we've been in a range for some time. you can see of course 3% well in the rear, isn't it? nobody's talking taper too much anymore. as for europe, let's take a look. kind of a mixed bag overall on the couldn't net. let's go to our road map. it starts where else would you expect it? hope with washington, leading to hope for investors but for how long? we'll take a closer look at where the markets are headed the day after that big, big point gain on the dow. >> and bank earnings kicking off this morning. jpmorgan posting its first quarter lost amid litigation costs. >> and mixing coffee and politics. starbucks ceo howard schultz looking to end the d.c. gridlock, launching a petition today urging congress to open the government. we'll speak live with mr. schultz later. >> mark zuckerberg going on a real estate spending spree in silicon valley. we'll tell you what the billionaire is buying coming up. >> it's the morning after the major averages rose 323 points, all on hopes republicans and the president will end the grid llg, lifting the debt ceiling. >> i was in texas at the barefoot economic conference, a lot of large asset managers there in the room over the two days. almost to a man or a woman, they were not putting on hedges, they were not believers that we would pass it. and they were proved right, at least, by that rally as have those who can't choose to sell. we kept seeing we need to see the big losses to move the two parties towards a deal. >> talk about a victory lap, over at jefferies. >> he was there. we made fun of him a little bit the last couple of weeks, so many people have come out and said we're buying the dips, we're buying the dips but the buy the dip crowd this morning is saying, look, this move has proved us right. >> i think there's still a great belief in the market, david and kelly, and from the big investors -- once you get this in the rear view, you're going to focus on the fact that yellen is the selection and some of the facts that the economy is improving, globally things are getting a little bit better, that you're going to get some kind of good push into the end of the year, november and december, at least a view from the folks that i talked to and i'm gathering it's the same for you guys that the end of the year will be pretty good once you get this out of the way. >> you also don't seem to be not likely to get talk of a taper. the data, coupled with the shut down, which is still going on and will have an impact. >> this is where i get a little frustrated with the narrative, which is to say there's one reason why stocks do well in this environment and it's because growth is not good enough. i'd so much love to be in a place where we've progressed beyond this. the fed can step back a little bit because the unemployment rate is falling for everyone. that would be a much better outcome than this continued muddle through. that gets lost sometimes. >> there a lot of questions, david, as to whether this move we saw yesterday, 323 points, as you said the best point gain of the year for the dow, is it justified, is it overdone? was there really anything going on in d.c. other than, hey, they had a conversation, we're up 300? >> 232 on the s&p can go very quickly if we get negative headlines between the vice president and republicans. >> whether it's today and whether it's just a prospect of revisiting this situation in six weeks' time, early next year, here's a quote from potomac research group, which i think sums um there is a broader picture here that can be worrisome. they said market psychology has soared because default is off the table but business and consumer psychology has taken more of a lasting hit. washington is still dysfunctional. how exposed do you want to be to this market or to this economy if you feel like the longer term picture is getting worse? >> i don't know. it depends on whether you think that, a, the people in d.c. are going to let us go over theboro verbial cliff. there's still a big bet that people think that's not going to happen. if you think it's going to happen, it changes your entire mindset about where you want to be in the market. >> i think tina fordham at citi puts it nicely, she calls it the near heart attack. you're going to keep getting these moments where there's big jumps and a selloff. >> but the market is not believing anymore. i would argue they're almost -- i'll believe it when i see it if you guys really are going -- you're terrible, we hate you but you're not that stupid. that at least seems to be -- >> i wonder what the 300-point rally will do to the whole conversation. it may have the same kind of impact as a decline would. now the pressure is on. you don't want to give it back. you don't want our inactivity to give it back. >> the dynamic may have been the opposite what we expected, which was the big falls that potentially would bring them together. now it's the idea of -- >> exactly. >> this morning president obama and vice president biden will meet with the senate republican caucus in an effort to resolve the standoff. hampton has the latest. good morning. >> reporter: how you doing, scott. this comes off the meeting that president obama had with house republican leaders for about 90 minutes at the white house last night. both sides basically describing that meeting as a good session. the president and john boehner explain a proposal for a short-term extension of the debt ceiling, about six weeks. that would buy the gop more time to seek more spending cuts. republicans appear to be steering clear of limits on the president's health care law and spending that led to the current crisis. back on capitol hill, several gop lawmakers said while no deal has been struck, the talks were constructive. >> we'll come back to have more discussion. the president said that he would go and consult with the administration folks and hopefully we can see a way forward. >> opening the government is a negotiation that will happen tonight and in the hours ahead, and we hope to have it open by monday morning. i know it's a holiday. >> now republicans continue to be battered in public opinion polls as americans hold them more responsible for the government shutdown. taking a look at the latest nbc "wall street journal" poll, 50% of the people blaming the gop versus 31% blaming obama. only a quarter of you republicans in a positive light but democrats don't escape unharmed either. nearly two-thirds of people say they'd fire everyone in congress, even lawmakers they like. overall, 78% of the people believe the country is headed in the wrong direction. now, scott, as you mentioned, president obama is scheduled to meet with senate republicans at the white house around 11:15 a.m. eastern time. kelly, back over to you. >> hampton, thanks very much for that this morning. for more on hough the pw the pon a deal could impact the market. guys, good morning. >> good morning. >> good morning. >> the numbers in the poll, the wall street journal/nbc survey were pretty bad all around. 78% of the people are unhappy with the way the country is going and yet we have a 300-point date. do we see this as a kie cot mi or are we making too much of the reaction of what's happened in the last four to six weeks in washington? >> no, i think this was very good political theater. the polls played an important role in bringing both sides of the party to the table. it was clear a week ago when the president's gallup number went to 11. that brought everyone to the table. we thought that would be the catalyst for deal, not a big market selloff. this looked more like '95/'96 and that it did in 2011. in 2011, there was a sovereign debt crisis going on. that was an acute situation. government percentage of gdp was still 24%. now we've had through dysfunctionality or otherwise a massive readjustment of those fiscal accounts. what's at stake here is nothing like the budget control act of '11 or atra of '12 where any deal will have massive fiscal drag and very real macro economic implications. that was always a political fight that created some distractions for the markets but was never destined to cause a significant market pullback. >> kevin, if what barpy is saying basically this isn't -- we shouldn't expect the kind of deal out of washington that includes massive short-term spending cuts. i guess that includes an obstacle for people who want to be along the markets. >> i think you're looking at a consensus view that we will get some kind of deal and we think there's going to be a deal. frankly, to not get a deal would put so much pressure on the system, it would undo so much of the things that congress voted for in terms of things like supporting the banking system. so we think a deal does come and most of the data, which i think ultimately will be when you get beyond this you're going to be looking at the data and most of the dayia we look at is perfectly fine. most continuithings are expandi. >> where's the data? no cpi, no retail sales. >> there is delay in some of the government data. but there's a lot of private survey and purchasing manager surveys, et cetera and so forth. which are pointing in a pretty good direction. when you look at markets, too, market-based indicators, which we have available to us all the time, every day, seem to be functioning relatively well. >> barry, much was made i guess it was maybe you upped your price target for the s&p, i think it's 1,800 now for 2013. you're pretty risk on across the board so to speak, right? you like cyclicals and that's what you think is going to carry the day to your target. >> absolutely. you guys hit on it a little bit earlier. wee thought we'd get this policy normalization correction right until 11:59 on the 18th when they didn't taper. even if there's a one-month deal, two-month deal, a fiscal fog doesn't completely clear. you may not even get tapering in december. if you push that to next year, you have support of monetary policy. i do think, like your other guests, that the trends and the number of market related indicators does it pertain to is the underlying part of the economy cyclical? i think it looks like a 2014 event. so the fiscal fog, which was really a political fight over nothing, all that does is have a favorable monetary policy reaction that creates a window into favorable seasonality for the market to y. >> we have to go here. just in a word, do you buy financials. barry? >> no! >> kevin? >> selectively. >> oh, interesting. some caution there on the street. we'll watch how those names react as we get earnings in. appreciate it, guys. >> thanks. >> they both did it in a word. i think that may be a first on cnbc. we were just talking about financials, at least in a word there. jpmorgan chase posted third quarter earnings of $1.42 a share. that did exceed wall street's forecast. but the company posted a loss actually because of increasing legal expenses. in the meanwhile, wells fargo's q-3 earnings conceded consensus. not that big a surprise at wells, which has been laying off employees in morgan's banking for some time. jpmorgan, 9.2 billion, 7.2 billion is the litigation expense after taxes. they did have reserve releases of 1.6 billion. you've had for some time at jpmorgan reserve releases, which is coming in as a plus and they take that and put it in the litigation reserve. kind of evens itself out. now it's swamping the reserve releases. the question is is this it? when are they going to come from the settlement? they can just tell you that jamie dimon is saying lack of settlement a little bit because of a shutdown, reality is the shutdown is complex because of some multiple agencies. litigation costs will be elevated for the next year or two and will be lumpy. >> do you know the number, though? it's $23 billion. that's the number they gave for litigation reserves, 23 billion. >> which really highlights if you're an investor thinking about this stock right here and right now, you have two choices. do you focus on the fact that the underlining business continues to perform pretty well, right, or do you focus on the fact of the legal risk that continued the litigation, the settlements, the arrows being flown at jamie dimon almost weekly? today as the stock was at 50, now it's at 53, it's got a little bit of a push here, it seems as though investors are focusing on the former, the fact that the business continues to do pretty well. >> agreed. but you do wonder if it keeps coming. if this is it and you can sort of have some confidence, and that is not clear that the $7.2 billion after tax addition to litigation reserves will more or less take care of a lot of it, then you probably do. but you get another quarter where reserve releases, by the way, they're going to slow. they're going to slow as the economy moderates, as credit has lost it's -- evened out now. you're continuing to see less and less of them. that lab key questiwill be a ke. >> that will be in focus today. there's that technical, that 50 mark and now at 53. >> coming up, starbucks ceo and chairman howard schultz is surging lawmakers to strike a deal on the debt ceiling. and it looks like small losses after one of the biggest days of the year. plenty more "squawk on the street" live from post 9 at the new york stock exchange when we return. ♪ ♪ tirement. those dreams, there's just no way we're going to let them die. ♪ like they helped millions of others. by listening. planning. working one on one. that's what ameriprise financial does. that's what they can do with you. that's how ameriprise puts more within reach. ♪ that's how ameriprise puts more within reach. ido more with less with buless energy. hp is helping ups do just that. soon, the world's most intelligent servers, designed by hp, will give ups over twice the performance, using forty percent less energy. multiply that across over a thousand locations, and they'll provide the same benefit to the environment as over 60,000 trees. that's a trend we can all get behind. that's a good thing, but it doesn't cover everything. only about 80% of your part b medical expenses. the rest is up to you. so consider an aarp medicare supplement insurance plan, insured by unitedhealthcare insurance company. like all standardized medicare supplement insurance plans, they could save you in out-of-pocket medical costs. call today to request a free decision guide. with these types of plans, you'll be able to visit any doctor or hospital that accepts medicare patients... plus, there are no networks, and virtually no referrals needed. join the millions who have already enrolled in the only medicare supplement insurance plans endorsed by aarp... and provided by unitedhealthcare insurance company, which has over 30 years of experience behind it. with all the good years ahead, look for the experience and commitment to go the distance with you. call now to request your free decision guide. ♪ ♪ welcome back. starbucks ceo howard schultz is on a one-man mission to end washington's gridlock. he's circulating petitions in starbucks stores calling on lawmakers to end the shut down and debt ceiling battle. it comes a few days after he called on fellow business leaders to ratchet up pressure on lawmakers. he will be a guest on the program a little later. here's a look at the full-page ads in the "wall street journal" today and "new york times." this gives you a sense of what we're looking together. it says "come together." sign the "come together" petition, one reopen the government to pay our people, avoid another financial crisis, three, pass a bipartisan budget by the end of the year. >> i guess it's fitting in the year of the activist as investors, he's become quite the activist ceo on a number of issues. >> nonpartisan. as a citizen i'm encouraged by what mr. schultz is doing but as a shareholder, who is paying for that ad? >> is it a distraction in any way for him? i don't know. but i just wonder. even though, again, personally i think it's a worthwhile endeavor but not quite sure how it lines up with shareholder value. >> starbucks and he in particular has been involved in the whole issue of bringing guns into starbucks chains. i'm wondering if it's not meant to be a little bit of a zig from that zag issue from a shareholder point of view. >> stocks up 34%. >> that will help you with shareholders. >> go spend that money however you want. >> just keep doing it. >> howard schultz will be with us later on the show. he can tell us himself. what a week it's been on wall street. i guess the question is how is it going to end this morning? here's a look at the futures, which are seeing the dow pointing lower by about 23 points, and the nasdaq as well. 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[ male announcer ] now the world is your trading floor. get real-time market scanning wherever you are with the mobile trader app. from td ameritrade. you're watching cnbc "squawk on the street" live from the financial capital of the world. the opening bell set to ring in about 30 seconds. key question, can we continue to rally after -- that was a big move. any time you're above 2% in the s&p, that's a big move. >> going to get some conversations out of d.c. today, press conferences and the like. we'll be watching the banks at the open. >> jpmorgan and wells fargo reporting earnings before the bell, seem to be moving in opposite directions. we'll keep an eye on that. friday october 11th, the opening bell. the realtime exchange, we'll call it more green than red. the board is changing itself as we speak. >> oh, an extra bell! >> double ring. >> is that a party? >> that's got to be some sort of omen. >> that's bad luck. >> that happened yesterday, by the way. that went well for that mortgage company. over at the nasdaq, premier, that's a health care company doing the honors. >> jpmorgan came off its highs on the double bell. we're watching that. that stock is up 2/3 of a percent off the open. >> it's important to point out the dichotomy between them and wells fargo this morning. both of them will be looked at for a gain to the financial sector but a little more for third quarter trends. the mortgage business in a lot of focus. remember when jamie told us last quarter that wells fargo was outmortgaging them? they may have outmortgaged but it was a tough business to be in the third quarter. revenue was down sharply. those shares a little bit weaker as a result, scott, as you mentioned, other parts of the business at jpmorgan keeping those shares in the green it still seems for now. >> wells down 2%. it's also going to be worth noting the high flyers, these momentum names, the teslas of the world, which were down hard the other day and then rebounded yesterday in the overall market and tesla is down today off the open but facebook is flat. those are going to be trillion stocks to watch just based on how they've traded in the last several days. >> they're the tell, right? it's sort of the momentum risk. we're not quite in that paradigm anymore. but the high beta names when they're doing well, you know it's that aggressive kind of strong growth, washington's out of the way kind of day or vice versa. >> i'm watching micron, too. micron shares have tripled. they've been really in favor with investors this year. they tripled, as i said. the stock is giving back about 2.5%. that stock has been indicative, again, on what the overall market has done where sentiment continues to be. >> what's going on with sentiment in the tech names as well? it seems as though there are just value traps right and left and every day we great new data point of what's happening with pc shipments and then you look at hewlett packard popping. are these days that they are in, they're going to stay in the space? >> it's going to go with risk. if you have people like barry knapp who think what we've seen in d.c. is either a non-event or noise, and you go cyclical with him, you're going to get a little pick up in sent miment there. >> safeway shares up about 5%. this is a company facing an activist in jana partners. also talking about a dominic sale. jpmorgan this morning it appears joining the bull camp so to speak, upgrading those shares, saying it does appear -- or they were unconvinced management would find a buyer for its assets. management likely willing to accept very low prices for its banners. however, in order to generate losses, we see more up side to the stock than we previously did. it's another reason why those shares are up, although that activist campaign is certainly in full swing at this point. >> you know what other stock is probably worth mentioning, guys? can we put up the gap? gap is down 7%. comps were down 3%. i think the street was expecting them to be positive. they were down 3% regardless of what the street was asking for. the stock was getting hit. there are real questions about what apparel is going to do as you head into the holidays. >> and by the way, what were we supposed to get an hour ago? retail sales for september didn't get it because of the shutdown. >> maybe it's better we didn't. >> right. it's up to these individual names. fewer than ever report those sales even to tell us what they see in terms of trends and momentum. >> the gap had a great deal of momentum, scott, as you know for some time, in terms of merchandising. i had not realized that stock had suffered so badly in recent months. and apparel continues to be this key question that we have for so much of retail. >> yeah. >> here is slow. mall traffic has not been good. what does it all mean? is it some sort of seminal change where people are all about buying their devices and spending time on their devices -- >> that's what they're spending their money on. >> and time on and not going to the mall. >> they spent the money on the car, the home and not on the clothes. >> macy's? >> down 1%, negative thoughts across the board on what's taking place at the big department stores. >> the consumer report from the beginning of the week, you see people not willing to borrow on their homes, not willing to take on credit card debt as they did in the past. disposable income is only growing at 2% pace. >> i wonder if the market is going to continue, though, to look past what could potentially be a worsening state of the consumer over the next couple of months. is the market still going to be able to rally if the consumer is in the tank? >> here's an important offset to that. a lot of people caution going into the holidays, pay attention to what happened, for example, cowen this morning when you talk about oil prices, taking the forecast down $10. i think going to something like 90 by thee end. between that and what the government is doing at the ethanol front, you could see prices coming down at the pump significantly and they have and that could be a big offset people people this time of year. >> it could be. i still wonder about the effects of the shut down. i don't encounter it that much in my daily life. there are people who have not been working. i guess they'll get their back pay, that's been voted through. perhaps there won't be an effect on consumer spending. maybe it's going on now. let's check in with bob pisani. >> we are slowly groping toward a deal on the debt ceiling. it's not sure whether that will include reopening of the government or not. we talked about this yesterday, the reason for the rally because they knew it was debt ceiling and the biggest risk in the market is on the debt ceiling. we'll have a talk with the president and senate republicans at 11:15 p.m. eastern time. that will be the big event for the day. asian markets all in the green, china up 1.7%, japan up 1.5%, own just fractionally this morning. an indeterminate morning. wells fargo beat but the quality of the beat was not particularly good. expenses are rising very fast. they've got a huge mortgage business and they can't ramp it down fast enough at this point. the yield curve steepened last quarter but not enough. in is a major problems for the banks overall. it's about 60% of the revenues for these banks, like wells fargo still. you can't get a steeper yield curve. it really hurts you overall. net interest income was on the flat side. they're the biggest mortgage bank of the country. refinancings are 70% of the volume. mortgage originations down about 30%. they indicated that would happen. expenses are rising really fast here. they can't cut expenses fast enough. i'll bet they have o 30,000 to 40,000 people in the mortgage business. they probably have to cut 10,000. where is the loan growth now? we're a long way through the credit cycle right now. weep should be seeing better moves, higher rates and better loan growth. we're not seeing it. you saw that prior full screen. 2.5% on the whole book, that's all the loan growth we got. last year we had better loan growth. we had 4.5%. if you want to know what it means, it means people are continuing to hoard cash. there's a sense here that there's too much uncertainty. that's what business leaders keep talking about. there are other uncertainties that are overall global economy that are mattering right now. let me close with stock mutual funds. we have the second week of outflow. haven't seen this in a long, long time. obviously got a big bounceback today. the one key to watch is to watch the volatility index, the vix. when the price of the front month vix was higher than months further out as it was all this week, invariably this year, it's happened three, four times, it was a buying opportunity and the market dipped and came back this year. that's one indicator that's worked very well and that changed yesterday. overall, watching nings like volatility index really does give indications of when the bottoms might be coming in. >> bob pisani down here on the floor. let's go to chicago and the bond pits. rick santelli is at the cne gro -- cme group. >> good morning, judge. >> if we look at twos, threes and fives, not on are they virtually unchanged from yesterday, they're virtually unchanged on the week. you can add 10s unchanged on the week but down on the day. we had a pretty good auction at the end of the day. but going into the weekend, it seems like reverting back. why did i leave the 30-year out? it's the only maturity that really is not only down on yield on the day, which makes sense, but it's down a handful, 3, 4 basis points on the week. let's look at the charts. two-day attend, two-day 30 gives you that curve look, if you really look closely at how far below the neutral line you are on the 30 years. open the chart up and we'll look at several sovereigns here from august 1st. yes, we have all our issues and we go to coffee shops and sign petitions but in the end what really is going on is still mostly unique to a global economy. whether what's going on with d.c. is lasting or not, divided government, divided country, no easy solutions. but look at how similar all these patterns look, whether you look at the 10-year from august first, whether you look at the bund from august 1st or the u.k. gilt. all patterns are almost identical with the bund moving up a little bit faster but look at the unemployment rates through some of the eurozone. the dollar index is up a bit on the week and it definitely helped a bit on technical levels but it seems like whether it's fx or any of the other marketplaces, so much is predicated on one issue, to seems like, for the moment. mean reversion to important technical levels is what we're looking for. let's go back to kelly, kelly, kelly. >> despite a gain on the dow yesterday, we're actually slightly positive. looks to be right around that flat line. we'll see what happens around the morning, especially as we approach key events out of washington. the s&p 500 interestingly managing -- it's now turned lower by about a point or two. we'll keep a close eye on all it have. former ceo jack welch sounding off on the message in washington. >> i wouldn't let the republicans market an ipad. >> and later, starbucks chairman and ceo howard schultz, he's urging customers and businesses to sign his petition calling for an end to the debt ceiling and government shutdown. just by talking to a helmet. it grabbed the patient's record before we even picked him up. it found out the doctor we needed was at st. anne's. wiggle your toes. 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[ female announcer ] today cisco is connecting the internet of everything. so everything works like never before. ♪ strike a pose welcome back. jack welch, executive chairman of the jack welch management institute and former ceo, this morning sounding off on "squawk box." >> i wouldn't let the republicans market an ipad when it first came out. they can't market anything. i mean, they come out of the white house and make a statement that's nothing and then harry comes out and takes the stage for a while and talks about all the bad things they did. i mean, it's crazy. we got the worst marketing in the republican party you can imagine. >> that brings us to this morning's "squawk on the tweet." what product would you want congress to market? tweet us @squawkstreet. >> jack, never know what he's going to say. the ipad comment was interesting. >> i liked that. it was pithy, as they say and quite on target i thought. talk about target, retail, let's take a look at some of those. scott brought up the gap. that may be the biggest loser. down almost 7% on not good comps. abercrombie and finch, macy's. this continued weakness in apparel which we've been mentioning for quite some time on the show and whether or not that's going to be fixed in some way or whether there will be resurgence in people wanting to buy sweaters i don't know. >> and it had been a good year for gap. gap is still up 19% year to date. so how quickly the market can taketh away. you know? so many of these stocks have done so well and then when there's one crack, you fall through pretty quickly. >> yeah. >> if gets larger and you fall through. now you wonder what gap is going to do between now and the end of the year. i mean, 7% is a nasty decline. >> there might be a reason why when a name like that gets hit that the rest of the sector takes it hard. if they ultimately have to resort to deep discounting, in jcpenney is going to keep selling $4 shirts and $7 jeans -- >> are they really selling $7 jeans? >> i have people sending me pictures. >> terry lundgren doesn't like it over at macy's. now he's going to be forced coming to the holidays as jcpenney is basically giving things away, everyone is going to be forced to play ball. >> or as mickey would say walking through a j. crew and everything is heavily discoun d discounted, there are the mistakes. >> it's not just about hitting the fashion right, it's also about knowing how much to order or not order. >> managing the inventory. ain't easy. >> facebook founder and ceo mark zuckerberg has bought four palo alto homes adjacent to his home at a sum of $30 million. he got off cheap. he did sell after learning of a developer's plan to buy one of those properties, build a large home and market it as being next door to mark zuckerberg. it is a good sales pitch. zuckerberg is leasing the homes back to the families that live there. >> it's not just hedge funds these days. >> it's not that he's got that big a yard. he could have bought the hums and knocked down -- >> put up a zucker palace, knock them p them all down. >> give him credit. he's living among the people still. >> among the people. the people out in palo alto? >> most of your hedge fund managers in greenwich have 30 acres. keep the people away. still to come, the economic report that's not hindered by the government shutdown. we'll have consumer sentiment plus market reaction when "squawk on the street" returns. dchbl welcome back to "squawk on the street." i'm courtney reagan at the nasdaq market site. the nasdaq composite did open in negative territory but has moved slightly positive after posting one of its best days of the year yesterday. still, the nasdaq composite not doing so great if we look at a two-month chart. over the last six weeks we've seen some ganins. we could be on track for the first loss. earnings season has officially kicked off. if you take a look at the biggest losers at the nasdaq, you'll see a lot of chip makers. that's because micron reported results disappointing wall street as we look at the profit. that had been one of the higher fly that's we had seen here. on the flip side, after you look at some of the winners, cognizant technology is up there, an indian i.t. company posting $2 billion in sales for the first time ever, largely seen as a bellwether for other indian i.t. companies. we're going to be watching those companies and those that follow it very, very closely going forward. david, back to you downtown. >> thank you. keeping an eye on shares of wells fargo. the net interest margin did come down to 3.86%, 4.6% in the prior quarter. we all know the mortgage business has slowed, wells is the biggest player there. deposits keep flowing in and many love the bank as certainly be a very well managed institution. >> doing as well as can you in this environment. >> and good that earnings have finally kicked off. now it's going to be put up or shut up time for the rally. i'd argue as we've gone positive today, it's a big win for people long in the market thinking that yesterday's rally was justified, the fact that we haven't given any of it back as of yet. >> let's get to rick san temtel with breaking news on consumer sentiment. >> 75.2 is the october preliminary read for university of michigan sentiment survey. let's put that in perspective and realize it's the preliminary. only the final goes into the books. this number, 75. 2, would be the weakest going back to the beginning of the year. so january, if you take january out at 73.8, this would be the weakest for 2013, but we all know the equity markets and what's going on in d.c. affects confidence. probably a lot more than the other way around. so the final read may be a lot more indicative of what's truly be felt by investors. david faber, it's back to you, sir. >> thank you very much, mr. santelli. there we are. >> and just for a little bit of color because you don't get a lot fwh this survey. another place that's open and still doing research. dysfunctional government and their poll has topped the u.s. economy has the top problem. in other words there is a real problem here. this isn't just a passing trend. >> wow. all right. simon hobbs has a look at what's coming up in the next hour of "squawk on the street." simon. >> welcome back. in the next hour of the program, now that we had the big rally yesterday, what is the risk for your port knollio this weekend? and should you by jpm now? we'll look at wells fargo and with straits being failed, we'll look at how they're getting it right in connecticut. hour two of "squawk on the street" heading into the weekend. ♪ became the first in flight. 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[ baby fussing ] ♪ [ baby fussing ] ido more with less with buless energy. hp is helping ups do just that. soon, the world's most intelligent servers, designed by hp, will give ups over twice the performance, using forty percent less energy. multiply that across over a thousand locations, and they'll provide the same benefit to the environment as over 60,000 trees. that's a trend we can all get behind. welcome back to "squawk on the street." shares of mortgage giant wells fargo are moving lower as the company's revenue comes in shy of expectations. >> those hopes of ending d.c. gridlock. president obama and vice president biden will meet with the senate caucus. >> and we'll talk to the head of the connecticut health care exchange to get the real deal on how the law is being implemented. >> this morning president obama and vice president biden will meet with the senate republican caucus in an effort to resolve the standoff over the debt ceiling and the government shut down. luke russert is live with the latest. good morning to you, luke. >> reporter: good morning. a lot of rumors of a possible negotiation to fund the government and end the shotdown, which is now in its 11th day. this happened yesterday when speaker boehner, paul ryan, eric can'tors and a few others went to the white house and met with president obama and paul ryan tried to say what can we do to figure out a deal with obama. they were receptive. we don't know what the agreement looks like, we expect it to be temporary, perhaps something that goes all the way through thanksgiving and allow negotiations on a larger bipartisan agreement to occur. we had a poll that spread like wildfire on capitol hill. number one, in terms of who should control congress, democrats now are up in this poll 47-39. that's the largest they've been in this poll since the obama honeymoon period and 2009 when he first came into the office. the reason why we're shut down, the opposition of the president's health care law, even more so than before the shutdown began. so the strategy of trying to shut down the government and opposition to health care law has back fired. it's it's what one of our posters called a bumer ainge effect. we see now a movement now to some sort of deal. i think we can say now safely on this friday that it would be unbelievably weird and unbelievably out of nowhere if the debt limit was not extended. >> just to be clear here, luke, the reason they've done so badly is because they're split and the conservatives could say to their core audience that they've been quite successful it is the bulk of the republican party kicking back here? >> correct. you're seeing the establishment part of the republican party, well funded on wall street, they've been in leadership saying you guys have had your fun, ted cruz had his fun, all the outside money that has poured in and has been literally leading the charge here for defending the health care law and being the leadership role, filling the leadership vacuum to a degree on capitol hill, that is being pushed away. these number don't lie. one gol on poll two years ago. that's the lowest entire history of a pole. so when you're having historical milestones. we got to figure out a way out of this. >> luke, nice to see you. luke russert for us in washington. >> jpmorgan getting hit with mounting litigation costs and the conference call getting under way right now. kayla tausche helping us get through it. >> to be able to pay for a $19 billion tax, it came at a share cost per earnings. they have in total $23 billion ear marked for such litigation, though it could all still cost $5.7 billion above that, as costs are lumpy for the next couple years. ceo jamie dimon said while no choice is good, he would rather settle -- the company said it would sell eight businesses. they like the fact that the underlying businesses besides mortgages are seeing improvement. jpmorgan wasn't open for trade, wells fargo was slumping, a slight rise in rates. the 30-year fixed now costs 4.22 percent on average, up one percentage point from earlier this year. the application pipeline has shrunk to half of what it was. last wells fargo's core business. they did relaease -- the call fr wells fargo just getting under way with analysts. they is a lot of questions about the outlook for interest rates with taper, with mortgage applications and how the consumer will ultimately react and vote with their dollars. >> we'll watch for more head lines as well as that call continues. the dow moving higher on hopes of a debt ceiling deal. that's remarkable because it follows the largest one-day gain of the year. let's go to our guests. good morning. >> good morning. thanks for having me on. >> are you surprised we're still positive this morning? can the positive momentum continue where it seems expectations coming out of washington are actually pretty high? >> i think it really comes down to what comes out of washington. our expectation is that we will grind towards a resolution, maybe bumpy as we go through the next month or so. but really the underpinnings here, if you have base case that cooler heads will ultimately prevail, even though may all may be upset with the function in washington, if you have a base case that a deal is ultimately reached, equities will likely be higher longer term. >> this morning we learned consumer confidence at its lowest level since january. i guess there's a worry that all of this is feeding into the environment of the fed is not going to exit so stocks will do okay. is that really all a net positive? >> i think this shutdown is having a very detrimental. but the i degree -- i expect next week the row will be open and a temporary suspension -- we don't need a grand, grand bargain to get the deficit to a place. back in 2011 it was 8.4% of gdp, last week was only 4% of gdp. i thif we can make progress between now and thanksgiving. if we can get bast this, i think they'll delay tapering back to possibly next year. the federal reserve needs to get utility of the business of providing so much liquidity to markets. if it does, interest rates will go up and will leave people nowhere to go except equity. >> jason, how should we read your stock picks as to where you think this market is going, if you like 3m, johnson & johnson and microsoft. >> one of the things we're doing is underweighting the fixed incomes because rates are coming up. as a counterbalance to that, we are staying a little bit on the bias of being defensive within exwits, preferring to make the equity wagers are relatively reasonably well, we're not stretching for position, we're looking for the singles and doubles right now. >> i think that's the point. let's come back to what you said, david. maybe we live in a world where our world is so low. the word that keeps getting used is "grinding." they might put off the debt ceiling for four or six weeks but we grind on with the political impasse. there's no sign of leadership or the perception that things are broken. that's dangerous for confidence in an economy. we lost a lot of ground in may, june, july of last year because we ground down on this expectation of when the fate might question. this continually debate never allows the stock market to rally sufficiently. we had a big rally yesterday but it only takes us back to where we were in the middle of last week. >> i think that's right. there is a big cloud of uncertainty billowing out of washington. i think what we'll see over the next six months is this cloud will begin to clear. we are never going to be cheering about what's going on in washington in general. i think we don't have great government. but i think they will become less relevant as we get into 2014 with less government stimulus, smaller government, and if that means there's more attention on the private markets, that's a good. >> yes, i would be. as we get past these worries, i think we will see a pick up in loan values. i think that's good for financials. >> jason? >> it has to be selective in this ways. we're still focused on that quality and stability angle, even within financials and perhaps more important within financials. in fact, our focus is primarily in the u.s. we think the european banks still need a round of recapitalization. >> this morning, we have two selectives, one yes, one know on buying financials. we'll see hough they do as the earnings season is kicked off. >> it's been more than a week for 4 states. however, connecticut has got it right, it would appear. we will go and talk to the ce f of -- ceo of starbucks. he is circulating a at the pe ti -- petition to stop the washington gridlock. we'll talk to him live here on cnbc. welcome back to "squawk on the street." micron shares are getting hit in early trading after the maker of computer memory chips that missed margins on sales that beat. now, micron shares had been up around 175% so far year to date entering today's trade. so, simon, certainly shares to watch. back over to you. >> thank you, dominic. >> from health care to the debt ceiling, former ceo janet welch of general electric sounding off on the lack of a clear message out of washington. >> i would not let the republicans market an ipad. >> yes. so we're asking what product would you want congress to market? tweet us @squawkstreet. >> you may have heard about survivalists prepare are for a nuclear bomb but what about preparing for the debt ceiling? we'll meet some of them when we come back. with my united mileageplus explorer card. i've saved $75 in checked bag fees. 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(cat screech) you feel that in your muscles? i do... drink water. it's a long story. well, not having branches let's us give you great rates and service. i'd like that. a new way to bank. a better way to save. ally bank. your money needs an ally. how old is the oldest person you've known? we gave people a sticker and had them show us. we learned a lot of us have known someone who's lived well into their 90s. and that's a great thing. but even though we're living longer, one thing that hasn't changed much is the official retirement age. ♪ the question is how do you make sure you have the money you need to enjoy all of these years. ♪ ♪ [ male announcer ] eeny, meeny, miny, go. ♪ ♪ more adventures await in the new seven-passenger lexus gx. lease the 2014 gx 460 for $499 a month for 27 months. see your lexus dealer. connecticut is one of the few states that successfully rolled out its piece of the nationwide health care exchange system under the affordable care act, or obama care as we call it. we talk to the ceo of the connecticut health insurance exchange. welcome, sir. how do you feel that your piece of the puzzle has gone so far? >> well, so far we're very pleased with how things are going. we were able to have a stable system up and running last tuesday, the 1st, and we're focused now on enrollment and enrollment is going pretty well. >> you have basically on your state-only system enrolled as many people as the federal system has across 36 states with 2 million people attempting it. >> well, we've been really fortunate by having a very stable system. we have been focused on outsourcing those operational issues that we don't need to address ourselves and we have a great staff. >> i think what i would really ask you specifically is whether you have a browse function at the beginning of the process, which seems quite benal, which may be why the federal system is failing. they can't just browse, they've got to register. so you have this log jam and everybody is throwing data around a very complicated process until you can use it properly. is that how your system works or can they browse first of all? >> our system works where potential enrollees may browse first. our research showed people wanted to browse anonymously without having to register first so we built our system to accommodate that. >> two simple questions. one, how many people tried to sign up on your exchange and how many people so far actually have signed sfup? >> we have about 1,700 applications so far. these are completed enrollments or policyholders, if you will. we have also more members in addition to that, which includes such things as spouses and dependents and such. that number is probably roughly twice than the number of subscribers that we have, maybe a little bit less than that. >> to be clear, 1,700 is the number of completed enrollments i think as you just put it. is that right? >> that's correct. those would be subscribers. and we probably have four to five times of that which are people that are in the process of completing applications. >> and how many -- what's the target? how many people do you have in the state that are uninsured and you need to get on board? >> about 9.6% or about 344,000 individuals in connecticut are uninsured. our goal for 2014 is to reduce that number by about 100,000. >> you're an interesting kind of ecosystem, if you like, an example for everybody else. how do you reach out to people? across the cultures, people who are sitting on the edge of society, i think you have some concerts. is there a figure where you can say do this and you'll probably get insurance? >> buying insurance is notes sexiest product in the world. pu we have found people -- 29% of our enrollees are under 35. we think we've done a reasonably good job reaching out to them. you reap out in media, unpaid media, news stories, parents. we're actually opening up an insurance store next week. >> and that for the rest of us is very important. if you can get those young people in and ethis pay insurance, everybody else's premium will fall. this remains a hurjly constitutional they're toe how do you feel about obama care and its place in society and what this means for this country. >> well, those are obviously very big questions. it seems to me that one fundamental question that we need to ask ourselves as a country is is having health insurance a right of citizenship or privilege of employment? i think if we have that debate and can come to some common ground on that question, i think the rest of it falls out. >> good to see you, kevin counihan, the connecticut health care exchange. >> thank you. >> and gearing up this time for a different kind of event, the debt ceiling. josh, i was expecting some sort of head lamp or can of food or a bunker there. good morning. >> reporter: well, get ready, kelly. listen, step aside food, save some gold and learn how to use a gun. that's what survivalists and preppers are saying as this government shutdown drags on. they're also fans of survival shelters and underground bunkers. we checked in with ron hubbard, the owner of atlas survival shelters built here in california. he says business has been picking up as tension in washington builds. >> it's through the roof right now. people are scared. they're scared of the government defaulting, civil unrest, the constitution being trampled on. there's a lot of fears that people legitimately have in this country right now. >> there are roughly 2 million preppers and an industry that caters to them. they're worried about a government shut down and default broadly bursting business, companies like mre star, prepackaged meals ready to make. they say orders shot up double in august. and tracker school in new jersey said many of its students are concerned about a government shut down or financial crisis. so if biography a shelter or underground bunker doesn't appeal to you, he says at least have some freeze dried food and stay alert. >> josh lipton, thanks so much. surviving could be a mega trend. cnbc's secret location where decommissioned underground missile silos are being converted to luxury apartments complete with a pet park, a pool and gym. a full-floor unit is a half million bucks and the developer is telling cnbc he is sold out and working on silo number two. don't miss an all-new episode, next wednesday on october 16th at 9:00 p.m. eastern and pacific. >> wow. there you go, the government making money selling old missile silos. >> it tells you you all you need to know -- >> i don't usually respond to one of those teases but i want to see that. >> the federal shut down must be significantly worse in california then if they're actually taking to bunkers. i didn't realize things were that bad. >> i figure robert frank is probably the one who visited. it will be great to know what robert thought. >> i just want to know if there was any relation to hubbard. >> is the economic uncertainty cutting into consumers' wallets? 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(announcer) scottrade-proud to be ranked "best overall client experience." . friday morning. good morning. we're one hour into trade. here are the stories we're talking about. the nobel peace prize has a winner going to the organize for prohibition of chemical weapons. they won the award after helping to eliminate syria's stock piles of poison gas. >> and the shutdown looks like bad news for republican. a wall street journal poll shows only 24% of the country have a favorable view of the republicans. >> and starbucks is calling for both parties to come together. starbucks ceo howard schultz is posting petitions in major newspapers across the country. we'll take you to the senate where the chaplain is opening today's proceedings. >> lord, give our lawmakers the wisdom to distinguish between truth and error and the courage to act upon those insights. help them to avoid the shortcuts that lead away from your will as you make them your eyes, ears, feet and hands to bring solace to those who suffer. give them a hatred of all hypocrisy, deceit and shame as they seek to replace them with gentleness, patience and truth. we pray in your great name, amen. >> let me just explain why you took you to capitol hill. the chaplain has been seen as a main mover in changing opinion on capitol hill, in particular on the money gone to military families. earlier in the week he gave a very powerful speech about them not losing contact with the military and specifically those of course, the relatives of people killed in action. that's why the producers took us there to see what he was going to say today. kelly, to you. >> it's sort of refreshing to hear something a little different. >> it's certainly different. >> jpmorgan and wells fargo kicking off earnings this weekend. jpmorgan slightly lower as the company reported a quarterly loss due to legal expenses. wells fargo, meanwhile, also down. its results exceeded consensus but mortgage banking income fell 43% in the period. what do you do with the shares now? let's bring in the vice president of equity research and also with us is jeff hart. guys, thanks so much for your time. good morning. >> good morning. >> dick, first to you. you got jpmorgan on the one hand, wells fargo on the other. the shares are diverting a little bit this morning. what do you read into this? is there a winner here? >> i think, you know, it's a good news/bad news story. the good news is if you take a look at the balance sheet of the banking industry, either jpmorgan or wells fargo, you can't find a better balance sheet, more pristine balance sheet than these companies have at the present time. if you take a look at their business lines, in other words, are they bringing in more depositors, are they making more loans, have their margins stabilized, all that's good. what is bad is that the government continues to add regulations on to the industry which constrains the use of the liquidity of the balance sheet and prevents these companies from actually participating in businesses they were in before. plus the government has this proclivity in the case of jpmorgan to sue the company. so you're locked into this situation where everything from a private sector, if you will, view is positive. everything from a public sector view is negative. and that's creating the conflict in the stocks. >> dick, is there something that you've seen this morning that you can share with us or our viewers as to why a stock that was up off of this earnings report has now turned negative when the overall market and the tenor remains positive? was something in there that recently was said or happened on the call? >> i think very definitely. i think when jamie dimon took a look at what was so to speak page 15 of his slide, he listed all of the businesses that jpmorgan would be exiting, which would cause reduced revenues for the company and he indicated the cost of running the business would be higher because of all of the regulations that would be put in place. what he in essence said is we're in terrific condition, we're doing a great job in bringing in customers and doing more business, however, we can't be in these businesses anymore and the cost of running our overall company is going to go up. i think that caused, if you will, investors to pause in all of the euphoria they had before the conference call this morning. >> jeff, do you think that's a right move for jpmorgan? perhaps they don't have a choice because of all the legal issues. as people look at banks, do you think this is a trend others will follow or will they take advantage of the fact that jpmorgan is ceding this ground? >> looking at the list of businesses to exit, i was kind of struck by most of the larger businesses were kind of old news. we know they're trying to sell physical commodities and equity partners is on the way out, we know they've dialed back the amount of mortgages packages they're offering. the part i heard on the call i probably didn't like was on litigation. they have a big reserve, which is nice, but i'd like to have seen what their estimate of max forward losses could be. i think it means litigation risk is going to remain with them more. and they sounded a little more cautious on the buyback that maybe activity levels would slow down there. but fundamentally almost all other businesses are doing very well. on the expense side they actually came in quite a bit below what i was thinking they would. they're getting the efficiencies more quickly than i thought think would. i think that's a plus and something people would focus on more and more. in a tough environment with a lot of regulatory pressure, scale matters more than ever and jpmorgan, along with bank of america and citigroup and wells fargo have that scale to capi l capitalize. >> how worried should we be on what's happening with wells fargo and a tremendous drop off in their loan origination business? >> it's obviously a negative. but when john spoke in his conference call, he indicated pretty clearly this is a highly diversified company and because of its diversification, it is in fact growing the loan portfolio, it is growing deposits, its loan quality is positive. its non-income business if you take mortgages out of the picture is reasonably good and expenses of running the company are going down. from an operating standpoint, the company is doing pretty well. i don't think people have to worry about the fact that refinancing mortgages causes difficulty in this quarter. >> if the mortgage business of the biggest mortgage originator is slowing and slowing dramatically and it's not a one-off, how concerned are you? >> not terribly. i mean, the thing you got to keep in mind is we've all known -- when i say "we've all known," management has been warning us for years this mortgage business is going to go down, it's not going to last. it's going down probably sooner than we thought but i don't know more dramatically than we thought, it's just pulling it forward. it would be nice if these revenues from mortgages continue but i don't think realistically anybody thought they would. >> dick and jeff, thank you much. >> we'gap is down almost 7%. the company blamed the poor performance on what it described as increasing economic uncertainties. john has an outperform rating on gap. how are you? >> good morning, simon. it is still full outperform. >> why still outperform? it would appear that the moles of this country are challenged. >> i think they are and they saw a big slowdown in traffic in the month of september. it shouldn't have come as too much of a surprise that gap's traffic also had fallen off. we saw it across the board. you heard from limited brands yesterday morning and it's really been a tough slog in the month of september. but we think it's probably a little bit more temporary in nature. >> if the management of the gap can take credit for colored jeans, which basically doubled the stock, should they also take the blame for pushing back to blue denim, which clearly isn't working. >> let's give them a little more credit than that. i don't think it was just color and color bottoms last year. glen murphy came in as ceo several years ago and began to focus division by division, attacking the two most important thing that gap or any retailer needs to get straight and that's real estate and talent and people. he consolidated a number of the underperforming stores. in fact, there's about a third less square footage space for the entire gap company over the last five years. then he began to attract in really significant talent coming from the likes of nike and uniglow and that really is what's behind the product turn around. that's what i think you have to take a longer term view here, just beyond the challenge of denim not sending well in the month of september when it was pretty warm. >> i'm just wondering why you think that october is going to be any better. what are we, ten days through the month? and everything that most of us up here have been hearing is that apparel especially is weak and is likely to remain weak, even into the holiday season where you'll see companies with 30, 40, 50, 60% off the norm. >> those are all really good points. and i don't think the retail environment is going to improve and turn around here overnight. as goes fall, a lot of times that's how holiday goes. you could continue to see retail challenged into the fourth quarter. however, a couple things to know about for gap in particular for the month of october. one is september was challenged in part because they shifted a pretty significant sale event out of september into october because of the change of how they're flowing some of the product. the other thing is you have sandy, an easier comparison. >> and it's got colder as well. john, we're out of time. briefly before you go, how do i make money at the moment? >> right now you buy gap. it's a fabulous opportunity with the pullback. it's less than 12 times estimates. >> john morris joining us from bmo capital markets. >> what a day yesterday. stocks soared on optimism with a potential deal from washington but with no actual deal on the table, how do you position yourself now heading into the weekend? the answer on that next. >> and the former ge ceo jack welch sounded off on "squawk box" this morning. >> i wouldn't let the republicans market an ipad when it first came out. they can't market anything. i mean, they come out of the white house and make a statement that's nothing and then harry comes out and takes the stage for a while, he talks about all the bad things they did. i mean, it's crazy. we got the worst marketing in the republican party you can imagine. >> this brings us to this morning's squawk on the tweet. what product would you want congress to market? tweet us. we'll have your responses throughout the morning. howard schultz is coming up. mine was earned orbiting the moon in 1971. afghanistan in 2009. on the u.s.s. saratoga in 1982. 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[ bagpipes and drums playing over ] [ music transitions to rock ] make it happen with the all-new fidelity active trader pro. it's one more innovative reason serious investors are choosing fidelity. get 200 free trades when you open an account. markets are in the green against this morning, up 12 points on the dow. that after we soared over 300 points yesterday on optimism over a potential deal in washington to end both the government shutdown and of course raise the debt ceiling in advance of next thursday's deadline. there's still plenty of uncertainty since there's no actual deal on the table. how should you position yourself heading through the weekend and the inevitable debt risk? dominic chu has that. >> opinions vary. we wanted to reach out to experts across the market on what they think on how to prepare yourself for a vol continue weekend up or down. michael pervis is buying put options or down side insurance. he suggests buying that down side protection with a december expiration because the relative values of those options cheaper than earlier in the month. he thinks there's going to be more down side than the small cap stocks than large cap ones. he prefers dying puts on the russell as oppose to the spider. now, traders like allen nutman are trading chang believe that put buying is prudent. he says if you can buy insurance on your house or car, why wouldn't do you it for your portfolio? he's looking to buy certain large blue chips and like coca-cola and microsoft with support near $31. meanwhile, do you see also a c. lange portfolio manager -- he believes once the dust settles in washington, interest rates are headed higher and that that could whack whack high yielding dividend plays so avoid things like utilities. that's how some of the pros are playing the weekend. back to you. >> thank you, sir. this is a fascinating story. shares in britain's royal mail skyrocketi skyrocketing, jump 40% offer the original rate. it is great to see you, good morning. >> fantastic seeing you as well, kelly. i bet looking at the red post boxes here brings back some type of longing to the days when you were here, kelly. a dazzling debut for royal mail. they skyrocketed to about 450 before settling in somewhere around 440, right now the current price. a huge premium on the first day of uncondition al trade. the undervalued bid has been getting investors going. on the gray market listing people were saying we could be looking at it valued too low. today 1.7 billion pounds worth of shares on offer compared to, listen to this, 27 billion pounds worth of orders. you saw 700,000 individual applications. this was very, very popular. the mix was 33% retail investors versus 67 p 767% institutional investors, valuing the company forth of 5 billion pounds. the uptake has been very popular here but not on the streets of london. right outside the london stock exchange, we've seen protests being staged by the communication workers union and they're protesting on issues like job security, pay and they're nervous they could get squeezed given we are seeing a privatization of this magnitude. they call it the great mail robbery. the secretary of the union shared his thoughts saying he thinks the deal is undervaluing royal mail by as much as a billion letters business has been seeing less and less business one of the units questioned. but trading beginning on october the 15th, kelly. so lots to watch out for next week as well. >> right, and so many people here will be looking at that as they consider the future of our own postal service. louisa, say hi to everybody there and have a great weekend. still ahead starbucks ceo howard schultz is urging lawmakers to come together and get a deal done. is it on the company's daughter. shareholders are weighing in via twitter. here is a tweet. i couldn't care less if he takes out 400 ads. the man creates value when he sleeps. david, want to comment on that one? >> well, no. we spoke earlier about it. there are some impassioned tweets and even e-mails. as i said as a citizen it's a great thing. clearly his shareholders also, at least some, you can make at argument it is perfectly right for the company to be doing things that are beneficial to the community in which it operates that being, of course, the world. >> we're just not used to seeing it. the man himself, ceo howard schultz will join us live in the next hour, and he will explain his strategy. we have plenty of questions for him. you won't want to miss it. 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[ female announcer ] today, cisco is connecting the internet of everything. so everyone goes home happy. welcome back to "squawk on the street." what a week, huh? it's been a crazy week. if i look at, let's start with the markets, rambling man friday in terms of santelli exchange. what i saw was a three and ten-year option that i think had a certain nervousness to it i would expect at the time we're in in history but the 30 year, the last of the options had an aggressive tendency to it. and as i talked to traders on a postmortem on the supply, most traders think obviously what happened in stocks yesterday made it a little more palatable potentially to get aggressive in the option but maybe the biggest driver, which is, in my opinion, exactly the opposite of what happened in stocks, i agree with my buddy art cashin, i don't think it was short covering in stocks, but i do think it was short covering in a sense on the good demand for the 30-year because i think there were a lot of curve unwinds and it really is all about the yield curve. all right, the next one, halloween is coming pretty quick and, poof, magic wands. you know, i think that when it comes to what's going on in the shutdown, it's so easy to say that the polls say this and the polls say that but, remember, we have one president. you have 535 congressmen between the house and the senate. when you think about polling, think about it that way. even if people love half or a third or a quarter of congress, the rest, if you don't like them, it seems pretty obvious it's easier to have that very fine point on this because i think leadership is an issue. you can't wave a wand and i think as much as starbucks is trying to make what we all believe to be a rise above, it's going to be difficult because the country is divided and it's reflected in government. the easiest way to understand what's going on is both sides love of the country, but you really can't multiply wealth by dividing it and you can't legislate jobs, in my opinion, through congress. and it's the philosophical differences that is going to have to get decided in the only poll that counts, that's the polls that occur pretty much every november. back to you. >> compromise in the meantime. thank you very much, rick santelli, live in chicago. tweet time, former ge ceo sounded off on the lack of a clear message in washington. >> i wouldn't let the republ republicans market an ipad. >> what product would you want congress to market? tweeters @squawkstreet. [ paper rustles, outdoor sounds ] ♪ [ male announcer ] laura's heart attack didn't come with a warning. today her doctor has her on a bayer aspirin regimen to help reduce the risk of another one. if you've had a heart attack, be sure to talk to your doctor before you begin an aspirin regimen. if you've had a heart attack, be sure to talk to your doctor ido more with less with buless energy. hp is helping ups do just that. soon, the world's most intelligent servers, designed by hp, will give ups over twice the performance, using forty percent less energy. multiply that across over a thousand locations, and they'll provide the same benefit to the environment as over 60,000 trees. that's a trend we can all get behind. welcome back. it is finally that time "squawk on the tweet." jack welch sounding off on washington's seeming inability to craft a coherent message. take a listen. >> i wouldn't let the republicans market an ipad. >> so that brings us to this morning's squawk tweet. what would you want congress to market? congress should market scissors or shredders. both can be used to destroy their government credit cards. cramer, a favorite, tweets windows takes four or five tries to get something to work right. windows, takes four or five tries to get something to work right there we go. kind of like reading sometimes. scott, thank you for joining us. >> thanks for having me. >> do come back in an hour with your own show. >> i'll see you then. >> quickly like that. >> have a good one. >> announcer: welcome to "squawk on the street." here is what's happened so far. >> every big business i'm associated with still growing but they all will miss their third quarter, and things have really sort of flattened out. and we seem to lose momentum every year in one of these quarters. >> why are you able to get some of these dramas some networks can't? >> i will say we all develop with one goal in mind which is to create great television. what we're trying to do is super serve specific target audiences so, again, to make a walking dead and try to serve that audience. >> cost also be elevated the next year or two and will be lumpy. >> did you hear the number? $23 billion for litigation reserves. $23 billion. >> do you focus on the fact that the underlying business continues to perform pretty well, right, or do you focus on the fact of the legal risk? >> this number at 75.2, if you look at all the finals, would be the weakest going back to the beginning of the year. >> if you have the base case today, a deal is ultimately reached, then equities will likely be higher longer term. >> the big thing for investors to realize we don't need a very grand grand bargain to get the deficit to a better place. we've already made a lot of progress. good friday morning. live. let's check the markets, up 15 on the dow. the morning after the night before that huge surge on yesterday's session up over 300 points. here you can see we're basically hanging on to those gains which take us back to the levels we had at the beginning of last week. shares of johnson & johnson rallying this morning. goldman sachs upgrade to go neutral citing an improved outlack for the pharmaceutical sector. shares of dr. pepper/snapple are moving to the down side. of wells fargo down grading the beverage maker to market perform pointing to weak industry volumes and aggressive pricing structures. some breaking news to get to now. jerome powell saying in a speech that an event shows the fed was correct in its decision not to initiate a taper, that we called a chose call. speaking at the institution of international finance meeting in washington powell said policy will remain highly accommodative for quite a while longer but that when the fed does taper based on improved economic data sho short-term rates are better aligned with the fed's forward guidance. powell also said that while he would have supported a small reduction of of the fed -- a small reduction in qe, the fed's concerns about the effects of higher rates and potential for a government shutdown were well-founded, it would seem recent events have borne that out. now to the road map for this hour. can't we all just get along? that's what ceo howard schultz is wondering after all the drama in washington over the shutdown and the debt ceiling. today the starbucks ceo is trying to get everyone to come together, quote/uncoat. he'll tell us how in just a few minutes. plus, the latest reports say if we get a deal in washington, it may only be a short-term extension of the debt ceiling. how should you be investing if we end up right back where we started? we'll try to get some answerses on that. and are you mad at your congressman or maybe just at government in general? one website has an interesting solution, a drunk dial. we will explain. wells fargo and jpmorgan both out with their quarterly results this morning. kayla tausche has been going through them with a fine toothed comb and, kayla, it should be said, listening to the conference calls. >> reporter: shares of jpmorgan turned negative. wells fargo has fallen 2%. it's ironic considering they paid $7.2 billion after tax into its legal reserves and saw its first loss in eight years. wells fargo posted a record prof profit. but it's because wells' poor business, which is mortgage origination, saw a steep drop-off in activity as rates rose, cfo tim sloan on the analyst call said it's a transitional period. the last quarter that saw residential mortgages dry up by nearly half. consumers are not refinancing or purchasing new homes as mortgage rates rise driven by the expectation they will stop buying. if rates stay where they are the bank will see lower origination next we're. they have played off 350 employees to adjust because of severance costses, sloan says the bank won't see compensation savings until next quarter. he said it's too soon to tell how consumers and customers will react to the shutdown and how banks business will react. wells is working on a case-by-case basis to work with cu customers who expect paychecks today. there is good news for shareholders. they plan to increase dividends at the next round of the stress test. back to you. >> all right, kayla, thanks very much this morning. keep a close eye on that. now to washington in a couple of minutes senate republ republicans will arrive at the white house for a meeting with president obama. this meeting comes as we seem to be getting closer to a deal on the debt ceiling. that was after the president's sitdown with house republicans yesterday. i understand that in just a couple of minutes we might expect something. >> reporter: we should get more clarity on what's going it on when the senate republicans emerge from their meeting. the republicans have arrived at the white house now scheduled to begin that meeting with the president himself. an interesting side drama is one of the senators who is at this meating is ted cruz and, of course, you remember ted cruz was one of the instigators of this whole obama care fight to begin with. he made a speech in which he says he doesn't want house republicans to back down. take a listen to ted cruz earlier today. >> none of us know what's going to happen on this obama care fight right now. in my view the house of representatives needs to keep doing what it's been doing which is standing strong. [ applause ] and that is the model for every other fight. we need no more washington solutions ms. we need to go back to the american people. >> reporter: so ted cruz saying he's willing to continue the fate here and, oh, to be a fly on the wall when ted cruz meets with president barack obama in just about five minutes' time. this should be an interesting one. we'll get a sense whether or not we're going to have any more deal making today after yesterday's little bit of openness, guys. >> okay, yes, indeed. thank you very much for that, eamon javers. waiting for a compromise on, importantly, the debt ceiling. the short-term res laugs mean just a six-week rally until the next great debt debacle? joins us is the portfolio manager and david joy is with us, chief market strategist. gentlemen, good morning. >> good morning. >> david, you know, things -- you could debate how much further they took us along the path to a compromise yesterday, david, but the important thing is we saw some sort of movement because, otherwise, this could have been really nasty going into the weekend. you could imagine this was the weekend that things began to fall out of bed and they haven't. where do the markets go from here? >> well, i think the market has priced back in the idea we're tw going to get some sort of agreement. you see it's bounced up to his 20-day moving average. it's washed out all of the a anxiety. i think we're going to get some sort of agreement, or the at least i hope we do. and then the market will focus on fundamentals. i think there's been some serious damage done to economic confidence for the fourth quarter and, as a result, i think the 9% earnings growth that the street is looking for this quarter is not going to be realized. and i think the market flattens out at around this level. >> and so how does that bite? because the ceos don't make the figures or their statements? why will that bite us and keep us flat? >> well, i think the third quarter is going to be okay. the numbers look like we'll hit the 4% target that the street wants. i think the guidance will be very tepid and you just mentioned the university of michigan number, the gallup numbers. confidence is way down in the last two weeks. >> guys, just a quick one. we have to go. skip and david, are you buying financials here? skip, first to you. >> oh, i think selectively on the debt you dabble in the sector, of course. >> david? >> i agree. i like financials here. but i think they'll do better after several months. >> all right. it sounds a little bit cautious echoing the narrative we've heard from other guests this morning. thank you for your time as we wait on a deal out of washington. starbucks ceo howard schultz is a man on a mission to end the gridlock in washington. starting today he is rolling out a petition to encourage lawmakers to reach a budget deal. the come together campaign asks officials to reopen the government, pay our national debt on time, and pass a long-term budget deal by the end of the year. the petition is available at starbucks stores nationwide and on online. and joining us now is howard schultz, chairman and ceo of starbucks. mr. schultz, good morning. thank you so much for joining us. >> thank you very much for having me. >> so can you explain why you have now come forward with such urgency to extend in a all of your stores this campaign to, as you say, come together in washington? >> sure. well, i think every american is watching with profound disappointment and disdain with regard to what is happening in washington and the dysfunction and lack of leadership. even though they're watching it from the sidelines, they do not have a voice. so what we're trying to do at starbucks is provide our stores as a platform and in view of that have them sign a petition, a nonpartisan petition, to immediately open up the government, to pay our bills on time so we do not default, and, perhaps most importantly, achieve a long -term bipartisan comprehensive long-term budget deal so we don't find ourselves in this situation again. but let me say something -- >> go ahead, i'm sory. >> this is not a game. this is not a game. this is not a charade. these are the lives of people across the country who are sitting in their homes, walking the streets. these people do not have an opportunity to provide their voice to be heard and washington obviously is not only letting us down but taking us down a path of no return. and i think this is so serious. the other thing i want to say is those people on the street or in the media that are going to celebrate a short-term deal, that is fool's gold. that is not leadership and that is not what we need. what we need is a long-term deal. the worst thing that could happen, we are here again during the holiday season because a short-term deal is not going to give us what we need. i think this is a tragic situation for the country and starbucks is just trying to do what we can to, in a sense, use our scale for good and provide our customers and the people who can come into our stores, lend their voice and we will deliver that petition to washington on tuesday or wednesday. we already have 200,000 signatures and we haven't even started yet. >> and, howard, there are a lot of people who applaud that kind of moral leadership. it is something we can be cynical about in this country and it's refreshing to see. you say that people don't have a voice but it is precise ly the exercising of a voice, of a group of people, for example, who are unhappy with the pace of federal spending or about the disagreement over how to make the budget issue, you know, how to resolve that over the longer period of time. in other words, it's not an easy thing to try to figure out whether you should cut back on entitlements or raise taxes. these are real divides and i think the divide in washington does are represent a real difference of opinion out there. in other words it is part of the democratic process. >> well, i think that's true t. that's why we have a democracy. the democracy is based on leadership, on courage, on conviction. and what we all observed -- and this is nothing new. this goes back to 2011 when we were here then. that cost the taxpayers a billion dollars when we saw the debt rating of america's balance sheet go down. we're going to be here again. now i agree with you. we have serious problems, and we need serious solutions. we need a 21st century tax plan, a 21st century immigration plan, and obviously a fiscal plan that will help us navigate through this. but the problem is not the divide in the country. the problem is the polarization in washington and the lack of responsibility. the people in washington, in congress and the president, do not represent one faction or one party. these people have to understand that as americans we need to once and for all come together. we are on a collision course with time, and i'm saying enough is enough. this is a situation where we just can't allow this to continue one month and one month after another and allow this to go on because people are not talking and not getting along and the level of disrespect among people and parties. the polarization in washington is affecting our standing in the world, consumer confidence, consumer behavior, small and large businesseses across the country will be affected dramatically. and this is no way to run a country. and what i feel is that we all know something is wrong. we know the country is going in the wrong direction. we deserve so much better than this, and i'm asking myself what can i do given the fact that we have stores in every community to provide a platform and a vehicle for our customers and people across the country to lend their voice and we will deliver that to washington and tray to make a difference on their behalf. >> mr. schultz, you sound very passion a. just for the record, did you pay for the ads? is the business paying for the ads that are in all the newspapers today? >> well, you know, that's not the question but of course weigh paid for the ads. you want to ask a question, ask this question, how can it be that the death benefits of fallen soldiers were not being paid as a result of the government shutdown? that's the question you should be asking. is that the country that we're proud of? the conscience of the country is at stake not whether or not who paid the ad. of course we paid for the ad. >> you sound as if you're almost an island. i mean, there are -- who else is putting themselves in the middle of the political atmosphere as you are asking for some sort of movement? i mean, howard schultz, the ceo of starbucks, where is everybody else? where are the other ceos? i think you sent a letter to some of them. >> i've spoken in the last 48 hours to one half of the ceos of the dow 30. i spoke to paul ryan, to patti murray, to valerie jarrett at the white house. and, you know, what i feel is i'm trying to extend the fact that i am concerned and frustrated, and i believe that we have to do something. the question that i'm asking myself and asking others, and i think it's an appropriate question is, this is a time in america where we cannot be bystanders. we are watching and observing a situation in washington which is not consistent with the long-term values and the promise of america. our parents and our grandparents provided us a country that we no longer recognize and we need to do something about it, and we need to have our voices heard. and i am doing everything i can to try and enlist the support of others, but i can't be concerned with what others are going to do. i can only be can concerned with my company, our people, our shareholders and our customers and i believe we are on the right side of this debate in trying to move the country forward in a positive, nonpartisan way. >> you are obviously part of the community. what would happen if speaker boehner or nancy pelosi walked into a starbucks to pick up a venti? >> we would serve them and try to exceed their expectations. but if i was in a room with hem, if this was a business we would not close the door of that room until we all agreed we're not going to leave until we solve these problems. and i think metaphorically the congress and the administration literally needs to put their feet in the shoes of the american people and recognize that we are being let down, that we deserve much better than had this. open the government, pay our bills on time. do not let us default and achieve a bipartisan, comprehensive long-term deal. that's what america deserves. >> howard? >> yes? >> that's what america wants. the polls all indicate that people are upset, they're frustrated. what i don't know if we need so much is more pressure on washington. i mean, what we really have is a deficit of ideas. people are all ears. if you, howard schultz, can come up with a way of bending the cost curve and making changes to entitlements, the kinds of things there have been committees in washington for years on both sides trying to come together and find some way out, some way of give and take on both sides, some way to make everyone sort of come to an agreement as to where we could compromise, i think they would love that. i think they would say absolutely. >> but let me address that for a moment. first off, starbucks could haff company and howard schultz are not policymakers. however, what you just bring up in terms of trying to solve america's problems, i don't want to in any way minimize the complexity of the problem. but in the same context i believe these problems can be solved. but it can't be solved if the lens in which you are approaching the problem and the issue is through the lens of a partisan constituency. we have to view these through the lens of the american people. now we're going to disagree but we need civil discourse. we need respect on both sides. and we have to recognize that, yes, we are a democracy and we must make compromises. we can't have it only one way. there has to be a compromise on revenue and entitlements. there has to be a compromise. but this is no way to run a country. we can't shut down the government. we can't default on our bills. >> mr. schultz, one way that you could change that is in the 2016 race for the presidency to actually have somebody win who comes from outside the two main political parties, who comes in as a deal maker. what did you discuss with those other ceos? you said i think you've spoken to hatch of the dow 30. >> sure. >> are you talking about some sort of political movement? would you think about running for political office or at least standing behind someone who ran for political office, major office, as an independent? >> what i said is i have spoken over the last 48 hours to more than half of the ceos of the most important companies in america on the dow 30. and i can tell you 100% of those conversations were consistent with the level of disgust and disappointment that people have about what's going on. i think there is a move to foot that business people and business leaders of america need to have their voices heard in a way that can persuade and influence the policymakers to understand the critical nature of the situation. we were not discussing at this point 2016. we're worried about wednesday and thursday about the government defaulting which would be a tragic event that would be dire for the nation and dire for the world. >> howard, would you run for office? >> no, no. i'm not here to run for office. i'm here to do everything i can to provide my voice and the voices of our customers and people to make a difference. >> that's starbucks ceo howard schultz this morning amid a national campaign and, again, you can see more at your local starbucks. howard, thank you so much for your time. we really appreciate it. >> thank you very much. thank you. new laws in washington have changed the game in the meantime for venture capital and we'll tell you how in a bit. but first, over to rick santelli who is looking at an upside to all of the gridlock. the rick? >> reporter: yeah, you know, we're going to look at upside, down side, median line on gridlock and we're going to do all this with david malpas who wrote about ougautopilot spendi. i will ask him about two other words and his thoughts, one is complacency. one is superficiality. how does that fit in? you'll have to tune in in ten minutes to find out. americans take care of business. they always have. they always will. that's why you take charge of your future. your retirement. ♪ ameriprise advisors can help you like they've helped millions of others. listening, planning, working one on one. to help you retire your way... with confidence. that's what ameriprise financial does. that's what they can do with you. ameriprise financial. more within reach. so much focus on the health care sector lately but what about how the sector is doing as an investment the? well, kelly, the market waters have been still. a mix of stocks that are helping things at least stay slightly positive. some include johnson and johnson, those shares up a percent. goldman sachs upgraded to a neutral. medical device maker medtronic up closer to a percent. same thing with drug maker mylan. and amgen rose 3.5% yesterday so health care stocks certainly very much in focus with all the talk going on about obama care and everything but, still, this sector at least start iing to sw some signs of life here in today's trade. we'll see if it carries through on this flat session. simon, back over to you. >> thank you very much, dom. a quick look at gold if we can. this has been getting a hot of attention. for underperforming, secondly for getting some big sell signals early in the session and, again, confirmation from the cme today that there was a stop event for what looks like about ten seconds 8:42:46. trading resumed at that point. anyway, it appears according to the nynex it was a single trade that was responsible. there's focus on that particular move this morning and, again, at the broader backdrop here where gold really hasn't performed well, simon, and a lot of people are wondering if this is a couple positions changing or the underlying thesis is changing. >> let's bring in sharon epperson with more on that. i see the suggestion it could have been an order to sell 5,000 gold futures contracts in the market that caused the pause. >> reporter: often that is the case. that is what they are saying that it was one big trade that happened around that time. the cme group is saying that, yes, it was a brief halt about ten seconds or so and then trading resumed. all trades will stand. keep in mind, though, there's been a lot of pressure on gold and, as you mentioned, on the commodities sector in general. looking at a three-month low for gold and for oil prices. the uncertainty we're seeing in washington is certainly having an impact here but it is also creating a lot of volatility in these markets. and so traders are watching very carefully everything that we're reporting here in terms of what is happening in washington but, also, some key technical levels and the fact that we're right now here at this three-month low in both of these key commodities is significant. >> in essence it is a vote in confidence that they're actually going to do a deal on capitol hill, sharon. otherwise you would expect to see a safe haven play. you would expect to see gold rising. >> reporter: you would expect to see that. gold has been acting like the other commodities and as people are taking assets off the table, they may take gold off the table as well. so traders in gold have been very skittish as to which way to play this. you would ideally think this would be a safe haven play and that we would see gold go down if there is, in fact, a deal. also, there are others who say even if there is no deal and if there is other disruption in the marketplace and we are seeing a se sell-off of in other commodities gold may follow suit. so, again, it's been very hard for many of these traders on the floor to really gauge which way to go with this market particularly with this precious metal. >> we trade at $1,269. still ahead, noted economist and former deputy assistant treasury secretary david malpas will join us to talk about the shutdown. jackie: there are plenty of things i prefer to do on my own. but when it comes to investing, i just think it's better to work with someone. someone you feel you can really partner with. unfortunately, i've found that some brokerage firms don't always encourage that kind of relationship. that's why i stopped working at the old brokerage, and started working for charles schwab. avo: what kind of financial consultant are you looking for? talk to us today. in a we believe outshining the competition tomorrow requires challenging your business inside and out today. at cognizant, we help forward-looking companies run better and run different - to give your customers every reason to keep looking for you. so if you're ready to see opportunities and see them through, we say: let's get to work. because the future belongs to those who challenge the present. [ bagpipes and drums playing over ] [ music transitions to rock ] make it happen with the all-new fidelity active trader pro. it's one more innovative reason serious investors are choosing fidelity. get 200 free trades when you open an account. >> reporter: welcome back to "squawk on the street." we have a special guest today who penned a great op-ed. david malpass, thank you for being our guest today. >> hello, rick. >> there's much more at stake behind the shutdown and that was basically the highlight but what really captured my attention is this whole notion how many billions are on autopilot. can you tell us why that is so important and maybe even give a little defense to so many congressmen that are just getting vilified because they tried to use something in a messy way to accomplish something. after reading your article it's almost impossible to work on an engine of a car that's always this in motion. please explain your perspective. >> hi, rick. good to talk with you. well, the idea is it conceptually in the constitution congress was supposed to have the power of the purse but what we're seeing is over time there's been an erosion of that power. now a bunch of the government is running on entitlements or on -- what they're doing now is called rotating furloughs meaning people work for a few days and then they take a few days off. most of the activity is continuing on. so from a deficit standpoint it hasn't gone down very much at all. >> now is there a certain superficiality how our leaders explain to the american public about debt? and i guess what i'm referring to is, you know, there's a lot of talk about how much the deficits have come down and from a budget stand point that's tru from $1.6 tril wron to under $700 billion but these are still the largest single year deficits outside the stretch of '08 to '13. how do we really get at trying to make adjustments in a way that doesn't keep raising the debt which is hovering at $17 trillion and it's up a significant amount under the last two presidents. >> right. this is the huge problem that the government is growing by leaps and bounds and took a giant upward ratchet over the last three years or so. so the argument is should it grow rapidly from the current level which is maybe what the president wants or should there be some way to find restraints? there's this big battle i think will take years to really sort out how do you restrain a government that's grown too big? not just the federal government but the federal reserve. and so those are all getting sorted out in a crisis mode right now. i have to tell you, rick, that i'm in washington now and it seems pretty quiet. people are talking calmly about ways to move forward. how do we find a way to find restraint over the federal government? >> excellent. we only have ten seconds left. i want to you weigh in on something quickly. many are saying the markets are complacent. many leaders are saying the market is complacent. my argument is the markets are the only logical adults in the room with regard to the default possibilities. your thoughts, sir? >> well, you know, the markets have been pretty calm through this. you keep hearing rhetoric from the government saying it's going to be a disaster if there's default but it looks to me like the real consequence is the one of trying to slow the spending happening over the last month and might deepen into the next few weeks. that's the real issue and the markets are kind of treating it that way. >> dave, we're out of time. i hope you have a great weekend. i hope the country has a great weekend. thanks for taking the time. thank you very much. take a look at what's happening in the market. apparent lip the house gop is set to offer an end to the government shutdown and potentially some spending cuts, a request for spending cuts in its meetings with the white house this morning, simon. >> yes, and the important point there is it doesn't include anything about obama care so they're back to it areas they could get a deal and the president is meeting senate republicans as we speak. >> exactly and, again, ending the shutdown was one thing not addressed the last time we heard from the leadership when john boehner spoke publicly leaving that question unresolved. a resolution here, again, maybe one reason we're seeing markets after 300 points up yesterday adding 40 or so and the s&p up 0.2%. >> we don't have the event risk we might have had heading into the weekend. if they hadn't come together yesterday the markets by now, the commentators were saying, would be really scared. you would have to have bigger moves as people further shutdown positions. >> and i believe we have eamon javers with more details. >> reporter: as of right now they're negotiating with the white house about what it is that a large scale budget negotiation would look like. now, remember, the republicans have asked for negotiations on budget issues in exchange for raising the debt ceiling and ending this government shutdown. it looks like they're going to get that. the white house has said they won't negotiate before those things are done but it's clear that there is a behind-the-scenes negotiating going on right here. nbc news saying the way forward would look like this. the house would vote first, possibly as early as tonight or tomorrow and extending for six weeks and then early next week they would figure out a way to fund the government through december 15 and they would want something, the house republicans, that is, would want something in return from the white house. we'll have to see what they can get in terms of a concession. they won't negotiate in advance. it's up to everybody's interpretation but there's a conversation going on right now. >> eamon, within the last half hour howard schultz was on this network and he was saying people paraphrase it would be crazy to be jubilant if there was a short-term fix. we're still talking, aren't we, about a short-term fix. >> reporter: we are. we're talking about a fix even in this skcenario, that is bein floated now as something that would only go until december. so clearly you're dealing with a matter of a few months here. what a the lot of folks in the markets would like is a year, a year and a half or some kind of indication that we have some stability. and i can tell you that a lot of people in washington would like some kind of solution here that goes until december of 2014 and put it after the midterm elections next year and fight about it then as opposed to fighting about it every couple of months between now and then. washington is going to have to figure out how to manage without having constant repeated crisis. and we don't seem to have been able to learn how to do that just yet. >> yeah, enough crises calls for a solution. we'll let you go back for now to do the reporting. the dow is up about 50 points so taking significant encouragement from the headlines. we'll have more to follow, simon. we still have about four hours to go. more than four hours to go before the end of the session on this friday. 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[ indistinct talking ] [ male announcer ] right there in their trading platform. ♪ [ indistinct talking continues ] [ male announcer ] so the magic shell went back to being a...shell. get live squawks right in your trading platform with think or swim from td ameritrade. get live squawks right in your trading platform ido more with less with buless energy. hp is helping ups do just that. soon, the world's most intelligent servers, designed by hp, will give ups over twice the performance, using forty percent less energy. multiply that across over a thousand locations, and they'll provide the same benefit to the environment as over 60,000 trees. that's a trend we can all get behind. welcome back. stocks coming off their lows. the s&p 500 slid around 10:00 as numbers were weaker than and it tis pated. we've come back on word as the house republicans -- excuse me, the house senate are meeting with president obama. the important thing here is there may be some negotiations, debt limit may be raised, end of the government shutdown. we don't have a lot of details. we have the senate meeting with him and that's the important thing right now. hope for some more information shortly. take a look at a comment from this morning. this is important because a lot of people feel this way. howard schultz said the same thing. market psychology has soared but business and consumer psychology has taken a more lasting hit. that's the concern. we are calm today. take a look at the vix. the curve much more normal. the front end much higher. today this is a lot more normal looking. things have calmed down dramatically. elsewhere, banks are lagging. wells fargo, bottom line is the mortgage business slowed town more than people thought of the it was a sort of low beat quarter for them. jpmorgan also a revenue miss, other big names to the down side. a classic opportunity. this happens a lot. sell right at the earnings and this is the first day. home builders are up. very interesting facts here from jack. i spoke to him this morning. between thanksgiving and tax day home building stocks have gained an average of 22% in each of the last six years. that is far outperforming the rest of the stock market. so an interesting poll. they've been beaten up pretty badly and underperfeormed. maybe this is the time to own them. back to you. >> thank you very much, bob. let's pick up on the financials. jpmorgan and wells fargo reporting quarterly results. shares are both trading in negative territory. let's get some advice. jason goldberg is managing director and senior equity analyst at barclays. also with us paul miller managing director and head of financial institutions research. >> good morning. >> of the two of you, jason, you are the more upbeat on both of these names. let's talk about jpmorgan, first of all. jamie diamond provisions for fines further down the line. why should people buy his stock now, jason? >> they have some legal issues and took a big step forward to put those issues on the back burner. the sooner they can get these litigation concerns in the rearview mir aror the better off for the shares. >> and do you have can can have deny that's happening now because they've taken the provision, they put a number on where they need to take their stockpile of provisions? i think it's $23 billion, isn't it? >> a big step. now they've disclosed for the first time their legal reserve is $23 billion. another $2 billion in mortgage and purchase reserves. away from that charge results were good. increased income for the first time in a while. you have control of the expenseses, very good asset quality expected. so good core momentum in a lot of its businesses. you take away the legal issues and bank stock recovers. we see a lot of upside over time. perhaps they'll have more legal charges in future quarters but we didn't think a big step this quarter. >> soeded ed quarter. >> soeded $65 is your price ta. paul, yours is $55. on the conference call there was talk perhaps jamie dimon spoke about exiting businesses because the regulation was too stiff, it was going to raise the costs as a result. what did you take away, paul, from the conference call in particular? >> well, that was well known. he's been talking about getting out of some of these businesses where it's overregulated or is not the a core business for them. they want to simplify and focus on those businesses where they have a much higher r.o.e. that was well known. the problem with jpmorgan and any of these bigger banks is when is the litigation going to stop? we didn't even know about the litigation, the amount of this litigation that came through the quarter until a couple weeks ago and it really did surprise not only the bank but the analysts, also. is there more out will? we don't know. they talk about another $5 billion that we have to run through those models. what we struggle with these bigger banks is when is this litigation going to go away? until then, we don't think you can really own them. >> is jamie dimon safe, paul, in his job? >> i think right now he's safe. it's not jamie dimon's fault. this is stuff that he did -- a lot of stuff from the acquisitions the regulators keep on picking at him. >> in fairness, though, as hank paulson said on cnbc, he did know that when he took them over, he knew the litigation. we have to leave it there. jason and paul, have great weekend. >> thank you. and if you're fed up with the situation in washington there's a new website that has an interesting way to help you drown your sorrows and communicate your frustration with your elected leaders. it's as simple as this. at bny mellon, our business is investments. managing them, moving them, making them work. we oversee 20% of the world's financial assets. and that gives us scale and insight no one else has. investment management combined with investment servicing. bringing the power of investments to people's lives. invested in the world. bny mellon. you really love, what would you do?" ♪ [ woman ] i'd be a writer. [ man ] i'd be a baker. [ woman ] i wanna be a pie maker. [ man ] i wanna be a pilot. [ woman ] i'd be an architect. what if i told you someone could pay you and what if that person were you? ♪ when you think about it, isn't that what retirement should be, paying ourselves to do what we love? ♪ paying ourselves to do what we love? ido more with less with buless energy. hp is helping ups do just that. soon, the world's most intelligent servers, designed by hp, will give ups over twice the performance, using forty percent less energy. multiply that across over a thousand locations, and they'll provide the same benefit to the environment as over 60,000 trees. that's a trend we can all get behind. at the new york stock exchange, the day after the about big rally, can you trust the move in stocks, and how should you be positioned heading into the weekend? a man who called this week's action almost to the point ubs' paul richards is here. where he thinks we go from hear. plus, we head to the intersection of washington and wall veit to cut through the gridlock. simon, we'll see you in a few. one of the big stories of the morning is the fact gold was briefly suspended today as a result of the price move. sharon epperson has more on that. sharon? >> reporter: simon, this often happens when there is a huge move in terms of volume and that is what occurred right around 8:45 or so this morning only for ten seconds or so. the cme group says it stopped and immediately went into action and that's when we saw that trading halt. they also say that trades will now stand, though, and we are looking at, of course, trading has resumed and resumed immediately after that brief halt. traders are saying what happened here, well, of course many on the floor somewhat caught off guard it was such a brief amount of time but what they are focusing on as we reported earlier in the week, if there does appear to be some sort of resolution we could see an immediate drop, say 3% to 5% in the price of gold. that came from peter hough at kitco earlier this week. and we have seen gold prices down about 2% or so. but as i reported earlier, traders are also watching the moves in other commodities and we may see gold follow suit with the commodity sector, not necessarily play as a safe haven. it remains to be seen in this very volatile market. back to you. >> and the headliner, the stock is pretty bearish as well. thank you, sharon epperson there, on gold. are you mad about the government shutdown? are you also a frequent drunk dialer? well, then we've found a website for you. more on that in a moment. peoples peoples store and essentially they just get sold something. we provide the exact individualization that your body needs. before you invest in a mattress, discover the bed clinically proven to improve sleep quality. once you experience it, there's no going back. oh, yeah! at our columbus day event, save $500 to $700 dollars on the final closeout of our performance series mattress sets. but hurry-ends soon! only at a sleep number store, where queen mattresses start at just $699.99. sleep number. comfort individualized [ laughter ] ♪ [ female announcer ] each one of us is our own boss. ♪ and no matter where you are in life, ask your financial professional how lincoln financial can help you take charge of your future. ♪ furlough friday. time to cry into your beer and perhaps call congress in a rage. jane wells, our reporter, does both, of sorts, in the week. jane, the first question is to establish why, if it needs any questioning, why you are in a brewery in denver. >> reporter: well, it makes perfect sense, simon. i'm at the brewery in denver because down the street is this. it's the great american beer festival. this is the super bowl of craft beer. many, here, though are angry at congress because now brew labels and breweries cannot happen without government approval. so what do they do? they drunk dial congress. there's an app for that, or a website put together by ref lugsary messaging in d.c.. it even provides inebriated talking points, like my grandma can't get her cancer treatment and my kids won't stop yelling at me about camping. here's how it works, you put your number into the website and then it calls you back. i did it. this is the message i got. >> i like to tell people what's on my mind. so in a minute, we're going to forward you to a member of the house of representatives and you can tell them what's on your mind, and tell them to get back to work. >> so then they forwarded me to a member of congress. so randomly. a representative todd rokita, she said i was the first known caller from drunk dial congress. revolutionary messaging tells me they launched yesterday and got 2,000 calls in the first four hours. they're not making money on it, they're using it to highlight the technology and because they have a bunch of friends out of work. and guys, they're even putting on a website, suggested drinks in case you want to drunk dial congress responsibly, including the bad representative and the sleepy senator. for once, drunk dialing that you won't regret. >> jane, i think they've stumbled on to a successful business model, potentially here. there's money to be made. >> well, yes, if they can actually use drunk dialing to somehow sell their services, genius! >> yeah, i know. someone's thinking about it. in the meantime, lots of obviouses where some of the lone sta people working for these staff people are probably going, oh, my god. >> i love that it randomly dials anybody in congress, because they're all kind of the same, as the nbc poll pointed eed out. jane, have a great weekend, at a brewery in denver, where else, on a friday lunchtime. solar city, spiking this morning. they're up 20, almost 22%. we'll tell you why when we come back. thing i want is giving me a sales pitch, especially when it comes to my investments. you want a broker you can trust. a lot of guys at the other firms seemed more focused on selling than their clients. that's why i stopped working at my old brokerage and became a financial consultant with charles schwab. avo: what kind of financial consultant are you looking for? talk to us today. the world is changing faster than ever, creating new opportunities for those who stand ready to seize them. in a time when the biggest risk is playing it safe, we believe outshining the competition tomorrow requires challenging your business inside and out today. at cognizant, our flexible, collaborative approach helps forward-looking companies not only run better, but run different... to give your customers every reason to keep looking for you. so if you're ready to see opportunities and see them through, we say: let's get to work. because now more than ever, the future belongs to those who challenge the present. welcome back. here's a look at shares of solar city. they're up more than 20% this morning after the company reported its third quarter system capacity deployments. a key operating metric. they beat expectations. you can see the response, just a sharp upward move there, simon. >> yep. by the way, solar city and tesla's space exports, elon musk, making a cameo in the new film "machete kills." he also serves as the model for the film's eccentric billionaire. the space-obsessed villain played by mel gibson. let's mention the markets, putting on a decent climb. we're up 71 poisons and continuing to make gains. the breaking news is that there is an offer on the table from republicans that involve an extension of the debt ceiling in return for spending cuts. >> remarkable if you add that to the 323-point gain, we're up almost 400 points in the last three trading sessions. . >> you've seen oil down, gold and silver down, copper is doing reasonablery well, but some big moves there. and if you're just tuning in, let me tell you, there was a ten-second suspension on gold earlier today. >> plenty happening this morning. thank you so much for joining us for it. have a great weekend, simon. >> thank you very much. >> now over to the guys for the half. scott? all right, kelly, thanks so much. here's what we're following today, right hear at post nine. stocks surge after the biggest point gain of the year for the dow. can you trust this rally? the right prescription, j&j gets an upgrade, but should the stock be in your portfolio? a street fight is just ahead. but first, our top story, the shutdown showdown. day 11 of the d.c. dysfunction, but finally there appears to be hope that an agreement can be reached, possibly even over the weekend to reopen the government and avoid the looming death threat. stocks are rallying sharply on that optimism, but is there really a deal in sight and what does all of it mean to your money? it is halftime and let's play the action.

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