and senate republicans. after the president's meeting with republicans yesterday, the white house signaled that it may back the gop plan to temporarily raise the debt ceiling and prevent a historic default. >> the president is happy that cooler heads, at least, seem to be prevailing. in the house. that they're at least seems to be a recognition that default is not an option. >> house majority leader eric cantor. >> the president said that he would go and consult with the administration folks and hopefully we can see a way forward after that. >> speaking to larry kudlow last night, the vice chairman of the house republican conference sounded optimistic. >> opening the government is a negotiation that will happen tonight. and in the hours ahead. and we hope to have it open by, you know, monday morning. i know it's a holiday. >> markets hoping so, too.

stocks soaring yesterday on all of this news about a potential deal out of washington. yesterday, the market was up by better than 2%. a gain of 323 points for the dow. that's one of the best market days all year. the futures this morning after that big rally are actually, believe it or not, indicated slightly higher. barely up there, but you did see a downturn earlier in the futures that turned around after it looked like a deal was at least a very good possibility. as for the public's opinion on the whole situation, americans are saying fire them all. there's a new nbc news "wall street journal" poll that finds the majority wants to toss out the entire congress. just 14% say the nation is headed in the right direction. that's about 0.5% of who felt that way just a month ago. 78% call the country on the wrong track. that tells you a little bit about how bad things got in the last couple of weeks and that might tell you why the two sides sound more willing to negotiate. john harwood is going to join us with more in just a few minutes. but now, andrew, over to you.

>> thank you, becky. for all the people that want to throw everybody out, i imagine in a couple of years they won't throw everybody out. jpmorgan and wells fargo, jpm's numbers expected to hit the tape about 7:00 a.m. eastern time. we'll bring them to you here on squawk. analysts are looking for a share of revenues at 1.79 aboutel. and we're going to have a preview from a banking analyst at 6:15 eastern time. conference calls on both of these earnings are going to be what everybody is going to pay attention to, including whatever settlement on the jpm side we get or get close to. joe. >> this poll will have harwood on. i saw brian talk about it last night and then release the numbers. also saw costello's report. did you see that? >> i saw that. >> on the first week of trying to sign up.

there are literally places where they went over it and thousands -- and like one person. >> i was listening to an npr report. >> it was a pretty scathing report on how things -- i don't know whether they're trying to help, you know, light a fire under the administration's butt or whatever it was, but it was very negative. >> because the clock was ticking. people who are expecting to bfr covered by january 1st, this clock is ticking. >> the numbers do show republicans getting more of the blame, but the numbers are bad for everyone involved. this is the one i got that the headline was ask about the current budget battle and they emphasized 70% said republicans in congress are putting their political agenda ahead of what's good for the country. >> right. >> how about the president? what percent? >> i don't know. >> 51 %. a majority of people asked think that the president is putting

his political agenda ahead of what's good for the country. 51% is not a good number, is it? you can win an election. a lot of numbers are still kind of representation of that same election, the numbers that were there. 51% is the number that -- or 52% is the number that you win. >> i wonder how quickly public opinions change if it looks like the government is reopened, if they sit down and talk. obviously, the markets have huge sold will i -- >> i think they'll be just as unhappy. >> but no one has switched party affiliations based on the latest -- >> correct. >> and it's still 52/48. >> if you're a republican and sits around and goes, you know what? i hate these guys so much, all of a sudden i love the democrats. and if you're a democrat, even if you're frustrated with how you think they're approaching it, you don't say, well, actually, i have to tell you i love ted krooudz now because you

just don't. >> you would think -- but they don't even -- >> well, independents might be swayed by it. but if you're an independent and 31% of them blame obama and 54 bers blame congress, if the independents come down, maybe a few more -- >> right. but then there are still going to be people -- >> everybody is holding their nose on this. >> but there will be still people who look, some are more fiscally conservative and they can see some merit -- they just don't lie how this was done? >> you tell me, i think most of the establishment in terms of the republicans, whether it's the same betters or others are upset. >> most of the what? >> most of the establishment of the republican party -- >> but another one norbert said

he was mad at ted cruz. there's solidarity on the left and on the right. the republicans want something and the democrats want something. ross westgate probably will talk about the rutgers outcome. was that big in london, the rutgers/louisville game, ross? >> that was huge, as you know, ross. royal blue. >> and the giants, 0-6 of. >> yes. >> i don't know, was it detroit or oakland? i don't even know. >> those are the only two games i know. >> detroit won. >> there's a third. they're going to host a third game now, a third regular season game in london next year. >> you're going to get a team. i've seen them start talking about there's -- so much of it is on tv, anyway, and since you people are coming around to what the real football -- what football actually is. would you rather watch a nothing to nothing soccer game or a

51-48 football game? we have action in our sports, ross. >> yeah, but it takes so long to play. how long do you have to be in a stadium to watch an nfl game? >> you're drinking beer and having hot dogs. what, do you want to get in and out? do you want a 15-minute game? >> 60 minutes of action spread out over hours. >> ross, these games start -- on over here, we start in the parking lot at 6:00 a.m. with beer. and brats. >> well, there's nothing wrong with that we job pe. >> i knew i'd get you on that. >> it's more akin to rugby. let's mott worry about the sport. let's just stay in the parking lot. here we are, we're three hours into the trading day, joe. 6-3, advancers jourt pacing declineser. 92 points higher. not quite as big of a move as we saw stateside. and today, we've had some gains. not fwig moves, around 0.7%

today. xetra dax up 0.7%. kwet ra dax up 0.3%. cac 40 up 0.1%. ftse mi byup 0.18 bers. banks up around 0.6%. financial services are stronger. you've got health care up along with basic resources. a little weaker in telecoms and utilities. we'll see what happens with the dollar and the commodity prices, as well. one company that is in big focus today is royal mail. yes, the british government told a 52% stake in the royal mail, which is its main delivery post in this country. and the issue price was 330, up 35% on the open. currently trading at 4 pounds 39. investors couldn't get enough of this. 800. 20 times.

it's the conditional trading at the moment. but big, big interests in getting a slice of that. and the government is taking about $1.7 been pounds out of that po pay down their debt. would did have an auction out of italy. italian yields, 4 .29%. we saw the lowest yields there since may and on the 15-year, the lowest level since february, as well. it's a pretty good demand for per r per r perrefereeal debt out of europe. >> john, the latest poll numbers show why the two sides may be willing to talk to each other. >> well, no, they showed why

republicans are giving in on their position. this is a poll that shows it's bad for everybody, bad for the economy, bad for the public mood, but it's worse for republicans and a lot worse. >> i saw this was the lowest marks in the history of journal polling. >> if you look at what happens, like big picture, president obama's approval rating actually went up since the crisis began. support for funding obama care went up. republicans have the lowest approval rating in the history of the "wall street journal" poll. republicans are under water by 20 points in terms of evaluations of their performance. and -- excuse me, guys, i have a cold. when you ask about who's to blame, by 53 to 31, the american

public says that republicans in congress rather than president obama are to blame. during the clinton gingrich standoff in 1995, the proportion of americans who blame republicans never got to 50%. >> you're kidding me. >> it's over 50%. >> didn't gingrich lose his speakers? didn't he have to step down from the speakership after that? >> it was a couple years later. yes, he did. on every measure, it shows impact for everybody, but it's a lot worse for republicans. >> you know, john, the way that they're going about trying to achieve their end is probably what you're talking about there. but i bet you ask it in a way that this looks at what the underlying arguments are about. and i'll bet you they're not nearly as polar. >> but it didn't help their cause. >> but there's a lot of people that we want to get started on dealing with these unfunded --

you happen, these unfunded promises that we made. >> sure. >> but all i'm saying is the country is still split on whether we should be pieg more money from china to spend on infrastructure or whether we should start looking at handling entitlements and everything else. >> bill mcenturf, the republican pollster said basically the result of this episode has been a political boomerang for republicans. that is the proportion who want to defund obama care has gone down. the ones who want to fund it has gone up. and in a question that we ask consistently a question. is government doing too much or should government do more? the proportion of people who say government should do more has gone up since this happened. it's now 52% say government should do more. 44% say -- >> it just means stay open. >> it's 47% says stay shut, 53%

says stay open. >> and one of the reasons that this is worse for the republicans in congress than it was for gingrich in 1995 is that in 1995, gingrich and clinton passed a bunch of spending bills, so the shutdown was partial. this is a circumstance where even though some exceptions have been made, no spending bill has been passed.it is a broader shutdown with more impact. so when you ask people, have you and your family been affected by the federal shutdown? in 1995, the note that we got over a couple of months was 18%. the number in this poll, 31%. >> john, people are feeling it and they don't like it. >> what i don't understand and maybe i don't get it, what is possibly going to happen over the next month or two months? >> what are the three things again? >> poly anna, ignorant, naive, whatever, i'm all of those

things. when you say we'll negotiate over these things, they wanted to negotiate over these things the whole time. i'm not sure what the big deal is here. >> the democrats have been willing to negotiate, republicans have not wanted to. >> i'm not sure that's true. i think republicans wanted to negotiate over tax reforms, too. >> no. >> no. >> both sides have wanted to do this. nobody has ever got it to the table. >> no, no, andrew, you're not paying attention. the republicans made a demand. they said we're not going to pay you, senate, unless you pass the budget. the senate passed a budget. they asked to go to conference with the house and have a negotiation. the house was unwilling to go to the conference. and the reason that they've been unwilling to go to the conference all year is that under the rules of conferences, republicans were worried that the outcome of the conference was not going to be what they wanted. so they resisted. >> yeah. they didn't feel like they have enough leverage in conference,

right? >> yeah. if you go to conference and the conference doesn't wrap up in a certain period of time -- >> you go with the senate, right? >> you lose the ability on the house floor to control what goes to the floor. so they have been resisting having a conference. and the reason, why have they been resisting having a conference? >> because they thought they were going to lose. >> well, yes, but there's a more specific reason than that. their strategy has been to squeeze very much the domestic -- the discretionary parts of the budget, which are not the long-term budget problems. they've gotten to the end of the road on that strategy. in fact, they cut those so much that when they put their own appropriations bills on the house floor to try to pass them, they couldn't pass them because not enough republicans thought there was enough spending in those bills. so if you then go to entitlements, which is where the real problem is, guess what? that's not very popular. that's medicare and social security. >> that is -- >> so they're not pushing that

discussion. >> that has been paul ryan's point for a long time and that's what he anged earlier this week in an op-ed. that kind of gets you back to that position. but both sides are looking for the way that they can get the most out of it. >> on andrew's underlying question, becky, i've also been a polyanna. i totally have been someone who looks at the potential grand bargain and says that's obviously in the interest of the country, they need to do it. but it is difficult because if you go big, if you go after medicare and social security in a serious way, democrats are going to insist on tax revenues. well, if the republicans say no to tax revenues, you can't have a grand bargain. so what paul ryan has been talking about is a down payment bargain, something smaller. now, that's not going to be the easiest they can get it, which they should be able to get it, a rational negotiating strategy should be able to produce that. it will be lesser entitlement

reduction and no tax revenue or maybe some user fees or things that, you know, are kind of quasi revenue. that is what could happen in a deal. >> but that's where we're different, john. and i think that's how we see the world differently is if you add in the obama care taxes and the tax hike that the democrats got last year, you add all that in, to a lot of people with how much government has grown just in general in the last 10 or 20 years in terms of, you know, how much it actually is doing, it seems much more reasonable to some people that we should just handle our entitlements and not even be talking about more revenue at all because you've got your revenue. >> yes, that's the philosophic difference. >> i've heard a lot of people say democrats are the ones who are unreasonable by not be willing to take on entitle manies without troog to go back to the revenue well where you and probably others would say, it's not an unreasonable demand. >> they keep calling it a balanced plan.

and that means they're going to raise more revenue and we're going to be at 60% or 65% marginal rates with state taxes and everything else. >> joe, you are right there the. you just put your finger on the nub of it. but then it requires you to make a choice. >> i know that. >> if you're concerned about the size of government, the safety net -- >> or the size of the debt. >> the safety net is for the people that truly need it, it should be really big. and then for other people that maybe, you know, i don't know, it seems like we don't -- you know, europe has a different system. there's a safety net for people all the way up to probably the 90% of the people. and that takes away, you know, the ability to earn your own success. >> extreme positives. >> what you've just outlined, joe, is the precisely the nub of the problem. and it's the reason why we haven't been able to get a deal. it's because the people on the right and the people on the

left, they both have a lot of clout sxp the people on the right, their concern is not really the deficit and long-term debt. it is the size of government. and the problem is, the people who believe in the size of government that we have is large enough to prevent them from reducing the size. if they decided to focus on the debt and deficit, they could come to -- >> even republicans, recipients of medicare love their medicare. i understand all the ironies and the incongrewties of -- i don't know what we're going to do. i plan on living forever. i don't know, it's going to get more and more expensive. >> how about for you guys on the panel? what's more important, debt and deficits or size of government? >> i think they go hand in hand. >> no, but they're different issues because if the issue is debt and deficit, then you say, okay, revenues and options and i

can make a deal with democrats. if you say it's the size of government, then you say forget about it. no more revenue. >> that's in the way of fund. >> if the government can work like -- i don't think it can. if the government can work with the private sector with accountability and people having to report to someone to keep -- i mean, look at the way this thing has rolled out. >> we are giving our producers heart attacks. >> yeah, we are. thank you, john. we are going to move on and have a quick conversation about jpmorgan and wells fargo, which are kicking off their earnings for the financial sector later on this morning. here to talk about winners and losers and what he sees ahead, eric wastrom from sun trust. how are you? >> good morning. how are you? >> help us with this. we're going to get jpmorgan at 7:00 and wells fargo right after that. we know i think everyone has a sense of what the numbers are going to look like, but maybe you could shed light on that.

but everyone i think is waiting for the conference call and what ultimately we hear about this settlement. is that going to be the big news today? >> well, i think you're right in that it's certainly what the market is hoping for. although i don't know if jpmorgan's management is really prepared to speak about it. obviously, it's a particularly sensitive topic. i mean, it looks like from the media reports we were headed for .kind of resolution, but it seems like those conversations have been suspended with the government shutdown and the doj currently -- current staff obviously not functioning. >> let me read you something that dick bove just row. he said the predominant view of jpmorgan is once the bank makes a large settlement, all activity returns to normal and the bank returns to $20 billion net. he says while i've not adjusted my earnings estimate yet, i do

not share this view. i believe the short-term earns of the have been can be affected by the changes being forced on the company. is that the rye or whong? >> i'm not sure if i agree or not here. what we've seen with the volcker road rule and some of the other models, the business model has change. so i think i end up agree, dick that the outlook for jm morgan and its peers is that the future is not particularly like the recent past. >> and when we look at this quarter, total revenue is expected around $23.4 billion. what's your number? >> my number is ahead of that. on the whole nod of a fikly strong quarter, but i vary from the consensus on a few different items. >> and when you look at out after this quarter, is this a flip or do you think it gets better or worse from here? >> well, you know, i think the

conversation that you just had poses one of the major questions, which is what is the macro back drop heading into the fourth quarter into early next year? i think our view was that, you know, the 2014 was not going to be a fan ft take year for the macro economy, but it should be stable. obviously to the extent that these issues aren't resolved, the outlook gets worse. so, on obviously, that will have a big influence. >> eric, give us one thing to look for in the wells earning report that we should be paying attention to. >> two, one is asset growth and the other is the msr evaluation. i think both of those could end up pushing the numbers ahead of consensus. >> thank you for joining us this morning. >> thank you. coming up, why new york city mayor michael bloomberg is getting dragged into a fight in mexico. first, though, squawk sports news. the detroit tigers downed the athletics 3-0 in oakland. to advance of the american

league championships. justin varlander, who has time to date super models while doing this worked eight inninges and gave up only two hits and ma gill cabrera belt add two-run homer. the tigers now play the red sox in a classic american league matchup. it's great, the st. louis, l.a. and the other two. this is turning into a really good -- baseball needs it. they could use about news. but boston is always fun and now they have those beards.

welcome back, everybody. it's time for the executive edge. michael bloomberg is ooig being dragged into a mexico soda tax hike. the mexican government waits to raise tax on soda. mexico has the highest soda consumption and now has higher

obesity ads than the united states. some of the ads target bloomberg. his charity has contributed potentially to mexican protax groups. although i think what really happened is he set aside millions of dollars. >> i aplow what's going on in mexico. >> i do, too. >> i love it and i think it's the right thing to do. >> they drink like 43 -- how much do they drink every year on average? more than 43 liters or gallons. i forget what it was. >> 43 gallons. >> i guess we're three for three because i don't care what the mexicans do in terms of taxes. i don't. they can tax things, not tax things, they can go wild, do whatever you want. >> hold on. i have a question for you. this goes to a free market -- this is one of those instances where i say the market isn't working. >> well, here's the problem with this. >> they create incentives. >> there's a lot of money that's been put into advertising in

mexico to fight this tax and the people in favor of this tax can't get time on the spaces or billboards because the television stationes and billboard advertisers don't want to alien ate companies that give them a lot of money. >> taxes isn't great, but i would prefer this to making all the producers have a certain size bottle and change all the manufacturing 23589s the way bloomberg tried. if you want to make it more expensive tore people to consume sugary drinks, that moves down the list on how -- >> okay. great. >> i agree with that. let's talk about the second story. the ft is reporting that google funneled $12 billion of royalty payments to bermuda last year. that is a quarter mon more than it did in 2011. the tech giant has been at the center of an international corporate tax controversy.

it earns foreign income in ireland and there's crazy schemes from there. >> the uk is particularly incensed about this. it's sales happening in the uk and have been final united statesed in ireland. >> eric schmidt testified in the uk. there's articles every which way. this is the issue that's going on in the u.s. in many ways about where we're moving moenl. >> money goes to the places where it can most quickly move. all kinds of arguments about why you need to change the tax codes. >> right. when we come back, stocks tracking every twist and turn out of washington. we will ask what the latest means out of washington when we come back.

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lawmakers in washington showing an ability to resolve all these things. yesterday, a glimmer of hope saw stocks rebound and get back maybe half of what they lost in this latest government induced

debacle. joining us now, karen and thomas, i want to start with you, thomas. you've got a 1675 s&p target. at the worst, you look at this as a way to maybe deploy some dry powder. hopefully you would have something and be able to buy more. >> i mean, that's right, voe. i think the only person who should be raising cash right now would be someone who's got a much higher exposure to markets than what they're comfortable with. but otherwise, you know, i think there are a substantial portion of the risks that are reflective. and we could see them in the hedge funds, mutual funds data.

it's about where it was in august of 2011, people people have derisked. we haven't disowneded a default. there's still substantial risks out there, but i don't think the risks are so great that we need to liquidate our decisions. >> no. from here, it's 5%. certainly if you got a pullback and that 1775 would represent 10% or so by the end of the year, you would want to jump on with both hands. >> that's right. i think that the market is still capable of hosting a receipt good rally of relief when we get resolution. but as you said, you know, i think there's a chance of volatility in the next couple of weeks. i don't think it's smooth sailing. we'll start in november. >> yes. >> tom, i'm unclear why you don't think we're going to have some form of a slowdown more broadly in the economy as we get

ahead of the holiday season. all of this will be dragging out in the press and on our show and in the media every single day. i don't think people are feeling particularly brilliant about all ooh this. i don't want to throw a well blanket on it, but -- >> if the market was trading on the economy instead of qe, maybe that would make a difference. >> yeah. >> people who are on hotels, people who are booking travel, they say there might be some slowdown, really. >> yes. it's pretty hard to figure out what the second older effects of the shutdown is which is what everything you've described and everything that's being reported in the media. i think it's going to come in the back drop of what would have looked like itself would have been pretty good results for companies. but i think the up shot is it gives us somewhat of an insurance possibility when it comes to monetary policy. i think the markets are going to feel like, well, this is going to give the excuse for easier money for a bit longer, it's still a pent up demand story.

a lot of these are temporary disruptions and i think that's why the markets are going to show some relief. >> plus we're going to be gelling with yellen. i would probably add the zero go & go out to 2025. things are things that you -- anyway, margaret, i'm trying to decide how to view what we've seen in the credit markets in the last month. my take is that they've been amazingly doe siel and i -- because you watch it so closely, you see the -- you know, you see a one-month bill go up to the highest level since the crisis. and it looks like oh, my god, because you're watching it so closely. but a quarter point versus 5% in the crisis, does it really matter whether it doubled or triple it when we're at 25 basis points? >> i think it's more an

indication of the stretch in the front of the market due to the debt ceiling debate. we did see selling of the october the t-bills surrounding the date. and i think most people went through the two sets and figured out what could be impacted. rooet right now we're seeing debt being pushed into the november date. while it's not overall stress, it is indicative of what's going on on the front end. the problem is the risk/reward is a one-month bill. at the same time, you're risking the chance that you have a bond that hasn't paid. and in that snaredo, most people think that the treasury would extend the maturity one day at a time and you really don't know how long that maturity will be extended. there are national security issues involved and what we did see is we saw government mutual

fund selling both sets. we saw people going through. there are collateral pools looking for those bonds and rather an unwillingness to take those securities as collateral. >> the -- >> i was looking at a three-month or two. and i don't follow it as closely as santelli or you, margaret. four basis points? for real, four basis points? >> well, everything is expected to be solved by then. so the front end is still held down by the fed on hold and i think yellen's credibility and in addition to that the belief that they will keep rates low for a long time. >> it doesn't look like a lot of stress on the system or a lot of angst. i don't know, it just seems like if -- you know, if you were really to gauge the probability of something really bad happening, i don't see how they could be down there. you know? >> yeah, i agree. with regard to, you know, the

stress states, i think that, you know, the kicking the can of six weeks really just pushes the issue into november for the front end of the bond markets. but certainly you're not seeing any real stress out of the curve and bonds from this situation. >> that should be interesting to watch the yield curve based on the time frame these guys start putting on how long they raise it for so we can prepare for the next -- you know, for the next argument that we know is coming at some point. and we can watch it on one month, six months, anyway, thank you, margaret. we appreciate it. they wrote b-e-e-m-o into the script for me, margaret, so that i don't -- >> andrew and i appreciate that. i might see it and i might say beamo and i may not. >> beemo is a frisbee company.

you don't have anything to do with that company. >> you would have said something like bee-em-o. >> man, is my brain -- anyway, coming up, washington is the key drivers in stockses right now. we'll get the latest from capitol hill when republican kevin brady joins us next. plus, a very big morning for bank results. we'll hear from jpmorgan and wells fargo. earnings season, it is open for business. we're back in just a moment.

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wroib to "squawk box." in washington, capitol hill staffers negotiated late into the night. there is another meeting this morning between senate and republicans. joining us now is kevin brady. congressman, what do you think the odds are that, a, the government will be open by monday and that, b, we will have some sort of res lug to the debt limit? >> good morning, becky. i don't know the timetable, necessarily. i think the negotiations are pretty encouraging. i think the appropriate, look,

let's buy six weeks to come together with a solution on the debt ceiling, let's put the budget committee back together among -- between the senate and the house final resolution to our budget figures for the next year and then finally, let's start talking about how do we open the government and what that final solution is on the debt ceiling. i think this could be a break through. >> the idea of defunding obama care seems to be completely off the table at this point. do you think that that move to try and do that hurt your party in these negotiations and hurt you with the public? >> you know, there is a lot of speculation about that. i do know that no president in modern history has ever repealed a major signature law that was just passed. so that clearly was a bridge too far. our frustration, obviously, with is that law and its impact on the economy, small business, on patient care itself. but going forward, i think the bigger issue is how do we really

start tackling the sustainability of washington's finances? they're just nowhere near where they need to be. we need some real changes. and historically, the debt ceiling as tough as it is, and i can tell you we are not going to fall on this debt, absolutely not. but we're not going to have a blank check. we have to make some changes. this has traditionally been a historical opportunity to have some discussions. i hope they're fruitful. >> at this point, obama care might not be quite as expensive as you thought. apparently you have to cover about four people so far. i don't know if you need to defund those four people that have been able to sign up at this point. >> those four people will get a sweet deal probably from that. but boy, the numbers that came out yesterday were awfully for the white house disappointing. 51,000 for the first month. that works out to a little over a million in the first six

months. the white house was shooting for seven million. so there's a real problem there. >> and i saw a report last night. they all said you're not ready. the code is not there. >> it is not there. >> it would have been good for the white house to think of some kind of way -- you know, they did it with corporations, some kind of way to come to a -- and it probably would have been good for you guys not to give them a delay, to let us all see how poorly this was handled. you were both on the wrong side of the issue. >> it may be. but what we know is i lead the health care committee on wayes and means. two weeks before the rollout, the white house has not sent successfully a pile of exchange in the process. i think one of the smartest things both kaerts could do is say today, give americans a choice. if people want to go into this plan as an option, terrific.

but back off the mandate. let this thing work itself out. give people a choice at this point >> >> congressman, the 30 or so congressmen of your colleagues who were dead set on defunding obama care andparty? >> well, i would disagree that there are 30 members of the house willing to go over the debt ceiling. republicans are not supportive of breaching the debt ceiling. we want to see this resolved sooner rather than later. >> 30 people could not pass a clean cr. >> there you go. >> under any terms. >> yeah, well, there's a big difference between the two issues. truth is, back home, i can tell you people are so upset about this new law. businesses are certainly are, families are, they see special treatment for many, but not equal treatment for themselves. >> you think they will go along? or are they going to go kicking and screaming with any deal? >> it is hard to know at this point. . what i do know is we've got to

find a way out of these back-to-back financial crisis. i think the country is tired of it. later today, a vice chairman and i are holding a hearing with two economists. about how do you find a way forward? how do we tackle the long-term challenges of the country without this crisis after crisis? i think that's the big issue at this point. >> congressman, thank you very much for your time today, we appreciate it. >> thank you. still ahead on "squawk box" this morning. a man who needs no introduction and never minces words, veteran corporate leader jack welch will sound off on the fight in washington. plus, quarterly results from two big banking giants, we have jpmorgan and wells fargo. we'll have the numbers and instant analysis. stick around, "squawk box" will be right back. next week, we have a huge lineup leading up to thursday's debt ceiling deadline. on monday, former citigroup chairman dick parsons, aetna ceo

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welcome back to "squawk box." starbucks planning to circulate

petitions, urging lawmakers to reopen the government and avoid a looming default. howard schultz says he wants to give americans a platform to express frustration with politicians. i'm surprised you haven't said anything about this yet. the petition will be available in starbucks stores online and in tear out ads running today in the "new york times." the "wall street journal," usa today and "washington post." schultz will join our friends on "squawk on the street" at 111:0 a.m. eastern time. he tried to do something similar before he suggested you don't make donations to these folks. >> he's really nonpartisan. >> it's a rise above kind of thing to do. >> it's only directed at congress. >> no, it's not. he's had conversations with the white house too. >> he wants them to -- >> he's had conversations with the white house and patty murray in the senate and with paul ryan. >> those two words, stand strong. >> we're going to be back in a moment. we've got quarterly results from dow component jpmorgan.

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welcome back, everybody. jpmorgan just out with its earnings. looks like the company came in with the net income of $1.42 a share. that's when you exclude litigation expenses and reserves that were brought back through. the street was looking for $1.17. of course, with litigation expenses and the release reserves, you're looking at a loss of 17 cents a share. revenue came in at $23.9 billion. >> do you remember earlier this week we had people on that said the reason they're going after jpmorgan is because they're so -- >> the money. >> they make so much money. >> bill daly. >> yeah, right. so is this good or bad they beat expectations?

actually, if you do the lower number and did you see the litigation expense? that's a pretty big number. >> it's a huge number. >> $7.2 billion. >> while we have strong underlying performance across the businesses, they go into how the number one ranked in just about everything. we continue to evaluate our legal reserves. with escalating demands and penalties from multiple government agencies, we thought it was prudent to significantly strengthen them. we expect our litigation costs should abate and normalize over time, but they may continue to be volatile over the next couple of quarters. >> they earned $1.42. their legal expenses are wiping out the profit for the quarter and then some. >> and there's no -- we will talk a lot more about jpmorgan. but just right off the bat. the stuff with jamie dimon, what do you make of it? you're afraid to -- you'll get audited if you say something and you've got plenty of money to

worry about. watch what you say. >> i don't mind being audited either. it's the piggy bank. and if you cross these fellas down there and don't play ball, you get nailed. that's just the way they play. >> should've never said i'm barely a democrat at this point. he should've never said that, right? >> well, seems that lloyd's done a good job of signing up as a good democrat. >> blankfein because he's been in the clear. >> and he's saluting fue -- >> i'm sure he has his concerns about the way things are being -- he's a businessman. >> i'm looking from a distance. i mean, the facts -- jpmorgan's a piggy bank right now. >> i'm not sure whether it's the regulators and the white house. >> goldman sachs is a piggy bank too. >> they haven't gone there for a while. >> yeah. >> let me tell you about a few

more comments that jamie dimon makes. this is more than you might have expected to hear from him given how much the government has come after him at some point. he says the board continues to seek fair settlement and one that recognizes the extraordinary circumstances of the bear stearns and washington mutual transactions undertaken at the request or encouragement of the u.s. government. so he's continuing to kind of talk about -- and we've had a lot of guests who have come on from hank paulson to warren buffett who have said they don't necessarily think it's fair to go after these companies for things that happened before they took over the companies. your thoughts on the idea -- >> i mean, let's face it, they asked them to do that. and they did it and now they're getting whacked in the head for it. but it's a tough game down there, i'll tell you that. it's not puff ball. >> let me give you the -- not "huffington post." i'm not going to mention that guy's name that writes for

rolling stone. it would be the biggest fine in history. jpmorgan's in the paper every day. every day for some regulatory concern. by definition, jamie dimon must be responsible for a lot of the problems so he should go. yes or no? >> no, he shouldn't go. you crazy? >> with all this that's happening? >> he bought a bag of junk and he's tried to clean it up. and every time he cleans it up, he gets nailed again. >> you have made the point that he -- even before the government induced him or asked him for help with, you know, to try to bail these out. he was eyeing these cheap assets, something he wanted to -- >> no, no, no -- i quoted an article to hank paulson that made that point. that is not a particular point i -- i'm making. >> okay. >> no i'm -- >> you can't be indemnified.

>> i think they should have indemnified him. >> they should nailed him right there. >> but they didn't. >> and therefore he did take on that risk. and what do you do about that? and it becomes complicated. i'm with jack. you rob the bank because that's where the money is. if you're the government, that's where the money is. >> so then the perception that the average man on the street has reads about jpmorgan every day, can -- could you point to the regulators being overzealous and say it's not necessarily jpmorgan is in the wrong but these guys are basically shaking down -- shaking the money tree? >> well, he's tried to make that point. made it again. becky just read that quote. he's trying to articulate a point and walk a fine line. in this crowd, you don't want to -- you've got to play a pretty -- >> which crowd would that be? >> that'd be the administration. >> all right. i need to know what you're actually saying. who knows who this crowd is.

could be us, could be -- i know who you're talking about. but you're right. back -- how many of the fines that spitzer was finally able to raise were just companies saying, look, i don't want to go any further with this and i'll pay you off just to leave me alone. >> look, settling has been for a long time. you can settle and not plead guilty to anything. >> right. >> and you can pay the money and get them off your back. >> looks bad. but here's one question. we've got to get to quick headlines. is there a deterrent effect. meaning jpmorgan's announced they're going to spend $1.5 billion on more lawyers and compliance, which i'm not sure necessarily is a good thing. but maybe it does prevent similar things like this happening in the future? do we look at it and say, okay, maybe it's actually forced the hand and if they had only sued them for $1 billion or tried to slap them on the wrist that that kind of structural step would not have been taken?

>> look, $1.5 billion more is not going to solve the bad actor doing this and that in london or somewhere else. you -- you're not going to -- the regulators were sitting in their offices. they had regulator -- almost one regulator per one trader standing over them. you can't regulate against bad behavior if they have it. now, i don't think the bad behavior occurred here by jpmorgan and the mortgage issue on the trading thing, they had a bad actor. let's face it. you can't stop a bad actor. >> it should be easy to go after individuals, i don't know how much it changes behavior to set up big fines that companies pay. it's the shareholders' money. may be shareholders that weren't there at the time it happened. >> we read the papers every day and watch how many government back actors pop up all over the place. whether it's over here in this agency or that agency. and that didn't say the administration's bad because

that's happened. that says you can't manage bad actors that well. >> this is a larger conversation because people will then say -- >> and we're boring people by -- >> no, i don't think we're boring people. jack, you never bore people. let's do some headlines and come back to this conversation. in the headlines this morning, the fiscal gridlock has put america in a very bad mood. according to the latest nbc news "wall street journal" poll, only 14% of americans say the nation is headed in the right direction, that's half the reading of a month ago and the lowest since the financial crisis. get this, 53% blame congressional republicans for the government shutdown, 31% blame president obama. the u.s. is about to become the world's biggest oil producer according to the international energy agency, overtaking russia for the top spot in 2014. it's grown at dramatic rates, china replaced the u.s. as the biggest oil importer. and howard schultz is on a

one-man mission to end washington's gridlock. he's circulating petitions in starbucks stores calling on lawmakers to end the shutdown, end the debt ceiling battle. coming a few days after. he instituted a promotion that gives a free coffee. you want a free coffee? to anyone that buys someone else's beverage as a way of showing lawmakers how americans can support and connect with each other. so everyone's getting a coffee on me this morning. >> so he's saying he wants these guys to work things out. it's his point. >> that's his suggestion. >> i think that's good. >> the rise above. >> yeah, i hadn't thought about that. i think that's nice, that's good. >> all right. we get it. sarcasm is dripping. >> we all want that. you don't need to come in and save us, howard. >> i'm buying you a coffee. here. >> you know what is implied and you say he's assigning equal blame. >> he's contacted the white

house, contacted patty murray. it's not just about the house republicans he's been talking to. >> all right. our guest host for the next two hours is jack welch. executive chairman of the jack welch institute. you were at the old mother ship for how long at ge? >> 40 years. >> not everyone knows your legacy there because they're new. people are aging, dropping out of our key demo and other younger people are moving into our key demo. what was revenue when you started at ge? >> $25 billion. >> and when you left? >> $130 billion. >> so that was good. >> you were only ceo for -- >> 20 years. >> the stock when you took over was adjusted at a buck, wasn't it? >> it went up 4,000%. >> oh, but who's counting? >> i'm guessing. i'm winging it. >> was it 4,000%?

>> 4,007, or something. >> so i made the point with john harwood, our guy earlier that we do these polls and the they're as good as you can get in terms of the quality of the poll. but the question that you're asking people, i think it has more to do with maybe they don't like the method to what they're doing. but i think you could get a more even split if you ask people, do you want the government growing more and taxing more and spending more? or do you want to actually, you know, start getting our house in order. i think you get a much more even split if you ask that. maybe the republicans went about it wrong, but don't you think most of the country wants us to get our house in order? >> of course you do. but these polls end up being who's the best marketing manager. they can't market anything. they come out of the white house and make a statement that's

nothing and then harry comes out and takes the stage for a while and talks about all the bad things they did. it's crazy. we've got the worst marketing in the republican party you can imagine. >> looked like a trap, didn't it, that the white house set for these guys? >> i think they put themselves in there. >> they put themselves in these things. >> but they loved it. >> negotiation 101. you sit across the table. first of all, you put yourself on the other side of the table and say -- what can they do, what can't they do. you get the lay of the land. the second thing you do is make an offer that they will accept some in that range, and you'd be willing to take. and the third thing you want to do in a negotiation, you want to end up as you walk out the door with a win/win. now, both sides went down the wrong path. the republicans take on the president's signature bill and they say de-fund it.

by definition, that's not sitting across the table and saying what will they take? and can we work with that? and then the republicans, the president says i will not negotiate. that's not a position that the other side can accept either. so you've got two guys breaking the basic rules of negotiation. and then you end up with the president -- he changed 15 regulations at least from the time it was law. so this is law. law is enforced bill regulation. and he changed the employer mandate, put congress in. did that whole series of things. so he says i won't negotiate. one side changes the law as it was approved, the other side sits there like -- >> like. >> i mean, there are so many ways that this could have been marketed. the -- >> which part? >> the republicans could've marketed the president's

behavior. he was able to call them right wing, nuts, terrorists. you pick the words that were used. >> right. >> they could have brought the nih victims of this thing, right to the stage, mr. president, i have funded nih and look at these children. look at them. please, mr. president, accept this. come on. you can -- he did so many -- he gave them so many chances to come back. he changed all these rules arbitrarily. because one of the big problems we have in generalness argument, the presidency has become too powerful relative to congress. that's been happening for a long period of time and it's accelerated. >> hold on -- >> you think it predates the obama administration? >> yes. it's been happening. absolutely. >> you think the president has more power now. because some would argue the reverse is taking place. >> some people are wrong. let's put it that way.

the facts are he can arbitrarily legislate around congress on clean air, change the game. change the game for carbon. with the epa, voter i.d. has been approved by the supreme court. >> right. >> so they can do it by legislation. the nlrb, all of a sudden they pop up and appoint -- >> i love -- that is the "new york times" take, though. that the president because the house has tried to stop them on anything he wants to do, suddenly the house is more powerful. that's a joke. >> you go through the things he's able to do and has done through holder, there mccarthy, through solis before. >> you say this predates the obama administration. >> i think early in the bush administration, a bit in the clinton administration. >> is that because of the growth of the regulatory agencies?

>> and the ability -- look at what the president does. the irs scandal. i don't know where he was. slaps it away. and the republicans sit there and have these hearings. >> that could be bad actors, government's not able to control bad actors too. >> but it doesn't come out that way. he slaps it away. jim clapper goes up to congress and tells them that the united states is not as safe as it used to be. try that one for size. what's the president's main job? keep the state faafety of the c. the last sequester thing, they had 48 predictions of what would happen. 11 proved out to be true. by the "washington post." >> we've got a lot more to talk about. >> come on. >> nothing's changed for executive power. executive power has always been there but you think he's wielding it. >> i don't blame him any more

than the last guy. they have said -- >> i want to continue this conversation when we come back. >> so do i. in the meantime, we're watching shares of jpmorgan, the company coming out with quarterly results. the number, the net income number was $1.42 a share. the estimate was for $1.17, but that $1.42 did not include litigation expenses or reserves. we'll get reaction from the street after this. "squawk box" will be back after a quick break. people

welcome back. jpmorgan reporting quarterly results moments ago. joining us on the "squawk" news line, the banking analyst. surprised by this, the expected and what do you make of the legal reserve issue? >> well, it was going to be interesting to see how much they could actually put away this quarter. because they didn't have a settlement in hand or at least we don't know of a settlement in hand. so they must be pretty close and must know that their estimate would let them put about $9 billion away to address this and to build reserves in expectation those settlements are near. >> so you think the reserve number is pretty much what they think the settlement must be. if it comes in higher, how does

the market react? >> doesn't mean it can't come in higher. just means this point, this is what they're comfortable with. they wouldn't be any less than this. so when you're setting up reserves, it's a minimal number, not a maximal number. they basically put away one quarters worth of earnings. relatively break even once you get past the litigation reserve they took. >> so jamie said he expects those legal costs to abate and normalize over time. we also -- i read earlier on the 6:00 hour from dick bove who said, look, long-term, this is going to have an impact on the company. that things may not normalize. not on the legal cost issue but to the extent that they were on a trajectory that you can't see my hand now but looks like it's going to the moon that things are going to become a little tougher. >> only in the sense that, you know, what we had was announcement of incremental resources they're putting in place. these large signs are tone at the top address. that the regulators are putting

on jpmorgan to make sure it's big enough that it gets their attention throughout the organization, they're putting the resources they put up, tighten up the controls, such as, a lot of these things you said earlier, these issues don't reoccur in the future. >> 20 seconds. is jamie's job in jeopardy? >> no, we've been through that battle. i think that's behind them. i think that's one of the reasons they're addressing this so aggressively. it has the confidence of the board, of the shareholders. if you look at fundamentals, they're still producing around, you know, take out all the noise, about a 15% return on tangible common equity, which is worth much more than what the stock price shows today. he's trying to clear the decks, he's taken a page out of brian moynihan's book, which is clean things up, get your fundamental reported and you'll get the benefit from it for your shareholders. >> who are you liking in the nlcs, marty? >> say that again? >> who do you like in the nlcs.

>> well, the national league, we'll have to go with the dodgers. >> okay. just wondering. >> he has a special relationship with them. >> we might have a little connection there. >> you got good seats? >> well, i'm in mississippi, so i'm quite a bit away, but we keep it up through the company. this is -- we're definitely go big blue. >> i'm worried about ole miss, by the way. >> for those who don't know guggenheim owns the dodgers. anyway, hoping for a good game. coming up, most powerful woman in banking, beth mooney joins us. "squawk box" will be right back. time now for today's aflac trivia question. virgin records founder richard branson credits his success to a career move he made 40 years ago when he signed what artist? the answer when cnbc's "squawk box" continues. on your recovery?lps you focus yo, yo, yo. aflac.

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the answer, mike oldfield. it is estimated that the wildlife economy estimates to about $144 billion annually. but the government shutdown is now threatening the beginning of hunting and fishing seasons. there are over 37 million hunters and anglers in the united states accounting for $1.5 billion in revenue. through the licenses they would normally be getting because of this government shutdown right now, 329 wildlife refugees are closed to hunting. about 270 will closed to fishing and many of these areas were under pressure already thanks to the sequester, which included a 27% cut to the budget. what does this mean to business? it means retailers who depend on the beginning of this annual season could get hit if the shutdown continues. almost $86 billion in direct hunting and fishing related sales occur each year. names like dick sporting goods, cabela could be names to watch

over the next few weeks. still to come this morning, wells fargo ready to report. we'll get the numbers at the top of the hour. but before we do, we'll meet the most powerful woman in banking, the ceo of key corp., beth mooney will be joining us. "squawk box" will be right back.

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welcome back to "squawk box" this morning. in the headlines, we've heard from jpmorgan chase, now we're going to be looking forward to wells fargo at the top of the hour at 8:00 a.m. the bank expected to earn 97 cents per share for the third quarter on revenue of nearly $21 billion. also, the ongoing government shutdown taking three reports off the economic calendar today.

prices won't come out at 8:30 eastern time nor will september inventories at 10:00 eastern. but we do have jack, so you can watch him. we're also going to see the university of michigan's preliminary october sentiment index at 9:55 eastern time. also, some more hopeful signs that the debt limit standoff will end. treasury secretary jack lew and ben bernanke told the g-20 officials last night that the debt ceiling standoff will end before the october 17th deadline. do you believe that? i don't know. that's according to russia's finance minister who attended a dinner held in conjunction with the imf world bank fall meeting that's taking place in washington. becky? our guest host today is jack welch. he's executive chairman of the jack welch institute. jack, we just mentioned all of the economic numbers we're not getting right now. we don't have a good read on things. the job numbers have been skewed from computer problems even before the shutdown. but you have a pretty good read

on what's happening in the economy just from all of the business you're involved in. can you tell us what you're seeing right now? >> in 2013, we are seeing just what we saw in 2011 and '12. we get ready for launch and then it rolls over. i mean, we had -- if you asked our ceos and a variety of companies i'm involved with, what second half of the year would look like in may. they were all on ward and upward. thought it was really going. at the end of june, in the middle of june, it started to roll. and we had every business i'm associated with still growing, but at a -- they all will miss their third quarter. and things have really sort of flattened out. and we seem to lose momentum every year in one of these quarters. it's the second quarter in '11, the fourth quarter in '12. and now looks like the second

quarter in '13. so we never take off in this recovery. >> what happened? a lot of times we talk about and blame washington, blame uncertainty. is it that or something else? >> you know, it's tough to really pinpoint. when we look at what -- at what's going to happen going forward, ed lezier had a great piece where he talked about unemployment. in terms of a number of people working age that are employed. we really have now 58% of the people of working age employed. we've had a tradition of 63 or above. so you can talk about that silly unemployment rate, which you and i have had debates on over the past. that isn't the measure of what the economic activity in the country is. it's 58% of the people of working age are now working. it used to be 63 before the recession. we haven't gotten millions of

people back to work. and the other thing that's happening is we used to have churn. people used to be thrown out, fired, they used to be downsized because the company had troubles. or they quit. no one's quitting these days. we're down 30% a year in churn. so no one's leaving. as a result, no one's coming. we're down 30% in churn. people are hanging on to their jobs, they're afraid to go -- >> businesses you're associated with -- >> no, in the country. >> oh. >> i want to go back to politics for one second if i could. >> yeah. >> which is you're republican and traditionally the business community has been focused on the republicans, has been considered republican. there's a number of people who have come out in the past couple of days given what's going on in washington and said that the republican party has moved away from the business community. this is the head of the nfib who says there clearly are people in the republican party whom in the

business community and interest of the business community, the jobs and numbers they represent don't seem to be their priority, don't really care what the nfib thinks, chamber thinks, probably don't care what the round table thinks. >> we saw it. >> you saw it. >> i saw it, read it, got it. >> i want to know from somebody who cast his lot with the republican party whether you think that's accurate. and by the way, there's other people, lobbyists for the retail federation, same thing, the ideological brand of conservatism. >> they jumped over to the obama side. >> i don't think they are jumping over to the obama side. i'm trying to understand what you think is going on here. >> not much. not much. i hang out with these guys all the time and i don't see -- they're so irritated over aca. i don't see any -- >> suddenly they think higher taxes regulates, they think that's all the answer now. most of these. >> joe, do you think democrats

are jumping away, the moderate democrats over the aclu? >> no, we talked about since 6:00 hour. i don't think the democrats are becoming republicans so quickly and i don't think the republicans are becoming democrats so quickly. but there may be some people in the middle that move. i don't know. and i just don't know where parts of the business community are when it comes to -- >> i'm in the middle and i'm not moving and there are a lot of people in my crowd. i just don't -- i see this as more fear tactics. >> does it change the dynamic, though, in terms of the way the chamber, the business round table, the others in terms of donations, in terms of who they support, in terms of how that works? >> do you think it's the most anti-business president -- and this isn't fresh in your mind? >> when you sit around the table. >> with regulations, epa, keystone, all the stuff suddenly you think the way this debt

ceiling negotiation has gone and they're deciding to abandon the core principles of private sector? >> no, i don't think that. but i think there are some people among the business community that look at what's taken place and say -- >> it's ludicrous. >> man, i wish we weren't having this debate and we wouldn't be having this question over the debt ceiling and it was done in a different way. i think there are people in the party that say that. ceos that say that. >> well, there's no question, but they don't have any alternative. what's the alternative? negotiate with harry reid? >> there's a left brain and right brain. there's cat people and dog people. you're never going to get people to say i love big government and i think big government's the answer. >> you wouldn't argue that the republican party has split at all? and that there is an ideological split? >> there are people that want -- >> no, no, no -- you're right. >> there are people -- >> people in the business community. people that are too far right, taken it too right. >> and on the left. there's scorched earth guys on

both sides. >> i think if you look at why the republicans lost the last presidential election and the challenges they're going to have in the next one is to get through the primaries, you're going to have to run -- >> i don't know how long that lasts. >> particularly with social issues. and if you run that far right -- >> i agree. >> and the tea party was spawned by the way the aca was passed. that's what got all these guys energized was when not a single republican vote came when controlling 17%. >> you're right theoretically. but the facts are, running companies, and not one of them is going to pull the lever differently than they were before. >> i agree. but i question that the money gets steered back so you think there's a right that's gone too right that somehow the money gets steered towards people who are going to try to bring the party back closer to the middle. you think that's happening. >> you don't think there's been a migration from business leaders that supported obama the first time around? the migration has been one way.

it's been that way it hasn't been that way. how many of you know that are still saying, wow, i'm glad i did that. >> there are business leaders who had supported obama who are now supporting republicans. i'm just saying at the same time, there seems to be another debate going on within the republican party where there seems to be a pushback. and i'm just sort of -- >> no one likes the way right and no one likes the way left. but this is a way overstated right-hand column, front page propaganda. that's what that is. that's scaring people. that's just trying to get them -- >> what was your point? >> that's putting out something on the right-hand side. >> it's the "new york times," you're saying things we already know. but back to the 58%. >> i know. >> but back to the 58%. corporations have learned how to make the same amount of money with fewer people. and technology has a allowed them to do it. and globalization overseas.

and i can think of a lot of other things that have happened for why we're at 58% that might not have to do with regulation and government -- >> do those jobs come back? >> yeah, are they gone and is it nobody's fault they're gone because of technology and globalization? >> no, if you -- we're running at 1.7 time gdp. that's not going to -- if we get a 3.5% to 4% gdp growth, a lot of this discussion will go away. >> right. >> and we do it through energy which is what you've talked about before. >> through energy, absolutely. let me go back to another point, which i think is -- when you sit around a table and you listen to the costs of obama care in terms of the 26-year-old issue, it ranges from $2 million to $7 million a company. when they take that, what do you think they do to get the $2 million to $7 million back?

they look at layoffs, cuts, et cetera. so when you have these costs going, there are consequences. obama care is just another cost. so now how do you deal with that cost? >> right. you deal with it through ways of attrition and productivity that you look for. so the people that -- that 30-hour week thing, that just cost people jobs. there's an op-ed piece and there's a piece in the journal today from a gentleman that runs a restaurant on cke or something. and he's right on the button. temporary workers were added in the first half of the year because people didn't want that cost. >> right. >> if you're a ceo, you're not thinking politics, you're thinking, damn, i got hit with $7 million. how do i make it up? and who gets hurt? the workforce. >> okay. that article should have been brought up. you should've brought that up yesterday. it was yesterday's article. >> it was yesterday's article. but -- we didn't have jack here. >> but -- okay.

>> all right. >> it's a once and for all -- >> but translate that to the actual sitting around the table, which i did this week and watch guy after guy tell you the cost increase that he's incurring. >> right. >> because of the 26-year-old issue. and what are they going to do? they're going to -- you see it every day. spouses are being pushed off of coverage. >> all right. >> you see all of these things that impact workforces. >> so once and for all, all your guys, your 20 guys, are they not jumping over to deblasio because of this? they're not going into the fund -- >> are you sure? >> he's going to have to leave. >> they're not going to deblasios? >> most of them don't live in new york. >> all right. wanted to one more time find out. >> we will continue the conversation with jack welch, but up next, beth mooney, among the most powerful women in banking. we'll speak to her next about

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jpmorgan chase reporting earlier, earning $1.40, $1.42. and jamie dimon saying the bank continues to seek a fair and reasonable settlement with the government. up next, wells fargo, they're expected to report at the top of the hour. we'll have those numbers and the reaction when they hit. we should get a better look, maybe, at all things housing related with wells fargo. >> yeah, 30% of the mortgage market. >> yep. american banker is out with the list of the 25 most powerful women in banking. awarding our next guest the top honors. beth mooney is the chairman and ceo of keycorp., and thanks for joining us this morning. >> good morning. we had the celebration last night at the waldorf astoria, it was a big night. >> does it make it difficult to do your job in the spotlight like this and being pointed out? or is it business as usual? >> it's business as usual but i think it's good for women in our industry as well as business to

see the american banker honoring the 75 most influential women in our industry and gives a lot of determination to those coming behind us to work hard and aspire for things. >> i've been watching your stock price and it's done incredibly well, up over 40% over the last year or so. what is happening in the industry right now? finding new revenue, is that the biggest challenge? >> well, it's a balance of two things. i was listening to your commentary earlier and i was going to agree with jack, this is an economy that feels like it's stuck in second gear. and so it's really a combination of you have to find new revenues as well as really work on your efficiency. so it's a two levers all the time. how do you grow? how do you get more revenue and what can you do to bring down your cost? because the bottom line needs both at this point in time. there's no tail wind in this economy. >> what -- why do you think that is? jack was just kind of pondering what he thinks is happening in the economy. what happens from your perch as a bank where you're making loans and bringing in assets? >> well, what we're seeing is continued caution among our

business clients. i think it was well put when you said that every year people have a much greater expectation for growth and than they end up ending the year with. and our clients would echo they're putting their thoughts into 2014 now. so borrowing for expansion is less but our clients are doing well. they're highly liquid. american business is very profitable. but it is still a very muted economy. so we do not see a lot of demand in what you do see. banks are highly competitive for the good assets, good loans and good customers. you have to grow your own capabiliti capabilities, grow your revenue and invest in being productive. >> what do you think about the nomination of janet yellen to head the federal reserve? if she is as dovish as some people have expected, what does that mean for your business? >> well, i think it's going to be a continuation of the fed policy. she's obviously been part of the dialogue, part of the debate and part of the decision making of the fed. i see it as a consistency a

policy coming out of the federal reserve. i think from -- she was an unspoken hero as the most powerful central banker she will become and. and as vice chair, i think it indicates a desire to keep consistency and policy. >> what did you think of the policy? >> i think it had been very accommodative to support markets and growth. >> has it worked? >> i always say, how can you prove the alternative? >> like, do you -- do you worry about the exit? if rates were to go up a point on the long end, we know how many own those bonds and we know it's $2.3 trillion globally. is it going to be a messy exit strategy? or was it all going to be okay and it was worth it? >> chairman bernanke says there's an accent. and very soon if you ask me to speculate, that's all i would be doing, that we're going to start tapering. i think there's pressure on the long end of the curve already. you can see some desire for long

rates to go up. and i'm not sure a sustained low interest rate environment is what this economy needs anymore. i do think there is a quality and a strength into this economy that just falls short of true growth. but it is strong. i don't see the downside risks in the economy that i would have seen in the prior years. >> no inflation -- with no inflation, do you do it? >> joe, if you think about janet yellen. he's talking about -- she has over the years talked about jobs more than inflation or anything else. if she believes in jobs, she's not looking -- and bernanke has commented on this. you're not looking at the unemployment rate. looking at 58% of the people working and it's down from 63%. that's where they're going to measure against. i would argue that the tapering is likely to be later than earlier. if you think of where we are today with her appointment and focus on jobs and the 58% of the working force. that working force working,

you've got to believe you're more likely to be later than earlier. >> i would agree with jack. on that point, if you're going to use the primary metric being jobs related, there's nothing in the data that would suggest it's time to start tapering. i don't know how they balance that with the underlying strength of the economy even though, like i said, stop on second gear. it is true as we talk to our business clients, we are not hearing people talking about hiring. >> you think -- oh, go ahead. >> no, i was going to say quick question, which is, you know, we just at jpmorgan's earnings, we just had wells, you're a smaller bank than some of those. do you have different views on too big to fail than they do? >> we're certainly in a different size group. but i will tell you, we are a regional bank. the way i look at it is banking is an ecosystem and i think part of the financial industry in this country and part of our global distinctiveness is to have this wide array of banks meeting different needs, having capabilities.

>> you don't think you're at a competitive disadvantage? >> i don't think that's healthy for the ecosystem but i also like being a mid-sized regional bank because i think it is a very nimble and competitive position. >> we shouldn't sell short, though, $88 billion in assets. so, beth, thank you very much for coming in. >> thank you. >> appreciate it. >> congratulations. when we come back, he's ripped up the government's credit card on the floor of the senate. what's his plan to get the country back on the fiscal road to success? we'll talk to senator tom coburn in the next hour. "squawk box" will be right back. with the government in shutdown mode, we wanted to book a guest with negotiations. we called darrell from "the living dead." it was a no-brainer.

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coming up, republican senator tom coburn of oklahoma. "squawk" coming right back. at farmers, we make you smarter about insurance.

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that's a trend we can all get behind. the presidency has become too powerful relative to congress. >> one more hour with jack welch. plus -- >> i think i'll just tear it up. it's time we quit borrowing money. >> senator tom coburn says the u.s. will not default on its debt. he'll join us at 8:30. after his last "squawk box" interview, paul krugman called us zombies. >> let's do it. >> well, we called in an expert. >> there's go to be a way.

>> darrell dixon from "the walking dead" will join us onset. earnings alert, wells fargo reporting we're going to dig through the report with an analyst. the third hour of "squawk box" starts right now. >> welcome back to "squawk box" here on cnbc first in business worldwide. i'm andrew ross sorkin. our guest host all morning, jack welch, and we've been having a lot of fun together this morning. we are waiting, i should say, for wells fargo to report its earnings that usually comes around 8:00 eastern time. and it is out right now. joe? >> oh, oh. well, i didn't want you to come to me. yeah, i'm just telling you it is out. 99 cents a share is the number that is the first one to appear on the screen on $20.48 billion. >> better than expected. >> 97 was expected. 20.48 is -- i think they were

looking for 20.973. a lot of times the revenue number with banks can be affected like the bottom line number which sometimes makes it hard to do apples to apples comparisons. 975 million, provision for credit losses, 75 million. a noninterest expense of $12.1 billion. i haven't actually clicked into the press release yet for commentary. we'll take a quick look and see what our "squawk" friend say about all this stuff. but referring to it as continued strong results in record net income. i guess 5.6 billion was the number if you use not the per share number. that was up 13% from the year ago period. the diluted earnings is also a record. but revenue was actually down from the year ago period, down from 21.2 in the year ago period. >> some of the commentary, you

know, we've been looking at this, wells fargo has huge -- in terms of homes and mortgages packages and we've been looking for commentary they might offer to suggest whether things had been turning or not. because when interest rates spiked, we did hear a lot of commentary about how this pushed business down, especially on a quarter over quarter business. the improvement in the housing market has been beneficial to our customers and significantly contributed to our broad-based credit improvement in the quarter. doesn't say anything at all about very specifically in terms of the rates. although, the cfo tim sloan says as expected mortgage banking revenue was lower in the quarter and the recent increases in interest rates, reduce refinance volume. but offset by improved credit and lower expenses. year-over-year, strong loan growth, double digit increases. and they continue to build on the capital and return toer shareholders through buybacks and dividends. >> things look like they're

getting better. return on equity. >> the quick jump that came. >> return on equity up 69 basis points. can you -- you did at general electric, you had someone else do the actual numbers, right? you were overseeing all of the operations, but do you want to comment? is that a good number for a bank? >> you know, i think it's pretty good in this economy coming back. i think it's pretty good. >> what's the key metric you would use for a company like wells fargo would you think? nonperforming assets? >> earnings, return on assets. >> yeah, the ones we already gave. you want to know anything else? >> no. >> no, i think -- >> the stock's up. the stock's up. >> just caught it. the facts are that it did slow when the rates spike and now it's coming back a little bit. >> right. >> and it's interesting. it'll be interesting to see what they say on the call. at least in the comments in the press release, it didn't suggest that things are dangerously low or dropping below what people already anticipated.

so maybe that's good news. we'll see what they say. >> here's third quarter mortgage applications. 87 billion. a year ago, 146 billion. >> wow. >> so that -- but when we had bank of america on, at least one of the numbers. >> brian moynihan, right, a 40% decline. >> which the fed heard too. >> a lot of that had been refinancing. >> and that was one of the things we said. they got down 40% on -- even though it's been a great. you're going to have three steps forward, two steps back in the housing market. when you see 40%, it gets your attention and you don't want rates to go up too much more that quickly. we'll have much more on wells fargo still ahead and we're going to dig through the report with an analyst in a few minutes. that guy at sandler o neil partner there's other big stories. >> jpmorgan reported better than expected earnings, revenues were

roughly in line. the bank increased litigation reserves, though, jamie dimon says he expects litigation costs to abate over time. they continue to be volatile over the next several quarters. and that reserve, by the way, $9.2 billion effectively wiping out any profits for that quarter. let's get a quick check on the markets. stocks soared on hopes of a deal out of washington. this morning, to work on a deal and you can see futures at this hour are up on expectations that maybe we do get -- oh, things turned around. we were up before, now the dow is off, looks like it would open off about 10 points, nasdaq off about 8 points and the s&p 500 off marginally 1 1/2 points. >> we were up five points. >> if it was a 15-point swing in the s&p -- >> then we'd be excited. >> our guest host is jack welch. the executive chairman of the jack welch institute.

and we've been talking about the economy. we just had beth mooney on and you asked her a key question as she was leaving the set. >> a keycorp question. you asked her if she was seeing some of the midwest industries really start to roll over in terms of not being as profitable. >> and she answered affirmatively, which is exactly what i'm seeing across industrial america. now that this economy has micropockets that are absolutely -- you can't look at the overall economy. autos are good, oil related businesses are good. cities are good. boston is redoing the whole water front. and looks like construction site. the whole water front is huge. so there are pockets of activity in this economy that are strong. but you will have a gdp if i had to pick one.

but probably betting on the downside more than the upside. 1 1/2 to 2 versus 2 to 2 1/2. >> for this year? >> no, the third quarter. >> the third quarter. >> and where we come out in the fourth quarter. >> that's what i was going to say, what do you think the real economic impact of the whole situation will be in the fourth quarter and first quarter. >> it'll have a modest impact. 83% of the government's working. it hasn't had a big impact. >> you don't think it's affecting psychology whether people are going to buy, go on vacation this winter? >> try getting reservations at all of these restaurants. i was in europe. i spoke to probably 10,000 people over four days a week ago. one person, one business person asked me about this shutdown. not one. questions all day. >> because they assumed it would be resolved? >> and they do business.

>> they're asking how to deal with the democratic party at this point. >> oh, stop. >> isn't that what? oh, okay. >> these were europeans. >> they were already democrats. they didn't have to switch. there was no switching going on. >> but there's a lot of optimism. the same optimism that was here. and if you go from negative two to plus .4, it feels good. and that's what they're feeling over there. there was incredible optimism in europe. really feeling that they've got the troubles behind them to a great extent, which we have -- we felt that way in may. >> right. >> amazing. guys buying greek banks. putting money in the greek bank. did you ever think it would happen again? >> these things all have cycles. so, yes, i mean, look what happened here and everybody jumped back in. >> right. right. but, you know, greece is not -- it's a nice place but they don't have quite the ability for --

>> spain feels better. unemployment youth is still a disaster. and that's a problem for all of us. we got that here. i mean, when you have youth not getting jobs because people aren't quitting and doing other things -- >> yeah. the churn effect you talked about. >> we have our own brand of that. >> not the same numbers, but it's bad. >> it's bad. >> jack, how do we ever hit escape velocity. we keep we're on the verge of hitting stronger growth and it hasn't happened year after year. >> a government that truly comes to work. i've told you this before. that agency after agency comes to work without an attitude of get the bastards, but how do we help them grow? that will change it. you'll get epa, you'll get labor, all of these agencies working towards making this economy great versus get the bastar bastards, control them, regulate them, do this to them. that's the reality. >> the comments by exxon that

this is a morally bankrupt company and the sooner they're out -- that's the attitude. >> i mean, that is the issue. you've got an administration that frankly doesn't like business. whether you want to call -- and that's what's going to change. in the end, that comes down to the right-hand column. that's why people aren't changing. >> four years ago you said every regulation, everything done should be viewed with the -- through the prism of jobs. >> right. >> and they didn't listen. >> just the opposite. so if you get an attitude, get the bastards versus grow the economy you'll get the bastards and you won't grow the economy. >> and that's how you end up with 58% of the population, working age population. >> right. that's how you get it. that's -- we've been in the 60s for years and now we're at 58%. that is absolutely it. you can't get escape velocity from this economy. >> there's a story in the "wall

street journal" today talking about how the poverty levels are starting to level off for some. but this is still not good news. you're talking about 15% of the americans that fall below the poverty line and a rising percentage of those who fall into deep poverty. something like 6.6% of americans who fall into that deep poverty. part of this is trying to find jobs that maybe don't exist anymore. if you've lost some of the manufacturing base, you lost the higher paying jobs you can get without a college education. how do we fix that problem? >> you get it through growth, becky. all of these things go away with growth. they don't all disappear, but you get enormous momentum, attitude, excitement, et cetera. that changes the game. and instead of this cost, do you think it's good for morale? it might make a few people happy this guy's fine, that guy's fine. this guy carbon comes out. this happens. all of these regulations, do you think that makes people feel good?

might make somebody who is an activist feel good, but doesn't get the general population feeling good when their bosses have to -- when you impose a cost on business, the ceo has to go find that cost somewhere else. you've got to understand that. if a guy gets whacked and has a budget and it costs him ten, he's got to go find ten. and where does he look? over here, over here, maybe people not buying. every one of these has a consequence. the idea that you can $11 billion, $5 billion, or $2 billion. and it's no impact on employment, it's crazy. the ceo sits there with a number. he's got to meet it. he goes into other pockets of the company and who gets hurt? unfortunately, the less advantaged of all of us. >> right. we're going to continue this conversation with jack. he's our guest host for the program today.

coming up, wells fargo out with quarterly results minutes ago. up next, we'll dig through the report with an analyst at 8:30 eastern time. senator tom coburn on why he thinks we shouldn't fear the debt ceiling. and then the man of the hour. joe, where are you running to? is he here already? the star of amc's walking dead is going to join us when we come back. >> it's darrell. your representatives in congress have failed to compromise, failed to do the job you elected them to do. so we called someone who is used to dealing with deadweight. >> sorry, brother. >> coming up on "squawk box." darrell from "the walking dead" will join us onset. >> you don't owe us anything. >> don't miss it.

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welcome back to "squawk box," everybody. the futures this morning, at least at this point looking like they're just below fair value. dow futures down by 12 points, s&p off by over two points. but remember, this comes after a gain of better than 2% for the markets yesterday. so it was a pretty massive move. also, wells fargo posting third quarter earnings just moments ago joining us now on

the "squawk" news line to break down the numbers is scott. good morning, scott. >> thanks for having me. >> give us the headline from your perspective. >> yeah, couple good, couple bad as you might expect from the industry. let me start out on the good things. so first, you know, they reported 99 cents. that beats the consensus by a couple of pennies. importantly, though, that allows them to do -- they've had 15 straight quarters of re.at leas perspective, they're still finding ways to make their numbers. two, credit's still improving. that's obviously a very good thing. they released about 900 million of reserves, that's about 4 cents better than we anticipated. the credit environment continues to produce some tail wind here. and third, they're attacking the expense base. expenses down 1.5% better than we had thought and that's definitely key given the soft revenue environment. having said that, couple of things. mortgage down as you would

expect. we knew that was going to be the case. but it's just going to be a rough ride. >> more than you expected? >> no. thankfully the cfo had given some sort of telegraphed some things into our quarter. i'm looking at originations down about 30%. that's exactly in line with what they had thought. bad but not surprise. margins still under pressure, it was down about eight basis points. unfortunately, twice as much as we would've thought. i think as long as we stay in this low environment, that's going to remain a head wind. finally, a tough environment to generate core loan growth. they're generating about 2.5% analyzed loan growth which is not what you want to see at this point in a so-called recovery. >> just give us your sense of what this means for the housing market given wells' role in the housing market as an originator. >> by far the number one in the

industry. they're an excellent read through for what's going on elsewhere. you know, i think at this point, we don't have anything to suggest that credit is going to start to roll over in housing. that's a good thing. having said that, there's a rule of thumb that for about every 100 basis points, increase in mortgage rates affordability goes down by about 10%. so, you know, at a time when we're supposed to be in a recovery, higher rates at the long end of the curve aren't helping things. i don't think we're really rolling over significantly in terms of overall pricing, but we're not making any easier for people either. >> did we lose scott? scott was making a very good point. oh, you can hear him? >> we can hear him. >> i can't hear a word he's saying. >> i'm still here, guys. hopefully you can hear me. >> i'm hearing nothing. >> your battery's probably done. plug into the hard line. >> are you able to hear me now? >> we've got you, scott. it's not you, it's us. trust us.

>> scott, you're back, i can hear you. >> that's not the first time i've heard that i'm afraid. usually not a flattering comment. what can i do. but i was saying for every 100 basis points in rates, about 10%. at a time we're supposed to be improving, we're certainly not helping things i'm afraid. >> did you see their numbers this morning? >> i don't cover them. i took a brief look at the numbers as you can imagine. looks like you've got the big litigation reserve in there. jpmorgan's a bit of a unique animal in that they've been under this regulatory attack for so long. to the extent the market has perhaps some resolution here to some of those costs, it can't be a bad thing. >> scott, one of the things -- why is wells fargo stock down in the premarket? >> the issue is that -- and while they beat on a headline basis, there are going to be questions about quality. i made that comment that reserve

relief is where about $900 million. and tend not to pay a higher multiple. what they want to see is revenue growth. and in the face of this pressure on mortgage, on margins, slow loan growth, that's not something that people would necessarily consider high-quality earnings. >> right. scott, thank you for joining us. and i couldn't hear you, but you could hear the rest of us. and it really wasn't you. it really was me. >> i appreciate that, guys. thanks a lot. senator tom coburn says the united states will not default on its debt even if we pass the debt ceiling deadline in congress. and then, norman, darryl dixon. usually right among the top three with the cross bow and he's cool. he lost his brother last year. we're going to talk to him a little bit about meryl and how he's getting on without him. but meryl was kind of -- he

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the destruction of syria's chemical weapon arsenal. >> jpmorgan's stock, andrew, is called higher by 60 cents -- >> yes. >> i don't mention the names of irrelevant media entities. and there's one in particular where they will call jpmorgan an international crime syndicate. a major international crime -- and they think it's funny and cute and, you know, they're so edgy and everything. so now they're saying that by reporting the results were positive and that the stock's up so we're enablers of these capitalist pigs. these are your -- this is why i try to bring you over to the normal side of reality. the one that -- >> and i try. >> jpmorgan is an institution, the financial system is important, they provide capital for entrepreneurs and prosperity increases. it's stupid. are they communists? do you understand where does that come from? are they sandinistas?

>> i do not represent this line of thinking. >> don't be afraid to trash them just because they'll say something about you. >> i'm afraid. very afraid. >> i know, they are nasty. they're haters. >> the twittersphere is a dangerous place. >> we're not going to say who it is. but is a black board made, right? >> oh, now you're giving away clues. don't go there. >> i know. when we come back. we're going to have much more with our guest host jack welch. plus details from the jpmorgan media call. we'll be right back.

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welcome back to "squawk box" this morning. kayla tausche joins us with details from the media call that just took place. >> there's always news made on this call and especially with the legal issues hitting jpmorgan this quarter, of course, that was top of mind.

how much in total it has actually stowed pay way for legal issues. that number is $23 billion. that is a huge number and i think that's pacifying some investors who were worried that they could eventually get caught. they also said that the settlements could be up to $5.7 billion, costs and legal expenses included above that $23 billion number. but that is lower than they'd expected previously. yeah. and previously said $6.8 bill n billion. so it's a big number. they said this is a new reality but they do hope their reserves that they have to set aside each quarter will start to abate. they couldn't comment on the status of the settlements but said ultraimately the number waa board decision. there was a spicy comment in the press release about how they want to get the credit for the bear stearns and washington mutual deals. they did it at the behest of the government. it's particularly noteworthy now

they're in the middle of these talks and that's still the line he's taking. >> real quick. do you think there's going to be a true global sentiment that captures everything. the this, the that -- >> no. >> is it just going to be the mortgage piece? >> no, i think it's going to be the mortgage piece. that's why they say it's the new reality. they're going to continue having some of these issues. they say there's going to be no effect on management change. that is the first question that was asked right at the top of the call. jamie, of course gave up his chairmanship of one of the subsidiaries, they said that was in consent with regulators trying to meet some regulatory demands there. but that we shouldn't expect any other management changes. no changes to capital plans, dividends, buybacks, what have you. >> in business you define the market. what is the market? they've just defined it for the regulators. $23 billion there. sitting there going how do we get it? how do we go into the piggy bank and take the 23 out? that doesn't create jobs. back to our earlier discussion.

>> that's traditionally why the regulators ask for that number but they never make banks disclose it to the market because they know that as soon as you know what that piggy bank stands at, that's what they're going to go after. >> are you kidding me? what a party this is going to be. we've got $23 billion to go get. who's getting it? which agency? >> last comment, i know you have to move on, but he did comment on the debt ceiling saying there's no way our country can default on his debt. that's all he said about that. >> thanks, kayla. >> i wondered what he felt about that. >> he says he doesn't want them to default on the debt? >> says the country cannot default on its debt. >> contrarian view. >> exactly. >> all right. let's get the treasury secretary, talk about jack lew testifying. our next guest argues that the debt ceiling does not even exist. joining us now with more, senator tom coburn, a member of the banking committee. senator, it's good to see you. did you watch secretary lew the other day? he went to great pains to dispel the notion there's a way of

prioritize payments. was he telling us something that's not true? or dissembling in some way? how is that different from how you see it? >> well, every federal agency can manipulate things to the advantage of the president right now. they don't want us to believe that we can handle it. it's been four years since the president's had an appropriations bill on his desk. that shows you how dysfunctional congress is, we won't pass bills. and my point is if you always raise the debt limit, there's really not a limit. and the debt limit is the one thing that will force reality on congress that we have to deal with our unfunded liabilities. >> why do we even have it? that's a good point. all we do is raise it. why even have it? >> it's always been raised. and over half the time it's been raised to -- along with something else used as leverage. so i guess the leverage does work.

but the point is, we have a debt limit out there. it's the international financial markets. and when they don't see us addressing the very real problems, the thing that's causing us to continue to have deficits, then they're going to price our securities in such a way that we can't afford them. and so what we have to do and the reason i'm kind of hard over on the debt limit is there's nothing going on right now that makes the politicians make the tough choices to prioritize things. and that's what we ought to be saying is why aren't you fixing medicare? why aren't you saving social security? why aren't you reforming medicaid in a way that makes it much more efficient and gives better access? and as you do that, why aren't you trimming the other $250 billion to $350 billion a year of pure waste and fraud and duplication. >> maybe the president hasn't done the whole cr thing. that shut down the government.

you're right, why have -- the only reason to have a debt ceiling is to -- because you're always going to -- you're never going to not raise it, but you would want to have some discussion about how to slow the rise in debt every time you get up to it again. that would be the reason. or don't have one at all. but you don't shut down a government and it is affecting some people. >> joe, i agree with you. i wasn't a proponent of that strategy. but we are where we are today. and -- but, again, i'd make -- i'd make the point that we have not sent the president regular appropriation bills in four years. >> yep. plus you had the president -- >> and harry reid hadn't put them on the floor. >> you had the president who voted against raising the debt limit in 2006. and he says, oh, it's a mistake and i wish i hadn't. okay. now the tables are turned, it was good for the goose, not good for the gander. you had him there where he had done it. but when you shout down the government, it puts everyone in -- is blame will be assigned to the republicans on that.

>> i agree with that. but i think it's irresponsible to shut down the government, one. number two, it's irresponsible not to pass appropriation bills to give our federal managers the capability. number three is it's irresponsible to let people at the end of the year waste money so they can use it or lose it syndrome here in washington which was billions in the last two days of -- $40 billion was spent because they're afraid if they didn't spend it, they wouldn't get it next year. we're out of control and i'd make one other point. you wouldn't invest in a business that had $128 trillion in unfunded liabilities and assets of $94 trillion and also a $17 trillion in actual debt. >> all right. >> and that's where we are today. >> we've got you, senator. they're calling you a denier. debt denier, i see that. it's weird, we get religious with climate change. there's deniers, heretics,

birthers, it's all so weird right now. i don't know, maybe go back and practice medicine and oklahoma might be -- i don't know. >> might be. >> you chose this life for yourself. but i appreciate it. thank you, senator. we appreciate seeing you today. >> all right. coming up, daryl from the "waugh dead" will jowalking dea. maybe the biggest guest id say we've had on "squawk box" coming up. i love having a free checked bag with my united mileageplus explorer card.

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you either know that music or you don't. amc network's kicking off the much anticipated season four, "the walking dead" this sunday night at 9:00 p.m. joining us now on this. star of amc's "walking dead." great to see both of you. both of you gentlemen. i didn't watch at the very first season because zombies -- >> you didn't? >> i didn't understand. i mean -- >> you've never -- >> i've watched repeatedly since even on the marathon days, black and white, i've seen that too. but then reading about -- you've almost changed the whole business model for dramas on tv. there was a time where the show that followed "walking dead" that talks about the episode was getting higher ratings than any other drama on any other

network. >> it has been a phenomenal. it's been one of those shows people have been passionate about for the reasons we hoped they would. we knew the core zombie fan would be engaged. it's a drama about survival. the choice you'd make if you were the last dozen people on earth. what would you do? would you stay or go? lead or follow? and i think people really sort of responded to those. >> and you would think if you were to describe the plot of the show, it's like, okay, how many episodes can you get out of that? you've got -- i think i've talked to josh about this. you've got the rights to this all yourself. you don't even share it and the comic books will go on forever. this could go on for 50 years. >> robert kirkman who created the comic book and series, they had their 100th edition of the comic book celebrating that this week at comicon. it's been a great partnership for us to have the source material but also be able to veer from it. >> i saw shane in some movie,

but norman, you don't want to get killed in this thing. >> please don't get -- >> do you know about the last show of this year? you don't, do you? >> i mean, i know a bit of a story line. but they're very good at making us wait our turn. >> are you out of the prison this year? >> we do -- he's my boss right now, i don't know what i can tell you. >> sort of carry the cross bow. >> do you have an agreement with these guys? >> i'm smiling just trying to get through. >> it's cool. >> he's phenomenal. >> he's fantastic. >> you move me when you -- you -- that was pretty good. you dug deep when you saw him his body. it was a hideous looking -- >> i'm going, oh, this day's going to be hard. and, you know, we love -- the cast are such good friends with each other. we are a big family. >> don't get too attached to anyone. >> you do, though. you do, though, you get attached to these people and we shoot down in georgia in our own little bubble and we're very

fond of each other. so when one person dies on the show, one character dies -- >> actually, if you don't shoot them in the head, they live forever anyway. >> just have a bunch of pets. >> right. like the governor's daughter. uh. >> i want to know what you think of the role of netflix. >> sure. >> the success of many programs on your own network. >> sure. >> vince gilligan said the large success was because people caught up on netflix. i think some people for the first season of your show caught up on netflix. "madmen," huge. >> you watched our marathon, watched the black and white versions. they've been a great partner of ours, but it's one of many ways we try to get people back to the water cooler event. someone earlier on the show talked about ecosystem in finance we talk about ecosystem in television where we say the live water cooler event is still the moment. but then after that, you really start your own engine to go -- all right.

how do we get the marathons to work? vod on our cable partners to work? >> you had a marathon last night. is that all leading up to the premiere? >> every episode airing, we did the same with breaking bad. it's been a great success story and netflix is one part, but our partners starting with itunes the next day. >> what does that say about vod and binge viewing and the success you think the netflix or amazons will or will not have where they're not dependent on sort of a live sunday night where everybody has to watch. >> well, i think, you know, something about even the word water cooler. that live sunday night still works. these guys put together the highest rated show in television and people are showing up -- >> on cable. you know, black and white, you know, casablanca. i said, amc, are you kidding me? "madm "madmen," "breaking bad." >> there are more than just your

little community in this post apocalypse world. you should be doing another -- there is going to be another show, right? >> we have a companion series in development and it's just that. and we get the question, that's what's happening there, what's going on elsewhere. >> atlanta i know is the epicenter. but you -- are you totally happy with what's happened? you're an artist, did you want the notoriety. did you want to be somebody in a zombie tv show that became so famous you can't go get a starbucks? >> i mean, it's definitely my favorite show i've been on so far. and the thing with television, too, you have -- we've had four years to develop these characters and tell these stories. so the writers know our characters so well and the actors know the characters so well. sometimes if you have that much time, you can weave your way around and drop these little seeds as you're doing it and sometimes they turn into trees and story lines and it's very fulfilling. >> the one word or one line -- fear the -- fight the dead, fear the living. that sums it up there.

you've got to worry about the zombi zombies, they're always around but it's the living that are -- >> well, the walking dead, if you read robert kirkman, the forward to his comic book compendium talks about how it's not a story about zombies, it's about survival and it's about, again, choices you would make that are so, you know, at the core. what would you do if you were the last person on earth? what would you do to fight for your family? would you observe the laws that were the laws? and are they still the laws? >> absolutely. >> how do you come up with another act? i would say a second act. you've had so many already. what do you follow this up with? >> this is thriving and we're excited for this. and mad men comes on right after it, but we have a development slate that goes 52 weeks a year. we have new shows next year. >> what's the show about the software guy? >> sure, yeah. there's a show that's coming next year called "catch fire." >> entrepreneur, silicon -- >> this is -- i think it will be. >> walking dead might not be. >> can it have the draw that

zombies does? >> i think that's the goal always. we set out to create pop cultural relevance with everything that we do. you know, one of the things i'm most proud of besides the fact that the walking dead is so successful is it can live on the same network that has but all with the through line of quality. that's the goal. >> you're an artist. you do photography. you could have foreseen a life where you just have galleries and people see your work, right? was this a means to an end? this wasn't the end you were thinking of? >> i remember reading the pilot. it was so different and it was -- i knew it would be great. to tell you the truth, i watched amc shows pretty much only before i was on amc. it's true. it had such heart, this story. like charlie was saying, everyone's clock is ticking and it's your two feet on the ground and what are you going to fight for and who are you going to fight against? it sucked me in.

>> you really changed. >> did you know darrell was going to be -- other than rick, you're probably the guy now. i don't know what happens to carl in all this. >> i don't know. darrell sort of has a different story line. he was destined to become his brother. i didn't want to say racist things and take drugs and do the things my brother did. i sort of tried to play him where i was embarrassed of what happened growing up. this opened up a new zone where there's a sense of worth. >> "world war z", the whole genre is on fire right now. you know what, if there's ever an activity that kills our grid for about a year and a half, i don't want to be standing there in my house like with a spear when everybody else has got -- >> cross bows. >> and i'm also getting a

generator that's not as loud. >> why are you able to get some of these dramas that some networks can't? i won't say that about nbc. >> you just did. you're blacklisted. >> nbc had a great couple weeks. we all develop with one goal in mind, which is to create great television. in any -- >> do you think the bar is different? >> we're certainly in a different business on the cable side than the broadcast side. by definition they're trying to be broad. we're trying to serve certain target audiences. >> great having you. other than bicycle zombie or well zombie, you are the number one pick for someone to -- bicycle girl, if we could have had her just dragging her with her arms or something. we have the action figure. >> i'm ready for talking dead,

my friend. >> if i do "talking dead," will you come on? >> and if the world goes down, i'm coming to your house with the generator. >> i was implying. i registered, took me nine months, i'm prepared. >> i'm just going to call sol. >> there you go. >> excellent. >> thanks, guys. >> is this good enough for amc for you guys? >> our guest host all morning has been jack welch. up next, who will be the next ceo of microsoft when we return.

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let's get back to our guest host for the last word, jack welch. we didn't get to a few issues today. one of the them is the microsoft succession story. one of the thoughts i liked was mulally. do you have any thoughts about who could step in? >> without question i don't know the inside candidates but i think if they had one, with the exception of the guy that was running nokia -- >> elan? >> yeah. they would have announced it when steve made his decision, i would think, a normal transition, steve's leaving, his, mr. x.

i love alan, i know him at boeing, i know him from ford, he's done a hell of a job, he's a great guy. i happen to think there's a better guy. >> who? >> sam panasano. he's 62 years old. 60 is the new 50 so i tell him he's 52 years old. he's coming from a hardware company. he knows the industry in his toes. >> you think he'd take the job? >> that's another question. but if i were the microsoft board, i'd back a truck up to his house, a brinks truck, and i'd say pick out what you need here out of the brinks truck and come and take this job. sam is a great leader, probably one of the best leaders by far in the last decade. he knows the industry. people like him and respect him. he did the bloomberg research.

>> review? >> yup. >> he's just a great guy and he knows the industry in his fingertips. he knows big data and all that stuff. >> but you're probably talking about someone who is more of a restructuring person than a visionary. >>. >> no, he grew the hell out of the place. >> but lou was the guy who was the visionary behind? >> no, he was there as a lieutenant. he knows that, he's been through there. the last then years he's been ceo growing that company in the toughest market there is. he could have been a lumbering old, big server company and instead he's turned into a nimble company with a great market valuation. you asked me who i would pick. there are other people i'm sure and there may be internal candidates i don't know about. the question is going to be who is going to take it with the two guys staying on the boar, td.

two ceos on the board. >> you think they both should be off? >> no. i don't think think bill should be off. >> i learned from my predecessor. he gave me the keys and said go get it. i did the same thing. >> ballmer is still one of the largest shareholders. he owns 4%. >> that's a different situation, you have a founder. it will definitely have an impact on the attractiveness of the job, to an outside candidate. >> what about the idea of gates himself coming back? >> i don't know but i think he's so involved doing good work with his foundation that i can't see him back. i don't know, though. i have no personal information. and the inside candidate will be thrilled to get the job with bill and steve still there.

an outside person -- >> you don't want some young gun, a 20, 30-year-old, even a mark andreesen type, visionary. >> sam has done a hell of a job taking this company, he's strong in big, big data, the word "cloud" doesn't scare him. >> jack, thank you so much for coming in. that does it for us today. right now it's time for "squawk on the street." ♪ ♪ good morning and welcome to "squawk on the street." i'm david faber with kelly evans and scott wapner. we're live from the new york strange. carl quintanilla and david faber off today. we are opening with potentially a lowpe