table and he doesn't want to go. now that's the way i see the thing sorting out. >> unfortunately, i think -- unfortunately -- both sides haven't been spending a lot of time at the table. >> we have divided government. one person hasn't been told about that there are actually other people involved in governing. >> i think it's a both sides thing but boone pickens, thank you. it was a lot fun. join us tomorrow. stre "squawk on the street" begins right now. good wednesday morning. welcome to "squawk on the street." i'm carl quintanilla here with jim cramer. david faber is at the barefoot economic summit in texas. we'll talk to kyle bass a little later this morning. we await the formal nomination of janet yellen as formal fed chair. it happens at 3:00 p.m. today.

alcoa kicking off earnings season. europe was missed and the nikkei was up about 1%. our road map begins with history in the making. the president set to nominate federal reserve vice chair janetijanet i yellen to be the new chairman of the federal reserve. if confirmed, she'd be the first woman. young, costco and family dollar all down after issuing disappointing results. first up, though, history is about to be made in washington. the president will nominate fed vice chair janet yellen to replace chair ben bernanke. if confirmed, she'd be the first woman to head any major world

central back. the official announcement taking place at 3:00 p.m. eastern time in the east room. jim, it's been said there's one less uncertainty that we have to worry about. >> breathed a sigh of relief. i felt a sigh of relief because it's just nice that something came out of washington that, well, just happened and immediately we saw reaction that, well, corker, my love because he comes on "squawk" might be against. this is what people want in congress so maybe something happens that's predictable. >> corker did vote against her in 2010 saying he hasn't seen anything to suggest she's any less dovish than she was back then but also said she's probably going to get confirmed anyway. >> bernanke said, listen, i'm not tapering. great. you know what? if people get scared about our bonds, like say the chinese, which very rarely ever make these public announcements, well, we got a ready buyer,

which is bernanke. we may need bernanke. he may be par bid for $100 billion. i've been there par bid for a million but never for a billion. >> you mentioned, say, t-bills for instance. you were on with walter isakson this morning on "morning joe" talk about how china never meddles in affairs. >> they never do. that's earth shaking they came out and basically lectured us. you may not like the chinese but they're usually very pleasant about these issues. they weren't pleasant. >> the t-bill yield is getting up to '08 levels. banks can now borrow cheaper than the government. >> certainly apple can. i'm now putting it at 20% technical default. i'm up from about 0 three weeks ago, 5% on friday, 10% on

monday. after the president's speech, i think it's 20. i think a technical default could likely happen if we don't get an answer by friday. this reminds me of lehman where everybody says don't worry, it's going to be rescued. if you don't get started in the rescue process, this game of chicken, somebody's foot might get caught in the train. >> david? >> we have a number of managers of equity-based portfolios but also fixed inkcome portfolios. at this point there still seems to be a little more complacency than you might think. people pointing out last people we spent a lot of money on hedges, none of which we ended up needing and that was a waste. but they did note the number of

people -- do you see the bank -- there were a few things that started to move. the bank cds started to blow out as well and that was worrisome perhaps and perhaps a sign of more to come here as both people figure out is there a hedge i can take that makes sense for me and what should i be doing? i also sense that risk is going to start to come off from those who do run equity based portfolios. >> one of the things that really helped us is my friend put a fantastic piece out, "an eye on the market" which really just talks about what really goes on in the treasury market. and many people don't understand, that's my commentary not his. there's just lot of repercussions. $4 trillion won't work in the repo market. that's unfathomable to me. the president hasn't explained

that that well and also talking about how it's main street that really gets hurt. it's small and mid-size firms that can't get credit. this wipes out a lot of small business. when you get these republican congressmen who have been against this, do they know it's small business that gets hurt? it's not big business. it's not even jamie dimon. >> then ears wearhouse rejecting that unsolicited bid. >> they don't like the way that bid looks. had to do that, i'm sorry. >> it took me a second. >> i've been waiting for that all morning. >> we have seen this flurry of retail m&a, within a little pocket of m&a in general. they're looking for something a little sweeter. >> yeah, sachs comes to mind. this is an interesting bear hug. they don't have a staggered board. unclear what joseph a. bank is willing to do in terms of trying

to mount a proxy fight or at least the threat thereof to get them to the table. the letter was sent on september the 18th. there's been some time for men's warehouse to contemplate and joseph a. bank. it is the smaller bank but they do seem to have financing lined up with goldman sachs and brought in partner with golden gate. men's wearhouse whose chairman, as we know, was no longer interested in any go private transactions but at this point all we have is a rejection. we'll see what joseph a. bank chooses to do. watch the stock. my guess is it will be up. if it is up, one would think it gives a little more fuel to their opportunity. >> mesh greenberg, who is to me expert on joseph a. banks, though i don't think he wears

joseph a. banks or men's wearhouse. joseph a. banks literally will be doing better if they can get this deal done. does matter. >> we do have a flurry of earnings to work through this morning, jim. probably the biggest mover this morning is going to be yum, 85 cents does miss 93. not only was china same-store sales down 11, september was down 13 and they say it's going to take longer to turn around than thought. >> charitable trust did buy some. the ceo did let people down. 2014, it's now a show-me story. i still believe china can turn around. why buy it? there is a longer term history of it working. on these dips making so they get it right. i'm not going to sugar coat this. the only reason my trust is buying it is because it's down so much of where we had it.

>> jpmorgan saying people should take advantage of what they call short-term dislocation. >> it's a chicken bone caught in the throat or the colonel was overruled by general cho. they're not having this stuff right now in china. but do i believe they can come back. however, i feel they could come back before and i feel very compromised on this. as much as i like david novak, we both share the same address, we both lived in our car. he should shut -- be quiet. i almost said shut up but my mom would yell at me. be quiet on guidance here. he let a lot of people a couple weeks ago know things were good. this is not right, not right! >> costco has had some bumps coming into the center. september was worse. >> sold at 118, buying it back.

why buy? the comps are 5%. who else has comps at 5%? i simply believe this is the most to buy costco. it's drifted all the way back down from 118. at 109, 110, you buy it because no one has those kinds of comps. that is some culture, as you know better than anyone. in terms of buying tequila, where do you buy it cheaper? >> costco has tequila. >> alcoa beats by 6 cents, the first quarter reporting after being booted from thedown for 54 years. nice things to say about trucking, aerospace about global growth. >> he's using a terrific number, clause kleinfelt.

he took his growth rate up from 12 to 16, to 17 to 20%. china goes from 7 to 10% to 9 to 11% for autos. so he raised european growth. this is the quarter that rodney danger field -- oops, clause kle kleinfeld should get some respect. >> take a look at what he said "to play with this giant taser is irresponsible." >> i spoke with clause after the conference call. he promised me he wouldn't use that line, that i could have it. hey, claus hey, klaus, when you give a guy

a line -- i guess i laughed so much. i do think if you listened to this call, he's talking about china being better. he has lowered his break even, he has got free cash flow, much better than people realize but there are still people who hate this stock. they remember it was in the 40s. i think klaus is doing an amazing job but they make aluminum. >> beverage cans down 2% to 3%. what does that i a about coca-cola? i'm worried about coca-cola after i'm on that call. >> interesting. all these things are going to play in your interview. what else can we look forward to later on today? >> you know, we were going to also talk to kyle about jcpenney, by the way. don't forget that, one of the largest holders there.

and we'll talk port uerto rico. there are a lot of guys here talking about reaching the 17. they say it really won't be until november 17th. do you think the market won't react until we get past the 17th or does the volatility start to really move up? >> i think it starts ramping. we went from being unthinkable, meteor hitting washington to thinking, okay, if it happens i think what we'll do next week at this time, it will be when it happens. i think the president and congress don't understand exactly the ramifications of this, even though the president said it could be chaotic.

if i don't start getting a deal done now, you're going to up the percentage of the chances you'll default. i go to the leman analogy. everyone thought it was going to work out and the koreans were going to buy them. everyone thinks this is going to work out. >> david, everyone wants to know if there's going to be any horse riding tonight. >> i don't think so. i think i convinced larry lindsay to come out in a cowboy hat but -- >> what do you think about -- >> jim, it's a little hard to pick up some of the audio. you're talking about the new addition to the board of jcpenney? >> that's right. i think it very positive i

think. >> just on "mad money" basically told you never worry about sachs and we never worried about it. though he did sell me a jacket when i was there and i did look at the price tag when i was there because i was embarrassed. holy cow! holy cow! i don't like the way i look or feel. >> david's exclusive interview with hedge fund manager kyle bass with hayman capital. and a lot more "squawk on the street" live from post 9 at the nyse when we return.

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and provided by unitedhealthcare insurance company, which has over 30 years of experience behind it. with all the good years ahead, look for the experience and commitment to go the distance with you. call now to request your free decision guide. it's been about a month since hp was taken out of the dow. meg whitman, the ceo of hp said when hewlett packard was removed from the dow a month ago -- she told employees "i hope every hp employee took today's announcement personally, it was a blow to our brand."

interesting for a ceo to come out so candidly and say this is embarrassing. >> klaus also said we're going to show you how good we are. some people took it a little personally. it was business. and michael eisner talked about "godfather" earlier. >> sort of interesting touchstone in hp's narrative, along with dell and everyone else for that matter. >> we will be getting new guidance from hewlett packard for 2014 at the end of the day, or at the end of the day pacific time. i should say at the end of the day here, about 1:00 pacific time. and importantly it's 2014. this is the key year. this is the year that meg whitman has told us in the many

times she's appeared, both good and bad quarters, by the way, that that's the year that's going to really determine whether this turn around is sticking and whether it's working. and one wonders, of course, if it doesn't work what the other plan is, what's the break the glass plan, to break the company apart and when would they make that decision? it's beginning with the guidance for 2014 and the execution on that guidance and whether that turn around is really working. >> about the on company in the dow are former analysts. nike is having theirs today. remember last quarter? >> what a different story. nike very strong, china very strong. nike is everything that we export that people like. >> absolutely. this will be nike's -- which already reported earnings season. we talked about whether that was the beginning of earnings season. a couple of big names to look

for in terms of guidance and a view of the court of the coming. >> i'm very concerned about hewlett packard. c.k. sold some big chunks of samsung. i get concerned when i hear about pcs. i'm not concerned about apple's pcs because i still think that mac has some momentums. but pcs in general, like the one i took to college. >> on the day we against this announcement on an event that apple may have the next generation ipad. when we come back, we'll see. cramer's "mad dash" is next. futures rebounding a bit. janet yellen nomination coming this afternoon. a lot more from the nyse and "squawk on the street" straight ahead. ♪

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time for cramer's "mad dash." we talked about alcoa's numbers. but there are a lot of lessons within various industries. >> aluminum is pretty much everywhere.

your takeaway should be three. coca-cola, i don't trust their numbers coming out. but second, boeing. i also feel great about cummings because i like those built in china. >> what they had to say about autos, tesla, the model s is all aluminum, there's more talk about the ford, the up in f-150s having a greater percentage of aluminum. >> carl has a fabulous relationship with ford. i see the -- if you want gas mileage lower, you have to put a lot more aluminum in cars. klaus owns that market. european car numbers going up good for gm and good for ford. i think gm could go higher here if we didn't have the taser pointed at us.

that's the credit -- >> yes. >> family dollar, 85 cents, beat by 2 cents. >> operations matter. the operators doing well in that segment are dollar general and dollar tree. family dollar will snap back. think about dollar general big in california, think about dollar tree as just a fabulous place to shop. >> fabulous, one to watch with same-store sales roughly flat. after two straight days of selloff, will we see green arrows to return to wall street and hold hopefully? opening bell in three and a half minutes. world that's changing faster than ever,

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[ male announcer ] time and sales data. split-second stats. [ indistinct shouting ] ♪ it's so close to the options floor... [ indistinct shouting, bell dinging ] ...you'll bust your brain box. ♪ all on thinkorswim from td ameritrade. ♪ the opening bell set to ring in a little less than a minute's time. the s&p has lost its 50-day moving average. worst day since august yesterday on pretty big volume. even the nasdaq. on track for its biggest drop

since june of last year as the high flyers gave up the ghost. >> down 22% for the naz. two or three days later, the stocks start moving back. celgene. >> qt trust sell baiting its ipo and union on the nasdaq. jpmorgan upgrading o.c. >> i have trouble with those. if you believe that there's going to be credit market worries and jpmorgan does not necessarily speak with one voice but michael has a fabulous piece today about the possible credit worries, the last thing you want to do is recommend a company that has anything to do with

housing. you're going to see mortgage applications go down here. i think this is a premature call. i'd wait for the quarter. >> a lot of retail moving back and forth today. piper, coors hold to buy -- >> if people stop shopping, everything goes down. i'm concerned about the psyche now. the consume confidence numbers have dropped rather rapidly. i'm not trying to be a doom sayer here. stocks are saying go with bristol myers. >> over today credit suisse. pfizer a buy. >> pfizer works here. merck, they were going to do this gigantic headquarters in new jersey where i live. merck is scrapping a lot of plans in order to save money. that's not how i want my quarter made. i understand the merck hold call. they announced layoffs and

people are starting to realize, what were they doing building all those buildings in summit. do they have a clue? i'm not sure they have a clue. i'm not sure that merck knows where its future is and that is worrisome. >> jcpenney is up 4%, the biggest gainer on the s&p. we had a discussion on the commercial break about what this addition to the board, sachs chairman steve sadoff means. >> he is a numbers guy. he's originally from bristol myers but i do think what you need is both a merchandise guy and a numbers guy. so he brings in say some of that sachs team. people feel sachs is out of touch. they have all fifth. they did a very good job with that. he did a very good job pruning bad stores. of course eddie lambert about

sears, good scores. >> david down in larue, texas at the barefoot. i'm sure jcpenney will be a topic of discussion today. still a lot of people wondered whether those results we talked about yesterday were just a carefully worded release or whether it does show signs of progress. >> i think they wanted to try to instill some confidence in the marketplace, watching the stock decline almost every day and wanted to respond at least to a certain extent. there's no line of people lining up to replace mr. ullman as ceo and they've still got quite a ways to go in this very, very difficult turn around. in a way it's sort of being characterized as they're not drowning, they're swimming. maybe they're just doing the doggy paddle at this point of getting it together and moving a little faster in the water at some point. we are going to talk to kyle

bass about that. taking it back to the broader themes, though, guys. it's very interesting. i just went back to the lodge here and spoke to two guy who is run very large hedge funds, neither of whom are hedging the risk of a default in washington. it just keeps coming up and i wonder whether the one time nobody chooses to hedge the risk is the time they actually should have. >> remember, the koreans are going to buy lehman brothers. we don't have to worry about lehman. the koreans are in there kicking the tires right now. >> we did have relative volume on vix yesterday, 54% gained since the market high back on september 19th. people are getting more worried. >> yeah. i got to tell you, "squawk box" had some fabulous guests today. they had boone pickens and this fellow patterson, who worked

with tim geithner. very sobering about what happens on october 17th and speaking very much in english if you're a person running your household, you don't want to get your household budget down to $30. $30 billion is not a great amount of cushion. we have to be very careful here. that's a considered man on what could happen on a drop dead date. >> some of the stocks we talked about are leading the decline. yum is down 7.5%, family dollar about 2. netflix is in for another rough morning, too. >> yeah, they're going to stake some profit there. my charitable is going to buy some yum. david novak, the ceo, not good. family dollar again, people who play with the not great operator, this is what happens. dollar tree and dollar general

at one point had some problems but they've come back rather remarkably. if those stocks come in, would i go into those because those are very good companies for an environment where we suddenly may have a slowdown going. remember, the president come on air. he goes, listen, if we don't get this done, we're going to have a very severe recession. we could say he's posturing or we could say, wow, we have a very severe recession. a lot of people say i have to go with the president here. in the article today in the wall street journal, a senator and congressman are saying we don't have anything to worry about, we have plenty of money coming in. people would say, jim, you're just speaking the democratic line. no, i'm speaking the line -- i was in the slow class. it's true. i was tracked in the fourth level. it took me a while to get back up there. i knew my math -- >> arithmetic. >> i know i was in the slow class, hi some problems. but i knew how to do 50 billion

out and 30 billion in and that comes out to be negative 20 billion. i should have been in the higher track because i knew there. i got there. i'm like, geez, i'm with the good guys. >> the collision between this yellen nomination -- and we're going to be talking about her all day long. it does make you con der how that confirmation process is going to go, if qe will be on trial. right? >> i don't want to feel the president's pain because he's president. but if anyone nominated yellen -- when you look at her credentials, you say this is absolutely the best the country has to offer. what is her worry? she cares about unemployment. last i looked, that's what fdr cared about. the there's these core battles.

there's public service, berkeley. do they also have to win the nobel prize in medicine? >> she is married to a nobel prize winner. >> she's got that thing, too! does she have to land on the moon? does she have to cure cancer? i mean, what do you want, congress? this is as good as it gets! i'm proud to have a house in brooklyn not that far from her! holy cow, i can't believe it. >> you think she's the best our country has to offer? >> i think she's good! >> we're going to be talking about her, assuming she's confirmed, every day for the next several years. >> senator corker, golf buddy of peyton manning. i'm calling peyton, i don't have him in my fantasy league but i think peyton should talk some sense into senator corker, say,

listen, stop saying bad things about yellen. she could start for the broncos. she could play for the broncos. i'm not kidding. at least kansas city. one of these 5-0 teams. >> champ bailey. >> think about who's 5-0. i think yellen's team could play with those guys. by the way, yellen may have a tough game with the giants on friday. >> we didn't even talk about baseball. how ridiculous is that with the sox and -- comes back, he's a reliever. this is one of the most exciting times in sports i've ever seen. no yankees but the jets? the jets! >> i go on vacation for two days and geno -- >> who lost more weight, governor christie or coach ryan? >> there's a good question. the dow is up 12 and pisani is

on the floor. hey, bob. >> qts reality, data storage centers, a reit ipo. the pricing, $21. that rarely happens, that was a bit of a miss there on the pricing target. they've had a tough year. they were darlings a few years ago but pricing and the competition has really hurt them. take a look at the stocks of some of the big names out here, equinix, cyrusone,interxlon. it on the surface, yellen's nomination, here it sounds like a --

>> what i keep hearing is the timing is terrible. they're going to hold hearings on the senate banking committee right after the debt ceiling deadline. this is going to be another confrontation with the republicans over obama's economic policies. it's going to be a slug fest again and the republicans are going to argue qe2 is now owned by obama and taper is owned by obama. one point somebody brought up to me and i hadn't realized it is janet yellen will become acting chairman on february 1st because bernanke is leaving or presumably leaving and she becomes the acting chair because she's the vie was that they would raise their global

guidance. i know, jim, you've been optimistic on alcoa. i thought it was good news on the chinese automotive parts. they of 7 to 10% gains. now they're at 9 to 11%. the aerospace is the only thing they didn't change. the numbers were good. it was a good report. you were commenting on the vix. the front month is higher than the price of the contract out two or three months. what that means -- in the past at least, that has been a very good inflexion side for the market. it's a sign of high stress in the short term and in the past, generally, that's been a good buying opportunity. but that historically has been the case. jim, back to you. >> did you make that point because that's what i've been focused on, bob. at what point does it s&p you're

absolutely right, this is riveting to viks. got to stay on it. >> thanks, jim. >> day nine of the shutdown. >> day 12, ten years don't seem to in the. let's put up a two-day chart. here we are. let me tell you something, if this was, you know, a house in terms of the range of treasuries, i would think you could put on a blindfold and find your way around because at 260 and 265 is where it seems to close. open the chart up to 9.24. looks crazy until u look at the right-hand side. it's called automatic scaling to fill up the screen. if you consider most of the talk the last several days is about the unlucky issue that there are some t-bills out there that happen to mature in a period of question. and we all know what i'm talking about. so let's look at that bill. if you look at a two-week chart,

you can see this is zooming. last time it zoomed up to this level, in the auction it was 45. if you look back at a chart two years, i think that really covers it. if you want a dose of reality, open the chart to ten years and see how it looks. that to the far left was something to worry about as of course these rates plummeted as we went into the '08 crisis. if we look at the dollar index, even though all currencies seem to have lost their vinegar to some extent, it's like a slow motion intersection with a lot of traffic, these extremes, whether you're looking at that time from the vantage point of the dollar index or the parts, the euro to great extent or the pound to a lesser extent. carl, nice to you have back and back to you. >> thank you very much, rick. we'll see you soon. when we come back, david's

exclusive interview with hedge fund manager kyle bass, known for making that fortune by betting against sub prime minister. "squawk on the street" comes right back. bny mellon combines investment management & investment servicing, giving us unique insights

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♪ ♪ welcome back to "squawk on the street." i'm sharon epperson. with the nomination of janet yellen of fed chair, a lot of gold traders, she's likely to continue to keep quan tative easing in place, the unemployment rate gets better. why isn't gold getting a bid here? we've also seen reaction with the dollar. with the dollar gains we have seen gold prices and other commodities take a dip. we're also watching the imf announcement that growth will be slower than we thought, blaking it on china, brazil and that's

impact on oil prices. crude is lower and we're going to keep our eye on u.s. oil prices. this week's report from the energy department for inventories may be the last one we see for a while, carl. this is the week that they expect perhaps that money will run out for those reports to come out. >> we've been fortunate to have the data as long as we have. >> after a slew of rumors, samsung announcing a phone with a curved display. it's dubbed the galaxy round. samsung says the curve will actually make it easier to grip and allowed for more advanced content display options. the other day when we got the other iphone, you said "where's samsung?" maybe this is it. >> there you go. it works for budweiser. >> i have a company on with new

technology that allows you to point your samsung at the register, it kind of goes around the bar code issue, which hasn't worked if you hold your hand held. i got to tell you, samsung is trying a lot of new things. apple, a lot of good news coming. i talked with eisner -- >> at "morning joe." >> yes. samsung comes in with kind of an interesting grip. i don't know. i like a bowling ball with three fingers. maybe a two-fingered thing. i don't think it's that revolutionary. >> you takize isakson's view wh it comes -- >> eyes, i yes, i do.

>> i think samsung's new frontier is in the camera. and paying at the register. >> wanting lawmakers to come together and resolve the standoff, starbucks ceo is looking to prompt customers to set an example. from now until the end of the week, they are offering a free, tall u.s. brewed coffee who buys another person a starbucks beverage. the initiative is intended to help fellow citizens support and connect with one another, even as we wait for our elected officials to do the same for our country. big ad in the "washington post" today. >> there must be like four schultzes. he's offering a two for one, has great social media. by the way, this was not an attack on the gop. if you read through his comments, it is saying

washington has to get more civil. a lot of people associate schultz with liberal causes. this is where he's associated with nonpartisanship. it's important to point that out. >> the stock may be right or left but it's definitely down. >> almost every high multiple stock is coming in again. they do not go down for just one day. they go down for multiple days before they snap back. >> with that in mind, the dow is in the red just slightly. here's what's coming up next on "squawk on the street." >> coming up, the government may have closed up shot, but you can never shut down jim cramer and his six stocks in 60 seconds. "squawk on the street" will be right back. so she could take her dream to the next level. so we talked about her options. her valuable assets were staying. and selling her car wouldn't fly. we helped sydney manage her debt and prioritize her goals, so she could really turn up the volume on her dreams today... and tomorrow. so let's see what we can do about that... remodel. motorcycle.

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kansas city southern, removed from the focus list. >> i thought this was surprising. boone pickens was talking lovingly about mexico. autos are going to come from mexico and the united states.

>> upgraded halliburton. >> i want to stick with the oil theme. there's a lot of drilling worldwide. halliburton has come down. >> jp says don't worry about haynes. >> i'm with them on this. this is a my mobile stock. this is netflix, this is tesla. they all trade the same. >> and they reinstate hertz. >> i think it's probably right to pull the trigger. >> what's up tonight? >> i'm trying to do some companies that are literally ahead of the game. this is a company -- you know, i have to -- there's too much politics to not have someone who knows politics more than anyone. this man, chris matthews, an old friend, "tip and reagan," he did that book. i'm going to talk about how we compromised before hard right and hard left before. maybe he can offer some light. >> we'll see you tonight, 6:00

p.m. eastern time. >> simon is here with a look at what's coming up. >> we'll have david faber's exclusive interview with kyle bass live from texas. and we'll weigh in on the debt debate and is it all really kfc in china. that and more in the second hour of "squawk on the street." i love having a free checked bag with my united mileageplus explorer card. i've saved $75 in checked bag fees. [ delavane ] priority boarding is really important to us. you can just get on the plane and relax. [ julian ] having a card that doesn't charge you foreign transaction fees saves me a ton of money. [ delavane ] we can go to any country and spend money the way we would in the u.s. when i spend money on this card, i can see brazil in my future. [ anthony ] i use the explorer card to earn miles

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let's solve this.

♪ welcome back to "squawk on the street." our road map begins with of course the debt ceiling. the deadline getting closer and closer. things in washington seem to be just getting more tense. senator witter will tell us what needs to happen in order for congress to reach a deal. >> and yum stock struggles. is the stock still worth a look? >> and men's wearhouse saying no thanks to a bid from joseph a. bank. what's ahead for the two retailers now? >> and kyle bass will join us from the barefoot economic summit in texas.

>> the nasdaq and s&p posting their largest two-day drop since june. but has janet yellen's nomination for fed chair helped calm investor worries? it is great to have you two here. >> thank you. >> great to be here. >> it's been pointed out this morning, yellen one less uncertainty to read about. you said, dan, go back and read what she wrote in 2012. >> at the end of the day, the most important speech up need to read is one she gave early in 2012 explaining her views in the context of the larger economy and it really does walk through. if you're a complete nerd and you have a half hour or 45 minutes to kill, it really does explain how she sees things and why she sees being easier than the market expects as the appropriate strategy.

>> every news outlet has five things to know about janet yellen. most say her powers as a forecaster are better than a lot of her colleagues on the fed. >> she's a very accomplished monetary economist, she's a very good census builder, a good vice chairman. i think this is continuity and i think the market is right to like it. i think they're getting a fed chairman who will be quite market friendly. >> we're not exactly getting a yellen rally out of it. >> the government shutdown itself is not a big deal. after all, we had 21 days of government shutdown in the clinton administration and the market really didn't falter. having said that, the real problem is the debt ceiling. and unless we get through the debt ceiling without a default, then there lwill be a problem.

>> i would add mike mckenzie has a great article talking about how while stocks haven't reacted badly, you're starting to see in the short bill markets, the t-bills, you're starting to see there. >> people are anticipating a bounce when we get through it and they want to be there in the rallies. in the money markets, if you perceive a risk that the money markets could freeze up and some of those could go to the wall because the short-term complications and therefore the prospect of a major defensive move in advance of that from a lot of those players in order to reposition them, i don't know tomorrow when we get secretary lew, i think it's the senate finance committee at 8:30 in the morning talking about this political decision not to prioritize the servicing of federal debt.

>> hold on a second. i would reject the characterization that it was a political decision. the treasury department for some time has said they don't know how to prioritize. we can quibble about whether it's political or not. i think it speaks to government ineptitu ineptitude. >> others would say it's to pushes republicans' hands to make it look more like a crisis. >> if that's what they're doing, it's unforgivable. over time more moneys did come in in terms of revenue than goes out on interest payments but on a daily basis, that's not always the case. you can see tons of money comes in and out all the time and it's not always equal. >> but that's what makes it dangerous. you have different suppositions on either side. it is a political debate. it is not anything other than politics because the democrats want to keep spending and the republicans want to stop them spending and they're using different confrontational

tactics to try and get their way. now, having said all that, i would like to shift it by talking about the fundamentals of the u.s. economy. the u.s. private sector continues to do really well. you have low energy costs here, you have innovation and productivity, you have a recovering housing market. this is not yet bad enough in washington to stop those good things happening, which is why i continue, although there is more risk of an economic catastrophe than there was, i continue to say buy in setbacks and stick with it. >> what about specifically that untangible, the wild card of the money markets? >> the money markets is really interesting. the bill issue was on 35 basis points yield. it's been zero flat for the last year or two. that is actually a big change and shows that towards the end of the month into early november, there may be an issue with collateralization with various kinds of credit. if that happens, it's really bad for the world's economy.

>> are you an equity bull then? >> yes, i am because the probability of a default remains quite low but it is there. >> in 2011 we did not breach the debt ceiling, did not default, went right until the 11th hour, everything happened in 2011 that everyone says is going to happen in 2013 and the stock market fell almost 20%. even if i could guarantee you we won't breach the debt ceiling, there might be a decline in the assets across the world. >> that's where i might disagree with you. the heartland of america is doing better now than it was in 2011. there was a real fear of a growth slowdown then. i i don't see that now unless washington really pushes it. >> i don't disagree. >> back then so many things out of our control were happening. this does seem more in our control.

>> europe as well was considerably worse off. >> i wouldn't be buying europe, though, because i think the long-term debt overhang is still very serious on european financials. >> but the fundamentals in europe are clearly shifting in favor of more positive outcomes. >> the only m-- imf projections yesterday were lousy, lousy. >> you obviously were not invited to the big -- >> we're going to contract ha halvers half percent year, grow a half percent next year, germany is -- >> you two are good together. >> thank you. that's only because they plastered it with liquidity. >> and the housing market -- >> can you guys come back every day? >> i make everybody better so -- >> jim, dan, thanks, guys. >> let's focus on janet yellen

again. how will the new fed chairwoman be different from the current chairman, provided that goes through the senate finance committee? senior economics reporter steve liesman has more on janet yellen. good morning. >> thanks. the difference between bernanke and yellen is a big topic in the markets. many see her more dovish, which could mean keeping rates lower for longer. but today it was said "the idea of yellen as an agent of continuity will come as a surprise to many in the market. we view her as being close to though slightly less bullish. >> i hope this improved guidance will help to boost confidence in the outlook and bolster households unusually depressed expectations for income gains,

which in turn will spur a faster recovery. >> somebody who knows janet yellen well, the chase chairman and head of central bank strategy. good morning. >> good morning, steve. >> are there important differences that we need to know about between janet yellen and ben bernanke? >> i think larry's basic point is correct you'll see basic continuity from bernanke to yellen but i think we can expect more consistent accommodative policy from yellen even than we would have got from bernanke. it will not only be highly accommodative today but to make it absolutely clear to the markets and to businesses and households you're going to remain highly accommodative even

as the recovery strengthens. in the words that you quoted, juices up the recovery. >> let's go back. i have to think in retrospect now that june guidance looks like a mistake. do you think under a yellen fed that june guidance would have come out? >> i think that janet would be very wary of repeating what i think was a policy error under the bernanke fed in may/june where they started to throw the steering wheel in a different direction in may/june because of excesses starting to build. you'll see a focus on macro economic stabilization and she'll be wary of relying on that unemployment rate. >> i think a big question is if the economy were to falter more, is janet yellen somebody you think will be shy about adding

to quantitative easing at the current level? >> my own view is the fed is unlikely to add, absent a major shock. i do think with janet in that risk case, you would expect janet to hold the line at the current level of purchases for somewhat longer. but i don't believe it's qe infinity, even with yellen. >> what happens when a person goes from being the vice chair, where their words are important but not the most important to being chair and the person who has to corral the sometimes rockous sometimes 17 members of the committee. do you think she'll soften her views now? >> i think you'll see two things happening. janet as chair will have to move rhetorically towards the center of the committee. she'll have to speak to the whole committee as opposed to just powerfully articulate her own views. at the same time, she'll pull

the committee towards her. this is still a very chairman centric organization. to some degree they're going to meet in the middle. >> krishna, thanks for joining us this morning. welcome to this side of the cameras. >> great to be with you, steve. >> money's wearhouse has rejected a bid from joseph a. bank. courtney reagan has more. >> what seemed like a big deal in men's clothing has already apparently been squashed. joseph a. bank made the 2.3 billion all-cash offer in mid september, though they just announced they made that proposal this morning. while the offer represented a 42% premium to the share value at the time the offer was made, the men's wearhouse lead director said after careful

review and deliberation, our broadcastors determined it significantly undervalues men's wearhouse and falls fails to reflect the company's growth. >> continuing to focus on our core competencies as an organization in men's specialty retailing and leverage these great assets and returning excess cash to shareholders in dividends and stock buybacks. >> remember this summer ousted founder george zimmer was attempting to take the company private, something he had suggested to the board prior to his termination, which we found out the company also rejected. didn't think that was the greatest use of shareholder value. we'll see what happens going

forward. simon? >> thank you very much, courtney reagan. >> up next, shares of yum brand not looking so tasty this morning. china causing trouble once again. and later on the program, kyle bass will tell us where he is putting his money now as we come toward the year's end. "squawk on the street" will be right back. ♪ ♪ [ male announcer ] what's the point of an epa estimated 42 miles per gallon if the miles aren't interesting? the lexus ct hybrid. this is the pursuit of perfection. ♪

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>> either with the chinese economy or that they have maybe built out too many outlets within that franchise. did you hear anything on the conference call that confirmed your view? >> well, they firmly assert that it is just related to the chicken supplier issue and the avian flu but by their own admission, they said it would take a couple of months to recover from that and it's been nine months. mcdonald's, which has a smaller presence and has no exposure to the chicken issue is reporting

weak sales and hotels are seeing weak numbers as well. >> rachel, is something that a renewed marketing effort can fix, at least before the end of next year? >> well, renewed marketing is definitely going to help. if you put money out there, it will drive sales and hopefully it will drive traffic. i think the key question will be will that be profitable sales? we all know we can always buy comp. you want to buy comp that actually drives the bottom loon. >> just before we let you go, things look quite soft here for them in the united states, kfc down, pizza hut down, taco bell is up 1%. the central call is a $72 price target? >> that was going into the call. there will be changes to estimates here. the call was going on as i was speaking with you. we'll be back with an update after it's over. >> you look great, by the way.

>> thank you. thank you for having me. >> as we get close to the deadline, senator david vitter will tell us what is needed to reach a compromise. so i c

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as the debt ceiling deadline near, the president is set to nominate janet yellen as the new fed chairman. we talk to senator vitter from washington. no signs that her dovish, as some would portray them views would change any. would you be against them again? >> i want to talk to her, i want

to hear her testimony. i do have clear concerns. that's one of them. that she'll continue -- even aggressively continue printing money in this essentially free money policy. my other concern is she won't aggressive push for higher capital requirements for mega banks. i think something close to that is very, very necessary to truly end too big to fail, to prevent future bailouts. i think she continues to support that policy. >> a lot of reporting about her past dealings with the fed, advising greenspan in the 90s that in fact inflation was too low. i wonder if there are some arguments that you're beginning to hear that she is a dove admittedly but also worried about the long-term effects of keeping policy too accommodative? >> clearly coming out of this free money policy if we ever come out of it, that's a huge

issue. and a lot of conservatives like me are very concerned she has little to know worry about inflation in the future. i think that's out of whack and balance because i think we need to have our eye on the ball in that because i think that is a key danger in the future. >> the central question of course is whether you believe that she is very dovish and therefore is potentially inflationary or whether she simply called it right. because as things stand at the moment, we don't have inflation and unemployment is stubbornly high. >> nobody said the inflation threat is next week, next month. i think her record suggests that she is extremely bias toward a focus on unemployment. obviously we all care about trying to get unemployment down but has little to no concern about inflation. >> on that other question that you raise, senator, on whether wall street should fear her and

she would be sensitive to too big to fail, she's been sensitive other of period that she was leading -- i think should said in the past she would more rigorously regulate going forward. would you support that? >> i don't think the solution to too big to fail is more careful regulation. we had very smart people, regulators involved in 2008, 2009 and they didn't catch it. i think the solution is much more systemic, reforms like higher capital requirements for mega banks, systemic reforms, not just to replace smart people with more super smart people. it didn't help banks like chase with their issues the last few years. >> talk about the danger of a

dead default. at the end of a quentin tarantino movie, someone says you put the gun down first and the other one says you put the gun down first. is that what's going on in washington? and how are we going to break that? >> right now the president refuses to have a discussion about it. going into the break you asked the question is there going to be a compromise? you never get to a compromise unless the two sides are talking. so step one is pretty basic and pretty simple that there should be a discussion. >> as the shutdown continues? >> yeah, there should be a discussion about that and a discussion about the debt limit. the notion that we're not -- the two sides aren't going to discuss that notion the president keeps mushing i think is crazy and obviously you're not going to get to a compromise, you're not going to get a solution if you're not talking about it.

we're hoping the conversation begins somehow, senator. keep a close eye on it as well. >> thanks so much. >> david vitter joining us from capitol hill. >> straight ahead on the program, some actionable advice from the manager of hayman capital. we'll back after a quick break. in real time. ♪ the shell brought him great fame. ♪ but then, one day, he noticed that everybody could have a magic seashell. [ indistinct talking ] [ male announcer ] right there in their trading platform. ♪ [ indistinct talking continues ] [ male announcer ] so the magic shell went back to being a...shell. get live squawks right in your trading platform with think or swim from td ameritrade.

a huge increase in crude

supplies is causing a selloff from the oil market. crude supplies rose by 6.8 million barrels. we were expecting an increase of 2.2 million and american petroleum institute reported an increase of 2.8 million barrels. so a much bigger than expected increase, nearly triple what analysts had been expected. we are looking at oil prices down more than $2 right now. we're also looking at the latest report showing gasoline supplies in the past week actually rose just about 150,000 barrels for the increase in gasoline supplies. meanwhile distillate fuel supplies decreased down 3.1 million barrels. ca carl, we'll be looking into why those numbers were so much greater than had been

anticipated. >> thank you, sharon. let's head down to our own david faber in larue, texas where asset managers are convening to discuss all kinds of issues. he has a very special guest. >> thank you very much. i'm here with kyle bass, clarm -- chairman of hayman capital. >> after you bought in at a higher price, what were you thinking. >> the prior ceo destroyed more value in such a short period of time than i've ever seen in my life. he was clearly the wrong guy for the job.

bringing back ullman, someone who knows retail very well, he has grown up in retail, he knows who the customer is and our investment was predicated on the fact that we believe that, number one, we thought jcpenney had adequate liquidity to get them through holiday 2014, based upon their current adl, all of their credit facilities, we thought they had enough money to get through 2014 obviously -- >> in particular, goldman sachs reports. >> i'm not going to call anyone out. i think the pr was handled improperly from the country's perspective, they had agitated board members stepping down and vendors were asking them what was going on --

>> they didn't communicate well at all. i assume as a shareholder, you were frustrated. >> yeah, we didn't appreciate it. they diluted us 30%. it wasn't because they wanted to but because the market told them they had to. >> some people own cds, both side, you'd expect if they raised that equity that, would have benefitted but it hadn't. >> right. >> why is that? >> there's this belief that all of a sudden they're going to run out of liquidity. if you look at the way they deal with their vendors, and one of their largest vendors, levi strauss, they're in a perfect situation with jcpenney, i think it's been a misinforming campaign. i think ullman and his team will be able to stabilize. >> so you're going to stick with them? >> i'm not going to tell you

what we're going to do. i'm telling you we're disappointed in 38 dissolution. their same-store comps were down so far year over year, i think all they have to do is stabilize to see double-digit comp claims. >> i want to move on to puerto rico, miechelle caruso-cabrera doing a report on it yesterday, $70 million in debt, 3.5 million people. it's hard to make sense houof h they get out, though there are plenty of municipal bond investors who think they will find way to continue to pay. why are you not one of them? >> you have $70 million of debt,

any puerto rican who has enough money to get out of the country does, their pensions are turned to the tune of only 9%, they owe 32 billion to the pensions, you have a commonwealth south of florida that has no electoral votes, they don't pay any federal income tax and we funnel $30 billion to them every day -- >> every year. let's hope it not every year. >> you look at the moody's downgrade back in december and that's back when their rates were 4, 4.5. now their rates are 8, 8.5. and moody's is reaffirming their rating and not cutting them the junk when clearly they are completely junk. the difference is -- when i met with greece in 2009 and 2010, they were telling me we have all these assets. any municipality or commonwealth

or sovereign entity is typically asset heavy. but how many times have you ever seen a sovereign entity cede their sovereigncy, sell an asset, it would never happen. >> this is one of the most wild live held pieces of paper in a lot of municipal bond funds. given that there's probably a way to bail out the bond holder, if not the state or however you want to refer to it, the island nation. >> don't confuse and conflate bailing out a bond holder with bailing out the people of puerto rico. they're all measured against an index or benchmark -- >> and are triple tax free. >> they're effectively speeding. many of them are caught speeding now. if you look at it from a fundamental perspective, when

puerto rico has its crisis, which it looks like rear we're on the precipice on, the whitedown has to be 80, 90 cents. >> they have a first line. they have a second lien. they just announced a third lien on their sales tax revenue. they have securitized and sold forward every revenue stream they can out of every asset on the island for the next 30 or 40 years and they can't pay it back. so it is such an enormous problem because it's 70 billion but the muni market is -- i don't see how it doesn't happen. >> you've said the same thing with europe -- >> look at japan. greece did have an 80%

writedown. >> europe seem to be in a better place. you're very well known for your thesis on japan. you've been saying the same thing there. it hasn't happened yet. >> you've seen a currency move from 78 to 103-ish on the end. >> and hayman has benefited from that. >> it has been it's been a substantial move. it's really difficult to talk about debt super cycles and how they end and what causes them to end with any kind of precision. >> precision within many years, right? >> precision within two, three, four, five years. we get judged month by month. >> i understand it cannot cost you that much money to take that risk -- >> these are hedges, right. 90% of our capital is long. the billion is i try to hedge systemic ris beings. in my opinion, there's not a way

to hedge a puerto rican system risk. >> you are going to short the bonds and cds in puerto rico, right? >> no, nothing. >> you're just talking a look at it because you think it's interesting? >> it has enormous repercussions on the rest of the muni market. >> systemic risk. i've been in the lodge and friends i see to and speak to every year, nobody seems to be hjed for that risk on the debt ceiling. are you? >> i'm not. >> why not? >> if the politicians were really to stay at loggerheads into a prioritization of payments or an actual payment default, there's nothing can you do to hedge yourself from that in my opinion. >> so either you're all in or you're not? >> yeah. all the money you're going to have is under your pillow and it

probably won't be worth as much -- i don't think we're going to get to this appoplectic point. you saw yesterday the big jump in 30-year t-bill yields, you saw the off the runs move more than the on the run. clearly we don't want to repeat a long-term capital problem but there are people levered 50 to 100 times that could be having trouble. >> banks cds also moved up. but, again, these -- if you're 50 or 100 times levered, it can be a problem. in the end the politicians, the policy make verse to realize the catastrophe that would ensue if

they actually missed a payment. i think their advisers are all giving them proper advice that they can use brinksmanship up to a point and then someone has to brink. >> yesterday i had jay newman on the show. they're a big holder of the nonexchanged bonds, seized a vessel or got ghana to do it, we know the story between elliott andage teen a. you're a holder of the exchange bonds. he believes this is the best time to settle, though no talks are taking place. >> i understand elliott's perspective. think won in the lower and appellate courts. the property rejected what was an interlocutory petition for cert. their true petition wound up being filed --

>> in other words the spoupreme court could revisit this and take it on? >> in my opinion they will take it on. if i were elliott and i were the hold-outs, i'm at my peak in efficacy today of trying to force a settlement because down the road, a year down the road you have no idea how the supreme court will react. there are matters of law, there are matters of the foreign sovereign immunities act. there are many reasons why this would change -- if argentina beats it, we'll also win. >> back to you, carl. >> thank you so much. when we come back, nicky rising more than 10% in the last three months. will that momentum continue? we'll get a live discussion with

a investor when we return after the break.

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since the start of the shutdown, senate chap plan brown has been using his time to admonish political leaders during morning prayers. here's today's from moments ago. >> lord, when our federal shutdown delays benefits to the families and children of those

dying on far away battlefields, it's time for our lawmakers to say enough is enough. cover our shame with the robe of your righteousness. forgive us, reform us and make us whole. we pray in your merciful name, amen. >> and that sentiment sort of echoed in some of the tabloids around new york city this morning, simon, the notion that the government may shut down but the victims are often the families of military personnel killed. >> i think there was a plan to move through to take care of that, if that is possible. >> after nike was added to the

dow, what lies ahead for the business? jane wells is live in beaverton, oregon with more. jane, good morning. >> reporter: hey, simon, this could very well be the future, not just in performance but profit margins. i'm here at the tiger woods center where nike is holding its first investor days in two years. last time they did this, the stock popped 10%. can they do it again. i've seen analysts estimate 9% to 10% growth a year. china is taking a hit. can that turn around? what to do with over $5 billion in cash and can miknike grow women's sales? >> beat her mentor, beat serena.

>> you see women all over nike's new ads, along with men and of course lebron. nike had a great earnings report, recently hit an all-time high. they protect the house fr underarmor? they continue to grow double digits, and while nike dwarfs with $30 billion in sales expected this year, underarmor hopes to double to $4 billion by 2016, and is signing more athletes. while nike has king james, under armour has tom brady. two interesting developments. the new shoes are of one piece, cutting down on materials and labor, without cutting down on price. i'm holding what is 160 bucks a pair. watch for new digital technology, and fuel band, and the man left fuel band, went to apple. later, we'll hear in a first on a cnbc interview with ceo mark

parker. and these are the shoes. this is all one piece. knitted of one piece. no cutting of material here. and then they added on the bottom. this cuts down waste 80%, 90%. cuts down labor. so far hasn't cut down on the price. back to you. >> yeah. that's one reason a lot of the bulls still like it here, jane. thanks a lot. jane wells in beaverton. >> can i point out that tim cook was seen wearing a fuel band. >> interesting. and they've made hires, people who have formerly worked at nike. still ahead, former director of the national economic council larry lindsey. we'll find out what he thinks need to be done to reach a deal. but when it comes to investing, i just think it's better to work with someone. someone you feel you can really partner with. unfortunately, i've found that some brokerage firms don't always encourage that kind of relationship.

that's why i stopped working at the old brokerage, and started working for charles schwab. avo: what kind of financial consultant are you looking for? talk to us today.

welcome back, "squawk on the street." wednesday. what day is it, mikey? doesn't everybody just love that commercial? i tell you what day it is. it's what, day ten, for the government closing, add a couple of days from the last time the 10-year note yield closed out of a range of 2.60 to 2. 65. but it's continuity.

noteworthy. think janet yellen. when larry summers' name was tossed in, i think it changed the general perspective of those i deal with on a daily basis -- traders, sources, train riders, people i buy my coffee from that pay attention. and i think that janet yellen does represent continuity. my question is, do we want to continue down this path? enough said. now, let's talk about something else. i call it the south poll, and it's a south poll if you're sitting in the white house right now. this is an apgfk poll, the latest. here's what it says. that the total approval rate is now at 37% for the president, 53% on total disapprove. of course, those don't add up to 100. why not? because 10% didn't weigh in one way or the other. they had to lean one way or the other. i think this is significant. and as sad as it is to think any

politician would decide the fate of many issues like debt, deficits, stagnation, and just general not getting along to polls, i don't like that either side of the aisle, but maybe some good things will come of this. i was very surprised that the headline of janet yellen hitting yesterday, after reading this, i think it makes a little bit more sense. simon, back to you. >> okay, rick. thank you. very much. apple is set to host the latest event. what will tim cook unveil? my mantra?

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apple is reportedly set to hold an invitation-only event on the 22nd to unveil new updates to its ipads. according to all things d, apple is likely to take off the wraps of a thinner, lighter, more powerful fifth generation ipad and ipad mini with retina display. you'd follow the iphone launch with something on the ipads, which haven't been refreshed in a while. >> it will be interesting to see if they have the fingerprint i.d. i think the jury is still out. and the timing is interesting. this is the same day as microsoft will be debuting the surface 2 tablet in the retail-sphere, and also nokia

has a big product announcement that day. so a busy day. >> samsung today with the curved glass, and apple in a couple of weeks. in the meantime, i never thought i'd see alcoa and jcpenney lead the list of gainers on the s&p. every dog has its day. >> that's true. if you're just joining us this morning, here's what you missed earlier on. ♪ >> announcer: welcome to "squawk on the street." here's what's happened so far. >> she's got a stellar background and record. the experience to do the job. you know, my sense is that it could be a continuation of the kind of policies we've seen under ben bernanke. >> i want to make sure she doesn't view herself as an enabler of bad policy within the congress itself. look, this ought to be an interesting hearing. i look forward to learning what her views are. men's warehouse rejecting the unsolicited bid. >> they don't like the way that bid looks.

had to do that. sorry. [ bell ringing ] what do you want, congress? this is as good as it gets! i'm proud to be -- to have a house in brooklyn not that far from her! holy cow! i'm in the same borough! this is good! i can't believe her resume. >> you believe she is the best candidate bar none. >> i think she is everything our country has to offer. >> the notion that we're not -- the two sides aren't going to discuss that notion, the president keeps pushing, i think is crazy, and obviously, you're not going to get to a compromise, you're not going to get to a solution if you're not talking about it. the purs reerto ricans have every asset for the next 30, 40 years and they can't pay it back. it's such an enormous problem. good wednesday morning. we're live here at post 9 of the new york stock exchange, waiting

to see if the appointment or nomination of janet yellen results in any kind of rally. so far, not yet. the dow is down 16 point, s&p off 3 at 1,652 and nasdaq is down 27 points. shares of yum! seeing a move to the downside after third quarter profits fell 68% year-over year, and may not get better anytime soon. they say it will take longer than expected for sales in china to rebound. road map. history made today in washington at 3:00 eastern time. the president will nominate janet yellen to be the first to head the federal reserve. we'll talk to the former director of the national economic council larry lindsey to see what a yellen-led fed will look like. and stocks are moving lower as the dysfunction weighs on the minutes of investors. they say congress will have to raise the debt ceiling, but how much damage to the economy before that happens? hp under the microscope. meg whitman will update the

investors this morning. the meeting is happening now. we'll bring you any news as it happens. we will start with the future of the fed. this afternoon, the president will nominate janet yellen as the first female head of the federal reserve. she seems to have a pretty easy path to confirmation. how different would she been than ben bernanke? david favor is in in larue, texas, with more. you have a special guest. >> i do, indeed, carl. that's a great place to stay, larry lindsey, frequent guest. you served with janet yellen on the fed, '91 to '97. give me your take. answer that question. will she be any different than her predecessor? >> i think she's a great choice. i think she does represent continuity and not change. and i also think she represents someone who's institutional loyal to the fed. i think that's important. the fed has a mission to do. it should carry out its mission. getting the fed involved in other matters at this point wouldn't be helpful, and i think janet will stick to the mission.

>> well then why -- give me a sense as to why she's a great choice in your opinion. >> first of all. you can't beat the resume, right? [ laughter ] she's the vice-chairman. she's been a governor. she's been president of san francisco fed. she knows the institution well. remember, this is a collegial institution. so i think the president made a very good choice. >> and as for talk of taper or change in policy of any significant? >> remember, the fed made a decision last december. it was going to use extraordinary levels of asset purchases to achieve a goal. it hasn't achieved the goal. growth has not accelerated. unemployment rate has come down, but largely due to a drop in labor force participation. you know, why would you -- if you set out a path, why would you go off the path until you achieve the end -- until you achieve your goal? it doesn't make sense. again, if you're going to be

internally consistent here. so i think we'll have to wait quite a while until the fed tapers. we'll have to wait for much better economic numbers, or alternatively, if inflation picks up, they may change their minds, but i don't see real growth accelerating. >> carl has a question for you. >> larry. >> carl, how are you? >> good. it's great. you look fantastic in that hat. i just want to jump in -- >> i'm trying to fit in here. >> i want to jump in on the yellen conversation before i can, before you guys move on. i just wonder, it's been written this morning that the process for her, especially, was on the humiliating side, because it appeared that summers was, in fact, the president's first choice. do you think she looks bad as a result? is any of her political capital diluted because of that? >> you know, in the end, i don't think it matters. and i don't think the president handled the selection process well. i think he ended up with a very good choice, however. i think larry would have been a good choice, i'll be honest.

but i think janet is an extremely well-qualified person. and i don't think the process of how you get there really is going to matter. >> larry, let's move on to the debt ceiling. i've visited with people in this room, up on the hill there, who manage tens of billions of dollars. and almost to a man, they were largely men, they say they're not that concerned, they're not putting on hedges, for example. they're not -- we're not going to breach the debt ceiling, therefore i'm not going to be concerned and be the sucker who puts a lot of money putting a hedge on and worrying about it. are they right? >> if i had to bet one way or the other and not hedge, i would bet that they probably are going to do it in time. but this is a 60/40, or 70/30 bet. it's not a 99/1 bet. every debt ceiling has involved some sort of side negotiations. we're in texas. maybe we should remind everyone of the 1990 debt ceiling where the democrats forced

then-president bush to back down on his no new taxes pledge in order to get the debt ceiling raised. reagan made concessions. clinton made concessions in the debt ceiling both to the democrats in '39 and to the republicans in '95. the blue dog democrats almost forced us over the cliff under bush in order to get changes related to payrolls. it's nothing new. i think the extraordinary thing is, you will get a debt ceiling through without the side measures. it goes back to the power of the purse. congress has to have a say in how policy is run. >> that being said, to this talk that, oh, it'll be okay if we breach for a day or two, or even if we miss a payment, which we're hearing, do you believe -- >> yeah, well, i think it's best if we don't find out. we'll start with that. because no one really knows. what concerns me is that the treasury has not done the

spadework to be able to prioritize payments. you know, if the lindsey group, god forbid, was cash-constrained, i know what i would do. i would say pay this one, don't pay that one. the treasury has made no effort to -- >> you know that to be the case? >> yes. to set up the mechanism to actually have that done. i don't know how long it would take them to make the programs to do it. you know, not being prepared for this, i think, is really a mistake. and that's why i think it's so dangerous. >> all right. thank you, as always. >> thank you. >> thank you for sporting the texas wear. >> my pleasure to be in texas. >> i may have to get on a horse tomorrow to match that. larry lindsey joining us. back to you. >> people say he looks like a poor man's charles derning. david. a cross between boss hogg and j.r. ewing. all of those are compliments, larry. >> i hope so, thank you! >> david, we'll see you in a little bit. david. it's been a choppy session this

morning for the markets. we want to bring in brian westbury and christina hooper, u.s. head of investment wi, and good morning to you. >> good morning. >> vix showing worrying signs. others are saying we've been here before. i won't hedge materially. how nervous do you get? how quickly do you get nervous? >> yeah, i'm -- carl, i'm not going to get nervous at all. we will not miss an interest payment. that's impossible. if the treasury does miss an interest payment, it's a dereliction of duty. they have more than enough revenue to pay the interest on the debt. the issue comes on what else they choose to pay. and obviously, there's pain to deal with there. but the default issue, for me, is off the table. we are not going to default. we don't have to raise the debt ceiling to do that. we just have to pay the interest. and we have lots and lots of

revenue in order to do that. >> right. >> so my feeling is, i don't have to buy insurance. >> and so, are you willing to ignore whatever consequent declines in equity prices we withstand over the next two weeks? >> yeah. i think these are temporary. i think the market is really cheap. i think the private sector, you know, when you look at new technologies -- the cloud, the smartphone, tablet, fracking, 3d printing -- these things are what has been driving growth. and i think they still will drive growth. washington -- you know, washington thinks it's the center of the universe. but that's not where wealth is created. it's created in the private sector by entrepreneurs with new technologies, and we are living in one of the greatest times the world has ever seen. and i think once we get through all of this noise, that will show itself again. >> yeah. christina, you make the point -- you know, people say we've sort of been here before, but the economy does look different, doesn't it, than the last time

we went through this ridiculous exercise? >> it does look different. we've seen some level of recovery. but right now, we are seeing the beginnings of headwinds coming from consumer confidence. so we could hit some short-term turbulence in the economy. >> imf having a big gathering this week of finance ministers, central bankers. their global forecasts are looking pessimistic, in part of what's going on in the states. how worried do you get on a macro level, about the changes, the global economy may do, if this gets more serious? >> so much of it depends on the length of the shutdown, what happens with the debt ceiling. there are so many unknowns. but, of course, as each day continues and we don't have resolutions, it becomes more significant. but when we look back on this, it will likely be a very short-term event. even if it lasts a month. and it won't have a long-lasting

impact on gdp growth. that's what we think investors need to keep in mind. >> brian, do you feel good about yellen? >> i mean, she clearly understands the fed. she's been there a long time. as larry lindsey said. she's got a great resume. what i worry about is the fed being taken over by politics. clearly, janet yellen owes her seat to a real push by liberals in the senate. the president expects the fed to bail out the economy, even if fiscal policy is bad for growth. and back in the 1970s when richard nixen had burns on a tether, it led to inflation. that's my worry. in the end, the fed will stay too easy, too long, trying to help the economy when fiscal policy is so bad. and i think janet yellen would likely lead the fed in that direction, and that -- that worries me. whether she's qualified for the job, i'm not worried about that at all. >> yeah.

>> what i'm worried about is the policies that she would follow. >> echoing what a lot of detractors will say during the confirmation hearings. christina, brian, thank you so much. >> thank you. meantime, a big meeting for hewlett-packard kicking off. they're holding the analysts' meeting. meg whitman sure to be in the spotlight. jon fortt is following it and joins us in san jose with more. hey, jon. >> hey, carl. yeah, she's lit rally in the spotlight right now. her tone is kind of "we're doing pretty well under the circumstances," talking about the services business being more stable now. now, hp stock is up 44% from where it was a year ago. when she last did this meeting, which helps on the optics. and whitman's executive shuffle will be on display, as well, as diane wiseler, and speaking of the pc and enterprise businesses. and there will be questions about the growth and her strategy. last year, she said she believed 2014 would be the year we'd see,

quote, real recovery and expansion, unquote, at hp with growth from every business unit. and by hp's last earnings call in august, she had changed her tone, saying growth in 2014 is unlikely because of global macro uncertainty and i'm guessing the government shutdown isn't helping. and questions about the hp overall standing, the company got removed from the dow, and whitman sent an e-mail to them, saying take it seriously and make every sale. carl? >> yeah, call tgs a blow to our brand. very interesting memo. thanks a lot, jon. we'll come back for more later on. catching a connecting flight can be stressful. if you're a luxury flyer at delta, it's about to get a whole lot easier -- for a price, the new program will pick you up outside your plane, on the tarmac, and drive you directly to your next flight. we're going to go live to the runway to show you how it works in a moment. first, rick santelli talking

government shutdown with congressman pete rosscum. >> yeah, in the people's house. of course, there will be no shortage of topics to talk to him about. but maybe the most recent topic, janet yellen. see what his thoughts are and just thoughts in general. in a world that's changing faster than ever, we believe outshining the competition tomorrow requires challenging your business inside and out today.

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the dow starting to add to some losses here. down 43. utilities, one of the big winners in the sector. not surprising, given the action toeds. dominic has that. >> hey, carl. the utility stocks are helping to provide a positive influence on the market overall today. they're the second-best performing grperform ing group in the s&p 500. edison leading higher. a southern company. con edison. many are appealing to investors who seek regular cash payments in the form of dividends. er for instance, northeast utilities, a 3.6%, and both pg&e and duke energy have yielding closer to 5%. now, it's important to note that these stocks have fallen out of favor with investors as interest rates have risen. the sector is the second worst performing one in the s&p 500 so far, carl, in 2013. back over to you. >> all right, dom, thanks a lot. you know, connecting at airports between flights can be stressful if you're not -- but not if you're one of delta's

uber elite passengers. phil lebeau has more on how the airline is wooing the all-important vip passengers. good morning, phil. >> reporter: good morning, carl. this is a program that delta is on the verge of expanding to other airports around the country. we'll talk about that more in a little bit. let's explain why these porsche models are behind me. these models pick up elite diamond medallion status travelers. 2,000 flights come through this airport every day. a lot of connections here. they look at the flight manifest, pick out those diamond medallion passengers, those who have more than 125,000 in frequent flyer miles, and unbeknownst to those passenger, they will show up at that plane, and knowing the passenger has a tight connection, elsewhere here in atlanta, they will bring the passenger down, put hem in a porsche, if they're with their wife, a spouse, put them in the porsche, as well, and then drive across the tarmac so that they make their connecting flight.

and the folks we talked to yesterday, who were a part of this program, they love it. >> this isn't my first time doing this. the first time i was actually late arriving, and my -- i had a very tight connection. and literally, they took me off one airplane, drove me, walked me in, put me in my seat, closed the door and pushed it back. i wouldn't have made it otherwise. >> reporter: they're expanding the tarmac escort -- guys, it's hard to hear down here. they are expanding this to other airports. this week, adding it at their hub in minneapolis, and also at the hub in los angeles. and then soon we'll also see this service at the delta hub at jfk in new york city. the whole idea here, trying to reward those elite passengers and let them know that delta is aware they have a tight connection. >> yes, sir. we look for the tightest connections, because, i tell you, when a person is running late and they've given up hope

that they'll make the connection, we meet them, look out the door and see a porsche sitting there. and it turns the frown into a smile. >> reporter: as you look at shares of dealt tash the stock is up more than 140% in the last year. i have to tell you, carl, watching the reaction of the people who were picked out yesterday to have this escort service, fantastic. they don't know about it in advance. you can't pay for this service. it's not as if you are a frequent flyer, you can call delta, could i be picked up by a porsche at my gate? huh-uh. it's not the way it works. it's on a random basis. they look at who has a tight connection and pick up that person. it's a service we'll see other airlines look to add. united has it already in houston and chicago. other airlines are going to see this, how successful it is. they'll be doing the same thing. guys, back to you. >> phil, only you can keep your cool and stay smooth next to a running jet engine. that was good tv right there. our phil will he woe at

hartsfield airport, in atlanta. thanks. >>. >> day nine of the government shutdown. if you listen to the president and speaker boehner yesterday, both sides seem further from a deal than ever. so what will it take to finally get something done? we'll talk to congressman peter roskam in a moment. opportunities aren't always obvious. sometimes they just drop in.

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♪ why can't we be friends why can't we be friends ♪ ♪ why can't we be friends as the u.s. enters the ninth day of the government shutdown and inches closer to the debt limit next thursday, the standoff in washington is intensifying, how long will it last? lit let's get to rick santelli in chicago. the dow just hit a three-month low. >> yeah, no, definitely hitting

a three-month low, and interest rates are rip van winkle. let's welcome congressman roskam, local boy from illinois. thank you for taking the time. >> thank you, rick. >> let's go back with the news cycle, janet yellen. i know you don't, as a house of representative -- as a member of the house, you won't get a chance to do an up-or-down on it, that's a senate confirmation, but weigh in nonetheless. what's the talk on the side of the hudson regarding janet yellen and enany issues? >> i think she'll get a fair hearing and fair consideration, obviously. there's issues that have bubbled up in terms of her advocacy in the past for the stimulus, which is largely seen as underperfo underperforming. you know, it's, hey, why not deal with the continuing resolution and the debt ceiling and let's throw in a new fed chairman all in there in the same tumbler and mix it up? she'll get a fair hearing. >> all right. another thing that's been out in

the last 12 to 24 hours, the new a.p. poll showing the president's approval rating under 40. any talk about that? is that something that you've seen, congressman? >> i think that president obama is on an island that is beginning to flood. here's what i mean. this notion of not talking to people is, i think, very unpopular. while everybody can have different positions and that's have been articulated and argued over the past several weeks, the notion of saying, i am unwilling to sit down and negotiate substantively with other folks on the other side of the aisle, is something that most americans bristle at. it's not a position the president will be able to sustain over the next several days and he will, in fact, come to the negotiating table, particularly in light of the softening numbers. >> you know, as the chicago bears fan, when the vikings come in town, it's always been a great rivalry. if the coach of the vikings started going on tv talking

about how he wouldn't do the same plays that the bears' coaches are doing, i probably would ignore him. i find it so odd that the democrats, of course, keep saying things, oh, there's enough votes. can you kindly explain how both harry reid and boehner squelch votes, and both sides do it, whether it's medical devices on an up-or-down vote in the senate, or other issues, and i'm not i trust either side's count to the other, explain how much power is in the gavel to call votes. >> the gavel has the ability -- to your point-- has the ability to put things onto the floor or not put things onto the floor. i have a responsibility in leadership called the chief deputy whip, which means i'm talking to a lot of members all the time on the republican side in particular, intermly, trying to drive consensus. the notion that folks from the outside are prognosticating saying, oh, there's all of the support for clean continuing resolution -- a resolution, is a fiction. it doesn't -- it doesn't exist. i think --

>> we're almost out of time, congressman. let me interrupt you. one final question. do you think there's going to be a baby chopped in half or a king solomon moment? do you think this will get worked out in the 11th, 12th, 13th hour? >> there's no question it will work out. we're a nation of capacity to deal with these things but we have to talk to one another. the white house my redefine the word negotiate, but they'll negotiate. >> congressman, thank you for being our guest. >> thanks, rick. >> carl, simon, back to you. >> all right. thank you very much. the bells are about to sound across europe. simon will bring us that in a couple of minutes and talk about the impacts here as we breach the 200-day moving average on the dow. we're down 39 points. ♪

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[ music transitions to rock ] make it happen with the all-new fidelity active trader pro. it's one more innovative reason serious investors are choosing fidelity. get 200 free trades when you open an account. the european markets are closing now. >> they're closing, but not before deterioration in the major indices, simon. >> yeah, the big equity markets are in negative territory today. you can see there is relief. you have german industrial production rebounding in august. the standoff in the united states is affecting the big markets. what you will see, though, is the periphery, the pigs are still -- if we can use that -- those with weaker banking systems, industrials with

weaker, reliant on global interest rates -- those have rallied. you could call that the janet yellen rally. if she is in there as chairman of the fed, rates -- global rate also stay lower for longer, arguably qe is still on the agenda for longer, that is a real boon. you see the italian banks have risen. other banks around europe have done well. bank of ireland is another one that's rallied. credit agrical, there you go. and the homebuilders are doing well. the u.k. government has involved on the second phase of its help to buy program. basically forces the banks into soft loans with government guarantees to buy homes. that's new in the u.k., and there may indeed be a housing bubble in the u.k. yet they are pushing on with that. so the homebuilders have done well. one more i want to show you.

alcatel. they've had a phenomenal rally, as you can seement more than doubling in value over the last six months as they restructure. now you can see they're in negative territory. the prime minister of france is saying, no, 10,000 job cuts may be too many. back to you. >> all right, simon, thank you very much. a check on energy and commodities with crude oil down almost $2. sharon's at the imex. >> it's the lowest since we've seen since the shutdown began, and a lot of it is to do with the inventory report. we saw the largest supply in crude supplies than we've seen in a year. nearly 7 million barrel increase and 5 million barrels came from the gulf coast. now, we're seeing the potential supply glut in the houston area, according to the bank of america. that's the reason why fair saying we could see oil prices below the $100 barrel mark in the fourth quarter. we're also watching what's

happening with gold prices, because with the imf cutting the global growth outlook, that's had pressure on gold, as well as the shutdown, as it lingers on, it's also removing some of the inflationary fears out of the marketplace and the fact that janet yellen will be business as usual for the fed, there is nothing really for gold traders to trade on at the moment, they say, with that nomination. 1,300 key level for the gold. let's see if gold can hold that level going into the close. back to you. >> yeah, right on the money. $1,300, sharon. thank you very much. let's bring in bob pisani to talk about the market action, as we try to hold critical levels. at least in the dow. >> i think a lot of people thought yellen would be a modest positive for the market, but the concern about the shutdown, still weighing on things. and drifting lower. i would note the volume is heavier the last couple of days. 3.5 billion we'll probably do on the consolidated tape. we just can't seem so get momentum. look at what has been here. we've come off the news. the volume's a little heavier.

and high beta names are having tough times. consumer discretionary are having a tougher time. i want to put up the vicks futures and note that once again we're continuing to see the friend end of the curve, higher price. so this is backward-ation, you know, 20 on the vix here. the futures contracts, october, november, december, they're lower. normally, this is inverted. this should be higher than that one. you see they're inverted. this indicates a lot of near-term stress in the markets. historically, by the way, when this has happened, this tends to be a buying opportunity. i want to push this too much with the uncertainty. normally, the market has done bheter a couple of months later when you got this kind of situation. let's move on, show you discretionary names, have had a tough time in the past couple of days. yum had a poor outlook, a lot of disappointment. so news on yum. but petsmart, best buy, staples, a lot of the names are down 1%, 2%. the consumer discretionary names have been down much more than the overall market. high beta names. traders love to trade certain

stocks like green mountain, tesla, linkedin, yelp. look at the declines. second day in a row. why? because whether this happens, the guys who play momentum pull back, because they're not sure what's going on. less people around the stocks, tend to droop. this is what happens when you you live and die by high-momentum, lhigh-beta names. the tech stocks, hot for a while. you see 2%, 4% declines. and the chinese internet stocks, same situation here. same kind of decline. so overall, you get these trading names on the days when nobody knows what's going on and they tend to pull back. >> speaking of which, bob, harry reid is speaking, i believe, on the hill. let's take you to washington, d.c. >> -- agreeing to do that was not easy for us. but it should be easy for the speaker. to do the right thing. the government's been shut down now for nine days. our neighbors in maryland, in virginia are going to tell us how it affects them.

two states that are hit so hard by this. in fact, harder than any other states. perhaps. but it's not just virginia and maryland. the republican governor of nevada yesterday, brian sandoval, said something that was very alarming to everyone in nevada. he said nevada is in danger of catastrophic consequences if the republican shutdown lasts longer. now, brian sandoval is a conservative republican governor. he said he may need to call a special session, because nevada's already running out of money. as mark warner will explain maybe later -- because he certainly explained to me having been a governor -- the pass-flus are extremely important to a state -- pass-throughs are extremely important to a state, and nevada is a great example of that. if this republican shutdown continues in nevada, 365,000

food stamp recipients will see their benefits halted. not cut. halted. 425,000 women, infants, and children would stop having food for their babies -- in nevada. 425,000. unemployment benefits will be stalled. other programs like rape crisis call centers eliminated. the adjutant general -- >> we'll monitor the comments by harry reid. the market not reacting to the rhetoric today, with the dow currently down 25 points. meantime, some of the top investors are meeting at the hayman capital barefoot summit in texas, including kyle bass. he spoke with david this morning. and he joins us again from

larue. >> hey, carl, that's right. usually with kyle, we talk about large macro issues. we did that in our conversation. our viewers may know his hedge fund, along with a number of other prominent hedge funds, have taken sizable positions in shares of jcpenney, the beaten-down retailer trying to turn itself around after the reign of ron johnson. i asked kyle, given the dilution suffered, whether he's still in the stock. and he was somewhat noncommittal. >> we're really frustrated. we didn't believe they needed to raise capital, now they diluted us 38%. obviously, it was not because they wanted to, but because the market was telling them they had to. >> clearly, the market did perhaps tell them they had to after a goldman sachs fixed-income report put a lot more uncertainty in the market in terms of the -- especially on the credit side of jcpenney's balance sheet. as for hayman, again, it does

remain unclear. it sounded, in fact, given i've done these many interview yous, from the answers mr. bass gave, they are paring their stake or no longer in. as for jcpenney, carl, they have rebounded ever so slightly over the last couple of days as the company tried to instill some confidence in the marketplace, giving same-store sales numbers, down 4% in september, and hoping be better come october. kyle said, in fact, he's looking for a stabilization not necessarily a turnaround. something else we talked about, puerto rico, a subject that may come up a lot more -- certainly in the discussions of those who invest in municipal bond markets in this country, because it is a significant issuer with $70 billion of debt out there and held in many muni funds. bass is not optimistic on puerto rico's continued ability to repay that vast sum of debt. >> you look at their finances and you say, i have no clue how

this can exist for very much longer. and you look at the moody's downgrade, just above investment grade, back in december, and that's back when their rates are 4%, 4.5%, and now it's 8%, 8.5%, and moody's is reaffirming the rating and not cutting them the junk, when clearly they are completely junk. >> of course, there are others who will take the other side. hayman is not necessarily an investor, kyle said, but they are monitoring this because of the damage it conceivably could do to the municipal market if, in fact, puerto rico were to stop paying on its obligations. again, there are many who say they'll figure out a way, or they'll get bailed out, whether it's the bond holders and the nation state itself, or the island nation, much of -- what do we call puerto rico? >> that's a -- is it a territory? i'm not sure what the legal -- >> territory. yes. i think you're right. a territory.

>> thank you. not a state. >> yeah. >> maybe one day. >> yeah, not a state yet. a territory. >> all right, david, thank you. a lot more later to come. charles evans is making comments on the shutdown. steve liesman has more. >> thank you. charlie evans making the first comment of a fed official since the shutdown. he is saying the uncertainty is hurting the fed's ability to gauge the effects of the policies on the economy. a difficult environment in which to be making decisions saying the environment is full of uncertainty and fraught with risk. not only affects the fed. but very difficult for business to do any serious planning and difficult for business to make decisions to hire or invest. and he's saying, hey, we could solve this pretty quickly and urging congress and washington to do so, carl. >> all right. between yellen and three, minutes at two, you have -- >> a full fed day. these are comments, they're something we've been waiting for, about the fact of the lack

of economic data and broader effect of a shutdown on the economy, and evans is the first one out of the box with the comes, carl. >> all right, steve, thank you so much. >> sure. >> steve liesman. later, as we said, the president will officially nominate janet yellen as the next fed chair. when we come back, we'll talk with al broadus about what yellen could be up against in just a moment.

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♪ coming up on "the half," gemma godfrey. plus, high-flying internet stocks get ripped, so our traders will tell you what happens next. rough going for hp. it's been kicked out of the dow. why is one of our traders getting bullish? carl, we'll see you in ten minutes. >> all right, scott, thanks. a few hours from now, the president is expected to nominate janet yellen. and with the government shutdown showing no signs of ending, debt worries front and center, how much of this will impact the fed's next move? al broadus is former richmond federal reserve president. he joins us this morning. good morning. >> good morning, great to be here. >> how much of her confirmation, al, do you expect to be buffetted either way by what's going on in washington right now? >> well, i guess to some extent, carl, it depends on the timing.

if we can get past some of this immediate crisis-like stuff, if i can put it that way, and the confirmation hearings begin after that, it will be easy. you know, if these issues are still out there and still not fully resolved, then it's likely to be brought into the hearings. but it's going to be -- you know, it will be an interesting period going forward. >> yeah, you'll have those who want to make a statement regarding the power in the senate, i suppose. but they'll also be questions about her dovish nature, right, about the effects of qe, and i think probably, al, about her communications strategy, which really she was a leader of within the fed. >> i think you're right, carl. i think all of those things are -- you know, the confirmation hearings are going to be an opportunity for a lot of people to raise issues about the way the fed is conducting policy and try to get them aired. but i would just adhere, it will

also be an opportunity, i think, for janet, if i can use her first name, because i sat next to her in the policy meetings for a while there when she first came into the fed, although she's been on the front page a lot lately, the public doesn't know her yet. and she's very good. she's very smart. she's personable. and i think this will be an opportunity for her -- for her to introduce herself to the american people, so to speak, and give them a better sense of where she stands on some of the issues. >> what would you say personally about her, al, that people don't know? i mean, we know some of her personal life. we know she's married to a know pe -- nobel prize winner in economics. she's a big kisser, just around the office, tactile way, but on a human level. >> yeah, she's meticulous in the way she goes about her work.

she's scripted pretty well when she's makes a public statement. she'll have an opportunity in the confirmation hearings to do q&a, and she will come across as the way she always did to me, as a warm person, sincere, she's very smart, extremely well educated, she has a very strong human side. this will -- this always helps. >> finally, the biggest pushback in your view to those who argue she's a danger to the removal of accommodation in a timely fashion. >> i think that's -- that's a point that she's going to need to address. i think it's a good point, carl. there's strong perception out there -- i see it here in richmond, places like, you know, small towns i'm in in richmond -- investors know about her and her record, and there's this perception that while inflation, in particular, is not a problem now, it could be one at some point, three, four years down the road when she's still in the chairmanship. and so, she needs to, i think, address that and get the point

across that she understands that risk and that if she confronts that kind of situation, she will move in a timely manner. you're right. i think that will be the main substantive point she needs to put people at ease on. >> al, thank you so much for your guidance. hope to talk to you during the course of the hearings. al broaddus, joining us today about janet yellen. you can buy bulk in costco, but should you buy the company's stock? the shares are moving -- they were down earlier. they're flat now. we'll look closer at the quarter and what they said that made this intraday reversal. back in a minute. ♪ who do you think you are didn't come with a warning. today her doctor has her on a bayer aspirin regimen to help reduce the risk of another one. if you've had a heart attack, be sure to talk to your doctor before you begin an aspirin regimen. if you've had a heart attack, be sure to talk to your doctor stick with innovation. stick with power. stick with technology.

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welcome back to "squawk on the street." check out shares of hp. the tech giant is surging higher. this on comments from ceo meg whitman at an analyst meeting. she says she sees revenues stabilizing fiscal year 2014. it will be a pivotal year for them. the turnaround, they're still optimistic about it. also coming in with full-year earnings estimates that are just coming ahead of some analysts' expectations here. so again, hp shares, carl, surging toward session highs now, up about 6%, 7% on the heels of the less-bearish, we'll call them, slash bullish comments from ceo meg whitman. >> thank you. another name with intraday spike. costco. guys, good morning to both of you.

joe, what did they say midday to bring it into the green? >> well, two things, a lot of concern about the membership fees, which i think they gave people comfort, which was only 3%, and the sg&a wasn't quite as bad as it appeared. if you remove a couple of one-time things, again, it would have been a little better. that gave people comfort the stock looks better going forward. >> yeah. chris, there were some concerns after the numbers came out about spending for a company that's usually pretty resolute about cost discipline. what was your take? are your concerns alleviated today? >> i think they are. i think the other big change that happened intraday is the company, they tend to be pretty tight on letting margins flow through. and we started talking about how the food category's becoming deflationary. that's a positive for costco from the margin perspective. and that should drive some expanded margin in earnings growth as you look forward. now, that's not great for some

of the competitor, like a walmart, who has heavy growth rate exposure, but certainly from a margin perspective, and a company that tries consistent 4%-plus traffic growth. it's a good story. >> i am out of time. joe, i will mention your price target is $123 on cost. appreciate you guys coming to the camera for a -- on a busy news day. thanks a lot. >> thank you. when we come back, how is this for one in a million? a teacher in wisconsin inherits 100-year-old car, brought it to auction, hoping it might be worth 100,000 or so. we'll tell you what happened after the break. i love having a free checked bag

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one teacher in wisconsin got more than she bargained for when she took her dad's old car to auction and it made her an instant millionaire. >> tonight, we'll take you to an auction at amelia island where this teacher brought her car and ran into basically one of the top car collectors in the country, jim taylor. we won't tell you what she sold it for, but her reaction and the price she got is amazing. so a fun night. we'll show that, as well as a lot of ferraris, $50 million sold in that one weekend.

big episode. >> there are some days, robert, i think you'd do your day for free. >> yeah, please don't tell management. >> secret lives of the super rich tonight on cnbc, 9:00 p.m. eastern time. dow's repaired a lot of the damage. basically back to the flat line. back to headquarters, scott wapner and "halftime report." >> and for today, topping the koors. several high-flying names getting smacked. stocks in a shutdown. it's now 900 points and counting for the dow. that's how far the blue chip index has fallen from its september highs. so is the market's march toward the debt threat deadline, what is the best way to defend your money? it is "halftime," and, doc, is it time to start playing serious defense?