♪ ♪ imus in the morning ♪ >> all right, everybody, how is this for debate prep? the yo show. good morning, everyone. it is debate day and the president emerged from his intense preparation to appear on a radio program the yo show about the celebrity feud on american idol. shoring up his base, perhaps right before a must-win debate? well, the latest gallup poll gives governor romney a 4 point lead and now tied with the president with women. the republicans, will they have a pre-debate strategy, highlight joe biden's bizarre behavior in the veep debate? you'll see the new ad. hillary clinton is shielding the president. she has taken responsibility for the benghazi security disaster, who misled america over its cause?

that may come up tonight. and a shocker, the top two at a huge american bank suddenly out. "varney & company" is about to begin. follow the wings.

>> i've got a shock of the day for you. vikram pandit is unexpectedly stepping down as citigroup ceo. he was just on an earnings call late yesterday with no hint of this at all. and pandit led the bank through the financial crisis and even testified on capitol hill and look at citi shares in pre-market right now. they are going to be down and by the way, the number two man, chief operating officer stepped down and we're following the story and the stock throughout the program. to the big story, more than a month after the attack in libya killed the ambassador and three others, the administration is struggling to deal with the fallout and subjects say hillary clinton is taking responsibility for not providing more security there as reportedly had been

requested. >> i'm responsible for the state department for the more than 60,000 people around the world. the decisions about security assets are made by security professionals. but we're going to review everything to make sure that we're doing what needs to be done, in an increasingly risky environment around the world. stuart: but she did not accept blame for the confusion surrounding the cause of the attack. it was initially connect today a movie, but we now know it was a pre-planned terror attack and even two weeks after the event, president obama went to the u.n., never mentioned the terror pl plot, but brought up the movie several times. >> that's what we saw play out in the last two weeks, the crude and disgusting video sparked outrage throughout the muslim wor world. now, you i have made it clear to the united states government had nothing to do with this video and i believe its message must be rejected by all who respect our common humanity. it's an insult not only to

muslims, but to america as well. stuart: this may well come up in the debate tonight and coming up later it hour we'll discuss the issue with mike reagan, libya was a big problem for his father during his presidency, muammar gaddafi even threatened to kill mike himself. he joins us at 9:45 and next, we're counting down to tonight's must-win debate for president obama. will the media give him the win no matter what? we're talking about that. and plus the spokesperson for the coke industries, is with us, and her bosses sent a letter about the election to thousands of employees, was it a call to vote for mitt? she's next on the opening bell. you see us, at the start of the day. on the company phone list that's a few names longer. you see us bank on busier highways.

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>> one minute to the opening bell and the corporate story of the morning is unquestionably stepping down of vikram pandit. number one at citi and also the number two guy, also stepping down. and this is a very sudden move. it came as a real shock when it was announced about an hour ago. late yesterday, citi had done one of the analyst calls where the top guys and people at the bank hold a call for all interested parties who can chime in and the big guys tell

everybody what was happening with the bank and earnings, not the slightest hint late yesterday that vikram pandit, the man who led the bank all the way through the financial crisis, was going to step down. he stepped down this morning. remember, please, when vikram pandit had citi in the year 2007, before the financial crisis, citi stock was around 332 a share and now, it's at a low 30's, it's dropped 89% during his tenure, but he has taken the bank through that financial crisis. so, we've just opened up on the big board and we're up about 7 points in the very early going and we expect a modest gain by the time we start running with the trades and now we're up 14 points. but let's go straight to citi. and as we said, pandit stepped down. let's bring in nicole, the open of the stock is down about .8%, down just 26 cents per share, all right, nicole, this is a real shock.

had anybody come up with any kind of valid reason why he suddenly steps down? >> you know, there's no real valid reason at this time on wall treet, instead, traders begin to speculate, why, why does vikram pandit step down now and why does the chief operating officer supposed to resign at the end of the year do that on the very same day? >> a lot of of the traders start to speculate, what's the uncertainty, and why today and say, maybe, just maybe, the board says enough is enough, you're out and pushed them out. stuart: if that's what the board is saying, then the board must have known about this before the earnings call late yesterday afternoon. >> no doubt. no doubt. we're completely speculating here, but yes, if you're the board members and you know that you're kicking out the chief he executive officer and the chief operating officer, oh, yeah, that takes some coordinating and you don't just wake up on a tuesday morning and say, let's did this. >> yeah, i think the initial

shock may have worn off in the last hour, can we put the stock back up again? 'cause i don't think it's down that much at all. it's at 36, down two cents. >> okay, so, it's coming right back. the truth is when i was looking before. before the 9 a.m. hour, it was at 35.55 let's say and here it is well over $1.10 from that level and a gain up or the lows and adjusted it and moving on. it was expected he would step down at some point. stuart: the shock value he did it so suddenly after an earnings call with no hint it was happening. i think the shock value has important off and dead even. >> an earnings call. >> nothing wrong with the earnings, it's pretty good. >> a quarter, all right, i did great and i won, the playoffs games and let's go. stuart: all right, nicole we'll follow this through the day with you, thank you very much, poll has mitt romney ahead by

four points in the swing states. that's the polling back drop to tonight's debate. joining us now from cleveland, greg valliere. i say it's a must-win for the president tonight and i say the media will not let him lose, what do you say. well, i said in my commentary this morning that if obama does tonight as he did in denver, he will lose the election. that simple. i agree with you, i think the press likes a good story. i mean, obviously, there's a tilt to the left except for you guys, but i think the press likes a good story and i think after denver the narrative shifted to the romney surge. i think after tonight the narrative will shift to the obama surge. stuart: i think it will shift at the he least to making a comeback. he's back and his game is on. and i'm not going to guarantee that, but-- i'm not going to guarantee that, but that's what i read tomorrow morning. the bounceback is surely in the cards. >> i think so. stuart: one other issue, hillary clinton had taken responsibility

for the security in benghazi, she says, okay, it's my job, provide security, got it. my responsibility. and, but left unsaid is who is to blame for the misleading of the american public on what caused the attack, on whether it was an attack in the first place, is that going to come up tonight? >> it might. and don't you think, stuart, that, in a couple of years when there's a newwbook out like "game change" was four years ago and portray both of the clintons as furious, they got thrown under the bus by axelrod and joe biden and thrown uppnder the bu and she's a good team player and she took the hit. somebody misled the public, is it susan rice? i don't think it's her. someone at the white house has to bear some responsibility. stuart: okay, last one for you, do you think that the president is going to come out swinging tonight, much more aggressive? >> oh, absolutely. i think it's got to be not just stylistic, it's got to be

substantive. talk about the 47%, romney's taxes and romney's lack of spes if he spesty, the problem is, romney is good at this format. i've watched the republican debates. even if the president does well, romney will do well also. stuart: i think that you and i are up four o'clock eastern time tomorrow morning going through the media to see what the reaction is going to be. >> i'll call you. stuart: you could, that's not problem you should do that. greg valliere everyone, thanks indeed. i've got bad news from car battery maker a 123 systems. could be default on debt payments and a-123 says it may not have enough funds it continue operations and again, could seek he have protection. and v 249 million and used half

of it to build a factory in livonia, michigan. and a first drop in sales in three years, makes an announcement after the bell, and beck uncall, it's close to a low, isn't it? >> yes, it is. what we're looking at intel, here, the up arrows today. are coming up with the numbers after the bell. we focused on it here on "varney & company" and they've been slashing the outlook because of weak pc sales and such and they're down about 13 cents in three months and 22.09 with an up arrow, but the analysts want to know what's what. we'll get more after the bell and obviously reduced the expectations. a grim looking chart and by the way, i think that citi is just about even and down one cents. two cents, something like that, it's coming back again. nicole, thank you. by the way the dow is up 58 points in the very early going this tuesday morning, look at that, back to 13,480.

the koch brothers have come a target, and the industries encouraging employees to vote for pro business candidates. joining us now is nancy, the spokesperson for koch industries. i'm going to quote from the letter. we believe any decision about which candidates to support is as always yours and yours alone based on the factors that are most important to you. you're saying, i put it to you, nancy, with a smile on my face, the koch brothers are telling their employees get out there and vote for romney, right? >> it's just ridiculous, i mean, we've gone past the sublime to the ridiculous. i was saying i would say that i was shocked at the selectivity of their analysis of this letter, but i simply am not. it's been one thing after another, obviously, this election cycle. we're very proud of our employees, and we posted this on our website, i think on october

44h, in a completely transparent manner and we expect them to make the right decision. the right decision being vote for mitt romney. i can read these things and so can you, nancy, come on, now what, vote for romney. >> well, what it does, certainly says is that koch pac employees supported political action committee has supported mitt romney and we said there are issues facing this country and that there are two individuals and different perspectives how to move forward, but we trust our employees to make the right decision and we put it very clearly and underscore it for them that we're not telling them what to do. we trust them to weigh what's important to them and to make the right call. >> look, i think any employer should be allowed to say this kind of thing to any employee. i don't see why you should steer clear of the election completely, but you you know, nancy, you're going to get

demonized for this. i'm sure you've watched the show news room and the koch brother funded the wicked tea party and-- >> i couldn't watch more than once i thought it was poorly plotted and inaccurate. it doesn't surprise us, it's fairly typical. you get a fairly left leaning web go up and hypocritically and inaccurately describe the letter and goes on msnbc and then on huffington post and atlantic journal constitution and then finally, we get it, again, misrepresented on "the view" yesterday. if this were, ff college and pro bowl were more predictable i'd have more money in my pocket. stuart: and i suspect that the koch brothers-- >> they're not intimidated by it. stuart: i think they like being at it. >> they're clearly not intimidated and not about the

step down, but it's hard to like things like when death threats are issued against your family or fire bomb, and that your employees are in fact at risk. that's not pleasant, but they certainly are going to make their case for the best policies of the country. stuart: point taken, nancy. i appreciate it, thank you for joining us as always. >> thank you. stuart: here is what we have new at ten for you, cost of living increases for people on social security are at their lowest level since 1975. and find out exactly how much those 56 million people will get extra next year. it's not a lot. the exact number top of the hour coming up. time is money, 30 seconds. do we have that? we've-- we're going to move on the we want to hear from you, send your e-mails, varney cott foxbusiness.com. i'm in a hurry let's get on with the 7 early movers, intel expect today announce the first drop in

sales in three years after the bell today. the stock's trading near a 52-week low. so what? it's up 47 at the moment. bank rate cut the outlook and expects profits to disappoint. the financial information company. and it's way down. vikram pandit down, out, as chief at citigroup, so is his second in command. the stock is now up, 17 cents. and goldman sachs, more than doubles the money coming in, on investment gains, and not good enough. down a few cents. amazon is going to hire 50,000 workers for the holiday season. that stock is down today. toy maker mattel, made more money than expected, it is up. and you know, the name, wd-40, profits and outlook disappoint, hurt by lower sales in europe. that stock is down, 6%. and the dow is up 65. and the republican national committee watches "varney & company." i think. and they're out with a new ad blasting vice-president joe biden for his inappropriate performance at last week's debate.

mike reagan is next and we get his reaction to this. >> it's never too early to speak out for our values. they keep misquoting him, but let me tell you, but the mitt romney i know, says don't raise taxes on small businesses because they're our job creators and show that-- >> vice-president? >> incredible. [ male announcer ] at scottrade, we believe the more you know, the better you trade. so we have ongoing webinars and interactive learning, plus, in-branch seminars over 500 locations, where our dedicated support teams help you know more so your money can do more. [ rodger ] at scottrade, seven dollar trades are just the start. our teams have the information you want when you need it. it's anothereason more investors are saying... [ all ] i'mith scottrade.

boring. boring.

[ jack ] after lauren broke up with me, i went to the citi private pass page and decided to be...not boring. that's how i met marilyn... giada... really good. yes! [ jack ] ...and alicia. ♪ this girl is on fire [ male announcer ] use any citi card to get the benefits of private pass. more concerts, more events, more experiences. [ jack ] hey, who's boring now? [ male announce] get more access with the citi card. [ crowd cheering, mouse clicks ] >> we've got a rally on our hands tuesday morning and the dow is up. right at 13,500. where is the price of oil today? roughly 92 $93 a barrel? no, 91.75 down a fraction. the republican national committee has a new ad blasting joe biden for his behavior at the debate last week, showing him laughing, even during discussions of serious topics. >> you both saw benjamin

netanyahu hold up a picture with the bomb with the red line. >> thank hearns we had sanctions in place in spite of the opposition. >> oh, god. >> they've given 20 wavers during this all i have are the results and four years closer to a nuclear weapon. >> and joining the company now is mike reagan of the mike reagan.com and author of the new reagan revolution. i wonder right off the top the reaction to that ad? we only showed 20 seconds of it. what's your reaction, mike? >> and the reaction is dead on with joe biden. the fact you know, this has been the joe biden i knew forever and my dad knew forever also, laughing at the issues like he's the guy. he's the guy who ate the cat or the cat bird or whatever. and the reality is, joe biden is what joe biden is, and i think that paul ryan did a great job in had a debate. serious issues, not laughable issues like joe biden in fact made them and i hope this one really does hit home and people

see biden for who he truly is. stuart: frankly i thought it was somewhat troubling and disturbing when the vice-president laughs like that and the man a heartbeat away from the presidency is laughing. i did not like that at all. >> i'm going to tell you. why didn't your father tell anybody when he went know grenade da. joe biden is the reason why, because joe biden use today sit in meetings with my father and threaten my father he would leak information to the media to stop my dad from doing anything of that nature internationally. this is what this man would do. and this is the kind of man that he truth is. ask the polls, they doesn't like him. ask the prime minister of iraq who turned him down when he asked him not to fly planes over iraqi air space to give weapons to syria, what did the pm of iraq say? he said no to joe biden. joe biden is not liked, loved or anything internationally. and by the way, jack kennedy, because he lowered taxes, my

father gave me a larger allowance. [laughter] >> i've got to move on fast. hillary clinton, she accepts responsibility for the libya security failure. mike, your reaction to that? >> oh, you think she's swallowed on that one i mean, taking responsibility, taking away from the white house, joe biden, the president, national security council. i wonder what she's going to get in return for playing that political football with the president of the united states of america. and not happy-- >> that she takes responsibility for this side of this development, the lack of security, she's not taking responsibility for the misleading of the american people on the cause of that attack. and the statement that it was an attack. that is still with the intelligence services and the white house. >> yeah, and the fact that the white house still isn't getting it right and what happens tonight on the debate on foreign

policy, what position the president's going to take tonight. it's simple, it was always an assassination of stevens, covered up by a terrorist attack. this was to get stevens. he waste the point of the spear and in the world, the intel guy, the guy with the information to all the tribes in north africa and they figured if they he could get him they could in fact take over that area of the world. i'm telling you, things are not good in the the middle east and he is the puppet master of what's going on and in fact, mitt romney and paul ryan know that. stuart: once again you've got the advantage on the west coast, you can you stay up to watch the whole debate tonight. and i'm sure you will. mike reagan come see us again soon. >> thank you. stuart: and fox business network will have a special coverage starting at 8 eastern with neil cavuto. the price of gold 9:50 eastern. $1745 per ounce. the first lady weighs in on the economy. here is what she said. >> we're in the midst of a huge

recovery, all right, because of what this president has done. stuart: now, you heard it, happy days are hear again and here comes sandra smith and david asman, we'll get their response to this next. ♪ those surprising little things she does still make you te notice. there are a million reasons why. but your erectile dysfunction that could be a question of blood flow. cialis for daily use helps you be rea anytime the moment's right. you can be more confident in your abity to be ready. and the same cialis ishe only daily ed tablet approved to treat ed and symptoms of bph, like needing to go frequently or urgently.

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>> it's your primary source for financial news and the state of the economy is first lady michelle obama and you might think that the economy is doing well. and here is what she said during a radio interknew. here's in the midst of a huge recovery. we've been adding jobs because of what he's been doing. the stock market doubled, house prices rising and foreclosure rates lowering. what does sandra smith say. sandra: it's interesting she points to the stock market, and her husband won't point to that. we know it could quickly fade. there's no reason to point to gas prices where they are today and say there's a huge recovery. nearly 8% unemployment that's not huge recovery and saying that the housing market is bottoming out is not-- >> got to interrupt. the wall street journal says that vikram pandit is out of citi because he clashed with the board over performance and strategy. got it, just in. new at 10.

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♪ >> new at 10. 56 million people on social security will get a 1.7% increase in their checks in

january. that's the cost of living increase, it amounts to roughly $20 a month. that's it. and also, new at 10. the wait book, senator tom coburn, detailing government wasteful spending and make you mad when you hear some things they spend your money on. that's coming up. the big story today though is debate prep. we're 11 hours away from a must-win debate for president obama, what was he doing yesterday? he was appearing on "the yo show", a radio talk show in miami talking about a celebrity feud on american idol between mariah carey and nicky minaj. now, we say must-win because the latest gallup poll of likely voters had mitt romney ahead by 4 points and the two candidates are tied now among women. and then there's libya, the terrorist attack on the the u.s. consulate in benghazi on the 9/11 anniversary. hillary clinton now takes responsibility. >> i'm responsible for the state department for the more than 60,000 people around the world.

and the decisions about security assets are made by security professionals, but we're going to review everything to make sure that we're doing what needs to be done in an increasingly risky environment around the world. stuart: all right. all of this is on our plate. talking about it for all of the next hour, to the big board, we've got a rally this tuesday morning. the dow is up over 100 points and well above 13-5. and sandra smith is with us and so, too, is david asman and on the floor of the new york stock exchange, we have nicole petallides and we start with you, nicole, we broke the news on citigroup at the end of the last hour. wall street journal reports that vikram pandit left after a clash with the board over performance and strategy. the stock, please, nicole? >> you can see it's still above the $36 mark. this was the speculation all morning long, why not? and the board probably ousted him or something to that affect

and exactly what we're hearing now, right? he had clashes with the board over strategy. over performance, we're also hearing that the citigroup board had frustrations, including the performance of institutional clients, that unit in particular and that the departure came as a shock to the employees, because we said this yesterday, that all the employees, we have the conference call yesterday, we had the earnings on citigroup and the question all along was did he make the right steps? everybody is waiting for dividends and some folks said that he sold too low, the morgan stanley part. and that they saw for morgan stanley, so there are questions throughout the year that people really are delving into citigroup are probably wondering. >> all right, the board says out you go and the performance and strategy, david, what's your angle? >> well, we knew there was something going on here, it happened so quickly, it wasn't just pandit. it was the ceo and the coo leave so quickly there's got to be disagreement along the line. but pandit. you look at who he is and what citigroup has become since he

came on board. it really is the definition of crony capitalism. i mean, he came on and he had a huge hedge fund that he bought for i guess about 800 million dollars, isn't that right, back in 2007, something like that, and they bought it and then he came on as ceo and then came the economic crisis, he made sure that they got the money to bail them out. but citi has been in the bailout business since i began covering it in the early 1980's when they began to get bailouts for bad bets in latin america and-- >> the taxpayer is out, we don't have money-- >> what's in, the taxpayer is still in because they have the open access to the federal reserve bank that they did not have before the economic crisis with which they get all of this cheap money with which they make all of these dollar trades. so the taxpayer is still in because they have much more access to the freebie money that ben bernanke-- >>'s he out and the dow is up

95. an important story for many of our viewers, this morning, the cost of living increase for social security recipients. 1.7%, and that's the government's measure of inflation for the just completed fiscal year, obviously, everyone's check is different, but it means that the average recipient will get about an extra $20 a month. and sandra, that's not a great deal of money. >> that's not a great deal of money the at all when you consider that the value of all of our homes is still down and near record lows, and rents are up. food prices have doubled in many cases, and gas prices are sky high, so, a $20 increase is going to be very difficult for a lot of these folks to bear. >> and because it falls more heavily on the simple things that people need, like food, like filling up with gasoline, or even like the subway fares or the bus fares,en and the price of government has increased enormously. stuart: that's the rule. when the cpi, what the consumer price index does in the

preceding years, that's the-- >> and how they're now defining inflation which is much more narrow than it used to be defined and that's a problem for seniors. >> the cpi up 1.7%, that doesn't take out food and gas prices, it leaves them in. >> understood, but anybody who's got shopping recently knows the basic items you have to buy have been increasingly norm mustily. stuart: do you think the social security recipient should get more than 1.7%, give them a bonus. david: if you have an honest real assessment of inflation, you've got to give more, and richard fisher with the dallas fed. stuart: i don't care, who is going to pay. who pays? you want to give more, who pays. david: you're going to have to pay seniors enough to get by. we made a commitment when we got into the social security-- >> who pays? you want to pay more. david: we have to pay a little more, a little more for seniors is not going to kill our country. stuart: are you prepared to see social security, the payroll tax, go up so you can pay social

security recipients more? >> if we do not fix social security fundamentally it's going to die anyway, we have to fix social security and we have to begin by honest accounting. we have to begin by honest accounting. are you. stuart: i'm surprised-- >> do you really think that inflation has only gone up as much as you say it is. stuart: i'm questioning whether or not we can apay. david: we can pay people the amount their expense goes up, yes, it should be higher than it is. stuart: i want to know who is going to pay for it. david: i again, i think we have to reapportion where we portion money, less on solar reeearch and-- >> the reason why the price of goods have gone up. we've been devaluing our currency and driving up the prices of raw materials. stuart: i think we've reached concensus. david: i think we have. stuart: we've mentioned a new gallup poll at the top of the hour, mitt romney up by four points overall. perhaps the most telling number from gallup, the two candidates are in a dead heat among women. yesterday, on "varney & company," real estate developer

and ardent obama supporter, don peebles, said romney still has a problem among women voters. >> know a woman, not one woman, democrat or republican, who's excited about romney because of his position on choice. stuart: okay, if you caught sandra smith reaction at the end of that clip, you saw her diplomatically biting her tongue. later this hour she'll say what she wanted to say about women and romney and 10:50 this morning you will see sandra respond. back to nicole, you're watching bank rate, on-line financial services company. find out what mortgage rates are through them, but it's down big, why is that. >> it's down big time. the late news after the bell we saw is under pressure and this is a name that came out with an

ipo this summer, but they're warning, warning on the earnings, warning on the revenues what they're seeing is declining insurance referrals and that in turn is hurting their bottom line and you said, you check along there and check things, it's bank rate.com insurance quotes.com where you check mortgages, credit cards, loans, and such. stuart: i do regularly, as a matter of fact. i love it when their mortgage rates are down to 3 1/2%, i love it. and bank rate. thanks, nicole, the dow is now up 99 points. some companies are switching employees from full-time to part-time, because they can't afford to pay for benefits required under obamacare. darden restaurants, the operators of red lobster and olive garden are among them and our next guest says he's thinking about doing the same. joining us now is zane, applebee chairman franchises. >> good morning.

stuart: you're thinking of taking people from full-time position toss part-time positions because of obamacare? explain it. >> well, running a business is relatively simple. more money has to come in than goes out. stuart: sure. >> so if you get an unforeseen cost that comes from left field, ie, obamacare, you have to pay for it. stuart: obamacare would force you to pay more for health insurance for your full-time employees? >> i wish i could say that definitively. i don't think anybody knows what obamacare is, but, yes, we're anticipating a cost, as everyone is, and with every ying there's a yang. with additional cost you have to find money to pay for it. >> so, do they want to be made part-time as opposed to current full-time? >> of course not. it's a loss of income for them it's that simple. but the reality is, we could raise prices and our consumers won't want a price increase, we could find additional efficiencies, which this might be considered one, or we could cut people. >> so this is the best of both

worlds, we can keep our people and we can just pay them less, because, somebody has to pay obamacare. obama is not paying obamacare, is he? >> okay, now, what's the response? how many employees have you got? >> about 3,400. stuart: is it 14 applebee's. >> 38. stuart: 38 and you've got 3 or 4,000 people. have you heard from them. >> no, we haven't made a definitive decision. we're budgeting for 2013. that line is blank it will there's a definitive decision. we have full-time time people on ground in washington and no one knows what it's about. and i guarantee you the president doesn't know. unfortunately, he's not a business man, so what he looks at is from one angle. you need to look at this globally, in business, economics will find its most efficient use. capital will always find its most efficient use, so the most efficient use of capital is a, keeping our people intact and

ideally hiring more, but being able to pay for it at the same time. stuart: now, when will you find out? do you have any idea when you'll find out a definitive cost, the exact amount of extra money obamacare's going to cost you? when do you find out? >> i was at an international meeting of restaurants all week last week in los angeles and not a soul, including darden seems to know what it is. and i assume we need to call the president or waiting until after the elections possibly and drop it on us. sandra: he's asking if you've heard from your employees on this matter. i'm curious if you've thought about influencing their thoughts on this election like we've seen from recent business heads. stuart: are you sending a letter? >> no, i'm not. in all fairness here is what i say to them we meet in groups of 100 and 200 all the time, weekly almost and i say to them, you need to vote. i'm not going to tell how to vote for, but i think everybody needs to go out there and vote.

unfortunately, the electorate is not sophisticated enough to really dig down, other than to see that they're going to get something more, and i'd be hard pressed to tell them to vote for this candidate or that candidate. >> look, thanks very much indeed for coming on the show today. very important subject, and very important, your employees for sure. thank you very much, sir. >> thank you. >> i want to go back to nicole, more on the breaking and developing story on citi. what have you got? >> thanks to our charlie gasparino and reporting that he's done coming out with the latest that the board wasn't happy for a long time and some of the things that we've talked about this morning and confirmation from some sources, and this is a source close to citigroup, according to the charlie gasparino and that one problem after another, this is one of the reasons why we said that the board may not have been happy with vikram pandit and was not happy and had so many issues, the failed stress test, said that the bank had actually passed it and that they might

buy back stops. the fed stopped him from doing that and you may remember that, and the morgan stanley fiasco, and that the evaluation was not correct and so citigroup got screwed in that one and that's what they're saying. and the overall finding, that he's a smart guy, but that's not the greatest ceo. stuart: thanks very much. i see citigroup doing what? it's still high. at 37 a share, right. after that shock earlier. right? and it's 37 bucks a share, got it. thanks, indeed, nicole, dow is up 106. the other story new at ten according to senator coburn's waste book. one is giving free cell phone service to 16 million people. it doeses you, the taxpayers, 1.5 billion a year, and rich edson is in d.c. all right, rich, i was kind of a little upset when i heard about the free cell phones 1 1/2 billion dollars, but you've gone through the whole report. make me and our viewers even more angry.

go. >> stuart, robo squirrel, how about a squirrel robot? for $325,000 brought to you by the state university system of california, it's built to look and act and smell like the real thing. a squirrel. a prom week video game for about half a million. a video game to simulate prom-like situations. and talking urinal cakes and super bowl buses, you use your hands in this game, it's american football and copies of lets me ultima brought to you by my alma mater rutgers state university, same school that brought us snooki. i don't think that was a federal grant. stuart: edison, you made me laugh. that was very good, with a list like that you can still make me laugh. i don't know what our viewers are thinking, but that was a good report. rich edson, thanks indeed. next question, what do children

want these days? toys or electronic gadgets? is the iphone replacing the barbie doll? we continue the debate that we started yesterday. look at this. >> can i tell you, i went to a birthday party yesterday, stuart, where they asked for money so that the nine-year-old girl could get an iphone 5 s.

>> i'm going to call this a solid stock market rally in progress right now. and the dow industrials are up 108 points. 13-5 and above. the big economic number out today. the consumer price index, and that's basically inflation, up 6/10 of 1% in september mostly because of gas prices and the annual number use today determine the cost of living increase because of social security that's up 1.7%. we've got a big week coming already started for earnings, and the company's reporting profits. start with johnson & johnson, 3 billion dollar profit. mostly because of strong sales of pharmaceuticals of course. coca-cola revenue, total revenue that is not as much as expected and sales in europe and asia were rather weak. all right, everyone, we're coming back in 90 seconds with an interesting story. with so many kids wanting gadgets, do they even play with toys anymore?

>> look at this, amazon says it's hiring 50,000 temporary workers to help fill on-line orders this holiday season. the company says that after all of the orders have been shipped, it expects thousands of the holiday hires to stay on full-time. take a look at amazon stock, languishing recently, 243, hit a high of well over 260. more and more children want ipads and iphones under the tree.

so, what does that do to traditional toys, barbie dolls, dolls, board games? joining us is jay, welcome back to the program. >> thanks for having me. stuart: seems to me, i've got children, i've got grandchildren. you don't give them the traditional toys any longer. they're fading fast. you're a market analyst, a trend analyst, do you agree? >> yeah, we see the trend moving away from toys to more gadgets and see, even apple will tell you the biggest market for the ipod touch is not adults, it's children, right? they're giving it to their children, right? and i have a child and you know, if he doesn't have an ipad he's got plenty of friends that do. stuart: how old? >> eight. stuart: is he getting one soon? >> yeah, he is, he is of course. you have to. you have to. >> and probably knows how to use it better than you do. >> naturally and his cousins have one. an interesting story. last weekend my nephew got to toy and bought a toy like a transformer thing and didn't know how to put it together so

he looked at a video on his ipad to figure out how to put it together. so he kind of brings it altogether a little. i don't think that's the worst thing in the world. stuart: nothing wrong with it, but i'm interested in the trend here. look at this for a second. i've got a picture, this is an iphone and a toy add on to the iphone. can you see that? that's an iphone in the middle. is that correct. >> it's an iphone or an ipad. it looks like a treating ring supplied by a toy maker on the outside of this thing. i mean, that's what toy companies do, they provide add-ones for ipads. >> is it potty training proof? and of course, you want to protect it, it seems extreme. we've seen a lot of adults use those gadgets as a quick, i need to entertain my child going to the store. stuart: by the way, put that picture up again, because i believe what the child was playing with was not the surround, but the actual iphone.

>> right. stuart: that was a toy, something coming up on the screen in the middle of it, right. >> yep, yep, listen, one of the great things about the new touch screen devices, and leading in the spaces it's intuitive. how easy is it for a child to pick up one of the devices and going through it and you know, how did you figure out how to do that. sandra: you've got to be concerned about social issues, there's no sharing of that device, right? if it was an actual stuffed animal and share and play with someone else. this you're in an isolated environment and it's just your toy to play with. >> you could have a room full of kids all playing on their ipod, ipad and not interacting. david: so why is mattel doing so well? >> mattel had a great day earnings, full disclosure, we were short mattel going in, and we thought fundamentally there's headwinds for this kind after company. stuart: do you buy it or not? . we look at the price jump to get on the other side of it.

stuart: jay petrocelli, thank you, sir. it's the climate report you probably didn't hear about, no global warming in the last 16 years. so why did we spend billions on climate change? will we get our money back? my take on that. when we got married. i had three kids. and she became the full time mother of three. it was soccer, and ballet, and cheerleading, and baseball. those years were crazy. so, as we go into this next phase, you know, a big part of it for us is that there isn't anything on the schedule. oh, hey alex. just picking up some, brochures, posters copies of my acceptance spee. great! it's always good to have a backup plan,

in case i get hit by a meteor. wow, your hair looks great. didn't realize they did photoshop here. hey, good call on those mugs. can't let 'em see what you're drinking. you know, i'm glad we're both running a nic clean race. no need to get nasty. here's your "honk if you had an affair with taylor" yard sign. looks good. [ male announcer ] fedex office. now save 50% on banners.

>> they also say there are serious challenges facing this country which inarguably is the case and there are two different individuals and perspectives how to move forward, but we trust our employees to make the right decision and we put it very clearly and underscore is. >> that was koch industries spokesperson in the last hour. remember, we start every weekday sharp. >> that's a rally. dow is up 105. 13-5 is where we stand. and fossil's a winner today. fossil's what? >> watches. stuart: they make watches apparently i'm informed in my here. nobody, the watch stock, fossil. >> fossil is a huge winner today. up about 7%, and fossil watches and accessories are very popular. what happened was, in the last quarter, the numbers came out and the stock and citigroup put them to a neutral. now, citigroup is putting them

back in a buy today and consolidating their earnings and outlook has upside potential and looking up about 7% and so we'll get the earnings in the beginning of november. and of course we'll cover them at that time. and hey, a gain of 7 1/4%, you like that? >> i think that most people like a 7% gain in the next couple of hours, we would like that, thanks, indeed. in california the feds are cracking down on medical marijuana. on the east coast, one approved a shop. what's going on. the judge will be here at 10:45 this morning. there was no formal press announcement, no fanfare, no, this report just kind of slipped out on to the internet. it was in fact unannounced, but it was political dynamite. here is my take on the zero global warming of the last 16 years. yes, surprise, right? britain's press tprestigious

meteorologist department found that the planet temperature had not gone up in 16 years. the predictions wrong, the computer models in need of an adjustme adjustment. wait, much of the western energy polyis t po policies that the globe is warming. and president obama pumped 90 billion in green energy subsidies, have we spent all of this money with a flawed theory. the british are changing course, building power plants again. they don't like blackouts. and germany, and ubergreen nee zealand. let me quote the energy minister, the left wing academics will not override the interests of ordinary people in britain. i love it. but the obama administration plods on. always hating big oil and

pursuing its war on coal. i'm reminded of president obama's vision four years ago, his victory then he said would mark the time when, quote, the rise of the oceans began to slow. and our planet began to heal. please, mr. president, can we have our money back? you see us, at the start of the day. on the company phone list that's a few names longer. you see us bank on busier highways. on once empty fields. everyday you see all the ways all of us at us bank are helping grow our economy. lending more so companies and communities can expand, grow stronger and get back to work. everyday you see all of us serving you, around the country, around the corner. us bank. [ male announcer ] how do you make 70,000 trades a second...

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>> the company manufactures apple's iphones has found workers as young as 14 at plants in china. fox com technology group says they found the interns at the factory and won't say how much or how they got there. a series of negative reports on those apple plants in china. question, is the first lady wearing rose colored glasses when it comes to the economy? roll it. >> we're in the midst of a huge recovery. we've been adding jobs to this economy because of what he's been doing. the stock market has doubled, housing prices are rising, foreclosure rates are lowering. stuart: all right, joining the company from chicago is trey with capital management. happy days are here ago, you would certainly think that if you listened to the first lady. go. >> stuart, come on here, we can't begrudge the first lady here, guess what? all she is doing is channelling

the great lyrist, stand by your man. >> short and sweet, thank you for being with us, that was good input. >> thanks. stuart: i'm going to bring in the chief economist at wells fargo and a surrogate for the republican national committee. welcome. >> thank you. stuart: and you heard what the first lady had to say, huge recovery, stock markets, housing market, happy days are here again, what say you? >> no, this is the typical hockey stick recovery that every time you see someone in office and particularly after the stimulus, the economy is going to stake off after the stimulus, the economy was going to take off after this. it's not happening, excuse me, the last three years we've had basically 2% growth, stuart. stuart: that's it? >> that's it. and even at, you know, when

you're talking about jobs, adding a job at 114, $120 per month doesn't get the job done. as you know, and probably everyone else here knows, a lot of the the decline in the unemployment rate has been labor force participation rates decline. workers dropping out. the u-6, which is the broader measure of unemployment, is still, you know, 14 1/2% or so, so, that hasn't improved at all. >> i disagree. >> now, you're a surrogate presented to us from the republican national committee. >> okay, sure. >> you're speaking not on behalf of, but in favor of the romney campaign. if we get tax reform, as governor romney wants, and lower tax rates for individuals, lower tax rates on corporations and we end some of the loopholes and deductions, if we get tax reform, do you think we'll get 5 or 6% growth in the economy in the next couple years? >> i would combine that with your earlier guest from applebee's. you've got to have some certainty with respect to

dodd-frank and health care reform. stuart: all right. >> once you get that in place, then someone like applebee's would be able to go forward. and you get rid of tax reform and unfortunate aspects of obamacare and dodd-frank, get your wish list, 5, 6% growth? >> i think we could easily do that. once ronald reagan got past the uncertainty and volcker, the economy took off. i think we've had three or four years now of a really suppressed economy where a lot of people in the private sector have struggled and they are he' make the economy move, unfortunately, so much government regular hatian and uncertainty on taxes has inhibited activity. once you take that out the economy running. david: the more stronger the economy gets, the more tax

receipts the government receipts. 1983, 8% once the tax rate cuts kicked in. it was enormous boost to the economy. >> absolutely, we tend to be pessimistic in terms of the revenue and the deficits, but once the economy takes off those revenues come in and the deficits come out. >> is there something to say for the fact that people are oddly enough, feeling better? consumer confidence is up there. why are people feeling so good despite the horrible numbers? >> let's go back to michelle obama's comment. i think part of the consumer confidence is a reflection of the stock market improving and part of it is a reflection of home prices have turned around. so, is the economy recovering? yes. but in many of my presentations, i say it's recovering, but not at the pace we're traditionally used to. or what we had expected and we don't get the hockey stick and we sort of get the slow improvement of europe. >> we feel like europe, and i know you very, very well and i think that's what we feel like at the moment for the last couple of years, do you agree. >> i agree.

>> you're coasting, you're going downhill. >> in this society with so many young people in the labor force not getting jobs, coasting is downhill. >> all right, john silvia, chief economist at wells fargo and a surrogate for the rnc. thank you for joining us. thank you, sir. >> i've got this for you, ford motor company recalling more than 150,000 fiestas, they're going to fix the problems with the side air bags. ford says if the front passenger seat is empty the side air bag won't inflate to protect other passengers. no crashes or injuries linked to the issues, but a big recall. 150,000 vehicles and the stock not reacting, up 4 cents, that's it. in california feds crack down on medical marijuana, but in new jersey, the state just approved a legal pot shop. what's going on? has the world turned upsidedown? the nudge is next. the judge is next. and save. joe doesn't know it yet, but he'll wk his way up

from busser to waiter to chef before opening a restaurant specializing in fish and me from the great northwest. he'll start investing early, he'll find some good pele to help guide him, nd he'll set money aside from his first day of work to his last, which isn't rocket science. it's just common sense. from td ameritrade.

>> i guess you could say that the big corporate story of the morning is the surprising resignation of vikram pandit. he led citigroup out of the financial crisis and now gone from theecompany. no mention of this on the earnings call. there was a conference call yesterday. know the a hint of this happening, came out of the blue first thing this morning and we're now hearing from reports from the wall street journal from our own business desk about the reasons for this sudden departure. pandit clashed with the board over strategy and the company-- for the company, that's, and over his performance and

apparently the board didn't think he was a very good ceo. he's gone. citigroup is just a smart part of the dow's big gain today and right now the dow industrials a are up a strong 114 points. and we're back with the judge, a man opening up dispensary in my home state new jersey, what is is going on.

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insurance companies are hitting stock price highs, nicole is on it, i want to know why. >> the 52-week highs for travelers and also ace limited and we're looking at the names in particular and one thing we should remember here, you remember, in 2002, citigroup spun off travelers and that's our dow component right there. up 1 1/2%, and we are waving the earnings calls on travelers as well and you can see it, 7083, but the three names hitting new highs, 52-week highs, all time highs, i stand corrected. >> we'll take that, too. nicole, thank you very much indeed. the dow is now up 117 points and that's a rally. the department of justice cracking down on medical marijuana dispensaries in california and the feds say get out of it,'s he not going to do it, but a new one, medical marijuuna dispensary is opening up in new jersey, oh, my home state and the judge's home state. here is andrew napolitano himself. on the face of it, i don't get this, because the feds say, hey, you in california knock it off,

but one opens up in new jersey, and the feds say nothing. i don't get it. >> we start out with the baseline that the sale, distribution, use, possession, you all of those of marijuana for any purpose, even something benign and beneficial like medical purposes is unlawful under federal law and we proceed now to the fact that a dozen states have made it lawful under state law for it to be distributed and used when described by a decision. so, state law and federal law are in direct conflict. >> okay. >> normally when that happens, federal law supersedes because the constitution trumps the states, basically. attorney general holder has not followed that basic principle. he decided some places, like california, i'm going to enforce federal law and other places like new jersey, i'm not going to enforce federal law and done so without giving a rational basis, why he's going after them in california and leaving them

alone in new jersey. stuart: i think i know why. >> why. stuart: you're asking me? a california there's experience with medical marijuana dispresendispens dispensari dispensaries, there's evidence that not everyone is sick. >> do you think? >> and you know, there's good experience that it's bogus, but it's only just starting up in new jersey. and not enough experience. >> okay, there's not enough experience. the feds cannot regulate it in new jersey. they could, they could give the state money and ask the state to spend that money to regulate it aggressively, but the feds cannot regulate it in new jersey because that would be then violating federal laws and federal law prohibits-- >> no, no, you totally lost me. why account feds shut it down in california, but cannot shut it down in new jersey. >> i chose the word regulate, meaning that the feds cannot come in and regulate the distribution directly. only the state can regulate the distribution, the feds can't

touch distribution. david: in california they can shut it down or overlook it, can't regulate it the way that the fda regulates. stuart: why can't they shut it down in new jersey? >> well, there's a defect in giving this much discretion to the attorney general for him to decide in some states, i'm saying this as a person who believes that the federal law is profoundly wrong and unconstitutional. you should be able to put in your body whatever you want. doesn't mean you should drive a car when you're high or your children-- >> and given the legal arguments. the e-mails will be over the top. how can the federal government decide to enforce federal law in one state and not in another state? they then run afoul of something in the confusion called the equal protection clause, which says that similarly situated people must be treated by the federal government in a similar

way. let it go or enforce the law. more problems in november, three states have on the ballot absolute legalization of marijuana and in colorado looks like it's going to pass. stuart: by the time you get it, we'll be geriatrics and-- >> some of us are closer to the geriatrics. stuart: judge, that was good. >> present company excluded. stuart: and the latest gallup poll shows the candidates in a dead heat among women, but a big obama supporter sat in this studio yesterday and said women will flock to president obama, what does sandra smith have to say about that, next.

>> here is what real estate developer and supporter don peebles said about women voters on "varney & company" yesterday. >> i don't know a woman, not one woman, democrat or republican who is excited about romney because of his position on choice. >> what? >> and that may-- >> come on. >> every day there are many women, passionate about voting for romney. stuart: by the way, according to gallup, romney and obama are in dead heat. sandra you were biting your

tongue. sandra: those are swing states and i was biting my tongue and doing it all over again listening to mr. peebles. guess what? peebles is only referencing social issues when it comes to women. guess what? women are paying attention to the economy and they're watching their money, they're watching the deficit. and women tend to start paying attention to history shows, women pay attention to elections much closer to the actual election day. which makes them the quintessential swing voters. they're the most influenced right now and they will be voting with their wallet. they're the ones who put gas in the tank, food on the table. you've got single moms out there, they care about the direction of this economy and that's their number one-- >> we should have asked you yesterday. >> you have a way to suggest that the most important thing in their life is free birth control? >> you guys tried to tease me at the commercial break about that. absolutely not. that's not the concern of women voters right now, it's the economy. stuart: got to get this in,

mr. peebles had this to say about manufacturing jobs in ohio. >> ohio, for example, the growth in jobs over the last 18 months has been very significant in ohio and so, if you look at the manufacturing jobs that have grown in that, in that state, that favors the president. stuart: well, hold on a second. according from research from our fox brain room ohio lost more than 12,000 manufacturing jobs since president obama took office. david: and specifically in areas he was taking credit for. specifically some of the jobs that were claimed to have been created in the auto industry have not panned out the way they said they would. by the way, remember who the governor of ohio is. stuart: john kasich. david: truth be told used to work for fox news, owned by our parent company and he's done a lot to turn around and if they do, it's more to the governor than the president. sandra: we like mr. peebles and he's wrong on all topics.

david: other than that. sandra: other than that, please come back. stuart: the story, which really still is tonight's debate, get the latest rasmussen swing state tracking poll and it has president obama back on top by 2 points, okay, that's going into the debate tonight. predictions for tonight, quickly, sandra. sandra: i think that president obama's going to come out much stronger, i think that mitt romney is prepared for it. david: whether the president comes out stronger or not, i think the press is dying for a victory, comeback victory for the president and do their best to spin it in that direction. stuart: that's my opinion actually. come tomorrow morning, media will not allow the president to lose no matter what, comeback, expressions. sandra: impressions are everything and there was definitely a clear victory in the first presidential debate. stuart: you'll be up all night watching it. david: we will on fbn. stuart: and so will my 16-year-old daughter be taking notes at three o'clock in the morning. david: brain wash her well.

stuart: i didn't brain wash her it's a free speech household at varney-- free speech, but out of the will if you go the other way. . [laughter] >> toys are so five years old. that's in the highlight reel and that's next.

speak to it is time for the highlight reel. >> what do children want these days? >> they asked for money so the five year old girl could get an iphone. >> the biggest market is for the ipod touch. >> you share and do play with someone else. >> pick up one of those devices. stuart: let me pick up on a

couple points. you said these boys could not be shared. >> i do not see a way to. could you imagine a barbie doll being shared between a couple of youngsters. >> at the end of the day, kids do appreciate good old fashioned games if presented to them. >> when kids are bored, they will go to the ipads. when they are playing with each other, they will just be playing with a football or something simple. stuart: put up a picture of the teething ring with the iphone. it has been made into an app. they can play with a toy. >> that is why a child that young could teach you pay to or thing. stuart: the dog barks at you or sings a song or