcpenney, the business, as it stands at the moment? >> it's very promotional. it's clear from what they said today that people are going in and buying the merchandise that is marked down. transactions are still negative.

the average unit retailer, the average cost of something going out the door, still negative off a low base. the only thing is -- that's up, is units per transaction. so people are going in and buying a lot of units at a very low price. >> as you would expect. i mean, there's a lot of people out there who are smartly saying, this sounds great. i can get a sale at jcpenney, if nothing else, though, the company has bought itself time here. and they emphasized will ed li through the end of the year. this could potentially be a bridge for them, no? >> possibly. i do want to point out that what they said today with the $2 billion in liquidity should get them through year end. that's no different than a few weeks ago when they said $1.3 billion, because that didn't include the proceeds which they announced today. >> and a like-for-like basis, it's 1.5 billion, correct? it's a much smaller increase. >> it's 1.3 plus the 785. so that really didn't change. >> oh, okay. >> let me ask a stupid question.

one of the producers on this -- on our morning call we have for this show every day said this morning why would you ever believe what jcpenney tells you again? the point he was making was, ullman, the ceo, told us they had ample liquidity to the end of the year. then one or two days later they have this massive sale of equity that diluted everybody. they raise $800 million, whatever it was, diluted everybody by a third, if not 35%. why would you believe the statements about the liquidity? is there a problem here? >> first of all, i wouldn't say that's a stupid question. i'd say that's a very apt question. >> he's a very bright producer. >> obviously. i think saying we have ample liquidity, you say you don't need liquidity, but then you may want liquidity. i don't need a lamborghini, but i would like to have one, for example. so there's a very fine line. >> so there's no credibility -- >> oh, i think there is a credibility problem. because of that fine line.

>> right. so what happens from here? i mean, what, in essence, is -- what saying to clients about jcp? >> i think there is so much leverage -- financial leverage and business leverage, because they've lost so much in sales and piled on so much debt. this is very -- this is a very risky stock. i believe that comps are going to continue. i'm not sure it's going to be enough to stop the cash burn. i mean, i could make a case that they could run out of cash even with the raise next year. >> good to see you, rick. >> thank you for having me. >> rick snyder from maxim group. billionaires are speaking out on the economy and the state of play in washington. we'll hear from one of them next. listen to sam on "squawk box" this morning. >> the president sits on high and says, i will not negotiate. and everybody is supposed to lay down.

i don't understand that. bush never got away with that. eisenhower never got away with that. clinton never got away with that. what makes this man different than everybody else? she loves a lot of the same things you do.

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welcome back. some of the market's favorite stocks are getting hit hard. facebook is down better than 4%. a 2% drop for tesla. almost 2% for amazon. the social media stocks, as well. we've got linked in in. down almost about 6%. groupon, 4.5%. netflix even off 3%, simon, in a tape that's punishing a lot of the typical favorites -- favorite players. the nasdaq underperforming as a result. as the dysfunction in washington continues, business leaders like howard schultz and sam zell are weighing in with calls for action and leadership.

jane wells joins us with another billionaire from the real estate sector who gives us his take. jane? >> hey, kelly, i'm with rick caruso, the americana brand. good morning. >> good morning. yeah. >> what's your take on the shutdown? we're 3,000 miles away. are you feeling it at all? >> we aren't yet. but we will. i will tell you i think the consumer is generally optimistic. but the shutdown is going to shut them down. it's time everybody grows up in washington. they have a job to do. they were sent back to do a job. show leadership and get it resolved. it's not good for the economy. >> consumer confidence is down. reuters is predicting same-store sales growth at apparel companies under 2% for the month. what have you seen? give me a snapshot of your properties. >> i think nationally there's probably going to be something around a 3%, 4% growth for the rest of the year. we're in the critical season. what we're seeing on ours is pretty strong growth. but we're a little bit of an

anomaly, because of the kind of retailers we have, the environment that we create. it's all around an eck peerns -- experience, sort of best-in-class. we're seeing strong growth. we opened a brand-new nordstrom's here. it's tracking substantially greater than the other nordstrom's was before they closed it. but i would still say with the shutdown and what's happening with the economy, i think people will start getting nervous, and i think the confidence is fragile. and it just -- it's amazing to me that one part of the government is propping up the economy and then you have congress and the white house hurting the economy. so it's really time to sit down and figure out how to move the government forward. >> are you hearing any talk of perhaps holding back on holiday hiring, just because of the uncertainty? >> i'm not hearing it. but there's news reports -- i think target is saying they'll probably hire less. amazon is hiring more. you know, i don't really know. i think a lot of people are just in a state they don't know what to do. we're going to plow forward.

make it great holiday season. we may have to work harder in terms of marketing and promotions in order to get the sales converted on the properties. we shouldn't have to be doing that because we're actually moving in the right direction. now, i think if this gets resolved soon, everything should be fine. if it lingers on for another week, i think we'll have a problem. >> how about the dodgers? you think they paid too much for them now? >> i love the ownership of the dodgers! congratulations to the dodgers. thid a hell of a job last night. >> great, jane. thank you very much. interesting interview. have you heard of snapchat? if you haven't, don't worry. you're not the only one. the u.s. attorney preet bharara had to learn about it from our own jim cramer recently. >> can the bad guy, snapchat, wireless on 3:45 on friday -- >> i don't know what you're talking about. [ laughter ] >> and we'll have more on snapchat with the ceo himself,

evan spiegel, later in this hour. plus, the bells are about to sound across europe. we'll have the close, the details, the impacts on what it means to us right here. stay with us.

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four-week low. let's look at a chart of how we've performed. and like u.s. markets, we're all trending negatively. on the subject of negative news, the jobs situation -- or the data is not good from europe today. on the one hand, you've had german factory orders unexpectedly weak from the last month, though trending upwards according to jpmorgan, and announcing further job losses, notely 15,000 at alcatel, the third-largest bank in italy announcing it will cut up to 8,000 staff, so 23,000 jobs in all. both of those ceos are chasing resolution. alcatel would like to be bought by nokia, a telecom equipment maker and lucent would like it to be signed off. and the trend continues for drug wholesalers to buy competitors around the world. you may not have heard of this

german player before. celesio, but its stock has ramped higher upon reports that mckesson would pay up to 22 euros a share, nearly 20% upside there, as they try to get greater leverage around the world, buying other wholesalers with the drug companies. that story will continue. >> thanks, simon. let's bring in bob pisani with a look at what's moving around on the big board. and it's red. >> high beta names. a lot of rumors that maybe we'll get a house/senate conference to form a special committee to work out a deal. nobody is -- >> a committee -- >> -- nobody quite knows what's going on. in the absence of any rule news, real movement, we just drift lower. that's happened again here in the middle of the day. the s&p 500. you know, you add up the days where you're down six, seven, eight points and it starts to amount to something. there we go. snot a lot of news. the absence of any progress. the s&p for last month now, because we're at basically the

lowest levels since the beginning of september. let's call it a one-month low. the series of down days, a few days, four, five, six points, and then it starts adding up. the slow drip downward that we've been talking about. we've been talking about the stress in the bond market and the short-term area and the one-month and three-month t-bills. you can see this in the vix curve, as well. here's the spot vix. 19.79 here. but you can see here, 18.71, 18.75, 19.25. sort of, you know, higher lev s levels, short-term, in the vix. that's an indication that, at least right now when you see the cash right here, higher than the near-month futures contract and they want out, that's an indication that they're expecting volatility in the very, very near term. lesser so going forward. there might be hope of a resolution going forward. elsewhere, high beta names, stocks that have outside moves in the market, getting hit pretty hard. biotechs have been a market

leader throughout the year. huge moves to the upside. you can see down 2%, 3%, in the big names. the big name, moving biotech forward. and some of the names in the high-flying tech names. call them high-beta names. they tend to move a lot on market-volatility days. so facebook, linkedin, yelp, the low since the beginning of august there, yelp, also, lowest since middle of august. and another group that always moves around a lot. the chinese internet stocks. these are a favorite of the traders. don't ask me about their earnings potential and what they're actually making. they tend to be favorites of intraday trader, and they're having outside moves, 5%, 6%, 7%. all of this is a sign, folks, we're not sure what's going on. when guys who are trading these -- and they tend to be intraday types -- the china internet player, they're moving aside, unsure of what's going on. it's the slow drip that people are worried about. the s&p is at a one-month low now essentially. >> okay. bob, thank you very much for that. in the meantime, it's been one week since obama care

insurance exchanges opened amid technical glitches. the question is, how is the new law changing the health care industry? two health care experts joins now. john is chairman, founder, ceo of med assets and glenn torman joins us, managing partner at seven y ventures. good morning. welcome. >> good morning, simon. >> before we get into the weeds about whether the platforms are working at the moment or not, i want to, glenn, talk about a conversation that i had with the senior businesswoman. she was actually in the wall street, and she said the media is not telling the story of obama care, and she said, simon, you have to say two things to people. the first that it's a simple matter of math. everybody's premiums are going to fall. because if you have a given number of health events in the country, and you increase the number of people that are

insuring against them, all premiums will fall. and she said, simon, the second thing you should tell people is that for the first time ever when they buy health insurance in this country, it will -- for the own tire country -- be on a regulated exchange. therefore, if an insurer makes abnormal profits, they will have to return -- physically return checks in the post to those people that have paid those premiums if they haven't spent enough on their health care. she said to me, simon, that's a game-changer. glenn, would you agree? >> well, i think it's clearly a game-changer. we're going to have millions of people who are handed money to go out and spend in this market. so for the first time, it's really not about the government controlling it. it's giving people the ability to go out and purchase health care on open exchanges. these will take all different formats. we'll see the unleashing of innovation unlike anything we've ever seen before.

as for pricing, there's going to be, as has been discussed, a whole variety of different pricing options that individuals can decide upon. and they're going to vote with their pocketbooks now. but for the first time, we're putting dollars back in to consumers' hands, and there'll be a lot more dollars available for spending. more coverage. so i think on her first point, she's right. on the second point, we'll just have to see. but this is the opposite of what most people think. it's not about more government control. the reality is more and more companies are handing checks to their employees and saying, go out and buy health care, make your own decisions, and i trust the american consumer -- or what we call the health consumer. >> you know, john, the second thing, the other thing that this woman said to me was that she was very concerned that it might fail ultimately, and if it fails, it is because it won't have enough momentum. either because it won't have been communicated properly to

people, or alternatively, because there will be smoke screens by opponents of obama care whose real fear is that it actually will be a success. is she right to say that, too, john? >> well, there are clearly industrial forces, simon, in whose best interests obama care, or the affordable care act, is not. and so, those forces which have been largely responsible in some part for driving up costs -- which really started with medicare in '65, by creating cost plus. the remnants of which continue to exist today. those who have made a lot of money off the system that has worked in such a way will continue to be against it, no doubt about it. but i agree with glen wholeheartedly, this is the first time in history of government and privately funded health care, where the consumer is in charge. so a $1.7 trillion portion, of private dollars, will be influenced by consumers, and we'll see what corporate america does by weighing in with its

pocketbook, in determining how it will allocate its dollars towards individuals or continue to promote and fund group plans? i think the individual will be the game changer here. >> yeah. at the end of the day, glen, the cutting edge of this, is what the free market actually offers. so let me give you an example. i was listening to two trainers in my gym discussing -- and they're both about the same age, both have a wife, both have a child. one of them had just -- he was part-timer. he had just gone out on the health exchange, a tax credit, had bought himself insurance at $600 a month for his wife and his child and him. he was over the moon. the guy standing next to him, who is actually in the gym's -- the employer-provided scheme, was paying $150 more a month to insure his wife and child, and he had a $5,000 deductible that the guy on the open exchange was not going to be charged. the point i'm making, glen, is, in essence, it's about the free-market solution and whether you get across the country great

deals offered by the private sector. >> well, that's exactly right. again, this is what john said, putting the power back into consumers' hands, and that example you gave of two different individuals making their own decisions based on what their family needs are. so someone might want a higher deductible. someone else might want a lower deductible. this isn't about big employers deciding. this is about individuals being given those decisions. now, what has to happen is we have to have the right amount of transparency, and there's companies out there that are starting to provide the innovative solutions to give consumers the right information at the right time to make those decisions. as for demand. you know, the fact of the matter is everybody is talking about healthcare.gov going down. i was on there this morning. it was working fine. i haven't seen a whole lot of businesses complain, because they have so much demand that

their sites are going down. the last time that happened was when jay-z put his new album out and it took the site down. but everybody seemed to think that was a positive. >> okay. i mean, obviously, guys, it remain as very controversial subject. we'll leave it at the moment. thank you both for your time. glen and john. thank you. >> thank you. computer glitches are holding back health care exchanges. the shutdown is holding back some regulatory agencies. earlier, we spoke to the cftc commissioner bart chilten about that, and i asked him if the cop is not on the beat, so to speak, could that open the window to questionable trades? take a listen to what he had to say. >> no, it works like that, unfortunately. we're not on the job. now, the exchanges are there. they're self-regulatory organizations. so it's not like there's nobody looking at it. but again, we would have to go back, as you suggest, and find something nefarious, go through the records, et cetera, and these are millisecond markets,

so the job is mounting up as we speak. it getting worse and worse every day. now, i want to draw your attention to news hitting the market, as we look at stocks taking a leg lower. 11:30, a bill auction, one-month treasury bills, went off 0 .35%, a significant spike upward from the near-zero yields that were previously on bills before we headed towards a breach of the debt ceiling. investors became concerned about whether this he would receive mamts -- payments for funds maturing around the time -- towards the middle and end of this month and noon november -- even into november when treasury may change the way it makes some of the payments. it would also suggest that this crisis this time around for these very short-term markets is worse than it was back in 2011. stocks appear to have taken a leg lower when that happened. the dow is now down about 80 points, simon, as angst continues. the popularity of the social

app snapchat exploding. 350 million pictures and messages sent through it every day. here's a look at just some of the more artistic things that people are doing on snapchat. in case you don't know, snapchat attaches messages or drawings to pictures, but usually self-destruct right after you look at them. but a new snapchat feature changes all of that. we'll get more from the ceo of snapchat next. ♪ with fidelity's options platform, we've completely integrated every step of the process, making it easier to try filters and strategies... to get a list of equity options... evaluate them with our p&l calculator... and execute faster with our more intuitive trade ticket. i'm greg stevens, and i helped create fidelity's options platform. it's one more innovative reason serious investors are choosing fidelity. now get 200 free trades

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axiron. so i c an reach ally bank 24/7, but there are no branches? 24/7. i'm sorry, i'm just really reluctant to try new things. really? what's wrong with trying new things? look! mommy's new vacuum! (cat screech) you feel that in your muscles? i do... drink water. it's a long story. well, not having branches let's us give you great rates and service. i'd like that. a new way to bank.

a better way to save. ally bank. your money needs an ally. coming up on "the half," the man who says the shutdown is likely to get worse. and why that's good. and what's twitter really worth? we reveal the numbers. and trading yum. two traders make their cases. ahead, the numbers. kelly, we'll see you in 15 minutes. >> all right, scott, thanks. 350 million photos and messages are sent each day through the popular app called snapchat. the app built its popularity around messages that self-destruct almost immediately after being viewed. snapchat is now expanding that window from just 10 seconds to 24 hours with its newest feature, snapchat stories. it allows users to string

together the videos and messages for an entire day before they disappear from the recipient's cell phone. evan spiegel joins us, the ceo of snapchat. welcome. >> thank you. >> clearly, it's for people who want their content to self-destruct. you have made this into a big business. >> it's a fun, fast way to share. >> well, we had earlier showed a piece of jim cramer talk with preet bharara. and did you see that? >> yeah. >> how do you address this issue of people saying, well, wait a minute, if this purportedly self-destructi self-destructs, i won't get caught. >> we have no purported issues as of yet. you know, we always work with law enforcement to respond to the legal process. >> have you had to do that? >> no. we -- we do respond to legal process, but we've not had any insider trading on the platform. >> you said in the break you're headquartered in jim more son's

old house. which i think is great. in california. so now, tell me, how are you monetizing this? are you making money what's the story? >> we're not making money now. we're fortunate thouo have a ro model, from china. they've been able to do it without relying on bland advertising. it's exciting. we'll look at transactions, and maybe down the road, advertising. >> okay. so it would be -- it will be a platform, not a feature within everybody else's platform? >> well, right now, we see a lot of people using snapchat every day to share photos. >> you're in competition with twitter and facebook and everybody else? you're up there with the rest? >> yeah, there are a lot of places to spend time on your phone, and we want to be one of them. >> do you think you can all survive, or do you -- i asked you about an ipo in the break, and you gave me a very political answer. you know, just happen to run the business. do you all survive? what's the future as you move

out of jim morrison's house? >> that's a great question. we're seeing a lot of companies spend a lot of their time collecting the data and organizing it and presenting it to users. snapchat, we're doing something really different. we're making a bet that people want the ephemeral content, because it's more expressive and fun, and a better way to communicate. that's where we're placing our bet. >> ephemeral content. >> nice word, huh? >> which is pornography? >> no, ephemeral content is content that disappears. >> all right. how ephemeral is it really? in other words, can you really delete something for good should people assume that the stuff that's posted and goes away and is stored and is backed up, backed up, backed up in a back up way? >> the underlying premises is default -- the default option should be deletion. but you can always save things. so the first experiment with that was screen shot. you can take a screen shot of

any snap sent, and save it forever. now with stories, we're extending the life to 24 hours. we think that provides a better narrative for sharing with all of your friends. >> you haven't said whether the stuff is once posted or taken or put out there into the media world really, truly disappears did. >> so after a snap is viewed by someone on our service, we delete it from our servers. we store it until your friend pulls it down and views it. and then we delete it. >> so how are you dealing with the legal authorities, then, to the point that jim cramer made earlier, who might use it as a way of communicating insider information? they can do that quite successfully, because you will destroy it, or is there a print somewhere? to ask you the same question again. >> yes, if a message has been viewed by the recipient, it's deleted from our servers. there are lots of ways to save snaps on your phone by taking a screen shot, et cetera. >> who are the biggest users of

snapchat? >> we've seen growth across all demographic, but the biggest is 13 to 25. >> both sexes? male and female? >> yeah, the service skews female 65% right now. >> what is the end -- i mean, i know you're all very young and exciting. what is the kind of immediate plan? you must have backers who at some point will want to get out. is it an ipo? do you want to sell the company? where are you heading? where is this road taking you? >> i think it's a little too early to say. right now, we think the market's really in its adolescence. so our focus is building a great brukt th product that people love to use and monetizing that down the road. >> real quick, how do you monetize it if you're not advertising on the platform? >> transactions, gaming has been extremely profitable on platforms like ten cents. >> looking to china for guidance. evan spiegel, fascinating. >> thank you. >> thank you so much.

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as the cost of education continues to skyrocket across the country, investors and entrepreneurs are jumping into what they see as a new opportunity -- ed tech

start-ups. in fact, venture capitalists have poured over $500 million into ed tech start-ups in the last year alone. julia boorstin is live in new york with more on that. good morning, julia. >> good morning to you, simon. well, ed tech companies use technology to make education more affordab abable accessible effective. huge upside is driving a surge in venture capital investment. the amount of funding going into ed tech deals quadruple from $154 million back in 2003 to $630 million in 2012. and the number of ed tech companies funded quadrupled from 23 in 2003 to 95 last year. the first education focused d.c. fund has invested $60 million into 40 different ed tech companies. >> we're now in this age where anybody can learn anything anywhere. with the explosion of mobile devices and open content, it's

really made it possible for anybody on the planet to access the best professors in the world. >> drawing the biggest checks, companies offering free access to higher education with massive open online courses. like courseair. it just started charging people who have completed a course. so far, that business has generated $1 million in revenue. its rival last month launched an alliance of educators and employers. nine major company, including google and at&t, to help them provide trading for employees and to offer online classes and a curriculum to help students prepare for tech jobs. udacity helped schools like georgia tech with an online paid masters program, less than $7,000. they're competing with a nonprofit called ed ex, created by harvard and m.i.t., and it

partnered with google to offer what it calls the youtube for online education. the real winner from all of this competition and all of the companies are the students and also companies who will benefit from better trained employees. simon? >> the age of enlightenment. julia, thank you. straight ahead, the tesla model s, now the most popular car in one country, but can you guess which one it is? it's not this one. we'll tell you the answer when we come back. ♪ wow...look at you. i've always tried to give it my best shot. these days i'm living with a higher risk of stroke due to afib, a type of irregular heartbeat, not caused by a heart valve problem. at first, i took warfarin, but i wondered, "could i up my game?" my doctor told me about eliquis.

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straight to breaking news out of washington, to eamon. >> that's right. the white house is now announcing that the president will be in the briefing room. he'll take questions from the reporters in the briefing room at 2:00 p.m. today. this comes just after reports from both speaker boehner's office and the white house itself that the president and the speaker of the house spoke about 10:45 this morning. we've got two different accounts of what exactly happened on that phone call. the speaker's office said the president reiterated he wouldn't negotiate. the white house says the president said he wouldn't negotiate until the threat of the debt ceiling breach were removed. he was willing to negotiate as soon as they remove the conditions. that's the setup into the press conference now at 2:00.

duelling war of words continuing in washington, guys. >> eamon, thank you so much -- eamon, thank you so much for that. we watch simon, back here, now, the vix jumping above 20, the dow off 80 points. >> and the dow down now 82. obviously, we're watching exactly what happens this afternoon. from our team, that's it for "squawk on the street." >> now time for "half." guys, here's what we're following on "the half." the perfect storm. why one of our guests says the d.c. duel is good for investors. he'll tell you where the opportunities are. twitter's true test. the professor is grading what the sought-after social stock is worth. the top story is now the deadline at nine days, the shutdown saga drags on and our question is, are the markets too complacent about what potentially lies ahead? it is "halftime," so let's play the action. joe terranova, i'm going to you first. are we still too complacent about what could happen?