Transcripts For CNBC Squawk On The Street 20130925

Fiveday losing streak and nearly the same position since a very similar budget battle. Jeff bezos saying he doesnt care if his new kindle makes money when they buy it, only when they use it. And jpmorgan avoiding a wave of separate litigation. And alibaba planning to list right here in the old u of a. If the s p finishes to the down side, its the indexs first fivesection losing streak sinces fiscal showdown at the end of 2012. One of the recent headwinds about a Government Shutdown. Republican governor ted cruz of texas and allies have been on the floor, but do threaten to strip a defending provision of obama. Harry reid has scheduled a test vote today at noon, like live one of several procedural votes. There is an increasing amount of chatter that we might get a continuing resolution. It does seem like there is something hidden going on, even so we have the s p down five, the depth of decline is not that great the nasdaq was up yesterday, transports were up yesterday. Last 20 minutes were certainly l were ugly but better than i thought. Continuing resolution, maybe we get something done till the middle of november but now were focused more it seems on the debt ceiling. Were heard harry wilson referring to the senators they had on as guests from the both sides of the aisle saying theres not really a big lplan o figure out the road map to get there. No, theres no triptik. Remember aaa . It said speed trap when you went through 414 in georgia. Ism thi i think things are acg a little better. The shorts are afraid to be short. A lot of bids underneath, some takeovers. Just not a bad moment. I expect a worse moment. And the nasdaq you mentioned, which had been really trading up in teandem with the other indics has pulled ahead up 25 for the year, 19 , 20 for the dow. The top gainers, tesla, netflix, micron, gmcc. Thats whats leading the nasdaq. At jim cramer on twitter, you dont have to go back and forth. Remember i told you teslas one of those if the triple a were to come out and say they think teslas great, these things trade above 200. People by the stocks, netflix, thats a sign of bullishness. I know people want to say thats a sign of excessive bullishness. Weve also had people, theres nay sayers and say this thing is trading at per vehicle. I can remember amazon, per book, its bigger than the book. This is years ago. In this case with tesla theyre look at ford and say one is making millions, the other one is 20 something thousand. When does that start to matter again . There was a cover story in business week that merck passed gm. How ridiculous was it really . But then they didnt do anything. Im not saying theres is merck. People spin tales. These analysts like to get behind stocks. Facebook is now like a vegas routine. Did you hear the one about facebook walks into a bar, im taking mine to 55. We have the 23rd straight day goes prices are down, 3. 46 a gallon, down 35 cents year on year. Were expecting another 20 to 25 cents down. Wasnt that something . I think at a certain point that kicks into retail. Remember the price of gasoline is a tax. We know heating is not going up because the natural gas stays low. So theres going to be a little more money in the consumers pocket. Does that mean chipotle . Does that mean panera . Did you get the invite at Neiman Markus . Were they good . I think they looked extraordinary. I think youd look good in a cashmere sweater. Judging from the last sweater experience, i dont know if you want to go down is that road. That was green. That was kellys sweater i had around my neck. The chinese communist, celebration of north korea. It was a deputy dog hat, at the conrail meeting well have to find the video. It was blowing in the wind and it was minus 20 degrees. I looked like deputy dog. You were a trend setter. I was. No one ever trended again. That trend has yet to occur. Talking about trends and talking about high flying stocks and ip multiples that stay strong, kindle revealing two tablets with faster and lighter versions than previous generation. And also a may day button, an online help feature. Jeff bezos spoke with our jon fortt. We dont make money when people buy these devices. We want to make money when people use our devices by buying kind kindle ebooks and movies and tv shows. We think were better aligned with our customers when people use the device, not when they buy them. Hes the man. Its that simple. What he says goes. You can argue all you want about 160 multiple or whatever the number is, i dont even know 200. 200. But look, its a gillette model. Thats what you do. Heres the razor, right, and then you go into cvs and pay 28 for four blades. Of course they dont tell us how many they sell. Its none of your business. We dont know how that model is even working. My question this morning is he says we break even on device, were going to get you on the content. Apple does both. They sell a device for a profit and then they sell you a song on itunes for a profit. People have always discounted that screen. I think what happens if they do original content. Yesterday you asked me a question, which is im going to leave his name out, its the adams family, another kind of tv show like that, but he has been saying theres a glut in apple i got it. I know who it is other show. The guy went to harvard. Ed guinn. 54 i think at harvard. He was good when he was the judge in cousin vinny. Dan had him on last night. Hes very tall, ceo of sprint, huge, huge seller of apple products. I asked him directly, i said, liste listen, im hearing theres a giant glut. He said send me some, im out. Send me some because we dont have any. How do we believe the analysts . Heres what dan hesse told jim last night on mad money. I know you have up to thement and to the minute analysis. How is the demand . Strong. Too strong because were againiagai beginning to run out of inventory, especially the 5s. Meanwhile, its not a good quarter. When the stock fwas at 2, he came on mad money and said people think were going out of business, were not. And then the stock is at 5 and suddenly the stock is up 50 i wonder about timo, i think theyre taking some business. Theres no doubt about it that sprint had to cut back on advertising because theyre doing this transition from nextel and in some places, you go on twitter and people say it doesnt work in toledo. It was down a lot in chicago. Its not a great quarter. Its not. But theyre taking a 300year approach. How many quarters is that . Its like 1,200 quarters. That was fast im raising numbers, 20 for the out years, raising numbers in 2323. In the year 2525 this thing is going to bust out. Theyll be there to take it from you, whatever they need. They are very health conscious. By the way he owns some alibaal alibaba. He does . Yes. Soft bank does. It will be probably a First Quarter event, i think well talk more about that. Well see what twitter does in the Fourth Quarter. Very important when it comes public. I think twitter is going to be much bigger than people think. I think its going to be an 18 billion to 20 billion a year. It doesnt mean im saying buy it, it doesnt mean its not inflated. I dont want people at home to say cramer said buy it. No. Just for fun, the New York Post publishes vegas odds on a number of metrics. Exchanges, nyse leading with 47 odds, the ticker, twtr wins with 56 odds, bird has 351. The over under on the ipo price, 35. 50, over under on the first days close, 54. 50. So vegas of course is betting on a good day. I like that. We got to stay close to vegas. When we come back bei, recor sales for the new iphone good for apple but bad for some retailers. And looking for a modest nice open to the up side. Squawk on the street live from post 9 is back in a minute. Looking at covered call strategies to generate income . With fidelitys options platform, weve completely integrated every step of the process, making it easier to try filters and strategies. To get a list of equity options. Evaluate them with our p l calculator. And execute faster with our more intuitive trade ticket. Im greg stevens, and i helped create fidelitys options platform. Its one more innovative reason serious investors are choosing fidelity. Now get 200 free trades when you open an account. Building animatronics is all about getting things to work together. The timing, the actions, the reactions. Everything has to synch up. My expenses are no different. Receiptmatch on the business gold rewards card synchronizes your business expenses. Just shoot your Business Card receipts and theyre automatically matched up with the charges on your online statement. Im john kaplan, and im a member of a synchronized world. This is what membership is. This is what membership does. Welcome back to squawk on the street. Im eamon javers from washington. John boehner estimating when the treasury estimates the United States government will be unable to fund itself going forward. Jack lew saying extraordinary measures will be exhausted no later than october 17th. We estimate at that point treasury would only approximately 30 million to meet our countrys commitment. This amount would be far short of net expenditures on certain ba days, which can be as high as 60 billion. They say it will be impossible for the United States of america to meet all of its obligations for the first time in its history. Eamon javers in washington. Jpmorgan chase trying to recover. Its a big range as the bank tries to weigh whether toy avoi settling a long, protracted fight versus what a settlement opens you up to in civil litigation. My sources are saying the other way. Saying theyre going to fight . No, that the Justice Department is not the least bit interested in settling. I think the Justice Department would rather settle than go to trial. The Justice Department wants to keep opening investigations everywhere. Its like the bp deal. This is a get jpmorgan it is. The government doesnt necessarily want to go to a trial either. Fighting the government is extraordinarily difficult. Why has holder allowed this perpetration of cases all over the country . Why have they made a proliferation of cases in many districts if they really want to do a National Settlement . If i were jpmorgan i wouldnt do National Settlement because i could pay 4 billion in legal fees or pay 7 billion to the government. Theyre big numbers. I dont know the answer. I know that the reversals of reserve reversals only go so far. At some point it begins to hit things. Riemt n right now theyve been able to reverse loan reverse. With washington mutual, they had a contract that said we cant get sued for the stuff wamu did. Bear stearns, there was an understanding were going to help you out, dont come back and sue us, that was 1997, i guess time ran out on that one. Are you coming with a due process argument with me, a fifth amendment, Fourth Amendment analysis . This is the government. Do you think they care . It will be interesting to see, does the government really want to litigate over that . I think the government is trying to make it that Jpmorgan Dimon look bad, stock goes bad, this is incredibly hard for shareholders because the Charitable Trust has it. Someone wants to float there may be an arrangement, so be it. I think holder has blessed this get jpmorgan campaign. In the mean time, you have comments at a summit yesterday saying its not a money changer, its not about collecting fees but talking about the Budget Constraints of his own office. Are they after the check or admission or guilt of guilt what . I took that dershowitz class at harvard. The government wants to say theyre constrained by money. Theyre not constrained by anything. They can put anybody out of business in the world they want to. Forget the money and fines. This is about making of institutions heel. Theyre saying listen, jamie dimon. Were not even after a settlement. Were out to make you look bad. You guys said you were geniuses, no more. Theyre using the whale as a reason to do it. When you speak with lawyers involved in situations on both sides, it isnt like the Justice Department is trying to get money. The Justice Department is trying to make jpmorgan look horrible. And in order to be able to show that theyre tough, rfk, get hoffa. This a hoffa situation. Ive never seen the Justice Department do this other than with hoffa. Just say, listen, due process jpmorgan will pay a lot to move on. Jpmorgan wishes it was as easy as someone saying move on. Thats not Robert Kennedy in your ear, by the way. I loved rfk. We count down to the opening bell on this wednesday. One more look at futures and squawk on the street is back in a minute. [ male announcer ] staying warm and dry has never been our priority. Our priority is, was and always will be serving you, the american people. So we improved Priority Mail flat rate to give you a more reliable way to ship. Now with tracking up to eleven scans, specified delivery dates, and free insurance up to 50 all for the same low rate. [ woman ] we are the United States postal service. [ man ] we are the United States postal service. [ male announcer ] and our priority is you. Go to usps. Com® and try it today. We got six minutes before the opening bell. It is wednesday, mad dash wednesday. Hump day. Okay, now stryker needs growth. People worried about the Affordable Care act and whether theyll have the growth. And buying mako, i now count one, two, three, four, five in the last quarter, 5 for 5, they missed the number. Why not pay 100 premium, an allcash deal. This stock was 16 yesterday. When you wake up to this, you are very happy. A lot of these deals, whether its devices or health care, sometimes carry extraordinarily high premiums. Well pay your 52 week high and then some. How much did stryker need growth. The son of intuitive surgical, it had been a very popular name with retail. Retail gets bailed out. That is a huge premium deal and one of the few weve got. Lets move on quickly to noble. Ne, very interesting. This is a company doing okay. They decide to split in two kinds of drilling companies. This is again something that keeps happening, david. We see these Companies Say were not happy with our stock price, lets do something thats going to bring up value. You talked about it, this activist, splitup thing going on. Its replacing the normal m a. Shrink to grow. Shrink to grow. I was 59 when i got in this business. Ive grown. I hope i dont shrink but i would like the grow part. I dont know. We can always hope. These are examples of companies that say, you know what, dont be short us. Mako had been an annuity short. Id rather be bit by a great white than be short mako. The s p is looking to end a foursession losing streak. The opening bell, that usually comes up about four minutes from now. Well put. Thank you. [ bell ringing, applause ] five tech stocks with more than a 10 . Change in aftermarket trading. All the tech stocks with a market cap. Of at least 50 billion. Are up on the day. 12 lowvolume stocks. Breaking into 52week highs. Six upcoming earnings plays. That recently gapped up. [ male announcer ] now the world is your trading floor. Get realtime market scanning wherever you are with the mobile trader app. From td ameritrade. Youre watching cnbc squawk on the street. The opening bell in about 60 seconds or so. The s p threatening perhaps its first fiveday losing streak of the year. The dow has had six down straight within the past month. Well be watching that closely. Keeping our eye on washington. And then these durables, the collision between the durables and isms. Europe and china very tied in. Thats where the action is. If you sell into those markets, youve got good business. If you sell into autos, youve got good business. I think that im going with the higher ism. And with that, there is the opening bell and the s p at the top of your screen. And the Prime Minister of italy is here. What a turn around in italy. Weve got to salute them. The greatest trade is whether you went and bought those italian bonds, they couldnt finance it. That was a great trade. It needs more growth but i think theyll pull it off. Its a great country and we dont salute how well they come back. Consumer numbers highest since june of 2011. Over at the nasdaq, a biopharm company, celebrating its ipo. We have autozone numbers out today. I like the autozone numbers. People saying its not moving. The buyback is quite tremendous. The journal they shouldnt right these articles in the day the companies report. You get to the journal by 2 00 in the afternoon, youre thinking, wow, you got to wrap that blue fish in it, you know, maybe some of the stripers. Remember, its 38 inches now. Is it 38 . I went fishing this summer, it was great. And the stripers are running now and the blue fish, too . Yes, in september they run. You want to use that autozone article. I like to cut blue fish with milk to get rid of the oil. I want to point out shares of jcpenney are lower yet again. Im looking at 11 now. Youve got a bunch of smart hedge funds who own big chunks of this country, whether it be heyman, harry capital, soros, name only, george soros is not making those investments. Ackmans out, worries continue, jim, about the Fourth Quarter outlook or about traffic for the Fourth Quarter, about well, any number of things here in terms of whats going on with this company. Macys has been doing this gigantic sales, macys stock has been going down. But when macys when that stock goes down, its very difficult to stem the tied for jc penny because they have been perceived as being a little zero sum. Jcpenney getting out of Martha Stewart. The lawsuit has been endless. I dont know. You said to me these guys wont able to get out as quick as you think and that was a great call. They dont know anything theyre looking at a share that will be 3 bucks or more, they will have the financing they need to get that done and that they will emerge victorious from this position. Right now not going their way. And theyre apparel based. You mentioned the interesting New York Post. We havent mentioned jones. They claim theres about to be a deal. Thats apparel. Apparel has been so tight. A lot of research out on goldman on apparel, enough free cash to open new stores for a decade, they say. One of my absolute favorites, ross. I think they are one of the beneficiaries of the decline in apparel. Remember, theyre closeout. They sell apparel cheaply. Justice, the old dress barn and maurice, some people call me maurice, love for the stock today. They do take dollar tree off the conviction list. They added it in october of last year. Since then they like to brag. They deserve a little kudos. That was an absolutely great call. Came in right when Dollar General was saying that margin pressure was and cigarette wars were occurring. That was just a great contrary call. My hats off to them. We do slam a lot of research. They got that one right. A couple of ipos may be up sharply. Fmi. We saw one in the opening bell, i believe. Similar i mean, in some ways what we saw last week to rocket fuel and the other one. Fire eye. Fire eye. These are in different areas, Foundation Medicine is one im talking about. One was a google ventures. Google ventures. I dont know if this is the first time theyve taken some been trying to keep up with all the new companies. This we reminds me of the 83 to 85 period, you get hit with this prospectus, you got to sell this one, got to sell this one, which ones hot, which ones hot and of course very few are still around. But, wow, this is just a plethora of ipos. Foundation medicine sounds interesting. First clinical product, comprehensive molecular information product designed for use in the routine care of patients with cancer, based on treating the patient individually based on their molecular some of these stocks have had amazing moves and theyve worked. I think the one that has had the best first day debut so far is still sprouts, if im not mistaken, they still lead with better than 100 gain on day one. Pot belly, noodles had a great one. Noodles. Whole foods, remember how everyone said that quarter was bad. Have you seen that stock . Its off to the races. Gluten free. Well, not really. I just think that whole foods is the umbrella. This is an amazingly powerful move, organic and natural. If you see the packaged goods that dont do organic and natural its not cheap. The whole foods prices is extraordinary. Walter roberts would tell you its not that inflated versus the rest. You might be buying some of the fresh baked things. Im not buying anything but it does show up in the house. You know who has some good things on the trend is kelly evans. Holy cow, how did you sneak in here . If were talking about whether alibaba lists its a shares in new york, i wanted to give people a sense of what were looking at in terms of who is winning the ipo business. Hong kong had become the biggest market for ipos in terms of listings from 2009 and 2011. Heres what were looking at so far this year. The New York Stock Exchange in first place, 27 of ipo proceeds. Interesting the nasdaq has had more listings, 82 to the nyses 71 but havent raised at much money. London in third, hong kong has dropped to fifth. The deal itself will be, as you said, it will be enormous, dwarf the likes of twitter in terms of what theyre selling. Yahoo has the right for them to sell 12 of the company, yahoo owns 24 . What happens to the other 12 . Is it possible for yahoo to distribute that to shareholders in a taxfree manner . That may be a story for another day. But back to alibaba, 100 million value, they have yet to pick an underwriter. First Quarter Business most likely at this point is the alibaba. They want to watch how twitter does and it seems thats leading into the First Quarter of next year. Twitter will be an important barometer at least for the market, those far smaller. Charles lee is defending hong kong in a blog post. What does that mean for china for the market over there more broadly . But it is a turn around from what we saw back from the 09 to 11 period. Whats the price of when alibaba when the yahoo stake is wore more than yahoo . You have to tax adjust it, 12 especially. When it comes to yahoo there is a thought why couldnt they distribute the remaining in a taxfree manner, the way john malone would do Something Like that with liberty. Thats a great way to look at it. The bulls, thats why theyre in it. Its affected that whole internet group. Google has been the outlier, hasnt moved here. It just snuck up on us, alibaba. What was microsoft going to pay . 30 . So ballmer was not so wrong. If you wait long enough, eventually ballmer always wins. Kelly, thanks. See you in a few. Lets get to bob pisani on the floor with more. Good morning. Another low volume open. Were getting what traders are calling fiscal fear fatigue. I like that phrase. The bottom line is we have concerns about whats going on in washington but weve seen this all before. Stocks are just sort of listless. A real problem is that the tenyear yields are at sixweek loads. Interest rate sensitive groups like reits and Home Builders and utilities, were not seeing any move up in any of those that are really appreciable. Speaking of Home Builders, the Mortgage Bank association has applications up 6 to buy a home. That is encouraging that lower Interest Rates are starting to be noticed. Alibaba was the hot topic this morning. The New York Stock Exchange has no comment about whether theyve been contacted. But a lot of talk about why they would list here is that new york based china stocks are doing terrific this year. So take a look at some of the big names here in internet commerce in china. Dangdang is up, all of these names are really doing well this year and a lot of people down here watch these stocks. Thats one of the main reasons hong kong is interrested in listing here. Whether there be interest about alibabas partners, it might be an issue here as it was in hong kong, i dont know. Speaking of ipos, we have three biotech ipos over on the nasdaq today. Foundation medicine, a cancer diagnostic company, only evoke pharma is at the low end. Morgan stanley estimating 22 billion in stock has to be sold in Pension Funds to rebalance. They do this at the end of every month and every quarter so well see a little gyration in stocks very soon. Back to you zip want to see what the opens are like on two of those ipos. I want to come back to the story earlier in the week, that being blackberry. That was an interesting story. We covered it at the time. It was not during our show but jim and i both on the air at the time. Fairfax making that offer, letter of intent i should say, 9 a share. When you look at the math and having spoken to a number of bankers, those who were involved in perhaps trying to sell the company and those who simply know their way around, as i tend to do after covering m a for so many years now, ilt going to be a tough deal to pull off. The key there is the financing. Lets assume it is a 5 billion deal. They do own 10 , that being fairfax. Youd want it to be overcapitalized. Youre talking about raising 3 billion in debt for the company. What multiple to ebidta . Four times . Five times . Can fairfax find the financing is a fair question and a key one investors should be asking as they conduct their due diligence, taking that roughly sixweek period to decide whether they are going to move to a definitive agreement. No growth here at all. Nothing to grab ahold of and say, okay, were going to be able to finance it, we can restructure and believe we can restrictier towards growth. That does not appear to be the case. All that being said, what i am hearing from people familiar with the situation is there are Companies Taking a look. You have intellectual property, you do have some cash. I dont know if that means you end up at 5, 6, 7, above 9 whereby fairfax would get paid its incentive fee, about 157 million. Theyre the largest shareholder. Well see. Private equity being shopped. A lot of big private equity firms passing. Theyre not interested. What ive heard is the gem is the Security System. The Security System is a way to be able to fight a lot of this youve done the spy work. And that Security System could be worth a couple of bucks to someone. So keep that in mind, thats the hidden jewel here. Security system and intellectual property. But those are big maybes. Theyre moving with all determined speed here. Every day that goes by is another day of cash going out. Yeah. Why dont we shift to bonds and the dollar, Rick Santelli, cme group in chicago. Rick . We have about a 3 basis point range, roughly 263 to 266. If you open the twoday chart up, you can see how important it is. Is the Interest Rate Market Building a base for higher yields based on the momentum for the last two days . Maybe could you auger for that. 8 30 eastern we did spike down a little on weak durable goods but it didnt last long and the market came back to what it wanted to tried anyway. Open the market up on the 12th of august, well call it 6 1 2 week low yields. If we keep that chart time frame, the 12th of august and put in the boone, can you see theyre exactly at sixweek low yields going back to the 14th of august, which was a wednesday and hovering into the 80s here, very similar pattern to the treasuries. They did get off kilter a bit with that spread as pregerman elections sealed, if we looked, you can see were in a zone trading around 135, hovering. If you do the pound versus dollar, its the best zone since january. But lets add another year to the chart on the dollar index. Weve done the zone to 79 1 2 to 80 1 2. It still looks side ways where the buy is lower. Back to you. Thank you. When we come back, former labor secretary robert reich is out with a documentary called inequality for all. S p at 1,693. 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. Therell be the usual presentations on research. And development. Some new members of the team will be introduced. The chairman emeritus will distribute his usual wisdom. And you . Well, youre the chief life officer. You just need the right professional to help you take charge. To help you take charge. In a we believe outshining the competition tomorrow requires challenging your Business Inside and out today. At cognizant, we help forwardlooking Companies Run better and run different to give your customers every reason to keep looking for you. So if youre ready to see opportunities and see them through, we say lets get to work. Because the future belongs to those who challenge the present. [ agent smith ] ive Found Software that intrigues me. It appears its an agent of good. [ agent smith ] ge software connects patients to nurses to the right machines while dramatically reducing waiting time. [ telephone ringing ] now a waiting room is just a room. [ static warbles ] youre going to want to keep your eye on jcpenney this morning. That is below 11. Year to date down some 43 , people beginning to ask very Big Questions about they are. Had an opportunity to make a couple of calls during the break. Dont think any of the big shareholders are selling. If they were to, theyd have to file. You have a little bit of time. There was a breakfast this morning sponsored by stern ag with mike holman, the ceo of jcpenney. That was this morning, right . Todays wednesday, september 25th. Yeah. We are expecting perhaps some sort of Court Decision regarding the Martha Stewart case, somewhere in the 10 00 a. M. Hour. I think they called for court to be in session at 10 30. Looking for other wouldbe catalysts today. Theres this worry theyre going to have to issue equity, right . Right. So that kind of plays into the listen, its a big fight here between the bulls and bears. You got a big chunky base full of bulls. You just got to keep in sight the fact that what they sell is not doing well in the you might say jcpenney, the gang who couldnt shoot straight. Remember macys missed the quarter, nordstrom made the quarter. Tjx made the quarter. I great quarter of what i would pay at macys for that stuff, including the jockey stuff. Theres a mental image i need to erase. 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More for you. I think the dominant theme for housing over the next few years is filling the hole of production that has not been filled over the past years. There will be speed bumps as you noted before that derived from Interest Rates, public policy, international events, but the trajectory in our view over the next three to five years is generally positive. Thats Stuart Miller from lennar last night on mad money. There are four comments about facebook doing very well in mobile today. Stern ag talking about the possibility of facebook getting its foot in the door in china. Alibaba look out and morgueans ccut on carniv. Yes, obviously the cut is bad. Boeing. Boeing using 146, 147 target. Im using 152. Apple, a lot of people saying thats over. Please, its not over. I mention that mako gets a bid, theyre like a junior intear tiff surgeon. Red hat . Red hat. We have to find out whether this particular stock is slowing and vivek, well see how they pulled that off. A lot more from jeff bezos when squawk on the street comes back. Every day, every day i write the book 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. Welcome back to squawk on the street. We have august new home sales up close to 8 at 421,000, seasonally adjusted and annualized, last month revised from 394 to 390. The 390 is the lowest level since october of last year, but the 421 would be the Second Lowest read outside of that going back to the same period and we havent had a threehandle sense last year. So its better than expected from a worse level but still matched actually, exceeded expectations. Karl, back to you. Lets get to diana olick. After durables disappointed, not too bad, right . We do have to take into account julys numbers were revised down from 394,000 to 390,000. An increase of 7. 9 month to month, thats pretty good. Inventory came down. Inventory has been the story in both new and existing homes. Theres just too little out there. Prices for a new home up 2 54,600 is the of a price a new home, even as Mortgage Rates were increasing and you have to remember that these new home Sales Numbers in august are based on signed contracts, not closings. So you had mortgage rights pretty high in august and still theyre able to raise prices and make the sales. The question is how much higher can they push those prices if the rates go up again . It is a solid number again for august. Back to you. Meantime is Guggenheim Partners said the threat of a shutdown is increased. Gentlemen, good morning. Good morning. Good morning, simon. Its something of a Lone Campaign as weve seen through the night. How important is what senator cruz is attempting to do here . In other words, can he succeed . No, he cant. All hes really doing is delaying the inevitable, which would be the Senate Passing some type of clean bill that keeps the government funded. That will send it back to the house probably sunday evening. The markets will probably open on monday without resolution on this. Ultimately we believe the house will pass a resolution sometimes on monday, keeping the government open. The big risk here, though, is that this is only the undercard, the real fight is over the debt ceiling Health Insurance going to begin and end in october between two retractable positions. Both are just assuming the other side is go to blink. Thats no way to run a government. Lets come out to that in a moment, the ekd deadline we have. Just on the more immediate future, carl was pointing out for every minute that cruz is on his feet, its less time boehner has to marshall support. Do you ultimately think that the House Republicans will pass it through and we will get a continuance . Ultimately yes. Keep in mind even though ted cruz is speaking on the senate floor, the house doesnt come back until votes later tonight pup all the House Republicans will be tomorrow at 10 or 10 30 a. M. Tomorrow. Well find out which way the House Republicans are going to go. If they side likely keep the government open on october 31st. Do you agree that the debt crisis is the bigger fight, one more difficult to solve potentially . I would agree with chris there. I also think theres going to be a continuance of government in the short term. If there is a shut down, its not going to affect earnings in a significant way. But, yes, certainly the bigger issue here is the day bait over the del krelg. Its been clear from the rhetoric that en, effectively even if we stopped talking about a shutdown now, we could still be talking about one in a couple of weeks. Rob. Absolutely. I mean, that is certainly a possibility. I do think at the end of the day, even though both sides will threaten armageddon along the way, as chris sort of implied as the deadline approaches for the debt ceiling, i do its just unmath omable they wouldnt. There are still some who say the market has become desensitized to these type of showdowns and the last four, five days are still about some sort of monetary policy, fed discussion lingering in the background. Do you think thats true . To a certain extent. Weve seen all of the boy cries wolf story over the last two years. Keep in mind, taking this right up to the brink, which is what it looks like its going to do, thats going to increase uncertainty and volatility regardless. Sometimes in october were probably looking at a fed chair nomination as well as perhaps five other fed chair nominations. Even if we get through this month and next, well have a government shut down fight again either in november and december. You really just have this endless horizon of policy fiscal cliffs. Before we let you know, there was an idea floated by Deutsche Bank that in the end you may find that the president bends and that there is a provision for delaying the implementation, rather than the defunding of obama care for one year and that politically might be acceptable for democrats. It push. No. You see in the wake of syria, the failed summers nomination. The only thing the president is focused on right now is the successful rollout of his Signature Health care law, which is probably going to be the extent of his legislative legacy, that and sort of trying to break the will of Congressional Republicans over what he views as sort of weaponizing the debt ceiling. Those are the top two priorities and we see no indication of the president bending on his signature legacy issue on october 1. Its been great to have both of your on al sis. Thank you. Now coming up on the programming, well hear from amazon Ceo Jeff Bezos. But first, robert reich is taking his fight to the big screen. The former clinton staffers new venture is being called an inkling of truth on the economy. 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 . Female announcer the savings really stack up during sleep trains during sleep trains inventory Clearance Sale. Save 10, 20, even 35 on a huge selection of simmons and sealy clearance mattresses. Get two years interestfree financing on tempurpedic. Even get free delivery sleep train stacks the savings high to keep the prices low. The inventory Clearance Sale is on now guaranteed sleep train you ticket to a better nights sleep welcome back to squawk on the street. Im dominic ho. Infinity said its now going to focus on a drug meant to treat rare blood cancers and asthma. Back to you. Theres a new drama called inequality for all. Heres a sneak peek. All of the developed nations, the United States has the most unequal distribution of income and we surging toward greater inequality. It looks like a suspension bridge. Last year we made 36,000. I probably make 50,000 a year working 70 hours a week. The middle class is struggling. Robert reich is the former labor secretary under president clinton and he joins us this morning. Good to be here. Thank you. One thing that strikes me, theres no Empirical Data that can argue about what youre seeing in the film. Were surging toward greater and greater inequality and its a problem for the economy because if the vast middle class and everybody aspiring to join the middle class doesnt have enough money, they cant go deep into debt anymore, we dont want to do that again, then how do we create enough buying in the economy to generate Economic Growth . I mean, this is really a huge problem. Consumer spending is 70 of Economic Activity in the United States. We are not dependent and will not be dependent on net exports for years if we ever get there. So we depend on consumer demand. And yet consumers are running out of money. 95 of all of the gains since the recovery started have gone to the top 1 . We all understand that here, of course being on the floor of a giant trading floor. Others might argue were in a deleveraging process, households are deleveraged, they have cleaned up their Balance Sheets, delinquencies are down, theyre paying their mortgages on time more. Is that not step one of progress . It is definite progress. But median Household Incomes keep dropping adjusted for inflation. And the new jobs created since the recession pay on average less than the jobs that were lost. So as the median household keeps on really having less and less income, there is a very profound and important question about where demand is going to come from in our economy. Anybody who is looking at the structural challenges we face, this is not a matter of fairness, this is a matter of just keeping the economy going and it also goes to some measure to explain why the recovery has been so anemic. We were just talking about the president s legacy and what happens into fall and next year. His legacy is at risk. Using the same source you cited, they say the economy is worse under president bush and present and et cetera. So what does he do . What is the policy answer here . There is no magic bullet. There are a number of policies that have to be invoked. The problem is as you know, washington is completely in deadlock. There is no chance of anything coming out of washington. We can talk policy until were blue in the face. Changes in infrastructure are su absolutely critical. We have to redo education and tax regulation i would agree with you on education. The logical progression of capit capitalism, it is the biggest, homogenous market in the world. And some people are better rewarded for the labor skills they have. The rest due to technology or whatever are just left hanging. There is no great solution to that, is there, unless you interrupt the capitalist process and talk about redistribution. I am a capitalist. And this country has shown a genius over the last hundred years for continuously saving capitalism from its own access. By blowing bubbles. No, just the opposite. In the progressive era, 1901 to 1909, in the 1930s and 60s in terms of Voting Rights and so on. But the mechanism has speeded up many, many times faster. Youre going back to an era when things moved very slowly. Youre right, the challenge has become greater. But if you become a global determinist, the rich are going to get richer, what happens to the economy . Then the economy implode. But you have to identify that as the problem. You cant just describe the problem again is the point im making. It has to be big. The purpose of this movie is to say regardless of your political ideology or your party, youve got to understand the problem. This is not a matter of blame. Stop blaming the poor or the rich or government or big business or wall street. Understand the forces that are at work here. Understand this is very big and weve got to, you know, there are a lot of potential solutions, theres not one individual solution. But if we dont get together, roll up our sleeves, stop bickering and do something about, this our economy is going to suffer. The rich would be much better with a smaller share of a rapidly growing economy than they are doing now with a big share of an economy is it just me or are you sounding a little less partisan . They say its not about fairness anymore, its not about blame. Would you argue youre not coming at it from an ideological standpoint as much as you have in the past . No, for 35 years ive been saying much the same thing. If you want to talk about fairness and morality, thats fine. But the way to appeal to everybody, to understand the reason we titled this film inequality for all, its important people understand this is getting worse and eroding everybodys standard of living potentially and causing huge divisiveness in this country, its undermining our democracy and around the world. And around the world. The United States has a more unequal distribution of income than any country. When we surge of inequality in china, many of the same forces are at work but it is dangerous. Cant wait to see the film. This friday. Go out and see the film. Robert reich, who left with unemployment at 5. 3. I created single handedly 22 million new jobs. Congratulations. Thank you. It was hard work. Take the office again. Coming up, find out why jeff bezos says its okay the company doesnt make money from the new kindle. Hes speaking out in a rare interview next. 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. [ 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. How lincoln financial can help you take charge of your future. 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. Amazon is launching its Third Generation of kindle tablets and our own jon fortt sat down with amazon Ceo Jeff Bezos for a rare interview. Take a listen. Thanks for sitting down with us. Youve got some new products to show you us, jeff. Tell us whats new. Were announcing a whole new line of kindle fires, with other entry level hd starting at 139, which is a break through price point for a kindle tablet. Were introducing a button mayday, an a tech instructor will copilot you on your screen, they can draw on your screen, show you how to do things. Were trying to make it easier for people staying in control of the technology instead of the technology being in control of the person. Its a big day for us. Were excited to be launching this new family of kindle fires. And it looks like youve got a lot of higher end features built into these new devices. I want to ask about some of the purpose behind, the thought behind what youre doing here. How much more engaged in Amazon Services is a kindle buyer say an ipod user . People who use tablets in general are very engaged in Amazon Services. When you think about our Retail Service for example, mobile has been a big big tail wind for Retail Business. When people can lean back on their sophfa, thats good for amazon. We have big content, video, the music mp 3 store, games and apps and so on and customers who have kindle fires are very heavy participants in the Digital Ecosystems, as well being physical product shoppers as well. You havent said exactly on a unit basis how many kindles youve sold. All we say is millions and were extremely grateful to those customers. Ever since we weve only been in the tablet business for two years but since we entered that, our kindlefire line has always been our best selling product. When i look at that, Amazon Web Services and media, a significant portion of which is digital, it seems like from amazons perspective, Digital Content or delivery might even be approaching 50 of revenue before too long. Are you approaching that and how significant would that be . Well, our physical products business is also growing very rapidly so i dont know when or if that day will come. But its a highquality situation because weve got multi businesses that are growing fast and were, you know, thats a knock on wood a situation we hope will stay around for a while. You know, we have our Amazon Web Services business, which is doing well, we have our Digital Ecosystem and device business, which is growing well and we have our Retail Business which continues to grow well also. And up said that these kindles, dont just think of them as gadgets, think of these as services. Yes. I know that you talked about the importance of experimenting and innovating. Youre doing some grocery pilots, some flowers even recently. How does all of that fit into these kindles were seeing today and what you can do with them. When you think about some of the things the hardware, if you think about these tablets, the hardware is extremely important. You need a fast processor, you need a beautiful display with high resolution, but once you have a great piece of hardware, the next question that customers have are what are the services on top of that hardware that i really want to be able to use . When we think about that, we think about things like prime instant video, we think about things like the kindle ebook store, so those are the services that sit on top of our hardware. Another kind of slice at that is this new may day button feature we have just announced. So those are the kinds of things we mean when we talk about services. I know that you take pricing very seriously and cost very seriously. The larger tablet last year was 299, now its 379, youve built in a better camera, a much Higher Quality display. Given that you view these as services, why are those things important enough to justify the higher price . So the new 8. 9 inch fire hd is 35 lighter than it was last year. Its got a processor thats three times as fast. Its got a graphics processor thats four times as fast and its got twice the memory. And that is really the that is kind of the high end of the kindle fire family of tablets. So for people who want the very best hardware, thats the right tablet to buy. The 8. 9 inch forum factor is useful for doing things like browsing the web, email and movies and tv shows look great on it. And then we have for people who are buying a tablet for the family, who are 139 kindle hd has the same Processing Power that our high end had last year and the same display quality our high end had last year. So at 139 its at a breakthrough price point. Jeff bezos speaking to jon fortt. I know we have more of the interview to come up later in the day. I just cant help myself, the contrast, the launching devices at cost, still the stock is up 25 this year and the experience that tim cook has when he comes out with products and a stock that is down now 9 for the year, totally different approaches to more or less the same products coming to market. Yes indeed. And very different market caps, too. Apples market cap is still in the stratosphere, despite all the gyrations the stock has been through. Bezos trying to get these devices out there as cost as a way to get Amazon Services in front of people. He was really very specific that the Digital Content is what these digitals are pushing. He gets more philosophical about how he motivates his team and casts vision for the future and how he looks at the world when he strategizes. That was very interesting, too. He gets pumped about the products. These billionaires are almost the same. You wont see them until they finally got a consumer product. They are kids with toys, they want to launch, they want to tell the story. In this case its a special popup window. Its interesting. You mention the billionaires. We see Larry Ellison and his team ditching the keynote. You see their passion and the various things theyre involved in. For jeff bezos, this may day feature of getting help, its classic him. Jon fortt with the latest kindle announcement. Its nice to see business is powering ahead because we are just again just days away from a possible Government Shutdown. The question is how worried should you be about your money and the impact on markets. Find out what some of the biggest investors are doing with their portfolios as the deadline looms. Well be right back. Clients are always learning more to make their money do more. ann to help me plan my next move, i take scottrades free, inbranch seminars. Plus, their live webinars. I use daily market commentary to improve my strategy. And my local scottrade Office Guides my learning every step of the way. Because they know i dont trade like everybody. I trade like me. Im with scottrade. announcer scottrade. Ranked highest in Customer Loyalty for brokerage and investment companies. Court is in session in downtown manhattan. The judge in the macys versus Martha Stewart living jcpenney case, calling lawyers in for a 10 30 a. M. Start time. Courtney reagan is back with more details. Whats going on with the stock and the story . New York Supreme Court judge has still not issued his decision in the lawsuit. Closing arguments were heard nearly two months ago. We dont believe there will be a decision today but truly anything can happen at this point. The judge has called the lawyers back into court beginning just three minutes ago. The official action at appearance has been left blank on Court Documents but macys lead attorney ted grossman told me the judge has been a little unclear about his aim, though he wants the parties to report on issues that have been reported in the press, primarily regarding interactions between jcpenney. I understand that the senior jcpenney design team was in the lmso offices yesterday placing orders for 2014 in the nondecor category, which would appear that part of the relationship is in tact. In the meantime jcpenney shares continue to fall today, down 12 in the past two days, trading at lows not seen since january of 2001. It is the most shorted stock in the s p 500. We know those concerns are hovering over weak sales and a possible debt raise. Courtney, thanks very much for that. In the meantime, where elbows are rubbed, you can bet gary come inski will be. We want to take you to gary. What are the big Money Managers telling you . Good evening. If i have a 5 00 shadow, its been a long day so apologies for that. For viewers who have listened to the commentary, viewers know the narrative here typically tends to be right. This is what the big money is doing. As it relates to the Government Shutdown, the answer here is its a big yawn. Very little concern about the theatrics associated with that. Nobody making major financials as a result. If we do have a debt default discussion, that is something unlike a Government Shutdown that will take the attention of the big money players here in singapore. I mean, i guess, gary, the thing that people are trying to figure out right now is markets havent moved too much, stocks have weakened. If you want to get really gr granul granular, credit default cds spreads jumped, in other words, on the u. S. Government. Are people looking at this as some kind of opportunity or is this a way you get on the sidelines until the whole storm has passed . These professional investors, the best investors, they have to go to work every day. So they cant Pay Attention to much of this noise so they try to find the macro themes. Some of the themes are the japan macro trade, still very much in tact and in the minds of many. In terms of the bond bubble, the socalled bond bubble, very little believe the bond bubble will burst. They think the tapering and tightening is years away. So maybe the bond bull market is over but no bond bubble burst. I would say were seeing money move back into the emerging markets, which has cheap because of the taper talks back in the states and i would say things such as u. S. Financials five years after 2008, some of the strongest in the world and a lot of people believing our financial institutions, believe it or not, are the best on the planet. Gary, we still are yet to have a formal announcement from the white house as to who will be nominated as the next chairman of the Federal Reserve. There is a man the president would dearly love to take the job, timothy geithner. Did he turn up at the meeting or say anything that might be of interest to markets . Fantastic questions. I did interview mr. Gieeithner hour and a half ago. While the discussions were off the record and i cant discuss the specifics that we talked about, i can tell you one of the few things there was 100 consensus on is after mr. Geithner left here, there was a strong feeling that if in fact he decided to take this fed job, that everybody here in singapore believed it would be the most bullish thing in terms of u. S. Equity markets for continuity in terms of fed policy. A big unanimous decision, theyd like to see him take that job. But there is a problem. I dont know how much he was paid to turn up there at the conference but i imagine it was 200,000, 250,000 for one days work and travel. The official salary of the chairman of the Federal Reserve and what ben bernanke gets a is 190,000. When the man says i dont want the job, financially the incentives are skewed away from him stepping into the Federal Reserve and dealing with all that. Yes, simon, i think when youre talking about money and looking at apples to apples, one cant argue with your analysis. As you and i have discussed and debated friendly for many years back there in englewood cliffs, there a lot of people, bleaelie it or not, that make decisions and determinations that arent based on money. There havent been any discussion based on whether the job was offered but he would be a great person to run the treasury and a lot of people would like to see that. Gary cokominski out of singapore. Thank you. We want to get back to jcpenney. Shares are continuing to tumble. What are you hearing . This morning weve been able to make a number of different phone calls, sort of give officer sense as to why those shares have been so weak and what is going on with the retailer itself. There were a couple of researchers out in the last 24 hours that caught the attention of investors. One was on the bond side from goldman sachs, that was out yesterday, didnt end up in in boxes perhaps until this morning. They said a combination of weak fundamentals, inventory rebuilding and under performing Home Building will likely challenge jcpenneys liquidity levels. We also have Cleveland Research out with a note augering for similar types of trends, appears to be dialing back on initial order intensification strategy and promotional cadence does not appear to be yielding better sales traffic trends. Couple that with the fact that the companys ceo, mike ullman has been in new york today at meetings. I know a number of large shareholders who are going to be meeting with mr. Ullman oneonone. Some investors were expecting a more positive tone. But someone who did attend the meeting said turning around this company is going to take a lot of time, through 2014 and perhaps threw cold water on the idea that you would see double digit up Comparable Store sales. That may not be the case if youre looking at Cleveland Research. Thats a key change here for jcpenney. Couple that with the belief they need to raise perhaps more money, whether through a Debt Offering or through an equity offering. In the last few weeks weve seen bill ackman sell the entire stake. So the opportunity for the company to have sold equity, they didnt take it, they let these large shareholders take it. That window perhaps closing. Would they need to raise equity. How much would it be and at what price continues to be a key consideration . Finally, while there have been rumors that large shareholders, whether it be perry or haimen or soros, i have not been able to discern whether that has been the case with any of the large shareholders, all of whom are suffering with the stocks down sharply. The new iphone is a success for the team in cupertino. But apples success could mean difficulty for other stockholders. Well discuss that when we come back. I want to be prepared for the long haul. Ishares minimum volatility etfs. Investments designed for a smoother ride. Find out why 9 out of 10 large professional investors choose ishares for their etfs. Ishares by blackrock. Call 1800ishares for a prospectus, which includes investment objectives, risks, charges and expenses. Read and consider it carefully before investing. Risk includes possible loss of principal. A lot can happen in a second. 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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. For a second straight session, shares in carnival are trading sharply lower, wiping out more than 3 billion of market cap. This could be an important turning point after the ceo warned they were left profitable than the market things. Analyst jamie rollow said its held up significantly well on other earnings downgrades over recent years because investors were willing to look forward to a normalization of earnings but now that norm at keeps getting pushed out and he said even for 2015 projections, the shares look expensive. Not only is the incoming ceo choosing to disclose that yields will continue to fall through the first half of next year, whilst Arnold Donald sounded upbeat in his exclusive interview with us yesterday, hes not talking about a major restructuring, nor having extra cash to return to shareholders. We see fundamentally a very strong business, we are still cumulatively if you added together the other publicly traded cruise companies, our net income and earnings exceeds those combined. Were still the largest, we have tremendous scale and opportunity and our fundamentals are strong going forward. The interesting thing will be whether the newcomers like norwegian and royal caribbean, norwegian has younger since that dont require the refits. To see whether they can capitalize or you have an industry slump as a result of all the crises. Lets get to the cme group. Rick santelli with todays santelli exchange. Hi, rick. We have a lot of strange times. Can you almost set your watch by them with regard to government, politics, issues, debt piling up in most developed economies but i think that nothing reaches level of hypocrisy with the people leading the country. Ive been looking at the last time we had debt ceiling issues with with we had a republican in the white house and were talking 2006 with w in the white house. And having a slightly different slant on the debt ceiling, debt and creating debt and how unpatriotic it is, but i found Something Interesting in all places the new york times. March 16, 2006 to be exact. Lets take a walk down hypocrisy memory lane. Harry reid, i like this one. Put it on the screen. Any objective analysis of our countrys fiscal history would have to conclude this administration and this rubber stamping Republican Congress are the most fiscally irresponsible in the history of our country. It isnt just the democrats, okay . March 2006 when they took that vote, it was 5248, okay, to raise the debt ceiling. All the democrats of course voted against it, a handful of republicans. But look at what Charles Grassley said, republican. Iowa republican. He said, this is great, increase the debt limit to 8. 97 trillion was essential to preserve the full faith and credit of the federal government. What is he saying now . Is he any better . No. Hypocrisy on both sides of the aisle. But there are a few standouts beep had senator coburn of oklahoma on. He said identify we dont have too little money in the government. What we have is not enough will to cut the funding or reform the programs. Right now we have difference, whether you think its hat tricks, at least we know where he stands, an hes standing on principle whether you agree with it or not. One final note, while were biting our nails about the debt ceiling, in reuters regarding the moodys report, a shutdown is unlikely to hurt the sovereign rating. You know, quick the scare tactic, guys, and be real. Address the debt. Address the debt ceiling, but do it in a responsible way and maybe remember what you said a couple of years ago. Back to you, kelly. All right, rick, thank you very much, sir, this morning. Up next, well take you inside floridas versailles mansion and why she needs 11 kitchen, a roller rink, and a childrens opera theater. Rear back after a short break. ] this is claira. To prove to you that aleve is the better choice for her, shes agreed to give it up. Thats today . [ male announcer ] well be with her all day to see how it goes. [ claira ] after the deliveries, i was okay. Now the ciabatta is done and the pain is starting again. More pills . Seriously . Seriously. [ groans ] all these stops to take more pills can be a pain. Can i get my aleve back . For my pain, i want my aleve. [ male announcer ] look for the easyopen red arthritis cap. For my pain, i want my aleve. Does it end after youve expanded your business . . After your companys gone public . And the capitals been invested . Or when your companys bought another . Is it over after youve given back . You never stop achieving. Thats why, at barclays, our ambition is to always realize yours. 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 sleep cooler with extra cooling comfort on our bestselling tempurbreeze beds. Visit tempurpedic. Com to learn more, and find a retailer near you. The largest private home in america is getting closer to completion at 90,000 square feet. Its more than 1. 5 times larger than the white house, and as robert frank found out, that means it takes quite a while to get from one end to the other. Reporter to show you how big americas biggest home is, im going to run the entire length of the first floor. Here we go. Ahhh, ooh still running. Still running ooh still okay. [ winded ] this house is way too big, because theres a lot more to go. If someone offered us the the asking price right now, hed have mixed feelings. Very mixed emotions. Now somebody wanted to buy it, id probably sell. Yeah. So and robert frank joins us here at post. Thats incredible. Thats more than a 40yard dash, im guessing, right . Yeah, ill have a new sport, called mansion marathons. Either i have to get in better shape or the mansions have to stop getting so darn big. 90,000 square feet. 13 bedrooms, 11 kitchens. There are 30 bathrooms. You could use a different bathroom threezero. A different bathroom every day of the week in the month and then go back are the kids going to be grown up by the time its done . They are. I asked them how theyre going to get around the house because its so big and they cant run all of the time. Segways. And theres a great clip tonight. She was showing me around the house and shy got lost. Id ask her, okay, what room is this . She would forget. Because there are so many rooms. I mean, its huge. You know, robert, for those people we should get everybody up to speed. Yeah. This is the couple that there was the big documentary about him going bankrupt possibly with aired on cnbc. A very emotive you saw these people in all reality going through a very bad period in their lives. Right. Theyve bounced back . It was such a great symbol of the boom and the bust. And now the recovery for both housing and the wealthy. And they are back. They did this house, it went into default. They had to give up the private jets. His company, which had 1 billion in debt, is now reporting record profits, so theyre back, building this house. Its going to be finished in 2016. And its one of the most amazing financial comeback storiesment but we spent a lot of time theyre very fun on tv. Yes. But how will it be affected by the Government Shutdown, robert. [ laughter ] not at all. That would be the quick answer. Are these built by any homebuilder we would have heard of . Is it like a lennar project or a toll no, hes got a private army of when i was there, just one day, they were putting marble again, its versailles, modelled after versailles. The entire exterior was done in marble. They had 34 marble workers just on the outside. And then they start the inside, it will be whats the number . Beginning to end, do we know how much how much you know, tens of millions. What are they asking . Theyve put more than 20 into it. My guess is 40, 50 maybe. Whats the asking she said about the asking price. 100. Ah. They would sell it for 100. Worth bearing in mind, guys. With bonus season coming. Yes. Secret lives of the superrich premiers tonight on cnbc. Coming up, why other retailers arent happy about the new iphone success. Well have more on that story when squawk on the street returns in a bit. 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. Unh [ male announcer ] you can choose to blend in. Or you can choose to blend out. The allnew 2014 lexus is. Its your move. [ agent smith ] ive Found Software that intrigues me. It appears its an agent of good. [ agent smith ] ge software connects patients to nurses to the right machines while dramatically reducing waiting time. [ telephone ringing ] now a waiting room is just a room. [ static warbles ] [ telephone ringing ] now a waiting room is just a room. 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 to squawk on the street. Heres whats happened so far. I hope we wont go down a bunch of political rabbit trails that actually take away from the seriousness of trying to solve our countrys fiscal problems at large. This is kind of political theater at its worst when at the core what we ought to be talking about is how we get our nations Balance Sheet back right, which means both Political Parties will have to give. Things are acting a little better, and i think thats because theres a sense, all right, weve been there before. They screw off. It goes down the shorts are afraid to be short, end of the month, end of the quarter. A lot of bids underneath. Some takeovers. Just not a bad moment. Yeah. And i expect a worst month. We dont make money when people buy these devices. We want to make money when people use our devices by buying content, buying kindle ebooks, tv shows. [ bell ] and with that, that is the opening bell. If they decide to amend the senate bill, that probably triggers a shutdown. If they take the senate bill, we will likely keep the government open on october 1st. This problem is go getting worse, an its eroding everybodys standard of living eventually, even of the very, very wealthy. And its causing huge divisiveness in this country. Its undermining our democracy. Good morning. Were live here at post 9 at the New York Stock Exchange. Lets start with a check on markets, which are largely flat today. Were keeping an eye on the s p 500 in particular to see if it will continue its recent losing streak. All of this as the focus is pretty much on washington, whats happening there with the policy debate and a couple of big names falling today. A terrible day for jcpenney. The shares of that company falling to 12year lows. Goldman sachs did initiate the companys debt with an underperform. Cleveland research has warned the Third Quarter may be worse than expected. Shares of jcp down almost 50 this year. Shares of carnival also slipping today following a wave of analyst action. The Worlds Largest cruise line was downgraded to underweight at morgan stanley, had the price target lowered at jpmorgan and susquehanna. Yes, and what a night and morning for ted cruz, and marco rubio, the senator still talking on the floor speaking out against obamacare. While they talk, a Government Shutdown looms in the distance. Well take a look and tell you what it can mean for your money. And amazon announcing the next generation of tablets, but jeff bee zoes doesnt care if the new models make money. Youll hear him explain why later this hour. Apple is hanging its hat on this number. 9 million new i foeps sold in the first three days, but does good news for apple mean bad news for retailers . Well explain. First to washington where senators ted cruz and now marco rubio are speaking on the floor, continuing their sort of filibuster against obamacare. It comes with less than five days away from a Government Shutdown. John harwood joins us from washington. John, perhaps help walk viewers through the procedure here. We understand that perhaps this current sort of filibuster can only go till noon, but a lot can happen after that. Reporter yeah, theres a sequence of votes that will occur, kelly, before if all of the time is played out, all of the time is consumed by those who want to speak. That will conclude on sunday when the senate is expected to strip out the defunding of obamacare and finally pass an extension of government funding. But theres several hoops that have to get through. We believe that all of those will be cleared. We think harry reid will get more than 60 votes to go to the bill today. Therell be another vote on friday. To end the debate on the bill. And that debate will, in fact, end on sunday. But it hasnt produced what one would call a serious debate. You know, bob corker in the intro, you talked about saying i hope we dont go down rabbit trails so we can have a substantive debate. Overnight, the debate in the senate about the extension of government funding came to this. Heres ted cruz. An opportunity that i dont usually have when im in d. C. , to read them a couple of bedtime stories. Do you like green eggs and ham . I do not like them, sam i am, i do not like green eggs and ham. Would you like them here or there . I would not like them here or there, i would not like them anywhere. I do not like green eggs and ham. I do not like them, sam i am. Reporter and the relative point here is that democrats and most republicans alike do not like Government Shutdowns, and they do not like debt crises, which is why there is so much pushback against what ted cruz and the Tea Party Members of the house caucus will try to do, have been trying to do. It appears that theyre not going to get their way on the extension of government funding, but the open question, guys, is what happens on the debt limit . Thats in a couple of weeks. In fact, the treasury secretary, jack lew, said in a letter to congress a few moments ago that we had lit the debt limit for good on october 17th, which is a new deadline for congress to raise the debt limit. Yeah, in the meantime, the page from the congressional record quoting green eggs making its round on twitter this morning, john. Thank you so much, john harwood in washington. For more on the Economic Impact on the Government Shutdown, lets bring in david kelley, chief Global Analyst with morgan stanley, and jane. Good morning, guys. David, you were critical, i think like a lot of other people, when the fed decided not to taper last week. I wonder where you think we would be if we were dealing with a taper and whats going on in washington . Did they not see around this corner pretty well here . No, i dont think wed be in a different place really. I think youve got to look past whats going on in washington right now. I think its strangely appropriate to have green eggs and ham being quoted, because its an ininfantile level of discussion. Any shutdown that occurs only lasts a few hours, and i believe that we will we will raise the debt ceiling in time to prevent any default on the debt. If thats true, then by the end of this month, by october 30th, when the fed next meet, youll have a lot of this problem behind you, plus you have good housing numbers this morning, plus youll get a good jobs report for the month of september. So overall, i still think were probably moving towards the argument for phasing out qe despite whats going on in washington this week. In october, david . Thats what i would have done, before september. Okay. But i dont want to make that prediction given how dovish theyve been so far. Okay, diane, thats interesting. Because if anything, more and more the rhetoric out of washington seems to be, okay, well get to a resolution on this piece of it, to keep the government funded through midnovember. The real fight happens around the debt ceiling which may fall october 24th, or earlier, because jack lew said yesterday tax receipts over the summer were weaker than anticipated. If thats the big fight, id be surprised if the fed will turn around six days later and do something to change the course of the monetary policy. I dont think theyll do that at all. I dont think october tapering is in the cards. Im actually even doubtful now, and im the one that thought it would be september, with david, i was live with him, wrong in that, but it was a 5149, i think i had said at that point in time. At the end of the day, it will be difficult by december, depending on how bad the fight gets. Also whats important is to understanding the fiscal drag. I agree with david, a Government Shutdown is not likely to be long if it occurs. And it could be disruptive and uncomfortable, but not going to derail the economy. But its at a fragile stage of the economy and certainly a showdown of the debt ceiling with the implicit additional cuts, sequestration will go on, even if we have a continuing resolution. That will be a larger sequestration next year for the 2014 year than it was this year. And well also see additional cuts weve not seen, 139 billion funded for medicare fix, and other effects in there that could be implicit, headwinds for real Economic Issues for the Federal Reserve to deal with beyond just the brinksmanship and nonsense and infantile attitude, as david pointed out, in washington, d. C. Yeah, david, separate from all things politics, right, and all things political, we did get durables that disappointed, sort of collides with what the isms have been telling us. The surveys versus the actual data, i wonder if theres a cloud in your mind over what manufacturing does in the Fourth Quarter . You know, there is a little bit. And its got to do with uncertainty, of koufrs, and washington is contributing to this. I think thats that business is still lagging and consumers are leading in this recovery. Overall, when i look at the growth in wealth over the last year, that will continue to Power Consumer spending and im hopeful globally were seeing a pickup of growth in china and europe. That will help the exports. Overall, i still think the economy can pick up in growth going forward. You know, i agree with diane that the Federal Reserve is seems very, very reluctant to pull the trigger on reducing qe. Well, and, diane, just briefly here, as well, we were talking with robert reich earlier about u. S. Income inequality, the president s legacy, and the extent to which the Federal Reserve keeps its foot on the pedal here, the stock market, to a lot of people, seems divorced from the economic reality. Is there something to that . Well, i dont know if its divorced from economic reality, and certainly david could address that more, because we have seen profits come back much more rapidly than incomes. The bottom line is, the fed works through asset prices. Asset prices of homes affects most households. That is something that helps the middle class as well as the upper class. The bottom line is, it doesnt even up income inequalities, and thats where the problem is. Fiscal policy is more suited to that. We dont have any a fiscal policy in the United States. We have a default of fiscal policy, and its going in the opposite direction. You can say that again. Thank you for your time. Well talk to you soon. Anytime. Now some news out of the u. S. Post office. The price of a firstclass stamp is going up to 49 cents. Thats a threecent increase, and it will take effect january 26th, 2014. So, carl, you have to wonder how that affects bernankes term at the end of the fed. Yes, that was my first question. How does it affect the fed. There is there is a parallel. A lot of people saying to the post office, a threecent increase is not going to change things. It wont solve the problem. But people who bought forever stamps are feeling good right now. Yes, absolutely, nice hedge. Amazon unveiling a new line of kindle tablets today, but jeff bezos says its okay if they dont make money. He will explain in a moment. First, Rick Santelli, watching new home Sales Numbers, rick. I am. But first, you know, yesterday i really liked the kay schiller data, and i particularly like Robert Schiller, made some comments about the Housing Market and whether or not its bubbleicious. Lets reconcile the optimism of one and the anxiety of other, all at the bottom of the hour. [ 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 sleep cooler with extra cooling comfort on our bestselling tempurbreeze beds. Visit tempurpedic. Com to learn more, and find a retailer near you. Welcome back. Take a look at the basic materials sector today. It is one of the bestperforming sectors in whats generally a flat market. Dominic chu has more on this one. Hey, kelly. While stocks try to avoid the fifth straight day of losses, at least for the s p, one sector thats standing out is materials. One of the best performers in the large cap index. So helping to lead the way higher are some names you may know. Fertilizer maker, cf industries, up around, well call it, 2 . Fellow fertilizer producer, mosaic, also up. Also the Steel Companies helping with the gains. Look at diversified steelmaker, u. S. Steel. And specialty names like allegheny technologies. Those four stocks are among the best performers in the materials sector so far. And, of course, in the s p 500, carl. So materials very much in focus today. All right, dom, thank you very much. Dominic chu back at hq. Amazon unveiling the latest generation of tablets this morning called the kindle fire hdx. Our own jon fortt sat down for a rare interview and we mean rare with amazon Ceo Jeff Bezos. Jon, you have a lot more. Yeah, carl. The second half of the interview, bezos talked to me about his Guiding Principles in media and in retail, and why hes not like thomas edison. Take a listen. You have, as amazon, have made a lot of investments in content. You personally just made an investment in content, as well, with the washington post. Peel like to ask you whats going to change in ten years. I want to ask you whats not going to change in ten years as far as Digital Content is concerned. What is fundamental, you believe, about Digital Content . Well, that first of all, that is a very good question. Because i rarely get asked that second question. I often get asked whats going to change. I rarely get asked, whats not going to change. And its usually better to build Business Strategies and product visions around stability. So in our Retail Business, we know, for example, that ten years from now people are still going to want low prices. We know theyre still going to want fast delivery. We never have to worry well wake up ten years from now and the customers will say, mr. Bezos, i love amazon, i just wish you delivered a little more slowly. Thats not going to happen. And i think in content, there are some fundamental things that we know, too. Often, these most fundamental things are really, really profoundly obvious, and sometimes in life, its hard to maintain a firm grasp of the obvious at all times. But in content, you want you have to be interesting. Thats you know, you have to be riveting. Thats a key feature of content. Thats whats you know, we develop content at amazon, we have amazon publishing, developing books. We have amazon studios, developing original tv for prime instant video. And the numberone rule in that business is be interesting. Is that the only thing, or is there more . I know there are things you pointed to when you talked to the post, also. I think there are also possibilities around innovating with new kinds of content because of the new medium. So and even innovating around how you develop content. So for amazon studios, for example, we are bringing the pilot process and sort of crowdsourcing the pilot process. Instead of having a small group of studio executives and maybe a small focus group of people decide which pilots should be turned into series, we release those pilots and let everybody help decide. Now, i understand you spent quite a bit of time in Silicon Valley at lab 126 where you develop electronics this summer. When youre with that team yeah. Maybe developing products like this, whats your role . How do you either inspire or push or question whats going on in there . Well, so this is a this is a very good question, also, because sometimes i think theres a myth of this of the topdown leader who is, you know, inventing and this sort of what we have in our minds when we think of thomas edison. And thats not how largescale Innovation Works inside of a company, in my experience. It really is the great strategies, the great product visions, even the great features that kind of emerge, and then somebody has an idea and somebody else has a refinement to that idea. And by the time you finish and have a real product, its nobody is the father of that product. Nobodys the mother of that product. You know, theres a saying, failure is an orphan and success has many fathers. Thats a very true saying. And it captures something very deep, that anything large scale that gets done and is successful, you can count on the fact that there genuinely were many fathers. Do you ask a lot of questions . Do you insist on the impossible, what what i did this summer, for example, is we had three book clubs. The Senior Leadership team, we met. These were all day book clubs and we had nice dinners. One of the things we did was read Business Books together and then talk about the strategy and the vision and the context. And those books really just become frameworks. Theyre kind of skeletons we can end up using to talk about the business. So those were great conversations. It gives all of us a chance to get to know each other better. And then, of course, we have lots of brainstorming sessions. Were talking mostly about the future. You know, whats going to happen in 2014. Whats going to happen in 2015672015. Whats the future roadmap. The decisions, what were announcing today, its what we were talking about a year ago, two years ago. Were filling the pipeline with what well do next. I believe time is about to be called on me. So this is my last my last question for you. What does success look like on a product like this . Because youve got a really low price yeah. With compelling specs. Ipad is still selling a lot. Youre driving services. What will you look at and say either this worked the way i wanted, or not . Success is for customers to say, wow. I want customers to say, wow, ive never seen an 8. 9inch tablet this light. I want customers to say, wow, the mayday feature is incredibly helpful to me. When i want to change something in my settings, i can do it right away. I want people to say, this display is the most beautiful display ive ever seen. And so on. Its really about can you get customers to say woug. I guess you want them to say, wow, not just we even have a different approach to that, which is we have been very clear we sell these devices at breakeven. We dont make money when people buy these devices. We want to make money when people use our devices by content, buying ekindle books, music, tv shows, movies. We think were better aligned with our customers when people use our devices, not when they buy them. Well, youre making this journey into mobility that more interesting and affordable and were having fun doing it, too. Its fun watching you do it. Thank you for sitting down with us. Of course. You couldnt see it there, carl, but i actually opened up my wallet and said, you want people to say wow . Not just, wow. Theyre in business to sell these things still. Yeah. I wonder, jon, its so great actually seeing him talk and move his arms and legs and realtime. I wonder, were you frustrated at all at his unwillingness to really open up in terms of metric, Empirical Data, all of the investors want to know about . Yeah, you know, some people you get the sense if you just push on them again and again, you could eventually get them to spill out the number. He very clearly was not going to spill out anything that he hadnt intended as far as metrics are concerned. So we went on to philosophy, to try to figure out how he thinks about the business. You did your best, jon. Thank you very much. Again, still a look at what amazon is up to. Now, new versions of the iphone, meanwhile, are already a big success. A record 9 million sold over the first three days. While the record sales are great for apple, it could mean bad news for a lot of other companies who have nothing to do with technology. Well explain that one when squawk on the street returns. 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. 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. Unh hey lets go [ male announcer ] you can choose to blend in. Yeah yeah yeah or you can choose to blend out. Oh, yeaheah the allnew 2014 lexus is. Its your move. Welcome back. While a record 9 million new i phones were sold this weekend, the launch of the new iphone is anything but good news for many other retailers like lululemon, williams sonoma, and coach, to name a few. Matt neemer is the Senior Analyst at wells fargo with a new note on this trend, calling the iphone hangover. Matt, good morning. Good morning. You know, i was surprised to read this, because i would have thought based on the mall traffic i saw this weekend that, if anything, the new iphone was helping people get into stores, and youre saying, no, instead, its stealing wallet. We had a thesis the iphone launch would steal wallet from other sectors, so we looked at the first six launches. In fact, we did see in certain retail categories theres some share shift to the iphone. Now, share shift to the iphone. In other words, what youre saying, and weve seen this in some of the retail sales data, is more and more of the money consumers are spending is basically on this product and this product alone. Yeah, if you look at certain categories like clothing, autos, sporting goods, general merchandise, the sales growth decelerated along with the iphone launch in a number of occasions, and we think that that share shift to apple, you know, obviously, a lot of other noise in the numbers, so its hard to tease it out. What i would say is last week the International Council of Shopping Centers said that sales growth was the worst its been since june. So it does seem like there is some tiein with the iphone launch to other categories of retail sales. Yeah, definitely interesting to see whats causal here and whats not, matt. I wonder, is it your thesis that it takes that an iphone takes share away from other wouldbe luxury names . Or are people truly extending their wallet to the limit, splurging on an iphone, and then not going, say, to a discounter . Yeah, we also looked at a number of companies that we cover, wells fargo securities. And theres certain sectors that werent impacted like grocery, consumable sectors, the dollar stores, walmart, whole foods. And then there were other s sectors you did see a pronounced impact, tiffany, coach, lululem lululemon, blue nile, dicks sporting goods. It does seem to be a split between needs and wants, consumable sectors. And the sectors more aspirational. Right. You still need to eat. You still need to buy household goods. Just curious, matt, if this is something people, then, should trade around iphone launches . Or is it actually a more important longerterm trend that were seeing here . Yeah, were not recommending that this is the sole, you know, reason for a trade. But i think to the extent youre looking at retailers, and youve come out of a choppy backtoschool season, and youre looking at potentially easier comps in the fall, this is a little bit of a red flare. I think this is a warning signal that we need to be aware of. Certainly, i would suspect that the september and maybe even the october sales in some of the discretionary categories are impacted by the iphone launch. Yeah, and a good thing for all of us to keep in mind when we talk about that disappointment if, and when, it happens. Matt neemer from wells fargo on the iphone hangover. Thanks, matt. Thank you for having me. Fascinating thesis. New info coming out of the macys jcpenney case. Courtney reagan has details at hq. Thats right. New York Supreme Court judge jeffrey owen called all three parties into the court and met the lawyers with jcpenney, Martha Stewart living and macys in chambers. He called everyone into court to get information about whats been said in media reports, that there was a lot going on and he wanted a straight story. Now he has it, hell go forward with issuing an opinion. We dont know when that will be. Court is adjourned for the day. We dont know what the street story is, because it happened behind closed doors. All right. Keeping an eye on both of the names actually, all three. Courtney, thank you so much. Dows up almost 35 points. A few minutes left in europes trading day. Finally, a little bit of beta in the intraday session. Well get europes picture and a look at the afternoon session in 40 seconds. announcer scottrade knows our clients trade and invest their own way. With scottrades smart text, i can quickly understand my charts, and spend more time trading. Their quick trade bar lets my account follow me online so i can react in realtime. Plus, my local scottrade office is there to help. Because they know i dont trade like everybody. I trade like me. Im with scottrade. announcer scottrade. Voted best Investment Services company. [ bell ] the european markets are closing now. Simon has a look at the european session. Simon . I guess we held in check in europe, for all of the things we could talk about here capitol hill, the fed but also, importantly, the clear assertion from dragi, that if needs be, he will extend the maturity of the 1 trillion euros of cheap cash the banks are sitting on beyond three years if necessary. Very important thing this week. In the meantime, below that lack of market action, you have very big european stories, in fact, driven by a lot of the analysts at the moment. Carnival we spoke about yesterday, saying were much weaker than you think we are in terms of earnings. You have a host of downgrades today. Morgan stanley, ubs, steve forbes, credit suisse, all cutting price targets. Of course, we look to say at what point will you recover, and the shares become a buy. Also, two other big downgrades came through today. Within was on comos bank. This is the second day that theyve fallen. Jpmorgan had an interesting call on that giant u. K. Retailer tessco saying the german how would you call it, like audi, will change the landscape for them moving forward, underweighting tesco. The stock falls as a result. Let me give you one more deal, which on the surface here in the United States, youll go, huh. But this is huge. Telefonica is effectively going to take over telecom italia. The headline figure is 1. 5 billion. Its a complicated deal. You have to understand theyre sitting on 39 billion of debt. Its a huge deal. It also raises the question to buy out the italian shareholders, raises the question of whether other highwater marks of italian industry, like air italia, the airline, might be up for sale as the italians kind of stand to one side. Guys, back to you. Interesting. Thanks a lot, simon. Now to some controversy surrounding last weeks fed decision. A few people in chicago appear to have had access to the feds data before anyone else. Eamon broke that story and he joins us with the latest. Good morning, eamon. Good morning. The Federal Reserve told us yesterday that theyre contacting news organizations to go over the policies and procedures surrounding the feds lockup. Thats the area inside the Federal Reserve where they give the fed decision early to reporters who cover the fed, and they expect that theyre not going to report on it until 2 00. The question here now is going to become, did anybody inside that lockup room any of the reporters or news organizations transmit any information out of that lockup room before 2 00 p. M. . Unusual trading in chicago would seem to suggest, according to the market firm nanx, that people in chicago had access to that information before 2 00, before they should have, if this travelled from washington, d. C. , on the telecommunications lines. Weve been asking the news organizations who participated. A lot of them told us they did not transmit a thing out of that room. I want to give you the statement from dow jones, which declined to answer a question of whether or not it transmitted any information. Instead, they say, we will continue to work with the fed cooperatively to report in full accordance with their desires. Thats the statement from dow jones. Thomson reuters has told us this morning that they did not transmit any data outside the fed room before 2 00 p. M. Now, the question here in all of this is the new level of weirdness is what were the feds rules last week . The fed has not answered a direct question from cnbc about whether or not it was, in fact, against the rules to transmit any data at all outside of the room before 2 00 p. M. So were going to wait on an answer here from the fed about what the rules were before we can figure out whether anybody may have broken them or may not have broken them. Exactly, eamon, because that will tell us whether there could have been anything illegal going on. So anyway, well find out. Thats one of the questions, yeah, absolutely. Thank you very much, eamon out of shin lets kick things back up to bob pisani with a look at whats happening at the nyse. I suspect the rules the fed has are not clear, not written down, and theyll clarify that, and make it clear that sending messages to a server is not in the spirit of the agreement. Thats probably whats going to happen. Theyll do it very quietly, by the way. We have churning. And im calling it fiscal fear fatigue. Its annoying. Look whats going on. The white house and the congress are far apart, particularly the republicans on the continuing resolution here. So traders just say, why am i getting involved in that . We have low volume, low activity here. Theres generally, everybody agrees, well probably make a deal. About you it could bleed into october. Most people believe well avoid some kind of shutdown. The irony is, the fiscal situation in 2014 is better because theres Less Government cuts and that will help the gdp. The closer we get to that, the better the gdp will look overall. Its not helping us now. I know were down. Put up the s p. Down five days in a row. Oh, heavens. Its one of the lowvolume selloffs. Down 1. 6 from the historic high we hit last wednesday. Thats the way the pullbacks have looked this year. Lowvolume pullbacks that have been buying opportunities. What worries me more is the 10year and the treasuries. We have seen yields declining now, i think 10 out of 11 days in the 10year. Thats normally good news for the stock market. Its not really happening. Obviously, theres concerns a slowgrowth economy wont be helpful to earnings. Thats why the stock market isnt doing much. Look at the builders here. Interest ratesensitive group, it should be benefitting as the Interest Rates go down. Were not seeing much. Homebuilders up a little bit on mortgage applications. Utilities, reits, not doing much overall. Elsewhere, Department Stores are having an awful day. You heard david report earlier about jcpenney, the turnaround could take a while. Down 11 . Macys, lowest since april. And biotech, ipos, anything around oncology, the hot thing this year. Oncology, ipos, we saw today foundation, look at this, 31, priced at 18. And that was above the price talk, opens at 31 and has held up there. Anything this year in oncology, biotech is doing terrific. But particularly cancer research. Also its great breakthroughs coming through. Were in a golden age, some argue. A good thing. Thank you, bob. New home sales data released earlier this morning show a 7. 9 jump in august. But sales still hovering near their liest levels of the year. Lets get to Rick Santelli in chicago with his take on housing and mark cantons, too, rick. Absolutely. Before we get to our guest, mark, id like to play something Robert Schiller said yesterday on cnbc. Roll the tape. Im still worried im starting to worry more about bubble. And some cities, its looking bubbly now. This might be the beginning of a slowdown. It could be the beginning of a bubble, but i dont know. Theres really a fundamental change in the Housing Market. Part of that is just explained by change in tastes. People seem to want to rent more. All right. Id like to welcome my guest, mark hansen. Thanks, rick. Mark, why dont you respond to Robert Schiller, and respond in the context of up close to 8 today, and reconcile what appeared to be on the surface good news and the anxiety Robert Schiller obviously harbors regarding housing. New home sales this morning, they beat consensus beat could have come from two houses. Remember, they round up and they round down. If you take a look at the noseasonally adjusted numbers, they were flat. Month over month. 35,000 houses this month, 34,000 houses last month. However, the subcomponent regions were identical monthtomonth, meaning that if someone took one house and added it on to 499, you would get an extra 500 houses times 12, and all of a sudden have a 421,000 beat. However, if the grand scheme of things, the year 2013, we were supposed to be at 500,000 to 600,000 seasonally annual rate, and postthe surge, we gapped down to 390 last month. Lets say 400, 420 this month. But these are real low rates. But keep in mind, also, new home sales as a percentage of total house sales are only 6. 99 . Throughout history, theyve been 20 , 25 . They added a lot to gdp. In fact, existing sales, just the brokercommission component alone, is 50 fivezero percent of totaler builder residential investment. Its never been lower. So real low levels, still depressionary levels, still arguably room to go to the upside, but we havent seen that demand transpire yet. All right. One final question, because you hit something i see all the time. Seasonal adjustments seem to have gone awry. Were in this new normal postthe crisis. Do you think at this point its more informative to also be monitoring the nonseasonally adjusted housing data, specifically the data you referenced this morning on new home sales . Obviously, housing is very well, its very tied to Interest Rates. When the feds in there pushing around yield curve with a bulldozer, and from month to month we can get price swings that change affordability by doubledigit percentages, you saw what happened post the rate surge. It had more than the cooling effect. It was a catalyst. It was a credit event. New home sales gapped down 27 month over month on that rise in rates. So, yes, i like to look at notseasonally adjusted rates. All right, excellent. Mark, thank you for taking the time to be our guest. And back to the squawk on the street crew. Yeah, a couple of great data points in there. Thank you, mark, and thank you, rick. Senator ted cruz, meanwhile, is still pulling his allnighter on the senate floor to protest health care reform. His speech cant actually stop it this morning, but it might bring us to a Government Shutdown. What does it mean for the economy . Art cashin joins us when we come back. All night long [ male announcer ] the new twin turbo xts from cadillac. 410 available horses. 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[ telephone ringing ] now a waiting room is just a room. [ static warbles ] coming up next on the half, who knew what and when ahead of last weeks fed meeting and who may have traded on it . Is the u. S. Still the best place to invest . Well get the word from asia, and also from london. Plus, its one of the dows newest member, but does nike belong in your portfolio . Two of our trader also debate that. Well see you in about 15 minutes. All right. Its in the dow now, so well have to stay tuned to find out. Scott, thank you very much. With the Government Shutdown looming, the next guest says the markets are approaching the key technical level you want to keep an eye on. Heres art cashin, director of floor operations, joining us at post 9. Art, good morning. Good morning. Right now, we have about 15 minutes left to go in the filibuster of sorts thats happening down in washington. Are markets trading off of that . Theyre watching it carefully. Sometimes with a little tongue in cheek, as i said to you offcamera, it is slow enough that people are running around doing parodies of green eggs and ham with a political theme through it. And it is a little tough. They had one this morning on the right doing, i will not fund my uncle sam, because i dont like the health care scam. Okay. And a couple you cant repeat on the air. On camera. [ laughter ] so theyre watching that as a backdrop. We have the dow now climbing 28 points. The actions since the feds meeting last week, has it been about whats happening in washington . It has been. Its about cautious. But again, the markets always internalize. This morning i sent a note out to some friends that the s p was approaching a kind of temporarily critical neckline support at 1,693, 1,695. We got down in there and tested it and tested it. And it didnt break. I think if the filibuster werent going on, you might have gotten a pretty decent rally out of that. Instead, you got a kind of halfhearted bounce. But the viewers should watch, if negative news comes up, watch for that area, because it will be important. Some point out s p hasnt had five days in a row down since the fiscal cliff at the end of last year. Others say the market is desensitized to a lot of the shenanigans in d. C. Whats the truth . Is this an automatic response to what we see down there . Well, i said with pisani several days ago, the markets have built in a kind of rationality put, the idea that, yeah, confrontation going on in syria, theres confrontation going on here, there, economically, militarily, geopolitically, and at the end when they get nosetonose, people go, well, lets not go that far. Lets buy some time, lets delay some things. You know, people remember Barbara Tuckman wrote a great book called the guns of august, and it was how we accidentally marched into world war i, because nobody believed the other guy would blink. So weve got to be careful. This one, you have to remember, were in washington. And rationality and washington dont necessarily go hand in hand. Somebody might misstep. It looks like when they get back to the house, there will be less than 24 hours to act on it. You can accidentally trip over it. People express that concern. All right. Well keep an eye as we head into the weekend. Art cashin, thank you very much. The smartwatch era is almost here. Samsungs version of the smartwatch scheduled to hit store shelves soon. But the question everyones asking, is it simple . What kind of stuff can do with it . Well talk to a Company Behind one of the first apps for the Samsung Smartphones in just a moment. Just by talking to a helmet. It grabbed the patients record before we even picked him up. It found out the doctor we needed was at st. Annes. Wiggle your toes. [ driver ] and it got his okay on treatment from miles away. It even pulled strings with the stoplights. My ambulance talks with smoke alarms and pilots and stadiums. But, of course, its a good listener too. [ female announcer ] today cisco is connecting the internet of everything. So everything works like never before. In a cnbc exclusive, Courtney Reagan sitting down with mens warehouse ceo following recent headlines with a clash from the former face of the company, george zimmer. Courtney joins us more with a busy day for courtney. Thats right. Sick of me yet . His termination garnered a lot of attention. The ceo says he hasnt seen any evidence in the business of the falloff of zimmer no longer rvinv commercial spokesman. What happened, mr. Zimmer . Well, you know, im going to have to refer you to the statement that the board put out soon after it happened. So the only option was to terminate mr. Zimmer, because he was disruptive . Well, i can tell you that the board tried very hard to find another resolution, and was really left in this position. And is there no contact with mr. Zimmer at this point . He is still the largest shareholder, although its only 3 . No, we havent had contact with george since then. Zimmer termination as executive chairman, mens warehouse reported a 20 drop in quarterly profit and lowered guidance, but they cite economic pressures and traffic slowdown in some of its stores. Goldman sachs initiating coverage of mens warehouse with a buy rating, a 45 price target, lifting shares here almost 5 . And while mens warehouse extended its exclusive relationship with Davids Bridal for an additional five years, ewert says this year, 2013, is scaring superstitious brides to push their weddings and subsequent tux rentals into 2014. Ewert says they rent more tuxedos than anyone else in the u. S. The average age is 27. If youre a valuable millennial client, they hope you switch over to other suits and goods. Carl . Courtney, fascinating. People are putting their weddings off to 2014 because of the number . I couldnt find any data, and i asked him if he had any data. He said were seeing evidence that some brides feel superstitious about the year 2013, getting married in a year with 13. He said it happens when a saturday falls on the 13th. On the flip side, 777, he said, was one of the best wedding days ever. And i imagine popular among the chinese, as well. Isnt number 7 in thats one of the really whats the opposite of being a bad luck . A good omen . Yeah, 8s positive. Oh, 8. 4 is the one you want to avoid. All fours. That could be trouble next year in general. Thats true. Neumerology. Burying the lead, court. Thank you so much, Courtney Reagan, back at hq. Speaking of retail, were keeping our eye on jcpenney, which for a brief period this morning did have a 9 on the price, 9 and change. Got just below 10 before rallying a bit. But clearly not a good day. In fact, its the worst two days for the stock in about six months. This is a 12year low for the second consecutive day. Yeartodate, down 43 . Favor mentioned some of the big names that have been reportedly on the long side that are clearly having a tough time today as people wonder about comps, wonder about the future of mike ullman and other things. Exactly. Green mountain coffee also a big loser today. Well tell you why in a moment. Squawk on the street will be 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. 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 . 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. Lets send it over to dominic chu to get a quick market flash on Green Mountain. Thats right. The shares getting roasted. The stock is down another 2 , off session lows, down about 11 during its current losing streak. The worst fiveday loss for the stock in a year. Keep in mind, though, shares are still up 86 so far in 2013, and a quarter of Green Mountain shares are sold short. So lots of investors, carl, kelly, betting at least on a fall for Green Mountain coffee. Interesting. The nasdaq 100, which is pulling away from the s p and the dow, Green Mountain is the fourth biggest gainer of the year just behind tesla, netflix, and micron. Shows you what a tear its been on. Yeah, exactly. 2 today. Meantime, samsung announcing plans to make a smartphone with a curved screen at a galaxy smart launch event in seoul, south korea. The company wouldnt elaborate on specs. Recent patent filings says the screen would be curved inward. Carl, i cant say i totally follow all of it. It looks like samsung shares are weaker in that session, down. 3 this morning. We have seen pictures, potential plans for this kind of device. You know, i wonder how much of a gamechanger that would be . Is it enough to make a person who would buy an iphone buy a curved Samsung Phone instead . Makes you wonder if were getting to the edge of the innovation envelope when it comes to some devices, because thats been the knock on devices, that we put as many bells and whistles as you can get on them. Its probably more interesting for the samsung watch. If you can curve the screen, get the chips to be smaller, even with the iphone people have said to us, its about the chip and getting things on a scaleddownenough platform you can put it around your wrist. Right. We keep our eye on the hill, of course. Senator ted cruz, looks like hes about to wrap up. Hes got to. He has only a minute left. Until noon, which well see procedural votes. One of a series of votes that well see in the senate over the next, what, 24, 48 hours. Yeah, it sounds like its tough to follow. And then, of course, every minute he has spoken has been one less minute john boehner has to get some sort of response to the senate out of the house. But thats going to be a discussion for the weekend and next week. In the meantime, the market really riding a 20point range here. Right. Will you take big positions with that looming over the weekend . Doubtful. With that, lets get back to headquarters for this afternoons session. Scott wapner and the halftime. Heres what were following. The frontrunning of the fed. Who knew what about the taper and when . And who profited as a result . A slam or dunked . The dow newby nike reports tomorrow. Should you get long ahead of the numbers or wait . First, the s p hoping to avoid the first fiveday decline as fears of a Government Shutdown continue to linger. How should you maneuver the markets which sit just 2 from new highs, and is the u. S. Still really the place to be for your money . It is the half. Lets play the action. Pete najarian, is t