good morning, everybody. "squawk box." i'm becky and andrew is in hong kong. he'll be joining us in the next hour. the futures have been down about 9.5%. s&p 500 down 1.5%. in our headlines today, the good news, jpmorgan reaching a tentative $13 billion deal with the justice department and other government agencies. this will settle investigations into bad mortgage loans that the bank sold to investors before the financial crisis. part of that came from companies that it acquired. the deal will not release the bank from criminal liability. we will have more from kate kelly in a moment. also the fte is saying that they're looking to fine bank of america for its role. the fha is pursuing claims on behalf of financing agencies, fannie mae and freddie mac.

as for earnings central, mcdonald's results will be in the spotlight. 8:00 we'll expect those numbers. it will be a busy week on the economic front. a number of key numbers. the september jobs report. that's right, on tuesday we get that jobs report we were supposed to get a couple of weeks ago on a friday. also, we'll get last month's consumer price index and then september cpi on wednesday. our economic newsmaker of the morning on "squawk box", charlie evans will be joining steve leaseman in a cnbc exclusive. joe. >> thanks. back to our top corporate story of the morning. jpmorgan coming up with a settlement. this is mandatory reading. i'm going to talk about it later. we'll let you do your report and then we'll talk about what it means.

>> and then we can go for it? >> then we can go for it. >> after weeks of tense negotiations with the government, jpmorgan appears to be very close to a resolution to the tune of about $13 billion, which is a bit more than expected originally. in a phone call friday night jpmorgan ceo jamie dimon agreed to the elements of the pack with eric holder that would wrap up the civil phase of a justice department investigation into a number of its past mortgage-backed securities. the deal which would also settle outstanding claims by the federal housing finance agency and the new york attorney general, eric snyderman, will carry a record settlement amount for the doj and would take an astonishing amount of money off of j.p. morgue's balan-- jpmorg balance sheet. the balance will go to the justice department along with a payment to new york state. a substantial settlement has

been in the works for some time now. something jpmorgan acknowledged by boosting its legal reserve by 9 billion in the recent quarter after what dimon described as escalating demands for penalties. so the magnitude of the settlement while high may not take investors by surprise. the problem is the continued uncertainty with what may happen with this criminal aspect of this suit. that's something, joe and becky, they were not able to resolve as something they expect in the coming days and maybe even week. >> j.p. doesn't have much choice as pointed out. if dimon were to fight the charges at this point the screws would get turned even harder. the journal makes the case that a lot of these banks are now really almost utilities and the real lords of american finance are eric holder, jack lew, and

the boss in the white house. dick parsons wrote a piece, too. dick parsons' piece is that next time there's a systemic crisis, good luck asking some banks to buy the weaker players because of the liabilities they might incur. this was mostly bear stearns in the first place. >> although there is some legacy jpmorgan that are wrapped into this. >> well, who are we hurting here? the shareholders are going to lose half of the -- half of the profits that the bank made for an entire year. it will also be tougher to get credit. what it accomplishes, i like the analogy the journal is giving it, will put stakes on the head. the last guy andy brewer didn't bring any criminal charges. he got so much flak from the left they're not bringing any charges against -- don't have any ceos so now we'll get it in money. see what you think of these,

kate. the truth is lenny brewer didn't indict bankers because the crisis was a result of bank fraud. in fact, it was a result of classic credit panic caused by bad government and bad government policy coinciding with the rational exuberance, rational exuberance to bankers who were responding to the incentives forex ses sieve risk taking that the government created. if you want to get to the crisis, you have to arrest barney frank. the journal, a lot of times it's called the morgan shakedown. a lot of times the journal doesn't pull punches, but in this case -- and then you have dick parsons, right, across on the other side of the fold talking about you'll never have anyone help next time. i don't know. i know where you're coming from.

i'm trying to talk a lot. >> you know where i'm going to come from. >> i have a pretty good idea. >> i think there's no doubt that the government has jamie dimon over a barrel here, and one of the interesting analyses i think for us today is you saw a little bit of this in the new york time and in the "journal" he had to make a 180 from sticking it to washington, talking tough, to being more conciliatory. there was a call from him to eric holder in late september that reversed the situation. it was leading to a news conference for public charges against jpmorgan by the doj. we had a truly devastating financial crisis in 2008. the american public wants heads. i don't think it's on the part of the regulators or the doj and eric holder to bring hard charges. maybe it's too little too late. these are astonishing numbers. >> that's total crap. saying that the mob outside the castle with the pitch forks

deserves to go in and get the people that didn't do anything and tear them limb from limb because it feels good, that's ridiculous. anyway -- >> well, in terms of barney frank here, here's the question. what about the derivatives that ended up biting us in the bottom in 2008 as well? there were attempts to regulate those time and time again and that's another missed opportunity arguably. >> he said it the best. he was surprised that they didn't use soarbane oxley. >> there would have been players more centrally involved. >> the entire government -- the entire government wanted us to give bad loans to people to build up d you know, to get to 70% on housing ownership and -- >> ironically jamie dimon saw this coming which is why he

wanted to pay $2 a share for bear stearns. he thought the legal liabilities of purchasing a company with that much mortgage exposure meant they were probably close to zero because he would be paying out in legal exposure down the road. he was absolutely right. >> poor fannie and fredie, they had no idea. they were shocked that some of those loans weren't going to be paid back. >> they were setting the standards, that's for sure. >> they certainly were. i'm not saying it's one party or the other. it goes back to the clinton administration, the american dream, owning a home, and everybody using the piggy bank of the home equity loan and flipping california real estate. kate, thank you. >> you're welcome. >> "the wall street journal" on the reporting side, reporter side. >> i was a "wall street journal" reporter. >> i know you were. i called you a rook.

you might as well be at "the new york times." >> let's bring in jacob frankel. he has an interesting perspective. he's a former prosecutor and an sec attorney. jacob, i'm really eager to hear what you have to say coming from the sec background, coming from a prosecutor background? is this the right deal? >> the short answer, it's absolutely preposterous. it's almost as if what we're getting now, federal regulators, the justice department, sec, is a roulette wheel or whether he hit some kind of jackpot. how much can you jack up the fines. fundamentally here you can understand if it's about trying to make the mortgage holders whole or -- i mean, where there's a logic to the number. here you have $4 billion to a

plaintiff's claim that was brought on behalf of the federal government, $4 in collections to improve things going forward and $5 billion in penalties. at some point corporate america is going to say, you know what, we just want to pdon't want to the u.s. capital markets anymore. now what comes on the heels of a government shutdown, a $13 billion fine against one of the biggest banks which in essence is being penalized. >> is it a shakedown, jacob? >> there's no question. the pattern logically leads to that conclusion. the journal editorial is dead on. to say it's a shakedown, the fact is you do have an agreement between the parties in the sense of jamie dimon and eric holder

having negotiated a settlement. you do have very experienced lawyers on the bank side who really understand this process. >> okay. >> i was going to say, what the bank needs is closure and unfortunately to get that closure it needs to write a really, really big check. this is unfair to wall street. >> where is the money going to go? the journal also points out that the charges relate to the mortgage security. those were the big institutional investors. we'll see how many big buyers get any relief. the journal makes a point that we really want to see in the administration how many checks arrive from this settlement in swing congressional districts before the 2014 election in the house. >> but that's actually part of the problem. >> advocacy groups, friends of the -- you know. >> i mean, unfortunately the

shareholders of the large institutions themselves aren't institutions so it really is this notion of heads on stakes public clam morgue. the cases should not be brought bus of public clam morgue. there is evident and facts and i believe that for jpmorgan writing this, they should have closure. >> they don't. >> they're not getting a non-prosecution agreement. i do think the lawyers are making a good assessment, that we are not going to see a prosecution of the banks. i think what you have is you have this perception being created although i think the cooperation has been all along to really root out those individuals. ultimately when we talk about any type of corporate liability, whether it be civil or criminal, it's because individuals acted a certain way. it's fair to say hold the individuals accountable but don't penalize the shareholders. don't pemlize the corporations

and don't incentive advise the government to continually raise the stakes and raise the numbers. it used to be on the pennsylvania turnpike they would say, okay, the fine is x if you speed. so, okay, it's worth my while to speed. the fact is, that's not the case here. now what you really have is creating a fear factor. >> i don't even think that analogy works because if you were speeding, you know the fine is going to be $200 of your money that you're paying. >> exactly. >> if you're paying shareholder fees, that's not your money, it's not going to start somebody from doing it again. i agree on you for going after the individuals. if you want to stop this behavior, go against the individuals that have done something wrong and prosecute that from something not happening in the future. and don't penalize the shareholder and the bank. >> everybody is playing with

monopoly money, too. i have problems with this on two counts. one in the idea that you're going after the money because you think you can get the money, whether or not you have the case. second, with the penalty that's being paid is not something that's ever going to stop somebody from doing anything that's ever been done wrong because it's not their money. >> your analysis is exactly right. joe, back to your point at the beginning as well, which is the journal item. it did not really hit the issue on the head. this is a bad precedence. >> try fighting the government. i don't want to talk about this. if you get in an audit, try fighting them. try saying you're wrong. you cannot fight city hall. that's an old expression. if i were jpmorgan and had these guys in this position, i'd be going -- i'm afraid -- i would do the same thing. it's like arguing with a

policeman on the spot. >> right. >> see how that works for you, getting smart with a state trooper. >> becky and joe, you're both making the exact same point, and it's a great point. which is fines like this create a disincentive. it's a disincentive to take away from fighting for a fares solution. it's not an evening playing field. at some point growing members can't do that. you have a major corporation saying, again, why should we be public? let's go private and minimize the risk. >> right. >> i think this is a dangerous precedent being set m washington. jacob, thank you very much. we appreciate t. we will talk to you soon. >> thank you. time for the global markets report. ross westgate is standing by in london. the nfl didn't play in london

which you didn't have any college football. you didn't have any nfl. the world series, you didn't see any of the boston series or detroit. was there anything on tv? downing ton abbey, soccer? >> soccer, futbol. >> i don't know how we get through the weekend. >> that was my point. maybe you go outside and get activity. we had -- wow, what a weekend for us over here. i'm not rubbing it in. you have a great country over there. >> okay. we did okay. we're okay. we have some things to keep ourselves amused, joe. thank you for the concern. i appreciate that. yeah, here we are. first trading day of the week without nfl in europe, and we are going to get three regular

home season games next year at wembeley. no major moves at the beginning of the week. overall investors are fairly cautious. like the united states, the s&p is reporting big heavy earnings here. the footsie ftse down. let's kick off with philips up 6.5% on the dutch exchange. ongoing head winds will affect sales growth but the key point is they beat expectations. it tripled its third quarter profit. s&p, big competitor oracle stock giant stock up 6% in frankfurt. net profit up 23% to 762 million euros. mainly because it has declining costs. but this is another company,

s&p, that's coming out and talking about the strong euro beginning to be a head wind. software company warning that exchange rate effects could hit its fourth quarter revenue growth to 5%. the dollar below the 137 level. there are companies coming out saying it's a bit of a problem. rbs, down 5.28%. seriously considering breaking up the banking into good and bad banks. that's around about 3, 4, 5 years too late. of course impacted by the settlements from jpmorgan as well. so the banking sector is extended to rbs today. that's some of the key stories around europe. back to you guys. >> rugby? rugby. >> rugby. >> like professional teams that people follow and have standing? really? >> yeah. yeah. >> let me ask you a serious question today. do they wear those rugby shirts?

>> do they wear them? >> you know those rugby shirts that we can buy over here. do they wear them? >> yes. >> that is a tough -- >> yeah. >> i can't say i was a -- >> with less padding. >> i would get squished. you'd need a blotter to pick me up. they don't play on astroturf, they don't play on -- your collarbone -- >> there's one thing, joe, they play on artificial pitch. >> your clavicle would be shattered. >> yeah. especially it's a new type of artificial pitch. it has give in it. >> they don't wear equipment. they wear a jock, that's it, man, that's it. never mind. ross, thank you. >> people are called jocks when they're sports greats. nothing wrong with mentioning that. >> just the image. thank you. >> that's your problem.

get your mind out of the -- anyway, stocks rally into the end of last week after washington took the government back to work. joining us to talk monday morning strategy is david joy, ameriprise financial. chief market strategist. mark vitner is wells fargo's economist. in retrospect, i like the way the market acts, david. i sort of feel the 85 billion. is that it? i mean, it's helping, isn't it? money does find its way in the equities. earnings are okay, but we're talking about maybe not tapering now at all this year. maybe not, you know, early next year. that helps the equity markets, doesn't it? >> well, apparently so. i would have thought that there would be some ramifications to the economic shutdown. obviously it has stinted fourth quarter gdp. the market seems to be looking right through it because the fed

is still on the job and because we've bought a little peace in washington. i would have thought we would have had the trading opportunities. the market adjusted. >> we he did. >> we've had nothing. >> the fullback to where people said if we get 5 or 8%, i want to get it. then it looked like there was going to be a sell on the news the day after but that was mostly ibm. i think the s&p was way up that day even though the dow barely made it back. we even get a sell on the news. >> no, we didn't. i think, you know, the lesson here is you maybe still get a trading opportunity at some point in the next few weeks, month, but if you're a long-term investor, clearly markts looking over this speed bump. i think you have to stay the course. i think equities will go higher over time, absolutely here. >> mark, let's subtract some -- i don't know. how much do you subtract from what happened off gdp? then that's sort of a rear-view

mirror look at gdp. do we do 3% next year? >> i don't think we do 3%. we think that the loss to gdp growth is around .3%. >> .3%? >> .3%. that's the midpoint of the range we thought it would fall in. the shutdown began on the first day of the quarter. we have the whole rest of the quarter to make up for any lost activities. i don't think it's going to turn out to be all that much. next year i can't see how things are going to get better. the idea that we're going to get a taper at some point next year. then growth will ramp up to 3%. that just doesn't add up. i think somewhere in the 2 to 2.5% range next year because the estimate is 2.4. >> so what does that say about unemployment, mark, coming down? the more we -- it's troubling. it's troubling in terms of

part-time jobs getting so common and it's also troubling if you look at how many people in the work force, what the participation rate is. it seems to be kind of a lousy job market which seems to indicate the fed needs to stay but might never be able to leave. >> $85 billion a month for a few more months and then beginning to taper. that's a lot more. we're probably adding another $400 billion of bond purchases by this delay. >> will we get under 7% and will it be a real sub7% jobs number? >> not for a while. we will get under 7%. they have to back off the unemployment rate target, threshold, whatever it is because we're going to get there a lot sooner than we're going to finish tapering. certainly well before we begin to raise interest rates. it's not that meaningful because we see a huge drop in the labor

force interest rate. we are seeing a bit of a rebound for prime rates. they put off hiring late this year and get off to a real weak start next year. >> mark, we're going to lose you. david, do you have a year end target for the s&p? do you think it continues to go higher next year? >> yeah. i've been at 1650. it looks like that won't happen unless we get that trading activity. i think it goes higher next year. i think it ends up 1825, 1850. >> your 1650 has been terrible. you understand that's 94 points? >> yeah, absolutely. but i've been invested all the way through. i'm at least enjoying the ride. >> okay. good. all right. david, thanks. mark, like the races, you can all the count on him.

i can't tell what's on today. >> like bulls, maybe? >> bulls. >> making that up. when we come back, why some furloughed federal workers may get paid twice. first we have some squawk news for you. peyton manning did not get the homecoming he wanted in indianapolis last night. they beat denver 39-43 handing the broncos the first loss. manning passed for 386 yards and three touchdowns but he threw a fourth quarter interception and he fumbled out of bounds. now to the national weather forecast with alex wallace. alex, good morning. >> good morning. tracking chilly conditions plus the threat for some snow showers coming on in through the mid part of the week. cold air across the upper midwest, great lakes. this system will dive its way in bringing a few snow showers across the dakotas. by tomorrow moves into the midwest. wet snow mixing with rain across parts of iowa into illinois. chicago, you're going to stay

chilly. it's a chilly rain. no snow there for you. check out the temperatures compared to average. a lot of 40s. that includes minneapolis. that's 16 degrees below average. that colder air continues to sushlg towards the south and east tomorrow. the ohio valley, you get a chance to see sub60 degrees readings in louisville. wednesday, hits the east coast. d.c. expected to get up to 70 today. by wednesday, 57 degrees. it's one of those bundle up up and coming days across a lot of the eastern half of the country. that's your national forecast. "squawk box" coming up. more of that next.

welcome back, everybody. right now it's time for the executive edge. this is our daily segment focused on giving business leaders a leg up. "usa today" is reporting that some federal employees will get paid twice for their time out on furlough. several states are allowing those who got unemployment can keep their money and the back payment. >> it's a loophole. >> it's too complicated to get back some of the money. forget it. it illustrates the stupid at this of the shutdown. we have these people and you lose the productivity. then we issue back pay and you have the unemployment. if you're going to do a shutdown, say it's a shutdown

and not do anything. keep the people coming in and keep paying them. >> the total of all of that money. >> it shows the stupidity. it slowed down the private sector. you couldn't get things like the irs to confirm they had the income they were claiming. >> it department happen in '95 and '96. >> they didn't get unemployment benefits? >> they did but they knew exactly -- they had to pay back the unemployment benefits. the law that provided them with the back pay, tvs workiit was w. 4400 filed for unemployment, 1300 took other steps needed to receive a week of benefits and then part of them will get to keep it because they can't -- >> go back and try to figure it out. focusing on obama care and the website. any i.t. people, they should be -- >> sent there? >> wouldn't you?

i would bring anybody that knows anything. >> i think they are at this point. >> they are. boy geniuses, young people, hackers, all welcome. come for a seminar. all come to washington and there will be a contest for someone that -- >> like facebook. they would sit around and have hackoffs. >> supposed to be 7 million in by early next year. >> yeah. some of the state exchanges are running well. >> the state exchanges, not a single federal exchange is working. >> i saw some numbers yesterday of who had started. a lot of the processes. there's something like three steps along the way. >> right. >> first you have to sign up, then it has to be verified, then have you to pick the plan. >> when it's all said and done we'll go and the postmortem is writt written, i don't mean the postmortem that it dies. >> the launch. >> how much pressure to make sure you had it there.

once you give something to someone, it's hard to take it back. it's a signature deal. we have to get it rolling because once we're rolling, then you will never get rid of it. >> i don't think that's the problem. >> even if one person -- >> they laid out what he would have done if he were doing it in private industry. the problem is they weren't doing it soon enough. a lot of this went live and that was the first they were testing it. >> why? >> i'm not sure. incriminations are coming. it could have been done earlier. aetna was warning, get your act together. they had been warning them for a long time. do more. not just do it, do more. >> you need to be doing more. they said, no, we haven't. then they roll it out because we want people -- >> the problems were earlier when they had time to fix it. >> they didn't have to launch it if it wasn't ready unless they wanted it there. once you start it, you can't take it back. >> the president i think is going to be speaking about this today. >> we have that going for us. all right. anyway, in science news, a

biological clock finding the young at heart have new meaning because heart muscle, researchers report that most of your body is aging in a koof coordinated way. there are odd anomalies. your heart may be younger than the rest of your tissues and women's breast are older. tumors are oldest of all. this researchers might help scientists understand cancer and explain why breast cancer is so common. if you look at the way -- if you use methylation as a way of saying something is old, then you can see how old tissues are. >> tumors are old because they grow rapidly and age rapidly? >> it looked like part of the way cancer is able to make a foot hold is by fooling the biological clock and it continues to -- that's why when

you think about ways a couple of years back there was a way of making an individual cell live longer, the telomeres are like a little fuse that gets shorter and shorter. if you make a cell longer, that doesn't mean the organism lives longer. you make it easier to get cancer. it's tough. a difficult one. i want to see the twitter story. >> okay. >> everybody quits twitter. >> you haven't quit yet? >> i kind of have. i only do one thing on twitter. >> you like to watch, too? you watch what's happening. >> excuse me? >> you like to watch. >> i do like to watch. >> mark cuban -- >> that's a news feed, but some people drive me crazy. then i stop following them. >> some people use it actually as work. our final story on this, as twitter prepares to go public, you're getting more statistics. some analysts are worrying about

this. the twitter quitters. a rating poll says 36% who join twitter, they say they quit. 7% of facebook users say they don't use it. for those of us who use it for work, that's an indispensable tool for work. facebook i never found anything for work. >> rugby world cup season starts saturday. times in u.k. >> i'm finding that out on twitter. >> it's a useful news tool. >> it is. a lot of propaganda from other news shows. don't you see a lot of propaganda? >> yeah. i think if you're looking at reliable sources -- >> we do a lot. it's not propaganda. i have to squawk. you can block some of these people. >> getting political. we'll take a quick commercial break. when we come back, erngs season is about to kick into overdrive.

we'll look at some that have reported and come back later. "squawk box" will be right back.

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centurylink. your link to what's next. markets are gearing up for another barrage of quarterly results this week. joining us is sharaz neon. also the ceo and chief research advisor of cal research group. if i had to look back on what we've seen in earnings season, my thought is it's been disappointing when it comes to

revenue. some of the top lines. >> that's true. i don't think it's as systemic as it was in the previous quarters. i think we have seen some decent top line growth with a lot of companies. it's not as broad based and as systemic as it was in the past with negative revenue. there have been some pockets of different strength. we're looking at 1.5% revenue growth and 1.5% earnings growth as of right now. that's pretty good. >> i'm thinking of big name companies, somebody like ibm who misses by a million. these are high companies like goldman sachs came out with better than expected earnings per share. that stock was down. coca-cola, volume growth was down. more deeply. >> that's true. google on the other side. you have -- i think it's been kind of split. if anything else, the revenue growth has been a little bit stronger than it has previous

quarters. >> how would you quantify what we've seen and how would you quantify how the earnings season has gone? >> totally uninspiring in terms of not much growth was expected to begin with. expectations had sharply come down as the quarter evolves and it would be very easy for companies to jump through the significantly lower expectations. what we are seeing now, the companies are struggling with beating expectations. there are some pockets of strength, but in the aggregate what we see is that it's tracking to be more than what we have seen thus far from the same companies in the last quarter and the average for the last four. so overall it's turning out to be a weak earnings season. >> what are the pockets of

strength that you both have talked about, sheraz? >> google is good. everybody is zeroing in on it. the investment side of ge bodes well for what we could potentially hear from others in the investment sector and there is some positive hope in the uptick in the pmi surveys, both here and globally, could potentially provide a tail wind for a group which has been hit harder in recent quarters. that categorizes it as a positive. overall the trend at least at this stage, withhich is to a la extent leading towards finance is uninspiring. >> we have a lot of names coming up, 140 on the s&p 500.

a bunch. dow components. mcdonald's towing, boeing, caterpill caterpillar, dupont, all coming this week. >> much better earnings this week than last week. consumer spending up 6 to 8%. oil prices, in the past a few earnings seasons we've faced a lot of tailwinds in terms of -- a lot of headwinds. i think we'll face a lot of tailwinds. this week financials are setting a solid mood with goldman sachs, jpmorgan the earnings weren't as strong. this week you get stronger earnings. a few things to keep in mind, we're still expected to earn over $100 for the s&p for this year. another 10% expected next year. i think you look at earnings in context, they're not as strong as probably we've seen in previous earnings cycles but,

you know, things are still starting to get a little bit better on the top and bottom line. >> thanks for coming in today. >> thanks for having me. coming up, shares of earnings giant sap. we'll talk to the company's co-ceo. other corporate news, hasbro is up better than expected. i love having a free checked bag with my united mileageplus explorer card. i've saved $75 in checked bag fees. [ delavane ] priority boarding is really important to us. you can just get on the plane and relax.

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coming up, software giant sap backing a full year forecast. bucking an industry trend that the company warns that volatile exchange rates could hit results. the company's ceo, let me elevate this guy. he's a friend of the show. he'll join us in studio when

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may, 2014. that's good. that's a huge company. not always american. will you be the first american to run the company? >> yes, i will. >> that's neat. >> thank you. . . .

the world's fastest data base. >> an island in hawaii. >> just rocket fast and, joe, what's the big difference? it does transactions, analytics, machine to machine, mobile, social. so a ceo can take a complete realtime purview of how their company is running at any instant in any day. this is the bridge to the future that we built for our clients around the world. >> and you're moving away from fixed location hardware to the cloud? >> yes, and i actually need your help on this. >> i told you everything i know. >> here's why i need your help. the transition to the cloud is the move that we started making with the company in 2010. we are now the second largest cloud company in the world as measured by revenue.

salesforce, because they were the one in the cloud first and that's all they do. but we do everything now, including running entire enterprises in the cloud. so when i see you say revenue has slowed and -- your editors have said that. i want to clarify a few things. >> they know more than i do. so your revenue's slow? >> no, our revenue's up 13% year-over-year. >> year-over-year. >> and what you see -- >> our cloud revenue grew 162% year-over-year. so we're taking the core, which will grow slower and we're transitioning the company to be thee, thee cloud company. when you think of s.a.p., you'll think big data leader, cloud market leader, global market leader and everything runs on a consistent core so companies can perform better. that's what we're doing. >> let's talk about just the environment for -- because s.a.p. is one thing but the environment you're operating in is another.

how is it in this country? is this your most important market? >> well, this, you have to have the united states. we grew 17% year-over-year in the americas. >> what is that? revenue? >> that's revenue. 17% in the americas but, again, the transition in the americas to the cloud is unbelievable. third of our revenue now is coming from the cloud in the americas. three years ago, zero. >> how profitable is that? >> that's a good question. in the early years, people say clouds are less profitable. you don't recognize it all up front, you recognize it over three years intervals. if you have high renewal rates with cloud revenue, the margins actually accelerate beyond year three. >> and are you seeing that? >> yes. we're already seeing that. we're profitable in the cloud today, but three years from now, we'll be incredibly profitable in the cloud. europe, very interesting with europe. we grew 10% in europe year-over-year. as an example, oracle down five. >> we love throwing that in.

the reason i bring it up is we are doing well even in southern europe, not just northern and compared to other large i.t. companies, we seem to be doing better than everyone. >> we've got to run, but your stock is going to have a big pop today. you close at 73, 75, it's going to trade up around 77.90 or so, it's going to be up four or five dollars. >> i want to say thank you. i want to say we have a great strategy, we put it in place in 2010 and it's now yielding all the dividends we've predicted. >> because of your leadership, i think. >> and my co-ceo and your great friend. >> anyway, bill mcdermott thank you for coming in. when we come back, two news making guest hosts, one runs a conglomerate with businesses in every part of the economy the other sends warning signals about the trouble in the world. we'll welcome jim tisch and marc faber.

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jpmorgan ready to pay. jamie dimon cutting a deal with the doj to settle probes into the mortgage business. the details and the street reaction. plus, marc faber and jim tisch, we'll talk about the debt ceiling and the impact on the u.s. economy and get their outlook on what's to come. and then we huddle up and talk the economics of the super bowl. jonathan tisch treasurer of the new york giants and former lineman sean o'hara as the second hour of "squawk box" begins right now.

good morning, everybody. welcome to "squawk box" here on cnbc. i'm becky quick along with joe kernan, andrew is in hong kong this morning. we'll hear from him in a few minutes. the futures this morning have been indicated a little bit down at least for the dow and s&p. s&p futures off by close to three. the nasdaq up by one point. >> jpmorgan, close to a $13 billion settlement over financial crisis. that's just -- it's a big, big number. i don't care who you are. when it starts with a "b" and it's in the teens, it's amazing. tell us more. >> it's the kind of headline figure that we used to say at the "wall street journal" causes yo uh to choke on your cheerios, joe. the $13 billion that jpmorgan is preparing to possibly pay would tie up a number of loose ends for it legally.

outstanding claims by the federal housing finance agency, the new york attorney general and perhaps most importantly the department of justice over mortgage securities packaged during the housing boom. it would also contribute about $4 billion to consumer relief efforts. just as notable is what the amount won't cover, namely the criminal aspect of the doj's ongoing case which reportedly involves a whistleblower cooperating with authorities who is familiar with the mortgage practices. also leaves out the federal deposit insurance corporation which at least as of friday was not involved in these settlement discussions. although anything could change as this thing gets put together. the settlement now being negotiated between jpmorgan and the attorney general has been -- has not yet been finalized, rather, and a few details remain to be seen, including what some of the nonfinancial language is. however, it could be a watershed for regulators who have never leveed such a large fine on a corporation. bp's $4.5 billion payment over

the deepwater horizon disaster, for instance, was the doj's biggest penalty ever dwarfing a glaxosmithkline fine not long before. bank of america it should be noted paid about $8.5 billion to settle outstanding mortgage issues but that was not with regulators, joe, a group of private investors. >> yeah. it's amazing. and then -- bank of america, man, i mean it's -- what are we doing? it's a lot of money. i think we ought to, i don't know. we ought to be able to do something with all this. can we cut the deficit or something? or give the defense contractor some money? this is adding up isn't it? >> reporter: well, the doj money goes to the treasury, right? and we're having issues closing the budget gaps here. i did want to say something to your earlier point when we were talking around 6:00 in terms of whether jpmorgan is being punished for helping the financial situation in the 2008

crisis. we were out here in front of their headquarters and someone muttered, bear stearns did this to us. >> yeah. dick parsons was on last week and then he said some of this -- and i think he thought about it even more and wrote a big piece in the journal today about how this could change the future behavior. i hope we don't need, you know, the banks to help again with -- to take over for the government. if we do, they may not be ready to take on someone else's liability. >> they certainly wouldn't do it without the liability. >> one said it's like buying some property with environmental concerns. >> i don't think it's the same because if you're buying a property with environmental conditions that you know are there, it's one thing. and the government says please do this. so you will prevent the system from having major headaches. you do it over the course of 48 hours. >> what's interesting is -- >> your due diligence is very limited at that point.

>> we haven't introduced you yet. it sounded like a voice in the wilderness. >> jim tisch is here, we have marc faber. very quickly in some of our other headlines, president obama's going to be addressing the glitches that have plagued efforts by consumers to try to sign up for health insurance under his signature health perform program. he'll do so in a white house statement. the government's going to begin to catch up on the economic numbers this week delayed by the recent shutdown. . we have the september employment report. that was the friday number we missed a few weeks ago. it will now be out tomorrow morning, of course, this is a back ward looking number. dow component mcdonald's among the companies set to issue company earnings this morning. we should be getting those numbers in an hour. mcdonald's is expected to earn $1.51 a share on a revenue of $3 billion. >> the economy, the markets, winning back the american people and in terms of the government

and much more with our guest host. jim tisch the ceo of lowe's corporation. i can't see that tie well enough. but it's heartwarming that the jets win and did woody ask you to -- that's really -- i know your cousin and you have your moments -- but this is -- this is nice that you're doing that. aren't you a giants fan, still, though? >> i'm definitely a giants fan. >> look at you, though, because of the patriots. >> it's like it's christmas time here. we've got a little red going and green. >> all right. and also in studio, marc faber, publisher of the "gloom boom and doom report" joining us with their economic outlooks. jim, nobody has a better gauge on even, i think global economic activity because lowe's -- i've got to ask marc to start with. i asked our producers to go

back. and i'm not sure of the month and date when we talked about -- we were in qe-1. and those were the good old days because when they did qe-1, they said it's going to be six months, this much per month and then it's going to be done. and we talked to you about it and you said there would be a qe-13, requeqe-14. >> i said it would go to qe-99. >> and this was like two years ago and then by the time qe-3 came it was qe-infinity because they didn't put a time limit on it and you were absolutely right. >> look, every government program that is introduced under urgency -- >> never goes away. >> and temporary measure is always permanent. and in my view, the fed has boxed themselves into position where there's no exit strategy. the question is not tapering, the question is at what point will they increase the asset

purchases to say 150, 200, $1 trillion a month. that is the question. >> at some point, the market's going to react. >> yeah, of course. jamie's right, the market has already reacted. at the press conference in september 2012, mr. bernanke said the objective of qe-3 which turned into qe-4 was to lower interest rates. but what has happened the bond yield on the ten-year touched a low. july 25th, 2012, in other words, more than 12 months ago at 1.43%. we went to over 3%. now interest rates are easing again. i think we may drop on the ten years to 2.2%, 2.3%. we're not going to see new lows in my view unless we have a depression. >> but what would -- and jim, you can address this. because, mark, you say some things from time to time that

are incendiary. and it's great for us. i like it. i like when you say $1 trillion a month. just the idea of that. i'm not sure that will happen. that would mean this economy is in really bad shape that they would have to increase it that much. and that -- what they're trying to orchestrate in the unemployment numbers and everything else that they'd be ineffective in trying to bring down unemployment. >> in my view, he said ben bernanke is his hero because he stepped in definitely with very strong measures, with qe-1 in 2008, 2009, in the early stages of the crisis. okay. i can accept that view. but to have qe at the present time, i think is counterproductive. and they are statistics that actually show that the qe doesn't flow to ordinary people,

it flows essentially to a very limited number of people. >> but they would say -- >> would you agree with that? >> no, i think that's totally -- >> but inflation has not been a problem. why not do it if inflation isn't a problem and the economy -- too many people are still looking for a job if there's no negative effects we can see yet, you say there will be negative effects. >> one will be taking off quantitative easing. the fed balance sheet has gone from under $1 billion in '08 to almost $1 trillion in '08 to $4 trillion now. >> it could be taken back in, right? >> no, but when they take it -- the quantitative easing is wind at the back of the economy. but when they unwind the quantitative easing, which they will ultimately have to do, it will be wind in the face of the economy. and then it won't be so much fun. >> yes. and by the way, when you said $1 trillion a month is impossible, i want to tell you something.

i started to work on wall street in 1970. the total global stock market capitalization, all the stocks in the world was $740 billion u.s., less than 1 trillion. the total capitalization was $780 billion u.s. a big bond issue in those days was $50 million u.s. that was a big bond issue. $75 billion was a huge issue, new issue. you remember. nowadays, $1 billion here, $1 billion there is nothing. you know, we're talking about big numbers today and if this continues explosion of money and you say there hasn't been any inflation in here, in this room, we are the inflation. we are the bubble. we have a colossal asset bubble in the world. leverage, government, debt bubble. just consider. the government spends every year in this country $3.7 trillion.

$3.7 trillion. these are huge numbers and people say there hasn't been any inflation. >> all right. >> the other thing going on with qe, back in the 70s, we were worried about crowding out wh e where -- >> right. >> the government bond market was enjoying to crowd out all other investment. well, today all that public money is going every place other than the government bond market. that's what's helping to drive up equity prices and what's driving down interest rates. >> and hurting savings. >> that's right. >> how is just -- with all your varied businesses at lowe's, you would give the economy a -- >> i was going to give it a "b" minus, but i'll give it a six or seven. it's okay. >> but your oil stuff -- that's going gang busters, does that

make up for some of the weaker areas? >> insurance is doing very well. the hotel business is not too bad. >> not too bad. >> no, no. >> the rig is great. >> but you have to understand, it's not lowe's. it's good management of lowe's. it's above the average of the economy. an old friend of mine, i can joke with you. >> yeah. that's right. this side of the business. how's your cousin doing? >> he's doing great. >> but he's a giants fan and not a jets fan like you. >> well, we'll see if he's wearing a blue tie today. tonight might be the night. i felt that yesterday about the redskins. about washington. i thought that might be and they did beat the bears. anyway, we'll be back with these gentlemen in a second. think of some crazy, i love when you're on. >> i love to be here. and i would prefer if it was in the evening and not so early in

the morning. normally i get up in the afternoon. >> i know you do. let's talk off camera. we're counting down -- you live in thailand half the time. >> yes, not half the time but when i'm not traveling, i'm in thailand or vietnam. we have to talk about vietnam. >> we are counting down to our big interview with charlie evans, the chicago fed president, the economic impact of the shutdown all the way to janet yellen taking the fed chair. and still to come, a big weekend around the nfl. the bengals taking control in the afc north and andrew luck stealing the show from peyton manning. the business of the nfl with sean o'hara and giants' treasurer jonathan tisch.

welcome back, everybody, take a look at the futures this morning. we've seen things under pressure, not by a whole lot. dow futures down by about 14 points. the maker of brands like north face and wrangler earn $3.91 a share for the third quarter.

also approved a stock split and 21% increase. we're watching tellabs today. and just announced $891 million deal. that's $2.45 a share. >> do you know richard parsons' middle name? >> what does it start with? >> "d." >> this is j. parsons. >> that's not dick parsons? that's interesting because he said similar things. >> i know. this guy richard j. parsons is a former bank of america executive vice president. the author of "broke." >> but dick parsons. >> richard dean parsons. >> our dick parsons said some similar things last week. >> it's funny, yeah. >> all right, andrew in hong kong today for the first "new york times" book conference there. he joins us with highlights.

great to see you this morning. >> hey, becky, i miss you over there. a couple take aways, given conversations i've been having around town here in hong kong. the first is for all the conversations we've been having around the table recently about our standing, the u.s. standing in the world, the treasury and whether people will be buy treasuries and whether they trust us and whether the circus in washington has had any impact. oddly enough or maybe not so oddly, it seems, actually, people in hong kong here, the financial professionals actually look at what happened in washington and don't think much of it which may come as a surprise. at least a surprise to me. that was a big issue here and i asked everybody and nobody seemed to bat an eyelash. the other big issue this morning, jpmorgan chase, the $13

billion settlement. one issue important in china, is the ongoing investigation by the sec into whether jpmorgan has hired the sons and daughters of politicians to gain business. everybody here seems to think it happens a lot and maybe even more than you think. but they all think it's not a problem. wade christianson the ceo of morgan stanley china and here's what she had to say about it. >> first of all, the kids have to be confident. they have to have the right background, the right skill sets to be hired. second, the process has to be followed. and it has to be transparent process. a lot of people have to interview them. there has to be a majority vote. and third, you cannot do anything specifically different and special for these kids. if you follow these rules and i think you're fine.

>> when i come back in the 8:00 hour, i'm going to bring you comments from hank greenberg who had some very interesting words about the jpmorgan/jamie dimon situation. this, guys, is an ad in the international herald tribune for "squawk box" asia. there's me and bernie lowe. and i will be hosting the show tomorrow morning right here from hong kong. so we're going to transplant for the day. apparently i'm told, there's -- i'm told there's posters and other things, someone said they saw a picture like this in the airport. i haven't seen it yet. i'm going to go take a look. back to you guys. >> is it in hong kong? where does "squawk box" asia? we should know this. i haven't been over. >> it's it's in hong kong. and i'm going to do it with bernie lowe and do a couple hits

during "squawk" and i'm going to be on their version of "the call" a little bit later with bernie, as well. >> do you find that to be? could you move there? is it a livable city? are you -- this is -- >> you know, keep my seat warm but not too warm, i'm coming back. i like it here. i also you know me. i'm a new yorker. >> i know you. >> we had a great time here. >> and you got -- let's see, "new york times," international "new york times," deal book, "new york times," international, you've got -- where's too big to fail? maybe you could just hold the book up while you're -- >> well, no, and we can't -- we can't show you. i'm told it'll pixulate, but there are cnbc signs. they've been broadcasting this. >> all right. you're with cnbc. and we're proud. we're -- you know. >> he's ours.

>> we're very proud. anyway, i'll see you in the next hour. coming up, dimon's deal with the doj and street reaction and find out what it means for jpmorgan. and check this out. it's the huddle shuttle. the super bowl committee recently kicking off a mobile tour in a new york, new jersey area. jonathan tisch will tell us. it's in new jersey, i'm sorry. it's the new jersey super bowl. i'm sorry. time now for today's aflac trivia question. what does the word groke mean? the answer when cnbc "squawk box" continues. o run your lines? okay, who helps you focus on your recovery? yo, yo, yo. aflac. wow. [ under his breath ] that was horrible. pays you cash when you're sick or hurt? [ japanese accent ] aflac. love it. [ under his breath ] hate it. helps you focus on getting back to normal? [ as a southern belle ] aflac.

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now the answer to today's aflac trivia question. what does the word groke mean? the answer, to stare at somebody while he's eating in the hope he'll give you some of his food. okay. up next, jpmorgan close to a deal with the government to settle probes into its mortgage business. we'll find out what it means for shareholders. and then we add another tisch to

the mix, jonathan will join us along with super bowl champ and pro bowler shone o'hara. we'll talk business conditions and football. "squawk box" will be right back. at a ford dealer with a little q and a for fiona. tell me fiona, who's having a big tire event? your ford dealer. who has 11 major brands to choose from?

your ford dealer. who's offering a rebate? your ford dealer. who has the low price tire guarantee, affording peace of mind to anyone who might be in the market for a new set of tires? your ford dealer. i'm beginning to sense a pattern. get up to $140 in mail-in rebates when you buy four select tires with the ford service credit card. where'd you get that sweater vest? your ford dealer.

welcome back, everybody. take a look at futures. dow futures down by about 14 points. in our headlines this morning, at&t is on the rise in the premarket trading, up about $5 billion by selling or leasing. it's raising nearly $5 billion by selling or leasing 9,700 wireless towers. upbeat on the economy but not so much unemployment. that's how economists surveyed by the national association of business economics are feeling these days. they say there's a good chance of rising economic growth in 2014. but only 37% expect to see more jobs at their companies that is down from 39% in the prior year.

gasoline prices down 2 cents over the past few weeks. this is the average price now at $3.36 a gallon. the cheapest gasoline found in albuquerque, new mexico at $3.03, the most expensive in san francisco at $3.81 a gallon. oil now below $100. wti. >> wti broke $100 for the first time since july. >> that's pretty amazing. thatst going to be one of the tail winds that other companies see when it comes to earnings. but with the crude oil prices coming down so quickly, that's a stunner. >> well the question is how far down does it go? my guess is it won't go much below 85 because production starts to dry up. it costs that much to find that next barrel of oil. >> okay. >> i don't know what that says about the global economy. sounds like we need more qe, doesn't it?

>> more. >> it also means we're finding more oil. >> yeah. >> this is jpmorgan, they've been inching ever closer to reaching a record $13 billion settlement with the fha. joining us more to talk about it is eric robinson. and we've been trying to figure out, what does this mean? should they sell at this point? is it too late? what happens? >> i actually think that a settlement when it's finalized to understand the parameters and the terms could be a cathartic event for the stock. >> even if the criminal probe is not finished up at this point? they still have the option of taking a look at any criminal charges. >> yeah, well, i think that's why it's important to understand what's covered, what's not covered and what remains outstanding. >> right near a high, right? it's $2 off a high. and that's a high -- is that an all-time high? i didn't go back far enough to see. pretty close. >> it's pretty close. but also, this is a company with tremendous earnings power. when you backed out the charge,

this was a company that earned north of $1.40 in the quarter, heading towards $6. in an environment that isn't strong. i think there's a disconnect here between the underlying fundamentals which we see are reasonably good given all the challenges in the world today in qe and all the other issues. and this litigation issue which clearly is the major overhang which not only compressing the earnings, but also the multiple. >> but the risk isn't reflected in the stock. is there any reputational risk to jpmorgan and jamie dimon? >> it's trading at a major discount to its peers. >> where do you think it would be without this overhang? >> well it's about a two hch point discount, that kind of tells you to trade that level of a discount. it mean, the market's kind of telling you what they're taking a point or two off for that. >> and what do you think the scale of the cost of some sort of criminal element could be?

>> i'd hesitate to speculate. again, without knowing the parameters of what's left out there. we know very little of what's being investigated. >> you're not sure. you have to get the details before you decide this is something that clears up the issues for you with jpmorgan? >> yeah, i think the market's focused on two things. one is obviously the dollar cost. six weeks ago we were talking about $4 billion, and two weeks ago, $11 billion, this morning we're talking about $13 billion. that seems relatively well bounded by the $23 billion of litigation reserve they disclosed. >> what's the criminal activity we're talking about. the two bear stearns guys -- was that the most glaring possible criminal case that's already been brought? and what else is there? what are we talking about? >> yeah, i mean, i wish i knew. i'd have a better answer for you. i think the other issue the market's focused on is what is

left out of this agreement. and to the extent we know very little about what that is, it's hard to speculate. >> they tried to get the bear stearns -- remember, the mortgage guys, that was the most glaring thing. they were unable to make that stick. >> yeah, i think -- >> why are people worrying about a criminal case there's nothing there? >> i don't know if there is or isn't. >> you don't know what area their business? >> no, all we know from their disclosure, it's outstanding, being run by the, you know, the sacramento -- the attorney general in sacramento. i think the issue is, you know, what -- what remains unresolved and what time frame can it be resolved? >> what about other major banks? should we worry they'll be the next one the government turns its sight on. we're hearing the fha wants $6 billion from bank of america, do

you have issues or concerns about any of the other big banks? >> clearly the industry is at some stage or another with settlement on some authorities. either as a consequence or as a consequence of their mortgage banking activities. >> should investors feel comfortable buying these stocks or not? >> we're broadly pretty neutral on this space because it looks fairly fully valued. but there are certain names where we think they're undervalued and that's where we would concentrate. >> how would these settlements affect the requirements. >> the good news it's massively overcapitalized by a standard to the extent that's still being sort of an evolving standard. it's less of a capital issue. it's much more of an earnings issue because of the continued payouts as we saw with jpmorgan. 9 billion took them down to about zero earnings but didn't affect the capital position. >> eric, thanks for coming in today. >> thanks. coming up, two men who know a thing or two about super

bowls, shaun o'hara and jonathan tisch. the markets are waiting to hear from the fed. well, wait no longer. wow. fiery and outspoken chicago fed president charlie evans will join us. i mean, all the fed guys are wild and crazy. these guys really wild and crazy. "squawk box" will be right back. ♪

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checking the futures this morning, we've seen that, yeah, things are barely budging this morning. dow futures down by ten, nasdaq up by 4 1/2. >> the government shutdown extracted a steep price from industries like travel and leisure, an estimated $152 million. here now is jonathan tisch, co-chair and chairman of lowe's hotels, also the chairman of this year's super bowl committee and the treasurer of the new york giants. also with us is shaun o'hara, former lineman and an analyst at nfl network. you never met vladimir putin because you still have your super bowl ring. >> i do. i do. you're going to have to pry this from my kung fu grip. >> can i see it? >> no. your reputation proceeds you. >> i know. jonathan, thanks for coming in.

>> thanks, joe. >> one little correction on your numbers. >> yeah. >> that was $152 million a day. >> okay. >> $2.2 billion during the shutdown. >> that doesn't help anyone. and tonight i'm hopeful. >> we're all hopeful. we are 0-6, it has not been a great start. but the team is very focused. the players are upbeat, great coaching staff. he worked for coach. >> you know what's going on. and some people don't like what you say you've been a little bit outspoken. is it -- eli's a great quarterback. is it the line? what's the real? >> i mean, of course it's ease is sy -- >> have they called you? >> i'm not going to say that. i'm not going to say that. you know, it's really just the ultimate example of how tough it is to win football games in this league. and we've all seen that, you know, they make mistakes, you

know, and it's easy to say it's on eli. but i look at the defense too. the jets have a rookie quarterback and he's throwing interceptions and they're finding ways to win games. it's a collective effort. it's never all on one guy. it's a team concept and you mentioned tom, he's one of the best coaches to coach the game. it's very frustrating, i know for myself as a former player, even more so to see this type of performance. but i think tonight, i think they turn the season around and get that first "w" against a team that's starting a quarterback in josh freeman. >> and your jersey -- >> i'm a jersey guy, yeah. >> everything, new york -- it's a little irritating, isn't it? they hate jersey all the time, make fun of it, but newark airport, oh, that's a new york area airport. the super bowl this year, it's going to be in the new york area. it's in new jersey, is it not? >> yeah, it's in new jersey. i'm shocked you were able to get

john to come across -- >> i know. both of these guys. both of these guys. >> both of us were born in new jersey. >> he breaks out in a rash every time -- >> no. no. governor christie has been great, governor cuomo, mayor bloomberg. >> what have they got to do with anything? i just said this. >> played in new jersey. the practices will be in new jersey but the hotels, the restaurants. >> the meadowlands, the game is being played in new jersey this year. you're doing it again. >> i'm not doing it again because we're the people -- they're going to stay everywhere. >> all right. i don't know where i am. >> the thing you're confusing is the fact there's a super bowl game but then the super bowl week. and i think that's really the biggest part of the super bowl. everything leading up to the game. i mean, for the players, you're so focused on. you don't realize what's going on but for the fans and the teams coming out of state and coming in. they want to come to a great hotel. >> there are more of them in new york city. >> is there -- is there a lowe's

in new york? that's right. i forgot about that. >> january 16th, the lowe's r e regency hotel. >> the huddle shuttle, that's one of the innovations the host committee came up with this year. it's going to travel to both states. this is a chance for the young people for fans of all ages to really engage with the game. the day of the game only 82,500 people are going to be able to sit there in metlife stadium and watch. here they have a chance to look at the super bowl trophy, look at eli's locker room, do some drills and they're really engaging in our huddle shuttle. it has been very well received. >> i want to ask you about what happened with the government shutdown. you quoted those numbers, $152 million a day that ate into tourism and leisure. did that come back immediate lip when the government reopens? or is that going to take time? >> it's going to take some time because people are rescheduling their trips. the people that got hurt are the mom and pops who are operating

hotels and restaurants outside our nation's parks. they're the ones who took a big hit. also, there was some international press that hurt us. people internationally put off trips and that international traveler is so important for us. they stay longer, they spend more money. it is going to take some time for them to say, okay, the government is working now, my trip can take place as i plan. it's going to take a little while to rebuild that. >> particularly when you have the deadlines pushed off to january and february. do you think it'll come to the same sort of fed or are you convinced that washington will -- >> i'm not convinced about anything in washington. but for us to go through this again in two or three months is going to be a problem for our industry. our industry created jobs faster than any other segment since 2010. and we still have the ability to do that and that's why the international traveler is so important. we have to make sure they know government has reopened they can take their trip. >> you want to weigh in on that too. >> it's not just the hotel industry that's affected by the government shutdown. it's all industry.

it's our business confidence and consumer confidence. it's a sense of not knowing what direction the government's going in what taxes are going to be, what's spending going to be. creates tremendous uncertainty. puts a big head wind to the economy. and i hope that they -- the politicians on both sides of the aisle decide to go with statesmanship rather than partisanship because that's the thing i really think is going to help us get out of this mess we're in. >> do you expect, either one of you that there's a big deal that will take place? the "wall street journal" points o out that the president could have trouble with the progressive wing of his party that they don't want to see anything done to social security or any of the other entitlements. >> there's absolutely no reason to think there's going to be a grand bargain. it's been talked about for the past several years. it's never happened. i'd just be happy with a small bargain.

something to get us through the next year. and then once confidence is built up among the sides, once the rhetoric comes down, then maybe they can sit in a room not on the stage but in a room and negotiate rather than giving speeches to their bases. >> jonathan, you're the treasurer. and you -- you were right about the $150 million. do you know like actual numbers about gambling and how much is done on the super bowl? >> i do not know that. the number that we use is about $500 million to $600 million. >> that's just for -- you're not talking gambling? >> no, i'm not talking about gambling. that's not my area of expertise. we don't use that word. >> i wonder per week, i wonder how much is legit in vegas and atlantic city and other places. i wonder how much is done with -- >> you're going to have to do your own research on that. i cannot help you. >> which would be another, you

know, from what i hear about jersey, pretty good place for gambling too. you know what i'm saying. >> i do not. >> you do not. >> you're speaking gibberish right now. >> i'm speaking gibberish. >> can you -- well, you're a jets fan. do you -- you've had something to bet on this year anyway. >> i was going to say, is it gambling or betting? >> is it gambling or betting? depends on whether you're calling, you know, your bookie or placing a legal bet. i think denver is the favorite. >> denver lost yesterday. >> i know they did. >> i'll take the colts. you want to bet? >> i'm a bengals fan. i will bet against the bengals winning the super bowl, i've been a fan for long enough -- i'm not crazy at this point. anyway, gentlemen. >> all right. good. >> are you crazy? >> let me see that. that is cool. thank you very much.

wow. and they're all different -- >> i'm faster than i look. >> you are. i don't think you could take it back from me anyway, to be honest with you. >> commercial break. >> oh, yeah, there it is. >> he's really a giants fan. >> yeah. that's right. all right. guys, thanks, appreciate. what's wrong with the lowe's new jersey? there is land out there. >> we had one at one time. >> you did? >> yes, your family comes, the first business was in new jersey. >> that's where we started. >> started out in the pines. >> where's the attitude now? >> what do you mean? >> no, i'm kidding. >> thank you, and jim, you'll be here for another 20 minutes or so -- ten minutes. when we come back, we'll talk about marc faber's next big prediction. his final thoughts and we'll hear from jim tisch one last time. at the top of the hour, charlie evans joining steve

liesman. check out oil this morning as jim was talking about earlier. back below $100, $99.74 for wti. we'll have more on what's moving this and more when "squawk box" comes right back. opportunities aren't always obvious. sometimes they just drop in.

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joining us right now for the last word is jim tisch the ceo of lowe's corporation, also marc faber. and jim, we have not talked enough about your business and what you see. we've talked about the broad story. but with oil prices coming back down, what does that mean for the oil parts of your business? >> for the energy parts of the business, i don't think it means too much just yet. oil's been hanging between $100 and $110 a barrel for the past three months. i'm not concerned it's going to go down to 50. >> is it coming down because of economic activity and concerns around it? >> no, i think it's actually coming down because we're so successful in generating new supply. so it's not demand as much as it is additional supply coming on the market. >> but when we were off camera before, you said it's what $85 a barrel and that's when the production here in north amer a america.

>> $85 a barrel, you'll see drilling start to dry up quickly. >> can i ask faber one more thing? do you think the wealthy people in the world will eventually lose 50% of their wealth? >> yes, the question is from what level. you know, do you have $1 billion maybe goes first, $2 billion or $3 billion. >> what you have today you will not necessarily lose half of? >> i think it's not likely but from a higher level. but you understand. >> what's your basic reason? >> you said earlier there is no inflation. inflation can be consumer prices, it can be in commodities, it can be in wages. it can also be in assets and we are in a gigantic asset bubble around the world with prices of real estate having risen a lot. i do not deny some property prices have come down in the u.s. we have a decline in 2007, since

then we also have a recovery. in the hamptons, in london, hong kong, singapore, and we have a high inflation overseas so i think that one day this asset inflation will lead to deflationary collapse one way or the other. we don't know yet what will cause it. in 2007 that in spite of their easy monetary policies property prices in some areas would fall by 50%. it's like jamie said, oil has been down. i say oil is down maybe because in my view there is at the present time in emerging economies practically no growth. the growth has slowed down to trickle. and some sectors like tourism and asia is still growing rapidly. but other sectors are not growing. so if you go to hong kong where andrew is, he sees essentially a

boon town but it's not growing, it's at the high level of economic activity. same in singapore, you look at global exports they're flat. so i think the demand for oil is weakening. >> we've got 30 seconds. you can't give us the time frame or how high we will be when this happens? >> i don't know. >> within -- was it within five years? >> look, i can show you statistics from the federal reserve, the bottom 50% of the population in terms of wells. they have lost 44% between 2007 and today. this is the bottom 50%. if you think that high end will never lose anything. >> are you listening, jim? >> high end. >> this is all the result of quantitative easing. the fed wanted to get the stock markets going. that's what qe-1, 2, and 3 are all about. move people out the risk curve and so far it's worked.

>> all right. we've got charlie evans coming up who will talk to steve liesman about it. next time you're in, you come to jersey, you know, this horrible place we heard about again. cnbc exclusive coming up. steve liesman joining us with charlie evans, taper, government shutdown and the economic. optios really appreciate our powerful, easy-to-use platform. no, thank you. we know you're always looking for the best fill price. and walk limit automatically tries to find it for you. just set your start and end price. and let it do its thing. wow, more fan mail. my uncle wanted to say thanks for idea hub. he loves how he can click on it and get specific actionable trade ideas with their probabilities throughout the day. [ male announcer ] open an account and get a $150 amazon.com gift card. call 1-888-280-0149 now. optionsxpress by charles schwab. call 1-888-280-0149 now. they're the days to take care of business.. when possibilities become reality.

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outspoken fed president charlie evans joins us on a cnbc exclusive. timing for the taper, economic head winds. jpmorgan putting $15 billion on the table to settle some of the government's investigations. we'll tell you what it'll mean for jpmorgan shareholders. and mcdonald's out with quarterly results. the third hour of "squawk box" begins right now. welcome back to "squawk box" here on cnbc first in business worldwide. andrew ross sorkin is in hong

kong. he'll join us a bit later. mcdonald's is reporting. >> came out with earnings of $1.52. revenue right in line at $7.3 billion. the company also said it's increasing its dividend of 5% to 81 cents for the quarter. if you look at what they expect for numbers coming out, they do say that they expect the current environment to persist. the dynamics of the current environment, it hasn't been a great one. they say the company is looking for global comp sales in line with recent quarterly trends with restaurant margin percentages expecting to decline at a level relatively similar to the first quarter. they say global comp sales for the month of october are expected to be relatively flat. now, that may be why the stock has traded down a little bit. it's down by about almost 1% on some of this news. >> yep. >> even though earnings beat by a penny. >> kind of in the middle of the range, 83 on the low, 104 on the high end. if you look just at the last two years or so, it's right in the middle.

seen kind of mixed results. >> they've been in asia pacific and middle east and africa. some of the challenges reflected weakness in china, japan and australia again in part to what they're blaming on an ongoing challenging environment. jpmorgan reaching a tentative $13 billion deal with the justice department and other government agencies. this will settle investigations into bad mortgage loans that the bank sold to investors before the financial crisis. the deal will not release the bank from any potential criminal liability. we'll talk more about the jpmorgan settlement at 8:30 with an analyst that covers the stock. in other banking news, u.s. housing regulators are looking to fine bank of america more than $6 billion for its role in misleading agencies during the housing boom. the fhfa is pursuing claims on behalf of the finance agencies

freddie mac and fannie mae. let's get a check on the markets this morning, again, the u.s. equity futures are indicated down a little bit. down a little bit by 16 points. mcdonald's is a dow component. if you're reflecting overseas in asia, you can see how the market's closed there. a little bit higher across the board, shanghai up by 1.6%. nikkei by almost 1.6%. a little bit of weakness in france and germany and the ftse relatively flat. if you take a look at oil prices this morning, wti dipping below $100 for the first time since july 2nd. right now, 99.79. all right. let's get to steve liesman in chicago. he joins us with a special guest. good morning, steve. >> hey, joe. how are you? joining me is chicago fed president charlie evans. charlie, a lot of questions to get to. let's start right away. >> all right. >> you were quoted last week saying october was going to be almost impossible for the federal reserve to taper. is december possible? >> well, sure. i said we would look at each

meeting at what the data are and what the circumstances are. given that in september we thought that it was much too close a call. we needed to see evidence of more sustainability of improvements in the labor market. and we haven't had a lot of data since that meeting because they stopped publishing data during the government shutdown. so october's a tough one, december. i think we need a couple of good labor reports and evidence of increasing growth, gdp growth and it's probably going to take a few months to sort that one out. >> one of three reasons you gave in september for not tapering was concern about fiscal restraint. a three month on the debt ceiling. how can you feel comfortable in december that you won't have another bout of fiscal restraint come january and february. it's difficult to feel confident. given we're going to repeat part

of what just took place in washington. there's a lot of fiscal drama which caught everybody's attention, business people that i talked to or, you know, still concerned about how things are going to play out. so december will be pretty tough. and we could, you know, in fact, get more restrictiveness. we've seen the government lop off over a percentage point from growth this year by many estimates. and over the last couple of years, it's been virtually impossible for the private sector to just plow through that in terms of accelerating gdp growth. >> what's your assessment of the recent impact of the recent shutdown and debt ceiling debate had on economic growth. >> i don't have a great estimate. i've seen a lot of assessments by people and it ranges from a couple of tenths to something more like .5. we're just going to have to see, we need the data to start coming

out. >> why is there a disconnect between the federal reserve and congress right now? the federal reserve seems to be saying done cut deficit and resolve these issues of uncertainty and congress keeps doing the opposite? >> i don't know, we're looking at the state of the economy and our inflationary pressures. that's what we're focusing on financial stability risk is all. as much accommodation as we have in place is going to be helpful for overcoming these head winds that every second half of the year, every few years we seem to be running is into. congress and the president are focusing on something else. we're doing our best to keep things moving quickly. >> how would you feel about the possibility of more deficit reduction in january and february? >> well, you know, i agree with a lot of analysts, the chairman has said this before. we need to address our fiscal challenges over the medium and long-term.

absolutely, but we also need better growth right now. fiscal stimulus done smartly that could add to growth. if you go back to the early '80s. in the early '80s we saw a big downturn and we saw it ramp back up. we saw it close the resource gaps within a couple of years. current period's very different. why is that? well, government spending at that time was adding two percentage points to growth at a time the economy needed it whereas now it's subtracting one to 1.5% this year and it's been bad before. the other reason is that the fed at that time could lower interest rates until it knew the economy was back on track. >> could you see the federal reserve doing more quantitative easing in the face of more deficit reduction. >> i think we're going to have to go into every meeting and look at the landscape. i would like to believe that the

outlook for the economy is stronger than what you're currently suggesting. the chairman in june pointed out the fomc's outlook was somewhat better than other people had been mentioning. second half of the year would be better than the first half and then next year would be an acceleration. we thought that was possible. and the chairman pointed to if this outlook comes about, we need to begin to reduce our flow purchases. you know, if we saw a different kind of outlook or if inflation started turning down, we'd have to ask ourselves whether or not we could add more accommodation. i favor putting in place as much accommodation as we need. >> would you like to do more right now? >> i think we need to get other factors in the economy that are slowing things up to be quieter, to let the business community focus on what they do best. everybody is primed to take advantage of the opportunities that are in front of them.

businesses have good balance sheets, they've refinanced households have been making a lot of progress. there's more hiring, more capacity. we need more customers walking through the door and anybody who can aid that by just calming down and getting things back on track, that would be the most helpful. >> in the fed is going to begin tapering later, it already has later than had been essentially forecast in june. does that mean it will end later? the forecast or the con censs c seems to be a summertime ending to the tapering. is that possible? >> i know everybody would like a nice time frame. >> well, not everybody, just me. >> you're not the only one. >> and i think the chairman has been very clear and saying it's going to depend on the data. it's going to take longer, clearly, given the fiscal drama in washington, the already slight weakness that we were seeing relative to our outlook.

so we could begin to reduce our flow purchase rate, you know, later, several meetings in the future, couple meetings, not sure. if things really started to take off. if various actors in the economy stepped back and let the business community really take hold and consumers too, we could see a big expansion in growth and then we could pull back that much more quickly, delayed at the beginning, but then we could do it faster at the end. i don't know what it's going to be because i have to see the data. >> i have one more question for you. which is i want the answer now. is there any practical limit to the size of the fed's balance sheet? hold on, we're going to answer that on the other side of the break. >> all right, steve, thank you. we will take that break and we'll be back with much more from the chicago fed president. >> you've got your first question. >> i do. >> steve already asked it. >> he'll ask that question too. we have some other questions for

him. we'll take a look at the shares of mcdonald's. we'll bring you the september same store sales right after the break.

welcome back to "squawk box," futures right now, have been flat lining the day. it was the fair value being up 17, which has us down, the futures only up three. tomorrow is jobs friday even though it's tuesday. >> does the number matter this time? it's an old number. >> i think it does. before the government shutdown.

the state of, we never got that number. after -- it was a crappy number before that and we were already worried about the slowdown. >> that's what charlie evans was talking about. the weakness. >> and the fed is supposedly -- the fed needs that -- and we all need it to gauge how the economy's doing. >> this is the last jobs number. >> zandi was the most popular girl in town. >> yeah. >> that's a sick thought. anyway. we are watching the shares of mcdonald's. we mentioned the third quarter earnings beat the street by a penny. we're also getting september same store sales. the street was looking for an increase of 1.2%. sales in the u.s., europe and asia, pacific, mideast and africa. all missed the mark. we'll talk to an analyst about that in a couple of minutes. >> let's get back to steve liesman and charlie evans.

president evans, thank you for your time this morning. we were just talking about that friday jobs number that we'll be getting tomorrow morning. and you had said that the fed really needs more data. it's going to need more time to look at the unemployment picture, the employment picture. when you say it's data depending, can you run us through two or three of the most important numbers you're watching. i think the labor report is important. payrolls, we need to see numbers getting up to 200,000. that'd be very important. we need to see the unemployment rate continue to improve. we need to see it improve because more people are actually turning up to look for work. i think the labor force dynamics have been a bit unpleasant suggesting continued weakness. we need to see improvement there. we need stronger growth and, frankly, i think we need better consumer spending. one thing that's been discouraging is that outside of durables consumption, consumption growth has been weaker. and that is sometimes a

harbinger. i'd like to see better consumer prospects there. >> and steve, i know you had a question you asked before break too. you want to reiterate that? does the fed have a limit to its balance sheet? >> yeah. charlie, is there a limit? you're headed towards $4 trillion. could it be $5 trillion, could it be $12 trillion? what limits the size of the fed's balance sheet? and do you start to panic about the possibility of inflation? >> well, i think the fed needs to do whatever is necessary to help meet our dual mandate objections. so if for some reason we thought we needed greater expansion because inflation was moving down. i think if inflation moved down and down around zero, that would be most distressing. i think if the economy turned the other way and it was very weak, that would also be distressing and we might need to do more in terms of asset purchases. is there a limit? i don't really think about it that way. i think there's a tremendous amount of capacity.

we could go on as long as necessary especially if we were in a period of falling inflation. look, i'm not looking for that to happen. i think the economy's going to do better, especially once, you know, a number of these head winds step down and stop causing trouble. but you know, if we had to, we could do that. i think we haven't placed the forward guidance on short-term interest rates that is capable of adding an awful lot of accommodation during those periods where things might be turning down because people would have confidence we're not going to step back prematurely. that's our number one risk, people think we're going to step back and somehow add restrictiveness to the economy at all the wrong times. we've already seen that from other people. we don't need that. >> back at global headquarters. >> yeah, that's where i am, steve, you're right. i love that. i love the global headquarters. you guys probably didn't have ifps in for marc faber. and the name of his report is

the boom gloom and doom. and he says crazy stuff sometimes, incendiary. i don't know i'd say crazy, some of has come true. he thinks it's going to go on for a while because he doesn't think there's any growth in emerging markets and we're going to knee h neneed it. in his view, there's an asset bubble from qe that eventually have to be dealt with that will only get bigger from here on out. since people are buying bonds necessarily because of the yield they've moved out on the risk curve further than they should have and at that point, it's inflated and only going to get bigger from here with a day of reckoning some day. does the wealth effect, the positive wealth effect we see, t does that offset this he's talking about? >> well, we look carefully at the concerns you just expressed. we're constantly thinking about whether or not our policies or any other events are causing

risks of financial instability. i think that, you know, the run-up in the stock market is explainable by the fact that, you know, corporations have been doing pretty well. they've been doing well on the basis of bottom line, you know, improvements not so much top line. we need more top line revenue growth. we need more customers walking through the door. i think that, you know, you can always look at stocks and ask whether or not they're overvalued or undervalued and an awful lot of people who think they're undervalued. we just sort of look at what we're trying to do with quantitative easing and our forward guidance is to provide low financing costs for everyone so they can go out and make some investments, buy some durable goods, get things kick started because i think good things are going to happen once that takes place. but we look at financial instability risk, look at all kinds of data on markets and products and at the moment, i don't have a lot of concerns in tharea. >> charlie, we just had an analyst on "squawk box" and he goes by the name of richard

effen bernstein, that's his nickname. he says we're in a classic mid cycle here. i started thinking about that and started thinking, you guys have promised to stay low look at the fed forecast 2015, maybe even 2016 and even when you begin raising rates, it's a long way to a normal interest rate. is this a mid cycle time in the business cycle or early cycle in your opinion? >> well, that's a catchy phrase. i'm not quite sure what it means. it doesn't feel like mid cycle in terms of business cycle to me. the unemployment rate's too high. normally, you know, when the economy's doing pretty well the unemployment rate would be far south of where we are. that's why 6.5% is really too high relative to sustainable unemployment rates, a lot closer to 5.25%. i would say. we still have an awful lot of room to grow once things begin to pick up and i'm not worried about inflationary pressures. >> you talked earlier that, you

know, one of the biggest risks is people not believing in your forward guidance. but what you did in may and june, isn't that a loss of credibility for forward guidance from the fed? how do you get that back? >> well, we have been -- i have been surprised that the markets have not been able to look at our separate tools of quantitative easing and forward guidance. there's nothing we said that will cause anyone to step back prematurely before we hit 6.5% and we might go on longer than that. but the markets have sort of only been paying attention to one element at a time, maybe half an element at a time. and they'd become entangled. >> that's not the market's fault, charlie. the market is the market. it's the fed that communicates with the market. where's the fault in the fed's communications. >> i take that point, people tell me when i'm speaking very clearly and people aren't understanding me, then i have to take that point. we need to go out and communicate more. i think that the chairman did an

excellent job during the summer. after the june press conference, he went to boston, he explained it more, things settled down and interest rates stopped going up. it settled down in september. we don't have enough data to make the assessment that the labor market improvement is sustainable. so far, that hasn't been proved wrong. >> how does policy change if janet yellen becomes chairman? >> well, i think -- i think janet will be a great chairman. she has an awful lot of experience with monetary policy up close and personal. and i think we'll see a lot of continuity and, you know, we'll be looking at the economic situation and inflationary pressures as they present themselves and respond accordingly. >> charlie, thanks for joining us this morning. >> thanks, steve. >> guys, charlie's going to sit with me for another few minutes here and we're going to do some stuff for the web on price level targeting, participation rate stuff. all the great stuff you know

we're interested in here. you're going to do that and that's going to appear on the dot com later today. in the meanwhile, back to you guys at global headquarters. >> faber said it could get up to $1 trillion a month. i'd say he's a little bit hyperbolic. you should tell charlie that. >> he's listening. >> it could get up to $1 trillion a month because it's going to be so bad. which i'm all for. i don't know where -- stock market would be by then, charlie. great interview. thank you. it was a good day to have -- >> the two. >> the two on. >> our thanks to fed president evans. >> charlie evans. >> for being here to answer all those. >> jpmorgan's $13 billion settlement, the tentative one with the govent.we'll talk to at it means for shareholders. up next, we'll dig through the mcdonald's quarterly report.

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mcdonald's out with earnings a few minutes ago. let's get some quick analysis on the numbers. he is director and senior research analyst at the advisory group in new york. how would you characterize mcdonald's performance, peter, over the last year and the last quarter? >> well, thanks for having me on. i would say it's, you know,

pretty challenged, they're struggling to find any sort of growth and i think why you see the stock down today is not necessarily on the september same store sales numbers but more so on october. they're expecting october to be about flat on a global basis and they're lapping the easiest compare from last year. deceleration and traffic trends from september into october despite the launch and all the advertising behind that. i think that's what's concerning investors is regardless of all the advertising and the new products they're trying to put out, nothing seems to be grabbing the traffic and driving it through the doors. >> that's actually something company specific and it has to do with innovation and what mcdonald's has been pretty good at over the past five years or so. but you don't see it as a commentary on different regions of the world and how the economies there are fairing? >> it is. i would say overall economy is probably not so strong, the

restaurant sales have not been across the board, not particularly strong, some operators are doing well. but generally speaking, mcdonald's has been struggling. and if you look at europe, the uk and russia business is doing well but the rest of europe is struggling. china continues to struggle, as well. it is about innovation for mcdonald's and trying to find that home run type product. and so far, they haven't been able to nail it down. >> in the last six months or a year. they had consistently been finding some stuff two three years ago which got us all thinking. >> was it the coffee? >> the coffee, apples. >> premium wraps. >> yeah. and rib thing. >> yeah. no, i would tell you that the struggles they're having is a function of their own success over the past five to ten years. the unit volume is well in excess of anyone else's qsr. they're driving on absolute basis a lot more traffic than any of the other competitors in the burger space.

the problem is growing on top of that. yeah, mccafe was a huge success and mcrib when they launched it and all the other products they have have been great successes. it's growing on top of that. >> there's pushback from fran ch franchise franchisees. there are only so many items you can put on a menu. >> yeah. the drive through speed standard is 120 seconds in this sector and, you know, the more items you put on, the more challenging it is in the back of the house. you've got to limit the number of items on the menu for sure. >> yeah. that's true. thanks, peter. >> thank you. we're also talking this morning about jpmorgan. another dow component and the record breaking $13 billion tentative settlement and what it means for jpmorgan investors. joining us on the "squawk" news line is raymond james equity research manager. the stocks not far from a high. then we heard versus its peers,

it's still selling lower because of all this -- all this regulatory overhang. does the $13 billion put things to rest? or do people still worry about the criminal investigation after that? >> well, good question. the stock is cheap as you said, 8 1/2 times earnings for a company typically trades at 10 or 12 times. the deal is adequate in removing the lion share of the residual mortgage risk. how long will it take the street to realize that? i think that's the key question. and also we don't know if the company has to admit to any wrong doing. and if they do, this could pave the way for subsequent losses. >> yeah. do you -- i was asking someone earlier, they went after bear stearns and those two guys and they were unable to make that stick. but then they got fab. things have changed a little bit. it was the goldman situation. do you think now they could make

a criminal charge against something done at wamu or bear stearns? >> it's tough to say. it's hard to see it getting up to the level of the bank executives of jpmorgan being criminally prosecuted. but there could be some employees along the way. now, supposedly justice department has a key witness. we'll have to see how damaging that testimony can be. most likely given the fact that jpmorgan has $23 billion in legal reserves right now, most likely for shareholders for jpmorgan it's more of a cloud, more of an overhang than it is financial exposure at this point. we could probably damage the income statement as much as we're going to have to. >> okay. and when it's done and settled, you figure that would be a time where you'd buy the stock since it's trading below what it normally would. well if you have a longer term

horizon, you have a business model that is well positioned for this challenging environment. they're growing revenues have an international expansion program. tops in the league domestically and m & a. a lot of positives for the stock. we just have this residual mortgage exposure. and you can file it under the category of who said life is fair. but at the end of the day, this is an event for jpmorgan current shareholders right or wrong. and we're close to putting it behind us. but we still have residual. you either think he's unfairly sort of targeted, that's probably some people think that and he's a good ceo and a good risk manager. or you've already thrown him in the lot with all the bankers that cause the financial crisis is what the other side thinks. has anyone's opinion been changed? >> certainly mine has.

and i think he has the full support of the board. and i think wall street in general is on jamie's side and he's been improperly villainized. actions were done by a company that he basically rescued. >> right. but knowing -- >> only the "wall street journal" editorial board really can really take his side. everybody else is scared they'll be next if they speak up which is a great environment to be in right now. >> anthony, really quickly. do other banks face a risk? we now hear about fhfa going after wells fargo or bank of america. >> that's a good question, the fhfa if you look at the original filing, they basically had 17 companies listed, one of them is jpmorgan. there's only three i remember settling, u.s., citi and ge. b of a has the biggest exposure, even bigger than jpmorgan when

you look at the numbers. and the fhfa has offered b of a a $6 billion settlement. ironically, that's pretty much in line with their legal reserves right now. so there is a potential settlement with b of a looming or probably something in the $4 billion to $6 billion range. and good news for b of a shareholders is they have those legal reserves already set aside. >> all right, anthony, thank you. when we come back, netflix quarterly results due after the bell today. we'll get a preview from an analyst in a few minutes. plus, checking in with andrew in hong kong, he has comments from hank greenberg on jpmorgan. also kate kelly caught up with jamie dimon as he arrived at work this morning. tdd#: 1-800-345-2550 trading inspires your life. tdd#: 1-800-345-2550 life inspires your trading. tdd#: 1-800-345-2550 where others see fads... tdd#: 1-800-345-2550 ...you see opportunities. tdd#: 1-800-345-2550 at schwab, we're here to help

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welcome back to "squawk box." few stocks on the move, s.a.p. posting earnings in line with estimates but then the software giant backed its full-year foreca forecast. the stock's up. we spoke to bill mcdermott in the 6:00 hour, he's co-ceo, soon to be sole ceo.

earnings beating the street estimates by 13 cents. also declared a stock split and raised the quarterly dividend by 21%. and at&t is selling or leasing the rights to wireless towers for $4.9 billion. >> andrew is in hong kong today for the "new york times" deal book conference. cnbc has the exclusive broadcast partner and among the topics being discussed there, jpmorgan. andrew, good morning again. >> hey, becky. you just can't get away from me. you go around the globe and the only topic anyone wants to talk about is jpmorgan and jamie dimon. spent much of the day talking about that issue. one of the people we spoke with was hank greenberg. of course, former chairman and ceo of aig and he had some very pointed criticism of the government, not of jpmorgan saying this entire episode is unfair. listen to what he had to say.

>> i do. i think that -- that's colored everything. it really has colored -- he's not getting a fair shake. and what we're going to do, we're going to destroy -- not destroy, we're certainly going to shrink a great institution. >> and i have to say, his view echoed by many other speakers and also just attendees, people i spoke to throughout the day talking about how they felt that jamie dimon was getting an unfair shake. you know, joe, i heard you talking earlier about how you say that, you think you're going to be attacked these days. at least in asia, there's a very high regard for jamie dimon. the other thing i wanted to bring you quick was hank greenberg's comment on obama care. as you may know, he's been a critic of obama care but he seems to have changed his tune. take a listen to this. >> i think that we should stop talking about obama care.

it passed, it's law, the supreme court has ruled on it. forget that. what we should be focusing on is making our industries more competitive. we have the highest tax rate in the world. you want to pay for obama care which is going to be very expensive, make corporate america more profitable. >> guys, that's the story from hong kong today. a lot of interesting perspectives on a lot of different issues. and i'm going to be headed back to see you very soon. as i said earlier, keep the seat warm, i'm not going to hang out here too long. >> andrew, i guess it's probably not a huge surprise to hear some of hank greenberg's comments about this. he's taken issue with the government too for what it did to his company aig. >> he has. he has. and, in fact, he wrote an op-ed in support of jamie dimon just a couple of weeks ago. but when you put the $13 billion settlement and that number out there, he was even more

vociferous about it as were other people here on this issue who felt -- but interestingly, one point that's worth making. i said to a couple of the ceos of foreign companies. i said does this make you less inclined to want to do business in the u.s., do you think any differently about it? and they said, no. take that for what it is. an interesting or different view from hong kong. >> andrew, thank you very much, we will check in with you again. andrew was there, he'll be back here on thursday, though. in the meantime, kate kelly caught up with jamie dimon this morning. kate? >> reporter: thanks so much. i managed to catch a minute or two with jamie dimon. he answered a couple of different questions about the supposed $13 billion settlement talks. let's listen to what he said. >> any chance of a quick comment on the discussions? >> you know, it's -- we're trying to get it resolved. >> the "wall street journal."

>> people coming in bright eyed and bushy tailed. >> and they're not happy to see us. >> people doing a great job for our clients. we're gaining market share, doing great stuff, trying to get our product behind us. i'm so proud of this company. >> i hear ya. >> these other things i know we have to fix. >> reporter: i hear ya. do you feel this is a shakedown as the "wall street journal" says? >> i'm not going to go there. i want to get our problems resolved. so we can focus on the main mission serving our clients. >> how worried are you about the ramifications of criminal charges? >> we're going to try to resolve every matter the best we can and then we're going to move on. i've got to go. >> okay. >> reporter: so as you can hear, he is not going to get into the politics of this, becky and joe. he doesn't want to talk about the "wall street journal" shakedown story line. he also would not address whether or not these criminal ramifications that may be lingering even after this expected $13 billion lawsuit is

finished. he's just trying to move forward and highlight the company's business successes. >> yes. i advise him to continue along his current path of the way that went, kate. anyway, stop trying to get him to say more. i saw you trying to do that. come on, jamie, shakedown. could you imagine if he said, yeah, it's obvious -- >> reporter: i tried twice, joe. i had to get it out of jamie. >> can you imagine if he said, absolutely, this is extortion pure and simple. i don't appreciate it and i'm only doing it because i have to. could you imagine if he said that? >> reporter: then what would happen? >> i don't know. make it $26 billion maybe. i don't know what that would be worth. anyway, kate -- i think it's nice, you know, i would have walked right by you at this point. he can't do that either. >> that's gracious. >> it was gracious. netflix shares have been on a tare in the past year.

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netflix is set to post third quarter results right after the bell this afternoon. joining us right now onset with the preview is brett harris. and brett, i guess the big number's got to be the u.s. subscribers, paid subscribers coming through. >> absolutely. netflix is a growth stock. trends at 77 times this year's ebitda and 40 times next year's ebitda. and everybody's going to be looking at the subscriber -- the domestic subscriber number. >> it's estimated they now have over 30 million subscribers to pass hbo as the most subscribed and most paid. >> and the number we're looking for is 1.3. a gain of 1.3 million subscribers. >> the other thing people will be looking at quickly is 63 cents is the estimate on the street. what they're guessing the company earned. what do you think? >> we're at 55. but the eps number for the quarter is going to be significantly less important than that domestic subscriber net edition and also the domestic -- the domestic

segments margin expansion. right now, they're currently generating about 22% contribution margin from that segment. and in order for the company to justify the valuation, it needs to both grow subscribers and expand that margin. >> is reed hastings plan with content, is that working? >> i think so. certainly "house of cards" was a tremendous success. orange is the new black is a tremendous success. netflix originally made their money by having a better user interface. they had deep library content, but you could access it better. with the cable channels improving their interfaces, netflix needs to move away from the better interface and moving to original programming making it different than -- >> where's the xfininty thing stand right now. >> it's been ruled out. >> will netflix end up just being -- >> on your settop box? >> well, we think it highly

unlikely that netflix gets distribution on traditional cable networks. >> how would they count subscribers then? i have them already. if it got that easy to where it was just something on -- >> right. i mean, i think what reed . . which cable and netflix are natural competitors. over the top and specifically netflix is the number one reason we have court nevers, which are people that come out of college and don't buy that off the bat. there is a natural competition there. >> the second issue is going to be what happens with the other pay tv providers. if netflix gets to be off and on the cable subscriber, they would want that as well.

and that would facilitate a la carte. >> you don't think come cost and netflix become frenemies. >> i don't like what you are saying. >> thanks for coming in. >> thanks for having me. >> when you come back, start your week off with jim cramer stocks to watch. we're going to head down to the new york stock exchange. >> tomorrow, the day is over. it is jobs tuesdays. we'll get a read on september employment and inflation. delta airlines ceo, richard anderson, will join us, first, on cnbc. don't miss "squawk box." starting tomorrow at 6:00 a.m. eastern. at a ford dealer with a little q and a for fiona. tell me fiona, who's having a big tire event? your ford dealer.

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welcome back to "squawk box." jim cramer joins us from the new york stock exchange. we got the numbers back. that's not what they were expecting. they were expecting a growth of 2.3%. >> you can't have global be a .9 or a .7. how many boolly h

how many ballyhoo initiatives do we have? wen wendy's is better. this is a tough time for this company. >> it is a tricky question. the franchisees are upset. you need new innovation. when you are a fran chai see and y you are expected to have 150 items on your menu and then the dollar menu, which some blame for not being able to sell more expensive food. >> panera has too many simple things. >> wendy, very simple. chip po chipotle, very simple. mcdonald's thinks they need a makeover. come on, you are mcdonald's. just gli just deliver. the new york giants, you are so

good. what are you doing? didn't you guys win the super bowl. we are struggling to try to figure out how to value this company? >> they point to a weak global environment. it sounds like you are not buying that. >> i am seeing too many other companies say good thing. i would ask, joe, joe, maybe if they moved to new jersey and get out of there. i live in jersey. i have never gone to metlife and found myself at 34th street. >> i'm glad you are with me on that. everything else. they snicker, they laugh with jersey until they fly out of a newark area network. they are talking about newark. i went to a giants came in the new york area such. the super bowl is in the new york air why area?

>> chris christie speak up and give us a google map. >> wait until the president is from new jersey. see how they like that. >> mcdonald's, disappointing. see you in a few minutes. macoming up, several stocksn the move. only one will be the stock of the day. is it in your portfolio? find out next. serving you, the american people. so we improved priority mail flat rate to give you a more reliable way to ship. now with tracking up to eleven scans, specified delivery dates, and free insurance up to $50 all for the same low rate. [ woman ] we are the united states postal service. [ man ] we are the united states postal service. [ male announcer ] and our priority is you. go to usps.com® and try it today.

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same store staales disappointed investors. that does it for us today. right now, time for "squawk on the street." good monday morning. welcome to "squawk on the street." i'm carl quintanilla, jim cramer and david faber at the new york stocks exchange. what a jam-packed week. the s&p at record highs. we have a flood of earnings. an apple ipad refresh. take a look at the ten-year yield. we keep an eye on fixed income as well as equities. look at oil falling below $100 a barrel for t