oh, there we go. village people. san francisco. that works. >> it does. what she just did matches with everything that was playing. >> it does. we've had a lot of different beats and it really works. you know what, wouldn't you like to be on tv when you're not on tv? >> yeah. >> that would work. >> anyway, have a great weektd everybody. see you monday. right now it's time for "squawk on the street." you're looking at a live picture of the white house this morning. chinese president xi jinping making his first u.s. state visit arriving at the south lawn. in a few moments holding a bilateral with the president in about an hour. good morning. welcome to "squawk on the street." i'm carl quentenilla. they've already made news announcing this cap and trade program, but it also comes on a day where we're responding to yellen last night. futures obviously markedly

positive. gdp running 39 in the quarter. final revision. a lot to talk about today. >> yes. and i think that the amount of news coming out and the news flow is being reflected. yesterday boeing reported the biggest order in history. no one cared. today i think they will care. yesterday i think we had a lot of bank stocks down because they figured yellen would say same old, same old. yellen did not come out with same old. she said, listen, things are ready. we're going to move. some people say we're enough weasel and i don't think that's what's going, but i caution. oil's up, don't want that. shanghai's down. don't want that. interest rates are up. don't want that. and europe's up because the dollar is screaming. so we keep the pajama traders, i've been watching europe since 3:30. as europe gets stronger we get stronger. why is europe getting higher? because they can export more. these things are good for europe. what's good for the goose is

bad -- >> it is one of the big questions of the morning. dollar's closing in on a five-week high against a basket of currencies and some people might wake up and say why are we suddenly rallying on so-called hawkish news? yellen last night saying at least she is a member of team 2015. >> i think some certainty. honestly last thursday she left us with -- i mean, i thought it was a dovish statement. this whole problem, hawk, dove, hawk, dove. listen, we're going to have a rate increase. saying it point-blank and saying things are strong, but you know obviously if things tumble it's fine. obviously i think glenn corp's out there. i think brazil is out there. p petroba is out there. these are out there. people want to ignore them. fine. i think you're getting an opportunity to reposition. but i like the banks. i dislike them other than wells fargo. i like the banks. this is the bank's universe. they need higher rates, which

they're getting. and they need fed fund increase and they're getting. and that group has been 70% of the s&p. so some of that makes sense. everything else i'd rather just be at the white house, the u.n., anywhere but wall street. >> right. we're going to keep our eye not just on the white house and president xi, but the pope is speaking to the u.n. today moving around new york city going to the 9/11 memorial later on. and madison square garden mass tonight. we've got a vw board meeting that's happening about now. and we should hear some news about their succession plans in a little bit. there's a picture of the pope arriving at the u.n. with ban ki-moon. as it relates to the fed, jim, we know you've been critical of a would-be hike. >> right. >> but are you at a stage now where you would be willing to accept one to get it over with? >> yes. jack welch said it yesterday. fabulous. what he said was like, okay, the indecision has to end. even if it means rate hike. and i feel after last thursday where i thought that she put it

behind us and all it did was cause more turmoil, the indecision has to end. >> that's a term for you. >> yes. the indecision has to end and the reason why is because we cannot move on in this stock market and focus on stocks until there is an end to the indecision. now, the stocks are not the ones you think. this is not a caterpillar market. but you know what, enough. enough. i surrender to all these people who say nothing can happen until we get a rate hike. now watch what happens when we get a rate hike. won't be the stocks that you think. but i do like the banks. banks have something. >> that's exactly right. general mills and some banks. >> yes. >> by the way, this meeting between the president and xi jinping is going to be interesting. the cap and trade program making some news, but "the washington post" today, jim, saying it's a relationship in their words with little personal warmth and even less trust. this is one of the tougher bilaterals he has. >> yes. i think that this is -- china's

a country that is saying, listen, we're not emerging growth. the equivalent at one point you could say british if you want to go ally. i don't think that. you could say soviet union. look, we are -- it's our time. i think they feel what i would use in college the word understand they own that sphere and stay away. i think a lot of -- they've thrown us some bones, boeing orders. the meetings with all the executives i'm told and i actually talk to a lot of the executives, very possible. but the president isn't an executive. he's not ceo. and i think from the president's point of view it's defense, it's cyber security, it's freedom of speech. and on the wrong side of every single part of that history. >> yeah. our chief international correspondent michelle caruso-cabrera of course has been following the story in seattle and in tacoma and made

her way to washington, d.c. on all of this. she's at the white house. michelle, good morning to you. >> good morning, carl. you highlight the relationship at the moment between china and the united states in a really perfect way. i mean, state visits are ve served for close partners of the united states. so clearly that's what's happening today. at the same time there's a lot of tension between the two countries at the moment for a number of issues, whether it's the south china seas and the creation of those islands which many here suggest an expansionist approach to the world by the chinese. the issues of cyber security and the way the chinese conflate espionage at the political level and at the economic level when it comes to intellectual property, which is something that the united states is struggling with and trying to get them to change their positions on or at least their actions on at the moment. and then, you know, when you read the general media those are the two big issues that come up frequently. we know jack lew was at dinner last night, he's in the video there today, economic issues are

also extremely important. doing business in china, facebook banned in china, google choosing not to submit to the rules in china. what can be done to make china a more friendly place for american investment and a better place to do business, which the u.s. position is if they did that it would be better for their economy. >> michelle, as we see the honor guard here start to play the music, the chinese president must be close. there's a big debate this morning as to whether or not china's setbacks -- and we all know what those are, makes them more or less willing to cooperate? >> yeah. that is the question at the moment. you're absolutely right. and i've heard opinions on both sides as we watch the president and the first lady come out and await the arrival of president xi. at some points it makes them more defensive. when you speak with china watchers and china experts, they feel as if the leadership of china has tried to take even greater control, become more

statist because of their concerns about the economy rather than allowing dynamism to expand and market forces to expand, which many economists believe would be what would actually help the chinese economy grow at this point. >> as we take a look at these pictures here we'll keep aur oue for the arrival of the chinese president. it brings up for instance nike, emerging market revenue up 19, you said last night in a week where companies that outperformed and have seen their stocks go down, nike will be a test today. >> yes. i've got to tell you just like when nixon went to china, opened the door, michael jordan is going to china in the middle of october. and the numbers in china, to quote that conference call, are amazing. there's been an acceleration in chinese sales there. there's been an acceleration in apple phones there. there's been an acceleration in star bubucks numbers there. the consumer in china is surprising people. don't forget this chinese market

has held at this 3,000 level long enough you can get out of it. i think people shorting chinese consumers might be making a mistake here. now xi obviously, i think this is -- listen, we are the global power that you must respect or else. and i think the or else is uncool. you don't need to do the or else. now, his talks with some of the ceos were about let's do more business. but let's do more business in a joint way, not in a way that you come in and take us. no, you're not going to take our markets away. >> there is the president and the first lady meeting president xi and madame peng to the white house. we'll have a bilateral with the president at 10:00 a.m. there's potential, michelle, i believe for reporters to toss out a couple questions to president xi, right? >> if there's a moment of high drama today, you've put your finger on it, carl. there's a press conference noon. tradition is two questions from the foreign press that have traveled with whoever the dignitary is.

today would be the chinese press. and then two from the american press. and we have been told that he has agreed to take those questions. there are, again, china watchers are waiting to see if this really does happen. the talk in seattle many were skeptical that would actually happen. he took one question in 2014 from a reporter at a press conference for "new york times" in beijing. that was a rarity. it was a really long-winded way where he finally answered the question. but that is the last time he's actually done that. the only time that we know of. so we're waiting to see if it really does happen today at noon. >> and as michelle said earlier getting full honors, state dinner tonight. we should remind people president xi is a man who knows this country well. he was here as a young man in his 30s. part of delegations for instance to go to iowa, was many

muscatine, iowa. he's not a stranger to the way we operate. >> i have never met a ceo on or off the record that didn't have amazing respect for this man. they talk about the same thing he's fighting -- he wants stability. meaning he doesn't want an overthrow. he doesn't want a revolution. he is trying to fight corruption. that makes it so the economy slows. >> yeah. i guess the question at that point is if you hold on too tightly at what point does that actually make it harder to control your country rather than make it easier, right? the more freedom you allow sometimes the more stability you get. >> there's been a long discussion today too, michelle, about jim points out china's craving for stability which goes back thousands of years. >> yes. >> but the way they operate and their interests sort of clash with the president's pension for

collaboration, if you know what i mean. >> yes, for sure. well, the craving for stability i think it's hard for americans to understand the way chinese of a certain age who literally live through starvation, who lived through 50 million people dying of hunger. at least we think that may be the number. nobody really knows. life under mau was incredibly tough. life under the cultural revolution was catastrophic. xi jinping himself was sent out to the hinterlands to be a farmer. they did that to educated people. wide swaths of the population wiped out. i mean, when they talk about stability in china, they're talking about things that it's very difficult for americans to understand. and that's the love of stability there. is what comes to mind. >> after a busy week at the white house and of course it's just going to get busier for the president on monday as he meets with putin at the u.n. to talk about ukraine and syria, jim, but this picture right here is a

reminder that there is no more important economic relationship in the world right now. >> oh, absolutely. but remember there's also military relationship now. they've been -- they cut back the army. they increased the navy. this is about projecting power. this is a country that's never been imperialist but they have imperial designs. i think people have to recognize it. the whole world is rearming because of russia and because of china. these are the two powers right now turning the world upside down. and we all right now the pope -- the pope, putin and xi, i mean, when worlds collide. so it's very hard to process what it means for bristol myers. >> that's very true. when all of the upgrades of koch and intel. >> little overshadowed. >> some people wonder to what degree is this a lot of business

news, but if you don't think this picture right here has a lot to do with the future of american business, you have another thing coming. >> and technology by the way. xi went out of his way to be able to endorse -- do you know that ibm was next to him in the picture? nothing's idle with the chinese. that wasn't like, hey, let's stroll out to see who stands next to him. ibm a favorite nation stock when it comes to china. >> michelle, one last word before we watch them go inside. >> you talk about how important this relationship, you're absolutely right this is the most important economic relationship in the world, the largest economy in the world, the united states. the second largest economy in the world, china. and china at such a crucial moment, carl, can they continue to grow? they've got 400 million people who have emerged from poverty as they have started to embrace the market forces more and more. just a billion more to go, right? i mean, the world needs china to grow if their people are going to live better, if those billion people are going to emerge from

poverty. and it's a symbiotic relationship. if they grow, it's good for us. just as you were pointing out. so if -- they've got to get past this moment where right now they're a middle income country, can they move to a high income country which would really allow for greater prosperity there? >> certainly that's what the cat pi pillars -- >> oh, yes. i can't wait to see the seating chart. i know that standing chart showed on who's on the ins and who's on the outs. >> we'll keep our eye out for some pictures. we expect them around 10:00 a.m. and as michelle said a noon joint press conference in the rose garden with president obama and chinese president xi jinping. take another look here at the pre-market which looks relatively healthy after yellen's comments last night. and gdp for q2 revised finally to 39 from 37. we'll talk about what that might mean for q3 when "squawk on the

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you got this.

the south lawn of the white house hasn't seen this much activity in a long time. you've got the pope of course earlier in the week. and right now it is president obama and chinese president xi

jinping shaking hands with some onlookers, even some children waving, both u.s. and chinese flags, before they move inside for a bilateral meeting, a cool spray, some pictures and a press conference at noon eastern time in the rose garden. which our michelle caruso-cabrera says may include at least a couple of questions from either u.s. or foreign press. >> cyber security's probably going to be on there. now, by the way, when he was in seattle he met with henry kissinger. the respect he showed apropos what you were talking about that his knowledge of the united states was extraordinary. a lot of people talking to the president about how he was just in awe. >> brings to mind some of the comments putin has made to charlie rose this week talking about how what sorts of things about america he at mires. >> we may be in some sort of moment where we are being too cynical and our worlds coming

together, not colliding. if ukraine were to able to restart -- if ukraine -- when you went to the olympics, carl, was the top of world comps. >> that was the top. pre-ukraine -- i mean, syria already had begun to devolve. >> everything had begun -- everything unravelled the week after you left. i'm not saying it was because of you. that was the peak of world commerce and it's all been downhill since. >> speaking of whether it's ukraine, whether it's been china's slowdown, certainly now volkswagen and the refugee crisis in germany, the most important economy to europe has just been hammered repeatedly. >> i caution people to read jim stew art's piece. talk about 2012 shareholders volkswagen elected his wife, a former kindergarten teacher, a governist before that but it was

the fourth marriage to her. this was the kind of thing with jim stewart postulates at the end. covered all these issues all his life doesn't know if volkswagen's going to make it. so those of you who are sangu e sanguine, they may not make it. he actually puts it out there. >> the revelations of the insular board. we already know about germany's love of rules and metrics. it's incredible to watch. in a country where i think it's one out of every seven jobs is in the auto sector. >> yes. and 70% of the economy is related to export of autos. here we go. look at this. jim stewart, he just says it. given this serious financial repetitious damage the long-term survival of volkswagen is a real question. he's probably the foremost expert about who lives and who dies. believe me. and that is a death sentence. conceivably a death sentence for volkswagen. >> michelle caruso-cabrera at the white house. let's pretend for a moment you

got a chance to pose a question to the chinese president. what's it going to be? >> i would probably ask why is facebook banned in china? that would be my -- i think that would be a real touchstone question for the widest swath of the american public. i mean, there's so many questions you could ask that would be controversial to them but which would be normal to us. but i think, you know, facebook is so emblematic so many ways in the entire world that would be my choice. how about you, carl? >> i'm not sure. i was thinking more to ask you than what i would ask myself. but that one would open up a lot of avenues, the facebook question. by the way, susquehanna today jim saying 20% of the ads spent at facebook is now video. a year ago it was five. >> these guys are on fire. and every single ceo involved says put ads -- all right, here

we go. >> members of the chinese delegation, on behalf of michelle and myself, welcome to the white house. on behalf of the american people, welcome to the united states. [ speaking in a foreign language ] >> across more than two centuries americans and chinese have traded together. chinese immigrants helped build our railroads in our great cities. the united states is enriched by millions of proud chinese-americans including those who join us here this morning. so this visit reflects the history of friendship and cooperation between our two great peoples. [ speaking in a foreign language ]

>> this is also an opportunity for michelle and me to reciprocate the hospitality shown to us during our visits to china. michelle, our daughters and my mother-in-law were warmly welcomed last year as they traveled across the country, as was i when i made a state visit to beijing. and i'm told that news about michelle's trip got some 1 billion views online. president xi, i believe that we are both accustom to being outshone by our dynamic spouses.

[ speaking in a foreign language ] [ speaking in a foreign language ] >> as i've said many times, the united states welcomes the rise of the china that is stable, prosperous and peaceful, because that benefits us all. our work together to increase trade, boost the global economy, fight climate change and prevent iran from obtaining a nuclear weapon shows that when the

united states and china work together, it makes our nations and the world more prosperous and more secure. [ speaking in a foreign language ] [ speaking in a foreign language ] >> even as our nations cooperate, i believe and i know you agree, that we must address our differences candidly. the united states will always speak out on behalf of fundamental truths we believe

nations are more successful and the world makes more progress when our companies compete on a level playing field, when disputes are resolved peacefully and when the universal human rights of all people are upheld. [ speaking in a foreign language ] [ speaking in a foreign language ] >> during our multiple visits together, i believe that we have made significant progress in

enhancing understanding between our two nations and laying the foundation for continued cooperation. [ speaking in a foreign language ] >> president xi, you've spoken of your vision of china's peaceful development. and during my visit to beijing last year you said that there were wide areas where our two nations need to and can cooperate with each other. and i fully agree. [ speaking in a foreign language ] >> in fact, i believe that our

two great nations if we work together have an unmatched ability to shape the course of the century ahead. president xi, madame paung, members of the chinese delegation, in that spirit with the eyes and the hopes of the world upon us, welcome to the united states of america. [ speaking in a foreign language ] [ applause ]

>> as we await the chinese president to make his remarks, you can tell the contrast between this ceremony and the pope's meeting is dramatic. as some of the tense -- president not wasting time. >> i think that was very telling. takes the glove off talking about issues that are very important to him that xi doesn't want to hear. >> let's take a quick lesson and see what the chinese president has to say. >> in this season of autumn my wife and i are very pleased to come to the beautiful city of washington, d.c. [ speaking in a foreign language ]

>> translator: at the outset i wish to thank you, mr. president, for your kind invitation and gracious hospitality. i also wish to convey to the american people the warm regards and best wishes of over 1.3 billion chinese people. [ speaking in a foreign language ] >> translator: china and the united states are both great nations. the chinese and american people are two great peoples. since we established diplomatic relations 36 years ago, china-u.s. relations have forged ahead despite twists and turns.

and have made historic advances. [ speaking in a foreign language ] >> really quickly hear you might have heard my open mic a few seconds ago. we did get a report that speaker john boehner would resign from congress. and in fact that's now being widely reported. will resign, give up his house seat at the end of october according to aides in his office. as you probably know it was under a lot of pressure from certain caucuses in his party specifically over the defunding of planned parenthood. >> yes. wow. i'm trying to process everything. i'm sure there are people who will say this is less of a chance of the government shutting down actually.

i think they're just not in a position to do anything expect pass continuing resolution on that. this is disarray. >> boehner of course has fended off many battles before. >> right. >> but this is clearly one he believes he's not going to win. and of course it comes a day after the pope addressed congress and tried to get them to mend some fences and build a bridge. >> i just think the disarray may mean we're not going to be -- does the vacuum come in and the house does nothing? or does a vacuum come in and the house shuts it down? you know what, this is very tough to figure. i know a shutdown is something yellen doesn't want. >> no. some still argument that the impact is limited, that a shutdown is manageable. even in some cases the market hasn't fallen even rallied by the government's been shut down. >> well, absolutely true. i think right now people are very concerned that one of the

weasel reasons they could hold off. some say weasel because i've joined this contingent who favor the market going down and interest rates going higher. >> in terms of boehner, we're getting some more con ffirmatio that boehner just announced in conference that he will resign as speaker and from congress at the end of october. for more on this let's get to eamon javers in washington. what a morning. >> carl, absolutely. you see this news with john boehner and it brings to end a really storied congressional career here. we're just getting word now that nbc news has also confirmed this news that john boehner will be resigning as speaker. we're going to have to see what his announcement says. but this is a man who's had some trouble with his republican conference. he has tried again and again as speaker during the obama presidency to bring together a fraction -- republican conference to come to a realization that they don't hold the white house.

the key challenge is he's dealing with a group of conservatives frustrated by their lack of ability to put in place their vision for america's future while obama holds the white house. and they continue to take steps that cause the speaker challenges in terms of just organizing the government, operating the government, basic blocking and tackling of governing. he faces another one now. the question is how will congress avoid a government shutdown going into next week? this is an issue tied up with funding for planned parenthood and abortion is such a zero sum in this country. once you attach something like that issue to funding in the government it becomes very, very difficult. we know there were meetings late last night with conservative leaders and the speaker of the house. no word from those conservative leaders as they exited those meetings last night about what exactly they were planning. so what we'll have to figure out here is is this a move unilaterally by john boehner out of frustration to say, you know

what, i'm just frustrated and fed up with dealing with these seemingly insurmountable leadership problems, or is this more of a political coup. we'll have to see exactly what the circumstances are led to this. i remember covering john boehner back in the '90s and he's a gruff guy but a friendly guy, a knowledgeable person, somebody who really understands the inner workings of congress. i remember covering him you'd sit with him back in the speaker's lobby just off of the house floor after he smoked cigarette after cigarette. and he wouldn't give you the answers to the questions you asked him but give you a nod or eyebrow raise or a wink. he was able to communicate to the media very candidly what he was thinking without ever actually saying anything. so you wonder if this is a guy with all the political skills he has who couldn't bring this republican conference together, you wonder who is the leader inside the republican conference who might be able to step

forward and run it. >> odds of a shutdown increase dramatically. what do you think here? >> well, i think you'd have to say as of right now the odds of a shutdown do increase dramatically. the game plan has been that the senate will pass this measure, send it over to the house what they call a clean cr, a clean continuing resolution that does not include stripping out planned parenthood funding. that's not palatable to a lot of the house conservatives. so you wonder whether boehner as sort of one last act in his speakership here will move that bill to the floor. and he will do it with democratic votes. that might be the way he resolves this conflict here and comes up with a deal. and that might be the thing that kills his speakership with republicans to say if you need democratic votes, you can't be the republican speaker of the house. >> we're getting a statement from one of boehner's aides. this is courtesy of one of our colleagues at msnbc. speaker believes that the first job of any speaker is to protect this institution.

and as we saw yesterday with the holy father it is the one thing that unites and inspires us all. the speaker's plan was to serve only through the end of last year. primary changed that calculation, the speaker believes putting members through prolonged leadership turmoil would do irreparable damage to the institution. proud of what his majority has accomplished, will resign the speakership and seeding effective september 30. he saw a lot of pain ahead and was trying to spare at least the party that pain. >> absolutely. the question is going to be and the question that that statement doesn't answer is going to be, you know who are is it? who steps up to take the void? to fill the void in the republican leadership as of right now? that is an unanswerable question, at least where we sit today. but i bet as the day goes forward, guys, we're going to learn a lot more about what happened here and who it is republicans are going to turn to to lead them through this next crisis. >> we'll talk to you in a few moments. of course the timing of this is

problematic, jim. why you would let this -- i guess it's a busy week. when are you going to do it? but just as the president is greeting xi jinping to the south lawn. that's tough. >> yeah. i'm sure the bad will resonate, but the s&p has gone down since then. we're not up nearly as much as europe, which is right. remember the dollar is very strong. but this is, again, this disarray it's very hard to buy stocks in a period of uncertainty. just when you thought maybe yellen gave you some certainty, isn't everything else censored. >> we got that right. before we move on get to a couple other stories on the day. blackberry for instance a 13 cent loss four cents wider than expected. revenue's short. they see modest sequential revenue growth. they recognized revenue on 800,000 devices for the whole quarter. >> this was a terrible quarter. those who were saying, listen, this is the bottom, the ceo of youtube in an interview i heard last week said, listen, there's

no chance these guys are coming back. i'm not going against her. she may be the smartest person in silicon valley. absolutely not. she says it ain't coming back, it ain't coming back. go back to shutdown for a second. maybe this is why she didn't raise. maybe this is why. shut down's bad -- initially it's going to hurt -- it's turmoil. and it's going to make it so we don't focus on individual stocks again, but you know i've been hoping. nike seems like now a lone force out there that biotechs have all turned around and started going down. regarded as washington stories. oil's come back down. watch the brazilian rial, a lot of reasons you don't want to leap into stocks right now. you just don't want to. >> layoffs continue after a couple of weeks where caterpillar and hp made big moves. not nearly the scale but trying to restructure some of their mobile operations. >> yeah.

that was a layoff that was greeted positively. i came in today wanting to talk about j bill and how jay bill said things are great. on the conference call they're going to be cryptic. jay bill is the guy who makes the watch and makes the iphone, one of many. but they make the watch and iphone, and they said wearables and phones were incredibly strong. jay bill's up 10%. apple is up big. and now coming back with all this chaos. but apple remains the one to own, not to trade. and next week we're going to have to hear -- all weekend we're going to hear how many iphone ss they sold. old would say these analysts are idiots, i'm not saying that. calling suspect, no more calling them morons. i'm playing a new game. sweeter game. maybe it's all this, you know, kind of stuff. >> yes. there's the president and president xi jinping along with the first ladies on the balcony before they go in for their

bilateral. probably the last picture we'll see of them at least for a little while. you mentioned apple. the 6s is hitting retail stores. a lot of pictures floating around today about people waiting in line, employees readying for the rush. estimate is for 13 million units this weekend. >> 13 million. >> 13 million. >> i think that florence store opens might be 13.2 million, well, apple is still in so few cities. people don't know how few cities apple stores are in. and i've regarded that as being again as part of the growth of why i like apple so much. but this is a problematic market. any time you have this much to process it makes it very difficult. we got some great calls this morning. almost all bullish calls. go back to that nike conference call where they talk about eastern europe being incredibly strong, western europe being incredibly strong. do you really need a new pair of nikes? >> yes. >> oh, you do. okay. >> but that's me. by the way we're hearing we might hear from boehner around

10:00 a.m. we'll see if that happens. we've gotten the statement from an aide but it would be good to hear it from the man himself. he's usually pretty prompt. >> yes. >> and direct. >> there's a lot going on. now, we're seeing off of jabil we're seeing a lot of the different absolutely seeing a tremendous number of the iphone parts stocks go higher. look at cirrus logic they make the sound boards. people saying i want to get ahead of this weekend's sales. once again skyworks is just a key component. i keep saying that stock is the one to buy if you want to play this teardown game. it's still too low at 88. so there's a lot of very bullish tech news, a lot of upgrades today. intel, semiconductor equipment companies these stocks have been terrible, however remember strong dollar is the bane, not the boehner, but the bane of their existence. >> we got upgrades on intel, on 3m. >> i was almost at wit's end yesterday. they're fighting so many

headwinds, finally someone comes out and says this is the industrial. don't group it in with the others with the so-called machinery still reeling from caterpillar. by the way finishline, memo to finish line, if you're selling nikes. >> meantime nike is the best dow component and caterpillar even in this cannot get out of the red. >> cutting numbers caterpillar again just in the last few minutes. >> bob pisani's on the floor watching what's moving. good morning, bob. >> caterpillar one of the very few stocks that is in the red. we are right at the highs of the day essentially. take a look at the sector gains. understandably financials are the leadership group here. technology, consumer discretionary that's largely the autos and some of the home builders are up. and energy stocks up as well. so i think you can call this a yellen-inspired rally. i think that's fair. i want to thank her for finally taking a side. it was driving us all crazy here. she did clearly state a hike seems likely some time this

year. and thank you for clarifying the sudden emphasis that you placed on developments abroad and the fomc statement. here's what she said last night. the committee is monitoring developments abroad. and we do not currently anticipate that the effects of these recent developments on the u.s. economy will prove to be large enough to have a significant effect on the path for policy. do not expect them to be large enough to influence policy. thank you for clarifying that. that's all we wanted. a little clarification on that sudden emphasis on what was going on abroad. here you can see the positive effects on the banks, the usual suspects, the big money center banks and even regional banks, all on the upside. earnings estimates for these banks have been under some pressure recently on the inability to realize higher rates that's very helpful of course today more importantly investors are really relying on what's been going on with the -- to help move the earnings estimates forward. here's the problem that you've got right now.

4.5% decline in earnings for the quarter. revenues down for the third quarter in a row. that hasn't happened since 2009. margins are peaking. last quarter a historic high now at 10.1%. margins are at record high, revenue is trending negative, how do you keep your earnings up on that? and you've got 16 times forward earnings. this is getting very, very tricky. that's why this whole financial thing with the developments in the financials are very important because we really need financials to move the s&p 500 forward. take a look at what we've got here for the quarter on the earnings situation. consumer discretionaries expected to be up 10%. financials up 8.5% and health care up 7.4%. we need financial earnings to be strong to offset the disastrous decline in energy. 65% decline. and tech is not helping at all. you see why everybody's worried? if the banks start falling apart there's no place to get earnings from. we've got autos and some home

builders that will do fine, but they're not big enough. financials is a big part of the whole game. let me note europe is up nicely as well. europe is a bit on the weak side today. >> thank you very much, bob pisani. let's get to the bond pits as well. rick santelli's already had a busy morning at the cme. >> yes, absolutely. good morning, carl. you know, i know everybody's somewhat elated that the markets, especially equities have reversed a bit. remember, most of the policies especially zerp are going to put janet yellen in a very well liked camp if you're a stockholder. obviously anywhere in the globe for the most part. but it's the miscommunication and the fed directly that has been responsible largely for much of the volatility in the marketplace. but today with her words can we really put faith in those words? what did bob say she said today? that basically the issues internationally aren't going to directly have a huge impact on the u.s. doesn't exactly sound like why she didn't normalize on thursday of last week.

it seemed like a completely different direction. so i guess all the confidence and nervousness disappears as long as the stock market direction's to the upside. look how all the markets are scripted today. now, i'm going to show you five two-day charts. okay. if you're listening on the radio, they're almost exactly the same every chart, a two-day of two-year note yields. boom. to the upside. ten-year note yields. bund yields, but maybe the key are the next two charts. okay. this is the dax followed by the dollar index. okay. they're all the same. and i know that many including jim cramer just hate the idea of a stronger dollar. i guess that's kind of like being a greenie and hating energy and driving to work and taking airplanes to meetings. because if there's going to be normalization, guess what, there's going to be a strong dollar. carl, back to you. >> thank you very much. >> i love him. what can i tell you i love him? >> boehner -- we're all over the place on this.

>> we're following up on news that the house speaker john boehner is resigning as speaker, and from congress. there was a media availability scheduled at 10:00 a.m. with speaker and gop leaders. there's a look at the stakeout position right there. we believe that is still happening. and of course as soon as it happens we'll bring it to you. in the meantime some folks noting that some short t bill yields are rising on the fears of a shutdown. although chuck todd on msnbc, i believe, said this might actually make the likelihood less. >> that was my initial take which is, well, look this is going to go away. there will be something done and then moved on because you wouldn't let it go like that. but then eamon javers said the opposite. indecision makes it so that you're not that bold here. i think this may be one of the things yellen left the door open and not raise rates on. oh, man. just last night. will you take it back?

by the way i don't fly everywhere. >> talk about another cross current. not only the content of yellen's speech, but then the worries about her health. >> oh, my, i hope she's doing great. >> suffer from dehydration, unable to finish, helped from the stage, attended to by emts to be safe. >> wow. that in itself was -- i looked and said, oh, my, i hope she's doing okay. apparently she was, right? i hope she comes out today and i wish her the best of luck obviously and best of health. >> stuck with her schedule for the rest of the night and fed officials say today's schedule is on track as well. >> okay. >> brian gardner from kbw joins us to talk about the boehner news. brian, good morning to you. >> good morning, carl. >> what are the immediate effects of this decision? >> carl, i'm in the camp that this lower the chances of a government shutdown. i think speaker is taking one for the team. he's going to probably try and strike a deal that includes

congressional democrats which would have been poison for a group of conservatives who would have rebelled against him. it's a very fluid situation, but my immediate takeaway is that this decreases the likelihood of a government shutdown. >> when you say strike a deal with democrats, what awe stens bli will we be talking about? >> i think it's a resolution that gets into december, which could complicate the gop leadership race. that's another matter. but probably just a clean cr that does not defund planned parenthood because the votes just weren't there for that. votes off the table which boehner viewed as political catastrophe for his party going into a presidential election year. so, you know, we still need to see the details.

again, very, very fluid. my best guess is that government shutdown is now unlikely that the government is funded some time into december. coupled with a debt deal in december, if you loop that in with kind of the yellen comments from last night, it could be a very interesting december because now you're looking at the potential of a rate hike within the backdrop negotiations over a budget and debt ceiling increase. >> wow. what a new cycle we are in, brian. we appreciate that so much. we'll talk to you soon. brian gardner joining us on the phone. >> 50/50 commentary here on shutdown versus no shutdown. but the averages are liking it. the dollar is a little stronger here. do i favor stronger dollar? i favor higher earnings. >> one thing we didn't get to

with brian in that short amount of time we had was who might succeed him as speaker. people are throwing around jeb henserling. >> i think the timing of this is when the president's meeting with xi, i mean exactly that moment. that doesn't read good will, does it? >> no. and i was just thinking to myself wonder if that meeting yesterday played any influence in his decision. >> so much happening, but the market is like iing -- the mark is focused on the idea that perhaps there will be a shutdown and yellen, i think, won't raise off that. honestly, it is very difficult to figure out why buyers came in on this news. on boehner resignation news. it's very difficult to figure out because to me it creates

more uncertainty. i think there's a line. this is one of those moments where you feel like there's a line. that someone absolutely knows and it's just taking a big risk out there. i would never just step up to the plate on this stuff. but if someone's stepping up the plate big and buying stocks right here with the dollar going higher. maybe they're just so enthused about the financials. which have been very good today. >> yeah. a lot of talk. we didn't really get to q3, gdp, final revision so it's back ward looking. a lot of people argue that a strong number, it's almost 4% meaning that we built some inventories and there's going to be payback in q3. >> right. look, i think this is actually a market that's liking tech. and like it and doesn't like manufacture i manufacturing we know from pier

one inventory is bad. why do you buy stocks? we're going to be focused on earnings. it almost feels like we have made it so there's going to be a rate hike. people like the idea that there's some certainty. we're back on earnings. the boehner news is not being viewed as a shutdown because i think that would complicate everything. people are feeling -- they're feeling a little more positive since boehner resigned. >> so your best case scenario would be what? continuing resolution. >> yes. >> the fed moves in december. >> december. >> and then you just pray for a q3 earnings to come in. >> yes. and the dollar doesn't spike. and interest rates settle down enough that banks are new leaders. this would be the incredible thread the needle situation that would make you more positive. the certainty -- we got some certainty from her speech last night even though she quits in the middle and boehner resigns, how anyone could regard as a certain time i don't know but someone's buying here, carl.

>> jim, you have a lot to talk about tonight. what do you have planned for "mad money" at least at this moment? >> i have the transports are just dying here. so let's talk xpo logistics just bought a major trucking company. i'll give my game plan. the weirdest thing of all, carl, the strongest group the clorox and proctors. i think people are throwing money at this market because they feel like nike was good and china's better. and you know what we're going to raise enough already and we're not going to talk about the fed anymore on tv. and that makes people really excited. that's what's got them going. >> jim, we'll see you tonight. >> thank you, carl. hardest show we've done. >> yes, this was one for the books. we will await speaker boehner's appearance at that lectern in just a moment. it's intelligent enough to warn of danger from virtually anywhere.

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good friday morning. welcome back to "squawk on the street." i'm carl quentinilla. you're looking at a live picture of capitol hill.

speaker john boehner set to speak at any moment about his resignation as speaker and resignation from congress. already thrown a busy news cycle in disarray. you've got the president meeting with chinese president xi jinping, the pope in new york, putin coming to the u.n. on monday. just an unbelievable flurry of events. >> in terms of market moves interesting to see what happened after the resignation of john boehner we saw yields pop up to the highs of the day on this idea that perhaps a government shutdown is looking increasingly likely. remember, the republicans were set to meet today behind closed doors to figure out a strategy to avoid shutting down this government over the planned parenthood issue and funding of that. now it looks like chances are higher. we'll have to see what he has to say. >> although aides to boehner are not painting it like this. saying this is part of a long-term desire to leave congress and saying he would have left at the end of last year, what happened to eric canter he had to stay on.

speak a campaign that could disrupt the gop, he says. there's a lot of questions clearly to be asked here. >> still others believe it actually makes a shutdown less likely if boehner can cut a deal that would have been unpopular with his own caucus. let's bring in hampton pierson for more on this as we await the speaker. good morning. >> carl, to pick up on what you were just talking about, here's perhaps what might have happened inside that republican conference. if john boehner for instance told his republican colleagues that he was prepared essentially to pass a clean cr with democrat votes, the price for that happening might in fact have been his resignation, which has now been tendered and we're awaiting to hear from the republican leadership. we're being told that he may or may not appear in front of those microphones that we're looking at in the meantime. but in terms of the prospects of a government shutdown next week, it appears perhaps it's less likely just given that political

reality going forward. who might succeed john boehner? of course the majority leader, kevin mccarthy of california gets on the proverbial short list. you folks were mentioning the likes of jim henserling or paul ryan. that's up next for the conference, but it has to be someone with true bona fide conservative credentials in the eyes of the republican house cauc caucus. to give you some idea of boehner stock to the degree it's fallen with hard core conservatives, across town there's an event going on where a lot of the presidential candidates are going to be appearing during the day. at that conference senator mark rubio is the one who announced that john boehner was stepping down. and the word there it was greeted with loud applause by the folks gathered at that value voters summit across town. so hard to believe john boehner not conservative enough in the

eyes of a lot of republicans. and his ability to control the caucus being undercut going forward. so, again, short-term less likelihood of a government shutdown. republicans living to fight another day going forward over the debt ceiling issues more towards december. so we are awaiting hopefully speaker john boehner and others back to you for now. >> hampton, that is some telling color. thank you very much for that hampton pierson in washington. joining me cnbc contributor larry kudlow joining us. >> good morning. thank you. >> your immediate reaction. >> i'm kind of not surprised. i've been hearing this in the last 24 hours. obviously i'm not in the caucus room, so i can't report. i don't have any disagreement with what happened. i do want to adjust a few detailindetai details if i may. john boehner does not want a shutdown even for a few days.

so he had come up with an idea for something called an enrollment correction, it's a legislative term. people shouldn't worry too much about what it means except for this. it means a cr put past the house continued resolution, but there would be a policy rider on it which would defund planned parenthood. you're just voting for the cr because this enrollment correction is not binding. it's just a statement. it just says, hey, we're going to vote but we don't really agree with this and we're going to come back to deal with planned parenthood. what come back means is some time next week the gop in the house might offer a reconciliation bill which would take roughly half of planned parenthood out and the other half is medicaid they can't touch that. that's $250 billion.

and they would go to work on a vote towards that. regarding boehner, you know, he's been thinking about this for a long time. this is his fifth year, maybe this happened sooner than we thought. there's some speculation that john regretted to bow out. kevin mccarthy is the odds on favorite to succeed him. and what would be interesting if mccarthy does, and i believe mccarthy will, from california current majority leader, i'm hearing jim jordan, veteran congressman from ohio, leader of the house conservatives, might be put into the leadership in some way, shape or form, maybe as a whip, maybe as a deputy whip. jeb henserling's name comes up. i don't think paul ryan wants it. of course the grassroots call as you know you've seen it in this primary it's fired an effect. the republican grassroots are furious that the republican house and senate have not put a bunch of bills on president obama's desk. and planned parenthood of course adds to that.

>> hey, larry, we did get our hands on that sound bite of senator marco rubio announcing senator boehner's resignation this morning. it gives a good sentiment of the republican party right now. hampton mentioned it. >> just a few minutes ago speaker boehner announced he will be resigning. [ cheers and applause ] >> and with all due respect to people that serve in government, it is important at this moment with respect to him and service that he's provided to our country it's not about him or anybody else and i'm not here today to bash anyone. but the time has come to turn the page. the time has come to turn the page and allow a new generation of leadership in this country. >> i mean, that was something, larry, to hear that loud applause when he announced that speaker boehner was stepping down. i think the fear that the market has is that there will be a hardline replacement and therefore the odds of a shutdown actually go up. there's a lot of debate out there right now. >> well, you know, i have felt

last couple days the more i investigated this story i have felt that there was a 50/50 chance for a shutdown. okay. and i don't think that's going to go away whether mr. boehner is the speaker or not. let me also say two things quickly. i guess i'm one of the last living human beings who believe john boehner has done a very good job as speaker the best he can. and secondly, with respect to my friend marco rubio, who's a good man, the fact remains the senate has not changed. the issue of planned parenthood and other matters mitch mcconnell has a firm grip on the senate majority leader. okay. he is not going to close the government down over planned parenthood. he is not going to change the nuclear option filibuster for the iran deal from 60 votes to 51 votes. so i don't think much is going to change here in terms of the overall picture unless mcconnell has a major change of heart.

which i think is highly unlikely. it's been a task of fleeing planned parenthood bill yesterday. >> larry, why does the gop entertain the idea of shutting down the government given what happened to their popular perception last time around as we go through now to 2016? why do they do that? >> well, look, it's just one of the options. it frustration, i think that's the best way i can put it. people at the grassroots are wondering why hasn't the republican party been more aggressive, as i say passing legislation on obamacare, passing corporate tax reform, passing energy bill and now defunding planned parenthood. they don't understand the process. they don't understand, you know, veto issue. they don't understand the 60-vote closure issue. those are all things, obstacles in the u.s. senate unless you have a president and a republican president and a larger majority. i say to you though this, i

guess i'm in the minority. if the government shuts down for a couple of days, it is of no consequence to the economy or the financial markets. don't make too big a deal. i mean, i worked for reagan. we had a couple of government shutdowns. you're making a point. and you're also buying time to negotiate with democrats and so forth. it's no big deal. if this were a debt ceiling issue, i'd have a different view. i'm opposed to stopping any debt ceiling -- i don't know. sometimes you make the point. sometimes it causes political change as it is right now with respect to the house leadership. sometimes political points are important to make. >> yeah. i think you're right, larry. we've seen markets hold up and even improve. happens all the time in labor

negotiations. athletes, union workers, manufacturers, they always go past the midnight deadline. >> you're exactly right, carl. we've been through this before. even a couple years ago i didn't have to agree with senator cruz on obamacare, but my disagreeing with him was procedural as we argued one night. i said, senator, you can't change an entitlement off of a continuing resolution for appropriation. the only way you can change an entitlement is to vote the entitlement down straight up. >> larry, i really have to disagree with that view. i think most people will be appalled that the government shuts down. it is not what happens in other democracies around the world, major democracies. it's not routine. it will be seen as a sign of sclerosis and inaction i think by most people as they go about their daily work. but again congress has decided to basically leave the plate. >> well, simon, you're entitled to your views. god bless you. i don't happen to agree. most governments in europe by the way on this kind of thing

the entire government would fall, simon. >> correct. and there would be change. and there would be action. and there would be new things. >> this is the way we do it here in the states. this is the way we do it. sometimes it takes these kinds of actions. i mean, look, you've already had the leadership change in the house. okay. that's just an example of how these short-term practical arguments can play out. but i just want to repeat this message. this is much ado about politics, much ado about policy, it has nothing to do with the economy. nothing to do with the stock market. nothing to do with the debt ceiling. and nothing to do with the dollar. >> i wonder, larry, how it's going to play out on the campaign trail and what the different candidates are going to say about it, are they going to use this as an opportunity? what do you think? >> i think they're all going to embrace it. i think what you got from rubio, which by the way i just caught that little bit you played.

rubio kind of smacking his lips with an i told you so. you know, that's great, marco rubio, but the senate is still going to be an obstacle which is a body to which you belong. so i just kind of like don't really get that. and piling on is not going to be a good thing. in the primaries and the next debate which is going to be totally cool, the cnbc debate is going to be the focus of this whole argument which is just going to be great because we will do it right. unlike some of our competitors. we will ask about the economy and finance and what their specific policies are, which many of our competitors did not. but putting that little shout aside, i kind of enjoyed this. you know, it's time for a change. and sometimes legislative maneuvering and government shutdown for 48 hours is okay with me. i just don't think it's a big deal. and i'm going to be interested to see who emerges from the

house to take over the leadership, and then what the spillover effect is going to be on the senate. here's a point. let me make this point. carl, i think you'll get this, mitch mcconnell may have a revolt on his hands regarding the iran deal. because senators -- look, governor kasich said on tv two nights ago that he now favored the nuclear option, which is end the filibuster closure of 60 votes and mark it down to a 51-vote majority to vote against the iranian deal. he is the first candidate to say that so far as i know. and i know there's a lot of hidden support for that. the democrats did this over executive appointments. do you remember a couple years ago? >> yes, yes. >> so a lot of grassroots people are saying why the hell doesn't our side do that. and i'm waiting to see how this planned parenthood revolt effects the iran deal, which i think is an existential

important issue for the united states and should be stopped at all costs. that's just my personal view. >> right. well, larry, you mentioned the debate which is a month and three days away. and we're going to be talking to you a lot between now and then. thank you, larry. >> thank you. appreciate it. >> larry kudlow. and the republican presidential debate october 28th in bolder, colorado. with the dow up 164 points let's bring in chad morganlander from stifle, he's a portfolio manager. scott brown also joining us chief economist at raymond james. scott, as a chief economist i imagine you will have to feel calls about a government shutdown and potentially about this political situation as we await boehner speaking. what will you say to clients when they ask you about the efks on the economy? >> well, the effects on the economy ought to be relatively small. you're talking about maybe a tenth or two of a percent off of gdp growth. it mostly shifts the growth

around a little bit from maybe week-to-week or month-to-month. there is some concern we may not get an employment report next friday. and if it's a lengthy shutdown, a lot of the data collection is not going to be there. so it may distort the economic numbers not just for october but november as well. i think economists are certainly going to be looking uncomfortably at this. >> which is exactly the time we don't need our data distorted given where we are with this distended relationship with the fed. chad importantly last night janet yellen kind of reset everything. we came back to an era of normality i think for many people. she twice mentioned in her speech that she thought it would be appropriate for interest rates to rise before the end of the year. is that why we're rallying now? >> i believe perhaps that's the case. maybe there is more of a bullish case for the global economy that janet yellen was making. we do believe though that global growth is decelerating, the federal reserve will raise rates

probably in 2016 the early part. >> oh, you still don't think she'll deliver this year? >> no, i don't. >> won't that create huge market nerves? won't they believe their ability to function is really disabled? >> well, they're path dependent on the financial market's global growth and stability. and when you look at global growth, we're expecting 3% growth for 2015. as well as maybe 2.75 for 2016. but two-thirds of that growth comes from emerging markets including china. and if emerging markets is decelerating as well as china, then you've got yourself a real issue with the united states. >> we're trying to keep track of all of these major news events and how they're impacting the markets and the economy. the theme is uncertainty. we don't know what the chances are of a government shutdown next week. we don't know when the fed will raise rates whether it will happen in december and what happens to the markets and the economy if that does happen. we don't know the situation of china's economy. can you be a buyer of equities

with all of these uncertainties? >> we've been cautious all along since the beginning of the year. we would actually move up the quality spectrum, stay balanced within one's portfolio and stay dollar denominated centric. >> what is quality? >> companies that are consistently grown proper, well capitalized and large cap value that have dividends increasing over a longer period of time. >> aren't they likely to be internationally exposed? >> they may very well be but you have a timeframe of 3% to 5%. when it comes to the dollar strengthening, we do believe the dollar will continue to strengthen. and it's taken that short term pause actually sold off about 4% this year. >> right. >> yeah, but it's going back up. >> it's starting to. >> five-week high and having best week in two and a half months. >> fed futures are starting to point towards the fed raising rat rates eventually.

we don't believe that will be a rapid assent. >> scott, you're the economist, what view are you taking on the fed now and where we are with the economy? in the wake of a really good revision to gdp almost growth of 4%. >> i think the important takeaway from yellen's speech yesterday is she really downplayed concerns about the rest of the world. that's a theme i think we're going to continue to see. you look at the gdp numbers people focus on that headline number, but there's a new number that the bea now issues and that's private final sector demand. final sales. that's gdp excludeing inventories and net import. that was 3.9% annual rate in the second quarter up 3.5% year over year. that is very, very good growth in the domestic economy. and that's going to be a continued theme into the second half of this year and into 2016. we've got a lot of strength at home helped by lower commodity prices, lower oil prices, some concerns obviously about what's going on in the rest of the world. but it's not going to drive the u.s. down. >> i want to put this in perspective though.

the united states is not growing out a forehand l, we're looking at 2 to 2.5%. what our expectation is long-term forecasts to return for the s&p 500 to be around 5% over the next several years. >> that's stock market growth or earnings growth? >> stock market. when you look at earnings growth what are you going to get for 2015? nothing. >> financials are making a move up today pretty significantly. best performer right now on this idea of higher rates and a better economy. can they resume their leadership position? >> so for our sector call we would be overweight financials at this juncture. absolutely. >> on these ideas? >> on these ideas you're starting to get this -- you're going to get a glacial raise within the federal reserve. perhaps a steepening of the yields curve over the next 24 months. you want to at least start to have exposure to financials. >> in an ordinary time that bet would work. but people are expecting even

after a hike the curve would be so flat that banks would be a sucker's bet. >> we don't believe that to be the case. i'm not looking for widening in a tremendous way, i'm talking another 50 basis points and that's over a longer period of time about 24 months. >> scott, what is the raymond view of the markets? what is the house view of the market? >> well, again, we've got this dichotomy with domestic strength here but concerns about the rest of the world. forward earnings have been very important to a lot of u.s. companies. a lot of multinational firms and we've seen that in the last several quarters where, you know, the strong dollar slower global growth it's been a really double whammy on foreign earnings. but the domestic economy i think again is in very, very good shape. and that's likely to continue well into the early part of next year. >> we'll leave the conversation there. scott brown at raymond james and chad morganlander. >> busy hour for breaking news. hampton has headlines from the

epa on the continuing volkswagen crisis. hampt hampton. >> there's a conference call underway this hour. the headlines we've got thus far epa is telling basically all auto manufacturers it will step up compliance missions after vw. it's telling manufacturers additional evaluation tests to look for devices are in order. and those are forthcoming. that's the major line out. they're saying basically in light of the vw situation they realize that their own compliance efforts need to be stepped up. so now it's not just vw but the entire auto manufacturing industry that will be under increased scrutiny over these so-called emissions defeat devices if you will. back to you. >> hampton, have we got any news yet, any color on the negotiations that went on with volkswagen? reuters is running a story that they were talking for at least a year and vw basically stone walled them until the end of august. there was no deal in sight. there was some recalls but

couldn't come to some sort of agreement. it's important of course because the judgment regulator came to on friday was so stock it has huge financial implications for vw. the question becomes was vw kind of asleep on the job maybe too arrogant in the way it was dealing with the regulator as perhaps jamie diamond might have been over the london whale or perhaps the agency itself stonewalling. >> the short answer so what you laid out is no. right now the epa is just focusing on what it needs to do near-term not just vw but the entire auto industry going forward. the rest of that saga i'm sure will play out over time. >> okay. hampton, thank you very much. hampton pierson there as the epa holds its audio conference on the volkswagen affair. of course we're waiting for speaker boehner's news conference in the wake of news that he will be resigning at the end of october. we'll be back after this short break. at mfs investment management, we believe active management can protect capital long term.

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go to ziprecruiter.com and post your job to over one hundred of the web's leading job boards with a single click. then simply select the best candidates from one easy to review list. and now you can use zip recruiter for free. go to ziprecruiter.com. i'm watson. and today hundreds of companies are putting me to work. i'm teaching watson to help your vet speak dog.

you're a dog, right? i'm teaching watson to help you make healthy choices. i'm teaching watson to help design a vacation around your personality. don't judge. i'm teaching watson to answer endless questions. how big is infinity? where do babies come from? why can't i have chocolate for breakfast? i'm watson and i'm ready to work with you. you are looking at a live shot inside the united nations general assembly where pope francis is addressing the crowd. he's talking about the urgent need to do more for climate

change. talking to more than 100 world leaders and diplomats. he's the fifth pope to speak at the u.n. here in new york city. we'll continue to monitor that. a very busy hour of breaking news. >> yes. we await john boehner to come to the lectern. we'll see if that will be a little awkward for him to do that while the pope is still speaking, but we'll see what the timing is on boehner. he's usually pretty prompt as it adheres to the schedule. in the meantime let's bring in ben white of politico to talk more about the speaker's decision to resign as speaker and from congress. ben, good morning. >> good morning. >> we're getting word from nbc's frank thorp today that paul ryan was just asked if he will run. his response, quote, i'm not. it's a good job for an empty nester. your calculation on what comes next. >> yeah, i just saw that tweet about paul ryan as well. i think kevin mccarthy is the most likely successor to boehner. boehner wanted to leave at the end of last year but didn't when eric canter lost his primary.

but there will be a leadership fight here. there are going to be conservatives who will see mccarthy as more boehner not willing to take on the president and democrats. so we're going to have a difficult and lengthy leadership collection in the republican conference. i do think it makes a shutdown at the end of next month less likely, not more likely. conservatives will feel like they got a bit of a scalp here with boehner leaving and less n inclined to shut down the government. that may be the near-term impact. >> i guess near-term from a business perspective you would expect a little bit relief on the shutdown dynamic, but longer term once a new speaker is installed are we right back to the difficulties in getting these parties to mend fences? >> i think we are right back there. i mean, my guess is short-term good for business and markets in the sense of a shutdown not happening. but then you'll remember we're going to have a fight over the debt limit some time later in the winter. and that's going to coincide with another fight to fund the

government. whatever they do next week is just going to be short-term continuing resolution that will just get us to later in the fall and winter. so we'll have another big fight and a new speaker who knows if they're able to corral the rest. boehner himself had a very difficult time doing that and part of the reason he is leaving now because tired of having to do that. so there's going to be a big fight. it will be coming at the same time that the fed might be raising interest rates. so i'm looking at in november, december time period to be very difficult for washington and hence very difficult for wall street to understand and deal with. boehner at least people had confidence at the end of the day he's probably going to dpet these guys together. who knows what's going to happen now. >> yeah. i mean, for a lot of people we saw the writing on the wall, right? boehner's been fighting some of the tea party conservatives within congress for a long time now. i wonder if you have an update on the status of divisions within the republican party and how bad it is right now and how this sets us up for the fall session. >> right. it's pretty bad.

i mean, you know, there would have been a challenge to boehner after the government shutdown fight conservatives were already talking about leadership challenge he probably could have won that. he's beaten these things down in the past. but now, you know, we don't know who we're going to get as speaker, probably mccarthy, but there will be a challenge to him. and whomever takes over the speakership post is going to have to deal with the fact you've got a lot of conservatives who are very hungry for confrontation with obama and democrats. you've also got people on the presidential campaign, ted cruz, carly fiorina, others who are very interested in playing up this idea of trying to use the funding of the government to block the funding for planned parenthood. it's going to be chaotic. there's no reason to think that somebody's magically going to come into this republican speakership post and be able to get a unified front among republicans who say they want to be able to govern but may not be able to. >> ben, is there a political

calculation they make as to how this will play across the country in advance of 2016? and an important powerpoint for everybody, or simply the infighting and frustration within the party and want to fly their own colors? do they think about the broader implications for the party and getting that middle ground in politics? >> there's two levels to thachlt the top level republican leadership thinks about the broader implications for the public view of republicans can they actually be an effective governing party. don't want it to see shut down, don't want to see dysfunction, think that would ultimately hurt them in 2016. other republicans in safe congressional districts conservative republicans think it's good for them if they are substantiately fighting the president and democrat. so you've got two very different strands at play here. the national level republicans who don't want to see this and then congressional republicans who do want to see it. and you've got different strands in the presidential primaries.

you've got those running as people who can get stuff done, bring people together, jeb bush to an extent marco rubio wing against those who are closer to trump and cruz who think it plays well to just constantly be fighting. so there's no unified theory of how republicans should be operating congress and that's why you wind up with the dysfunction. which side of that wins i don't know. >> well, the standing ovation as marco rubio delivered the news today is a visceral illustration of the frustration that republicans have. as larry kudlow was talking a moment ago. ben, thank you for your time. ben white joining us from politico. >> let's bring in our chief washington correspondent john harwood who joins us as of course we await presumably house speaker boehner addressing the public, addressing the media in the wake of that decision to resign at the end of october. john, what is important now in your view? >> well, first of all this is an important reflection of severe strains at the seams of the modern republican party.

it's in danger of coming apart. and donald trump's rise shows that. and the ouster of john boehner shows that. the people who pushed john boehner out are completely disconnected from any achievable governing reality in the country. and the fact that john boehner felt that he could help his party by stepping aside in the short-term as ben white was just saying this probably makes it less likely there will be a government shutdown. but there's no realistic path to a political majority, an electoral majority or governing majority for the people who brought john boehner down. they have completely unrealistic expectations. and it's a reflection of real, real trouble for the republican party. much more important than anything related to hillary clinton's e-mails as we look at 2016. >> so there's no question in your view he was kicked out? >> oh, yeah. well, might he have survived this circumstance, yes. but he was accumulating so much scar tissue, so much d

disaffection from people who have the capacity to deny republicans majority, remember, john boehner has the support of the majority, a large majority of the republican caucus. but if you have a minority that is insistent on pressing its agenda, whether it's realistic or not, they can prevent republicans from governing. and that's what's happened. so john boehner said i'm not going to mess with that anymore. i'm going to step aside. and it was in some ways you could say a selfless act by john boehner that perhaps made easier by the fact that he was with the pope yesterday. this is something that his aides have said he had intended to do last year before eric canter left. he has a feeling of responsibility toward the house and toward his party. but this is not a controllable faction of the republican party. and for them to have a positive political outlook for the future they're going to have to get it under control. >> well, that influence of the

pope is one we're going to pay attention to. we are getting word, john, from kate snow today at nbc news that he did read the prayer of st. francis in that meeting in the republican meeting as he was delivering this news to members of his own party. john, we'll be talking more later throughout the course of the day. we are waiting to hear from the speaker. potentially nancy pelosi later on today. there's an event at which ted cruz and donald trump will speak in about an hour. we'll be right back. dow's up 151. opportunities aren't always obvious. sometimes they just drop in. 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. at ally bank no branches equalsit's a fact.. kind of like mute buttons equal danger. ...that sound good? not being on this phone call sounds good. it's not muted. was that you jason? it was geoffrey! it was jason. it could've been brenda.

we are waiting to hear from house speaker john boehner in washington. there's a live shot of capitol hill. to discuss his recently announced resignation from congress. joining us now cnbc contributor and pulitzer prize winning columnist jim stewart. we want to get to your column on vo volkswagen, but first to the house speaker stepping down. what signal do you take from this for what's ahead for congress and could we be looking at another government shutdown? >> well, i'm surprised and then i'm not surprised. i mean, would you want that job? i think we're looking at a republican party that have de facto has already broken into two. we've got the adolescent die hard ied logs on the one hand and on the other hand what i would call the adult republicans in congress. and how do you manage those two factions? >> house speaker boehner in the adult republican category? >> i would, yes. and i guess he was sort of pushed. but i don't think they had to push very hard. that's not a job that i would

particularly want. so i guess my concern is who are they going to get who can actually bridge this gulf? this planned parenthood thing and the threat to shut down the government over that, i'm appalled by that. that is so juvenile. i mean, to pick one narrow issue like this. first of all, if you want to deal with planned parenthood, something they did bothers you, outlaw whatever it is. pass a law banning that. great. that's a mature way of going at it. but to hold the entire nation and the economy at hostage over something that a tiny minority deeply cares about. >> i mean, you're painting a picture in which i don't know the birth of a third party. something people have snickered about for a couple of years. but you think moves closer to reality today. >> i think it has. it's been moving that direction for some time. i wouldn't like to see that happen. i think it's self-destructive on the part of the republicans. third party governance has never worked in this country. really doesn't work in england. look when the independents there

tried to form a third party. but at some point if i was in the adult republican camp i would just say, look, i've had it with you guys. go off and do your own thing. >> how does the sense of donald trump change the environment, do you think? because that's obviously something they've been grappling with tremendously. >> well, i think it has dramatically changed the environment. you have to hand it to donald trump he is certainly -- he speaks his mind. and he is appealing to a certain hard core group that is, you know, frankly they've had it with government. and they really just, you know, want to throw fire bombs at things chl these ideas on their face are pretty preposterous and yet people are embracing them. i think in a way send a protest message. they can't really believe any of this stuff is going to work. >> and yet ben white at politico just reminded us as it relates to the economy, to business, to the markets, what we cover here at cnbc, very little impact. we went through the shutdown before. >> right. >> so a debt limit argument,

that's the main thing to take away. >> yeah. >> ben white also mentioned this, it is coming into a fall where we could see the first interest rate hike from the federal reserve. >> right. >> since 2006. how does it all play out in your mind as it influences the economy and the parmarket sns. >> the markets seem to be taking this in stride, but i'm a little more worried about this. if you look throughout history there have been many examples of where ideological fanatics gain control of government. and it is never good for the population at large, for economies. i mean, it doesn't happen a whole lot. it hasn't happened much in this country thank goodness. but, you know, government especially in a democracy of a plurlistic society like america is about compromise. and there is no mood to compromise in this hard core group. >> doesn't that argue potentially then that actually if you satisfy these people that are so dissatisfied. if you give them something to cheer about you can reinvigorate your party base.

where they're sitting from their perspective makes them stronger and more powerful. >> i think you invigorate a very small segment of the party. i know lots of republicans, but honestly i don't actually know anyone who is supporting donald trump. they're out there, obviously. >> they are. >> but they are a tiny segment. >> look just for some color on that one, whenever donald trump comes on the television and we put it on here at the new york stock exchange, a lot of people stop, watch, listen and cheer. just as a straw poll of people walking around us at the moment. so there is huge interest. i don't know if i would call it support, but there's huge interest in what he says. >> i agree there's huge interest. and a lot of people like what they're hearing. but i don't know that means they actually want him to be president. i know a lot of people in the media say i hope he keeps going because this is great, entertaining, stimulating, fun, great to cover. but god forbid he would actually be the president of the united states. the fact that there have been 15 or however many candidates has played to him because he can be

the leader with a relatively small percentage even though the republican party let alone the entire electorate. >> jim, a lot of people disagree with you about your views on planned piernt hood and twitter and beyond. >> it's a contentious issue. why not just deal with it directly rather than try to tether it to things completely unrelated? >> other people argue the points of conflict are based on ideals that people hold so closely they are not willing to compromise. and they point back to the birth of the nation, which was also a battle over wills. >> yeah. i mean, i just saw hamilton this week which is terrific. >> excuse me, we have senator cruz just speaking. hang on a minute, jim. [ cheers and applause ] >> my only request is can you come more often? to tony, we need to schedule these weekly. once a week.

listen, every one of us we know that our country's in crisis. we know that this is not a typical time in politics. we're bankrupting our kids and grand kids. our constitutional rights are under assault each and every day from washington. and america has receded from leadership in the world. it is making the world a much more dangerous place. but i want to come to you this morning with the word of hope and encouragement and exhortation. all across this country the american people are waking up. and i'll tell you today help is on the way. [ cheers and applause ] >> that is senator ted cruz at the values of voters summit, which is an all-star lineup of gop leaders today. we heard from marco rubio today.

donald trump's going to speak we think around 11:45. but obviously they have a lot of -- a lot to chew on given the resignation of speaker boehner today. >> let's bring in eamon javers with more from d.c. eamon, give us more color as to what's happening on capitol hill. it looks as if the journalists are beginning to disband, i don't know that the boehner conference is not going to happen. of course there was a feeling he might not speak for as long as the pope was speaking at the united nations. the information we have is that that is still happening. eamon, are you with us? >> i'm here, simon. absolutely. what you're looking at there that microphone position is in the basement of the capitol just outside the room where republicans meet behind closed doors. what we saw a few moments ago kevin mccarthy walking by those microphones. he was asked if he's going to be the next speaker of the house. he did not answer that, but boy was he followed by a whole long trail of reporters and staffers as he moved down the hall to his office. so we are seeing some expectation now that maybe speaker boehner will not speak

from that position. but i want to tell you i just got an e-mail here from a republican member of congress who was in the room when speaker boehner made his announcement this morning. and this is what this member of the republican conference e-mailed me just a few minutes ago. he said everyone is stunned and surprised the speaker resigned to protect the institution and to allow the gop conference to unify and go forward. the pope's visit yesterday was the capstone of his career and a natural point to leave. kevin mccarthy will be a likely shoe-in for the next speaker of the house. i asked this member of congress what does this mean in terms of the shutdown as we were discu discussing earlier this morning does it give boehner the flexibility to cut a deal with democrats. and this member of the republican conference says, yes, it does. he says it ensures no shutdown next week. he is free to work any deal now to make that happen. but then i asked what about kevin mccarthy if he is to take over as speaker of the house, won't he face the same challenges that john boehner did in hurting this particular group of cats, this member of congress saying, yes, mccarthy will face

exactly the same challenges. it's not clear yet who is going to be running to succeed john boehner whether the house freedom caucus of conservatives will nominate their own person or whether we'll see other leadership folks running for this office. kevin mccarthy is someone only elected to congress back in 2006. he's only been in the leadership since 2009. what you might see among conservatives in the base they don't want anybody who's associated with the current leadership group who's been working with boehner and leaders over the past couple of years. they might want a fresh face entirely in their own candidate. so all of that is being worked out behind the scenes. that's why you're seeing all this toing and froing in front of that microphone position up on capitol hill. >> we'll see if he gets the job, the house majority leader to become speaker of the house. eamon javers thanks for the update and some of the context there. with us jim stewart from the "new york times" still. how do we expect this to play out? kevin mccarthy been in office less than ten years, some wonder if he has the deal making skills and gravitas house speaker

boehner did to be able to avoid things like another government shutdown. >> well, obviously if he's going to hold this fashion together it's going to take tremendous not just leadership but diplomatic skills. i don't know that that's something that surfaces in a typical campaign. i don't know most of these people well enough to evaluate them on that basis. but this is going to require an extremely exceptional person to be able to pull this off. he's absolutely right, the problems are not going to go away simply because the personnel changes at the top. >> i'm sorry we didn't get to the column on vw, it is a good read as cramer mentioned earlier on the history of governance issues. >> the board is a travesty. one point i'll say is the previous ceo put his fourth wife, former kindergarten teacher, on the board. need i say more? >> the guy being blamed for the technical changes, not the current ceo, nine years ago they instituted that. >> i'm not surprised to hear that. i mean, this has been going on quite some time. >> as we await results from the

board meeting happening now in germany. thank you, jim, always good to see you. >> joining us this morning on the phone congressman david schweikert. >> good morning. forgive a little bit of the background noise. we have a vote going on. >> we're going to forgive any distractions on what is turning out to be a remarkable day. first tell me what your response is to the speaker's decision and what do you think the fallout is going to be? >> first response is a little bit of shock on the timing. but if you've actually been an observer of modern politics and even old politics, this is just the rhythm of how the process works. you're just sometimes taken aback that when all the sudden it happens. >> what happens in terms of now we're suddenly swimming in these discussions about the type of candidates that various caucuses

put up for leadership position like this one? where does the party go from here? >> well, it's actually hopefully we will embrace it as an opportunity sort of of renewal. take the things we've been doing that worked, try to understand the things where we've had difficulties. i hear the discussion over and over -- >> congressman, forgive me, sir. we just have nancy pelosi speaking live which we want to get to. just bear with us, sir. >> -- environmentalist. so i was interested to hear what said yesterday and at the white house the day before on our home planet and the responsibility we have to pass it onto future generations and not to wait is connected to his holiness and the challenges he gave us as he addressed his remarks not only to us but to workers, to children, to seniors, how he

referenced other leaders in our country who are so much a part of our culture. i would love for his holiness to >> when he referenced martin luther king and the selma march and -- >> to the degree she addresses the speaker's decision to resign, congressman, once again, to get back to you, you are talking about the things that have worked for the republican party. does that mean that you would support the kind of leader that is going to broker a compromise, or as a candidate might say, stand up for some ideals. >> that's a really broad question and more complicated. look, things -- we right now have the largest majority in modern history. you have to embrace that that, hey, we were doing something right. for many of us, we desperately want more creativity, more sort

of policy centric movement on what we do. now we start to listen to those folks who may be candidates for the leadership slots and will it cause a cascade of movement within all the leadership spots? we just don't know yet. >> congressman, can you help us with the more immediate question as to whether the capitol hill will be shut dune or the deposit will be shut down over the planned parenthood issue? >> the fact of the matter is i think that was always a shiny object in the air. i do not believe there was ever, ever a change, and i'm one of the conservatives. ever a chance of that happening. i think that's a rhetorical talking point, and we all bought into the shiny object. >> you are categorically sure there will be no shut down of

the government here or specifically about planned parenthood some. >> there was a dozen different ways to deal with the mechanics of this issue. >> there is no on the discretionary part of that budget that needs to even exist because it's already taken care of. >> then you're arguing that the speaker stepped down for nothing? >> i think you hit an inflexion point in all of our careers where you are on top. the speaker did something very noble. he just had the pope here. he is on top of the world. what an amazing time to say i'm going to move on to the next phase of my life. >> you are arguing that the speaker did not step down because of any near term or

acute political pressure that he essentially wanted to go out on top? >> that is my impression. >> if you are asking my opinion, that's -- >> we are getting word from reuters that the speaker has canceled his press conference, although he is scheduled to appear on "face the nation" this sunday, so i'm not sure we're going to get any near term comments. >> he certainly left the meeting without comment. we know that for sure. we know that for sure. >> i wonder, congressman, we are expected to hear from some of the republican presidential candidates a little later this afternoon. already we've seen the likes of donald trump, senator ted cruz and even senator marco rubio be openly critical about republican leadership, like house speaker john boehner. is that a problem that that is running on the campaign trail, and how do you expect that dynamic to play out as we head into the election next year? >> running against the

institution is normal, whether the left or the right. i don't think you could expect anything different. pope francis is in new york wrapping up his remarks to the united nations. let's get to mary thompson who is right outside the u.n. and lower manhattan. excuse me. with his message to world leaders. mary. >> hey there, sarah. the pope's speech wrapping up just about five minutes ago, and in that speech it was focused on the environment, but the poke also appeared to the leaders for help in the migrant crisis. the silent drug war, he said, is killing millions, and in the effort to rid the world of nuclear arms. he also asked the u.n. for greater cooperation and responding to financial crisis and to not place unrealistic debt burdens on developing countries as they hurt the poor. >> subject people to mechanisms

which generate greater poverty, exclusion, and interdependence. >> especially the poor who are pushed to the margins by the misuse of natural resources. becoming what francis called a byproduct of the culture of waste. he urged the moan to go beyond writing up proposals and told them not to rely on a single solution for addressing climate change and said that recognizing or defending the environment means recognizing a moral law respecting life in all its stages and dimensions. lastly, he called education land lodging, labor, and spiritual freedom pillars of human development that governments must insure for their people. now, we are expecting him to arrive down here at ground zero in just about ten minutes or so. he will meet, first, with families of the victims of 9/11 and then will participate in an interfaith service at the 9/11 memorial museum, and we'll have more from that later today. back to you. >> mary, thank you for that.

mary thompson, who has been -- has had a busy week covering the pope both in washington and now in new york. in the meantime, this is videotape of john boehner leaving his meeting earlier this morning. if you recall, we suspected, expected him to make some remarks at that lecture where we had the live shot for the past hour or so. apparently it's not going to happen now. we'll have to wait possibly for the sunday shows. >> it was interesting that you said he read the prayer of st. francis. maybe his tenor has changed entirely. he was emotional sitting behind the pope at points in what francis was saying yesterday. >> apparently he had a private audience with the pope before that address in the joint meeting of congress. i thought actually he looked a little relieved in that shot of him walking away. maybe a big burden has been taken off his shoulders. i mean, it has been a rough few years for house speaker boehner.

>> we'll get to more of that when squawk alley returns in a moment. warns you about incoming cross-traffic. cameras and radar detect dangers you don't. and it can even stop by itself. so in this crash test, one thing's missing: a crash. the 2016 e-class. see your authorized dealer for exceptional offers through mercedes-benz financial services. awe believe active management can protect capital long term. active management can tap global insights. active management can take calculated risks. active management can seek to outperform. because active investment management isn't reactive. it's active. that's the power of active management.

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political. this is house speaker john boehner who a couple of hours ago announced his resignation as speaker, his resignation from congress in october. we were awaiting what was scheduled to be a statement, but is clearly not happening now. this is video of the speaker making his way away from a republican meeting today. in the meantime, so much else to talk about. yellen giving her speech last night. short-term worries about her health as she was almost unable to finish a 23-page speech. nikkei up overnight. dollar at a five-week high. nike earnings. blackberry to talk about. we're going to get to all of that. in the meantime, let's turn to our john harwood who has been watching these political developments all morning long. good morning. >> good morning, carl. it's a stunning end to john boehner's speakership. everyone had known that he faced some disent in his caucus. there has been speculation for numerous years that he might decide he has had enough of it after we had the difficulties in