after yesterday's talks. >> it's safe to say we've made substantial progress. >> we're doing our best to make everybody happy, but everyone knows we're not going to be able to do that. everybody, understand we're doing the very best we can with all the frailties that we have as people and legislators. >> the deal under discussion would end the shutdown and reopen the government through the middle of january. negotiations are focusing on raising the debt ceiling through mid january. of course, this is only the senate. the house would still have to sign on, too. we'll have more from john harwood in just a few minutes. stock hes ending a volatile session yesterday with small gains. the futures are morning are up indicated by 22 points. the bond market reopens today after columbus day, the holiday. "the wall street journal" looks at an important trend taking place in the market. investors who are worried about debt in washington, they've been unloading billions of dollars of u.s. treasuries. the banks have reduced their holdings, trimming short on term government debt by 50% in the

last two weeks. the yields on debt that comes due in one month have risen to levels higher than yields for maturity that's don't secure for six months. that's a big deal because normally an issuer would pay to borrow for longer periods of time. the institutions want to avoid being stuck with debt in the event of a default. citigroup has told clients it would rather not take treasuries on october 24th as a sign of collateral. andrew, this a sign your money is no good here. >> we've got more on the situation in washington in just a few minutes. i don't know if people are going to be taking paengz or not, but i think we should see a number of companies set to post quarterly results for today. before the bell, we'll hear from the follow. citigroup, coca-cola and johnson and johnson. intel and yahoo! are among the other we will be hearing from. burberry's ceo is leaving the

british fashion house to move to, guess where? apple. angela ahrendts is going to take up a newly created position at apple with oversight of retail and online stores. she's going report directly to ceo tim cook. blackberry opening to publishers, appearing in major publications around the world today. the letter tries to reassure customers saying in art, there are no doubt challenges times for us and we don't underestimate the situation. but we should continue to count on blackberry. blackberry is, of course, considering a sale or break-up of its operations. joe. >> what does that mean? i mean, continue to count my blackberry still working? >> and you should be very happy about that.

>> let's check on markets. a one-month bill? if you really want to look at the -- what we've seen, the effect of the worry, let's look at the effect on the one month or the three month. billions? when you're talking billions, you know, the short-term funding that goes on around the world, billions is a big number, but the global flow of funds and what's in one month and -- >> if you haven't seen the panic in the two year, you -- >> i think if it was a real worry about, you know, a default, i think people would be selling and the chinese would be uncomfortable in the ten year and the 30 year, etcetera. >> as the headline pointed out, even the six month has not seen any panic. >> this is a technical thing.

maybe there's near term, maybe there's something that happens -- >> but you wonder what happens. if you go past thursday and later you wonder -- >> we saw the 2ekal reasons for the money market funds. >> i think the markets went up thursday, friday, and it's indicated up higher today. >> all on the assumption that we get a deal by thursday or friday or through next week. >> and the actual day is not the 17th, it's probably the 1st. >> i would beg to differ and suggest that actually next monday is the day when the markets -- >> what happens next monday? >> there's apparently a couple of payments that they start having to make next monday where things could get choppy. we're going to talk to harwood and see what he thinks. do you get the house today? i doubt you get the house today. do you get them tomorrow? probably not.

so you get the senate done. >> boehner's name is not going to be on the default. i think he'd let a vote go. >> but i guess the question is when does he do this? >> he would let it go to vote. >> but i wonder, would he do that by thursday? would that be something that it took until friday or monday to actually do? >> these guys look askance over at the house. he hear them talking, they're collegial, they remind me of the guys like delta tarr. what was his name? >> i'm not going to give them a hard time. >> no, just hold off for a second. do you remember the guy database have you seen "animal house"? the guy who -- >> yes. >> and then you've got the house. delta house. are they not delta house? belushi, food fights -- >> but they're the fun ones. >> but they're insane, but swinging from the chandeliers

and then the -- >> that is really good. of course, the senate is thank you, sir, may i have another. in they have those dark rituals where they're getting slapped and -- who knows what's going on there. but there's toga parties going on over at kai omega? sorry, omega beta -- i don't want to do any actual fraternities. but they talk about how collegial they are in the senate. >> yesterday, bob corker did tell us he got a little heated, actually almost rose out of the chair with ted cruz. >> and then he stopped himself. >> but that is heated. >> that is heated for the senate. whew, wow, settle down, big fella. whereas over there, it's like mixed martial arts or mud wrestling naked. are you into mud wrestling?

>> no. but it's the big two year, six year difference. you represent an entire state when you're the senate. when you're a congressman, you're a small -- >> it's like the house of lords versus the house of commons. these guys are commoners, are they not? so i can blame the house if we end up in the beltway? >> it's the house's fault, trust me. and you will be down in the beltway. >> i'm leaving after the show to go to washington. >> oh, yeah, you're going to be down there. you recognize if we go to the 17th, i won't be going to a bengals day, right? >> god, i've got jim nance saying bengals, you say bengals. bengal tigers. bengal button. mean wile, the last point i will make, does goal look to you like there's a lot of stuff going?

>> no. nobody cares. >> 1255. do you see that thing on the left? we are slowly approaching -- if it goes through that, do you see that number at the very bottom? we're going to have to move that down below 1,000. we're going to have to put 900 on the chart, perhaps one of these days. anyway, time for the global markets report. ross westgate is standing by in london. whenever i come can in, ross. god bless you. i love "worldwide exchange" and everything. but you get some squirrelly looking guys from time to time. >> what? injury going to snut the guests? >> no. but i look at them. we don't have -- the hair is different. just everything -- have you ever noticed you guys get some unique looking people coming in there for -- >> there's no way he can answer that. >> it makes him look good. >> i think unique is a good thing. a lot of the guests in the last hour are american, as well. >> i just assumed. i don't have the volume up normally. and i go, look at this guy.

the big weird ties and the english -- i just think in general you get some interesting, quirky looking eccentric looking guests over there, right? >> that is the world, joe. that is the world and that's title of the show. >> yeah, you're right. >> there you go. that's what we do. >> quirky "worldwide exchange." >> becky is right. i can't really comment any more than that. thanks for that. let me show you where we are with the debt debate going on in washington, d.c. equities are firmer here in euro europe, around 8 to 2. we're not quite at the session high. we hit that around 30 minutes or so ago. up 20 points, up another 50 this morning. 0.75% higher for the xetra dax and the ftse 100. cac 40 up 0.6% and the ftse mib is flat. utilities are the weakest along with industrials.

here is one we want to point out. basic resources up 2%. rio tinto, the world's biggest iron ore producers coming out and ramping up production, fairly bullish. this comes on the back of figures yesterday which show record iron ore imports. things are looking much better for the remaining diversified giants than they were a year ago. basic resources have been the underperform underperformer. take a look at the individual stocks in focus today. it's all about burberry, 4.73%. angela ahrendts is leaving burberry. guess where she's going? over to apple. apple stock up up 1.3%. basically, she's going to be the head of apple's retail. the last time she spoke to us in september she was very bullish about digitalzation of burberry products for things like the apple iphone 5s, as well. that's where these going.

taking over at burberry will be the current chief creative officer chris bailey. he's been there for around six years. there we go. will she do similar things for apple? that's what we'll have to look at. right now, investors believe there is a temporary solution on the table in washington and that's pushing assets prices higher. >> let's get back to that washington story and to john harwood. john, it looks like things are starting to take shape in the senate. when do you think we might see it? >> i think we'll see it today. the way it was taking shape last evening when they brock and decided mitch mcconnell was going to talk to his this morning you would have a continuing resolution through the middle of january. that was shorter than democrats wanted because they want to be

able to in the budget talks negotiate higher spending levels. republicans have been asking for a longer cr. on the debt limit, you would have that go through february the 7th. that is shorter than democrats wanted, but republicans wanted it short to keep the pressure on for a deal. the medical device tax would shed some on the right and republicans wanted to repeal as a sort of stop to the effort to stop obama care. that is no is in the discussions. they were talking about last night income verification steps that republicans had asked for. paired with a delay in a tax that labor unions don't like called the re-insurance tax. both of those are relatively minor provisions designed to give something to they needed something for having pushed this as far as they did. so it was looking pretty promising, both mcconnell and reid were confident that they

could move this with their numbers. i think the odds are going good that they will pass in the senate today or tomorrow. 1234 some say i don't think mitch mcconnell will send us something that we can't and get a good number of republicans. we'll see what happens. >> i guess the issue is how many republicans you actually get. is there going to be something that will be carried by the republicans or will the democrats have to agree, too? >> will it be a small number? i don't know how to forecast that. i do think most republicans want to bleeding to stop. they want this crisis to be

over. but, remember, that ted cruz and the members of the tea party faction kind of overran their leaders in the first place. the leaders never wanted to go down this road. and so i think it is -- you have to assign some uncertainty to that outcome. >> the other question, john, is an extension like that is not an incredibly long extension when you start thinking about the holiday time that popped up between now and then. is there the sense that there will be very real talks coming up with a proposal that could then be acceptable just a few months down the road? >> yes. they're talking about having a budget conference that could conclude by mid-december. and the aim of that conference would be to alleviate parts of the sequester, which members of both parties don't like and they feel it's pinched too hard and replace those with entitlement cuts. and the question is is that a small deal or a big deal? if it's a small deal, it might

be able to be done without any additional tax revenue, which is obviously a problem for republicans. if it's a big deal, a more ambitious thing that has more savings out of social security, democrats would insist on tax revenue. is that possible in this environment? it hasn't been in the past. don't know about this one. >> is it going to be a deal that gets done by thursday or is this something that you think gets pushed past thursday and into this weekend? >> i would bet that it is done by thursday and john boehner will put it on the floor and pass it. you don't know how much the speaker and the house is going to be influenced and moved by objections from the right if those come. >> okay. john, thank you. we will continue to check in on this and thank you for keeping us up to date. >> if it's done, you know it's done, then i don't see why he's down there. >> i don't think he knows.

>> you know where i stand on that. >> you don't want to go. >> i don't want to go, but i think we are going and, therefore, i'm not going to the football game. >> he wanted to go to -- you'd rather go to washington than the football game. >> which football game are you going to? >> that was the bet that he and harwood made. >> it's the bet. >> he's trying to make you say it. >> i'm not going to. >> coming up, amazon is steaming up with procter & gamble. we're going to tell you why competitor res upset about that. the dodgers beat the st. louis cardinals, 3-0. cards lead the nfc at 2 games to 1. monday, the san diego chargers didn't allow a touchdown in a win over the indianapolis colts. the chargers improved to 3-3 and the colts dropped to 4 -2. but first, it is now time for the national forecast with the weather channel's alex wallace. good morning. >> good morning. and the big weathermaker here this morning is here across the midwest. the northern plains up in the west is our storm system.

to the east, wet weather. it's a bit of a soggy one for us, duluth into minunesota. snow in the western portions of south dakota. a little wintry weather to deal with this morning there. that will be generally what we find for the day for our forecast. snowy here on the wes side. then rain showers and storms moving through the western great lakes and the ohio river valley. that will all head east. so for tomorrow, interior northeast, buffalo, you'll see rain. those are showery conditions across the western portions of the great lakes. now, behind all of this mess, we have temperatures dropping quite a bit. through the midweek highs, it will be 10 to 20 degrees below average. denver, 22 degrees below average. temperatures stuck in the 40s. so those coats and jackets, they are coming out. that's your national weather forecast. more "squawk box" coming up next. [ man ] on december 17, 1903,

the wright brothers became the first in flight. [ goodall ] i think the most amazing thing is how like us these chimpanzees are. [ laughing ] [ woman ] can you hear me? and you hear your voice? oh, it's exciting! [ man ] touchdown confirmed. we're safe on mars. [ cheers and applause ] ♪ hi.

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time now for the executive edge. amazon is setting up shop inside warehouses of some of its key suppliers like procter & gamble.

it's all part of amazon's push into everyday products like diapers, shampoos as it tries to stay ahead of warehouses and groceriers. better compete on price and cut the time that it takes to get the items to customers. as for the other players in this deal, p&g benefits because it saves on the transportation costs it would have incurred sending the products to amazon's regional distribution centers. guys, the grocers out there are up in arms. but this is a good partnership if you are amazon. >> i would hate this if i was anybody but amazon. >> i can't think there's anything wrong about this. >> i don't think so, either. walmart is not there. >> it's a partnership. hey, it's a partnership. >> and kroger is not there. and amazon is there fist. and think how slim they can sell it so cheaply. but p&g benefits, amazon benefits. >> right. i was trying to figure out what the complaints would be, but i don't think you can come up with an argument.

>> the question becomes the following, however. if walmart calls up p&g and says we want space, and if kroger calls up and says, we want space -- >> but you know what? the only people who are going to get that would be walmart. walmart is the only other player that has that. internet sales are growing so rapidly, that's one of the advantages you get. >> gets to you faster, your toilet paper gets to you faster. >> you use them for everything, don't you? >> we use them for everything. prime, right? >> it used to be if you were amazon prime, you could order anytime at any time and it would come and you didn't have to care about the shipping price at all. you could order batteries or a toothbrush and you wouldn't pay attention to shipping. they did something in the past more on two where they've changed the policy. >> if i'm an amazon shareholder i would say yeah, bravo. >> some of the smaller items, they have an add on product. so now it will only ship when it

ships with the next thing that you get. >> that makes sense. that's a smarter way of operating. >> because they had to be losing money on prime. >> you told me two years ago they had to be losing their shirt on you. >> had to be. >> i think we need to run the days off. >> you know, walmart doesn't think this is very funny, i don't think. >> what do you think he thinks about that? >> walmart doesn't think this is very funny, jeff. >> there we go. he's listening from afar. we haven't used it in a while. >> we haven't. did we replace it with paris hilton singing that's hot? >> crickets. crickets. >> anyway, crickets. closing arguments are expected today against billionaire dallas mavericks owner mark cuban. the s.e.c. sued him after

selling his stake in mama.com after the ceo told him about a planned stock offering. joe, you've had some strong thoughts on this. >> i just remember when it happened. it was like, we are going to sell some stock. he was like, you're what? you can't raise money now. and he goes, if you sell it, i'm out. i remember the whole time it didn't look like he thought it was inside info. >> i don't understand. if i called you up and i had real information -- >> i just remember the way it happened. it didn't seem to me that it was nonpublic information. >> didn't cuban make it public right away, anyway? he said he was selling for that reason. >> of course, i was surprised when fabulous fab, when that happened. >> i like mark cuban. i think this is a challenging one. >> no, no. >> you saw how much money it was, too. at best he would be fined $2 million. >> if it was meaningless for him

to get in and out of. >> the canadian ceo refused to come here to testify. they testified by video in canada, which is a little strange, too, if you're on the jury. >> i just remember -- i don't remember the details, but i remember when it happened. i remember wa cuban said and he was incensed that they were doing it. and it wasn't that it was like, well, i found out they're doing it. it was like, i'm not going to be in your stupid stock, then. >> but r but that would be like lloyd blankfein calling you and saying, i'm getting rid of your stock. >> i don't think he thought that want that it was confident information. my most interesting thing is this. did you see this? can you get in on this? >> what sitd? >> those pink lynx are your immune system cells. and that big thing -- >> what is it attacking? >> that's a cancer cell. >> whoa. >> but it looks like some kind

of big, hideous bug, doesn't it? >> but the immune cells are ineffective against that? >> no. there's things you can do to get your t cells to get even more aggressive in recognizing cancer as non-self. but i thought it was cool. now, they dyed the different cells so you could see them. but you look at that hid why heus looking cancer cell, totally uncontrolled, divides, divides, spreads and breaks off and colonizes other parts. and then you see these beautiful pink t-cells in there, trying to -- you know, we're doing our best. and if we can get those guys ramped up, to see what's not -- i am definitely going to read that article. thank you, joe. >> i'm trying to point out something valuable in the times. every once in a while on a tuesday i find something. rare. >> tuesday is a big day because that's andrew's column, too. >> it's hard to put an

editorialal comment in the times. they still try to get something in there, but lard. >> we're going to check that article out and andrew's column. >> thank you. when we come back, some of the best known names in investing. we have robert shiller, plus leon cooperman. he's going to share his best ideas for this market. and we have david pepper. he's going to be sounding off on washington, the fed and his investing outlook. amazing lineup. stick around. (vo) you are a business pro.

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good morning and welcome back to "squawk box" here on cnbc. i'm joe kernen along with becky quick and andrew ross sorkin. sneed senate majority -- he's not here, but i'm going to talk about him. senate majority harry reid and republican minority leader mitch mcconnell both sending out messages following yesterday's talks in washington. >> it's safe to say we've make substantial progress. >> we're doing our best to make everyone happy, but everybody knows we're not going to be able to do that. everybody understands we're doing the best we can with all

the frailty we have as people and legislators. >> harry has come around. remember for the last month he's been just, like, scary. scary harry. and now -- >> since the deadline is here. >> you know, he gives it out, he takes -- yeah, now it's -- but kumbaya. i think it works, though, because it's such a change. i think they brought the guy we need in, too, hopefully. >> who? >> you know who we need. biden, man. hey, guys, come on! >> i can't believe i haven't heard that. >> he's around. that's wa we need. i sort of make fun of him, but he's -- it doesn't matter which side of the aisle you're on, i don't think so. >> would you like him to be your president in 2016? >> it doesn't matter. now i like him. i've developed a -- >> he has friends on both sides of the aisle. he was there for a long time. >> i guess maybe i see a little bit of -- >> a little bit of you in him?

>> a buffoonish nature and not trying to be mean or nasty. anyway, the deal we're talking about, the deal would enter the discussion would end the shutdown and reopen the government in the until the end of january. negotiations are focused on raising the debt ceiling until the end of february. and he has a wife that is much nice -- that keeps him around and looks am him and just shakes her head. >> that's sweet. >> right? trying to figure out who you are. >> in what? >> yeah. who is that vermont guy? >> sanders? >> yeah. >> sanders the socialist? >> i didn't even think about that. that's right. he's a socialist. never mind. let me take that back. let me find someone else. >> rethink it. we have a corporate buzz this morning, macy's announcing most of its stores will open on thanksgiving day for the first time in its history.

it's a sign of how the holiday season is opening up. it's going to be opening most of its namesake stores at 8:00 p.m. it's a big issue and is consistent with what many rival res now doing. the government shutdown is two days away from possibly running out of money to pay its bills. but as we've been talking about, markets remaining optimistic that lawmakers will reach a deal before that deadline. darrel crock is with wells fargo private bank and you do believe a deal will be reached by thursday? >> yeah. i think we'll get a deal, becky. it looks like obviously there's a deal moving the senate. as joe just pointed out, we have mr. biden to the table. if you remember in 2011, biden and mcconnell were the two architects of putting the 2011 deal together. so i think we've got those discussions happening. they'll get it to the floor of the senate this morning. it will move on to the house. and it looks like there's probably the votes in the house. >> if you don't have a vote by thursday morning, do the markets panic at that point or do they

give a little bit of leeway for a deal that could be done by friday? >> certainly as we've talked many times, october 17th is not a default issue, right? we're not going to miss a principal or interest payment on treasury. >> no. but it doesn't make us look very good. >> correct. it does give the markets some anxiety. i think you see the short end of the treasury curve, continue to react, the repo market, all the stuff that happens within those securities that are maturing within this window of time kind of late october, early to mid november. >> forget about what the markets think. what do you think? if we push past that thursday morning deadline, is it a new world and a new arena where we are much more willing to touch the nuclear options? >> i think if we push past it, but there's a realistic chance that we're close, you know, on the floor of the house and stuff, then i think the markets buy some time for them. if it looks like all the negotiations have really kind of broken away, then i think the markets do react poorly to that.

>> so let's push through this. let's assume there's a deal. we saw a sell-off in the market down about 4%. we've rebounded. what do you think about the prices of stocks at this point? >> we still think they're very attractive. when we head into 2014, we would say by mid to later part of 2014, we have a target on the s&p of 1850 to 1900. which means about a 5% earnings growth. it means a little bit of multiple expansion. i think the risks, though, becky, when you think about this is we've talked often about the bernanke put, and the monetary policy on the bottom side of the market. we're quickly putting in what i call a fiscal glass ceiling on the top. we keep doing these short-term deals and that's not buying both congress time to get the real issues, entitlement reform, tax reform, you know, a future fiscal pass on the table.

so you stick yourself between this bernanke monetary floor and fiscal creel. the deals we're putting together are smaller deals. the issues are big, but -- >> you're not worried about a drag on the economy between now and what's -- some of these deals are going to be january 15th? is that the day? >> january and february. >> you don't think the overhang on all of this is going to ultimately create a real drag? >> i think it creates a -- well, certainly i think just the shutdown alone has taken off probably close to about 0.5% to q4 gdp. that's consensus. i think it troubles business and consumers confidence, you know, as we head to the fourth quarter. and andrew, that's the issue, as much as we want to see this deal and we want to get the whole idea of default behind us, the reality is pushing this out to a january 15th, you know, cr, living kind of cr to cr instead of a traditional budget process and the debt ceiling to february 7th doesn't buy us much time to

solve the real issues. and i think that's where the markets longer term, if we can't get on a sustainable fiscal path, they're going to start to react to that. >> is it a sustainable fiscal path or a sustainable bucketary path so we're not living, as you said, cr to cr, but that's different than a sustainable path. >> i think it's both, quite frankly. we need to get back, as we know, the senate and congress hasn't passed a budget in five years. so we need to get back on an annual bucket that everybody can agree on. but beyond that, when you look at, again, what people forget is when you look at the budget every year, 80% of it is made up of three line items. it's entitlements, defense spending and interest on the national debt. the other 20% is the discretionary spendsing. that's wa we keep negotiating over, cuts to discretionary spending. that's a nonsensical issue if you don't solve for the bigger 80%. >> thank you so much for coming in. >> thanks, becky.

still to come, two well known investors, leo cooperman and at 8:00, david tepper. plus, i don't think there's any question, she's she's been called the greatest golfer of all time, the only female to break 60 in an official event. she stepped away from competitive golf to focus on her own business ventures. she'll join us to talk about it when "squawk box" returns. i love having a free checked bag

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welcome back, everybody. it's time for today's squawk planner. we'll get quarterly results today from coca-cola, citigroup and johnson & johnson. intel, yahoo! will be dominating the list of companies after the bell. we have one report for a market that is starved for data during the fed shutdown. the empire survey is out. walmart is holding an investor date today. it's scheduled to begin before 9:00 a.m. eastern time. mike duke will provide an overview for the company's strategy over the next year. other members of the executive leadership team will field questions. joe, i'll send it back to you. >> thank you, becky. our next guest is a woman of many talentalents. she found add golf academy, runs her own branded business, a charitable found algdz, a wealth management fund for athletes and much more.

annika sorenstein joins us. it's exciting announcement. for me, it's no different than jack or tiger in terms of the ladies. i can't think of anyone that is even up to your low shoulders in term of your stature. >> well, thank you very much. you made my day. >> is there a champion's tour for ladies at this point? >> there is a legends tour. but i'm still a little too young for that. >> you got out right at the top, too, didn't you? you could have won another couple of majors, i think. >> maybe, thank you. i've been a professional for 17 years and i've achieved everything i wanted to achieve. so it was time to move on with all the other different businesses. i had other passions in life i wanted to pursue. i was getting married. >> the beaten balls every day for two or three hours -- >> or maybe six hours. >> or six hours. i think about phelps getting into that cold pool for like 12 hours a day. he said what do you mean you're not swimming again in atlanta? it's like you get in a pool for

12 hours a day and see how you feel. >> i love the game. >> your nerves didn't get old like mine. you told me not to even say the "y" word or the "s" word. >> no, no, you have to stay positive in golf. it's such a hard game. the longest distance is between your ears. >> it's hard to stay positive when you know your next shot is going to be terrible. >> why are you thinking so far ahead? one shot at a time. >> what can you tell us today you're doing that's new? >> we have partnered with 3m fortune 500 companies to support the ain this can i a award, global tournaments i do around the world with my foundation. we are so excited to have them on board. they're going to help me with our initiative we started in 2007. it's all about getting back into the game and giving some young people tools to help their game. >> there's no other annika, is

there? >> no. i've been lucky. i have a name here in the u.s. that nobody else really shares. it's important for me. >> why is it important for you to set up a foundation at this point? i guess you've done pretty well with golf and in life. you might as well try and share that. >> yeah. i have achieved my goals in life. when i stepped away in 2008 i said, hey, i want to give back to the game of golf, i want to give young girls the opportunity to pursue their dreams. golf is something i know, nutrition is something i know. and i think we're at a time in our lives when, you know, you can give back. and i wanted to do that with annika foundation. so we have tournaments around the world. i'm partnered with first tee and we created the nine healthy habits. i think golf is a great platform to show other athletes how healthy you can be. with a partner like 3m, is gives us the opportunity to do that. for me, it's to inspired these young girls, there's nothing more fun. i remember when i was in those shoes. you look for opportunities, you

have dreams. and for me to do that now is -- it couldn't be a better time. is there anyone on the lpga that appears to have the -- you know, the potential to challenge any of your records, do you think? >> well, there are a lot of wonderful players on the tour. we have lexi thompson winning this past week in malaysia. she's only 18 or 19 years old. i'm sure you've heard of lydia cole, an appear temperature or at least she was an amateur. she's only 16 and 17 years old. there's a lot of wonderful players out there. and they're terrific young women, as well. tiger won player of the year. >> a few times, yeah. >> as you did. you won more than anyone else, obviously. you had a scoring average one year of 68, right? >> yeah. those were some good years. >> they were. do you think tiger -- i mean, you know, not just lpga, i think tiger is back. is a major in the cards next year or the year after? >> yeah. i thought this year.

he was a contend her in some ft of the majors. i think he has five victories over all. he's turned his game around and he's kind of the guy to beat nowadays. >> can you explain, as a european, can you explain the ryder cup? it's not a curse, i don't think so. there's something that happens to the u.s. team and it doesn't happen in the president's cup. i don't understand it. and last year was unfortunately for us a prime example of that. and no one on the u.s. team did things like ian poulter. >> no. ian poulter has -- he's a ryder cup star. he actually is a neighbor of mine in orlando. >> oh, nona? >> yeah. there's a few golfers there. >> geez, i've never played there. i've always wanted to. >> waiting for an invite, are we? >> we have a lot of our guests and our viewers who are very interesting in philanthropy. is there anyone lieu to as

somebody you took lessons from or you look to as an example? >> there's a lot of people in the industry of golf that i look up to. arnold palmer has done a lot. he has several hospitals in orlando. i don't know if you can say we were lucky or not lucky. but we had a son that was born a few months early. so we spent a lot of time at the orlando hospital. here is a gentleman that stepped away, spent a lot of time for philanthropy. i think as athletes we're very lucky. we live a life that we enjoy in fulfilling our dreams. when we walk away, we have a chance to impact a lot of kids or adults to make the right choices in adults. i've learned from our athletes, of course, and given the success in general. to me, it's a good feeling to be able to do that when you're in a good place in your own life. >> are you doing any apple? >> no, i don't, other than the product. >> but you buy stocks? >> i do. i love stocks. that's why i watch your show a lot. i started to invest my own money

early on in 1997. i'm what they call kind of a blue chip chick. >> you are? >> yeah. my dad worked for ibm for many years. i have a few holdings i'm pretty proud of, but i'm a long-term ed down. just stay calm. >> business hero is welch who was here on friday. >> that's right. >> he's a pretty good golfer too. >> yeah. >> and you have a horseshoe in your golf bag. it's heavy, isn't it? >> well, i don't carry the bag. >> annika, thank you, and any time you're here, you're welcome -- i mean can we play? >> yeah, i'd love to play. well, now you know i live in lake nona, when the snow starts to fall, let me know. >> let me just write your e-mail down here. no, anyway, it's great. we like all the stuff you're doing, as well. >> thank you. >> i want to see you on the champions tour when you're ready 15 years from now. coming up, it's one of the

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release the new fuel band. it's not alone in the space. i often talk about wearing a jawbone up band on my wrist. it's this one, not the other one. and michelle caruso-cabrera is also a fan of the fit bit. >> yes. >> i don't know if people know what these things are. this thing wherever i go, whatever i do, i can take it in the shower, sleep. >> yep. >> it tracks all my walking. >> steps. >> steps, running, whatever. if you go on a bicycle. >> you have to put it in your pocket so it knows you're actually moving. >> i have to input to say i was on a bicycle during this period. >> and the most important part for me is sleep. this will show you my sleep. for example, last night i actually slept -- here. you can see 4 hours and 28 minutes which is not great. i'm messing it up again. i've totally screwed it up. 4 hours and 28 minutes. and you can see my sons woke up, which didn't help. this shows the deep sleep like

rem sleep and light sleep based on movements. >> the fit that has this that syncs wirelessly. does yours sync wirelessly? >> i have to take it off and connect it. >> oh, no, this just talks to each other automatically. and then if you can see here, i've got my minutes, my calories burned, my goal on how much weight i'd like to lose. how much i slept last night, how much i've eaten so far, how much i'm allowed to eat. it's got all kinds of metrics. >> so the nike, by the way, we should -- the fuel band is the one that tim armstrong from apple actually wears himself. >> okay. >> and just hired someone from nike to go to apple. i wonder whatever we see is going to be the game changer. >> i didn't like the nike fuel band because, again, it wasn't wireless. the fitbit was wireless and also has a scale i like. but this one is wireless, i understand, the new one and measures your heartbeat. >> supposedly. but no sleep.

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can the senate save the day? >> i think it's safe to say we made substantial progress. >> and everyone just needs to be patient. >> hints of a possible deal in d.c. to raise the debt ceiling and stop the government shutdown. details and market reaction are just ahead. delivering alpha at omega. value investing guru leon cooperman joins us for the hour. find out what names he likes now, where he's putting his money to work. plus, the newest member of the "squawk" laureate class. the second hour of "squawk box"

starts right now. good morning and welcome back to "squawk box." take a look at the futures. we did have some green arrows before. we'll see if those are standing up. dow looks like it would open up about 26 points higher. s&p 500 about two points higher and the nasdaq almost eight points higher. that comes as we hit now day 15 of the government shutdown. but there are some hope of a deal. and that's what may be moving this market ahead of the senate leaders. mitch mcconnell and harry reid say they're not there yet but are close to an agreement to raise the nation's debt limit. optimism over a possible agreement helped stocks erase early losses yesterday, also set the dow and s&p 500 to their fourth straight day of gains. also, apple now hiring burberry

chief executive. going to run in 2014 after serving as ceo since 2006. she gets a lot of credit for the stock of that company. apple looking for stability. ron johnson, of course, left in 2011 for his ill-fated tenure at jc penney and his replacement left apple last year after only six months on the job. >> the next big apple product? have a little burberry -- you know, it's going to be colors. >> it's going to be colors. logos on the back of the case. >> you know, she knows colors, she knows style. >> it's high end. and everybody -- i would say anybody who thinks they're going for the low end, people said when they came out with the 5c. i don't know, maybe they want certain customers. >> you know, you need to know how to market. but i still hope they continue to have technology innovations

not style innovations. >> she is not an engineer, but they also hired the former ceo or president eve st. lauren. >> a lot of people say ralph lauren. >> it's ralph lauren. >> leon cooperman -- >> why did he change that? >> we will formally introduce leon in a moment. we have one other piece of retail for you this morning because macy's is planning to open its doors on thanksgiving. for the first time ever, macy's will be opening most of its stores at 8:00 p.m. on thanksgiving night. the move is consistent with what its rivals are now doing. last year, macy's opened at midnight on black friday. our guest host this morning is the "squawk" market master. he's also one of the top-performing managers this year. joining us for the next hour is lee cooperman, chairman and ceo of omega advisers with $9.5 billion under management. and the fund is up 26% this year. lee, thank you so much for being

here. >> my pleasure. my pleasure. >> you talk stocks and we listen. and a gain of 26%, that's phenomenal. when you warned this year was going to be a tougher year than we've seen before. >> it's really just modestly better than the market. we benefitted along with a lot of other investors. my message this morning frankly is rather unexciting. i think that mr. bernanke coupled with the modestly growing economies put the market in fair valuation. the profits are growing modestly, so really the future -- the market valuation is a function of what went into the earnings. and i choose to think in terms of 15 to 16 multiple. i put that on $109 in earnings. i don't want to sound so precise because the market isn't that precise. it gives you something like 1650, 1750 range or 17 and change. so the market is fairly valued.

i don't think it's overvalued, i don't think it's a bargain anymore. i guess if you study the history of market cycles, generally bull markets move in three phases. the first phase, the bull market i refer to is wow, we survived. when you're heading down, looks like the world's coming to an end. nobody sees a turn, you get to turn because fiscal monetary policies and it's the wow, we survived and that was really from the bottom of '09 to late '09. and the second phase of the bull market is reflecting that which is perspective. what i mean by that is the average economic expansion in the post war period has lasted about five years. you get four or five years of rising earnings and the market capitalizes that. and the third phase of bull market normally is like the exuberance phase, the silliness phase where people forget about the mistakes of the last cycle. there are pockets of market valuation that are silly. i noticed, i think i owned it

for three seconds. pot belly, you know, 100 and something times earnings, doubling from the ipo price, tesla having a market cap almost as great as half gm, a fraction of the revenues, you know, very competitive business. but by and large, we've not yet gotten into that speculative phase of the market. but i would say -- excuse me, as an investor, i think the market is reasonably valued and i have to kind of work hard and find stocks or macro themes that would work. i think the market will be higher. let's say we're saying 1650, 1750 is own fair valuation, profits go up 5% next year, 6%. some market could give you 6, 7, 8% on top of that next year. i think the main pluses as i see it, the number one most bear markets are associated with recessions. and we don't see a recession. china's getting a bit better, europe is turning and the u.s. is kind of grinding out 2%.

i think the fed has created an environment where in all honesty there's no alternative to common stocks. bonds have been very negative on for a few years and continue to be negative. i think the returns after tax adjusted for inflation are not particularly attractive. so you're left with cash earnings zero, bonds at 260 or 270, high yield is not high yield anymore, it's 6.3, down from high teens, even at one time 25%. and then you're left with equities that are trading in line with historical evaluations. so they're fairly valued, but where they come across as being undervalued. bonds i think are overvalued. who wants to buy an overvalued instrument? i think also, i don't think the process of investors moving out of the risk curve is complete. and really what's been happening the last four or five years is the buyer of t-bills saying they're yielding zero, i can't

get beyond that, so i'm going to buy t-bonds. the buyer of t bonds says that's unattractive, i'm going to buy industrial credits. went to high yield, the high yield buy went to structured credit. and now the fixed income people are putting a certain percentage of their portfolio with equities. the process is not yet complete. also, when i look at the flow of funds data coming out of the fed, i think institutions and individuals are still underinvested relative to benchmarks. so they used to be in the low 60s. so i think that's a plus. i'd say that neutral plus of the market, the conditions for a bear market aren't in place. and i'm trying to stock pick my way to the success. we've been doing okay so far this year. i think there's no question of the negatives out there we should not overlook. i thought maybe i read somewhere

they closed the circus but they're still paying the clowns. it's disgraceful what's going on there. but it's very complex. i felt at the time last year it was a defining election history of the country. you had to make a decision. and the public went a different direction than i would have gone. and this is the stress that we're seeing. and you know, i would -- if you allow me, it's a quote that's attributal to abe lincoln. this is a message, i think, given my political persuasions more to mr. obama and nancy pelosi and harry reid. but this is what i would tell them. you cannot help the poor by destroying the rich. you cannot strengthen the weak by weakening the strong. you cannot bring about prosperity by discouraging thrift. you cannot lift a wage earner up by pulling the wage payer down. you cannot further the brotherhood of man by citing class hatred. you cannot build character and

courage by taking away people's initiative and independence. you cannot help people permanently by doing for them what they could and should do for themselves. and i think there's a lot of philosophical views in play here. but this country became great because all of us had the ability and right to achieve. and i fear we're moving down a path we all have the right to receive. there's a play on words that's very important. i think a guy i have enormous respect for has been on your program. talks about the theft of the future generations and what's going on. and we can't seem to bring it together. >> hey, lee, we had erskine bowles on yesterday. he's still looking for a grand plan, the grand compromise. he thinks if we cut about $2 trillion in spending and are able to raise revenue, raise taxes of about $400 million to $500 million, he thinks that would take care of a lot of the long-term. >> i'm not saying it's hopeless.

i'm saying we have to come together. my theme -- and i'm an economist, i think i have a certain amount of common sense. the vast bulk of the revenues the government collects, they collect for wealthy people as it should be. i'm a great believer in the income tax structure trying to give back as much as i can to society. but we have to sit down as a nation, our leaders have to agree upon what is the appropriate tax rate on wealthy people? once you agree upon that number, that defines the revenue yield to the government. then we have to size government to that revenue yield. now, mr. buffett, which we all have enormous respect for, i think, he would say and has said that if you make over $1 million a year, 35%. and maybe if you make over $5 million, close to 40%. well, i'd sign on the dotted line for 40%. phil mickelson i don't want to pay 62% marginal tax rate living

in california. we're already there. we've got to live within our means. i'd pay 40% of my income to the government happily going forward. but we're heading into a different direction than that. >> do you think we can look over to europe and they've never been the united states. and in terms of the ability to going from the ability to achieve to the ability to receive. and i'd say they have gotten to a certain point where they decided they wanted to have the ability to receive. they are certain countries over there are trying to bring back earned success and individual initiative. if they can do it -- what i'm getting at, can we go past the point of no return? we're at 47%. we can always bring it back, can't we? i worry this time. we brought it back with reagan and we have this argument over and over again. we have all this evidence of what builds wealth, but we forget every 20 years and start over. >> i'm by nature an optimist.

>> we can get it back? >> yeah, i would say so. the trouble is generally speaking, we have leadership at a crisis in america. and mr. bernanke has created an environment -- >> yeah, bernanke plays into this whole narrative. >> we don't have a crisis environment. we're living too comfortably. >> there's no -- the fed doesn't want anyone to have any pain at all. >> there'll be pain. >> there will be pain. and europe can come back -- >> europe is coming back now. >> structurally they can become less of an entitlement. less of an entitlement state even over there? >> i don't know. i was saying we were probably going in their direction. the correction is the speed with which they're going in their direction. >> well, it matters. >> i think andrew here is getting upset with -- >> no. >> and by the way, for the record, i'm very, very socially liberal, you know. >> no -- >> my fiscal conservatism. >> he was saying that i don't

believe -- but i think the american dream's dead and you think well, you think it's wounded. what i was going to question about where we are is whether you think we have moved towards what some people say there's a book called "winner take all." and it's about sort of the way the economy has moved over the last 30 or 40 years both through globalization, both through technology and both through the haves and have nots and therefore what do you do about that? and then the question becomes, this is the taking versus the receiving. how do you make up for that group? the american dream we're used to check the box, go to college, get a house, get a dog, wife, a job, it all works out. that's much harder today if you're a young person. and the question becomes what do you do about those people. >> try to educate them to adapt to the needs of the corporations hiring people. you have to have intelligent fiscal policies. no real fiscal policy initiatives because the people

in washington don't get along. the entire burden of dealing with the severe recession has fallen on mr. bernanke. created environment of zero interest rates. pushed up the stock market. he's aware of something, hypothesize that 5% of change in wealth worked its way into consumption. says let's get the stock market up, create a lot of wealth and that wealth will be consumed and that consumption will create more employment. trouble is, very small cross section of the population owns stocks. so the rich have gotten richer like myself and the average joe six pack and pretzel guy has not benefitted as much. they've benefitted to some degree because their homes are more valuable. but it's been a lopsided policy and we need good fiscal policy to create jobs, allow corporations to bring back earnings overseas tied to job hiring and get the machine working. but they don't get along. the guy that had it right

basically was even bye. >> for all the lip service we've heard about the administration, middle class, middle class, middle class and below the middle class, they're the people that when things don't go right, they're the ones that get hurt the most. most affected by ill conceived misguided -- well, anyway. up next, bubble warnings, home prices and more, robert shiller joins us after the break. and the man that runs ooeaton, sandy cutler joins us in a bit. "squawk box" will be right back.

our next guest is a renowned economist and familiar face to "squawk" viewers. he correctly forecast the dot com bubble in the late '90s and the housing bubble that led up to the 2008 crisis. and he was just awarded the nobel prize in economics yesterday. joining us now as our newest "squawk" laureate, used to be a market master. robert shiller, co-founder of the case shiller home price index. congratulations, professor. >> i'm happy. it's a good day. >> so, before we even get to -- i want to get to details on the nobel.

but i want to know where you were when you heard it. did you know it was coming? and, you know, what happens behind the scenes before this happens? >> well, the funny thing is, the night before i read "the guardian," the uk newspaper online and i saw my picture and it said a likely winner. i don't know what they knew. but then that morning -- that morning, it got to be after 6:00 a.m. and i thought, well, it's too late. they were wrong. so i went and took a shower. just as i was coming out of the shower, the phone rang and that's how i found out. >> who called? someone from the committee or someone sees it on the news and calls you? >> well, someone i actually have met and known an economist. he's visited yale about some years ago. so i know him. so it wasn't -- >> and just help us with this. we were talking about it yesterday. is there a campaign, sort of an underground campaign that happens prior to the announcement?

are there people that are working as surrogates on behalf of people to try to get them this award? what happens? >> i know nothing about that. they were a well kept secret. >> we were all wondering. let me ask you one other question, which is, you share this prize with three other -- two other economists. one of whom i would say comes at this from a very different place than you do. you have described the markets as irrational. mr. fama has an efficient market theory. what do you make of him? >> not only does he have it, but he's the father of efficient -- i think -- well, he doesn't claim. he claims the term came from harry roberts, his colleague at chicago. but i think it was fama who popularized the term. so i think he has an ego involved. this is something that psychologists say. when you hatch a theory, you don't easily let go. that's where he is. i think he's -- he's a brilliant

man. he has a basic open mind. he's open and interested. he's rather involved in this theory. >> i imagine you think he's fundamentally wrong. the man you're sharing the nobel with, you completely disagree with. >> no, i actually admire him and i read him. he's done a lot of interesting things. for example, this whole fat tail idea, the distributions have outliers that were not distributed. that's one thing he hammered home. he's a brilliant man. i read him. but i think it's -- people develop biases. and it's more -- i trust him to report the results properly. i think it's just -- it's almost political. he's at the university of chicago, i'm at yale. you get -- >> i'm at hunter college at columbia university. and i have a modest disagree with both of you.

did warren buffett get his net worth because the market is efficient? the other guests these five folks have every morning that have become very wealthy got wealthy because the market's efficient. in terms of market irrationality, the worst you could say about the stock market is maybe it's discounted eight of the last five recessions. but by and large, the market's been a fabulous leading indicator. this last cycle, the average bear market i think was something down like 25%, down 58%. the retraction was negative 2% in gdp. we had a bear market twice as severe as the average bear market and by coincidence we had a recession twice as severe as the average recession. i think the stock market is very high-quality indicator and the stock market's reasonably rational. it's not day-to-day. >> you just got through saying that warren buffett made a lot of money, so you don't think -- >> i was addressing fama who said the market was efficient. if the market's efficient, how

do people like -- >> you said it was efficient because it's -- >> no, no -- i'm addressing two issues. there's truth in both of their arguments. these guys don't get to be nobel laureates -- >> hey, bob, we need you for bubble analysis. and i remember you educating me on is animal spirits and how important it is in all market sort of action. unprecedented qe infinity. must have been good for the animal spirits although i don't feel we're that excited about financial assets. but are we in bubble territory yet in terms of exit strategy? >> there's so much to say here. it's not an easy answer. animal spirit, yes, you know, part of what's up under grabs in congress right now is the traditional american spirit that you can make money and you can keep it. and that's under debate now. so we have this budget. this debt crisis.

i think it's not necessarily bad for the stock market because it -- the republicans want the rich people to keep the money. that has to be good for the stock market. of course, bad for the stock market is the -- the reputational loss that this country could lose. it's a wash. i don't see any clear outcome for the market. so i don't have any alarm bells for the market at this moment. >> how about the fed? >> well, looks like we're going to get a really good new chairman with janet yellen. >> you advocated for her. >> well, yeah. >> but what do you say to someone like leon who actually in the past 15 minutes suggested that the fed policy is actually what's created an even greater schism between the haves and have nots because people who own homes, their values have gone up. those who don't, haven't.

if you don't, you don't. >> well, this is a problem that we've left stabilization policy to the fed. and there should be a fiscal component to that. and the congress won't -- >> agree. >> can't make that happen. and i would like to see scientific research. how about the national institute for health, how their budget expanded rather than stimulating housing or the markets. >> go ahead. >> bob, could you talk about -- are we in the early stages of a sustained recovery in housing where we could be looking at rising activity over the next few years? >> well, that's -- moderately rising is -- they look at the futures market at chicago. that's the market forecast. not dramatically rising and my surveys show that questionnaire survey show that's the usual expectation. but, you know, it could go either way. it's still a risky market. >> all right. okay. robert shiller, congratulations,

again. i don't know if you have lunch or how this works with eugene fama. >> i'm going to call him up and congratulate him. >> i'll treat them both to lunch. >> you got a lunch date. thanks so much, robert. >> all right. when we come back, more from lee cooperman where he's putting his work right now. and later david tepper. time now for today's afla krrc question. when did the debt ceiling first hit $1 trillion? to run your li? okay, who helps you focus on your recovery? yo, yo, yo. aflac. wow. [ under his breath ] that was horrible. pays you cash when you're sick or hurt? [ japanese accent ] aflac. love it. [ under his breath ] hate it. helps you focus on getting back to normal? [ as a southern belle ] aflac. [ as a cowboy ] aflac. [ sassily ] aflac. uh huh. [ under his breath ] i am so fired. you're on in 5, duck.

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now the answer to today's aflac trivia question. when did the debt ceiling first hit $1 trillion? the answer, in 1982. >> aflac. >> expectations. welcome back to "squawk box," everybody. we are just getting earnings from coca-cola. the numbers. >> 53 cents, in line with expectations. revenue in line with expectations too. revenue 12.03 and the estimate was 12.05. >> the case volume is up 2%.

below what the street was expecting, 2.9% is what the street was looking for. >> yeah. >> europe, case volume down 1%. the street looking for a loss of more than that, drop of 2.1%. i've got to look through north american case volume up 2%. north america, that's better than expected for north america. so it's not north america or europe that are the problems, just looking through the release right now. take a look at that stock, it's -- well, it's flatlining at this point. 2% growth in global price mix, though. >> case volume flat. the company -- >> that's the problem. expected to be up 3.3%. >> it hasn't been great. it started out, it hasn't been good. it's given back most of its gains. company tried to get ahold of the asperthame angst. and that's our own critical trial of how many people have

had this artificial sweetener. but you get uncomfortable about artificial sweeteners and company tried to get out in front of it and it's safe. but you hear rumblings that you don't want to drink like three diet cokes a day. there is a diet coke story now. >> the other problem was eurasia and africa. the street looking for a gain of 7.1%. >> and the food police don't like bloomberg. >> you know me, i drink diet coke, occasionally diet pepsi. paulson used to drink six to seven cans of diet coke a day. he's your guinea pig right there. >> what's he doing now? is he still drinking six a day? >> less. no longer needs to be awake -- >> some people would think -- my doctor told me i could get kidney stones from the acid in diet coke. >> the chairman and ceo says they delivered sound third quarter results in the confines

of an ongoing challenging environment. lee, your thoughts just about the emerging markets and volatility that's taking place. would you call this what he does a challenge macro economic environment? >> well, it's a very slowly growing environment. there's been a major expansion in profit margins for u.s. corporations. i think they're going to start to be challenged. i believe if you look at the earnings that are coming out, revenues are generally missing and they're a higher percentage of companies missing this quarter than any time in the last couple of years. >> they're okay on revenue. >> do you think the pepsi business model, do you think you should own a salty snack company? now coke is sort of. it's a favorable viewpoint. >> i think there's no question. i don't own coke or pepsi. but basically, there's no question that coke is being challenged by a lot of alternative beverages. teas and -- >> and they've tried to get into that a little bit. >> yeah. it's a very extremely well run

company they're going to try to sell you everything. >> who bought the vitamin water? >> that was pepsi. >> that was pepsi? >> they also have -- >> not worked out too well, i understand. >> really? i love it. >> i don't know if that's worked out. nelson -- nelson pelts wants to split everything up over pepsi still. >> not involved. >> not involved? >> not involved. stock's up now up about 20% on the bid. but it's down from almost 43 1/2, it's down to 37.91. up about 19 cents. >> also saying that wow they did see sequential improvement in the business compared to the second quarter. they remain constructively discontent and resolutely focused on further advancing the global trajectory. we'll continue to watch that stock in the meantime. let's take a look at the other headlines this morning. that senate deal to end the government shutdown and raise the nation's debt limit is closed. although senate leaders harry reid and mitch mcconnell say it's not quite there yet.

an agreement could be announced later today. blackberry is publishing an open letter saying although times are challenging, you can continue to count on blackberry. and apple filling a big hole in the retail executive ranks hiring burberry ceo to run the operations. apple shares have been indicated higher. and much more when we return from leon cooperman including names he's investing in now. as we head to a break, steve liesman playing the role of treasury secretary lew as he fields calls and decides which bills to pay and which to put aside. but is the choice his to make? okay. tell me how much is in the account. $42, 686,000,302.65.

pay the interest on the debt but delay social security a couple of days, okay. until there's $30 billion. hold on a second. good afternoon, mr. president. yes, sir, pay social security right now, mr. president. understood. did you hear that? shut down the justice department and the -- yes, i know that closes the courts and grounds the planes. okay. all right. good. court's closed, social security paid, interest paid. not good, but not that bad. defense secretary hagel, how can i help you, sir? yes, i'm aware of the military payment's due november 1. i'm going to do my best. i understand how important it is to pay the military. yes, defensive democracy, sir. can you hold that thought for one minute? can you hold on, mr. president? yes, i'm sorry. yes, mr. president. i'm watching the market reaction now. right. not good. unemployment insurance?

i don't know, mr. president. we might -- i understand might is not good enough. we'll find a way to pay unemployment. mr. president, i hate to do this. can you hold on one second? i can tell you categorically the environmental protection agency will not be funded. yes, i know the environment support. listen, hold on one second. hold on. senator cruz, i suppose good afternoon. no, sir. construction on highways in texas will not be funded. why? because we hit the debt ceiling, sir, that's why. hold on one second, hold on. mr. president, no, sir, i was not yelling at you, i'm sorry. but if you could hold on one second. hold on. i'm sorry, i don't have a lot of time for the counsel, what do you mean? i don't have the authority to make these choices between payments. hold on a second, mr. president, i have some very bad news.

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stock picks from our guest host lee cooperman, $9.5 billion in assets under management. you said you own 95 things. >> we have roughly 95 positions in the portfolio. >> i quickly can -- i could come

up with a number, average in each one. you've got 9.5 growing in assets. big and small. >> big and small. >> you've had stuff for a long time. >> yeah. >> you want to talk about your big positions, favorite positions, newest positions? get as many as we can get in and make the case for some of them. >> first you've got to understand -- it's important, we're value investors. somebody looking to pay less for more what's behind that index, index of 500 companies. we think on average grow 5% a year. the average yield about 2.1%. sells about 2 1/2 times book value, debts around 35% of capital, return on equity about 15%, somewhat elevated versus history. and for those statistics you're paying about 15 times earnings. what we're looking for is to try to find more growth lower

valuation and more yield and more asset value. to spend their money. and i would say generally speaking given the fact that the market's in its own evaluation we're finding ourselves going to the red chips not the blue chips. going into -- not the major companies. but companies that have a good story, a good valuation and we have to be patient. you know, we're not traders, we're investors. >> we brought up sprint, aig. >> yeah, sprint is an example. absolutely brilliant in his acquisitions, vodafone japan, everything he's bought has been extraordinarily well run. we owned sprint started buying $2 a share. we tended our stock to the company. i think it was 765. i made a note since the end of the tender offer, soft bank bought 75 million shares, taking

the ownership a little over 80%. if you look at proper profit margins for this business, the growth in revenues we think sprint could probably in two years earn over $1 a share. a stock of $6. >> great. all right. >> just one example. >> pick out some other ones and we're going to have more time later to look -- people did see your five or six picks. >> when you're running this stuff, you don't even know if i still own them. >> right. you didn't give that to us? >> i don't know what they ran there. >> quick mention of vitamin water, bought by coke not pepsi. when we come back, we'll talk more about the fix the debt campaign. ceo of eaton corp. will be joining us.

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although there are hopeful signs out of washington, there is still no definitive agreement to end the government shutdown and raise the nation's debt ceiling. the clock is ticking on this. and joining us right now to talk about the impact of all this is sandy cutler, the chairman and ceo of eaton corporation also a member of the ceo of fiscal

leadership council for the campaign to fix the debt. as we get closer to this deadline, are you getting more nervous we will actually reach an agreement? >> well, good morning, becky. i think news of last night and the discussions you've been having this morning, it's a little bit encouraging we seem to be getting to the point where there's at least a coalition coming together to postpone the debt ceiling. and i think any economically intelligent person cannot find any solace in the fact we might have a debt crisis where we can't pay the country's obligations. a lot of work to be done in the next 24 to 48 hours. and it's critical as we start to address the fundamental issue which is not the continuing resolution, not the debt ceiling, but the fiscal crisis here in this country and needing to find a way to reduce our debt. >> as the government shutdown or all of the talk and kind of what's happened, has it affected eaton in terms of the economy or anything that's gone on there?

>> well, i think as a number of your guests have been talking about this morning, i think part of the damage is in for the fourth quarter. any time you end up with a period of hesitation like we've seen over the last couple of weeks, it does affect consumers and business and trading partners. we're talking about shutting down the government respectively in the u.s., the rest of the world has not shut down. the rest of the world is moving forward. but they've got significant questions about our country and our ability to really convert the promise of democracy into the promise of strong comic growth. and that's obviously a condition we all have a big stake in and is really important that every one of us be in contact with our legislators urging them to find a solution. >> has eaton put any plans into place if we do breach the debt ceiling? would that impact on your company? or is this something you're concerned about as a business leader in general? >> i would say more concerned in general. it's very hard, i would think, for any one of us to forecast the impact of this crisis could

be. frankly, we've been through this three times in the last 3 1/2 years and i think an awful lot of people have gotten to the point where they feel like this is the wolf at the door once again and it hasn't materialized. clearly, this is very, very serious. it's an issue that i think is hurting our credibility around the world. our trading partners look at us with a real question as to whether our form of government is working today at at time when the u.s. used to be the model for economic growth. a lot of people question it. >> the plan moving through the senate right now is one that push off both the debt ceiling and would continue government spending through at least the early part of next year, maybe get into january and february on each of these things. that would be so they could talk about some of these larger issues that you're concerned about. what happens to our longer term plans as a government. what do you think those plans need to look like? >> you know, clearly i think we all know these facts, $17 billion in debt. no budget for the last four years. these are situations that we

have to address. and clearly, both parties have to come together, we have to have a bipartisan agreement to deal with both entitlement reform and the very important issues of fundamental tax reform and defense spending. all subjects have to be on the table. everyone's going to have to give a little to get this to be solved. the question is not a plan that solves things in three to four months. the question is a bipartisan agreement on a ten-year plan for beginning to reduce the increase in our debt. this is going to take a long time to solve this problem. but it shouldn't take a long time to put the plan together to address these issues. while the fix the debt coalition isn't advocating a specific set of solutions but we are advocating a bipartisan agreement to address those four elements. >> sandy, thank you very much for joining us today. >> thank you. >> dow component, j & j up after the company reported $1.36 adjusted and that's above expectations.

of $1.32 on revenue which was also above for johnson & johnson. $1.32, revenue was pretty good at the company. it was above, you don't see a lot of global companies able to boost revenues. i think it was a 3% boost on 17.6 billion in sales. the outlook is 544 to 549 and the estimate is 546. it's a good number and the stock's trading higher. >> we have citigroup. if you look there, we miss on both the top line and the bottom line on the revenue side. you can see it there. at one point, $1.02 x items versus $1.04. on the issue of revenues, they came in at about 18.2 billion revenues, the consensus estimate 18.6. seems to be around fx issues, currency fluctuations and so we're looking at that stock now down off marginally. also looking at some of the other issues related to

expenses. they did bring those down from about 4% last quarter and they're now releasing $675 million of mortgage reserves, mostly for u.s. mortgages. people are going to take what they want from that. >> lee, you own shares of citigroup, what do you think of what you hear initially? >> you know, it's 2 cents less than expectation and a base of $1. it's not the end of the world. i'd have to really read into the release i would want to have with my partner and develop an opinion. as i said before, the third quarter, you're seeing a lot of revenue and earnings misses, can is different than you've seen the last couple of years. we're getting toward the end of a strong profit cycle and profits aren't the game. only growing 4%, 5%, 6%. it's the question of the valuation. >> we certainly can control our costs. is there some question in this

report about it? the loan loss is $26 billion in the period. if someone says, hey, we can control our costs -- >> i was just pointing it out. >> sounds like they'll be laying off some people. >> yeah, we certainly can, but sounds like he's saying that in response to -- >> because the stock is down now. it's down about 80 cents or so. >> or maybe it's in reflection, we can't control the revenue numbers. you can control costs. >> $200 million of those revenues, currency fluctuations and that's a hard thing to control. that's a hard thing to control. >> legal expenses is only 600 million. >> they don't have jamie's problems right now. they don't have jamie's problems. coming up, david tepper, find out what he's thinking. the third update from his original amazing call we had 2 1/2, 3 years ago. we'll be right back. weekdays are for rising to the challenge.

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more stock ideas from lee cooperman. plus big names helping investors rise above the rhetoric. we have david tepper from the tepper rally to the tepper taper. "squawk box" will be right back. bny mellon combines investment management & investment servicing,

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who create powerful strategies for a country's investments which are used to build new schools to build more bright minds. invested in the world. bny mellon. this hour on "squawk box," an exclusive extended interview. >> the economy's not going to pick up in the next three months and the fed's going to come in with qe. then what's going to do well? everything. >> david tepper talking about the fed, the markets and the government shutdown five months after he told us the fed tapering would be bullish for

equities. >> guys that are short, they better have a shovel to get themselves out of the grave. >> plus, unveil details of a high-profile robin hood conference to benefit new york's neediest citizens. earnings alert, we'll bring you the numbers and 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 becky quick along with joe kernan and andrew ross sorkin. hedge fund manager david tepper will join us in a few minutes. joe has a round-up of this morning's earnings reports. >> really? okay. citigroup reporting earnings of $1.02 a share. that was 2 cents shy of estimates. revenue light, as well. results hit by a slowdown in bond trading. that's the headline on the report. a little bit negatively affected by fixed income operations.

we're going to dig through the report with an analyst later this hour. among other major results, couple of dow components. coca-cola reported earnings and revenue that were in line with consensus. worldwide case volume fell short of estimates. but north america was better than expected. and that's what has the stock trading higher. and johnson & johnson earnings were pretty good, beating the street about 4 cents. that's a nice move, premarket. revenue also above expectations. let's check on the markets, this would be four straight days of -- if it were to trade higher, but it's now indicated lower. maybe a little trepidation. we'd been higher for most of the session. yesterday we managed after a weak open to -- as the developments in washington turned somewhat positive. we ended with our third straight gain yesterday. >> and we had a little bit of news out of -- we'll call it uk and silicon valley. burberry's ceo moving to apple.

angela ahrendts as senior vice president as oversight of retail and online stores. she'll be reporting directly to ceo tim cook. and we were talking about this earlier. she's an expensive hire. she was the highest paid executive, i believe, in all of the uk. not just as a woman or man, last year she made in total $26.3 million. i assume some of that has to be in stock. it can't be the stock. but nonetheless, i assume if you're leaving a position like that to go to apple, and she doesn't run a hedge fund. >> wow. >> i assume -- in the uk where they don't like to pay you. >> they frown upon that. >> you have to assume that tim cook is offering her a lot. >> an ipad, an iphone. >> you think that's all you get? a free ipad and iphone? >> i don't think in the uk they would want people not to be old money.

not be people who have had it in the family for hundreds of years. i thought they would want people to do well. >> i thought they do. >> they don't. >> in terms of what you might bring into the government. let's get more stock picks from lee cooperman. lee, in 2012, for delivering alpha, delivering alpha conference, you gave ten stock picks and it was pretty incredible because you went 10 for 10 on those. >> got lucky. >> well, i think there's a lot more than luck that was involved with that. you gave ten picks just this year for delivering alpha once again. and i'd like to revisit some of those stocks you picked and maybe mix in -- >> you have to remind me. >> let me tell you about the new ones. you were going to talk about technology stocks, one of them, qualcomm. >> we've been kind of disappointed not in the fundamental performance, but the stock price performance. we rotated out of apple and apple was trading to 600 and put the money into qualcomm. you know, as i medical examiner

mentioned, s&p, fortress balance sheet. their chip is going into most all of the smartphones. we think probably grow after high growth rate this year, probably 10% going forward. very reasonably valued buying back $5 billion worth of stock. it's very cheap. motorola's solutions -- >> that's a new one. that was not on your list. >> it's very hard at any one point in time. the margin, we're looking to put more money into europe. we like michelin, the tire business, the oil service, swatch in watches. as i said before, given the view that the market's in its own fair valuation, we're looking for the medium sized company, one that we like. getting paid 11% while you wait. cim is the symbol, we think the economic value is somewhere near $3.50, paying a 36% dividend,

stock around $2.95 a share. if you can stomach a turn around, warren buffett says reputation for brilliance tackles the business with reputation for poor fundamentals is usually the reputation of the business that remains intact. we have a very positive view of sandridge, a well-regarded hedge fund, launched a proxy fight, replaced management. on their website, they thought the underlying value of the business was somewhere between 11 and 12. we think around 10. the stock is 6. we think the news could get progressively better. we think they're an acreage position and would justify a price, probably 50% higher than it is presently. and we think things are an improving trend. lots of different things like that. in a large cap if you want large cap, you know, a major company in the life sciences business and actually acquiring life sciences. the deal should close in the fourth quarter. probably grow 2, 2 1/2 times

more than the economy will grow and above a market multiple. >> i saw aig on your list. is that? >> i say what's going to happen with aig is some time in the next two or three years, the book value and the market price are going to cross the market. the book value over 60 and the stock trading around 50 and the book value will rise and it's an improving situation. it's not the company it was before they were forced to divest many attractive businesses. one of the most important is the insurance company in asia. we have a large position and their stock is up a lot. it tend not to recommend things up a lot because i'm trying to look for things that have not moved. and there are a few of those. the market's moved a lot. i say we like citi, probably will sell off a little bit. maybe we like what we read, we might add to the position. i mentioned fisher, one thing, you know, carl icahn has had a golden hand this year. the one thing he owns i own that

hasn't done well but i think is cheap is transocean offshore. the oil rig company. stock yields 5%. trading at single digit multiple. and carl is a guy that's done very constructive things in the marketplace. and so i won't say i'm riding his coat tails because i owned it before he owned it, but he tends to be an activist and i look for well-run companies that management gets compensated and do the heavy lifting and i benefit from it. not to say his approach is wrong. >> who has the higher market cap? intel or qualcomm? >> i guess qualcomm since you asked it. >> no, 116 billion for qualcomm. >> i would say qualcomm's fundamental outlook is stronger than intel's. >> but people don't realize that. >> thermal fisher must be 30. their market they serve is $75 billion market for life

sciences, growing at like i said 2, 2 1/2 times the market growth rate. there are a lot of individual stocks that are cheap. just keep in mind that the bond market's very homogeneous. my job is to find the 1,300 stocks and either be short or avoid the 1900 stocks. and that's the -- and i think that's more of the game going forward. i would be surprised. we were off the camera. i said what would make me bearish? because i'm really kind of complacent going along, the stuff in washington is scary. i think it's going to work out. a lot of air time devoted to something that's going to go away shortly. the longer term issue of whether we're going down the path of receiving or achieving. and i'm not overly optimistic. >> receiving or achieving. >> what will make me negative is

a 10%, 15% quick rise in the market, getting into that third phase of exuberance which we're not at now. a view of a recession emerging. i think as much evidence of the economy picking up a little momentum and losing it. and what would make me negative, frankly, is very strong economic growth because that would bring the fed into play. >> right. >> if we start seeing 3%, 4% type of growth and tapering off the table. tapering begins, the markets will start to worry. >> right. >> thank you so much for joining us. >> thanks for having me. >> it's been our pleasure. from one great guest to another, we'll be welcoming david tepper, the markets, government shutdown and the fed. we're going to kick things off with our change the world series. look how corporate philanthropy is making a difference. we're coming back in a moment. [ banker ] sydney needed some financial guidance

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welcome back to "squawk box," i'm here with hedge fund manager david tepper talking about the markets, the fed and the government shutdown. but first -- that's our tease for you. but first, we're going to

continue our change the world series. it's "squawk box" own focus on corporate philanthropy and how it's making a difference in the world we live in. we're joined by the executive director of the robin hood foundation. they're here in part to talk about the mission and the conference november 21st and 22nd. and it is a killer lineup, david. >> both davids. and how did this come together? i mean -- >> well, we were thinking if you want to apply investment principles to charitable giving which is what we do at robin hood, what better way than to bring together some of the world's greatest investors to have them share investment insights and save lives. >> and you get every big name. i assume -- is that how this works? >> no. >> you're on the board now. >> i've been on the board for a little bit of time. not now. >> how many friends did you call to make this happen? >> i didn't call friends, they

called friends. i said okay. it's easy for me. they were the -- i think -- i don't know where the idea. was it einhorn's idea? >> they said let's save lives and provide higher returns. >> right. >> and how much does a ticket cost? >> $7,500. >> how much can you make in a day doing this? >> how much can you make in a day? >> doing this. the whole point is to raise the money. >> oh, to raise the money. i thought if you were talking about if you come to the conference and listen to the investors, how much can an average guy come and make. and the answer is, of course, he gets a positive return on his investment. >> how much can you raise in a day doing this? >> thanks to our good friends at jpmorgan who have sponsored the conference, we're going to end up netting somewhere between $3.5 million to $5.5 million to save lives in new york city. >> you've done pretty well. and at some point you have to decide how you were going to participate in the world of

philanthropy. i know you've hired a couple of people to help you. >> yeah. listen, you know, i've been involved for a long time. ten years ago, before that i was involved, but ten years ago, a major gift to carnegie mellon that you're probably aware. >> yeah. >> being involved in philanthropy as you probably know, started with -- you put money in a box. >> absolutely. >> every day to help poor children. so how did that start? it started a long time ago. a long time ago. but for me, look, when i got to any kind of point of being able to give, i knew you had to give back in different fashions. and robin hood, you know, i got to robin hood probably i think two years, three years ago i went on the board of robin hood and basically that was the idea that, you know, i -- i had a lot of my career in new york city although i'm in new jersey now. >> right. >> and i wanted to give back something to the city of new york. and also, the other thing with

robin hood, i thought they could use one representative from new jersey. >> right. you have not signed the giving pledge just yet. >> no, i haven't signed. i found jesus a long time before buffett found jesus. and he was jewish jesus. anyways. i have not signed a giving pledge. but because it's really complicated for me the giving pledge because you do the charity. but for us, we do a lot of other things. we do things on the political side. we led the reform fight in new jersey and that was not strictly a charity sort of deal. so it's like you don't want to make a contract unless you are going to do exactly that contract. so i don't -- you know, and i actually feel i don't need to do it. i was doing it for so long my whole life. >> right. david, for those viewers who don't know or who just think of robin hood broadly, what does robin hood do? >> robin hood's mission is

simple, we fight poverty in new york city. 1.8 million new yorkers live in poverty. we've got to all come together and create a giant community of caring. that's what we do at robin hood. >> right. i want to ask you both about this. this is something i will say in advance i completely disagree with but i want to put it out on the table. there was an op-ed in the "new york times." the op-ed was controversial. >> not you, though. >> not me. >> they want to know what i'm going to say back. this is peter buffett, son of warren buffett wrote an op-ed over the summer and wrote the following. as more lives and communities are destroyed by the system that creates vast wealth for the few, the more heroic it sounds to give back. it's what i call the conscious laundering. feeling better about accumulating more than any one person could possibly need to live on by sprinkling a little round as an act of charity. i imagine you're in the philanthropy business. what did you think of this?

>> he's a terrific guy and a long time robin hood supporter. i know he has the biggest heart along with a big brain. how's that? >> that's a nice answer. but, david -- >> that's -- >> thanks, boss. >> no. look, look. people give from the heart and give back. i plan like, you know, you said about the pledge. i plan to give back as much as i possibly can. who knows if it's 50, 80 or 90. i don't know what the heck that means. i really don't know what that means. spreading back and spreading money around and the system's the system. i didn't create the system that's out there. but i can try to make things better. and whether it's -- when you see different things that are wrong, you try to make them better. >> did you think to yourself as warren buffett did that he was going to try to accumulate wealth in part because he thought i'm going to give it away at the end but i feel like i'm a better capital allocator and can actually do more by not

giving it away early? >> one thing -- it takes time to actually give money away intelligently to tell you the truth. it really does. and try to get, impact for people. something that robin hood does exceptionally well. thinking about how they're going to get money back and having impact on people. and to give money back willy nilly just sprinkled out, it doesn't work. it doesn't get to the people. you want to take some time. that's why a lot of people give money back when they're 65 or 70 or 75. coming more toward the end of the career. but for me, since i was giving back major money ten years ago, i'm not that old. >> let me ask you one other question. you have pioneered what some people describe as the roi version of philanthropy. you're focused on the numbers. got this thing started from the beginning. are there certain pieces of

charity and philanthropy that should not be measured by roi? >> absolutely. we know little league is a great thing, piano lessons are great things. there's no way of measuring the return on investment for little league and piano lessons. you should still help kids play little league and make sure kids who can't afford piano lessons get piano lessons. >> in terms of the business focus on philanthropy, a good thing broadly speaking? >> absolutely. hold ourselves accountable. come on, there's so much work to be done, we can't waste money. >> let me say this. when we had different things during sandy, which we were really involved in new jersey and involved in the whole tri-state area. at that point in time, there's times when robin hood will say, we have to go to strict roi. but there are times when we say we've got to get out there as fast as we can do. we know people need help. >> right. >> and you just can't worry you're going to have the -- you

know, normal sort of times when you have the best. you've got to get people help. and if you make one bad investment, it doesn't matter. you've got to help people. you've got to help people. and so robin hood recognizes that at times. there's a time you've got to do what you've got to do. >> thank you for doing this. you're going to be sticking around because we're going to talk -- >> bribery. >> and it worked. by the way, i know it's morning tv and we're not on broadcast. you've got to watch your mouth. i love you, though. did you not notice? >> what did i say? >> as joe would say, like at a zoo. >> andrew, i disagree, that was perfect and it's not broadcast. it's cable. and that was fine and the -- >> oh -- it was the b.s. comment. >> the other thing that's beautiful. >> bull manure. >> that is a guest list that looks like we would kill for that and we have a lot of those people on "squawk box" as guest hosts. it's so great, it's a way of combining. you can give them a little look

it's for charity. that's a list -- you've got druckenmiller, everybody. that's phenomenal. i thought about paying. >> you should. joe, you have so much money. >> hey, joe. >> come over here. >> joe, you're rich. >> come over here. >> that's a bunch of bull shih tzu. >> we should say. >> don't be nervous. >> i'm going to promote this now. you can purchase tickets by visiting robinhood.org. and we'll talk more to this david when we come back, but thank you, david. >> tepper will be sitting over here. a lot to talk about. after all the stuff he said in the past, still probably one of the best performances in the last couple of years after he said it. so, i mean, future performances -- past performance no guarantee of future, but does it year in and year out. listen to this. more from david tepper when we return. >> if there's a true taper, there better be a true taper or else you're back into the last

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go national. go like a pro. welcome back, everybody. we have a quick earnings central recap for you. coca-cola earnings matching wall street estimates. the stock is up today by about 1.3%.

johnson & johnson's earnings beating the street by 4 cents. revenue also topping estimates that stock's up by 1.3%. and citigroup reporting earnings of $1.02 a share. two cents below what the street was expecting. revenue was a little bit light. hit by a slow down in bond trading. stock down by 1.3%. earnings at domino's pizza, missing revenue by a penny. that stock still is down by just over 2%. when we come back, much more from our special guest david tepper, the markets, the fed and the debt negotiations. a lot more, stick around, "squawk box" will be right back. to make their money do more. (ann) to help me plan my next move, i take scottrade's free, in-branch seminars... plus, their live webinars. i use daily market commentary to improve my strategy. and my local scottrade office guides my learning every step of the way. because they know i don't trade like everybody. i trade like me. i'm with scottrade. (announcer) ranked highest in investor satisfaction with self-directed services by j.d. power and associates.

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welcome back to "squawk box." we have a special guest onset with us. david tepper, i don't know the exact date you did the very first interview here, but the market's up about 90% since then. what you do is not simple. but what you said at the time was either the economy gets better and the market goes up or the fed makes the economy get better and go up. that's what's been happening. you said they better taper at some point or it's going to be like 1999. now, they didn't taper. they're continuing, was there a

good reason for them to put it off in your view? or do we start worrying about the negative effects of all of this qe? >> now, joe, you know i was going to say something right now besides the tapering economy. and the thing i was going to say to you. there was this one-game playoff between the pittsburgh pirates and cincinnati reds, you didn't mention anything about it yet. >> this is what i'll say. >> what will you say about that? who won that game? >> it was a seven-game series. dusty baker got fired because they lost the last six games. >> you know, but -- >> didn't recognize -- >> news flash for you, pittsburgh's out, dude. and the cardinals. i don't know how you can have -- >> i see you -- >> your happy ending's not coming from me. >> thank god. >> you're welcome. go back -- >> i got in trouble for the b.s. comment before. >> you did get in trouble, only from -- >> only from the censors, i guess. >> they didn't taper and i

thought you meant, look, otherwise it would be '99. and '99 ended badly, didn't it? >> '99 didn't add badly. it ended fantastically. >> eventually. >> 2000 ended badly. look, i mean, they're not tapering for a long time now, unfortunately, or fortunately depending on -- and they have no choice. >> is that fortunate or unfortunate? >> i don't know. it's unfortunate what's going on in washington, d.c. right now. >> right. >> that's kind of forcing their hand. it mean, look, the government's still shut, things are going to obviously slow down and now they have a short-term -- looks like they may have a relatively short-term deal. >> right. >> which is going to not create the kind of confidence you would quite like. now, if you can get a big broader budget deal, that'll be great and markets can fly. in the meantime, to know the uncertainty of three or four months may be a little tough for markets to really fly up. on the other hand, on the other hand, you know, my basic belief has been when you have this large qe, markets go up. markets go up and you have a chance for asset prices to go

up. you have a little bit -- i think generally speaking, markets will go up. i don't think you're going to get, you know, '99 because i was talking about not tapering in a world where you didn't have politicians who have nearly lost their minds. i was talking more stable environment if they didn't taper. so you don't have that environment. >> but you said the fed, they didn't taper and they really can't right now. is that because -- >> there's no way they can. >> yeah, because of the washington situation. look, if it wasn't, you know, the fed, people criticized the fed one way or another. but they basically said what they said they actually kind of did. the economy didn't pick up. it wasn't just employment. people have their just one statistic but the economy was just not, you know, growing a lot. you didn't have great jobs numbers, you had the employment rate going down but because of participation as much as anything else. so, you know, i -- i was a little surprised but not that surprised and understood exactly when they did taper why they didn't taper.

it was because the economy wasn't at their projections. well, if it wasn't quite at their projections before this nonsense, certainly not at the projections now. and the question is going to be when will you have the momentum in the economy to start? certainly not now. you know it has slowed what has to be affected and probably not for the next three to four months because you have this overhang again. does it come in march? maybe. does it come in june? i don't know now. that's definitely going to be sort of, you know, a push-up to markets. but, look, i mean, if cruz wants to, you know, do something incredibly stupid in the senate which he could do some maneuvers or the house doesn't want to pass this thing and god forbid -- and i hate to use that name in vain, but push us into a day of default or any kind of verge of default. although we really won't default on the 17th.

that is just incredibly bad. and, look, it's not bad for -- it's not great for me but it's horrible for the middle class. it's horrible for poor people. everybody's mortgages if they -- they if they default, it's not a big deal. it's a huge deal for every single american. it's the biggest deal for the middle class and main street. if they don't get that, if they really don't get that, well, you know what, i hope their mothers had at least one smart child because it's not anybody there. >> if we get something out of this in terms of entitlements or something that brought people, brought the president to the table in terms of addressing the long-term structural wishes we have. was some of it worth it? was some of the wrangling worth it? >> sure. first off, what we should do is just -- there's this question about the 14th amendment about what it says or doesn't say. they should just -- pass

something in congress to say -- i and i know they had something up there. say the debt would be paid always. >> do it another way. >> they don't have to worry about the contracts and other things in question. do that, and that will make things much more stable and let the economy not have these issues. they're doing it for china, doing it for japan, no. you're doing it for main street. you're doing it for the average guy. if you let us default and interest rates go up on average 50 basis points, the treasuries, everybody's mortgage is more expensive. everybody's mortgage is more expensive. and that's what matters. >> is it if we don't make payments on social security, on veterans benefits, other things promised. or are you talking default on treasuries. >> i'm talking technical default on treasuries. it's really bad if you don't do

social security. it's a different issue, though, when you don't make a payment on treasuries. if you don't make a payment to social security and week delay, it's a week delay. that doesn't have any implication on every single american. okay. when you start messing around with the debt of the united states of america, which by the way has not missed debt payments when we were way overleveraged at the time of the revolutionary war. when hamilton made the decision to make the debt payments and didn't miss a debt payment during the civil war. this is the time you're going to choose to miss a debt payment? this is a time? >> the republicans would say, though, they think there's enough cash in treasury to prioritize and pay those commitments to the treasuries to the -- to the debt commitments on that and they could stretch that out for some time. do you agree with that? if there's not an agreement by thursday, friday, next monday, do the markets react? >> i mean, obviously you can do it on the math and if they want to pass something like that to be very narrow, they should do it. if they want to do it at some

point, that would be a good thing. what they can't -- what you can't do is then -- you still have the military contracts and other things like that to have this balance with. that's really something for the democrats to do. it's really something for, you know, the president to put forward at some point in time. to have this situation when you don't have that in place and have the republicans put, you know, the threat of default and already affecting treasuries right now and who knows what's affecting. and already affecting people's mortgages right now is -- it's social security, to miss social security payments is somewhat cruel if it goes on for any period of time. they've done cruelness. to the average american right now. right now already. okay. whether it's one basis point to two basis points or three basis points. you know, when you lose your reputation, okay, it's very hard to get your reputation back. okay, so when you miss a treasury payment, that's not a one week or two-week deal.

you don't get it back so fast. it'll take years and years and years. and we can't afford. we can't take the chance. can't be monkeying around, can't be playing around. and these guys who were debating guys in college. i'm so happy they were great debaters. so happy, so smart. so smart. they're so smart that they're so stupid they don't -- >> fine. >> so frickin stupid. we have a saying, you have to be stupid before you're smart. you have to know what you don't know and admit you don't know some things and some of those guys don't do that in congress. but you can't -- you can't say i'm going to default for two days and it's all going to be good. it's not. it's not. >> you know, you can muck whenever you need -- >> muck? >> yeah. if these muck. >> which is better? >> you can use either. >> can i use muck and frick? >> when you first said that

either the economy will improve or the fed will be there to make an improvement, in your wildest dreams did you know they would go to zero for a long time. when you said that did you have any idea three years later we'd be sitting here with $85 billion a month? >> no. >> you knew what it would take, you didn't know what this is what it would take. that's a commentary on how slow -- >> it's a question of which part of their mandate you want to emphasize. >> inflation has allowed them to do all this -- >> exactly right. it's incredibly low. and if they -- >> why not do it? >> they can do it, i guess. i mean, it's -- obviously the reason not to do it is to make the balance sheet big. >> give me the upper end of the balance sheet where you'd say holy shih tzu. shih tzu is a dog and you can say -- >> i didn't -- i have to bring my dog bengji in one day. >> is $5 trillion possible? if the long end goes up 100

basis points, people holding these bonds we're at $2.3 trillion in losses. >> joe, it depends on what part of the treasury they own. so obviously if they own 30 years and $5 trillion 30 years or something, huge problem, but if you own, you know, $1 trillion of one year, that problem goes away in one year. so the question is how they eventually do their balance sheet. now they have it spread across, they can shift that around. and i at some point believe that they should shift it whether they do or not to make it more -- to make it more consistent with their interest rate forecasts and where they said they're going to hold interest rates. if you move it on the short end, then you don't have the problem you're talking about. >> okay. >> if you make it bigger in five years and it's all five years and under. >> it's okay. >> it's gone. the problem's gone in five years. >> what i'm trying to figure out -- >> people say well it can't be gone because you'll let the

economy -- it's really a question of how the economy gets good. >> is there enough supply to pile everything in there? >> well, may not be enough supply in that part of the curve. >> you would have to -- you have 16 billion -- >> i don't have 16 billion. >> how much? >> 19 billion. >> if you don't have 19 billion -- >> you would have to position yourself if it was going to be a messy exit. you would do a lot of stuff. we would see you doing stuff. did you expect it to be a messy exit? will you tell us? >> yeah, you know what, what's your number? i'll give you the first call. write it down. >> after he's dumped out of -- >> no, no, no. >> you don't think it's going to be a messy exit? >> no, not yet, no. >> they might as well keep the pedal to the metal then. >> well, hopefully the economy does get better. i don't know, the real question is not only that, the real question, what does this tapering do for you. that's not i'm sure of this point in time the marginal

advantage versus -- the marginal advantage of keep buying versus to the economy versus just cost of making the balance sheet. >> we're going to go to break. would you rather have -- would you rather win a nobel prize or make $2.2 billion in a year. >> the prize. >> we'll be back. >> because he's already made -- >> he's already done it. >> it should be a yearly event. >> three of them win every year. we're going to slip in a quick break. more from david tepper. first a look at shares of citigroup. you still own that don't you? >> dumped it yesterday. >> the company reported $1.02. made a lot of money on that thing. more tepper in a minute. the debt ceiling deadline hits on thursday. we'll bring you the biggest names from the world of investing and business tomorrow. three hours with the oracle of omaha warren buffett. plus, fedex chairman and ceo

fred smith and spanx founder and self-made billionaire. you can't afford to miss "squawk box" tomorrow. i know what you're thinking...

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welcome back, everybody. let's get back to our special guest david tepper. david, you've been coming on for a while and the last several

times we talked to you you said you thought stocks were cheap. we spoke with lee cooperman in the last hour. he says he thinks stocks are fairly prized. he thinks they're the best asset class when you look around comparative to bonds and different things. would you say stocks are cheap here? would you say they are reaching a fair valuation? >> i heard a little bit of what lee said. and he was talking about multiples. and the real question -- listen, putting aside some of the stuff in d.c., okay, because this is making it difficult to invest right now. or, you know, like i said real economy for other people. if you look historically at what multiples are. what lee was saying was growth was a little lower than it has been historically. what people ignore is that interest rates are also lower and will be lower. okay. so if you take both sides of the equation that should make it p/e, they both have come down, i

think, perspective, not just because of the fed. i think they're going to be lower in the future. where they might have been 5% before they'll be 4% now. and so i think both sides will be lower. so if you take that and you believe that is a fact and, you know, a lot of people say, well, you know, interest rates are too low now and i -- you know, historically when you have a 4.5% multiple, 4.5% interest rate, 5% interest rate, you have 20 multiples. i think your interest rates will be more like 4% okay now. and maybe your growth instead of being historically 3.5% or 3.25% might be 2.75% going forward. both sides will be different and i think you're going to end up with a higher multiple in the future. not right now but in the future. i think you're going to get more toward a normal multiple of 18 to 20 times. and historically if you had 4% interest rate to 4.5%, you'd be in the low 20s. that's where you'd be on a multiple. so i -- this is just a multiple question. so if you get over this nonsense

in d.c. let's say they get a deal in d.c. let's, you know, cross our fingers, hope they get a deal and don't put us through yearly stuff like this we're going through right now. so you're looking perspectively. i think you can get 18 to 20 times multiple at some point. if you're trading around 14 times, little like the 14 times next year's numbers right now. you can have, you know, pretty large increase in stock prices to get to there. to get to there next year. and talking about current multiples being right and that's kind of where they are. and listen, i don't know -- right now if you're asking me if the market's high, low, whatever. you know, it's low if these guys don't screw it up and it's high if they do screw it up, okay. so i mean -- >> d.c. has that much impact? >> well if you -- if you do something incredibly stupid even if it's 5%, it does have an

impact, right? i've got to put that in calculations. and, you know, it makes a little hard to really be out on a limb and you're investing until this stuff clears out. on the other hand, this makes it difficult. if you don't have -- if you're not investing and this thing goes, you're going to be lagging far behind. especially for people who are not up where the market return is. >> you almost fell there. >> you've always been a very good reader. i think you were the first to come on this set. and when you were walking through what the fed was actually saying. and one of the things they said this all ends. it was supposed to end in a year meaning the tapering was supposed to end by 2015. now does it end in 2016? >> the tapering or the easy money you're saying? or the lower interest rate. >> i'm talking about the tapering. >> i think they were saying that the low interest rate environment was going to end in 2015. i don't think they ever really said anything about the tapering. they talked about -- >> the assumption was they had to get through tapering. >> they have to get through

tapering. if you're asking me when it's ending, i think it ends when they see employment picking up. and whatever that means. when they have that part of the economy picking up. >> right. >> that's the question, if it doesn't pick up, what did they do? and i can make an argument that at some point they should be moving theirup, what do they do? at some point they should more treasury purchases in and keeping them out with lower interest rates. the shorter interest rates probably affect other parts of the economy. so can i make that argument at at some point -- and you would probably like that because that, as we talked about before, is a lillies krttl little easier to manage than having a five-year out there and three-year out there. it's not as hard to get out of that situation. >> what about the situation of mortgage-backed securities? has that had a big impact on the housing market? >> i'm sure it's affected interest rates in the housing

market to a certain extent. the fed has done -- everybody likes to criticize the fed but we had a really, really, really bad situation back in 2008. and this could have all turned out like the 30s. you know what it didn't do? it didn't turn out like the 30s. yes, is it perfect for main stre street? no. but are there soup kitchens and lines and the blocks? there are some but not like anything like the 30s. it's really difficult to say this plan did not benefit the average guy. the average guy has a cheaper mortgage, they're buying cars again pup see those rates. so they are benefiting in some respect. did you not see the horrible, horrible stuff that happened when you had a similar type of events with potentially banks rolling over. so, listen, the fed wanted to make the housing market better. the housing market is better. cars are being sold.

and the middle class, while not great is not -- they're not -- they haven't gone down and become poor. >> right. >> like they did in the great depression. so depending how you viewed your measurement of what they did, i think you have to say it certainly didn't hurt, what they did and i would actually say that they really did a great job. >> the viewers are fine with the language that they're just saying please no wardrobe malfunction. >> no wardrobe mall financifunc? >> i was up so late, i got up so late, that's why i was on late in the set. i slept in. sew i didn't shave. >> i'm trying to figure out what color my face is today. >> do you have a pasty on? just in case -- >> i have two pasties on. >> and we're going to show themto you. when we come back, we have the last word from david.

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welcome back to "squawk box." check out shares of mollycorp

this morning. chairs of fedex getting a boost, announcing a $32 million share buyback program. >> when we return, our special guest has been hedge fund guru david at ttepper. we will give him the last word right after this. you make a great team.

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welcome back. tepper's here. >> we're invested in some individual names in europe. >> i worry that the worst thing can happen that we're worried about. let's say unemployment doesn't come down. let's see we have a slow down. what if the fed can never get out? what if inflation does finally come back where there's no adverse consequences that we're seeing now? you don't worry about that? people are still too negative you said? >> i do worry about those things. inflation is not coming back any time soon. >> the unemployment rate will come down? >> i think the unemployment rate will come down. there may be some structural things. they'll figure it out. if inflation goes too high,

they'll stop what they're dpooi. >> i'm taking away 20 times earnings -- >> look, look, i'll leave you with one thought. >> 15 seconds. 10 seconds. >> we are at 14 times next years. whether it goes to 16 like lees said, if we get over this crap in washington -- is that all i got? i got more. >> love you, though. >> thank you very much, david. great having you. now it's time for "squawk on the street." ♪ ♪ >> good tuesday morning. welcome to "squawk on the street." i'm carl quintanilla with david