>> we should take a quick look at futures. >> a little over 11 points as well. >> i will see you tomorrow in washington, d.c. >> we'll see, we'll see. "squawk on the street" begins right now. zvlgs i i'm carl quintanilla, david faber and jim cramer with me.

gold steady around 1275, as for europe, mildly week action despite an eight-month high in uk investor confidence. we are right up against the deadline. senate leaders say they're hopeful about a deal today. our credit rating on review for a possible downgrade. >> twitter selecting the new york stock exchange over the nasdaq for its highly anticipated ipo. >> and apple saying it will cut orders for the smartphone in the fourth quarter. one day to go until the debt ceiling deadline. the ball is back in the senate's court this morning. meantime, fitch has put its

triple a rating on negative watch meaning a downgrade could be in the offing. warren buffett weighed in earlier this morning on "squ "squawk." >> the led not to raise the debt ceiling after you've raised the money is really a political weapons of mass destruction. >> jim calls it akin to a poisonous gas, asanine to destroy your reputation after a couple of years. >> i don't think what buffett says means anything to the people who are against this deal. >> you never hear anyone from the other side. i think we're a three-party

system. you never hear anyone from the third party -- how about we call this many patriots. what matters right now is we got to do this debt ceiling no matter what. i hear the patriot party saying we're all about the sol vevency our nation and -- >> the patriot party may not have a choice in the matter if we do get mcconnell and reid to present a compromised package to their caucuses this morning and we get a vote later today in the senate and they send it to the house of representatives.

>> what about ted cruz? >> ted cruz is going to step up? >> why not have the patriot party in the house say we think lew's a liar . i'm saying let's leave some room for the great anti-hamilton party to make a statement and hold things up because they think that lew is not honest. >> so you think it's possible we go into tonight with no deal and start talking about a $12 billion social security payment on the 23rd, right? a refi on the 24th. >> these guys don't think -- they think lew's a political hack.

this stanford america party think lew's a political hack. i respect the treasury secretary. i represent the position of position of treasury. now alexander hamilton, what is he being reduced to by the patriot party? he's a rest stop. >> i think you were out a couple days ago when david and i raised the question of what is the argument for triple a at this point. even if fitch says there is a downgrade, do we deserve triple a even at that poeis moment? >> i don't think so. the celestial seasoning party, zinger party, one of the things they have been right about is the s&p downgraded, interest rates plummeted. maybe it plummets again. i'm being devils advocate we come out every day, a couple of senators say things are good,

three women senators say things are good, i'm not hearing anyone from the new peculiar third party say we got to change our mind. he says it's poison gas. >> does anybody understand by doing this time and again to the point of threatening triple a and our credibility, even if we do manage to get a deal done. maybe it's 10 basis points, maybe 15 basis points over 10 years where our borrowing costs are higher because of this nonsense. >> 10 basis points on $17 billion? that adds up to a lot more money than they're trying to save. >> do you want medical devices to be made all over this country, overseas? in 2014 maybe we're better off with the debt ceiling raised but in 2040 you're bankrupt and when i am 95 i am going to have to pay for what the democrats are

doing. my dad's 91. when he's 135, this is going to be a terrible time. i'm going with the part. >> we do need entitlement -- >> i think it's ridiculous we violate the debt ceiling. we're the united states of america. who gets hurt in china and kuwait? do you care about them? japan? >> that's what i'm saying. i listened to mike corbat yesterday on the citi call. they don't have any paper due in october. did you see the 30-day paper yesterday? let's be me for a second? this is ridiculous. >> more t-bills on the way today. black&decker down 11% premarket. and a lot of other earnings to get through, too. >> black & decker cited the government. they didn't say it was the patriot party. >> let's get to some of those earnings this morning, rapid fire in a sense. bank of america, it beat

expectations with its third quarter earnings, reversing a year ago loss. pepsico also posted third quarter profits that were above the consensus. that was due to stronger sales in its snack business. intel's third quarter earnings beat the street. that was by a nickel. its current quarter estimates below forecast and cnbc and yao who have a business alliance to share and produce editorial content. so we got a lot of names, largely positive. even yahoo! is up, even though the numbers -- >> did you see yahoo! initially down? >> i want to talk alibaba later in the program, that's so important, particularly to yahoo!. >> they talked about a little bit of stabilization. it's funny because here is twitter basically saying not

only are we mobile but we dominate. >> 70%, 70% of revenue mobile. >> and myers is saying we hope one day to dominate but we did stop the page view degradation. revenue not as bad for advertising. i can understand why people would say, look, in the end they're alibaba and they have this tail of yahoo! and. >> "new york times" lead this morning "the honeymoon is over." is that true? >> no. they probably wrote that story when yahoo! was down. when it was down 30 seconds, they thought the honeymoon was over. now takes a few more weeks, maybe goes to the riviera. >> food was up in america but they clearly lost some share to coke and non-carb beverages in

america, carbonated down. >> i think frito lay is the driver here. i listened to warren buffett talking about the need to keep the company together. the company did beat the numbers. i thought it was a clean beat despite the fact that carbonated soda not that good. mountain dew very strong. >> don't underestimate the power of mountain dew? >> do the dew. >> yes! mountain dew has got some -- look, i'm trying to find things to justify why a stock is up, you could argue, or i just think it was a clean quarter. nelson on the call, why would they want to merge with a company they're taking share from? >> that's a good point. there doesn't seem to be a lot of momentum behind that. >> and they didn't cite that do dorito sales were weak because

of senator boehner. >> you want to save that one for later. >> you think pita chips could get hurt by that? >> i think so. >> that's what it trickles down to, sun chips. >> i like those. >> the social media company is tentatively slated to begin trading november 15 under twtr. third quarter net losses did triple from a year ago but sales more than doubled in the period, helped by mobile ad revenue, which as we said, 70% of the business. the q3 loss widens as sales double, as they continue to invest in the company. that's the whole point of going public. >> in 1996 when i was helping to bring public, when i started the

street.com, you'd meet with the bankers and they would say you're not losing enough money. i mean, the idea this is another one, just like we talk about some of the oddities in this market, tesla, netflix. the more money twitter loses, the more commitment we are seeing to the mobile area. >> we actually have a sound bite with you and duncan talk about this issue a couple of weeks ago. >> i think we got a shot. like any other business week have to earn the business. we look forward to having the opportunity to present to the team at twitter. i'll promise them if we do earn their business, we'll deliver when the time comes. >> nasdaq still winning in the overall. i think twitter is one of those companies that just said we can't be facebook, the ipo

facebook. of course they would love to be facebook the company. they can't afford to have another facebook. i think the risk-reward was for the new york stock exchange. let's say they did it on nasdaq and nasdaq screwed up again. shame me once. how do you -- >> the question for nasdaq is you have consolidation that's occurred all around them. what are they going to do? they lose a high-profile company that typically would have gone their way. >> right. >> it's interesting from that perspective. >> you re-up the ceo for how long, greifeld for how many years? they're very committed to greifeld. >> it is interesting, their user growth is not that good. it's not growing that much,

carl. >> 200 some-odd million month live users, not daily users. they have had to admit in some of the amended s-1s how many of those are not human beings. you compare it to the scale of a facebook, it's not in the same ballpark. >> facebook is doing so many things right. they just keep -- i mean, this compression technology they just bought from israel, that could be terrific in terms of just becoming your phone, your tv, your -- i mean, i had dominos pizza on last night. i know the stock got hit. what's a big driver? the facebook application. goes right to dominos. it's been a huge hit and they're a forward looking company. >> when we come back, the stock that buffett says he wishes he bought years ago. we'll get the answer in his own words. also ahead. also, apple's new spaceship headquarters finally getting

cleared for liftoff. we'll talk about it with the mayor of cupertino, california. futures again up triple digits as we wait for a deal out of the senate ahead of the debt ceiling expiration. "squawk on the street" from post 9, back after a break.

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apple management's done a pretty good job of running the company. i wish i bought the stock years ago. i did advise apple to buy and sell a few years ago. >> steve jobs you're talking. >> they have a lot of money, it's not trapped overseas. they'd have to pay a big tax to bring it back. >> on the flip side, it will cut orders on the 5c phone. pegatron had reduced production, sort of feeds into this food not finding an audience for this phone, especially in china. >> the c selling better -- >> the s is selling better. >> s is selling better, c not

selling. s has higher margins. the stock is going up because the deutsche bank piece, when we try to piece together who's building what, it's not necessarily produced the greatest results. all these touchy feely things, this factory doing this, this factory doing that, for all we know apple has shifted production. i like the idea that the s has higher margins and the stock is reacting to that. >> it's above $500. i'm still wondering what carl icahn is going to talk about when he tries to reengage on a dialogue. he's going to keep saying the same thing. i'm not sure if they're listening. >> he's going to talk about burberry ties and burberry incomes. i watched a ten-minute video of this new retail person. she's not retail.

she's the social phone of -- i'm not an expert in ties. i got a ricci tie, this cost $2.95. >> $2.95. >> i still don't regret that i gave back burberry tie -- >> you can't get over it? >> i can't. >> and they have what they call a turn around -- >> there are not a lot of stores. they could put up more stores. i think the buzz is she introduces her new clothing line on an ipad. instead of these big splashy things, wouldn't it be something that apple started introducing that the big splashes were on their ipads and not on some san francisco auditorium that quite

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♪ ♪ six and a half minutes before opening bell time for cramer's "mad dash" ahead of the market open.

we talk a lot lately about pioneer. >> here we go. this is bank of america. they are taking this -- they are saying point blank that the upcoming results should take the stock to 275. i was using a $300 number. i reiterate that. this braybury wolf camp is the second largest field in the world, i have core labs on tonight. they're the company that identifies a lot of these big reservoirs. stay close to this. this stock is not nearly done. >> and you need an enormous amount of capital to get that oil out of the ground. you need investment, stor extraordinary investment. >> the permian was remarkable. permian in the 50s, 60s, 70s. go back and watch the movie "giant," which has my favorite and i'm often confused with james dean. point blank that's when oil was

king. oil is king again in that area. >> let's move on to a deal this morning, a $2 million deal, it is rocketing. the deal was extraordinarily accreted. i talked to a couple of shareholders this morning. perhaps that might have been the gold to get o'reilly to buy it but this is the silver. >> carquest in is akin to when the rental car companies got together, akin to when the airlines got together. >> i have not heard any anti-trust concerns but i can't say i did a full round of reporting this morning. they're talking about it being 20% accretive. numbers go from $6 a share to $725, hence the stock price approaching 100. >> why are companies not buying

other companies? th it would take years to add 15 points. they shell out some stuff and boom. are they not aware of what's going on in the government? i feel a little defensive because these people want to default. would defaulting help advance auto parts? >> defaulting is not going to help anybody. we'll have a conversation about the budget -- >> its like war, what's it good for? >> nothing. >> debt ceilings, earnings, ipos, oh, my god, it's incredible. stay with us. (vo) you are a business pro.

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five tech stocks with more than a 10%... change in after-market trading. ♪ all the tech stocks with a market cap... of at least 50 billion... are up on the day. 12 low-volume stocks... breaking into 52-week highs. six upcoming earnings plays... that recently gapped up. [ male announcer ] now the world is your trading floor. get real-time market scanning wherever you are with the mobile trader app. from td ameritrade. you're watching cnbc "squawk on the street," live from the financial capital of the world. the opening bell in about 30 seconds. we've gotten so many big earnings, today, bank of market, pepsi, intel, american express tonight, ibm, ebay. it's not going to stop for a while here, jim. >> no, we are in the thick of it. it's happening fast.

please listen to the calls before you make a judgment. >> meanwhile the legislative maneuvers continue out of washington. we did miss yesterday our first chance since march to have a five-day win streak for the dow. missed it by that much. there is the opening bell, a look at the s&p 500 at the top of your screen. the big board veeva systems, celebrating its ipo. and over at the nasdaq, deepak chopra celebrating the launch of a new series, "one world" on newswire fm. >> i'm struggling, why did we break the streak? i've been trying to find canaries in the coal mine. we will know things are really bad if regulators say funds will

not have to mark -- will not have to break the buck. that's a sign that things are really out of control. >> larry fink and black rock doing all different things. you need to prepare. there's worries about collateral chains. think about the treasury, the collateral chains. so many things could blow apart. >> the break the buck is an obvious one. they have to break the buck if they own short-term paper, which is what they're supposed to own and the regulators give an excuse and say we're defaulting, move on. >> other points would be a vix indicator, gold indicator, swap deposits over the next few days. and we'll see how this tivo watch goes. the yield on the notes due october 24th .72 up from .51

yesterday. >> you're kidding me! it's crazy. bank of america, very little exposure. everyone wants to know who's in a position to really get hurt by this. i feel very confident about bank of america. looks like they've taken evasive action. that's not the way they short -- they don't short-term fund. >> no. bank of america. we haven't spoken much about the earnings. the stock is up about 1.5% this morning. generally good. it was a beat on the way these things are measured but also all the different metrics you might look at, that interest income not looking too bad. haven't had -- it kept expenses in line. >> remember, litigation -- before the government got aggressive, they were doing some settling. 2011. a lot of people felt that might have been wrong at the time. i think that jopmorgan is evidence that the government got very aggressive. maybe bank of america settled when settling was still good.

>> we haven't mentioned mattel. 121, does beat by 9 cents. sales growth 7%, better margins. people talking about the yield at 34, jim. we worry about the holidays and getting closer to christmas, whether walmart is going to crush them again. >> this is not an important quarter but, hey, that's pretty good. we're not finding a lot of clean beats. mattel is one of them. csx didn't let kohl drag them down but they're not getting that excited. the european car registrations now unbelievable for gm and ford. charitable trust owns that. would anybody care in an environment where it's difficult to finance cars if you don't know what the treasuries are. i used to sell ford motor paper when i was at goldman sachs. it was triple a paper, a lot of people thought it was equivalent of u.s. government paper. you know what?

better than u.s. government paper if ford continues on that excellent path of being clean. >> we have a split screen going. . plains gp, ipo of 22. you like the story at least. >> i like any company that transports oil because we have so much more oil in this country than anybody realizes. you transport oil, you're going to be making some money. just a good business. there's some research firms that question this whole process and whether, say, rich kinder at kinder morgan is spending enough money to maintain. i've been back and forth with kinder morgan for a long time. that's a great american company. they have put a lot of people to work and they have been right about where they put pipe. everybody transporting oil has a windfall in this country. >> it's a key point. the infrastructure being in place to service so much of the oil that's now coming from nonconventional means.

>> yes. >> and that's another advantage we have over other countries. china's got an enormous reserves. they don't have the ability to get at them. >> a lot of countries like poland has tremendous shale. eastern germany has amazing gas and oil holdings. this oil gas revolution is not occurring on public land. it is occurring on private land, which matters tremendously. >> we mentioned advanced auto. >> i think we got plains open. you want to check in with pisani? bob? >> plains just opened, 22.75. nice move on the up side. this is the biggest ipo of the year, 128 million shares, at $22, opening at $2.75. that's 2.8 billion ipo, far and away the biggest we've had all

throughout the year. it was twice the size of antera last week. that was an oil and pipeline deal. this is a limited partnership, not a master limited partnership. yield's a little lower. a lot of people wrote to me and said why is the yield so low? the important thing is biggest ipo of the year. veeva, another blockbuster. it's pricing 13.1 million at $20. indications now are close to $30. this is combining a lot of big ideas here. cloud computing as well as life sciences for pharmaceutical companies to negotiate in the cloud. it's got that magic word, cloud computing. two big ipos today. we've got a third one in the ipo area. we have got an ipo etf today, exchange traded fund. this is being put on by renaissance. it's a basket of recent ipos in the last two years. it's going to start trading

right now, may have just opened. i've been waiting for it to open. biggest companies like facebook, michael kors, twitlter will be n there. it's been a great year overall for the ipo business. i'll have kathleen smith on about 11:20 eastern too many to talk about the ipo business, investing in ipos. a lot of talk about etfs this morning. the government shutdown is starting to affect the earnings report here. we had stanley black & decker lowering earnings, citing the government shutdown. and linear tech saying they'll be flat and also cited the government shutdown. people are getting concerned about earnings for the fourth quarter. back to you. >> thank you very much. as of yesterday, more companies

had filed ipo papers since the shut down began than did in the preceding 15 days. >> i think one of the problems with people who are not as worried about a default is that they hear that and say it's all a big joke. it's all a big joke. the government is going to function just fine. i feel like social security, 80 million checks, these can't financial if you don't have enough money in. >> larry fink did comment on the situation in washington during the firm's conference call. mary thompson has more on that. >> hey there, carl. the world's largest asset manager reporting earnings in lo line with expectations. larry fink said the narrative in washington is hurting people's confidence and they're buying back shares as opposed to putting money in investments,

which is hurting the economy. he sad the damage has already been done to the economy. he said he has dozens of people working on a default contingency plan and it goes well beyond the money market funds. it's also impacting their muni business, collateral and clearing as well. he said the federal reserve is not going to want to move on interest rates until the central bank sees what kind of damage is done to the economy by this narrative and impasse in washington, d.c. back to you. >> thanks very much, mary thompson. >> shares of yahoo! are up after yesterday. i've been talking a lot about yahoo! but primarily as it relates to alibaba.com.

interesting journal piece today does a good job explaining much of its business, which is related to its tao-bao -- it's as if it's a mall with millions of businesses and they have to advertise to get noticed and that's where the numbers come from. yesterday we got a peek at alibaba's numbers. this is why the people seeking the lead underwriting position there are talking about a $100 billion value on this company when it comes public selling perhaps as much as 10%, hence a $10 billion ipo early next year. look at those numbers! 61% revenue increase, 74% gross profit, income 130%, net 145. i mean, the numbers are extraordinary. the growth rate continues to move higher for this company at this point and it is a key consideration when you are looking at yahoo!. and i would argue the main

reason why the stock has done extraordinarily well is because alibaba keeps doing extraordinarily well and that stake keeps going up in value. yesterday we learned they're going to sell fewer shares in an ipo than they previously said they would. we thought it would sell half of its stakes, about 12%. that now down about about 9%. alibaba expected to go public in the first quarter of next year. on the conference call, the company's cfo, ken goldman, was asked about the tax efficiency of dealing with that alibaba stake at yahoo!. it's a question i've raised a number of times. the question came from jordan

rohan. ken goldman says i was waiting to that question, two-thirds into it and i hadn't gotten that question. i said this before, we're working with a lot of outside advisers. we also getting unsolicited help that comes from different folks. so we're getting a lot of input, we have some ideas we're working with at the time of the ipo and down the road. we'll see. more tax efficient means more money for yahoo! which only keeps going up in value given the underlying performance. >> had alibaba in the been part of this call, we would have focused on pricing pressure for ads, which is the way to carpet bomb the web, we would have been talking about the comments by myer of undermonetized mobile utilization. we would have talked about many things that were not what -- >> that's not why people have

been buying the stock. it is largely -- >> dead right. it's not the 800 million, it's not the 20% increase over the past 15 months. he's back in the bond pits. rick santelli, cme group in chicago. rick? >> reporter: if we look at t-bills, that's where most are looking, if you want to find the anxiety meet ater up a bit. if you look at the bills that carl referenced on the 17th and the 24th, they're trading 13 and 68 basis points, 1031 maturity, 54, then if you start to go in november, 35 basis points on the 14th and everything else goes into the mid teens and everything's starting in 2014 back in single digits. so i can understand that if you're one of these firms or one of these banks that wants to be absolutely 100% safe, they're going to avoid those dates. it certainly doesn't look like

we need to cry fire and if you look at the coupon curve, let's do that, you can talk about the politic politics, the messiness. if there is a technical default, you'll still get your money. as you look at everything, whether it's the five-years, low-to-high yield, about 10 basis points, the 10-year, 10-year bund, about 14 basis points. yes, they're elevated but it's about about two and a half weeks. the dollar index has been hovering around 80 for a very long time and it ebbs and sways and flows to a point in time

where we do get the final solution, i think there's very little doubt where the markets are going to go, especially the equity markets. carl, back to you. >> thank you very much. this is certainly the opportunity to test some of these would-be theories if we cross after midnight. >> for 30-day, it's been bad. i think what's funny is if we have a default, we need to go to a safe haven, we need to buy treasuries. hey, kelly. >> got some news on jpm. >> thanks so much. we understand that the commodities future trading commission, the commissioners, four of them, are in the process of finalizing a settlement with jpmorgan to the tune of $100 million fine and an admission of wrong doing as part of the accusation that they manipulated in the london whale trading.

a majority of the commissioners are in favor of this deal and we'll see the details of it very soon, i'm told, carl. >> thank you, kate. we wait for the official word. buffett had some interesting things to say about jaime dimon, saying if a cop follows you for 500 miles, you're going to get a ticket. and also said hank aaron hit a certain number of home reasons, also struck out a number of times. he doesn't care how many times he struck out because he still hit those home runs. >> he sees nothing, that's an asterisk. the important one is the justice department. it looks like there's no real deal right now. justice department seems to have it in for jamie dimon, regardless of -- look, i'll take the other side. hey, listen, there are a lot of bear stearns loans that he bought that were bad and he has to own up to that.

>> right. >> in the week that he had to -- >> it's outrageous. he's worse than the default guys. it's outrageous he stepped up to the plate. did he not know -- caveat emptor, partner. >> i want you to know sarcasm does not always translate. i found that out yesterday in our conversation about netflix in part. >> jamie, i know that was for you. he did buy bard. remember there was really only no resort other than jamie dimon but now he has to pay, oddly, for what he did. and had he bought lehmalehman, really would be in a lot of trouble. you see, if you don't go sarcasm, it's too absurd. bails out the republic. >> laugh through the pain, is that what you're saying? >> he bailed out the public and

now no good deed goes unpunished and i'm just struggling with it. i'm struggling with eric holder and why jamie did it so badly. but maybe i'm looking at it wrong. maybe jamie dimon's paid a lot of money, it's america, he screwed up on the whale and now it's his time. it is a little absurd to me. i'm just someone who reads the papers like everyone else. >> we'll talk to bart chilton in the next hour. when we come back, cloud provider veeva systems on the big board. a lot more "squawk on the street" back in a minute. ♪

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. this was important because the last thing we heard about american towers is their accounting wasn't so good. >> chenierre has quadrupled and it's not done i guess. >> stanley black & decker. >> basis points and margins december crease, th decrease, this is disaster. >> and abbott labs. >> doing great things. huge. >> this is important. we don't spend enough time talking about where the oil is. core lapse is the technology behind finding all this oil is amazing. beth mooney, a lot of people were saying the regional banks aren't doing it right. take a look at that stock. it's a fantastic quarter for key

this morning, she will explain it. these are two bullish movies not involving anybody with the government. that's not sarcasm, that's reality. >> dow is up 129. we'll talk about why in a few moments. in the meantime, veeva systems, we'll talk about their debut in just a moment. it's as simple as this. at bny mellon, our business is investments. managing them, moving them, making them work.

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the dow is now up 150 points, making up for yesterday's losses. speaker boehner will take up a senate pass a senate plan and allow it to pass with democratic votes. we thought things were going to go well this time yesterday. >> i need to hear from cruz, i need to hear from house people who are very opposed to this. >> could have avoided a shutdown if he brought a cr to the house floor the same way three weeks ago. >> is that what people want? there are some people who like this. they don't like the government. remember ronald reagan? get the government off the backs of the people. >> ronald reagan new how to deal

with people. >> the wheels are congress still turn. veeva listing on the big board today, after pricing at $20 above the range, epeter gassner is the ceo. i have to ask what you think of the first-day pop. >> it's a great day for our employees and customers. we've been focusing on building this company and we've built it up in just six and a half years. it's an amazing day for us. >> this is an amazing story. there was a client server way, an oracle way. you are making it faster, making it better and making it cheap per. >> yeah, this is the next wave in computing. i think we're talking about cloud computing, the move from client server to the cloud. veeva is bringing these benefits

of cloud computing to industry-specific applications, in our case the live sciences company. >> it seems you've teamed up with another company, you know where the trials are and be able to identify, rather than the old days where you would schmooze doctors, come up with the information that the doctors need to know what's in trial. >> we're trying to make our industry more efficient and effective. their clinical trials in promoting their market. these are top-line issues for ceos in our company. >> what are you doing with the money? >> we view this as a long-term thing and it takes capital to build a business. >> no specific plans at this point with the money being

raised right now? >> we have to grow our employee base and take care of our customers. >> how many employees do you plan to add? >> we have about 650 now and we'll add significantly to that as the company grow ps. >> to what degree are r & d assets moving toward products like yours? >> our industry we serve is very dynamic. you have changing regulations, you have obama care, the growing middle class and they have to adapt to that. they come to us for more nimble, more effective cloud software. the legacy client systems can't keep up with the change. the change in the industry is good for us and we're helping them change. >> we have merck and gilead.

the oracle system is not working for these guys, everyone tells me about that. i have to believe your customer base is about to grow. >> inside our customer base, we'll help them with more solutions. i was a main frame guy back at ibm and then early days of client server, early days of the cloud. in these industry-specific applications in the cloud, we're just getting starred. we're just getting started. >> it's big. very big company. >> the open, looks like it's going to be good. >> thank you very much. >> peter gassner, the ceo of veeva, which opened on the big board. let's get to diana olick to check in with home builder sentiment. >> it slipped a larger than expected 2 points in october.

the builders blame the drop on, quote, uncertainty in washington, big surprise there. in addition to continuing costs and labor challenges in the housing market. the survey was taken between october 1st and 11th, just as the government shutdown began. buyer traffic and sales each dropped 2 points. buyer traffic is the only one still stuck in negative territory. builder sentiment was unchanged in the south, rose in the northeast. we would normally get september housing starts tomorrow. that won't happen because of the shutdown. it's expected to be in the range of unchanged since august. let's go to eamon javers.

>> reporter: thank you. all eyes on speaker of the house john boehner. he's the guy that will face the political decision of his life today, if the senate republicans and democrats can come together with a compromise deal. will john boehner move that deal to the floor? there are some indications the answer to that may be yes. it looks very difficult for the speaker, his members are all over the place. it's going to be a very dramatic couple of hours here in his life and obviously we're also waiting on the president of the united states, president barack obama has been a little bit removed from this debate. he stepped back publicly and that means that harry reid, the democratic leader in the senate, has been the chief guy negotiating on this. that might take some of the pressure off, it might be a savvy negotiating strategy. we'll see. it's going to be anybody's guess where we go from here. but deal making it is in the offing anyway. >> eamon, do we know what the

mood is of those conservatives within the tea party, for example, if boehner says, yes, i'll take any senate deal and allow a vote on the house floor, does that mean that senator cruz feels he has to mount some sort of filibuster before we get there that could go on for days and push us through the debt ceiling? >> that's the question. we don't know what the senator cruz is going to do. the republican party was not able to put together an alternative bill. their effort fell apart early in the evening last night, they abandoned it and said we can't do this, we're going to punt and let the senate deal with this. a lot of the tea party conservatives are confused. they wanted to continue to fight but they my not have the votes to continue to fight and they might decide a strategic retreat is the best way. it's going to be minute by minute and hour by hour tonight.

>> in the moon time, just to remind you for the kind of action we've seen this morning, stocks are surging. the dow touched almost a 200-point gain this morning on hopes for good news on a deal out of washington. we're now up about 170 points but better than 1% across the major indexes. let's bring in our guests. good morning. >> good morning. >> good morning. >> we've seen the market rally before, only for hopes to, dashed. will today be any different is it. >> no, we have seen this movie, last time in 2011. last time the vix trading lower only to be resolved to be business back to usual. i think investors are looking at that and saying we're not spkting these guys to collectively jump off a cliff. we think this ultimately will be

resolved. investors are looking at the huge monetary supply provided by the fed and taking comfort in that. >> eric, do you think people should be exposed to this market where understandably nothing happens at the stroke of midnight but the uncertainty from here grows tremendously? >> they should be exposed. we do expect equities to move up from where we see them now. this is an interesting market phenomenon in terms of the headlines coming out of washington. but you've seen a lot of resilience in washington. it seems clear the market wants to move up, driven by monetary policy, zero return out of cash, not attractive returns out of bonds, it's going to push the equity markets higher. i think the best interest politically in washington is to get a deal. >> it is true on the headline price action we've really held

in very well during the last days on the market overall. as matt points out, the internaling ainterna internals are not looking that healthy. triple digit up days are coming in on a lower value now than triple digit up days. we are losing momentum and may not be able to rally to year's end. what would you say to that, erik? >> if you look at the emerging markets, not a lot of people talking about the emerging markets. the russell market emerging index is up 9% over the last three months. it's not bogged down with the same political issues out of washington and they've come off their toxic headline -- >> come on, erik. that's complete red herring. emerging markets were smashed at the beginning of the year. that's not happened here. >> it's built on the fundamental

understanding that the economy global is getting better and in specific markets appears to be improving and the fact that if you look at opportunities outside of equities, it's hard to see really good places to put investments to get positive returns. >> jack, do you think earnings will support us as we work our way to washington, d.c.? >> analysts are expecting roughly 2% year over year revenue growth, about the same amount of earnings growth and what's remarkable to me as we go into first quarter 2014, they're expecting revenue growth and earnings growth to ramp up to 8% on revenue growth of 2%.

i agree there's a lot of money supply getting pumped in. i do think the fed has put off any release off the accelerator until at least the first quarter. i think that's going to find its way to the market and this issue ultimately gets resolved and then maybe we look for the relief rally to start trimming some risk and moving investments overseas. >> that's the view this morning. thank you both. >> thank you. >> if you're wondering why the dow is up 150 points, it's largely due to a tweet from robert costa. good morning. >> good morning from capitol hill. >> this is a story everybody wants. so far you are pretty much the on one to have it. what do you know? >> my sources, including members of the senate, tell me that they're hearing from house leadership that the house will accept the deal that the senate brokers and the house is likely

to vote first on that later today. >> robert, can you lay out the timing for us? >> sure. what's happening now is senator mcconnell and senator reid have been working on a deal for the past few days. that deal is ready to go. it was all about if john boehner accepts it, he puts it on the floor. i heard late last night he accepted the senate deal is the only deal that can move forward and that's going to start processing today in the house. >> do you have any idea what conservative elements like cruz will do in the meantime? will they feel it's incumbent on them to stop the process in the senate by filibustering? >> i think even conservatives in the house and even senator cruz know that with default looming, any kind of political filibuster is not in the cards. most senators privately can

accept the terms of the deal, which would extend the debt ceiling until february 7th. >> we're seeing some items across the tape, a republican aide saying the senate hasn't decided. >> there's a majority of republicans in the house that want this to end. now that boehner has agreed, it's leading to a conclusion where it passes both chambers. >> robert, in terms of the timing, when do you expect we'll start to know for sure one way or the other? are we just waiting to hear from speaker boehner at this point sm. >> the way this is working, senator reid and senator mcconnell will announce once it

opens today at noon. so pay attention at noon. >> the collision, robert, between what you're saying and this ipo, which just opened next to us is a little bit jarring. forgive us the applause on the trading floor here. one last question for you, robert, how would you handicap boehner's tenure once this episode is over? does he survive as speaker? >> i think boehner does survive because he's exhausted all the conservative options on the table and most of the conference recogni recognizes that. >> robert, thanks for coming to the phone. a busy morning. that is robert costa, a cnbc contributor and largely could you argue the man responsible for the dow's rally today. >> with the applause, veeva

systems has opened at $38. 13.1 million shares. they were priced at 20, opened at 38. you see it right there. now 38.22. >> doubled in value then. >> that's a nice open. >> another good pricing. >> jpmorgan expected to pay $100 million to settle charges by the cftc over the london whale. the commissioner bart chilton says really it's not enough. he'll join us live right after the break. "squawk on the street" will be right back.

welcome back to "squawk on the street." it's all fun and games format l spaspace mattel today. barbie dolls posted their first quarter sales growth after four straight quarters of decline. hasboro up in sympathy on that move. hasboro reports its earnings next week. >> jpmorgan expected to settle charges related to the london whale trading disaster, but it will cost them about $100 million. earlier warren buffett talked about policing wall street. >> if a cop follows you for 500 miles, you're going to get a ticket. and believe me, you've had a lot of cops that have been following a long time and they're going to

write some tickets. >> here for a cnbc exclusive is bart chilton, commissioner of the cftc. good morning. >> good to be with you. >> are you that cop following the car for 500 miles? >> we are that cop. even with the government shutdown, we're doing the best we can with very limited staffing. >> i'm looking for dissent from some commissioners who wanted stronger charges against jpmorgan. can you talk about that? >> there's one i believe that dissented. some people don't like dodd-frank in general, they don't care for the provisions like this one, which prohibits reckless manipulation and that's what we've gone after, jpmorgan on this and they've admitted to reckless behavior what we think ed in that manipulative conduct. so i commend jpmorgan for what they're doing, for taking

responsibility. i hope that's a sign to others on the street that they got to stand up and do what's right in these circumstances. >> commissioner, there's clearly trouble in paradise. you do have one dissenter, who just published his reasons. >> there was just one. >> the point that he's making in the statement that he's released is he thinks you are rushing into this to be seen -- to be seen at the table with jpmorgan and he thinks that you've settled for a charge that is too far down. in order, you should have gotten more out of jpmorgan. i think this is a very important point because you're using this new terminology under dodd-frank that hasn't been tested and he says it may have to be tested in the courts. the important this evening ng it

have to prove intent. and if i'm right, i think he wanted you to prove intent and arguably get a much higher fine. >> i think we could but do you want to spend another four, five months or year? as mr. buffett said, if you're following a guy for 500 miles and you pull them over and they say i did it, why would you say we didn't have our radar detector on? the old standard didn't work so well. we only had one successfully litigated case in 38 years. this new provision is an important and key provision to dealing with this millisecond markets and ensuring that bad actors at least are fined and this is a significant fine, $100 million for one trading day. >> it is significant. you're fining them $100 million.

they just put aside last week $7.2 billion. it's much less than the other regulators are charging. you are still capped. what is that, $140 a violation? >> $140,000 per violation. a violation has been construed by the case law as only occurring once per day. so $140,000 once per day or $100 million for violation, i think i'm taking the hundred million. >> what goes through your mind when hank paulsen comes on our air and says we begged and pleaded with jamie to buy bear? >> look, that was a time when people who h to do what they had to do. i hate to sort of monday morning quarterback things that happened years ago. we're in the circumstance now, i think we're moving forward. i'm pleased they've taken responsibility in this regard and i'm hopeful that the culture of corruption will be shifted now. i think this is a really good

start to that. >> commissioner, last time you were kind enough to come on, you were detailing to us what people could get away with on the markets because so much of what you do is shut down due to the sequester. now that you've got this fine from jpmorgan, when will they pay it? will you be able to open up and have more bodies on the bead and if y -- beat and if they do that, what will people not be able to do that they can do now? >> i commend our enforcement staff. the team did a super job on this, particularly given the shutdown because we really don't have staff. we had to call people in on an emergency basis this morning to process it. i can't tell you exactly how the money is coming in. i can tell you this, that these funds and we already have $100 million from other civil monetary penalties, these funds should be used to keep the

agency on the job, to keep an eyeball on the markets. it would take a simple sentence by congress to allow to us do that. we returned a billion dollars as we recall from last week on october 1st. and so, you know, this would make sense to keep us open. we're doing a good job based upon a really bare bones staff and i commend everybody who is there doing the job. >> okay. commissioner bart chilton from the cftc this morning, thank you very much. >> straight ahead, it's quite a coup for the big board, twitter heading to the exchange next month. what it means for people who want to get a piece of the action. we'll be right back. in a world that's changing faster than ever,

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markets higher this morning on news from various sources

that speaker boehner is going to allow a plan on the senate floor to vote on. dow is up and the s&p is up to 1717. we'll keep an eye on that. >> kayla, this is a major coup here for the nyse. >> it is. twitter had been leaning toward the nyse. it's also funny considering that its handle, nyse euronex didn't

follow at twitter until about a month ago. but nonetheless, we've also learned that not only has twitter decided to list at the nyse, but according to my sources, they're choosing to debut on november 15th. it's currently expected to raise a billion or more and valued up to $15 billion. starting at its underwriting banks on october 25th, heading to the mid-atlantic, to new york, to boston, and then so lchlkts a. and san francisco and back to the midwest. the date of the 15th was chosen to provide a buffer between any government fallout and shows just how much twitter's lead

underwriters stand to gain. jpmorgan with a 10.3% stake in twitter. goldman sachs will of course benefit as it gets to sell the largest slice of new shares to new investors. those investors have a lot of questions during that road show. that's the plan. the users and revenues are growing at a fast clip but its losses are now on pace to double. >> as cramer said this morning, a lot of times when a company is going public, they're told by their bankers, you're not losing money fast enough because you're not going after the scale quickly enough. we'll see what the next few weeks bring for twtr. that's a look at the speaker a few moments ago. interesting look in the "times"

today at what the last few weeks have been for him. going for a walk in the morning on the way to his favorite cafe for solace. >> unable to use their majority in the house for any purpose -- >> well, they shut down the government. >> to the benefit of gop overall, though. what is fascinating, i know we're a business station and this is politics, what happens now to the gop? does it need an outsider, like christie, a governor, to unite it? and does this become constructive for them moving forward to 2016? >> i'm not sure parts of the republican party want to be united. this is the philosophical question that's happening right now. >> and the market completely ignoring fitch yet, which in a different era would have meant real pain today.

>> maybe in 1980. >> we knew there was a risk of default. that's what they told us. >> fitch's point, even if there is a deal and it's not enough to restore confidence long term, there could be a move. >> i think a lot of countries wondering why they haven't already made a move? >> you have to wonder how much more bearish people will be on the green back after this. >> sure, long term as well. >> still ahead, fitch warning of reviewing the government's credit rating.

♪ wish you would step back from that ledge, my friend ♪ welcome back. normally at this time on wednesdays we'd be bringing you the crude oil inventory numbers. but of course because the government is shut down, that data is not coming out today. the information submitted to the eia will be processed after. and we were also supposed to get the consumer inflation index. the cpi factors into some of the long-term debate on entitlement reform. >> good morning if you've just joined us.

advanced auto parts surging 16% after agreeing to buy privately held general international, creating the largest auto parts retailer in north america. plain gp holdings, whose ipo is the largest in the u.s. so far this year rising about 2% on its wall street debut this morning and the cloud software provider veeva systems skyrocketing, up 85% from its ipo price of $20, carl, a share. >> markets jumping on that report from robert costa of "the national review," sources telling him the speaker has agreed to take up the senate's plan and allow it to pass with democratic votes. art cashin, director for operations for ubs joins us here. art, a heck of a week. >> it certainly has been.

and when you got that "national review" tweet i think the buy the dippers went into a frenzy. this is the last big visible dip they saw. people are figuring if it's game, set and match, let me scramble to get in. i'm not sure it's fully game, set and match, though. >> why not? >> you'll probably get the debt ceiling and the continuing resolution passed but there may be more chapters in this story. will it cost boehner his speakership? if it costs boehner the speakership, will the house republican majority be in even more disarray? and will you see some other plays? will they attack things like obama care from a different direction? so this could be an ongoing situation. it will be very interesting to see how the market reacts, i would say, about an hour after the deal passes. i assume it will pass because not many people want to be the

signator to taking us over the cliff. that being said, you have the procedural problems in the senate to accelerate things that require nearly unanimous consent. >> and this moves the bar to basically january or february whether we're talking about funding levels. that's not far in the future. how much is the market going to pay attention to that into the winter? is that going to matter? >> and if he loses the speakership with one of the key players changing. so that could change the tactics, that could change a lot of what the next battle will look like. >> if you're sitting at home and you're really trying to commit for years, you're a long-term investor, is the message that you take away from this that the market can hold on in there and possibly rise despite whatever washington does? is that the broader picture here? >> i think it certainly has

been, as desperately as our elected leaders have tried to screw this thing up, we look like we may survive anyway. and it's certainly a longer-term holder. you heard warren buffett this morning saying he's never let an item like this influence a decision he's made. >> that's why it's so tough. even warren buffett was saying two things, on one hand they were playing with weapons of mass destruction and on the other hand they were playing with the hand on washington. and people are left with their head just spinning. >> i think the difficulty is people don't get a chance to grasp what would happen if you defaulted and that would be one of those processes once described as going slowly and then suddenly. and i think things would burst

out. and then you have the longer range effect of that. does it send you back into a deep recession? does it jeopardize your financial system? so to simon's point, even the long term, and i agree with warren buffett, you probably want to plug away, if you can afford to walk away from it for a year or two, if you're wrong and things go against you. >> in the meantime there is a concern that the momentum is weakening in the market, the triple ups aren't on heavy volume like the triple downs. are you concerned we're losing momentum to the up side? >> yes, i am. i'd like to see the series of new highs advance more readily and see the advances trump the declines handily. yesterday we went down on higher volume. i'm not sure we're going to have higher volume today but we have a volatile session in front of us. we'll know things a lot better tomorrow. as i said, when and if this

passes, i'll know a lot more when i see what the market does one hour later. >> great. art cashin, thank you for your time this morning. >> thank you. >> fitch is putting the united states on ratings watch negative. it happened last night. but a look at the report in detail shows the change has nothing to do with government finance, it's more about attitude. steve liesman is here with a look at how the politics of deficits have gotten much worse while the deficits themselves, steve, we should note have gotten better. >> reporter: this is extraordinary. the fitch report last night and other reports from ratings agency contain few of the comments you would normally associating with negative rating changes. here's a quote which fitch maintained, "the aaa rating reflects the having of fb

deficits since 2010 which is now approaching a level consistent with 2012. that big drop you see right there, the best since 1969. the improvement has been so sharp, they complained about the drastic effect it has had on the economy. government spend beiing has com down in three of the past four year and is right around the 30-year average. what is not normal and the area of concern is the total debt. fitch does remark about debt as a percent of gdp, surging to over 100% of gdp as a result of the stimulus, recession, substantial entitlements expected in the next decade.

they add that the current level of debt remains consistent with a aaa rating, especially if it continues to improve what they point out and what moody's already said is the current level of political discourse around the debt is what's not consistent with the highest rating. so, kelly, the politics have gotten worse while the finances have gotten better. >> if the deal goes through today as we expect in the senate and the house, then the sequester remains in tact and it will bite again heavily at the beginning of january? >> and i believe bite worse is my understanding. what the fed has called for and other economists is a long-term deficit that deals with the entitlement problem but does not do as much up front as we've done and it's taken about a point off the gdp the last couple of years. >> it sounds like rolling back will be at the next budget fight

if we pass this leg it have. >> can't wait for that one, kelly consideration you? >> i know, i know. coming up next, how are the shutdown and debt ceiling affecting big business? stay with us. >> the threat to not raise the debt ceiling after you've already spent the money is -- it's really a political weapons of mass destruction. mine was earned orbiting the moon in 1971. afghanistan in 2009. on the u.s.s. saratoga in 1982. [ male announcer ] once it's earned, usaa auto insurance is often handed down from generation to generation because it offers a superior level of protection and because usaa's commitment to serve current and former military members and their families is without equal. begin your legacy. get an auto insurance quote. usaa.

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welcome back to "squawk on the street." we're about to see advanced auto parts become the biggest retailer, it's buying general parts for $2 billion in cash, the parent company for carquest auto parts stores. investors love the acquisition, investors are bidding up the

stock by 17%. back over to you. >> a news from cnbc contributor that the senate is on the verge of a deal. and for a c.o.'s take on that, we welcome back add. to the network. nice to see you again. >> thank you. it's nice to be back on. >> so within about 15 minutes, we think the senate is going to finally start discussing this deal that could finally end this shutdown and get us past the debt deadline tomorrow. how has this affected your business? i know you've had to reorganize excursions for some of your passengers. how do you feel about this watershed moment?

>> well, it's really interesting being here at a conference on our dependence on oil, which is a problem that's been in the making for decades and which will take decades more to solve. on the one hand. and then on the other hand being in a news environment where every 15 minutes we're waiting for some kind of new announcement. as it relates to the services b provided by the united states government, we are receiving most of the services from the united states coast guard and customs and border protection, but as you mentioned, when it comes to bringing our customers to national parks such as acadia up in maine, we're not able to do that and it's very frustrating for us and our guests. >> do you make more money by keeping them on the ship so they have to buy stuff or by sending them on excursions? >> it's not a money-making proposition to disappoint your customers. they brought these vacations a long time ago with high expectations. they want to see these national

parks. we're not going to improve our situation by being a part of their frustration. >> i need to ask you about the conference you're at on energy security. as far as your company is concerned, these new massive ships, the quantum ships that will have the capsules that are 300 feet up in the arm or the sky diving attempts that people can do, as the ships get bigger in your industry, are they more fuel efficient or less? clearly what you're able to charge for people to go on the quantum will be more. that is the big bet. >> yes. as we go forward, each time we build a new class of ships, we have essentially a completely new opportunity to maximize fuel efficiency. previous proven over the last several years we've been able to make great gains, 20% and 30% improvement over eight to ten years ago. and we try to take as many as those improvements as we can get back into the existing ships and help their fuel efficiency as

well. the bigger, new are ships are the best bet we have for maximum fuel efficiency. >> i know you're obviously in a close period because you're about to report. i'd love to ask you about pricing. credit suisse says it's 5% down from last year. let me ask you about carnival. we know the history of carnival and its troubles. the vacation guarantee which they put in the market place, which means if you're on a carnival cruise and you're there for 24 hours and you want to get off, they give you a 110 refund and they give you a credit. how do you respond in the marketplace to that? >> royal caribbean did not have any specific response to that initiative.

on a broader level, the industry wants to communicate how safe this industry has always been, that customer satisfaction is at unprecedented levels with the addition of different ships and it's really important after the last couple of years of challenge beings that we and the other cruise companies promote a positive message about the benefits of cruising. >> i didn't realize you weren't in the s&p 500, adam, though the commentary at the moment is with your present market cap that, could happen. are you making any moves to pressure for that? obviously if you could get out of the russell into the s&p 500, or both, that would be an advantage for you. >> i tell you, simon, our focus has been and continues to be on maximizing the revenue from the fantastic products and services we offer, being very, very disciplined about cost control, looking to bring our capital structure back to investment grade metrics in the near term.

if those things result in us being in the s&p 500, terrific. >> okay. it's good to see you, sir. hopefully you'll come back when you actually report the results. there's so much to talk about in industry.you. adam goldstien there. president and ceo of royal caribbean international. >> the senate could be on the verge of a deal. when we come back, the dollar treasures and the repo. the s&p now within 1% of it's all time high. s all time high.

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let's get to the cme group this morning. good to you back, rick. >> thanks, carl. it's day 16 for the shutdown. we can argue as to what date we run out of money. you know, i know that to the victor goes the spoils and that's positions like treasury secretary that get to view the party line. i personally think it's a shame. i think there are many ways to find 20 to 30 billion considering our next payment for interest rates is at the end of october when you're taking in 250 billion a month and i know that things can be uneven.

it just doesn't seem quite the way it ought to be. but let's look at a quantitative assessment for day 16. i know the markets are considered the conscience of washington. that whole concept is a bit convoluted but it is what it is. day one of the shutdown. here's where we're at today. i heard several people today, simon, you were one of them, talking about how the dollar is just having a tough time with all of the issues of the day but it just doesn't hold water. 822 on 10/1, 146 today. 265 on a 10. 274 today. of course there is an effect but it's difficult to pull it out and not think that some honey shrunk the effect. the s&p is less than 1% away from it's september 19th record

high. you can say it's because they're going to deal2s september 19th high. you can say it's because they're going to deal2 but you can put any on it. this is the two markets that have had an effect. i was one of the first to talk about the bill options. there's been a lot of talk starting with sheila going down but make it's time we look at the money funds and really the sensitivity of stocks has a lot to do with the money market and the repo market. my friend is giving me updates. right now it's 33 offered at 30. if you offer at general collateral maybe it's trading at 35 basis points. elevated for sure. don't want to dismiss it. but if you look beyond the issues, things normalize quite a bit. the media isn't in favor of the

messiness going on in washington. neither am i. wouldn't be my strategy if i was there. but if you want to understand what's going on, think about it as cruise control. many in washington think cruise control, just steady as she go in every respect then there's a group against cruise control and one year from today when we're looking at the midterms, my guess is that the biggest variable effeaffecting the poll will be howell or not well affordable care act is going. let's wait and see. back to you. >> thank you the former defense secretary says that the president needs to roll up his sleeves and get more engaged. secretary panetta will join us on what he wants to see from the white house coming up on cnbc. my mantra?

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like they helped millions of others. by listening. planning. working one on one. that's what ameriprise financial does. that's what they can do with you. that's how ameriprise puts more within reach. ♪ 2% of your growth with less than 1% population gains means 1% real growth per capita. in 20 years, that's 20%. if every generation lives 20% letter than the generation before them, that's not terrible. i'd much rather have 3% growth or 3.5 like we've had. but 1% real gdp growth per

capita over a long period of time, it does wonders. >> that's warren buffet taking out the homespun wisdom this morning. look at the markets up about 190. close to the highs of the session. buffet's point is that the world economy continues to chug along. not necessarily accelerating or deccelerating and at the same time, how terrible it would be to play around with the debt ceiling. >> countries with immigrations do better. >> but 2% is not great. we've had 3.7% over a long period of time. that's a problem. >> as fitch said last night, absolutely. we'll see what the next hour brings. it will be interesting. if you just joined us, here's what you missed earlier on. >> welcome to "squawk on the street." here's what's happened so far. >> the market probably feels that nobody could be this

idiotic to take something that the country for 237 years has built up it's reputation for being good for its obligations and destroy it over some extraneous matter. it really should never be used as a weapon, the debt ceiling. it's a political weapon of mass destruction. >> i hear the patriot party saying, listen guys, we're all about what really matters which is the solvency of our nation. not how much they hate obama, not about the medical tax and we think that buffet is another guy that doesn't get it and the patriot party is not going to relent. >> there's the opening bell. >> i think there's a lot of interest in what we do and it's a great day for our employees and our customers. we have been focused on building this company. we built it up in 6 1/2 years. it's an exciting day for us. >> including members of the senate, tell me that they're hearing from house leadership that the house will accept the

deal that the senate brokers and they're likely to vote on that later today. >> i commend j.p. morgan for what they're doing, for taking responsibility. i hope that's a sign to others on the street that they have to stand up and do what's right in these circumstances. got breaking news this morning with the dow closing in on a 200 point gain. republican senators meeting on capitol hill trying to finalize a deal to raise the debt ceiling and avoid the first default in u.s. history. news that we were close on a deal sent stocks soaring earlier on this morning. the dow is up 15, 364. s&p back to 1720. we're still close to a deal but we don't have it yet. you're right. republican senators are meeting. they're scheduled to meet at this very minute over in the

senate side to figure out what their game plan is going forward. the presumption has been going into this meeting that reid and mcconnell will layout their deal or mcconnell will layout the republican side of the deal to his members and see if he can get buy in and commitment. will the house pass that first and send it back to the senate and do this today within a matter of several hours. but there's so many variables here. this thing could fall apart at any moment. we'll have to watch very carefully. there's questions about whether house conservatives will revolt against it. whether anybody in the senate will filibuster this deal and of course what the deal actually is is still up in the air. we expect it will be some type of short-term can kicking down the road kind of deal but it will at least solve this current crisis but we hope to have more information. once the senators hope to come out of that meeting we'll be standing in the hallway and we should start to get some leaks or strategic information

releases here to get a sense of what's going on inside that meeting and what this deal might be. >> eamon, to be clear, if speaker boehner brings this bill to the floor for a vote, is there any reason to think it wouldn't pass? >> no, i think this would definitely pass on the house floor at this point if boehner puts it on the floor. it's clear democrats will support the deal. nancy pelosi thinks all the democrats would vote for it. you just need a few republicans to vote for it to put it over the top. what boehner would like is the vast majority of house republicans to support this deal and whether he's going to get that and a leadership challenge as a result of putting something on the floor that the majority of his own members don't like. this could be threatening to his job here. he could be risking his career on this move but the stakes are high. >> following the latest out of washington. thanks. markets are rallying with the dow up almost 200 points on hopes of a compromise in

washington. only 13 hours until the debt ceiling deadline is breached. let's bring in allison dean, and michael, senior columnist for yahoo! finance. good morning. >> good morning. >> you look at the s&p 500 points away from closing at an all time high and through there's too much euphoria? >> no, i think people are being very cautious going into this whole thing although washington is becoming a management by crisis. it's hurting our credibility globally. it will effect our cost of funds globally but the economy is strong and if we do eventually get to these resolutions and get past the drama, things are going well globally and the markets not that expensive. >> we only have 90 days in which to have a conversation about earnings. >> yeah. >> even the fed. who is going to have a long-term hold here before january? >> i don't think it has to be a long-term hold but 90 days is an eternity in market time. at least perception-wise.

we didn't panic this time when it was only a few days. so obviously it's not the solution anybody wants but you're going to defer back to the general conditions, right? slow growth, high liquidity, let's not talk about the fed until the first quarter will be the assumption and earnings while choppy in spots is good enough to sustain leadership here. >> are we back to an aggressive trade or are people going to want to hold on to utilities in the last quarter of the year. >> i don't think it's a good idea to hold on to utilities. interest rates will be going up. economic recovery is happening globally. things are going well in japan. china is slowing down dramatically. you want to look to the industrial sector. it's a slow recovery and growth is going to be okay but not incredibly robust but i think anything that's very interest rate sensitive you need to be careful about. >> i wonder when we look into next year if we're not muddling

through an area for stocks and not necessarily for the tun employed and the tracks cracks seen. that means where we could have had 3% growth we won't get there. >> we keep pushing off that moment of acceleration. we thought it would be this year. coming into this year, the standard wisdom was as soon as they get some kind of grand bargain done we'll have a weak first half and strong second half. obviously nothing really came about in that direction. so yeah i agree with that. again, it's sort of status quo. i don't think it's a real sell on the news type of event but i think we've come a long way. if there's one thing that worries me it's everyone thinks once this deal is out of the way it's up and away the rest of the year. >> we're now up 200. 1721, does that seem weird? earnings coming in up 1-6,

doesn't that feel a little strange? is there some a symmetry there? >> people do get a sense that washington is more drama than a real fundamental issue. and also i'm trying to look at a silver lining to this. i think there's been a vocal minority and now their own party is turning against them. if that happens, we might have compromise in washington and the issues with the health care bill will be fixed rather than repeal or keep it as is. there could be a positive coming out of this which is maybe this weekend the tea party which i think we need. >> wall street is a glass half full cup today. anyway, allison and mike, thank you very much as we keep an eye on markets down here. mean tile, reports of a possible debt deal today. but our next guest knows washington inside and out and he is not thrilled about the hands off approach the president has taken with the budget crisis. let's bring in leon panetta. he joins us this morning from the securing america's future energy conference.

mr. secretary, it's great to have you. welcome. >> thank you, nice to be with you. >> the president fielded questions on this, namely from a local affiliate here in new york said and tried to defend the degree to which he has compromised over the next couple of years. he says when i do it i get hit as hard from the left as i do from the right. where is he wrong? >> i'm having a hard time hearing you, could you repeat the question, please? >> sure. how should the president be acting in compromise in situations like this. >> i think, obviously, the president has tried to do what he can to try to see if we can develop some kind of reasonable approach here that wouldn't involve shutting down the government and defaulting in terms of our debt. and what i'm hopeful of is that it appears that the congress is going to do the right thing, end

the shutdown, extend the debt limit, and get to work on the budget. that's what the president wanted. that's what john boehner wanted and what all of the leadership wanted. they're at least at this point headed on the right track. >> i wonder, as well, about this question of leadership. you were saying that we've seen washington and many have said this governing crisis to crisis. does leadership ultimately come back to the president. should he have done more here to avoid the outcome that we're looking at? >> you know, look, the point i've been making is that we are in a situation where, you know, we govern in our democracy either by leadership or crisis and we have been governing in a process of crisis after crisis for a number of reasons, but i think what happened is there's been a breakdown in trust between all of the players. we've got to get that trust restored. and, frankly, everybody, president, the leadership,

everybody has to get into a room, be able to restore the trust that's necessary to do the decisions on the budget that are really important to where we go in this country. >> mr. secretary, in ruth marcus's column you say this town has gotten a lot meaner in the last few years. who makes the first move to remedy that? who is more responsible to weald an olive branch? >> you know, my experience is that this is very much a human process. and, you know, the president, the leadership in the congress have to continue to work together and they've got to be able to do it in a way in which they can be honest with one another and be able to try to ultimately find consensus. that's how we govern in democracy. that's how we always govern in

democracy. and i think what has to happen, we've been through a rough period here. it is mean in washington. we've seen a lot of partisan gridlock. everybody bears some responsibility for that but i think the time now has come to recognize that this country needs to be governed. the message we're sending to the world is that america is having a hard time governing our democracy. we need to end that message and get back to governing. >> and mr. secretary, even if there is resolution today, do you feel that america's reputation in the world has suffered? >> oh, i don't think there's any question that the message we have sent to the world as a result of this shutdown, which has impacted on our people, it's impacted on our economy, it's impacted on our national defense. we have sent a message to the world that america is weaker as a result of that. and it's not that we can't repair the damage here.

but clearly, at this point, the world is looking at the united states and asking the question, can we effectively govern ourselves. >> you're not the only bridge builder here, mr. secretary. we did have simpson boyles. we know how that ended. do we have that in us to go through that kind of exercise again? >> we have to. that's the nature of the job. we now have to move to this next stage which is t you know, the budget conference in which everything should be on the table. we've got to look at entitlements and discretionary spending and revenues and we've got to be able to put together the kind of package that will not only deal with the deficit but replace sequester. that's the next challenge. is it going to be tough? you bet. does it need to get done? yes it does. there were two lessons that came out of the shutdown 17 years ago when i was chief of staff to the

president. one was that the shutdown was a stupid thing to do, hurting american people is not smart politically but the next decision that was made was that it was better to govern this country. i hope that john boehner and others make the decision that it is much better for this country to govern it rather than to shut it down. >> mr. secretary, thank you for your time. enduring some of the audio difficulties in what is clearly a loud room. leon panetta joining us this morning on squawk on the street. a check of the markets, highs on the session up 203 on the dow. up 23 on the s&p. a lot of optimism after twitter selects it as the exchange of choice for the highly anticipated ipo. more in the amended s-1 that we'll take a look at in a moment.

but first, the reaction of the budget battle. we know how those have been active today. >> absolutely. they have been a little bit volatile but we also have a 26 billion cash management bill today. so we'll discuss how could that be if we're bumping up against debt ceiling? what will that money free up the treasury to be able to pay? and is our credibility really on the line here? there's two sides to that story. and of course we'll discuss every side to every story in about ten minutes. (announcer) at scottrade, our clients trade and invest exactly how they want. with scottrade's online banking, i get one view of my bank and brokerage accounts with one login... to easily move my money when i need to. plus, when i call my local scottrade office, i can talk to someone who knows how i trade. because i don't trade like everybody. i trade like me. i'm with scottrade. (announcer) scottrade-proud to be ranked "best overall client experience."

welcome back. we're taking a look at financials in particular. >> there's a good reason for those financials to be among the best performers in that index today. we have a number of positive catalysts on the earnings front. today is one of the heavier days in terms of banks reporting. check out shares of regional banks. keycorp up around 3 or 4%. it grew by over 5%. that's big there. also regional player comerica beat estimates. blackrock as profits rose for more demand and b of a up on earnings as well. by the way, every single member of the s&p 500 financials index is up by around 1% or more in trading today. certainly leading the way higher. back over to

>> it certainly is. thank you very much, sir. twitter will list it's ipo on november 15th on the new york stock exchange. one company is trying to make it easier for you to buy into twitter and other companies after they go public. but is it really the best way to buy into an ipo? more on this one in a minute. >> visit them on the web at sector spiders.com.

is . todd, what's the best trade you ever made? >> trading my old platform

. a lot of optimism about a deal coming out of the senate pretty soon. it's about 9 points from the day high. we'll see what the next few hours bring. >> it's official. kayla is reporting that twitters ipo is set for friday november 15th and it will happen right here on the new york stock exchange. twitters amended s-1 filing also announced it's third quarter results. so on that note, julia joins us

now with the low lights and the highlights. >> well, kelly in the third quarter twitter's revenue grew but so did the losses. it maintained the growth rate more than doubling to 168.6 million. the company saying it's increasing the amount of money it earns every time it's users look at their twitter time lines. twitter continues to strengthen it's mobile business now representing 70% of its ad revenue up from 65% just three months earlier. this stat is key. it's the fastest growing ad category and dwarves facebook's 31% of revenue. but twitters net losses triple to 64.6 million. that's up from 21.6 million a year earlier. so why? twitter's massively investing in growth with acquisitions, 300 new employees, higher data center cost and r and d spending that was 47% of sales in the

first nine months of the year. in contrast, facebook's costs were 10% of its sales. while twitter added 14 million users the growth rate of users slowed. when comparing money losing twitter to facebook, the fact that twitter waited so long to start generating revenue seems like a big disadvantage. it only launched ads in 2010 and no mobile ads until last summer but that also means the fact that they just started generating revenue also means there's plenty of room to grow, carl. >> all right. thank you so much. renaissance capital unveiling awe new way to invest in companies that recently went public. >> three big ipos pricing today and something even more interesting. an ipo etf. a lot of acronyms here. why an exchange traded fund for

ipos? you're launching it today. the symbol is ipo. take a look at it. why do we need it? >> there's been plenty of etfs but nothing focused on the newly public companies. the investors get an efficient way to own a portfolio of newly public companies inside of the etf structure. this is the first tuopportunityo have a low cast way to get exposure to companies trading well this year. >> i want you to explain what's going on in this etf. it's a basket of ipos essentially. companies that have been public within the last two years. >> correct. >> it's going to have largest holds, facebook, michael kors, workday. how did you determine them? >> we screen them first. they have to be a certain size to enter and the etf is based

upon our best research look at organizing this portfolio to optimize the returns. they have to be a certain deal size. usually 100 million and then we weigh them based upon market cap and it's capped at a 10% individual holding. the larger ones will be weighted. the idea is to capture the most liquid larger ipos and returns associated with those. >> now explain why people should be interested in investing in ipos as a separate asset class? how do you sell that idea? >> most other indies or core portfolios wait for seasoning of the ipos before they enter the index. so if you think you own the u.s. ipo market by owning the s&p 500 you're missing this entire segment. if you want to own a more comprehensive portfolio of u.s. equities you would add this to your s&p 500 etf. it's a piece of the puzzle.

it's the seasoning factor. this is a portfolio of unseasoned equities. >> once the name goes into the s&p does it disappear from the etf? >> we don't customize it that much but our studies show that with the two year holding period it's about the time it will rollover into the major benchmark. >> are you familiar there's a first trust ipo index. >> yes, there is another one. it's a good segment to be in. the first trust doesn't focus just on ipos and it has a much longer holding period. >> what's yours? >> two years, right? >> ours is a two year holding period. >> you're up 40%. 40% this year, your mutual fund. >> yes. >> it's a hot year for ipos. are you anticipating this was going to continue? and why do you think? >> it's hard to predict these things but i will say -- we are seeing a more active ipo market than we've seen since the financial crisis. we're getting back to more normal levels but we're not where the internet bubble was of

'99 and 2000. companies were much riskier and we're seeing 400 to 500 ipos in a year. so we're back to possibly, we could call a more normal level of issuance. no straight shot at anything but we're going to have some time in the cycle to go. >> all right. kathleen smith, thank you very much. >> thank you, bob as well. appreciate it. >> thank you. >> we'll get a deal on the debt limit. ratings firms are still sounding the alarm. fitch put the u.s. rating on watch. will other firms follow suit? we'll ask the head of sovereign ratings at s&p. also the bells are about to sound across europe. details on the close when we come back. >> this portion of cnbc is sponsored by pimco, your global investment authority. [ indistinct shouting ]

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falling at its fastest and good car registration data as well. but there's a problem within earnings today in europe. notably there's a problem with slowing growth in fashion and within leather. those are the areas they have a problem. part of it is because they're taking the brand more up market and losing the logos and making it more expensive on the material front but there's a problem within cosmetics which is why you see loreal in negative territory. champagne sales doing great. elsewhere, i mentioned to you that the car registrations were good. there's two companies that still have declining sales. they are down today and let's have a look at some of the other ceos that have disappointed with their earning statements in europe. they turned positive. it was a problem. they had a recall. this is the big yogurt maker within baby formula but that was a disappointment for many in the

market. record levels from any markets. individual corporates disappointing. >> shutdown is a term we're hearing as well as the european simon looks into what's happening in the u.s. >> keep buying the champagne. >> thank you. >> warren buffet was on squawk earlier sounding the alarm on d.c.'s dysfunction. here's what he had to say. >> we have been building a reputation for proper fiscal behavior with our currency, at least, for 237 years. we have become the reserve currency of the world in the process and people all over the world hold our paper. so to give up or to do anything that damages a 237 year period of good behavior is idiocy. fitch put the u.s. credit rating on watch negative yesterday but it was s&p and that famously downgraded the u.s. rating last time around saying american policy making

and political institutions weakened at a time of economic challenges. joining us on set is john chambers, welcome. >> thanks, kelly. >> you guys took a lot of heat at the time and now your words seem rather prophetic. >> we think our decision to lower the rating two years ago has been validated. we know that last time we spoke we spoke about going stable on the outlook which is what we have now because we expect that there would be an 11th hour deal. looks like we are getting that 11th hour deal now. >> a lot of people in the market are wondering what happens next. what is your view if the u.s. happens to miss a debt payment? what that means for their credit rating. >> we don't think they will. but when a sovereign misses a debt payment unless it's immediately cured the rating goes to default. >> if the u.s. doesn't pay out on the bill due next week, even if it's just a delay will be put on default by your firm.

>> criteria calls for the rating to go to d or sd for default. >> what does that mean? >> five days. if you thought it wouldn't be cured you could go in a shorter period of time. >> we had john during the summer when you guys did go stable and there was some discussion about the potential for cooperation on capitol hill. has that view been destroyed by the past two weeks? >> i wouldn't say it's been destroyed. particularly if we get a deal today or tomorrow but this is no way to run an army. i think it highlights the sort of dysfunctionalty we have with the budget process. you have shutdown of government which is destabilizing. >> it's not enough to force s&p to go negative watch again? this was the assumption that we took. we thought that when you got to the debt ceiling that it would

be a very activitidebate. but we think at the last moment it will be resolved. >> if this bill is what it needs to be, meaning it gets us into january and february, would you expect the next round to be more contentious? >> i think equality contentious. >> really? why no worse? >> i think policy makers, maybe by then, will realize this has been very destructive to the economy. our economists believe that the shutdown is costing us .3% of gdp each week the government is shutdown. that's a lot. it's delaying hiring decisions. i've had people come up to me who i know and ask if they should sell all of their government securities in their 401(k). and this is just creating needless anxiety. >> i'm curious as well, part of the problem of course is the country's debt load. this is a problem that the ratings firms first called to

attention over the last several years before, during and after the recession. so at the same time you're saying this is doing so much damage to the economy, you're still warning that the debt level is so high and i can't remember -- it was one of the firms, perhaps that said we needed $4 trillion worth of debt reduction over the long-term. that's at the heart of the debate we're having right now. >> that's true. >> how do you square the circle? >> we lowered the rating for two reasons. one for the political issues we just discussed and the second was the debt trajectory. we are still not at a position where we have a debt stabilizing balance. but the deficit has come in quite sharply in the last two years for a number of reasons. one is the budget control act. another is sequestration which is a blunt instrument but delivering a fiscal consolidation and the last is a number of cyclical issues. >> well, growth. >> well, that's what i'm saying. on the cyclical side, the growth is picking up. and that is happening with the

fiscal receipts, but you're still going to need to consolidate the budget by a percent or so, gdp and more importantly, beginning around 2016 because of the demographics and people retiring and age and health-related costs, then the debt to gdp ratio will deteriorate unless we take measures now. it's better to take measures now because then it will cost less and people can make plans for it. >> right but then the very measures are in the middle of the negotiations. we have to leave it there. >> thank you very much. >> thank you for coming by. an important voice this morning. >> let's get to john who has breaking news for us, john. carl, i just got off the phone with the senate democratic leadership aid that said if things go as they now expect, a debt limit increase and bill to reopen the government could pass both chambers and be on the president's desk for signature today. under that scenario, the house,

per an understanding that they have with speaker boehner, which they hope speaker boehner will move on, soon. speaker boehner would first pass the senateise which will be unveiled after mitch mcconnell meets with his members. that's a meeting going on right now. if john boehner, in fact, does that, the house passes the senate language. then it would go to the senate and if there is no delay, if ted cruz and mike lee and the people who have been pushing this effort that has lead us to this point decide not to delay the bill, it could pass in the senate this afternoon and go to the president. if cruz and lee decide they do want to object under that scenario it would get to the president's desk no later than saturday because they would have to run a clock before they have a vote requiring 60 members to vote in the affirmative. they know that they will have 60 votes. so it would be really the trading range timing rise according to the expectations that now prevail in washington

and the capitol is as late as saturday and that even in the latter case would be soon enough to avoid a u.s. government default. >> obviously closer to the bone there, john. >> yes. >> you spoke yesterday about the peer pressure cruz and lee would be under. a lot of senate moderates trying to lean on cruz. can you kounlt the chances of him putting up last minute road blocks? >> you can look at signs different ways. given their behavior so far there would be every reason to think they would want to stand up and say they're trying to vindicate this cause. on the other hand, the collapse of the house effort yesterday shows to everyone that there is no chance of the other side prevailing here. and secondly, you are starting to hear some conservatives last night saying forget about congress. congress is not where the action is. now we're going to go and put primary candidates up against some of the republicans that haven't done what we want. if that is the prevailing mind

set, if they're turning away from congress, you might see cruz and lee being able to justify, we did what we could do and now we're going to look elsewhere and the house and senate can do whatever they will. >> john, harwood out of washington with the developments as the market reacts positively. thank you, sir. >> for more on the markets, let's get to rick santelli. busy day, rick. >> busy day, jim, you just heard john harwood. do you think it will all happen today and does it need to all happen today? >> might all happen today but it does not need to happen today. >> why not? >> treasury found out they had a little more wiggle room. today at 1:30 eastern they're going to auction off $26 billion in cash management bills that are due in april. they have now enough money to pay all the bills through october 31st should they elect to do that. the countdown clocks that all say midnight tonight, there's

another two weeks left if we want to have another two weeks. >> well, the bill market must sense something along those lines. that one month bill that matures tomorrow, briefly traded negative yields. >> yeah, went all the way back to zero. >> and the bill that expires a week after made it up to the 70 bases point range and about cut that in half. let me ask you another question, what about forbearance with respect to interest payments? anybody brought that up? >> it's been brought up but it gets down to the whole thing about payment prioritization. if the secretary wanted to mid gate this situation with payment prioritization with asking the fed, you have $3 trillion in treasuries, how about if we don't pay you, eventually you get paid, there's lots of wiggle room. >> what about social security? now listen, is social security a trust fund or isn't it? >> it's a trust fund. it's a separate account. it's not involved with any of this.

social security will continue to get paid as long as we want to continue to pay it if we wanted to do it that way but we decided to lump all the stuff together with an artificial date of october 17th that the world will end tonight unless we get a deal tonight but that's not simply the case. >> okay. let's look at it from another angle. we've seen a lot of headlines of late about how countries like china are looking at us with a bit of destain. >> they're looking at us with destain and we're embarrassed about what they think about us? i'm not buying that. i'm not buying that the russians are and we're embarrass td. no one has a clean slate here. everyone's politics are dirty and messy and so are ours. i don't understand this whole argument about embarrassment. >> do you think speaker boehner can last and should he last? >> he might be able to last. i don't know woman standing they would put up in front of him but if he were to cave and wind up

with nothing, he'd have a problem on his hands. >> we're running short of time, back to you. >> thank you so much. the markets are digesting a lot of quarterly results from bank of america, pepsi, mattel is doing well today. the earnings squad will break it down in a moment. >> bull markets report is sponsored by fidelity investments. 've completely inted every step of the process, making it easier to try filters and strategies... to get a list of equity options... evaluate them with our p&l calculator... and execute faster with our more intuitive trade ticket. i'm greg stevens, and i helped create fidelity's options platform. it's one more innovative reason serious investors are choosing fidelity. now get 200 free trades when you open an account.

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>> coming up on the half, we're trading the stock surge as wall street watches every move from d.c. plus what do our traders think about warren buffets picks and commen comments. and digging into warning reports. see you at the top of the hour. can't wait to get started on this big market day; you know it. s&p up 22. it will be interesting what the markets reaction is about an hour after the deal is done. not immediately after. >> do general markets get momentum? i want to take a look at what's happening. bills getting a lot of focus. there's 1-month t-bill. you can see prices falling there. that's what the percentages indicate. the field has been moving higher. it's curious to see the yield on a bill you're paying in one months time to be where some of the longer term debt typically

is. that's one place to watch for stress as to whether people think the u.s. might miss a payment. >> yeah, gold not telling us a lot. so even down to 15. some people are sort of doubting the efficacy of it to tell us what people are really thinking but that treasury bill may tell us more than anything else today. >> a lot to keep an eye on. it's a major day for earnings. companies reporting before the bell this morning keeping an eye on positive reaction. the earnings squad will be here to tell you exactly what you need to know about these results. stay with us. >> coming up, earnings squad, in color scarring mandy dury and domm dommic chu. squawk on the street will be right back. woman: everyone in the nicu --

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and welcome to the earning squad where we dissect the earning stories everyone is talking about. i'm sitting in for melissa lee today and joining me today is dominic, the dominator and also, dr. john, co-author how we trade

options. great to have you with us. first, let's look at the scorecard. with 11% of s&p 500 companies reporting so far, 57% have beat their eps targets. 15% have met estimates. 28% of reports have come in below forecast, but today, i want to start with one of today's really big movers. stanley black and decker. trading down over 12% after the company released lower than exing pechted third quarter earnings. due to u.s. government cuts and the shutdown. the company also expecting slower margin expansion in its security business and you can see what investors feel about that. but dr. john, i want to get to you first. you've been watching bank of america for us. >> yeah and mandy, i've never seen a deal that warren buffett has done, a special a buffett deal, that is not a great deal. in other words, when he buys a stock, it's not necessarily the time to buy, but if he gets a buffett deal like in goldman

sachs, bank of america. preferred shares with the dividend and all the rest, i've never seen him miss. this stock is outperforming. smaller declines than citi, jpmorgan, wells fargo. their expenditures are under control and it's only up 26% year to date. it's doing about as well as any financial stock could do. >> brian moynihan is like the unsung hero here. his project, his turn around plan, is gaining momentum and you're starting to see the signs of that. >> pepsico beat iing third quarr expectations. what are investors looking for? >> just like coca-cola yesterday, we're talking about diet soft drinks. the ceo said rapid, the decline in demand for diet drinks has come quicker than they anticipated, so when you look for them, also warren buffett

said he likes the fact that pepsico not only has the drinks business, but a snacks business to off set. >> that is the key. the salty snacks is a key as well as the fact this is a great sandbag because as well as they did and outperformed the street estimates, they said it's a challenging environment. you've got to love that. even on a big beat, they come out and sandbag a little for the coming quarter. >> okay, and also, mattel reporting better than expected third quarter earnings. after about four quarters of declines, sales for barbie, finally, barbie is back. also, american girl doing well as well. if you want to join the conversation, tweet us. we're going to be back with lots, lots more during street signs and more signs of the market in response to the latest developments out of washington in just a couple of moments time.

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welcome back. markets are up strongly this morning, a rally taking place as people look to washington for the prospect of a deal that could be done today.

let's bring in steve grasso and stuart frankel. good morning. we've seen a pop and people have got nn trouble before trying to chase it. at the same time, we've had people telling us -- >> consistent in saying there was going to be a deal, so a dip was going to be a viable dip. once that word default came out, people got scared. once you learn there was no way that was going to happen, it made it buyable. >> at the same time, we had s&p just telling us a few minutes ago that if the u.s. were to miss a payment for a couple of days, it would be considered a default. the prospect is not out of the question at this point. >> it's not, but i don't think you see a collateral damage. it doesn't cascade through the whole market. treasuries are segregated, so you're not going to see that ripple through the markets. have traders here gotten better at reading political tea leaves

because you've had a chance to practice? >> it's funny you ask that, carl. politics has been my hobby since i was about 10 years old. i enjoy reading the tea leaves. i'm the president of that club, but i think what we have to realize is people are speaking their own book when you're in politics, so you have to sift through and understand the data. no different than companies. >> i mean, look, i'm glad you have the stomach for it. sounds like we're going to have to be doing it for quite some time. people knock the tea party, doesn't matter what side of the fence you're on, the republicans threw up a moderate. mccain. he lost. the only win the republicans have had is 2010, so who's going to stick to their guns and at the end of the day, if this brought forward a debt battle, so be it. there's a lot of people who have suffered. i'm not belittling that. at the end of the day, there is

not going to be a default by stocks. >> on that note, obviously, stocks reflecting that sentiment. don't forget by the way, tune in tomorrow for our exclusive interview with double lines jeffrey gunlach. a lot to say about politics in this country. back to headquarters. scholarsh scott wapner and the halftime. >> it may be high noon on wall street, but all eyes are on that building right there in the nation's capitol where the stakes could not be higher. the senate expected to come back into session at any moment with the fate of the markets and your money in its hands. the debt default deadline is now just 12 hours away. the clock right there as you can see is ticking. in the markets this hour, stocks are surging on several reports that a deal is close and could be announced any time. let's go to d.c. john harwood, who is live w