Will get 300 million from jpmorgan and the remaining will be split between the securities and Exchange Commission and the uks conduct authority. We do not know whether jpmorgan has admitted wrong doing. The firm has said there were errors in its oversight and loopholes to allow that trade to happen and get as big as it did and to cause the steepness in losses that it did. But we havent seen a formal admission of guilt to a regulator. That is expected, if it does happen, to come in the release from the securities and Exchange Commission, which we have not seen hit the wires yet. But this is a coordinated settlement with all of those four regulators, 920 million in fines. There are a lot of allegations outstanding at the department of justice and cfdc and reported criminal investigations ongoing as well. Certainly this is a major milestone for jpmorgan in set e settling these issues but theres a long way to go. Kayla tausche, thank you very much. Kayla mentions the number of agencies that this is all sort of commingling, the acc, the fcc, the occ in the u. K. Theyre just in the cross hairs. Its all for things that have already happening. Its not continuing. This is their time to get it. You lose 6 billion but the taxpayers have nothing to worry about. The institution pays the shareholders pay for a certain amount of time watching the stock go down and then you have to pay huge fines. If you lost 6 billion and went out of business, there werent be any fines. And the shareholders pay. Its obvious this is an ongoing thing. Jpmorgan is really a lot of people felt the regulators gave the banks too much of a pass. How do you show that you didnt . Well, you come after jamie dimon and jpmorgan. Terrific. If i were a regulator i would say, jamie, give me 500 million. The osa, they could use some funding. At one point the number of agencies looking into this was up to eight, right . So this cuts that in half. Is that not progress or well, i think that theres still some more to come. Sure. The company is very silent, which is probably what i would do. I dont know. Ive never been in a position where i write checks for 500 million. Where does that money go . They say it goes somewhere. What does it do . Goes to the treasury. Pays down the debt . Does it go to enforcement . I dont believe the penalties go to the enforcement. Youre saying jpmorgan is one of the reasons we can have an Affordable Care act. We can push out the debt ceiling a few more days. Hes preventing a shutdown. Fannie and freddie are the main reasons. Its about patriotism. Hes preventing a shutdown. Nonessential services will be paid because of jamie dimon and the shareholders. Thats a Silver Lining i wish andy the best of luck. I still like him. Kayla tausche has a little bit more. Just as i was on the air before, we did get the release from the securities and Exchange Commission saying that jpmorgan has agreed to settle the charges by paying a 200 million penalty, admitting the facts underlying the s. E. C. s charges and also acknowledging publicly that it violating federal securities laws. We knownd mary jo whites regime at the s. E. C. There has been a change of tack that firms can not settle without admitting wrong doing. The company has acknowledged there were gaps in oversight and they should have had more control over the issue from the getgo. This is one of the most high profile cases where the firm is admitting wrong doing. Another point that jim brought up which is where the money goes. If the s. E. C. Believe there is is a tangible pool of victims, they will put some of these proceeds in a fair fund and it will go back to that group. When you pay something to the department of justice or to the treasury or a lot of these other government agencies, it does just go to treasury. It goes to the same place that your tax revenue goes to. A all gets pooled and in all likelihood it could be used for deficit reduction. In terms of the other matters yet to be resolved, would you argue the cftc is next to be in line . We keep hearing about backandforth negotiations. There are negotiations going on there. Within one of the things theyre report reportedly investigating is whether jpmorgan manipulated the trading market. Theres been a lot of talk about how could you spot the trade and bet against it because there was such dislocation in the pricing that you knew that this was going on, you knew that jpmorgan was the socalled london whale that was moving this market. But you have to have intent to actually figure that something criminal was going on and to claim manipulation. So i dont know if the cftc has information. Whether thats enough to prove that jpmorgan manipulated the credit markets, well have to see. Kayla tausche, thank you. Futures on the rise. Record highs for the dow, the s p, the russell and the transports of course after the fed surprised some say shocked wall street by not scaling back its stimulus program, gold up 60, the yie 10year yield up 2. 7. They had telegraph tapering, they could have started the process, get us off the dope. It wouldnt have cost them anything because it was in the market and to me they blew it. Guys, stan said my concerns with qe as a citizen. As a money manager, its great. As a citizen, should he not care about the fact at that the government is going to cease, just like it did in december of 1995, january of 1996 . Dramatic decline in gdp during those periods, dramatic decline a shutdown. A shutdown you gave at 60 yesterday, moved up to 80 . Well, bernanke. I dont think hes having conversation why not . He knows hes just not acting the markets not acting on it but bernanke i think showed some foresight. Can you imagine four weeks from now if it turns out he tapered and people say what an idiot, didnt he see this coming . What kind of fed chief is he . If congressional discord is the bar you have to hop over in order to taper, were never going to taper. There was one of the greatest articles in the new york times. If you read the article, which is like on page a12, you realize wait a second, look at the new york times. The lynch story is the fed is still going to buy bonds. On twitter, this was a mean whammajamma up side slam for people who were short the bonds, which i guess most hedge funds were because that was a once in a lifetime move. Whammajamma move . Yeah, whammajamma. They can flip the bonds. 30 basis points. Thats a huge home run. Move of a lifetime. And people dont talk about it enough. If you were long bonds going into this week, youre done. Your year is made, your decades made. Kelly, jim says he showed foresight, others say hes lost his credibility. Whats important is what jim just said about this raising the odds of a Government Shutdown. The fed yesterday, did it trade instability now for instability down the road . Followed by stocks hitting fresh alltime highs on thursday as the fed pursues this policy. If youre worried about the politics of this. If youre the president and youre worried about the wealth gap and you doesnnt want to preside over all of this, does this raise because of how well the stock market is doing that they push the shutdown to the brink or does it keep in play the idea of going to someone who is not necessarily as bernankelike as you would think . And not just yellen in terms of running the fed but a lot of other positions that are open as well. What about a bernankelike person like bernanke . Steve asked a great question yesterday and he punted. Im not answering that question. If the president didnt get his guy so well just stick with the guy. If i read one more article that says yellen got the job, i mean everybody says its going to be sunday night. She does give a speech in new york. Wait for them in her terms to confirm her dovishness or not. Bernanke sees the Housing Market tailed off dramatically, retail tailed dramatically. I love the fact that everyone gripes immediately. Oh, emerging markets. I dont care about emerging markets. What about americans . Shoot, the indonesia is in trouble. We live here we do live here but theres been questions around the world about whether or not the fed has to take into account its ramifications more broadly. A lot of americans pooled into the emerging markets because they were chasing the return and liked the story and the manager told them to and now theyre getting carried out. Hes worried about the pharmacists in dylan, south carolina. Hes a true america. Turkey should be worrying about turkey. Suddenly he has to worry about turkey . How much can the wealth effect bail out the rest of the u. S. Economy . What the fed is doing here is hoping the wealth thats been created so far through the Housing Market and through the stock market will eventually either trickle down or start some broader cycle that brings people back into the labor market but the feds own research has been questioning how much of a health whats congress doing . Whats the president doing . Theyre doing nothing. Thats the point. Theres a report out this morning entitled get to work mr. Schumer because thats where onus really is now, right . The fed was the only one doing anything. Everyone else is cutting back, the democrats are cutting back. This is not an Eisenhower Administration where they set up the interstate highway system. In 37 we had a terrible recession. Bernanke, thats what hes about. Hes a student of history. He is. Hes a smart guy. There are many who say they love gridlock in washington, d. C. , but many would also counter the inability to get an immigration bill, to get anything that could codify certain policies that would help chi Economic Growth in this country i would love to hear from bill clinton. He was saying the shutdown would be terrible. I think hes going to be on letter man. Letterman going to have bernanke . No. I think fallons got bernanke. Stewarts got bernanke. What a get there is one final interesting point about all this because tomorrow were going to get this vote on whether to defund obama care in the house. What bernanke did yesterday was effectively tie say a vote against qe if youre not happy with what the fed is doing right here, then you want to keep the government running. If keeping the government running means keeping obama care funded, he has now just tied everything. Try grappling with that if youre a member of congress right now. They gave you a little gift here. Well be talking about that for days. Is that a positive conversation . No, its not at all. How many jobs are created by that . Druckenmiller would tell you hes as worried about that as anything. Tepers statement this morning is the fed is leaning heavy. If you work at united technologies, this is a great time, 3m. Theyre having a great quarter because asia has come back. If youre a local guy, shopkeeper, retailer, its not a great time. What Manny Chirico said, the last ten days have been horrible. Last night on mad money, they said we have money, were okay. That goes back to druckenmiller, why not choose now to taper. Theres still a problem. My metaphor is the teacher in high school who extends the essay deadline after half the class pulled an allnighter because the market was ready for it. Some guys are short oh, wow. Holy cow, their year is lost and the people who bought it, their decade was made yesterday. It was 20 basis points. Their decade . When was the last time we had a 20 basispoint move . Theyre getting more common. I bet you could go back this year and find another 20 basis point move. On the long side. On the long side. I will find it. It has been a while. A lot of movers to get to this morning, including oracle and disney. Well see what cramer has to say about that. And days after announcing a div hike, microsoft, that meeting with analysts is today. The Steve Ballmer era starts to wind down. And futures a little more positive, best day since july 11th. Back in a moment. Has its ups and downs. Seasonal. Doesnt begin to describe it. My cashflow can literally change with the weather. Anything that gives me some breathing room makes a big difference. The plum card from American Express gives your business flexibility. Get 1. 5 discount for paying early, or up to 60 days to pay without interest, or both each month. Im Nelson Gutierrez and im a member of the smarter money. This is what membership is. This is what membership does. Wall disney shares down in the premarket. Morgan stanley saying growth is now tied to what theyre calling difficult to predict creative success. Disney also pushing the release of the pixar movie the good dinosaur until 2016. That means no pixar movies will be released next year. First time thats happened since 2005. And grand theft auto 5 generated a Record Number 800 million in first day sales. You have to put that number in context. Thats 60 more than the call of duty black ops 2, which was the largest. 60 above the largest. The last harry potter movie, 483 million day one. This is the largest single entertainment title daily take of all time in history of man. Are there any parents left . Id never let my kids have this. This is unbelievable. Its a huge number. Buy game stock. Its not even taking into account and the model is changing to a certain extent. There are a lot of addones to this game. Youre going to measure by average revenue per user, because the kids are typically the ones who buy them, buy additions to them when the new one comes out. We havent seen a new one in i think five years. It is great looking stuff. This is great for xbox and it is good for game stop. Well see how take two does. This news was out with about an hour to go in trading yesterday. And the market did not react. They werent focused on grand theft auto yesterday afternoon. It was the data release bad news as opposed to good news. If you looked at the number for grand theft, its incredible how robust they are. Were still not going to take it. How about the disney downgrade . Take the other side. Its now about multiple expansion. End of an investment cycle. Thats been the story for five year. Bob iger has a series of movies rolling out every quarter. I saw one was pushed back, oh, wow. Its a staggered Product Launch as if it were Procter Gamble during the days of yore and hes got it all figured out and these analyst who is have run big Entertainment Companies that are billions of dollars, not, they are constantly small minded about what igar has been able to do. I think its because igor carries himself hes not going to tell you what hes going to do. He comes to your green room with no one. He has no entourage. He has no posse. Who was the one guy that steve jobs respected . Mr. Iger. When we come back, well have cramers mad dash. One more look at futures as we come off of that nutty day yesterday with the fed decision and a lot more still to come. A lot more squawk on the street in just a minute. In todays markets, a lot can happen in a second. With fidelitys guaranteed onesecond trade execution, we route your order to up to 75 Market Centers to look for the best possible price maybe even better than you expected. Its all part of our goal to execute your trade in one second. Im derrick chan of fidelity investments. Our onesecond trade execution is one more innovative reason serious investors are choosing fidelity. Now get 200 free trades when you open an account. [ tires screech ] [ male announcer ] 1. 21 gigawatts. Today, thats easy. Ge is revolutionizing power. Supercharging turbines with advanced hardware and innovative software. Using data predictively to help power entire cities. So the turbines of today. Will power us all. Into the future. That was the brothers johnson, which i think Johnson Johnson goes to 95. We have about five minutes from the opening bell. Lets get a little mad dash in bio marin shares. Heres the problem. This guy comes on a monday, early this week, and i wake up and the stocks suddenly up six, david, because of rumors that a company that doesnt need to raise money is going to make a bid. What is that . I cant really give you any confirmation whatsoever that roche is raising money to potentially make a bid for bio marin. Theyve been selling stock, theyre not aware about it if its coming. They do have about 24 billion in debt but theyre a 2 billion market cap company. They dont need to go out and raise 10 billion. They can do whatever they want very quickly. Its unclear why we get stories about roach raising money when theyre the last company that needs to raise money to do anything, unless theyre going to buy out verizon. This stock was here and it came up here. There might be guys that are long that want to get out. I do believe this is the floated rumors so someone can get out of biomarin. And roche, a 30 voting stake in roche. Well talk about that coming up soon. Thank you. The s p coming off of record breaking session. Lets see if we can get more market history made right here on squawk on the street. [ cows moo ] [ sizzling ] more rain. [ thunder rumbles ] [ male announcer ] when the world moves. Futures move first. Learn futures from experienced pros with dedicated chats and daily live webinars. And trade with papermoney to testdrive the market. All on thinkorswim. From td ameritrade. Youre watching cnbc squawk on the street live from the financial capital. The opening bell in a minutes time. The dows at a record high, the s ps at a record high. Some of these dow theorists, jim, if this really matters remember, we had a few hin n hindenberg. Go to lake hurst, new jersey, were done with the hindenberg omen. This is a this market broke out yesterday and i dont want to go into the shutdown with a head of steam but, wow, we had everything. Housing stocks, housing related stocks, home depot finally down to where it was when they reported that great number. Nobody liked it, getting there. There is the opening bell. Ellington Residential Mortgage doing the honor, a reit. Over at the nasdaq, taste of france, showcasing french innovation and culture in new york city september 28th and 29th. My executive producer got some of that boulange and didnt like it. She said that the muffin made her finger greasy and then she couldnt use her iphone. You have downloaded ios 7 . No, im going to buy one this weekend. You have . I downloaded it. Have i have to say i am impressed. Theres been coverage of people having difficulty get to the download. Tim cook offn of cover of business week, what us, worry . I think hes moved the needle. I would think about buying ups off the hand sales. Fedex yesterday, Goldman Sachs downgrades it today because theyre grouchy. Disney guys grouchy. Why are they so grouchy . Why cant they be a little more upbeat . Disney did move up a great deal. If youre trying to stick to some sort of price discipline. Price discipline . What is the point of that . Why do you always let the facts get in the way of the story . Is that something that just happened now . I cant help it. Its all the years of reputation. Its annoying. There are a lot of purists who do not want to look at it. Its an up market. Maybe it shouldnt be and i fear the shutdown but wow. Jpmorgans statement is out on the settlement. Jamie dimon says, quote, we have accepted responsibility and acknowledged our mistakes from the start. We have learned from them and worked to fix them. We will continue to strive towards being the best bank across all measures, not only by our shareholders and customers burr also our regulators. The bank when it comes to paying fine, i think jpmorgan doesnt get hit did you just say the best bank when it comes to paying fine . No one pays fines like they do. Theyre setting the standards, too. Theyre the benchmark of good fining. I apologize to the purists and im going to spew green vomit at that camera if someone doesnt stop criticizing me on twitter. The stock was done a buck in the after market. A lot of people are very worried that the cloud is a headwind for them, not a tailwind. The conference call, they call a big cloud game. In the end you want cloud, sa s salesforce. Com. You mentioned some of those downgrades. Conagra had been downgraded in the past few days. That looked kind of smart today, did it not . There was a downgrade general mills. That was a grumpy downgrade by wells. Killing the stock. That was a bond market equivalent. Thats stiritz who sold it to him. He was distributing herb herbalife. Since bill stiritz got into it, its sold a lot. The man knows how to make money. He has been a money maker from the old there are very few investors as good as steeritz. The money manager at bernstein said do whatever steeritz does. Thats what people have been doing in herbalife. You talked about not going into the shutdown with a head of steam. Would you argue today is a day to buy anything at all is. No. Its not a day to buy anything. Travel stocks during 1995, 1996, travel stocks got hit. You ought to be very careful because nonessential services do get cut back, retail did to the do well during that period. They did have a decline when they finally settled it. It let up and boom, first week of january it started rolling over giveagain. You have to be careful. Do you want to buy rite aid up 10 . I dont know. Rite aid probably goes to 5 and can you catch that 5 . Id rather wait until everything comes down. Should we have a the government is going to shutdown, we dont know whats going to happen portfolio . Rise above, partner. Uhoh. Did you keep your button . After i read that boehner story where he basically said try and break out the lipton and the taso, and the teavana its a tea party phenomenon. 80 congressmen. You have talked about stocks in the past that would weather this kind of uncertainty. International stocks. You can go in united technology, the Charitable Trust in honeywell, 3m. These are International Companies located here. Boeing is a classic example. Everyone said they would be hurting defense. I think that every minute that boeing is open they get a billion dollar order. There was a billion dollar order from airline i never heard about today. Hes withone of the greatest ex of the world. You got to have your every day tesla mention. Deutsche going to a 200 mention. I think hes anticipating that triple a is going to say its a really good car. What does he have there . State troopers in nooj like the car. That thing is such a cult. I dont want to get in front of a cult. Netflix dont get in front of, tesla, dont get in front of. What are the other three you dont get in front of . Ulta salons, lumber liquidateors and tractor supplies. Do not get in front of a growth stock between here and your end. If you get in the mind of a guy who likes tesla, he says, listen, its a 400 stock. Its a 400 stock. Thats what they say. They dont say its a 190 stock. Netflix is a 700 stock. I tell my little one always look before crossing the street and never get in front of is it gandhi plays with ralph bunch sitting around with nelson mandela. Bishop tutu is behind the wheel there. Theres not a lot of value to grand theft auto. It seems to be very popular. That doesnt make it good, david. Dow is up only 4 points but 85 new highs on the s p. Lets get to bob pisani on the floor. Were seeing housing stocks move up, some of the cyclicals a little stronger here. Did an informal poll from the traders. Lets put up the full screen. Number one, we got a fed thats going to keep the stimulus going, we have europe stable and china and japan improving. A classic bit of understatement this morning, david tepper said it should be a favorable environment for the markets, i agree. Thats what the fed appears to be very worried about. This is all still very fragile. I asked what about sectors in the next month or so should be outperforming . I got some emerging market inflows but there were a lot of caveats around that and Interest Rate sensitive was far and away the number one group, housing, telecom, reits and a lot of people felt the Global Economy is still to fragile to make a lot of investment there is. Where do we go next . Heres whats very clear on emerging markets. They have the bernanke has thrown them a real lifeline because for the moment theyre going to be free of some of these currency devaluations they have been plagued with. Its only a temporary respite. A lot of negative comments that emerging markets have not undertaken the fundamental infrastructural reform. Traders have woken up to some of the longer term problems that these countries have not april dress addressed. Theyve got a little time now hopefully theyll address those. India is a two and a half month high, brazil already at a two and a half month high. Theyre off their lows already. Were going to have a quadruple witching tomorrow, the expiration of quarterly and index futures. These prices moved so far so fast that a lot of this is irrelevant. A lot of this unusual volume already happened. 1675 and 1,700 on the s p were at 1725 and close to 1730. Theres just much less action in those strikes that are out there. I think this quadruple witching is going to be a little less relevant than it might have been in the past. Right now were basically flat on the dow. Thanks very much, bob pisani. One thing we havent mentioned yet today and perhaps a sign of quiet activism, though i havent confirmed that,a agilent will split into two companies. This has been a name ive heard in activist circles for some time, though nobody has surfaced. Unclear if you have an activist in a smaller position at least p pushing them to do this. You talked about this as a potential outcome. June 3rd we suggested they split into two companies. Some activists said thats a great idea. I dont want a fee. Its just a spinoff of Hewlett Packard. Just cats and dogs. Isnt it funny this would have been great business for Hewlett Packard now versus their regular business. Life sciences and measurement and tests. Remember Hewlett Packard, it was the oscillateors. Remember, it was the first thing they did, testing measurements. This was the heir to originally their smart guys. I wonder what they would think of the company now. Im sure theyd have a lot of thoughts. Should mention that agilent hopes to complete that by the end of 2014. Thats a long, long time. I talked to one shareholder who remarked on that being an awfully long time to get this done and it will require the approval of the board of directors at that point in time. Some are wondering why so long . Can we really be assured it will occur . Most likely its going to. They already have a ceo designate of the new company. That is the current coo who will be running that. The current ceo will continue as ceo offa agilent itself. Shrinking to grow. We heard it yesterday from Chris Ventresca at jpmorgan. That perhaps is one of the themes here. And he was not fined. Right, hes just doing his job. Doing his job, coming into work every day, trying to make something happen. The atm machine was fined, the nfl has fined jpmorgan 500 million. Late hit. Weve looked at the videotape, got the fedex envelope. In defense, whats the term when they hit them when they cant defend themselves . Why am i indefensible on that . Want to shift to bonds and the dollar . Why dont we do that. It something i wanted to do very badly. Rick santelli is at the cme group in chicago. You said, jim, something today i agreed with. Uhoh. You said the 10year had no demand at 290. Youre spot on. Thats why ben had to keep on with the artificial demand. Dont disagree. Whos going to buy those 10years. Everybody is calling it the greatest day for making money in a long time. Look at the twoday chart and remember the 10year based on yesterday and the day before moved a net amount of basis points of 16. 5year moved about 20 18 base points to be precise. Why does it matter . July 1st, the big moves of Interest Rates up. Well, just before 4th of july to coming back we had bigger moves to the up side. Why does it matter . I think it was more catching people off guard. I cant tell you how many people i bumped into this building that have been long 5s forever and waited the trade out. I understand how these things work. But i think in the end if you look overseas and look a at bund monthtodate, you can see much smaller moves. You can argue its because maybe theres more stability in europe or maybe the outlook may be better but i caution maybe you want to take a reevaluation of the headlines after sunday nights election. Think greece, think size of bailouts, International Bank of settlements. Do a little homework. Is it going to be a 15 billion bailout package or closer to 50 billion, 60 billion, 70 billion. If were going to look at girth and size, the area want to look at is how wonderfully the response was of the dollar index after yesterday. So people can talk about inflation or you can talk about commodity volatility. Either way, one is just a little later to the parade. Back to you, carl. Rick, talk to you soon. Rick santelli. We have two words for you, cool and zuckerberg. Find out why after the break. Also, google investors have big reason to smile. The stock is up more than 25 this year. Is the tech giant spreading itself too thin by forming a new Health Care Venture . Squawk on the street will be right back. Nascar is ab. Out excitement but tracking all the action and hearing everything from our marketing partners, the media and millions of fans on social media can be a challenge. Thats why we partnered with hp to build the new nascar fan and media engagement center. Hps Technology Helps us turn millions of tweets, posts and stories into realtime Business Insights that help nascar win with our fans. Also, google investors have big vo you are a business pro. Maestro of project management. Baron of the buildout. You need a permit. To be this awesome. And you. Rent from national. Because only national lets you choose any car in the aisle. And go. You can even take a fullsize or above, and still pay the midsize price. aaron purrrfect. vo meeeow, business pro. Meeeow. Go national. Go like a pro. Snlt. Welcome back to squawk on the street. The move in metals really tells you what the market thought about the feds inaction and the no tapering. Its really been relevant to the gold market, to the Precious Metals in general with gold up 4 , silver up almost 8 . Even the Platinum Group metals are benefiting up about 3 or so. They were unable, though, to catch any up side momentum from the fed. The overhang in the oil market is the supply issue, the global issue with libyas supplies coming back online, as well as the outlook now in iran, with the iranian president now talking about not developing Nuclear Weapons, telling nbc news exclusively its a change in stance and a change what is changing the risk premium that has been in the oil market for such a long time. Back to you, carl. Sharon, thank you so much. Mark zuckerberg will discuss a meeting to discuss immigration reform. He gave an interview yesterday about the future of the social network facebook. Heres what he had to say. One of the things that i find interesting is people think that were trying to be cool. That is like thats never been my goal. Im like the least cool person there is. I want to produce something that is thats a really kind of fundamental service for the world. Were almost ten years old, right . So and were definitely not like a niche thing at this point. So news angles are coolness are kind of done for us. If you look forward five or ten years, he said youll found every within of these experiences people have around tv, music, health, finance will be redesigned to be around people. I believe that. Taking a longer view. I think its true. If hes untrue, what is it facebook is in your Charitable Trust. Its too big of a position now because of the rally. Thats what happened with apple in the Charitable Trust. I trimmed a little back but i still believe in it, furiously believe in it. Yelp, facebook. I put yelp in because thats also like tractor supplies and lumber lick quidators, its lik cult stock. Dont let your children get in front of it. Right. Do i think that facebook is a real stock. Its been an amazing story. Heres whats coming up next on squawk on the street. Coming up, its not exactly ocd behavior, but its certainly something requiring order and nobody does it like jim cramer. Six stocks in 60 seconds when squawk on the street returns. Thank you orville and wilbur. Amelia. Neil and buzz for teaching us that you cant create the future. By clinging to the past. And with that youre history. Instead of looking behind. Delta is looking beyond. 80 thousand of us investing billions. In everything from the best experiences below. To the finest comforts above. Were not simply saluting history. Were making it. You really love, what would you do . [ woman ] id be a writer. [ man ] id be a baker. [ woman ] i wanna be a pie maker. [ man ] i wanna be a pilot. [ woman ] id be an architect. What if i told you someone could pay you and what if that person were you . When you think about it, isnt that what retirement should be, paying ourselves to do what we love . Dells off about 8 points. Lets get six in 60 with jim. Dr. Pepper seeing action. Goldman says this is losing its fizz. This is a company that a bunch of iterations, new drinks. Looks like theyre falling flat. I thought it would hold but its not holding. And masco is near the top of the s p. Be careful that, is a quintessential home. Now no taper. And updated groupon today. Its still not too late to buy groupon. Theyve fixed the business model, new management and is doing well. Updated travelers. A lot of people worried about the last quarter, thats starbucks, not travelers. And pier one. I dont understand why they missed. I think its a very, very good company. If you tune in tonight, maybe well find out. This may be a buying opportunity. Anything else on mad we should know about . I got International Game technology. Very controversial stock. I dont know if it should be because they had a really good quarter. And finally, big game tonight. Andy reid, welcome home to philadelphia. Is that how youre putting it, welcome home . Well, i like the reids very much. I like chip kelly, too. And tammy reid is a friend of mine and shes sensational. Its going to be a good game to watch. See you on monday. When we come back, breaking Economic News times three, existing homes, philly fed, lei and the Market Reaction in just a moment. [ female announcer ] youre the boss of your life. In charge of long weekends and longer retirements. Ask your financial professional how lincoln financial can help you take charge of your future. Nice car. Sure is. Make a deal with me, kid, and you can have the car and everything that goes along with it. [ thunder crashes, tires squeal ] so, what do you say . Thanks. But i think i got this. [ male announcer ] the allnew cla. Starting at 29,900. [ male announcer ] the allnew cla. Nascar is ab. Out excitement but tracking all the action and hearing everything from our marketing partners, the media and millions of fans on social media can be a challenge. Thats why we partnered with hp to build the new nascar fan and media engagement center. Hps Technology Helps us turn millions of tweets, posts and stories into realtime Business Insights that help nascar win with our fans. Welcome back to squawk on the street. We have september philly fed surging to 22. 3. Wow. As i cipher through, i have to go all the way back to march of 11. We know this is volatile, makes durable goods look comatose. Lets go to august, leading Economic Indicators are up 0. 7 . You lost that to a revision. Lets dig down just a little bit. If you look at the Employment Index in philly fed, it increased from 3. 5 to 10. 3. If we look at new orders, they increased a big amount as well, large amount from 5 and change to 21 and change. So philly fed, surprises, lei delivers and we still have more data to come with diana olick. Lets get to diana for more on the home data thats breaking. Diana. Reporter existing home sales, simon, up 1. 7 month to month. Thats a big surprise to the up side. We were expecting sales to be down. Were at 5. 84 Million Units. The realtors themselves saying this is, quote, the last hurrah. They say this was numbers from june. These are signed contracts in june which go to closings in august. They say that was people respond together higher Interest Rates and jumping into the market in fear of rates going higher. They expect sales to go lower throughout the fall. Median home pretty, 212,100. Up 14 year over year. This is a mix of homes issue because the realtors use a median home price. Home over half a Million Dollars are up 30 over a year ago. Inventory continues to be the issue, down 6 year over year, just 2. 25 million homes for sale, a 4. 9 month supply and the realtors say they expect that amount to go down as well to keep places high because of low inventories. Sales on pace at the highest level in six and a half years, even higher than the home buyer tax credit. Carl . Thank you very much, diana. Pretty good data. Lets see what it all means for the economy, especially in light of yesterdays decision. Steve liesman is back at headquarters with a lot more. Good morning, carl. How you feeling . All in all, id rather be in philadelphia. Good numbers yesterday. I want to look at what has changed in fed policy from the big june statement to the september statement yesterday. Heres the timetable ben bernanke gave us in june. If uncoming data are broadly consistent with the forecast, theyll taper later this year. Reduce further in measured steps through 14 and end purchases around mid year. Yesterday if the data confirm our basic outlook and we believe the threepart test i mentioned is coming to pass, then we could move later this year. Whats the threepart test . Bernanke said confidence in job and Economic Growth, the september employment report seemed to scare them. Their own june rates stopped them from doing the taper. We are tied to the economy, woo dont have a calendar. Heres what he said about future fed moves. Asset purchases are not on a preset course. They are conditional on the data. Theyve always been conditional on the data. Secondly, even has we move from asset purchases to rate policy as the principal tool of Monetary Policy, its our intent to provide the accommodating Monetary Policy. The new forecast for the Federal Reserve, they mark down 2013, marked down 2014, kept 15 the same. One more thing i want to talk about. Clear the fed has been saying more and perhaps explaining less. We counted up this morning the average number of words in a fed statement. Greenspan in 05, 170, bernanke ups it to 420. Then up see the last couple of months with 720 words in the last statement. Theres more to explain, theres more policy out there, it more complicated and there have been some big events. Not clear to me the market is understanding more even while the Federal Reserve is saying more. Simon . You know, steve, jim reed at Deutsche Bank said no one is particularly well connected to what the fed are actually currently thinking. Its important because if you dont know what theyre thinking, by definition, they cannot be leading, steve. Reporter thats right, simon. And theres some very good and really agreed upon central bank theory, which is the fed needs to talk enough so that the market know when is things happen how the fed would react. They call it the reaction function. It feels a bit broken now, simon. Im not precisely sure why. Is the market not hearing . Is the fed not talking . But the last two big announcements, june and september, have led to outsized market moves and i think that bernanke would agree thats not what he really wants to happen. Steve, well obviously discuss is further throughout the day. For the moment thank you, Steve Liesman with the latest on the fed. Lets get to jpmorgan and its fallout from the london whiale. The bank is to pay almost 1 billion in fines. Theyre also extracting a rare admission of wrong doing from ceo jamie dimon. Kayla tausche has more on that back at hq. Good morning, simon. Its just one chapter in the london whale trading factor. The firm said it would pay the 920 million to four regulators that have been investigating the situation for over a year, 200 million to the Federal Reserve, 200 million to the s. E. C. The s. E. C. Settlement came with the rare admission of guilt acknowledging to the agency that its giant monthslong derivative trade violated federal securities law. Jamie dimon said in part, quote, weve accepted responsibility and acknowledged our mistakes from the start and we have learned from them and worked to fix them. Steps undertaken demonstrate substantial and healthy introspection as well as the seriousness of a commitment to a strong control environment. It just it seems like the regulatory issues keep on coming, especially where london whale fallout is concerned. And in a filing today the bank says it received a wells notice from the cftc, indicating cftc staff have recommended a separate parallel action. So, simon, even though todays action is a big milestone for the firm and for regulators, this chapter and this book are not closed just yet. We should mention even if the fines for this particular episode stack up to over 1 billion, theres still the issue with regard to what jpmorgan was doing in energy markets. This is just one of many different battles that the firm seems to be caught in the middle of right now. And theres still an issue over the companys credit card collection practices and a lot of other issues that are ongoing. One thing people forget about with regard to the london whale yet, we still havent seen the volcker rule. And rivals say its been the single most painful issue for the volcker rule. They say that regulators are continually point together london whale. Of course we havent seen the volcker rule but its expected to be strict because of that. The london whale hurting liquidity. Kayla tausche, thank you very much. Stocks have calmed down this morning after hitting record highs yesterday after the fed announced it wont begin to taper this month. Joining us now Neal Hennessey and ira, credit director at credit suisse. Good morning. Good morning. There are people who say i dont want to get involved. I dont want to buy at the top. You said the dow could end another 3,200 points from here, though. Why . If you go back to the high in 2007, the price of sales ratio in the dow jones was approximately 1. 7. Today it stands at 1. 40. If you go back to the high in 2007, the market wasnt frothy. The reason the market got cut in half is it was the only place for liquidity. Between 2003 and 2007 depending on what indices you looked at, it was up on average but clearly not keeping up with real estate. So everybody went over to real estate, no money down, no paper work. All of a sudden that game to an end. Where you going to get cash . It was the market. It had nothing to do with Company Profits and Company Profits as you see today are at an alltime high, well over 2 trillion. Ira, there was a massive credit crunch in the u. S. Economy. Focusing on that event and where weve come, are you surprised rates are back below that 2. 8 r 2. 7 level . Im not surprised Interest Rates have come back a little bit, particularly given that the Federal Reserve is going to be buying bonds for longer and a lot of bonds for a while longer than we thought. Risk assets in general, Corporate Bonds or stocks in general, theres going to be this continued liquidity. Im worried what is liquidity like in fixed income markets, like the mortgage bond market where the Federal Reserve is going to be buying almost all of the bonds issued for the Housing Market. The story at the top of your show was about that august might be the last time youre going to have big home purchases for the next few months, which ironically is one of the reasons the fed didnt do anything yesterday, but on the other side theyre buying all these bonds and theres not going to be enough of them out there to avoid liquidity problems in some markets. Ira, beyond that, where are we now on the credibility of the fed . The most powerful thing the central bank has is the power of intent. You see it with the e. C. B. , they say well do all we need to do to continue the eurozone and the markets are contained. Bernanke said they might taper by labor day, rip the heart out of emerging markets and now all for nothing. It not happening. There must be consequences to that, ira, are there not . Its very confusing. I think they have one more chance to try and be transparent and not lose their credibility in that transparency. The chairman yesterday was he made a comment that said he wasnt going to let the markets dictate what the Federal Reserve was going to do with policy, but the only reason why we believe that was because you had fed members, whether they were hawks or doves saying were going to cut asset purchases in the fall. Well, it the fall and they didnt cut asset purchases. Now its just going to be harder because they have to go through that again. If theyre going to cut purchases in december, january or march of next year, theyre going to have to hint theyre going to do it again. Will we believe them . I dont know. Neal and ira, interesting thoughts this morning. Really appreciate it. Meantime, oracle shares recovering a little bit after falling sharply. Well tell you how you should be playing the stock. Plus markets seeing some big upward momentum. Is it time for a pullback . Well find out which areas of the market may be at risk when squawk on the street continues. The california teachers association. 150 years of making a difference that lasts a lifetime. Shares of oracle are stable after the Software Giant reported a weaker outlook than analysts had expected last night. The managing director also covers microsoft, which has its analyst day today. Brent, good morning. Good morning. You could almost hear the sigh of relief that this quarter they didnt disappoint the market. They were 0 for 2 at the plate. Q4 was a decent outlook but that was disappointing. We think youre going to have to get to the second half of the year for oracle where the comps are very easy. Oracle is a cash flow earnings story, not a revenue story now. We think theyre looking for the next catalyst to put them into the fast line of growth. Many of their Software Peers are outpacing them right now, crm, work day, a handful of application names. What difficuvidend are they g at the moment . Its a modest dividend. Oracle has been very aggressive on the buyback, as well as selective m a. Unlike microsoft where they focus on the dividend, oracle is focused more on the buyback. The stock hasnt really gone nip where over the past year, has it. You mentioned salesforce or workday. Isnt there a better place to be than big tech like this . We think so. We believe that crm is a top pick for us. Weve liked that story for a long time. Its outpaced oracle shares. Our philosophy with investors is you have to bar bell low valuations and high valuations. Were not telling our clients to go all hypered growth. I think bar belling has paid off with microsoft up 20 this year. I think that strategy has worked in that case with a low multiple story and low growth in microsoft as well. In the meantime we have a major meeting today for microsoft. Theres a 40 price target you put on the shares. They didnt respond well necessarily to news of that dividend to news about the nokia acquisition. What are they going to have to say today to turn things around . Amy hood, the new cfo, has to set the course for the financials and their journey to the cloud in mobile. Everyone on wall street is trying to figure out how they get to the other side of the legacy world on the pc side to the cloud and to mobility. And we believe amy has to set that course. They also have to put the right ceo in. So i think from those are the next two catalysts. I think we got the ceo Succession Plan obviously and then the dividend was healthy. I think the buyback investors were looking for a slightly more accelerated, larger buyback than they announced. What sort of ceo would you like . An elder statesman of the Business Community or someone who is younger, more cloud focused, more tech focused . I think its a good question. You know, al malala at ford, theres a case where i think investors would be excited. Also from an innovation perspective, thats whats lacking. So i think that they would like someone from the outside rather than the inside. So i think thats what investors want right now. I think theres a couple internal candidates they could go with but were looking for the outside. Its a big ship to turn around. Brent thill joining us. Who took the top spot this year . Well tell you when squawk on the street continues. Stay with us. [ woman ] id be a writer. [ man ] id be a baker. [ woman ] i wanna be a pie maker. [ man ] i wanna be a pilot. [ woman ] id be an architect. What if i told you someone could pay you and what if that person were you . When you think about it, isnt that what retirement should be, paying ourselves to do what we love . A lot can happen in a second. With fidelitys guaranteed onesecond trade execution, we route your order to up to 75 Market Centers to look for the best possible price maybe even better than you expected. Its all part of our goal to execute your trade in one second. Im derrick chan of fidelity investments. Our onesecond trade execution is one more innovative reason serious investors are choosing fidelity. Now get 200 free trades when you open an account. Dows off about 10 points here. Some experts think it may be time for a pullback. Whats the general thinking . Dominic chu is back with that story. Reporter many traders are still trying to figure out the meaning of yesterdays fed inaction. Another reason theyre in a Holding Pattern is stockings are throwing up a caution, a yellow, if you will. How strong is any market move and how sustainable is it . Heres a look at the s p 500 so far year to date. Yesterday we hit a record high. Today again another record high. Before yesterdays record and todays record, we hit two other distinct highs, one in august, one in may. Each of these peaks put by the s p 500 had a statistical situation where a pullback afterwards was highly likely. In august, that turned out to be a 5 drop. In may it was closer to 8 . So if the market drops by about what it did the last two times it peaked, we could see a pullback to 1626 in the s p 500. If you still have that pullback, we can still stay in that current longterm up trend for stock. There is no crystal ball but traders are approaching with caution because recent history is one of the big reasons why is each time weve hit this peak this year, weve seen this kind of a pullback, kelly. No crystal ball but thats the reason why many traders are approaching the market with at least a little bit of caution, kelly. Back over to you. All right. A lot of people on the short side carried out yesterday. Thank you very much, sir. Fortune is out with its list of the 40 stars. First from blackrock, goldstein managing more than 500 million in assets. And john elkann has landed fourth. Mark zuckerberg got the coveted third spot, the bronze medal. Hes 29 years old and the youngest of the top five and in second place, jack dorsey, cofounder of twitter of course and the current head over at square, payments company, came in at second. The top honors this year, drum roll, please, went to the president and ceo now of yahoo . Yes, we know her well, guys, marissa maye r. I think whats really interesting is what those tech people, now that theyve made their money do more generally through society. You saw google going to well being, an extension of life. Here in new york a lot of talk of techies that have made money is they will go into health care exchanges. Policy makers in the Health Care Segment have been desperate for innovation. If you look at whats happening to walgreens saying theyre going to move employees going to some of the other exchanges if you can sex it up and make it clear, that would be a bre breakthrough. Simon, its not just the u. S. List. It is global. So bts liv garfield comes in at number ten. Hurrah. Enthusiasm. Im not there, you know . When we come back, former fed governor randy krosznel will give us his opinion on ben bernanke and what he had to say. Back in a minute. announcer at scottrade, our clients trade and invest exactly how they want. With scottrades online banking, i get one view of my bank and brokerage accounts with one login. To easily move my money when i need to. Plus, when i call my local scottrade office, i can talk to someone who knows how i trade. Because i dont trade like everybody. I trade like me. Im with scottrade. announcer scottrade. Awarded fivestars from smartmoney magazine. Were just 11 days away from a possible Government Shutdown. Gop leaders may pass a bill that will only pass a law if the Health Care Law is fully defunded. And we heard from the white house the president will veto any bill like that that comes across his table. Its one reason the fed yesterday decided not to taper. Heres what ben bernanke had to say. A Government Shutdown and more so a failure to raise the debt limit could have very s serious consequences for the economy and its our policy to do whatever we can to keep the economy on course. John, how does boehner get out of the situation . He chose not to lead those 40 or so conservatives into some bipartisan deal but to follow them into conflict with the democrats. What happens . How do we get out . Its not clear how we get out of this, simon. What we have is an extraordinary situation in which the Republican Party has disconnected itself from rational economics or rational politics. Every mainstream economist will tell you that the Macro Economic consequences of obama care, which theyre trying to defund, are not all that great one way or the other, whether you like the law or not, but the consequences of a shutdown combined with a debt crisis are huge. Every political strategist in the republican mainstream will tell you republicans will get blamed for a shutdown in a debt crisis and it will hurt them in elections. Thats why the u. S. Chamber yesterday begged the house of representatives to raise the debt limits, its why john boehner tried to dissuade the 40 renegade conservatives but he couldnt do it. The house is scheduled by the end of the week to vote to extend government funding while defunding obama care. That defunding provision is certain to fail in the United States senate. What happens after that absolutely nobody knows. And i think what the Republican Leadership is counting on, simon, what the white house is counting on is that enough alarm gets raised about this that ultima ultimately once the Senate Rejects what the house wants to do, the house leadership is able to rein in its members and raise the debt limit without triggering this sort of crisis. We know the real alarm and siren tends to be the stock market. Today its only off 10 points. It will take more than that. It will take a lot more than that. Lets go over to sharon at the nynex and natural gas. The number came out at 10 30, it was a surprise to the market, a rise of 45 billion cubic feet in terms of natural gas thats been put into storage the past week. Analysts were expecting between 55 to 59 billion cubic feet. The fact that it was a smaller addition to storage is seen as bullish for the marketplace. Natural gas prices hit a session high of 3. 82. Were at a twomonth high now, at least for Natural Gas Prices and weve rallied more than 20 just in the last five weeks. Weve seen some coaltogas switching, some Nuclear Power plants that have had outages due to maintenance and weve also seen warm temperatures for this time of year across much of the country. A lot of people may have underestimated the type of demand that created for natural gas. Thank you so much. What exactly is holding the fed back . Randy kroszner is a former Federal Reserve governor, professor of economics at the university of chicagos booth school of business. He joins us from the windy city. Randy, good to see you again. Good morning. Good morning. Doesnt sound like you think a taper is necessarily coming this year at all . Its going to be dependent on the data. I mean, the chairman has always said that. The labor market has been less strong since he started talking about it in may, june. The previous months it looked like the labor market was on a sustained recovery path. Stepped down a little bit over the last few months. Weve got a lot of uncertainty on the fiscal issues, as you were just describing. And the big backup in Interest Rates has potentially led to a slow down in the Housing Market. The fed has been focusing to make sure the housing recovery is sturdy. It doesnt want to destroy that with a little bit of taper talk. How does he get out of this box where he says he committed to communicating with the markets, which gives the markets some intelligence, rates do go up and then hes unable to tape are because the higher rates are affecting the economy. How do you bust that cycle . I call these open mouth operations, sort of talking what you will do with open market operations. I think wisely what they did to Start Talking about this in may june when the economy seemed stronger but it gave them two or three months of gathering data to see what would be the impact on the markets and on the economy. That data came back not so positive. So i think thats why theyve sort of stepped back. I think its actually useful to gather the data before just taking the plunge, like in 1994 with no warning. You know, randy, for those in the market, the last 24 hours have been really astounding. This is how paul donovan, global economist at ubs in london put it, he apologized to his clients in the past for having given his clients the thought that the that is not what you want to hear from ubs. I would disagree a little bit with that. Think about the alternative back in 1994 when Central Banks didnt talk about what they were going to do and that was devastating. People were expecting some sort of stepdown now but the 10year rate is still 60, 70 basis points higher. Well, to the extent, randy, that the fed is trying to assert its will on long end of the curve, are they going to be able to beat the market should the market have a different perspective perhaps on all those different variables out there . And this is exactly why theyre trying to calibrate their message so that they get the Market Reaction that they want. In the old days it was really simple because you just had short Interest Rates and you could raise the fed funds rate 25 points or lower it 25 basis points and the feds could pretty much nail that. This is New Territory of using the open mouth and work the open end of the curve. Its still a learning process between the fed and the markets. Randy, just a quick question. Who is the best candidate to lead the Federal Reserve . Fortunately, the president has a very deep bench. And i think the frontrunner now seems to be janet yellen. She would be excellent. I think don kohn would also be excellent. They would be valuable in leading the fed in this still troubled time. Randy, on your time at the fed you chaired the committee on supervision and regulation of banking institutions. Id like to you weigh in on the fines today that jpmorgan that are being levied against jpmorgan that its paying, the bulk of it to the Federal Reserve. Can you explain why it makes sense for a bank that suffered a 6 billion loss to follow it up with huge payments, even though taxpayers did not have to step in here . I dont know the specifics. It was a while ago i was on the supervision and regulation committee. I dont know the inside information that the central bank has and the other regulators have about what they did. Obviously if they had done something wrong and were inconsistent with proper compliance and inconsistent with the rules of safe and sound banking, then they need to be subject to sanctions. I dont know the specifics here, though, so i cant comment whether it was the right number or not. Randy, i got one more question. Just fly on the wall kind of give us some insight. When the chairman makes a decision that some believe is based on his forecast of congressional discord, right, a wouldbe shutdown, difficulty in passing legislation, how much political intelligence goes into the decision . How much does the committee know about the vote counting, where the political battle stands between the left and the right . So thats always much more of an art rather than a science so we dont have very good prediction models on this. But clearly the chairman and the fed is acutely aware of whats going on with those kinds of battles. As you know, when the chairman testifies before congress, a lot of the questions posed to him are about fiscal policy rather than about Monetary Policy. Theres a back and forth there. I dont think it comes down to individual vote counting. Its more the uncertainty thats around it. As were getting closer, its becoming clear its not going to be a simple resolution. Certainly the fed doesnt want something that is going to suddenly crater the economy and that the fed has to come in and clean it up later. That would be messy, too. Randy, always good to talk to you about it. Thanks for your time today. Byebye. Rand each kroszner. Weve got new details on the chrysler ipo thats coming. Kate kelly has more back at hq. Chryslers ceo has said his company is getting ready to go public. Hes been awfully vague about what the details will be. Weve been told like live jpmorgan will lead and papers are being filed. The union trust that owns the remaining stake nicknamed viba has been far away from the valuation. He has pegged chryslers value at at 4 billion and viba at 10 billion. Marchionne has been reluctant to go public. It was a surprise then, kelly, to hear that jpm was likely in the pole position here with other participants to be named. Of course given what i said, everyone will be very curious to see where the market values this thing and what size the offering will even be. If, kate, it actually comes to market. This is to a certain extent marchionnes attempt to call the bluff of the unions, isnt it . Absolutely. Maybe some lawyers wrote it and its on a top shelf somewhere. No ones been hired and no paper work is ready, even though he said to the ft a few days ago, we could be ready by this very week. Kate, some great details there. Thank you very much. As they go public. At bloomingdales, the retailer taking big steps to prevent customers from buying a dress and returning it just the next day. Well tell you about that when we come back. My cashflow can literally change with the weather. Anything that gives me some breathing room makes a big difference. The plum card from American Express gives your business flexibility. Get 1. 5 discount for paying early, or up to 60 days to pay without interest, or both each month. Im Nelson Gutierrez and im a member of the smarter money. This is what membership is. This is what membership does. Unh [ male announcer ] you can choose to blend in. Or you can choose to blend out. The allnew 2014 lexus is. Its your move. [ male announcer ] the parking lot helps by letting us know whos coming. The carts keep everyone on the right track. The power tools introduce themselves. All the bits and bulbs keep themselves stocked. And the doors even handle the checkout so we can work on that thing thats stuck in the thing. [ female announcer ] today, cisco is connecting the internet of everything. So everyone goes home happy. Welcome back to squawk on the street. Daily deal site groupon is getting a nice boost in trading today, hitting a 16month high, thats after an upgrade to buy from hold. Its up 380 from its low back in november last year. Steeple says theres more up side left because of better growth in the u. K. , better mobile trends and better bargains. Kelly, back to you. There are times when we all need a store with a forgiving return policy, when something doesnt quite fit or look the same at home as it did when you tried it home. But one retailer is pushing back against consumers who abuse the policy and bringing back close theyve already worn. Take a look. So this is a dress i bought at bloomingdales yesterday. It came with this tag attached to it with the black plastic. Im now committed to keeping this because i took the tag off. Theres no way they say could you wear something out with this on it and bloomingdales says thats really the point of this new policy. Its a practice so common retailers have given it a name, wardrobing. People go into a store, they buy the merchandise, they wear it maybe once or twice and they return it. What people dont realize is its an illegal process known as return fraud. Reporter in the most recent survey from the National Retail fedderation, 65 of retailers say theyve had customers return used clothing. Theyre losing almost 15 billion a year to return fraud. Its a cost thats passed on to consumers. When stuff like that happens, the prices go up. Im pretty sure people do it too often. It cant be im just buying this to wear and and return it. Bloomingdales is returning what it calls a b tag on dresses that cost more than 150. Sale people put the tags on when shoppers check out and explain the dresses cant be returned once the tag is taken off. Thats it. Reporter in a statement bloomingdales says these b tags are in place to reinforce the fact that bloomingdales will be unable to accept a return of merchandise that has been worn, washed, damaged, used or altered. I think for a store like bloomingdales, attrition will happen because quite honestly, who wants to deal with a store with a difficult return policy. Reporter analysts say in the long run, the change will save customers money. And outside the Flagship Store in manhattan, many welcome the move. I probably wouldnt want to get a new outfit thats already been worn. Now, some of bloomingdales competitors like nordstroms say they have no plan to do it. But stores have been doing things look this for a while, things like tracking returns and thats why they ask for your license, theyre trying to make receipts you cant replicate or fraud in that way. This is an expensive problem. This is bloomingdales way to try and do that. I can understand bloomingdales being frustrated, but you also have to recognize there is a demand for people to wear something once for a party and then return it. If anything, thats why weve seen the popularity of sites like rent the runway. So from a Strategic Point of view, wouldnt it be smart for bloomingdales or some of these stores to adopt more of that policy so people who want that option adopt it at the store . It might be. The problem is there are people who dont want to pay anything, dont want to arent. They want to just buy and return. I bought a gown from lowmans and i got it home and there were sweat stains and i got stuck with it. Did they say it was you who wore it . Luckily they didnt. It was something i should have looked closer in the store and they should be watching when people do make returns to see if it is damaged, if its been worn. Its a problem. I was surprised yesterday when we were talking to people on the street how many people know somebody who has done this. Its good to see you. Thank you for joining us on the network. Kristen dahlgren joining us on the program. And coming up, Mark Zuckerberg says he and phafaceb are not cool. Hear what he has to say when squawk on the street comes right back. Ask me what its like to get your best nights sleep every night. [announcer] why not talk to someone whos sleeping on the most highly recommended bed in america . Ask me about my tempurpedic. Ask me how fast i fall asleep. Ask me about staying asleep. [announcer] tempurpedic owners are more satisfied than owners of any traditional mattress brand. Tempurpedic. The most highly recommended bed in america. Now each of you can personalize your comfort at the touch of a button with our new tempurchoice. So both of you can get your best nights sleep together. The dows in a tight range. Down about 17. Lets get to Rick Santelli exchange, over at the cme. Hey, rick. Hi, carl. Were going to go fast, so buckle up. Yesterday, of course, we saw ben bernanke kickin the can of normalization down the road. The day before, the cbo released the longterm budget outlook. I really like this. 121 payments. Yeah, im wonky, i read it. But what was interesting is chapter 6, budgetary effects of alternative budget policies. Why is that important . Its based on debttogdp. Ask your mom, wife, girlfriend, whats debttogdp . Its kind of you know, its in the weeds. So ffy, and my friends at san economics, used chapter 6s own numbers, Social Security administration data, the debt clock, and they changed it to something we all understand. Instead of debttogdp, projected Government Debt per taxpayer. In constant 2013 dollars. Go to that debt clock, and youll see that per citizen right now, its about 50,000 ahead. And per taxpayer currently about 150,000 a head. As you can see on this chart. So the baseline, which is the only chart thats in that cbo report basically, is this blue one. Now, the next two are created from their own data. The data effects to the economy according to the research, basically what were talking about is unemployment isnt going to always be full. We wont only have growth and no recessions. So the alternatives get figured in. So what you end up looking at, as time goes on, youre actually going to get up to about 1. 2 million per taxpayer 2056. 600,000 in 2044. And we all heard ben yesterday, of course, that by, you know, spending more of these, were going to get a big economy and its going to grow, more promises, more promises. The problem is that we have a wimpy economy, and in the words of the famous wimpy and popeye, okay, heres what we end up paying. And instead of getting this as an economy, this is the bill were getting. This is the bill. This is the bill, by kickin it down the road. But what do we actually end up with . We end up with this. We get this, we get billed for this. So no matter how ben wants to make this thing look, its still a little cheeseburger with a pretty darn big price tag. Back to you. All right, rick, but real quick, you do admit, sir, if youre looking at debttogdp, you have to keep the gdp portion growing, not shrinking, right . Oh, i completely agree with that. What i dont like is how we play fastandloose with statistics. At the depth at the depth of the recession, we say were making all of this improvement. When in actuality, the debt our kids are going to pay, its pretty constant and its rising its rising faster than any bread dough i yeastified. All right, rick, thank you very much. Up next, Mark Zuckerberg insists he and facebook arent cool. And later, why the feds decision not to taper may be cooler than most realize. Well be right back. You really love, what would you do . [ woman ] id be a writer. [ man ] id be a baker. [ woman ] i wanna be a pie maker. [ man ] i wanna be a pilot. [ woman ] id be an architect. What if i told you someone could pay you and what if that person were you . When you think about it, isnt that what retirement should be, paying ourselves to do what we love . Mark zuckerberg is on capitol hill today. Hell be attending a meeting with all people House Speaker boehner to discuss immigration reforms. Zuckerberg gave an interview to the atlantic yesterday about the future of the social network, and here is what he had to say. The things that i find interesting is that people assume were trying to be cool. I didnt i dont im, like, thats never been my goal. Im the least cool person there is. I want to produce something thats a really kind of fundamental service for the world. Were almost ten years old, right . And were definitely not a niche at this point. I think to be 29 and founded a 110 billion company is cool. I dont listen to hiphop. 111 billion, you talk two gms, the global reach, the number of users and the things theyre talking about. Theyre five and ten years down the road. Being cool is not his priority. Whats the broader point hes trying to make about the company . They wont focus overtly and spend money in trying to buy or build some of the cooler kind of apps or in the beginning, the s1 was we will be cool. We wasnt profit maximize, remember that . And then they decided we better monetize and profit maximize. He is less cool than he was. And instagram, too, thats next. Heres what you missed earlier on this morning. Announcer welcome to squawk on the street. Heres whats happened so far. They have telegraphed tapering. It was in the market. They could have startinged the process. Get us off the dope. It wouldnt have cost them anything, because it was in the market. And to me, they blew it. An exclusive statement from david tepper, that they are not worried about inflation in the next few years, and want growth first, growth second, and growth third. The crossborder regulators are levying a 920 million in fines against jpmorgan for faulty oversight related to the london whale trading debacle. Bernanke, i think, showed some foresight. Can imagine four weeks from now it turns out he tapered, sand people said, what an idiot, he didnt see this coming . Well, if congress is the bar, if congressional discord is the bar you have to hop over in order to taper, then well never taper. [ bell ] existing home sales, simon, up 1. 7 monthtomonth. Thats a big surprise to the upside. Now, it will just be harder. Remember, they have to go through this again. If theyre going to cut purchases in december, january, or march of next year, theyre going to have to hint that theyre going to do it again. And will we believe them . I dont know. There has been a bit of tightening thats gone on in the market. Maybe not as much as some had expected. And i think more than the today had expected. And thats why theyre taking a pause. Good morning. Were live here at post 9 at the New York Stock Exchange on this thursday. Lets get a check on markets as we continue to look at markets at or near alltime highs after the fed meeting today. The dow giving up about 17 points from that level at 15,659. And nasdaq and s p green, just barely. The nasdaq is up by 3 or 4. Shares of conagra slipping today after the First Quarter earnings missed estimates on the top and bottom lines. The companys ceo did sound optimistic, saying he still expects to post good earnings for the rest of the fiscal year. Shares arent listening, down 4 . Shares of rite aid are rallying. They posted a Second Quarter profit and boosted earnings outlooks based on continued sales growth. Shares up, look at that, almost 16 . So who needs the taper . Stocks rallied yesterday after the fed decided not to act and left its bondbuying program intact. But did the fed actually do more for the economy by doing nothing . Well explain in a moment. Plus, eat your heart out, hollywood. Take twos new video game grand theft auto v making 800 million in its first days in the stores. And can google solve death . Thats what the fund page of Time Magazine is asking. Well tell you what theyre talking about and what it may mean for google. And a major shock to markets yesterday when the fed decided to delay any tapering. Heres an interesting question, though. Did the fed actually do more by doing nothing . We want to ask kevin ferry, an independent trader, cnbc contributor, and he joins us now. Kevin, good morning. Good morning. The bull market and uncoolness. Wul bull market and uncoolness, exactly. We were talking this morning, to jim, about a major, major move in the 10year falling like it did. What are your thoughts here . Well, i think two things id point out. First is that the marketplace, prior to the fed in the days leading up to the fed, had a dramatic reduction in open interest. And so, many of the alleged bears are people that were looking for higher yields had already exited the market. And after the fed move, we saw the turn premium, which i think is the major story, in forward rates come down. But not dramatically. So, you know, i think theres a lot of hype. The reality is the term premium had blown out on them while they were at full l sap anyways, so i think were probably overanalyzing this whole thing a little too much. So what do you mean, then, you drill through that noise, where does that leave us . Well, actually, a little bit better off. If you look at treasury supply, tax revenues are at an alltime high. So youre going to see more paydowns going forward. The flip side is, in the mortgage market, the rate move has caused a reduction in origination. And so, Everything Else held equal, the fed is actually easier today at 85 billion than they were before, from a supplies standpoint. So are you saying, kevin, they made the right move or the wrong one . I dont know. I cant really you know, im not really into value judgments. All i know is that the relative harm from a from a donoharm standpoint was rather mild. I mean, it could have been worse, because the market had definitely been in front of them. Yeah. By our calculation, they could have cut 40 of the taper and still been the forward term premium is all right with it. You mean thats what markets had priced in at that point . By my calculations, it was over 40 , yeah. Yeah, well, i say i say go for it. Thats what Millers Point this morning on squawk. They had a freebie, everything was ready to roll, and they just saw something maybe well find out, maybe we wont. But i just wonder if you think that the would the reaction have been dramatic if they had gone ahead . Not past the first 15 minutes, carl, no. It might have been a little bit positive, because you are really monkeying around with the shape of the yield curve out there. You know, we dont know what will happen tomorrow, and we certainly dont know what will happen 30 years down the road. But i think the netnet is were going to go down this path ag n again. The actual reduction in term premium so far is not that great. So that yeah, thats interesting. Yeah, kevin so stability going forward, maybe well get more benefit from that. Exactly. Weve been talking a lot about volatility and the big moves in rates, again, relatively speaking, up and down basically all of this time going back to may. Yeah. If the fed were a little worried about that, about that movement and what it means to People Holding onto these assets, youre saying that yesterday didnt do a lot to fix that. In fact, its kind of maintained the status quo. Right. And, in fact, the only way to fix it is over time, kelly, is what im saying. So if the fed can hold some stability, then you ride up the curve. But the fact of the matter is, i think were going to revisit this a few months down the road, and then well and then well see. Key difference. In may and june, the market was seizing up. You had china problems, you had other problems in europe. The very frontforward funding rates were rising just as much as the back. The rest of the summer, thats not the case. And you had this dramatic blowout in the curve. I mean, i even commented i think the curve past voyager on the way out of the universe. The thing is weve never never been in this place before, so the ability for me to understand whats going to happen is id be lying if i told you i was sure about it. Kevin, some economic bloggers are out there saying the smart thing for the fed is to actually pull in some buying, right, essentially, initiate a taper, but only tell us after the fact. Do something nominal. Do 5 billion that no ones really going to notice, and then when we come public, say it was happening all along, you guys didnt even feel it. Right. Well, okay, two things. One, the fed doesnt like that overtly tricky, because theyre trying to get into this transparency thing, which im on the record as saying, its stupid. The more open they are, the more dumb we look. I would say the reality is, carl, i think that thats exactly what will happen from a supply side. If the production doesnt happen, the fed will be buying less, and as my friend david shay said, only seven people in the business will know it. Yeah. On International Talk like a pirate day, there is no other man id rather see leading the hour, kevin. Thanks again. All right. Kevin ferry in chicago. Argh stocks trying to extend the notaper rally. The markets hit highs yesterday. Bill stone is chief investment strategy, and lori is from miami. Good to have both of you with us this morning. Thanks. Thank you. Bill, what does this do . How many buy signals does this trigger, if any . You know, i dont think it really changes the buy signals, because i think what youre really hearing is, generally speaking, its just going to push the taper out, whether its next month or maybe december, you know, obviously they really spoke to the fact that its datadependent. At the end of the day, it probably shifts it out a bit. You know, i would say keep your eye on the ball in the sense that, you know, maybe we have a repeat of what we saw prior to all of the expectations building up for this taper. Dorothy, your thoughts . I mean, 1,725. That would have been seen as an aggressive yearend target just a week ago. Yeah. I would agree, though, nothing has really changed. Its only a question of when, not if. And its going to add volatility to the market, uncertainty to the market, which actually will give opportunities for managers who are going both long and short to try to make some money here. But nothing has dramatically changed. Bill, what do you think most people are going to do here . Are they going to look to the period between now and year end and try to jump in and goose and chase this market . Or do they get conservative and kind of sit back and pull in their horns here . Well, im going to say maybe you have to go with, i guess, the history, which is people tend to chase the returns. So i do think its more of a reason to maybe expect that you get some more flows into stocks. Not to mention, you know, what weve seen is, you know, weve seen the front end, you know, how you even go out five years, and youre still stuck at negative real rates, which continue to kind of force people to want to go out to risk assets. So i do think it at least in some intermediate timeframe, maybe were ahead of ourselves, because we jumped up real quickly on this, but that it still tries to force money, or it does end up forcing people to still look towards risk assets. You know, dorothy, some people say that what the fed did yesterday even if it was precaution against a Government Shutdown made the odds of that more likely, because now the markets at alltimes highs and and people can play around with the system. What are you saying to clients about all of this . I think that its the politics of it make everybody nervous, and the fact that the fed is having to react to not only politics in terms of whats going to happen with the debt ceiling, but the fact we politicize the next chairman of the fed, which was supposed to be sort of a nonpartisan adventure, and as we saw last sunday, that now has become a political football. So all of this just adds a lot of uncertainty, a lot of volatility, and i think it is very hard to think you can just ride the market forever. There will be market timers, im sure theyll get out in time. But i think nimble and opportunistic, who are trading around the markets, will end up better off on a riskadjusted basis. Bill, in terms of sector allocation, i think of the new highs were getting today, i think maybe a quarter, maybe half of them are industrials. Do you chase sort of a china rebound . Or do you go back to names that are going to yield more than the 10year . You know, we would stay with kind of the theme of ill call it a tilt towards the cyclical, weve been not been talking about that for a while, because we still think youre getting that i guess ill call it the continued expansion in the economy. We think the economys going to grow in the u. S. By something, like, 2. 3 here in the second half. So we still think thats the way you should be. Not to mention what we kind of mentioned earlier, europe, not maybe a strong recovery, but maybe not in intensive care, barely moved out of that, but okay, its moved out. And china is no longer maybe the worry that it was not too long ago. All right, guys, thank you very much for your thoughts this morning. Bill stone, dorothy weaver. Thanks. As we continue to watch the markets here, carl, dow is off about 30 points. Thank you. Who says video games cant keep up with hollywood . Take twos grand theft auto v made 180 million on its first day in stores. The companys shares are rallying, but stay tuned. Well let you know if we think the good times will last. Plus, Rick Santelli taking a closer look at the fed. Absolutely. Lets put everything together. Kevin ferrys comments, dovetail with stan millers comments, which is basically, they were there. Why did they stop with regard to fed and the taper . We have peter who will weigh in, because he sees it like i do. I think ultimately, its a fight between the real market and the feds managed market. Whos going to win . Well discuss who we think may win in about 15 minutes. [ cows moo ] [ sizzling ] more rain. [ thunder rumbles ] [ male announcer ] when the world moves. Futures move first. Learn futures from experienced pros with dedicated chats and daily live webinars. And trade with papermoney to testdrive the market. All on thinkorswim. From td ameritrade. Ask me what its like to get your best nights sleep every night. [announcer] why not talk to someone whos sleeping on the most highly recommended bed in america . Ask me about my tempurpedic. Ask me how fast i fall asleep. Ask me about staying asleep. [announcer] tempurpedic owners are more satisfied than owners of any traditional mattress brand. Tempurpedic. The most highly recommended bed in america. Now each of you can personalize your comfort at the touch of a button with our new tempurchoice. So both of you can get your best nights sleep together. Taking you to the Eisenhower Executive Office building where the president is say dressing the export council. Domestic production is actually starting to exceed imports. Across all these fronts, there are some very positive pieces of news, but i tell you one of the biggest bright spots in our economy has been exports. The fact that made in america means something and has provided a boost to our domestic economy and has reminded the world just how competitive we are. This has been a top priority from the start. Part of the reason we set up this export council was to make sure that we were in a position to meet our goal of doubling exports during the course of a fairly short period of time. And we now sell more goods overseas than ever before. Jason, correct me if im wrong, but i think our current account deficit and trade deficits have narrowed as significantly as weve seen in a very long time. Now, part of that is because were importing less foreign oil and increasing domestic production. But a lot of it is because were selling a lot of great products all around the world. And this council has done a great job in helping to guide our policies. Weve got large businesses, weve got small businesses. Weve got mediumsized businesses. Weve got services as well as manufacturers. And your input has been enormously important in this entire process. Part of what weve seen is a continued transformation in American Business to become more competitive and more productive. And i would be remiss to say, since its in the news quite a bit, to note that one of the reasons our businesses are more competitive is because healthcare costs have actually stabilized relative to what we had been seeing in previous years. Just an interesting statistic here for folks who may be interested. [ laughter ] thanks, in part, to the Affordable Care act, also known as obamacare. [ laughter ] the cost of healthcare is now growing at the slowest rate in 50 years. Employerbased healthcare costs are growing at about onethird of the rate of a decade ago. And just yesterday, cms estimated that healthcare spending grew at its secondslowest rate ever in 2012. It will grow at its thirdslowest rate ever in 2013. Growing at the slowest rate in 2011. So the three years since obamacare passed, weve seen the slowest growth in healthcare costs on record. I think this is critically important to recognize, because one of the huge competitive disadvantages that our businesses have had is that we American Businesses oftentimes are shouldering healthcare costs that their competitors are not, because theyve had a more efficient, more effective system. And so, for us and when we passed the Affordable Care act, by the way, there were all kinds of arguments about how all of the cost savings werent very meaningful and werent going to do a lot, and we werent really bending the cost curve. Well, it turns out actually a lot of what weve done is starting to bear real fruit. And it has an impact on the bottom lines of American Businesses as well as the American People. So if the Current Trends hold and all estimates are that, in fact, they will. This is not just a byproduct or hangover from the recession were going to see a continuing slowing of increases in healthcare costs. Thats going to boost our exports. Now, we can still do more when it comes to exports. And thanks in part to new trade deals that ive signed as well as obviously really great products and services that you all have designed, america now exports more to the rest of the world than ever before. Were on track to export even more this year. Last year, 1 billion in exports supported nearly 50,000 jobs or 5,000 jobs in the United States. So for every 1 billion we sell, its 5,000 new jobs right here in the United States. And so, were really focused on how do we keep that momentum going. Our in trade rep, our new ambassador, michael frulman, who many of you have had the chance to work with when he was in the white house, is in the process of trying to complete negotiations around a transpacific partnership. Youre talking about the larg t largest, most dynamic, fastestgrowing market in the world. And because of some incredibly hard work by michael and previous that is the president speaking to the export council in washington on a day where the current account deficit is at a 15year low. Kel, 2. 4 of gdp. We see that all of the time in boeing sales and the sales of multinationals. No comment, though, on any wouldbe bill in the house that strips away elms of obamacare, something the white house today said they would veto. Exactly. Im sure they feel like his views on that are pretty clear. But he did again emphasize the fact that healthcare costs are coming down, and subtly a reference to all of it. Well keep you apprised of any comments that come out of that speech to the council. Meanwhile, 800 million in one day. Thats how much take twos new game made. Well tell you if you should buy the stock, in just a moment. Neil and buzz for teaching us that you cant create the future. By clinging to the past. And with that youre history. Instead of looking behind. Delta is looking beyond. 80 thousand of us investing billions. In everything from the best experiences below. To the finest comforts above. Were not simply saluting history. Were making it. See who does good work and compare costs. It doesnt usually work that way with health care. But with unitedhealthcare, i get information on quality rated doctors, Treatment Options and estimates for how much ill pay. That helps me, and my guys, make better decisions. I dont like guesses with my business, and definitely not with our health. Innovations that work for you. Thats health in numbers. Unitedhealthcare. Welcome back. Sales of taketwos new Interactive Game grand theft auto has smashed records in just the 24 hours its been on the shelves. The question now is whether shares here are a buy. Lets ask daniel ernst, principal at Hudson Square research, and joining us is julia boorstin. Good morning to you both. Good morning. Daniel, shares today are only up about 1. 5 . You know, a decent ralliment but for the size of the sales here, it sounds like expectations to some extent were even bigger. Yeah, i mean, i think, you know, taketwo and a lot of the Consumer Tech stocks, you know, have the apple problem. No matter how good you do, everyone says, well, thats the top, they cant possibly do better in the future. No one gives them credit for the actual earnings that theyre generating. Because video games, theres a base cost to put that game out, and pretty much all of the excess falls to the bottom line. So our numbers for the current year, about 2. 44 in earnings. This could take them close to 3 a share in earnings in the year. The stock is 17. You know, its trading at just over six times earnings. Its kind of silly. But the problem with taketwo is that historically, theyve only ever made money on this one single game, and so, i think a lot of investors have that in mind. So then, this next year, they would historically lose money. But a couple of things that are different. Since the Current Management Team came in, they stripped out a lot of the loss making games. They streamlined the products. A game from taketwo called bioshock which didnt exit in the last generation. Theyve done a lot of that. Also, given the size of the install base, probably around 13 Million Units in just one day, they have a bigger installed base than world of warcraft, which gives them tremendous runway. So digital updates, addones to the games, anywhere from 15 to 60 a pop. Kelly, the key thing here is digital. This time around when taketwo is releasing this game, they are offering significantly more Digital Content than five years ago when the last game came out. This could contribute another 100 million in revenue to the company. And i think the key thing here is whether or not they can translate the success of the game in its first day to continue selling games over the rest of the holiday season, and then to continue to sell the Digital Content. If they can you know, the problem with taketwo has always been its lack of diversification in terms of games. If they can really build up that digital revenue, which is the gift that keeps on giving, rather than a onetime sale, that would make a big difference for the company. Great point. Julia, i guess its one well have to wait and see during the holiday season. Thank you for your perspective as we watch shares up a little less than 2 . Well keep an eye on broader markets, as well. The dow is off about 20 points. Squawk on the street will be back in two. Nascar is ab. Out excitement but tracking all the action and hearing everything from our marketing partners, the media and millions of fans on social media can be a challenge. Thats why we partnered with hp to build the new nascar fan and media engagement center. Hps Technology Helps us turn millions of tweets, posts and stories into realtime Business Insights that help nascar win with our fans. The european markets are closing now. It wasnt just the u. S. That responded well to the fed announcement. You have to remember the european markets were shut down when bernanke said no action. This is full catchup to fiveyear highs in europe. And gold up 7 , silver up 7 . The mining stocks are leading the charge there. The fact that you have easier Credit Conditions from the fed, obviously also helped in europe. The banks are higher today. A big discussion about whether that trillion euros that the banks are sitting on, whether that threeyear term will be extended for them. Jpmorgan suggesting there will be further injections from the ecb easing if you look the beginning of next year. The banks are doing well. I want to make the point that actually while were at record levels here in the United States, if you have a look at a long track of europe versus the United States, they are just in europe at fiveyear highs. Theyre not at the record highs that youre seeing here. And one more, silvio berlusconi, of course, yesterday, gave the very aggressive attack on the italian judges who have conviktdconviktd convicted him of fraud. Heres what he had to say in his release. I am innocent, i am absolutely innocent. In response today, the Prime Minister of italy has said he will not allow he will not allow his Coalition Government to become what he called a Punching Ball by silvio berlusconi, so the coalition continues, as berlusconi tries to reinvigorate with a new party down the line. Wow, we think our governments got problems. Thats an interesting story. Thank you very much. Lets get a check on energy and commodities. Sharon epperson at the imx. Its the postfed prefrenzy. Theyve been up since the announcement and rallying into the evening. Were seeing big gains not only in copper but in palladium and platinum, itself. The biggest gainer definitely silver. Silver up 8 since the 1 30 floor close we saw in the komx yesterday. Keep in mind, a lot of folks are saying, why are we seeing such gains in the futures for Precious Metals but not in the gld . And its because its priced off the futures and much of the gain were seeing in gold futures came at that time. So were just seeing a slight up tick right now in that gld in todays session. Also keep in mind as we see the no tapering, the fact that qe will continue, and we talk about the benefit that that has had to the stock market, we are going carl, back to you. Sharon, lets take you to washington, d. C. , House Speaker john boehner speaking. When it comes to the healthcare law, the debate in the house has been settled. I think our position is very clear. The laws a train wreck, and its going to raise costs. Its destroying american jobs. And it must go. Well deliver a big victory in the house tomorrow, then this fight will move over to the senate where it belongs. I expect my Senate Colleagues to be up for the battle. And while that fight plays out, we engage in another set of challenges, the debt limit. And more importantly, the debt itself. And let me be very clear. Republicans have no interest in defaulting on our debt. None. We just want to find a way to pay it off. Thats why the house will act on a plan that will reduce the deficit and includes progrowth economic reforms, including a delay of the president s healthcare law. Theres a common sense principle here. If youre going to raise the debt ceiling, you should work to reduce the deficit and grow the economy at the same time. Now, the president s remarks notwithstanding. You know, the white house may not get it, but frankly, the American People get it. Every major deficit Reduction Plan over the last 30 years has been tied to the debt limit. In 1985, president reagan signed the grand rudman grahamrudmans bill that included an increase in the debt limit. When president bush reached a budget deal with the democrats here in the congress in 1990, it included an increase in the debt limit. President clinton reached two similar agreements, both tied to the debt limit. And i would remind president obama himself that in the summer of 2011, there was a major deficit reduction bill enacted with an increase in the debt limit. This time should be no different. In fact, i think its more important than ever. A report this week from the Congressional Budget Office makes it clear that our debt is set to grow rapidly in the coming years if we take no action. Thats why its so troubling that the president s decided to just sit out this debate. He says he wont engage. Well, you know, most president s refer to their bipartisan efforts to reduce the deficit as achievements. The president sees this, quote unquote as extortion. So while the president is happy to negotiate with vladimir putin, he wont engage with a congress on a plan that deals with the deficits that threaten our economy. Now, let me just be clear here. A debt limit increase without any reforms to lower our deficit just isnt going to cut it. Not when under this president the United States has racked up 6 trillion worth of additional debt. And you can see it right here. So when the president took office. Look whats happened over these years, and look what happens out into the future if we dont do something about our spending problem. So a bill that does nothing to deal with the deficit is really telling the world that were not willing to deal with our spending problem. The president needs to recognize that weve got a shared responsibility to govern. You can try to stay on the sideline, but here in the house, were going to lead. Mr. Speaker, yesterday some comments came over from conservatives in the senate that rattled many conservatives over here about what might happen when the bill goes next door. You say your Senate Colleagues will be up for the battle. Are you convinced now that ted cruz is up for the battle next door . Well, im not going to speculate on what the senate is going to do or not do. But the fight here has been won. The fight over there is just beginning. Speculation, because he said theyve theyve already said the fights over here and they hope House Republicans can unintelligible . Whats your reaction to i expect my Senate Colleagues to do everything they can to defund this law just like the house is going to do. Mr. Speaker, if they dont do that, if they dont im not going to get into the ifs, ands, buts, all that nonsense members will allow you to go to you need the cooperation of pelosi, and is it incumbent on im not going to speculate on what the senate will or will not do. Mr. Speaker, do you expect to have debt limit vote next week, and what are the musthaves were going to have a conversation with our colleagues tomorrow morning about how we would proceed on the debt limit, and after that conversation, well probably have more to say. The chamber of commerce is saying House Republicans dont do this. Senate republicans are saying, almost universally, dont do this, this is a losing strategy for republicans. To do what . To do what . To do what . To tie funding the government to defunding obamacare. Listen, obamacare is driving up the cost of healthcare. Its destroying millions of american jobs. It is a train wreck. It has to go. Weve done everything humanly possible over the last two and a half years to make our point, and were going to continue to make our point. Senate republicans say they agree with that. They just dont think this is the vehicle. They think republicans are going to get blamed well, guess what . Were having the fight over here. Were going to win the fight over here. Its time for them to pick up the mantel and get the job done. Speaker boehner, in a recent interview to nbc news, the president of iran said they would not use Nuclear Weapons ever, seemed to strike a more moderate tone, as well as said put the question of Holocaust Denial saying hes a politician, not a historian. Do you have any comments about the recent words of the president of iran . Actions speak louder than words. And i think its time for the iranians to take actions to show the world that theyre not interested in producing Nuclear Weapons. The debt limit. How do you expect these negotiations that youre calling for to proceed . You told your colleagues earlier in the year that you didnt want to go back to the, you know, shuttling over to the white house oh, im not doing that. Im not doin that. How do you want to proceed . The house will pass a bill. It will be up to the senate to pass the bill, and i would guess the president would engage with the majority leader over there, if he so desires. Jonathan . Mr. Speaker, you said yesterday unintelligible . So who yesterday did you listen over the last few days were you listening to . And who do you think is running the republican listen, we have a diverse caucus, frankly, so the democrats have a very diverse caucus. Republicans, by their very nature, are a bit more independent than our colleagues across the aisle. Ive seen that from the day i got here. And so, whenever were trying to put together a plan, you know, theres weve got 233 memb s members, all of whom have their own plan. Its tough to get them on the same track. We got there. David . Welcome. Get around doing unintelligible farm bill as soon as we can. Can you be more specific . Will you name cantor unintelligible [ laughter ] i love those editorial comments that come along with the questions. After we pass the nutrition bill today, well send it over to the senate, and as i understand it, the senate probably will have to reappoint conferrees, and when they appoint the conference, well appoint our conferrees, as well. [ question inaudible ] well see. Thank you, mr. Speaker. Are you willing to violate unintelligible we expect to have the votes tomorrow to pass the c. R. , and well take it from there. [ question inaudible ] i wont speculate on what the senates gonna do, not do, and where the votes are. Its way too early for that. Well have plenty of time next weekend to discuss that. And that is Speaker Boehner talking about what he called a train wreck, in his words, what obamacarry sexuallysex ually e is. He the market not surprisingly, clockwork, 10year ticked up to 2. 73, just starting the money at 2. 7. You have to wonder if thats a little bit of pricing in the fact that we get even close, carl, to anything like a threat of not paying investors, even though he repeated that they wouldnt do that, shut down the government instead. Yeah. Meantime, talking when his diverse caucus, john harwood is in washington and listened to the comments and will make sense of how becamer balances the caucus with the karl roves whos saying he shouldnt go down this road. Reporter the balance he struck right now is to let the people who want to shut down the government, who want to defund obamacare, have the vote that they want to have. Thats going to happen tomorrow or saturday. Undoubtedly, that will pass the house of representatives. The speaker didnt want to speculate, but he knows, as everyone in washington knows, that that will not pass the senate. And what comes next, john boehner doesnt know, harry reid doesnt know, barack obama doesnt know. I expect that what he is hoping, and this is why he didnt address the question of, will you put something on the floor even if a majority of your members dont support it . Hes trying to preserve some wiggle room for if the senate strips out the obamacare provision and tries to extend government funding, he wants to preserve some Maneuvering Room he could put that on the floor and pass it. The same is going to be true on the debt limit. Because theyre planning to move a debt limit bill that would delay obamacare. Thats something that president obama, the white house, the senate, democrats will never agree to. And so, what is standing between the United States and a shutdown and default is whether or not john boehner can get enough control over his members in the house, or disregard some of those members in the house and get votes from nancy pelosi and the democrats to pass legislation that opens the government and avoids a debt crisis. But the whole situation has gotten a lot hairier, carl and kaelly, than i thought it would get a month or so ago, because the desire among leaders is very strong not to shut down the government, not to have a debt crisis, because they know it would hurt republicans. They just cant stop it right at this moment. Yeah. Karl rove and others, the journal op ed kamikaze pilots. Could be worse than 2005. Reporter thats right. When i talked to republican members of Congress Political strategist, the republicans have a firm grip on the house of representatives. Theyre highly unlikely to lose control of the house in 2014 unless we have a crisis provoked by this situation. That could be the one thing that not only tips the economy into recession, but tips republicans out of control of the house of representatives. John, thank you for that. John harwood joining us in washington. The dow still down about 29 points. Lets get to Rick Santelli in chicago. Rick . Well, you want me to talk about that or you want me to bring in my guest, carl . What do you think . I tell you what, ill weigh in on it. Ill weigh in on it. Listen, the last i looked, there wasnt an election that put karl rove in office. The last i looked, the wall street journal op ed writers arent, you know, dealing with counting the votes that put them in office. Theres something called principle. Peter, i know this isnt what we prepared to talk about, you know, i was raised that maybe it isnt about the outcome of the elections or perpetuating having a job in government, maybe, you know, the elected officials from the 2010 midterms will do their job, and if they lose, fine. At least they tried. What are your thoughts about that . Right, well, theyre going to put on the table the vote. And it will be for all everyone to see that they are against funding obamacare. What happens next is really the most important thing, because well have the symbolism of it, but then we need to deal with the reality that the fiscal year ends in 11 days and then soon after, they have to deal with the debt ceiling. So there will be somewhat of emerging with the ideology and also the reality of governing. I agree. Now, lets switch gears to the fed. I loved your piece today. And i have to say, it reminded me of things i said over the years that there will ultimately be a duel, and the duel is the ability of the fed to manage rates and the markets to price discover in a freemarket fashion what rates ought to be. Your thoughts. Absolutely. I think in the eyes of many market participants, including myself, and certainly you, the fed lost a lot of credibility yesterday. They singed the markd. The bond market is the feds transmission mechanism in conducting policy. Everything stems from what the bond market does in response to their policy. If they lose the confidence of the bond market, which i think theyve already begun to, then they lose control of policy. So going forward, the bond market is going to focus less on what bernanke says, because of what he did over the past four months, and leading them down one road, and then pulling it back. And focus on the economic data, the inflation numbers, and where they think normalized Interest Rates should be, rather than where the fed thinks they should be. Listen, peter, wire out of time. Theres one more variable real quick. And that is, they might not have put the evicted notice on the door, as many thought, with regard to qe. But i still think that everyone knows its coming and the bond market and bond redemptions may continue to be the main driver of potentially higher rates. Thanks for taking the time to be our guest today. Thanks, rick. Back to you in the studio. All right, rick, thank you for your time. More details on jpmorgans nearly 1 billion settlement announced this morning. Coming up when we come back after a short break. Stay with us. My mantra . Always go the extra mile. To treat my low testosterone, i did my research. My doctor and i went with axiron, the only underarm low t treatment. Axiron can restore t levels to normal in about 2 weeks in most men. Axiron is not for use in women or anyone younger than 18 or men with prostate or breast cancer. Women, especially those who are or who may become pregnant and children should avoid contact where axiron is applied as unexpected signs of puberty in children or changes in body hair or increased acne in women may occur. Report these symptoms to your doctor. Tell your doctor about all medical conditions and medications. Serious side effects could include increased risk of prostate cancer; worsening prostate symptoms; decreased sperm count; ankle, feet or body swelling; enlarged or painful breasts; problems breathing while sleeping; and blood clots in the legs. Common side effects include skin redness or irritation where applied, increased red blood cell count, headache, diarrhea, vomiting, and increase in psa. Ask your doctor about the only underarm low t treatment, axiron. When we come back, well talk more about jpmorgan agreeing to pay 920 million in fines over the london whale case. Do not go away. My mother made the best toffee in the world. Its delicious. So now weve turned her toffee into a business. My goal was to take an idea and make it happen. Im janet long and i formed my Toffee Company through legalzoom. I never really thought i would make money doing what i love. [ robert ] we created legalzoom to help people start their business and launch their dreams. Go to legalzoom. Com today and make your business dream a reality. At legalzoom. Com we put the law on your side. Big news this morning. Jpmorgan agreeing to pay 920 million in fines as part of the london whale case. Our kayla toushe has the news. Its a trifecta this morning. Nearly 1 billion in fines levelled over the banks mishandling of the london whale trading debacle. Four regulators reached a coordinated settlement in the investigation. The s. E. C. Got an admission of guilt from the bank. The occ 300 million. Theyll also collect the steepest single fine. The cftc is investigating the matter and on monday gave the bank a notice that the staff had recommended separate Enforcement Actions on the london whale. Its unclear what that would allege, but the agency had been investigating whether the bank was manipulating credit markets. The occ issued a Consent Order over their practices to collect pastdue debt from auto and student loans, as well as from active military members. They must overhaul the unit, figure out how to compensate consumers and create a threemember compliance committee. The issues for jpmorgan have been mounting and theyve been costly. The bank has said legal issues could cost 6. 8 billion above where the bank has budgeted for. The banks cfo said earlier this month the bank would earmark 1. 5 billion as more fines approach. Its the highest spend, guys, of any bank and it seems far from over. Little wonder diamond issued a memo to employees telling them to brace for more action from washington and be confident of the resources the bank has pledged to pay for it. Carl and kelly, back to you. Interesting. Same, s p ups their rating on the stock to a strong buy, takes the price target to 61. I guess the feeling among some, kayla, they are beginning to clean house. We will see. Thanks a lot. Thanks. When we come back, well tell you why eli musk is smiling today. Re a business pro. Maestro of project management. Baron of the buildout. You need a permit. To be this awesome. And you. Rent from national. Because only national lets you choose any car in the aisle. And go. You can even take a fullsize or above, and still pay the midsize price. aaron purrrfect. vo meeeow, business pro. Meeeow. Go national. Go like a pro. You really love, what would you do . [ woman ] id be a writer. [ man ] id be a baker. [ woman ] i wanna be a pie maker. [ man ] i wanna be a pilot. [ woman ] id be an architect. What if i told you someone could pay you and what if that person were you . When you think about it, isnt that what retirement should be, paying ourselves to do what we love . With my united mileageplus explorer card. Ive saved 75 in checked bag fees. [ delavane ] priority boarding is really important to us. You can just get on the plane and relax. [ julian ] having a card that doesnt charge you foreign transaction fees saves me a ton of money. [ delavane ] we can go to any country and spend money the way we would in the u. S. When i spend money on this card, i can see brazil in my future. [ anthony ] i use the explorer card to earn miles in order to go visit my family, which means a lot to me. The dow is down 36 points. But it led to the degree its up at all, is led by utx and boeing, two of the things that we were talking about as some of the exporters continue to get a lift out of a fed that will be supportive for a while, it appears. The s p 500 is now in the red, too. It started out in the green a little earlier. Carl, as you said, the dow is down about. 25 . You know, there are a couple of things going on. We mentioned we heard from Speaker Boehner talking about the prospects of a Government Shutdown will hurt the economy. But we have the 10year moving higher as well from overnight lows of about 2. 67 to roughly in the area of 2. 72. All on a day when the data was doing its part. The philly fed, best since march 2011. Right. Existing homes, the best since august 07. Ironic it comes the day after the fed said, you know what, the economy is too weak. It works that quickly. 24hour Monetary Policy the 18houring lag. Well see what the afternoon brings. Lets get back to headquarters and scott wapner and the halftime. All right. Welcome to the halftime show. Four hours until the close. Lets go to the wall and find out where we stand on this, the day after. Heres what were following on the half. The dow is down 37. S p is negative, as well. The nasdaq is barely positive. Lets talk about what were following on the halftime show, and taking stock. An ultimate stock picker is here with the top plays. Is the price right after priceline hits 1,000 a share . Where does it go from here . Battles will do battle. First, the top story, what now . A big day after the fed shocker sent stocks to new highs, is the rally ser
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