it's wednesday, november 13th, 2013. 11- 13-13, which means nothing. "squawk box" begins right now. >> good morning, everybody. welcome to "squawk box" here on cnbc. i'm becky quick along with joe kernen and andrew ross sorkin. the treasury department will release figures for september. speaking to cnbc asia earlier today, treasury secretary jack lew sounded optimistic. >> we obviously went through a period of economic difficulty. but what we learned is it did get to the 11th hour. but in the 11th hour, there was a broad bipartisan consensus in the united states to be where the united states has always been, that we stand by our

obligations and the full faith and credit of the united states cannot be called into question. >> among the catalyst, there was expectation that the fed could taper sooner than expected. today, andre pinalto will speak at 8:45. fed chairman ben bernanke will appear tonight at 7:00 p.m. the treasury auction of $43 billion in ten-year notes could be a key thing to watch for the markets today. if you take a look, the yield on the ten-year, 2.76%. it has picked up steadily since friday's jobs reports. but that treasury auction is set for 1:00 p.m. we're watching oil prices and api will be releasing its latest inventory data this afternoon. appeared rue, right now, over to you. >> can you do that little electric dance for us? i don't know -- >> i'm not sure why we were

playing eye it's electric" but you can't help but get that awful dance out of your head. anybody that has been to a wedding in the last 15 years has seen that. >> weddings, anyway, we have some corporate news to get you caught up on this morning. you're not going to believe this one. the group includes holders of more than half of the $34.6 billion of preferred sars in the company. the plan reportedly being pitched as a way to bring tens of billions of dollars of private capital back into the capital. treasury has controlled fannie and freddie, of course, for the last five years. johnson & johnson agreed to what could be a $4 billion settlement over hip implants. the deal could include thousands injured. a tentative plan must win court approval. starbucks will be paying

kraft food nearly $278 billion after it ended the grocery deal early. it includes damages and legal fees. mondalieze will receive all proceeds from the starbucks/kraft dispute. >> it seems like a lot of money. >> and don't forget, starbucks, coffee, a chain of coffee houses, $60 billion. almost $61 billion. but still, wow. i saw that and i thought there was a dismal wrong. >> $60 billion, you said? >> $61 billion. >> did you ever hear that howard schultz, the venture capitalist says i want to do coffee chains. >> what are you talking about? >> and allen goes home to his wife and said this guy came to me and he wants to do coffee shops. it's ludicrous.

he did not invest and here we are. >> a lot of those -- i didn't, either. and anyway -- i wasn't asked. >> white house news, a top adviser is going to testify at a congressional hearing today about the troubled health care website on the administration had originally said the chief technology officer todd park was too busy to appear appear, but late yesterday the white house confirmed he would comply with the subpoena to testify at a hearing of the house oversight committee. the one that stood out to me as day in the newspapers was this washington post piece. >> which says? >> that sources say there's no way this will be done by tend of november. and the industry insurance is working on contingency plans. we get some twitter people .people that write in and they're smart [ explative ] some of them. they signed up 50,000.

we lost 15 million. so within 25 years, we should break even. >> break even on this. >> but it's a problem. a million lost in california and if you can't sign up, you've lost. think mow mad you would be, even if you are get ago better plan or whatever. >> the cost is huge. >> there's a bill in the house and another one in the senate to try and -- to try and -- >> but the problem is even if those bills pass, it's going to be nearly impossible -- well, i don't think you can undo it at this point. for the insurance companies, they've spent months and months gearing up for this. they've sent out the letters. even if these bills pass tomorrow, how do the insurance companies possibly get back to people before january 1 and say never mind, you're keeping it? >> we saw valley jarrett yesterday who spoke at the conference. she's very hopeful that they'll get their act together soon.

but of course they cite medicare part d and all the other programs where the beginning was so rocky, six months later or a year later it's -- >> the question is whether this time it's different. i don't know the answer there, though. >> massachusetts was slow to start, she, by the way, no doubt the most powerful woman in the world, i think. >> i think you may be right. >> i was going to say merkel or potentially soon to be yellen. >> no. she's been commenting on people. but i still think valerie is above merkel. how many people do they have in germany? this woman is powerful. anyway, this is a weird one. if there's one thing about medical science, it definitely is an art, not a science. and we don't know what to do a lot of times with cholesterol and heart disease and what helps it and what you need to do. now more people, i guess, could

get statins, but other people don't need statins. so there are some new clinical guidelines being hailed as the biggest shift in cardiovascular disease prevention. the change could more than double the number of people who qualified for these cholesterol cutting drugs, the biggest selling drugs like lipitor. more could qualify, but a new guideline, the panel recommends abandoning the guidance, that you need a number, like below 100 or below 7 on for people at high risk. instead, they just suggest a doctor assesses the patient's risk more broadly and just prescribe a certain dosage of statins to those that fall into one of the four risk categories. the recommendations were jointly developed by the american college of cardiology and the american heart association. and 40% of people over 40 take one of these things. and i do not. nothing. >> i don't take one.

>> everything i've got. i think maybe aspirin? >> ro, no. >> you know what i do take? i do take like an adult -- one. and then i take a well, i might take like a fiber thing. >> that's enough. that's enough. >> one little thing called a fiber con and it's for geezers. but it seems to be working. i don't always eat enough fiber and i want to get -- >> centrum? >> no, i don't take a centrum. it's just a generic. that's what i -- you know, and i got the card and -- i told you yesterday, i have gone from a young guy who was getting a little old to an old guy who is actually still young. >> you should know that at least according to men's health magazine that they say that even young men should take centrum silver over centrum.

>> do you? >> i do now because i read this article. they had a whole story about it. >> you think older than i do in a lot of different cases. and you're more mature in certain ways. you have. i watched you yesterday. the grand poobah of all interviewers with the big thing that said sorkin all day long .all these people coming in. it was weird the first thing they did was kiss your ring like that. guys worth billions of dollars saying please, go easy on me. aren't you proud? >> it was a great time. we had a lot of fun. we had a lot of fun and we made some news and we had some great, great guests. it was actually pretty cool. >> still doesn't mean you don't need to complete your assignments, your ten favorite musicians or bands by friday to put on the website. i've done my ten. becky has done her count. i don't think you can come up

with ten. i don't. i really don't think -- i think you're going to have to go to elmo or -- because he sings. >> no, no, i'll get i you some. >> you have music interests? >> i do. you won't be impressed, but i do. >> we node to talk about this. >> the art world? >> it's not the bacon from hundreds of years ago and it's not sigmund freud. >> no. >> who is lucci and freud? >> he was bacon's big frenemy of the day. francis bacon, yeah, not the guy from a long, long time ago, from the 1960s, his painting, three studies of luccian freud, he was a contemporary of his who was a fred and a competitor. this series of paintings fetched $142.4 million. that makes it the most expensive work of art ever sold. christie sold $491 million worth of art and that did beat

expectations. >> you know, they're kind of cool. instead of one of those -- >> it's like you hated the ones that were -- >> and he died young. >> do we know who got it? >> we do know who got it. and it was for his gallery -- well, we know would people who didn't get it. both of them were buying, trying to get it. one for a client at a gallery and -- >> that is not a very flattering photo, a flattering picture. but at least you can read something into it. that other stuff, what was the one with the color here and a line and the color -- >> it was like the green or the orange. >> it begins with an r. >> roscoe, mark roscoe. brilliant. it was the color he slengted to put a line between. >> we did our interview and someone did a picture of him online of being there and there. he's going after sotheby's. >> i wonder if he sees the guy

who is going to flip him off, right? why would he be there? >> the sculpture balloon dog went for $58.4 million. that sets the record for top price ever achieved at auction by any living artist. >> wow, i guess. people that have money see $58 million in a different way than people that don't have the money, right? >> that must be true. wouldn't that be enough for you? >> 58 million, you could invest it and not be so worried about your future. >> dog? >> no. >> when gordon gekko is asking how much money do you need, the

answer is always more. tesla's musk says fires will not be recalled. it is five times less likely to have a fire than gasoline cars. musk, sitting down for a q&a yesterday, among the other items we discussed, tesla's stock price. >> i think the stock price was distracting. in fact, i went on record as saying that i thought the price

was higher than we had a right to deserve. but to give us that valuation now is to have a lot of faith in our future execution. >> among among the other headliners -- >> to put it on the table. >> we don't have a good legal justification for breaking up the banking system, but if i could wave a magic wand, i'd break up the banking system. >> having -- there were so many other financial players who spoke and said, no, we need universal banks. and then all of a sudden ken comes out and says the exact opposite. and -- well, the opposite. not the exact opposite.

and it was interesting to hear someone in the financial business so critical of the banks. >> if you see the people with the big thing, almost like an altar. and it just says sorkin. >> well, you know, we take what we can get. that's what we looked at all day long. >> is that your terrible? is that identifying your table? >> that was next to each panelist. if you went farther to the right, you would have said griffin. >> it reminds me a little bit of the monolith in 2001. and i actually heard the thing that did all the apes around the thing and there's like stuff flying. look at that. >> keep going. i love this. >> you do an ape very well.

>> i do do that. and i pick lies out of under my arms. and everybody is sort of -- they touch it and they want to be part of it. and it has a much higher meaning than just a -- >> thank you. thank you. the check is in the mail. >> that's what occurred to me yesterday while i was looking at it. look at it. no one else's name. >> next year you can come and jump in the ring if you'd like. >> which by the way, we need to talk about and we don't have time probably now, but -- >> what happened? >> i'm from the midwest, number one. so i like chicago and does it count? who bribed the architects for the new building? >> it says if a fire is architecturally significant -- >> there's no floors in there. the other one is 1100 feet higher where there are people working and windows and desks and everything.

>> it was continue visual. did you see what rahm said? i don't know. if it walks like an antenna, looks like an antenna and acts like an antenna, then it's an antenna. it's 1776 minus 400 and the other one is -- i think it's tough to count -- i think it has to be floors. you have to do it by floor. a livable, workable -- >> then why would the architects that make these decisions decide in favor of this tower? >> i don't know. >> there is some cultural significance. >> and we want it to be the tallest because of 9/11 and it's the freedom tower, but still, if i was chicago it i'd be like, god, we're second at everything?

>> we don't we talk about the markets this morning. we've been watching the futures today. we did see a bit of a sell-off. it was light trading volume. there wasn't a huge activity. this morning, futures are indicated down by about 11 points. s&p futures off by just over a point. oil prices dropped significantly yesterday. they're up just 18 cents this morning. 93.22. you're looking at wti. this is something that's going to end up being a huge boom for consumers as you're looking at this being like a tax off the table as prices at the pump continue to come down. the ten-year note pushed up to 2.868%. the yield is sitting around there at 2776%. that's been a huge issue. some fed members trying to talk it down yesterday, fwu market seems to be looking at what happened on friday with the jobs report and assuming that the taper is going to come sooner rather than later. right now, the dollar is up against the euro.

1.3414. and gold prices this morning at least right now are up by about $3. $1,274 an ounce. right now, it's time for the global markets report. julia chatterley is standing by in london. good morning. >> good morning. thank you so much. as you were saying, china market down 2% on a lack of details as far as reforms are concerned and, of course, lockhart's comments from yesterday suggesting tapering may be a possibility in december. that's taken the european markets down between 0.5% and 1% points. the uk markets, i want you to keep that in focus as we flip to the currency markets. sterling, we've had the latest details out from the bank of england this morning. up employment, better than expected. growth better than expected. that's weighing on these markets because, of course, raising fears of a tightening rather than later. more broadly, sentiment is dominated by fed tapering, the timing of that, more data and

the effect from barrels yesterday. but just what's going on in latin america? well, we spoke to the govern of the mexican central bank and asked him about the fed communication policy with regard to tapering. both aring manage expectations with regard to tightening. listen in. >> tapering is not tidening. but more than anything from the point of view of the outlook that the fed has about output growth and inflation and if tapering meets to more normal situations, i think that would be good for the markets and for mexico. the mexican central bank governor speaking there. and i'm going to hand it over to you guys before i get confused over any more tapering, timing, "t" words. >> thank you so much. coming up, why microsoft is

changing the way it reviews employees' performance. those details when "squawk box" returns. i am today by luck. i put in the hours and built a strong reputation in the industry. i set goals and worked hard to meet them. i've made my success happen. so when it comes to my investments, i'm supposed to just hand it over to a broker and back away? that's not gonna happen. avo: when you work with a schwab financial consultant, you'll get the guidance you need with the control you want. talk to us today.

time now for the executive

edge. microsoft is dropping major parts of its so-called stack ranking employee review and combination system. "the wall street journal" reports that the software giant will no longer requires managers to grade employees against one another and rank them on a scale of one to five on. this is similar to what ge used to do with six sigma. >> i don't know if i'm going to get in trouble for saying this. i like the stacking idea. i think that employers and employees are -- there's not enough honesty about what's going on. people are not straightforward enough about where people actually stand. nobody really wants to have this awful conversation, whether it's on the good side or bad side. and this forced you to do it. i creates its own problems. but it's honest and, you know, anyway -- >> it's very subjective, though. and i would always say accountability is paramount. you look at this launch of this thing. there's no accountability a lot of times. you absolutely need accountability. anyone who has responsibilities.

but the numbers system of -- what's the difference between a three and a four and a five? it reminds me of -- you know, the terrible thing in college where you would rank -- >> but otherwise, there's no way to -- i'm not saying it's the best way to do it. it's suggesting that we seem to be moving towards the sort of review where everything is pc, nobody wants to tell anybody anything. when you're awful, you want to know. you do want to know. >> you want to know that you're a one? >> you tell me every day. >> no. i imply it. i make you get through calculations to arrive, but -- >> but he doesn't get to decide your pay. >> 2001 for saying -- >> and i appreciate that. >> i mean, i believe the -- >> no, this is the ring you were going to kiss. >> no, i'm fought going to do that. but i believe it was the preeminent being in the universe. >> i'm grateful for that. >> in my book, and i've said

this many times, you are a ten, my friend. >> thank you, sir. >> especially in those suits, the ones that are fitted and everything, the pants. >> before you two start kissing, let's move on to the next story. pressure is rising on president obama to adjust his problem plagued health care law. many democratsic leader are calling on the white house to allow americans who are happy with their health care plans to keep them. the most significant coming from president clinton. he said in part, i personally believe even if it takes a change to the law with b the president should honor the commitment to federal government and let people keep what they've got. the reality is it could be very difficult to allow people who have been canceled at this point to be back on in the time in less than 45 days. >> i was fascinated by this because i tried to figure out the calculus that goes into the things that president clinton does. he's been a big supporter of president obama in that speech he gave at the convention went a

long way towards helping to re-elect the president. but then there are times when he does definitely step off the reservation. when he called mitt romney's business career stellar. and i wonder why he picked now. but there are times when i think bill clinton genuinely loves the democratic party and cares about the democratic party and thinks, you are messing this up for a lot of people in 2014 .it's not too late. you did the apology, it's not too late to try and fix it. my question has to do with -- becky, did you learn how a bill is passed? whenever obama changes something arbitrarily about the law, but he didn't do it with the corporate mandate, right? and are you allowed to just -- >> the white house is not -- jay carney recently just this week i think was making comments about how they don't want to throw the baby out with the bath water. >> but how do you change it? >> the white house doesn't want to change it, they're fought going to -- >> how do they change it? don't they have to send it back to congress to change it? >> my guess is for things like

that, you would have to go back, putting off the company mandate that was put off without going through. >> korea. that is true, but people say you're not allowed to do that. executive power is very strong. i don't know -- i need to know someone constitutionally that -- your dad was a constitutional lawyer, isn't he? >> no. he's just a lawyer. >> i don't know what the white house would be allowed to do if they want to change it unilaterally. the point is, they don't. there are separate bills one in the house and is one in the senate out there. >> bipartisan. >> the bill in the senate is coming from democratic senators. the bill in the house is coming from republicanes and they're not that far off. >> the second you try to open it up, though, you have -- >> it would be ironic if this obama care mess brought us together. >> anyone who looks at this realizes it was slapped together late. it does need to have changes. i don't think there's any argument on either side that you want some changes going through. >> i think someone finally read it on the democratic side. 4,000 pages, whoa, wait a

minute, what is this? nancy pelosi said, we'll find out what's in it when we pass it. that was a great quote, one of her best, i think. >> the thought was it would have been fixed in committee. we never got to that committee. >> that's because in the most liberal state in the country, ted kennedy passed away and lost his seat to a republican because there was so much -- >> angst. >> opposition to the bill. and now you know what the numbers are now and they'll write it. i know the defenders on the other side will say, what do you expect of the glitches? but i think it's new highs of 56% are absolutely opposed to this law. >> it is a big change and there are a lot of unintended consequences some of which are popping up right now. >> is it definitely unintended? >> i think some of the things that are coming are unintended and unrealized. there are others, things that were put in it where it was intentionally written in to make sure people -- >> in the back of your mind, you really don't think they like the

employers eventually -- most employers, i would think, would eventually say it's cheaper for us to pay the penalty than to keep doing this. this is not our problem and sooner or later, everybody would migrate to this thing. >> that is certainly what judd gregg told us. it would be interesting to speak to emanuel and see what he thinks about that. >> conspiracy theory. >> really? oh, you really think they wanted us to stay as is and keep our current plans? >> but i don't think this is all one -- >> you don't think it's a single step? you're part of the conspiracy because you want to go single payor. you've told me that. >> i think that's very interesting. >> oh. say it. you're a single payor. >> i could be a single payor, but i still do have questions. >> but you're below a ten now. you're like an 8 1/2 and you're headed south. sorry. >> when we come back, we have a busy day on capitol hill. testimony on obama care plus

budget negotiations resume behind closed doors. john harwood joins us from the nation's capital when "squawk box" returns. but first, as we head to a break, take a look at yesterday's winners and losers. ♪ norfolk southern what's your function? ♪ hooking up the country helping business run ♪

♪ build! we're investing big to keep our country in the lead. ♪ load! we keep moving to deliver what you need. and that means growth, lots of cargo going all around the globe. cars and parts, fuel and steel, peas and rice, hey that's nice! ♪ norfolk southern what's your function? ♪ ♪ helping this big country move ahead as one ♪ ♪ norfolk southern how's that function? ♪

welcome back to "squawk box." joining us now from washington, john harwood. john, one of the reasons i follow twitter is because you're -- i follow you. and i got -- i get a lot of

redskins news, i get a lot of duke news. i know you saw kentucky last night, which was kind of -- you know, it's early. you can't get too excited about college -- >> no, we lost to kansas last night. >> kansas is good, right? >> we're good, too. >> you are. okay. i know. take it easy. but one of the things that you saw yesterday -- and i don't understand a lot of where you're coming from, as you know, because we talk bp. but i saw you say yesterday that president clinton's comments about obama care should be filed in the meaningless slash irrelevant file. and i'm trying to figure out what you meant by that because everyone is covering it and no one else thought it was meaningless. and what were you saying, that president obama said the same thing? >> well, he did say the same thing and it was also kind of irrelevant, which is why we haven't seen this so-called

mystery fix that was being talked about. the reason that i said that is that there really isn't any practical way, without undermining the law itself, to fix this problem because, you know, you guys were talking a few minutes ago about unintended consequences of the law. what's happening right now, set the website aside. what's happening with these canceled policies is an intended consequence of the law. the law set out to substantially remake the individual market for insurance. and what we're seeing now is the result of that deliberate attempt. they are trying to open it up to people who couldn't get insurance before who were not insurable. they were trying to change the way that insurers were able to vary their rates by age and by sex and they were putting in minimum standards is. and the results of all of those

things is what's happening in the individual market. unfortunately for the administration, because their website is screwed up, the people who come out ahead of this can't find that out and the people who are hurt by this are finding it out and they're making a lot of noise. and that's why what clinton said -- >> because when i read this in the times, i thought it was different than what you said. they say at the same time officials installed the president's strong opposition to calls from across the political spectrum like from former president bill clinton to do -- to allow people to keep their current insurance. they're saying the president strongly opposes what president clinton says. >> right. and that's because if you are going to make these exchanges work financially, you can't let people who have these skinny policies who may be healthy who are going to pay lower rates out of the system because you need

their money. >> i guess that goes back to if you like your plan, you can keep it. did they know this all along? >> yeah, i think they did know it all along. honestly, i think the president's apology last week was pretty lame because he was apologying for something that he did on purpose. and i don't -- honestly, i don't understand why he kept saying you can keep your plan if you like it. even after the law was put into effect. >> the democrats say the republicans made him say it. >> well, yeah, i -- >> the republicans made me do it. >> but he didn't understand it himself? >> no, no, i think he did understand it. did you see the piece of video -- >> it's like that conspiracy theory. >> did you see the piece of video that eric cantor's team released the other day where cantor was in an exchange with obama and pressed him on this very point about the way the law was written so that people with policies like this, they were going to be discontinued.

and the president acknowledged what cantor said and said, yeah, but those people will be better off. >> can you just in a word tell us what was bill clinton's motive? what do you think he was thinking? >> it's kind of a free shot for anybody who doesn't like was going on to say yeah, we should keep our promise. insurance industry people tell me they couldn't really do that even if you wanted to because it's -- >> all the rates have been filed with insurance regulators. they can't just take these letters back and -- >> it's months. months. >> is it about hillary? why did he do it now? >> i think clinton has an instinct for what's popular and he was reflecting that. >> okay. >> john, thank you. >> you bet. >> we'll talk to you again soon. >> great policy. on when we come back, setting the agenda. the events that will shape the day ahead. plus, why the markets may think the fed will start to taper sooner than expected. "squawk box" will be right back.

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welcome back. macy's will report earn eggs before the bell. this afternoon in washington, they'll be releasing the federal budget figures for october. and google's motorola will be unveiling their next phone. the low-cost phone comes in big weak sales we should say of that flagship moto x model. becky, back over to you. >> andrew, we've been talking about stocks ending the day

mixed as more fed speak spooked the markets yesterday. douglas c. lane and associates. guys, looking at what the fed has been talking about, looking at the expectations from the market, look, you're looking at the ten-year back above 2.7%. the market is thinking game on. we are set to taper and that jobs number set us up, correct? >> absolutely. we're ten basis points away from when we were at the peak six months ago. rates are going to move up and essentially, if you look at where to invest, you have to look at areas that are going to grow not just be defensive. as rates move up, companies that have high dividend res focused on saying where they are are not going to do well. >> ben bernanke talked us down last time. he came back out and told the markets, no, we're not there yet. they didn't taper as anticipated. there was some talk from fed officials yesterday who sounded like they think the market is not understanding and maybe it's an issue of clearer

communication. >> bernanke -- the press conference after they decided not to taper. i think the same thing is going to happen. i think if you look at the last statement when they decided not to taper, they talked about financial conditions. but if you look at any measure of financial conditions, they were easier the day of the meeting than they were three months priority. equities were higher. interest rates were up. the equities offset. you have the same conditions occurring now where we're ten basis points off the high in the current 30-coupon mortgage rate. >> meaning you don't think he's going to taper down again? >> i don't think he's going to talk us down. but if you're the fed, you do not mess around with the equity market especially when you have a week less in terms of holiday shopping. you'll be in the middle of holiday shopping -- >> but you think the ten-year is here because they expect the taper in december? >> the market is expecting the taper in december and they're going to be disappointed again. >> i don't think if i agree with that. i don't think if they think the taper is occurring in december or in march. >> i think we're talking about a

couple months here. but with the market, we had a reprieve. people saw what happened. we saw what happened to the stock market especially defensive stocks. what you're doing now is to say since we're already building into that, it can be in the first quarter. but the difference now is going to be we're going to taper, you about i think rates are going to be low. we're not going to be on this upward rise. it's going to be slow and steady. >> the climbing yield on the ten year was a big deal. that was something the fed officials were paying attention to and that they talked about when they decided not to taper. >> i think it's making them nervous and i think, you know, we're in this per verse kind of loop where, you know, if they talk about tapering or they allow us to talk about tapering, then rates do exactly what they don't want them to do and then they decide not to taper because rates are too high. this is the problem with quantitative easing which is you can never get out of it if you're scared. >> yeah. i thought that they -- i thought that they were bruised by the

criticism for not tapering. but then they were able to fall back on, well, we had the government shutdown and we were smart. >> and then it turns out the shutdown was -- >> they got a second chance, they would taper this time. they got so much criticism. unfortunately, this fed seems to respond to -- you know, it's like, oh, they're mad at us. >> you don't think it's the straight numbers? >> well, i can't believe we're -- >> i think they're responding to the market and they're respond to go washington, which they shouldn't be doing. they should be respond to go overall conditions. >> he's a nice guy. he tries to pend over backwards to make everybody happy. >> what will be interesting is if the data still shows constant improvement and they don't taper. i think the market is going to reflect it, anyway, for march. >> meaning the market is rising because they see the improving economy? >> yes. >> the yield, i should say. >> the yield is rising and you will get a sell-off potentially, but i think stocks that will do well in a rising market are going to be okay. so the question is kind of how

do you actually allocate your portfolio going down six months to two or three years? >> you see wrb the fed is going to point to low inflation and say we have plenty of time to do anything we want and q4 is when actually we had the government shutdown and we had data for the third quarter. therefore, we should just wait. and, you know, i do think, though, yields are moving like the market is beginning to think about december again. a lot of clients were calling up says, shouldn't we be thinking about december? and we're like, we continued to stress that we're in the q1 camp. i'm happy to be in that camp. >> you definitely don't have to go back up at some point. >> make sure once they start moving -- >> they went down to ten. what are we talking about? >> they should have been moving it around all the time. that would have made it so much easier. they should have been going up and down by 5 million every meeting. >> and what kind of volatility would that have created? >> 5 billion doesn't matter, except for when it's a choice between tapering and not tapering. >> it's all about signaling. >> this is tightening.

>> this is the beginning. >> natural. right inspect so when did this stop? >> guys, thanks very much. >> thank you. when we come back, black friday is coming early. but where? some major price cuts. huge lines out of electronics stores. this comes with a twist. we'll explain when "squawk box" returns. the american dream is of a better future, a confident retirement. those dreams, there's just no way we're going to let them die. ♪ like they helped millions of others. by listening. planning. working one on one. that's what ameriprise financial does. that's what they can do with you. that's how ameriprise puts more within reach. ♪

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are telephone companies more likely to build these days? >> we were tweeted every 11 seconds. we got involved with tweeting and facebook. we're the number one food mention in america. this idea of winning and losing makes for interesting headlines but doesn't go to the core of benefit that activists brings? >> is it worth $40 billion? >> twitter is a good investment for people that got in early post sale. ale.

welcome back everybody. as we went to a break we showed video that looked like black friday in your local wal-mart or best by best buy. >> the lines are from venezuela. the president announced the reason prices were so high in the country weren't because of his policies causing rampant inflation, it's because there were greedy get rich quick business men charging people too much you money. he forced prices lower, occupied several electronic store, arrested the managers. people have been able to go in and buy electronics much cheaper than previously. >> how much of a cut are we talking? >> from 40,000 to 20,000.

there's the black market and official rate. if the official rate is better, see if you can actually get the. the country pumps so much oil but everything is gone. >> this country is use to growing short. they're running out of stuff. it's an economic low. >> so you didn't get one then, you're not ever getting one? >> exactly. >> venezuela bonds are more widely held than you expect. it's one of the places you can get yield. there's venezuela, puerto rico. this ises the price of the bond. here's the price. it is really hitting the fan. this is really perhaps speaking to the inability to control the country. there was looting over the

weekend. everything you want to see about chavez. i think shaun penn doesn't know about economics possibly but how would they explain when you can see the actual effects of what he proposes most of the time for the rest of the world when you can see it happening. how does he explain? >> you're asking me? >> i'm sorry. how would he explain when you can see what happens when you don't let market forces dictate pricing and allocate capital? >> good for the people. >> for two days. >> until they run out of stuff. >> i'm not taking this one. >> because look -- one of the kennedys just willingly gladly accepted the oil for poor people. >> it was people in his district

benefits from it. >> right. >> but look what happened to the people -- >> here's the funny part. venezuela this week is going to try to borrow money on the international markets. 3 $1/2 billi1/hal1/2 billion do. they are one in the same and raid the oil company all the time. >> what's going to happen? >> i don't know if it will get pulled or if the interest rate is -- it will be super interesting to see how it goes. >> thank you. will you call him and ask him? >> crudeman or chavez. coming up this morning, top stories plus elan musk on the high price of stocks. that and more back in a moment. vo: two years of grad school.

20 years with the company. thousands of presentations. and one hard earned partnership. it took a lot of work to get this far. so now i'm supposed to take a back seat when it comes to my investments? there's zero chance of that happening. avo: when you work with a schwab financial consultant, you'll get the guidance you need with the control you want. talk to us today.

timing is everything. has this market climbed too far too fast? the focus for investors turning to the fed and looming budget battle. dan white and richard bern stein are here to prep your portfolio. time to order a pizza on capitol hill. >> let's start with a pizza. former director jim with what washington needs to do to come up with a deal before we have another deadline. is the art bubble about to burst? robert frank takes a look at tonight's action and state of the art market as the second

hour of "squawk box" begins now. good morning everybody. welcome back to "squawk box" here on cnbc. we've been watching the future this is morning after closing lower yesterday, you can see dow futures down 26 point, s&p 500 off by four points. in our headlines the nyse purchase is done after being announced last december. the company will announce possible plans for the operation. jeffrey will be on "squawk box" to talk about what's next. the date on capitol hill this morning, white house chief technology officer will appear

before the oversite committee. the white house wanted to delay that hearing saying the park was too busy to get the website running properly. netflix users will see a new look starting today. changes to the various screams and images optimized for big screen monitors. blue ray players will see the changes. that's not true for others. let's check on shares of starbucks. the chain took a tax litigation charge. starbucks was ordered to pay $2.8 billion for ending the partnership with craft three years early. it revised the fourth quart tore she a loss from the reported $63 a share profit. craft foods spun off the grocery

business. shares up barely for mondelez. joint economic committee holding hearings to examine the current outlooks. speaking to cnbc asia earlier. jack lew sounded optimistic. >> i have to be clear it was political not economic cry sichlts what we learned just a few weeks ago it did get to the 11th hour. at the 11th hour there was a broad by partisan consensus for the united states to be where the united states has always been to stand by our obligations. the full faith of the united states cannot be alled into question. >> speculation the fed could taper sooner than expected. comments from fed officials are closely watched. the tesla ceo saying models won't be recalled.

few vehicles had sparked speculation a move could be coming from the auto maker. they say the car is five times less likely than having a gas fire. among the other topics discussed the volatility of tesla stocks going so high in the past year. >> i actually think the high stock prices are distracting. in fact i went on record saying i thought the the price was higher than we had any right to deserve. with that said, i think long term the price will be -- the value of the company will be well in excess of that. but to give us that evaluation now is to have a lot of faith in our future execution. >> i thought he was remarkably candid. look at shares now. they're up margely in the free market. when it comes to safety thing -- and a i don't own the car so i

shouldn't be considered the master of anything. >> it's five times less likely. how do you get that? i'd like to see how he got that. >> the way he said we've got so many cars on the road, about 25,000 i think. he said look there's 200,000 fires a year. there are so many cars on the road. i said you have a small sample. nonetheless the real question is whether batteries are more dangerous. he says not so. every person in one of the accidents called up and said i want to buy a new car. they believe had the car saved their life. >> they want to buy another tesla? >> they want to buy another tesla. that says something about something. >> i thought about when boeing was you having the problem. musk waslike the way we do it -- it seems ironic it's happening.

>> the two other things. he was saying these were horrible accidents. he went through details of types of things. >> it wasn't just spontaneous. he said these are situations cars are flying into cement in one case or into a tree. i don't know how fast it was. >> it ran into a telephone pole. >> he said a lot of vehicles you wouldn't live from that. >> think about it. 20 gallons of flammable gas versus a battery. it would have to be. >> this isn't the spontaneous issue that's happened with some batteries. >> do you believe people can spontaneous come bust? there are pictures where people -- that's all that's left. there's a song too. >> the most interesting thing he said -- >> excuse me while i burst into flames. you've heard that song? >> most interesting thing he

said. i said would you fly 787 if you weren't on must air? >> he said no. he said actually i really like a 747. that's the most beautiful plane in the sky. >> it doesn't have to do with safety issues. >> he said if he could come back and start another company, he'd like to create a plane company. >> he has a lot of ideas. >> he thinks he can do a plane with batteries. >> it's amazing. >> we'll queue it up. pardon me while i burst. >> what song is it? >> yeah. just never understood what they were saying. >> like most songs. >> pardon me while i burst into flames. i don't like this life anymore. on the verge of spontaneous combustion. >> okay. >> certainly does. what are you talking about belt

way ben. stocks ending. incubis is great. stocks ending modestly. that's not a ban. stocks ending modestly lower on more talk of a possible taper next month. belt way ben, ben white. cnbc contributor. that's going to stick. you should be proud. >> i'm proud. >> and richard bern stein. when you say f you get the high five. he's now richard e. bern stein advisors. you should but that in your name. he's also a cnbc contributor. do you give targets for s&p 500

anymore? >> not anymore. >> do you think s&p 500 is able to consolidate and move higher next year? >> i'm not smart enough to tell you if we're going to have a short term correction or not. i don't know. fundamentals argue for above average returns. when you look at evaluation, sentiment, profits growth compared to what you get around the rest of the world. it argues we're still in the low market. >> rates might be going up. >> that's exactly right. >> you need growth and earnings. the only thing to hurt that would be a recession. he says the yield curve isn't indicating recession. there's no inflation overheating. then again, it's been five years. you never know. >> you don't. i think everybody is in agreement there's going to be multiple compressions as rates go up. i don't think anybody argues against that. the thing is, most say the only

way you get multiple compression is p of pe going down. it's inperceivable e could go up. why would interest rates go up unless the economy is getting stronger? that's what's happening. >> unless they've been artificially damped by the fed and fed changes what it's doing. >> why would the fed change what they're doing? they're data dependent. >> what's the best you can hope for in growth earnings? >> the best? >> 20%. >> your question was what's the best. >> we had three years in the 90s we did 30% plus. after 25 i would think we've paid it forward on the market. >> right. one similarity between now you and the period 95-98 whatever it was, disinflation and lack of belief this could go on.

sentiment is absolutely amazing. saw data this morning from ici that pointed out funds flows to equities is global equities. u.s. equities see net outflows which is incredible. >> so you guys are weird to be here together. i don't care what you think about the stock market. i really don't. i do care -- >> that deeply hurts. >> i do care. i care but more interested in your belt way analysis. when bill said it yesterday, you lover ee -- loved it. when bill says this, it's like whoa. >> i think he hit it on the head when he said he's got killer instinct of what's popular. the president said keep your plan so he should let you. harvard pointed out doing that is next to impossible given all

these insurance companies have set up the rate. >> you say that knowing it's impossible to do it. if you were in the white house and someone came to you and said mr. president, bill clinton was being interviewed and i've got to play this for you here. i want you to sit down for this. >> he promised. >> he didn't like seeing that did they? >> i'm sure they didn't like seeing it. they have moved their message back to we agree we should let people keep their plan. it's not that discourted with what the president is saying. it's what you can actually accomplish. >> you remember the speech clinton gave at the convention, how good that was and how much that helped obama. then clinton reads in double down. i can take this guy in small doses. you're supposed have dinner with him. invite 30 other people. i think really barack, you can

only take me in small doses. how does this dose feel? >> it's not just the dinner thing. it was also on the golf course. >> that probably irritated him. it's more bill clinton knows exactly what the american people are feeling at all times and channels that. they're feeling how did this guy say this when it's not true? we want to keep our plans. >> i thought it may be he really thinks instead of just an apology you need to handle this. he loves the democratic party and cares about what happens. >> also cares about his wife. >> that's why it was so rich yesterday. >> i'm like, bill i love you. >> speaking of you loving bill, i like the fact you pointed out multiples in the 1990s under

clinton who was obviously your favorite president. >> he was a republican wasn't he? >> no he was a liberal democrat. >> a liberal democrat? >> in terms of -- >> he tried to get health care -- >> that's relative. he raised taxes on the wealthy and did a number of things considered progressive in the early 1990s. >> all i want is deep down an understanding that most good jobs come from the private sector and the revenue from what you get from those jobs are what pay for these government jobs that aren't that effective. >> clinton understands that in a way i don't think president barack obama does. >> these guys are sticking around. we're going to continue a lot of this conversation. up next, could interest rates be headed much higher? that's the question. editor and pubbisher dennis gartman going to be joining us knick

next. "squawk box" returns after this quick break. k break. opportunities aren't always obvious. sometimes they just drop in. k break. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group: how the world advances.

welcome back to "squawk box" if you could hear what we talk about during the breaks.

we're going to talk about the economy. the 10 year notes could be a key market mover today set for 1:00 p.m. eastern time. here's a look at the ten year now. take a look. there you have it. we're looking at 2.757. our next guest is call farg massive top in the bond market and says investors should be shorting the long end of the curve. joining us now on the squawk news line dennis gartman, editor and publisher of the gartman letter. we've bb talking earlier about how the yield on the ten year is in striking distance of where it was when fed got nervous and tried to talk things down. what happens next? >> i think rate is at the long end of the curve are quietly going to go higher. not dramatically higher in a short period of time. they're going to quietly edge up. i think the fed is comfortable

with sponsoring a continued movement to a far more positive hill curve that the fed knows the best thing they can do for the banking system is make sure the curve is positively sloped. the more positively sloped the better. the concept or talk about rising inflation even though i'm not sure the fed is a great concern at this point is fluff to keep the curve moving positive. i think we're going to see over in next 12 months the yield up. we may get to three and a quarter before the end of next year. i don't see that as detrimental to the economy. >> you don't see this a situation the market is taking back control. you see a gradual yield that had to come? >> yes. very gradual. i don't think it will be shocking or swift. it will be slow. the fed will be quite comfortable with that.

>> richard pointed out earlier if this is happening it's because the economy is improving. do you agree with that. >> >> i really do agree with that. when you get out as much as i do, travel around, talk to cab drivers, check in hotel, see how planes are crowded, watch buildings go up, see cranes in the city and country, the economy is doing reasonably well. not great but reasonably well. that's sponsoring yielding. >> you get out a lot. usually say need to get out more. you get out a lot. for me, this means no way you'd still be long of gold is there? >> i don't think there's reason to be long of gold in dollar terms. anybody that's been long of gold for the last year and three quarters, almost two years as suffered 40%. >> you went back in the last

couple of months. i think you got a bounce didn't you? write as good on the wall. anything close to tapering is positive for the dollar and negative for gold isn't it? >> yes. that's quite some period of time before we have a reduction in the amount of accomodation by the fed. i think it will be through the middle of next year if not the end of next year before we see reduction in the accomodation. >> at all. >> at all. >> really? >> it's rich bern stein, osi has a survey they go out and look at the bond portfolio managers and ask whether your long or short duration, making a bet, interest rates going up or down. they're historically short duration. they think everybody out you there that rates are going up. i agree that rates are going too. what could be wrong? what if bond portfolios are shortest ever in the history of the survey?

>> we could see the economy weaken not strengthen. that's got to be the big concern. that obviously can't happen. do i think that's going to happen or see the roots the for a dramatic weaking? no, i don't think so. i would have liked greater definition. do i have we have reached a point housing is overvalued, too many automobiles? no. i think we're at a slow, lo borous economic period. >> real quickly if all other things are happening because economy is improving, how come oil prices are dropping rapidly? >> that's easy in the united states. we've got so much crude oil around.

fracking has done what it should have done, created an abundance of crude oil. we've taken wti to bidding for storage. there's so much of it around and no reason to think that's going to stop any time soon. abundance of crude in the united states. small shortage in europe because what's happening in libya and in arab countries. here in united states, canada, new mexico, an abundance of crude oil. i see every reason to think it will continue to fall. >> dennis, thanks a lot. we'll see you soon. hopefully next time we'll get to see you. coming up -- think of larry summers. that was clinton's guy. >> it's a progression for clinton. >> look at larry summers and you see the huffington post and what

writers did. who did the president listen to about summers? >> he listened to who he is. he listened to his own heart. coming up, it's value wednesday on "squawk box" we're searching for names that have a potential for a upside move. david will join us. later, the season for art. big auctions taking place last night with record results. is this art bubble about to pop? robert frank, looks like he could pop that one. that's not balloons. he brings the story and a special guest. stick around. "squawk box" will be right back. fedex one rate. really makes my life easier. maybe a promotion is in order. good news. i got a new title. and a raise? management couldn't make that happen. [ male announcer ] introducing fedex one rate. simple, flat rate shipping with the reliability of fedex.

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so you can. when we return, david helps us through names have potential in the upside of the market. jim nussle on the budget war in washington. "squawk box" will be right back. someone you feel you can really partner with. unfortunately, i've found that some brokerage firms don't always encourage that kind of relationship. that's why i stopped working at the old brokerage, and started working for charles schwab. avo: what kind of financial consultant are you looking for?

talk to us today.

welcome back to "squawk box" everybody. in our headline this is morning, dow component johnson & johnson will pay $4 billion to settle lawsuits. this deal would resolve 7500 lawsuits. j and j declined comment on this

when reached by cnbc. both new purchase applications and refinancing fell. 4.4%. also hotel extended stay america chain will trade today after the initial offering of $20 a share at the midpoint of the expected range. extended stay was brought out of bankruptcy three years ago by the pallson and company and partners. finding value in a market that seems to be getting top heavy. we're looking for names that can still make you money. david is joining us. what is working now? where do you think we are? are we tiptopy? >> there are easy points in time you can look back and say the market is cheap. there are always sectors in the

market we think as value investors you always find value. >> let's talk about sectors and get to specific names. >> we look at the energy sector as a place that is interesting. >> energy is broad. >> gassy mp companies based mostly north america. these are large in our portfolios. they remain cheap in our broadly resource conversion, doing to balance sheet to unlock value. those are two companies. in the service sector rethink there's opportunities. we own bank of new york melon that we think remains unexpensive compared to that sector. things in europe like the telle

come industry. >> if you looked at stocks over five years they're down. you asked what's cheap out there. these are stocks that continue to climb. >> vodafone is one. >> can we take that out longer. let's go to five years. this company has a lot of cash. it's part of the investment they're going to give you that cash back or going to acquire something with lit. >> we entered that stock when they were in conversations with verizon about what was going to happen. nobody was sure the deal would go through. now that they have it, we hope they do something interesting. >> the stock looks like it's run up even over five years. >> if you chart it against the market, it wouldn't look that way. >> is there take over given speculation at&t would love to

try and go to europe and the right target to get its hands on. there was question about whether the nsa business in the u.s. would make it harder to acquire a company? >> that's noise. >> told you. i keep talking about that. >> she's suspicious about a lot of things. >> it's unbelievable. you have said at least ten times -- >> at some level you're a professional skeptic. >> not one that's not logically appropriate to take ridiculous positions. >> there's a story that said e thothe bankers were an shxious about t. i talked to people. >> canada said talk to the hand. they're worried about the national security issues. >> i'd worry about national security with the chinese company too. not the american company because of the nsa.

>> this is fun. you get to debate all day long. the real point is vodafone can do a lot of things. there are other companies suffering also that don't have the cash resources or balance street strength that vodafone or telle come. how do you love real estate and how do you play it? >> all over the world. when you're in the real estate business and told you're a investor, they think you're a read investor buying real estate companies that pay dividends. we do do that. we buy that generate appreciation over long terms. there are tremendous jewels around the globe we identify as great values. we have been buying the stocks

since 1998. >> can you share names? >> there's a beautiful company called song bird. song bird is canary wharf in london. everybody knows about canary wharf. they're going to build a rail train to get you into that development. rents are far cheaper there than the downtown financial district of london. this is an inexpensive stock. in our minds now, it's controlled by people but there's public security we like. it has a pretty name doesn't it? >> a couple of others by the way, these are not real estate stocks. you like locadia. you like warehouser. because? >> interesting assets. there's a timber play there

going on. >> these are all real estate related. i like your thinking. when you think about twitter or any stock, you're owning a piece of paper that says you have a billionth of this company that one day makes money or maybe it doesn't. if this all went to hell, you know someone has to buy it to make noi money on it. it doesn't have inherit value. real estate you could sleep there, put a sleeping bag on the profit. >> does make our job easier if there's an asset tangible you can grab in value. you can look back in history and project forward about what you think could happen. you could protect yourself on the down side. >> how do you really know? >> i'm not arguing with you. >> i know. isn't that where twitter was at $50? >> i'm not saying you were.

i'm just getting -- >> she's thinking 30. >> she's young. >> can you discuss real quickly credit conditions in real estate and hard assets? >> clearly on the credit side it's more challenging. we're looking for company as with good balance sheets that are low leverage. >> thank you. >> my pleasure. >> you were leaning. >> he was going to grab me. >> i know. my body language. what washington really needs is a pizza party. former owner says nothing until republicans and democrats rebuild good will. he'll join us. and a new world oorecord ar piece. that's a balloon dog. that's not a balloon.

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time for our pizza party in washington. the budget conference committee has limited time to reach agreement and avoid another shutdown. joining us jim nussle former chairman house budget committee, office of budget and management under george w. bush. founder of the nussle group. we said you'd have a solution. i figured you'd say give them everything democrats are asking for. >> you know better than that. we ought to spring for the pizza. the bottom line is people don't know each other. you and i both know that. they don't know each other, don't like each other and don't trust each other. i was trying to say if you're going to have effective negotiation about anything, start to get knowing one another. realize for a change you were closer on a lot of issues you believe, that you care about the future of the country and

there's more commonality in the budget than people realize. it was just a way to kind of kick things off. the last time we saw a deal was arrived at about ten minutes after the midnight pizza was rolled in. i thought let's start with pizza this time. >> i just wonder the extent to which you think there's a possibility the sequester could be rendered and come out of possibilities? that's the one thing that would be the fiscal dragon 2014. what are the possibilities that could happen? >> there are three things they are doable. number one is commitment on everybody's part. debt is the problem. let's put the debt on a downward pass as compared to gdp. that's a common agreement people come to. number two as you say, replace sequester with a plan that makes sense with a cutting plan that

makes sense. there's $91 billion take effect. let's replace that. number three, come up with a process that works going forward. i don't think the current process makes sense, the one using now doesn't certainly make sense. come up with deadline, a calendar, a process with automatic votes and reconciliation process so there's a method to get bills for the floor for discussion, debate and a vote. if you could do those three things in the budget conference, you'd probably be able to accomplish something. >> we have a big interview coming up. we just got. i'm trying to figure out the pizza. for progressives you need a foo weird. for republicans y s need sausagd meat. they don't like each other.

face it. >> joining us you now as you were sighing, a "squawk box" news maker. former news secretary larry summers joining us. thanks for being on. >> good to be with you. >> the big news today we keep talking about over and over at the table is obama care. you've been writing religiously in the past couple of weeks the need for growth. i'm curious given the complications that obama care seems to be creating at least in the transition period if not longer and i wanted to get your view on that. how do you see this impacting growth now? >> look, the stuff about the website is very exciting theater for all of you. it obviously wasn't managed the way the president wanted in the white house. getting it right is obviously important for fully getting the benefits of obama care. if you look at the medium run and long run, the important

thing that's happened for growth is that in the last three years since obama care was passed, we want bent the curve on health care cost. for the first siem since second world war health care as a share of gdp has stopped going up. that offers huge promise with respect to the federal deficit that looks much less serious than it did even a couple of years ago. it means much less burdens on businesses which means more competitive american producers. it means the ability to pass on higher wages to american workers. so let's keep some perspective here. we have had outcome with respect to health care costs that is well beyond what anything thought possible three or four years ago. we've had it with respect to health care costs. look, in a different sphere we've had respect to energy. we're a net exporter five years

from now. that would have been inconceivable at the beginning of the president's term. that's not all policies the president has put in place. i'm the last to claim that. it's not true it's all the president's policies with respect to health care. we've had a frame work going in the country under the surface while everybody is talking about gridlock has let profoundly good and positive things happen to our economy. energy, independence, bent cost curve with respect to health care. a federal debt to gdp ratio now subjected to come down the next ten years. i've been tough our economic situation. we don't have the philosophy for growth. we've got a lot to do. what's coming out in the commentary just isn't right.

>> you mentioned -- you're right with the website and you know how the media likes to sell the sizzle not the steak. we were invoking your name earlier when trying to decide whether bill clinton was different in terms of being eccentr eccentric. look at larry summers, a big part of the administration and the great growth in the 90s. look at party that the democratic party at this point. everyday the huffington post. i read people could write about you from the left. it was significantly -- the lines were totally moved way, way over to the left. now we've got people -- bill de blasio in new york, elizabeth warren. suddenly she's a bona fide contender. they represent a new center so far to the left from where it

was when clinton was president. isn't that true? >> where are we today? >> none of us are fair judging our own press. i'm certainly not going to pass judgment on what's been said and written about me. look, of course i'm concerned about pressures that would take us away from the market oriented system. i think it's served the country well. we obviously have to be careful with respect to that. on the other hand, you do have to look around you. we've seen two things in the last ten years that it seems to me have to cause a thoughtful person to think in a different way than they would have in the 1990s. one is we've seen a financial system that celebrated itself, celebrated each bank's ability to monitor its own risks crash in a way that did enormous dano

month millions of people that think call is something you do on a telephone and put is put something on a table. we're a million miles from that system. yet they've been thrown out of work. it's hard to believe you don't need to be monitoring and managing and regulating the system more than you were before. that's just being sensible. that's not being leftist. in the same way, if you look at a graph of wages or incomes and the overall dgp. they stayed together much of the post world war ii period. over the last generation, they've very substantially diverged. so what's happening to the the distribution income is now a huge determinant of what happens to middle class living standards. that's why people are paying more attention and focussing more on distributional issues.

that's right too. we've got to avoid excess. there's certainly a lot of things said out there that seem to me to be excessive. if they were implemented in the way they're literally proposed could do a great deal of damage. i think if you have the same values that i had in the 1990s that i believe president clinton had in the 1990s and you see what's happened to the financial system, you see what's happened to the distribution of income and what's that has meant for middle class people. it's going to affect the policies you advocate. what i hope we'll never lose sight of, and i think this is the danger, is that many the 1990s certainly the approach i always tried to take and i believe president clinton always tried to take was one of not

governing from the gut. governing on the basis of a hunch or an instinct or feeling or a basis for anger. trying to do it as analytically and carefully as possible. i think that in people's legitimate frustration about things that have happened, there's a risk that you won't govern as carefully and analytically as is appropriate. you will get policies that are determined only by passions. i think that can be risky and unfortunate for the country. that's the important role of economic advisors and analysts in an administration not to set the the overall values. that's for our democracy to

determine. to try to make sure that with respect to whatever objectives are set, it's done as effectively and efficiently as possible. >> larry you said earlier you don't think the economy has hit the escape velocity. i know you advocated making sure we're doing more to spend on infrastructure and other things to stimulate the economy. that sounds like an argument of keeping quantitative easing at the fed. is that something you agree with to keep that on and key off the taper? >> that's a good time old treasury secretary habits die hard and certainly i'm not going to make either predictions or prescriptions for what the feds tactics should be going forward. as you say that the primary policy emphasis doesn't have to be on spurring growth going

forward. it is a serious problem. it's one that frankly your listen eers need to take on boa. it's been four years since the financial system had been fundamentally repaired since the sense of panic that defined the fall of 2008 largely gone by 2009. that was a great achievement especially of secretary geithner, chairman bernanke. since that time we haven't caught up with the economy's potential. haven't raised the fraction of adults who are working. the inflation rate if anything has come down. we've got to focus on growth. >> let me try a different approach on this. janet yellen likely to take the role that you decided that you were not going to try and take? one of the things he's been a advocate of is more transparency at the fed? do you think that policy is a

good thing or bad thing? >> oh who's going to go on television and oppose transparency? i think it's all you about how you do things. i think janet yellen will do a great job at the fed. i think the test of policy is going to be what happens to the economy and what the degree of uncertainly is in markets. i'm sure all of that is amply debated going forward. >> i've got another quick one for you. we had the winkle boss twins on yesterday are. we were talking about bik coin. i asked them at the end of the interview, if you had gone to larry summers and told him you were going to make a big investment, what would he say? since we have now now, what would you say? >> i'd say the same to any harvard student coming to me saying they were going to make

an investment. good luck. i have no comment or advice. it's your business. if you want to talk about class, i'm happy to talk about classes. you're investments are your affair. >> is bik coin going to be the reserve currency? as a former treasury secretary. >> i think the dollar will be the core of our system for a very, very long time to come. >> i can't imagine a treasury secretary saying yeah. we support a strong bik coin. >> that will be a different era. larry summers, thank you for joining us this morning. appreciate it. talk to you soon. when we come back, macy's gearing up for holidays and getting ready for earnings. we'll have that after the break. plus tom cole on the budget numbers. check out this hour, up 36

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we'll ask tom cole. it's make or break time for retailers. we'll bring you quarterly results for macy's. who owns the moon? finders keepers. >> one small step for man, one giant leap for man kind. >> other countries not yet to see the moon. a quiet billionaire that wants rights to the moon. third hour of "squawk box" begins right now. welcome back to "squawk box" here on cnbc. first in business worldwide. couple of guest this is morning.

richard bern stein and more importantly and more prestigi s prestigiously, our cnbc contributor. >> more importantly. >> more importantly we have ben white. >> is that what you were worried about? i said you first. i'm sorry about that. our guest hosts today ben white chief correspondent author of morning money a cnbc contributor and also richard bern stein. >> earnings are supposed to be over. retailers are on the weird fiscal year. >> macy's came in with earnings that were up you 31% to 47 cents in the quarter. the estimate 39 cents. they beat strongly. they say they were able to

achieve the successful quarter despite the economic climate. let's see, both macys and blooming dales performed well in the quarter. we saw improvement in every region of the country. they say business improved during the quarter with strength in october. they're entering the fourth quarter with confidence. macy's say they're not seeing effects from the shutdown at this point. they say they're entering fourth quarter with confidence. >> sales up for the fiscal year. 2 to 2.9. third quarter up 3.5. you mentioned the sales number which is well above 6.2 v. >> 2 1/2 to 4% for the come of the year.

that suggests strengths. >> that's a big lead. >> they're also looking for earnings of 380 to 390 a share for the full year. just checking the shares. 380 to 390 no matter where it comes in at that range. it's above where the street anticipated. >> i think they have models for men's fashion. he's a handsome man. i almost can't take him seriously. you can't be a great ceo and look like that. he is the george clooney of ceos. >> macys is a place you can go in and find things you want to buy. there's never stuff in department stores that i want that fits me. macys is a good department store where you can find stuff you actually want to buy. >> you see the old comic books

where the guy changes into whatever he wants to. he looks like that. did he have work done? did he always look like that? >> he does not like us talking about his handsomeness. >> we'll talk to an analyst that covers macy's in a few minutes. >> don't be laughing at lundgren. look who we're talking to. he's got nothing on you. >> thank you. i was mistaken for a navy seal the other day. >> who was? >> i was. my wife asked if the person was blind. >> did the person know a navy seal that happened to look like you? >> i was speaking at an event before the navy seal. someone asked if i was the navy seal. >> oh. go with it. >> i was eating it up. >> let's go to today's agenda.

here's coming up. the treasury department releasing federal budget figures. the the joint economic hearing will examine the outlook. speculation the fed could taper sooner than expected. we'll have the debate here. comments from fed officials closely watched. also today's speakers include cleveland fed president sandra pianalto. ben bernanke will be tonight at the meeting. we have dow across the the board. nasdaq opens off ten points down and s&p 500 opens off about seven points down. >> bipartisan budget committee

is meeting the second time. joining us now with expectation, representative tom cole a member of the committee. thank you for being here today. if you could lay it out for us, what do you think? what would be your ideal of what we could expect with some sort of deal? >> there's not as much separating the two sides as most tend to agree. we're talking about a budget deal not settling the whole question of long term debt. the two side, house and senate passed a budget. they're $90 million apart. that's a lot of money. that's a 3 1/2 trillion dollar budget. if we give each committee a number to work from for this fiscal year we're in and next year, i think we could get back to normal appropriations, get out of the crisis where we lurch

from one to another. >> i'm guessing it's not as easy as splitting down the middle and taking a $45 million different between the two? >> you're exactly right. getting to a top number theoretically shouldn't be hard. it's how you get there. go it by savings? there's a large budget. there's enough common elements in the senate, house budget and what the president proposed to do that. you don't need to increase revenues at all. put in savings. on the other hand friends on the other end of the aisle want to raise taxes. i think that's a non starter in this environment. if we focus on savings we can get to a reasonable number, loosen up sequesters some and get a functioning budget. again, there's a lot of personalities and politics between here and there. >> mentioned personalities and politics. there's a general sense in washington there's not an appetite for this time the odds

of a shutdown are slim and another debt ceiling crisis are slim. it's not that easy to get from a to b to agree on a number and sequestration. do you think people are underest ma mating the potential of another train wreck? >> i'm not worried about did debt ceiling. both showed last time that's a line they're not willing to cross. we stumbled into shutting down the government which i don't think was a good idea. i don't think that's likely to happen again simply because results were so obviously bad for all concerned. but there's always the risk. we're not moving fast enough in the right directions in my opinion. we need to get serious. this committee is supposed to report about 30 days from today. the government shutdown is 30 days roughly after that. it's time to get ideas on the

table so to speak and identify the areas of differences and start winding down. >> let's talk about one of the areas. revenue is what democrats would like to see more of. you would like to see it on the table. your definition isn't the same as democrats. you've talked about revenue meaning what? >> pro growth revenue. we could expand profits oversea, expedite expiration for oil and gas offshore and federal lands in areas frankly expiration has gone down and revenue has gone down. we've got assets. we're looking for a one year, two year fiscal budget deal. there's more than enough money in savings to find that. we could frankly reach a deal by adopting one of the president's proposals on changed cpi that saves you money in terms of what you spend in entitlements over the decade and brings money into

the treasury that's linked to tax exceptions and things like that. the revenue producer and cost saver. that would more than cover our needs. >> both should cover tacks. if you told a democrat, yeah, sure i'm for more revenue, we can do change cpi, more explo explorati exploration. they're going to laugh you out of the room. that's what they want. >> of course that's what they want. we're not going to get the ryan plan on medicare, not going to get medicare blocked to the state. there are things on both sides of the table. if you look at what's there, there's more than enough. >> when they say what are we going to offer revenue, you say

we might consider changed cpi. >> i already said those things. >> that's what they're giving you. >> i'm real worried about that. frankly they need a deal. we need a deal. differences aren't that great. we ought to be able to get it done on what's in common on all three plans. >> we'll offer up revenue. change cpi. >> thanks congressman. >> thank you. we should stop calling it revenue. you can inflate different things with it chl. democrats want taxes. >> there's closing loopholes. people mean different terms, different things when you talk about closing loopholes. it's not just the $90 billion. it's how you close. >> all things republicans want. >> you'll probably get a mix of both if there's a deal that comes. >> ben says no deal. >> i think there will be a deal

but i don't think a deal that does tax reform. >> you go with two s's. i go with you brinkman ship. there's only one s. >> brink mans ship. there's alternative spellings. >> it's gotten picked up over time. i'm going to show you. >> picked up over time like ain't. deal is finally done after being announced last december in coming days. the company will announce possible plans for parts of the nyse operation. we are joined now with bob the special guest. >> he's right here with me, ceo of intercontental exchange. good morning. you own it all now. yesterday we were talking it was

a very bittersweet day for a lot of people. nyse has never been owned by an outside firm. you're the first man. what's it feel to own an iconic institution like this? >> hopefully colleagues and i can change bittersweet percepti perception. we're excited to own it. it's an unbelievable franchise. it's not just iconic but exciting. i watched your coverage last week of the twitter ipo. i ended up pushing back a meeting i was scheduled to go to because i wanted to watch the open, see the price, watch the founder, management team. >> did it restore or increase your faith in the value of base trading or having humans around under circumstance? >> absolutely. there's two companies going public this morning. as exciting as this deal was for my colleagues and i, walking across the floor to come meet you and see management teams all you nervous and excited and

waiting for their stock to open and trade the first time, it's an infectious thing. it's great. it's hah this company stands for. >> the value of the floor is clear to you? >> absolutely. you keep getting asked what you're going to do with it. >> absolutely. it's become virtual to a certain degree. my company has been a disrupt tore in other markets. there's no other market like this. in a market where we don't have full confidence in how our stocks are trading, there's something really rewarding about being here and seeking human beings. >> you want to bring back the little guy to the floor. how do you do that when customers are high frequency traders? >> you start by talk about it. and then working to change behavior to change the

trajectory to the way things are going. i've been open about my concerns. i've gotten flak from peers who have asked me not to talk about it. i think f i believe that's the wrong way to go. if you don't want to own that company, i don't know if you have a heart and soul. >> i want to put up indicates where you get your money from. only 5% of the revenues of the combined company from stock. you're basically a futures company. where is the growth going to come from for you? you're going to spin off the european business. where's the growth for you? >> you're seeing we're a multis

is -- multiasset company. it feeds the goal. it is global. the new york stock exchange while small is an important part of what we do. >> i want to hear your ideas of how you'll grow and retirement. we've been talking about jeff's ideas. i hope you'll be a frequent guests on "squawk box." i hope i'm in my office representing. >> congratulations. >> thank you so much, bob. >> back to you. all right robert. long time no see. wow. on "squawk box," bob. coming up, retailers reports. we're going to dig through some including macy's results with the big jump in stocks. a look at numbers coming from other retailers. the all important shopping season for christmas. later, she was named the most important pension player in

america. we'll talk to wine garden, the president of the american federation of teachers.

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welcome back to "squawk box" let's get back to another story we've been talking about all morning. the auction of the century. $691 million worth of art set an all time record for a single auction. lots of other records were broken. we have robert to help make sense of it all. >> it's a great morning to talk about art. we have clients including a lot of billionaires, guys on this show quite a bit. one of the smartest guys i know in the business, andrew. let's talk about the francis bacon. the the most expensive painting ever sold at auction.

what makes this so special? why did people want this? >> there are only 28 known of francis bacon. bacon for having as long and prosperous career as he had. there are only 660 paintings compared to other artists like roscoe and others in the thousands. of the 28 that exist, the vast majority are in institutions. it makes this picture particularly special. also the subject matter of freud who was a close friend of bacon and member of the london school of painter, that combination made it irresistible. >> it had bright colors. >> bright colors. it had been in a private collection many, many years. six or seven bidders involved last night, there was spirited activity to buy this. >> we don't know who bought it. we know the does he recall bought on behalf of a client.

there's rumors out there it could be steve wynn. we don't really know. let's talk about the art market. particularly talk this morning about the art bubble. we saw you the most ever raised at auction last night. are we at a peak or beginning of this cycle? >> people have been predicting the burst of the bubble for years. the art market has proceeded una baited since 1995 when it sort of began to pick up steam. >> the crisis didn't phase hit. >> 2008 was a blip. the bubble is a many tiered market. you have this market of expensive items and a private market selling items nobody knows about. the rest of the market public and private is drafting off this

limited information. it's not always clear. >> do you think these prices are real? is somebody actually paying this amount? there's so many side deals and guarantees and things that most collectors don't really moe. are these prices at the auction real? >> you have to assume they're real but also assume when you have a third of last night's sale guaranteed by the house or third party guarantors, most of that material has been gained and dealt with before it walks in the door of the auction house. you're bidding in a way against a preconceived deck. that makes it very difficult to say whether prices are real or not. >> so a wealthy collector going into auction, what's your advice to them? >> seek council. that kind of advice is abundant and usually free. you want to really know what you're dealing with in terms of level of guarantees.

reserves are always confidential. you want to understand if the reserve is fluid or whatever. there are many knin buying art that are not clear to a large majority of people not familiar with the inner workings of the art world. there are have few rules. >> dangerous game. >> we were talking off camera. i didn't know who you were but i'm impressed and glad you're here. >> did it resemble freud at all? it's bizarre. >> freud was an extremely dashing handsome man. he had 20 ill legitimate children. he was an extraordinary individual.

>> wow. 20. >> johnny apple seed. >> they were very close friends. i would say that the resemblance is certainly there. bacon is one of the few artist of the postwar era who was a humanistic spirit. the ex terrible idea of this idea and person is prominent in his work. he's trying to show a complex individual such as freud. >> were they competitors too? >> they certainly were. freud's career began very quietly and slowly. he's one of the few artists a live in the history of art who's work got better as he got on the liner. the the only other is picasso. it's rare. bacon's first painting was

purchased in 1985. he was successful throughout his career. >> wow. >> thank you for coming. >> robert, thank you for bringing him. when we come back, macy's reporting earlier this hour. we'll dig through the report with the analyst and talk about holiday expectations for the nation's biggest retailers. still ahead, who owns the moon? we have a quiet millionaire that wants to determine lunar property rights. [ male announcer ] what if a small company became big business overnight?

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welcome back to "squawk box" macy's out with third quarter earnings. beating the street by eight cents. joining us to make sense of it. matt, good morning to you. >> thanks for having me. a nice beat. what does it say about the coming holiday shopping season so you? >> there's no question there's optimism in this report. we got off the phone with may have is cfo. october was strongest of the quarter. all regions up. some optimism as you mentioned fourth quarter we have here, beauty strong in the quarter. you have strength in fine jewelry. some of the components heading into the holiday season would typically be the drivers. they look to be accelerating here as the quarter progresses.

>> what about the online space? >> one of the things macy's has done better than anybody else is the idea of the multichannel. >> the channel retailers are winning. macy's spent the money on it. nordstrom spent the money. you're starting to see retailers bear fruit. particularly as you head to this holiday season, weather reports look as if we're going to get a real winter. that could impede traffic. that could be a nice opportunity from a cold weather standpoint given if last two winters we haven't had it. going back to the channel, i think they're winning with the custer that shops multichannel. if the weather is a head wind, you have the opportunity with the online shop. >> do you think this is the situation the shutdown in washington didn't have impact on the consumer or macys is

benefitting to detriment of competito competitors? >> macy's has the brands and offers the value. when you think about macy's versus peer, it's things at the core. es at a lauder, coach, ralph lauren. a number of peers don't sell those. there's optimism for retail as a whole given the october stren d strength. the hurricane benefits falls in november to help the fourth quarter get off to a nice start. it's also macy's model the key. >> are you calling for a good holiday retail shopping season overall? >> i think it will be front end weighted. november will be best. it will cycle post christmas. it will be front and end weighted. the environment out there from

the promotional standpoint will be fierce. everybody is trying to get that wallet in the condensed period of time. i think the holiday will come and go and be okay. >> as the economy gets stronger, do junky companies do better? >> we've been saying for a while that the dynamic of housing prices are stabilizing. we've been seeing that over the past up couple of months. as you think about 2014 and 2015, that's a dynamic when you think of macy's that has cost base expenses. difference in two, four, five comp should earns. consumer value the s the price of the home. it affects when they're in the stores. it's definitely something to think about as we move forward.

>> thank you for that. leave the conversation there. >> thanks for having us. just ranked the most important pension player in the country. we're taking to wine garten about her battle with hedge fund managers. first a client billionaire getting involved in a copy rights battle for the moon. we have this story when we return. welcome back. how is everything? there's nothing like being your own boss! and my customers are really liking your flat rate shipping. fedex one rate. really makes my life easier. maybe a promotion is in order. good news. i got a new title. and a raise? management couldn't make that happen. [ male announcer ] introducing fedex one rate. simple, flat rate shipping with the reliability of fedex.

here are the futures down 80 despite great numbers from macy. stock market is down. i did see one of our guys earlier in the week talking about how far we were from the moving average near term. just the s&p 500 way above it. i don't know -- that doesn't have to be a long time. >> i'm not a if he ctechnician. >> can you play one on tv? >> i'm not a big fan of technical analysis.

soim sorry. >> we have exclusive. it's definitive, definitely not cheese? >> well, the apollo crew did not find any cheese. i don't think they're going up to mine cheese eventually. the billionaire says if america is going to maintain space leadership, partners need orbit. he says this is not going to work. he says private ventures aren't willing to risk capital in lives unless they're guaranteed ownership in what they discover. >> should anyone own parts of the moon? >> no. no one anything should own the moon. but, yes, multiple entities, group, individual, yes.

they should have opportunity to own the moon. >> bigelow isn't interested himself but providing housing and habitats. they're going to fly to the space station 2015. china is about to send men to the moon. >> how worried are you about china. >> a lot. >> why? >> tell me something that they don't have significant interest in, ability to be involved, ability to control ultimately. name something. it's a psychological impact that has a value of every soul looking at moon and knowing that it belongs to china. >> now at the same time the nasa news conference says the agency

is trying to figure out what it should buy from people like bigelow and what it needs to invest in to keep pushing american technology to the next level. >> i don't want to go there. i'm afraid number one. >> there's no gravity. i want to go. >> you saw gravity. it's beautiful up there. >> gorgeous. >> there's nothing there. >> under the surface there may be a lot. how do you eventually learn to live on mars if you don't first get to the moon. eventually we're going to need to move on. >> i'm afraid. i admit it. i don't like going to a place there's nothing to breathe. >> come to los angeles. it's the same thing. >> i knew i could count on you. see you later. >> it's not cheese though. where did that come from, it

looks like swiss cheese? >> i thought it was green cheese not swiss cheese. >> i could see you as a space traveler. >> i know. andrew, the funny thing is, he's scared to death of planes and going up on this thing. >> pretty much. >> was that a serious discussion about people buying the moon? you can't actually sell property rights to the moon. >> people own parts of the earth. >> who's going to decide who gets what chunk? who owns it now? >> christopher columbus my friend. have to get there first. >> i don't think anybody should own it. >> they can't own pork and can't own the moon. right joe? >> yes. >> more worried about the bacon. when we come back, a pension story that affects more than a million teachers. the president of the american m

talks about it. we'll find out more why when we come back. the last thing i want is to feel like someone is giving me a sales pitch, especially when it comes to my investments. you want a broker you can trust. a lot of guys at the other firms seemed more focused on selling than their clients. that's why i stopped working at my old brokerage and became a financial consultant with charles schwab. avo: what kind of financial consultant are you looking for? talk to us today.

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institutional investors out with the pension 40. a list of most important players. our next guest a top the list at number one because she's powerful. joining us now from washington randy weingarten the president of the american federation of teachers. good to see you again. you were on a couple of weeks ago.

i definitely don't want to argue. i don't know how to define befits in the zero interest rate environment with the fed and easing. i thought it made since everyone switch to contribution because you look at assumptions made a year ago six to seven percent. it looks like you're dooming to failure if you stick with the define benefit system. it seems impossible to work. >> look, i'm not the mathematici mathematician. first off, thank you for having me on the show. >> you're welcome. >> the national institute of employment retirement security just came out with a study that shows defined benefit plans actually are 46% cheaper than define contribution plans. in fact both west virginia and nebraska switched from defined contribution plans back to

defined benefit plans. it has a lot to do with how you pool the assets, how you the assets are invested and in fact there's now a group of wall streeters, retirement people and unions working together to do professionally managed asset management. because we see we have to be really efficient with every single dollar. i think what's happening, sir, is that two things get conflated. a lot of defying contribution plans actually don't provide enough for retirement security. that's what gets conflated with the defined benefit plans. if you're only putting in 3% a year and matching 3% a year, you don't have enough for retirement security and that's the part of the problem in terms of defining contribution plans. the last thing, a lot of defined benefit plans basically average

out for people $23,000 a year. most people who have are defined benefit plans actually have contributed during the course of their working lifetime. they're called deferred wage. the real issue is how do we cite retirement for all. the median is tops $12,000 period. >> think about what happened in the past and how long people are living now and assumptions made. even at one point you -- hedge funds took the task for risking some of the defined benefit money. here they are in the zero interest rate environment where you can't buy safe investments and get any return. they're trying to get the return somewhere else that entails more risks. damned if they do and damned if they don't. as far as defined contribution, if you mess up contribution investments, then you're left with notenough.

if the people running the defined benefit plans mess up, you can take down a whole state basically or the entire municipality can be bankrupted. >> i think what essentially happened if you take places like new jersey or rhode island where you've seen real issues when the bottom fell out -- by the way with the stock market doing what it's done, these pension plans have now become more and more funded again. but what you saw happen is that the employees kept on giving their contribution. the states basically said we need a pension holiday. that created a lot of the problem in both rhode island as well as new jersey. let me also just say this. we represent people that have about $1.5 trillion of assets invested in their pension plans

so that they can actually live their lives in retirement as opposed to anyone else trying to support them. what if we use those funds, invested them in infrastructure so you could rebuild america? that's part of what we're trying to do as the labor movement as the aft with our trustees making sure that they are good investments. invest in america, build in america again, build that tunnel that chris christie said he couldn't afford. rebuild those bridges. build the kind of energy efficient places that we need. that's the kind of things that we should be thinking about in terms of using the capital investment of pension plans. >> i'm not sure i understand the connection. take funds and invest them and make sure investment is growing by doing what? >> what happens is what we've done with the clinton global initiative with some of the

funds throughout the country is that you take some of those assets and instead of investing them in risky investments, use the -- invest in 30 year bonds so that you're building things like a new tunnel -- >> bonds are guaranteed by who, states who are underfunding to begin with? >> or guaranteed by whatever you need to build. you have you what you're investing. these are funds you can use to invest to rebuild america. instead of going to the municipal bond market, use the capital of pension funds. i'm saying let's be innovative, have investment banks, actually try to figure out how to use the capital to rebuild america. that's why i think that they named me high on that list because that's what we're trying to do here. quick question.

i interviewed dan lowe yesterday. your name came up. one of the questions i had you targeted his fund and others and suggested pension funds shouldn't be investing in funds like that because he has talked about the a school issue about charter schools and there's also a separate issue around supporting defined contributions versus what we're talking about here. and the question, therefore, becomes do you not think that your pension money should go to whatever manager out there can get you the highest return? do you think the politics should matter? >> first off, it's so sad that dan loeb would not have a meeting with pension trustees on this issue. it has nothing to do with what his positions are on schools. frankly, i have no idea what his positions really are on schools. what we said to dan loeb and to other investment managers is that transparency counts, which is frankly what dan loeb does

when he tries to take over corporations. and so we said we want pension funds to know if you in your side job or side business are actually trying to kill pension funds. and so i asked him, i said clarify your position. do you, if you're actually soliciting business from defined benefit plans and actually trying to say you can make them a lot of money, make sure you also disclose that the boards that you sit on want to actually kill those same plans. that's all we said to him and he had trouble with being transparent. >> you might -- if de blasio begged you, would you do it, randi? richard johnson says you want it. >> oh, stop. richard johnson, i mean that -- this is what i love about the "new york post," everything in that story was made up. >> like the two bagmen --

>> i woke up to that story and i'm like there is nothing in this story that is correct. >> we're going to keep this tape. >> thank you. >> randi weingarten, thank you very much. >> richard, we went to school together. >> we were in the same kindergarten class. >> but we're telling no secrets. >> what happened in kindergarten stays in kindergarten. >> exactly. >> we'll talk to jim cramer at the new york stock exchange in just a moment. bny mellon combines investment management & investment servicing,

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welcome back. let's get down to the new york stock exchange where jim cramer joins us now. good morning, jim. >> i thought your stuff yesterday was fabulous. i found it riveting. your questions were unbelievable and the musk thing was amazinam. you just brought it. congratulations. >> that's kind of you to say. one of the things i was going to ask you is what you made about what elon musk said and about tesla and the stock. >> i'm saying this guy is the most hands-on guy. i was totally jealous i wasn't interviewing. the stock is incredibly overvalued. that means nothing.

it means nothing that netflix is overvalued. those who love tesla will buy more tesla today. >> and another topic this morning that came out, macy's. what do you think there? >> terry lundgren is such a good merchant. the comp stores are so great. huge numbers within that store. you added a terrific guest saying circle back at kors. i know some people feel it's zero sum. i think this is a function of gasoline coming down, some pent-up demand and a belief that we were never going to go back to apparel, which is now proving completely wrong. both hard goods and apparel are selling wrong in this country. geez, it a good time. >> thank you for that. your nice comments. we learn from the best. we appreciate it and we'll see new a couple minutes.

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stock of the day. pot belly. yup. pot belly. the restaurant chain's earnings

beat the street by 6 cents. it also saw same-store sales rise better than expected, 2.5%. hasn't been public for that long. it's been a pretty good stock to own since it came public, or if you could get it on the ipo. >> thanks to our guests today. it's been great having both of you here. make sure you join us tomorrow. right now it's time for "squawk on the street." ♪ ♪ good wednesday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer and david faber. 10-year yield easing right around 2 opinion 74 this morning. our audio board's on fire today. >> it's always