becky quick this morning. let's begin with the markets. stocks coming off a bullish session yesterday, the s&p ending at a record high. meanwhile, the dow staging an impressive comeback, as well. a triple digit loss to finish near flat and the so-called fear gauge, oh, the fear gauge, the vix slumping below 14. take a look at futures this morning and see how things are setting themselves up. we're going to check it out right over here. the dow, up about 12 points. s&p 500 up about 3 points and then the nasdaq up close to 22 points. on today's agenda, here is what we've got. earnings central, quarterly reports due before the bell. here is what's coming up. dow component general elect, morgan stanley, honey well and a couple of others. we'll bring you the numbers and instant analysis. as for the economy, september's leading indicator set to hit the tape at 10:00 eastern time. and then there's the issue of all of the government data that hasn't been released during the shutdown. the bls says it is going to be

releasing the september jobs report next tuesday. so on forget our jobs friday. it's now jobs tuesday. last month's producer price index will be announced on the same morning. then on wednesday, we're going to get september cpi. steve liesman, of course, and all these numbers are going to join us 8:30 eastern time with more on what we can expect. before we do all of that, michelle has this morning's top stories. >> andrew, do that again what you did with the fear index. >> ooh, the fear index. >> it sounded like homer simple standard operating procedure, it was really funny. in global news, china's economy glooe grew 7.8% in the third quarter. in line with expectations. but the country's sta.ic bureau said growth showed signs of slowing in september. speaking of china, chinese computermaker lenovo has signed a nondisclosure deal to examine blackberry's book. but the company reportedly faces regulatory obstacles if it bids for all of the company. it is said to be likely to

pursue parts of blackberry. bank of america reportedly considering a plan to introduce a checking account that curbs overdraft practices. "the wall street journal" says the plan will not allow customers to overdraw their balances at an atm or when making an automatic bill payment. no word on whether bofa is considering boosting fees as part of its checking account overhaul. joe. >> thanks, michelle. i was going to ask him to do that, too. great minds. he's pretty brave today now that we've got a deal. you were -- ooh, but you were trembling about going over before. weren't you anxious? >> i was a little anxious. i was. >> well -- >> but now we can all relax. >> take a breath. we've got three months. >> to hold our breath is what we have. >> in the market yesterday, that was impressive. because ibm was down like 10 bucks or something. >> and people still -- i don't know what's wrong. but this is all the fed. this is some kind of bizarreo

backwards psychology. >> it's not bizarreo. >> this is not a function of, oh, we'll see how that in washington is sorted out. it's now everything in washington is so screwed up. >> but if we have another deadline that they have to anticipate not going well, which means they've got stay loose. it's all good. all good. there's a few after the bell movers. google posted better-than-expected earnings and revenues. shares rising on the news. look at that. wow, 961 for google. that is a -- that's a horse to just get on and ride, is it not? >> did you read the "new york times" story? if you read the "new york times" story, you would think things weren't going very well. is that a wishful article or an actual article? >> that the pace of growth is slowing, and, therefore, you don't get as much revenue still. >> all right. i did see a couple of things.

and i'm start to go think like you. >> in fact, i was with you last night and i did think. >> no, i brought you up because i was using ways again. >> i don't know how many hours it will add to my life of not sitting in the lincoln tunnel, but ways is the greatest -- >> ways? ways. >> it's an app. >> oh. >> i saw writ will change your life. it shows my where the traffic is. it's phenomenal. and here's a couple of things, just quickly. then i'm going to get to capital one, i promise. all the internet activity went from 60% mobile to 50% mobile. i passed a bus the other day when i was down in d.c. and the lady driving said look over at that bus. there was a line of window and everybody was on their phones. everybody is connected all the time. with ways now i hit to see where there is a copper something and a home depot ad came up and it was like, ding, ding, ding,

ding. >> did you click on the home depot tab? >> i didn't. but i thought of it in a positive wait, home depot and frank blake and the way he looks in his apron and everything. but it's possible to monetize mobile. >> but not as much. >> but who sits at home now and who opens a big laptop now? it's all -- and i said these smartphones and then penelope said i don't even have a -- she doesn't. she has a piece of crap blackberry. it's not a -- it's a blackberry. >> still, getting on the internet is so hard on a blackberry. >> no, no, you're on the old boels. the new ones are better. >> i dictated an e-mail the other day with huge words in it, two paragraphses, perfect on iphone. >> the chinese wanting to buy all that hot security that blackberry is always famous for in terms of e-mail. >> i don't know -- i don't know about that. is that what they want to do? >> i don't know. >> lenovo wants to buy

blackberry. >> i didn't want them to buy the pork. >> but now they can buy all your e-mails, too. >> there's nothing going on in my nooels. capital one's results. capital one, alec baldwin, the viking. >> he's the ceo, right? >> alec baldwin is now a colleague of yours. >> i know he is, god bless him. he's a gregariously engaging fellow. he's very talented. it's not easy to act that naturally about everything. anyway, beating the street for capital one and chipotle. the worst mexican food is great, in my opinion. >> this is great mexican food. >> he's just saying that -- >> it's great. you don't have that expression sxregz? i'll tell it to you on a break what it's actually all about. better than expected sales, boost in rt kwaerly profits. insisting it may raise prices in

20134 to offset higher food costs. and advanced microdevices. why were -- anyway, it's $3. advanced micropost ago 6% decline. every quarter we report on this company, the company dampening hopes that its fast growing gaming console business can take up the slack. poor company for 30 years i've watched it. >> amd, one of the four horses of the nasdaq. >> $2.9 billion at this point. but you're not in all the mobile phones we're talking about. >> even intel has never regained its late 1990s mojo, really. >> it's a crazy time. check on the markets this morning. futures right now are suggesting that we're going to have a positive open. the s&p would open slightly higher. dow would open higher by five and the nasdaq would open by more than 20. will, wti is at $100.

the ten-year yield has fallen. 2.55 as we saw what andrew was talking about. maybe the fed will be around for a long time. the dollar is at an 8 1/2 month low. 97.65 yen for every dollar. euro will cost you 1.36. almost 1.37. the pound is going to cost you 1.62. the price of gold is lower, $1,230 per ounce. time for the global markets report, roscoe p. coaltrain is standing by in london. >> michelle, good to see you this friday morning. equities a little firmer here around europe as we wait for the u.s. to post later. advancer outweigh decliners by a racho of 7 degrees. yesterday yesterday, just up another 18. the housing mkt has been -- in the uk.

the cac 40 up nearly 0.5% in paris. now everybody in the states will be looking at what happened with google yesterday. we get on to that. this is the sector i wanted to look at here. travel and leisure, household goods doing fairly well. we had some news out of china overnight. third quarter gdp growth up 7.8%. a little bit of disappointment with the breakdown of that because it was still sort of government led growth raerchb private bess. still there's a concern about what that is going to do for the future, as well. the fourth quarter, going to look a little deeper. but normally if you've got a number that you thought was good, you might see basic resources up amongst these sectors, but it's not. technology down 0.2% despite what google was saying. of course, and i'll just show you the frankfurt quote here for google, 7.6% up google in the frankfurt trade as it's nearly that $1,000 mark in the united states, as well. one other, corporate is worth keeping your eyes on here.

loreal 2.3% today. the cosmeticsmaker coming out and saying, look, we're pretty comfort where with things are. confirmation, the cosmetics business is in exclusive talks to buy two japanese companies, as well. they've been in a pretty sweet spot, loreal. wrap up with a quick look at where we are with the bond markets. pointing out the ten-year treasury yields, 2.55% for ten-year treasuries. up bond markets here following to italy and spain. interesting thing is, italy is now yielding less than spain once again. so we're out of the yields for now. and yieldz also lower today, next treasuries, 1.82%. although that spread has narrowed just a little bit. that's it. >> thank you, ross. good to see you this morning. we mentioned china earlier. ross just mentioned it. let's get to eunice yoon with more details on it. hi, eunice.

>> hi, michelle. st numbers came in at 7.8%. the big question is how is the economy going to look going forward? a lot of people are talking about how the september data showed us peaking out a bit. the retail sales numbers came in at 13.3%. industrial numbers came in at 4.3%. this comes after the september export numbers made people nervous. there's a lot of uncertainty there. on top of that, the people here are focused on a november meeting. this is a party conference when all officials get together and start forming policy for the next several years. people are wondering what are their policies going to look like? what kind of reforms could we have? and then you throw on top of that all the uncertainty that people are feeling about the u.s. debt ceiling debate. there's been a lot of chatter about that and how that could impact sentiment in the united states and that, of course, affects everybody here in china, especially in the manufacturing sector.

now, the government here did weigh in on this. again on an official level, very happy with the resolution in the united states. but on an unofficial level, the state press was blasting washington. there was one editorial that said that the deal really just pro longs what it calls the fuse of the u.s. debt bomb. also, there is a chinese ratings agency that downgraded the united states because of all the politicking. this is not a household name in the united states, barely a household name over here. but at the same time, it does show a signal. send a signal of how china is feeling about the deal and the politics getting in the way of the safety of their investments. guys. >> thank you so much, eunice yoon. andrew. >> from china to washington, we're really talking about washington today rather than yesterday where we were in washington. washington back finally to work, but what do they need to do to win us back? that's been the question we've

been posing. and morning money's ben white of politico joins us now on the set. do you think they -- i'm not going to say do you think they can win us back. i don't want to be cynical. >> did they never lose you? >> it's not that they never loft me. it's just that i don't know if there is a low. >> you have a long way to win people back when you're at like 20 pefrs approval. >> across the board. >> one of the more dirveth things, you haven't seen each other, actually. >> i saw you. you looked good on camera. >> you looked good on cam wash as well. i was a little suppressed with any of the questions we asked these folks in congress about what they were prepared to do. they were prepared to do basically nothing. >> you didn't get depressed when the president spoke -- >> he spoke before -- >> before it was actually signed. >> that didn't seem helpful. >> let me ask you if these words

would ever be used in terms of the president. constellatory, gracious in victory, collegial, open. did any of those words ever be in the lex confor -- >> they're not the first things that come to mind when you think about the president, which is a problem for the budget talks going forward. >> how do we start the conversation on the right foot? >> i don't think the president started it necessarily on the right foot by going out and saying, if you want to make big changes, republicans will say we won a lot of elections and we control the house of representatives. and speaking for the vote in the house was not that helpful. we're starting off on a bad foot. and i think the idea that you'll get a grand bargain right now that includes entitlement reforms, it will be hard. democrats will demand more revenue. >> what is the path? >> not too business all over again. >> the path is getting an agreement on funding levels for 2014, we know the somewhat over $1 trillion that democrats want

and the sequest every level of $67 billion the republicans want. you get somewhere in ta range, less than a trillion. maybe you reprogram the sequester a little bit. then we don't go into crisis mode again. if everybody shoots really high and wants to get a grand bargain, maybe it's possible. i think it's not. i think you get a funding level deal and you get from there. >> do you think it's a mistake to shoot high? >> i don't think it's a mistake. you want to talk about corporate tax reform, repatriation, there's a lot of things that could be done that would be helpful. the problem is you always run into demands from democrats for significantly more revenue. and that's just a place republicans are not going to go. they gave their tax increase -- >> how is -- you know, i talked to steve israel yesterday. how emboldened do you think democrats -- i mean, you talk about the president. >> for three months. and that's what they won?

>> no, but that's what i'm -- i just want to know in terms of, therefore, how they approached the negotiations. and, therefore, also how republicans approached the negotiations. >> i think democrats feel emboldened in that they believe they broke republicans' demands on the debt limit. they've broken the cycle of we're going to default and crash the economy unless we get a, b, c and d on obama care. >> do you think they just broke on obama care or do you think it was -- >> it's mainly they broke on obama care. i don't think they're going to try again to have a deal with the shutdown and the debt limit, you know, crash as the end result if they don't get obama care changes. but they haven't broken them on we're going to give you more revenue. they're not that emboldened and they shouldn't be. >> this occurred to me last night. it's sad that i'm not thinking about the dodgers or something, but it wasn't. i was thinking about this. when they change their tact from obama care to overall budget negotiations to try to get the president to negotiate on that

prosecute this, they didn't. he got this. but does it matter that the president made it to october 17th without negotiating? and that's the victory? but now they're basically where they wanted to be -- they wanted him to negotiate on budget issues. we went through the 17th. now he has three months, but now he has to negotiate. so all he did was win a week -- >> well, i think what the thinking in the white house was you can't give in to unilateral house republican demands as part of a negotiation. you can't set up a scenario in which the debt limit every time is going to be a weapon that house republicans -- >> well, not anytime. senator oh bam in ma in 2006 thought waits good strategy, but no longer a good strategy. >> he was our that was in the context of a vote that nobody thought was going to fail. i'm not saying that the. but that's what they would argue. >> boehner and everybody else, meaning how does he operate now? he let the rightist of the right

wing -- >> they like us now. >> drive him. what does he do this time? >> it's an excellent question. i think he probably counseled them not to try again to make n unrealistic demands in return for a debt limit increase. >> although they didn't listen the first time. but they like him. they knew they were bad boys and he let them be bad. >> and he let them push it to the end before caving. >> he sort of let -- he gets strung around by all sorts of groups. >> he could try to change tactics. he doesn't have much choice because he doesn't have much control over that group of republicans who are going to do what they do no mart what happened. you can hang on to the tactics, but i don't know what other tactics he can use. >> wow. >> appreciate it. >> the crazy crackbarian still has a few gaps of light left. >> mr. sorkin corrected you. there's still -- >> reading twitter all day.

that was the entertaining part. >> in the death throws. but there's one last thing. thank you, ben. coming up, if you didn't get a good note's sleep, you'll want to hear our next story. why a lack of shut eye could do more damaging than -- it makes you fat, number one. >> and none of us around this table get enough rest. "squawk box" will be right back. (vo) you are a business pro. maestro of project management. baron of the build-out. you need a permit... to be this awesome.

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time now for the executive

edge. daily segment focused on giving business leaders a leg up. most people know that it's a good night's sleep that's so important. there's a new study that suggests a reason for why good shut eye leaves you feeling sharp. scientists say they've discovered a system in our bodies that scrubs away neural waste as we sleep. mostly active when you are at rest and stops when you're awake. i am not surprised by this at all, guys. >> i remember in college with in the uro anatomy and things like that, sleep was poorly understood. we didn't know why anyone -- i mean, it's obviously that you're in a resting state and something is happening that needs to happen because when you do sleep deprivation studies, people can't last beyond a certain point. and that makes perfect sense. something is building up. it's all chemically mediated. so things get broken down. you would need to -- and your in

the ural waste is not being cleaned out on many mornings, i've noticed that. >> you've noticed? >> i've smelled it. >> wow. i'll tell you, what worries me about this, though -- >> you're a worrier. >> there's a suggestion that plaques are related to alzheimer and things. so it's a big itssue for me. >> it's a big problem. >> we both don't get enough sleep. >> i can't lie and say i'm great on four hours. i'm not. but there are people who are great on four. >> no. that would be greater on seven. >> but some people did, like, calculate life hours that they're alive and they think they're wasting eight of them. and it's like, that's not the way to think about it. >> but some of the most successful people i know claim they don't need a lot of sleep. >> when you don't sleep very long, do you remember -- i don't remember my dreams very well, but when i do, there's a lot

going on. there's a lot going on that -- >> i love to have all those crazy dreams. >> you do? >> yeah. and if you nap, i find i can get more dreaming. >> can you do me a favor? >> what's that? >> can you put some clothes on in my next dream about you. i don't know what it means. >> this squawkward moment has been brought to you by joe kernen. >> cover up? >> a robe. a robe. >> oil companies. >> we've got some more. toga. how about a toga. >> toga, toga friday. sorry, michelle. >> oil companies are being sued for wasting natural gas. mineral owner res seeking millions of dollars in lost royalties. companies deliberately burn natural gas when they don't have the pipeline to transport all that is produced. the process is called flaring. the value of flared gas in north dakota is said to be worth nearly $100 million a month

according to those who are suing. property owners believe they're losing money when royalties aren't paid on what's flared. it's my understanding, there's no economic incentives due to the price of natural gas to capture this natural gas. >> i bet it's unbelievable. there's no way to capture it? >> you can capture it. it's just is it worth the money. yeah. >> the infrastructure is not there at this point, right? >> okay. dare i say is there any -- i don't want to say it. by flaring it, is that bad for the -- you know where i'm going with that. maybe i shouldn't even ask. >> is talking bad for it? yes. is breathing bad for us? yes. >> i'm just saying burning the stuff into thin air -- >> it's killing. >> if you believe co2 is a harmful gas, then it is bad, yes. quarterly results from dow component general electric coming up, so don't move. the american dream is of a better future,

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good morning. welcome back to "squawk box." i'm joe kernen along with andrew ross sorkin and michelle caruso cabrera. general electric's results are hitting right now. looking at these, after worrying about ibm and whether there was some macro sort of headwinds, this -- you know, unless i'm wrong, this is pretty good. 36 cents a share was a penny

above expectations, number one. that's up 18% including restructuring. now, what do we worry about a lot of times with ge ref knew? and revenue was 35.7 billion. the company attributes that to faster than expected shrinking of ge capital, which they've said in the past sometime to explain why it misses estimates. but the estimate was only 35.9. so 35.7, there was an fx impact of $100 million. so that is going to hurt it to some extent. but, you know, this is not far off. in terms of what some people think has been a slowdown. revenue, you'd call that just barely below. a record backlog of 229 billion. that's something that the company always likes to trumpet because it does sort of set you up for a more positive future. good strength across all regions, including the u.s. up

18%. europe up 17%. and growth markets up 22%. i guess the restructuring charges were known about because if you exclude those, it was 40 cents which would have been above analyst expectations. but the company is saying it's only a penny ahead up 36 from an estimate of 35. ge capital earnings up 13%. and tier one common ratio, 1 1.3. they have to worry about basul 1, too, andrew? >> they do, they do. they have something called ge capital. >> oh, yeah, yeah. >> and the overall framework for 2013 remains unchanged. jeff immelt says third quarter results were very strong. on an improving global business environment, so it was improving. i guess europe is better.

orders through 2.9%. stwril margins up 120 basis points and we're on track of plans of 70 basis points for the whole company for the year. and ge capital continues to perform well. so at this point, for this stock to trade at a new high -- and i don't mean an all-time high, but 24.95 is the old high. so it's up 15 cents at 24.83. jack began as he usually does, chief investment officer of harbor advisory. jack has owned this stock for so long that, you know, he knows everything about it. so that's why you stuck with it. do you remember $5, jack? i'll bet you do. >> i do. i remember march 9th, 20309, doubling down for some clients that liked 769, which helped because, boy, we owned it from like 1996.

but, joe, this is a great report. the industrial margin expansion -- oh, yeah, you were on. >> did you get an ending net investment in capital? >> no. that's why you're on. this is a quarter where i thought it might be hard to hit the numbers. it's basically in line. i thought that was a positive. >> that's a real good revenue number. i thought it would go to 3.75. it probably went lower if that's what they're telling us. and that's a real good reason for a revenue shortfall. we're finally done with the

revenue decreases. but orders were great, industrial margin expansion, that was much better than expected. so this is a good report. it will move the stock. i'm expecting a dividend increase and if we didn't get it in these bullets, i'm hoping we're going to get it at 8:30 on the conference call. each of the last few years, joe, it was this quarter that they announced the dividend increase. it should be about 10% from 19 cents to 21 cents. >> and ge capital returning revenue to finally profitable to the top. that would help that, right? are you satisfied with that? does it need to get smaller? >> i didn't hear that number. could you run that by me again, please? >> hold on. let me put on my glasses. werings was 13%. real estate and consumer businesses. >> ge capitals were up 13%. ge capital earnings up 13%. eni at 385 billion.

>> yeah. in light of taking down revenue, i mean, any net investment, that's a good number. and you're absolutely right, that's what michelle is going to allow them to do more stock buybacks to increase the dividend, repatriating that cash upstream is really allowing them to juice their capital allocation. >> 2 billion in dividends to the parents. >> yeah. that's great. >> and you point out, so when was the last time that revenue grew year over year? >> gosh, i -- i think it was -- i think it was '08, joe. >> it was a while ago. >> oh, you bet. you bet.

>> 2496 now. i don't know whether people believe you or are listening to you, but you're right, it is trading higher. 24.96, this is a new -- let me look at a longer looking chart. there it is, the last time it was this high. might even hit 25. who knows. >> as a journalist, i guess i can hope for prosperity increasing for some people. >> it's not allowed. you have to be cynical all the time, joe. >> you really do have to. considering these people are trying to earn a profit all the time at the expense of these people, right? >> yes. >> jack began. thank you. they are, andrew. >> they're evil. >> trying to make money.

i'm trying to line their pockets, trying to give shareholders more money, constantly. and they don't even deny it. i read it in the "new york times". >> this is a business show and that is what people are trying to do? >> your read here. >> i don't know how to respond. >> it's earnings season. we're going to talk expectations next the but first, if you want to know what's going on behind the scenes of "squawk box" and, boy, i don't know if you want to know this week, but if you do, check out talking quack. go to squawk.cnbc.com. boy, can you learn a lot. we're back in just a moment. [ man ] on december 17, 1903,

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

. welcome back to "squawk box" this morning on this friday morning. take a look at u.s. equity futures at this hour. after ge after just reported dow looks like it would open about 13 points higher. nasdaq up close to 23 points and the s&p 500 up over three points after what was a great day for the s&p yesterday and the dow ultimately turning itself around. also, as we discussed before the commercial break, shares of ge boosting -- getting a boost this morning following the quarterly report. so you have that news. plus we had a couple other headlines for you. and this is for those that in northern california this morning, if you're a commuter -- and i hope you're up watching us. i know it's early for you. but if you're out there, you should know it could be a very messy morning. commuter rail workers in san francisco bay area are on strike today after talks with management over a new contract broke down.

the bay area rapid transit management and the unions have been fighting for months overpay and benefits. and if you're making your way to work this morning, you take the rails, it could be complicated. >> all right. as the u.s. government reopens for business, let's get the latest on what's happening in the bond space. plus, a gauge of the global economy. here with us now are chris corso of cut water asset management and paul donovan's global economist at ubs. >> fed easy forever here because of the standoff? and we're going to get another one in january. so if -- what, second quarter next year? >> there's a difference between quantitative policy and monetary policy. the monetary policy is all about -- >> i'm talking about taper. you know what i'm talking about. >> it's quantitative policy. no, they stop. >> even if there's another fight in january? >> oh, for goodness sake, who cares what's going on capitol hill. quantitative policy is about the circulation of money. are banks lending or not? if banks are lending it out, you

stop pumping so much in. >> i think you're a contrarian to the market. >> well, the very good news here is the fed is run by economists, not by market traders. something we can all be very, very thankful for. economists run the fed. economists know the consequences of this. janet yellen is an economist just like the rest of them. >> so we're probably going to have another fight in january. tapering doesn't happen until at least may or june next year. you don't believe that? >> if the banks roll over and say you know what? this lending we've been starting to do, this critical thing that's happened this year, if they dry up on that, then the fed doesn't taper. but if they carry on as they're doing now, there is simply no need to keep on putting this much money in. >> how are you acting? >> i think the economists control the front end, the traders control the back end of the market. >> even though the fed has been buying out on the curve? >> they've been prekaump about it. of course, the market is

rejoicing. >> 2.55 this morning. >> 2.55%, rejoicing about the fiscal cliff. that means taper is delayed. >> so you disagree with him. >> my concern is this. my concern is that if the fed sticks with this target of 6.5% inflation -- >> unemployment. >> yeah. thank you. we're not that far away from that given our view on the economy, the economy is picking up speed. i think we'll get through this temporary -- >> we get to 6.51 you think? >> quicker than we think. tapering could be more forceful. >> so do you think we have another big fight in january? >> well, yeah. i think if we have a big fight in january, they'll hold off for that. but at some point, the kneconom is going to pick up speed. they're going to look at the fundamentals. and we should be tapering. the economy is getting better, not worse. so i think the longer we delay it, the more the price to pay. >> what impacts on the economy in terms of people out of work or the killing of confidence and knowing that we're going to go through it again, which has an

impact on economic action in the next three months. >> well, there's an impact on confidence in the states, absolutely. the problem is, confidence has become increasingly unreliable. >> as a metric. >> as a guy to what's going on in the economy. what you are getting can confidence is hysterical overreaction. everything is always black or white. there's never a shade of gray. and so the confidence data is not actually telling us a great deal. as you're seeing on cnbc or cnn or whatever, every night you're all case yoes on capitol hill, you're going to say, actually, i don't feel like confidence. so i'd better go down to walmart and spend more cash, anyway. that's the american past time. you're not going to get necessarily reaction. we estimate you lost 0.2% gdp. >> and wa impact have you assigned any number to the next three months if you send people -- you don't think people will retrench at all?

>> i don't think we're going to get it, no. i think the fed has to be careful. they're not going to change policy in december or anything like that. you don't mess with christmas. but we'll go through to first quarter of next year with a reasonable momentum. >> so you're a cio. you're telling people to do what now? >> it's a risk on market. so we're riding the risk right now. i think you have to look forward six months now. toward what i was talking about earlier. i think there will be tapering. and guess what? the market is not prepared for tapering. >> there's a risk on market. why aren't yields rising? >> well, i think it's a complex question. i think the bond market right now is looking more towards the slowdown in tapering. and saying, guess what? i'll clear on the bond market for now. >> so we get what is an odd pattern historically, which is that people buy both stocks and bonds. >> yes. you're in a weird market. it's on fire right now. >> i think you have to bear in mind, treasury markets are

rigged. you're not going to go back to fair value. >> because of the fed? >> not just because of the fed. because of the regulations. if barclay's is 200 pages of regulation of buy bonds, buy bonds, buy bonds. you have foreign companies coming in and buying bonds because they have to buy bonds. >> do these people remember what they did when everybody was encouraged to buy mortgage bonds and the regulations lead to unintended consequences that can cause the very thing that they're trying to prevent. >> absolutely. basul is packed with unintended consequences. maybe in ten years time, it will all go horribly wrong and we'll have basul 4. >> you're telling people to buy everything? >> i'm telling people to be careful about what they're buying. buy risk, but do it smartly. and the bond market defensively. we're recommending a bar bell between long dated municipal bonds which v unduly beaten up and incredibly cheap. they have price risk, though, so

you want to balance that out with floating rate securities like levered loans. get twice the yield of the market. >> you're worried about puerto rico causing widespread infections? >> perhaps. it has widened all mini bonds out. >> so 75% of municipal bond funds owned from puerto rico because of a triple exemption? >> they do. it's been a baby with the bath water syndrome on things like aaa texas. >> aaa texas is a great state. it has a lot of revenue, a lot of diverse -- >> the field there is what? >> >> wow. >> yeah. it's a great deal. price sensitivity. i caution you. balance it. >> hold to maturity and get paid. >> thank you. good to see you this morning. >> thank you. coming up, why a swiss bank is closing shop. first, though, a little news on jc penney. the retailer announcing it's going to open its doors on thanksgiving evening to compete with its rivals.

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swiss private bank is closing shop, cites unsustainable costs stemming from the country's dispute with the united states over alleged tax evasion. this is the second swiss bank to shut as a result of the fight between the u.s. and switzerland. >> all right. in the chairs. >> we are in the chairs. we've got a couple of stories to talk about this morning. the story i wanted to talk about. joe, and none of us have talked about steve cohen in a while and the fact he's going to pay $1 billion to end this whole thing. and there's part of me that s s says -- >> biggest find e in history ist enough? >> if the case is so good and the government's going after the guy for however long they're going after him, he shouldn't be able to buy your way out of it. and it's not a knock on steve kohn, it's just a suggestion either bring the case or don't bring the case. there's a calculus going on here that the sec has decided that $1

billion settlement is somehow better than going to court and possibly losing. >> and possibly losing. >> and it seems to me given all the headlines that have gone on for years around this, this seems to me almost like the worst outcome. look, if you're steve kohn, i understand why you would do this. i'd be happy -- >> it's always about the money. isn't it? unless you're madoff and then madoff -- that was weird. drexel out of business, obviously, parked in a little stock. those guys had no idea to really break the rules. they did a little. >> it looks like child's play, doesn't it? >> it does at this point. >> i don't know. anyway -- my two cents for the morning and that's all they're worth. >> okay. i'm sort of in friday sports mode. >> go for it. >> it's just, you got the -- you've got baseball. both series are really great teams, great pitching, exciting and they're both still going on. and there's going to be -- so these are things to watch.

tonight's a big game and tomorrow. and then college football is always great. and then there's this story about -- i don't like -- i like tom brady now. >> we do. >> and if you saw last week against the saints why tom brady is one of the best quarterbacks, top five probably in history. the jets think they might win. i like the jets, i'm a new york fan, but i worry -- i worry a little bit about how they're going to do against the pats coming up. but this guy says that the officials when he gets too close, he's a jets defensive tackle. when he gets too close to brady, the officials say, hey, this guy is important to, you know, the league. >> the same way tiger woods is important to the pga. >> kind of the same way. >> kind of the same way. look, i don't think that's true. i think brady's pretty tough. >> we've got to go. coming up, omb director jim nelson and steve rattner. vo: two years of grad school.

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restoring faith in the government. can washington win back investors. former omb director jim nussel and steve rattner, both here. earnings central, honeywell and morgan stanley reporting within the hour. the numbers and market reaction just ahead. plus, a vulture is circling. billionaire wilber ross on whether lawmakers will rise above and where he's putting his money to work ahead of the next looming deadline as the second hour of "squawk box" begins right now. good morning and welcome to

"squawk box" here on cnbc. i'm andrew ross sorkin along with joe kernan and michelle caruso-cabrera. it will argument has begun. >> we'll properly introduce them in a moment. in the meantime, take a look at how futures are setting themselves up. dow looks like it would open about six points higher and nasdaq about 20 points. we should note we're going to hear from ge news in a minute, but that's probably going to be weighing a little bit on the dow and this jobs report. we should feel good about it. >> this is good that we have tuesday. it's a big day for stocks. >> it is official, jobs friday will be next tuesday. that's when the labor department plans to release the september jobs report which was postponed, of course, because of the government shutdown. >> and the next one doesn't come right away. it comes a week after it would normally come. but we've got two of them coming. we get good ratings and it's exciting and we're able to play it up and everything and it's interesting to watch.

>> the backup, we thought we missed it the first time around, we're going to get -- >> get it back. >> like all those furloughed employees. >> that's what i'm saying. that's what i'm saying. things may have slowed down a little. we're going to see because of ted cruz. >> in your view. >> in the headlines this morning, taking a hit in overseas trading this morning on news it's considering a bid for all or parts of smartphone maker blackberry. the pc maker had signed a nondisclosure agreement to look at blackberry's books, lenovo has been looking for ways to ramp up the smartphone business. and joe's been getting e-mails from blackberry haters all morning. jc penney joining the ranks of retailers opening on thanksgiving. we heard macy's opening at 8:00 a.m. now the stores at jc penney opening at -- i'm sorry, i said 8:00 a.m., 8:00 p.m.

some earnings to tell you about this morning, andrew. dow component general electric earning 36 cents a share in the first quarter. beat estimates by a penny. >> waiting to hear whether there might be a dividend increase. now they're under the gun. if they weren't planning one, now they're -- >> it's the highest price since 2008. >> it is. throw us a bone. 10%. >> revenue slightly shy of consensus with ge citing reductions in the capital unit which is paying dividends to the parent company. i remember ge options at 40. >> 43. >> yeah. suntrust bank earning an adjusted 66 cents, revenues at $1.9 billion. both of those numbers below estimates. oil field services company schlumberger, revenues coming in ahead of expectations at $11.6 billion. and baker hues reported an adjusted 81 cents a share. 3 cents ahead of expectations.

revenues basically in line at $5.8 billion. >> okay. ladies and gentlemen, it's time to rise above this morning. skepticism lingering as congress tries to win back the confidence in the american people. the former omb director and currently runs the group. and the former obama administration car czar, both gentlemen are cnbc contributors. gentlemen, here's the thing. we were down in washington yesterday, and it was quite depressing. you'd ask a senator or congressman what are you going to do? what are you willing to give up? how are you going to get there? and it was if nothing had happened over the past two months. in fact, i would argue the democrats felt emboldened, the republicans didn't feel any less emboldened. so my question for you, steve, is this. can a deal be done without tax increases for the democrats.

can they give that up on day one because that seems to be one of the holdups on getting anything moving here. >> this is not the end. this is not even the beginning of the end, this may be the end of the beginning. we have a long way to go. and to your point, there is not a lot of reason, i don't think, to be overly optimistic about it. i suspect a deal with any kind of meaningful tax revenues is going to be very, very hard to do. you may be able to do some stuff with so-called loopholes, deductions, things considered tax expenditures that republicans can wrap their minds around. but the issue -- if you just simply take the senate budget that was passed by patty murray, the house budget passed by paul ryan and put them next to each other. you see a huge gulf between the two sides and there's a gulf within the republican party. you remember last summer, the republicans could not pass the transportation housing of urban development deal because how rogers said it was too tight within the caps of his own

party's budget. it's a real complicated. >> he's the same guy who said that americans don't do anything until the last minute. they try everything else instead of doing the right thing and finally do the right thing. >> the alternative before doing the right thing. we're talking about churchill a lot. >> a lot of churchill. >> yeah, two of them. >> never! never! >> we could use -- >> didn't you run the budget deal or something? >> yeah, this is all my fault. trust me. >> you're here for the next two hours. you've got to have something to say. >> steve is right, this is probably one of the hardest tricks they're going to try to pull out of a hat in the next three months. those of us who have done it before, i've run three of these committees. one of the things you've got to do up front, you've got to put down rules of the road. part of the problem, andrew, you get in this situation where you say are you willing to do this? are you willing to do that? that's the first conversation. the other night when they wheeled in the pizza at 11:00 at

night and all of a sudden magically, another deal came out. let's start with the pizza this time. seriously, these people don't know each other. they've never talked to one another. >> that happened to you yesterday. >> well, in part because what they do is they talk to one another through the television or through press conferences or through twitter and rather than do that, start with the pizza. and so that's number one. number two, don't come to the meeting without a plan yourself. you can't criticize someone else's plan until you've put a plan on the table. so that's the second step. and the third, i would suggest, is there is no deal until there is a deal on everything. you can't pick and choose these litt little, you know, nits and gnats, you've got to have one deal before you announce to anyone else. >> not a mini grand bargain but a truly grand bargain. >> it's totally worth trying.

people like jim and i are both involved in the campaign to fix the debt. and anyone who looks at numbers, knows anything about numbers and looks at the federal budget's numbers knows we have to have a big deal at some point. we're not only -- forget about the question what you think the deficit should be. our priorities are all completely misguided. we're cutting the wrong things. if you look inside revenues, you have the tax code riddled with loophol loopholes. you've got a process set up in which there's no enforcing mechanism, no super committee, no sequestration. >> it's only -- >> and with holidays in the way. >> the dog that finally catches the bus and it's like, you know, now what. the president was able to avoid having to negotiate to get this done. and that -- and i don't know whether ed klein, did you read the ed klein piece that said, look, we're going to do this,

use words like hostage takers and, you know, the press picked it up and it worked beautifully. maybe it did. now that we're beyond the 17th, we've got a three month deal. he's in a position where he can't say i'm not negotiating anymore. >> no. >> is he capable of negotiating in good faith with these people he reviles, do you think? >> he's totally capable of negotiating. he has a different style than jim would have, others would have. he's not going to -- >> so you're sure of this? because we all are confounded by what that style actually is in terms of negotiating. >> look, i believe, and you can jump -- the two of you, my two good friends over there. >> you've got your boy andrew here who is -- he's -- >> yeah, he's a man. i mean, when -- but he's with you. he's on your side. i'm michelle's boy. >> the fact is, the president is totally capable of negotiating, has negotiated, what he said here, and i think he did a service to the country is to get

this debt ceiling thing off the table as a negotiator. >> he learned his lesson in 2006. >> he learned his lesson. >> and after that experience in 2011 he said -- >> the debt ceiling isn't going to come up again? >> no, it's going to come up again, but -- it's been a teachable moment. here's what i think we have learned. i think we have learned the american people do not believe in using the debt ceiling as a negotiating tool. i think they understand the concept of default and what it means to the economy. >> does not mean default. those are two separate events. you have to have the first to get the second but don't necessarily get the second. >> we get it quickly. you eventually get it. if you don't raise the debt ceiling you eventually get it. i think the american people have said no mas to that. i think the american people have said no mas to trying to get rid of obama care to the back door. >> let it just -- >> you're quoting -- you're talking about the national polls. when you talk about the hard right, when you're talking about not using the debt ceiling as a

tool, those folks were elected locally. and i'm not convinced that what they've done doesn't actually get them -- >> they just suffered -- they just suffered the worst defeat since the charge of the light brigade. >> individuals -- >> but individually in their districts they're having parties and celebrations back home. >> okay. >> and ted cruz got unendorsed by his own newspaper. >> oh. everybody looks at the editorial papers. >> i mean, i understand what you're saying, steve, but that's not doing anything for his motivations. his motivations -- >> too optimistic is what i'm saying. >> i'm not optimistic at all. >> how many twitter followers he has and how many people are contributing to his national campaign and how often he gets invited to iowa right now, quite frankly. that's what's driving him. those invitations, twitter feeds and followers, they're coming in still. >> after the shutdown in '95, i think you're right. i don't think that's what happened this time around. but i do think when we were sold the idea of tax reform where you

get rid of loopholes and then you lower the overall rate, it wasn't that you first raised the overall rate and then closed the loopholes and keep the revenue. and the president seems to think -- that's not gaucnegotia. if they use that balance word, you have to have revenue. can't we lower the overall rate if we close the loopholes? >> we've had $3.5 trillion of deficit reduction since you go back to the time of simpson bowles. >> none on entitlements, steve. >> $3.5 trillion, only $700 billion's been revenues, it's been 80% spending cuts. >> you can keep your discretionary cuts. >> we've got almost two more hours to go. so we can continue this conversation. we'll be back hearing more from our guest hosts.

oh, up next, we turn our focus to the markets, what should investors do now that the government has kicked the can down the road for a few months? i'm getting tired of that phrase. and then as we head to a break, check out shares of ge, the company reporting quarterly results a short time ago. this is the highest level we've seen in the stock since 2008. those dark days. $25.30 a share. above $25. we are expecting morgan stanley earnings when "squawk box" returns.

morgan stanley right off the bat is trading higher on this number. it's 45 cents, but from a continuing -- on a continuing

basis, continuing ops it's 44 cents versus expectations of 40. but they're giving one revenue number of $7.9 billion. even that is above the estimate of $7.7 billion and it would be different than what we saw with goldman, which the trading revenue was disappointing. if you do net revenue, it was $8.1 billion. the $7.7 billion estimate, either one of those numbers is above. there's a lot of other metrics, do you care, andrew? what do you like? sales and trading? 2.22. >> you care about fixed income. no, it was $835 million versus $1 billion estimate. investment banking was a beat, $992 million against 919. wealth management was basically in line. investment management a slight beat. you know, it's not a bad report. but, you know, you look at what happened to goldman sachs yesterday. >> it's $1.27 now.

andrew, you can do a little more work on this but i am seeing -- >> i know where you're going on this. >> i don't have the ratio. >> they paid these dirt balls $3.79 billion. >> they didn't pay them yet. >> you know, gouging -- >> blood suckers, leeches. contribute nothing to society except moving paper around. >> i thought you were capitalists. >> i don't know what the ratio is, but it's $3.97 billion, which could have been spent on day care or something, but instead, it's being spent on -- >> i'm sure they're going to ask -- >> deblasio is going to take care of this. when bono sings, i listen. i don't want to -- >> it's -- >> have you already sucked up to him, rattner? >> no. >> jim gorman will be on at 11:30.

>> to promote -- >> good. >> i'm sure they're going to ask him about the comp. >> i know. andrew, you've got to sic 'em. markets can focus on corporate earnings, the s&p 500 closing at a record high, but lackluster quarterly results weighing on the dow. here now with us is the portfolio manager at quantitative management associates and richard bernstein, ceo of -- i have named you. this is an old gag. >> it is. it is. >> you don't have a middle name. your mother did not give you one, i gave you one. it's cool, it sounds cool. you get a high five after it. he's a cnbc contributor. the fed is not tapering anymore. people say, we've got three more months to mess this up, they've got to stay out. the $85 billion continues, the party continues, is it that simple? >> they'll stay where they are for a couple of months, but i do expect them to taper soon.

>> they were supposed to taper in september or november or march. >> i think what happened this week is part of the reason why they did put it off because they were concerned about the possibility -- >> is that -- >> another fight in january. >> they can't do it again. is that enough to -- >> i think the economy is gaining traction and i think the fed realizes that they're going to be willing to start to taper maybe the end of this year, maybe this year. >> okay. so the economy's improving and we have the fed. that's pretty goldie locks. >> we did raise a little cash during this fight. >> you did? >> yeah. i think we're in a -- let's remove washington for one second. i think we're in a very classic mid cycle environment. you get a tug of war between improving fundamentals in the economy and the question of will the fed ruin it? that is the discussion we are having right now. what's very ironic is people don't even think there's a cycle let alone we're entering the mid

cycle environment. that's why i think both ed and i are very bullish. people don't believe this is happening. >> are you saying that ruining it means not giving the $85 billion forever per month? is that ruining it? >> no, no, no. i'm saying -- always in the mid cycle you have a question of is the fed going to raise rates and are they going to raise rates too rapidly? >> this sounds like -- >> that's what everybody says every cycle. the fed taking the punch bowl away from the party. when was the last time you had a recession that bad? >> the question's always the same. >> is the fed going to take the punch bowl away from the party? >> the tapering is not taking the punch bowl away. just the foot off the gas. >> i disagree. all those blood sucker traders. >> too much of the fed and fed tapering. what's the underlying economy doing? and that, i think, is starting to accelerate. and it'll be more obvious in a

couple of quarters. >> did you not see what happened in the market when we started tapering? >> the fed wants people to believe tapering is now tightening. the market told them very squarely that tapering is tightening. and it was clear what the market was saying the economy is not yet ready for tightening. that was the message that came out very clearly. the fed quickly backed off. that's also not unusual. the fed is a lagging indicator. they react to the data. that that's what we're going to see. >> the headline is the fed will not be deterred from tapering in december. >> it says from eyeing december tapering. >> eyeing. >> well, that depends on what the data -- if the data in the next several months is quite strong, they'll probably start tapering. >> they leak stuff to different people. >> right. >> they have 20 guys leaking different things to --

>> right. >> does ibm, did that mean anything to the broader? is that specific? >> the work i do, i don't spend that much time thinking about individual companies. i look at the overall earnings picture. i think we're going to see about 6% growth when all the numbers are in. and the other thing is that the sequential growth. every quarter for about eight quarters the s&p 500 earnings per share have been going up a little bit. you're making slow, but steady progress. and i think the key thing to look for over the next -- not so much this quarter or next quarter but into next year, i think going to start to see revenue growth pick up considerably. >> was the analyst on your show who had the theory that the ibm weakening in china was pay back? >> i don't remember. >> no, that came up on "squawk on the street." thought maybe it was the individual -- >> it's one big -- >> yeah. >> do people not understand, i'm a morgan stanley backer and -- i was channeling you. >> being facetious. >> i'm being facetious. i'm not matt taibbi.

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now the answer to today's aflac trivia question. what former nfl wide receiver currently works at barclays? wayne chrebet. coming up next -- >> ti like the jets and i wish him well. >> so, all right. coming up next, the tools of the trade, a closer look at fixed income markets and the dollar which hit 8 1/2 month low this morning.

standing by to get ready for the weekend. and vulture investor wilbur ross will tell us how washington can win back corporate america. "squawk box" is back after a quick break. (vo) you are a business pro. maestro of project management. baron of the build-out. you need a permit... to be this awesome. and you...rent from national. because only national lets you choose any car in the aisle... and go. you can even take a full-size or above, and still pay the mid-size price. (aaron) purrrfect. (vo) meee-ow, business pro. meee-ow. go national. go like a pro. in a we believe outshining the competition tomorrow requires challenging your business inside and out today. at cognizant, we help forward-looking companies run better and run different -

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welcome back to "squawk box" this morning. in the headlines, morgan stanley shares are jumping following the latest earnings report. the firm beat estimates on both the top line and the bottom line on strong results and equity trading and investment banking, morgan stanley earned 50 cents a share. this was a much better story than what happened at goldman sachs yesterday. that was excludeing certain items. 10 cents above estimates. and we should note chairman and ceo james gorman will be doing a victory lap on "squawk on the street" at 11:30 eastern time this morning. also, a big reversal for the video game industry which has seen sales slumping for months. npd groups says september sales jumped 20% over a year ago fueled by joe.

it's grand theft auto 5. you watch a lot of that? >> i do. >> doesn't it give you angst? >> watching it? >> yeah. speculation growing over the future of ford chief executive alan mulally. refusing to confirm or deny reports he's being courted by microsoft and boeing. mulally was asked during a visit to china about those reports and all he would say, quote, is i love serving ford. the ultimate politic. time for the trading block. fixed income and currencies. joining us now is bk asset management managing director and sharon stark, managing director and fixed income strategist. hello, ladies and gentlemen, 8 1/2 month low on the dollar. is this because you think or the currency markets think the fed is on hold for a very long time? >> yeah, not a surprise at all. last time i was here, i said the one key take away is from the whole shutdown fiasco was the

fed was going to stay on taper for much longer and the end result is a weaker dollar. but having said this, it's a two-way street. one of the other reasons why the dollar has been so weak is because it's the other trading partners have been nonchalant. it's been surprising to me how nonchalant the europeans have been. and even the australians are okay with aussie at 95. i think if they push them higher, you're going to hear more rhetoric from the other side and the dollar will start to come in. >> yeah, i think that's because of the germans, right? even though it hurts them the most, they seem to love the way the ecb is acting over there. sharon, what's your assessment? we keep talking this morning, the ft cover story says the situation is not going to deter the fed from considering, perhaps, a december taper. what's your bet? and is that what's driving the december taper to 2.55? >> i think the fed is probably going to taper later in the year. perhaps in early 2014. i think, you know, the

expectations prior to all this were for december move. but frankly, given that the government's been shut down for two weeks, i think we're going to see slower gdp growth going forward. there's not a lot of confidence amongst consumers or businesses to spend or to hire. so we -- i wouldn't be surprised to see the fed wait until march. >> and if we get another fight in january. is that why you think march is a possibility? >> very much so. january 15th is the day with which we're supposed to get some final, you know, budget coming through. and that doesn't seem to be plausible. this is, you know, kick the can american style. i think with yellen likely to be confirmed in january, budget negotiations going on, i don't see the fed really acting inin the march meeting. >> it actually helped australian dollar a little bit. the chinese gdp still very, very

investment sensitive and looks like they're still following the old play book of trying to pump and dump government stimulus. i think it soothed the market. there isn't a major slowdown. i am going to take the opposite side of conventional wisdom. i think there's zero chance they'll do a second shutdown in january. this was such a distasteful horrible event and it's so recent that i actually think they're going to work out some kind of a deal. and the fact that they were able to come up with a deal right now before the christmas selling season may be a ray of sunshine. usually i'm a prophet of doom. >> you are so optimistic compared to every other person. >> i disagree. >> really? >> yesterday we had mccain right on the record saying that back in '95 when they did it, there wasn't another shutdown for however long it's been. it was a familiar, bad taste in your mouth it's not going to happen in three months. i think you're in the consensus. there's not going to be another shutdown. >> i think the worry of the market. a lot of analysts are expressing the fact there may be another shutdown, huge amount of

uncertainty. i think they're going to solve this and it's going to be more positive. >> we're not going to reform medicare, we're not going to do a ryan voucher. >> what's your definition of solve? >> right. >> i think it was zandi who said all they have to do is come to some kind of deal, get out of the way and let the economy take care of itself. >> you think there'll be another shutdown? >> no. >> sharon? >> i don't know if that's possible. i don't think there'll be a shutdown, but look at what happened last time. they formed the supercommittee to get something going and they couldn't come to an agreement then. >> i don't understand how the incentives will be different in january. on capitol hill yesterday -- >> because nobody really on either side wants to hurt the american people for no reason. >> right. right. and i think that will create a much more workable environment and it'll be net positive of all of us going forward. >> you would buy the buck i would guess. >> i think we're getting close to -- yeah, if you're a

long-term trader, this may be -- we're getting close to valuation. in the meantime, by the way, the fact that the dollar is so low should be positive for multinationals. that should also be positive -- >> sharon, what are you doing with the short and long end here? >> i think the short end obviously is starting to recover as is the long end. we think rates will stay low for a longer period of time just because of the uncertainty that all of this causes -- there may not be a shutdown but there's not a whole lot of incentive to go out there and spend and to grow and i think that keeps rates low for a longer period of time. >> what's low? >> the ten-year around 2.75%, maybe 3% in 2013. but we're already seeing the impact today with the ten-year trading at 255. i think the economy's in slow growth mode, maybe 2% at best. >> thank you. good to see you this morning. >> thanks, guys, bye-bye.

>> you can't do three months, you can't run a country that way. and i think the president realizes that. >> you can't. but we have. >> i was going to say. >> i'm not saying it's right, but we have. >> it was longer than three months. >> i think not just the president, i think anybody with a brain recognizes that's no way to run a country. >> but you've got some guys more willing to commit suicide than, you know what i mean? and they'll get reelected anyway. he may really -- >> if you're running a business during all this, though, do you just play through and just decide you don't care? is that the deal? but if there becomes talk of a real grand bargain, i wonder then if you slow down. if the world may change, i may have to adjust. >> there may be another fight. it takes a big toll on planning. >> you add the fed on top of

that and add that together and get 2%. >> right. >> which is enough to create a few jobs, keep -- you know, you're not going to -- >> that's the sad thing. >> the biggest impediment to growth in this country is washington. whether you think about it in terms of the uncertainty they create, in terms of the fiscal drag from the deficit. >> all that stuff. >> we can debate regulation. they are the biggest problem in the economy. >> always. always. >> both sides would say government but from different viewpoints. >> let's get rid of government. >> no. anyway, coming up -- you said government's the problem. both sides of government are the problem. one side wants privacy of government. that's what i heard the president talking the other night. not the entrepreneurs and private sector.

>> i'm just listening to robin thicke right now. >> is this that guy? >> i hear it every morning. >> i don't like him, i don't like the song. >> wilbur ross -- his dad's okay. no, actually, i don't like him either. wilbur ross on getting a deal done on the budget. and in the next hour, alan krueger is going to be with us. hopefully he'll be onset. "squawk box" coming right back. announcer: where can an investor be a name and not a number? scottrade. ron: i'm never alone with scottrade. i can always call or stop by my local office. they're nearby and ready to help. so when i have questions, i can talk to someone who knows exactly how i trade. because i don't trade like everybody. i trade like me. that's why i'm with scottrade. announcer: ranked highest in investor satisfaction with self-directed services by j.d. power and associates.

all right. we're going to win us back, the u.s. back, it's a play of that period but really means us. the washington drama over the government shutdown and the debt ceiling influence corporate cash flows in the campaign. wilbur ross joins us with more. you know what i want to ask you as a savvy guy, you've turned around businesses, you know -- you know how to run things. do you think it's possible to run a business right now when we're doing things three months at a time? how do you do it? do you just prod ahead as a ceo

and, you know, you do have the fed, the fed has your back. but other than that, you just keep doing what you're doing, not expecting anything great to happen in the beltway? >> well, i think that is the case. my best guess is that this next go round will simply produce a little bit of tinkering with sequester. i don't think much more than that is going to happen. and i think there'll be a lot of rhetoric. i don't think there'll be another shutdown. i surely don't think there'll be a default. but i think it's going to be a very, very small amount of change from sequester. >> did you see -- and it'll be great because i remember harry and mitch, you know, they're slapping each other on the back, historic. historic agreement for the american people that they finally came to -- and if we did, if we got what you just said, just little sequester stuff and maybe a plan to have a plan about medicare or entitlements and we're going to

see another -- they'll be congratulating each other at that point even though it's not much progress even though we'll get that hopefully at one point. >> well, the most ancient political trick is accomplish nothing but declare victory. and i think we're getting close to that. >> all right. when -- what would it take to do tax reform, to do entitlement reform? will it take a different president. will it take an election where the house changes hands in 2014? when do we get something done in your view, wilbur? >> my guess is not until after the november elections. every month we get closer to it, i think makes it more and more difficult for anything real to happen. >> but then, okay, what are you saying? the republicans get thrown out of the house or they get -- they add to the house? >> no, i don't know it will make an awful lot of difference. but i think that's what

everybody's focus will be, not on the immediate things of legislation. >> still need the president to let them go through then. so you don't think it'll take until 2016 for us to get a grand bargain? >> i think once we clear the air one way or the other in november of 2014 and there'll be relatively little change coming. maybe some faces change, but i don't think the math is going to change very much. because there's been so much gerrymandering that the vast majority of seats in the house, have saved seats on one side or the other anyway. i don't see the dynamic. >> one which is hopeful, baucus and camp are both retiring at the end of next year. they would like to go out in a blaze of glory and get something done on tax reform whether -- i think it's a low probability, but it's possible. but i guess, wilbur, i don't quite agree with you, i think

after the 2014 election, all we're talking about is 2016 election. and the idea that we're going to get tax reform in years seven and eight of a two-term president, any president i think is pretty remote. >> although, there is historical context -- >> well, i don't think it would be initiated by the administration. i would agree with that. i think if it were initiated, it would have to come out of the congress. >> and i realize it's hopeful, but the most significant refo s reforms, historically, have come during a congress of one party and a president of another. so, you know, whether you look at welfare reform, social security reform, tax reform in recent history in particular, it's come during divided governments. so while there is a lot of pet mitchell about what's happened, there is some historical context for both sides coming together and figuring this out in divided government. >> that's a good -- >> i think if you think -- if

you go back to those instances, it was mostly presidential leadership. >> exactly. >> i think that's one of the things lacking. >> well, i think presidential leadership but you also had a different situation on the hill where you had a speaker of the house who did well for the country the past couple of weeks. i give him credit for that. but nonetheless, he's a speaker that doesn't have control of his own caucus. it's hard to have a negotiation when one side of the table doesn't have all its people lined up. >> well, i think that it's more complicated than that. i think the real problem in the congress is that with the gerrymandering and the seats being made so safe, the only real danger people have is in the primaries. because in the primaries, both parties run to the extreme. >> that's very true. >> so you've killed the moderates. it used to be that the way that legislation got through was the moderates were the swing votes. now it's the extremists on both

sides. >> one other thing, wilbur, as a restructuring guy. steve is a restructuring guy. how does obama care look, steve rattner? in a year, will it be? wilbur, how would you fix it? will it be fixed? there's worries if they don't get enough people, there's a real problem if they don't -- >> well, there's one problem if they don't get enough people. the other problem is if they don't get the right people. there's a big assumption and namely that healthy young people will sign up. i think that's a very doubtful assumption. i think the healthy young people are going to wait until they get sick, worry through the six months. >> yeah. that's an elephant in a room, steve. he wants to protect us. that was part of this whole thing we went through. it's a signature achievement. meanwhile, if the republicans hadn't been, you know, sucking up all the news cycle, we may have been focusing more on how badly this has gone. >> we would have been, and there's no question it has not gone as well as it should have.

they built this complicated contraption in the garage with everybody weighing in. now they're trying to figure out if they can drive down the street. obviously the computer systems are a problem. the point wilbur raises is a good question that we're all going to be watching. but i think -- >> it's the sticker shock, which is what he's speaking to. >> all that. >> no private company -- no private company -- no private company would ever roll out a nationwide program all at once. the sensible way to roll out a gigantic complicated program is do a test here, gradually expand it, get the bugs out and then do it. >> hold on. >> there are a lot of reasons why that couldn't happen. and remember that the conception was not that the federal government was going to run these exchanges. the state was supposed to run all these exchanges and decided not to run. all i'm saying -- >> that was an assumption, it wasn't a fact. >> all i'm saying is give it a

chance, let's talk about it in a couple of months and see where we are at that point. i think the jury should be viewed as being out on the success of obama care. >> the jury is out and no final verdict has been voted yet. but i don't see why any sensible young person who is healthy would sign up. >> this is not a jury system. this is a consumer system. and if the consumers don't show up, that's the decision. it's not a jury decision. >> that's the jury i'm talking about. let's see who shows up. >> using a metaphor. >> using a metaphor. >> wrapped in a riddle. >> since we're quoting -- >> is that churchill again? >> i always attribute it to churchill. you know to know my favorite quote? the perfect martini, you glance at the and use the gin. coming up, we have more from

our guest host, jim nussle and steve rattner. alan krueger, former chief of staff ken duberstein, the futures this morning, dow could open about 12 1/2 points higher. "squawk box" returns with a lot more. ve. they always will. that's why you take charge of your future. your retirement. ♪ ameriprise advisors can help you like they've helped millions of others. listening, planning, working one on one. to help you retire your way... with confidence. that's what ameriprise financial does. that's what they can do with you. ameriprise financial. more within reach.

welcome back to "squawk box." that is denver right now.

it is snowing big time. if you're a skier, it's a good thing, my sister lives out there. staying dry today. big snow in denver. anyway, still to come in the next hour for those of you in denver and elsewhere. former reagan chief of staff ken duberstein, alan krueger and senator -- you know what, i never pronounce her name right. klobuchar. >> we planned this. line up an interview that andrew -- and i even said her name to you. >> a key player in raising the debt ceiling. i like her a lot and i never pronounce it properly. check out monday's lineup, we've got a big one planned including bill mcdermott, mark faber, i'm missing everything today. there you go.

shaun o'hara, as well. and charles evans, not so difficult. starts monday at 6:00 a.m. eastern. "squawk box" returns with a very big 8:00 hour. we're back in a moment. it's as simple as this. at bny mellon, our business is investments. managing them, moving them, making them work. we oversee 20% of the world's financial assets. and that gives us scale and insight no one else has. investment management combined with investment servicing.

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with this temporary deal in place, it's time for washington to win us back. >> we've all got a lot of work to do on behalf of the american people and that includes the hard work of regaining their trust. >> we'll ask senator amy klobuchar if the president can rise above the partisan politics to tackle the country's debt crisis. >> plus, ken duberstein and alan krueger. >> did you experience data withdrawal during the government shutdown? well, your wait is almost over because steve liesman is here to tell you when you can get your next data fix and how the numbers will be? >> the third hour of "squawk box" starts right now.

welcome back, "squawk box" here on cnbc, first in business worldwide. i'm joe kernan along with andrew ross sorkin. jim nussle, former omb director, and steve rattner, former auto czar. you're also part of fix the debt aren't you? >> i'm also on fix the debt. >> both are cnbc contributors. and they're at the pinnacle of the respective careers. >> absolutely. >> i think the first time we introduced you first. did you see how we introduced him first? i think that's fair. >> fair and balanced. >> we're trying to show these guys how to do things, andrew in washington. >> in washington. >> set an example. >> we'll see how that goes. >> we get along swimmingly.

>> we've got headlines for you this morning to get you through. earnings reports. the big one being morgan stanley. they earned 50 cents a share. while revenues, with $8.1 billion. also beating wall street consensus. ceo james gorman's going to be on "squawk on the street" later today. may take a bow at 11:30 a.m. eastern time. it is a cnbc exclusive. so you're going to want to watch that. and we're going to talk more about the banking sector earnings in just a few minutes with brennan hawken at ubs. also, dow component ge reporting earnings of 36 cents per share in the first quarter beating estimates by a penny. revenue was slightly shy of consensus with ge citing reductions in the ge capital unit. >> new high. >> new high for ge. wow. >> new 52-week high. >> since 2008. >> and we're waiting -- so

he's -- we could have a dividend increase announced. >> we'll see. >> that other time -- and finally, if you have been experiencing a data withdrawal with the government shutdown, relief in sight. september's jobs report, not on jobs friday but on we'll call jobs tuesday. that'll be next tuesday. and then check it out, on wednesday, we're going to be getting september's cpi and steve liesman will join us at 8:30 eastern time today to give us a little bit of preview of what to expect next week. >> let's get a check on the markets. u.s. equity futures suggest we are going to get a move higher. dow opened higher, s&p by 5, the nasdaq by 25. moving to overseas in asia. the nikkei was lower by 25 points. shanghai composite higher by five, and the hang seng by 245. across europe, stocks are higher, the ftse 100 by 1%, and

the german dax higher by .25%. we got through the 17th, didn't we? just barely. i think you -- it was signed after midnight. >> after midnight. you done think i have to go to cincinnati. >> to pay off harwood? >> washington, obviously, we're all talking about it. we've got three months, a long way to go when it comes to winning back the confidence of the american people. joining us now is alan krueger, professor of economics at princeton university and former chairman of the council of economic advisers and ken duberstein. and former white house chief of staff to president reagan. alan, i'll get with you in just a second, let me just -- let me just start with you, though, ken because you were in the reagan white house. and i got nussle here and he always just sort of differentiate yourself from current tea party types by saying you're a small government, limited government

reagan type guy and i ask him, well, how is that small government activity going for you at this point? how is it working out? is it working? and what did you tell me? it's tough. is it working? >> no, of course it's tough. >> you're losing ground. you're on a treadmill that's going -- >> hasn't given up, i know that's for sure. >> what can we do to get back? we did seem to -- i won't mention the 7% gdp growth or 800,000 people being added a month, what can we do to get back to normalcy? >> i think the president has to lead and congress has to realize they can't just dream the impossible dream. they can't be don quiote. everyone is looking for both sides to get together. both ends of pennsylvania avenue. the trouble we have today unlike the reagan days is the 100% or

nothing. in the reagan days if you got 80% of what you wanted, took it and kept moving and cake back the next year for the additional 20%. somehow that's out of fashion. i think that's what has to be done. i don't think that's been happening in the recent past in washington. >> which, i don't, you know, if i told president obama if you get 80% but don't get any revenue increase to do entitlements or if i told republicans that, you know, there's going to be a little new revenue raise from closing loopholes, but your you're going to get the other stuff, i don't think either side would say, fine, let's do it, ken. >> well, i think the cardinal, the red line, so to speak is no

rate increase, not revenue. so that if you're closing loopholes and generates more income, i think that is something that is sellable. as long as you don't increase rates. >> you know, ken, if we got some growth, we might increase revenue. >> absolutely. but you also get a tradeoff if you get the significant reductions in entitlement spending which is the fundamental problem we have. >> alan, you probably have the president's phone number, don't you? >> it's on speed dial. >> i think all of america's got his phone number. >> would you call and offer him that deal? >> yeah, i think then there was a speaker that could deliver. we saw speaker boehner can't achieve what he wants with his caucus and he's walked away from deals he probably wanted because his caucus wouldn't go along.

that's why we've been going through these constant budget wars over the past couple of years. >> ken, is that -- is that the problem? >> what you have to do what reagan did is sometimes say to your strongest supporters when they're on the far right or far left, no, we're not going that way. they don't want to be satisfied, that's how they make their money and get their members. you do what you think is right and get 80% of what you want and come back the next year for the additional 20. that's what governing is all about. and whether it's saying -- >> that's exactly -- that's exactly what the president has done. he left out his last offer to speaker boehner. got difficult entitlement cuts there, switch to the chain cpi, less revenue he wanted at the end of last year.

as ken said, we're not talking about higher rates, talking about closing loopholes, that's exactly what the president's done. he's done difficult things for his party to go along with. the party is, and we saw there's not a functioning majority in the republican side or the house and that's what cost the economy so much. and when you're just talking about growth rates, comparing now in the early 1980s, these constant budget wars have created a lot of uncertainty. they've been big fiscal drag, we haven't gotten the kind of stimulus you had at your back in the 1980s from military spending. in fact, we're cutting spending very quickly. i think that's the difference between now and what was going on in the economy in the 1980s. >> there's that old saying, though, you've got to accept the things you can't change. if the president is facing that in the house, then what do we do? wait until we try to get a new house in 2014? if it's boehner's fault and boehner can't wrangle any of his cats, should the president not

try to do anything then? >> no, i'm not speaking for the president, an outside economist, but i think the best thing to hope for is they do no harm. they've done quite a bit of harm and kicking the can down the road for a few more months. again, i would say the best thing we could hope for is they do no harm. they minimize the amount of damage they're causing to the economy. the debt problems, we've got a window where we can fix them. the bigger problem we have now is high unemployment rate, the enormous increase in inequality. those are the problems i'd like addressed along with the debt. so the best we could hope for is they minimize the amount of harm they cause. >> alan, i am much more hopeful than you are, but try to be realistic, i think it is uphill but it is doable. i think the shock of what's gone on in the last two or three weeks has brought an awful lot of people to their senses. the question is whether or not

the president on the entitlement side can deliver a democratic group in the house of representatives that is more than 20 or 30 who are fix the debt types and can broaden the consensus so the democratic caucus and majority of the republicans can sign on on entitlement reform and tax reform and see if they get a new package done by december 15th. >> the president delivered that at the end of last year. i think the issue is whether the republicans will accept additional revenue. the president, i think, showed in the negotiations with the speaker at the end of last year he was willing to do those very hard things and that the democratic leadership in the house and senate were willing to go along. the speaker walked away from that bargain then, i don't see what's changed to cause him to stay at the table this time. >> i think the last two weeks

brought a shock wave, especially to the republicans but also to all of washington that something has to be done to win back the trust of the american people. >> that's going to -- that is going to be on a sound bite -- did you hear that? something's got to be done to win back the trust of the american people. god bless you, duberstein. did you know that was our campaign? did you just come up with that? >> guess what, it's always your campaign and i subscribe, how is that? >> you're going to be in the promo. >> and you're not working with us at all. i mean -- >> i agree with ken. totally. if you want another sound bite, i agree with ken we need to do something to win back the trust. >> you see. >> look at where the stars are aligned for a deal. probably more likely immigration reform. >> i think we have a shot at the budget, i really do. >> well, steve, whenever i hear

all these daunting challenges about the economy, unemployment and income disparity and all these things and i hear it's because the speaker can't control the house to allow government to fix all these things, isn't -- don't we know who really needs to fix most of these things? and isn't -- that's what bothers me about the primacy of the public sector instead of the private sector. >> what we've talked about for the last hour is you have a public sector that's a drag on everything. >> it's different than borrowing a lot more money to do infrastructure and to do all these other ideas. >> it's a drag. what you heard alan say, let's get it to do no harm and there are those of us who think it could be a positive force. it's not going to solve all the problems, i agree with you. the private sector -- >> what's wrong with the private sector? >> excuse me? >> what's wrong with it? there are other things that are wrong with it. >> no, there are roles that government play. there's fallout that government needs to address. for example, the private sector has done a master philadelphia job of turning the corporate tax

code into swiss cheese where nobody pays -- pretty much nobody pays what they should pay. >> they build facilities other places. that doesn't help us. >> all that stuff. and so you need the tax code to be fixed. >> all right. >> that's my point. there are things government can do that will make it better. but obviously the private sector is where the growth -- >> there's a difference between unencumbering the private sector -- >> it's a fine line. >> i have to tell you, i think the president believes in the primacy of the government and not the primacy of the private sector. >> correct. >> there isn't a single problem -- like george w. bush, by the way, didn't think there was some big government program that wouldn't solve a problem. new big financial legislation, new big interventions. we've had four terms of people who like big solutions for problems. >> wait, we needed -- everybody, i think, agrees we needed some version of dodd/frank, whether you like this version or not. but we needed -- >> we're still dealing with

sarbanes oxley. >> and i could counter you over and over again that it would be consequences of bad government regulation that caused unintended consequences. >> i agree with that. we need better government regulation not no -- >> no, less. >> steve, what you're saying is government's the problem. isn't it? >> i -- >> government at the moment but i think government should be part of the solution. >> absolutely should be. it has to be. >> alan and ken, we're going to continue this conversation, i'm sure, for many a day. >> at least three months. in the meantime, small pools is playing right now. i like them. >> nice. morgan stanley reporting third quarter earnings of 50 cents a share beating estimates by 10 cents. we'll talk more about the banking sector next with an analyst. and later, we'll talk to senator amy klobuchar. i got it right.

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welcome back to "squawk box." morgan stanley's q3 earnings, joining us now to talk more about that, brennan hawken. good morning to you. >> good morning. >> let's talk morgan first. stock is up. impressed generally? >> yeah, i thought the results were really, really encouraging. morgan stanley has been going through a turn around. and in my opinion, we saw convincing evidence of that turn around in this quarter's

results. as you mentioned before the break, 50 cents earnings, that's actually xdva. all that noise, it's about 45 cents. there were a few gains in the institutional securities business, but you know, not hugely meaningful. still definitely a beat above consensus. what was really, really encouraging, wealth management pretax margins, actually increased this quarter. we were looking for them to be flat to moderately down. >> which is the focus of their business now. >> it is. very much the focus. about half their earnings and way more stable. it's sort of a key piece of how they're restructuring that business to be more stable, more predictable and so, you know, we see -- your former colleague obviously doing his part to help out. >> what did you make of the investment banking earnings also beat. i thought that was surprising. >> yeah. >> when you looked at goldman sachs, that was -- it was a horror story yesterday. >> absolutely. and it was very, very encouraging on morgan stanley's side. what's interesting here is that morgan stanley's in the process

of shrinking what was a problem for goldman sachs. the business for goldman sachs was remarkably weak and really missed expectations dramatically, it has been a business that's helped derive trading profitability across the firms. >> here's the question, then. on goldman and the business writ large, secular or cyclical problem? >> i think it's a combination of both, right? clearly we had leveraging going on, leveraging cycle as a tail wind for the last decade. we're now in a process of deleveraging. so interest rates will start rising. separately, you've got regulation that's putting larger and larger capital constraints on those businesses. that's going to cause these businesses to shrink, they're going to be facing head winds and we're in a period for multiple years where they'll be generally under pressure. morgan stanley has a much smaller business, equities house, equities franchise really showed through the strength of that franchise this quarter and i think that's going to help

really propel the stock. >> okay. if you were to line them up, who do you like? and what order would you be placing your bets then? >> looking across the firm altogether? >> yes. ubs has ratings on morgan stanley, jpmorgan and citigroup. in my opinion, you've got morgan stanley, i like morgan stanley a lot. i think the results here today extremely encouraging. i think we're in the process of transforming the multiple. so personally, that's my favorite. jpmorgan is right now under pressure because of a lot of these legal issues. they've got a $23 billion reserve on the legal front. and so you've got to be increasingly confident in how they're going to be able to weather that storm. that's likely giving you a great chance to buy an ultimate franchise at a cheap multiple. with citigroup, you've got a massive capital locked up in that firm as they begin to release capital. then you're going to get the capital coming down, getting return to shareholders.

it supports returns and leads to multiple expansion. i think they all work. >> thank you for joining us this morning. we've got a quick programming note. don't miss james gorman, he's going to join "squawk on the street" at 11:30 a.m. eastern today. >> he really just attributed the morgan -- >> to kminski. >> i love gary, and -- >> he really did just -- and -- >> yes. >> fleming hired gary. >> fleming gets credit. >> does gorman get any credit? >> gorman's doing a phenomenal job. >> and it was gorman's strategy. >> it was gorman's strategy, and we love gary, but we knew morgan stanley needed him more than we needed him so we let him go. >> right. coming up -- >> we should have komanski on the show too. >> we should and you should

introduce them both. >> we're going to have senator amy -- >> klobuchar. >> just to entertain the audience. how washington can win back the trust of the american people and compromise on the budget and get 80%. both sides get -- that's 160, though. and in "squawk" booze news, high-end bourbon heist in kentucky. things i prefer to do . but when it comes to investing, i just think it's better to work with someone. someone you feel you can really partner with. unfortunately, i've found that some brokerage firms don't always encourage that kind of relationship. that's why i stopped working at the old brokerage, and started working for charles schwab. avo: what kind of financial consultant are you looking for? talk to us today.

welcome back to "squawk box." in "squawk," booze news. someone has stolen a lot of very valuable kentucky bourbon. nearly 200 bottles of 20-year-old pappy van winkle bourbon was stolen over the course of several months. the suggested retail price is $119 per bottle. the low supply can push the actual retail price above $200 per bottle for those lucky enough to find it for sale. only about 7,000 cases produced per year compared to jim beam about 7 million cases per year. the local sheriff's department believes the theft was an inside job. >> can you say american greed coming up? don't you think? >> it would be great. >> i love "american greed." >> i do too. i love it. it gets good ratings.

>> i'm switching around, why? >> it's so predictable, they're buying land and art and everything. >> he's great too. his voice. i know someone's doing something wrong when i hear his voice. >> "american greed" on cnbc prime. coming up, the government shutdown is over and number crunchers are playing catch-up. steve liesman will join us next on the gorging you'll be able to have on economic data. the updated schedule next. ♪

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welcome back to "squawk box." let's look at some of the stocks on the move this morning. general electric earning 36 cents a share. revenue fell slightly short which the company attributes to the shrinking of its ge capital unit. >> i think it began he's owned ge so long, he's jonesing for an increase. it's december normally when the last couple of years. it's usually december. so i don't know about the likelihood of a dividend. >> today at the 8:30 call. >> maybe today, but if you look, it's been december the last couple of years though.

i wouldn't count on it, but maybe in december. >> we'll watch. >> there you go. morgan stanley earning 50 cents a share for the third quarter, beating estimates by 10 cents. revenue above consensus. upbeat earnings reports from two oil field service company, baker hughes earned 90 cents a share on improved results in the north american market. schlumberger coming in with $1.29 per share, 5 cents above estimates, schlumberger's results were driven by strong results in the middle east and asia. you're not going to criticize the way i say schlumberger. >> it was beautiful. >> it was good? okay. >> i say a lot of things. i say chair. >> what's wrong with chair? >> sonny and cher. >> bono. >> that's close to something else, so be careful. >> that's why becky's normally here. the shutdown is over and

that means the return of economic data and the return of steve liesman. >> do i get some music? >> are you so happy? >> i'm very happy. tuesday we'll get the september data -- >> so tuesday is jobs friday? >> is jobs friday. why not? why does it have to be friday? >> right. >> and the next one is delayed by a week but still close -- >> in the zone. >> in the zone. >> this is good. >> it'll come after the october meeting for the federal reserve. >> november 8th or something. >> yeah, they're -- or late october. >> but the october numbers come -- >> come november 8th. >> november 8th. it's too soon anyway. >> right. we don't have a schedule for the rest of the data like the retail sales data, all this other stuff. i think it's worthwhile right now to go back and look at the three-part test the fed gave us for tapering. >> we've been discussing this all morning. >> okay. let me show you why i know what the ft said today. a very bold headline. shutdown will not deter fed from eyeing december taper.

but what you look at -- >> right. >> the first thing we wanted was confidence in the economy. my point would be no data, no confidence, right? and when i say no data, i don't mean just not having the data, they won't really know the effects of the shutdown until maybe the december meeting. and what i'm reading, guys, a lot of folks bringing down their fourth quarter forecast around 2%. shaving anywhere from a full point to 1/2 point up because of the effects of all of this uncertainty. fiscal restraint, two-month reprieve but maybe a more benign battle. i would point out the fed maybe did a better job of forecasting the political situation in washington than they did the economic situation in the country. they were right this was going to be bad and they were early in making that call. of course, the high rate situation, i don't really know what the fed is after. i want to show you a quote here from -- the yellen factor is prominent. may require the administration to consider more moderate candidates for the three vacant

seats. remember that the last two were democrat/republican package that were given to the senate here. that was part of the politics of getting them passed. yellen, whoever yellen is, the point here this morning is that wait a second, it matters what the yellen fed is like. and one more point i want to make today is are you guys celebrating the republican victory when it came to spending? did you see what happened to the -- >> it kills me. it kills me. >> i have a chart. it's a huge victory. look at that. those two numbers there about discretionary spending, the percent changed year to year. you can go back in the history of mankind in the united states. you cannot find two percentage declines that strong in discretionary spending. >> i agree. >> the money's in entitlements. >> one man's victory is another man's terrible policy. >> well, i'm just asking -- >> that is the story. >> and i thought -- >> you did not lose the

sequester, you got the sequester. >> it would not -- discretionary spending, joe is right, it's 20% of the budget. but for republicans, it was -- they got their number here. now, whether -- how that changes and influences the dynamic in the january discussions is really an interesting -- >> and that includes defense spending there? >> yes. >> last time -- >> it's nondefense discretionary. >> nondefense discretionary went down under clinton and reagan. >> it's going down in a big way. what does this mean for the fiscal drag? as you saw, the fiscal drag will be less in 2014. it's still going to be there. >> you said not to look for effects of the shutdown until which number? >> well, you might see it in the november -- >> maybe -- >> in the october data. >> but we are ready for all of your reports. we've got this ready to go. any time we can talk about a

slowdown. and this will be brought up every time. okay. so that's ready to go every time we talk about the slowdown. if it's november, we'll put it in our master rundown. reveal ted cruz. retail sales, reveal ted cruz. so i've got it ready -- >> cruz control. >> cruz control. i've got it ready for you every time we have a bad number. reveal ted cruz. >> the one up side, joe, they'll stop blaming george w. bush. >> that's true. it can be a co- -- sort of. >> not to be argumentative here. but are you saying this was a good way to do budgeting? >> i'm trying to just -- >> are you creating a fabulous environment in which to invest in higher -- was that your point? >> no. i just saw -- i just saw one of our colleagues say how glad he was when the president blamed

bloggers he blamed radio pundits, all these people and this guy said, but he didn't blame anybody on tv. and it's like, duh! right? >> i don't get it. >> i don't get it either. >> because everybody on tv's already in the tank basically. >> oh, right. now i get it. >> why would he blame the pundits on tv when they basically did all the selling for -- of course it's only radio and bloggers. tv, thank you, you helped me win. >> not to be serious about this. but we -- >> bring up ted cruz again. >> in case you were wondering, there's the problem. there's the problem. there is -- >> and millions of americans who have been hurt by obama care. isn't that what he keeps saying? >> that's the biggest tragedy. we didn't really focus on how well that was going. >> but do you think you might have gotten something if you focused on the debt and fiscal side? >> steve -- >> this is twice the republicans got a worse deal than they otherwise would've gotten.

>> he wanted to not negotiate before the 17th. now we're through the 17th but now he must negotiate over the next -- >> i don't know how you spun this around. >> bad spin. >> why, that's what they wanted all along was a negotiation on the budget. >> absolutely. >> and now we have it. >> ted cruz lost. >> i just showed you that. >> here's the thing. >> there you go. there you go. >> you do not know that. >> if he didn't have a basic knowledge of schoolhouse rock how the bill comes along. >> i understand. >> seriously. he has not been able to be effective as a legislator so he decided to go to the air waves. >> fine. okay. i agree with all of that. >> let's move on. the republicans in an odd way, they lost politically, it was a disaster for them but they got their sequester. it's in place. it's going to ratchet another $20 million in january. >> so now he will negotiate. he was saying i'm not going to negotiate. >> what is the baseline now for

negotiation in that you've essentially already given a major victory to the gop here when it comes to the spending level. now -- and now i know we're going to break. now that puts the onus on the republicans -- >> no, you got your revenue. >> you got your revenue. >> the trade is you get some revenue, you give entitlement reform. you get a little bit -- >> closing loopholes. tax hikes. >> i'm not convinced it'll work, i think you're right. >> we've got to go to break. >> shut it down. >> ted cruz is why we've got to go to break. >> amy klobuchar. in a world that's changing faster than ever, we believe outshining the competition tomorrow requires challenging your business inside and out today.

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government shutdown stretched on for more than two weeks, damaging economic credibility -- oh, they just asked me to bring that up again. could it have lingering effects without a long-term budget deal in place? here to talk about winning back the confidence of the american people, we need help, senator amy klobuchar, the vice chair of the joint economic committee. we figured out ways to do this, senator, in terms of both sides maybe giving a little. i think what we decided on was maybe that the republicans let a little revenue come in from closing loopholes and maybe the president does a little bit on the chain cpi. do you think that -- are we going to do something like that? >> well, i think that the good sign was the budget committee

heads have already met and seem very committed to finding common ground. and i was listening to the earlier discussion with some interest and remember, when you talk about, i was somewhat interested you thought -- some people thought it was a republican victory because i think if you look at the initial democratic proposal it was for a time period to allow those two sides, the senate and the house to bring their budgets together. this is what this is really about. that's what your song is about, getting a bill done on capitol hill. and this is the opportunity. i think you should see some kind of common ground on a mix. now, remember, at the end of the last year, the president put on the table some entitlement ideas and they weren't all about chain cpi. there was also a delivery system reform. and i think he put about $400 billion on the table. so there are some ideas, knowing, i'm from minnesota, where we have a high-quality, low-cost health care system and there's more we could do that would actually encourage better

quality health care with medicare and could save us some money. >> if you could get everything you wanted and the president could get everything he wanted on the sequester, would the insistence be on raising revenues? >> again, i think you've got to let the budget people do their negotiations. we had a bipartisan group that came up with ideas that i hope we'll continue to meet. but i think we heard some good words from there. if you talk about restoring the faith of the american people, it's about stopping the insults, stopping drawing lines and really trying to find that common ground. the 80% -- >> senator, you can't conceptionally say, you got everything you wanted, you couldn't say billionaires can't have medicare or ought to pay more? >> no, i'm sorry if i didn't make that clear. i think looking at some more means testing is right on the table. we already do some of it. i think that could be a very positive way to go forward. i also think you could look at the income level for the social security tax and raising that

some or looking at putting it in place again at 250,000. that could bring in money. negotiating under medicare part d would bring in over $200 billion in ten years. on reducing costs on medicare. there are a number of things that could be put on the table that could be very important in the entitlement area. and i think one of the problems with the sequestration cuts and one of the reasons it's an incentive, you want to continue that trend you showed on your charts on the debt reduction but you want to do it not just on that 20% of the budget which involves, you know, nih research into alzheimer's and things that could save us money in the long-term. >> i remember watching harry reid and he seemed like he was just so intractable couple of weeks ago. and then when he got with mcconnell and i watched him, he was such a -- like my grandfather. i really liked him. and people can do it. and mcconnell and they look like buddies and they weren't fighting. and then i think of the president and how he feels about republicans and the tea party

and how they feel about the president. and i just don't ever know we can -- how can we ever have that moment? >> okay. first of all, i thought this was an emergence of moderate republican voices being much stronger, we're willing to take on the tea party. our group in the senate, people willing to say we want to go a different route here. i thought that was important, the house members that stood up and said they want to open the government again. that's a new thing that wasn't quite as loud before that was important. when you look at how we move forward, that's going to be a factor. the second thing on the president, look, he has shown a willingness to negotiate at the end of the last year, remember how close he and speaker boehner were. he did meet with senate republicans through the summer and i think right now he's putting a lot on the table willing to talk about things. what we were up against, as you know, the last month, was a shutdown government, people literally saying it didn't matter if we defaulted on our debt and a situation where people were trying to throw

things on like birth control issues in order to open the government. you can understand why he was drawing the line on that. but i think you can see a willingness in the words of patty murray to talk about negotiating an actual budget. that's how we restore the faith of the american people. >> senator, look, i think your optimism is great and we certainly all want this to come out the right way. on the other hand, you've got a house budget that paul ryan engineered that is massively different from what you guys did on the senate side. i think he's got $6 trillion of discretionary spending cuts over the next ten years. it has the repeal of the obama care embedded in it. . seems to me, between what the house republicans will come to the table and what you guys will come to the table with. >> i think we've been very clear. we're not going to support their budget and they're not going to support ours. that's not news on this program. but i think a new direction is to look for the common ground issues and we've identified some of them with some of the reforms that could be made that i think

you could find enough votes to get something through. and which isn't really doing anything that's going to set back middle class families, it's going to set back our economy. looking for revenue where there's common ground. and i think there are things, loopholes and incredibly complex tax code where you can find some money there without sending us back again. i think that's where we're going. look at the gang of six, gang of eight. how many more proposals can we have out there. where the people have looked at this stuff. the debt commission. all of them, by the way, had ratios different than what we're seeing right now with our debt reduction which is currently 70% on the cut side. they had more than 2-1, 3-1 ratios. >> senator, steve is not rising above. we've been watching this for a couple of hours. >> i'm happy to rise above. >> it doesn't sound like it. and, senator, we had heidi heitkamp and she informed me that fargo, the movie was not

about fargo. it was about minnesota and you're the people -- >> exactly. >> you're the people that talk like that. you betcha. >> you don't think her accent sounds a little more fargo than me? >> yes, i did think that. but she immediately said no, no, no, no, that's amy's problem. >> well, no, i'll explain this. the cohen brothers, great directors what put that movie out, they are from minnesota, and they did do a lot of the filming in their home state of minnesota. in their home state of minnesota. >> where is paul bunyan? >> he's in minnesota. you can come and see both of them if you'd like. i would like to. you bet you i would. thank you. it's great having you. hope fly we'll have you again. >> i would love to be on again. be optimistic. >> okay. coming up, guys, don't close out the trading week without jim cramer's stocks. we're going to head to the new

york stock exchange next. and don't miss "squawk box" on monday. we'll have a live exclusive interview with chicago fed charlie evans and squawk market master and jim and jonathan tisch are going to join us, co-chairmen of lowe's. big week ahead. see you on monday.

>> look, let's put it to rest right now. this is a much better than expected earnings season. a lot of people say big disappointment. you look ge, slumber. >> what do you think of morgan stanley? >> 100 basis points better than i expected. this was a monster quarter. looks like they were right to take that big brokerage group from citi. >> is it from a model perspective in do you think others try to take a lesson from all this?

>> i think gorman took a chance. a lot of people felt ala what the citi guys felt. gorman was saying this wealth management company can be terrific. bank of america, it's so lost in the shuffle. goldman did not have anything to write home about, global wealth. i'm sure they can argue with me but this was a remarkable quarter from the point of view of the retail broker who is making a lot of money for his company. >> it's gorman, fleming and come is -- come inski? >> why are you putting kominski third? >> this was the quarter a lot of people were waiting for. i've got to tell you, i haven't seen any flies on it.

it looks really good. >> okay. >> don't forget google. amazing. chipotle. oh, chipotle growth is incredible. >> that should be easy to -- right, jim? mexican food? >> no, the worst mexican food is -- >> don't forget the new vegan product i've been waiting for. rolled out in baltimore -- >> come on. you're not a vegan, are you? >> no, my daughters. >> safrita. >> what's it called? >> safrita. it's made out of tofu but tastes as good as the stuff that's not. >> really? >> yeah, it's for really. >> safrita is when you take your olive oil, onions and peppers and saute it all, safrito. >> really? >> yeah. that's why you have a minority on the show, to inform you of these things. >> our guest hosts, we'll give

them the last word when "squawk box" returns. [ male announcer ] this store knows how to handle a saturday crowd.

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day of my life, my life, my life ♪ ♪ this is going to be the best day of my life ♪ >> stock of the day. it's not our parent company in any way, shape or form. it has nothing to do with the stock of the day or why we picked it. >> we all hold so much of it. >> general electric, shares of the dow component rising in early trading, follow results, people thought maybe 4x or shrinking ge capital would cause revenue to mix. revenue was just about in line. next quarter they talked about seeing gains in revenue and earnings per share, which has been tough as they shrunk that ge capital unit just about every quarter since the financial crisis -- >> which resulted in the book too big to fail. thank you. >> gets another little -- >> thanks to our guest hosts, jim nussle and steve rattner,

good to have both of you in today. >> i'm struck sitting here between the disconnect in the private sector and washington can't get from a to b. i'm acknowledging that. >> he's coming to your viewpoint. >> thank you. everybody have a great weekend. make sure you join us on monday. "squawk on the street" begins right now. can't believe it, we've made it through this crazy week. good friday morning. welcome to "squawk on the street." i'm carl quintanilla, david faber and jim cramer at the new york stock exchange. a teflon bull market as "usa today" calls it. plenty of earnings on tap. the 10-year note the yield at 2.58 essentia